EDITOR'S note:

This year marks the 40th anniversary of the establishment of diplomatic relations between China and Mexico. The two countries are the fastest growing among emerging economies and have enjoyed burgeoning bilateral trade.

However, tensions occasionally flare up, in the form of trade disputes. Is there a way for both sides to narrow the scope for confrontation and cement the consensus for cooperation? How can China seize the opportunities for growth in Latin America?

Dr Enrique Dussel Peters, director of Centro de Estudios China-Mexico at Universidad Nacional Autonoma de Mexico, spoke to Shanghai Daily reporter Ni Tao on Tuesday about these questions at the Shanghai Institute for International Studies. The views are his own.

Q: Trade and economic ties between China and Mexico have been booming. Which sectors have seen tremendous growth?

A: From 2000 to 2011, the annual trade growth rate has been beyond 35 percent, so trade has been dynamic both ways.

Exports from China to Mexico are mainly manufactured goods, electronics and auto parts, and to a much lower level, items such as automobiles and textiles. China is very strong in electronics and auto parts.

From the Mexican side, since 2010 and 2011, Mexico is mostly exporting oil, copper and other raw materials to China. It is important to understand again, based on what China's Commerce Minister Chen Deming said recently, that the trade relationship between China and other countries has to be increasingly balanced.

According to Mexican statistics, the import-export ratio is 9 to 1, which means we are exporting one unit and importing 9 units.

Q: Mexico is among the most active emerging countries in slapping staggering punitive anti-dumping duties on Chinese goods. Is there a way for the two countries to avoid trade retaliation and achieve win-win cooperation?

A: I would say first that this issue of high tariffs has really changed substantially.

Since December 2011, Mexico will only be able to impose the Most Favored Nation (MFN) tariffs on China, which will be 35 percent at the highest. So the times of huge tariffs, even with four digits, have passed. This is a good thing. 

What we are witnessing these days nevertheless are non-tariff barriers in both Mexico and China. In general the tensions that have risen between Mexico and China in the last few years in the trade area are a good example of why it is important to work and prepare ourselves for challenges. And for this purpose, we have to have better institutions and better exchange between academic people, the public sector and private sector.

Besides trade and investment, we have a centuries-old relationship in terms of historical and cultural exchange. I can give you a long list of topics, which includes not only trade. Unfortunately, we have this trade dispute or that on grapes, on auto parts, but is this all we have in our bilateral relationship?

I would say no, we have many other topics. Focusing only on trade and commercial issues is a dangerous problem and it reminds us that the list is much longer.

Q: Few Chinese firms appeal against the Mexican duties on their goods and even if they do, they rarely succeed in having them scrapped. Is it hard for Chinese firms to seek trade remedies in Mexico?

A: Again since four or five months ago, you don't have any high tariffs. China is exporting, according to Mexican statistics, goods worth almost US$50 billion annually.

Remember, Mexico is a pretty open country, in my opinion, too open. It is open within Latin America, with the United States, and also with China. In general, the tariffs Chinese producers are paying for exporting to Mexico is below 2 percent.

Historically there were some items that were not allowed to be exported because the tariffs were so high, and even that has been diminishing today.

So in terms of the difficulty for Chinese products to be exported to Mexico, I can't think of one single product today. It's not that all Chinese goods pay the highest 35 percent MFN tariffs. The weighted average tariff in 2010 is 1.89 percent. This is extremely low. You would find few countries in which tariff is so low. It's even lower than in the US.

Q: Mexico hasn't recognized China's market-economy status, a major hindrance to further improvement in bilateral ties. What can be done to change that?

A: In two weeks, on April 5 and 6, there's going to be a national conferene between China and Mexico. Mexico will make some proposals and so will China. I would say it's part of our national agenda for Mexico to ask China to eliminate a group of, say, non-tariff barriers. According to Mexican producers, it is still very difficult for them to export to China because of these non-tariff barriers.

I would hope the topic of granting China its coveted market-economy status can be raised and concretely discussed and some problems also addressed at the meeting.

Q: How can Chinese firms benefit from Mexico's membership in the North American Free Trade Agreement (NAFTA)? What disadvantages do they face?

A: This topic hasn't been sufficiently discussed. It's not clear enough for many Chinese firms.

I've visited factories of Geely, Cherry, BYD and SAIC. And I have several thousand interviews with people in the auto parts and automobile sector, especially of Chinese brands.

Most of the firms do not understand sufficiently what is the difference between investing in Mexico and in Brazil.

If you are in Mexico, you are also in the NAFTA region, which includes the US and Canada. This means that to invest in Mexico, you have to comply with NAFTA rules of orgin. NAFTA rules are stricter.

For example, if you want to export from Mexico to the rest of Latin America, with the exception of Brazil, in general their rules are very relaxed.

If you want to export from Mexico to the US and Canada, 62.5 percent of your operations have to be based in the NAFTA region. Otherwise you would have to pay very high tariffs. So this is the incentive.

The negative part is that you have to invest in Mexico, it cannot be a CKD (completely knock-down) plant which simply does assembling work.

Second, if you plan to invest in auto parts and automobiles, you should invest at least US$100 million and after three years, produce 5,000 units in the automobile sector. With this you are accepted. This is your entry ticket to NAFTA.

Source of documents：Shanghai Daily