The Governments of Mexico and Chile Negotiations for the modernize the Free Trade Agreement (FTA) between both nations, after 25 years from the date it came into force.
In a joint statement, the authorities of both countries announced “the successful conclusion of the technical negotiations for the modernization of this bilateral treaty, incorporating two new chapters: Gender and Trade, and Micro, Small and Medium Enterprises (SMEs)”.
The head of the Secretariat (Ministry) of Economy of Mexico, Rachel Buenrostrocongratulated both delegations for the agreement and emphasized that the modernization of the Treaty “brings us closer to a more inclusive policywhich vindicates and strengthens the role of women and micro, small and medium-sized enterprises in the economy.”
Meanwhile, the Chilean Undersecretary of International Economic Relations, Claudia Sanhuezanoted that Chile and Mexico share principles and values where trade is considered an “essential tool” to promote economic development of both nationspromoting the inclusion of all sectors of society.
They highlighted that the chapter of Gender and Trade seeks to promote the economic empowerment of women through their inclusion in foreign trade.
Meanwhile, the chapter of SMEs Its objective is to link this type of companies to global and regional value chains and bilateral trade.
With the agreement they predicted significant impacts on trade between both nations, because after 25 years of the entry into force of the FTA between both countries, the commercial exchange reached 3.435 billion dollars in 2023 and has recorded a average annual growth of 3.9%according to the Chilean Ministry of Foreign Affairs.
The Chilean exports to Mexico grew from 500 million dollars in 1998 to 1.751 million in 2023, while imports from Mexico to Chile went from 847 million in 1998 to 1,684 million in 2023.
In 2023, Mexico was ranked as the main destination for Chilean exports of mineral fertilizers, canned peaches, multi-layer cardboard, particle board, Gouda cheese, fresh garlic and detonator capsules for mining, among other products.
Specialists warned about a “cooling” of the phenomenon of company relocation or ‘nearshoring’ in the northern border of Mexicowhere the maquiladora industry lost more than 100,000 jobs in the last 18 months, according to a report from the Border Business Block.
The report reported the disappearance of 101,501 export manufacturing jobs in the border areas of Tijuana, Ensenada, Mexicali, Tecate, Nogales, Ciudad Juárez, Acuña, Nuevo Laredo, Reynosa and Matamoros, which are equivalent to 10% of the 1,032 million that existed in October 2022, when they reached the highest figure.
Only Juarez Citythe largest employment position of this type in Mexico, eliminated 54,906 jobs in 10 months, the document indicated, based on data from the National Institute of Statistics and Geography (INEGI).
Thor Salayandía Larapresident of the Border Business Block, said that this loss of employment means a “serious risk” for the economy of the entire Mexican border with the United States, due to its high dependence on export manufacturing and its low economic diversification.
The business leader attributed the fact to the Political uncertainty in Mexico and the United Stateswhere presidential elections are taking place this year.
“The manufacturing industry has been depressed“There has not been much work due to various issues, such as the economic and political turbulence or uncertainty that we are experiencing in both Mexico and the United States,” he stated.
The Government of Mexico has highlighted the ‘nearshoring’a phenomenon in which companies relocate their investments and manufacturing to be closer to their markets, such as economic engine of the countryreporting 127 future announcements foreign investment for a total of more than $39 billion so far in 2024.
