US Agency Accord With Mexico Will Boost Investment
- US Agency Accord With Mexico Will Boost Investment
Washington, Jan. 18 (Bloomberg) -- Mexico reached an agreement with the U.S.
Overseas Private Investment Corp. enabling the agency to finance investments
in Mexico for the first time, the top OPIC official said.
The breakthrough comes just two days before OPIC President and chief
executive George Munoz leaves his post with the end of the Clinton
Munoz, a Mexican-American raised less than a mile from the Mexican border in
Brownsville, Texas, said the agreement will fill a gap left in the
U.S.-Mexico trading relationship since the North American Free Trade
Agreement took effect seven years ago.
``One of the downsides of Nafta... is that it really did not address the
support of small businesses in the U.S. and how we were going to help finance
them so they could be successful in their ventures in Mexico,'' Munoz told
Bloomberg News. OPIC ``will not support any business that will shut down in
the U.S. and re- open in Mexico,'' he said.
Small and medium-sized U.S. companies with a net worth below $250 million
will be eligible for OPIC loans of between $100,000 and $200 million.
Joint-ventures between U.S. and Mexican companies are also eligible.
Once Mexico reaches additional agreements with the U.S. government, OPIC
could also offer loan guarantees and insurance for U.S. investments that
cover political and foreign exchange risks, Munoz said.
OPIC began operations in 1971. Its portfolio of loans, guarantees and
insurance encompass transactions worth $17 billion. Mexico could potentially
become OPIC's largest client, surpassing Brazil and Russia, which each
account for about $2 billion of the agency's portfolio, Munoz said.
With Mexico now eligible for OPIC financing, the only Latin American country
still outside the U.S. agency's reach is Cuba, where U.S. investors are
barred by law from investing.
Mexico remained off-limits to OPIC for three decades because the
Institutional Revolutionary Party, which ruled Mexico for 71 years,
considered the agency's requirement that countries promise to respect foreign
investors' rights an infringement on its ``national sovereignty,'' Munoz
Under President Vicente Fox of the National Action Party, who took office
last month, ``Mexico has become much more receptive to the kinds of programs
that we offer,'' Munoz said.
Mexico has pushed past Japan to become the No. 2 U.S. trading partner, after
Canada. U.S. exports to Mexico grew 32 percent in the first 10 months of 2000
to $92.8 billion, while imports from Mexico climbed 26 percent to $113.8
billion, according to data released by the U.S. Commerce Department.
The relationship could grow even closer, Munoz predicted. ``There's going to
be more merging of our economies that will make Mexico probably our No. 1
trade partner'' in the long term, he said.
The Mexican economy ministry had no immediate comment.
Jan/18/2001 20:46 ET
(C) Copyright 2001 Bloomberg L.P.