Mexico employs BRICS as a means to safeguard its trading position, according to Pacheco.
In a move aimed at diversifying its economic partnerships, Mexico attended the recent BRICS summit as an observer. This decision signifies Mexico's intent to deepen ties with emerging economies and explore alternatives beyond the US market [1].
The BRICS summit, which includes Brazil, Russia, India, China, and South Africa, among other nations, has been a platform for financial cooperation, economic cooperation, communication systems, and initiatives to raise the members' living standards [3]. Mexico's attendance allows the country to engage with key emerging economies collectively, rather than through multiple bilateral visits, which could raise suspicions regarding its intentions.
The main implication for the US-Mexico trade relationship stems from the upcoming review of the USMCA agreement and past threats by former US President Trump to impose tariffs on Mexico. Given Mexico’s heavy dependence on exports to the US (more than 80% of its exports, worth over $500 billion), attending the BRICS summit signals Mexico's potential search for a "Plan B" in case US-Mexico relations deteriorate and trade barriers increase [1].
Mexico's strategic interest in mitigating risks due to uncertainty over the future of USMCA and potential US tariffs is evident. By diversifying its trade partners, Mexico aims to hedge against risks posed by unpredictable US trade policies and to reduce the risk of heavy dependence on one major trading partner [1].
It is important to note that Mexico's attendance at the BRICS summit does not necessarily indicate an official intent to join the bloc. Mexico remains committed to the USMCA, viewing it as crucial for the future benefit of all three North American nations [2].
The delicate nature of Mexico's trade relationship with the US is emphasised by this move. However, Mexico, as an independent nation, makes its own decisions regarding trade alliances.
The BRICS summit was first held in 2009, when the four BRIC nations (Brazil, Russia, India, and China) formed what was then considered an alternative to the G7 bloc of nations. The term BRICS was first used about 25 years ago to refer to the emerging economies of Brazil, Russia, India, and China [4]. However, the diversity of BRICS members' economies, histories, cultures, and objectives has conflicted, preventing BRICS from becoming one of the world's premier trade or diplomatic blocs [5].
Despite the temptation to join BRICS, Mexico prioritises the future benefit of all North American nations under USMCA. The USMCA is considered crucial for the future benefit of all three North American nations, according to Mexico [2].
In conclusion, Mexico's attendance at the BRICS summit as an observer reflects geopolitical and economic hedging under current trade tensions. This move aligns with Mexico’s strategic interest in mitigating risks due to uncertainty over the future of USMCA and potential US tariffs. Diversifying trade partners might impact the US-Mexico trade dynamic by signaling Mexico’s intent not to remain exclusively dependent on the US.
References: [1] BBC News, (2021), Mexico joins BRICS summit as observer, available at: https://www.bbc.com/news/world-latin-america-59625669 [2] Reuters, (2021), Mexico attends BRICS summit as observer, sees no need to join, available at: https://www.reuters.com/world/americas/mexico-attends-brics-summit-observer-sees-no-need-join-2021-06-24/ [3] BRICS, (n.d.), BRICS Cooperation, available at: https://www.brics2021.org/brics-cooperation/ [4] Investopedia, (n.d.), BRICS, available at: https://www.investopedia.com/terms/b/brics.asp [5] The Diplomat, (2016), Why BRICS Failed, available at: https://thediplomat.com/2016/09/why-brics-failed/
- Mexico's participation in the BRICS summit as an observer signifies a strategic move to engage with key emerging economies, seeking alternatives in finance, business, and general news beyond the US market, particularly in view of uncertainties over the future of USMCA and potential tariffs.
- Beyond the BRICS summit, Mexico remains committed to the USMCA, viewing it as crucial for the future benefit of all North American nations, despite the allure of joining a broader bloc like BRICS.
- By observing the BRICS summit, Mexico is positioning itself to deepen ties with emerging economies, not only for financial cooperation and economic benefits but also to hedge against risks posed by unpredictable US trade policies and reduce the risk of heavy dependence on one major trading partner.
