Mexico’s Industry Pushback: Calling for Exit from the Trans-Pacific Partnership
Mexico's industrialists are calling for the government to reevaluate its participation in the Trans-Pacific Partnership, a free trade agreement that has been in effect since 2018. The TPP includes a diverse group of nations, spanning from Asia, Oceania, and the Americas, such as Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, and Vietnam. However, local industries in Mexico, particularly the steel sector, argue that the agreement has put them at a disadvantage in a number of key areas.
The general consensus from industrial leaders, including Salvador Quesada, the director of the National Chamber of the Iron and Steel Industry Canacero, is that the TPP has failed to benefit the Mexican industrial landscape. In fact, some sectors, including steel, claim that the trade deal has harmed local businesses, and they are pushing for the government to withdraw from the agreement.
The Trans-Pacific Partnership: A Controversial Deal for Mexican Industry
The TPP, which facilitates free trade among its member countries, was intended to boost commerce and increase market access. However, many of Mexico’s industrialists argue that it has instead led to an influx of cheap, often subsidized goods from other countries, particularly steel from Asia. This situation has undermined Mexico’s local production, making it harder for domestic manufacturers to compete on an equal footing.
One of the major concerns is the impact of the TPP on the steel industry, as Quesada noted that Chinese satellite nations, such as Malaysia and Vietnam, have used the agreement as a gateway to dump low-cost steel into Mexico. This steel, subsidized by these countries, is then allegedly triangulated into the United States, circumventing U.S. tariffs and protections. As a result, Mexico is becoming a conduit for Chinese steel exports, thereby hurting local steelmakers and undermining their ability to compete effectively within the market.
The Economic Impact: A Strain on Mexico's Domestic Producers
Canacero and its allies in Mexico’s industrial community argue that the TPP disproportionately benefits foreign producers at the expense of domestic businesses. According to the Confederation of Industrial Chambers Concamin, of which Canacero is a member, industrial sectors in Mexico contribute significantly to the nation’s GDP, roughly 30% or about $1.81 trillion. However, these sectors are struggling with the adverse effects of the TPP, as it allows products like steel to enter Mexico at much lower prices, often undercutting local manufacturing costs.
Quesada highlighted that the TPP agreement does not provide enough protection for Mexico’s industries, especially in the face of an increasing influx of cheaper goods from TPP member nations. The result, he argues, is that Mexican industries, including steel production, are facing stiffer competition, lower profit margins, and even the risk of market destabilization. The perceived imbalance in the agreement has raised serious concerns about the long-term viability of these sectors, particularly as the country’s industrial capacity is increasingly strained by external pressures.
A Legacy of Discontent: The Mexican Government’s Stance on the TPP
The discontent among Mexican industrialists regarding the TPP is not a new issue. In fact, the former Secretary of the Economy during the 2018-2024 presidential administration raised concerns about the deal’s negative impact on Mexico’s industrial sector. Quesada revealed that the previous administration had considered withdrawing from the TPP entirely due to the widespread consensus that it had been an unfavorable deal for Mexico.
The general sentiment was that the TPP was one of the “worst negotiations” for the country, as it was perceived to have failed to protect key industries. The concern was particularly acute in the case of steel production, which, as Quesada mentioned, is highly vulnerable to steel imports from subsidized nations. As a result, many local producers feel that the government should take stronger steps to protect domestic industries from the consequences of what they believe is an imbalanced trade agreement.
The Role of Triangulation: Chinese Steel Entering the U.S. via Mexico
One of the most controversial aspects of the TPP, according to Canacero and other industry representatives, is its role in facilitating the triangulation of steel products. Triangulation refers to the process where products, such as steel, are sent to a third country. in this case, Mexico, and then exported to another nation like the United States, often bypassing tariffs or other protective measures.
Quesada and other industry leaders have expressed concern that countries like Malaysia and Vietnam, which are members of the TPP and have close ties to China, are using Mexico as a route for Chinese steel. The steel produced in China is often heavily subsidized, making it difficult for Mexico’s domestic producers to compete. When this subsidized steel is routed through Mexico and then sold to the U.S., it undermines both the Mexican and U.S. steel markets, threatening the stability of both.
At the recent OECD Global Forum on Steel Excess Capacity, which discussed issues surrounding China's overcapacity in steel production, the issue of triangulation was also brought up. The forum shed light on how trade agreements like the TPP may inadvertently contribute to the global steel overcapacity problem, which is partially fueled by the illegal or unfair trade practices of certain nations.
Moving Forward: Mexican Steel Industry’s Call for Government Action
As industrial leaders in Mexico continue to express their concerns about the TPP, there is growing pressure on the government to take action. Calls for Mexico’s exit from the agreement are gaining momentum, with advocates arguing that the country’s economic interests are being compromised in the face of unfair competition. Some industry leaders suggest that the government should renegotiate certain terms of the agreement, while others believe that a full withdrawal may be necessary to protect key sectors like steel from further harm.
In any case, it is clear that the TPP has become a contentious issue in Mexico’s industrial sectors. The Mexican steel industry, in particular, feels that it has been placed at a distinct disadvantage by the trade agreement. As pressure from industrial leaders grows, it remains to be seen whether the government will take steps to address these concerns and protect Mexico’s industrial future from the challenges posed by the TPP.
The battle over the TPP is a reflection of larger debates about trade policy, industrial protectionism, and the future of global trade. For now, Mexico’s industrialists are pushing for a shift in the nation’s trade strategy, hoping that their government will prioritize the long-term interests of local industries and secure a more sustainable economic future.
