The GDP of Brazil and Mexico for several years represents 60% of the Latin American economy, but the two giants still do not take advantage of its potential for a successful bilateral trade relationship. A commercial approach – Mexico and Brazil – is in focus
“In the XXI century, the two great Latin American powers still do not have a free trade scheme, but now they see the need to get closer,” says Ignacio Bartesaghi, director of the Department of International Business and Integration at the Catholic University of Uruguay, one of the most important specialists in international trade in the subcontinent, and adds: “In addition, a convergence between the Pacific Alliance, in which Mexico is integrated together with Colombia, Peru and Chile, and Mercosur, headed by Brazil and of which are also part Argentina, Uruguay and Paraguay, is only possible if both countries close a deep trade agreement. ”
The two countries are the most industrialized in the region, but during the last century, and to the day, they remain at a distance: a very low percentage, of 2%, of Brazil’s exports are destined for Mexico, and even less in sales from Mexico to Brazil, totaling 1%. According to experts, historically the isolation between the two main economies of the region originates in their perception as competitors and not as partners.
Although still insufficient, the commercial relationship between Brazil and Mexico is experiencing strong growth in recent years, which is related to the signing of the Economic Complementation Agreement in 2002, which reduced tariffs between the two countries for more than 800 products, marking the way forward. Nowadays, with the issue of renegotiating the FTA, in which the probability of rupture with the neighbor of the north appears, Mexico is urged of a commercial independence. At the same time with the political changes last year in Brazil, the new Government of Michel Temer sees as a priority the development of a more open trade policy and effort to unlock agreements with negotiations for years without effective results. Although not in the foreground, Mexico is also in the plans.
In the words of Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC): “Brazil is the fifth largest food exporter in the world and, in case of the rupture of the treaty, it would be a great opportunity for both countries.”
“It is not that Mexico wants to replace everything that imports from the US, but at least it sends the signal that it wants to diversify its commercial matrix,” adds Bartesaghi, also mentioning Mexico’s growing contacts with the European Union, South Korea and Argentina, expanding the new markets.
The experts point out, however, that any rapprochement between the two nations is a long-term project.