Mexico Pushes for Canada

July 11, 2013

The economic relationship between Mexico and Canada has been somewhat awkward over the past two decades with the United States influencing its structure. Yet the 1993 North American Free Trade Agreement, or NAFTA, provides a working framework for a direct Canadian-Mexican economic relationship, a relationship that remains more talk than action. Manufacturing in Mexico generally goes to the U.S., not Canada. However, both sides in the Canadian-Mexican trade dynamic recently expressed more interest in setting up a working trade partnership rather than a paper tiger of a treaty, one in which most Mexico manufacturing stopped at the U.S. border.

Mexican ambassador Francisco Suarez recently carried a message of manufacturing in Mexico and economic trade to Ottawa, saying new opportunities in addition to NAFTA existed to deepen economic ties between the two nations. Suarez said he had been instructed by Mexico’s President Pena to make increased economic trade between the two nations a real priority and not just a talking point.

However, Suarez also noted the “big elephant in between” of real Mexican-Canadian trade, the perception in Ottawa that trade with Mexico, and Mexico manufacturing may be important, but trade with the U.S. was all-important.

The “political stars” are changing, Suarez said, meaning the time has come for Ottawa to re-focus on its relationship with Mexico just as it was re-setting foreign policy. Not to mention Canada and Mexico were each other’s third-largest economic partner.

Setting the stage for this new push for a more robust economic trade between the two North American nations was recent cooperation to fight the protectionist practice of country of origin meat-labeling in the U.S., referred to by the acronym COOL. Canada and Mexico filed complaints against the practice with the World Trade Organization.

Suarez said Canada and Mexico shared an interest in creating a more dynamic economic infrastructure among the three NAFTA signees. The energy question loomed large with each nation participating in various partnerships to create more energy more cheaply, Saurez said.

A major contribution his nation could make was courtesy of manufacturing in Mexico with its younger population able to create partnerships with more Canadian companies like Bombardier, which utilized Mexico manufacturing to construct airplane parts under existing agreements, Suarez said. That Canadian-Mexican partnership created cost-effective parts rivaling those made in Brazil for price and quality, he said.

“Those airplane parts are sent to Canada,” from Mexico, Suarez told The Globe and Mail. “They integrate the Bombardier full units here. But at a cost where the Bombardier planes can compete better with the Brazilian planes.”

The fact is Mexico features lower labor costs that can work in conjunction with revived Canadian manufacturing resources to build a better product more cheaply, analysts say. That, in itself, buffers the Suarzez argument on behalf of Mexican-Canadian trade going above, and beyond, the talking stage it has been in since 1993 and into a more active partnership arrangement.