The Undersecretary of Industry and Commerce explains its policies towards driving growth for Mexico’s steel industry.
What have been the Ministry’s key achievements in the last few years and what are some of its main priorities in helping Mexico’s industry today?
When we first entered government in December 2012, we conducted a diagnosis of the economy and policies supporting it, which led to the government launching the structural reforms. All of these reforms have been important for Mexican industry but four stand out: the energy, financial, labor and education reforms. We have continued the policy of openness in terms of Mexico’s economy and its trade relations, which we believe is the best path for Mexico.
In addition, we have launched a new industrial policy based on Industry 4.0. If we want to move to higher value-added manufacturing, we need to develop human capital, SMEs and have more accommodating laws. There are two main ways we work in Mexico – supporting the north which requires help with things like Industry 4.0, and parts of the south which need different assistance through policies like the special economic zones. Furthermore, we want to create a completely new educational model to adapt to technological change.
How confident are you in the trade environment for Mexico going forward?
There have been more advances in the modernization of the trade agreement with the European Union than NAFTA and it is possible by December 2016 we may be close to finalizing the agreement with the EU. Whilst there are some issues to smooth over, there is little risk of any negative scenarios. It is a different story with the United States. Now we are in the process of showing our red lines in the negotiation on issues, such as rules of origin. The next round in January 2018 will be crucial for the trajectory of NAFTA. We are confident we will find a way to get an agreement.
The steel industries in the United States and Mexico work together a lot, and we do not see problems with this going forward. The United States has some concerns about China but these are also the same concerns as Mexico holds. We need to find a situation where we can work together under fair trade. It is clear China is not competing in this way when it comes to steel; therefore we have taken these actions. There may be more anti-dumping measures but we cannot predict this as it depends on what the industry demands; the Ministry will not launch an investigation by itself.
What are the prospects for the steel industry going forward?
The steel industry has grown a lot in the last two to three years and Mexico now produces nearly 19 million mt/y. With the over US$2 billion combined announced investments by Ternium and ArcelorMittal into new plants, Mexico’s capacity will grow even more. Both new plants also have plans to work with the automotive sector, so the industry is also moving up the value-chain. Factors such as the reconstruction after the earthquake will be a boost to the industry as construction increases. We expect GDP to grow at 2% or more in the coming years and this will keep demand high for steel.
Where will Mexico’s economy be in three years’ time and why should investors view it as a top business destination?
In the last few years, we have shown Mexico is committed to promoting investment and proven our capabilities. We invest in infrastructure, human capital and technology. Also, we have shown that we have macroeconomics under control. We do not play with this, although this is a concern going forward depending on who wins the presidency in 2018. All recent finance ministers, such as José Antonio Meade and Luis Videgaray Caso, have had a clear vision about working with macroeconomics which has given certainty to investors. This is essential for the future. Hopefully, we will continue with more than 2% growth. With the global scenario as it is, if we maintain this level is shows we have managed the economy with a lot of care.