By: Eduardo Arnal, Cónsul General of Mexico in Denver Issue: Global Trade Section: Building Bridges
NAFTA at fifteen: The Mexican Perspective
Fifteen years after the creation of the North American Free Trade Agreement (NAFTA), Mexico, Canada and the United States trade relationship has become one of the most dynamic and important partnerships worldwide.
Since NAFTA came into effect, its members have managed to reduce barriers to trilateral trade, create new opportunities for business growth and higher-paying export-related jobs in all three countries and generate confidence among companies through clearer rules and mechanisms to assure its compliance. In the last 15 years, trade between Mexico, Canada and the U.S. has tripled, reaching exchanges for more than $894.3 billion dollars in 2008 and laying the foundations for a strong economic growth and higher levels of prosperity for the population of the region.
NAFTA gave Mexico access to a market of 335 million consumers that constitute 31 percent of world income. Since NAFTAs inception, Mexico’s trade with the United States has quadrupled, reaching $367 billion in 2008 with partners exchanging over $1 billion a day. This has made Mexico the United States’ third-largest trade partner, right after Canada and China.
During this period, Mexico’s exports to the United States grew 444 percent, making Mexico one of the largest suppliers of goods to the U.S. market. Within just a few years, Mexico’s exports have diversified from primarily oil to include an array of manufactured products. In 2008, 9 percent of total U.S. beverage imports came from Mexico, as well as 30 percent of auto parts, 16 percent of vehicles, 37 percent of audio and video equipment, 19 percent of communications equipment, 24 percent of electrical equipment, 21 percent of household appliances and 14 percent of agricultural products, livestock and manufactured food goods.
background - organic vegetablesSimultaneously, NAFTA connected the United States with two of its largest trading markets. Since it implementation, U.S. exports to Mexico have grown 264 percent. In 2008, Mexico purchased $152 billion worth of U.S. goods, representing 11.7 percent of all U.S. exports worldwide. This is more than the United Kingdom, France, Netherlands and Belgium combined procured from the U.S. in the same period, making Mexico the second largest market for U.S. products worldwide. In the case of Colorado, Mexico was the second largest market for Colorado-based goods in 2007, up from the seventh position in 1993, which shows the impact of NAFTA for Colorado’s economy.
This two-way trade relationship illustrates the impact of NAFTA as it encourages U.S. business growth and continues to clearly indicate Mexico’s valuable relationship to U.S. businesses. Mexico has played an important role in several key sectors of the U.S. economy after NAFTA took hold. In fact, Mexico imports approximately 13 percent of total U.S. agricultural, livestock and manufactured food products, as well as 24 percent of U.S. auto parts, 13 percent of fabricated metal products, nearly 20 percent of audio and video equipment, 16 percent of computer equipment and 21 percent of electrical equipment and components.
Talking about investment, in 2006 Canada and the United States’ foreign direct investment holdings in NAFTA reached $400.2 billion dollars. Meanwhile, between 1999 and 2008 Mexico received $212 billion in long-term investment, making it one of the largest recipients of foreign direct investment among emerging markets. This reflects the confidence of foreign investors in Mexico, not to mention that the government has developed comprehensive and legally-binding disciplines to protect investors and intellectual property rights. As a result of NAFTA, investors from all around the world are now seeing Mexico’s strengths - such as its young and highly-skilled labor force and its ideal geographic location. These attributes attract potential investors and businesses considering Mexico as an integral part of the North American market when investment decisions are being made.
Job growth has also been strong in all three partner countries since NAFTA came into effect, reaching almost 40 million new jobs since 1993 in the entire region - 10.1 million jobs in Mexico, 25.8 million jobs in the U.S., and 4.1 million jobs in Canada.
NAFTA has perpetuated a highly integrated trade relationship among its partners – Mexico, the U.S., and Canada. Many Mexican companies are now exporting their products successfully in an increasingly competitive global market, making Mexico’s export sector a major part of the country’s economy. In 2008, Mexico exported more than $294 billion globally and was ranked as the 10th largest exporting country in the world. Several factors have reinforced Mexico’s solid foundation for growth such as the further integration of Mexican firms into international markets, the transitional programs to facilitate this process, the reforms of the legal and fiscal systems in Mexico and the advancement of democracy.
Eduardo Arnal was appointed Consul General of Mexico in Denver by President Felipe Calderon and ratified by the Mexican Congress August 15, 2007. Consul Arnal holds a degree in law from the Universidad del Pedregal in Mexico City.
He was part of Mexican President Felipe Calderon’s transition team when he took the top office from former President Vicente Fox in 2006. In 2003, Consul Arnal was City Manager of the City of Atizapan de Zaragoza, State of Mexico. From 2000 to 2003, Consul Arnal served as a federal congressman for the National Action Party (PAN) in the Chamber of Deputies, Mexico’s House of Representatives, in the 58th Legislature. During his tenure, he was a member of the Commission on International Relations and the Commission on Strengthening Federalism. He also served as President of the Mexico-Argentina Friendship Group. In 2002, he was a participant in the National Democratic Institute’s Political Leadership Program in Washington, D.C.
In 1997, he was Executive Secretary to the Mayor of Atizapan de Zaragoza, State of Mexico. In 1996, he was Legal Parliamentary Advisor to the Commission of Governance and Constitutional Affairs at Mexico’s House of Representatives. In 1994 he also served as Legal Parliamentary Advisor to the Miguel Estrada Iturbide Foundation, a think-tank for the National Action Party (PAN).