Chancellor Angela Merkel of Germany will meet Mexican President Enrique Peña-Nieto on June 9 with trade likely to be on the agenda. The EU more broadly and Mexico are in the process of negotiating a trade deal, which could be completed by year end as outlined in Panjiva research of May 9. While these talks won’t specifically advance that deal, opportunities for increased Mexican trade with Germany could be.

Germany is Mexico’s seventh biggest import supplier but only its 13th largest export market, Panjiva data shows. Mexico will be keen to increase its exports to Germany – despite a 50.0% increase in the 12 months to April 30 it still has an annual trade deficit of $9.8 billion.

Chart compares Mexican exports to Germany and vice versa. Calculations based on Inegi data. Source: Panjiva

The growth is accounted for by exports of completed autos to Germany from Mexico by Volkswagen SE and its Audi subsidiary. That’s the result of the opening of the San José Chiapa factory, which produces the Q5 SUV for the global market. Total exports by Volkswagen to Germany from Mexico were $676 million in the three months to April 30 from $146 million a year earlier, equivalent to 63.0% of the growth in Mexico’s exports to Germany.

Further discussions in autos may also center around relations with the United States. As well as Volkswagen – which exports $5.24 billion of goods to the U.S. from Mexico – Daimler also produces in Mexico for onward shipment to the U.S. That makes them vulnerable to the renegotiation of NAFTA (via rules of origin) and a border-adjustable tax.

Daimler produces trucks in Mexico that are exported to the U.S., with its total U.S.-bound exports worth $5.24 billion in the past year. It is, however, considering the future of its planned joint venture factory with Nissan at Aguascalientes, Bloomberg reports. Finally, BMW has yet to start production in Mexico, but it plans to build a new factory at San Luis Potosi, presumably to export to the U.S. as well as Mexico and the rest of Latin America, that will start operations in 2019.

Chart compares imports from Germany to Mexico, to exports from Mexico to Germany by brand name for BMW, Daimler and Volkswagen. Source: Panjiva

Autos aren’t the only area for discussion however. Panjiva analysis of Mexico’s top 500 exports globally vs. those exported to Germany shows the largest opportunities for expansion outside autos include power distribution equipment and refined oil products.

Chart compares exports to all countries except Germany to those that go to Germany by HS code. Chart excludes autos sector (chapter 87) for clarity. Source: Panjiva