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Mexico, US Hold Strongest Trading Relationship Globally: AMSOC

Larry Rubin - AMSOC


Perla Velasco By Perla Velasco | Journalist & Industry Analyst - Wed, 11/08/2023 - 10:36

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Q: How does AMSOC’s mission and core objectives foster friendship and cultural ties between the US and Mexico?

A: The AMSOC was founded by former US Ambassador George Messersmith in 1942 to serve the US community in Mexico, which now includes about 2 million people. We focus not only on economic and commercial aspects but also on the nonprofit work carried out by US institutions in Mexico. Under our umbrella, we have a coalition of 130 nongovernmental organizations (NGOs).

The core function of our organization is to empower the US community in Mexico. Our honorary chairperson is US Ambassador to Mexico Ken Salazar. Since its inception, the organization has received considerable support from the US Embassy, even though we operate independently as an NGO.

Q: What are some of the challenges and opportunities in the US-Mexico relations, especially in the context of trade and investment?

A: AMSOC engages significantly in commercial and economic matters but we also address broader issues, particularly those related to immigration, drug trafficking and occasionally policy. The US-Mexico relationship is inherently complex, extending far beyond the 3,000km border that connects the two countries. Numerous issues with significant implications for US national security intersect with Mexico’s, primarily centered around drug trafficking and immigration. These concerns have consistently featured on the bilateral agenda for several decades. Drug trafficking has evolved over time and now includes fentanyl, a substantial challenge in the US as it is the leading cause of death among adults aged 18 to 45.

Regarding logistics, tourism and trade, we have been closely involved in discussions related to the Mexico City International Airport (AICM). The reduction of flight slots is a crucial concern for us. Fewer slots impact tourism and investment in Mexico City, which is the primary hub for investments in the country. By diminishing the number of available flights to Mexico City, the city and the country become less competitive. 

Beyond these issues, we engage with a multitude of evolving matters daily. For example, we recently held a press conference on the Mexican government's new initiative to foster nearshoring, which includes incentives for companies from the US and other countries. We applaud these efforts and hope to see more of them.

Q: What potential does Mexico have to attract investments and grow commercial ties with the US?

A: The trade volume between both countries stands at nearly US$800 billion, making it the most substantial trading relationship globally. Mexico has become the largest trading partner of the US and this trajectory is expected to continue with double-digit growth. Despite Mexico’s attractiveness as an investment destination, we acknowledge certain challenges, such as security and the rule of law. 

Mexico will experience a change in government in 2024 and the US will also witness transitions within its government. The outcome of the 2024 elections will bring forth potentially different policy initiatives in both countries.

We maintain a highly optimistic outlook regarding trade. We derive this optimism from the good relationship between businesses in both countries, which drives trade often independently of government policy. We maintain a clear stance with both governments, advocating for opportunities and areas where collaboration can be enhanced. We believe that Mexico has the potential to elevate its trade relationship to a range of US$1 trillion to US$1.3 trillion but this requires the right strategies to attract investors. To achieve this, both governments must work together and resolve disputes within the USMCA and address critical issues.

Q: What impact does the USMCA have on trade and investment between the two countries?

A: The trade relationship between both countries is intrinsically connected to the USMCA. This relatively young instrument has proven to be an invaluable asset, much like its predecessor NAFTA. One of the challenges we face is that the benefits of the USMCA are not immediately apparent to the general public. 

The USMCA provides a sound dispute resolution mechanism that offers security to investors. While it can be costly to pursue dispute resolution through this mechanism, it does offer a crucial avenue for resolving disputes. This element is a significant strength of the USMCA, as it provides a framework for addressing disagreements. The USMCA is a pivotal update to NAFTA, which had been in operation for over two decades. Over the years, new challenges and issues have arisen in the trade relationship between Mexico and the US. The USMCA addresses these emerging concerns and provides updated provisions for contemporary trade dynamics. 

The energy chapter, for example, holds immense importance, reflecting the opportunities in the Mexican energy sector. As the new administration takes office, we hope they recognize the potential in energy investments. Our focus moving forward is to encourage the new government to view the energy sector as a significant opportunity for Mexico and its people.

Q: How are US companies reacting to Mexico’s business climate?

A: Elections introduce an element of uncertainty. Nevertheless, we hold a degree of confidence in the two prominent contenders, Claudia Sheinbaum and Xóchitl Gálvez. Both seem to grasp the role investors play in Mexico's economic expansion and job creation. In my discussions with both candidates, I underscored that such opportunities translate into enhanced livelihoods, particularly for those just completing their education or embarking on their first job. US companies operating in Mexico actively contribute to the creation of such opportunities.

The USMCA incorporates a significant entrepreneurship component, which distinguishes it from NAFTA. This segment provides specific guidelines for small businesses, creating favorable conditions for their operations within the USMCA framework. SMEs hold great potential for future growth in the Mexican and US economies, making significant contributions to the economy in ways that larger corporations cannot replicate. We advocate for a heightened focus on supporting and nurturing the expansion of SMEs, fostering their growth and prosperity.

Q: What are the key distinctions you have observed between SMEs in Mexico and those in the US? 

A: The fundamental distinction lies in the robust agency supporting SMEs in the US. This agency, known as the Small Business Administration (SBA), not only offers financial backing but also equips SMEs with tools to enhance their professionalism. The SBA administrator holds a pivotal position directly appointed by the US president, underscoring its significance.

Regrettably, Mexico lacks an equivalent organization that can provide similar comprehensive support to local entrepreneurs. This arguably represents the most critical difference between the US and Mexico in terms of SME development. We hold hope that the new administration will prioritize establishing an organization akin to the SBA and endeavor to forge a robust partnership with it. Such efforts are vital for Mexico to bolster its economy and foster a thriving entrepreneurial landscape.

Q: What role does AMSOC play in facilitating investments across the Mexico-US border?

A: We maintain continuous engagement with border governments, particularly emphasizing the critical role of Laredo, Texas, in our bilateral relationship. Laredo is of paramount importance due to the volume of trade and logistics activities that transpire there, making it a pivotal border city and one of the foremost ports in the US.

Sinaloa is also a priority due to its significant agricultural activities. We greatly appreciate the state's focus on increasing agricultural produce exports to the US. During the Agricultural Summit in Guadalajara, we underscored the immense opportunities that await the agricultural sector in the US. There are also opportunities to expedite the transportation of produce to the US, ensuring fresher products for a market willing to pay a premium for quality.

Q: What are AMSOC’s near-term goals and initiatives in the realm of trade, investment and cultural exchange between the US and Mexico?

A: We aim to increase the number of Mexican students pursuing education in the US. We are collaborating with the US ambassador on an initiative to facilitate this and we are also forging partnerships with many US universities to attract more Mexican students. To support this endeavor, we are working with organizations like Proyecta 10,000, offering grants and loans to make studying in the US more accessible for Mexican students. Moreover, we are actively engaged with US corporations in Mexico to provide internships and employment opportunities for Mexican students within these organizations. This not only benefits the students but also enriches US companies with diverse talent. 

We are also highly committed to promoting the impactful efforts of our 130 NGOs. These organizations are dedicated to serving underprivileged families, assisting children and providing support to individuals with mental or physical disabilities. Our collaboration with these NGOs helps further strengthen the relationship between US companies and Mexico.

Our organization will also focus on setting a robust agenda with the new president of Mexico. We are closely monitoring the upcoming elections and participating in the creation of content that addresses critical issues to make Mexico even more attractive for trade. Our ultimate goal is to enhance both the trade relationship and the relationship between Mexico and the US. We will continue to work closely with both governments to achieve these objectives.

The American Society of Mexico (AMSOC) is a nonprofit, nonpartisan organization established in 1942 to serve the US community in Mexico, which now consists of about 2 million people.


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