Trade relations and statistics
Mexico is actively pursuing a program designed to reduce its reliance on the USA as a trading partner. It most recently signed a free trade agreement with Japan in March 2004. Mexico has completed free trade agreements with 33 countries giving it access to over one billion consumers.
Over the past 10 years, Mexico has negotiated free trade agreements with the following countries:
- Japan
- Costa Rica
- Colombia and Venezuela (Grupo de los Tres)
- Nicaragua
- Chile
- European Union
- Ireland
- Liechtenstein – Norway – Switzerland (Asociacion Europea de Libre Comercio)
- Guatemala, Honduras and El Salvador (Triangulo del Norte)
- Bolivia
The North American Free Trade Agreement was signed in 1994 between Mexico, the USA and Canada. All non-tariff barriers to agricultural trade between Mexico and the USA were eliminated. In addition, many tariffs were eliminated immediately, with others being phased out by 2008 for goods originating in Mexico. It also strives to promote fair competition, increased investment, to protect and enforce intellectual property rights, and to increase cooperation between the countries.
Mexico has rapidly emerged as a major trading nation, mainly to the North American Free Trade agreement (NAFTA) an the subsequent surge in new manufacturing facilities in Mexico by USA, European and Asian organisations keen to sell into North America.
Mexico is now the world’s eight largest exporter, with exports to the USA and Canada accounting for almost 90 per cent of its international sales. Manufactured goods account for around 85 per cent of the total. Australian exports to Mexico have recovered strongly from the slump in the mid-1990s caused by the peso collapse.
The leading sectors in Mexico are below:
Airport and ground support equipment
Mexico has the most developed airport infrastructure in Latin America. Every city of more than 50,000 inhabitants benefits from airport services. The Mexico city airport is the largest in Latin America in terms of number of passengers and operations.
Mexico has developed an aerospace industry and important international corporations have established plants in 13 Mexican states. Aerospace industry groups have announced investments totalling about US$379 million in the next few years.
Automotive parts and supplies
Mexico’s auto part industry is closely related to the US industry, There are approximately one thousand auto parts manufacturers in Mexico and about 70 per cent of them are subsidiaries of foreign corporations, mainly from the US.
The best prospects for this sector are: collision repair parts, catalytic converters, steering wheels and sound systems and generally all types of accessories.
Electronic components
Mexico’s electronic industry continues to evolve, the growth of electronic components has lately been driven by a switch to new products lines including the aerospace, automotive, network equipment, game consoles, printers, high capacity servers, storage media, and consumer electronic industries, which continue to be the largest user of electronic components. Consumer electronics is the second most import export manufacturing industry in Mexico.
The best prospects for this sector are: switches, plugs and relays, followed by integrated circuits.
Energy sector
The sector includes the sub-sectors of oil and gas and electric power systems, equipment and services. With the start of a new administration, both sub-sectors have been identified to be priority for Mexico’s Federal Government. Mexico’s energy sector between 2000 and 2006 has been going through a modernisation process in which large budgets have been assigned to the three most important federal agencies. Government owned - Petroleum Company (PEMEX), Federal Electricity Commission (CFE), and Luz y Fuerza del Centro (The Mexico City power company).
The best prospects are: drilling of work-over rigs, to be used in the exploration, discovery, development, maintenance, testing, depletion or production of oil and natural gas wells, pipe, valves, pumps, electrical apparatus, for switching, insulated wire cable, electric capacitors, board panels, electric transformers, electric motors and generators, static converters and rotary converters.
Environmental sector
This sector includes the sub-sectors of pollution control equipment and water resources equipment and services. The Mexican environmental market has been growing at an annual average of 5.2 per cent. According to the Ministry of Environment and Natural Resources SEMARNAT, the priorities set for 2007-2009 will be centred on the construction of municipal wastewater treatment plants, industrial waste treatment facilities and sanitary landfills to promote the remediation of soil contaminated sites and increase the infrastructure of portable water in rural and urban areas.
The best prospects are: liners for landfills, solid waste containers; solid waste recycling equipment, dust collectors; hazardous and toxic waste transportation equipment; autoclaves for medical waste; medical waste transportation equipment, bio-remediation technology environmental engineering services; chlorinators, desalination plants irrigation equipment primary clarifiers; water pumps; water meters; water leak detectors; water supply and distribution systems and design and engineering services.
Franchising sector
The franchise industry has grown between 15-20 per cent every year over the last decade. Mexico is the eighth largest nation in franchise development according to the World Franchise Council.
Although food concepts (formal/fast food) continues to lead the industry, there are many others sectors that are growing rapidly and successfully in Mexico – education/entertainment services for children, personal care services (spas, beauty shops, health care centres), Automotive services, among others, are considered as the best prospects for the next five years.
Housing and construction
The Mexican housing construction industry has experienced constant growth over the last five years with an average rate of 4.5 per cent per year. The current administration has made housing a priority and assigned additional funds to government institutions that support the development of low-income and pre-fabricated housing. The Mexican Government also offers support to efforts of private companies’ involved in this industry through additional access to capital. With government support and private investment, the housing market is expected to grow at nearly eight per cent for the foreseeable future.
Best prospects are aligned with the Mexican firms search for new and rapid construction techniques and new materials (high quality, low prices, easy to use and install).
Please see the Department of Foreign Affairs and Trade country economic fact sheet for key trade statistics.
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