NAFTA UPDATE: A MEXICAN PERSPECTIVE

KAREN ANTEBIT R A D E A N D N A F TA O F F I C E

S E C R E TA R Í A D E E C O N O M Í AM É X I C O

Mexico is a growing economy

Source: INEGI, SE-DGIE (Dec. 2016), WTO, UNCTAD, Brookings Institution, SHCP.

Mexico has built a solid framework for macroeconomic stability in the past two decades.

Total Exports$374 billion

The 15th largest world economy 10th largest world exporter and 1st in Latin

America 9th largest world importer 5th leading recipient of FDI among

emerging economies

$1.2 trillion economy $776 billion in total trade $457 billion in FDI attracted

since 1999 125 million consumer market/

60% middle class

GDP

1.4%2013

2.3%

2014

2.6%

20152.3%

2016

Total Imports$387 billion

… and a magnet for investment

The U.S. is Mexico’s #1 source of foreign direct investment, accounting for 46% of total FDI.

More than 66,000 companies in Mexico have FDI.

Source: Mexico’s Ministry of the Economy.

Accumulated FDI in MexicoBillion dollars

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

1432

62 86105

130 156177

209238

256284 308

330377

405 438465

U.S. Others

Source: SE-Washington with data from DGIE. Other includes agriculture, utilities, construction, transport and storage, and services such as professional, educational, health, hospitality, entertainment and other. */ January-December.

1999-2016*

FDI in Mexico by industryas a % of total

Manufacturing49%

Financial Services

15%

Commerce7%

Mining5%

Telecom.5%

Other19%

17.9

Mexico1.1

United States

North America represents 18% of global exports

North America exports $2.3 trillion in goods worldwideCanada

1.5

North America: a dynamic economic powerhouse

Regional GDP (trillion $)

NAFTA created a thriving regional market of 480 million people and a combined GDP of over $20 trillion.

Source: SE with data from IMF and WTO.

Recognizing the importance of NAFTA

Trilateral trade has more than tripled, reaching nearly $1 trillion in 2016.

Source: SE with import data from Statistics Canada, Banxico, and USDOC, and World Bank.

0

200

400

600

800

1000

1200

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1,122

1,033997

Mexico-Canada Trade U.S.-Canada Trade Mexico-U.S. Trade

289

699626602

661568

506476419

376338

893846

772

942

699

880

1,010

615

1,059

NAFTA 1,075

Trilateral Trade between the NAFTA Partners

Since NAFTA, U.S.-Mexico trade has multiplied by six

0

100

200

300

400

500

1993 1998 2003 2008 2013 2016

42 79 97 152226 231

4095

138

216

280 294

U.S. Exports to Mexico U.S. Imports from Mexico

$ Bi

llion

82

174

235

367

507 525

NAFTA

Source: USDOC.

We trade over $1 million per minute.

Source: USDOC . BRICS includes Brazil, Russia, India, China, and South Africa

Mexico is the U.S.’s second-largest export market and second-largest supplier of goods

U.S. exports to Mexico represents more than 16% of its sales worldwide.

Mexico market share of US total imports = 13%

116

130

163

180

231

U.S. Exports 2016

Billion dollars

Mexico

BRICS

UK, Germany, France & Italy

Hong Kong, Taiwan, Singapore, & South Korea

Buys more than:

260

259

294

U.S. Imports 2016

Billion dollars

Mexico

UK, Germany, France & Italy

Japan, South Korea, Taiwan &

Singapore

Supplies more than:

China

Nearly 5 million U.S. jobs depend on trade in goods and services with Mexico

Source: Jobs figures are from 2014, according to Growing Together: Economic Ties between the

United States and Mexico, Mexico Institute, Woodrow Wilson International Center for Scholars,

2016.

(Jobs in thousands)

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More than 10050 - 99Less than 50

MD

MA

CTRI

NJ

WA106.8

HI

DE

NH

VTME

NC

SC

FL

GA

VA

NYWV

PAOH

KY

TN

MS

LA

AR

IN

MI

IL

WI

IA

MN

MO

OK

TX

KS

NE

SD

NDMT16.8

WY

CO

NM

AK

AZ

UTNV

CA

OR ID

565.5

89.3

382.065.4

151.599.7

200.2 178.2

138.0

199.9

322.2

152.5

70.4

61.397.4

96.3

53.1

47.7

92.9

133.8

AL

290.2

57.223.3

43.6 46.7

9.1

88.0

26.810.7

23.6

50.6

33.9

15.4

13.4

41.6

40.8 67.2

95.5

23.3

11.4 22.4

22.1118.516.961.1

140.815.2

96.5

Mexican investment strengthens U.S. competitiveness…Mexican companies have invested over $52 billion in the U.S. and export more

than $1 billion to the global market.

Source: SE-Washington with information from SelectUSA. */ FDI figure from IMF Coordinated Direct Investment Survey

(CDIS), using outward position (stock) data 2015.

ManufacturingServices Food

Industrias CHBanorte

KatconRassini

Kuo

Metalsa

GCC

Cemex

Alpek

Grupo Mexico

Mexichem

Kaltex

Bio-Pappel

Lamosa

IUSA

Interceramic

DeAcero

Vitro

Condumex

Helvex

Corporacion EG

Nemak

GIS

Verzatec Xignux

MonexVector

EnlaceInteracciones

Cinepolis

Chedraui

Grupo Bal

SofttekAmerica Movil

TelevisaAzteca

America

Coppel

BBG Wireless

Famsa

Qualfon

OmnilifeNeorisCarso

Grupo Salinas

Financial services

Automotive

GrumaLala

Bachoco

Bimbo

La Costeña

Minsa

Sigma Alimentos

Femsa

Arca Continental

ElamexZucarmex

Frugo

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MD

MA

CTRI

NJ

WA

DE

NH

VT ME

NC

SC

FL

GA

VA

NYWV

PAOH

KYTN

MS

LA

AR

IN

MI

IL

WI

IA

MN

MO

OK

TX

KS

NE

SD

NDMT2.7%

WY

CO

NMAZ

UTNV

CA

OR ID

15.4%

37.8%

39.8%11.6%

10.1%14.2%

15.9% 13.1%

22.1%

10.0%

4.0%

9.9%

6.8%

7.7%18.4%

14.5%

19.0%

18.5%

12.2%

6.7%

AL

5.4%

1.4%4.8%

5.1% 6.1%

3.4%

14.2%

42.9%

10.7%

22.9%

24.7%

6.1%

12.0%

9.9% 12.7%

14.1%

3.6%

4.3%1.6%

10.7%9.6%9.2%7.4%8.3%3.2%

4.5%

2.5%

1

2

2 22

2

2

2

2

2 22

2

22

2 3

1 1

1

3

2

22

2

2

2

1

13

3

Mexico is an important export destination for each U.S. state

Source: SE- NAFTA with data from Wisertrade.

Mexico’s Share in U.S. Exports by State 2016Mexico ranks among the top 3 export markets for 31 states

1 2 3 Mexico’s rank as an export market for the state

More than 15%Between 10% and 15%

Less than 10%

% in Total Exports

Mexico Canada Malaysia South Korea China Japan

40%

25%

8%5% 4.0%

2%

Mexico is a strategic production partner for U.S. goods and exports worldwide

When Mexico exports, the United States exports. • There is a 40% U.S. value-added in Mexico’s exports to the U.S.

Source: NBER, Global Value database in Koopman, Powers, Wang, Wei (September 2010, revised March 2011)

MEXICO

U.S. exports also benefit from Mexico’s network of free trade agreements with 46 countries, providing preferential market access to 70% of world GDP and two-thirds of global imports.

Mexico and the United States do not simply trade

goods; we work together

to manufacture them

U.S. value added in final exports of selected countries to the U.S.

U.S. – Mexico trade is not only large, but also diversified…

7.6

5.0

1.1

11.6

7.3

8.1

8.6

5.3

17.0

26.2

58.4

99.5

3.3

10.4

16.7

7.0

10.0

10.7

9.6

21.7

18.9

16.3

42.9

31.8

U.S. imports from Mexico U.S. exports to Mexico

Source: SE-Washington with data from USDOC.

Computer & electronic products

Electrical equipment

Transportation equipment

Machinery

Chemicals

Oil refined products

Fabricated metal products

Primary metal manufacturing

Processed foods

Plastics

Agricultural products

2016 US-Mexico Trade by Sector

Billions of US dollars

Oil & gas

Agricultural trade is bigger and more integrated in North America

Canada is the US´ #1 exportmarket and supplier

Source: USDOC and Canada Statistics. Agricultural products include chapters 1 – 24 HS

Mexico is the US´#3 export marketand #2 supplier Canada is Mexico´s #3 export

market and #2 supplier

Mexico buys 8% of total U.S. apple production25% of ALL U.S. apple exports go to Mexico

$230 millionMexico

Source: United States Census Bureau; HS: 080810 Apples, Fresh;2016 Value of Apple Exports USD

ROW

15

Challenges

Expand NAFTA benefits to all sectors and regions of the three countries.

Streamline regional integration.

Strengthen regional value chains.

Efficient border management.

Develop new elements of competitiveness.

Rising protectionism.

NAFTA 2.0

NAFTA modernization should rely on:

Liberalization Goods Services Investment

Economic integration Supply chains Energy Talent

Competitiveness Innovation Trade facilitation Regulatory cooperation Border efficiency

NAFTA 2.0

A NAFTA 2.0 should be based on four pillars:

Strengthening the competitiveness of North America;

A more inclusive and responsible regional trade;

Addressing the 21st century economy;

Certainty for investment.

It is time to speak up in favor of free trade

Globalization and technology are here to stay.

Trade is part of the solution.

A strong North America is key to our ability to compete in world markets.

Globalization and technology are here to stay.

A strong North America is key to our ability to compete in world markets.

Trade is part of the solution.

It is time to speak up

Karen AntebiTrade and NAFTA Office

SECRETARÍA DE ECONOMÍAMÉXICO

karena@naftamexico.netMX-US Trade

www.naftamexico.net More information:

naftadesk@naftamexico.net(202) 728-1705

Washington, DC