NAFTA UPDATE: A M EXICAN P ERSPECTIVE K AREN A NTEBI T RADE AND NAFTA OFFICE S ECRETARÍA DE E CONOMÍA M ÉXICO

NAFTA UPDATE: A M EXICAN P ERSPECTIVE K AREN A NTEBI T RADE AND NAFTA OFFICE S ECRETARÍA DE E CONOMÍA M ÉXICO

Mexico is a growing economy Mexico has built a solid framework for macroeconomic stability in the past two decades. Total Exports $374 billion GDP $1. trillion economy $776 billion in total trade $457 billion in FDI attracted since 1999 15 million consumer market/ 60% middle class The 15 th largest world economy 10 th largest world exporter and 1 st in Latin America 9 th largest world importer 5 th leading recipient of FDI among emerging economies 1.4% 013.3% 014.6% 015 Total Imports $387 billion.3% 016 Source: INEGI, SE-DGIE (Dec. 016), WTO, UNCTAD, Brookings Institution, SHCP.

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. Accumulated FDI in Mexico Billion dollars Source: Mexico s Ministry of the Economy. 14 3 6 U.S. 86 105 130 Others 84 56 38 09 156 177 308 330 377 405 438465 Telecom. 5% Mining 5% Commerce 7% FDI in Mexico by industry as a % of total Other 19% 1999-016* Manufacturing 49% 1999 000 001 00 003 004 005 006 007 008 009 010 011 01 013 014 015 016 Financial Services 15% 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.

North America: a dynamic economic powerhouse NAFTA created a thriving regional market of 480 million people and a combined GDP of over $0 trillion. Regional GDP (trillion $) Canada 1.5 North America exports $.3 trillion in goods worldwide United States Mexico 1.1 17.9 North America represents 18% of global exports Source: SE with data from IMF and WTO.

Recognizing the importance of NAFTA Trilateral trade has more than tripled, reaching nearly $1 trillion in 016. 100 1000 800 600 400 Trilateral Trade between the NAFTA Partners NAFTA 89 476 506 419 376 338 661 568 615 77 699 66 60 846 893 94 699 1,059 1,010 880 1,075 1,1 1,033 997 00 0 1993 1994 1995 1996 1997 1998 1999 000 001 00 003 004 005 006 007 008 009 010 011 01 013 014 015 016 Mexico-Canada Trade U.S.-Canada Trade Mexico-U.S. Trade Source: SE with import data from Statistics Canada, Banxico, and USDOC, and World Bank.

Since NAFTA, U.S.-Mexico trade has multiplied by six We trade over $1 million per minute. 507 55 500 $ Billion 400 300 00 100 0 NAFTA 8 40 4 35 174 80 94 16 138 95 6 31 79 97 15 1993 1998 003 008 013 016 367 U.S. Exports to Mexico U.S. Imports from Mexico Source: USDOC.

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. U.S. Exports 016 Mexico market share of US total imports = 13% U.S. Imports 016 Mexico Buys more than: BRICS UK, Germany, France & Italy Hong Kong, Taiwan, Singapore, & South Korea China 116 130 163 180 31 Mexico Supplies more than: Japan, South Korea, Taiwan & Singapore UK, Germany, France & Italy 59 60 94 Billion dollars Billion dollars Source: USDOC. BRICS includes Brazil, Russia, India, China, and South Africa

Nearly 5 million U.S. jobs depend on trade in goods and services with Mexico AK 10.7 OR CA 57. 565.5 #REF! WA 106.8 NV 43.6 ID 3.3 UT 46.7 AZ 89.3 #REF! MT 16.8 HI WY 9.1 3.6 CO NM 6.8 88.0 13.4 15.4 NE KS TX ND SD 33.9 OK 47.7 38.0 #REF! 50.6 MN 9.9 IA 53.1 MO 97.4 AR 41.6 WI 96.3 65.4 IL #REF! 00. #REF! 99.7 MS MI WV 138.0 #REF! OH IN #REF! 178. 95.5 61.3 KY AL 40.8 67. LA #REF! TN GA 15.5 (Jobs in thousands) More than 100 50-99 Less than 50 3.3 VT PA 199.9 #REF! VA 133.8 NC #REF! 151.5 70.4 SC FL 90. ME 11.4.4 NY 3. NH.1 MA 118.5 RI CT NJ DE 16.9 61.1 140.8 15. MD 96.5 Source: Jobs figures are from 014, according to Growing Together: Economic Ties between the United States and Mexico, Mexico Institute, Woodrow Wilson International Center for Scholars, 016.

Mexican investment strengthens U.S. competitiveness Mexican companies have invested over $5 billion in the U.S. and export more than $1 billion to the global market. Services Food Manufacturing Cinepolis IUSA Cemex Kaltex Famsa Softtek Bimbo America Movil Gruma Femsa DeAcero Bio-Pappel GCC Coppel Lala Qualfon La Costeña Sigma Mexichem Interceramic Chedraui Carso Frugo Alimentos Neoris Omnilife Bachoco Condumex Corporacion EG Azteca BBG Wireless Zucarmex Elamex Lamosa Alpek America Televisa Minsa Helvex Arca Grupo Bal Grupo Mexico Monex Continental Nemak Vitro Banorte Vector Industrias CH Kuo Financial services Interacciones Enlace Verzatec Xignux Grupo Rassini Automotive Metalsa Salinas GIS Katcon Source: SE-Washington with information from SelectUSA. */ FDI figure from IMF Coordinated Direct Investment Survey (CDIS), using outward position (stock) data 015.

Mexico is an important export destination for each U.S. state Mexico ranks among the top 3 export markets for 31 states Mexico s Share in U.S. Exports by State 016 1 OR CA 15.4% #REF! WA 1.4%.5% NV 5.1% ID 4.8% UT 6.1% 37.8% #REF! MT.7% 1 AZ 1 WY 3.4% CO NM 4.9% 14.% 6.1% 4.7% 1 NE 1 KS TX ND SD.9% 1 OK 18.5% 39.8% #REF! MN 1.% 10.7% IA 19.0% MO AR WI 18.4% 1.0% 14.5% IL #REF! 15.9% 7.7% KY TN #REF! 14.% MS MI 9.9% 1.7% LA #REF! 11.6% WV IN OH 14.1% 13.1% AL GA 9.9% 3.6% 6.8% SC FL VT VA 6.7% NY 4.0% 3 NC 10.1% 5.4% 4.3% 3.1% #REF! PA 10.0% 3 3 ME 1.6% NH 10.7% MA9.6% RI 9.% CT 7.4% NJ 8.3% DE 3.% MD 4.5% % in Total Exports More than 15% Between 10% and 15% Less than 10% 1 3 Mexico s rank as an export market for the state Source: SE- NAFTA with data from Wisertrade.

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. Mexico and the United States do not simply trade goods; we work together to manufacture them 40% U.S. value added in final exports of selected countries to the U.S. 5% 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. 8% 5% 4.0% % MEXICO Mexico Canada Malaysia South Korea China Japan Source: NBER, Global Value database in Koopman, Powers, Wang, Wei (September 010, revised March 011)

U.S. Mexico trade is not only large, but also diversified 016 US-Mexico Trade by Sector U.S. imports from Mexico U.S. exports to Mexico 99.5 Billions of US dollars 58.4 Transportation equipment Computer & electronic products Electrical equipment 6. 16.3 Machinery 17.0 18.9 Chemicals 5.3 1.7 Primary metal manufacturing 8.6 9.6 Fabricated metal products 8.1 10.7 Processed foods 7.3 10.0 Agricultural products 11.6 7.0 Oil refined products 1.1 16.7 Plastics 5.0 10.4 Oil & gas 7.6 3.3 31.8 4.9 Source: SE-Washington with data from USDOC.

Agricultural trade is bigger and more integrated in North America Canada is the US #1 export market and supplier Mexico is the US #3 export market and # supplier Canada is Mexico s #3 export market and # supplier Source: USDOC and Canada Statistics. Agricultural products include chapters 1 4 HS

Mexico buys 8% of total U.S. apple production 5% of ALL U.S. apple exports go to Mexico $30 million Mexico ROW Source: United States Census Bureau; HS: 080810 Apples, Fresh; 016 Value of Apple Exports USD

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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.0 NAFTA modernization should rely on: Liberalization Goods Services Investment Competitiveness Innovation Trade facilitation Regulatory cooperation Border efficiency Economic integration Supply chains Energy Talent

NAFTA.0 A NAFTA.0 should be based on four pillars: Strengthening the competitiveness of North America; A more inclusive and responsible regional trade; Addressing the 1 st 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.

It is time to speak up 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.

Karen Antebi Trade and NAFTA Office SECRETARÍA DE ECONOMÍA MÉXICO karena@naftamexico.net MX-US Trade www.naftamexico.net More information: naftadesk@naftamexico.net (0) 78-1705 Washington, DC