Mexico is approaching the top 10 largest exporters of products in the world

16/04/2021

Mexico came close to entering the ranking of the world's top 10 exporters in 2020, surpassing the United Kingdom, but below Belgium, with a minimal difference of 2 billion dollars. According to data from the World Trade Organization (WTO), Mexico managed to surpass Singapore, Canada, Russia, and the United Kingdom in this indicator in the last decade.

Mexican exports close to the Top 10 of the world's largest exporters of products. Image: Pixabay
Mexican exports close to the Top 10 of the world's largest exporters of products. Image: Pixabay

It had already overtaken Belgium in 2019, but this European country reversed positions in 2020. Belgium's exports totaled $420 billion (-5.6% year-on-year); Mexico's totaled $418 billion (-14.1%) and the United Kingdom's were for $402 billion (-14.1 percent). Ahead of them were China, the United States, Germany, Japan, the Netherlands, France, South Korea, Hong Kong, and Italy.

According to Santander, Mexico's unprecedented drop in the volume of imports and exports in 2020 was due to the global economic crisis generated by the Covid-19 pandemic, while exports of passenger vehicles registered the sharpest downward rates and the fall in global oil prices generated a notorious loss of value.

Mexico relies heavily on its trade relations with its main trading partner, the United States, which accounts for more than three quarters of the country's exports. Other destinations for Mexican exports are the European Union and Canada. As for the United Kingdom, both imports and exports fell sharply in 2020, also as a consequence of the global economic crisis due to the pandemic, together with the uncertainties related to the Brexit process.

For Santander, the trade agreement reached by the European Union and the United Kingdom at the end of 2020, which grants the United Kingdom "a zero tariff, zero quota" for its exports to the European Union, should be considered in the future. However, a series of new tariffs and regulatory controls were introduced, including rules of origin and strict local content requirements, which could slow down procedures and therefore affect mutual trade.

According to data from the World Trade Organization, Mexico has surpassed Singapore, Canada, Russia, and the United Kingdom in this indicator over the last decade.

At the top of the list was China, with exports of 2.6 billion dollars and an increase of 3.6%, followed by the United States, with foreign sales of 1.4 billion dollars, a contraction of 13% at annual rates. Despite the signing of a partial trade agreement in January 2020, U.S. trade tensions with China persisted, with most tariffs maintained (19% eaten on average in early 2020, compared to 3% in early 2018).

In Santander's view, what is clear from the start of President Joe Biden's term is that trade threats against Europe will fade, while trade tensions against China may take on a softer tone. Meanwhile, after a deep contraction in the second quarter of 2020, reflecting the impact of the containment measures, the U.S. economy grew strongly at an annual rate of 33.1%, although the second wave of contagion generated new restrictions, which aggravated the situation.

For its part, the Chinese government has been adopting more flexible economic policies to mitigate the growing risks to future growth. On November 15, 2020, China signed the Regional Comprehensive Economic Partnership (RCEP) with 14 other Indo-Pacific countries. This free trade agreement is the most comprehensive treaty in history: it covers 30% of the global economy.