Www.investinmexico.com MEXICO & NAFTA Opportunities for Chinese Companies Carlos Santos Trade...

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MEXICO & NAFTA

Opportunities for Chinese Companies

Carlos SantosTrade Commissioner of MexicoCIFIT, Xiamen, 9 Sept. 2006.


Why Mexico?1. Geographic Location

2. Free Trade Agreements

3. Economic Stability

4. Key Infrastructure

5. Investment Climate

6. Labor Force

7. Success Stories


Geographic Location

• Easy and fast communications between Mexico and North America, South America, Europe and Asia, as well as economic ties between these regions.


Free Trade Agreements

• No country in the world has signed more trade agreements with other nations than Mexico. These agreements can only increase companies´ competitiveness in those markets


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NAFTA• The North America Free Trade Agreement (NAFTA). In J

anuary 1994, Mexico joined Canada and the United States in the North American Free Trade Agreement (NAFTA), after 11 years of existance tariffs have been eliminated on 84.5% of all non-oil and non-agricultural Mexican exports to the United States and 79% of exports to Canada. The current duty free temporary import programs were eliminated as of January 1, 2001 for trade between Mexico, the United States and Canada.

• By the year 2009, there will be no more tariffs on products traded by the 3 countries.


Electronics Sector

• Mexico’s agreements, eliminates tariffs on imports from all the world to:– Computer products (Computers, monitors, p

rinters, scanners)– Telecommunication products (modems, cell

ular phones, office switching equipment, switching transmission equipment, audio & video)

– Other electronics goods (calculators, photocopy machines, cash registers).


Tariffs on raw materials and inputs of other sectors, such as steel, plastics, and chemical products, only to be used by the electronic, computer and telecommunications firms, were eliminated since September 2002 (278 tariff codes in the electronics PROSEC)


• The National Program for the Competitiveness of the Electronics Industry and High Technology includes issues such as:

– Designing a competitive fiscal policy– Promoting a competitive tariff structure– Efficient foreign trade processes– Develop the supply chain– Promoting technological development– Upgrading human capital– Generating an adequate infrastructure


Economic Stability

• Our economic figures indicate a well established and sustained economic program aimed at growth and sharing this growth with all the companies involved.


The Mexican economy has followed a very dynamic convergence process with the US economy in recent years

Mexico´s trade reforms have provided continued investment opportunities and strengthened growth prospects

The financial system has been strengthened and its regulation significantly improved and modernized

The Central Bank has consolidated as fully autonomous and independent

A clear division of powers has emerged between the Executive, the Legislative and the Judicial branches

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Highlights of the Mexican Economy


Financial Policy

Fiscal Policy

Monetary Policy

Exchange Rate Policy

Public Debt Management

Openness of the Economy

Strengthening of the domestic financial system

Strong track record of fiscal discipline

Inflation control

Fully flexible

Improvement of the amortization schedule, reduction of exchange and interest rate risks

Take advantage of international free trade agreements

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www.investinmexico.comSource: Banxico

Private Sector Forecast (Banxico Survey, August 2005)

Description 2005 2006/f

Gross Domestic Product Real % growth 3.1 3.5

Inflation Dec./Dec. 3.68 3.8

Nominal Exchange Rate Year closing 11.09 11.56

Interest Rates Cetes for 28 days, % 9.18 8.62

Current Account Millions of dollars -9,253 -12,825


1st exporter in Latin America 8th exporter worldwide (considering European Union as a whole) 3rd commercial partner of the United States of America as of December 31st, 2004

(1) Total Trade USD Billion

Source: US Department of Commerce and EFTA

1998 1999 2000 2001 2002 2003 2004

Canada 174.8 198.3 229.2 216.9 210.6 224.2 255.9

China 71.2 81.8 100.1 102.2 125.2 152.4 196.7

Mexico 94.7 109.7 135.9 131.4 134.7 138.1 155.8

Japan 121.9 131.4 146.6 126.6 121.5 118.0 129.6

PRINCIPAL US TRADE PARTNERS(1)

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EXPORTS TO:

1. U.S.A. 83.8%

2. Canada 1.7%

3. Spain 1.0%

4. Germany 0.9%

5. Japan 0.6%

6. China 0.5%

7. Brazil 0.4%

8. United Kingdom 0.4%

9. Venezuela 0.4%

10. Colombia 0.4%

IMPORTS FROM:

1. U.S.A. 56.2%

2. China 7.3%

3. Japan 5.4%

4. Germany 3.6%

5. Canada 2.7%

6. Korea 2.7%

7. Brazil 2.2%

8. Taiwan 1.8%

9. Malaysia 1.7%

10. Spain 1.4%

Source: Banco de Mexico

Mexico’s Foreign TradeTop Ten Partners 2004

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China’s Position in Mexico’s Foreign Trade Structure 　　

(Unit: US Nillions ）

　 2003 2004 20052006 （ April ）

Share

2005 Increase Rate

2°-Imports from China 9.4 14.48 17.63 6.52

7.96% 21.75%

10°Exports to China 0.46 0.47 1.13 0.45%

0.53% 139.13%

Source: Ministry of Economy of Mexico. 　　　　　　


Investment Climate

• Mexico offers a vast range of opportunities with benefits for all companies


Investment Climate

• Between 1994 to 2005 Mexico received USD $172.7 billion on FDI.

• Annual average of USD $15.7 billion.

• Free Trade Agreements have provided Legal framework for FDI.

• Largest investors: USA (62%); Netherlands (8.3%); Spain (8.1%); UK ( 3.8%).

• National Treatment for Foreign Investment.


Mexico's Key Information

• Mexico is the world´s 9th biggest economy and the 7th most important commercial trader.


Basic Information• Population (est. 2006): 105 million people• Land size: 1,964,375 sq. kms.• Religion: 89% catholic• Climate: Tropical to desert• Language: Spanish• Education is mandatory from the age of 6 to 14. I

t is also one of the Mexican Government's top priorities. A large proportion of the Federal Budget is spent on Education


Labor Force

• Mexico´s labor force is young, abundant, skilled, well educated and eager to fulfill any labor requirement


• From the total 105 million Mexicans:

0 to 14 30.6% 15 to 64 63.6% 65 + 5.8%

Population Growth is 1.16% per year.

Young Labor Force


Success Stories

• There are over 16,000 foreign companies established in Mexico, where they enjoy a big local market and a solid platform for boosting their exports.


CARLOS SANTOS TRADE COMMISSIONER OF MEXICO

BANCOMEXTEMBASSY OF MEXICO

E-MAIL: [email protected]

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