Mexico on the Eve of NAFTA’s 20th

Mexico on the Eve of NAFTA’s 20th

Many people don’t realize that Mexico is now the fifth largest export market for Canada and a large recipient of Canadian direct investment.

I’ve been leading the EDC Mexico team for the last four years and in that short time the market has evolved greatly. Many people don’t realize that Mexico is now the fifth largest export market for Canada and a large recipient of Canadian direct investment.

Since the launch of NAFTA—coming onto 20 years in 2014—trade between Canada and Mexico more than quadrupled, reaching more than US$30 billion in 2012.

Canadian exporters to Mexico come from all key sectors, especially mining and oil & gas, automotive, aerospace, infrastructure and industrial equipment. For example, Canadian firms account for nearly three-quarters of mining investment here.

In aerospace, Mexico is fast becoming a strategic location for parts suppliers who “cluster” around major aircraft builders—just like in the automotive sector. More than 260 companies are now in the aerospace industry here, well over double that of five years ago.

In the auto sector, a recent matchmaking session that we organized with International Trade Canada took place at the APMA (autoparts) conference in Windsor, Ontario. There we arranged for major autoparts firm SISAMEX to meet 11 Ontario companies. SISAMEX recently told us it had already sent requests for quotes to six of those suppliers.

Similarly, we have strong relationships, including financing, with leading firms in many sectors to benefit Canadian suppliers. This has led to more than $20 billion in EDC financing and insurance coverage used by Canadian firms and their Mexican partners over the past decade.

mexico_whyMore and more Canadian exporters are investing in Mexico to better service this market and use it as a springboard to third countries. That’s not surprising when you consider that Mexico has free trade agreements involving 44 countries. It also is valued for its skilled labour and relatively good infrastructure.

The Mexican government recently launched a new six-year Infrastructure Plan to invest more than $300 billion in new train and metro projects, ports, airports, roads, pipelines, telecom networks, power plants, and more.

Indeed, Canada is the fourth largest foreign investor in Mexico; some 2,500 Canadian affiliates are here, many being offshoots of Goldcorp, Bombardier, TransCanada and Scotiabank.

No country is without its challenges, and the recent rise in corruption and criminal violence in some areas could negatively impact business growth. Mexico is working hard to improve the country’s social fabric and contain these situations.

My own experience in Mexico has been extremely rewarding. Establishing relationships here is relatively easy when you respect the culture. And even easier when you have a dedicated EDC team to help you—including our regional managers Arturo Garduno (agarduno@edc.ca) in Monterrey and Teresa Nizzola (tnizzola@edc.ca) who recently joined me in Mexico City.

Johane Séguin is EDC’s Chief Representative, Mexico, based in Mexico City.

Categories Exporting, Mexico

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