Business Between Mexico and the U.S.

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U.S. Department of CommerceMinority Business Development Agency

March 10, 2010

Population: 107 million (11th ) Surface: 1,958,000 km2 (13th)

GDP: $1.1 trillion (13th )

Exports: $300 billion USD(15th ), # 1 in Latin America, Mexico exports more than Brazil, Argentina, Paraguay, Costa Rica and Uruguay combined!

Foreign Investment: Annual flows of over $20 billion*

International Reserves: $75-80 billion dollars

Income p/capita: $10,747 dollars

Universities: 2,363 institutions, 2.7 million enrolled students w/ 539,640 Undergraduates (28.4% in Engineering & Technology)

Life expectancy: 75 years (85 once 65 birthday).

* 2009 not considered

A Snapshot of MexicoA Snapshot of Mexico

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Size of the Economy GDP(Mexico: $250 billion in 1995)

1. U.S.A. 14,441 2. Japan 4,9103. China 4,3274. Germany 3,6735. France 2,866 6. U. Kingdom 2,680 7. Italy 2,3138. Russia 1,6769. Spain 1,601 10. Brazil 1,572

11. Canada 1,49912. India 1,20613. México 1,088 14. Australia 1, 013 15. Korea 92916. Netherlands 87617. Turkey 729 18. Poland 52719. Indonesia 51120. Belgium 506

2008 billion dollars

Source: International Monetary Fund3

GDP (PPP) Per Capita 2008Selected Countries (Dollars)

Source: International Monetary Fund4

Free Trade Agreements Network with 44 countries

•Austria, Belgium, Cyprus, Denmark, Slovakia, Slovenia, Estonia, Finland, France, Greece, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Republic of Bulgaria, Romania, Slovakia, Sweden.

* On January 1st, 2007 Bulgaria Republic y Rumania.

** On November 19th, 2006 Venezuela is no longer part of G3 Free Trade Agreement.

*** Economic Agreements (ACEs)

**** Germany, Iceland, Argentina, Italy, Australia, Netherlands, Austria, Panama, Korea, Portugal, Cuba, United Kingdom, Denmark, Czech Republic, Spain, Sweden, Finland, Swiss, France, Trinity and Tobago, Greece, Union Belgo-Lux, India, Uruguay

European Association of Free TradeEuropean Union (EU)

Iceland, Liechtenstein, Norway and Switzerland

JapanNAFTA

Honduras, El Salvador and Guatemala

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MEXICO HAS PROMOTION AND RECIPROCAL PROTECTION AGREEMENTS FOR INVESTMENTWITH 24 COUNTRIES ****

1. Germany 1,4652. China 1,4283. U.S.A. 1,3014. Japan 7825. Netherland 6346. France 6097. Italy 5408. Belgium

4779. Russia 47210.U. Kingdom 458

11. Canada 456

12. Korea 422

13. Hong Kong 37014. Singapore 33815. Saudi Arabia 32916. México

29217. Spain

26818. Taiwan

25619. U. Arab Emir.

23220. Switzerland 200

Leading Exporters2008 ($ Billion)

Source: World Trade Report. WTO, July 20096

Mexico’s Main Exports

Source: SE, Banxico

1982 2008

Oil 77%

Agriculture 4%

Manufacturing 19%

Oil 18%

Agriculture 2%

Manufacturing 80%

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Bilateral Trade Mexico-U.S.Exports

Imports

Source: SE, US Census

$40 billion (1993)$176 billion (2009)

$42 billion (1993)$129 billion (2009)

Bilateral Trade of 850 million dollars a day!

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U.S. Exports to Mexico (Billion dollars)

Source: SE, USDOC

NAFTA

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U.S. Trade with México, Latin America and the E.U

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Latin America Market: U.S. X’s $238.8 billion (22.6%)U.S. X’s to E.U.: $220 billion (20.8%)

• Mexico 128,997 • Brazil 26,175• Chile 9,365• Venezuela 9,359• Colombia 9,457• Argentina 5,559• Dominican Republic 5,270• Peru 4,925• Costa Rica 4,704• Panamá 4,358

• Ecuador 3,927• Guatemala 3,900• Honduras 3,384• Bahamas 2,455• Netherlands Antilles 2,130• El Salvador 2,019• Trinidad & Tobago 1,989• Jamaica 1,448• Paraguay 1,352• Nicaragua 1,094

Source: U.S. Census

• All tariffs and quantitative restrictions between the U.S., Canada & Mexico were eliminated on January 1, 2008

• Nafta links 444 million people, producing $17 trillion of goods & services

• Trade between the U.S., Canada & Mexico exceeds U.S. trade with the E.U. and Japan, combined!

• U.S. exports to Mexico & Canada rose from $142 billion, in 1993, to $334 billion in 2009

NAFTA & Mexico

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NAFTA Impact on U.S. States exports

• Mexico is a market for over 13% of U.S. exports of agricultural & food products, 24% of auto parts, 13% of fabricated metal products, 20% of audio & video equipment, 16% of computer equipment, and 21% of electrical equipment & components.

• The 50 U.S. States have significantly increased their exports to Mexico: 48 of them at least doubling their sales, since NAFTA implementation.

• Mexico is Illinois’ 2th largest market with $4.3 billion dollars in X’s.

• Illinois X’s to Mexico have grown at an annual average rate of 8.9% since NAFTA was implemented, growing by 260% in 15 years.

• Mexico accounts for 8% of Illinois X’s world wide.

• In 2008, close to 10,000 jobs were directly related to Illinois X’s of manufactured goods to Mexico

Source: Ministry of the Economy with data from WISER & USDOC 13

U.S.-Mexico Bilateral Trade•Mexico is the U.S. third largest trading partner;

•In 15 years, bilateral trade has quadrupled, reaching $367 billion dollars in 2008

•U.S. exports to Mexico grew by 264% in this period

•In 2008, U.S. exports to Mexico reached $152 billion dollars, same amount of U.S. exports to the U.K. France, Netherlands & Belgium together

•In 2008, Mexico’s accounted for 11.7% of total U.S. exports to the World, three percentage points more than 1993;

•Bilateral trade is registered from agricultural and food products all the way to metal goods, machinery, computer & electronics, electrical equipment, transportation and aerospace products.

Source: Nafta Works, Ministry of the Economy14

Selected products for which Mexico & the U.S.are each others main suppliers:

MEXICO IS MAIN SUPPLIER

• T.V. Sets• Ignition wiring• Digital processing units• Seats for vehicles• Trucks• Refrigerators• Denim• Beer• Tomatoes• Leaf springs

MEXICO IS LARGEST MARKET

• Gasoline• Components of computers• Engines of vehicles• Cellular phones• Video games• Electrical couplings• Polypropylene• Beef• Printed circuits• Sorghum

Source: NAFTA Works, Ministry of the Economy 15

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Illinois X’s (2009)

Illinois Main X’s to Mexico

Illinois X’s by Country

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Illinois X’s to Mexico (1993 - 2009)

Main Productive Sectors

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Autoparts

Biomedicine

Nanotecnology

New Technology Electric-

Electronic

TraditionalLeaderGrowthInnovation

Pharma

Priority Sectors

Automobile

Aerospace

IT

Energy

Tourism

Biotecnology

Health

AftercareAftercare - promotionPromotion

$50A

AA

AAA

Agro business

Agro

Process Foods

Construction

Leather, Footware

Metal Manufacturing

MiningFurniture

Chemical

Gifts/Toys M.

Logistics & Infrastructure

Medical Equipment

ProfessionalServices

Blooming Industries in MexicoBlooming Industries in Mexico

Automotive • Mexico is the World’s 11th largest producer; • 80% of auto parts production is exports to the U.S.;• Mexico is the US # 1 auto parts supplier. Aerospace • 214 companies are operating in México; • 20,000 employees and $3.4 billion exports; Electronics • Generates 35,000 direct & 110,000 indirect jobs; • Production of appliances is over $129 million;Software & IT Services• Mexico has evolved its IT services considerably, and the government has invested in industry associations and fostered a joint

approach to IT initiatives between the federal and state governments.• Mexico offers the advantages of proximity, cultural affinity, time-zone alignment, relatively lower costs, limited (if any) visa

restrictions, ease of software and hardware procurement, and preferences available in local trading blocks.• Mexico has 2,134 IT companies.• In 2008 Mexico’s software market grew 6% and the IT in 14%.Medical and Residential Tourism• Based on the demographic trends, estimates indicate that there is the potential that 10% of American retirees will consider

relocating to Mexico to establish residence and/or to benefit from lower cost of health care services.• México is the main medical tourism destiny for U.S. citizens, in particular for cosmetic surgery and dental procedures. • In 2008, Mexico’s medical tourism industry generated an estimated income of 880 MDD. Renewable Energies• Mexico developed 2 wind farms in Oaxaca (La Venta I & II) & a hybrid facility in Guerrero Negro w/total capacity of 85.48 MW.• CFE has five wind power projects in its pipeline (La Venta III and Oaxaca I-IV) that will add 500 MW to the grid before 2011• There are twelve private projects under development in Oaxaca, with a total capacity of 1,900 MW & four projects B.C. with

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Mexico is Investing in Infrastructure

• Railroads $4 Billion: 1,418 Kms. of railroads, 10 multimodal corridors w/12 intermodal cargo terminals.

• Ports $6 Billion: Build 5 new ports, modernize 22. Increase container management from 4 to 7 million TEUS & build 13 cruise ship docks.

• Airports $5 Billion: Build 3 new airports, expand 31. There are more than 1,000 airports, 50% offer world class service.

• Telecom $25 Billion: Achieve 24 million users of fixed line, 75 million users of mobile line coverage and 70 million internet users.

• Water Supply & Sanitation $14 Billion: Increase drinking water to cover 92% of the population.

• Electricity $34 Billion: Increase generation capacity by 9,000 megawatts, covering 97.5% of the population.

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Leading Development Sectors for Mexico

• Automotive;

• Aerospace;

• Electronics & Appliances;

• Metal Manufacturing;

• IT, BPO and Software Services;

• Pharmaceutical & Medical Devices;

• Renewable Energies;

• Medical & Residential Tourism.21

More Good News from Mexico’s Economy• Motorola just recently opened its first Engineering Design Centre in Monterrey• Sony Corp. established an alliance w/ Taiwan’s Hon Hai Precision for the production of LCD TV’s in Tijuana• Genomma Lab & Televisa agreed to work together in the distribution of personal care products in the U.S. • Cummins Filtration is starting operations in San Luis Potosi• Boehringer Inghelheim has invested more than $100 million in Mexico• Vitro Cristalglass & Dream Glass are working together in the Spanish market • Minefinders Corp., a Canadian company, is extracting gold and silver in Chihuahua • Mexico has doubled gold extraction since 1998 to reach a total of more than 45,100 kgs.• Bronco Drilling & Carso entered into a JV to provide oil & gas drilling in México and Latin America• Zodiac Aerospace and Manoir Industries will expand their operations in Chihuahua • Mexico and Colombia are going to be producing bio diesel from Jatropha in Chiapas• Nissan will start the production of a new model in Aguascalientes with an investment of $200 million• IBM will invest $20 million to increase its manufacturing capacity at its Technology Campus in Guadalajara• Fraunhofer Solar Energy Institute will assist in the development of solar energy plants in Durango• Baskem and Idesa will develop an integrated petrochemical project with Pemex Gas in Coatzacoalcos • Nestlé will invest $175 million in several projects, including the construction of the world’s largest coffee plant • Golden Dragon is opening a facility in Coahuila to produce high-tech copper tubes for AC• Samsung Engineering has been awarded public contracts for $944 million tghrough 10 years of operation• Takeda Pharmaceuticals recently started operating in Mexico

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• ProMexico is the entity responsible of strengthening Mexico’s participation in the international economy.

• ProMexico supports the export activities of Mexican companies and coordinates actions to attract foreign direct investment.

• ProMexico operates through a network of 52 offices throughout Mexico and 34 venues in 18 countries.

• ProMexico focus on facilitating communicaction between economy agents, Ministries of Foreign Affairs, Economy, Agriculture and Tourism, State governments, Chambers and Associations, Private Sector, Market Opportunities.

ProMexico: Mexico’s Trade and Investment Agency

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ProMexico: Mexico’s Trade and Investment Agency

OmbudsmanSoft Landing

One Stop Shop

Investor After Care

Government Procedures Advisory

How can we help?

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Follow up strategy for Investment opportunities

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• Increased Per Capita Income (PPP): $10,747 dollars; • Increased the Size of its Economy: $ 1.1 trillion dollars;• Strengthened ties w/the World: FTA’s with 44 countries; • Increased its Exports to the World: $300 billion dollars;• Increased its Exports to the U.S.: $216 billion dollars;• Became the U.S. 3rd trading partner and Minnesota’s 5th; • Increased annual inflows of FDI: $25 billion dollars; • Reduced Infant Mortality to 15 per 1,000 live births;• Increased Life Expectancy to 75 years; • Become a full-fledged democracy.

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In 15 years Mexico has:

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ProMexico can be a valuable resource for you!ProMexico can be a valuable resource for you!

.gob.mx

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225 N. Michigan Ave., Suite 1800Chicago, Illinois 60601 Tel (312) 856-0316Miguel.leaman@promexico.gob.mx