What is the GPS of Mexico in USA dollars? This question might seem peculiar at first glance, but it actually touches upon an interesting aspect of international trade and currency exchange. GPS, in this context, refers to the General Preferential System, which is a set of preferential rules that allow countries to grant reduced tariffs to other countries. Mexico, being a significant trading partner with the United States, has been part of the GPS since its inception. This article aims to explore the GPS of Mexico in USA dollars and its implications on trade between the two nations.
The General Preferential System (GPS) was established by the United Nations Conference on Trade and Development (UNCTAD) in 1974. The primary objective of the GPS is to promote economic development and reduce poverty in the least developed countries (LDCs) by granting them preferential access to the markets of developed countries. Initially, Mexico was not part of the GPS, but it joined the system in 1991, becoming one of the first non-LDCs to do so.
Under the GPS, Mexico benefits from reduced tariffs on its exports to the United States. This preferential access to the US market has been instrumental in boosting Mexico’s economic growth and increasing its trade volume with the US. The GPS of Mexico in USA dollars can be calculated by determining the value of Mexico’s exports to the US that are eligible for preferential treatment.
To understand the GPS of Mexico in USA dollars, it is essential to consider the following factors:
1. Eligible Products: Not all Mexican exports to the US are eligible for GPS benefits. Only those products that are designated as GPS-eligible receive preferential treatment. The list of eligible products is reviewed and updated periodically by the US Customs and Border Protection (CBP).
2. Tariff Reduction: The GPS provides Mexico with a reduction in tariffs on its exports to the US. The extent of the reduction varies depending on the product and the specific provisions of the GPS agreement.
3. Value of Exports: The GPS of Mexico in USA dollars is determined by calculating the total value of Mexican exports to the US that are eligible for GPS benefits. This value is typically expressed in US dollars, as the US is the primary trading partner for Mexico.
4. Exchange Rates: The value of Mexican exports in US dollars is influenced by the exchange rate between the Mexican peso and the US dollar. Fluctuations in the exchange rate can affect the GPS of Mexico in USA dollars.
In recent years, the GPS of Mexico in USA dollars has experienced significant growth, reflecting the expanding trade relationship between the two countries. According to data from the US Census Bureau, Mexico’s exports to the US in 2020 were valued at approximately $352 billion. Out of this total, a substantial portion was eligible for GPS benefits, contributing to the overall economic growth of both nations.
However, the GPS of Mexico in USA dollars is not without its challenges. The system has faced criticism for its effectiveness in promoting economic development in LDCs and for potential distortions in international trade. Additionally, the US-Mexico trade relationship has been strained at times, leading to discussions about the future of the GPS and other trade agreements.
In conclusion, the GPS of Mexico in USA dollars is a significant component of the trade relationship between Mexico and the United States. It provides Mexico with preferential access to the US market, which has contributed to the growth of its economy. However, the future of the GPS remains uncertain, and both countries must continue to navigate the complexities of international trade and currency exchange.
