Mexico A trusted economic partner in USMCA Luz María de la Mora Undersecretary for Foreign Trade Atlanta, GA July 23, 2020
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MexicoA trusted economic partner in USMCA
Luz María de la MoraUndersecretary for Foreign Trade
Atlanta, GAJuly 23, 2020
1. From NAFTA to USMCA
3
USMCA
ü Certainty.
ü Clear Rules.
üMaintains Free Trade.
ü Preserves North American Integration.
1. Initial Provisions and General Definitions
12. Sectoral Annexes 23. Labor
2. National Treatment and Market Access for Goods
13. Government Procurement 24. Environment
3. Agriculture 14. Investment 25. Small and Medium-sized Enterprises
4. Rules of Origin 15. Cross-Border Trade in Services
26. Competitiveness
5. Origin Procedures 16. Temporary Entry 27. Anticorruption
6. Textiles and Apparel 17. Financial Services 28. Good RegulatoryPractices
7. Customs and Trade Facilitation
18. Telecommunications 29. Publication and Administration
8. Energy 19. Digital Trade 30. Administrative and Institutional Provisions
9. Sanitary and Phytosanitary Measures
20. Intellectual Property 31. Dispute Settlement
10. Trade Remedies 21. Competition Policy 32. Exceptions and General Provisions
11. Technical Barriers to Trade 22. State-Owned Enterprises 33. Macroeconomic Policies
10 New Chapters
34. Final Provisions
24 Modernized Chapters
From NAFTA to USMCA: Deeper integration among 3 partners
Regional Competitiveness
Preferential access
Regulatorycoherence
Investment
SPS
TBT
Opportunities of the 21st Century
Intellectual Property
Digital Trade
Financial Services
E-Commerce
Certainty in Tradeand Investments
Dispute SettlementMechanisms
State-to-State
Investor-State
Remedy Laws
Inclusive and Responsible Trade
SMEs
Gender
Labor Rights
Anticorruption
Environment
Labor Value Content (LVC)
40% light vehicles
45% light and heavy trucks
$16 USD/h.
Regional Value Content (RVC)
75%
70% (heavy)
Keeps the Net Cost methodology
but removes“tracking” allowing
“roll up” or the cummulative
principle
Simplifies the RVC calculation
methodology
Core Parts
originating
Steel & Aluminum
70% purchases
Direct purchases
Purchases througha service center
Purchases aqcuiredthrough a supplier
Limited coveragefor steel
• Material & manufacturingexpenditures
• Technologyexpenditures
• Assemblyexpenditures
1. Engine
2. Transmission
3. Body & chassis
4. Suspensionssystems
5. Steeringsystem
6. Axle
7. Batteries
Key ElementsAutomotive Origin Regime
2. The successful North American partnership
• President Lopez Obrador met with President Trump to reaffirm Mexico´scommitment towards the USMCA and the future of the North Americaneconomic integration.
President Lopez Obrador visit to Washington, D.C. on July 8th
Source: IMF, Banco de México, WTO and TradeMap.
493Million people
$26Trillion dollars
Population GDP Trade
$6 Trillion dollars
NAFTA
6.5 % of world
population
18.3% of world GDP | 2nd global economy
(2019)
15.9% of global trade
2nd global exporter (2019)
$1.2Trillion dollars
Trade (Intra)
20% of theregión’s total
trade (2019)
FDI
$323Billion dollars
23.1% of world FDI (2018)
1st recipient in the world
NAFTA created one of the most competitiveand dynamic regions in the world
Foreign DirectInvestmentunder NAFTA
• USA and Canada account for more than half of total FDIreceived by Mexico between 1999- March 2020.
1999-March 2020: 589 B
From the US:
277 BFrom Canada:
41 B
Source: SE/DGIE
1432
6286 105
130156 177
209239
257284
310 331
379410
445476
510545
579589
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 IT
Bill
ion
Do
llars
NAFTA FDI to Mexico1999- March 2020 Canada USA Rest of the world
Source: Banco de México.
NAFTA trade
44 5368
8397 105
123151 144 145 147
168188
217 230 241
193
249
285299 310
329 319 313338
372 385
46 56 5569
84 96 108132
118 111 109 116 125 138 147 161
120
154184 195 197 205 197 189
204227 216
91 110124
152181
200231
282 262 256 257284
313
355377 401
313
403
469494
507534
516 502
543
599601
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Mexico- NAFTA Trade(Billion dollars)
Exports Imports Trade
Average annual growth rate 19/93: 7.5%
$25615.6%
$29217.8%
$1076.5%
$754.5%
$603.5%
$35814.3%
$32012.8%
$45218.1%
$1445.7%
$1275.1%
0
100
200
300
400
500
600
700
Mexico Canada China Japan Germany
Billio
nof
dol
lars
2019Source: Secretaria de Economía with data from the U.S. Census Bureau. U.S. ExportsU.S. Imports
614.5 B14.8%
612.4 B14.8% 559 B
13.5%
218 B5.3% 188 B
4.5%
In 2019, Mexico was the U.S. Top Trading Partner (614.5 billion in goods, surpassing Canada and China)
In 2019 the U.S. and Mexico traded over 47.5 billion dollars in agricultural goods.
$19 B14%
$21 B15% $14 B
10%
$28 B23%
$24 B18%
$4 B, 4%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Mexico Canadá China
Bill
ion
s o
f U
S d
olla
rs
2019Source: Secretaria de Economía with data from the Foreign Agricultural Service, USDA.
47.5 B17.7%
44.4 B16.5%
17.4 B6.4%
U.S. ExportsU.S. Imports
Mexico became the US Top Trading Partner in agricultural products
Source: Secretaria de Economía with data from the U.S. Census Bureau .
WA
OR
CA
MT
ID
NV
AZ
UT
WY
CO
NM
TX
OK
KSNE
SD
NDMN
IA
MO
AR
LA
MSAL
GA
FL
SCTN
NC
IL
WIMI
OHIN
KY
WV VA
PA
NY
ME
VTNH
NJDE
MD
Washington D.C.
MA
CTRI
Exports 8.2 BJobs 172,162Share 33%
Exports 2.4 BJobs 7,783Share 49%
Exports 109 BJobs 509,870Share 33%
Exports 2.2 BJobs 16,752Share 19%
Exports 27.8 BJobs 172,162Share 16%
Exports 1.7 BJobs 16,828Share 23%
Exports 8.4 BJobs 18,809Share 13%
Mexico is the largest exportmarket for 7 U.S. states
Mexico is the second largest export market for 19 U.S. states
Mexico is the third largest export market for 3 U.S. states.
U.S. exports by State, 2019
Mexico is a key market for U.S. states’ exports
158,200 Jobs supported by trade with Mexico (2017)
3.5 B Exports to Mexico accounting for 8.5% of its total exports
7.8 B Imports from Mexico, 7.6% of its total imports
Source: Secretaria de Economía with data from the U.S. Census Bureau and The Trade Partnership.
Mexico is a partner and an ally to Georgia, Alabama and Tennessee
GA
AL
TN
64,800 Jobs supported by trade with Mexico (2017)
2.2 B Exports to Mexico accounting for 10.7% of its total exports
5 B Imports from Mexico, 17.6% of its total imports
99,600 Jobs supported by trade with Mexico (2017)
4.1 B Exports to Mexico accounting for 13.4% of its total exports
10.3 B Imports from Mexico, 11.8% of its total imports
Mexico – GA -AL– TN Trade Outlook, 2019
We produce together to compete globally
The U.S. exports to MexicoProduct HS4 Amount Share
Gasoline 27.9 B 10.5%
Autoparts 17.0 B 6.4%
Accesories/computers 11.7 B 4.4%
X Low cost shipments 7.4 B 2.8%
Integrated circuits 6.9 B 2.6%
Gas 5.4 B 2.0%
Computers 5.1 B 1.9%
Diesel motors 4.5 B 1.7%
Electric switches 4.4 B 1.7%
Phones/cellphones 4.4 B 1.6%
Mexico exports to the U.S.Product HS4 Amount Share
Cars 35.0 B 10.1%
Computers 26.4 B 7.6%
Autoparts 24.7 B 7.1%
Trucks 22.8 B 6.6%
Crude oil 14.2 B 4.1%
Insulated wire 11.4 B 3.3%
Phones/cellphones 10.5 B 3.0%
Televisions 9.0 B 2.6%
Tractors 8.6 B 2.5%
Seats 7.0 B 2.0%
Millions of U.S. DollarsSource: Secretaria de Economía with data from the U.S. Census Bureau. (2019 data) and De Gortari, A. (2017) . Disentangling Global Value Chains.
Automotive
Electronics
Energy
38% U.S. content in Mexican auto exports to the U.S.
Georgia exports to MexicoProduct HS4 Amount Share
Cars 153 4%
Televisions 141 4%
Gas turbines 140 4%
Aluminum plates 131 4%
Paper & paperboard 113 3%
Kraft paper 112 3%
Autoparts 111 3%
Poultry 106 3%
Aircraft engines 95 3%
Peanuts 84 2%
Georgia and Mexico are integrated
Mexico-Georgia trade accounts for $10.1 billion and supports regional supply chainsspecialized in the automotive, electronics, machinery and aerospace sectors.
Mexico exports to GeorgiaProduct HS4 Amount Share
Cars 1,098 14%
Televisions 854 11%
Lamps 595 8%
Insulated wire 556 7%
Autoparts 396 5%
Refrigerators 291 4%
Equip for temp. Change of mat. 186 2%
Tires 173 2%
Sugar 169 2%
Parts for other aircraft 163 2%
Automotive
Electronics
*Millions of U.S. dollarsSource: Secretaria de Economía with data from the U.S. Census Bureau. (2019 data)
Machinery
Aerospace
Alabama exports to MexicoProduct HS4 Amount Share
Cars 274 12%
Flat rolled prods of alloy steel 265 12%
Flat rolled iron, hot rolled 214 10%
Engines 123 6%
Telephones/cellphones 91 4%
Chemical woodpulp 79 4%
Centrifuges 78 4%
Flat rolled products of stainless steel 73 3%
Autoparts 69 3%
Flat rolled iron, clad 66 3%
Alabama and Mexico are integrated
Mexico-Alabama trade accounts for $7.2 billion and supports regional supply chainsspecialized in the automotive, metallurgical, machinery and electronics sectors.
Mexico exports to AlabamaProduct HS4 Amount Share
Petroleum 1,559 31%
Autoparts 812 16%
Seats 307 6%
Alloy steel ingots 281 6%
Electrical ignition equipment 252 5%
Semifinished products of iron 241 5%
Insulated wire 202 4%
Engines 170 3%
Parts of other aircraft 153 3%
Imports of repaired exports 80 2%
Automotive
Electronics
*Millions of U.S. dollarsSource: Secretaria de Economía with data from the U.S. Census Bureau. (2019 data)
Machinery
Metals
Tennessee exports to MexicoProduct HS4 Amount Share
Engines 343 8%
Autoparts 311 7%
Kraft paper & paperboard 207 5%
Tires 193 5%
Aluminum plates 150 4%
Gasoline 120 3%
Parts for engines 119 3%
Centrifuges 93 2%
Cars 90 2%
Computers 88 2%
Tennessee and Mexico are integrated
Mexico-Tennessee trade accounts for $14.4 billion and supports regional supplychains specialized in the automotive, machinery and electronics sectors.
Mexico exports to TennesseeProduct HS4 Amount Share
Cars 2,917 28%
Autoparts 1,504 15%
Phones/cellphones 432 4%
Parts for engines 421 4%
Air conditioning machines 357 3%
Trucks 289 3%
Seats 272 3%
Tractors 258 2%
Appliances for thermo valves 238 2%
Electrical boards 223 2%
Automotive
Electronics
*Millions of U.S. dollarsSource: Secretaria de Economía with data from the U.S. Census Bureau. (2019 data)
Machinery
Georgia and Tennessee´s top metropolitan areas exports to Mexico, 2018
Exports from Georgia and Tennessee´s top metropolitan areas rely on Mexico
Source: Secretaría de Economía with data from U.S. International Trade Administration.
Metro area AmountShare of MA´s
total exp.Exp. As share of GDP (2017)
Exports growth (since 2005)
Atlanta - Sandy Springs 3.6 B 15% 1% 235%
Nashville - Davidson - Murfreesboro - Franklin 1.5 B 18% 1% 136%
Memphis 1.7 B 13% 2% 133%
3. Why chooseMexico?
USMCA and other 12 FTAs with 48 countries connect the Mexican economy to more than 1.3 billion consumers (60% of the world’s GDP)
1. Mexico: 7th largest exporter in the world and 1st in Latin America
According to the WEF, Mexico ranks among the top 30% countries withbest transport infrastructure.
2. Mexico offers a solidinfrastructure and logistics network
172,000 km roads, where 62.4% of México´s total exports move.
27,000 km railway tracks, move 13% of Mexico´s total exports
117 Ports move 19.7% of Mexico´s total exports
76 Airports (64 int. + 12 nat.) move 4.3% of Mexico´s total exports
Source: SecretarÍa de Economía with data from INEGI.
$140
$9
0
20
40
60
80
100
120
140
160
USD/m3
Low shipping costs
China to U.S. Mexico to U.S.
Maritime days to selected destinations
Destination Mexico China India BrasilSouth Korea
New York 5 32 25 15 21
Los Angeles 4 18 31 23 17
Rotterdam 16 32 20 17 33
Yokohama 19 4 17 35 3
Source: The Boston Consulting Group in De la Madrid (2014)
3. Strategic location and competitive logistic costs
Source: GBM. Global Value Chains Disruptions
More than 50 ports of entry between the U.S. and Mexico
2%
3%
4%
4%
6%
6%
8%
20%
20%
23%
0% 5% 10% 15% 20% 25%
Stone
Metals
Chemicals
Textiles
Minerals
Services
Agriculture
Electronics
Machinery
Vehicles
Source: The Atlas of Economic Complexity. High Complexity Sectors Low Complexity Sectors
With more than 2/3 of its exports in high complexity sectors, Mexico ranksas the 19th most complex economy
4. Mexico has a diverse and innovative industrial platform
Industry share of Mexican exports by economic complexity, 2018
5. Mexico leads in manufacturing production
Mexico became the 6th largest world producer of vehicles (2019) 1 and ranked 4th as exporter
worldwide (2018) 2.
6th largest supplier of aircraft parts to the USA (2019)3.
6th largest exporter of information technologyproducts and services (2018)4.
8th largest exporter of medical devices worldwide (2017)5.
1 Source: http://www.oica.net/category/production-statistics/2018-statistics/2 Soure: https://www.wto.org/spanish/res_s/statis_s/wts2019_s/wts2019_s.pdf3Source https://legacy.trade.gov/td/otm/assets/aero/AeroTop20SuppliersAnnual.pdf4Source CANIETI https://esemanal.mx/2019/10/desciende-mexico-a-la-sexta-posicion-como-exportador-de-servicios-de-ti/5 Source: AMID. https://amid.org.mx/wp-content/uploads/2019/06/Descargable-de-la-secci%C3%B3n-Datos-de-la-industria-.pdf
6. Competitive and cost effectivemanufacturing sector
86 8794 95
100 100 101 103 104
Mexico India Vietnam China US SouthKorea
Canada Brazil Spain
Global Manufacturing Cost Competitiveness Index, 2019
Source: The Boston Consulting Group
43.60 43.30
30.20
23.70
20.0018.50
France Korea Spain Turkey Mexico NewZealand
Natural gas for industry in USD/(MWh GCV), 2019
Source: International Energy Agency and CRE
7. Internet connectivity and broadband accesssupports 4th IR, IOT, digital economy
18
20
26
29
36
43
47
53
59
61
61
67
71
92
223
490
0 100 200 300 400 500
Chile
Netherlands
Colombia
Canada
Australia
Poland
Spain
Italy
Korea
France
Turkey
United Kingdom
Germany
Mexico
Japan
United States
Subscriptions, millions
Mexico is third in mobile broadband suscriptions within OECD
74%mobile
penetration rate
17%annual growth in past 5 years
92Mmobile broadband
suscriptors
8. Young, competitive and skilledworkforce
17%
12% 12%
8%7%
0
2
4
6
8
10
12
14
16
18
20
Mexico India Brazil SouthAfrica
Indonesia
Share of graduates come from engineering programs, 2017
Source: UNESCO
6%
22%
45%
16%
10%
0%5%
10%15%
20%25%30%35%40%45%50%
14 - 19 20 - 29 30 - 49 50 - 59 60 +Age group
Economically active population in Mexico by age, Q1 2020
Source: INEGI
USMCA opportunities
Stricter Rules of Origin for the automotive sector
Digital Economy
e-commerce
üMore inclusive tradeSMEs, Labor,
Environment, Anticorruption
4. USMCA challenges and opportunities
Actions to face COVID-19
USMCA governments work coordinately to:
ü Define protocols and conditions to allow transition towards reopening productive
activities: essential
ü Use of TICs
ü Coordinate border crossings to secure health.
ü Implement USMCA
USMCA opportunities
USMCA will be a key factor in the economicrecovery of the three countries as it willcontribute to:
• Relocation• Nearshoring• Decoupling
To build resilient GVC
Thank you!Dra. Luz María de la Mora
luzma.delamora@economía.gob.mx
@luzmadelamora
@luzmadelamora
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