(Download the PDF: Trading Room -21022020)
In UNCTAD’s 2019 investment report, it was mentioned that “Foreign Investors were reassured by the final signature of the revised [NAFTA] (now called the USMCA).” Now, the Mexican Ministry of Economy issued a newsletter reporting the preliminary Foreign Direct Investment (FDI) results. FDI in 2019 increased 4.2% in relation to that of 2018; specifically, Mexico received 32.912 billion USD of inward investment in 2019, while in 31.604 billion USD in 2018.
We highlight that 53% of the FDI was reinvestment earnings, while 39% correspond to new equity flows; also, almost half of the FDI was absorbed by the manufacturing sector, meanwhile, the FDI inward flows mainly originated from USA (36.8%), Spain (12.1%), Canada (9.7%), Germany (9.2%), Italy (4.5%).
Bearing in mind this context, the Minister of Economy, Graciela Marquez, mentioned in a meeting with Senators that there is an expectation that foreign investment will react positively to the incentives that were established in USMCA; and, the Ministry has two tasks to help activate the economy: implementing USMCA and relocating companies that are in China to Mexico. However, the Minister noted that the global economy presents signs of the economic deceleration, not only pertaining to growth but also due to the unknown impact of the coronavirus.
La @SE_mx presenta ante la Comisión De Economía del @senadomexicano los trabajos de MX para la implementación del #TMEC @GMarquezColin @luzmadelamora @LAntonioDLG @RicardoArandaG @IMPI_Mexico pic.twitter.com/AD5xol1kYk
— Orlando (@Orpega) February 19, 2020
As reported in a previous edition, the Ministry of Economy is organizing a seminar about USMCA (as well as CPTPP). This week’s session was about market access, rules of origin and trade facilitation. During the event, it was announced that Mexico has approached the USA and Canada on the matter regarding USMCA’s uniform regulations that have to be adopted and published in the near future. The rules will detail how the parties will interpret and apply the relevant Chapters, such as customs procedures and the rules of origin chapters, e.g. remanufactured goods, recovery of raw materials, auto, etc.
Durante la segunda sesión del #SeminarioEconomíaMX abordamos temas como reglas de origen, acceso a mercado de bienes, administración aduanera y facilitación del comercio, entre otros.
Vuélvela a ver 👉🏽 https://t.co/AwRWFpbdKi
Consulta las presentaciones👉🏽 https://t.co/ohBwPxcFvs pic.twitter.com/QixJ3ZBscb
— Economía México (@SE_mx) February 19, 2020
In an event organized by the Spanish Chamber of Commerce in Mexico, it was announced that the Underminister of International Trade, Luz Maria de la Mora, announced that the negotiations regarding the update of the European Union-Mexico Free Trade Agreement are close to being concluded and that it will be signed at the end of 2020. It has been two years since the Mexican Ministry of Economy and the European Commission announced that there was an agreement in principle, Mexican authorities had also announced that the signature of the update was soon; however, some details had not been sorted out, such as government procurement. One of the main features of the update of the EUMEXFTA is the full liberalization of tariffs since the agricultural sector had been excluded from the original FTA.
Agradezco a @CamescomOficial la invitación para exponerles sobre la política comercial de México, así como de los avances en la modernización del #TLCUEM. España es nuestra 2a fuente de inversión extranjera directa con un capital acumulado de casi 70 mil millones de dólares 🇲🇽🇪🇸 pic.twitter.com/hdEtgOlj2A
— Luz María de la Mora (@luzmadelamora) February 19, 2020
(Download our newsletter in PDF: Trading Room -20190823)
In an interview, the Underminister of North American Affairs of the Ministry of Foreign Affairs, Jesus Seade, commented on China and its “trade war” with the USA.
According to the news outlet, Mr. Seade commented that Mexico has to become more attractive for Chinese investment and that Mexico must address its trade deficit with China.
Also, we note that Chinese investment in Mexico is insignificant in comparison to foreign direct investment from other countries, e.g. the US, Japan, Korea, etc. However, Mr. Seade stressed that such situation must change and Mexico has “… to be [China’s] privileged partner in the western hemisphere, America, and Mexico has to do everything so that this can occur.”
This Wednesday, the US Department of Commerce announced a new draft agreement with Mexican tomato producers/exporters. The agreement will suspend the anti-dumping investigation and, therefore, it would avoid final antidumping duties on Mexican tomato.
Interested parties may comment on the draft suspension agreement during the next 30 days. In essence, Mexican tomato producers/exporters agreed to respect reference prices and, according to the Washington Post, 66% of tomato imports will be subject to an inspection to verify the quality of the product.
Once the suspension agreement enters into force, the US will eliminate the provisional anti-dumping duty, imposed on May 7th, 2019, and the duties paid would be returned or refunded to the Mexican tomato producers/exporters.
This week Mexico received an economic mission from Belgium, which was lead by HRH Princess Astrid and high government officials, accompanied by about 200 businessmen and businesswomen from Belgium visited.
Mexican President, AMLO, received the mission on Monday morning, and afterward, a forum was held where Kris Peeters, Belgium Minister of Employment, Economy and Consumer Affairs, and Graciela Marquez, Mexican Minister of Economy, gave a speech.
In their speech, it was emphasized the importance of the Belgium-Mexico economic relationship, particularly that Belgium is the 4th source of FDI in Mexico (1999-2018) and trade has increased five times since the EU-MEX-FTA, forming global value chains, for instance, in airspace and auto industry. Both Ministers reaffirmed the importance of the modernization of the EU-MEX-FTA, which is in its final process for its signature.
Our associate Emilio Arteaga attended this forum and B2B meetings.
This Sunday the DOC informed that it had delivered its 232 national security investigation on imports of autos and auto parts to the President, report that is not publicly available. We highlight the following two aspects.
First, President Trump has 90 days to decide whether he establishes or not measures, as reported in news outlets.
Second, the US-Mexico side letter under USMCA excludes Mexico from the application of any 232 measures on auto and auto-parts, the exclusion is limited to 2.6 million passenger vehicles and up to 108 billion USD of auto parts.
Hopefully, the US administration will respect this side-letter despite that USMCA is yet in the process of its ratification. Under-minister of Foreign Trade, Luz María de la Mora, holds that in the side-letter the US undertakes not to impose 232 tariffs on Mexico.
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