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Mexcentrix – Shelter Services Mexico Outsourcing

Jesus Aguirre

29Jun

Jalisco’s Tech Boom: “The New US Government is Helping Mexico”

junio 29, 2017 Jesus Aguirre Uncategorized

Read the daily news and you’d be forgiven for thinking US-Mexico relations are at a nadir. When it comes to some sectors, however, that isn’t the case. Jalisco State, on Mexico’s Pacific coast, has enjoyed an IT boom for several years. Now one of its leading tech scions tells Red Herring that Jalisco–and its capital city Guadalajara–are set to benefit from US President Trump’s nativist policies.

Anurag Kumar is CEO of iTexico, a software company that assists companies with mobile development via ‘nearshore outsourcing’–corporate lingo for using services in a nearby foreign nation. Its clients include top-line brands like Appcelerator, IBM and Microsoft.

iTexico employs over 140 people from its headquarters in Austin, Texas. It also has an office in Silicon Valley, but the vast majority of iTexico’s staff are based in Guadalajara. Kumar, a vastly experienced Indian businessman from Punjab, made his name at firms like Dell, Entreave and the Austin Business Board before co-founding iTexico in 2010. He flies to Guadalajara regularly. Since iTexico was conceived he has seen Guadalajara working to compound on several key advantages.

Low energy and labor costs have long drawn US companies south of the border. Mexico is the 11th largest economy in the world, with an economy worth $2.2tr. However its GDP per capita stands at just $18,900 compared to the US’ $57,300.

Jalisco’s tech industry took a lead almost half a century ago when IBM, Motorola and others began manufacturing semiconductors there. Engineering came soon after, and now software and IT services are providing a third wave of tech-led benefits to the local economy.

In recent years the North American Free Trade Agreement (NAFTA), signed into effect by George H W Bush, Mexican president Carlos Salinas de Gortari and Canadian prime minister Brian Mulroney in 1994, has increased movement between the three nations, and helped swell a wealthy, English-speaking Mexican middle class in major cities including Guadalajara, which managed to avoid the worst of Mexico’s bloody drug wars.

iTexico is part of the Guadalajara tech boom, a move that has seen $120 million poured into more than 300 startups since 2014. The state of Jalisco exports $21bn in tech products and services per year, and global firms like Oracle and IBM have significant presences.

85,000 tech graduates come out of Jalisco’s 12 universities each year. More and more are working in the tech industry, which is said to be worth around an annual $12bn. Since iTexico began operation the local ecosystem has “changed dramatically,” Kumar says. Tech firms from India, Russia, Ukraine and the US have been busy setting up shop. Universities have expanded tech programs. Salaries have gone up, as have several high-rises catering to an influx of wealthy workers.

“Because of NAFTA provisions, movement of professionals between US, Mexico and Canada is not as dependent on H-1B as with other countries,” Kumar says. “Nothing has changed for companies like ours. In fact, due to the H-1B concerns, companies in US are now looking more at Mexico for talent.

“Movement of people, goods, services and technology is the same as before,” he adds. “It is almost as if nothing as happened and it is business as usual.”

That may not resonate with millions of undocumented Mexican and other migrants living in the US, who have seen their rights to live in America under threat under Donald Trump’s conservative, protectionist rule. The President has attempted to incentivize companies to bring jobs back from Mexico to the US, and has issued statements on the Mexican population perceived by many to border on racism.

On November 10, under two days after Donald Trump won the 2016 Presidential Election, Kumar sent a letter to his team. “Today is the dawn of a new chapter,” he wrote. “While the results are surprising and may cause some concerns for you, we must understand, change is a fact of life.”

Kumar added that there would be, “no changes to our strategy and plans for the next few months.” In the intervening months, while the White House has issued statements and proposed policies to hinder interaction between the US and Mexico, businesses on the border have been busy doing the opposite.

This month the Texas-Mexico Trade Coalition was formed. The new agreement, Texas Association of Business CEO Jeff Moseley said, will contemplate “so much development in technology” that has occurred since NAFTA’s implementation. That will help firms like iTexico, which contribute to the $579bn traded each way between Mexico and the US.

Enthused by the talent, proximity and cost-effectiveness on offer, venture capitalists have begun flooding into Jalisco. Exits and big funding rounds are no longer pie in the sky. Local governor Jorge Aristóteles Sandoval Díaz has been on the corporate campaign trail, meeting with political and business leaders in the US and preaching his state’s potential benefits. “We want tech companies to know there is a huge opportunity for them to grow,” he told USA Today this February.

Ties to Kumar’s native India are being seen as a huge potential boost for Mexico’s economy. The Financial Times recently reported that Tech Mahindra, one of India’s largest IT companies, wants to double its Mexico operations in the next 18 months, if the president’s H1-B visa crackdown comes into place.

Elon Musk chose Guadalajara last September as the location in which to announce his plans to colonize Mars with interstellar project SpaceX. It also hosts a number of tech conferences each year, bringing people from all over Latin America and the world. Travel connections to its international airport are increasing and money is helping infrastructural development on all levels. The city is becoming a modern boomtown.

Ironically, says Kumar, “the new US government is helping Mexico. The increased awareness and media coverage about Mexico is making business look at Mexico again and realize that it is actually a really good idea for the two countries to engage even more.” That extends not only to goods like sugar and corn, which Mexico buys from US suppliers in huge quantities, by consumer electronics and IT services.

Kumar adds, “The city itself is a beautiful place to live and work.”

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27Jun

Japanese airbag maker Takata files for bankruptcy, gets Chinese backing

junio 27, 2017 Jesus Aguirre NEWS

Japan’s Takata Corp (7312.T), at the center of the auto industry’s biggest-ever product recall, filed for bankruptcy protection in the United States and Japan, and said it had agreed to be largely acquired for $1.6 billion by the Chinese-owned U.S.-based Key Safety Systems.

In the biggest bankruptcy of a Japanese manufacturer, Takata faces tens of billions of dollars in costs and liabilities resulting from almost a decade of recalls and lawsuits. Its airbag inflators have been linked to at least 16 deaths and 180 injuries around the world because they can rupture and send metal fragments flying.

TK Holdings, its U.S. operations, filed Chapter 11 bankruptcy in Delaware on Sunday with liabilities of $10 billion to $50 billion, while the Japanese parent filed for protection with the Tokyo District Court early on Monday.

Scott Caudill, chief operating officer of TK Holdings, said in a court affidavit that the company “faces insurmountable claims” relating to the recalls and owes billions of dollars to automakers. He disclosed that Takata has recalled, or expects to recall, by 2019 about 125 million vehicles worldwide, including more than 60 million in the United States.

Takata’s total liabilities stand at 1.7 trillion yen ($15 billion), Tokyo Shoko Research Ltd estimated.

Final liabilities would depend on the outcome of discussions with carmaker customers who have borne the bulk of the replacement costs, a lawyer for the company said.

The filings open the door to the financial rescue by Key Safety Systems (KSS), a Michigan-based parts supplier owned by China’s Ningbo Joyson Electronic Corp (600699.SS).

In a deal that took 16 months to hammer out, KSS agreed to take over Takata’s viable operations, while the remaining operations will be reorganized to continue churning out millions of replacement airbag inflators, the two firms said.

The U.S. company would keep “substantially all” of Takata’s 60,000 employees in 23 countries and maintain its factories in Japan. The agreement is meant to allow Takata to continue operating without interruptions and with minimal disruptions to its supply chain.

“We believe taking these actions in Japan and the U.S. is the best way to address the ongoing costs and liabilities of the

airbag inflator issues with certainty and in an organized manner,” Takata CEO Shigehisa Takada said in a statement.

The remainder of Takata assets will be reorganized to produce replacement inflators, but it is not clear how long they will operate.

Takata said it plans to continue building older model inflators for as long as five years at plants in China, Washington state and Mexico. It will not continue producing those inflators at a plant in Germany.

CEO Takada said he and top management would resign “when the timing of the restructuring is set.” His family – which still has control of the 84-year-old company – likely would cease to be shareholders.

Takata in February pleaded in a U.S. federal court to a felony charge as part of a $1-billion settlement that included compensation funds for automakers and victims of its faulty airbag inflators. The company expects to honor the terms of the agreement and pay the $850 million due for automaker compensation. Three former senior Takata executives were charged in January in a U.S. court with falsifying test results but have not made a court appearance.

About two-thirds of 46.2 million recalled Takata inflators in the United States have not been fixed. In June 2016, federal regulators said inflators in 2001-2003 model Honda and Acura vehicles have up to a 50-percent chance of a dangerous airbag inflator rupture in a crash and urged owners to stop driving until repairs were made.

The companies expect to seal definitive agreements for the sale in coming weeks and complete the twin bankruptcy processes in the first quarter of 2018.

Takata warned in bankruptcy documents that if it does not complete the restructuring by March and complete payments owed under the deal, the Justice Department could withdraw the plea agreement and seek higher penalties.

It also faces hundreds of lawsuits and claims in the United States, Mexico and Canada, including consumer protection lawsuits filed by three states and 100 personal injury and wrongful death claims. A judge in the U.S. Virgin Islands action had ordered Takata recently to pay $8 million into an escrow account but the payment has not been made, Takata said.

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16Jun

Texas business groups form coalition to protect US, Mexico trade

junio 16, 2017 Jesus Aguirre NEWS

AUSTIN — Texas’ largest business associations are forming a coalition to protect and foster trade opportunities between the United States and Mexico amid a renegotiation of the North American Free Trade Agreement spearheaded by the Trump administration.

The Texas-Mexico Trade Coalition will officially launch on Thursday and includes the Texas Association of Business, the Texas Business Leadership Council and the Borderplex Alliance. The alliance includes business operations on both sides of the U.S.-Mexico border.

“It is designed to inform Texas policymakers about how important bilateral trade with Mexico is to the state’s economy and to urge political leaders in the Lone Star State to actively engage in the process of the renegotiation and modernizing and strengthening of NAFTA,” said Jon Barela, CEO of the Borderplex Alliance, a regional economic development organization for El Paso, Southern New Mexico and northern Mexico.

“There have been some efforts (to collaborate) here and there, but this is unique in the sense that this coalition is and does represent businesses large and small throughout Texas who all recognize the value of the bilateral economic relationship and see it as an opportunity to create even more jobs in Texas and throughout our region,” Barela said.

President Donald Trump pledged to renegotiate NAFTA early in his presidency and has threatened to withdraw entirely from the pact if Mexico and Canada don’t agree to make changes that give “American workers a fair deal.”

In May, the Trump administration officially informed Congress of its intent to renegotiate, starting the clock on a 90-day period of consultation with lawmakers and interested parties over how to revise the agreement. Trump, who once called NAFTA “a disaster,” has asked that the deal protect factory workers in the U.S. and be revised to reflect modern technologies.

Members of the Texas-Mexico Trade Coalition are urging lawmakers to protect the “deep economic ties” between Texas and Mexico and to modernize the agreement to include new industry and technologies.

“The relationship benefits both countries economically, and we want it to continue to do so,” Jeff Moseley, CEO of the Texas Association of Business, said in a statement. “Our goal is to make sure that our voices are heard in any conversations that might impact that relationship and to provide real data from Texas and Mexico businesses to guide discussions at all levels of government.”

In 2016, the United States exported about $262 billion in goods and services to Mexico — $93 billion of which came from Texas. Trade with Mexico supported about 1.2 million U.S. jobs in 2015, according to the U.S. Department of Commerce. Trade with Canada supported about 1.6 million jobs.

U.S. Sen. John Cornyn, R-Texas, said during an event in El Paso earlier this month that revamping the trade agreement will have a positive economic impact on Texas.

“NAFTA is essential to our economic prosperity. If after 24 years it needs a tuneup, no one should be surprised,” he said.

U.S. Sen. Ted Cruz, R-Texas, also supports the NAFTA renegotiation and said opening Mexico’s energy resources to American should be a priority as it could “produce thousands of high-paying jobs in Mexico and in Texas.”

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31May

MEXICO TO REVIEW RULES OF ORIGIN TO HELP NAFTA RENEGOTIATION

mayo 31, 2017 Jesus Aguirre NEWS

MIAMI (AP) — Mexico’s foreign minister says the country is “inevitably” set to review rules of origin when renegotiating the North American Free Trade Agreement, giving a boost to President Donald Trump’s manufacturing push.

Foreign Relations Secretary Luis Videgaray said on Tuesday at an event in Miami that NAFTA has allowed Mexican industry to enter the U.S. market with lax rules of origin. The rules dictate how much U.S. content a product assembled in Mexico must have in order to escape tariffs when being imported into the United States. Currently set at 62.5 percent for the auto industry, that number could increase.

“One part that must inevitably be reviewed is the chapter on rules of origin,” Videgaray said at the University of Miami. “Over time, the free trade agreement has sometimes been used, not always of course, but sometimes as a way to access the U.S. market perhaps with laxity in some ways of rules of origin.”

The Trump administration told Congress earlier this month there would be 90 days of consultations on the renegotiation of the 23-year-old pact before beginning talks with Canada and Mexico. Annual trade of goods between Mexico and the U.S. was at $525 billion in 2016, with the U.S. running a trade deficit of more than $63 billion.

The foreign minister said Mexico won’t entertain any talks on building a wall along the border. Videgaray maintained it is seen as an unfriendly sign and questioned its efficiency. Trump’s budget seeks $2.6 billion for border security technology, including money to design and build a wall along the southern border. Trump repeatedly promised voters during the campaign that Mexico would pay for a wall.

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29May

San Antonio-based refiner Valero to spend $200M in Mexico

mayo 29, 2017 Jesus Aguirre NEWS

Investors at an energy expo in Mexico City last week got a sneak peek at San Antonio-based Valero Energy Corp.’s plans to spend $200 million building new fuel storage across the border.

Valero executives at the Onexpo conference May 17-19 said their investment would pay for 1.6 million barrels of storage in three locations. The largest terminal would store 925,000 barrels in the Gulf Coast city of Altamira in Mexico’s Tamaulipas state and would supply refined fuels into Mexico, according to reporting by Mexican newspaper Milenio.

“Valero representatives recently met with potential clients about proposed plans to distribute Valero-branded fuels in Mexico,” Valero spokeswoman Lillian Riojas said in an email. “The plans are in the works and continue to evolve as we hone our strategy to further serve the Mexico market.”

Valero will also build a 325,000-barrel terminal in Monterrey and one in San Luis Potosi. The largest U.S. refiner will also allow its brand to be licensed by Mexican gas station owners.

Official’s with Energy Regulation Commission confirmed that Valero has applied for a permit to sell gasoline in Mexico, but said no further details were available.

The announcement comes after San Antonio-based refiner Tesoro Corp. was given the first ever contract to lease storage and pipeline capacity in northwestern Mexico from Mexico’s state-run oil and gas company Pemex. Tesoro will supply gasoline and diesel into the region, which Tesoro’s President and CEO Greg Goff estimated had a daily deficit of 150,000 barrels of refined fuels.

Mexico has faced fuel shortages and rising prices since the government announced in 2013 its intention to open its state-controlled energy sector to competition after nearly 80 years.

Valero’s investment came the same week Exxon Mobil said it will invest $300 million into fuel infrastructure and gas stations in Mexico over 10 years. British Petroleum or BP announced plans to establish 1,500 BP-branded gas stations across Mexico over five years, and other oil and gas companies have made announcements that they are entering Mexico’s fuels market.

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24May

Ford’s New CEO Distances Himself From Trump On Mexico

mayo 24, 2017 Jesus Aguirre NEWS

Jim Hackett, who joined the automaker’s board in 2013, said he had nothing to do with the decision to cancel a plant in Mexico earlier this year.

In January, Ford Motor Co. abandoned plans to open a $1.6 million factory in Mexico, a move hailed by then President-elect Donald Trump as a vote of confidence in his promise to reverse the flow of U.S. manufacturing jobs to that country.

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But on Monday, Ford’s newly named chief executive officer distanced himself from an administration marred by a steady stream of self-inflicted scandals and a failure to enact key parts of its policy agenda.

“I had nothing to do with the previous decisions on Mexico,” Jim Hackett, who previously served as a director on the board and led Ford’s autonomous car project, said at a press conference Monday morning. “We made that decision not for political reasons, but for business reasons, and those are still sound today.”

Hackett, 62, spent over two decades as chief executive of the office furniture giant Steelcase Inc. In 2011, he oversaw the closure of three factories in Michigan, Texas and Canada, and moved production to the company’s two plants in Mexico. At Ford, he said Mexico ― where the company is already expanding two plants ― would remain a manufacturing hub.

“We’re a global company,” he said. “We want to own our strategies about where we play and how we win. We’ll be producing product all over the world. We have to do that. The supply chains are designed in interactive ways that you can’t undo.”

The board blamed ousted CEO Mark Fields for putting the 114-year-old automaker on Trump’s radar by announcing plans to move production on the Ford Focus from Michigan to San Luis Potosí last year. His failure to predict and prevent Trump from dragging Ford into the political spotlight factored heavily into the decision to fire Fields, according to The Wall Street Journal.

Ford declined to comment on the role politics played in determining Fields’ fate, but said in a statement that the company required change.

“Given the changes in competition, technology and consumer expectations, Ford’s board determined that the company needed a different kind of leadership to develop the culture, further strengthen the core automotive business and accelerate a strategic shift to capitalize on emerging opportunities,” Alan Hall, a Ford spokesman, told HuffPost in an email. “The statement provided clearly communicates the reasons for the board decision.”

Trump vowed to revive American manufacturing by slashing regulations and reworking trade deals, such as the North American Free Trade Agreement, that encourage U.S. companies to shift production to Mexico, where labor costs are lower. He kicked off the process before he took office, striking a much-ballyhooed deal with the air conditioner maker Carrier to keep a factory slated for closure in Indiana. He did so by offering lavish tax breaks and federal contracts to United Technologies, Carrier’s parent company.

Trump touted Ford’s announcement in January as yet another win for his manufacturing agenda, despite Fields’ insistence that politics had little to do with the decision. For months after, crediting Trump for already-planned investments in U.S. operations became a routine part of many large companies’ PR strategies, giving the new president fodder for boastful pronouncements on Twitter.

But confidence that such a piecemeal approach would give way to concrete policy change has faltered as the administration stumbles from one political crisis to the next, making it difficult to forge ahead with a comprehensive lawmaking agenda. Last week alone, the White House struggled to stave off daily reports of potentially illegal moves by Trump to squelch an investigation into his campaign’s ties to Russia’s alleged hacking of his rivals in the Democratic National Committee.

Ford’s sudden replacement of its chief executive came as a surprise to most, despite a rough few months for the Detroit automaker. Chairman Bill Ford said he had not briefed the president, who traveled from Saudi Arabia to Israel on Monday morning, about the decision.

Instead, Ford held a press conference to announce the new chief. The chairman said he scheduled a call with Vice President Mike Pence sometime after.

Ford’s stock price rose nearly 2 percent on Monday morning.

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19May

NAFTA Demise Fears Fade as U.S. Firms Committed to Mexico: Lobby

mayo 19, 2017 Jesus Aguirre NEWS

MEXICO CITY (Reuters) – Companies no longer fear the North American Trade Agreement (NAFTA) will collapse and top U.S. multinationals in Mexico are committed to investing in the country going forward, the head of a global business lobby said on Wednesday.

Frederic Garcia, President of Mexico’s Executive Council of Global Companies (CEEG), said preparations to renegotiate NAFTA and growing awareness of the accord’s economic benefits had all but put an end to fears that the deal would be scrapped.

“There was a moment where the probability, or the perception that NAFTA would end, was very strong,” Garcia said in an interview in Mexico City. “But today I think there’s an awareness that it will continue. The big worry that the deal could come to an end is an issue that’s behind us.”

The CEEG represents a host of multinationals in Mexico including AT&T Inc , Coca-Cola Co , General Motors Co , Microsoft Corp , Exxon Mobil Corp , Nestle, HSBC, Siemens and IBM Corp , which it says account for around 40 percent of total foreign direct investment.

It and other business associations have been active in extolling the benefits of NAFTA to Americans to counter threats by U.S. President Donald Trump to dump the 23 year-old accord that binds the United States, Mexico and Canada.

Mexico’s Economy Minister Ildefonso Guajardo said on Tuesday he expected the U.S. government to notify Congress early next week of plans to rework the accord, yielding talks by late August.

It was not yet clear how NAFTA would be revamped, but if Mexico’s efforts to update its free trade deal with the European Union proved instructive, it could include provisions to boost corporate compliance and adherence to the law, Garcia said.

Trump said last month he was ready to renegotiate NAFTA with Mexico and Canada, though since taking the presidency in January he also has maintained that the United States could withdraw from the agreement if talks did not work in favor of his homeland.

Arguing the accord has destroyed U.S. jobs, Trump has menaced multinationals manufacturing in Mexico with punitive tariffs, and his threats to quit NAFTA. This sent the peso to a record low in January.

Earlier that month Ford abruptly canceled a $1.6 billion plant in central Mexico following verbal attacks by Trump. But as the rhetoric from the White House began to moderate, the peso has recovered somewhat, and fears for NAFTA’s future have eased.

Last week, a Mexican business lobby said it expected investment to drop slightly this year due to uncertainty over Trump, but Garcia said the CEEG would make no forecasts over projected outlays to avoid drawing attention to the matter.

“As far as the U.S. firms in the CEEG go, from the first day of the new U.S. administration they’ve stated their great interest to continue operating in Mexico (and) their great interest to continue investing in Mexico,” he said.

However, they had done so in such a way as to preserve their interests with the U.S. administration, Garcia added.

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15May

In blow to Trump, GE backs NAFTA and voices support for Mexico

mayo 15, 2017 Jesus Aguirre NEWS

General Electric (GE.N) on Friday praised Mexico as a big part of its future and said the company is “very supportive” of the North American Free Trade Agreement (NAFTA) that U.S President Donald Trump has threatened to ditch.

GE Chief Executive Officer Jeff Immelt said on a visit that Mexico had great potential and was not properly understood. He touted the conglomerate’s Mexican operations and the trade deal binding Mexico, Canada and the United States.

“GE as a company, we’re very supportive of NAFTA,” Immelt told employees at an event to mark the expansion of operations in the northern city of Monterrey. He said the trade accord could be modernized, as Mexico has argued.

Immelt sits on a Trump-appointed manufacturing council that Mexico has targeted for lobbying as Mexico and Canada push U.S. business leaders to defend NAFTA.

The GE boss said trade meant “win-win” opportunities across North America.

“We will continue to work constructively in the context of wanting to see a close relationship between the U.S. and Mexico,” he said, noting that GE’s exports to the rest of the world from Mexico were worth $3 billion.

“We’re optimistic about Mexico, we’re optimistic about what we can do here,” Immelt added, saying Latin America’s no. 2 economy would be a “big part” of GE’s future.

Earlier this month, Immelt urged the Trump administration to avoid protectionist policies, calling on it to level the playing field for U.S. companies with tax reform, revived export financing and improved trade agreements.

Trump touts a “Buy American” policy and has railed against U.S. companies moving operations to Mexico. He has threatened to ditch NAFTA, a lynchpin of the Mexican economy, if he cannot rework it to secure better terms for the United States.

Unlike some U.S. companies, GE has not backed off plans in Mexico, risking broadsides from Trump on Twitter.

Earlier, the Mexican presidency said in a statement that GE had stated an interest in doubling purchases from Mexican suppliers next year. Immelt did not mention this.

Vladimiro de la Mora, CEO for Mexico, said the figure came from an announcement last year and did not mean GE aimed to double purchases between this year and 2018.

On Thursday, GE said it had won a contract to provide plants producing two new gigawatts of power in Mexico and secured a separate $120 million, multi-year service deal.

De la Mora said GE could not yet reveal details of the 2 GW deal, but it was “likely” the value of the total investment in the power plants would exceed $500 million.

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12May

Mexico warns U.S. of alternatives on trade, points to China

mayo 12, 2017 Jesus Aguirre NEWS

Mexico sent a stark message to U.S. President Donald Trump on Thursday, saying an upcoming visit by Mexican officials to China showed Latin America’s second largest economy had other places to export to if he tore up the NAFTA trade deal.

The North American Free Trade Agreement (NAFTA) underpins Mexico’s economy, prompting the government to try and diversify away from the United States, which takes 80 percent of its exports.

Trump indicated in an interview with The Economist published on Thursday that he wanted to get the U.S.-Mexico trade deficit down to about zero. He wants to renegotiate NAFTA to get a better deal for U.S. companies and workers, and has threatened to end the agreement if he does not get his way.

“We will use (the China visit) geopolitically as strategic leverage” said Mexican Economy Minister Ildefonso Guajardo, answering questions on trade at the Mexico Business Forum. “It sends the signal that we have many alternatives.”

Guajardo noted Mexico sends China a fraction of its total exports, and that the two major manufacturing nations tend to compete rather than complement one another on trade.

He also offered a rebuke to China on its trade policy.

“We all know that China is not a free trader, that’s the reality,” he said. But he added that Mexico has had success persuading China to ease trade barriers on some goods and expects it to continue to open up as its economy matures.

The trip to China would be in September, Guajardo said, but he did not provide details.

A Mexican diplomat in Beijing told Reuters he was referring to the China International Fair for Investment & Trade summit in Xiamen. “High-level contact is very frequent,” said the diplomat, who was not authorized to comment.

Guajardo said he was also working on a “radical broadening” of preferred tariffs with Brazil and Argentina to lower the cost of importing grains from the South American nations while giving Mexico better access to their manufacturing markets.

That would make the “worst-case scenario” of the U.S. withdrawing from NAFTA less painful for Mexico and strengthen its negotiating hand, Guajardo said.

“If NAFTA disappears, I can export cars (to the United States) paying 2.5 percent tariffs. If they want to export yellow corn to me, I can raise tariffs to inaccessible levels,” Guajardo said. “But to make that strategy credible, I have to broaden our agreements with Brazil and Argentina.”

 

Representatives of Mexico’s government and private sector are in Brazil this week to close new supply deals of corn, soy and rice, members of the delegation said Thursday.

Still, Mexico has found it hard to wean itself off trade with its northern neighbor. It has tried to deepen commercial links with China for years, but the scrapping of a Chinese high-speed train contract in 2014 soured relations.

The diplomat said Mexico was not sending top-level officials to “China’s Belt and Road Initiative” meeting in Beijing this weekend. Bilateral meetings between senior Mexican officials and their Chinese counterparts were planned throughout the year.

Guajardo said that the U.S. trade deficit was not a measure of the strength of its economy or trade relationship. But he said it might be possible to shrink the U.S. deficit with Mexico if more North American products were made with materials from within the region without hurting competitiveness.

Erecting tariffs, however, was “out of the question,” Guajardo said. “The precondition to negotiating NAFTA is that we can’t go back to the past,” he added.

 

 

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04May

Mexico, Canada seek U.S. soft spots to bolster NAFTA defense

mayo 4, 2017 Jesus Aguirre NEWS

MEXICO CITY/OTTAWA (Reuters) – From launching a data-mining drive aiming to find supply-chain pressure points to sending officials to mobilize allies in key U.S. states, Mexico and Canada are bolstering their defenses of a regional trade pact President Donald Trump vows to rewrite.

Trump has blamed the North American Free Trade Agreement (NAFTA) for the loss of millions of manufacturing jobs and has threatened to tear it up if he fails to get a better deal.

Fearing the massive disruptions a U.S. pullout could cause, the United States’ neighbors and two biggest export markets have focused on sectors most exposed to a breakdown in free trade and with the political clout to influence Washington.

That encompasses many of the states that swept Trump to power in November and senior politicians such as Vice President Mike Pence, a former Indiana governor or Wisconsin representative and House Speaker Paul Ryan.

Prominent CEOs on Trump’s business councils are also key targets, according to people familiar with the lobbying push.

Mexico, for example, has picked out the governors of Texas, Arizona and Indiana as potential allies.

Decision makers in Michigan, North Carolina, Minnesota, Illinois, Tennessee, Wisconsin, Ohio, Florida, Pennsylvania, Nebraska, California and New Mexico are also on Mexico’s priority list, according to people involved in talks.

Mexican and U.S. officials and executives have had “hundreds” of meetings since Trump took office, said Moises Kalach, foreign trade chief of the Mexican private sector team leading the defense of NAFTA. (Graphic:tmsnrt.rs/2oYClp2)

Canada has drawn up a list of 11 U.S. states, largely overlapping with Mexico’s targets, that stand to lose the most if the trade pact enacted in 1994 unravels.

To identify potential allies among U.S. companies and industries, Mexican business lobby Consejo Coordinador Empresarial (CCE) recruited IQOM, a consultancy led by former NAFTA negotiators Herminio Blanco and Jaime Zabludovsky.

In one case, the analysis found that in Indiana, one type of engine made up about a fifth of the state’s $5 billion exports to Mexico. Kalach’s team identified one local supplier of the product and put it touch with its main Mexican client.

“We said: talk to the governor, talk to the members of congress, talk to your ex-governor, Vice President Pence, and explain that if this goes wrong, the company is done,” Kalach said. He declined to reveal the name of the company and Reuters could not immediately verify its identity.

Trump rattled the two nations last week when his administration said he was considering an executive order to withdraw from the trade pact, which has been in force since 1994. He later said he would try to renegotiate the deal first and Kalach said the lobbying effort deserved much credit for Trump’s u-turn.

“There was huge mobilization,” he said. “I can tell you the phone did not stop ringing in (Commerce Secretary Wilbur) Ross’s office. It did not stop ringing in (National Economic Council Director) Gary Cohn’s office, in the office of (White House Chief of Staff Reince) Priebus. The visits to the White House from pro-NAFTA allies did not stop all afternoon.”

Among those calling the White House and other senior administration officials were U.S. Chamber of Commerce chief Tom Donohue, officials from the Business Roundtable and CEOs from both lobbies, according to people familiar with the discussions.

PRIME TARGET

Mexico has been the prime target of NAFTA critics, who blame it for lost manufacturing jobs and widening U.S. trade deficits. Canada had managed to keep a lower profile, concentrating on seeking U.S. allies in case of an open conflict.

That changed in late April when the Trump administration attacked Ottawa over support for dairy farmers and slapped preliminary duties on softwood lumber imports.

Despite an apparently weaker position – Canada and Mexico jointly absorb about a third of U.S. exports, but rely on U.S. demand for three quarters of their own – the two have managed to even up the odds in the past by exploiting certain weak spots.

When Washington clashed with Ottawa in 2013 over meat-labeling rules, Canada retaliated by targeting exports from the states of key U.S. legislators. A similar policy is again under consideration.

Mexico is taking a leaf out of a 2011 trucking dispute to identify U.S. interests that are most exposed, such as $2.3 billion of yellow corn exports.

Mexico is also targeting members of Trump advisory bodies, the Strategic and Policy Forum and the Manufacturing Council, led by Blackstone Group LP’s Stephen Schwarzman and Dow Chemical Co boss Andrew Liveris respectively.

Senior Trump administration officials and Republican lawmakers in charge of trade, agriculture and finance committees also feature among top lobbying targets.

Canada has spread the task of lobbying the United States among ministries, official say, and is particularly keen to avoid disruption to the highly-integrated auto industry.

A core component of Mexico’s strategy is to argue the three nations have a common interest in fending off Asian competition and exploring scope to source more content regionally.

The defenders of NAFTA also say that it supports millions of jobs in the United States, and point out that U.S. trade shortfalls with Canada and Mexico have declined over the past decade even as the deficit with China continued to climb.

Part of IQOM’s mission is to identify sectors where NAFTA rules of origin could be modified to increase regional content.

For example, U.S., Canadian and Mexican officials are debating how the NAFTA region can reduce auto parts imports from China, Japan, South Korea or Germany, Mexican officials say.

“The key thing is to see how we can get a win-win on the products most used in our countries, and to develop common manufacturing platforms that allow us just to buy between ourselves the biggest amount of inputs we need,” said Luis Aguirre, vice-president of Mexican industry group Concamin.

 

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