Mexican Stand-Off

If only I had chosen my parents more carefully, I would have gone to Eton and joined the ruling class. If only Mexico could sort out the drug cartels, it would be a great country. It has 31 states and four of these are set at Threat Level 4 by the US State Department, largely due to the ‘Drug War’. This places them alongside Iraq and Afghanistan.

In the first quarter of 2017 the homicide rate in Mexico reached 72.3 per day and, by the end of the year, 86.4 per day. One policeman commented that the bad news wasn’t that shooting homicides were at record levels but rather that they had not peaked and continued to rise. I have visited Mexico twice on business. Once to consider a new lead oxide plant and the second to discuss trying to set up a sporting gun distributorship. Both failed.

The first because, although we were intending to partner a wealthy and powerful family in Monterey, the third largest city in Mexico, the security required for our meeting convinced me none of our employees would be safe. The second because, our agent either was attempting to get permissions beyond his pay grade or we hadn’t been able to fulfil the detailed disclosure dossier that seemed to expand to the size of Encyclopedia Britannica; what a pity.

Mexico is becoming a heavy hitter in the first division of economies. Its GDP was $2.4 trillion (£1.84tr) last year. The UK comparable is $2.6 trillion (£1.98tr). The Mexican economy is growing at over two per cent per annum and Mexico is the 13th largest exporter in the world.

Last year 81 per cent of these exports went to the US. The country, in its trade, is exactly what the UK would like to be post Brexit. The country has trade agreements with 44 countries and 90 per cent of its trade is under 12 free trade agreements. Since signing the North American Free Trade Agreement (NAFTA) in 1994, Mexico has tripled its trade with member states, USA and Canada and manufactures the same volume as the rest of Latin America combined.

Its population is approximately 123 million. Geographically the same size as Saudi Arabia, it has five times the population but a quarter of the oil exports. It makes up for this in manufactured products particularly in electronics, where it ranks sixth in the world after China, USA, Japan, South Korea and Taiwan. Mexico is also a major manufacturer of automobiles.

Ranking seventh in the world as a manufacturer, it ranks fourth in terms of export volume. It is the third largest country in solar power and the sixth most visited country in the world. Mexico’s movement up the ranks is thought likely to continue under the new president elect, Andres Obrador. He has said he does not want to fight with Trump on immigration; he is willing to continue the fight against the drug cartels and has now a good pool of skilled workers to push the economy along.

However President Trump’s problems with Mexico continue. US authorities have announced the construction of a 16 foot wall along a four mile stretch of the border in the Texan town of El Paso. However, the outward migration from Mexico, legal or not, is not a substantial economic problem for the country, rather the relationship with the US is the worry.

The worry reflects the two-way traffic: drugs north to the US and guns south to Mexico. Estimates vary widely as to numbers but the relative proportions are generally agreed: the vast majority of drugs entering the US, come through Mexico and the vast majority of weapons illegally held in Mexico had their origin in the US.

Not all these weapons are smuggled, there are many thousands of illegal assault rifles which were held by soldiers who have not returned them. The availability of illegal weapons dwarfs legally held guns. Despite views to the contrary, Mexican citizens are allowed to hold guns.

Legal gun ownership is about the same as in France. Around 9,000 guns are sold legally in Mexico each year. They are .22 calibre rifles and pistols and .38 specials, being the only guns that can be held for hunting, home protection or competition. To acquire one of these, a buyer must provide all documentation personally and can only purchase a gun from a gun shop run by the Army.

Mexico has many attributes that recommend it as a country with which to do business, population, economy, manufacturing talent and trade agreements. However, its difficulty dealing with organised crime and the concern and close control of sporting weapons, restrict its current potential as a market. Unless, the rise in homicides and the influence of the drug cartels can be curbed, one needs to piggy-back on existing relationships to make progress prudently in the sporting gun trade in Mexico

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