Catalytic Role of the APEC Catalytic Role of the APEC Process: Behind the Border, Process: Behind the Border,

Beyond the Bogor GoalsBeyond the Bogor Goals

Raul Urteaga-TraniRaul Urteaga-TraniMinister, Trade & InvestmentMinister, Trade & Investment

Mexico’s Secretary of EconomyMexico’s Secretary of EconomyEmbassy of Mexico, Tokyo, JapanEmbassy of Mexico, Tokyo, Japan

March 15, 2006March 15, 2006

Mexico’s Network of FTA’sMexico’s Network of FTA’s

12 FTA’s with more than 40 countries12 FTA’s with more than 40 countries

1. Chile 2. US and Canada, NAFTA3. Costa Rica 4. Bolivia 5. Colombia and Venezuela, G3 6. Nicaragua 7. European Union, 25 countries8. Israel 9. Guatemala, Honduras and El Salvador, Northern Triangle10. Uruguay 11. EFTA, Iceland, Norway and Switzerland 12. Japan

Mexico’s Global Trade Mexico’s Global Trade Performance Since NAFTA’s Performance Since NAFTA’s ImplementationImplementation

60.9

79.3

-18.4

79.572.4

7.1

95.989.5

6.5

110.4109.8

0.6

117.5125.4

-7.9

136.4141.9

-5.6

166.4174.4

-8

158.4168.4

-9.9

160.8168.7

-7.9

165.4170.9

-5.6

188.6196.7

-8.1

-50

0

50

100

150

200

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Exports Imports Trade Balance

Bill

ion

Bill

ion

dolla

rsdolla

rs

Source: BANXICOSource: BANXICO

Mexico’s Exports have Experienced Greater Growth

than Overall World Exports…

325

216

166

100

150

200

250

300

350

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Mexico'sexports toFTApartners

Mexico'sexports tonon-FTApartners

WorldExports

Source: Ministry of Economy with data from Banxico and WTO

Merchandise Exports Index 1993=100

2,2242,026

855 851

518 462 373 344

0

400

800

1,200

1,600

2,000

2,400

EU* US Japan China Canada HongKong

SouthKorea

Mexico

US

bill

ion

do

llars

Source: WTO 2004* excluding intra-EU trade

Mexico is the World’s 8Mexico is the World’s 8thth Largest Largest Trading NationTrading Nation

Main trading nations 2003

Mexico has Diversified its Export Structure

Source: Ministry of Economy with data from Banxico.

Oil 70%

Manufacturings 25 %

Agriculture5%

2004Oil

Manufacturing85%

Agriculture3%

1982

12%

Mexico is the Second Largest Market for US goods

35

37

54

110

190

US billion dollars

China

UK

Japan

* Mexico

Canada

Fuente: Ministry of the Economy with data from USDOC * Ministry of the Economy with data from BANXICO

19

26

45

48

100

US billion dollars

Germany

UK

* Mexico

Japan

Canada

US exports

20041993

Today, Mexico is:Today, Mexico is:

The U.S. Second Largest Trading Partner, after The U.S. Second Largest Trading Partner, after CanadaCanada

A NAFTA Trade Member whose Trade with the A NAFTA Trade Member whose Trade with the U.S. and Canada has Almost Tripled since 1994U.S. and Canada has Almost Tripled since 1994

Mexico’s Trade Leads Latin America with 44% Mexico’s Trade Leads Latin America with 44% Share of the Region’s Total Exports and 49% of Share of the Region’s Total Exports and 49% of its Total Importsits Total Imports

The First Country in the Region with an FTA The First Country in the Region with an FTA with Japanwith Japan

Asia-Pacific is Mexico’s Priority in its Trade and Asia-Pacific is Mexico’s Priority in its Trade and Investment Diversification StrategyInvestment Diversification Strategy

Mexico FDI Flows. US$ 173 Billion From 1994-2005

FDI in Mexico by Sector

Other Serv.2

7.8%

Finan. Serv. 23.4%

Manufacturing49.3%

Agriculture and Infrastructure

8.5%

Commerce11.0%

2Social and communal services: hotels and restaurants, professional, technical and personal.

1Agricultural, Mining, Constructing, Electricity, Transp. and Communic, and Water.

FDI in Mexico by Country

Source: Ministry of Economy . Notified investment to the Registro Nacional de Inversiones Extranjeras (RNIE) in September 30*, 2000, plus maquiladoras’ fix asset imports.

USA62.5%

Others 7.4%

Japan 2.3%

Germany 2.6%

Spain 9.4%

Canada3.3%

Netherlands 7.6%

UK 3.4%

MEXICO PROMOTES MEXICO PROMOTES GROWTH AND GROWTH AND INNOVATIONINNOVATION

- - Automotive - TourismAutomotive - Tourism

- Electronics - Commerce- Electronics - Commerce

- Software, IT - Construction- Software, IT - Construction

- Aerospace - Maquiladoras- Aerospace - Maquiladoras

- Textile - Chemical- Textile - Chemical

- Agriculture - Shoe and - Agriculture - Shoe and Leather Leather

Mexico’s Policies in Support of Mexico’s Policies in Support of Growth and InnovationGrowth and Innovation

Providing economic, fiscal and regulatory Providing economic, fiscal and regulatory incentives for thousands of suppliers to incentives for thousands of suppliers to locate in Mexicolocate in Mexico

Supporting the development of local Supporting the development of local innovation, research and development innovation, research and development through university/business/local through university/business/local government partnershipsgovernment partnerships

Significantly increase investments in Significantly increase investments in physical and social infrastructure physical and social infrastructure

90100110120130140150160170

(Enero 1999 = 100)

Employment

Manufacturing Plants

Value Added Content

AUTOMOTIVEMexico’s Manufacturing Evolution

PUBLIC POLICY FOR PUBLIC POLICY FOR COMPETITIVENESSCOMPETITIVENESS

FISCAL ENERGY

FINANCIAL LABOR

TRANSPARENCY INFRASTRUCTURE

STRUCTURALREFORMS

EDUCATION

JUDICIALSYSTEM

PENSIONSYSTEM

GOVERNANCE

Mexico-Japan Mexico-Japan ComplementaritiesComplementarities

Technology and InnovationTechnology and Innovation Manufacturing SavingsManufacturing Savings Market AccessMarket Access Intra-Trade Growth, Particularly in Intra-Trade Growth, Particularly in

Automotive and Electronics Automotive and Electronics Transportation LogisticsTransportation Logistics Global Security ConsiderationsGlobal Security Considerations Investment Protection, including IPRInvestment Protection, including IPR

Mexico-Japan Trade and Mexico-Japan Trade and Investment ComplementaritiesInvestment Complementarities

JAPAN MEXICOWorld’s 2nd Largest Economy World’s 12th Economy

Population Age Average of 42 years

Highly Educated Labor Force

Población con edad promedio de 27 años

Abundance on Young and Capable Workers

High Saving Rates Economy in Need of Maintaining Growing Levels of Domestic Investment and FDI

Its Companies are a Major Source of FDI

4th Place Among Emerging Economies inFDI Attraction

Technology Companies Outsourcing Production Abroad

Producer and Exporter of High-value Added Goods. Maquiladora Outsourcing

Importer of 60% of its Food Consumption, (3er World Largest Importer)

Producer and Exporter of Agro Food Products.

Population Age Average of 24 years

Leading Producer and Exporter of High Technology Products

Buyer of High Technology Products and Systems

Promoting Mexico-APEC Promoting Mexico-APEC Business PartnershipsBusiness Partnerships

Mexico is committed to further economic ties and Mexico is committed to further economic ties and opportunities with Asia-Pacificopportunities with Asia-Pacific

Mexico’s trade agreements open up investment and market Mexico’s trade agreements open up investment and market access opportunitiesaccess opportunities

More than 12 years of trade achievements under NAFTA, More than 12 years of trade achievements under NAFTA, the world’s largest market, gives Mexico an edge on the world’s largest market, gives Mexico an edge on logistics, transportation and security issues, customs and logistics, transportation and security issues, customs and trade facilitation. trade facilitation.

Mexico, along with Canada and the U.S. conform a Mexico, along with Canada and the U.S. conform a transportation and logistics hub for Asia Pacific trade transportation and logistics hub for Asia Pacific trade

The latter is key to APEC and Asia Pacific companies The latter is key to APEC and Asia Pacific companies seeking North America’s market access, via Mexico seeking North America’s market access, via Mexico

Mexico: Key AspectsMexico: Key Aspects World’s 12World’s 12thth Largest Economy (2005) Largest Economy (2005) GDP: $775.2 billion (US$) (2005)GDP: $775.2 billion (US$) (2005) GDP/Capita: US$ 7,454GDP/Capita: US$ 7,454 3.0 % of GDP Growth in 20053.0 % of GDP Growth in 2005 Population: 104 Million (2005)Population: 104 Million (2005) 50% is under the age of 2750% is under the age of 27 Projected population in 2025: 125.9 millionProjected population in 2025: 125.9 million Inflation: 3.3 %, 2005Inflation: 3.3 %, 2005 Stable Currency: Floating Regime Since Stable Currency: Floating Regime Since

1995!1995!

It contains FTA known disciplines, in addition to bilateral cooperation mechanisms to promote economic growth.

Trade in goods (including agriculture)

Sanitary and Phytosanitary Measures

Technical Regulations Rules of Origin Customs Procedures Safeguard measures Investment Services Government Procurement Competetion Policies Dispute Settlement

Trade and Investment Promotion

Support Industries SMEs Science and Technology Education and Human Talent

Development Intellectual Property Agriculture Tourism Environment Improvement of the

Business Environment

FTA Disciplines Bilateral Cooperation

Mexico-Japan EPA Main Mexico-Japan EPA Main FeaturesFeatures

Mexico*

Japan

9%

49.5%

4% 5%0

25

50

75

100

Immediate 5 years 10 years

40%

% of fractions91%

Fuente: Secretaría de Economía.* Para México, el 1.5% de las fracciones arancelarias se desgravarán en plazos intermedios

Tariff EliminationPercentage of tariffs fractions of each country

Special Cases

Immediate access: capital goods, electric manufacturers, electronic.

5 years: Some Chemical Products, Auto Parts, Medical Equipment and Railroads.

10 years: Pharmaceuticals, Chemical Products, Cosmetics, Soaps, Rubber, Wood, Plastic Products, Steel and Glass.

Japanese Market Access

Shoes and leather

Apparel

Mexican Market Access

Steel

Automotive

Mexico-Japan EPA Trade Mexico-Japan EPA Trade SectorsSectors

Access to the Japanese Market:

Immediate access: green coffee, lemon, beer, avocado, tequila, mangoes.

5 year phase-out: grapes, toasted coffee, melons, sauces, frozen strawberries, nuts.

10 year phase-out: banana, processed vegetables, jams, etc.

Preferential access for sensible products, subject to quotas: pork meat, beef, chicken, chicken parts, oranges and orange juice

At third year, negotiation review of selected products: pineapple, sugar and wheat.

Incorporation of all Products of Interest to Mexico. Immediate and unrestricted access: yellow fin fresh and canning

tuna, shrimp, some crustaceans and squid.

Access under negotiated quota: sardines and calamari.

Mexico-Japan Market AccessMexico-Japan Market AccessFarming and Fishing sectorsFarming and Fishing sectors

MEXICO – JAPAN ECONOMIC PARTNERSHIP AGREEMENT

Total Trade 2000 - 2005

Source: Ministry of Finance of JapanExchange rate: 2000:US$1=107.36yen, 2001:US$1=120.95yen, 2002:US$1=125.65yen, 2003:US$1=116.41yen, 2004:US$1=119.18yen, 2005:US$1=112.03 yen. Figures are rounded off not necessarily adding up to the totals.Elaborated by the Office of Representation in Japan of Mexico’s Secretary of Economy

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2000 2001 2002 2003 2004 2005

Japan's Exports to Mexico Japan's Imports from Mexico

9,329.5

7,625.6

6,123.75,550.7

5,386.7

6,680.8

Mil

lion

US

$

Year

Source: Ministry of Finance of Japan*Exchange rate: US$1=112.83 yen. Figures are rounded off not necessarily adding up to the totals. Note: ¹R. S. - Ratio to the same month of previous yearElaborated: Office of Representation in Japan of Mexico’s Secretary of Economy

MEXICO – JAPAN ECONOMIC PARTNERSHIP MEXICO – JAPAN ECONOMIC PARTNERSHIP AGREEMENTAGREEMENT

TOTAL TRADE SINCE EPA’s IMPLEMENTATIONTOTAL TRADE SINCE EPA’s IMPLEMENTATION

R.S. (%)¹April 2004 – Jan. 2005

April 2005 – Jan. 2006

551.2

527.9

551.9

637.5

554.6

687.7

794.4

694.7

601.3

520.1

1,025.5

774.3

TOTAL: 6,121.3 TOTAL: 8,272.1 TOTAL: 35.1%0 150 300 450 600 750 900 1050

January

December

November

October

September

August

July

June

May

April

Million US$0 150 300 450 600 750 900 1050

48.9

70.5

40.5

22.6

38.2

39.8

13.3

27.3

22.2

31.8

0 20 40 60 80 100

551.2

527.9

551.9

637.5

554.6

687.7

794.4

694.7

601.3

520.1

726.5

645.2

702.6

722.1

775.4

950.5

974.0

976.0

1,025.5

774.3

Mexico’s Key Aspects…Mexico’s Key Aspects… A Consolidated Form of Democratic A Consolidated Form of Democratic

Government. Three Branches of Government: Government. Three Branches of Government: Executive, Legislative, Judicial. Executive, Legislative, Judicial.

Land Expanse: 1.967 million square kilometersLand Expanse: 1.967 million square kilometers 3,000 Kilometer Border with the United States 3,000 Kilometer Border with the United States In 2002, the U.S.-Mexico Border had 254 In 2002, the U.S.-Mexico Border had 254

million “land-port” crossings, including more million “land-port” crossings, including more than 75 million cars and 3.5 million trucksthan 75 million cars and 3.5 million trucks

31 States, 1 Federal District31 States, 1 Federal District Presidential Elections: July 2006Presidential Elections: July 2006

Thank you!Thank you!

Raul Urteaga TraniRaul Urteaga Trani

Minister, Trade & InvestmentMinister, Trade & Investment

Embassy of MexicoEmbassy of Mexico

Tokyo, JapanTokyo, Japan

rurteaga@economia.gob.mxrurteaga@economia.gob.mx