By Alejandra Oropeza
Mexico and the United States have economic, commercial, and social ties that have become key to making the North American region one of the most competitive in the world. Currently, both nations face a complex economic scenario.
In an interview, Larry Rubin, president of The American Society of Mexico, analyzed the panorama between Mexico and the United States, the pending issues, and the significant challenges and opportunities.
A.O.: Mexico is one of the United States’ most important trading partners. How is the trade relationship going between the two countries today?
L.R.: The business relationship has continued to grow despite the politicians. The Treaty between Mexico, the United States, and Canada (T-MEC) is a political agreement among the three nations. It has helped to accelerate the economy, but the reason the trade has been growing by double digits is thanks to businessmen. The growth is due to the continuous new projects and the fact that they are working together and creating important value chains. I would emphasize Texas, which is the number one state where trade with Mexico goes. Today, Texas represents a third of the total bilateral trade, 200,000 million dollars, which is due, in particular, to the action of Mexican and American businessmen.
However, there are important challenges because Mexico has entered a stage where the United States and Canada have requested a consultation period for violations of the treaty. The companies have invested in Mexico and created jobs. You can’t change the rules once the game has started. There is a lot of work to do. In commercial terms, we can improve, and I think it will depend directly on the Mexican government.
There are countless U.S. companies in Mexico, each generating more than 15,000 well-paid jobs, both on the border and in other parts of the Mexican Republic. U.S. investment in Mexico, apart from being in the billions of dollars, generates many jobs, and that places Mexico as the most important trading partner of the United States.
A.O.: What is the mood you perceive among U.S. investors? How do you see Mexico?
L.R.: It is very interesting to invest in Mexico because of the attractions it offers and because Mexican productivity is better than that of the United States and many parts of the world. There are many positive factors to highlight, such as the geographical location. I am sure that there are many countries that would like a part of the Mexican territory because of its border with the largest market in the world.
The T-MEC helps create certainty. The productivity of Mexicans is very competitive, and the workforce is very good. Also, there are the natural resources that Mexico has., They are a very important area of opportunity.
The understanding that exists between the two cultures is key because it is very easy for Mexicans and Americans to work together due to their customs and time zone. It is convenient to operate a plant here. However, the Mexican market generates a lot of uncertainty for U.S. businessmen, first because of the actions of the federal government and then because of the issue of energy required by manufacturing plants. They want to feel sure that they will have energy for production in the coming years. Another issue that generates uncertainty is the insecurity that exists in the country, not only for the protection of assets and products that are generated but also for the protection of officials and directors of U.S. companies.
A.O.: With this balance you present us, what is your reading? Will we continue to see more U.S. companies in Mexico? Which sectors have the most opportunities?
L.R.: In Mexico, there are many opportunities, one that will give an important plus is the trans-isthmian project that the administration of Andrés Manuel López Obrador has, which will connect and develop the Pacific port to the Gulf of Mexico. Although it will not compete with Panama, it will create a spectacular synergy for the U.S. market. To think that the Mississippi River, which crosses the central part of the United States, where so much trade goes up and down, could become an extension of what is wanted to be done in the trans-isthmus! It can then connect to Asia through the trans-isthmus with the Gulf of Mexico and the states of Louisiana, Florida, and Texas, among others. This is a great opportunity. There I applaud those efforts. It is not easy because it is an investment of a lot of time and money, but I think it is an important opportunity.
The manufacturing industry also stands out, particularly because of its nerve centers such as in Ciudad Juárez, which is the heart of manufacturing in all of North America. But other centers can also be developed in Matamoros and Reynosa. The political class is required to know what the entrepreneur is looking for. The largest percentage of foreign investment is from the U.S. and will continue to be so.
Without a doubt, we will continue to see the arrival of manufacturing companies in Mexico. However, it will be at a lower level due to concerns about energy, which is a key factor. Many companies, especially the largest ones, even have a mandate from their boards of directors that the power supplied to their plants be clean energy. If Mexico does not offer it, no matter how cheap it is, these companies are not going to allow their directors to put in plants. There, Mexico is behind in clean energy; it has not been a priority of this administration. It has to be so because it is not optional if you want to continue attracting investment. There are other countries that are doing it, like Costa Rica or Canada, and the latter has a competitive advantage over Mexico. The manufacturing sector will continue to grow, but not at the rate it should, and that is something that concerns us at the American Society of Mexico. How can we contribute to the growth rate of the manufacturing sector?.
*Published with permission from Mexico Industry, follow the link to continue reading: https://mexicoindustry.com/noticia/mexico-y-estados-unidos-facing-shared-challenges
