Despite the existence of longstanding and deep commercial ties, the sale of a greater diversity of Mexican manufactured exports to Spain is a priority of Mexico’s Secretary of the Economy.
Over the last several decades, Mexico has done an admirable job in exponentially broadening the base of quality goods that it is able to produce and make available to buyers all over the world. In terms of commerce with it one of its historically most important trading partners, however, most of what Mexico ships abroad consists of primary goods. Eighty-three percent of Mexican product imported by Spain today consists of primary goods. This is mostly in the form of crude oil. Given the characteristics of both countries’ economies, Mexico’s Secretary of the Economy, Ildefonso Guajardo recently expressed that the promotion of the diversification of Mexican manufactured exports to Spain should be one of the top goals of his agency.
The aerospace and automotive industries are clear areas of opportunity
The nature of the evolution of the country’s industrial base over the last several decades evidences two obvious areas in which quality Mexican manufactured exports can be offered to Spain at prices that are globally competitive. Opportunities for expanded commerce between Mexico and Spain in manufactured goods exist in both the aerospace and the automotive industries. Spain’s aerospace sector is a $6.1 billion industry with excellent opportunities for the sale of Mexican manufactured exports. Spanish aerospace firms are known for the production quality of their systems, frames and engines in particular. Over the last ten years, Mexico’s aerospace industry has expanded at a consistent double digit annual pace, and has developed to become the fifth leading supplier to the sizable US market. The diversification of Mexican manufactured exports to Spain as regards the aerospace industry holds much potential for growth.
Because Mexico is now the seventh largest exporter of passenger vehicles in the world, and Spain is the world’s ninth largest auto producer, another clear opportunity to diversify the sale of Mexican manufactured exports to its Iberian partner exists in the realm of the automobile industry. Because of a free trade agreement that Mexico has in place with the EU that is similar in scope and nature to the NAFTA, Mexican produced automobiles into the commerce of Spain, as well as into the rest of the European Union consumer market is done on a duty free basis. Sales of car parts produced in Mexico can serve as inputs into a significant percentage of the 2.4 million cars that Spain produces annually.
Foreign direct investment flows in both directions
Beyond the diversification of Mexican manufactured exports to Spain, a deepening in bilateral investing between the nations should be pursued, as well. Although Spain is already the third largest foreign direct investor in the growing economy of its North American partner, with US $50 billion of capital in approximately five thousand three hundred Mexican businesses, room for greater participation in Mexico’s expansion exists. Opportunities for foreign direct investment to flow in the opposite direction also exist. In 2013, Mexican firms were the biggest Latin American investors in Spain, putting money into Avanza, a bus company, and (with a Chinese firm) Campofrío, a meat processor, for example.