While governments and the public have been concentrating on challenges to global financial recovery, a historic economic alliance has been budding in meetings held around the world. The alliance is called the TPP, for the Trans-Pacific Partnership, an ambitious accord to promote a significant expansion of trade among Pacific nations, and this week Dallas hosts the 12th round of TPP negotiations.
What exactly is the TPP? It is composed of nine nations — the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. Their aim is to create a free-trade zone that not only eliminates tariff and nontariff barriers to goods and services but also develops regional supply chains to speed the production, sale and movement of goods, coordinates regulatory regimes, helps small- and medium-sized firms export more, and ensures state-owned enterprises compete fairly with private companies.
The TPP negotiations are the most important trade talks in the world, and the TPP accession process requires consensus. The United States should take the lead to give Mexico a seat at the table.
This would be to the advantage of the United States and Mexico, because over the past two decades the U.S. and Mexican economies have become so integrated that what benefits one benefits the other as well: 37 percent of the value added of Mexican exports comes from the United States. Thus, Mexican exports are also in good part U.S. exports — and Texas businesses and workers are the biggest U.S. beneficiaries. Mexico buys more goods from Texas than from any other U.S. state, with such purchases climbing almost 20 percent last year to $87 billion and supporting nearly a half-million Texas jobs.
That represents a sizable part of the nearly 6 million U.S. jobs that the U.S. Chamber of Commerce estimates are supported by U.S. trade with Mexico, which, as the second-largest U.S. export market, consumed $200 billion of U.S. goods last year. Mexico buys over 13 percent of U.S. exports, about twice as much as the combined purchases of current U.S. TPP partners ($105 billion). The $34 billion increase in U.S. exports to Mexico last year represents the largest U.S. sales increase worldwide and more than twice the increase of U.S. exports to the rest of the TPP members together.
Mexico has stepped up efforts to work with the United States to increase regional cooperation, building a modern and efficient border, boosting innovation and intellectual property rights, and promoting exports of small and medium-sized enterprises. These efforts parallel the TPP agenda.
To forge a truly significant pan-Pacific agreement, the United States should take into account Mexico’s expanding market. With a GDP of over $1 trillion, Mexico is the largest Latin American economy in the Pacific and ranks third among current TPP members (behind the United States and Australia). Trade generated a substantial part of GDP growth in 2011, which rose 4 percent to $701 billion. Moreover, Goldman Sachs projects that Mexico will become the world’s fifth largest economy by 2050, and the Brookings Institution estimates that Mexico’s flourishing middle class will make up 80 percent of its population by 2030.
Our long-standing bilateral trade relationship has shown Mexico to be well-suited for inclusion into the TPP. We are a trusted ally, one that plays by the rules. This fact should not be minimized when the threat of protectionism is ever present in today’s international landscape. The most effective way to fight protectionism is to open markets, an action to which Mexico is fully committed.
The United States should advocate for the inclusion of its southern neighbor and encourage further development of the trade ties that have been so mutually beneficial. This was highlighted in a bipartisan letter that 28 congressmen sent to the United States trade representative on March 30, supporting Mexico’s accession to the TPP negotiations.
Mexico’s participation in the TPP would enrich this new initiative, bringing together countries in Asia-Pacific and the Americas.
Bruno Ferrari García de Alba is Mexico’s secretary of economy and may be contacted at