The open processes between the three countries that make up the North American Free Trade Agreement (TMEC) have multimillion-dollar implications, but have stalled or, in some cases, been ignored. Consultations, which the United States opened to argue that Mexico is violating the deal on energy issues, have stalled, and recently the White House turned its dispute over the GM corn ban into a controversy group. “Nothing is happening,” said President Andrés Manuel López Obrador on the subject.
Perhaps this is why Economy Minister Raquel Buenrostro remains calm when discussing the TMEC. Mexico will show that the ban on this culture has no commercial impact, the dependency ensures. Meanwhile, there is good news for the country, which has “the advantage” in the global battle for nearshoring investments, the official assured in an interview with EL PAÍS.
Questions: Several TMEC processes have accumulated that have not been complied with. In the case of Mexico, the country has won the verdict against the US on the issue of rules of origin since January. Has Mexico pressured the US to comply?
Answer: If the verdict is already in, the voting between the three countries follows to establish a protocol on how to implement the resolution. The truth is that the application of the decree is very simple since there is a formula to calculate the regional content. There isn’t much to talk about. We have held meetings to draft the protocol and at the moment we are in no hurry as the regional content, particularly in the automotive sector, is well beyond the established limits.
P. Isn’t there frustration in business people?
R. No, there is no rush as there is no one near the border area. In fact, the topic of relocation strengthens the regional orientation in the automotive sector.
P. Foreign direct investment (FDI) in the first half of the year was mainly investment from profits from companies already based in the country. This shows us that the flows for company relocation, the so-called nearshoring, have not arrived. When do you expect to arrive?
R. The announcements that are being made add up to $68,000 million. Payment will be made as the project progresses. What we’re seeing is that we’re in a time where all the big, global companies are running their investment projects through their corporations because there’s a battle between the different companies in different countries on a global scale, who is attracting more investment? They tell us that Mexico has the big advantage and that’s why $68 billion is announced. Once the work starts we will see the flow of funds.
P. When will these 68,000 million arrive in Mexico?
R. These are announcements of complete projects, the project duration of which is between one and three years. Also, since this is a trade war, the ads are under-promoted. The foreign direct investments and the projects registered in the Secretariat are also insufficiently registered, according to the companies themselves. For every three pesos they want to invest, they only give one.
P. Does that mean the next government will get the benefits of the move?
R. We are already seeing part of it and what we will see is the development of private infrastructure. All industrial parks are now exhausted. People working in industrial parks are looking for land to develop more parks. We expect this year to be about getting land and permits for infrastructure to start next year. Even those of the Interoceanic Corridor and throughout 2024 we will see more concrete investments in very advanced projects.
Secretary Raquel Buenrostro and US Trade Representative Katherine Tai after a meeting on July 6. With kind approval
P. The Economy Ministry imposed tariffs on some sectors against countries with which it does not have a trade agreement. How were the sectors selected?
R. First, we received many SMEs and MSMEs who suffered from unfair trade and went bankrupt because if they wanted to advance an anti-dumping lawsuit, the fee for each office is at least seven million pesos and they cannot afford it. We conducted an investigation to identify customs fractions where, based on the import quantities and the value of the goods, we could conclude that they were unfairly traded, undervalued or dumped. We later ran an analysis to find out what the problem was and found 2,000 tariff items. From that we filter out the ones that have to do with food, basic services, health care or that were something Mexico didn’t produce because there’s no point in making something more expensive that we don’t produce. Then we sat down at the cameras and there were 400 factions left. We don’t want to be protectionist. Just avoid unfair trade. And we saw this as a first approximation because anti-dumping investigations take a long time and tariff fractions are a quick measure that can lead to a very quick result. In addition, we have signed commitment agreements in which the companies have given assurances that there will be no inflationary impact.
P. One of the countries hardest hit by these tariffs will be South Korea, a country with which Mexico has been negotiating to sign a trade deal.
R South Korea raised its hand to join TIPAT [Tratado Integral y Progresista de Asociación Transpacífico]. In order for this to succeed, all member countries must agree. First knock on the door has the right to be analyzed first and we just finished with the UK. Several countries have their turn, including Korea.
Q The strength of the Mexican peso has impacted tourism, oil revenues, exports and family remittances. Do you think something should be done to protect those most affected by this phenomenon?
R We consider external factors and market balance. We have suggested that this is the best time for companies to invest in expanding their capabilities. For those who buy their tools or equipment abroad to expand their manufacturing facility, this moment when the Mexican peso is worth more is the best. I think many companies have internalized it well.
Q Let’s talk about the Isthmus of Tehuantepec Interoceanic Corridor project. How many contracts have private companies signed to settle in the development poles promoted by the Secretariat?
R The procedure is an auction. Ten towers will be auctioned, all located between Coatzacoalcos, Veracruz and Salina Cruz, Oaxaca. The first auction consists of five poles and started on June 20th. There were 100 interested companies, with 65 completing registrations to participate as of Monday [14 de agosto] There were 12 companies that paid equity rights. Each company offers about three poles. We are talking about six companies per pole. There are five more to come and we’ll start announcing them soon. We will make an offer as long as we integrate a file for each pole and that file consists of permits already in place and all pre-feasibility studies for water, electricity, connectivity, environmental permits and all permits required to construct and develop as agile as possible.
Q Were the other five poles not auctioned off because of complaints from indigenous groups in the area who don’t want the project?
R Of the five poles that are missing, we have two poles that have a problem to solve. In one of them, a man identified himself as a local and filed a complaint because he doesn’t want a polo. This is being remedied as we believe your complaint is unfounded as the property has already been purchased by the government. We are already days away from the solution. The other only required a procedure before the Agricultural Register for the type of plot that would be ready immediately upon its completion and with that we have already prepared the 10 stakes for auction.
Q How will the government guarantee that the corridor will continue under the new government that will take office next year?
R The process ends in December 2023 this year. At that point, all decisions are made, the pole is assigned to the winner, and companies can start building and investing. In other words, with all legal documentation completed in 2023, we don’t think there’s a problem.
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