On October 22, Ambassador R. Viswanathan, Distinguished Fellow, Latin America Studies, Gateway House, spoke at the 11th Mexico Business Summit in Guadalajara, 20-22 October on ‘How Mexico fits in the global strategies of Indian companies.’
These are his observations and key takeaways that emerged from the discussions at the Summit:
1. The ongoing reforms initiated by Mexican President Enrique Peña Nieto under the Mexico Pact – that was signed by the four major political parties of the country – agreeing to a consensus on vital national policies and reforms, are commendable. However, the implementation of the Pact, especially in the energy sector, is likely to face more challenges.
2. The Trans-Pacific Partnership that is currently under negotiation will have an adverse impact on Mexico’s exports to the United States. On the other hand, Japan will get easier access with lower duties on the exports of their cars to the United States. It was noted that since Japan has a high, but unutilised, capacity for the production of cars at the moment, they will be able to export more cars to the U.S. – thereby cutting into Mexican car exports to the country. Secondly, Vietnam, a low-cost option, will get free access to the U.S., making it a potential competitor to Mexico.
3. The EU-U.S. Transatlantic Trade and Investment Partnership will have an adverse impact on Mexico’s privileged access to the U.S. market – which it currently enjoys as part of the North American Free Trade Agreement (NAFTA).
4. Although Mexico has expressed its concern on the aforementioned issues and its desire to conduct negotiations with the non-NAFTA countries, alongside the U.S., Washington prefers to deal with these negotiations directly.
5. The Mexican manufacturing sector is deepening and widening thanks to the continuing flow of investment by companies from the U.S., Europe, Japan, South Korea and even China, who want to use Mexico as the manufacturing base for their exports to the U.S. market. Mexican wages have become competitive to those of China, thanks to the rise in the Chinese wages.
6. Although the Chinese have made large investments in the rest of Latin America, they have ignored Mexico due to the not-so-friendly approach of their former President, Felipe Calderón. Incumbent President Nieto, however, has begun taking corrective action, and has already visited China seeking investment. However, the key concern of Mexicans is the monumental trade deficit with China: in 2012 alone, their Mexico’s export to China stood at $7 billion, while imports from China stood at $50 billion.
7. The Pacific Alliance, of which Mexico is a member, is inviting other Latin American countries who aren’t on the Pacific coast to join their alliance. This is likely part of their rivalry with the Mercosur. The Pacific Alliance showcases openness and liberalness of the markets of its four members in contrast to the Mercosur market which has protectionist barriers. It is worth noting that the intra-Pacific Alliance trade stands at just 4% of their global trade in contrast to the intra-Mercosur trade which stands 18%.
Following the conclusion of the Summit, Ambassador Viswanathan held meetings with Mexican think tanks and universities. Some of them have expressed interest in collaboration and exchanges with Gateway House.
On October 23, Ambassador R. Viswanathan, Distinguished Fellow, Latin America Studies, Gateway House, delivered a talk on ‘From the labyrinth of solitude to a network of partnership – evolution of India’s relations with Mexico and Latin America’ at the Centre for Asian and African Studies, Colegio de Mexico. Based on his observations on the meetings and discussions, Ambassador Viswanathan authored, ‘Mexico: A new frontier for India.’
Ambassador Viswanathan is Distinguished Fellow, Latin America Studies, Gateway House. He is the former Indian Ambassador to Argentina, Uruguay, Paraguay and Venezuela, and Consul General in Sao Paulo.
You can read more analyses from Gateway House on India-Latin America relations, here.