Earlier this month, the governments of Mexico and South Korea agreed to resume negotiations to reach a Free Trade Agreement.
The Secretary of the Economy, Tatiana Clouthier, has said that so far it is only the beginning of the negotiations and nothing has been stipulated.
However, the announcement provoked the immediate reaction and rejection of the Concamin chaired by José Abugaber, who warned of the serious damage that the industrial plant would suffer if the trade agreement between the two countries were finalized.
It is not the first time that an FTA has been attempted. And it is not new that the trade agreement is viewed negatively by the manufacturing industry.
While the agro-industrialists see it with good eyes because it would increase their exports.
The positions in the private sector are opposite.
That is why it is worth reviewing the figures.
The first revealing fact is that the trade balance between Mexico and Korea has been in deficit in the last 15 years.
In 2019 the deficit amounted to 15.4 billion dollars. Goods were exported from Mexico to Korea for 2.2 billion dollars. And goods were imported for 17.6 billion dollars.
Another important fact is that in the last 15 years, the trade balance between Mexico and Korea has been in deficit.
Why? Because it matters more than what it exports to that Nation.
Mexico imports mainly Korean manufactures.
Mainly machinery and electronics, plastic, rubber, transport equipment and steel.
And what does Mexico export to Korea? Mainly primary products and products from the food industry, such as zinc ore, lead, precious metals, internal combustion engines and pork.
However, although in the trade balance the balance of products from the primary sector of Mexico with Korea is positive, its dimension does not offset the deficit of the rest of the product categories.
According to a prospective analysis of the private sector, Korea’s total export potential is five times that of Mexico.
A projection was made on which products would be the most affected and the most benefited in the event of an FTA with South Korea.
The products that would be most affected in Mexico would be telephones, motors, insulated conductors for electricity, air/vacuum pumps and rubber tires, among 308 other products (metal assemblies, cosmetics, steel, glass, electrical appliances, textiles, tractors). , medicines), since Korea presents its greatest export potential to Mexico in them.
On the other hand, auto parts, piston engine parts, pork, centrifugal dryers and internal combustion piston engines, among 87 other Mexican products (dates, figs, pineapples, avocados, mangoes) would be the most benefited from the entry into force of an FTA with Korea, since they are the ones with the greatest export potential.
Korea’s export potential is 99% explained by the manufacturing sector.
While that of Mexico is explained by 20% by the primary sector and the remaining 80% by the manufacturing sector.
It is important to note that in Mexico the secondary sector accounts for 27% of GDP, while the primary sector accounts for 7% of GDP.
Those are the figures.
What they show is that if Mexico finalizes the trade agreement with Korea, the Mexican manufacturing industry would receive a severe blow.
We will see if the industry manages to convince the Mexican government that the FTA with Korea will have more negative than positive effects for the industrial plant.
We will see!
Journalist
Rich and Powerful
He has worked continuously in newspapers, magazines, radio, television and the Internet, in the last 31 years he has specialized in business, finance and economics. He is one of the three hosts of the program Alebrijes, Águila o Sol, a program specialized in economic issues that is broadcast on Foro TV.