Swiss seek better access to Mexican markets

Mexico's stock exchange and the economy are closely linked to the US visum

Economics Minister Doris Leuthard visits Mexico this week in an effort to boost trade relations with Switzerland's second-largest trading partner in Latin America.

This content was published on February 4, 2008 minutes

But Swiss non-governmental organisations fear trade liberalisation will hold no benefit for Mexico's poor. They also stress the need for improved human rights.

Switzerland is among the top five investors in Mexico and exports soared by nearly 30 per cent in 2006 – making the country an important partner among the emerging economies.

Leuthard, accompanied by a major business delegation, is due to meet the economics, finance and environment ministers for separate talks on easing access for Swiss products to the Mexican market and increasing investment in both countries.

The Swiss delegation will travel to Monterrey, a major industrial centre in the northeast, close to the border with the United States.

"A number of obstacles, notably insufficient protection of intellectual property rights, bureaucracy and monopolies, restrict bilateral trade and investment," an economics ministry statement said.

Trade imbalance

Switzerland concluded agreements with Mexico on double-taxation and investment protection in the 1990s. A free trade deal has been in place since 2001 through the European Free Trade Association (Efta).

"Mexico is – after Brazil - the most important market for Swiss firms in Latin America. It is also a very important market for Swiss investments. We already have a free trade agreement with Mexico, but we think that we could do better there," said Jean-Daniel Gerber, state secretary for economic affairs.

He added that there is a trade imbalance since imports from Mexico are very small.

"We would like to help Mexico to better market its products in Switzerland. Mexico has not yet seen the importance of the Swiss market with its purchasing power," Gerber said.

It is Leuthard's first official visit to Mexico since she became economics minister in 2006, and the first such ministerial delegation to central America for four years. Leuthard travelled to Brazil on an economic mission in 2007.

US dependence

Experts have praised the economic policies of the centre-right government of President Felipe Calderón but express concern over the high degree of financial and commercial dependence on the United States.

"Should the US economy be in recession Mexico has to take steps to ensure that it does not face a rise in unemployment," said Ngozi Okonjo-Iweala of the World Bank at last month's World Economic Forum summit in the Swiss resort of Davos.

Others point out that the government is on the right track with its fiscal reforms, but that more needs to be done in the infrastructure and energy sectors.

Mexico is expected to remain an attractive market for investors, not least because it is part of the huge free trade zone with the US and Canada. However, there is some concern that Mexico could lose its competitive edge owing to organised crime and drug trafficking.

"Like other companies Swiss firms are often faced with bureaucratic hurdles and organised crime," Leuthard said in Davos.

Civil society

Alliance Sud, the Swiss coalition of development organisations, says it is key that bilateral trade treaties also include a social dimension to allow the poor to benefit.

"Switzerland must not keep economic relations separate from efforts to fight poverty," said the coalition's Bastienne Joerchel.

She said trade liberalisation had not led to any improvement in the situation of much of the Mexican population. Joerchel also said that bilateral treaties – more so than multilateral accords - gave absolute priority to investment issues ignoring concerns of civil society, notably labour rights, the environment and democratic values.

Tildy Hanhart of Swiss Interchurch Aid points out that aid agencies have nothing against closer trade ties. "But we would also like to see Switzerland actively promoting human rights notably for indigenous people."

She said the Protestant churches aid agency regretted the end of government financial support for a peace promotion programme in the southern Chiapas region last December, after the foreign ministry refocused its projects in Latin America.

"We are still active in the region. We would welcome closer cooperation between government ministries on the issue," said Hanhart.

swissinfo, Urs Geiser and Andrea Ornelas

In brief

In the first 11 months of 2007 Swiss exports to Mexico stood at SFr1.28 billion ($1.18 billion) – mostly pharmaceutical products, machines, watches and chemical products – up 30% on the previous year.

Imports from Mexico had been on the decrease before they picked up again to SFr154 million in the first 11 months of 2007, according to the economics ministry.

Swiss investment in Mexico was SFr4.77 billion, putting Switzerland in the top five of foreign investors. Swiss firms employ about 37,000 people in Mexico.

Direct investment by Mexican companies in Switzerland is limited, since most firms target the European Union market.

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Development aid

The Swiss government does not run any aid projects in Mexico, which is a member of the Organisation for Economic Cooperation and Development (OECD).

The foreign ministry's aid agency backs the non-profit international maize and wheat improvement centre (CIMMYT).

Financial support for a Swiss church peace promotion project in the southern Chiapas region ran out at the end of 2007.

The Swiss embassy in Mexico has supported micro-campaigns to combat poverty and support reforms of the justice system.

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