The North American Leaders’ Summit, held on February 19 on Toluca, State of Mexico, is the seventh of its kind and the second that has Mexico as its venue. In this occasion, the meeting between the Heads of State from Mexico, United States and Canada occurred in the context of the 20 year anniversary of the implementation of the North American Free Trade Agreement (NAFTA) and although its broad and general targets are to enhance competitiveness and dynamism throughout the region, the consolidation of the Trans-Pacific Partnership (TPP) in the North American nations seems a higher priority.
TPP currently represents 26% of all trade and its members produce 40% of Gross Domestic Product worldwide. For Mexico, Canada and the U.S., TPP is seen as a second-generation agreement when taking NAFTA into consideration, one whose main objective is harmonizing the regional trade that the aforementioned countries have already integrated in the face of a new configuration of world trade.
For Mexico TPP implies facing a new normative framework in strategic sectors and issues, such as energy, transportation, food supply or border crossings. In the past, Mexico has been seriously questioned by other stakeholders about complying with deadlines and conditions. In addition, Mexican producers would have to adjust to new changes in sanitary legislation that will undoubtedly affect the dynamics of domestic export production. Likewise, the implementation of costly environmental and labor standards is yet to surprise several businessmen who ignore the impact that new commercial needs will have on their competitiveness. The reform undertaken in the energy sector will create new expectations regarding the trade opportunities and will set a new negotiation agenda for the future. The area integration will grant several incentives for Mexico that were not previously contemplated; undoubtedly, it will be an opportunity to improve its commercial relations and take advantage of the momentum in order to establish clear negotiation rules to attract investments such as exploitation of oil and gas fields located in the Gulf of Mexico basin.
Nevertheless, in the face of the conjuncture that the Summit is presenting, there are still pending issues such as security and migration that once again have not been part of the discussion. It is worrying that although when the bilateral cooperation between Mexico and the U.S. has already changed, security does not seem to be a priority matter within the agenda. Likewise, the migration issue is a debate that has a very low influence in Mexico and the corresponding decisions will remain at a unilateral level; and regarding Canada, there are talks about temporary work agreements. At this point, there is not much left to discuss, however transcendent these matters may be to determining cost structures of potential investors.
Undoubtedly, TPP negotiations should be closely followed and any agreement made should be undertaken with all possible caution. For Mexico, the advantage of accessing a market of 700 million individuals brings the risk of losing privileged access to the U.S. market and see its competitive advantages decrease in the face of other countries in the region that have lower costs and workforce. With the NAFTA experience in mind, will this prove to be a price too high to pay?
CIDAC
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