1 U.S. – Mexico Trade Relationship
2 Mexico is a growing economy Mexico has built a solid framework for macroeconomic stability in the past two decades Total Exports $374 billion $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% 2.3% 2.6% 2.3% 2013 2014 2015 2016 The 15th largest world economy 10th largest world exporter and 1st in Latin America 9th largest world importer 5th leading recipient of FDI Total Imports among emerging economies $387 billion
Source: INEGI, SE-DGIE (Sep. 2016), WTO, UNCTAD, Brookings Institution, SHCP. 3 Recognizing the importance of NAFTA
Trilateral trade has more than tripled, reaching nearly $1 trillion in 2016.
Trilateral Trade between the NAFTA Partners
1,122 1200 1,075 1,059 1,033 1,010 997 942 1000 893 846 880 NAFTA 772 800 699 661 699 615 626 568 602 600 476 506 419 376 338 400 289
200
0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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. 4 Since NAFTA, U.S.-Mexico trade has multiplied by six a million dollar a minute business Mexico is the U.S.’ third-largest trading partner $1.5 billion dollars in products are bilaterally traded each day
U.S.-Mexico Trade 506 534 531 494 525 500 461
392 400 NAFTA 367 348 332 278 280 294 296 294 290 305 263 300 267 247 235 230 233 231 216 197 198 211 173 177 200 157 170 131 136 156 $ Billion 131 134 138 108 82 101 110 226 86 95 240 236 231 100 198 217 74 163 50 62 134 137 152 129 40 111 102 111 120 71 79 87 97 97 42 51 46 57 0 199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016 US Exports to Mexico US Imports from Mexico Source: USDOC. 4 Mexico is the U.S.’s second-largest export market and second-largest supplier of goods
U.S. exports to Mexico reached $231 U.S. imports from Mexico reached billion last year, which represents more $294 billion. Mexico has a market than 16% of its sales worldwide. share of 13% of US total imports.
U.S. Exports 2016 U.S. Imports 2016
Mexico 231 Buys more than: Mexico 294 Supplies more BRICS 180 than: UK, Germany, Japan, South France & Italy 163 259 Korea, Taiwan & Singapore Hong Kong, Taiwan, Singapore, & South 130 Korea UK, Germany, 260 China France & Italy 116
Billion dollars Billion dollars
Source: USDOC . BRICS includes Brazil, Russia, India, China, and South Africa 6 US-Mexico trade is diversified and highly integrated, strengthening supply chains in key industries ELECTRIC-ELECTRONIC $143 billion dollars in electrical and electronic equipment are traded between Mexico and the U.S. per year. Mexico is the leading home appliance exporter in Latin America, and the 6th globally. Leading flat television screen exporter in the world. The second refrigerator exporter.
AUTO & AUTO-PARTS Mexico is the 7th largest producer and 4th exporter globally of new light vehicles in the world. $123 billion dollars in cars and parts are traded between Mexico and the U.S. annually. 11% of light vehicles sold in the U.S. were produced in Mexico. Mexico is the main auto parts supplier to the U.S. The Mexican auto parts industry became the th 5 largest in the world. Source: SE with data from Brookings Institution, US Census 7 Bureau, Banxico, and Comtrade. 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. 40% U.S. value added in final exports of selected countries to the U.S.
U.S. exports also benefit from Mexico’s network of free trade agreements with 46 countries, 25% providing preferential market access to 70% of world GDP and two-thirds of global imports.
8% 5% 4.0% 2%
MEXICOMexico Canada Malaysia South Korea China Japan Mexico and the United States do not simply trade goods; we work together to manufacture them Source: NBER, Global Value database in Koopman, Powers, Wang, Wei (September 2010, revised March 2011) 7 U.S.-Mexico trade in services has doubled since 1999
U.S. EXPORTS Other U.S.-Mexico Trade in Services Telecommunications 16% 3% US Exports $49.5 B Financial services US Imports 5% Travel 52% Royalties 10% $19.5 B $23.8 B Transport 14% U.S. IMPORTS Other $9.7 B Telecommunications 17% $30.0 B 5% Financial services $14.1 B 2% Travel Royalties 62% 3% Transport 1999 2015 11%
Source: USDOC with data from BEA. Financial services include financial and insurance services, telecommunications include IT services, royalties include charges for the use 9 of intellectual property. North America is emerging as a global energy power
Mexico is the US’ largest energy market, consuming over $20 billion in energy goods Canada is the US’ biggest energy supplier, providing over $54 billion in commodities 2016 US trade in energy with Mexico and Canada totals $100 billion, accounting for 40% of its total trade Source: SE-Washington with data from USDOC
$36.2 B $3.4 B $3.7 B $5.1 B $2.2 B $1.0 B
$190 M $2.8 B $4.6 B $5.1 B $1.5 B
$6.0 B $10.3 B $2.0 B $1.2 B
$660 M $7.6 B
Electricity Crude oil Natural gas Diesel & fuels Gasoline Liquefied gases 10 US – Mexico agricultural trade has multiplied by five since NAFTA Mexico is the 3rd destination for US agricultural products and its 2nd largest source of imports
U.S.-Mexico Agricultural Trade 45 42.8 40.4 40.3 37.2 40 36.6 34.9 35 28.7 30 NAFTA 27.6 19.221.122.824.8 24.9 17.7 23.5 17.1 25 20.9 18.3 12.0 14.7 20 14.8 16.3 13.4 11.3 12.4 12.1 13.1 $ Billion 10.5 15 10.8 10.9 9.3 9.5 9.5 8.2 19.3 7.8 7.7 7.2 18.7 18.0 10 6.5 6.0 6.1 6.3 5.4 5.6 15.6 17.8 17.518.0 3.4 4.4 4.8 12.2 12.514.0 5 3.1 4.4 9.0 10.4 6.1 7.0 7.1 7.6 8.1 3.4 4.4 3.3 5.1 4.7 5.4 5.3 0 199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016 US Exports to Mexico US Imports from Mexico
Source: USDOC. Agricultural products include chapters 1 – 24 HS 11 NAFTA promotes trade specialization
US exports are concentrated in grains, meat and oilseeds, accounting for 50% of agricultural exports to Mexico. Nearly 50% of Mexico’s agricultural exports to the US are fruits and vegetables.
US agricultural exports to Mexico 2016 US agricultural imports from Mexico 2016 $18 billion $24.8 billion
Meat Vegetables 18% Dairy Other 23% Products 30% Other 8% 44%
Grains Fruits Oil Seeds 20% Sweeteners Beverages 23% 10% 6% 18%
Source: USDOC. Agricultural products include chapters 1 – 24 HS 12 NAFTA also promotes a more integrated North American agricultural market
• The United States exports $5.6 billion in grains, oilseeds and animal feed to Mexico, and Mexico produces cattle, hogs and poultry (2016). • Mexico exports $590 million of bovine calves to the U.S. and imports $3 billion in meat and poultry from the U.S. (2016)
Mexico contributes with 35% of the U.S. total bovine animals imports
Mexico accounts for 20% of the U.S. total meat exports
Source: SE-Washington with data from Wisertrade. 12 Nearly 5 million U.S. jobs depend on trade in goods and services with Mexico U.S. Employment Related to Trade in Goods and Services with Mexico (Jobs in thousands)
WA ME 106.8 VT 11.4 22.4 MT ND 13.4 MN 16.8 OR ID 92.9 WI WV 23.3 NY NH 22.1 57.2 MI MA118.5 23.3 15.4 SD 96.3 322.2 16.9 WY 138.0 RI 9.1 IA #REF! PA CT 61.1 NE 53.1 OH 199.9#REF! NJ 140.8 NV 33.9 IL IN UT #REF! #REF! DE 15.2 200.2 178.2 43.6 CO 95.5 CA 46.7 MO VA MD 96.5 88.0 KS 47.7 61.3 133.8 565.5#REF! 97.4 KY NC #REF!151.5 99.7 TN AZ OK AR #REF! NM 50.6 70.4 41.6 89.3#REF! MS AL GA SC 26.8 152.5 40.8 67.2 TX LA#REF! 382.0#REF! 65.4 FL AK
10.7 290.2
Greater than 100 50 - 99 HI Less than 50 23.6
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. 14 Mexican investment strengthens US competitiveness and supports US jobs Mexican companies have: invested over $52 billion in the US and export more than $1 billion to the global market over 6,500 businesses in the US, providing over 120,000 jobs Services Food Manufacturing Cinepolis IUSA Kaltex Famsa Softtek Bimbo Cemex America Movil Gruma Femsa DeAcero Lala Bio-Pappel GCC Qualfon Coppel La Costeña Sigma Interceramic Carso Mexichem Chedraui Frugo Alimentos Neoris Omnilife Bachoco Condumex Corporacion EG Azteca Zucarmex BBG Wireless Lamosa Alpek Elamex Minsa Helvex America Televisa Arca Grupo Mexico Grupo Bal Monex Continental Nemak Vitro Banorte Vector Industrias CH Kuo Interacciones Enlace Verzatec Xignux Financial Grupo Rassini Metalsa Automotive services Salinas GIS Katcon Source: SE-Washington with information from iMapData 2015 and SelectUSA for export figure . */ FDI figure from 2016 IMF Coordinated Direct Investment Survey 15 (CDIS), using outward position (stock) data 2015. 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.
16 NAFTA 2.0
NAFTA modernization should rely on:
Liberalization Goods Services Investment
Economic Competitiveness integration Innovation Supply chains Trade facilitation Energy Regulatory cooperation Talent Border efficiency
17 NAFTA 2.0
A NAFTA 2.0 should be based on three basic elements:
A shared assessment that reflects a balanced perception of the benefits that each country has gained; A recognition that there is room for modernization, and A win-win-win proposition; the outcome of this process must generate benefits for all.
18 WISCONSIN Wisconsin - Mexico Trade Relationship
• In 2016, trade between Wisconsin and Mexico Exports: surpassed $5.8 $3 billion billion
• Mexico is Wisconsin’s 2nd Imports: largest export $2.8 billion market, up from 7th in 1993
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Source: wisertrade.org (2016) Wisconsin – Mexico trade by industry
Top Export Industries to Mexico Machinery, Except Electrical Other 19% $575 MD 39% $1,199 MD Transportation Equipment 14% $412 MD
Computer And Electronic Products 10% $295 MD Fabricated Metal Products, Nesoi Top Export Industries from Mexico 9% Electrical Equipment, Appliances, $278 MD And Component Other 9% $289 MD 52% $1,433 MD Electrical Equipment And Electrical Components, Equipment Nesoi 6% 14% $166 MD $388 MD
Motor Vehicles 7% Navigational, Measuring, $190 MD Electromedical, And Control Instruments Motor Vehicle Parts 12% 9% $323 MD $253 MD Source: wisertrade.org (2016), NAICS
21 Wisconsin’s Exports to Mexico since NAFTA
954% increase in Wisconsin's exports to Mexico under NAFTA All-time high set for Wisconsin's exports to Mexico in 2016 Mexico accounted for 14.5% of 3,050 2,967 Wisconsin’s exports worldwide in 2016 2,835
Over 96,200 jobs in Wisconsin depend 2,515 on trade with Mexico 2,167 2,012 1,988 1,851 1,761 1,586 1,481 1,338 1,062 Wisconsin’s Exports to Mexico 790 717 674 670 (In millions of dollars) 420 454 510 507 361 289 314
Sources: wisertrade.org (2016), 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. 22 Wisconsin– Mexico trade by main products
Exports to México: millions of US dollars Imports from México: millions of US dollars
Product 2016 Product 2016
Auto Parts 207 Electric Storage Batteries 342 Battery Waste, Scrap 203 Motor Cars & Vehicles 150 Centrifuges Parts 146 Tractors 143 Electric Transformers, Static 124 Soybeans 90 Converters and Inductors Padlocks, Locks & Keys & 83 Automatic Regulating or Control 123 Parts Instruments, Parts Air Conditioning Machines 78 Parts for Motor Vehicles 102 Parts For Engines 68 Gas, Liquid Or Electric Supply 100 Meters and Parts Articles of Plastics 63 Padlocks, Locks & Keys 89 X-Ray Apparatus; Tubes, 63 Panels, Screen and Parts Exports of Repaired Imports 81 Refrigerators, Freezers and 62 Parts of Engines 73 Parts
Source: wisertrade.org (2016), 4-digit HTS Classification System
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