While Mexico has made several structural reforms that may transform the economy, many investors still lack confidence in the rule of law. How is the government building confidence?
The governmental policy for tackling insecurity and corruption has advanced significantly in recent years. President Peña Nieto instructed the creation of the National Gendarmerie for providing protection to those areas of the country lacking an effective police presence, especially those in which economic and industrial activities take place. A prime example of this is how we are working closely with the mining sector and the automotive assemblers to provide security for the transportation of vehicles and parts from their plants to the export ports. To assist the National Gendarmerie in protecting businesses from bribes and extortions, we are carrying out a regulatory improvement process and working on increasing the government accountability and transparency in order to reduce the space for corruption. To bolster that process, President Peña Nieto sent a bill to Congress to establish the National Anti-Corruption System, which will strengthen the mechanisms for preventing corruption and hardening its sanctions. The nearly $110 billion of FDI received during the first three years of the administration of President Peña Nieto shows that investors themselves recognize governmental efforts for tackling insecurity, as well as the complexities of the Mexican territory, in which insecurity problems are concentrated in some zones of just two or three federal states, out of the total 32 federal entities.
Mexico recently signed the landmark TPP. What is the significance of this agreement for the future of the Mexican economy?
The TPP is the FTA with the highest ambition, depth, and standards ever negotiated in the history of our nation. It is of great importance to Mexico for several reasons. In the current international scenario in which economic recovery remains fragile, the TPP can contribute to its revival thanks to the long-term increases in trade that it aims to promote. The 12 members of the TPP represent one-fifth of global trade, more than one-third of global GDP (37%), and capture more than one-quarter (28%) of FDI worldwide. For Mexico, the 11 other countries that are also part of TPP account for nearly three-quarters (72%) of foreign trade in Mexico, and are the source of more than half (55%) of the total investments received by the country from 1999 through June 2015. Therefore, the incorporation of Mexico into this negotiation was a strategic step forward for our country. The configuration of the TPP, which includes economies throughout the Pacific Rim, provides a unique opportunity to establish a single instrument, strengthen productive integration with our NAFTA partners, consolidate trade preferences with the Pacific Alliance, deepen access to the Japanese market, and open new opportunities in six economies of the Asia Pacific region, where Mexican exports grew by an average 62% over the last five years. Thus, the TPP will increase our foreign trade, expand the protection of Mexican flagship products that have designation of origin, and increase market alternatives and supply capacity of SMEs that, incidentally, are the big winners of this agreement, as it is the first to include a chapter with measures to facilitate their integration into global value chains.