MEXICO CITY — Mexico's plastics industry is bullish about its prospects in the new millennium. Having signed the North American Free Trade Agreement with the United States and Canada early in the 1990s, Mexico ended the decade by doing a similar deal with the European Union.
According to Mexican government officials, no other country can boast such preferential trading treatment.
The European Union and Mexican parliaments, which still have to ratify the latest agreement, are expected to do so, making 82 percent of Mexico's industrial production exportable to the EU beginning in July, and the remaining 18 percent from the start of 2003.
"Some years ago [as recently as the late 1970s] most of Mexico's export earnings came from crude oil," says Alejandro Martinez Gallardo, chairman of Mexico's National Confederation of Industrial Chambers.
"Today, 90 percent of what the country exports is manufactured goods." Officials estimate the country's total exports in 1999 were worth US$133 billion.
Martinez said job creation still lags. Other problems casting a shadow over the Mexican economic recovery since the financial crisis of 1995, he said, include:
- A lack of credit for the manufacturing sector over the past five years as a result of a weak and almost bankrupt banking sector
- An inefficient fiscal system in which 80 percent of the population avoids paying income tax.
Juan Manuel Alvarez Icaza, former president of the National Association of Plastics Industries, points out that the sector also requires a crackdown on smuggling, which "continues to harm the industrialists of this country."
According to Alvarez, the demand for plastics products worldwide will grow by an estimated 7 percent annually between 2000 and 2005.
"But in Mexico the growth is estimated at 9-10 percent annually in the same period," he said.
Over the past four years, the industry has spent US$2.2 billion on upgrading equipment and machinery, Alvarez said.
"We've also started looking for new export markets," he said. "The value of plastics exports over the past 10 years has grown by 405 percent."