Los Cabos, BCS. November 9, 2023. The conversation about the nearshoring or relocation has been extended in Mexicoespecially as of October of this year, when the Secretary of the Treasury announced tax incentives, but that cannot be all, infrastructure will be needed.
Shanon O'NeilVice President and principal member of Nelson and David Rockefeller for Latin American Studies in the Council on Foreign RelationsThe company's industrial economic commitment to the Summit 2023 Prosperity: A Possible Purposeof Sea of Cortez ForumThe company's main goal is to create better scenarios for foreign investment.
"Mexico should not only see that it will benefit from being close to the United States, but also that the right infrastructure should be created so that these companies that want to invest can have good conditions," said the specialist.
In more detail, O'Neil stated that there is a need for better communications such as roads, ports, rail systems and a better social security system.
"Mexico does not have rail systems for trade, which limits the interaction between the two countries. It also has problems with basic services, such as lack of water, medical services and education," he said at the "Nearshoring in Mexico" discussion with Rafael Fernandez de Castro, Director of the Center for U.S.-Mexico Studies at the University of California, San Diego (UCSD).
Mexico has to decide between the US and China: Fernandez de Castro
The UCSD academic, Fernández de Castro, made an assessment of Mexico's current trade situation, in which he highlighted the country's participation over the last five years in two markets, the United States and China.
However, he added, the situation between these two countries is not the most positive and Mexico must decide which commercial partnership is the most important.
"I believe that Mexico should bet on the North Americanization of its market," he proposed and then recalled that this country has an advantage because of the trade agreement it has been part of since 1994 with the United States and Canada, but also because Mexico's strategy revolves around manufacturing and that is an activity of interest for the northern region of the continent, while China bets more on the primary market, which leaves lower profits.
Urgent infrastructure
Relocation is now a market that Mexico can exploit, the panelists agreed, as the geographical conditions exist.
But doing so will require further infrastructure development to facilitate the movement of goods, essentially those components of interest to the United States and Canada.
Just in October of this year, tax incentives were announced by the Mexican Government ranging from 56% to 89%, only on investments made in 2023 and 2024 in 10 items:
- Electronic components.
- Semiconductors
- Batteries
- Engines
- Electrical or electronic equipment
- Fertilizers
- Pharmaceuticals
- Agribusiness
- Medical instruments
- Cinematography
The states that have achieved the best attraction of companies are Nuevo León, Coahuila, Guanajuato, Chihuahua, San Luis Potosí and Jalisco.
This is an important challenge and one that needs to be addressed for the Sea of Cortés Regionfor both specialists in the field of Global EconomyThe geographic and orographic location are attractive factors, but the lack of road infrastructure and labor conditions has hindered the development of this type of industry.
Who is...?
Shannon O'Neil. She is Vice President and Nelson and David Rockefeller Senior Fellow for Latin American Studies at the Council on Foreign Relations A Harvard Ph.D. in Government, she is an expert on global trade, supply chains, Latin America, democracy and the U.S.-Mexico relationship.
Rafael Fernández de Castro. He is director of the Center for U.S.-Mexico Studies at UC San Diego. The former foreign policy advisor to President Felipe Calderon, he is an expert in U.S.-Mexico bilateral relations and founder and former chairman of the International Studies Department at ITAM in Mexico City.
