Katrina Cooper – Australia Ambassador to Mexico

AS AMBASSADOR WHAT IS YOUR PLAN OF ACTION THIS YEAR IN TERMS OF DEVELOPMENT FOR STRENGTHENING THE BILATERAL RELATIONSHIP BETWEEN AUSTRALIA AND MEXICO?

As we face an ever faster and globalised world, the bilateral relationship between Australia and Mexico is more important than ever. Australia and Mexico continue to bridge the geographic divide as we integrate ourselves as strategic partners on a bilateral, multilateral and commercial level. We are both members of the G20 and we are constructive like-minded partners on many multilateral issues from climate change to disarmament, to trade liberalization and the environment. We understand the growing mutual commercial opportunities each country offers, especially in key sectors such as mining, energy and infrastructure. And we are constantly building our peopleto- people links through student exchanges and tourism. Last year for example, we expanded the number of quality scholarships available to Mexican students to study in Australia. My goal as Ambassador during the coming year will be to further consolidate this close, productive and cooperative relationship.

WHAT IS THE CURRENT SITUATION IN REGARD TO THE AUSTRALIAN AND MEXICAN DIPLOMATIC RELATIONSHIP?

Australia has a solid strategic relationship with Mexico across the board. Mexico and Australia are partners of choice, not necessity. The importance of the bilateral relationship for both countries is underlined by the number of high-level visits in both directions over the last few years, including visits to Australia by Mexico's Economic Minister, the Health Minister and also the Vice-Minister for Mining. And there have been visits to Mexico by Australia's Minister for Foreign Affairs, Minister for Trade, Minister for Climate Change and Energy Efficiency, Minister for Transport and Infrastructure, and Minister for Communications. During his visit to Mexico in September of 2011, Kevin Rudd, the former Minister for Foreign Affairs signed an Action Plan which provided a framework for strengthening cooperation in a number of key areas of mutual interest. Moving this Action Plan forward is something we are currently engaged in. In addition, we are also continuing to work closely to advance the multilateral agenda in the areas of key current issues related to the G20, the Rio+20 Summit, global nuclear disarmament talks, international climate change negotiations, the WTO Doha Round and United Nations Security Council reform.

HOW HAS THE TRADE BETWEEN MEXICO AND AUSTRALIA EVOLVED IN THE PAST 5 YEARS?

Over the past five years we have seen a steady expansion in the Australia and Mexico business relationship. In the last year, for instance, Mexico ranked as Australia's largest trading partner in Latin America, slightly ahead of Brazil. The trade balance in Mexico's favor has become more pronounced over the last five years. The latest statistics indicate that during the recent 12 month period, Australia exported AUD 888 million worth of exports to Mexico, but imported AUD 1,592 million worth of merchandise, according to figures from the Australian Bureau of Statistics. Mexico's main exports to Australia are manufactured goods (such as telecom equipment and parts, computers and passenger motor vehicles), as well as fertilizers. Australia's largest single export to Mexico is coal, followed by aluminum. The most important aspect of the trade relationship, however,is that its base is solid and diverse. This convinces me that we will continue to see strong growth in goods and services trade, particularly in the mining, water, energy, infrastructure, fi nance and agro-pecuario industries.

WHAT IS THE ROLE THAT MEXICO PLAYS FOR AUSTRALIAN INVESTMENT IN ORDER TO COVER THE SOUTHERN AND CENTRAL AMERICAN MARKETS, AS WELL AS TO SERVE AS A PLATFORM FOR NORTH AMERICA?

Some Australian companies which have chosen to make Mexico a regional base are also looking at opportunities for investing in other nearby markets, including Central America. However, Mexico is not usually seen as a base for operations in South America, although there are some notable exceptions including the Macquarie Capital, which uses Mexico as a headquarters for all of Latin America. Many Australian companies prefer to establish operations directly in the U.S. (with which Australia has a comprehensive FTA). It's done like that rather than using Mexico as a base to enter the U.S. market. However, we are encouraging Australian companies to consider supply chain opportunities in Mexico's advanced manufacturing and agro-food sectors. This is something that can give them access to a much larger market in the entire NAFTA area, in addition to Mexico.

HOW HAS THE AUSTRALIAN INVESTMENT IN MEXICO EVOLVED?

Australian investment in Mexico increased by 50 percent between 2008 and 2010, closing to almost US$3.5 billion last year according to estimates from the Australian Bureau of Statistics. Australian investments in Mexico have increased in recent years in terms of infrastructure and in the mining and manufacturing sectors. Mexico's size and geographical proximity to the world´s largest economy make it an especially attractive trading partner for Australia. I expect to see Australian investment in Mexico growing exponentially.

WHAT IS THE LEVEL OF SATISFACTION OF THE AUSTRALIAN COMPANIES WITH THEIR OPERATIONS IN MEXICO?

Those Australian companies having operations in Mexico are generally satisfi ed with their operations there. They tend to view Mexico as an important regional market with strong potential for growth – more so than in some established markets which have been struggling with low growth in recent years. The biggest challenge is the lack of awareness in Australia about the commercial opportunities in Mexico. Events such as the Latin American Down Under Mining Conference which will be held in Australia in May are being held precisely to improve knowledge and understanding of the bilateral commercial opportunities available to Australian companies in Latin America.

WHAT IS YOUR OUTLOOK FOR AUSTRALIAN TRADE AND INVESTMENT IN MEXICO FOR THIS YEAR?

I am optimistic about 2012. The bilateral trade and investment base is solid and diverse and there is enormous potential for growth. Both economies are performing well with positive growth outlook for 2012. There are a number of external factors that will affect bilateral trade and investment. This includes how the U.S. economy performs and whether or not the Australian dollar remains at an all time high and how confi dent the markets are. Overall however, I predict continued solid growth in trade and investment between Australia and Mexico. In fact, I think now is the optimal time for businesses to establish linkages between our two countries.

WILL ELECTIONS FOR THE PRESIDENT IN MEXICO AFFECT THE COMMERCIAL RELATIONSHIP BETWEEN THE TWO COUNTRIES?

The commercial relationship is led by the private sector and there are an increasing number of Australian companies that are discovering the benefi ts of doing business with Mexico. Unless there is some drastic change in Mexico's approach to foreign trade and investment settings, a change in the Presidency will not affect the commercial relationship.

IS THERE ANY ADDITIONAL AUSTRALIAN INVESTMENT IN MEXICO TO BE EXPECTED IN THE NEAR FUTURE?

The likelihood of Australian investment in Mexico is higher now than ever, having increased 50% since 2008. Macquarie Capital, a significant force in global infrastructure, has its Latin American headquarters in Mexico. It has already had significant success and is actively exploring other opportunities. We are seeing more and more mining companies looking closely at the Mexican market and the prospect for more investment in the industrial sector is also very good.

ARE THERE SPECIFIC SECTORS TARGETED BY AUSTRALIAN COMPANIES?

Mining and infrastructure development are sectors in which Australia has a strong competitive advantage. We see Australian investment in those sectors and hope to see growth in Australian exports to Mexico across the board. We are also seeing an increase in Australian services in Mexico, particularly education, mining and fi nancial services.

WHAT IS YOUR OPINION REGARDING THE MEXICAN MINING INDUSTRY AND HOW HAS THE INTEREST OF AUSTRALIAN COMPANIES EVOLVED IN THIS CONTEXT IN RECENT YEARS?

The Mexican mining sector is clearly performing strongly with strong government promotion of the industry. There are important opportunities here. Foreign investment in Mexico's mining sector has recently increased significantly. While Australia has some important investments in Mexico's mining sector, the total value of Australian investment in the sector is underdeveloped. There are much higher levels of interest from Australian mining companies in South America at the moment; personally, I want to see that change. Governments can play a constructive role in this regard. In the last year a high-level Mexican government mining delegation travelled to Australia to promote investment opportunities in the sector in Mexico in order to identify potential Australian investors. And we hope to see a strong Mexican presence at the Latin America Down Under Mining Conference in Australia in May.

WHAT IS THE FUTURE OF THE ENERGY INDUSTRY IN MEXICO?

Like Australia, Mexico has an abundance of natural resources. We have close commercial links to Mexico in the energy sector as well as strong cooperation in international fora. Mexico and Australia both have harsh and diverse climates and also the need to be creative in their use of natural resources and energy. The global trend is towards increasing the percentage of renewable resources in the energy mix and Mexico is part of that trend. We have also followed with interest the reforms in the Mexican energy sector, including the new
Pemex contracts. These certainly open up some opportunities for foreign companies. In addition to cooperation on traditional energy sources, I expect we will see increasing collaboration between Australia and Mexico in areas such as water use, irrigation, clean coal and renewable energy.

WHAT IS YOUR OPINION ON THE MEXICAN ECONOMY?

Mexicans should be very pleased with how Mexico weathered the global financial crisis. The banking sector proved itself to be strong and the economy recovered quickly from the economic retraction it experienced in 2009. The fundamentals are good and the outlook for 2012 is positive. Of course, the global economy is still fragile and no country is immune to that.

ANY LAST COMMENT FOR THE MEXICONOW SUBSCRIBERS?

Mexicans and Australians are surprisingly similar in their outlook and the relationship between our people and our governments is easy and comfortable. We share similar values. We have a similar sense of humor, and we share perspectives on many issues. Each day Australia and Mexico are working closer together across a range of fields and there is enormous potential for continuing to strengthen our relationship. For those subscribers who are not familiar with Australia, I would encourage you to look at Australia as a destination for business, education and tourism. Australia is a beautiful country with a vibrant economy, warm friendly people, world class education institutions and a perfect gateway for engaging
Asia. Mexicans are given a warm welcome in Australia and I would like to see many more visiting and studying "down under" in the near future.