Now that the United States is loudly breaking up with Mexico on social, Mexico is suddenly on the prowl for hot rebound trade with other markets. This is how it looks from here anyway, with Mexican officials popping up all over the media saying some country or other is going to be a big new market for Mexican exports. The new U.S. administration’s threats to dismantle the North American Free Trade Agreement (NAFTA) are currently stoking the flames of economic terror in Mexico, but we all know that Mexico’s dependency on the U.S. export market has been the stuff of economists’ nightmares for decades. To put it in perspective, the share of Mexico’s annual exports shipped to the USA has not dropped below 79% since some time before 1993, if it ever has. From 1998 to 2001, the concentration of Mexican exports destined for the U.S. market hovered near a truly bloodcurdling 89%. So it’s not like we didn’t know we were exposed to risk from overdependence on one market, but after 25 years of trade-loving U.S. governments, we became accustomed to living in denial. Read the rest of this entry »
Posts Tagged Trade
On August 18, 2010, the Mexican government published an updated list of U.S. products on which import duties will be applied, beginning August 19, 2010. The duties were originally introduced in March 2009 in retaliation for the U.S. Congress’ termination of a pilot program allowing Mexican freight trucks to cross the border to complete deliveries in the United States. Cross-border trucking, including the circulation of Mexican trucks in the United States, was intended to be implemented under the North American Free Trade Agreement (NAFTA), but is currently blocked by the United States.
The original list of 89 products affected by the Mexican duties has now been expanded to 99, by the addition of 26 items and removal of 16. The current list includes key agricultural products in addition to processed foods, household goods and personal care items, among others. Import duties under the scheme range from 5% to 25%. Read the rest of this entry »
Despite the sullen economy, the business press continues to report new investment. Here’s a few items from the past couple months:
- Logistics: Costco Mexico, a joint venture between Mexico’s CCM and U.S.-based Costco Wholesale Corporation, inaugurated a major new distribution center in the central state of Hidalgo. The facility, built at a cost of approximately US$98 million, will serve Costco’s 32 Mexican stores.
- Automotive: U.S.-based Cummins, Inc. announced it will boost production at its Cummins Filtration division plant in San Luís Potosí, Mexico. The increase in filter production at the site comes as the result of consolidation of manufacturing operations at Cummins plants in other countries.
- Automotive: General Motors announced plans to increase production at its Mexico plants located in the states of Guanajuato and Coahuila. The hike in output of vehicles such as the Chevrolet Avalanche and Silverado and the GMC Sierra and Cheyanne, among others, is expected to help reactivate the area’s hard-hit autoparts supply chain as well.
- Beverage: The Coca-Cola Company announced grand plans to invest US$5 billion in its various Mexico operations over the coming five years. The announcement came at the inauguration of the US$200 million upgrade of the company’s Jugos Del Valle juice bottling plant in the State of Mexico, on the outskirts of Mexico City.
- Environmental: New legislation took effect in August requiring retailers to substitute biodegradable bags for plastic where plastic bags are provided to customers. Although the law gives businesses up to one year to begin complying, some major retailers have already begun switching to bags made from alternative materials.
- Automotive: General Motors de Mexico inaugurated a new manufacturing plant in the north eastern state of San Luís Potosí. The plant, built at a cost of US$300 million, will produce six-speed transmissions for GM vehicles.
- Logistics: Major Mexican grocery and general merchandise retailer Soriana announced plans to invest approximately US$18 million in upgrades to its distribution centers in the states of Jalisco and Nuevo León. Soriana plans to install advanced automation equipment in the facilities to increase operational efficiency.
- Electronics: U.S.-based electronics manufacturer Jabil announced plans to expand its Guadalajara production plant. The company, which operates plants at three locations in Mexico, will invest US$60 million in the Guadalajara expansion in the face of a projected 30% increase in its exports this year.
- Financial services: Spanish financial services giant Grupo Financiero Santander launched a new customer services call center in the central state of Queretaro at a cost of approximately US$192 million. The company is lauding its new facility as one of the most modern and technologically advanced in the world.
- Food processing: Mexican dairy product maker Chilchota Alimentos will invest US$10 million this year in the construction of a new processing plant in the northern state of Durango. The new facility, to be located in Mexico’s Laguna dairy region, is planned to bottle 100,000 liters of milk daily.
- Water management: Mexico City mayor Marcelo Ebrard revealed publicly that his administration is studying the possibility of privatizing the management of the city’s water supply, currently managed by the municipal government. The plan purportedly considers participation by multiple private companies in the distribution and billing of the city’s water system, which would presumably generate major upgrades in systems and equipment for water management.
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