Transition from NAFTA to USMCA October 2018 -New Trade ... Since NAFTA, U.S.-built auto exports have

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    Transition from NAFTA to USMCA October 2018

    -New Trade Deal Removes Uncertainty-

    SECRETARÍA DE ECONOMÍA MÉXICO

    MX-US Trade

    www.naftamexico.net

    More information:

    naftadsk@naftamexico.net

  • 2

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

    480 Million

    $21 Trillion

    POPULATION GDP ANNUAL GOODS

    TRADE

    $1 Trillion

    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 firms have 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

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    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.

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    100+

    50 - 99

    Less than 50

    Job numbers in thousands

    MD

    MA

    CT

    RI

    NJ

    WA 106.8

    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

    NDMT 16.8

    WY

    CO

    NM

    AK

    AZ

    UTNV

    CA

    OR ID

    565.5

    89.3

    382.0 65.4

    151.5 99.7

    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

    57.2 23.3

    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

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    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%

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    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

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    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

    RoW 47%

    Canada 17% $24bn

    China 14% $20bn

    Mexico 13% $19bn

    Every $1 billion of U.S. agricultural exports requires approximately 7,550 American jobs throughout 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 Growth 2009-2017

    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

    Travel 52%

    Transport 14%

    Royalties 10%

    Financial services 5%

    Telecommunications 3% Other

    16%

    U.S. EXPORTS

    Travel 62%

    Transport 11%

    Royalties 3%

    Financial services 2%

    Telecommunications 5%

    Other 17%

    U.S. IMPORTS $9.7 B

    $26.3 B

    $14.1 B $33.3 B

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    Importance of NAFTA for the services industry

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

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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 transportation value in $ billions

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    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 19 39

    863

    724

    9.1 T 5.2 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

    182 36

    AUSTRALIA

    402

    1.3 T 196

    127

    297 168

    68