March 2010 * Volume 15, Issue 3

INSIDE THIS ISSUE 1 Mexico Improves Its Attractiveness for... 1 Trade Highlights 2 Agricultural Trade is Flourishing under... 3 NAFTA Related Events 3 Diario Oficial 4 Success Stories 4 Selected Readings 4 Infrastructure Projects in Mexico 4 Mexico Economic Update

Mexico Improves Its Attractiveness for Investments
Mexico has notably risen to the top-ten most attractive nations in the world for foreign direct investment (FDI) and maintained its number one position as US low-cost outsourcing for the year of 2009, according to A.T. Kearney’s 2010 Foreign Direct Investment Confidence Index and the AlixPartners’ 2010 US ManufacturingOutsourcing Cost Index. In addition, the World Bank 2010 Logistics Performance Index (LPI) has Mexico improving six positions since 2007. The largest cause for the overall changes in rankings, according to A.T. Kearney, is that in today’s depressed economy the market has moved towards safer markets, encouraging companies to invest closer to home. This approach along with NAFTA market access advantages has made Mexico a sound choice for US and Canadian investments. Mexico’s geographic proximity, duty free trade and its comparatively lower labor costs are a draw for these nearby trading partners. One sector of improvement in Mexico was logistics performance. According to the latest World Bank’s LPI, Mexico is ranked 50th out of the 155 countries measured in the index, scoring 3.05. This is an improvement from its 2007 ranking of 56th, when scored 2.87. Mexico has advanced in both international and domestic areas of the LPI, showing significant improvement in tracking and tracing, general logistics infrastructure, rate of physical inspection and logistics competence, among others. It also slightly improved in the areas of customs and timeliness. Mexico’s attractiveness for investment ranks 8th worldwide this year, up from 19th in 2007, according to A.T. Kearney’s FDI Confidence Index for 2010. Mexico has moved back into the world’s top 10 most attractive countries as US companies seek low-cost production closer to their core activities. There is a global tendency to invest in nearby countries and also to

In a visit to Mexico on February 8 and 9, US Trade Representative, Ambassador Ron Kirk, met President Felipe Calderon and Economy Secretary Gerardo Ruiz. They highlighted the importance of promoting and strengthening North America’s competitiveness as the way to speed up economic growth, and praised the strong conviction that the NAFTA partners have shown to work together. Delegations of both countries discussed topics of relevance for the good performance of the bilateral trade relationship. Mexican and U.S government representatives agreed to drive efforts in five important areas: 1. 2. 3. 4. 5. Intensify efforts in regulatory cooperation and intellectual property. Increase custom facilitation in order to make trade more efficient and safer. Increase export capacity of small and medium size companies. Improve productivity along the supply chain to increase competiveness, and Work diligently to solve existing trade disputes

5 Profile of New Mexico 6 Profile of Michoacan

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Volume 15, Issue 3

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which recovered slightly in numbers but fell in position from number 4 in 2008 to number 6 in 2009. Issue 3 nafta@naftamexico. During the NAFTA period. has been facing an adverse turn in exchange rates. Again. US consumers are purchasing fresh tomatoes and peppers produced by Mexican farmers during the winter. The region has also seen a rapid integration of North American grain markets. Not only is US agricultural trade with Mexico on a clear upward trend. The catalyst for this trade has been a dramatic expansion of Mexico’s hog and poultry industries.consolidate and deepen the supply chain. Difference in landscape and climate allows both US and Mexican consumers to have a broader selection of food throughout the year at better prices. The close-to-home business model is bringing more investment to the country. and orange juice were fully phased out. This sector attracts high levels of investments for Mexico largely due to foreign companies looking to manufacture for the US market with the benefits of the NAFTA free trade framework. In this year’s AlixPartner’s index. Mexico is the US’ largest supplier of fresh fruits and vegetables with exports that exceeded $4.4 percent despite the adverse economic situation during that period. Today. consumers eat were raised in the Mexican countryside. there is an improvement in the measuring of current and up-and-coming low-cost countries. One the principal reasons this happened is the high preference of US companies to invest in Mexico. Low-cost outsourcing is also a strong point for Mexico. as well as large and growing flows of intra-industry trade in products such as bread. Agricultural trade between the US and Mexico has multiplied by four in the 16 years of NAFTA. reaching 24. and confectionary products. according to the newest AlixPartners’ Index.9 billion in 2009. sugar. US grain exports to Mexico have quadrupled. Volume 15.S. dairy products. taking advantage of the complementary nature of both economies. and increased taxes. 2008. Industrial manufacturing has been the largest recipient economic sector. Mexico is quickly becoming a significant competitor in the world market. China. Mexico held strong at number one in the index’s lowest manufacturing cost rankings. In the last two years. The steady growth of the bilateral trade at an annual average rate of 8. two out of five lemons and limes. one out of every three asparagus. rising material and transportation Page 2 . when remaining tariff and quantitative restrictions on exports of corn. milk powder. accounting for just over 35 percent of the total FDI. dry beans. With such improvements and growth. US and Mexican processed food industries are increasingly interwoven trough substantial direct investment in each other’s industry. up from 39 percent in 1993. surpassing India and China for the second year in a row. which makes it a convenient location for North American companies looking for cost-effective outsourcing regions. Between 1999 and 2009. eggplants or bell peppers. Since NAFTA. The main drivers of integration in North American livestock markets have been harmonization of sanitary standards and industry restructuring. but also North American producers are reorganizing their economic activities more efficiently through the region for both inputs and outputs. an increase of almost 9% in the last two years and more than 4 times higher than those reached in 1993. Mexico’s market share in fresh produce imported by the US has increased to 46 percent last year. US-Mexico agricultural trade have increased by 6. Integration is not limited to production agriculture. two out of three mangos or papayas. Agricultural Trade is Flourishing under NAFTA The North American Free Trade Agreement (NAFTA) has had an enormous impact on the agricultural sector throughout the region. Mexico is ranked as the fifth most-favored destination for investment in the 2010 index. additional steps are necessary to promote more trade and further integration within the region such as better regulatory coordination. with India and Vietnam retaining their 2nd and 3rd places respectively. Among North American investors. Mexico also buys more than $2 billion a year of red meat and poultry from US ranchers. Mexico has taken the number-one position. driven in turn by a rising domestic demand for meat. improvements to the cross-border transportation system and more investment in border infrastructure. Since the final NAFTA transition period ended on January 1st. Mexico has received over 34 billion dollars of accumulated FDI with over 55 percent coming from US and Canadian companies. With the completion of NAFTA’s implementation. reaching $4 billion last year. beer.8 percent has made Mexico the US’ second largest trading partner in agricultural products. In 2010. Thus. and many North American pastures and feedlots contain cattle that have lived in more than one NAFTA country. Mexico ships rising numbers of feeder calves to the US for finishing the last stage of production and slaughter. Mexican livestock producers feed their animals with US coarse grains. This dynamic trade performance is speeding up an important long -term development in which the agricultural sectors of both countries are increasingly behaving as if they form one market. with more countries and highervalue added products. US firms have invested more than $9 billion in Mexico’s processed food sector. the improvement is also due to Mexico’s geographic position. half of the avocados.3 billion dollars in 2009. and one out of every four cucumbers or squashes that U.   For example. As a result. Reasons that account for Mexico gaining so much ground include an advantageous shift in the peso-dollar exchange rate and the fact that it was not vastly affected by increases in material and transportation costs. In order to complement domestic meat production. mixes.

mx/ 6to.  Draft related to Energy Efficiency for household laundry machines. Feb. Phone: 52. construction.3000 E-Mail: direccionmodama@gmail. 3 to 9.html Volume 15. Website: http://www. specifications and characteristics on the design. published on July 08. 11th.3 of Normative Appendix A of the NOM-040SSA1-1993.7734 E-Mail: crivera@comunicacionintegral. Mexico Feb. 15th. 3rd. Mexico City. 11th. Phone: 52. Michoacán as large avocado seed weevil (Heilipus lauri).mx Website: www.. small avocado seed weevil (Conotrachelus aguacatae and C. Feb. accessories and foods for pets. EXPO FARMA INTERPHEX 2010 April 21-23 Exposition of products and services related to the pharmaceutical industry. for the promotion of safety in aviation. supplies and related office products. Location: World Trade Center. Leon.31219238 E-Mail: Mabel@expojoya.expomascotas.55. Phone: EXPO LICENSING LANTINOAMERICA 2010 April 14-15 The largest owners and operators of licenses and brands will come together to show their licenses. 25th. EXPO FORO specifications and characteristics on the Website: . Page 3 nafta@naftamexico. Limits. persea). organic peroxides. between Mexico and Israel. Feb. special and additional specifications for containers. Feb. 15th. 2009. Feb.8420 E-Mail: ventas@expooficinas. and SAPICA. signed on August 14.2000 E-Mail: emartinezo@centrobanamex. Phone: 52. leather products and accessories Location: Expo Guadalajara.1669. and UL International Demko A/S and Underwriters Laboratories Inc. signed in Montreal on September 18th. signed on July 30. one from originating sugar of Nicaragua.safetymexico. Guanajuato. 16th.  Extension  NOM-009-SCT2/2009. occupational health and hygiene in Mexico Location: Centro Banamex. Mexican Official Standards:  Modifications to point 2. materials and hazardous waste of division 5. 2009. inspection and testing of portable tanks intended for the transport of substances. related to new radial tires of a kind used on vehicles with a gross weight not exceeding 4. Feb 23rd. and avocado seed moth (Stenoma catenifer) free  NOM-032-SCT2/ Website: http://www. Location: Expo Website: http://www. Irimbo.152. Feb.5268. 2007. S.4. intermediate bulk containers.) in the national territory.expooficinas.2060 E-Mail: apalomo@afmac.81.6734 E-Mail: eliastenorio@gmail. de C. Sanitary specifications. technical and security  NOM-027-SCT2/2009.licensingmexico. Phone: 52. Feb 8th to import sugar in 2010.  NOM-005-ENER-2010.6775 E-Mail: Feb 9th. Phone: 52. Mexico City. 23rd.9183.55. inspection and testing of refrigerated liquefied gas portable tanks. brands and services. imitation jewelry and supplies Location: Expo Guadalajara. Land transportation. tow and rescue. special and compatibility specifications for the storage and transportation of substances. Feb. April 28-29 Technical conferences related to technological developments of the Energy Sector and exhibition of products and services of the electrical Website: http://camaradejoyeria. announcing a tariff rate quota for 2010 to import under preferential treatment certain dairy products preparations containing over 50% by weight in milk solids. Phone: specifications and testing methods. packaging.expofarmainterphex. Tampico Tamaulipas. Location: Expo Guadalajara. LA FERIA DE AMERICA April 22-25 Fashion exhibition of the footwear industry for the 2010 fall/winter season Location: Poliforum Leon. Guadalajara. Location: Centro Banamex. and the other one from the rest of the world. 9th. 2nd.000 lb) .536 kg (10.V. 9th  Amendments to the Mexican Tariff Schedule and to the Sectoral Promotion Programs.. Feb. Jalisco.81. Characteristics.php MEXICO SAFETY EXPO 2010 April 20-22 Exhibition of industrial EXPO MASCOTAS April 17-18 Animal exhibition and sales. services. Feb.8289. Website: www. 25th.447. 2009. Guadalajara.33. Issue 3  Amendments to the temporary transition measure on imports of several goods originating from China. silverware. signed on November 18. Parácuaro and Tangamandapio.modama. Website: www. Feb.3343. specifications of towing  Draft  NOM-030-SCT2/2009. Feb.5280. Phone: 52. test methods and labeling. published on November 24. Monterrey Nuevo Leon. 12th. construction. materials and hazardous waste of classes 1. portable tanks and transportation of substances. DIARIO OFICIAL NOTICES  Notice that formally declares the municipalities of Hidalgo. and Costa Rica. Feb watches. 2nd. related to phytosanitary measures to mitigate the risk of introduction and spreading of Huanglongbing (HLB) / Greening of citrus fruits (Candidatus Liberibacter spp.33. Feb.55. published on September 23. related to iodized salt and iodized fluoridated salt.NAFTA Related Events EXPO JOYA 2010 April 13-15 Exhibition of jewelry. MODAMA April 26-28 Exhibition of women’s footwear. of the NOM-EM-047-FITO-2009. materials and hazardous waste of class 1 explosives.9005 E-Mail: info@ciceg. Feb 12th. 2009.  Decree enacting the Protocol Amendment to the Free Trade Agreement  Decree enacting the Strategic Partnership Agreement between Mexico  Decree enacting the Strategic Partnership Agreement between Mexico  Notice announcing a tariff rate quota for 2010 to import duty free powdered milk originating from WTO members. Jalisco. Phone: 52. Guadalajara.html EXPO OFICINAS April 23-24 Commercial expo features Website: http://www.A.  Notice  Decree enacting the Agreement between Mexico and the United States  Resolution amending the General Rules and Criteria for Foreign Trade issued by the Ministry of the Economy. Location: Cintermex. 9th  Notice announcing two tariff rate quotas and their allocation mechanism  Clarification to the Mutual Recognition Agreement for the acceptance of conformity assessment results in electrical and electronic products held between UL de Mexico. PROY-NOM-086-SCFI-2009.

increasing its total by 88 percent. February. Business opportunities: construction.pdf Infrastructure Projects in Mexico Manzanillo Power Plant Sponsor: Electricity Federal Commission (CFE) Location: Manzanillo. an international manufacturer and marketer of personal care products. Latin America’s largest retailer. The remaining $38 million will be allocated to several projects. build and launch 45 megawatts (MW) of solar projects between now and 2013. Volume 15. The investments will generate around 150 direct jobs and 900 indirect jobs. Malaysia. India. the short-term impact is expected to be gradual. Colima Project Value: $981 million CFE granted the consortium of companies formed by ACS. GE and Alstom the project for the conversion of units 1 and 2 of the Manzanillo power plant. $20 million more will go to a hydrogen plant in Tepeji del Rio. electrical equipment.500. Selected Readings NAFTA Implementation: The Future of Commercial Trucking across the Mexican Border Author: John Frittelli. tests. Congressional Research Service. Walmex will open 300 stores and restaurants this year. Mexico to meet the demand for its products. Issue 3 nafta@naftamexico. Durango Solar Project Sponsor: Durango State Government Location: State of Durango Project Value: NA The Government of the State of Durango and the company OPDE. "and it is based on Mexican abilities and talent". said Eugenio Godard. “This significant capital project investment supports our planned course of expansion and it will accommodate our anticipated growth for decades. Jafra’s parent company. manufacturing engineering.” Walmex also plans to open 168 branches of its bank.S. specialized in management. civil engineering. indicates that Mexican trucks operating in the United States are now safer than they were a decade ago.” CEO Scott Rank said. which will become the largest generation plant in the country. truckers. The 254. Business opportunities: construction. The project also includes upgrades of the transmission network. Hidalgo.000-square-foot plant will employ 800 workers and be the main supplier for Westlake Village. electrical equipment. use of drayage companies at the border is likely to decline as they lose part of their market share to Mexican long-haul carriers. with a capacity of 1. among other Banco Walmart. CA-based Jafra’s global sales and operations. “out-of-service” rates. will invest $150 million in Mexico in 2010. "This campus is recognized for its operative excellence". IBM officially inaugurated the facilities where XIV Storage System is manufactured. Production started last summer in the plant located in El Salto. The project consists of replacing the turbines that now generate electricity from fuel oil to natural gas and rehabilitate the steam turbines which will increase generation capacity.500 megawatts. the largest industrial gases company in North and South America and one of the largest worldwide. which is currently under construction in the same place. Page 4 . From this amount. quality assurance and systems engineering. http://www. Tamaulipas. adding to its current total of almost 1. IBM Expands Investments in Jalisco In a project which required $20 million investment. The first 1 MW photovoltaic solar farms that OPDE will build in the state will be located in the Logistics and Industrial Park in Durango (CLIP) and will be fully operational in 2010. has opened a new $30 million manufacturing facility in Queretaro. One truck safety statistic. The data indicate that Mexican trucks and drivers have a comparable safety record to U. “We expect a gradual economic recovery for this year. The largest amount. a managing partner with the Vorwerk Group. “but our investment plan doesn’t depend on a revived economy. have signed a collaboration agreement under which the solar company has committed to study. $70 million.Success Stories Wal-Mart Mexico to Open 300 New Stores in 2010 Wal-Mart Mexico (Walmex). Jafra Opens New Plant in Mexico Jafra Cosmetics International. Germany. engineering services. solar equipment. will be invested in another air separating plant in Sahagun. Canada and Colombia. Praxair to Invest in Mexico US industrial gases producer Praxair. Jalisco and the equipment is already exported to the United States. but full implementation has been stalled because of concern with the safety of Mexican trucks. a Spanish solar photovoltaic developer. The natural gas for use by the project will be imported in liquid form by vessel from Peru and will be regasified at the LNG plant. 100 jobs were created for this new project. Queretaro while $10 million will be used in facilities for gas fill-up in Altamira. In the long run. plan. The investment plan for new and remodeled stores and distribution improvements is a 28 percent increase from 2009. United Kingdom. IBM Campus Guadalajara Director. If Mexican carriers do eventually receive long-haul authority. New Zealand.naftamexico. 2010 NAFTA set forth a schedule for implementing its trucking provisions what would have opened the border states to crossborder trucking competition in 1995 and all of North America in 2000. $12 million will be spent in building an air separating plant in Monterrey. plans to invest a record $970 million in 2010.” said Walter Muyres.

Mexico is an important trade partner to New Mexico.3% of New Mexico's exports worldwide in 2009 Exports to Mexico 1993-2009 (Millions of US Dollars) Source: US Census with adjustments made by the World Institute for Strategic Economic Research (Wiser). and registered a flat performance in comparison with the previous year. while those to the rest of the world rose 173%. New Mexico's exports to Mexico have increased by 401%. Among all U. This means that the export growth rate to Mexico is 2.New Mexico In 2009. and SE-NAFTA. New Mexico's sales to Mexico have grown at an annual average rate of 10. It was ranked as the largest export market for goods from New Mexico in 2009. New Mexico's exports to Mexico reached $385 million. 1993-1999 by SIC AND 2000-2009 by Page 5 . Volume 15.S. up $308 million from their level in 1993. Since NAFTA was implemented. up from 2nd in 1993. New Mexico was ranked 35th as an exporter of goods to Mexico in 2009 In 16 years of NAFTA.3 times higher than its export growth rate for the rest of the world. illustrating the impact of NAFTA for New Mexico's growing businesses.6%. states. Mexico accounted for 30. Issue 3 nafta@naftamexico.

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