ALTOS HORNOS OF MEXICO TO INVEST US$1 BILLION
Steel company Altos Hornos de Mexico (AHMSA) will invest US$1 billion over the next two years. According to Alonso Ancira, President of the Administrative Council of the Company, the money shall be used to build processing plants in Coahuila and Durango. Mr. Ancira indicated that AHMSA is looking to gain access into the specialty steel market, such as automotive steel. Moreover the steel demand from the automotive sector, is not satisfied by the national industry. The executive informed that the Company is looking to expand its tin plate operations, as Mexico is currently importing 500,000 tons, which is why AHMSA is looking to increase its production, going from 150,000 to 400,000 tons. The operation of this plant will require up to 700 work positions.
MEXICO AND URUGUAY, WORKING FOR BILATERAL COMMERCE AND INVESTMENT
Officers from the Mexican Ministry of Economy (SE), led by the sub secretary of Foreign Commerce of the Ministry of Economy, Juan Carlos Baker, held a meeting in Mexico City with their counterparts from Uruguay, represented by Jose Luis Cancela, sub secretary of Foreign Affairs in Uruguay, with the objective of discussing mutual interest topics, namely commerce and investment.
The upholding and correct application of NAFTA’s regulations, the objectives reached with its enforcement, and issues related to the function of this agreement regarding Regulations and Origin Certifications and Health Standards, were some of the items reviewed. The Ministry of Economy stated that the objective behind this update, is to increase the bilateral commercial exchange, while promoting reciprocal investment.
RASSINI FRENOS WILL SUPPLY AUTO PARTS TO AUDI PUEBLA
Mexican corporation Rassini Frenos, manufacturer of brake discs, recently started supplying components to assemble the Audi model Q5, hence investing US$35 million to expand its headquarters. Hector Galvan Venegas, General Director of Rassini, explained that nearly 600,000 will be produced to cater to the Audi plant in Puebla. Galvan Venegas also stated that the factory’s expansion will help to increase the total production, shifting from 130,000 to 200,000 tons per year. With the new foundry area, new machining and painting lines, 180 new direct jobs were created, in addition to the 1,300 current staff members. Rassini Frenos exports 90% of its production to the U.S., Canada and Europe, while the rest is commercialized in automotive plants located in Mexico.
Source: El Economista
TRUMP’S ‘INCREDIBLY MISLEADING’ CLAIM ON MEXICO
Donald Trump says Mexico isn’t playing fair on trade.
He argues that Mexico sets a trade barrier on U.S. companies, but the same penalty isn’t applied to Mexican companies that sell in America.
“When we sell into Mexico, there’s a tax…When they sell into us, there’s no tax. It’s a defective agreement,” Trump said at the debate on Monday.
His critics believe his latest comment is misleading. It is true that Mexico has a 16% value-added tax (VAT) that American companies must pay in Mexico. It’s also true that Mexican companies don’t pay a VAT tax in the United States.
However, Mexican companies do pay the same VAT tax in Mexico that U.S. companies pay.
Trade experts say the VAT tax isn’t a trade barrier, or tariff, because local companies are paying the same tax in their home country.
“He was implying that it’s a trade barrier, and it’s just not,” says Alan Deardorff, an economics professor at the University of Michigan. Trump’s comment Monday night “was incredibly misleading.”
About 160 countries outside the United States have a value-added tax, which is imposed on goods and services at each stage of production and on thefinal sale. Socompanies pay thetax on improvements they make to the parts they receive from suppliers, while consumers then pay the tax when they purchase the final product. The U.S., however, levies a sales tax on purchases.
In a report released Monday, Trump’s economic advisers Peter Navarro and Wilbur Ross argue it’s not fair that products that American companies are subject to this additional levy from VAT countries. That’s because under World Trade Organization rules, foreign companies that manufacture in their own countries and then export goods to the U.S. receive a rebate on the VAT taxes they paid in their homeland.
This makes it more economical for U.S. companies to move their factories abroad and export their products back home, Trump’s advisers say. If the U.S. firm is based overseas, it also receives the rebate.
“This turns the VAT into an implicit tariff on U.S. exporters over and above the U.S. corporate income taxes they must pay,” they write.
Trump wants to exempt U.S. exports to Mexico from the VATtax, said Gary Hufbauer, seniorfellow atthe Peterson Institute for International Economics. Butthatwouldlikelygooveraswellashavingthe Mexican government pay for aborder wall between the two countries.
“Mexican firms will scream bloody murder because they’ll say it’s unfair,” Hufbauer said, since Mexican companies still have to pay VAT taxes on goods they sell within their own border.
Mexico has become a focal point of Trump’s campaign. He has threatened to put tariffs of 35% on some goods made in Mexico and sold in the United States. Trade experts say such a tariff would be devastating to Mexico, which sends about 80% of its exports to the United States. They also argue it would hurt U.S. exporters because Mexico could retaliate with atariff of its own on U.S. goods.
Trump wants to renegotiate or “terminate” NAFTA, the free trade agreement between Mexico, Canada and the U.S. He says NAFTA is responsible for the loss of millionsof manufacturing jobs to Mexico.
An analysis of NAFTA’s economic impact by the nonpartisan Congressional Research Service found that NAFTA has had a small, positive impact, and that it isn’t the central cause of the decline in manufacturing jobs. Trade with China and improved technology have played bigger roles, experts say.
source: CNNMoney (New York)