Mexico and the Trans-Pacific Partnership

QuestionEarlier this month, the United States invited Mexico and Canada to join the Trans-Pacific Partnership (TPP) trade pact negotiations, generating a certain amount of chatter in the media regarding the proposed agreement.  After reading through numerous articles on the TPP, we can’t help being reminded of the 1958 horror flick “The Blob”, starring Steve McQueen.  A ball of goo pops out of a fallen comet and gets bigger and bigger as it snarfs up the helpless townsfolk, while all the while everyone wonders, ‘what is that thing?’

The TPP apparently began in 2003 as trade talks between Chile, Singapore and New Zealand, then added Brunei in 2005, and was joined by the United States in 2008, followed by Australia, Vietnam and Peru, and then Malaysia in 2010.  Now Mexico and Canada have been invited to join, Japan is pondering the possibility as well, and still, a lot of folks including ourselves are asking just what the heck is that thing.

The TPP is being billed by promoters as a comprehensive trade liberalization agreement that will not only reduce tariffs but will include chapters that go beyond previously negotiated pacts, such as those relating to e-commerce, digital media, the environment, small and medium sized enterprises (SMEs) and intellectual property, among others.  The Office of the U.S. Trade Representative (USTR) identifies the following selected objectives for the agreement:

  • Eliminate tariffs and other barriers to goods and services trade and investment
  • Facilitate the development of production and supply chains among members
  • Establish regulatory coherence to promote trade between the countries by making trade among them more seamless and efficient.
  • Address concerns small- and medium-sized enterprises have raised about the difficulty in understanding and using trade agreements, encouraging small- and medium-sized enterprises to trade internationally
  • Promote trade and investment in innovative products and services, including those related to the digital economy and green technologies

Criticism of the TPP has been harsh, particularly regarding the scarcity of information available to the public regarding the details of the agreement (legislators in the United States have even complained that large corporations have greater access to information on the negotiations than do members of Congress).  Labor and public policy advocacy groups in at least the United States, Canada and Australia argue that proposed stipulations unfairly favor large corporations and inhibit governments’ ability to legislate for the common good.  Other criticisms have been directed at the broadening of patent protections for pharmaceutical multinationals do the disadvantage of developing countries, the risks of weakening industrial regulation, IP protections that potentially inhibit the free exchange of information on the internet and threats to environmental protection, among others.  In Mexico, industry groups have raised concerns about Mexico’s lack of participation in the first 12 rounds of negotiations, as well as potential threats to the country’s metal mechanic and furniture manufacturing industries under the proposed chapter on SMEs.

Since the administration of President Carlos Salinas de Gortari (1988 – 1994), Mexico has relentlessly pursued free trade.  The country has also put its money where its mouth is, opening up its markets through pacts with trade partners such as the United States and Canada (NAFTA, 1994), the European Union (Global Agreement, 2000), Japan (EPA, 2004) and Peru (AICMP, 2011) among others.  Particularly in light of the recent frenzy of protectionism on the part of Brazil and Argentina, Mexico’s interest in joining the TPP negotiations should further cement its reputation as a dependable and open trade partner.

We generally favor free trade, and we are particularly pleased with how recent administrations’ push for the diversification of trade partners is helping Mexican exporters overcome their historic reluctance to pursue business outside of North America.  Mexican goods producers, particularly in agriculture and food products, are discovering increasingly appetizing markets in Asia, with exports to the region growing by an average 20% annually over the past six years, according to the Economy Ministry.   If joining the Trans-Pacific Partnership will help us increase our exports to Asia, we’re all for that, but we also agree that all the stakeholders should be able to analyze the details of the agreement and make their voices heard before a final decision is taken.  We can start by making drafts of the various TPP chapters readily available for study.

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