1. May, 2006 Columbus, Ohio www.naftamx.org/ohio.html www.naftamexico.org/ohio.html

2. Mexico is an attractive market of over 105 million consumers with annual foreign purchases that exceed 231 billion dollars, making it the 8 th* largest importer globally. Mexico’s consumers spend more than five out of every ten dollars on U.S. goods. Source: Banxico *Source: WTO 2006, excluding intra-EU (25) imports Share in Mexico’s Imports by Selected Countries 2005 Mexico’s Market

3. Mexico has become the U.S.’ second largest export market buying more products from the U.S. than countries such as: Source: USDOC *Source: Banxico U.S. Exports to Mexico

4. Mexico’s market share of total U.S. exports increased more than any other country’s in the last twelve years Share in U.S. Exports by Selected Countries Percentage Source: USDOC U.S. Exports to Mexico

5. Export opportunities have grown across the United States. Between 1994 and 2005, 49 of the 50 U.S. states and the District of Columbia experienced growth in exports to Mexico. Among these, 44 states have at least doubled their sales to Mexico. Source: U.S. Census Bureau with Adjustments made by WISER U.S. Exports to Mexico

6. Today, Mexico is ranked among the top five export markets for 38 U.S. states Source: U.S. Census Bureau with Adjustments made by WISER U.S. Exports to Mexico

7. Mexico is a large market for products from the U.S., absorbing 30% of U.S. textiles and apparel, 29% of plastics and rubber products, 27% of electrical equipment and appliances, and 28% of leather and allied products exported worldwide U.S. Exports to Mexico Source: U.S. Census Bureau with Adjustments made by WISER U.S. Exports to Mexico by Selected Industries Value in billion dollars, 2005

8. One out of every four feet of copper wire One in every two office boxes of carton or paper Nearly half of electric motor and generator parts, and some articles of iron and steel 44% of some articles of plastics 41% of electric capacitors Two of every five containers of plastic 35% of printed circuits One out of every four parts for TV’s and radios 24% of new pneumatic tires One out of every five parts and accessories for vehicles Nearly one in every five of control instrument parts More than one out of every ten vehicles U.S. Exports to Mexico Among products exported by the U.S. worldwide, Mexico purchases:

9. Mexico has been doing its homework…....Mexico has free trade access to Europe and North America at the same time. Is the only country with free trade access to 10 countries of Latin America. And a free trade agreement with Japan entered into effect on April 1st, 2005 We have negotiated preferential market access throughout the world; so far with …43 countries

10. El Salvador Costa Rica Nicaragua Honduras Guatemala Israel Canadá 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 Sweeden Norway Iceland Liechtenstein Mexico’s network of FTAs is one of the largest in the world 20 BITs 12 FTAs 6 CEAs Brazil Cuba Czech Rep. Australia Peru Mercosur Uruguay Japan

11. Mexico’s network of FTAs is one of the largest in the world

12. As a result of its 12 free trade agreements with 43 countries, Mexico is by far, the leading exporter of the Latin American region. The eight exporter in the world and the second largest partner of the United States. Exports of Mexico account for almost twice the total exports of Brazil and Argentina and almost equal to all Latin America. Mexico is the 13 th economy in the world. In terms of Sq. Miles is the 14 th (equals to France, Spain, Germany, Italy and UK all together)

13. FDI by sector 1994-2005 Manufacture 48.9% Commerce 10.9% Financial Serv. 23.4% Other Serv. 8.2% Others 8.4% Source: Ministry of Economy we have diversified our inflows of FDI

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

15. 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.

16. Ohio’s Exports to Mexico 1993-2005* (Billions of US Dollars) Source: US Census, WISER and SE-NAFTA Series. * 2000-2005, NAICS series.

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

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

19. U.S.’ Exports to Mexico 1993-2005* (Billions of US Dollars) Source: US Census, WISER and SE-NAFTA Series. * 2000-2005, NAICS series.

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

21. U.S.’ Exports to Mexico – 2005 (Billions of US Dollars) Source: US Census, WISER and SE-NAFTA Series.

22. Selling in Mexico Directly to the Final Importer Through a Mexican Manufacturer Negotiations take less time No distributor mark-up US firm know directly client requirements US firm must know Mexican trade environmental Several travels to Mexico Usually products of the same industrial sector To complement product line Clear contract to avoid misunderstandings

23. Selling in Mexico through a Distributor / Retailer Wholesaler Several lines of products US firm take advantage of distribution infrastructure Negotiations with only one Party Distributions in several cities or States Distributions of several products of different sectors Easy to have products in stock Negotiations with only one Party

24. Sales Agent Representative Office of the US firm Develop a close working relationship with the appointed agent Provide appropriate training, product support, and timely supply for success. Develop a full understanding of what is expected Distribution agreement with scope and coverage of distribution Selling in Mexico through a Presence in Mexico Direct knowledge about clients Promotional, liaison, and branch collaboration activities

25. Opening an Office in Mexico Most common initial corporate and administrative steps 1. Acquisition of a corporate name 2. Formation of the Company before a Public Notary 3. Inscription on the Public Registry4. Obtain a Tax Paying Registry Number 5. Registration on the Foreign Investment Registry 6. Local or State Licenses (when applicable) 7. Labor contracts (individual, IMSS registry) 9. Visa and immigration process for foreign employees (when applicable) 8. Inscription on the General Importers Registry

26. Opening an Office in Mexico The General Commercial Law (Ley Federal de Sociedades Mercantiles) allows the establishment of several kinds of companies in Mexico, generally: Sociedad Anónima (SA) or Sociedad Anónima de Capital Variable (SA de CV) Sociedad de Responsabilidad Limitada (S de RL) (Limited Liability Company) Sociedad Civil (SC) (Civil Partnership) Mexican Branch

27. Sociedad Anónima (SA) or Sociedad Anónima de Capital Variable (SA de CV) Usually recommended to incorporate a limited liability stock corporation. Shareholder’s liability is limited to their stock interest in the company Minimum amount of paid-in capital One of the advantages of the latter is that the minimum fixed capital can be changed subsequent to the initial formation. Sociedad de Responsabilidad Limitada (S de RL) (Limited Liability Company) Minimum amount of paid- in capital Maximum of 50 partners Partners’ liability is limited to their partnership interest in the company It has the option of having a variable capital Opening an Office in Mexico

28. Sociedad Civil (SC) (Civil Partnership) Most common professional service providers. Non minimum capital requirements Non limit in the number of partners Taxable in the same way as a corporation. Mexican Branch Retain their liability characteristics from abroad Provide rights and responsibilities similar to a corporation, including tax liability and access to local courts Requires the approval of the National Foreign Investment Commission an the Ministry of the Foreign Affairs. Registration at the Public Registry of Commerce. Opening an Office in Mexico

29. Mexican importer is responsible for the import process, so he must be registered in the General Import Registry (Padrón General de Importadores), and for certain merchandises they also need to be incorporated in the Sectoral Import Registry (Padrón de Importadores Sectorial) In accordance to the Customs Law, all export and import operations must be done by a Custom Broker, so importers require to use the Services of any authorized Customs Broker

30. Required Documents 1.Entry Summary (Pedimento de importación) 2.Invoice 3.Bill of landing 4.NAFTA certificate of origin, or other Certificate related to preferential Treatment * 5.Proof documents of non tariff measures fulfillment, such as licenses, authorizations, permits, technical regulations, bonds, weight, among others * 6.Certificate of country of origin * * When applicable

31. Import Taxes Currently, most of the NAFTA originating goods enter Mexico duty – free. On January 2008 all products will be duty free, in accordance to the NAFTA tariff phase out. Non-NAFTA originating goods are subject to the General Import Rate (MFN rate), which is between zero and 35 per cent ad valorem for industrial goods

32. It is important to know the tariff classification of the exported good, in accordance to the Harmonized System (HS code) to determine the applicable import rate http://www.economia.gob.mx/index.jsp?P=2262 Mexico also has implemented Sectoral Promotion Programs (PROSEC) and a mechanism called Rule 8 th to reduce MFN tariffs on a wide range of important inputs needed by Mexico's manufacturing sector. Import Taxes In addition, Maquiladora and Pitex programs facilitate the import of raw materials to be used by Mexico's export manufacturing sector.

33. Other Taxes Antidumping or Countervailing Duties. Applied on certain products originating from some countries http://www.economia.gob.mx/index.jsp?P=392 http://www.economia.gob.mx/index.jsp?P=392 Value Added Tax (Impuesto al Valor Agregado / IVA) Tax on New Vehicles (Impuesto Sobre Automóviles Nuevos / ISAN) Special Tax on Production and Services (Impuesto Especial sobre Producción y Servicios / IEPS) Custom Processing Fee (Derecho de Trámite Aduanero / DTA). Goods originating from certain free trade areas are exempt. Storage Fee (Derecho de Almacenaje)

34. Import Trade Regulations Estimated prices. Established for certain goods (including tools, wood materials, appliances, textiles, apparel, footwear). If the transaction value of the good is lower than the estimated price, the importer may be required to guarantee payment of the difference in duties. Individual information of goods (Anexo 18). Import of certain goods requires disclosing detailed specification information for identification, analysis or control purposes, and customs enforcement efforts. This requirement may apply to more than 100 types of goods (wines and liquors, textiles and apparel, footwear, etc)

35. Import Trade Regulations Import Licenses. Established for sensitive products, Periodically, Mexico publishes in the Official Gazette lists that identify the different items that have a specific import control. Items are identified according to their Harmonized System (HS) code number ; Import Notices. the importer requires to notify the import of certain goods to Mexican authorities prior their arrival to customs. (i.e. medical products and equipment, toiletries, processed food, some chemicals, among other)

36. Exclusive ports of entry. Various goods are defined to enter into Mexico through a specific Mexican ports, in order that customs authorities strengthen compliance in relevant customs matters, such as tariff classification or valuation. Some products subject to this requirement are: meat of poultry in brine, fats and oils, beer, cigars and cigarettes, matches, bicycles’ tires, footwear, bicycles, CD’s, and textiles. Import Trade Regulations

37. Standards and Technical Regulations Voluntary StandardsNormas Mexicanas (NMX’s) Mandatory Technical Regulations Normas Oficiales Mexicanas (NOM’s) NOM’s apply to imported products as well as domestically produced goods. Many of these are enforced at the border. http://www.economia.gob.mx/index.jsp?P=144

38. Standards and Technical Regulations NOM’s are issue by several Ministries, for example:  Ministry of Agriculture (Sagarpa). Plant, animal and fish products, also to prevent the introduction of diseases  Ministry of Health (SSA). Processed food, beverages, medical devices, and medicines.  Ministry of Economy (SE). Commercial information (i.e. labeling), industrial safety, and consumer protection  Ministry of the Environment (SEMARNAT). Forestry products, energy efficiency, emissions and pollution control

39. Standards and Technical Regulations Labelling requirements. There are two main technical regulations in force for labelling of consumer goods:  NOM-050-SCFI-1994, establishing general packaging and labelling requirements, and  NOM-051-SCFI-1994, establishing specific labelling requirements for food and non-alcoholic beverages. In addition, specific labelling requirements apply to products such as:  Alcoholic beverages, (NOM-142-SSA),  Textile and apparel (NOM-004-SCFI-1993),  Leather products (NOM-020-SCFI-1993),  Second-hand products (NOM-017-SCFI-1993)  Electrical domestic appliances (NOM-024-SCFI-1994)

40. Standards and Technical Regulations Some NOM’s required testing and Third Party certification in accordance to NOM’s and conformity assessment procedures of each Agency Lab test must be conducted in approved and accredited laboratories Certification must be made by approved and accredited Certification bodies Accredited label verification units exist in Mexico, where companies can obtain an evaluation of their labels prior to export to Mexico

41. Noncompliance with regulatory requirements can result in import shipments being held by Mexican Customs, monetary penalties assessed against the importer and, when applicable loss of import privileges

42. Government Procurement > The federal levels comprises government agencies and parastatal companies > The subfederal levels comprises state governments and municipal authorities > The subfederal level is autonomous under the Constitution and therefore sets its own rules > Most public procurement is carried out by the federal government. Market is divided into federal and subfederal levels

43. The Public Bidding is the most common procedure by which government entities enter into contracts. Government contracting procedures Public Bidding Restricted Bidding Direct Award of Contracts  In the case of Federal Government a notice of Public Bidding is published in the Official Gazette containing the requirements to obtain the correspondent contract.  In order to participate in the bidding process, a contractor must purchase the “guidelines and requirements” of a particular bid (bases de licitación).

44. Useful Websites addresses: Legislation: http://www.sat.gob.mx/sitio_internet/informacion_fiscal/legislacion/ Mexican Customs: http://www.aduanas.sat.gob.mx Technical Regulations Catalog http://www.economia.gob.mx/index.jsp?P=144 Import tariff information http://www.economia.gob.mx/index.jsp?P=2262 Antidumping duties http://www.economia.gob.mx/index.jsp?P=392 Government Procurement information http://www.compranet.gob.mx/

45. Useful Websites addresses: U.S. Embassy in Mexico: http://mexico.usembassy.gov/mexico/econ.html Distributors / Producers http://www.cosmos.com.mx http://www.buyinmexico.com.mx/Bancomext/portal/portal.jsp?parent=141 ITA’s Portal with useful information of Mexico & NAFTA http://web.ita.doc.gov/ticwebsite/naftaweb.nsf!OpenDatabase&Start=1&Count=500&Expand=2.1 U.S. Government’s Export Portal http://www.export.gov American Chamber / Mexico http://www.amcham.com.mx Industrial Cost in Mexico 2006 http://www.investinmexico.com.mx/pied/cds/pied_bancomext/homepied/

46. NAFTA and Trade Office 1911 Pennsylvania Ave. N.W. 8 th. Floor Washington, D. C. 20006 Phone: 202.728.17.00 / 202.728.1705 Fax: 202.728.1712 E-mail: nafta@naftamexico.net If you required additional information or further assistance, contact: