1 a path towards a more secure manufacturing area in north america a deliberate and carefully...

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A PATH TOWARDS A MORE SECURE MANUFACTURING AREA IN NORTH

AMERICA

A deliberate and carefully considered invitation to a win-win proposition

Presented by: Alejandro Dieck

AUSTIN, SEPTEMBER 2, 2005

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CONTENTS

INTRODUCTIONINTRODUCTION

MEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENTMEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENT

PROSPECTS WE PUT FORWARDPROSPECTS WE PUT FORWARDIVIV

IIII

II

WHAT’S NEXT? WHAT CAN BE DONE ? WHAT’S NEXT? WHAT CAN BE DONE ? IIIIII

FINAL COMMENTSFINAL COMMENTSVV

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HAS NAFTA WORKED ?

I. INTRODUCTION

4

Trilateral trade reached $727 billion dollars last year, 140.8 % higher than pre-NAFTA levels…

302353

395441

498 529593

688642 628 653

727

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

NAFTA: TRILATERAL TRADE(BILLION DOLLARS)

+ 140.8

Source: Ministry of Economy

I. INTRODUCTION

5

Mexican exports to the U.S. have almost tripled…

MEXICO: EXPORTS TO UNITED STATES(BILLION DOLLARS)

Source: Ministry of Economy

4352

6681

94103

120

148140 143 147

165

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

+ 285.3 %

I. INTRODUCTION

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Specially, there has been a dramatic growth in bilateral trade, between U.S. and Mexico…

UNITED STATES: EXPORTS TO MEXICO(BILLION DOLLARS)

Source: Ministry of Economy

41.650.8 46.3

56.8

71.478.8

86.9

111.4101.5 97.3 97.5

111.6

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

+ 166.7%

I. INTRODUCTION

7

NAFTA has also helped both of our countries to cope storms arising from financial crisis throughout the last decade

NAFTA

HAS HELPED ECONOMIES TO DEAL

WITH FINANCIAL CRISIS

I. INTRODUCTION

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UNITED STATES: EXPORTS PERFORMANCE DURING ASIAN CRISIS

(1996-1999)

US. BILLION DOLLARSGrowth 96-991996 1999

US EXPORTS TO MEXICO

56 87 55.3%

US EXPORTS TO ASIA 204 186 - 8.8%

Source: Ministry of Economy

I. INTRODUCTION

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2.64.8 4.4 4.4

11.09.5 9.2

12.8 12.4 13.4

17.1

27.7

15.5

12.3

17.4

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

MEXICO: FOREIGN DIRECT INVESTMENT(Billions of Dollars; Cumulative 1994-

2004=158 bd)

Source: Ministry of Economy

I. INTRODUCTION

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CONTENTS

INTRODUCTIONINTRODUCTION

MEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENTMEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENT

PROSPECTS WE PUT FORWARDPROSPECTS WE PUT FORWARDIVIV

IIII

II

WHAT’S NEXT? WHAT CAN BE DONE ? WHAT’S NEXT? WHAT CAN BE DONE ? IIIIII

FINAL COMMENTSFINAL COMMENTSVV

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COMPLY WITH MOST DEVELOPMENT COMPLY WITH MOST DEVELOPMENT COUNTRIES (MDC) ON CRITICAL ISSUESCOUNTRIES (MDC) ON CRITICAL ISSUESCOMPLY WITH MOST DEVELOPMENT COMPLY WITH MOST DEVELOPMENT

COUNTRIES (MDC) ON CRITICAL ISSUESCOUNTRIES (MDC) ON CRITICAL ISSUES

Rule of Law11

Intellectual Property22

Anti-Trust Agencies33

Human Rights44

Labor Rights55

Environmental Issues66

Consumer Protection77

II. MEXICAN BUSINESS CONDITION: OPPORTUNITIES WE PROPOSE AT PRESENT

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THE TRANSITION TOWARD THE TRANSITION TOWARD A MODERN DEMOCRACYA MODERN DEMOCRACY

THE TRANSITION TOWARD THE TRANSITION TOWARD A MODERN DEMOCRACYA MODERN DEMOCRACY

The Central BankThe Central Bank11

The CongressThe Congress22

The Judicial PowerThe Judicial Power33

The Political Party in PowerThe Political Party in Power44

The Electoral InstitutionsThe Electoral Institutions55

THE 6 AUTONOMIES

IFAIIFAI66

II. MEXICAN BUSINESS CONDITION: OPPORTUNITIES WE PROPOSE AT PRESENT

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Investment Grade11

Labor Force Growth22

Modern Democracy: Transition Towards77

Labor Productivity33

Policy Making to Improve Domestic Economy

44 Industrial Policy Implementation

55

Sound Financial and Banking Sector66

IMPROVEMENT BUSINESS CONDITIONS IMPROVEMENT BUSINESS CONDITIONS FOR FOR

SUSTAINABLE ECONOMIC GROWTH SUSTAINABLE ECONOMIC GROWTH

IMPROVEMENT BUSINESS CONDITIONS IMPROVEMENT BUSINESS CONDITIONS FOR FOR

SUSTAINABLE ECONOMIC GROWTH SUSTAINABLE ECONOMIC GROWTH

II. MEXICAN BUSINESS CONDITION: OPPORTUNITIES WE PROPOSE AT PRESENT

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It is an International financial institution created with the purpose of financing environmental infrastructure projects.

The NADBANK is one of the best ways our two governments can contribute to enhance the benefits of NAFTA and to make sure we have an efficient physical infrastructure, especially at the border.

We need to increase investments in border infrastructure like transportation, housing, environmental protection, water and wastewater treatment, along with the strengthening of local institutions.

NORTH AMERICAN DEVELOPMENT BANK (NADBANK)

DEEPER AND TRUER COOPERATION…

II. MEXICAN BUSINESS CONDITION: OPPORTUNITIES WE PROPOSE AT PRESENT

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BORDER ENVIRONMENT COOPERATION COMMISSION (BECC)

Their primary roll is to provide technical assistance to border communities and to certify environmental infrastructure projects in the border region for financing consideration by the NADBANK and other sources

II. MEXICAN BUSINESS CONDITION: OPPORTUNITIES WE PROPOSE AT PRESENT

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FREE AND SECURE TRADE (FAST)Program designed to ensure security and safety while enhancing the economic prosperity of both countries.

FAST is already working in Texas, specifically in the US cities of El Paso, Laredo, Hidalgo and Brownsville.

We need to enhance security and facilitating trade…

CUSTOMS TRADE PARTNERSHIP AGAINST TERRORISM (C-TPAT)Initiative between government and business designed

to protect the security

II. MEXICAN BUSINESS CONDITION: OPPORTUNITIES WE PROPOSE AT PRESENT

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CONTENTS

INTRODUCTIONINTRODUCTION

MEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENTMEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENT

PROSPECTS WE PUT FORWARDPROSPECTS WE PUT FORWARDIVIV

IIII

II

WHAT’S NEXT? WHAT CAN BE DONE ? WHAT’S NEXT? WHAT CAN BE DONE ? IIIIII

FINAL COMMENTSFINAL COMMENTSVV

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III. WHAT’S NEXT? WHAT CAN BE DONE?

Construct real and effective avenues of integration, cooperation and alliances

Involve universities, enterprises, associations, research centers, to profit from the growing market of the region

Coordinate efforts to foster the regional automobile sector

Coordinate efforts to foster every other regional opportunity, particularly in the manufacturing sector

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III. WHAT’S NEXT? WHAT CAN BE DONE?

Create the Pro-America Financial Intermediaries Association that will facilitate the (financial) resources allocation to areas where they are scarce and hence expensive

Design mechanisms by which Mexican companies or individuals could be considered eligible for applying to programs where minorities have some preferences

Design mechanisms to promote consumption of goods and services of the region

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CONTENTS

INTRODUCTIONINTRODUCTION

MEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENTMEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENT

PROSPECTS WE PUT FORWARDPROSPECTS WE PUT FORWARDIVIV

IIII

II

WHAT’S NEXT? WHAT CAN BE DONE ? WHAT’S NEXT? WHAT CAN BE DONE ? IIIIII

FINAL COMMENTSFINAL COMMENTSVV

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POSITIVE OUTLOOK WHEN POSITIVE OUTLOOK WHEN STRUCTURAL REFORMSSTRUCTURAL REFORMS

OCURROCURR

POSITIVE OUTLOOK WHEN POSITIVE OUTLOOK WHEN STRUCTURAL REFORMSSTRUCTURAL REFORMS

OCURROCURR

FISCALFISCAL

• Sound Policy• Growth Oriented

LABORLABOR

• More Flexible Labor Market

ENERGYENERGY

• A World Class Competitive Energy Sector

TELECOMMUNICATIONS

TELECOMMUNICATIONS

• Improved Level of Competition in the Sector

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33

44

IV. PROSPECTS WE PUT FORWARD

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SECTOR WIDE INVESTMENT SECTOR WIDE INVESTMENT OPPORTUNITIESOPPORTUNITIES

SECTOR WIDE INVESTMENT SECTOR WIDE INVESTMENT OPPORTUNITIESOPPORTUNITIES

MANUFACTURING SERVICES

1. AGROBUSINESS

2. FOOD AND BEVERAGES

3. AUTOMOTIVE AND AUTOPARTS

4. PAPER

5. STEEL

6. SHOES

1. CONSTRUCTION (HOUSING)

2. FINANCING

3. ENVIRONMENTAL CARE

4. REAL ESTATE

5. FISHING

6. TOURISM

7. GOVERNMENT PROCUREMENT

8. ENERGY

IV. PROSPECTS WE PUT FORWARD

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CONTENTS

INTRODUCTIONINTRODUCTION

MEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENTMEXICAN BUSINESS CONDITIONS: OPPORTUNITIES WE PROPOSE AT PRESENT

PROSPECTS WE PUT FORWARDPROSPECTS WE PUT FORWARDIVIV

IIII

II

WHAT’S NEXT? WHAT CAN BE DONE ? WHAT’S NEXT? WHAT CAN BE DONE ? IIIIII

FINAL COMMENTSFINAL COMMENTSVV

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FINAL STATEMENTS

Globalization itself is changing; so does the way we need to adjust to it

Other economic areas have shown more aggressiveness on the matter

Limited progress could be explained by the priority security has gained since 9-11

We have before us an opportunity to set an example that can be emulated by other states in the Union

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ALEJANDRO DIECKChief of Staff of the Minister of Economy in Mexico

+52(55)5729-9149 & 50 e-mail: adieck@economia.gob.mx

2005