Hope for Infrastructure Development in Mexico?

Feb. 28, 2007
The newly elected Mexican government headed by President Felipe Calderon may focus more on infrastructure development according to the recent Alliance

The newly elected Mexican government headed by President Felipe Calderon may focus more on infrastructure development according to the recent Alliance for the Security and Prosperity of North America, signed last year by the leaders of Canada, the United States and Mexico. One objective of that pact is to develop better trade practices among the three nations under a security system that includes participation by private businesses.

In Mexico, the Foreign Relations Secretariat and the Economics Secretariat will oversee creation of better infrastructure at ports and customs facilities as well as continuing to work toward harmonization of rules of origin and norms to reduce costs of doing business. This will mean revising the North American Free Trade Agreement (NAFTA).

Rocio Ruiz, Under Secretary of Economics, says the United States is "well disposed" to the endeavors, and that his office has an excellent relationship with U.S. Commerce Secretary Carlos Gutierrez. The goal is to improve Mexico's infrastructure to better realize U.S. export advantages that it has over Asian nations.

Support for the government's efforts comes from Juan Carlos Lopez Villarreal of the Mexican Business Council for Foreign Trade, Investment and Technology of the Northeast. The organization covers the state of Nuevo Leon, in which Monterrey is located, as well as the other eastern states of Coahuila and Tamaulipas, which also share the border with Texas.

"Mexico's export sector lacks competitiveness in the global market due mostly to its inefficient infrastructure, inadequate regulatory framework and high transportation costs," says Lopez. He claims the region's true competitive advantage is its 1,960-mile border with the United States.

Fed up with an overwhelming bureaucracy, he says Mexico can't take advantage of already existing facilities at the border because of burdens created by its logistics problems. He points to obvious problems that contribute to high logistics costs that include transportation, cargo insurance, inventory management, as well as poor warehousing and management."

Mexico has been walking backwards due to lack of efficient transportation. In the past five years, measured worldwide, the nation has slumped from 54th to 75th place on a global scale. Some 80% of all freight is carried by road, 10% by rail, 9.5% by ocean and 0.5% by air. Adding to the problems are long lines at bridges that lengthen crossing times. The costs of moving goods from Mexico to the U.S. are rising.

"We are in dire need of legislation with fiscal, labor and energy reforms," argues Lopez "We need a clear future vision from government which presently has no long-term projects. It still lacks understanding of logistics technologies and the urgency for investment of tax funds into public, industrial and technological facilities that promote good logistics practices. People in government just don't seem to know what we are talking about."—Ricardo Castillo Mireles

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