While the renegotiation of the North American Free Trade Agreement into the U.
S.
Mexico Canada Trade Pact back in 2020 may have rocked Mexico's economy
in the short term, the benefits are beginning to be felt in Mexico.
Representing 20 percent of this country's entire manufacturing sector,
Mexico's automotive industry became the top vehicle exporter to the U.
S.
market last fall.
Car exports from Mexico grew last year to represent nearly 38 percent of the US
automobile market, a continuation of the steady growth seen over the past decade.
And with investment still flowing in, that figure is expected to rise.
And more recently,
Oscar León, a professor at Mexico's National Autonomous University,
says that has a lot to do with international companies seeking
positions inside the free trade zone.
For the U.
S.
market, Mexico is seen as a provider which is close, inexpensive, and trustworthy.
In
2021, the year for free trade.
Following the signing of the USMCA free trade deal, Mexico's automotive
sector attracted over 5 billion in foreign direct investment.
And it's not only the automakers.
Providers of car parts are following close behind, particularly from China.
The
rules of origin redefinition has brought operations to Mexico, which
were previously based in Asia.
One example is Ketai Industries, a Chinese company that makes precision car parts.
It's now based in Mexico, following its first ever investment outside of China.
As for the future of the industry, a 6 billion investment in a Tesla
gigafactory in the north of the country provides a clear hint.
With the manufacturing shift towards electric vehicles, so much
foreign investment is presenting opportunities for local providers,
a relatively underdeveloped part of the national sector.
One challenge here is that there are very few electric vehicle parts
providers, just 10 percent of those compared to internal combustion vehicles.
So this is presenting opportunities for Mexican businesses to grow
in the market and create jobs.
As foreign investment grows, the automotive industry in Mexico
Businesses here now have the chance to take on a greater role in their
own country's booming sector.
Alistair Bavstok, CGTN, Mexico City.