South Korea Could Increase its Investment in Mexico

Former South Korean Foreign Minister Yu Myung-Hwan said that the stalemate in negotiations between the governments of Mexico and South Korea to reach a free trade agreement (FTA) is limiting trade opportunities between the two countries. Yu stressed that if a deal is struck, bilateral trade could increase by up to 20 percent.

On March 1, 2022, Yeo Han-Koo, Minister for Trade of South Korea, visited Mexico’s Ministry of Economy to start negotiations to materialize an FTA between both countries. However, no agreement has been reached. Yu said the absence of a deal is causing both countries to miss out on both competitive tariffs and fair investment rules.

Yu recalled that in 2010, South Korea signed a trade agreement with the US, which allowed the former country’s trade to grow by 20 to 30 percent, whereas investment increased by 200 percent. Yu explained that while Mexico has fewer trade opportunities than the US, a significant increase in trade can be expected since the industries of each country complement rather than compete with each other, but rather complement each other. South Korea seeks to focus its investment in Mexico mainly in the aerospace, heavy chemical and health sectors. Yu explained that although these industries would benefit greatly from the FTA, some are dissatisfied with the agreement.

“Korea has several agreements with other countries, but not with Mexico. Even though negotiations began in 2006, the deal has not materialized. Not much progress has been made, we are missing more tangible or practical parts of the negotiation," Yu said.

In February 2022, Mexico and South Korea celebrated “60 years of friendship,” when Choi Jong Kun and Carmen Moreno, Mexico’s Undersecretary for Foreign Affairs, met in Seoul to “further strengthen the strategic partnership between the two countries.” South Korea is Mexico’s sixth-largest commercial partner globally, while Mexico is its most important Latin American trade destination. There are over 2,000 companies with South Korean investment in Mexico, including Samsung, LG, Kores, Kepco, Kogas, Posco, Hyundai, KIA and several other auto parts manufacturers.

Currently, South Korea signed trade agreements with Costa Rica, El Salvador, Honduras, Nicaragua and Panama. The South Korean government is working to also reach an agreement with Guatemala and the Dominican Republic, too. Moreover, the country also showed intent to join the Pacific Alliance, the trade bloc created in 2012 by Chile, Colombia, Peru and Mexico, reported EFE.