Nearshoring in Mexico: A Lifetime Opportunity

Railway Age, 05/17/2023

“The thesis for investing in Mexico remains strong,” Ottensmeyer said as he began his NGTC talk. “Mexico has maintained Investment Grade ratings throughout the pandemic. With exception of early in the pandemic, the Peso exchange rate has remained stable for the past five years. Through August 2022, Mexico’s manufacturing sector has grown at three times the rate of GDP growth. The country’s manufacturing base is large and is well integrated into existing North American supply chains. Most trade disputes have been resolved in Mexico’s judicial system, and the Mexican Supreme Court has ruled in favor of investors in proposed changes in Electricity Law.”

Ottensmeyer referred to the ongoing U.S.-China trade war, in which the U.S. imposed trade tariffs on China in the first half of 2018. Since, then China has lost more than four percentage points of its share of U.S. imports.

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Nearshoring and Beyond: Hot Topics for Automotive Companies Operating in Mexico

Foley & Lardner LLP, 05/02/2023

As manufacturing in Mexico returns to pre-pandemic levels, several recent legal developments may affect those operations. Manufacturers, particularly those in the automotive industry, need to consider new Mexican labor regulations, the recent interpretation of the United States-Mexico-Canada Agreement´s (USMCA) Automotive Rules of Origin, and new requirements concerning transparency of ownership. 

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Near-Shoring: Can Manufacturing Move From China To Mexico?

Forbes, 04/14/2023

China presents a less attractive location for manufacturing than it did a decade ago. Many business leaders wonder if they should re-shore their production to the United States, or near-shore production to somewhere close, such as Mexico. Shifting production will certainly happen, but gradually and very slowly.

China has always presented problems as well as advantages as a business location. The legal system often works against foreign companies, theft of intellectual property has been common and labor costs have risen in the last decade. Nonetheless, China has been a great location for many companies. Looking forward, however, less cordial diplomatic relations between the U.S. and China make business in that country riskier. President Trump’s hostility toward China has been continued by President Biden, in direction if not tone of voice.

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Exclusive: US plans ultimatum in Mexico energy dispute, raising threat of tariffs

Reuters, 03/27/2023

The Biden administration plans to send Mexico an “act now or else” message in coming weeks in an attempt to break a stalemate in an energy trade dispute as bipartisan calls grow for the U.S. to get tougher with its southern neighbor, according to people familiar with the discussions.

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Group bans some trade with Mexico over endangered porpoise

AP News, 03/27/2023

The international wildlife body CITES called Monday on 184 member countries to stop trade with Mexico for products linked to sensitive species, such as orchids, cactuses and skins from crocodiles and snakes.

The group said the decision came in response to Mexico’s failure to protect the vaquita marina, a small porpoise that is the world’s most endangered marine mammal. The trade ban will not affect commercial seafood species like fish or shrimp, though some groups are pushing for such broader bans.

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Mexico vows not to budge on US corn dispute

ABC News, 03/07/2023

Mexico’s president vowed Tuesday not to back down in a dispute with the United States over a potential ban on imports of genetically modified corn.

The U.S. Trade Representative’s office announced Monday it had called for consultations with Mexico over proposed rules that would ban GM corn for human consumption. Mexico has said it could eventually ban it for animal feed as well.

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Mexico’s Industrial Hubs Grow as Part of Trade Shift Toward Nearshoring

The Wall Street Journal, 02/01/2023

MEXICO CITY—Companies from around the world are moving production and equipment to Mexico as they seek a manufacturing hub closer to the U.S., part of a broader shift in global trade.

Some companies are relocating from Asia, while others are investing millions of dollars to raise output of goods that are exported tariff-free to the U.S.

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Mexican trade body sees auto parts output setting record this year

12/07/2022

Source: Reuters

Mexico’s auto parts production will likely hit a record of nearly $107 billion this year, up almost 13% from last year, the director of the national auto parts lobby INA announced on Tuesday.

Mexico’s massive car making and auto parts sector is a key driver for the country’s manufacturing industry, which is heavily integrated into U.S. and Canadian supply chains.

INA director Alberto Bustamante told reporters he expects the value of production to rise to about $109 billion next year and then surpass $110 billion in 2024.

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60 tankers carrying gasoline held up by lack of storage

07/20/2022

Source: Mexico News Daily

Over 60 ships carrying an estimated 18 million barrels of fuel are currently waiting at sea off the Mexican coast as they are unable to unload due to a lack of storage space, according to a Bloomberg report.

Citing people familiar with the situation, the news agency reported Monday that the majority of the ships are transporting gasoline and diesel imported by Pemex, the state oil company. The vast majority of fuel Mexico imports comes from the United States.

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US Poised to Escalate Claim Mexico Violated Free-Trade Pact

06/24/2022

Source: Bloomberg

The US is preparing to escalate its complaints that Mexico’s state-favoring energy policies violate the nations’ free-trade agreement, people familiar with the matter said, a move that would risk exacerbating tensions between the countries’ governments.

US Trade Representative Katherine Tai’s office in recent weeks has been working on a request for formal consultations under the US-Mexico-Canada Agreement and discussing it with other agencies, according to the people, who asked not to be identified without permission to speak publicly. The timing for the request is still being determined, the people said.

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