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1 Transition from NAFTA to USMCA October 2018 -New Trade Deal Removes Uncertainty- SECRETARÍA DE ECONOMÍA MÉXICO MX-US Trade www.naftamexico.net More information: [email protected]

Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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Page 1: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

1

Transition from NAFTA to USMCAOctober 2018

-New Trade Deal Removes Uncertainty-

SECRETARÍA DE ECONOMÍA MÉXICO

MX-US Trade

www.naftamexico.net

More information:

[email protected]

Page 2: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

2

North America’s economic development & success depends on a strong regional trade partnership

480Million

$21Trillion

POPULATION GDPANNUAL GOODS

TRADE

$1Trillion

Source: World Bank, and import data from Statistics Canada, BANXICO and US Census Bureau.

Page 3: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

MEXICO

3

Trusted partners invest in each other.

A predictable market

CANADA

U.S. companies have invested nearly

$363 billion in Canada

and

$87 billion in Mexico

Canadian firmshave invested

$353 billion in the U.S.

and

$12.5 billion in Mexico

Mexican companies have invested about

$58 billion in the U.S.

and

$501 million in Canada

UNITED STATES

Source: IMF, CDIS, 2016 outward Foreign Direct Investment positions (stock).

Page 4: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

4

NAFTA increases trade, supports jobs, and strengthens ties with Mexico.

Importance of NAFTA today

5 million jobs in the U.S. rely on

trade with Mexico1

World class supply chain

Efficient production

U.S.-Mexico trade has grown nearly seven-fold

since 1993.

1993 2017

$557 billion

1 Source: Woodrow Wilson Center

$84 billion

Page 5: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

5

NAFTA supports jobs.

Importance of NAFTA for jobs

5 million U.S. jobs depend on trade with Mexico, across many states and industries.

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.

#REF!

#REF!

#REF! #REF!

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#REF!

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#REF!

100+

50 - 99

Less than 50

Job numbers in thousands

MD

MA

CT

RI

NJ

WA106.8

HI

DE

NH

VT

ME

NC

SC

FL

GA

VA

NYWV

PA

OH

KY

TN

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

22.1

118.5

16.9

61.1

140.8

15.2

96.5

Page 6: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

6

Mexico is the U.S.’s 2nd largest export market.

Importance of NAFTA for U.S. exports

Mexicans buy:

16% of U.S. exports worldwide

nearly $243 billion of goods in

2017.

Of all food products, animal, and vegetable the U.S. exports worldwide. Source: US Census Bureau using NAICS industry codes

Of all automotive, rail, vessel and aerospace equipment the U.S. exports globally.

16%

U.S. EXPORTS

WORLDWIDE

13% 11%

Page 7: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

7

Our economic ties are highly integrated.

We are more than neighbors – we are partners

About 40% of Mexican final exports to the U.S. are U.S.-made value added.1

Exports to U.S.:

40%

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

Moreover, Mexican exports to the world include 37% U.S.-made content.

Exports to World:37% U.S. made

U.S. made

Mexican

Exports

Page 8: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

8

Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs

Importance of NAFTA for auto manufacturing industry

Source: 2016 data from the World Bank, OICA, and USDOC.

In 2017, nearly 3X as many vehicles were produced in the U.S. as in Mexico.

11.2 M

4 M

There is an average of $4,070 in Mexican-made auto parts per vehicle produced in the U.S., but $4,870 in U.S.-made auto parts per vehicle produced in Mexico – a 20% higher value for U.S.-made parts.

Over 300 hundred thousand more vehicles were produced in the U.S. in 2017 than in the year before NAFTA.1

Since NAFTA, U.S.-built auto exports have more than doubled. 2

10.9M 11.2M

1993 2017

1993 2017

978,155

1,981,873

1 Bureau of Transportation Statistics, Department of Transportation

2 USDOC, International Trade Administration, Office of Transportation and Machinery

Page 9: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

North America: An Emerging Energy Powerhouse

Mexico is the US’ largest energy market, consuming over $26 billion in energy goods

Canada is the US’ biggest energy supplier, providing over $73 billion in commodities

$9.8 B

$50.1 B

$6.1 B

$11.9 B

$5.5 B

$4.8 B

$8.7 B

$2.5 B

$5.1 B

$1 B

$2.0 B

$2.5 B

$7.3 B

$2.5 B

$2.0 B$2.4 B

$184 M

Electricity

Diesel & fuels

Crude oil

Gasoline

Natural gas

Liquefied gases

Page 10: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

$3.7

$2.1

$1.6$1.4 $1.3

$1.1 $1.0$0.7 $0.6

State Exports of Agricultural Goods to Mexico($ Billions, 2017)

10

Importance of NAFTA for agriculture

RoW47%

Canada17% $24bn

China14% $20bn

Mexico13% $19bn

Every $1 billion of U.S. agricultural exports requires approximately 7,550 American jobsthroughout the economy.

Main Export Markets for U.S. Agricultural Goods

Source: Mexico’s Ministry of the Economy (SE‐Washington) with data from WiserTrade, using NAICS. “Agricultural Goods” comprises: Agricultural Products; Livestock and Livestock Products; Food and Kindred Products; and Beverage and Tobacco Products.

Seven states all export over

$1 billion

of agricultural goods to Mexico.

Rest of the World

Mexico

U.S.Exports

U.S. Agricultural Goods Exports Growth2009-2017

Agricultural exports to Mexico support billions in sales and thousands of U.S. jobs

Page 11: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

U.S.-Mexico Trade in Services

US Exports

US Imports

1999 2017

Source: USDOC with data from BEA. 2016 services data from U.S.-Mexico Trade Facts, USTR. Trade in services by sector with 2015 data. Financial services include financial and insurance services, telecommunications include IT services, royalties include charges for the use of intellectual property.

$23.8 B

$59.5 B

Travel52%

Transport14%

Royalties10%

Financial services5%

Telecommunications3% Other

16%

U.S. EXPORTS

Travel62%

Transport11%

Royalties3%

Financial services2%

Telecommunications5%

Other17%

U.S. IMPORTS$9.7 B

$26.3 B

$14.1 B $33.3 B

11

Importance of NAFTA for the services industry

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

Page 12: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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Importance of NAFTA for the transportation industry

Transportation and logistics are key for trade

2017$ billion

% Share

385 70%

80 14%

53 9%

17 3%

4 1%

19 3%

Source: SE-Washington with data from USDOT/ Bureau of Transportation Statistics.

0

100

200

300

400

500

600

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Truck

Rail

Vessel

Air

Pipeline

Other

US – Mexico Trade by mode of transportationvalue in $ billions

Page 13: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

13

We have to continue working together

Challenges evolved to Opportunities with new USMCA

Page 14: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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Rising protectionism

Trade protectionism is not the answer

Page 15: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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Diversifying markets

Mexico’s ambitious ongoing trade negotiations

IMF

WTO

UNCTAD

TURKEY

EFTA

1.3 T

1.1 T

PACIFIC ALLIANCE

BRAZIL

ARGENTINA

JORDAN

EUROPEAN UNION

333

172

4.4

39

38

0.57

199

140

56

143

0.6 1939

863

724

9.1 T5.2 T

16.5T

545

1.8 T

-2.3

GDP (billion dollars)

IMPORTS(billion dollars)

FDI (billion dollars)

SINGAPORE

MALAYSIA

CANADA

1.2 T

1.5

417

CP TRANS-PACIFIC PARTNERSHIP NEW

ZEALAND

17

18236

AUSTRALIA

402

1.3 T196

127

297168

682

297292

10

201174

VIETNAM

1.4T

4.9 T608

JAPAN

IMF 2016. World Trade Organization 2016. UNCTAD 2016 FDI outward stock

Page 16: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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Increasing regional competitiveness

NAFTA evolution to USMCA, the most important trade negotiation

Page 17: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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NAFTA 2.0

The negotiation required partners to compromise

Automotive Industry

-Rules of Origin

-Labor Value Content

Sunset

Clause

Investment

Protections

Dispute Settlement Mechanisms

Energy

Intellectual Property Rights

Labor

Agricultural Trade

Page 18: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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Increasing regional competitiveness

NAFTA results and Opportunities

Regional competitiveness

Preferential access

Regulatory harmonization

Investment

Temporary entry

Cooperation & Development

Obstacles for free trade

Inclusive & Responsible

Trade

SMEs

Labor New

Chapter

Anti-corruption

Environment

New chapter

Certainty in trade and

investments

State Owned Enterprises

dispute settlement

mechanisms

Competition

government procurement

Chapters XIX and XX remainunchanged

New 3 country Competitiveness Committee:• Address problems• Improve Competitiveness • Coordinate efforts to favor manufacturers

competitiveness, especially when it comes to efficient supply chains

Puts in place the WTO government Procurement

agreement . It does noteliminate the Buy American, but it´s better Access than

was being proposed

WLO Standards

Page 19: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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Increasing regional competitiveness

NAFTA results and Opportunities

Opportunities of the 21st century

economy

Energy integration

Intellectual property

Digital trade

Energy: significant additions made:

• Clean up cross-border rules and procedures

• The Chapter recognize the sovereign right to regulate and modify the Mexican legal framework, including the Constitution. As well reaffirms Mexico´s inalienable and impresciptible property on hydrocarbons in Mexico´s subsoil.

E-Commerce / online Shopping / MinimisAgreement on higher limit for imports to be

Duty free: • Canada : from 20 USD to 150 Canadian

D and 40 Canadian D for Tax exempt• Mexico from 50 to 100 USD• US : 100 USD

Tax exemption in addition to a duty Exemption

Page 20: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

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USMCA will strengthen North Americas Competitiveness

USMCA agreement will

gives North America the tools to compete in the

21st century economy

A robust economic

agenda and trade

diversification

continues to be a

high priority for

Mexico

USMCA will bring all three Nations together

in competition with the rest of

the world.

The global economy waits for no one

Page 21: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

Annex

Page 22: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing
Page 23: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing
Page 24: Transition from NAFTA to USMCA October 2018 -New Trade ... · Since NAFTA, U.S.-built auto exports have doubled, supporting thousands of jobs Importance of NAFTA for auto manufacturing

24

Nicole Felix HuescaTrade and Investment Commissioner for

Alabama, Georgia and Tennessee

ProMexico

SECRETARÍA DE ECONOMÍA MÉXICO

www.naftamexico.net

More information:

[email protected]

Thank you