March 6, 2017

Mexico Building Its Own TPP

 |  By: Mike Opperman

One of the first actions President Trump took upon becoming President was walking away from the Trans Pacific Partnership (TPP). The TPP essentially set up trade agreements between the U.S., Canada and Mexico, and trading partners in Southeast Asia, South America and countries in the Pacific. Since the U.S. walked away from the agreement, the countries involved in the original agreement have been scurrying to establish trade deals in a TPP-like fashion.

New potential arrangements include the largest customer for U.S. dairy products—Mexico—and the largest competitor to U.S. export products—New Zealand. As published in the New Zealand Herald, New Zealand trade minister Todd McClay will request talks on a free trade deal with Mexico be placed on the agenda of an upcoming meeting.

And Mexico appears ready to negotiate trade agreements with New Zealand and other TPP trading partners. “The President has already instructed me to convert the TPP into bilateral agreements with all the countries with which we do not have free trade agreements,” said Mexico’s secretary of economy, Ildefonso Guajardo, in an interview with the Financial Times. A bilateral agreement between Mexico and the European Union could happen as well.

It appears that the decision to drop out of the TPP agreement may have made the U.S. a spectator in negotiations between prime trading partners and key competitors. This could be a problem for U.S. dairy producers whose milk price is dependent on strong export markets to maintain the supply and demand equilibrium.