Welcoming Remarks

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Welcoming Remarks
H.E. Francisco Nocolás González Díaz, Ambassador of the United Mexican States to the Federal Republic of Germany

Dear Dr. Bornmann,

Dear representatives of the German automotive industry,

Ladies and Gentlemen, Dear friends,

It is a great honour that the German Investment and Development Corporation DEG has dedicated a special event to the Mexican automotive sector. I consider this distinction as an acknowledgement of the development of this industrial sector in Mexico throughout the past years. Thanks to the Mexican automotive sector´s competitiveness, it has contributed to the growth of the German and world car industry.

I am pleased to tell you that the automotive industry is only one among many successful economic sectors in Mexico. This fact is due to our large resources and competitive advantages which make my country an interesting investment platform.

Let me start with some key facts.

The United States of Mexico – which is the official designation – is five and a half times the size of Germany and covers the fifth largest territory among the countries on the American continent. The latest census counted 114 million inhabitants, of which 39% are younger than 19. Economically and geographically speaking Mexico is part of North America. Historically and culturally speaking it is however part of Latin America.

Furthermore, Mexico serves as the proverbial bridge between the industrialized North and the emerging South as well as between the Anglosaxon and the Iberoamerican civilisations. Mexico and the U.S. share a border of 3’200 km. This is the longest and – might I add – with 350 million crossings a year the busiest border worldwide.

If you visit Mexico, you’ll get to know a wonderful country which offers great economic potential in addition to boasting unique natural beauty. With a 3.9% GDP growth in 2012, Mexico ranked 14th among the World’s most important economies and was thus the second largest economic power in Latin America.

Currently, Mexico is not only the World’s largest producer of smart phones but also of LED and plasma TVs. When it comes to the aviation industry, Mexico shows the largest increase in the region. In the year 2012 Mexico exported goods to the tune of 370 billion USD.

Concerning light vehicles, Mexico is the largest exporter on the American continent. Globally Mexico ranks 4th both in light cars or heavy vehicles exports. In the automotive parts industry, Mexico is the largest supplier to the US and the number four to Germany.

To achieve these records, one of the key factors is the increasing qualifications among Mexico´s population. For example, there are 115’000 new engineers who graduate every year – far more than in Germany, Canada or Brazil.

When it refers to a cost-benefit analysis, Mexico offers the best automotive part production costs in comparison to any other car producer country. Mexico will display real exchange rate stability with respect to the US dollar, between 2010 and 2020, while China, Malaysia, Taiwan, and Brazil will show strong appreciations. Moreover, Mexico will maintain competitive labor costs, while China will show a strong wage increase. Taiwan and Korea will display wages two and four times higher than those of Mexico.

Mexico has long been promoting free trade and the opening of markets. No other country disposes of such a wide net like our 44 free trade agreements with Nations from various regions. In fact this month negotiations with Panama will be reactivated to sign the newest free trade agreement. Mexico opened its market to become the place where the World wants to do business.

The signing of the NAFTA Free Trade Agreement with the U.S. and Canada in 1994 was only the beginning. The latest initiative of the Mexican economic diplomacy being the foundation of the Pacific Alliance oriented to the Asia-Pacific region. In June of last year the Presidents of Mexico, Chile, Columbia and Peru signed a framework agreement covering the free movement of goods, services, persons and capital.

Let me indicate some facts to give you an idea about the potential of the Pacific Alliance: The four countries – Mexico, Chile, Columbia and Peru – have a population of over 200 million, produce 35% of the Gross Domestic Product GDP and generate 55% of the overall exports in Latin America. Thus the Pacific Alliance ranks ninth among the economic and eighth among the exportation powers worldwide. Together the four member states achieve 850 billion USD in trade; this is far more than the 530 billion USD of MERCOSUR.

This is why and even more so dear friends, one has to be present in Mexico if one wants to achieve success in business. The time for Mexico has come!

Ladies and Gentlemen, allow me to briefly touch on the German-Mexican relationship. Today’s event falls into a period – and I say that with great satisfaction – during which these relations have never been better.

Currently Germany is the most important trade partner for Mexico within the European Union, both as a buyer and a supplier. Overall, more than a third of Mexico’s trade with the EU is with Germany. Globally, Germany ranks fifth among Mexico’s most important world trade partners.

By now there are more than 1‘300 companies with German involvement doing business in Mexico. They have a capital of almost 25 billion USD available and employ over 120’000 persons according to the Mexican-German Chamber of Commerce. German companies in Mexico currently generate revenues of roughly 7% of the Mexican industrial GDP.

The majority of the most important and biggest DAX-companies are present in Mexico. Among them BASF, Bayer, BMW, Continental, Daimler, Siemens and Volkswagen. In the coming month AUDI starts the construction of a production site where the successor of the Q5 will be assembled and exported globally.

It gives me great pleasure to be able to say that the presence of Mexican companies in Germany is increasing as well with production facilities in different German cities. CEMEX, in the construction field, Nemak, in the automotive parts industry, Mexichem, in the chemical sector, or América Móvil via E-Plus are some examples of the Mexican productive presence in Germany.

As you may know, Mexico is the only Latin American country which has concluded a free trade agreement with Germany as well as an investment protection and double taxation agreement – three treaties that considerably add to the attraction for investors to do business in Mexico.

Ladies and Gentlemen,

Mexico is aiming at a new phase of economic growth with excellent international opportunities. Only recently, for instance, did Congress pass a labour law reform which will give our economy and ultimately social development in our country important impulses. This reform is geared to giving the labour market transparency, security and flexibility and to bring it into line with international standards.

Mexico´s new government faces enormous challenges. Key and long-term vision reforms are essential. Therefore President Peña Nieto launched the “Agreement for Mexico”, which is a comprehensive political roadmap with the participation of all three major national political parties to define the most relevant objectives for the consolidation of the political, economic and social development of Mexico in the coming years.

As an important first outcome of this political agreement, the Mexican Congress approved recently a law initiative aimed at the educational system in Mexico, which could be considered a historical project for its economic and social meaning.

Through scheduled strategies, the “Agreement for Mexico” will provide expected and concrete results. Just a month ago President Peña Nieto presented the telecommunications sector reform initiative to increase investment and improve quality service.

In the short term the Mexican Congress will discuss reform initiatives on the energy and fiscal sectors. It is expected that these reforms will result in a 5% GDP growth.

Thanks to all these strategies Mexico will retake its leadership in Latin America. The region was already the focus for the first visits abroad of President Peña Nieto. Guatemala and Costa Rica were his first bilateral trips, whereas in Chile he participated in the Latin America-EU Summit. In the meantime the deadlock on the automotive trade agreements with Brazil and Argentina was overcome. Visa obligations for Brazilian tourists were suppressed.

Ladies and Gentlemen, I can assure you that there is a new political consensus in Mexico. The future belongs to Mexico, it has great potential and offers investors interesting opportunities to explore and know why Mexico is “the Germany of Latin America”, as stated recently by Christian Gattiker-Ericsson, Chief of Strategy of Julius Bär Bank. Thank you very much for your attention.

Muchas gracias.