MEXICO CITY: Mexico will seek to diversify its exports and imports, capitalizing on the Trans-Pacific Partnership trade liberalization initiative on which the U.S., Japan and 10 other countries recently reached a broad agreement, says Mexican President Enrique Pena Nieto.
To attain that goal, Mexico wants to sharply increase exports to Asia, Pena Nieto told The Nikkei in an interview on Oct. 8 at the presidential palace in the capital.
Shipments to Asia currently account for less than 10% of the country’s exports. Mexico will seek to boost that figure without setting an upper limit, Pena Nieto said, suggesting he is looking to reduce the country’s reliance on the U.S., which currently takes about 80% of Mexico’s exports and accounts for half its imports.
He added that the TPP is an extremely important accord that will greatly benefit to the region’s economic development. The nascent trade pact, which covers 31 sectors, brings together 12 Pacific Rim countries whose combined gross domestic product accounts for some 40% of the global total.
Pena Nieto said all 12 member countries will benefit from the TPP, as it will improve their productivity and competitiveness. Mexico will strengthen its ties with other members through expanded trade and investment, he said.
Mexico’s auto industry, which is now the world’s seventh largest, is key to the country’s export hopes. Pena Nieto said the industry aims to reach the No. 5 spot, with production increasing to 5 million vehicles by 2020.
The president said the Mexican auto industry is competitive, stressing its solid base. But when the TPP takes effect, Asia’s car exports to North America are likely to increase. As 80% of Mexico’s auto exports go to North America, they are likely to face tougher competition under the trade deal.
That stiffer challenge makes a greater focus on Asia an important part of Mexico’s industrial policy. According to the International Organization of Motor Vehicle Manufacturers, Mexico turned out 3.36 million vehicles in 2014, up 10% from the previous year. The country has overtaken Brazil as Latin America’s biggest auto production base. Its global rank jumped four places, up from 11th in 2004.
The rapid growth of Mexico’s auto industry is due to aggressive investment from abroad, brought about by the country’s web of free trade agreements, its proximity to the U.S. and its big pool of inexpensive labor.
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