PLAYA DEL CARMEN, Mexico (Reuters) - Asia could become twice as important to Mexico as an export market over the next five years as the country strengthens trade ties with the fast-growing economies of the region, Mexican Economy Minister Ildefonso Guajardo said on Monday.
Latin America’s biggest exporter is working to diversify its trade to reduce its dependence on the U.S. market, which takes in more than three quarters of Mexico’s exports.
For years a peripheral market for Mexico, Asia has been growing in importance, and Mexican President Enrique Peña Nieto has been at pains to bolster relations with China in particular since he took office at the start of December.
Mexico’s economy is facing its toughest year since 2009 and net trade has been a drag on growth, with imports rising faster than exports in 2013. However, robust demand in the Orient for Mexican goods has helped to take the edge off.
Guajardo told Reuters the government was in the midst of “redesigning” ties with Asia and was optimistic the share exports to the region would increase before Peña Nieto’s term comes to an end in December 2018.
“From what we have today to what we could have, I think it could be double (the export share),” he said in an interview on the sidelines of a meeting of ministers from Colombia, Mexico, Peru and Chile in the Caribbean resort of Playa del Carmen.
The four countries make up the Pacific Alliance, a nascent Latin American bloc that later on Monday could conclude talks on removing the last trade barriers between them.
Favoring stronger trade with fast-growing Asian economies, the members of the Pacific Alliance are pushing free market policies to spur growth and boost foreign investment.
Once the initial round of talks has concluded, the Pacific Alliance might consider setting up more flexible rules to allow other nations to join, Guajardo said, noting that Costa Rica and Panama were keen to sign up.
Mexican exports have been almost flat so far this year, with the economy now expected to grow by less than two percent.
But exports to Asia jumped by nearly 15 percent in the first half of 2013, accounting for almost five percent of the total, according to data from the national statistics agency. In 2000, they made up just over one percent of the Mexican total.
Exports to China rose by more than a quarter in the January-June period to some $3.3 billion, although that was dwarfed by the volume of Chinese exports reaching Mexico at $28.7 billion.
Still, around 90 percent of Mexico’s imports from China are component parts for producers that help to make Latin America’s No. 2 economy more competitive, Guajardo said.
Peña Nieto and China’s President, Xi Jinping, met in June and signed a number of agreements to strengthen economic ties, open up China to Mexican pork and tequila, and provide Mexican oil monopoly Pemex with a $1 billion Chinese credit line.
Mexico and China have long been rivals for the U.S. market, and Mexico also belongs to the U.S.-led Trans-Pacific Partnership (TPP), trade talks that could end up covering 40 percent of global economic output.
Some see the TPP, which also includes Japan, Australia, New Zealand, Canada, Chile, Peru, Malaysia, Vietnam, Singapore and Brunei, as a move to isolate China, although Beijing said in May it would examine the possibility of joining the talks.
Guajardo said Mexico would not stand in the way if China made a formal request to participate.
“Mexico wouldn’t have any objection if China put forward a bid to join one day,” he said. “Obviously, it needs to be with the consent of all the countries.”
Reporting by Dave Graham. Editing by Andre Grenon and Andre Grenon