For weeks, they crowded Mexico City’s central Zocalo Square, angered by the results of July’s presidential election. Ringed by the stately National Palace, City Hall, and massive baroque Metropolitan Cathedral, thousands of protestors erected a tent city to dispute the election of a president intent on creating what many need: jobs. Even government tanks wouldn’t dissuade the protestors, enraged by the narrow loss of socialist candidate Andres Manuel Lopez Obrador, of the Party of the Democratic Revolution, to conservative Felipe Calderon. Yet in mid-September, the demonstration finally ended, as Mexicans confronted the inevitability of economic reform.
With the restructuring promised by Calderon’s National Action Party–including fighting corruption and the commercial black market–Canadian investors may soon be able to help the disadvantaged in a land where, the World Bank says, 48 per cent live in poverty. Despite the mini-rebellion, investing in Mexico looks more attractive than it has in some time. And Prime Minister Stephen Harper was one of the first world leaders to congratulate the new business-friendly president-elect, even before a recount and court decision confirmed his victory.
Mexico is a US$200-billion market for exporters, of which Canada now garners just one per cent. So International Trade Canada is planning a five-year Mexico trade strategy–and at a good time. Former president Vicente Fox’s administration ended with some of the best economic indicators ever seen in Mexico.
As a sign of continental integration, a who’s who of Mexican, U.S. and Canadian business and political leaders met in Banff, Alta., in September to discuss “Continental Prosperity in the New Security Environment.” The low-profile conference had high-profile participants: Canadian Minister of Public Safety Stockwell Day and National Defence Minister Gordon O’Connor were joined by U.S. Secretary of Defense Donald Rumsfeld and Mexico’s deputy foreign minister, Geronimo Gutierrez, at a meeting co-chaired by former Alberta premier Peter Lougheed. Heralding further economic co-operation, business leaders abounded. And for good reason: economists dismiss the political turmoil of the most southern partner as mere pangs of democratization.
“It’s democracy in action,” says Gilbert Cardenas, a Mexican-born economist now living in Texas. “When people see it in Mexico, they see it as instability. I see it as part of the democratic process.” Cardenas sees a bright side to Mexican society, masked to outsiders: “Mexico is a very entrepreneurial country. Free enterprise is very strong.”
The World Bank agrees. Its recent ranking of business-friendly economies shows Mexico on the ascent. Overall, it now ranks 43rd (up from 62nd) out of 175 economies in the bank’s “Doing Business” report. It ranks third among countries reforming their business practices. Major gains were made in “starting businesses” (up 32 places) and “protecting investors” (up 100 places), vital in attracting small and medium-sized investors.
That has Ottawa taking notice. In April, International Trade Canada released its report, “Mexico, A Full Continental Partner,” outlining business opportunities there. It highlights oil and gas, construction, IT, agri-food trade, environment, manufacturing and forestry as areas where Canadian companies may find new markets. “Canada values Mexico as a NAFTA partner, and the government of Canada looks forward to working with the new administration,” says International Trade Canada spokeswoman Valerie Noftle.
The report singles out Ontario’s Halton Region for its mentorship program, led by export consultant Javier Lopez. Halton “exports over $5 billion a year,” says Lopez, but “750 out of these 1,100 companies are exporting only to the U.S., and that is … happening all over Canada. So our focus is on helping companies to diversify export markets.”
Ottawa is negotiating free trade with El Salvador, Guatemala, Honduras and Nicaragua, hoping to build on the $850 million in goods and services already exchanged annually with Central America. Lopez calls Mexico “the first logical step” for Canada to expand its trading power south of the U.S. Leftist Obrador vowed to “rule Mexico from the streets,” but if Calderon’s reforms take, Mexico could be ruled by an entrepreneurial culture.