Strengthening Italy-Mexico Ties: Trade, Investment and Tourism
STORY INLINE POST
Q: How has the relationship between Italy and Mexico strengthened over the years and what is the embassy’s role in this regard?
A: The relationship between Italy and Mexico has strengthened since the postwar period, with great potential in the political, economic and commercial sectors. Despite a decrease in trade in 2020 and 2021 due to COVID-19, the two countries have recovered and are now at levels superior to 2019. Mexico is Italy's top trading partner in Latin America, over Brazil, and the second on the continent after the US.
In 2022, Italy’s exports to Mexico reached US$7 billion. We are keen to buy a little more from Mexico. Last year, Mexico exported about US$1.5 billion to Italy. The Italian Embassy works to facilitate contacts between Italian and Mexican businesses, provides updated country information and helps to improve Mexico's image and opportunities in Italy. With the implementation of the USMCA and the relocation of supply chains, Mexico will increasingly be the gateway to North American markets for companies from Italy and the EU.
Q: How does the Embassy promote Italian investment in factories and manufacturing plants in Mexico?
A: Collaboration with state and local governments is crucial, as each state in Mexico has different opportunities and legislation. The embassy has worked intensively with both state and federal governments during my time in Mexico, and there are dynamic efforts underway. In Mexico, contact between business owners and state authorities is essential for taking investment decisions, more so than in other countries.
Q: How is Mexico's preference for FDI preventing the country from further growth?
A: There is a cultural limitation within Mexico’s state and federal governments and within the private sector because they only seek foreign investment and do not consider developing national investment and joint ventures. While foreign investment creates jobs and wealth, joint ventures and learning from European experience to develop new products are necessary for Mexico to become increasingly an autonomous and independent and prosperous economy.
Mexican and Italian capabilities could be combined to create new products. Mexico has a significant talent pool that is working for foreign companies instead of working for Mexican businesses. There are few Mexican companies with operations abroad, which is a result of the prioritization of commercial and economic relations with the US. Mexican entrepreneurs need to take more risks and promote local investment to create Mexican brands that are globally recognized for their quality and success.
Q: What are the main Italian products demanded by the Mexican market?
A: Although people often think about fashion and food when speaking about Italian products, Italy's exports to Mexico are mostly made up of industrial machinery, representing 80% of the country’s exports. Unlike other countries, Mexico has not received a significant flow of Italian immigration and while Italy’s cuisine is popular in restaurants across Mexico, it is less common to see Mexicans cooking Italian food at home. To encourage greater consumption of Italian products, an Italian gastronomic festival are organized at Mexican supermarkets. For instance, last November in La Comer markets, next in El Palacio de Hierro gourmet section, and every year we organize a week-long celebration of Italian gastronomy.
Q: How do Italian and Mexican companies cooperate in energy and renewable energy projects?
A: Italian companies are present in all sectors of the energy industry in Mexico, including Italy’s ENI in the fossil fuels sector and Enel in renewables; both have a strong presence in the country. Enel has invested the most in renewable energy in Mexico. Italy and its companies are playing a fundamental role in the energy transition, which includes not only generation but also energy savings and climate change issues. Recently, ENEL opened two new companies in Mexico dedicated to smart cities and sustainable mobility, and have signed contracts with the government for the electrification of the bus system in Mexico City. Italy respects the vision of the federal government and sees potential for growth in the energy sector in Mexico.
Q: How has the Free Trade Agreement between Mexico and the EU (FTA EU-MX) benefited trade?
A: The FTA EU-MX has greatly benefited trade and investment between the two regions. This agreement is not just about trade, it also regulates the protection of investments and includes political collaboration. The agreement has multiplied trade and investment several times and Mexico is now considered a strategic partner of the EU. The newly negotiated text is an improvement for both sides because it simplifies customs processes, lowers tariffs and protects the geographical origin of products.
Mexico has many free trade agreements, making it an ideal place for foreign investment. The EU is the second-most important investor in Mexico after the US, making it a significant partner for economic development. The negotiation process for the modernization of the treaty has concluded and we look forward to its approval by Mexico’s Minister of Economy.
Q: How has tourism between Italy and Mexico rebounded after the pandemic?
A: While it has not fully recovered, there have been positive signs for tourism in both directions. In 2019, about 150,000 Italians visited Mexico and a similar number of Mexicans visited Italy. The cancellation of direct flights and the changes Alitalia has undergone have been an obstacle in recovering these figures. However, Aeroméxico has decided to invest in a direct flight from Mexico City to Rome, starting on March 26, 2023, which will initially operate three times a week. Tickets are selling well and this direct flight will be crucial to fully take advantage of the potential of tourist visits between the two countries and of business trips. Italy and Mexico are both tourism powerhouses, with beautiful natural resources, cultural and gastronomic offerings. In addition, both countries share a Latin root and some customs.
Luigi De Chiara is an Italian diplomat who has served in various positions in the Italian Ministry of Foreign Affairs. He holds a Political Sciences degree from the University of Naples L’Orientale and joined the diplomatic service in 1992. From 2010 to 2014, De Chiara was Italy’s Ambassador to Bolivia. He has served as Italy’s Ambassador to Mexico since October 2019.