Mexico was one of 11 Pacific Rim countries that formally entered into a revised trade pact in Chile yesterday that will slash tariffs between the participating nations.
The signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or TPP11, contrasted sharply with United States President Donald Trump’s formal announcement that the U.S. is introducing tariffs on steel and aluminum imports.
Economy Secretary Ildefonso Guajardo represented Mexico in the signing ceremony in Santiago that was presided over by Chilean President Michelle Bachelet and attended by trade ministers from the member nations.
“Despite rising protectionism trends, what you have collectively achieved today constitutes a clear message that we stand behind open markets and trade liberalization,” the Chilean leader said.
Chilean Foreign Minister Heraldo Muñoz agreed, saying “we will be giving a very powerful signal against protectionist pressures, in favor of a world open to trade, without unilateral sanctions and without the threat of trade wars.”
The new trade bloc includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The combined population of the countries exceeds 500 million people and together their economies account for 13% of global gross domestic product (GDP).
The agreement was originally conceived as a counterbalance to China’s increasing economic influence.
But President Trump withdrew the United States from the original TPP deal on his first day in office, a move that many thought would kill off the agreement.
But the remaining 11 countries decided to forge ahead regardless and there is a possibility that nations including the United Kingdom, South Korea, Taiwan and the Philippines could later join.
If the United States had remained in the agreement, the TPP would have accounted for around 40% of global GDP. U.S. Treasury Secretary Steve Mnuchin has said that he is in discussions to consider rejoining the agreement.
The TPP11 will go into effect 60 days after six of the 11 member countries have ratified the agreement domestically.
In Mexico’s case, the text of the treaty will be sent to the federal Senate for analysis and approval.
The agreement creates the world’s third largest trade bloc after the European Union (EU) and the North American Free Trade Agreement (NAFTA). The latter is currently subject to a contentious — and slow — renegotiation process.
In a statement, the Economy Secretariat said that “Mexican products will have access to six new markets: Australia, Brunei, Malaysia, New Zealand, Singapore and Vietnam” as a result of the TPP11.
It also said that “it will enable Mexico to deepen its access to the agri-food market in Japan and consolidate preferential tariffs with Canada, Chile and Peru.”
News website Quartz said the TPP11 “creates more leverage for Mexico and Canada in trade negotiations with the U.S.”
The signing of the pact comes as some analysts say the U.S. government is using the introduction of tariffs as a negotiating ploy in ongoing NAFTA talks
Trump announced yesterday that Mexico and Canada will be initially exempt from its metal tariffs although the U.S. president appeared to indicate that getting a favorable outcome in an updated NAFTA deal was a condition of them being made permanent.
Uncertainty surrounding NAFTA has spurred Mexico into seeking new trade agreements and export markets.
It is currently negotiating an updated agreement with the EU that is reportedly close to conclusion. Names of cheeses and jalapeño and chipotle chiles have been among the obstacles that have held up the trade talks.