Giving a keynote address at the 53rd annual meeting of worldsteel (World Steel Association) held in Monterrey, Mexico, on October 14-15, Alfonso Romo, chief of staff to the president of Mexico, focused on what Mexico can do to attract foreign investment, taking as his starting point the question of what Mexico can control and what it cannot control. He said that it cannot control something like what the US President Trump tweets in the morning, while something which it can control like having good government in a state is a factor in attracting capital. He pointed to cases where good government is lacking, citing the “mess” in the UK under Mr. Johnson. Argentina is likewise in a very difficult situation. Mexico also does not control the effects of the trade war between the US and China, he remarked.
Mr. Romo listed a few points which characterize the policies of the current government of Mexico. The president of Mexico has decided to have a zero-deficit policy. One of the implications of this discipline, the Mexican official explained, is that it says to the private sector that this is a time for you to invest because we are not going to spend more than we can afford. A second factor is the respect of the government for the policies of the central bank, which has a very clear mandate to control inflation and monetary policy.
Of total private sector investment in Mexico, Mr. Romo pointed out, 85 percent is national, while 15 percent is international. Of Mexico’s exports, only 25 percent goes to the North American continent. Why should this not be 35 percent, he asked. He went on to say that Mexico is one of the most open countries for trade. It has signed free trade agreements with close to 40 countries, but the surprise is that it has a trade surplus with only one country - the US, with which it has a trade surplus of $70 billion, while having trade deficits with all other trading partners. While saying that Mexico does not want to break any rules, but wants to keep itself open for trade, Mr. Romo stressed that it needs to negotiate trade agreements differently. With China, for example, Mexico has a trade deficit of $70 billion. What Mexico gains with the US, it loses with China, he said.
He pointed out that the Mexican economy has been growing at a rate of 2.2 percent in the last four years, because the northern and central parts of Mexico have been growing at a rate of four percent, while the economy of the south of the country has been contracting at a rate of two percent. So, he asked, what does the government need to do in order to incorporate the south of the country and really achieve the goal of four percent GDP growth. In this context, the government has formed boards with the private sector in every state of the country. On these boards, the government tries to represent what the state is and what it wants to do. He said that the government has also formed close cooperation with the private sector in all industries, by means of which it aims to eliminate bureaucratic obstacles, to help industry to grow at maximum speed, and to increase cooperation with the rest of the North American region. In the last eight months, he said, meetings between the Mexican government and the private sector in all regions of the country have multiplied, far exceeding such meetings under previous Mexican presidents. The dynamics of this conversation really exists, he affirmed. In conclusion, he appealed to foreign investors to come and invest in Mexico, where everything would be done to facilitate their business.