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US Agency Accord With Mexico Will Boost Investment

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  • SIUHIN@aol.com
    US Agency Accord With Mexico Will Boost Investment Washington, Jan. 18 (Bloomberg) -- Mexico reached an
    Message 1 of 1 , Jan 19, 2001
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      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
      administration.

      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.

      Largest Client

      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
      said.

      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.
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