The opportunity that Mexico should not miss

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The agreement between the US and China only prevented the commercial war from escalation, but it is far from generating again certain conditions of certainty in the relationship between the two powers.

The trade agreement between the United States and China announced on Friday, December 13 prevented tariffs from increasing to 156 billion dollars of Chinese imports into the US from the 15th.

However, it did not change the condition of purchases for 250 billion dollars that today pay 25 percent.

That is, for the time being, the agreement only prevented the commercial war from escalating, but it is far from generating again certain conditions of certainty in the commercial relationship between the two main economic powers of the world.

Resultado de imagen para La oportunidad que México no debe perder

Trade frictions between the United States and China in recent times have resulted in a sharp decline in Chinese exports to our northern neighbor, which in the first 10 months of this year fell 14.4 percent.

This means that China stopped selling 65 billion dollars to the United States in this period, which has been one of the factors that have contributed to the slowdown of economic activity in China.

For Mexico, this represents a great opportunity, especially now that the Mexico-United States-Canada Treaty USMCA (T-MEC) has been ratified in the House of Representatives, to begin with.

In contrast to the drop in Chinese exports to the US, Mexico achieved a 4.2 percent increase in its sales to the US economy during the January-October period.

In addition, if we look at what has happened in recent years and not only in recent months, we see that China has lost participation in the North American market.

In 2016, the last year of the Obama administration, China’s sales to the United States represented 21.0 percent of the total, but for this year it dropped that percentage to 18.4 percent.

In contrast, sales from Mexico to the United States accounted for 13.5 percent in 2016 and now reached 14.6 percent.

This fact is a reflection of the way in which the productive chains of North America have been articulated and that is clearly observed in what happens with US exports to the two countries.

In the first 10 months of this year, Mexico bought 137 percent more from the United States than what was acquired by China. This means that for the North American economy the Mexican market is much more important than the Chinese market.

This condition is what today offers a great strategic advantage to Mexico.

With the certainty offered by the new trade agreement, it is feasible that more and more investments analyze the possibility of leaving their operations in China to settle in our country, the best platform to access the North American market.

The developers of industrial parks in the north of the country have perceived that firms from multiple countries are analyzing the possibility of moving part of their operations from China to Mexico.

If additionally, we see the economic brake of Europe or the situation of uncertainty in various Latin American countries, the relevance of this situation to Mexico cannot be overstated.

Yesterday I was wondering if a possible stay of Trump in the White House after the impeachment attempt would harm or benefit Mexico?

At least from the point of view of this perspective, it may be convenient for Trump to continue fighting with China for several more years.

But, it will require a smart public policy that generates the right incentives … if we do not want to miss this opportunity. That will be one of the great challenges of 2020.

China wants a trade agreement with Mexico

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The diplomat said it is an opportunity to enter a market with many consumers.

China’s ambassador Qiu Xiaoqi said that while Mexico has a trade surplus with its country, the Mexican government and businessmen must lose their fear and negotiate a free trade agreement with them, and thus increase investments and exchange.

Figures from the Bank of Mexico (Banxico) and the Ministry of Economy indicated that in 2017 China’s imports to Mexico were 74 thousand 145 million dollars, while exports of Mexican products to that country were 6 thousand 713 million, which left a surplus of 67 thousand 432 million in favor of the Chinese.

The diplomat acknowledged that unlike the “tense” situation with the United States due to the commercial war, with Mexico the exchange of goods and services is beneficial for both countries.

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Xiaoqi delved into China’s situation with the United States because of the imposition of tariffs, and said his country “does not want a war with them, because both sides lose.” He also reiterated that “this situation can be resolved through dialogue… however, we are not afraid of threats or blackmail. If you want a trade war we will accompany you until the end, ”he said.

Source: el financiero, el economista, forbes mx

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