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Mexico has long since benefitted from its close relationship with the United States, such that 88 percent of its exports went to America. However, after the crash of 2008, Mexico experienced a severe drop in American demand and began to rethink its strategy to service only the American market. These days, Mexico has diversified its export market so that only 80 percent of exports go to the United States, and more exports go to Latin American countries, Asia, and Europe instead. The share of exports going to America is expected to decrease further as Mexico is well-positioned to be the vendor of choice for emerging economies due to its unique market position.

Mexico’s Increased Global Competitiveness

Several factors make Mexico’s goods and services attractive on the global market. Mexico’s manufacturing environment already includes both outsourced European and American factories that used Mexico’s low wages to help reduce the cost to get a product to market. The peso has always been depreciated when compared to the dollar, increasing the buying power of buyers using other currencies. This peso slump has continued, but despite that it has not been in any danger of becoming worthless. The currency and banks continue to strengthen, just slower than other Latin American countries which saw their currencies rise against the dollar during the recession. That means that these countries also now see Mexico as a bargain. Lastly, transportation costs and wages from other countries that are major exporters globally, like China, are finding their costs rising with the increased cost of fuel and rising wages. This also makes Mexico, which is closer to Brazil and Colombia than China, a worthwhile alternative.

Mexico Wants Global Business

Mexico is positioning itself as the vendor of choice for countries outside the United States. Places like Colombia, Italy, and even China are expanding their business with Mexico. In the first three quarters of 2011, a 30 percent portion of growth in exports from Mexico was done with these three countries, alone. In 2010, Mexico had $298 billion of exports to countries around the world. Even though Mexico has no bilateral trade agreement with Brazil, Mexico’s exports quadrupled to Brazil in the period between 2005 and 2010. Much of that was due to telecommunications business exports. Business to Brazil can only increase should Mexico enter into a bilateral trade agreement with Brazil or China. China only buys about 2 percent of the total exports from Mexico at this time.

Expect More Free Trade Agreements

By diversifying its export market, Mexico becomes much more resilient should the U.S. economy again slide into recession. It can expand its economic growth faster by creating growth outside its relationship to the United States. Mexico would like to be included in the talks to create an Asian-Pacific free trade agreement. Currently, Mexico has 12 free trade agreements with 44 different countries and it is going to continue to make free trade a priority. With a depreciated peso competing against strong currencies like the Brazilian real or the Chinese yuan, it’s also certain that other countries will also continue to welcome the opportunity to do business with Mexico as well.