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Mexico

'Mexico is being shaken up'

Penalty duties, wall-building, an end to free trade - the shift in US policy is impacting Mexico especially hard. Johannes Hauser from the German-Mexican Chamber of Commerce warns of the potential consequences.

DW: Mr Hauser, does Mexico regard the new US president, Donald Trump, as an enemy?

Johannes Hauser: Mexicans are outraged and deeply wounded by Trump's brutish manner of confrontation. We are seeing this attack from outside resulting in cross-party solidarity. The Mexican president, Enrique Pena Nieto, who until now has had very low approval ratings, received nothing but praise for his announcement that he would not be traveling to Washington. Mexico is being shaken up. Mexicans have been caught unawares by the fact that Trump's crude words are also being followed by crude deeds.

One of Trump's "crude" announcements was that a wall would be built between the USA and Mexico. What would be the consequences of this?

As a German, just hearing the word "wall" makes one feel queasy. It's an abstruse idea, of course. But in terms of the consequences it will have, especially if combined with negotiations over the NAFTA free trade agreement, a wall could never be high enough to stop all the people seeking to get into the USA because Mexico's economic foundation, namely NAFTA, is being wrecked. I'm wondering how it can be in the interest of Americans to economically destabilize Mexico. The border is already one of the best protected in the world.

Johannes Hauser, Geschäftsführer der Deutsch-Mexikanischen Industrie- und Handelskammer (CAMEXA)

Johannes Hauser

Trump has announced that he will raise import taxes on exports to Mexico to 20 percent. Is such a measure even possible within the NAFTA North American free trade zone?

It would not be possible within NAFTA, because eliminating tariffs is one of the key elements of the agreement. That doesn't seem to bother Trump, though, so for now we have this announcement.

Could Mexico take counter-measures?

It's difficult. Mexico is in a markedly asymmetrical situation. 80 percent of Mexican exports go to the USA, whereas only 15 percent of all exports from the USA go to Mexico. So the USA is negotiating from a position of strength. In order to free itself from economic dependency on the USA, Mexico has signed a free trade agreement with the EU and ten other partners, in addition to NAFTA. So far, though, these agreements haven't really taken off. On the other hand, more than six million jobs in the United States depend on NAFTA functioning. Even someone like Donald Trump can't ignore that.

Some US car manufacturers have already announced that they plan to cut back on investments in Mexico. Will German car manufacturers in Mexico do the same?

That was Ford. General Motors has said it intends to stick to its plans. With the German companies, it's different. Trump's accusation that "they steal our jobs" doesn't hold water with them. Because VW, BMW and Mercedes all have manufacturing plants in the US. The BMW plant in the US is the company's biggest, even bigger than in Germany. None of its capacity there is being reduced in order to be re-built in Mexico.

But isn't the political uncertainty also resulting in German companies initially withholding investment?

At the end of November 2016 we did a business survey of our members, which we linked to a question asking what they thought about a Trump presidency. Eighty-three percent said they didn't expect anything good to come of Trump's election, and had misgivings about it. At the same time, more than 60 percent of the companies said they intended to stick to their investment plans for 2017. I don't know whether the result would be identical if we were to do the survey today. Uncertainty about general economic conditions is not advantageous for investment decisions. The Mexican government has also already revised its expectations as far as foreign investment is concerned.

Would you like to see more solidarity from Mexico's other trading partners and political allies?

There is marked sympathy for what Mexico is currently experiencing and suffering. Ultimately, though, it will be a task for Mexicans themselves to defend their own interests. And I think they are determined to do that. There's the announcement by the Mexican foreign minister, Luis Videgaray, that the country will leave NAFTA if there's no acceptable balancing of interests in any renegotiations. 23 years after the signing of NAFTA, it's not entirely unreasonable to say: We'll take another look at the agreement and see where we can improve it. That'll require detailed work, because the NAFTA agreement is thicker than the Bible. It remains to be seen what happens when everyone is actually sitting around a table, not issuing random statements via Twitter.

Johannes Hauser is the Director General of the German-Mexican Chamber of Commerce (CAMEXA), which represents 1,900 companies with German involvement in Mexico.

 

The interview was conducted by Astrid Prange de Oliveira.

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