Interview with the Ambassador of Taiwan in Mexico, Carlos S. C. Liao
How would you explain the current relationship between Mexico and Taiwan?
For the past two decades Mexico and Taiwan enjoy and appreciate each other a growing closer relationship based on a highly complementary nature that has made both countries mutually benefited in arenas such as trade, investment, academic and cultural exchanges and so on. These convenient ties have connected Mexico with Taiwan to consolidate an alliance of synergy, a union of reciprocity and a companionship of progress.
However, a tremendous potential still exists for bilateral endeavor to dedicate in terms of strengthening it in pursuance of even more success and prosperity between the two nations.
In what ways are Mexico and Taiwan linked economically?
Since NAFTA came into effect 23 years ago, the economy and trade relation between Taiwan and Mexico has been booming. It is observed that NAFTA plays a key role to enhance the bilateral trade and investment which has attracted Taiwanese businessmen to develop in Mexico. Taiwan, an island with similar size of the State of Puebla, is now a major Asian investor in Mexico, the third largest just after Japan and South Korea, with more than 300 Taiwanese companies installed, creating around 50 thousand jobs for Mexican people everywhere. The total investment amount that Taiwan has generated in Mexico reaches over US$3 billion. Many Taiwanese companies and outsourcing manufacturers majoring at electronics, computers, auto-parts, optoelectronics, injection molding, textile, apparel, footwear, precision machines, furniture and etc., established their factories in Mexico, especially in US-Mexico border areas, such as Ciudad Juárez, Chihuahua; Tijuana & Mexicali, Baja California; as well as some central and northern states, for example, Jalisco, Guanajuato, Coahuila, Aguascalientes, and of course, State of Mexico and Mexico City. Meanwhile, few are scattered at Sonora, Sinaloa, Nuevo León and Tamaulipas.
Massive investment from Taiwan has also enhanced bilateral ties. So far Taiwan ranks as Mexico’s 10th most important trading partner and 8th largest supplier. In 2016, the bilateral trade amounted to around US$7.08 billion, or an increase of 2.65% compared with 2015. Basically, Mexico exports copper, salt, data receivers, transmitters, fishery and agricultural products to Taiwan, while importing IC, printed circuits, steels, cell phones, auto-parts, DC motors, machinery, tools, medical equipments, computers and security devices from Taiwan to reinforce its socioeconomic infrastructure. If the foresaid highly complementary circumstances remain unchanged, trade exchange between Mexico and Taiwan still keeps a great deal of room for further growth.
Do you expect this to change in the near future?
It goes without saying that US President Donald Trump’s policy with several economic measures toward Mexico regarding the renegotiation of NAFTA and the leave of the US from TPP, among others, would trigger challenging impacts on Mexican economy, as well as Taiwan’s booming partnership with Mexico in these economic cooperation issues.
Meanwhile, Taiwanese investors in Mexico are very much aware of the process of NAFTA renegotiation in a bid to evaluate if their businesses with Mexico would go in a sustainable basis, or should leave Mexico to search for other convenient partners to cooperate with, if its eventual result does not support the feasibility to go on with Mexico.
Naturally, Taiwan does not expect it to come into an unsatisfactory end or even an impasse for the tripartite negotiators; neither does it like to see any party to quit NAFTA just like some analysts are concerned about.
Instead, Taiwan looks forward to an acceptable outcome for the three accountable countries so that Taiwanese businessman can be willing to adjust their investment to comply with the new rules stipulated on the NAFTA version 2.0, and to keep on operating in Mexico.
What effect has the fluctuating peso had the economic relationship between Mexico and Taiwan?
Actually, a fluctuating Mexican peso does not necessarily affect Taiwan’s business with Mexico in a negative way people in common would believe. Since the currency performs itself according to a free market mechanism, it seems nothing to worry about, unless when an emerging incident occurs that forces the peso to devaluate itself abruptly, which would require government intervention to ease.
For instance, those Taiwanese businessman who were very much worried about an eventual loss a year ago when Donald Trump was elected US President and triggered an emergent devaluation of the peso, are now getting back to their previous period of business profitability, following peso’s stabilization recently.
On the other hand, whenever a nation’s macro economy remains stable and healthy at a long term view, fluctuation of its currency should not mess about its economic performance.
How many changes in NAFTA influence Taiwanese investment in Mexico?
Among the 300 Taiwanese companies invested in Mexico, many are the so called maquiladoras, operating in the border areas with the US and the Bajío Zone, etc.
They introduce machineries, technology, intermediate goods and other capital from Taiwan or other Asian countries to manufacture in Mexico and re-export to the US according to the current rules of origin of NAFTA. Once these rules of origin are altered upon the renegotiation, it will by all means drive significant impact to Taiwanese investment in Mexico.
In order to reduce the cost and to be more competitive, they may adopt the following three imminent measures:
- 1. Move their factories in Mexico to the US: for example and in advance, Foxconn Group, a Taiwanese multinational electronic conglomerate majoring at electronic & computer components manufacturing, which has also installed more than 5 large plants in Mexico, just announced an enormous investment of US$10 billion in Wisconsin to produce LED, on July 26 at White House, which was witnessed by President Donald Trump & Vice President Mike Pence.
- 2. Move their production lines to other Asian countries that compete with Mexico by less operation costs.
- 3. Or stay in Mexico but will diversify their export to other markets like Latin America, European or even Asian countries, instead of focusing it to the US.
What has been the general response of Mexicans to Taiwan?
Generally speaking, Mexican people are getting more interested in interacting with the Asian Pacific region than ever before, although still timid and mild.
As a matter of fact, most people in Mexico ignore what Taiwan means for them, and know little about Taiwan´s contribution to the Mexican society, despite it has invested massively to create jobs; and when choosing to study abroad, they do not select Taiwan as their first alternative, even plenty of scholarships are offered to Mexico by Taiwan per year.
This reality somehow reflects Mexico’s traditional way of thinking by focusing on its long run ties with North and South America, and even Europe; versus limited links with Asian Pacific countries, where Mexicans can explore and diversify numerous and potential opportunities to enhance further development exchange programs, technology, science, culture and tourism.
In this sense, Mexicans may find Taiwan as an optimum partner specialized at innovation and creativity, which meets their demands and requirements to achieve their goals. In addition, Taiwan plays an essential role as a platform for Mexicans to bridge their business to access into other neighbor markets, particularly Mainland China, among others, based on Taiwan’s rich experience and dynamic practices in doing business there, and its strategic advantage: located at the heart of the West Pacific Basin.
In what areas do you wish Mexico and Taiwan to increase cooperation in the future?
Taiwan shares with Mexico the same common values of freedom, democracy, respect for human rights and free market economy, and looks forward to continuing a sustainable, harmonious, prosperous and mutually beneficial partnership with Mexico.
Also, both look forward to exchanges of a lot of opportunities for cooperation in other fields: for example, Taiwan possesses a high level technological development in semiconductor, biotechnology, photovoltaic, green energy, information and communication, transportation and other capital & technological intensive industries, making itself an essential hub and solid base as part of the global technology industry. These technologies could be transferred from Taiwan to help Mexico transform or upgrade its industrial structure, whenever a mutual investment is further enhanced. It’s to say, not only Mexico receives unilateral investment from Taiwan, but also pushes a feedback to invest there.
On the other hand, it is also worth to enhance cultural cooperation. In this arena, Taiwan has been invited to several Mexican fine arts festivals in recent years, and so has been Mexico vice versa. This partnership through flourishing cultural exchanges has linked both countries with more reciprocal understanding, as well as promoted higher added value of creativity in their business.
In addition, the academic exchanges between Mexico and Taiwan have increased impressively. The Government of Taiwan offers various programs annually, such as the Taiwan Scholarship, the Huayu (Mandarin Chinese) Enrichment Scholarship, Taiwan Fellowship, the ICDF Higher Education Studies Scholarship, and specific professional training courses for capacity building. Over the past two decades, Taiwan has awarded more than 800 scholarships to Mexican students, professors and public officials.
