December 2014

NAFTA Works
A MONTHLY NEWSLETTER ON NAFTA AND RELATED ISSUES
November - December 2014 *
INSIDE THIS ISSUE
1 Mexico and the U.S.
are Moving Toward a
More Efficient Border
1 Trade Highlights
2 Brewing the Coffee
Economy in Mexico
3 NAFTA Related
Events
3 Diario Oficial
4 Success Stories
Volume 19, Issue 11
Mexico and the U.S. are Moving Toward a More Efficient Border On October 17th, customs authorities from the
U.S. Customs and Border Protection (CBP) and
Mexico’s Tax Administration Service (SAT in
Spanish) signed an agreement to mutually
recognize two customs security programs that are
currently in place in both countries. The
agreement allows stronger collaboration between
both programs by creating a common structure
aimed at streamlining and securing cargo trade
across the border.
The two programs are the CBP’s Customs-Trade
Partnership against Terrorism (C-TPAT) and its
Mexican counterpart known as the New Certified
Shipping Companies Program (NEEC). The
programs’ goal is to promote cooperation between
the public and private sectors by establishing
requirements that participants in supply chains
agree to meet in exchange for benefits such as
4 Selected Reading
4 Infrastructure
Projects in Mexico
4
simplified cargo processing. The agreement will
link the two voluntary business-government
programs to create a unified and sustainable
security environment that can assist in securing
and facilitating global cargo trade, which will
reduce processing times for cargo trucks at the
U.S.-Mexico border.
The agreement provides tangible and intangible
benefits to program members such as fewer
inspections when shipping cargo, a faster
validation
process,
common
standards,
efficiency
for
customs
and
business,
transparency between customs authorities,
business
resumption,
front-of-the-line
processing, and marketability. Beginning in
2015, this arrangement will benefit immediately
manufacturers, carriers, importers, exporters,
and customs brokers by providing more agile
border crossings aimed at
reducing wait times from
three or four hours to 25
minutes on average.
The
new
cooperation
framework will contribute to
reduce transportation costs
and
increase
trade
operations’
efficiency,
which will have a significant
impact on North America’s
competitiveness. In 2013
alone,
bilateral
trade
between Mexico and the
United States set a new
record of $506 billion, and
almost 70% of this trade
was moved across the
border by motor carriers.
Over NAFTA’s 20 years of
existence, trade between
Mexico and the U.S. has
Mexico Economic
Update
5 Profile of Nebraska
6 Profile of
Aguascalientes
Continues on page 2
Volume 19, Issue 11
[email protected]
Page 1
increased six-fold, growing nearly 10% annually, a rate that
exceeds that of the U.S. trade with the rest of the world (6.7%).
Mexico is United States’ third largest trading partner and the U.S.
is by far Mexico’s biggest trading partner. Accordingly, it is
imperative for Mexico and the U.S. to work together in order to
promote growth and prosperity throughout the region.
Additionally, industries in Mexico and the U.S. are increasingly
becoming more intertwined and globally competitive through joint
production efforts. Together, both countries produce flat-screen
TV sets, airplanes, refrigerators, cars, trucks, beer and jeans to
meet both regional and global demand. As a result of highly
integrated production lines where the materials and parts zigzag
back and forth across the border, U.S. exports are used to further
manufacture and finalize products that are imported back to the
U.S. from Mexico. As a result, U.S. value-added in Mexican final
manufacturing exports to the U.S. is about 40%. This synergy has
created a win-win relationship that requires a world-class border
management system in order to successfully compete globally.
The agreement will further encourage a closer bilateral
relationship by
promoting both countries’ trusted traveler
programs Viajero Confiable and Global Entry, that will expedite
the flow of travelers, tourists and businessmen between Mexico
and the United States.
Mexico is the ninth country to reach a mutual recognition
agreement of this kind with the United States, joining Canada, the
European Union, Israel, Japan, Jordan, New Zealand, South
Korea, and Taiwan.
In the face of the challenges and opportunities of the global
economy, North America’s competitiveness relies on its ability to
take full advantage of its geographic proximity and the
complementarity of its natural, human, and capital endowments.
Thus, Mexico and the U.S. must continue working together to
further deepen trade and economic integration to increase their
prosperity. A comprehensive and modern border management
system in North America contributes to building a more efficient
border as required in the 21st Century.
Brewing the Coffee Economy in Mexico
One of the greatest assets of North America is the natural
richness of its geography. This favors the production of a wide
diversity of agricultural goods within the region. Mexico is no
exception to this and its production of coffee is one prominent
example. Its blessed geography and climatic conditions have
allowed the country to become one of the biggest producers of
coffee beans in the world. Mexico has ranked consistently among
the top 10 locations in terms of coffee production and exports,
according to the International Coffee Organization (ICO). No less
significant is the fact that Mexican coffee is internationally
recognized as one of the best in the world.
Mexico has a long tradition of cultivating coffee that dates back to
the end of the 18th century when coffee was first introduced in
Veracruz from the Caribbean by the Spanish. Currently, the states
of Chiapas and Veracruz concentrate more than half of Mexico’s
domestic production, followed by the significant production of 10
other states: Colima, Guerrero, Hidalgo, Jalisco, Nayarit, Oaxaca,
Puebla, Querétaro, San Luis Potosí, and Tabasco. Production
focuses mainly on the Arabica variety of coffee, accounting for
97% of total production, which is characterized by its light body
and rich blend with fine acidity and elegant fragrance that is
currently in high demand.
The diversity of the country’s regions provides the right
topography, altitude, climate and soils that are key elements for
Volume 19, Issue 11
the production of excellent coffee. In fact, more than 70% of
coffee fields in Mexico are located at over 600 meters in altitude,
which along with the existence of microclimates, produce high
quality coffee. In order to crystalize Mexico’s potential, growers
and government have been working on an official quality
certification program with great results. This quality has already
been recognized internationally, and the Coffee Quality Institute,
a renowned U.S. nonprofit organization, has awarded many
Mexican producers with the prestigious Q certification, which is
reserved only for the highest standards of production which
allows producers to compete in the most demanding markets of
the world.
Mexico is also receiving new attention for its single origin, fairtrade and organic coffees that meet consumers’ increased
interest in high-quality coffees that highlight the uniqueness of
different regions that confer their own particular flavor. A very
important feature of Mexican coffee is that its production has
been acknowledged as environmentally friendly by preserving
biodiversity and avoiding any negative impacts on nature.
Moreover, more than 95% of coffee plantations are shaded,
optimizing the use of resources without causing a disruption in
natural processes. Another important feature of the country is its
vast production of organic and fair-trade coffees that has
distinguished it from other coffee producers. The bulk of the
production of Mexican coffee, and particularly organic coffee, is
carried out mostly in small specialized farms, predominantly
indigenous, that accounts for 70% of the producers in Mexico.
With the aim of strengthening its competitiveness, the
Government of Mexico unveiled a new program for organic
agriculture certification in October, 2013. The program is based
on many requirements contained in the USDA National Organic
Program (NOP) guidelines, and also on internationally accepted
practices. As a result, Mexico is the main producer and largest
exporter of organic coffee in the world, according to the Mexican
Coffee Council.
Also, Mexico’s coffee exports have steadily increased over the
last decade from $186 million in 2002 to $763 million in 2012,
recovering their historical levels. Annually, exports fluctuate
between 2.5 and 3.5 million 60-kg bags which represent 60% of
domestic production on average. In 2013, Mexico exported only
$490 million in coffee due to adverse supply conditions.
However, ICO estimates an increase to 4 million bags in
Mexico’s coffee production for the 2014-2015 cycle, which will
expand export supply. The U.S. is the largest export market for
Mexican coffee, accounting for two thirds of its global sales,
followed by European and Canadian markets.
The coffee industry also illustrates how the supply chains work in
North America. Coffee grown in Mexico is actively sought out by
specialty roasters in the United States due to its close proximity,
quality and production capacity. Later, Mexico buys back roasted
coffee to meet its growing domestic demand, fueling foreign and
domestic investment in coffee shops. Chiapas coffee has
become an important asset for major brewing companies such
as Starbucks and Green Mountain, providing an essential source
of export-oriented income to local economies in the southern
regions of Mexico. From an economic point of view, the coffee
industry is a strategic activity for rural economic development,
taking into account that it involves more than 500,000 Mexican
producers.
Coffee producers in Mexico are taking full advantage of the tarifffree access to the U.S. and Europe, the world’s largest coffeeconsuming markets, as a result of its network of free trade
agreements. Trade in coffee increasingly represents an
important business opportunity for Mexican farmers to
successfully participate in the global economy.
[email protected]
Page 2
NAFTA Related Events
http://dof.gob.mx
 Supplement to the National Standardization Program for 2014.
INTERMODA 2015
January 13th – 16th, 2015
Exhibition of the fashion industry in Mexico.
Location: Expo Guadalajara. Guadalajara, Jalisco
Phone: +52 (33) 3122-4499
E-mail: [email protected]
Website: www.intermoda.com.mx
EXPO ESPACIO 2015
January 13th – 16th, 2015
Trade show of the gifting industry.
Location: Centro Banamex. Mexico City
Phone: +52 (55) 5276-6380
E-mail: [email protected]
Website: http://www.espaciosalpro.com/
EXPO ESTAR SALUDABLE
January 17th-18th, 2014
Healthy living expo related to naturism, alternative medicines,
and herbalist.
Location: Cintermex. Monterrey, Nuevo León
Phone: 52 (55)5741-3990; 52 (55) 5740-7593
Website: http://www.expo-estar-saludable.com.mx/2expo/
EXPO DECOESTYLO 15
January 19th – 23rd, 2015
Exposition of decoration, gifts, jewelry and crafts
Location: World Trade Center. Mexico City
Phone: +52 (55) 1166-0200
Email: [email protected]
Website: http://www.decoestylo.com.mx/
21st MAGNA EXPOMUEBLERA
January 21st – 24th, 2015
Trade show that brings together furniture manufacturers along
with industry suppliers ranging from machinery to wood,
hardware and fabrics.
Location: Centro Banamex. Mexico City.
Phone: +52 (55) 1346-9055
Email: [email protected]
Website: http://www.magnaexpomueblera.mx/
EXPO AGROTECNOLÓGICA
January 22nd – 24th, 2015
Conferences and trade show for the agribusiness sector.
Location: Centro de Espectáculos Calle 2. Zapopan, Jalisco.
Phone: +52 (33) 1316-58343; 52 (33) 3133-6625
Email: [email protected]
Website: http://www.expoagrotecjal.com/
MEXICO GRI 2015
January 27nd – 28th, 2015
Forum focused on investment opportunities in the Mexican real
estate market.
Location: St. Regis Hotel. Mexico City.
Phone: (1) 866-399-1210
Email:
[email protected];
[email protected]
Website: http://www.globalrealestate.org/mexico2015
EXPO JOYA MEXICO
January 27th – 29th, 2015
Exhibition of finished jewelry, silverware, watches, machinery,
gems, and jewelry.
Location: World Trade Center. Mexico City.
Phone: +52 (33) 3121-9238
Email: [email protected];
[email protected]
Website: http://www.expojoya.com.mx/
Volume 19, Issue 11
Diario Oficial Notices
Oct 3rd
 Amendments to the catalog of tariff items classifying goods
subject to import and export regulations by the Ministry of
National Defense. Oct 6th
 Amendments to the tariff rate quota and the allocation
mechanism to export new light vehicles to Brazil, according to
Appendix II related to trade in the automotive sector between
Brazil and Mexico, under the Economic Cooperation
Agreement (ACE) No. 55 signed by Mexico and the
MERCOSUR members. Oct 7th
 Resolution that discloses the identification numbers of
canceled IMMEX programs along with the names of the
corresponding owners. Oct 8th
 Final resolution of the sunset review of the countervailing duty
order imposed on imports of ferrosilicon manganese
originating from Ukraine (Mexican tariff item 7202.30.01). Oct
9th
 Final resolution of the antidumping investigation on square
construction galvanized carbon steel wire cloth or mesh
originating from China (Mexican tariff items 7314.19.02,
7314.19.03 and 7314.31.01). Oct 9th
 Initiation of the antidumping investigation on imports of
epoxidized soybean oil originating from Argentina (Mexican
tariff items 1518.00.02 and 3812.20.01). Oct 10th
 Initiation of the antidumping investigation on imports of
children bicycles originating from China (Mexican tariff item
8712.00.02). Oct 10th
 Decree enacting the Nagoya Protocol on Access to Genetic
Resources and the Fair and Equitable Sharing of Benefits
Arising from their Utilization to the Convention on Biological
Diversity, adopted in Nagoya on October 29th, 2010. Oct 10th
 Final resolution of the antidumping investigation on imports of
steel sheet plate originating from China (Mexican tariff items
7208.51.01, 7208.51.02, 7208.51.03, 7208.52.01, 7225.40.01
y 7225.40.02). Oct 14th
 Preliminary resolution of the antidumping investigation on
stainless steel sink imports originating from China (Mexican
tariff item 7324.10.01). Oct 16th
 Notice announcing the Decision No. 76 of the Administrative
Commission of the Free Trade Agreement between Mexico
and Colombia. Oct 27th
 Notice announcing the adjustment and redistribution of the
quota for the exportation of new light vehicles to Brazil
according to the Appendix II related to trade in the automotive
sector between Brazil and Mexico, under the Economic
Cooperation Agreement (ACE) No. 55 signed by Mexico and
the MERCOSUR members. Oct 30th
 Notice that formally declares Mexico as Mediterranean
Ceratitis capitata (Wiedemann) fly free territory. Oct 30th
 Changes to the Law on Public-Private Partnerships. Oct 31st
 Regulation of the Law on Geothermal Energy. Oct 31st
 Regulation of the Law on Hydrocarbons. Oct 31st
 Amendments to the Law on Mining. Oct 31st
 Amendments to the Law on Foreign Investment and the
Foreign Investment National Registry. Oct 31st
Mexican Official Standards
 Abolishment of NOM-004-ZOO 1994, NOM-010- ZOO-1994,
NOM-011- ZOO-1994, NOM-014- ZOO-1994, NOM-015- ZOO
-1994, NOM-016- ZOO-1994, NOM-017-ZOO-1994, NOM-02ZOO-1995, NOM-021-ZOO-1995, NOM-028-ZOO-1995, NOM032- ZOO-1996, NOM-034-ZOO-1996. Oct 9th
[email protected]
Page 3
Selected Reading
Success Stories
AT&T to Acquire Mexico’s Iusacell
AT&T, the U.S. telecommunications corporation, has entered into
an agreement with Grupo Salinas to acquire Iusacell, Mexico's
third largest wireless carrier, for $2.5 billion, including all of its
wireless properties, licenses, network assets, retail stores and 8.6
million subscribers. “Our acquisition of Iusacell is a direct result of
the reforms put in place by President Peña Nieto to encourage
more competition and more investment in Mexico,” said Randall
Stephenson, AT&T Chairman and CEO. “Iusacell gives us a
unique opportunity to create the first-ever North American Mobile
Service area covering over 400 million consumers and businesses
in Mexico and the United States” he added.
Huawei to Invest in ICT Facilities in Queretaro
Chinese telecom gear maker Huawei is investing $1.5 billion in the
construction of four ICT facilities in the Mexican state of Queretaro.
This is the largest investment ever made by a Chinese firm in
Mexico, eclipsing all the Chinese investments in Mexico put
together in the last decade. The investment will generate 1,100
jobs over the next five years. An innovation center is already under
construction and will be operational in 2015. According to Huawei,
Mexico will henceforth serve as its base for selling telecom
solutions in the western hemisphere.
Cirque du Soleil Expands Partnership in Mexico
Cirque du Soleil, a leading Canadian entertainment company, and
Grupo Vidanta, a developer of world-class resorts and tourism
infrastructure in Mexico, plan to construct and operate a first-of-itskind immersive theme park experience in Nuevo Vallarta, a resort
town near Puerto Vallarta. The project may include water park and
nature park elements and will feature an outdoor show
accommodating up to 5,000 spectators animated by Cirque du
Soleil artists. With an investment of nearly $900 million, the
entertainment park will create thousands of new jobs. Construction
is expected to be complete in 2018.
Constellation Buys Glass Plant in Mexico
New York-based Constellation Brands Inc., one of the world’s
biggest spirits makers, made a big bet on its beer operations by
agreeing to buy, in a 50-50 joint venture with Owens-Illinois, a
Mexican glass factory from Belgium’s Anheuser-Busch InBev for
$300 million. Constellation closed a $5.3 billion deal to buy U.S.
distribution rights to Corona and other Mexican beers, along with a
brewery in Nava, Mexico, from AB InBev. The glass plant, which is
adjacent to the brewery, will be operated by Owens-Illinois to bottle
the beer production.
Polaris Industries to Increase its Presence in Mexico
Polaris Industries, the Minnesota-based global manufacturer of
snowmobiles, ATV, and neighborhood electric vehicles, will expand
its manufacturing facilities located in Apodaca, Nuevo Leon. The
expansion will add 90,000 square feet and 1,850 workers with a
new investment of $110 million. The factory currently produces 600
vehicles per day, mostly RZR’s, for the U.S. and Latin American
markets including the Mexican market. Polaris’ initial investment in
the Mexican state of Nuevo León amounted $55 million.
Volume 19, Issue 11
Mexico’s Energy Reform: Ready to Launch
Author: David Goldwyn, Neil Brown, and Megan Reilly
Cayten. Atlantic Council.
August 2014
Mexico poised for an energy renaissance. It has ample reserves
of oil and natural gas, experience in energy production, promising
economic fundamentals, and industrial expertise. Mexico’s
leaders have found the will to reform and passed a set of laws
that can transform Mexico into a major energy and industrial
power. Much of the analysis on the reforms to date focuses on the
upstream. However, the political and economic implications of
success in the mid-stream and power sector reforms justify the
detailed analysis provided by this report.
www.atlanticcouncil.org/publications/reports/mexico-s-energyreform-ready-to-launch
Infrastructure Projects in Mexico
Tula Cogeneration Plant
Sponsor: Petroleos Mexicanos (PEMEX)
Location: Hidalgo
Project Value: $820 million
Canada's ATCO has been awarded a contract to build a natural
gas co-generation plant in Mexico for a Pemex subsidiary. The
638MW project at the Tula refinery located in the state of Hidalgo,
will produce 1,247 tons of steam per hour. The $820-million plant
will be developed in 50-50 strategic alliance with Mexico's Grupo
Hermés and will enter operation in 2017. Cogeneration is a highly
efficient, and environmentally attractive, process that produces
both electricity and heat. The contract is the second major project
in Mexico to be awarded to ATCO, having won a contract from
state utility CFE to design, build, operate and maintain a natural
gas pipeline, also near Tula.
Business Opportunities: financing, engineering, construction
material, turbines, electrical equipment, precision equipment,
control instruments, machinery and steel products.
Dominica I Wind Farm
Sponsor: Federal Electricity Commission (CFE)
Location: San Luis Potosi
Project Value: $196 million
Italy’s Enel Green Power (EGP) has grid-connected its Dominica
1 wind farm in Mexico. The renewable power giant invested about
$196 million building the wind farm, which is the first in the central
-Mexican state of San Luis Potosí. The plant, using 2MW Gamesa
turbines, is underpinned by long-term power-purchase deals
worth about $485 million. The Italian group now has almost
300MW of wind operating in Mexico with another 200MW –
including the Dominica 2 plant – under construction.
Business Opportunities: engineering, turbines, machinery,
control equipment, precision instruments, transmission lines,
substations, and electrical material.
[email protected]
Page 4
Nebraska
In 2013, Nebraska's exports to Mexico reached $1.15
billion, up $1.04 billion from their level in 1993. In the
first half of 2014, Nebraska exported $764 million worth
of products to Mexico, an increase of 48.6% in
comparison with the same period last year.
Exports to Mexico
1993 - 2014 2Q (Billions of US Dollars)
Among all U.S. states, Nebraska was ranked 26th as
an exporter of goods to Mexico in the first semester of
2014.
In 20 years of NAFTA, Nebraska's exports to Mexico
have increased by 964%, while those to the rest of the
world rose 374%. This means that the export growth
rate to Mexico is 2.6 times higher than its export growth
rate for the rest of the world.
Since NAFTA was implemented, Nebraska's sales to
Mexico have grown at an annual average rate of
12.5%. In 2013, the exports to Mexico decreased by
35.9% with respect to the previous year.
Mexico is an important trading partner to Nebraska. It
was ranked as the 2nd largest export market for goods
from Nebraska in the first six months of 2014, up from
3rd in 1993, illustrating the impact of NAFTA for
Nebraska's growing businesses. Mexico accounted for
18.3% of Nebraska's exports worldwide in the JanuaryJune period of 2014.
Volume 19, Issue 11
Source: US Census with adjustments made by the World Institute for
Strategic Economic Research (Wiser), and SE-NAFTA.
1993-1996 by SIC and 1997-2014 by NAICS.
[email protected]
Page 5
Volume 19, Issue 11
[email protected]
Page 6