Mexico: Korea’s most important economic partner in L. America
Korea Times
Mexico: Korea’s Most Important Economic Partner in L. America
By Woo Jae-Ryang
Regional Director for Central and South America
8 September 2005
Last year represented a historic moment in the economic relationship between Latin America and Korea.
Korean exports to the region exceeded $11.5 billion and the country’s first Free Trade Agreement (FTA) was established with Chile. Meanwhile, President Roh Moo-hyun’s visit to South America contributed to expanding trade and investment opportunities throughout the region.
The time is now right to promote trade and investment with Mexico, our biggest Latin American trade partner. In 2004, exports to Mexico stood at over $3 billion, some 25.8 percent of all exports to Latin America ($11.6 billion).
How can Korea benefit through a deeper economic partnership with Mexico?
First, Mexico is situated between the United States and Central/South America, making it an ideal base to export to the U.S. under the North American Free Trade Agreement (NAFTA).
Second, Mexico has free trade agreements with 43 countries around the world. In fact, over 85 percent of its trade is with countries it has FTAs with. Starting with NAFTA in 1994, Mexico has pursued free trade agreements with the European Union and countries such as Columbia, Venezuela and Japan.
Thus, Mexico is not just a destination for Korean goods, but also a source of demand from Europe, Japan and the rest of Latin America. By having a Mexican location, Korean companies could expand their commercial relationships to countries that are part of Mexico’s FTA network.
Third, with its 108-million population and an annual import bill of $195 billion, Mexico presents a huge market to Korean exporters.
Last, since Mexico is blessed with natural resources such as petroleum, silver, gold, and coal, the country is replete with opportunities in mining and refining.
Mexico is viewed as one of the world’s 12 most dynamic emerging economies, with growth expected to exceed 3.6 percent this year.
Mexico’s top exports to Korea include ores, minerals, lumber, marine products and beef. Trade relations with Mexico can be complimentary rather than competitive.
Korea can also benefit from exploring new investment and trade opportunities in Mexico through technology transfer. Therefore it would be beneficial to both countries to establish an agreement to effect exchanges of this order.
However, the Mexican government has expressed more interest in sector agreements rather than a more comprehensive FTA or EPA (Economic Partnership Agreement). Certain Mexican industries such as chemicals and steel are opposed to an FTA or EPA with Korea due to concerns over the competitive impact that it might have.
Since Mexico has not yet benefited from the FTAs it has signed to date in the most efficient manner possible, the country’s domestic industries have a marked preference for seeking the best advantage in these existing agreements rather than establishing new ones.
Mexican industries are also concerned about the increasing imbalance in trade with Korea. More than 65 percent of Korean exports to Mexico in products such as electrical parts, machinery and semi-finished items are destined for re-export to the United States from companies that are already invested in Mexico.
In order to change Mexican attitudes, it behooves our government to do more to promote Korea within Mexico and take steps to increase investment and technological cooperation between our two countries.
For the Mexican government and industry, foreign direct investment is one of the most important factors in creating new employment. Therefore, through increasing investment in Mexico, Korea can improve the overall bilateral economic relationship.
On the Mexican side, there is great deal of interest in their fishery and agricultural sectors, particularly the beef producers, in exporting their products to Korea.
In this way, the opportunity lies open for the KOTRA branch office in Mexico (Korea Trade Center, Mexico City) to further boost bilateral relations by organizing Mexican agricultural missions to Korea that will promote imports of these products from Mexico.
To enhance economic relations and promote technological cooperation between Mexico and Korea, KOTRA and the Ministry of Commerce, Industry and Energy have organized the Korean Products Show that will run until Sept. 10 at the World Trade Center, Mexico City.
This year can also be another milestone in the ever-developing economic partnership between Mexico and Korea, one that will emerge stronger and capable of producing even greater benefits for our respective peoples.
