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1
Transition from NAFTA to USMCAOctober 2018
-New Trade Deal Removes Uncertainty-
SECRETARÍA DE ECONOMÍA MÉXICO
MX-US Trade
www.naftamexico.net
More information:
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.
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).
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
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!
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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
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%
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
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
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
$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
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 $33.3 B
11
Importance of NAFTA for the services industry
U.S.-Mexico trade in services has doubled since 1999
12
Importance of NAFTA for the transportation industry
Transportation and logistics are key for trade
2017$ 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
13
We have to continue working together
Challenges evolved to Opportunities with new USMCA
14
Rising protectionism
Trade protectionism is not the answer
15
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
16
Increasing regional competitiveness
NAFTA evolution to USMCA, the most important trade negotiation
17
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
18
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
19
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
20
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
Annex
24
Nicole Felix HuescaTrade and Investment Commissioner for
Alabama, Georgia and Tennessee
ProMexico
SECRETARÍA DE ECONOMÍA MÉXICO
www.naftamexico.net
More information:
Thank you