Rising US protectionism gives Mexico’s export mission to the UAE fresh urgency

Mexico is seeking more export markets outside North America, such as the UAE, amid concerns the US may pull out of North American Free Trade Agreement, its Economy Ministry says.

The sale of Mexican goods such as steel tubes, berries, TVs and refrigerators to the UAE have increased 81 per cent in the past decade and there is more room for growth.

Rogelio Garza Garza, undersecretary of industry and commerce at the Mexican ministry, and Paulo Carreno King, head of the ministry’s promotions arm, Promexico, visited the UAE last week.

“The focus now in Mexico in terms of industrial policy is twofold,” Mr Garza said. “The first is in diversifying the destination of our exports. It’s the reason we have a lot of agreements, with 46 countries through agreements like Nafta and through the European Union.

“Our first big focus is to expand our market; the second one is how can we transform our high potential manufacturing sector to high-value-added products.”

The government’s export diversification started in 2012 but the need for it becoming more urgent in light of US President Donald Trump’s threats to pull out of Nafta, the two said.

Over the past week Mr Trump, whose campaign promises included taking jobs back to the US, has announced plans for a 25 per cent import tariff on steel and 10 per cent on aluminum.

At the weekend he also threatened to put tariffs on European car imports, stoking fears of a global trade war.

Mr Trump has called the free trade agreement with Canada and Mexico the worst deal the US has ever made.

He has also attacked other free trade agreements the US has struck.

Relations between the US and Mexico have also cooled because of Mr Trump’s proposal to build the wall between the two countries.

He also angered Mexicans by calling them rapists, drug dealers and criminals.

Mexico is boosting efforts to diversify its export destinations to lessen its reliance on the North American Free Trade Agreement amid concerns the US may pull out of the agreement, officials from the Mexican Economy Ministry said.

“The focus now in Mexico in terms of industrial policy is twofold,” Rogelio Garza Garza, undersecretary of Industry and Commerce at ministry, told The National on the sidelines of a Latin American forum in Dubai.

“The first is in diversifying the destination of our exports. It’s the reason we have a lot of agreements, with 46 countries through agreements like Nafta, the European Union,” Mr Garza Garza said.

“Our first big focus is to expand our market, the second one is how can we transform our high-potential manufacturing sector to high value-added products.”

As well as boosting exports to countries like the UAE, where sales of Mexican goods have increased 81 per cent in the past decade, Mexico is also looking to attract more foreign investment from broader sources, including the Arabian Gulf.

While its government’s export diversification efforts started in 2012, the need to do so is becoming more urgent in light of US President Donald Trump’s threats to pull out of Nafta, said Mr Garza and Paulo Carreno King, head of Promexico, the economy ministry’s promotion arm. Over the past week Mr Trump, whose campaign promises included bringing jobs back to the US, has announced plans to slap a 25 per cent import tariff on steel and 10 per cent on aluminium. Over the weekend he also threatened to put tariffs on European car imports, stoking fears of a global trade war.

Mr Trump has called the free trade agreement with Canada and Mexico the worst deal the US has ever made. He has also attacked other free trade agreements the US has struck.

Relations between the US and Mexico have also cooled because of Mr Trump’s proposal to build a wall between the two countries. He angered Mexicans with his speeches in which he branded illegal immigrants rapists, drug dealers and criminals.

The Nafta agreement went into effect in 1994. Trade between the three countries exceeds $1 trillion each year. In August, the Trump government began talks to amend the agreement to make it more favourable to the US, and those negotiations are expected to last until March.

“We are working to maintain the agreement, but the possibility of not obtaining it is there,” Mr Garza Garza said.

Since 2012, Mexico has reduced the percentage of its annual total exports to the US to 74 per cent from 81 per cent, Mr King said.

During the same period, exports to Western Europe have increased by 63 per cent, those to Oceania countries by 116 per cent while sales to Asia, particularly China and Japan, jumped 197 per cent. Mexico exports about $360bn worth of goods annually.

Mexican exports to the UAE include steel tubes, flat-panel televisions, refrigerators, berries and chickpeas, the officials said.

Other products that hold potential are agave syrup, an alternative sweetener to sugar, and more sophisticated products such as medical devices.

The push to bolster trade ties between the UAE and Mexico follows the visit of Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, to Mexico in 2014 and a reciprocal visit by Mexico’s President Enrique Pena Neito in 2016.

Earlier this year, the two nations signed an agreement to protect investors and prevent dual taxation, the official said.

Promexico opened an office in the UAE in 2015, its second in the region.