1

U.S. – Mexico Trade Relationship

2

The 15th largest world economy 10th largest world exporter and

1st in Latin America 9th largest world importer 5th leading recipient of FDI

among emerging economies

$1.2 trillion economy $776 billion in total trade $457 billion in FDI attracted

since 1999 125 million consumer market/

60% middle class

Mexico is a growing economy

GDP

Source: INEGI, SE-DGIE (Sep. 2016), WTO, UNCTAD, Brookings Institution, SHCP.

Total Exports$374 billion

1.4%2013

2.3%

2014

2.6%

20152.3%

2016

Mexico has built a solid framework for macroeconomic stability in the past two decades

3

Total Imports$387 billion

Recognizing the importance of NAFTA

Trilateral trade has more than tripled, reaching nearly $1 trillion in 2016.

Source: SE with import data from Statistics Canada, Banxico, and USDOC, and World Bank.

0

200

400

600

800

1000

1200

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1,122

1,033997

Mexico-Canada Trade U.S.-Canada Trade Mexico-U.S. Trade

289

699626602

661568

506476419

376338

893846

772

942

699

880

1,010

615

1,059

NAFTA

1,075

Trilateral Trade between the NAFTA Partners

4

Since NAFTA, U.S.-Mexico trade has multiplied by six

Mexico is the U.S.’ third-largest trading partner

0

100

200

300

400

500

199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016

42 51 46 57 7179 87 111 102 97 97 111

120 134 137 152 129163

198 217226240 236 231

40 50 6274

86 95110

136 131 134 138156 170

198 211216

177

230

263278 280 294 296 294

US Exports to Mexico US Imports from Mexico

$ Bi

llion

82

235231233247

197173

157131

108101

332290

267

348367

305

392NAFTA

461

U.S.-Mexico Trade506

Source: USDOC.

494534

$1.5 billion dollars in products are bilaterally traded each day

531

4

525

a million dollar a minute business

Source: USDOC . BRICS includes Brazil, Russia, India, China, and South Africa

Mexico is the U.S.’s second-largest export market and second-largest supplier of goods

U.S. exports to Mexico reached $231 billion last year, which represents more than 16% of its sales worldwide.

U.S. imports from Mexico reached $294 billion. Mexico has a market share of 13% of US total imports.

116

130

163

180

231

U.S. Exports 2016

Billion dollars

Mexico

BRICS

UK, Germany, France & Italy

Hong Kong, Taiwan, Singapore, & South Korea 260

259

294

U.S. Imports 2016

Billion dollars

Mexico

UK, Germany, France & Italy

Japan, South Korea, Taiwan &

Singapore

6

Buys more than:Supplies more than:

China

US-Mexico trade is diversified and highly integrated, strengthening supply chains in key industries

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 5th largest in the world.

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.

Source: SE with data from Brookings Institution, US Census Bureau, Banxico, and Comtrade.

7

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.

Mexico Canada Malaysia South Korea China Japan

40%

25%

8%5% 4.0%

2%

Source: NBER, Global Value database in Koopman, Powers, Wang, Wei (September 2010, revised March 2011)

MEXICO

U.S. exports also benefit from Mexico’s network of free trade agreements with 46 countries, providing preferential market access to 70% of world GDP and two-thirds of global imports.

Mexico and the United States do not simply trade goods; we work together to manufacture them

U.S. value added in final exports of selected countries to the U.S.

7

Chart1

Mexico

Canada

Malaysia

South Korea

China

Japan

Series 1

0.4

0.25

0.08

0.05

0.04

0.02

Sheet1

Series 1Series 2Series 3

Mexico0.42.42

Canada0.254.42

Malaysia0.081.83

South Korea0.052.85

China0.04

Japan0.02

To resize chart data range, drag lower right corner of range.

U.S.-Mexico trade in services has doubled since 1999

U.S.-Mexico Trade in ServicesUS ExportsUS Imports

1999 2015

Source: USDOC with data from BEA. Financial services include financial and insurance services, telecommunications include IT services, royalties include charges for the use of intellectual property.

$23.8 B

$49.5 B Travel52%

Transport14%

Royalties10%

Financial services5%

Telecommunications3%

Other16%

U.S. EXPORTS

Travel62%

Transport11%

Royalties3%

Financial services2%

Telecommunications5%

Other17%

U.S. IMPORTS$9.7 B

$19.5 B

$14.1 B

$30.0 B

9

10

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

$7.6 B

$36.2 B

$4.6 B

$10.3 B

$5.1 B

$3.7 B

$6.0 B

$2.8 B

$3.4 B

$660 M

$2.0 B

$1.5 B

$5.1 B

$1.2 B

$1.0 B$2.2 B

$190 M

ElectricityDiesel & fuels

Crude oilGasoline

Natural gasLiquefied gases

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

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

0

5

10

15

20

25

30

35

40

45

199319941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016

3.4 4.4 3.3 5.1 4.7 5.4 5.3 6.17.0 7.1 7.6 8.1 9.0

10.412.215.6

12.514.017.8

18.7 18.019.317.518.0

3.1 3.4 4.44.4 4.8 5.4 5.6

6.0 6.1 6.37.2 8.2

9.310.5

11.312.0

12.414.7

17.117.7

19.221.122.824.8

US Exports to Mexico US Imports from Mexico

$ Bi

llion

6.5

14.813.413.112.110.910.8

9.59.57.77.8

20.918.3

16.3

23.5

27.624.9

28.7NAFTA 34.9

U.S.-Mexico Agricultural Trade

37.2

Source: USDOC. Agricultural products include chapters 1 – 24 HS

36.6

40.4 40.3

11

42.8

NAFTA promotes trade specialization

US agricultural exports to Mexico 2016$18 billion

Meat 18% Dairy

Products8%

Grains20%Oil Seeds

10%

Other44%

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.

Vegetables23%

Fruits23%Beverages

18%Sweeteners

6%

Other30%

US agricultural imports from Mexico 2016$24.8 billion

Source: USDOC. Agricultural products include chapters 1 – 24 HS12

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 accounts for 20% of the U.S. total meat exports

Mexico contributes with 35% of the U.S. total bovine animals imports

12Source: SE-Washington with data from Wisertrade.

Nearly 5 million U.S. jobs depend on trade in goods and services with Mexico

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.

U.S. Employment Related to Trade in Goods and Services with Mexico(Jobs in thousands)

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Greater than 10050 - 99Less than 50

MD

MA

CTRI

NJ

WA106.8

HI

DE

NH

VTME

NC

SC

FL

GA

VA

NYWV

PAOH

KYTN

MS

LA

AR

IN

MI

IL

WI

IA

MN

MO

OK

TX

KS

NE

SD

NDMT16.8

WY

CO

NM

AK

AZ

UTNV

CA

OR ID

565.5

89.3

382.065.4

151.599.7

200.2 178.2

138.0

199.9

322.2

152.5

70.4

61.397.4

96.3

53.1

47.7

92.9

133.8

AL

290.2

57.223.3

43.6 46.7

9.1

88.0

26.8

10.7

23.6

50.6

33.9

15.4

13.4

41.6

40.8 67.2

95.5

23.3

11.4 22.4

22.1118.516.961.1

140.815.2

96.5

14

15

Industrias CHBanorte

KatconRassini

Kuo

Metalsa

Mexican investment strengthens US competitiveness and supports US jobs

GCC

Cemex

Alpek

Grupo Mexico

Mexichem

Kaltex

Bio-Pappel

Lamosa

IUSA

Interceramic

DeAcero

Vitro

Condumex

Helvex

Corporacion EG

Nemak

GIS

Verzatec Xignux

MonexVector

EnlaceInteracciones

Cinepolis

Chedraui

Grupo Bal

SofttekAmerica Movil

TelevisaAzteca

America

Coppel

BBG Wireless

Famsa

Qualfon

OmnilifeNeorisCarso

Grupo Salinas

Financial services

Automotive

ManufacturingServices

Mexican companies have:

invested over $52 billion in the US and export more than $1 billion to the global marketover 6,500 businesses in the US, providing over 120,000 jobs

Source: SE-Washington with information from iMapData 2015 and SelectUSA for export figure . */ FDI figure from 2016 IMF Coordinated Direct Investment Survey (CDIS), using outward position (stock) data 2015.

GrumaLala

Bachoco

Bimbo

La Costeña

Minsa

Sigma Alimentos

Femsa

Arca Continental

ElamexZucarmex

Food

Frugo

Challenges

Expand NAFTA benefits to all sectors and regions of the three countries.

Streamline regional integration.

Strengthen regional value chains.

16

Efficient border management.

Develop new elements of competitiveness.

Rising protectionism.

17

NAFTA 2.0

NAFTA modernization should rely on:

Liberalization Goods Services Investment

Economic integration Supply chains Energy Talent

Competitiveness Innovation Trade facilitation Regulatory cooperation Border efficiency

NAFTA 2.0

18

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.

WISCONSIN

Wisconsin - Mexico Trade Relationship

Imports: $2.8 billion

Exports: $3

billion

• In 2016, trade between Wisconsin and Mexico surpassed $5.8 billion

• Mexico is Wisconsin’s 2ndlargest export market, up from 7thin 1993

Source: wisertrade.org (2016)

20

Machinery, Except Electrical

19% $575 MD

Transportation Equipment

14% $412 MD

Computer And Electronic Products

10% $295 MD

Electrical Equipment, Appliances, And Component

9% $289 MD

Fabricated Metal Products, Nesoi

9%$278 MD

Other39%

$1,199 MD

21

Wisconsin – Mexico trade by industry

Source: wisertrade.org (2016), NAICS

Top Export Industries to Mexico

Top Export Industries from Mexico

Electrical Equipment And Components,

Nesoi14%

$388 MD

Navigational, Measuring, Electromedical, And Control Instruments

12%$323 MD

Motor Vehicle Parts9%

$253 MD

Motor Vehicles7%

$190 MD

Electrical Equipment

6%$166 MD

Other52%

$1,433 MD

22

Wisconsin’s Exports to Mexico since NAFTA

289420

314361

454 510 507674 670 717

790

1,062

1,338

1,851

1,481

1,7611,586

2,012 1,988

2,167

2,515

2,835 2,9673,050

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.

All-time high set for Wisconsin's exports to Mexico in 2016

Wisconsin’s Exports to Mexico(In millions of dollars)

954% increase in Wisconsin's exports to Mexico under NAFTA

Mexico accounted for 14.5% of Wisconsin’s exports worldwide in 2016

Over 96,200 jobs in Wisconsin depend on trade with Mexico

23

Exports to México: millions of US dollars Imports from México: millions of US dollars

Wisconsin– Mexico trade by main products

Product 2016

Electric Storage Batteries 342

Motor Cars & Vehicles 150

Tractors 143

Electric Transformers, Static Converters and Inductors

124

Automatic Regulating or Control Instruments, Parts

123

Parts for Motor Vehicles 102

Gas, Liquid Or Electric Supply Meters and Parts

100

Padlocks, Locks & Keys 89

Exports of Repaired Imports 81

Parts of Engines 73

Product 2016

Auto Parts 207

Battery Waste, Scrap 203

Centrifuges Parts 146

Soybeans 90

Padlocks, Locks & Keys & Parts

83

Air Conditioning Machines 78

Parts For Engines 68

Articles of Plastics 63

X-Ray Apparatus; Tubes, Panels, Screen and Parts

63

Refrigerators, Freezers and Parts

62

Source: wisertrade.org (2016), 4-digit HTS Classification System

Slide Number 1Slide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Slide Number 10Slide Number 11Slide Number 12Slide Number 13Slide Number 14Slide Number 15Slide Number 16Slide Number 17Slide Number 18WISCONSINSlide Number 20Slide Number 21Slide Number 22Slide Number 23