MEXICO - FLORIDA September

Mexico today Mexico is a middle-income country with the world's eleventh-largest population. Mexico's income per capita is larger than all other major economies in the region (7,100 dollars in 2005). After Brazil, Mexico is the second-largest market in Latin America by population ( millions in 2005) The average age of the population is 24.7 (2005) and 30% is aged 14 years or under. This large proportion of young people will represent a pool of effective consumers in the long term. Mexico is classed by the World Health Organization (WHO) as a "low mortality developing country". The rate of population growth has slowed from more than 3% (per year) in the 70s to a 1.26% in Mexico is the 10th economy in the world. In terms of territory is the 14th (equals to France, Spain, Germany, Italy and UK all together)

Mexico’s evolution is evident Gdp Gdp per capita Inflation Interest Rate Exports Imports Trade balance Public deficit Billions of US dollars % of Gdp US dollars Annual % Billions of US dollars

Nominal wages are growing and real wages are stable. This supports the strengthening of the domestic market Source: INEGI

Economic growth and positive expectations translated into a stronger labor market Source: INEGI

For the first time in 35 years inflation in Mexico was less than in the U.S. Consumer Price Index (CPI) and Core Inflation (annual % change) Core Inflation CPI Inflation Upper limit of the Inflation target (4%) December 2005

The stock market recovered strongly due to good expectations of the economic performance in Mexico and the United States Returns in the Mexican stock market (nominal and in USD) Period % MXP % USD Cumulative January- December 2004 return Cumulative January- December 2005 return Cumulative July 2006 return Source: Banco de Mexico Source: Nafta with data from BMV

As a result of sound economic policies, the economy is strong and stable Better economic fundamentals, a promising international environment, and more ambitious government programs have contributed to stronger growth and employment Source: INEGI Mexico‘s GDP grew 4.7% in the second quarter of 2006, reaching twelve consecutive quarters of growth 2006 GDP growth by economic sector (2nd Quarter % change)Sector% Total4.7 Agriculture7.6 Industry3.9 Services4.8 Quarterly Gross Domestic Product (Real annual growth)

Mexico’s country risk is low and stable due to its differentiation from other emerging markets Source: JP Morgan Risk indicators for emerging markets (EMBI+ JP Morgan, base points )

Clearly distinguish 3 clusters in Mexico Automotive Industry: Geographic Location

Electronic Industry location …… (700 + companies)  AUDIO & VIDEO  ELECTRODOMESTICS  COMPUTERS  TELECOMUNICATIONS  OTHERS

Baja California Chihuahua Coahuila Nuevo León Tamaulipas San Luis Potosí Guanajuato Querétaro Jalisco Edo. de México Distrito Federal Tlaxcala Puebla Home Appliances Industry Location...(32 + Companies) Ventiladores Copacabana Merrytech G.S.E.B TIMCO

Mexico’s network of FTAs is one of the largest in the world Transformation responds to a strategy

El Salvador Costa Rica Nicaragua Honduras Guatemala Israel Canada United States South Korea Chile Argentina Bolivia Venezuela Colombia Portugal Netherlands Switzerland Austria Spain France Italy Greece Germany Belgium Luxembourg Finland Denmark Ireland United Kingdom Sweden Norway Iceland Liechtenstein Brazil Cuba Czech Rep. Australia Peru Mercosur Uruguay Japan Mexico is among world's most open economies 20 BITs 12 FTAs 6 CEAs

Florida’s Exports to Mexico * (Billions of US Dollars) Source: US Census, WISER and SE-NAFTA Series. * , NAICS series. ** 2006 Jan-Jun

Florida’s Exports to Mexico by Sector (NAICS) 2005 Source: US Census, WISER and SE-NAFTA Series.

Florida’s Exports to Mexico – 2005 (Millions of US Dollars) Source: US Census, WISER and SE-NAFTA Series.

Florida’s Opportunities in Mexico Source: Ministry of Economy with data from WISER and USDOC Sector Total Computer And Electronic Prod. Transportation Equipment Machinery, Except Electrical Chemicals Miscellaneous Manufactured Electrical Equipment, Appliances Food And Kindred Prod. Fabricated Metal Prod. Paper Agricultural Products Plastics And Rubber Prod. Textiles and Fabrics Florida’s Total Exports 33,377 9,729 5,652 3,588 3,489 1,736 1,205 1, Florida’s Exports to Mexico 2, Mexico Imports from U.S. 120,049 23,298 14,455 11,494 12,899 2,727 8,071 5,641 5,059 3,206 3,590 5,817 3,067 Millions of US Dollars Mexico Total Imports 221,249 50,065 16,073 33,082 21,924 4,096 9,360 8,873 10,073 5,181 4,869 7,477 5,141 Share. 54% 47% 90% 35% 59% 67% 86% 64% 50% 62% 74% 78% 60%

Incentives to promote the competitiveness SME Financing Consulting Training, R&D Prosec Clusters ITA + Business Acelerator Program Fiscal Incentives OPIC Eximbank Nafin Bancomext Design Centers Prosoft Fiscal Incentives Automotive* Electronics* Software* Aerospace Textile Agriculture Tourism Commerce ConstructionMaquiladora* Chemical Shoe & Leather*

Elements to ease key imports for the industry:  ITA PLUS  PROSEC  RULE 8th Elements of Government support  30% TAX Credit on Engineering design, R&D  Reduced Income tax on Maquiladoras  Immediate Deduction of Assets  Grants to help location on designated areas  Training incentives Federal-State  Federal-State mixed funds on technology based projects (grants) University and Research Centers Involvement  Working closer to understand industry needs  Federal Funds for Research Centers Many Companies are Taking Advantage of the Mexican Strategy to Attract Businesses… We offer:

Mexico: a World of Economic Opportunity Tijuana Population: 750,000 Key Industries: beverages, processed foods, metalworking, radio and television manufacture, electrical machinery Hermosillo Population: 600,000 Key Industries: automotive, meat, cement and derivatives, electrical machinery Culiacán Population: 600,000 Key Industries: food processing, cereal milling, sugar, beverages, edible oils and fats Aguascalientes Population: 500,000 Key Industries: electronics, automotive, dairy, textiles, carpets León Population: 1 million Key Industries: refining, footwear, leather and tanning, bakery goods, beverages Guadalajara Population: 4 million Key Industries: high-technology, edible oils and fats, plastic products, chemicals, dairy products, processed foods, textiles, footwear Mexico City Population: 20 million Key Industries: retail, financial services, food, automotive, plastic products, paper and cellulose, chemical derivatives, basic chemicals Puebla Population: 1.5 million Key Industries: automotive, textiles, iron and steel, bottled water, chemicals, meat processing Veracruz Population: 450,000 Key Industries: petrochemicals, refining, basic chemicals, iron and steel, sugar, beef, processed foods, tourism, transportation services (maritime) Ciudad Juárez Population: 800,000 Key Industries: electrical machinery, transport equipment, meat, electronics, dairy products Mérida Population: 600,000 Key Industries: beverages, edible oils and fats, processed foods, cement and derivatives, plastic products Chihuahua Population: 650,000 Key Industries: electrical machinery, automotive, meat, electronics, dairy products, timber Torreón Population: 880,000 Key Industries: automotive, bricks, clay, refractory, general machinery, cement and derivatives Toluca Population: 850,000 Key Industries: automotive, plastics, paper and cellulose, chemical derivatives, basic chemicals Monterrey Population: 3 million Key Industries: oil refining, iron and steel, electrical machinery, glass and derivatives, breweries, meat products, cement, banking San Luis Potosí Population: 670,000 Key Industries: iron and steel, non-ferrous metallurgy, tobacco products, electrical machinery, automotive, livestock Querétaro Population: 460,000 Key Industries: automotive, paper and cellulose, synthetic fibers, general machinery, electrical machinery, processed foods, dairy products Tampico-Madero-Altamira Population: 340,000 Key Industries: chemical, industrial machinery, electronic & electrical equipment, oil and refinery, agriculture, cattle, fishing Source: SE-NAFTA.

DR. HÉCTOR MÁRQUEZ 1911 PENSYLVANIA AVE. 8TH FLOOR WASHINGTON, DC, TEL. (202) FAX (202) Web page: CONTACT POINT