The Mexican and Canadian governments signed an important partnership agreement last month to enhance and strengthen economic and security relations between the two countries.
Canada and Mexico are close economic partners regardless of their place in the North American free trade bloc; Total bilateral trade between the two countries in 2024 will be about $56 billion, and Canada’s total foreign direct investment in Mexico in 2024 will be about $46 billion. Canada was Mexico’s fifth-largest trading partner and Mexico was Canada’s third-largest trading partner as of the end of last year.
The main driver of the new agreement is the status of the trilateral United States-Mexico-Canada Agreement (USMCA), which is scheduled to be renegotiated next year. US President Donald Trump is already questioning its key elements in light of his criticism that Mexico and Canada are taking a lax approach to illegal cross-border activities in the region, from immigration to drug trafficking, and what he sees as anti-competitive trade and investment measures. The new bilateral partnership agreement aims to secure support for economic integration, while the future of the US-Mexico-Canada Agreement is less certain.
Canadian Prime Minister Mark Carney and Mexican President Claudia Sheinbaum highlighted several potential new areas of cooperation. Canadian leadership is interested in more diverse and resilient supply chains through Mexico, while the Mexican government wants to increase bilateral trade through direct access to Canadian ports, making the country less dependent on existing US maritime channels. Together they are exploring co-production to target the growing Latin American and Asian markets, leveraging the Trans-Pacific Partnership.
The new bilateral agreement also addresses key security components, such as strengthening security cooperation to combat trafficking in synthetic opiates, social inclusion of migrant workers and related work programmes. More meetings between Mexican and Canadian trade officials are expected in the coming months on a range of issues, from health to energy.
Meanwhile, public consultations have begun on the USMCA, which is scheduled to be reviewed next year. Public consultations are an integral part of the renewal process, enabling parties to better prepare for the upcoming negotiations. It also gives the leadership on each side a better understanding of political trends and their views on key economic issues.
