Mexico, GM Hail IRA's Effect on North American Auto Sector
The Inflation Reduction Act creates opportunities for more North American economic integration, according to a Mexican diplomat and a top General Motors official.
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Mexican Ambassador H.E. Esteban Moctezuma, speaking during a Dec. 15 virtual program hosted by the Atlantic Council, did not directly address dissatisfaction with the IRA's electric vehicle provisions in Japan, South Korea and Europe. But in addition to celebrating the legislation, he noted: "Mexico bought from the U.S. last year more than the whole European Union."
Omar Vargas, vice president and head of global public policy at GM, said the company wants to hone a "local to local strategy." He also said the last few years have taught company offices that "we cannot leave our supply chain at geopolitical risk," or too vulnerable to pandemics or natural disasters.
He said GM will continue to grow and invest across the U.S., Mexico and Canada, and that the IRA is a "profound opportunity" for the three countries' automotive sector.
"There’s a lot more that has to happen to make North America strong and robust in these categories," he said, referring to the electric vehicle supply chain.
He said that Canada is quite focused on developing both critical mineral extraction and processing and generally expanding production of components needed for EVs. He said there are opportunities for Mexico to also develop in mineral processing and battery component manufacturing.
The Atlantic Council hosted the program in honor of 200 years of diplomatic relations, but also referred to its recent report on the economic benefits of border efficiency.
Moctezuma said Mexican and U.S. officials find unified cargo processing useful, but also have discussed using compatible inspection equipment at the border, and using one port of entry as a model for changes.
Moderator Maria Fernanda Bozmoski brought up recent press reports that said Costa Rica has asked to join USMCA. The country is already a party to the Central America Free Trade Agreement, or CAFTA. Bozmoski, deputy director of programs at the Atlantic Council’s Adrienne Arsht Latin America Center, said that Atlantic Council scholars believe Canada, Mexico and the U.S. should think about integrating Central America into the agreement.
Bosco Martí, a nonresident senior fellow in the Council's Latin America Center, said CAFTA is a great start, but that if the U.S. really wants to slow migration from Central America, "we need to create employment opportunities in the region, in Central America." He said it would be worth it to analyze what adding Costa Rica would do.