In this scenario, the Federal Budget for 2025 proposes a 19.9% year-on-year reduction in real terms to the budget item related to expenses for Economy trade negotiations.
Mexico's Ministry of Economy lost more than 50% of its negotiating positions in the Ministry of Economy during the last six-year term, a technical area that will face challenges if its budget is not increased, said Kenneth Smith, international trade specialist and partner at AGON.
In addition, in the Draft Federal Expenditure Budget for 2025, presented this Friday, the federal government proposed a 19.9% year-on-year reduction in real terms to the budget item related to expenses for Economy trade negotiations, to 492.7 million pesos (US$ 24.1 million).
“During the last six-year period, many people left the Ministry of Economy and other negotiators were simply removed or their positions were not renewed. More than 50% of the negotiators' positions were lost and we must remember that it is not just the Ministry of Economy,” said Smith.
If the current project is approved, the budget for this area for 2025 would be the lowest in at least the last decade, considering amounts in real terms.
In addition to officials from the Ministry of Economy, officials from other departments participate in Mexico's international negotiations. For example, when it is an investment issue, negotiators from the Ministry of Finance and Banxico are involved, and when it is a labor issue, negotiators from the Ministry of Labor are involved.
"In all these departments, that human capital, that historical memory and that negotiation experience were also lost," Smith lamented.
OUTLOOK FOR TRADE NEGOTIATIONS
What happens now? Smith believes there is “a positive attempt” to bring back officials with experience in trade agreement negotiations, some of them in the USMCA (of which Smith was Chief Negotiator).
“The new undersecretaries have experience in economic matters and the heads of units that will be in charge of both Commercial Intelligence and Commercial Negotiations are people with a lot of experience. The problem continues to be at the lower levels, sub-directorates, area directorates and department heads; there were also many cuts made there in the last six-year term,” he added.
For 2025, the federal government is proposing to Congress an expenditure of 492.7 million pesos (US$ 24.1 million) for the Negotiation, administration and defense of international trade and investment treaties and agreements item, which means 97 million pesos (US$ 4.7 million) less compared to the budget for 2024.
This new amount represents 13.7% of the total budget of the Economy for 2025, which amounts to 3.598 billion pesos (US$ 176 million) and will be reduced, in turn, by 12.9% in real terms compared to 2024, if not modified by the Congress of the Union.
Among its functions, the Mexican Ministry of Economy must promote the network of trade and investment treaties and agreements signed by Mexico, with the aim of taking advantage of international markets for the diversification of exports.
It should also review the ongoing negotiation processes (Ecuador, the United Kingdom, the European Union and Cuba) and prepare for the review of the USMCA scheduled for 2026, but whose process begins in 2025.
Other functions include defending Mexico's commercial interests in dispute resolution procedures established under international trade treaties and coordinating legal work in each of the groups and roundtables established for negotiations.
