Mexico country brief

Overview

The partnership between Australia and Mexico is strong and growing. Both countries work closely together in multilateral forums such as APEC, the G20, MIKTA, the World Trade Organization, and within the United Nations. Australia is negotiating a Free Trade Agreement with Mexico as a member of the Pacific Alliance (Chile, Colombia, Mexico and Peru).

There is a comprehensive framework of bilateral arrangements which support increased cooperation between Australia and Mexico, including a Memorandum of Understanding (MOU) on Education, Research and Vocational Education and Training (2015), an MOU on Cooperation in Agriculture (2010), an Air Services Agreement (2010), an MOU on Mining (2010), an MOU on Political Consultations (2009), and an MOU on Energy (2005).

The United Mexican States is the world’s fourteenth largest country with a land area slightly larger than Queensland and Victoria combined. Its climate varies from tropical to desert and the terrain includes high rugged mountains, low coastal plains, high plateaus and desert. Almost all of Mexico is on the North American plate, with the Pacific Ocean on the West coast and the Gulf of Mexico and Caribbean Sea to the East. It borders with the United States of America to the North and Guatemala and Belize to the South-East. The name Mexico was derived from the country’s capital Mexico City, which was founded on top of the Aztec capital Mexico-Tenochtitlan, a word of unknown meaning from the Indigenous Nahuatl language.

Mexico’s population is approximately 130.8 million (2018). Most Mexicans are of mixed Indigenous and Spanish descent, with around 30 per cent of the population of predominantly Indigenous descent. Catholicism is the main religion. Mexico is the most populous Spanish-speaking country in the world.

Political overview

System of Government

Mexico is a federal republic with a directly elected President. The President serves a six-year term and cannot be re-elected. The bicameral Congress comprises 128 Senators, each serving a six-year term, and 500 members in the Chamber of Deputies, serving a three-year term.

President Enrique Peña Nieto’s Government (elected in 2012) has implemented widespread economic reforms. This includes sweeping energy, financial, fiscal, and telecommunications reform legislation, among others, with the long-term aim to improve competitiveness and economic growth across the Mexican economy. The UN and the OECD described the reforms as positive and unparalleled. Mexico is one of only three Latin American members of the OECD (the others are Chile and Colombia).

Mexican presidential and congressional elections will take place on 1 July 2018.

Foreign policy

Mexico’s relationship with its northern neighbour and most important trading partner, the United States, has traditionally dominated its foreign policy. However, Mexico is now focusing beyond its immediate neighbourhood, including to the Asia-Pacific.

Since gaining office, President Peña Nieto’s administration has actively pursued its four key foreign policy goals: to consolidate Mexico’s presence on the world stage; to strengthen development-oriented international cooperation; to promote Mexico through a worldwide campaign; and to promote the interests of the country and its citizens abroad.

Bilaterally, President Peña Nieto has been active in building international ties, including by undertaking a number of international official visits and receiving a large number of overseas visitors. President Peña Nieto has been applauded internationally for Mexico’s ambitious economic reform agenda.

Mexico is also active multilaterally, on issues such as climate change, development and disarmament.

Bilateral relations

Australia has a strong bilateral relationship with Mexico. In addition to our shared membership of organisations such as the United Nations, G20 and APEC; Australia and Mexico are both members of MIKTA, an innovative partnership between Mexico, Indonesia, Korea, Turkey and Australia which provides regular opportunities to enhance cooperation on global issues.

Australia’s Embassy in Mexico City is responsible for relations with Mexico. Australia opened a Consulate headed by an Honorary Consul in Cancún in 2014, with jurisdiction in the states of Yucatán and Quintana Roo. Mexico maintains an Embassy in Canberra and a Consulate headed by an Honorary Consul in Melbourne. Mexico established a Defence Attaché presence in its Canberra Embassy in 2014, and opened a ProMéxico trade office in Canberra in 2015.

People to people links

While numbers are modest, people-to-people links are growing. The 2016 Australian Census recorded around 4,800 Mexico-born people in Australia.

Bilateral linkages are deepening across all education sectors, including higher education, vocational education and training and research. In 2017, there were 2,672 Mexican students in Australian institutions, most pursuing higher education.

In 2016, almost 85 000 Australians travelled to Mexico and around 8,800 Mexicans visited Australia.

Between 2007 and 2017, 50 Mexicans accepted Endeavour scholarships or fellowships to undertake study, research or professional development in Australia.  For more information see the Department of Education and Training’s Endeavour Awards page.

Development assistance

From 2010 to 2014, Australia provided $100 million in development assistance to Latin America, including 250 Australia Awards scholarships. Under this program, 20 Australia Awards fellowships and 30 Australia Awards scholarships were awarded to Mexican students. The regional program has now closed.

The Australian Embassy in Mexico City funds projects each year through the Direct Aid Program (DAP), a flexible small grants program funded from Australia’s aid budget and managed through 66 of DFAT’s overseas posts.

Economic overview

Mexico is the world’s 15th largest economy and predicted to rise to a top 10 economy by 2030. It has a growing middle class of around 15 million households.  Annual growth is around 3 percent. Mexican GDP was USD1,142.5 billion in 2017.  Mexico is a strong supporter of the international rules based system for trade and has engaged in the Friends of the System core group to improve the functions of the WTO.

While significant corruption risks exist, Mexico has attracted and retained investor confidence with its commitment to economic reform, relatively cheap labour costs, access to US markets and independent Central Bank.  It is deeply integrated with the United States and Canada, but has one of the world’s broadest FTA networks.

Over 80 percent of its exports are to the United States.  Mexico is keen to move away from its reliance on the United States and diversify its trade and investment relationships, including in the Asia Pacific region.  

Mexico has FTAs with 46 countries, putting more than 90 percent of trade under FTAs.  It is a member of the Pacific Alliance (with Peru, Colombia and Chile). At the Pacific Alliance Summit in Chile in July 2017, the PA announced its intention to negotiate FTAs with Associate Members, including Australia, Canada and New Zealand.

Mexico and Australia are both party to the recently agreed Trans-Pacific Partnership (TPP-11), and the first FTA between Australia and Mexico. TPP-11 was approved by the Mexican Senate on 24 April 2018, paving the way for its formal ratification.

For detailed information on Australia and Mexico's bilateral economic and trade relationship, see our Mexico Fact Sheet [PDF 111 KB].

Trade and Investment

Mexico is a significant regional power and a key economy in Latin America. Its size and geographical proximity to the world's largest economy, the United States, and very good links to markets in Central and South America, make it an attractive trading partner for Australia. Given complementary economic and trade profiles, there are strong prospects for expanding Australia-Mexico trade and investment.

Australia’s commercial relationship with Mexico is growing.  Two-way trade in goods was AUD3 billion in 2016-17.  The balance of trade is currently in Mexico’s favour (exports of AUD293 million; imports of AUD2,555 million). Major Australian exports to Mexico are coal, aluminium, meat (excluding beef), and ores and concentrates. Major Australian imports from Mexico are telecommunications equipment and parts, medical instruments (including veterinary), alcoholic beverages, and ores and concentrates.

In 2016-17, two-way trade in services was AUD287 million, major Australian services exports to Mexico were education-related travel and personal travel excluding education, and major Australian services imports from Mexico were personal travel excluding education and business-related travel.

Australian investment in Mexico is growing rapidly, increasing from $200 million in 2010 to almost AUD6 billion today.  Over 150 Australian companies operate in Mexico.  Australian FDI in Mexico has increased from a flow of AUD129.5 million in 2016 to AUD1.63 billion in 2017; an increase that has seen Australia jump from a ranking of 23rd largest source of FDI in Mexico in 2016 to the 5th largest in 2017 and representing 5.7 per cent of total FDI inflows to Mexico in 2017.

Two major Mexican food and agribusiness investors in Australia (Gruma and ROBE) have contributed to Australian economic prosperity, including generating 200 new jobs and bringing new technologies to the Australian market.  Aside from these, Mexican investment in Australia is low, reflecting geographical and historical realities and the predisposition of most major Mexican investors towards familiar partners in North America and Europe.

A Double Taxation Agreement entered into force from 1 January 2004, which clarifies the taxation rights of the two countries and introduces measures to relieve double taxation and prevent fiscal evasion. The Investment Promotion and Protection Agreement (IPPA) between Australia and Mexico, signed in Mexico City on 23 August 2005, entered into force on 21 July 2007.

A bilateral Air Services Agreement was signed on 9 April 2010. In July 2013, Virgin Australia expanded its partnership arrangements with Delta Airlines (US) to add six Mexican cities to its destinations. Qantas also has codeshares into Mexico with American Airlines and Alaska Airlines.

Export and investment opportunities

The Australian Government is working actively to promote and facilitate bilateral trade and investment. The Australian Embassy and Austrade work closely with Australian companies in a range of sectors to help enhance new market opportunities in Mexico. Promotional events are conducted regularly to boost sales of Australian food and wine, education, tourism and mining technology and services. In most sectors, Australian exporters face competition from other sources that benefit from significantly lower tariffs, due to Mexico's existing free trade agreements. However, Mexican companies are continually looking at diversifying their trade relationship and doing business with Australia is now a viable option for many. In addition, the Australian Government devotes considerable effort to improving the regulatory environment for Australian exporters and investors and in assisting Australian exporters to resolve market access issues as they arise.

Australian business is well-placed to take advantage as Mexico’s oil and gas industry opens to private participation.  The energy sector will continue to yield interest from major Australian companies following BHP’s major investment in 2017 (worth USD11 billion).  Other investment opportunities for Australian companies in Mexico include in infrastructure, where Australia’s AUD2 trillion of funds under management could find more opportunities in infrastructure financing – IFM already has significant investment in Mexico.  FDI in Mexico is linked to job creation and employment so is generally viewed positively.

An Education Counsellor, based in Mexico City, commenced in March 2018 to leverage and promote the growing research relationship between Australia and Pacific Alliance countries (Mexico, Colombia, Peru, Chile) with a focus on the resources and agribusiness sector. Collaboration in research, higher education and vocational education and training is growing in areas such as energy, water management, agriculture technology, nanotechnology, biotechnology and animal genetics. 

Australia and Mexico will have an FTA for the first time once the Comprehensive and Progressive Trans Pacific Partnership FTA (TPP-11) comes into force.  TPP-11 will provide Australian companies with export opportunities to Mexico’s growing middle class due to the phased elimination of tariffs on a wide variety of goods and services.  Key opportunities include in agricultural goods (beef, sheep meat, pork, dairy, cereals and grains, sugar, wine, horticulture and seafood), manufactured goods (leather, paper, medicaments, pharmaceutical, machinery, mechanical and electrical appliances, and automotive parts).  Australian businesses will also have access to Government procurement.  On services, key opportunities include education, health, hospitality and tourism, mining-related consulting, research and development, engineering, environmental, mining and technical testing and analysis services.  The agreement also provides for temporary entry for business travel.

Information on doing business and opportunities in Mexico

High level visits

October 2017: Trade, Tourism and Investment Minister, Steven Ciobo MP, visited Mexico City with a business delegation.

May 2017: Minister for International Development and the Pacific Concetta Fierravanti-Wells attended the Global Platform for Disaster Risk Reduction in Mexico.

August 2016: Governor General Peter Cosgrove undertook a State Visit to Mexico.

November 2014: Mexican President Peña Nieto, then Foreign Minister Meade and Minister for the Economy Guajardo visited Australia for the G20 Summit.

July 2014: Mexican Minister for the Economy Guajardo visited Australia for the G20 Trade Ministers’ meeting.

April 2014: Foreign Minister Julie Bishop visited Mexico for a MIKTA (Mexico, Indonesia, Korea, Turkey, Australia) Foreign Ministers meeting, the first high level meeting of the Global Partnership for Effective Development Cooperation, and bilateral meetings.

Last Updated: 20 September 2017