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Luz Maria de la Mora

MEXICO - Diplomacy

Luz María de la Mora

Senior Business Advisor, Former Undersecretary of International Trade for Mexico

Bio

Luz María de la Mora holds a PhD in political science from Yale University and has over 25 years of experience in the public sector, serving as head of the economic relations and international cooperation unit at the Ministry of Foreign Affairs and as head of the international negotiations unit in the Ministry of Economy. She was also part of the negotiations team of the NAFTA. She is the former vice minister for foreign trade in the Ministry of Economy in Mexico.

"Mexico is the best ally for the US right now."
Mexico’s diverse industrial and manufacturing base—ranked 22nd globally—and its extensive know-how in assorted activities make it a key ally for the US in an uncertain future.
What are the main advantages of the Mexican market over other Latam countries?

We are an open economy, and we have active and dynamic international trade. Trade represents about 75% of our GDP, where our total trade in 2022 for example was around USD1.2 trillion, which was a record number, and it continues to grow. Mexico has an industrial and manufacturing base that allows it to be part of medium- to high-tech industries. The Atlas of Economic Complexity from Harvard University places Mexico 22nd among 131 economies. That tells us that Mexico has been able to develop diverse activities in the service and manufacturing sectors which allow it to attract different kinds of investment. In terms of investment, Mexico is the 10th-largest recipient of FDI in the world. In 2022, we received more than USD33 billion of investment, and we expect over USD40 billion in 2023. Notably, half of this investment goes to manufacturing, and a third goes to services such as financial, telecommunications, and business operations. Therefore, Mexico is ideally positioned to be part of this relocation of value chains. In addition, we have an autonomous central bank that has been responsible for controlling inflation, which is declining, the most recent number is 4.4%, the aim is to get to 3.5% which we aim to achieve by the end of 2024. The fiscal strength of the state is not where we would want it to be, at around 14-15% of GDP, which is not enough to realize the potential investments that Mexico merits. Nonetheless, public investment remains low, at about 3.8% of GDP, so these are areas of opportunity. Mexico has a flexible exchange rate, and no capital controls, though there are some areas where we need to find concrete solutions. Notably, we need to make the national oil company Pemex a viable commercial entity. In addition, we need to cope with the rising number of retired citizens that receive a pension; 22% of our budget goes to paying pensions. These notwithstanding, the Mexican economy appears healthy, especially when compared to other economies in Latam. USMCA represents around 6% of the world population but one third of the global GDP. Mexico has the potential to increase its share in the US market, it represents about 15.7% of US imports, and we have surpassed China as the number one supplier to the US. This will only continue to grow because of the China-US situation. Mexico is the best ally for the US right now.

What industries have you seen the most movement in, and what does this mean for the country?

Nafta transformed Mexico’s industry and the automotive sector. Now, every company in the world makes cars in Mexico, and we are seventh in the world in production and fourth by exports. There are clusters in place, such as El Bajío. In addition to vehicle production, we also have a dynamic auto-parts sector that includes firms from Europe, Asia, and the US and has allowed Mexico to create tier 2 and 3 suppliers. This is a powerful source of growth allowing states such as Aguascalientes and Guanajuato to develop and transform. They have seen growth of around 5% over the past two or three decades. The new USMCA has new rules of origin requirements that are encouraging new investments in Mexico. European countries are coming to Mexico to establish and supply parts to OEMs. Other less mentioned sectors are agriculture and food and beverage. Mexico is the 10th-largest producer of food worldwide. The country produces many products for the US market such as fruits and vegetables, beef, beer, and tequila. This has helped to ensure food security when climate change poses challenges to it. We are not self-sufficient in terms of dairy products and grains, but we can import them from the US. Right now, one in every two tomatoes consumed in the US comes from Mexico.

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