Potential Outcomes for Mexico – USA if (in the case) NAFTA is dissolved

At this specific moment, it is extremely difficult to forecast a mandatory decision by the US Government to dissolve NAFTA. The reasoning behind this is that Mexico imports 80% of more than 30 states of the US and is the first partner to the US as to trade behind China and Canada together (sources CCE – Consejo Coordinador Empresarial). Therefore, Mexico is the first partner, which behind trade, is the less political disrupted partner against the US and much more a friendly neighbor country to the US.

However, and, in the event of an unfortunate elimination of NAFTA by the US, we do have to consider that Mexico has nearly 70 trade Treaties and / or Alliances in the entire world, making Mexico a substantive attraction for direct and indirect foreign investment, to our country. It is imperative to say that eventough most of this Treaties and / or Alliances are not entirely used, at its in full trade scale usage. That does not mean that in case of any need, national entrepreneurs and / or business man, whether Mexicans or Foreigners with investments in Mexico might look in all those jurisdictions.

Useless to say that Mexico now a days, has more Free Trade Treaties and / or Strategic Trade Alliances that any other country in the world, providing Mexico a substantial attraction for Mexican and / or foreign nations, companies or people doing business in our country. Likewise, it is necessary to bear in mind that foreign investment provisions allow now a days what we call “fully open doors” to exports and imports into Mexico.

Despite of the negative elements that Mexico has, as many jurisdictions, what is important now is that Mexico is located at least in the 14th economy of the world and in the following seven years, it will be, just by means of inertia within the first ten (source CCE). The world force in Mexico in the following decade will be extremely productive because of its age and technical capabilities.

It is standard to say in our country, that it is unnecessary to “put all of the eggs in one basket (todos los huevos en una sola canasta)”. That is why and due to the geographical status of Mexico and the US,  that both countries have pretty much look into this statement, but as history  explain to us,  these type of statements vary from time to time. Importance now, is to be prepared for such changes, among those:

• Be prepared for the change.
• Be prepared for a high level education. Value added services will prevail not commodities.
• Modifications in our history, perhaps constitutional reforms, might be required, and abstain to look into a history without a realistic soberanity.
• Multijurisdictional transactions would be increased just because of globalization.
• Globalization came to be a player forever and, this does not mean that the undersigned is always on favor of globalization but the tides among most of the economies of the world, has a strength that it is extremely difficult to have them disappear.
• Reduction of cost but with the improvement of value added services.

I cannot say that this are the only elements to be considered for a potential disappearance of NAFTA but I should say that NAFTA, although being unhappily “observed” by some, mean that we should not “observe” other latitudes and jurisdictions.

Opportunities, capacities, entrepreneurs and business man, among others, are all over Mexico. It is not a time to fear, it is time to face realities and took those as an opportunity for making the impossible, possible.


By: Jose Miguel Zozayacorrea

Partner / Head of Legal Central-West Mexico EY Law