Eleventh anniversary of the Mexico-European Union FTA - Awex

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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$) 2010 2011 % Total 49.6 55.2 11.2 Exports 24.8 28.0 12.6 Exports (excluding oil) 21.4 23.4 9.0 Imports 24.8 27.2 9.8 Source: Banco de México 2 Mexico’s Trade with EU and EFTA (million US$) 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 3
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