Nombre:

Matrículas:

María Fernanda Navarro Mozqueda 2988047 

Nombre del Curso: Nombre del Profesor:

Negocios en Europa y Asia Raúl González Cantú

Módulo: Actividad:

Módulo 1 Activity 1

Referencias

Automotive Industry. (2022, 23 septiembre). International trade administration.

Recuperado 19 de enero de 2023, de https://www.trade.gov/country-commercial-

guides/mexico-automotive-industry
Lesson 1. Free-trade agreements

Mexico has already signed a free-trade agreement with the European Union, but we still
have a significant trade deficit with that economic bloc. What kind of opportunities are
Mexican businesses missing there?

1. Do some research about current trade stats between Mexico and the EU regarding
the auto industry.

Mexico is a major market for U.S. passenger vehicles, light vehicles, trucks, buses, auto
parts, and supplies. The automotive sector is one of Mexico’s most significant industries,
comprising 3.5 percent of the nation’s GDP, 20 percent of the manufacturing GDP, and
employing over one million people nationwide

The automotive industry represents 20% of total trade in Mexico, positioning itself as the
second most important in the country, only behind the food industry.

I found out that Mexico is the 7th largest global passenger vehicle manufacturer, producing
approximately three million vehicles annually. Ninety percent of vehicles produced in
Mexico are exported, with 76 percent destined for the United States. Established
automakers in Mexico include Audi, Baic Group, BMW, Stellantis (made up of FCA and
PSA Group), Ford, General Motors, Honda, Hyundai, Jac by Giant Motors, Kia,
Mazda,Mercedes Benz, Nissan, Toyota, and Volkswagen.

The United States–Mexico–Canada Agreement (USMCA), which went into effect on July
1, 2020, included a number of changes to the rules of origin for the automotive sector. The
USMCA requires that 75 percent of a vehicle’s content (70 percent for heavy trucks) be
produced in North America, and that core auto parts originate from the United States,
Canada, or Mexico. Following a phase-in period ending in 2023 for vehicles and 2027 for
trucks, only goods meeting these content requirements will receive duty-free access.

2. Look for the specific benefits of that industry for Mexico under the current free-
trade agreement with them.

The USMCA requirements for the automotive industry are likely to provide new business
opportunities for U.S. exporters with local OEMs and other suppliers in Mexico looking to
increase the percentage of inputs in their supply chains from North American sources. The
U.S. Commercial Service Mexico has prepared a helpful guide, which provides information
on the USMCA and its implications for the auto sector. 

By 2007 Mexican-EU trade in transport equipment and autoparts will be duty free. A
transition period was established:
At the entrance into force of the Mexico – EU FTA (July 1, 2000), the estimated percentage
of EU duty free imports in the auto sector in Mexico was 7.4%. That percentage went to
15.2% by 2003 and will be 20.6% in 2005.

When the Agreement became effective, the estimated percentage of duty free imports in the
automotive sector for Mexican products to the EU was 76.6% and went to 100% by 2003.

During the second Mexico-EU Joint Council meeting, (13 May 2002) Mexico and the EU
agreed to accelerate the liberalization of several industrial products:

As a result the EU eliminated duties for Mexican products such as vehicles, among others.
Mexico agreed to an early acceleration by 5 years (from 2007 to 2002), of the duty phase-
out for European auto parts. For vehicles, the agreed rule of origin establishes that, during a
transitional period, the regional content required to obtain preferential access in the EU or
in Mexico is the following:

-45% between the entry into force of the FTA and January 2001
-50% between January 1, 2002 and 2004
-60% between January 1, 2002 and 2004

3. Write a memorandum with your findings addressing the CEO of a leading Mexican
auto supplier company; add a brief forecast about what you think might happen
within the next six months (and why).

To: Mr. Balderas López Founder and Corporate President of Grupo SSC S.A. DE
C.V.

The commercial exchange between Mexico and the European Union has increased 235
percent in the last 15 years, after the signing of the Free

Trade Agreement (FTA) between the two regions in the year 2000.
Mexico and the European Union (EU) maintained the rule of origin of at least 60% regional
value for new cars marketed bilaterally enjoy a zero tariff.

In the negotiations, this rate was requested by the European Union, while Mexico, at the
request of the Mexican Association of the Automotive Industry (AMIA), presented a
proposal to relax the rule of origin agreed in the Free Trade Agreement between the two
(TLCUEM), with a lower rate consequently. The 60% rate is the same as that required by
the original FTA, and it is also the same for this industry as the EU agreed in its free trade
agreements with Japan and South Korea.

Looking at the statistics we can see that the European Union is positioned as the largest
market in the automotive industry, which benefits Mexico being the main producers of this
industry and because it has skilled labor in the sector.
The benefits of this free trade agreement in relation to the automotive industry are many,
ranging from the growth of companies in Mexico, the development of new techniques and
innovation in logistics chains, improvement in technology for this industry and the
economic boost for the country.