Future of Korea-Mexico FTA after Lees state visit

By Kim Se-jeong

Staff reporter

“We’d like to have a free trade agreement (FTA) with Korea,” said Mexican Ambassador to Korea Martha Ortiz de Rosas.

The seemingly simple diplomatic desire indicates a significant implication because the Korea-Mexico FTA has had a rough ride.

The negotiations began in 2004 and have been stagnant for two years now.

The then South Korean Prime Minister Goh Kun proposed the idea of a Korea-Mexico FTA to then Mexican President Vicente Fox during an official visit there in early 2003.

At the presidential summit in July this year in Mexico City, South Korean President Lee Myung-bak and Mexican President Felipe Calderon confirmed each other’s political support for the FTA, declaring the two will soon resume related talks.

However, there is little evidence to support that the two countries will make any progress any time soon, for domestic opposition is still difficult to surpass.

Export-oriented economy

The ambassador said both economies are complementary -- maybe to a certain extent because Mexico has oil and a big agricultural sector, which Korea lacks.

Mexico is the world’s sixth largest oil producer, with 3.7 million barrels per day.

It is also an exporter of agricultural produce.

Yet, the Korean and Mexican export-oriented economies are too similar to create a win-win scenario from the free trade accord.

Both Mexico and Korea have a large automobile industry. In Mexico, the “Big Threes” -- General Motors, Ford and Chrysler – as well as Volkswagen, Nissan, Toyota, Honda, BMW and Mercedes-Benz have manufacturing plants.

Mexico has CEMEX, the world’s third largest cement conglomerate and factories that import raw materials and produce goods for export.

Mexico is world’s most active participant in free trade.

“We have 11 FTAs with 43 countries around the world that encompasses around 1 billion consumers,” the ambassador told The Korea Times during a recent interview.

Since joining the General Agreement on Tariffs and Trade (GATT) in 1986, Mexico sealed the North American Free Trade Agreement (NAFTA) in 1994 with the United States and Canada. That was followed by deals with Chile, the European Union, the European Free Trade Association and Japan.

Heavy skepticism from the private sector has questioned the effectiveness of the FTAs, leading the government in November 2003 to announce a moratorium on FTAs.

The negotiations with Korea initiated in 2004, felt the effect of the anti-FTA sentiment from the country.

So far, Korea has sold a lot of goods to Mexico -- the trade volume in 2008 was over $10 billion with a nearly $8 billion surplus.

Open agricultural produce

Mexico has urged Korea to open its agricultural market, which Ambassador Ortiz de Rosas echoed during the interview.

“You import 70 percent of agricultural produce. We’d like to have open markets in agricultural products such as meat, beef, pork, vegetables, juices and tequila,” she said. “I wouldn’t say it’s a precondition, but it’s important for the Korean side to show goodwill and openness to Mexican agricultural produce.”

The United Nations Food and Agricultural Organization’s statistics show that Mexico is the world’s biggest exporter of barley for beer, tomatoes, wheat, chilies, peppers, lemons and limes. Korea imports avocados, sugar confectionery, pork and beef but in very small amounts.

Opening up the agricultural market is a tall order for Korea, in the face of protests that it would further jeopardize local farmers.

The ambassador said Mexico eyes Korea for tequila exports, the national alcoholic drink.

“The drink is a national identity originally from the region of Tequila,” and to this end, she hosted a tequila tasting event earlier this year, inviting prospective importers from Korea.

Opposition from steel and chemical industries

In Mexico, the private sector criticizes the Korea- Mexico FTA for being driven politically without sufficient consultation with private sectors in advance.

According to a report written by KOTRA in Mexico 2008, the strongest objection to the FTA with Korea was coming from the steel and chemical industries, which viewed Korea as an additional competitor in what is already a tough market.

The Korean trade commissioner wrote that the statistics in fact showed a thin flow of steel and chemical products from Korea to Mexico.

The ambassador, who called herself an optimist, said still the future is bright for the Korea-Mexico FTA, vowing that the Mexican government is doing its utmost to “convey the right message” that the free trade between the two countries will ultimately be beneficial.

Objections from the private sectors can be overcome in each country through communication, the ambassador emphasized. “Interrelations between the private sectors of the two countries are the main elements.”

200th anniversary of independence

This year, Mexico celebrates its 200th anniversary of its independence. During his visit, President Lee promised to donate the “Korea-Mexico friendship bell,” which will be exhibited at “Independence Park” in Mexico City.

Furthermore, in recognition of the golden jubilee of Korea-Mexico relations in 2012, Lee pledged to open a Korean cultural center in Mexico.