Latin America Begins to Realize Costs of Trade with China
MEXICO CITY -- Mexico's economy secretary said Monday that signing a free-trade treaty with China would be "suicide" for his country's manufacturing sector.
Gerardo Ruiz Mateos said in an interview with Efe that Mexico is "absolutely not" interested in a trade deal with China because the two economies are not complementary.
While such agreements make sense for nations such as Brazil and Argentina, agricultural powerhouses which stand to gain by exporting food to China, Mexico is not "an agro-industrial power but rather a manufacturer, where we don't employ unfair trade practices," the official said
"A trade treaty or accord with someone who is a manufacturing power who we suspect utilizes subsidies in the manufacturing of components, that really would be suicide for (domestic) manufacturing," Ruiz Mateos said of a possible deal with China.
Moreover, he said, most of Mexico's trade is with the United States, Canada and Central and South America because "to export massively to China from here without any type of subsidy is practically impossible."
Mexican exports to China currently run at around $1.8 billion annually, while the Asian giant sends some $31 billion worth of goods to Mexico every year, and the secretary noted that his country took steps last week to have the World Trade Organization review the legality of Beijing's subsidies to Chinese industry.
"Obviously, as long as I don't see Chinese investment in Mexico making products to attack a market like the one in the Americas, from Patagonia to Alaska, then I don't see China's intention to have an accord of equals," he said.
He pointed out that while the 27 members of the European Union invested $12 billion here in 2006 alone, Chinese investment in the Latin American country has totaled a mere $70 million over the past several years.
And that $70 million, the secretary said, "brought 400 Chinese to manage the factory, they didn't give employment to a single Mexican."
Conversely, Mexican firms such as baking giant Bimbo and flour-maker Maseca are creating jobs in China, Ruiz Mateos said, calling that approach the only basis for "a rational, equitable and equal (trade) accord."
He said the "best example" of a modern trade pact is the one Mexico signed with the EU.
Though Mexico does not export much to Europe, EU companies "make cars, have millions and millions of euros invested in this country creating jobs and added value," the economy minister argued.
EU firms here "import intermediates goods, they assemble them, and they export and attack the regional market, which gives Mexico a positive value," Ruiz Mateos said.