Mexico Japan Free Trade Agreement: What You Need to Know
Mexico and Japan have recently agreed to strengthen their economic ties by signing a free trade agreement (FTA). This agreement is expected to significantly enhance trade between the two nations, promote economic growth, and provides businesses with new opportunities to expand their global reach.
In this article, we will explore the details of the Mexico-Japan FTA, its benefits, and what it means for businesses in both countries.
Overview of the Agreement
The Mexico-Japan FTA was signed on 12 November 2020 and went into effect on April 1, 2021. The agreement aims to eliminate tariffs on roughly 99% of goods traded between the two countries. The FTA also includes provisions on digital trade, intellectual property rights, and sustainable development.
Benefits of the Agreement
The Mexico-Japan FTA offers several benefits to both countries. For Mexico, the deal provides access to the Japanese market, which is the world`s third-largest economy. Japan is a major importer of Mexican agricultural products like beef, pork, and avocados. The FTA eliminates tariffs on these items, giving Mexican producers a competitive advantage over other suppliers.
The Japan-Mexico FTA also provides new opportunities for Japanese companies looking to invest in Mexico. The country has a favorable investment climate, low labor costs, and access to other markets in North and South America.
For Japan, the agreement opens up Mexico`s growing market, which includes a population of more than 120 million people. Mexico is the second-largest economy in Latin America and has a large middle-class population with increasing purchasing power.
The FTA also strengthens the ties between the two countries and enhances their strategic partnership. Japan and Mexico have a long history of cooperation in various areas, including education, science, and culture.
Impact on Businesses
The Mexico-Japan FTA provides businesses in both countries with new opportunities to expand their reach and access new markets. Tariff elimination will make it easier and more affordable for companies to import and export goods, leading to an increase in trade volumes.
Small and medium-sized enterprises (SMEs) stand to benefit significantly from the agreement. SMEs make up a significant portion of both countries` economies and can increase their competitiveness by taking advantage of the new opportunities provided by the FTA.
Conclusion
The Mexico-Japan FTA is a significant step in strengthening the economic ties between the two countries. It offers significant benefits to businesses in both Japan and Mexico, particularly small and medium-sized enterprises. The agreement eliminates tariffs on most goods traded between the two countries, opens up new markets, and strengthens their strategic partnership. As the FTA goes into effect, there will be many new opportunities for businesses in both countries to expand their reach and increase their competitiveness.