Mexico leads exports to the US with advantages of FTA’s

Mexico leads exports to the United States under the regime of tariff preferences within the framework of the 14 free trade agreements (LAC) that operates the US economy with 20 countries.

In other words, Mexico is the country in the world that sells the most merchandise in the US market with reduced or zero tariffs granted unilaterally.

In 2021, Mexico exported products to its northern neighbor worth 198,225.5 million dollars with this type of sales, followed by Canada (123,832.1 million) and South Korea (42,394.3 million), according to data from the World Trade Organization (OMC).

In 2021, US trade under the 14 FTAs ​​accounted for $417 billion in duty-free imports, including unilateral tariff reductions below the Most Favored Nation (MFN) rate.

At the WTO, each nation sets ceilings on its tariffs and is required to give everyone MFN status, a phrase that seems to suggest some kind of special treatment for a given country, but actually means charging their respective tariffs. to all members equally.

In addition to the advantages granted under its FTAs, in 2021 the United States registered another 426,000 million dollars in imports with the franchise treatment under the MFN regime.

Thus, adding the two types of tariff advantages, the United States gives an advantage to some 843,000 million dollars, that is, 29% of the total merchandise imports to that nation.

Regarding imports to the United States with MFN duty (which includes other foreign purchases free of duties), Canada was the largest beneficiary (156,863.3 million dollars), slightly ahead of Mexico (152,299.8 million), while in the third position was South Korea (45,464.4 million).

MFN treatment and other duty exemptions include other duty-free provisions, for example, in the case of state imports and where no duty has been reported.

The United States maintained trade surpluses with most LAC partners, but significant deficits prevailed with the main LAC partners, resulting in the United States posting an overall trade deficit of $148 billion with its LAC partners.

Over the past four years, the United States’ main FTA development has been the conclusion and implementation of the revised agreement with Canada and Mexico, which replaces the North American Free Trade Agreement (NAFTA), now known as the United States-Mexico-Canada Treaty (T-MEC).

It was the first time that the United States comprehensively modified or updated an existing FTA.

During this period, the FTAs ​​signed with the Republic of Korea and Morocco were also modified.

Other agreements were not modified, although the United States continued to engage with its LAC partners on implementation issues, labor and environmental provisions, and other issues related to the proper functioning of the agreements.

roberto.morales@eleconomista.mx