USMCA Rules of Origin Outcome Brings US$15 Billion to Mexico: INA
The ruling in favor of Mexico and Canada's Rules of Origin posture by a USMCA dispute panel will greatly benefit Mexico’s automotive industry, said INA today in its first press conference of 2023. During the event, Marco Antonio del Prete Tercero, Minister of Sustainable Development of Queretaro, presented the International Automotive Industry Supply Summit, which seeks to become the second largest auto parts event in the Americas and the largest in Latin America.
The outcome of the USMCA Rules of Origin panel will incentivize trade in the region, offering companies a self-sufficient hub that provides certainty for automakers and suppliers. It has also helped to confirm investments announced during the second half of 2022 and the first month of 2023, amounting to US$15 billion. Experts agree that a great part of these investments were subject to a positive response from the dispute panel, as most were confirmed after the Ministry of Economy made an official announcement of the resolution in January 2023.
Of the total investment, almost US$11 billion will be seen in 2023. These funds will likely support the expansion of production plants and the introduction of new projects. Most of the investments seek to take advantage of nearshoring, which brings foreign companies a unique opportunity to have their operations closer to the North American market, says Alberto Bustamante, President, INA.
“Nearshoring has two main effects, the most illustrative one is when a new company arrives in the country, builds a new plant and creates new labor opportunities. However, there are companies that are already operating in Mexico so they start to redirect production capabilities to Mexico. In both of these scenarios, the country’s automotive sector grows,” says Rene Mendoza, National Coordinator, Mexican Industry Supply Chain (CAIPM).
By 4Q23, the industry expects to manufacture around 142,000 EVs, almost a 50% increase when compared to last year’s production figures. With this, Mexico would reach almost one million EVs locally assembled, highlights Bustamante.
Queretaro has had a key role in developing Mexico’s automotive sector, says del Prete. The International Automotive Industry Supply Summit will bring together automotive OEMs, Tier 1, Tier 2, Tier 3 and other suppliers in the region. The state’s automotive cluster and industry have worked every day to improve the region’s role as a global automotive powerhouse, says Renato Villaseñor, President of the Board, Queretaro Automotive Cluster. Renato forecasts a significant increase in export figures to North America during 2023, as the industry aims to produce 4 million vehicles in the short term.