On the 4th of October, the Mexican Ministry of Economy signed a new agreement, making the country the newest member of the “World Logistics Passport”. With this, Mexico hopes to not only gain access to new markets in the Middle East, Africa and Asia, but also to reduce trade barriers and thus boosting the country’s economic development.
What is the “World Logistics Passport”?
On Monday, Mexico’s Secretary of Economy, Tatiana Clouthier, and the CEO of the Dubai Port World, Ahmed bin Sulayem, signed a memorandum of understanding that makes Mexico a member of the “World Logistics Passport.” This is an initiative of the United Arab Emirates, which was launched in 2020 at the World Economic Forum in Davos. In addition to Mexico and the UAE, members and/ or countries with participating hubs include Brazil, Colombia, South Africa, India, Indonesia, Thailand, Ethiopia, Botswana, Zimbabwe, Mozambique, Burkina Faso, Guinea, Malaysia, Kenya, Paraguay, Ecuador, Kazakhstan, Uruguay, Morocco, Senegal, Nigeria, Singapore and Vietnam. The agreement aims to promote trade in the South and better connect ports of the Middle East, Africa, Latin America and Asia. By doing so, members hope to open up new trade routes and thus gain access to new markets, as well as speed up global trade flows and make trade more efficient.
What role does the Dubai Port World play?
The largest port of the “World Logistics Passport” is Dubai Port World, which is an important trading hub for Southern countries. In 2019, the port’s throughput was nearly 70 million TEU (Twenty-foot Equivalent Unit), of which about 85% came from emerging economies. The port is also a key hub in global trade in general, as 40% of all trade takes place port-to-port.
What are the benefits for Mexico?
Lastly, there is the question, which benefits Mexico hopes to gain from its membership in the “World Logistics Passport”. The biggest opportunity is probably market diversification, because although Mexico has a high volume of exports, most of it is destined for the U.S. market and Canada. The new agreement will give Mexico access to many new markets, especially in the Middle East, Africa and Asia, which will significantly boost the country’s economic development. Likewise, the “World Logistics Passport” will reduce trade barriers. This will facilitate access to new markets, especially for small and medium-sized enterprises (SMEs) and will enable more companies to participate in global trade. Mexico also hopes to reduce trade costs and increase imports and exports. However, the “World Logistics Passport” and its numerous new opportunities should also be viewed with caution, as Mexico already has trade agreements with over 40 countries and should not neglect existing relationships.
Do you have further questions about current economic developments in Mexico? Do not hesitate to contact us! Click here to get an overview of our services.