NAFTA Works NAFTA Works September 2013 * Volume 18, Issue 9 INSIDE THIS ISSUE 1 Mexico Reinforces its

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  • Volume 18, Issue 9 Page 1 nafta@naftamexico.net

    Mexico Reinforces its Commitment with Climate Change Agenda

    A MONTHLY NEWSLETTER ON NAFTA AND RELATED ISSUES

    NAFTA Works September 2013 * Volume 18, Issue 9

    INSIDE THIS ISSUE

    1 Mexico Reinforces its

    Commitment with Climate Change Agenda

    1 Trade Highlights

    2 Mexico is Emerging

    as a Key World- Player in Tech Services

    3 NAFTA Related

    Events 3 Diario Oficial

    4 Success Stories 4 Selected Reading 4 Infrastructure

    Projects in Mexico 4 Mexico Economic

    Update 5 Profile of Georgia 6 Profile of State of

    Mexico

    On June 3, 2013, Mexico's Ministry of Environment and Natural Resources (SEMARNAT) issued a new National Climate Change Strategy aimed at transitioning toward a competitive, sustainable and low carbon emissions economy as established in the National Development Plan 2013-2018 and in compliance with the General Climate Change Law (GCCL). The strategy builds on and strengthens the actions taken by Mexico's previous administration (2006-2012), detailing the lines of action to be implemented at the three levels of government in order to combat and mitigate climate change- related effects in the country in the long-term.

    The strategy also establishes guidelines for the private sector, regarding climate change-related criteria in national legislation and environmental damage compensation schemes produced by companies operating in the country. It also provides elements for implementing fiscal policies and economic and financial mechanisms for companies engaged in sustainable productive processes, developing a legal framework on the sustainable usage of Mexican natural resources, and accelerating the adoption of clean energy sources, among others. The Strategy has three chapters:

    The climate change national policy pillars detail six courses of action to be implemented gradually in Mexico by the three levels of government and the private sector, including:

    The establishment of cross-cutting, coordinated, and inclusive public policies on climate change to be implemented through 18 lines of action, among them: the incorporation of adaptation and mitigation objectives and goals in National and State Development Plans, as well as in sectorial programs; the inclusion of climate change- related criteria in current legislation and policy

    instruments on urban, tourist, ecological, transport and energy development; and the access to environmental damage reparation schemes for individuals and legal entities; The development of fiscal policies and economic and financial instruments with a climate-related approach in order to price environmental costs through 18 lines of action, including granting focalized supports, eliminating inefficient subsidies, and promoting sustainable productive processes through economic incentives; The implementation of a platform regarding research, innovation, development, and adaptation to climate-related technologies, as well as the strengthening of institutional capacities. This pillar also includes the promotion of advanced technologies for renewable and clean energy generation; The promotion of a climate-related culture, through wide educational programs, communication campaigns on climate change

    Continues on page 2

    effects, and by providing relevant information to consumers; The development of mechanisms for measuring, reporting, verifying, monitoring, and evaluating climate change, including developing a public policy evaluation system with criteria and indicators on climate change adaptation; and The strengthening of strategic cooperation and international leadership on climate change by contributing to the adaptation and mitigation efforts through Mexico's active involvement in international negotiations and by promoting Mexico's access to international funding sources.

    The Strategy's chapter on adaptation to the effects of climate change stresses the negative

  • Volume 18, Issue 9 Page 2 nafta@naftamexico.net

    impacts that Mexico has faced in recent years due to climate change, and its effects on diverse regions and economic sectors. The Strategy will implement three adaptation measures:

    Reduce the vulnerability of the population and increase its resilience to climate change effects by: (i) identifying the most vulnerable areas; (ii) strengthening the enforcement of land use regulations; and (iii) developing public policies focused on reducing risks related to food safety, public health and housing infrastructure; Reduce vulnerability of the strategic infrastructure and productive sector and strengthen their adaptation measures to climate change effects, including systematic vulnerability evaluations and the inclusion of climate change-related criteria in the planning and construction of new strategic and productive infrastructure; and Conserve and sustainably use the ecosystems by providing legal instruments regarding the territory's management in order to reduce ecosystem vulnerability to climate change.

    Low Carbon Emissions Development

    In 2010, Mexico emitted approximately 748 million tons of greenhouse gases into the atmosphere, 33% more than in 1990. The energy sector is Mexico’s largest source of emissions and gas flaring, waste and transport are the sectors with the fastest growth. The Strategy seeks to achieve the specific goal established in the GLCC of reducing CO2 emissions by 50% by 2050 in comparison to those emissions registered in 2000. Therefore, the strategy includes several mitigation measures:

    Accelerate the transition to clean energy sources by: (i) promoting clean energy generation by the public and private sector through the use of renewable energy sources and efficient technologies such as wind, solar, geothermal, and hydroelectric energies; (ii) strengthening the regulatory and institutional framework, as well as the use of economic incentives to promote clean energy sources, among others; and (iii) facilitating electrical interconnection of renewables power plants. Reduce the energy intensity through efficient and responsible consumption schemes. This measure seeks to increase energy efficiency in the country's more energy intensive economic sectors such as the public and private transportation sectors, as well as the steel, chemical, petrochemical, and cement industries, the public services, services industry and residential sectors. It aims to improve legal and regulatory frameworks for those fuels not yet regulated in Mexico, among others; Promote sustainable urban schemes with efficient transport and comprehensive waste management systems, as well as with low -carbon footprint buildings by: (i) improving regulations, and standards of energy-, gas-, and water-saving technologies in new and existing buildings; (ii) promoting energy efficient and zero-emissions public transportation systems, and multimodal and time-saving transportation modes and infrastructure; and (iii) promoting new technologies and infrastructure for waste and wastewater treatment, bio-gas co-investments and self-funding operations; Promote better agriculture and forestry practices in order to increase and preserve natural carbon sinks by: (i) promoting sustainable use of forestry resources, and (ii) implementing energy-efficiency actions and renewable energy use in the agricultural and livestock sectors; and Reduce short-lived climatic pollutants emissions (SLCPs) by: (i) developing regulations on SCLPs generation and use; (ii) encouraging black carbon emission-reducing technologies and fuels in the transport sector; and (iii) regulating SCLPs emissions generated in industrial processes, gasoline service stations, and facilities using or storing solvents, among others.

    Mexico has great potential for power generation using renewable sources, and opportunities have opened for private sector participation. These lines of action seek to focus efforts to

    overcome the obstacles that have prevented the full immersion of renewable energy in the national energy system.

    Mexico is Emerging as a Key World-Player in Tech Services

    The Mexican IT industry is rising as the most important tech services provider to the U.S. and Canada, in large part, due to its geographical proximity, strong intellectual property protection, human capital capabilities and NAFTA market access certainty. As a result, this industry has grown at a pace that is three-fold higher than the global average. Moreover, recent economic reforms adopted by Mexico will speed up its transformation as a world powerhouse.

    Mexican IT support and services providers already service companies from four continents, including a wide number of the Fortune 500 firms. In addition to well-positioned global Mexican companies in this sector that have formed important high-tech hubs such as those located in Guadalajara, Monterrey, Mexico City and Queretaro, small start-ups are increasingly dotting the country, forming a network of mini-hubs of innovation centers that create original software to sell on the international markets.

    Growth in this sector is driven mostly by the demand from the United States, the world’s largest consumer of tech services. According to IT consulting firm Gartner, 75% of tech outsourcing in Mexico is consumed by U.S. companies. Mexico has developed a critical mass of increasingly sophisticated tech services that also meet global companies' requirement