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News Article

Industry Leaders Talk NAFTA at Key Mexico Automotive Summit

Thu, 11/09/2017 - 13:12

Eduardo Solís, a leading Mexican auto executive close to the ongoing NAFTA renegotiation, told an industry audience on Thursday in Mexico City that the US is making a mistake in using outdated data to support its position during the treaty talks and that the topic of competitiveness must be on the table. He also warned that rules of origin should be off-limits.

“It is not understandable that the US is basing its strategy for the coming 20 years on figures that do not match reality,” said Solís, Executive President of the Mexican auto industry association AMIA, referring to comments made by US Secretary of Commerce Wilbur Ross. “We are talking about news or ‘fake news;’ myth and reality. This is an issue of competitiveness and Mexico enables the region to be competitive.”

Speaking at the opening of the Mexico Automotive Summit 2017 at the Sheraton María Isabel and during a subsequent panel discussion, Solís outlined the work that AMIA is doing as part of the NAFTA renegotiations, the importance of the Mexican automotive industry for both Mexico and the NAFTA region, the outlook for the rest of the year and the advantages that NAFTA has delivered to all member countries, Canada, the US and Mexico.

He added that the industry needs to understand the position of both Mexico and its trade partners. North America has experienced 27.7 percent growth thanks to NAFTA, he said. “About two-thirds of this growth took place in Mexico,” he said. “The US received about one-third and Canada a tiny part.”

Solís also suggested that competitiveness must be addressed during the negotiations. “Mexico enables the region to be competitive,” he said. “We are the main supplier of auto parts to the US, but the US is at the same time the main supplier for both Mexico and Canada.” He underlined that the US imports more vehicles – 46.6 percent – from the NAFTA region than from Japan, Germany, Korea, China and the UK combined. The US also exports 44.9 percent of all the vehicles it produces to the NAFTA region, with Canada being the top recipient. “Mexico is the first buyer of US vehicles and vice versa,” he said. “Do not touch the rules of origin; that is what makes this deal successful. Thanks to NAFTA, the US has grown with Mexico and Canada.”

In the subsequent panel discussion on Mexico’s road to automotive leadership, the AMIA executive said that ultimately, trade was not dependent on treaties. “Free trade agreements are not necessarily essential to trade with the US.” He added that, “60 percent of what Mexico exports to the US for the automotive sector does not depend on NAFTA but on the WTO regulations.”

Solís was joined on the panel by leading automotive figures Mario Chacón, Head of Investment Promotion Unit for Global Businesses at ProMéxico; Verónica Orendain, Director General of Heavy and High Technology Industries at the Ministry of Economy; and Juan Carlos Pérez Rocha, Country Head of Large Corporate for HSBC Mexico.

The panelists suggested the key requirements for becoming a global leader in the sector were to increase competitiveness through talent, technology and supply chain development.

Still, while NAFTA renegotiations hover like a cloud over Mexico’s automotive industry, the impact from the talks has been minimal. “2017 has been a very positive year in terms of investments for the automotive sector,” said Chacón.

Moreover, investment has not stopped. “Local and foreign groups have made great investments in many Mexican industrial sectors, mainly in the automotive sector,” said Pérez. He said that companies worldwide have a positive opinion of Mexico’s manufacturing practices and labor. “Foreign companies have successfully found excellent professionals when coming into the country, so they invest heavily in their training to ensure that they have all the necessary qualifications.”

Solís added that Mexico’s numerous trade deals have put it in a good position regardless of what happens with NAFTA. “Mexico’s free trade agreements have been fundamental for its economic growth. We should remain positive as this broad network puts us in an advantageous position,” he concluded.