Mexico has spoken to a host of foreign companies, particularly steelmakers, in an effort to lure business from Asia to capitalize on a new North American trade deal, Economy Minister Graciela Marquez said on Monday.
The U.S.-Mexico-Canada trade agreement (USMCA) took effect at the beginning of this month, replacing its quarter-century-old predecessor, as the coronavirus pandemic wallops the global economy and international trade.
The new deal includes tougher content rules both for autos and steel and aluminum than when the North American Free Trade Agreement was launched in 1994.
“In steel we see the biggest opportunity,” Marquez, a Harvard-trained economist, told Reuters in an interview. “We want to show these companies the opportunities that open up with this increase in regional content requirements.”
Marquez said the government of President Andres Manuel Lopez Obrador has held talks with foreign steelmakers, including South Korea’s POSCO (005490.KS), Japan’s Nippon Steel Corp (5401.T) and Mitsubishi Corp (8508.T) and Ternium (TX.N), about investing in Mexico to produce steel for the auto sector.
She said there is a possibility foreign steelmakers could partner with or take a stake in Mexico’s Altos Hornos de Mexico (AHMSA.MX). A spokesman said the Mexican company is not currently in talks.
None of the other steelmakers immediately responded to requests for comment.
Considering Mexico’s diverse manufacturing base, Marquez said the government was interested in attracting a range of companies from across the globe.
She said the government also would seek to speak with Apple (AAPL.O) and other U.S. firms about relocating their supply chain to Mexico.
Retelling a recent conversation with Lopez Obrador, Marquez said she pointed to the cellphone she was holding in her hand and said, “These phones don’t have to be produced in China, … there is an enormous opportunity to produce them” in Mexico.
The government is looking to attract North American and European firms producing in China, Singapore and Vietnam.
Marquez said the new trade deal came into force at a “critical” juncture for both the Mexican and the global economy and that it could help Latin America’s second-largest country recover from the fallout of the coronavirus pandemic.