New Agreements Shape Economic FutureBy MBN Staff | Fri, 11/22/2019 - 13:14
Q: What conditions have been met to give Japanese investors confidence regarding their projects in Mexico?
A: The major contributor to investor confidence is the Economic Partnership Agreement (EPA) between Japan and Mexico, which was implemented in 2005. Beyond a diplomatic relationship, the EPA included a chapter focused on investment and another focused on creating a committee to establish the right conditions to foster an attractive business environment. This committee has met over 10 times, bringing together government officials and private sector representatives from both countries. Trade between Japan and Mexico has more than doubled since the EPA’s establishment. Over the past five years, the number of Japanese companies in the country has doubled to a total of more than 1,200 players. Half of these companies are established in the Bajio region, including automakers, parts suppliers, construction and logistics companies and bankers.
Q: What strategies has the Japanese government implemented to foster collaboration with academic institutions to bolster the capabilities of the Mexican workforce?
A: Through the Japan International Cooperation Agency (JICA), we are working with local governments in the Bajio region – especially with Aguascalientes, Guanajuato and Queretaro – to develop training courses in the automotive industry. The number of Japanese companies in the country has created a large demand for talent and our efforts have paid off in the availability of quality engineers.
Q: What is Japan’s strategy to cooperate with President López Obrador’s administration?
A: Japan has a long tradition in Mexico. Japan’s Minister of Foreign Affairs visited Mexico in August 2018, while his Mexican counterpart visited Japan in October 2018. We have also had a chance to meet with several ministers from the administration to provide our input on infrastructure and human capital development, as well as the federal government’s plan regarding the southern region of the country. There are high expectations from the Mexican government for Japan to increase its trade and investment in the country and we already organized an economic mission with the Japanese Chamber of Commerce and Industry in February 2019 that brought 60 companies from various sectors.
Q: How will CPTPP boost the trade relationship between Japan and Mexico?
A: CPTPP will set the standard for the 21st century not only in trade but in investment, services, intellectual property protection, e-commerce and even relationships with state corporations. The agreement will be the basis for a new value chain established throughout the Asia-Pacific region and focused on a free, open and fair business environment. More countries are interested in joining the agreement beyond the original 11 members, which in turn will fuel growth in Mexico.
Q: How important is Mexico’s relationship with the US for Japan and how will USMCA impact Japanese companies’ development strategies?
A: The US is among the largest economies in the world and a key market for Japanese companies, which means Mexico is in an advantageous position to act as a platform for Japanese companies to reach the US. USMCA will change the business environment for Japanese companies in North America. New rules of origin established in the agreement will force corporations to find a new strategy to manage their investments and source more components locally. The Japanese government and the private sector have together devised strategies to foster growth among local suppliers and supporting industries in Mexico. We are even bringing in Japanese experts to train Mexican suppliers and increase their capabilities so they can participate in Japanese supply chains. These companies must meet Japanese quality standards and be capable of delivering components on time and on spec.
Q: How ready is the Bajio region to supply the coming Toyota operations?
A: Suppliers continue to enter the country. Honda and Mazda are already present in the state and we hope that all three OEMs can work together to build the capabilities of the local supplier base, as well as the workforce across the Bajio region.