Mexico looks south, sees trade deal with Argentina by end of 2017
Peña Nieto gov’t thinks Buenos Aires can become a market for manufactered goods
Mexico, seeking closer ties with the rest of Latin America, expects to finish negotiations on a trade deal with Argentina involving cars and agricultural products around the end of the year, Mexico’s deputy minister for foreign trade said in an interview on Tuesday.
Mexico has been trying to diversify its trade partners since Donald Trump was elected president of the United States, its biggest export market.
A team of Mexican negotiators led by deputy minister Juan Carlos Baker arrived in Buenos Aires City this week to advance talks that started last year, when Let’s Change (Cambiemos) President Mauricio Macri pledged to open the country’s economy.
Under the deal, Argentina could gain part of the lucrative grain market in Mexico, Latin America’s No. 2 economy, Baker told Reuters.
In 2015 Mexico imported US$2.3 billion worth of US corn and US$1.4 billion of US soy. But Baker said those numbers will likely decrease under a renegotiated North American Free Trade Agreement called for by Trump.
“The potential is there,” Baker said. “The Argentine exporters could find attractive conditions in Mexico.”
Mexico, in turn, could export cars to Argentina, he said.
“We have a very strong manufacturing industry and Argentina is an important market for us,” Baker said.
Mexico sells around 80 percent of its exports to the United States, which has been the source of roughly half the foreign direct investment in Mexico in the last two decades.
Formal talks to renegotiate NAFTA, which also includes Canada, do not have a specific start date. But the US Congress, currently in recess, requires a 90-day notification before official talks can start.
“I believe if the notification is sent once the recess is over, maybe at the beginning of May, if you count 90 days that will take us to August,” Baker said.
Baker said Mexico would not accept going back to paying export duties even if shipments to the United States were restricted. He said rules of origin, or the percentage of a finished product that must be made in North America for NAFTA consideration, could potentially be modified, however.
“Argentina is in the centre in all of Mexico’s immediate commercial decisions,” said Foreign Minister Luis Videgaray in an interview with Telam in Madrid. He hoped that by the end of 2017 the two countries would have reached an accord that would further deepen the commercial relations between the two countries. In another key point in the trade negotations, is integrating the Pacific Alliance with Mercosur.
He highlighted how they were working on a formal agreement with the four countries that form part of the Pacific alliance, and that Mexican President Enrique Peña Nieto had spoken to both Macri and Brazilian President Michel Temer about the issue.
“Argentina can transform itself as a supplier of foodstuffs for Mexico and Argentina could become a market for manufactured goods from Mexico,” said Videgaray. The foreign minister explained that since 90 percent of Mexico’s exports are manufactured, many of them high-technology products linked to the aerospace, electronic and automobile industry, they had a lot to offer Argentina. “Trade between Mexico and Argentina is inexplicably small,” he stressed.
Herald with agencies