Presentation by Ambassador of Mexico Jose Luis Bernal Prague, October 31, 2012

I. Facts and figures

Mexico in the world

Mexico is located in the North American

region, together with Canada and the

United States.

Mexico shares a 3,500 kilometres-long borderline with the United

States. Neighbours to the south are Guatemala and Belize.

I. Facts and figures

EMERGING ECONOMY

11th largest country in the world, in land and population size.

Land area: 2 million sq. km.

Total population: 112 million people

Largest Spanish-speaking Nation

12th largest world economy in GDP terms

Total GDP: 1 trillion USD

Per capita GDP: $9,700 US Dollars

10th largest contributor to the United Nations´ regular budget

I. Facts and figures

Trade

10th largest trading country (600 billion USD per year)

2nd trade partner of the U.S.

1st Latin American exporter

Investment

6th recipient of FDI among emerging economies

Tourism

8th most important destination in the world = 22 million tourists annually

A country of migrants, 23 million people of Mexican origin in the USA.

Remittances above 20 billion USD.

A country conducting a decisive fight against drug dealers and consumption.

A country with a vast culture, plentiful of traditions, music,

gastronomy, and a wide array of artistic manifestations.

II. Mexico has achieved major results in economic reform in the

last 30 years

• 1970-s – 1980´s Debt problem, end of inward-looking development.

• Since 1982, economic model has been oriented towards liberalization,

deep structural reforms and a diversification of the productive sectors.

• After the financial crisis of 1994-1995, decided orientation towards the

export market.

• Consecutive reforms oriented to modernize the productive infrastructure,

to encourage market diversification and competitiveness.

• Sound macroeconomic policies and a good management of public

finances and external debt have consistently contributed to stability and

growth, making Mexico one of the most relevant economies in the world,

member of the G-20, OECD, APEC, NAFTA, a leader in Latin America

and a country with a Strategic Association with the European Union.

Foreign trade supports Sustained growth

Mexico is one of the best linked countries in the world, with direct

communication to all areas of the United States, Europe, Latin

America and Asia.

Through a wide network of trade arrangements Mexico has

preferential access to 44 countries comprising more than 1 billion

consumers.

China has FTA agreements with 20 countries, the USA with 15,

India with 13 and Brazil with 12 only.

MEXICO’S TRADE AGREEMENTS

NAFTA:

Canada & USA

(Jan. 1, 1994)‏

Bolivia

(Jan. 1, 1995)‏

Uruguay

Argentina

Chile

(Jan. 1,1992)‏

Colombia

(Jan. 1, 1995)‏

Peru, Ecuador

EFTA: Switzerland, Liechtenstein, Norway & Island (July 1, 2001)‏

UE: 27 members since 2004, Global agreement since 2000 New Strategic Partnership 2008

Israel (July 1, 2000)‏

(North Triangle):

Guatemala, Honduras

& El Salvador

(Jan. 1, 2001)‏

Nicaragua:

(Jan. 1, 1998)‏

Costa Rica

(Jan 1, 1995)‏

Panama

OECD

APEC

Japan,

+ ALADI

Brazil

sectoral agreements

It is fair to say that most of these achievements were propelled by

NAFTA

What is the North American Free Trade Agreement (NAFTA) ?

A comprehensive agreement that sets the rules for international trade and

investment between Canada, the United States and Mexico.

It came into force on January 1st, 1994, and covers:

Market access for thousands of goods within North America

Gradual openness for agricultural, automotive and textile and apparel products.

Rules of origin

Trade in services

Special commitments regarding telecommunications and financial services

Investments

Dispute settlement mechanisms on trade and investment

Access to public procurement at the federal level

Competition rules

Protection for Intellectual Property Rights (patents, trademarks, copyrights, and

industrial designs).

Technical standards and phytosanitary standards

Safeguards

Easier access for business travelers

NAFTA additional contents

Side Agreements: the North American Agreement on

Environmental Cooperation and the North American Agreement on

Labor Cooperation

The Border Environment Cooperation Commission provides

technical support for the development of environmental

infrastructure projects in the U.S.-Mexico border region.

The North American Development Bank finances these projects.

What NAFTA is not?

From the very begining, NAFTA was conceived as an agreement on

trade, investment and services, ONLY.

Not a Customs Union nor an agreement to create a predetermined

integration area.

Issues like migration, energy, labor markets, or the establishment of

cohesion funds for development were left out of the negotiations.

Nonetheless, NAFTA was instrumental to lock in economic reforms

in Mexico

Results

NAFTA revolutionized trade and investment in North America, helping to

unlock the region’s economic potential, stimulate growth and

employment, creating higher-paying jobs across North America.

It has paved the way for greater market competition and enhanced choice

and purchasing power for North American consumers and businesses.

It has improved competitiveness in the three North American countries,

as businesses have better access to materials, technologies, capital,

human resources and markets.

And contrary to some views, it has actually contributed for the three

countries to continue expanding trade with other regions.

Assessing NAFTA benefits:Trade

Trade : Since NAFTA came into effect, trade among the NAFTA

countries has more than tripled, reaching around $1 trillion USD

Canada-U.S. trade has nearly tripled,

while trade between Mexico and the U.S. has more than quadrupled.

Today, the NAFTA partners exchange close to $3 billion USD in

merchandise on a daily basis with each other. That’s about $120

USD million per hour.

NAFTA: Growth of Mexican exports since NAFTA

(In billions of USD)‏

0

50

100

150

200

250

300

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

"

NAFTA

Trade increase under NAFTA

Nota: Se utilizaron las importaciones reportadas por cada país. * A junio de 2007

Fuente: Secretaría de Economía con datos de importación de Banxico, USDOC y Statistics Canada.

Permanent surplus in favor of Mexico

Mexico-USA trade.

(mmd)

Mexico – Canada trade

(mmd)

Mexico has been third trade partner of the United States,

after Canada and China ..., and this year will be second only to

Canada

Fuente: USDOC

Mexican trade with USA is almost triple of that of Germany and four times that

of France

Trade partners of USA

(Billions of dollars)

worldwide‏supplier‏US‏third‏and‏…

Despite the fierce competition of China, Mexico has increased its total participation

in USA imports

Mexico´s share of total USA imports.

Mexico is already the second largest food supplier

to the USA

Fuente: Secretaría de Economía con datos de Banco de México.

* Agrofood is the total of Agriculture and livestock and agroindustrial products added together.

Mexico´s exports to NAFTA countries

(millions USD)

Mexican food sales represent 14.2% of US imports, more than those of France (3d),

Brazil (4th) and Italy (5th) together

Assessing NAFTA benefits: Investment

Mexico has become one of the largest recipients of foreign

direct investment among emerging markets, and received

more than US$156 billion from its NAFTA partners between

1993 and 2008.

Mexico: A platform for new investments

15.124.7 34.8

49

61.475.1

93.1

122.5

143.6

158.6

181.1

201.0

220.2

243

260

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Cumulative flows of Foreign direct investment in Mexico (FDI)‏

Fuente: Secretaría de Economía cit. Por Luis de la Calle

North American manufacturing base:

Since NAFTA came into effect, North American manufacturers have

enjoyed better access to materials, technologies, capital, and talent

available across the continent.

U.S. manufacturing output rose by 62% between 1993 and 2008, compared

with 42% between 1980 and 1993. In 2008,U.S. manufacturing exports

reached an all-time high of US$1.0 trillion.

Canadian manufacturing output (real GDP) increased by 62% between

1993 and 2008 compared with 23% between 1981 and 1993. Over the

same period (1993-2008), Canadian manufacturing exports grew at a much

faster pace (up 103.6%).

North American manufacturing base:

NAFTA has empowered Mexico’s industrial base by facilitating

modernization, transforming Mexico into a strategic manufacturing center in

North America,

◦ Growth of manufacturing output has tripled since 1994 .

◦ Mexico’s manufactured exports have multiplied six times over the past

17 years.

Examples of leading industries:

◦ The automotive sector accounts for 20% of Mexico´s manufacturing

GDP = 2.6 vehicles produced in 2011.

◦ The aerospace sector is growing rapidly = 249 companies. Exports in

this sector tripled in six years, having reached 4.4 billion USD in 2011.

30

50

70

90

110

130

150

1.01

11.01

5.02

9.02

1.03

5.03

1.04

8.04

1.05

5.05

10.05

2.06

10.06

5.07

9.07

12.07

3.08

6.08

11.12

International reserves

(billions of US dollars)‏

Source: Banco de México

Moreover, Mexican international reserves reached historic maximum levels in

recent years... Which allowed to weather down pressures in the last crisis

Assessing NAFTA benefits: jobs

Labor standards and wages: The parallel agreement on labor cooperation

added a social dimension to NAFTA. Trading partners seek to improve

working conditions and living standards, and to protect, enhance, and enforce

basic workers’ rights.

Labor cooperation highlights three key areas: industrial relations,

occupational health and safety, and employment standards. It has also raised

the public profile of major labor rights issues, including protection contracts

and protection of migrant workers.

NAFTA has promoted higher wages. In Mexico, for example, export firms

employ one in five workers; these workers are paid 40% more on average

than those in non-export jobs. Firms with foreign direct investment employ

nearly 20% of the labor force and pay 26% more than the domestic average

manufacturing wage.

Exporting companies are creating new jobs and pay

higher salaries

Fuente:‏Secretaría‏de‏Economía,‏con‏datos‏del‏IMSS‏a‏diciembre‏de2006‏

Share of export-oriented companies in total job creation by state

National average

20%

Assessing NAFTA benefits: economic growth

Since NAFTA came into effect, the North American economy has

more than doubled in size.

The combined gross domestic product (GDP) for Canada, the United

States, and Mexico surpassed US$17 trillion in 2008, up from US$7.6

trillion in 1993.

NAFTA, macroeconomic impact

Convergence in consumptiom:

– The main benefit of NAFTA is that consumers in Mexico have access to the

same quality, variety, availability, price, service and credit conditions to those

existing in the US in the sectors open to trade.

Convergence on investment:

– Quality of investment in Mexico is similiar to those in USA and Canada in terms

of technological development, productivity and environmental protection.

Macroeconomic convergence:

– Mexico has economic and business cycles paralell to those in the US, with

inflation and interest rates converging

Social impact

Poverty reduction 1994 - 2006:

The first 15 years of NAFTA have coincided with an important reduction

in poverty in Mexico.

Food poverty was reduced from 21.2% to 13.8%

Poverty in terms of capacities went down from 30.0% to 20.7%

Wealth poverty went down from 52.4% to 42.6%

Source: INEGI and CONEVAL, as quoted by Luis de la Calle

Foreign trade expansion can be correlated to

improvement of standard of living

21.2%

13.8%

1994 2006

30.0%

20.7%

1994 2006

52.4%

42.6%

1994 2006

16.8%

31.9%

1994 2006

Patrimonial poverty

Food poverty Poverty in capabilities

Exports / GDP

Population by tipe of poverty and exports as percentage of GDP

NAFTA in a nutshell

NAFTA Partners

Canada U.S Mexico Combined

Population (July 2008

est.)

35 million 305 million

113. million

453 million people

Languages English and French

English Spanish

Gross Domestic

Product, 2008

(Current prices, US$)

1,501 billion

14,441 billion

1,087 billion

17.0 trillion

Trade with NAFTA

Partners, 2008

(Current prices, US$)

570.8 billion

919.9 billion

393.5 billion

946.1 billion

Inward Foreign Direct

Investment Among

NAFTA Countries,

2008 (US$)

240.0 billion

229.8 billion

156.0 billion

---

Jobs Created 1993-

2010 (millions)

4.5 27 10 41.5

National Employment

Level, 2008 (millions)

17.1 145.4 43.2 205.7

How do we connect these potential with Europe?

The European Union is Mexico´s second economic partner worldwide.

Open window for trade, investment, technology, tourism and best practices

in many sectors.

Active partners in international cooperation and dialogue.

Mexico and the EU signed an Agreement for Economic Association,

Political Dialogue and Cooperation, in application since 1997.

Since 2008, a new Strategic Partnership is being developed between

Mexico and the European Union.

Therefore, Mexico can play a role as a bridge to forge closer relations

between Europe and North America

Advantages of the Mexico-European Union Global Accord +

developing a Strategic Alliance for the 21st Century

Global

advanced

cooperation

Educational

Exchanges,

Training

Sustainable development

Coordination in

multilateral

institutions

Sectoral

Complementarity

And the Czech Republic can be an important link of that chain.

In the last 10 years, Mexico- Czech relations have increased in every aspect: political, economic, cultural, student exchanges, . . .

Reciprocal visits are frequent, including officials from the various levels of government, parliamentarians. business people, academic and research institutions, NGO´s, and other sectors.

Constant political dialogue. The Bilateral Mechanism on Political Consultations met three times in the last six years

Trade between Mexico and the Czech Republic went up by 500% between 2001 and 2008. This year it is expected to surpass 800 million USD

High level group on economic cooperation has met three times since 2008

Investment: Mexican companies in the Czech market: CEMEX, NEMAK, Impulse Logistics, food distributors.

Tourism doubled in the last few years.

Increasing number of educational exchanges.

Priority sectors for Cooperation

Automobile industry

Industrial equipment and intermediate products

Aeronautical and Space industries

Pharmaceuticals

Environmental protection

Water

Forestry

Institutional framework: Political dialogue forum,

High level group on economic cooperation,

visa elimination,

double taxation avoidance,

investment promotion and protection,

promotional activities between ProMexico and Czech Trade and CzechInvest;

a new agreement between the National Council on Science and Technology of Mexico

and the National Academy of Sciences of the Czech Republic, 2012

plus the Global framework between Mexico and the European Union.