Australia in Mexico

Australia in Mexico

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MEXICONOW Staff Report

The partnership between Australia and Mexico is strong and growing. Both countries work closely together in multilateral forums such as APEC, the G20, MIKTA, the World Trade Organization, and within the United Nations. In October 2012 Mexico formally joined the Trans Pacific Partnership (TPP) negotiations to which Australia is also a party. 
There is also a comprehensive framework of bilateral agreements which supports increased cooperation, including an MOU on Education, Research and Vocational Education and Training (2015), a bilateral Plan of Action (2011), a Memorandum of Understanding (MOU) on Cooperation in Agriculture (2010), an MOU on Mining (2010), an MOU on Political Consultations (2009) and an MOU on Energy (2005).
Australia and Mexico signed a Trade and Investment Agreement in 1994. This is provided for the establishment of the Australia-Mexico Commission on Trade and Investment (also known as the Joint and Trade Commission or JTIC).

In 2014, the Council for Australia Latin America Relations (COALAR) supported the inaugural Australia-Mexico Second Track Dialogue at the ANU’s Australian National Centre for Latin American Studies (ANCLAS). The Dialogue brought together senior representatives from government, business, academia and the media to discuss the future of the relationship.

Australia is one of Mexico’s largest trading partners. Exhibit 1 summarizes the Trade Balance between Mexico and Australia. It shows that commerce between the two countries reached its maximum level in 2012 (US$2.02 billion) which is the only time that trade has passed the US$2 billion stat. This certainly reflects the excellent moment that the bilateral relation is now having. The bilateral commerce historically has been negative from Mexico, but it has reversed with positive results in trade after 2012.

Several important factors in the trade balance between Mexico and Australia are revealing. Take, for instance, the fact that during the 14 year time span from January 1999 to December 2014, total exports from Mexico to Australia increased from US$122.07 million to US$1 billion (726%). And at the same time, imports from Australia to Mexico also showed an impressive growth from US$273.74 million (1999) to US$553.53 million (2014), a remarkable 102% of growth.

Total commerce between the two countries and reciprocal action brought in US$1.6 billion during 2014 in trade between the two partners and has consistently been with sustained growth or similar figures, especially from the period since 2005, with the exception of the year 2012 when trade was over US$2 billion. And another interesting detail is that in 2014 commerce stats increased 3.75% over the data of 2013.

In Exhibit 2 we can see Australian Investment in Mexico. During the period from January 2000 through June of 2015, companies with capital from Denmark invested US$994.4 million.

FIBRA Macquarie is a real estate investment trust targeting industrial, office and retail real estate opportunities in Mexico. Macquarie has been Australia’s largest investor in Mexico in recent years with over US$2 billion of funds under management, and ambitious near-term plans for expansion. This year, the Company reported that reached an agreement to acquire a portfolio of 10 industrial properties with a gross leasable area of 2.2 million square feet for a total of US$105 million. At the end of this transaction, the industrial portfolio FIBRA Macquarie will consist of 270 properties with a total of 31.4 million square feet area.

This year IMF Investors, agreed to purchase a participation of 24.99% at Conmex of OHL Mexico for US$600 million. IMF Investors considers that Conmex is an ideal investment for their strategic portfolio of assets in infrastructure and a unique opportunity to invest in a strategic asset of quality in the transport infrastructure market in Mexico.

The energy sector is becoming an increasingly important element of the trade relationship. Reforms to Mexico’s energy sector, ending Pemex’s monopoly over oil and gas and liberalizing the electricity sector, offer significant opportunities for Australian companies.

Expansion of mining-related services also offers strong potential for future growth. The relationship has grown as Australian companies in a range of industries (mining services and technology, agribusiness, food and beverages, IT, software, biotechnology, automotive parts and education and professional services) enjoy success in Mexico.

There is potential for new areas such as water management equipment and services, clean technology and environmental services including clean energy. BHP Billiton and Woodside Petroleum have seen important opportunities to invest at the Energy Sector in Mexico.