1. 1 Trade Commission of Mexico for Western Canada and the Pacific Northwest of USA Trade Commission of Mexico for Western Canada and the Pacific Northwest of USA SECURITY & PROSPERITY PARTNERSHIP OF NORTH AMERICA NAFTA moving forward Hispanic Metropolitan Chamber of Commerce Portland, Oregon October 25 th 2005

2. PORTLAND 2 The North American Free Trade Agreement (NAFTA) is an outstanding demonstration of the rewards to outward – looking countries that implement policies of trade liberalization as a way to increase wealth and improve competitiveness.

3. PORTLAND 3 NAFTA 10 years later

4. PORTLAND 4 Strengthening trilateral trade & investment US: Exports to Mexico and Canada grew from $147.7 billion to $260.2 billion (176%) Exports to Mexico and Canada grew from $147.7 billion to $260.2 billion (176%) Mexico: Exports to US and Canada grew from $61.06 billion to $144.9 billion (237%) Exports to US and Canada grew from $61.06 billion to $144.9 billion (237%) Canada: Exports to US and Mexico grew from $113.6 billion to $215.5 billion (52%) Exports to US and Mexico grew from $113.6 billion to $215.5 billion (52%)

5. PORTLAND 5 NAFTA 10 years later NAFTA = North America the most active trading region in the world NAFTA countries account: Trade. 19% of global exports and 25% of imports Trade. 19% of global exports and 25% of imports Investment. 24% of global inward FDI and 25% of outward FDI Investment. 24% of global inward FDI and 25% of outward FDI

6. PORTLAND 6 SECURITY AND PROSPERITY PARTNERSHIP OF NORTH AMERICA (SPPNA)

7. PORTLAND 7 SPPNA New areas of cooperation Practical and achievable measures are being explored that could build and enhance NAFTA cooperation: Improved Dispute Settlement Mechanism Improved Dispute Settlement Mechanism Rules of Origin Rules of Origin Harmonization of Regulations Harmonization of Regulations Government Procurement Government Procurement Investment Investment Services Services Border Security / Continental Perimeter Border Security / Continental Perimeter Business Travel Business Travel

8. PORTLAND 8 SPPNA New areas of cooperation Security: Improved border infrastructure US – Mexico Border Partnership F.A.ST and Smart Borders Cooperation Bioterrorism Act

9. PORTLAND 9 M E X I C O & NAFTA A decade of strengthening

10. PORTLAND 10 Mexico – A Snap Shot Population: 106 million GDP per capita: + $6.000 74% urban Under 20 – 44% Wealthy – 5% Upper Middle – 18% Middle Class – 37% Poor – 40%

11. PORTLAND 11 Mexico: Commercial policy n 1983 Mexico = a commercial strategy policy based on market economy. n Deregulation + commercial opening. n Improvement of the export performance + EXPORTS + EXPORTERS n THE CHALLENGE: TO BE MORE COMPETITIVE GLOBALLY.

12. PORTLAND 12 GATT (OMC) FTA Chile APECOCDE FTA Costa Rica NAFTA USA Canada FTA Bolivia FTA Colombia Venezuela FTA Nicaragua 199519941993199219861998 2000 FTA European Union FTA Israel 2001 FTA Guatemala Honduras El Salvador PFTA Uruguay FTA Island Liechtenstein Norway Switzerland FTA Japan 2005 Mexico: International agreements

13. PORTLAND 13 Mexico in the world GNP 2002-2004 (Billions US dollars) 1. United States 10,082 2. Japan 4,146 3. Germany 1,870 4. United Kingdom 1,422 5. France 1,330 6. China 1,155 7. Italy 1,090 8. Canada 700 9. Mexico 618 10. Brazil 605 8th export country worldwide 1st export country in Latin America 34% exports to GNP ratio Export companies pay wages 37% higher than non-export Manufactured goods are 85% of total exports in 2004

14. PORTLAND 14 GATT- NAFTA GATT NAFTA Source: Banco de México

15. PORTLAND 15 Main export industries Three industries integrate the 60% of the total exports: Electric and electronic goods, appliances and components. Machinery and equipment components. Automotive & auto-parts & auto-parts

16. PORTLAND 16 Export companies 5.0% 95.0% 75% 25% Export Companies Share in the non-oil exports

17. PORTLAND 17 Exports distribution by region

18. PORTLAND 18 Baja California States with highest foreign trade flows Jalisco Chihuahua Coahuila Nuevo León Veracruz Puebla Guanajuato Estado de Mexico Mexico City

19. PORTLAND 19 Export supply MEXICAN COMPANIES  Quality  Price  Commitment  Just in time  International standards MAIN INDUSTRIES  Fresh products  Food and beverage  Textiles and garments  Leather goods  Furniture  Decorative items  Plastic (subcontracting)  Electric-electronic goods  Autoparts  Do it yourself

20. PORTLAND 20 The Hispanic market In 2002 – 2004 the Hispanic population in USA was around 40.6 millions with purchasing power of 500 thousand millions of dollars. In Canada, the Hispanic population is around 250,000 which 13% are Mexicans. HISPANIC COMPANIES IN THE USA Total: more than one million. Manufacturing food: 2,500. Selling food: 31,000. Restaurant: 34,000.

21. PORTLAND 21 Mexico – outlook 2006 Speed of US recovery (85% Mexico exports) Speed of US recovery (85% Mexico exports) GDP growth – 4% Inflation between 3.8 – 4.4% Peso to weaken slightly Macroeconomic stability Lead up to Presidential election July 2006

22. PORTLAND 22 Business opportunities

23. PORTLAND 23 Mexico A large & complex market Tijuana, BC Guadalajara, Jal Monterrey, NL Mexico, City

24. PORTLAND 24 The retail market in Mexico Around 30 billion Growing 9% per year Represents 17% of GDP More consumers credit available Private labeling and innovation Consolidation amongst main players

25. PORTLAND 25 Export requirements “CLUSTERS” Integration of the export production chain Export promotion InfrastructureFinancingSuppliersKnow-how Transfer of technology TrainingInformationAdvising

26. PORTLAND 26 Main trade partners EXPORTS 1. United States 2. Canada 3. Spain 4. Germany 5. Switzerland 6. United Kingdom 7. China 8. Guatemala 9. India 10. Netherlands 11. Brazil 12. Aruba IMPORTS 1. United States 2. China 3. Japan 4. Germany 5. South Korea 6. Canada 7. Italy 8. Brazil 9. Taiwan 10. Malaysia 11. Spain 12. France Source: World Trade Atlas, 2004.

27. PORTLAND 27 Main imports 2004 Intermediate goods 76% Consumer goods 13% Capital goods 11% Source: INEGI, 2004.

28. PORTLAND 28 Imports by origin North America 64.2% Europe 11.8% Asia 18.7% Latin America 4.7%

29. PORTLAND 29 Foreign investment: entry strategy Import / Export Agent / representative office Strategic alliance Joint - venture Foreign Direct Investment HIGH LOW HIGH RISKRISKRISKRISK MARKET SHARE

30. PORTLAND 30 Source: Secretaría de Economía. Dirección General de Inversión Extranjera. Thousands million dollars NAFTA and the FDI into Mexico Cumulative FDI: 1994- 2003 115.3 tmd

31. PORTLAND 31 Main foreign investment partners 1. United States (NAFTA) 2. Spain 3. Netherlands 4. United Kingdom 5. Canada (NAFTA) 6. Switzerland 7. France 8. Germany

32. PORTLAND 32 Investment possibilities Foreign Direct Investment (FDI) Joint-venture Strategic alliance Subcontracting processes Maquila (in-bond industry)

33. PORTLAND 33 Mexico as manufacturing centre Finished Products Parts and Components NAFTA REGION CENTRAL & SOUTH AMERICA Finished Products ASIA EUROPE Parts and Components Parts and Components

34. PORTLAND 34 Incentives to do business in Mexico Location (Atlantic and Pacific Ocean). Internal market. External market (USA, Europe and Latin America). Competitive work force. Production flexibility (low volume – high mix)

35. PORTLAND 35 Best business prospects  Auto Parts / Supplies  Electronics components  Airport & ground support equipment  Travel & tourism services  Plastic materials  Telecommunication equipment  Safety & security equipment  Hotel & restaurant equipment  Transportation equipment

36. PORTLAND 36 Mexico - Oregon

37. PORTLAND 37 Oregon - Mexico EXPORTSApples Printing equipment Spare – parts (automotive) Berries Forestry products Pulp and others IMPORTS Fresh fruits Vegetables Processed food Furniture Decorative items Printed material (books) Garments

38. PORTLAND 38 Business possibilities Priority sectors to be promote during the business mission Agri-business & seafood Traditional Mexican Food Automotive and aerospace Biotechnology Building materials Electric and electronic Environmental

39. PORTLAND 39 Business possibilities Forestry Hi Tech Metal-mechanic Natural health products Pulp and paper Software development Tourism

40. PORTLAND 40 Trade Commission of Mexico

41. PORTLAND 41 Trade Commission Is the Mexican Trade Promotional Organisation (TPO) in charge of promoting Mexican exports from SME’s and attracting foreign investment, in order to make Mexican export supply more competitive.

42. PORTLAND 42 Strategy BY INDUSTRY: Find Mexican industries with more competitive advantages. BY REGION: Through our network of offices in Mexico. BY COMPANIES: Focus in small and medium size enterprises (SME’s). BY MARKETS: Consolidate the current markets and find new ones.

43. PORTLAND 43 We work together STATESGOVERMENT MINISTRY OF ECONOMYCHAMBERS OF COMMERCE OTHERMINISTERIESMEXICANCONSULATE TRADE COMMISSION OF MEXICO

44. PORTLAND 44 Region covered: Alberta, British Columbia and Yukon in Canada Washington, Oregon and Alaska in USA. Trade Commission of Mexico: Western Canada and Northwestern USA

45. PORTLAND 45 Our services in Canada and USA  Development and support of trade projects  Trade directory  Transportation and logistic information  Market research  Distribution channels  Information and support on trade fair and exhibitions  Opportunities available to potential foreign investors in Mexico  Development of in-bond industry projects  Industrial costs in Mexico

46. PORTLAND 46 NAFTA achievements US-Mexico relations have expanded into a close political, social, and cultural partnership. The increased movement of goods, services, and individuals has created growing linkages The exchange of ideas and methods in addressing common challenges. NAFTA has fundamentally altered the North American economic space, and increased the global competitiveness of all three parties.

47. PORTLAND 47 Doing business in Mexico Judicial System different to US or Canada Judicial System different to US or Canada Labor law is strict Labor law is strict Protect yourself with a contract Protect yourself with a contract Be flexible – stress personal relationship Be flexible – stress personal relationship Multiple distributors – complex market Multiple distributors – complex market Pay attention to local politics Pay attention to local politics Enjoy yourself in a different way of doing business Enjoy yourself in a different way of doing business

48. PORTLAND 48 Please contact us at: EEUU Portland Oregon VERONICA PEREZ 1234 SW Morrison Street Portland Oregon 97205 Tel. 503 274 1442 Fax. 503 274 1540 E-mail: vperez@sre.gob.mx vperez@sre.gob.mx CANADA Vancouver, Canadá SERGIO RIOS 200 Granville Street, suite 1365 Vancouver, Canadá V6C 1S4 Tel. 604 682 3648 Fax. 604 682 1355 E-mail: bancomext@trademexbc.com bancomext@trademexbc.com