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Trade Commission of Mexico for Western Canada and the Pacific Northwest of USA SECURITY & PROSPERITY PARTNERSHIP OF NORTH AMERICA NAFTA moving forward Hispanic Metropolitan Chamber of Commerce Portland, Oregon October 25th 2005 1 PORTLAND The North American Free Trade Agreement (NAFTA) is an outstanding demonstration of the rewards to outward – looking countries that implement policies of trade liberalization as a way to increase wealth and improve competitiveness. 2 PORTLAND NAFTA 10 years later 3 PORTLAND Strengthening trilateral trade & investment US: Exports to Mexico and Canada grew from $147.7 billion to $260.2 billion (176%) Mexico: Exports to US and Canada grew from $61.06 billion to $144.9 billion (237%) Canada: Exports to US and Mexico grew from $113.6 billion to $215.5 billion (52%) 4 NAFTA 10 years later PORTLAND NAFTA = North America the most active trading region in the world NAFTA countries account: Trade. 19% of global exports and 25% of imports Investment. 24% of global inward FDI and 25% of outward FDI 5 PORTLAND SECURITY AND PROSPERITY PARTNERSHIP OF NORTH AMERICA (SPPNA) 6 PORTLAND SPPNA New areas of cooperation Practical and achievable measures are being explored that could build and enhance NAFTA cooperation: Improved Dispute Settlement Mechanism Rules of Origin Harmonization of Regulations Government Procurement Investment Services Border Security / Continental Perimeter Business Travel 7 SPPNA New areas of cooperation PORTLAND Security: Improved border infrastructure US – Mexico Border Partnership F.A.ST and Smart Borders Cooperation Bioterrorism Act 8 PORTLAND M E X I C O & NAFTA A decade of strengthening 9 PORTLAND Mexico – A Snap Shot Population: 106 million GDP per capita: + $6.000 74% urban Under 20 – 44% Wealthy – 5% Upper Middle – 18% Middle Class – 37% Poor – 40% 10 PORTLAND Mexico: Commercial policy 1983 Mexico = a commercial strategy policy based on market economy. Deregulation + commercial opening. Improvement of the export performance + EXPORTS + EXPORTERS THE CHALLENGE: TO BE MORE COMPETITIVE GLOBALLY. 11 PORTLAND Mexico: International agreements FTA Island Liechtenstein Norway Switzerland FTA Colombia Venezuela NAFTA FTA USA Bolivia Canada GATT (OMC) FTA Chile APEC OCDE FTA Costa Rica 1986 1992 1993 1994 1995 FTA Israel FTA Nicaragua FTA European Union 1998 2000 PFTA Uruguay FTA Guatemala Honduras El Salvador 2001 FTA Japan 2005 12 PORTLAND Mexico in the world GNP 2002-2004 (Billions US dollars) 1. United States 2. Japan 3. Germany 4. United Kingdom 5. France 6. China 7. Italy 8. Canada 9. Mexico 10. Brazil 10,082 4,146 1,870 1,422 1,330 1,155 1,090 700 618 605 8th export country worldwide 1st export country in Latin America 34% exports to GNP ratio Export companies pay wages 37% higher than non-export Manufactured goods are 85% of total exports in 2004 13 GATT- NAFTA PORTLAND 180,000 160,000 140,000 120,000 NAFTA GATT 100,000 80,000 60,000 40,000 20,000 OIL MANUF IN-BOND MANUF NON IN-BOND MINING 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 0 AGRICULTURE Source: Banco de México 14 PORTLAND Main export industries Electric and electronic goods, appliances and components. Three industries integrate the 60% of the total exports: Automotive & auto-parts Machinery and equipment components. 15 PORTLAND Export companies Export Companies Share in the non-oil exports 5.0% 75% 95.0% 25% 16 PORTLAND Exports distribution by region 3.9% 90.5% 1.5% 4.0% Rest of the world 0.1% 17 States with highest foreign trade flows PORTLAND Chihuahua Baja California Coahuila Nuevo León Guanajuato Veracruz Jalisco Puebla Estado de Mexico Mexico City 18 Export supply PORTLAND MEXICAN COMPANIES Quality Price Commitment Just in time International standards MAIN INDUSTRIES Fresh products Food and beverage Textiles and garments Leather goods Furniture Decorative items Plastic (subcontracting) Electric-electronic goods Autoparts Do it yourself 19 PORTLAND The Hispanic market In 2002 – 2004 the Hispanic population in USA was around 40.6 millions with purchasing power of 500 thousand millions of dollars. In Canada, the Hispanic population is around 250,000 which 13% are Mexicans. HISPANIC COMPANIES IN THE USA Total: more than one million. Manufacturing food: 2,500. Selling food: 31,000. Restaurant: 34,000. 20 PORTLAND Mexico – outlook 2006 Speed of US recovery (85% Mexico exports) GDP growth – 4% Inflation between 3.8 – 4.4% Peso to weaken slightly Macroeconomic stability Lead up to Presidential election July 2006 21 PORTLAND Business opportunities 22 PORTLAND Mexico A large & complex market Tijuana, BC Monterrey, NL Guadalajara, Jal Mexico, City 23 PORTLAND The retail market in Mexico Around 30 billion Growing 9% per year Represents 17% of GDP More consumers credit available Private labeling and innovation Consolidation amongst main players 24 PORTLAND Export requirements “CLUSTERS” Integration of the export production chain Export promotion Infrastructure Financing Suppliers Know-how Transfer of technology Training Information Advising 25 PORTLAND Main trade partners EXPORTS 1. United States 2. Canada 3. Spain 4. Germany 5. Switzerland 6. United Kingdom 7. China 8. Guatemala 9. India 10. Netherlands 11. Brazil 12. Aruba Source: World Trade Atlas, 2004. IMPORTS 1. United States 2. China 3. Japan 4. Germany 5. South Korea 6. Canada 7. Italy 8. Brazil 9. Taiwan 10. Malaysia 11. Spain 12. France 26 PORTLAND Main imports 2004 Intermediate goods 76% Consumer goods 13% Capital goods 11% Source: INEGI, 2004. 27 PORTLAND Imports by origin North America 64.2% Europe 11.8% Asia 18.7% Latin America 4.7% 28 PORTLAND Foreign investment: entry strategy HIGH Foreign Direct Investment R I S K Joint - venture Strategic alliance Agent / representative office Import / Export LOW MARKET SHARE HIGH 29 NAFTA and the FDI into Mexico PORTLAND Cumulative FDI: 1994- 2003 115.3 tmd Cumulative FDI 140 0 2. 10 120 .4 72 .2 64 .6 85 100 80 40 20 0 .0 52 .3 44 .0 36 60 .3 25 .4 20 .8 16 .3 13 5 9. 0 7. 9 3. Thousands million dollars 9 1. 14 6 8. 12 3 1. 15 160 1987 1989 1991 1993 1995 1997 Source: Secretaría de Economía. Dirección General de Inversión Extranjera. 1999 2001 2003 30 PORTLAND Main foreign investment partners 1. United States (NAFTA) 2. Spain 3. Netherlands 4. United Kingdom 5. Canada (NAFTA) 6. Switzerland 7. France 8. Germany 31 PORTLAND Investment possibilities Foreign Direct Investment (FDI) Subcontracting processes Joint-venture Maquila (in-bond industry) Strategic alliance 32 PORTLAND Mexico as manufacturing centre NAFTA REGION Finished Products Parts and Components ASIA EUROPE Parts and Components Parts and Components Finished Products CENTRAL & SOUTH AMERICA 33 Incentives to do business in Mexico PORTLAND Location (Atlantic and Pacific Ocean). Internal market. External market (USA, Europe and Latin America). Competitive work force. Production flexibility (low volume – high mix) 34 PORTLAND Best business prospects Auto Parts / Supplies Electronics components Airport & ground support equipment Travel & tourism services Plastic materials Telecommunication equipment Safety & security equipment Hotel & restaurant equipment Transportation equipment 35 PORTLAND Mexico - Oregon 36 PORTLAND Oregon - Mexico EXPORTS Apples Printing equipment Spare – parts (automotive) Berries Forestry products Pulp and others IMPORTS Fresh fruits Vegetables Processed food Furniture Decorative items Printed material (books) Garments 37 PORTLAND Business possibilities Priority sectors to be promote during the business mission Agri-business & seafood Traditional Mexican Food Automotive and aerospace Biotechnology Building materials Electric and electronic Environmental 38 PORTLAND Business possibilities Forestry Hi Tech Metal-mechanic Natural health products Pulp and paper Software development Tourism 39 PORTLAND Trade Commission of Mexico 40 PORTLAND Trade Commission Is the Mexican Trade Promotional Organisation (TPO) in charge of promoting Mexican exports from SME’s and attracting foreign investment, in order to make Mexican export supply more competitive. 41 PORTLAND Strategy BY INDUSTRY: Find Mexican industries with more competitive advantages . BY REGION: Through our network of offices in Mexico . BY COMPANIES: Focus in small and medium size enterprises (SME’s). BY MARKETS: Consolidate the current markets and find new ones . 42 PORTLAND STATES GOVERMENT We work together MINISTRY OF ECONOMY CHAMBERS OF COMMERCE OTHER MINISTERIES MEXICAN CONSULATE TRADE COMMISSION OF MEXICO 43 PORTLAND Trade Commission of Mexico: Western Canada and Northwestern USA Region covered: Alberta, British Columbia and Yukon in Canada Washington, Oregon and Alaska in USA. 44 PORTLAND Our services in Canada and USA Development and support of trade projects Trade directory Transportation and logistic information Market research Distribution channels Information and support on trade fair and exhibitions Opportunities available to potential foreign investors in Mexico Development of in-bond industry projects Industrial costs in Mexico 45 PORTLAND NAFTA achievements US-Mexico relations have expanded into a close political, social, and cultural partnership. The increased movement of goods, services, and individuals has created growing linkages The exchange of ideas and methods in addressing common challenges. NAFTA has fundamentally altered the North American economic space, and increased the global competitiveness of all three parties. 46 PORTLAND Doing business in Mexico Judicial System different to US or Canada Labor law is strict Protect yourself with a contract Be flexible – stress personal relationship Multiple distributors – complex market Pay attention to local politics Enjoy yourself in a different way of doing business 47 PORTLAND Please contact us at: CANADA Vancouver, Canadá EEUU Portland Oregon SERGIO RIOS 200 Granville Street, suite 1365 Vancouver, Canadá V6C 1S4 Tel. 604 682 3648 Fax. 604 682 1355 E-mail: [email protected] VERONICA PEREZ 1234 SW Morrison Street Portland Oregon 97205 Tel. 503 274 1442 Fax. 503 274 1540 E-mail: [email protected] 48