Emerging Mexican and Canadian Strategic Trade Alliances Under NAFTA

Abstract

NAFTA and its provisions for free trade between the U.S., Canada and Mexico have reduced or eliminated import tariffs across a market of over 380 million people with a combined GDP of $7.6 trillion. While much has been written about U.S. and Mexican trade under NAFTA, considerably less attention has been given to the export and import trade activity between Mexico and Canada. Originally, Canada believed NAFTA was a sound defensive strategy to minimize preference losses in U.S. Markets. If Canada had stayed out of the tri-lateral agreement, it would have allowed the U.S. privileged access to Mexico's marketing potential. Canada needed to negotiate a trilateral trade agreement in North America and welcome the clear opportunities that Mexico offered. However, a closer analysis of Mexican and Canadian trade levels reveals that although absolute levels of exports and imports since NAFTA have increased between the two countries, these growth rates have increased at a decreasing rate. Have Mexico and Canada not really capitalized upon the NAFTA framework to become stronger economic allies? With over 70% of Mexico's 100 million people now under the age of thirty, Mexico represents a compelling market opportunity for Canadian businesses and entrepreneurs. This paper discusses some of the lesser-publicized trade alliances that are now emerging between Mexico and Canada in the areas of banking and finance, energy distribution, manufacturing, infrastructure modernization, telecommunications and agriculture and consumer products. One conclusion is that Mexico and Canada must vigorously pursue and expand bilateral agreements and strategic economic alliances to develop their own global markets within and outside the NAFTA framework.