Eleventh anniversary of the Mexico-European Union FTA - Awex

TABLE OF CONTENTS
Eleventh anniversary of the
Mexico-European Union FTA
MEXICO
Trade Balance
Financial and Economic Indicators
BUSINESS
Mexico’s Official Gazette Notices
EU Official Journal
Eleventh anniversary of the
Mexico-European Union FTA
Eleven years ago, on July 1 st , 2000, Mexico and the European Union
(EU) put into force a Free Trade Agreement (MEUFTA) which is part
of their Economic Partnership, Political Co-ordination and Cooperation
Agreement, that also promotes political dialogue and intensifies
co-operation between both partners. .
MEUFTA -the first free trade agreement between Europe and the American
continent- has boosted bilateral trade and investment. Additionally, Mexico has
signed Bilateral Investment Treaties (BIT) with 16 EU Member States*. All the
above has allowed to create exceptional conditions for business development
between Mexico and the EU.
Since 2007, as foreseen in the MEUFTA, all bilateral trade for industrial products
is free of duties. Moreover, since 2003 the EU liberalized all the industrial
products originating from Mexico.
Meanwhile, agricultural trade has been subject to a gradual and longer liberalization
process. Nowadays, 79% of EU’s agricultural imports from Mexico are
free of duties, while Mexico has already liberalized 73% of its agricultural imports
from the EU in that sector.
Bilateral Trade
After a historic decline in international trade in 2009, a global recovery is now
underway; and trade between Mexico and the EU is not the exception. In fact,
in 2010 bilateral trade reached more than 50 billion dollars (bd), representing
an increase of 21% compared to 2009.
Furthermore, trade between Mexico and the EU has grown 170% compared
with 1999 (year before the entry into force of MEUFTA). In contrast, EU trade
with other partners has increased 148% in the same period. Meanwhile, Mexico’s
trade with the rest of the world grew 113%, which demonstrates that, for
both parties, bilateral trade is more dynamic than with the rest of their respective
trade partners.
(Continues on page 2)
June 2011
Year 11, no. 6
* Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Italy,
Luxembourg, the Netherlands, Portugal, Slovak Republic, Spain, Sweden and United Kingdom.

Eleventh anniversary of the Mexico-European Union FTA
(Continues from page 1)
18.5 22.2 23.8
23.4
13.2 15.4 16.9 17.2 18.7 21.8
5.3 6.8 6.9 6.2 7.4 8.6
Mexican exports to the EU
Bilateral Trade Mexico-EU
(Billion USD)
26.1
30.4
99 00 01 02 03 04 05 06 07 08 09 10
EU's Imports
In 2010, Mexican exports to the EU reached 17.4 bd,
24% more than in 2009; consolidatating the EU’s position
as Mexico’s second export market.
It is worth highlighting that since the entry into force of
MEUFTA, Mexican exports to the EU have increased
230%, equivalent to almost the double growth rate of
Mexican sales to the rest of the world in the same period
(1999 -2010).
Thanks to this dynamics, the EU’s participation as a destination
for Mexican exports climb to almost 5% in 2010,
positioning Mexico as EU’s 24th supplier. In contrast
such participation reached only 4% in 1999.
In the period 1999-2010, sectors accounting for the largest
shares of the increase in value terms of Mexican exports
to the EU included: machinery and transportation
equipment (45.3% of the increase), oil and gas (20.6%)
and chemical products (7.6%).
37.6
42.4
50.5
26.1 29.2 33.9
39.3
11.5 13.3 16.6 20.2 14.0 17.4
Mexico's Imports
Source: Mynistry of the Economy of Mexico with data from Banxico and Eurostat
59.5
41.3
27.3
50.0
32.6
Mexican imports from the EU
In 2010 Mexican imports from the EU reached 32.6 bd,
achieving an increase of 19% compared to 2009, wherewith
the EU consolidates its position as Mexico’s third
supplier, only behind the United States and China.
The EU’s share in Mexican purchases from abroad was
10.8% in 2010, which compares favorably with the 9.3%
in 1999.
Since MEUFTA came into effect, Mexican imports from
the EU surged 146.7%, in contrast with the growth rate of
109% of the rest of the world.
Between 1999 and 2010, the Mexican import sectors that
have contributed with the greatest share of the increase
in Mexican imports from the EU, in terms of value, included
machinery and transportation equipment (35.8% of
the increase), chemical products (21.0%) and oil and gas
(15.7%).
It is important to highlight that more than three quarters of
these imports are capital goods (18%) and inputs (60%)
used on manufacturing process, whereupon MEUFTA
allows to reduce production costs and improves the competitiveness
of firms established in Mexico. Additionally,
producing high quality consumer goods in Mexico at lower
prices, brings benefits for Mexican families.
Thanks to the MEUFTA, EU’s companies that consolidate
production in Mexico increase their capacity to compete
internationally at lower costs, taking advantage of
FTA’s network great potential, that grant preferential access
from Mexico to 43 countries in North America, Europe,
Latin America and Japan.
(Continued on page 3)
Mexico’s Total Trade in April
(billion US$)
2010 2011 %
Total 49.6 55.2 11.2
Exports 24.8 28.0 12.6
Exports (excluding oil) 21.4 23.4 9.0
Imports 24.8 27.2 9.8
Source: Banco de México
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Mexico’s Trade with EU and EFTA
(million US$)
January - April 2010 2011 %
Exports to the EU 4,276.8 5,863.5 37.1
Imports from the EU 9,663.0 11,020.7 14.1
Exports to the EFTA 356.1 512.9 44.0
Imports from the EFTA 473.3 545.9 15.3
Source: Banco de México

Eleventh anniversary of the Mexico-European Union FTA
(Continues from page 2)
Enhanced bilateral investment flows
MEUFTA and the BITs have also generated higher level
of investments between Mexico and the EU given that in
addition to guaranteeing the free flow of investment, these
instruments ensure protection for investors and provide
a mechanism to solve any eventual dispute.
Mexico has received almost 108 bd of Foreign Direct Investment
(FDI) from the EU in the period 1994-2010,
highlighting that most of this stock, 93.8 bd, was received
since MEUFTA’s entry into force (2000-2010), which represent
a growth of more than five times than in the period
94-99.
303%
61.3
247.0
14.1
FDI in Mexico
(Billion USD)
Growth (%)
568%
93.8
Total EU U.S. Rest of the
World
Source: Ministry of the Economy
247%
125.3
36.1
94-99
152%
27.9
11.1
Moreover, it is worth mentioning that in 2010 only, FDI
flows from the EU almost duplicated those in 2009 and
that EU contribution to total FDI in Mexico reached a historical
participation of 62%.
Among the investment accumulated in Mexico between
2000 and 2010, the EU accounted for 39% of the total
received, with more than 10 thousand companies with
European capital operating in the country. The top three
most active countries are: Spain, which accounted for
40.7%, the Netherlands, 38.7%, and the United Kingdom
8.5%. These countries were, respectively the second,
third and fifth investors in Mexico.
In terms of sectors, the bulk of FDI from the EU has been
allocated to manufacturing activities (38.4%), mainly in
processed food, chemical and automotive industries. Other
important part of the FDI has also been oriented on financial
services (25.9%).
MEUFTA has also promoted Mexico’s investment in the
EU. Between 1995 and 2009, Mexican companies invested
14.4 billion euros in the EU, of which 12.8 were carried
out since the entry into force of the MEUFTA (2000).
MEUFTA boosts the recovery of bilateral trade and
investment
2010 was an exceptional year for the bilateral economic
relationships, experiencing a quick recovery after the deep
global recession in 2009, the deepest since the Second
World War.
In this context, MEUFTA demonstrated its great potential
to reactivate trade and investment flows between Mexico
and the EU, wherewith now our companies are better positioned
to take advantage of the business opportunities
that are showing up in this recovery environment and reconfiguration
of world markets.
Indeed, European and Mexicans companies are uniting
forces to consolidate their positions in the most attractive
markets and sectors with better perspectives of growth.
Mexico has been recognized by many international organizations
as one of the best places in the world to do business
–it is even considered as the best in Latin America
(see “TradeLinks” of December 2010); therefore European
companies are taking advantage of the strategic position
and competitive advantages that Mexico offers to improve
and enlarge their position in the global markets.
MEUFTA supports our return to the path of economic
growth, the companies development, and not less important,
jobs creation for Mexicans and Europeans.
In any case, our challenge remains to take even more advantage
of the MEUFTA considering all the great potential
that still exists to widen and deepen the economic relationship
between Mexico and the EU.
Mexico’s Economic Indicators
Inflation rate: -0.74% (May, 2011);
3.2% (2011, annual)
Industrial Production: 1.4% (April 2011 / April 2010)
Manufacturing: 2.1%; Construction: 1.9%, Mining: -3.1%
Global Index of Economic Activity: 3.58% (March 2011/March 2010)
Consumer Confidence Index: 89.3 pts. (May 2011)
4.7 percentage points (May 2011 / May 2010)
Open unemployment rate: 5.2 % (May 2011) Source: INEGI
Mexico’s Financial Indicators
Foreign exchange rate: 11.89 peso/dollar (June 27, 2011)
International reserves: $129,569 million dollars (June 17, 2011)
Mexican stock market index (IPC): 35,602 (June 27, 2011)
Interest rate treasury bonds CETES 28 days:
4.35 % (June 23, 2011)
Source: Banco de Mexico
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Mexico’s Official Gazette Notices
04/05/2011 Decree announcing the Additional Protocol to the Agreement between Mexico and the International
Atomic Energy Agency so as to Application of Safeguard in relation to the Treaty for the Prohibition of
Nuclear Weapons in Latin America and the Caribbean and the Nuclear non-Proliferation Treaty, done in
Vienne on March 29, 2004.
06/05/2011 Agreement that publicizes the Second Additional Protocol to the Economic Complementation
Agreement No. 55 celebrated between Mercosur and Mexico.
10/05/2011 Decree amending, adding and abolishing certain provisions to the Federal Law of Economic
Competition, the Federal Criminal Code and the Federal Fiscal Code.
13/05/2011 Decree announcing the Arrangement between Mexico and Australia on Air Services, done in
Mexico City on April 9, 2010.
EU Official Journal
11/05/2011 L122 Council Implementing Regulation (EU) No 443/2011 of 5 May 2011 extending the definitive
countervailing duty imposed by Regulation (EC) No 598/2009 on imports of biodiesel originating in the United
States of America to imports of biodiesel consigned from Canada, whether declared as originating in
Canada or not, and extending the definitive countervailing duty imposed by Regulation (EC) No 598/2009 to
imports of biodiesel in a blend containing by weight 20 % or less of biodiesel originating in the United States
of America, and terminating the investigation in respect of imports consigned from Singapore
11/05/2011 L122 Council Implementing Regulation (EU) No 444/2011 of 5 May 2011 extending the definitive
anti-dumping duty imposed by Regulation (EC) No 599/2009 on imports of biodiesel originating in the United
States of America to imports of biodiesel consigned from Canada, whether declared as originating in Canada
or not, and extending the definitive anti-dumping duty imposed by Regulation (EC) No 599/2009 to imports
of biodiesel in a blend containing by weight 20 % or less of biodiesel originating in the United States of
America, and terminating the investigation in respect of imports consigned from Singapore
14/05/2011 L127 Council Decision of 16 September 2010 on the signing, on behalf of the European Union,
and provisional application of the Free Trade Agreement between the European Union and its Member
States, of the one part, and the Republic of Korea, of the other part
14/05/2011 L128 Council Implementing Regulation (EU) No 451/2011 of 6 May 2011 imposing a definitive
anti-dumping duty and collecting definitively the provisional duty imposed on imports of coated fine paper
originating in the People's Republic of China
14/05/2011 L128 Council Implementing Regulation (EU) No 452/2011 of 6 May 2011 imposing a definitive
anti-subsidy duty on imports of coated fine paper originating in the People's Republic of China
31/05/2011 L145 Regulation (EU) No 511/2011 of the European Parliament and of the Council of 11 May
2011 implementing the bilateral safeguard clause of the Free Trade Agreement between the European Union
and its Member States and the Republic of Korea
Mexico-EU Trade Links is a monthly informational newsletter published by the Mexican Mission to the EU,
Representative office of the Ministry of the Economy. Av. Franklin Roosevelt 94, 1050, Brussels, Belgium.
For more detailed information or questions regarding this issue please contact us: e-mail info@economia-bruselas.be,
fax: 32 (02) 644 04 45, or visit our website at: http://www.economia-bruselas.gob.mx
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