U.S. - Mexico at a Glance

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Bilateral TRADE

The U.S. is Mexico’s largest trading partner, buying 85% of Mexican exports in 2006. Mexico is the third largest U.S. trading partner after Canada and China. Bilateral goods trade reached $332 billion in 2006 – including services, we trade more than $1 billion a day. To put this in perspective, Mexico and the U.S. do as much business in goods and service in just over a month as Mexico does with all 27 countries of the European Union combined in a year.

• U.S. goods exports to Mexico were $134.2 billion in 2006, up 11.5% from 2005. U.S. goods imports from Mexico were $198.3 billion in 2006, up 16.6% from 2005.
• Since NAFTA implementation in 1994, U.S. exports to Mexico have risen 223% and Mexican exports to the U.S. have grown 396%.
• 85% of Mexico’s total exports go to the U.S. and are valued at $212 billion dollars.
• 51% of Mexico’s total imports come from the U.S. and are valued at $130 billion dollars.

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Agricultural TRADE

With a growing population, an expanding economy, and an increasingly market-oriented agricultural sector, Mexico became the United States’ second largest agricultural trading partner in 2006, accounting for about 10% of U.S. agricultural imports and 14% of U.S. exports. The U.S. remains Mexico’s principal agricultural trading partner. Over 80% of Mexico’s agricultural exports go the U.S. Specifically, U.S. imports of Mexican agricultural products in 2006 were valued at a record $10.2 billion, and U.S. exports of agricultural products to Mexico were valued at $11.5 billion.

Since NAFTA was implemented in 1994, agricultural trade between the U.S. and Mexico has risen dramatically. Mexico’s agricultural exports to the U.S. have expanded by nearly 10% per year, growing twice as fast as they did before NAFTA. At the same time, U.S. exports to Mexico have grown by about 8% per year, reflecting the mutually beneficial outcomes NAFTA has provided to the agricultural sectors in both countries.

TECHNICAL COOPERATION
The importance of the agricultural economies of Mexico and the U.S. to both countries has led to a strong cooperative relationship. Over the last two years, the USG, private sector, and university community have invested more than $20 million dollars in over 120 projects to address issues affecting agriculture and agribusiness in Mexico.

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NAFTA

The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico entered into force on January 1, 1994, and created the world’s largest free trade area. NAFTA links 439 million people producing $15.3 trillion worth of goods and services annually. The dismantling of trade barriers and the opening of markets has led to economic growth and rising prosperity in all three countries.

Total goods trade between the U.S. and its NAFTA partners grew from $293 billion in 1993 to $865 billion in 2006, an increase of 196%. Total services trade between the U.S. and NAFTA partners grew from $44 billion in 1993 to $99 billion in 2006, an increase of 125%. U.S. two-way trade in goods with Canada and Mexico in 2006 more than exceeded U.S. two-way trade with the 27 members of the European Union and Japan combined.

In addition to lowering tariffs on goods, NAFTA mandates elimination of barriers in nearly all service sectors and greater transparency in rule-making and implementation. This means regulatory authorities must use open and transparent administrative procedures, consult with interested parties, and publish all regulations, thus reducing protectionism and discriminatory treatment. Greater transparency in Mexico has improved the business environment and made government more accountable to citizens.

Agricultural trade growth under NAFTA has been remarkably balanced, with U.S. agricultural exports to Mexico increasing by $7.6 billion dollars and U.S. agricultural imports from Mexico by $7.4 billion dollars in the last 13 years. Liberalization of trade in corn, dried beans, and a handful of other sensitive agricultural products occurred on January 1, 2008, when these commodities began to enter Mexico duty free following a 14-year phase-out period.

Total U.S. – Mexico Trade in Goods
in billions of U.S. dollars

* 1994 NAFTA implemented

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Foreign Direct Investment

NAFTA, proximity to the United States, and continued political and economic stability make Mexico an attractive location for foreign direct investment (FDI). Additional reforms to improve competition within Mexico, and reforms in the labor, education, telecommunication and energy sectors are needed to increase competitiveness and encourage more FDI.

• Overall FDI in Mexico for 2006 was over $19 billion with $10.3 billion coming from U.S. sources. For 2007, FDI is expected to reach $23 billion.
• The U.S. currently provides 50% of all FDI in Mexico. 18,629 Mexican companies benefit from U.S. direct investment. This represents 52.9% of all companies receiving FDI.
• The U.S. provides up to 50% of all inputs for Mexico’s “maquiladora” manufacturing/assembly firms, which translates to over $41 billion in annual sales. In 2007, the maquiladora industry was the third largest provider of foreign currency income to the Mexican economy behind petroleum and remittances.
• In 2006, approximately 38% ($3.9 billion) of U.S. investment in Mexico was directed to the 6 Mexican border states. These states, the location of the majority of maquiladora firms, receive 50% of all U.S. manufacturing investment in Mexico.