How has the Free Trade Agreement between Mexico and the European Union affected Bilateral Trade between Mexico and Sweden?
The free trade agreement (FTA) between Mexico and the European Union was created in 2000, and which sets up an important legal economic framework with the aim to facilitate and intensify trade relations between Mexico and the EU Member countries, including Sweden. Mexico is – alongside with Brazil – the most important trade partner in Latin America for Sweden. In 2008 the agreement was elevated to a “Strategic Partnership”.
The Partnership celebrated between the EU and Mexico encompasses issues of mutual interest such as social cohesion, justice and human rights, sustainable economic development, environment, education and culture as well as science and technology.
Swedish exports to Mexico rose US$133 Million between 2007 and 2008 reaching a total of US$798 Million and thereafter sank 2009 to US$587 Million. Important exports include refined oils, medical devices, industrial machinery as well as products from the automotive/transportation industry. Mexican exports stood at US$152 Million in the year 2008, up from US$109 Million in 2007. By 2009 the total amounted to US$100 Million. It is important to note that as stated exports from Sweden to Mexico during 2009 diminished due to the financial crisis, however to a less extent than to the rest of the Latin American region.
Sweden welcomes and encourages further increased Mexican imports as an important means to increase competition and variety of supply in our domestic markets and so does Mexico which established in 2008 a ProMexico office, one of its main trade promoting institutions, in Stockholm to cover the Nordic markets.
What is the Level of Satisfaction of Swedish Companies with their Operations In Mexico?
There is generally a high level of satisfaction among Swedish companies with operations in Mexico. However, many companies seem to find administrative and bureaucratic procedures burdensome. To deal with these obstacles Mexico and the EU started the PROTLECUEM, a Project to facilitate commerce between Mexico and the EU which has made headway through various training programs directed at custom officers.
Currently there are around two hundred Swedish companies present (or represented) in Mexico, including almost all major Swedish multinationals, of the 20 largest Swedish multinationals 13 have subsidiaries in Mexico, some employing up to 3000 workers. There are however also several newer, small and medium sized companies. The established Swedish companies that have set up operations in Mexico know from own experiences that once established great business opportunities lie ahead. The telecom giant Ericsson is a great example – it has been present in Mexico since coming here in 1904.
There is an interesting anecdote relating to the establishment of Ericsson here in Mexico at the beginning of the 1900s that explains the rather curious way by which Mexicans answer the phone, the widely used “¿bueno?” that is not used in other Spanish speaking countries. The explanation lays in that “bueno” was the word used by Swedish Ericsson engineers to check the quality of the sound, and so the “bueno” has lived on! When looking to enter the Mexican market some Swedish companies, being accustomed to rather simplified bureaucratic procedures in Sweden, find it challenging to handle all administrative requirements, for instance when it comes to registering a new business. Entering Swedish companies can receive assistance and know-how from our trade office, the Swedish Trade Council, when starting operations in Mexico.
What is your Outlook for Swedish Trade and Investment in Mexico?
International trade and investment has always been a high priority and a necessity for Sweden and its companies, not least due to the small size of the domestic market. This has turned Sweden into one of the world’s most open economies with global investment and trade interests. The fast growing economies in Asia and Eastern Europe have attracted the lion’s share of investment and trade growth in recent years, but in line with continued reform and development in Latin America, business interest in that region will probably continue to increase. Mexico is one of the promising economies in Latin America for trade and investment.
The current security situation in Mexico is however widely covered by Swedish media. None the less we do not know of companies that have held back investments or avoided the Mexican market for security reasons. This was underlined publicly in the media by our Minister of Foreign Affairs, Mr. Carl Bildt, during his visit to Mexico in February this year.
Many of the Swedish companies already established in Mexico have undertaken large investments benefiting from the regional trade liberalization and the NAFTA in combination with the proximity to the North American market where Swedish car and bus industry makers such as Scania, Autoliv, Haldex and Trelleborg Automotive are important players. Other recent examples of successful Swedish investment in Mexico include the expansion of the paper and pulp company SCA in the state of Hidalgo and the home appliances producer, Electrolux, in Ciudad Juarez.
Volvo Buses and ABB have also closed large deals such as the BRT system (Bus Rapid Transit) that has several lines in Mexico City, Estado de Mexico, Guadalajara and Leon Guanajuato; whilst ABB has built a Production and R&D center in San Luis Potosi and is involved in the energy transmission of the Wind Park “La Ventosa” in Oaxaca.
A fast growing company within the natural cosmetics sector is Oriflame that has spurred its sales through its direct selling structure also known as multi-level marketing. Moreover, several small and medium sized Swedish companies are establishing with niche products within the healthcare sector. Other relevant sectors include professional, technical and specialized services, ITC, retail sale of non-food consumer products and the pharmaceutical industry.
In which Industrial Sectors will the Swedish Government Maintain or Increase its Interest?
Probably the already established sectors will remain the most important ones for a foreseeable future. Recently the Swedish State Secretary for Trade, Mr. Gunnar Wieslander, on his second visit to Mexico in two years, arrived with an Infrastructure Delegation that covered aerospace, security solutions, mining and telecom with a special interest for the Mexican Government’s “National Infrastructure Plan 2007-2012”.
A sector that Sweden gives high importance to is its environmental technology which is being promoted through a green-tech nutshell known as SymbioCity which brings together more than 700 Swedish companies and their solutions in the making of a sustainable city. SymbioCity was presented by the Swedish Minister for the Environment in 2008 here in Mexico and there are high hopes that Swedish green-tech solutions can come to use here in Mexico. Swedish companies top various leagues in Corporate Social Responsibility which of course includes environmental aspects. Here in Mexico TetraPak, that sells packaging solutions, and SCA, a paper pulp and hygiene Product Company, widely promote recycling and of course see to that’s their products are easily recyclable.
A yearly event of which we are especially proud of is the Stockholm Junior Water Prize. For the last 11 years the Embassy together with the Swedish Chamber of Commerce, has played an important role in the organization of the Water Prize in close collaboration with the Academia Mexicana de Ciencias, the UNAM, the Instituto Mexicano de la Juventud, the Stockholm International Water Institute and several other Mexican governmental institutions with the sponsorship of Alfa Laval, Coca-Cola Foundation, Ericsson, Grupo Urrea, ITT Water & Wastewater, Kemira, Sandvik and Tetra Pak.
In 2008 three Mexican high school students were awarded the international prize which is handed out by the Crown Princess Victoria for the development of a water purifying system using egg shells. This year over 182 projects from all over Mexico have been presented, the winner will be announced in the near future and will represent Mexico in international contest in Stockholm to take place later this year during the Stockholm Water Week.
Which Conditions are Needed in Mexico to Increase Swedish Investments?
There is a large untapped potential for trade and investment in Mexico. But to realize this potential the general political and economic reform process and modernization needs to be continued, especially in terms of legal and personal security, increased competitiveness & market opening; the cutting of red tape and improved infrastructure, to mention some key areas. Social development that includes increased efforts to combat poverty, widening and improving access to education without forgetting the human rights situation. All very important factors for improving the business and investment climate.
Any Last Comment for the MEXICONOW Subscribers?
Firstly, on the political, macro level, I would like to again emphasize the importance of the issues brought up in connection with the previous question – continued social development, reinforcement of democracy and economic and legal reform in order to improve competitiveness – all paramount factors for Mexico to remain and advance as a major location for international trade, foreign investment and economic growth.
Secondly, I would like to use the opportunity to express the strong interest of the Embassy and our trade office, the Swedish Trade Council, in close cooperation with the Swedish- Mexican Chamber of Commerce, our Honorary Consuls, the Invest in Sweden Agency and the Swedish companies present in Mexico, to continue promoting intensified bilateral economic relations. I would like to emphasize that we wish to encourage trade and investment in both directions, both in Mexico and in Sweden.
The embassy here in Mexico works hard not only with the promotion of trade but also of cultural, technological and educational exchange placing emphasis on sticking to values that characterize Sweden as a country rich in innovation, with authentic solutions, open to new ideas and always committed to the caring for the needs of all individuals.
I would like to conclude by saying despite the challenges that Mexico is facing, I am convinced that there is a great potential here, both for trade and investment, but also to develop the country further. Mexico is a great country and concluding my fourth year as the Ambassador of Sweden to Mexico I would like to stress that it is a privilege to represent and promote Sweden here. Please visit our home page www.suecia.com.mx