Brazil and Mexico, the world’s seventh and fifteenth largest economies respectively, account for 55% of Latin America's population, over half of its GDP and 58% of its exports. Yet bilateral merchandise trade between the two in 2014 was a relatively trifling US$9.2bn, down from a record high of just US$10.2bn in 2012. Despite numerous attempts to forge closer ties over the past twenty years, self-interest has repeatedly scuppered approximation. There are signs, however, that recent engagement may result in a more significant and productive relationship.
For decades, prior to the 1990s, Mexico and Brazil had little to do with each other. As huge countries, both in terms of landmass and population, divided by language and geography and led by statist, protectionist governments, there was little need for proximity. But the experience of Mexico’s ‘lost decade’ in the 1980s convinced policymakers that the stability and transparency promised by the North American Free Trade Agreement (Nafta) would stimulate investor confidence in the country. Since 13 Nafta’s signature in 1994, Mexico has become one of the world’s most open economies.