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Europe

Germany's Mexican Dreaming

Chancellor Gerhard Schröder travels to Mexico this week to discuss with President Vicente Fox how Germany and the European Union can carve out a bigger slice of the prosperous Mexican market.

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"The best place on earth for investment"

Germany’s chancellor kicks off a four-day Latin America tour in Mexico Sunday night, where he will discuss increasing Germany’s
trade presence with President Vicente Fox.

Chancellor Gerhard Schröder plans to spend two days in Mexico before moving on to Brazil and Argentina, a government spokesman said Sunday.

Chief among discussion topics between Schröder and Fox will expanding the trade relationship between Germany, and the European Union, and Mexico.

The relationship has suffered since the United States, Mexico and Canada instituted the North American Free Trade Agreement.

"We don’t want to just leave the Latin American market to North America," he said.

Fox couldn’t agree more. For more than three years, 80 percent of Mexico’s trade has been with the United States. It’s a statistic
Fox, and Germany, is desperately trying to change.

In the late 1990s, Germany was one of Mexico’s major trading partners. The two traded 2.7 billion euro worth of goods in 1998.

Even back then, Mexico was looking for a way to diversify its collection of trade partners.

Free trade with the EU. Now, Fox hopes a 2001 free trade agreement with the European Union can get Mexico on the way.

The agreement, which went into effect March
2001, sought to "put the EU on a level footing with the US and Canada in the Mexican market," trade commissioner Pascal Lamy said at the time.

The EU traded 14 billion euro worth of goods with the major Latin American economy in 1999.

That figure has risen, last year by about
18.5 percent, since the agreement went into effect, according to the European Trade Commission.

"The best place ... for investment" Mexico has been even more attractive since a recent decision by the credit rating index Standard & Poor’s to raise the country’s credit level, something Fox sees as a green light to foreign investment.

"We are, right now, the best place on earth for investment," Fox said.

The country is also the only nation to have free trade agreements with both the EU and the US, meaning that any European committee that sets up shop there will benefit from the NAFTA agreement.

The fact isn’t lost on German companies like Siemens and Volkswagen, whose chairmen are traveling with Schröder through Latin America.

North America, including Mexico, is the fastest growing market for Volkswagen.

German chemical concerns BASF and Bayer already have a Mexican presence.

As indication of their faith in the country’s economy, BASF will enlarge its plant and Bayer has announced it will triple the number of tablets it makes in its Mexican plants in the next year.