Warning: mysqli_connect() [function.mysqli-connect]: Headers and client library minor version mismatch. Headers:50626 Library:50559 in /usr/home/frisch/db/fact-mysqli.inc on line 2
Factba.se: Australia DFAT Country Briefs - Mexico
Content

SEND US FEEDBACK


We're always looking for ways to make Geoba.se better. Have an idea? See something that needs fixing? Let us know!

COUNTRY BRIEFS


INTRODUCTION

The partnership between Australia and Mexico is strong and growing. In addition to working closely together multilaterally in fora such as APEC, the G20, Climate Change negotiations, the WTO, the International Whaling Commission and within the UN, an increased level of cooperation in recent years has resulted in a comprehensive framework of bilateral agreements, including a Memorandum of Understanding (MOU) on Cooperation in Agriculture (2010), an MOU on Mining (2010), an MOU Formalising Political Consultations (2009), an MOU on Education and Training (2008), and an MOU on Energy (2005). In 2009, Mexico joined the Australian led Global Carbon Capture and Storage Institute (GCCSI) as a founding member.

The final report of the Joint Experts Group (JEG) was launched by the former Minister for Trade Simon Crean and the former Mexican Economy Minister Gerardo Ruiz in July 2009. In launching this report, both Ministers agreed to reinvigorate the trade and investment relationship between Australia and Mexico. The JEG process commenced in 2006, when Australia and Mexico agreed to start a process to investigate ways to strengthen economic relations. Mr Crean and Mr Ruiz honoured their commitment to reinvigorate the bilateral trade and investment relationship by jointly hosting a Joint Trade and Investment Commission (JTIC) in Mexico City during Mr Crean’s visit to Mexico in April 2010.

A Double Taxation Agreement (http://www.treasury.gov.au/contentitem.asp?pageId=002&ContentID=405) entered into force from 1 January 2004. This gives impetus to bilateral relations by clarifying the taxation rights of the two countries, introducing measures to relieve double taxation and prevent fiscal evasion. The Investment Promotion and Protection Agreement (IPPA) between Australia and Mexico, signed in Mexico City on 23 August 2005, entered into force on 21 July 2007.

A bilateral Air Services Agreement was signed in April 2010. Qantas and Mexicana Airlines signed a new code-share service agreement in July 2006.

Back to the Top



POLITICAL OVERVIEW

Mexico is a congressional democracy with a directly elected President. The President serves a six-year term and cannot be re-elected. The bicameral Congress comprises 128 Senators, each serving a six-year term, and 500 members in the Chamber of Deputies, serving a three-year term. Senators and Deputies cannot stand for re-election.

Mexico’s political climate has changed significantly over the past decade. In 2000, the political hegemony of the Institutional Revolutionary Party (PRI), which had endured in Mexico for 71 years, was broken by the election of President Vicente Fox of the National Action Party (PAN). Fox, a former Chief Executive of Coca-Cola in Mexico and Governor of Guanajuato, defeated the PRI candidate, Labastida, on a platform of democratic change, an end to corruption and wider community prosperity. During six years in office, Fox’s Government pursued macroeconomic goals focused on increasing investment and employment. Sound fiscal management promoted economic growth and moved Mexico out of recession.

The July 2006 election of Felipe Calderon of the PAN continued Fox's economic liberalisation and stable macroeconomic policies. Calderon won the Presidency by the slimmest margin in Mexican history and was installed as President on 1 December 2006. Calderon campaigned on a platform of improving employment rates, strengthening investment, and tackling growing crime rates. Calderon especially identified the need to enhance national security through police and judicial reform as a key priority. Since December 2006, the death toll associated with organised crime in Mexico has risen to over 40,000. Moreover, violence has spread beyond the traditionally dangerous US-border towns to some of Mexico's biggest cities, such as Monterrey.

Presidential elections will be held in Mexico in July 2012.

Back to the Top



ECONOMIC OVERVIEW

According to the IMF, Mexico's economy is ranked 14th in the world (only Brazil has a larger GDP among Latin American countries). It is currently one of only two Latin American members of the OECD (the other is Chile), which is evidence of the growing transparency and improved governance across the Mexican economy. Mexico is also one of the WTO members with the greatest number of Free Trade Agreements (it currently has a network of 12 FTAs with 44 countries).

The interconnectedness of the Mexican and US economies is well known, stimulated by the North America Free Trade Agreement (NAFTA) which groups Canada, the US and Mexico. The economic integration is derived from close linkages across four important economic channels: trade, remittances, investment, and financial channels. The trade channel is especially well developed, with 70 per cent of all Mexican exports destined for sale in the US domestic market. Mexico slipped into a steep recession in 2009 as a result of the global economic crisis and an outbreak of swine flu in April of that year. The economy recovered from a 6.6 per cent contraction in 2009, achieving 5.4 per cent growth in 2010. Modest growth of between 3 and 4per cent is predicted in 2011.

Mexico can attribute its transformation from a highly protected economy to its more open, regionalised and market-based economy of today to widespread trade liberalisation over the past several decades. This has encouraged foreign firms to set up plants to take advantage of relatively low labour costs and proximity to the US market. Economic activity is increasingly dominated by the private sector, but is characterised by a mixture of modern, export-oriented industry and agriculture, alongside more outmoded sections of the domestic economy.

Much of Mexico's modern economy has been driven by competition and export opportunities stemming from Mexico's extensive network of Free Trade Agreements (FTAs), covering more than 90 per cent of the country's trade. They include FTAs with Chile, the United States and Canada (NAFTA), the European Union; Israel; Colombia and Venezuela; Bolivia; Guatemala, El Salvador and Honduras; Uruguay; the European Free Trade Area (Norway, Iceland, Switzerland and Liechtenstein), Peru and Japan. Mexico is currently negotiating an FTA with Korea and Brazil.

Despite some spending increases, windfall profits from the sale of Mexico's substantial oil reserves have enabled the retirement of considerable foreign debt. Mexico is one of only four countries in Latin America that currently has 'investment grade' ratings from the major international ratings agencies.

Back to the Top



BILATERAL RELATIONSHIP

Australia's bilateral relationship with Mexico is strong. Kevin Rudd, former Minister for Foreign Affairs, visited Mexico in September 2010. During the visit, he signed an Action Plan which provided a framework for strengthening cooperation in key areas of mutual interest. In November 2008, the then Minister for Foreign Affairs, Stephen Smith, visited Mexico and signed a Memorandum of Understanding on Education to deepen educational ties between the two countries. A visit by President Calderon to Australia for the September 2007 APEC Summit underscored our mutual interest in strengthening bilateral trade, investment, political and people-to-people links. In April 2010 the then Australian Trade Minister, Simon Crean, visited Mexico where he and his Mexican counterpart, then Minister for the Economy Gerardo Ruiz, reconvened a meeting of the Joint Trade and Investment Commission (JTIC).

The latest Australian Census (in 2006) revealed that there were around 1800 Mexican-born persons resident in Australia at that time. Also in 2006, around 25,000 Australians travelled to Mexico whilst nearly 7,000 Mexican nationals visited Australia.

Ms. Katrina Cooper is Australia's Ambassador to Mexico and took up her appointment in January 2008.

Back to the Top



BILATERAL ECONOMIC AND TRADE RELATIONSHIP

For detailed information on Australia and Mexico’s bilateral economic and trade relationship, see our Mexico Fact Sheet (PDF) (http://www.dfat.gov.au/geo/fs/mexi.pdf)

Back to the Top



AUSTRALIAN TRADE AND INVESTMENT INTEREST

The Australia-Mexico bilateral economic and trade relationship is in very good shape. Mexico was Australia's largest merchandise trading partner in Latin America in 2010-11 with two-way trade worth $2.5 billion. Australia's merchandise exports to Mexico are valued at approximately $888 million, dominated by coal. Other exports include: aluminium, medicaments, and lead ores and concentrates and a growing range of services. The trade in Australian education and training services has been especially strong and student numbers continue to grow. Mexico is Australia's fifth largest education and training market in Latin America. In 2010, over 1,500 Mexican students enrolled in Australian educational institutions, an increase of 2.7 per cent on the previous year. Australian food and wine brands are increasingly on sale in Mexico. Australian investment in Mexico increased by 50 percent between 2008 and 2010 to over A$3 billion.

Imports of merchandise goods from Mexico have increased significantly over the last decade and were valued at $1.5 billion in 2010. The major imports from Mexico were telecom equipment and parts, fertilisers,computers, and passenger motor vehicles. Mexican investment in Australia has largely been concentrated in private real estate and manufacturing, although one of Mexico's largest food companies, tortilla manufacturer, Gruma, has its factory Mission Foods located in Victoria. In December 2009 Mexican manufacturing company Metalsa, a subsidiary of Grupo Proeza, acquired two manufacturing plants in Melbourne previously owned by Dana Holding Corporation. Metalsa manufactures structural components for the light and commercial vehicle markets.

Mexico is one of the world's most important developing countries and a key economy in Latin America. Its size and geographical proximity to the world's largest economy and NAFTA partner, the United States, and very good links to markets in Central and South America, make it an attractive trading partner for Australia. Given complementary economic and trade profiles, there are strong prospects for expanding Australia-Mexico trade and investment.

The energy sector is becoming an increasingly important element of the trade relationship, with the sale of Australian coal, and potentially Australian liquefied natural gas (LNG), to Mexico creating new opportunities for Australian business. Expansion of energy and mining-related services also offers strong potential for future growth. The relationship has grown as Australian companies in a range of industries (mining services and technology, agribusiness, food and beverages, IT, software, biotechnology, automotive parts and education and professional services) enjoy success in Mexico. There is potential for new areas such as water management equipment and services, clean technology and environmental services including clean energy.

Coal is Australia's largest single export to Mexico,with a total value of A$285 million in 2010-11. Coal trade with Mexico was enhanced by the Mexican Government's decision in 2002 to remove a 3 per cent tariff from most primary and intermediate goods (including coal) imported from all non-NAFTA sources, which had previously favoured US and Canadian coal exporters.

Mexico attracts significant foreign direct investment (over US$15 billion per year for the last 10 years) due to NAFTA membership and its generally liberal investment laws. The investment environment has improved markedly over the last several decades as a result of domestic reform and the introduction of more simplified procedures, higher ceilings on foreign equity and greater intellectual property protections. Australian direct investment in Mexico is modest but growing, and concentrated in mining, consolidated services (linked to finance and leasing arrangements) followed by manufacturing. Australian companies with interests in Mexico include Macquarie Bank (financial services), Orica, Kings Minerals (mining), Elders (agribusiness), Amcor, Interlake (manufacturing), QBE (insurance), Recall (information management), and UGL (facilities and property management). Other Australian Companies active in Mexico include: Bolnisi Gold, Howe Leather, Mincom, Australian Elite Genetics, Baja Aqua Farms and TNA Packaging Systems. Several companies such as Rio Tinto Australia, Xstrata Coal and Shell Australia have an interest in Mexico's energy and resources sectors.

Back to the Top



EXPORT OPPORTUNITIES

The Australian Government is working actively to promote and facilitate bilateral trade. The Australian Embassy and Austrade work closely with Australian companies in a range of sectors to help enhance new market opportunities in Mexico. Promotional events are conducted regularly to boost sales of Australian food and wine, education, tourism and mining technology and services. In most sectors, Australian exporters face competition from other sources that benefit from significantly lower tariffs, due to Mexico’s existing free trade agreements. However, Mexican companies are continually looking at diversifying their trade relationship and doing business with Australia is now a viable option for many. In addition, the Australian Government devotes considerable effort to improving the regulatory environment for Australian exporters and investors and in assisting Australian exporters to resolve market access issues as they arise.

Energy

Australia is well placed to benefit from Mexico’s fast rising energy requirements: real potential exists to increase Australian energy exports in response to Mexico’s tightening energy supply/demand balance. The potential supply of LNG to Mexico presents a promising opportunity for Australia, given the shift towards natural gas usage in Mexico’s overall energy mix while there are growing opportunities in renewable energy. Australia has also emerged as a major and continuing supplier of thermal coal to Mexico.

Food and Agriculture

Opportunity exists for Australian investment in Mexico’s food processing sector and for wider engagement on agriculture. Australia currently exports live animals, meat (beef and sheep meat), dairy, wool, leather and wine to Mexico. There is considerable potential to increase export volumes out of Australia and to boost Australian investment in Mexico’s food processing industry. Australian wine is also well positioned to increase sales among Mexico’s growing middle class and the number of Australian wine brands available in Mexico has grown from 3 to over 40 in the last three years alone.

Infrastructure

Construction and engineering account for some 4 per cent of Mexican GDP. New investment in highways, utilities, resorts make Mexico a very attractive potential market for the Australian building, construction and engineering industries. Australian companies are already enjoying success in supplying high-end building products, water treatment technology and a range of services.

Mining

Mexico is the world’s largest producer of silver and bismuth. It is the world’s fifth largest lead, sixth largest zinc and tenth largest copper producer. Mexico has a long history of mining and has an attractive regulatory regime and business environment for foreign investment and participation in the sector. They have been joined by a number of Australian technology and services exporters. Two of the major Mexican players (Grupo Mexico and Luismin) have mining investments in Australia.

Education and Training

There are excellent prospects for expanding Australia’s education and training relationship with Mexico. Mexico is now Australia’s fifth largest education and training market in Latin America, after Brazil, Colombia, Peru and Chile. Increased demand for training to improve productivity and skills is also expected to provide new opportunities for Australia's Vocational and Training Education sector (VTE). Australian education services are well regarded in Mexico and the Department of Foreign Affairs and Trade, Austrade and Australian Education International work to continue to promote Australia as a quality provider of education services.

Other Services

Market opportunities exist for Australian businesses providing services linked to productivity/ efficiency gains across the major industry sectors (energy, mining, construction, agriculture and food processing). The growth of Mexico’s middle-class also presents the chance for expansion in tourism, financial, professional services and franchising. Australia now has some eight active franchises in the Mexican market.

For further information or assistance developing business opportunities in Mexico, please contact Austrade on 13 28 78 (anywhere within Australia), visit www.austrade.gov.au (http://www.austrade.gov.au) or e-mail info@austrade.gov.au (mailto:info@austrade.gov.au).

Back to the Top




Last Updated: February 2012

Mexico Main Page Country Briefs Main Page








IMAGES


Click any image to enlarge.


National Flag



($) Mexican Peso (MXN)
Convert to Any Currency



Map



Locator Map



Warning: mysqli_close() [function.mysqli-close]: Couldn't fetch mysqli in /usr/home/frisch/public_html/geo/fact/dfat-page.php on line 269