Doing Business In (Insert Country Name Here) - Department of ...

Doing Business in Mexico: 2010 CountryCommercial Guide for U.S. CompaniesINTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S.DEPARTMENT OF STATE, 2010. ALL RIGHTS RESERVED OUTSIDE OF THE UNITEDSTATES.• Chapter 1: Doing Business In Mexico• Chapter 2: Political and Economic Environment• Chapter 3: Selling U.S. Products and Services• Chapter 4: Leading Sectors for U.S. Export and Investment• Chapter 5: Trade Regulations and Standards• Chapter 6: Investment Climate• Chapter 7: Trade and Project Financing• Chapter 8: Business Travel• Chapter 9: Contacts, Market Research and Trade Events• Chapter 10: Guide to Our Services

Commercial Service offices in Mexico can conduct background checks onpotential Mexican partners.• Mexican customs regulations, product standards and labor laws may presentpitfalls for U.S. companies. U.S. Embassy commercial, agricultural and laborattachés are available to counsel firms with respect to regulations that affect theirparticular export product or business interest.• Violence between drug trafficking organizations has created insecurity in parts ofMexico, particularly in some border areas.Market OpportunitiesReturn to top• Abundant market opportunities for U.S. firms exist in Mexico; trade totals almost$850 million a day between the two countries.• The National Infrastructure Plan (2007-2012) offers key projects in power, oil andgas, airports, water supply and water treatment, and other sectors. There isextensive, unexploited potential for investments in renewable energy, energyefficiency and clean energy.• Some of Mexico’s most promising sectors include: agribusiness; auto parts &services; education services; energy; environmental; franchising; hotel &restaurant; housing & construction; internet & IT services; packaging equipment;security & safety equipment and services; telecommunications equipment;transportation infrastructure equipment and services; travel & tourism servicesand the agricultural sector.Market Entry StrategyReturn to top• To do business in Mexico it is key to develop and maintain close relationshipswith clients and partners. Mexicans prefer direct communication such astelephone calls or face-to-face meetings. However, e-mail is widely used.• Mexican companies are extremely price conscious, seek financing options, tendto desire exclusive agreements, and value outstanding service and flexibility.• U.S. firms wishing to export to Mexico will find a variety of market entrystrategies. Many factors help determine the best strategy, such as theproduct/service, logistics & customs, distribution, marketing, direct or indirectsales, exporting experience, and language proficiency, among others.• The U.S. Commercial Service can assess market potential of products andservice, provide advice on export strategies, and facilitate business agreementswith potential clients and/or partners through our 4 offices in Mexico: Mexico City,Guadalajara, Monterrey and Tijuana.Return to table of contents

Return to table of contentsChapter 2: Political and Economic EnvironmentFor background information on the political and economic environment of the country,please click on the link below to the U.S. Department of State Background Notes.http://www.state.gov/p/wha/ci/mx/Return to table of contents

Return to table of contentsChapter 3: Selling U.S. Products and Services• Using an Agent or Distributor• Establishing an Office• Franchising• Direct Marketing• Joint Ventures/Licensing• Selling to the Government• Distribution and Sales Channels• Selling Factors/Techniques• Electronic Commerce• Trade Promotion and Advertising• Pricing• Sales Service/Customer Support• Protecting Your Intellectual Property• Due Diligence• Local Professional Services• U.S./Mexico Border Trade Initiative• Web ResourcesUsing an Agent or DistributorReturn to topMany U.S. firms find it useful and/or necessary to use a distributor and/or retailer todistribute their products in Mexico. They can be used to distribute products in variousregions and to a variety of business. Using a distributor and/or retailer is also efficientwhen products are required to be in stock and readily available.Some U.S. firms sell their products through a sales agent. Usually, a sales agent is afreelancer. However, some Mexican firms are interested in serving as sales agents forU.S. firms. Sales agent’s can be effective in reaching smaller cities and remotelocations in Mexico.Selection of an appropriate agent or distributor requires time and effort. There may bemany qualified candidates and U.S. firms should be careful and use high standards inorder to select a qualified and appropriate agent/distributor. Since most Mexican firmssell in a limited area, U.S. companies should consider appointing representatives inmultiple cities to broaden distribution. It is usually not advisable to grant an exclusive,national agreement. It is important to develop a close working relationship with theappointed agent/distributor. Providing appropriate training, marketing support, samples,product support, and timely supply of spare parts is critical for success. There are noindemnity laws to prevent a company from canceling an agent or distributor agreement,but the cancellation clause should include specifics and be free of vague language.Sales performance clauses in agent/distributor agreements are permitted, and failure tomeet established standards can be a reasonable cause for contract cancellation.

Before signing an agent/distributor agreement, all parties should fully understand theterms and conditions and the relationship to be developed. Many relationships arestrained because insufficient time is invested in developing a full understanding of whatis expected.The Commercial Service and other organizations, such as the American Chamber ofCommerce in Mexico and U.S. state government representative offices, maintain lists ofMexican agents/distributors, manufacturers, Mexican government offices, and privatesector trade organizations. After identifying a suitable agent/distributor, the U.S.exporter is strongly encouraged to conduct a commercial background check on theMexican firm. The U.S. Commercial Service offers an International Company Profilereport that provides background information on a potential business partner.If the product is new to the market, or if the market is extremely competitive, advertisingand other promotional support should be negotiated in detail with your representative.Product and industry knowledge, track record, enthusiasm, and commitment should beweighed heavily. It is suggested that the U.S. exporter schedule annual visits ofMexican personnel to the U.S. company for training. Another factor to consider isfinancing, as the commercial and industrial sectors’ resources are limited due to highinterest rates. Joint venture arrangements should also be investigated to strengthenmarket penetration. Direct marketing and telemarketing are still evolving marketingstrategies, but they are gaining in popularity and scope.Establishing an OfficeReturn to topFor U.S. companies interested in establishing a presence in Mexico, the General Law ofMercantile Organizations (or the Civil Code) regulates many different forms of businessentities. The type of business incorporation that a U.S. company or individual chooses isextremely important as it determines the operations they are allowed to perform inMexico and, among other liabilities, the amount of taxes they pay.Some of the most commonly used types of business classifications are the SociedadAnonima (Corporation) identified with "S.A." at the end of the company name, and theSociedad Anonima de Capital Variable (Corporation with Variable Capital) identified with"S.A. de C.V." One of the advantages of the latter is that the minimum fixed capital canbe changed subsequent to the initial formation.Limited Liability Partnership (Sociedad de Responsabilidad Limitada) identified with "S.de R.L." is similar to a closed corporation in the U.S. and has the option of havingvariable capital (S. de R.L. de C.V.). As this is an organization formed by individuals, ithas similar characteristics to a partnership with the exception of unlimited liability.Civil Partnership (Sociedad Civil) is the most common organization for professionalservice providers. It has no minimum capital requirement and no limit on the number ofpartners, but it is taxable in the same way as a corporation. It is identified with "S.C."Civil Association (Asociación Civil) is the form that charitable or nonprofit organizationsadopt to operate and is identified with "A.C." A foreign company may open a branch(“sucursal”) in Mexico as an alternative to incorporating. A branch can provide rightsand responsibilities similar to a corporation, including tax liability and access to localcourts, but requires the approval of the National Foreign Investment Commission.

FranchisingReturn to topIn 2009 the franchise industry in Mexico grew about 8%; with nearly 1000 franchiseconcepts in the country. The franchise sector is an important source of job creation, selfemployment,and wealth creation, even in difficult economic times. According to theWorld Franchise Council, Mexico is the 7 th leading nation in franchise development.Franchises in Mexico are regulated by Article 142 of the Industrial Property Law andArticle 65 of its Regulations. Franchise agreements must be registered before theMexican Institute of Industrial Property in order to be effective against third parties.In January 2006, an amendment to the Mexican Franchise Regulations (Article 142) waspublished in the Mexican Official Gazette, stating a new definition of franchise,mandating requirements for franchise agreements, and providing new standards for presalefranchise disclosure.Business opportunities for franchises encompass many sectors: food (fast food/casualrestaurants), personal care services, education, and entertainment sectors for children,etc. Franchising in Mexico, as in any other country, requires a long-term commitment.Franchisors must commit human and financial resources, patience and time to maketheir concept succeed in the Mexican market.For more information on franchising in Mexico, please see Chapter 4 of this CountryCommercial Guide: Leading Sectors for U.S. Export and Investment – Franchising.Direct MarketingReturn to topWith the establishment of large international firms in Mexico and their emphasis inadopting similar marketing strategies to those of their international home base – inaddition to more and better educated consumers with higher quality expectations – themarketing services industry has evolved into a more segmented and specialized sectoroffering U.S. companies a complete array of possibilities from which to choose.Today, the choices firms have for promoting their products range from marketingcampaigns through one-to-one contact at point-of-sale displays, to inserts distributed inmonthly bills, to mass exposure through billboards or internet campaigns.Companies in Mexico invested nearly $98 million pesos in marketing services topromote their products and services in 2009, with electronic media and in Point of SalePromotion (POP) as the most important vehicles of promotion:Breakdown of Marketing Tools in Mexico - 2009Publicity (printed & electronic media) 54.1%In-Store Promotions 25.8%Direct Marketing 12.2%Market Research 4.9%Public Relations 2.3%Design 0.7%

In order to satisfy clients’ demands, direct marketing has evolved combining differentmethods of promotion, including internet promotional campaigns. The most importantpromotional tools chosen by companies were direct mail and telemarketing.Direct Marketing9%5%2% 6%TelemarketingDirect Mail17%*Source: CICOM61%InternetConsultingData BasesOthers (Catalogs)Medium and small-sized U.S. companies that enter the Mexican market should workclosely with their local distributor/representative in the creation of their marketing plan inorder to have a strong presence in the market.The leading association in Mexico that coordinates the activities of local/internationalmarketing associations is CICOM (Confederation of the Industry for MarketingCommunication).Confederación de la Industria de la Comunicación Mercadotécnicawww.cicom.org.mxJoint Ventures/LicensingReturn to topGiven the flexibility of engaging in joint venture agreements, joint venturing and licensingare common approaches for U.S. firms interested in establishing a presence in Mexico.Although some Mexicans rely on verbal agreements when doing business, it is highlyrecommended to have a written joint venture agreement with your Mexican businesspartner. According to Mexican law, joint ventures are considered separate entities fromtheir parent companies and must register separately to pay taxes.To safeguard a license or patent against third parties, all licenses and patents in Mexicomust be registered with the Mexican Institute of Intellectual Property (IMPI). Registeringa license or patent entails a government review that can take up to twenty weeks. Formore information on IMPI, please see the “Intellectual Property” section below.Selling to the GovernmentReturn to topThe Mexican government purchases large volumes of raw material, repair parts, finishedgoods, and hired services, to execute important infrastructure and construction works.In 2009, government procurement amounted to over USD $23.7 billion, of which 30%was to purchase goods, 45% for services and 25% for construction services, accordingto official estimates.

Traditionally, the entities and enterprises with the largest purchasing budgets have been:Public entities:• Secretariat of Communications and Transport (SCT)• Secretariat of Public Education (SEP)• Treasury Department (SHCP)• Secretariat of Health (SS)Public enterprises:• Mexican Petroleum (PEMEX)• Federal Commission of Electricity (CFE)• Mexican Social Security Institute (IMSS)• The State Worker’s Security and Social Services Institute (ISSSTE)U.S. firms may take advantage of electronic means to participate in the bidding process.U.S. firms that want to learn more about tenders and bids can check the following webpage, which includes all information on current tenders, statistics, and complaints:http://www.compranet.gob.mx.While maintaining a representative or office in Mexico is not a prerequisite to obtaininggovernment contracts, it can simplify obtaining the information needed to prepare biddocuments and support after-sales service and parts supply.U.S. firms are encouraged to carefully analyze with their representative the tenderspecifications. They may differ from entity to entity, depending on the value of operation,type of goods or services, budget limitations, etc. A bid will be disqualified if notreceived within the specified period of time. Stipulated bids can also be disqualified fornot meeting technical details. Likewise, each tender includes a specific period of timefor participants to ask questions. By paying attention to all the details, the unnecessarydisqualification of a firm may be avoided. In some tenders, only written questions arepermitted. Replies are given to all purchasers of the tender documents.If a tender specifies a certain brand or gives preference to a supplier, a complaint can befiled with the General Directorate of Complaints before the contract is awarded. Eachbid should only consider the exact specifications listed in the tender. "Additionalsolutions" and/or specifications not listed will disqualify the bid.Finally, U.S. firms should communicate regularly with their Mexican representative andfine-tune all details related to the required documents. There have been numerouscases of disqualification based upon seemingly insignificant failures on the part ofbidders to comply with tender regulations and procedures to the letter of the law.Distribution and Sales ChannelsReturn to topMexico has an adequate transportation network that is being modernized. The mainland-border crossings with the U.S. are: Nuevo Laredo, Ciudad Juarez, Piedras Negras,Mexicali, and Tijuana, of which Tijuana has the highest passenger traffic in the world.Laredo/Nuevo Laredo is by far the most popular land-border crossing for goods, whereapproximately 60% of all U.S.-Mexican trade clears customs. Most Mexican companies,

egardless of their geographic proximity to Laredo/Nuevo Laredo, prefer having theirgoods shipped through this point because the customs agents and customs brokersthere are the most experienced. The Government of Mexico and some stategovernments are trying to promote other border crossings, in order to decrease theconcentration in Laredo and to offer future options to the increasing commercial trafficbetween the two countries.Mexico has a modern highway system, primarily comprised of toll roads connecting themain industrial areas located in the triangle Mexico City-Guadalajara-Monterrey. Outsidethis area, road transportation is fair-to-poor. However, President Calderon has enactedan aggressive program to improve Mexico’s infrastructure, giving priority to theconstruction of new highways and modernization of existing roads to create an efficientroad network across the nation. This program expects to modernize 10,835 miles ofroads by the year 2012.The main maritime ports are Altamira, Tampico, Veracruz and Progreso on the GulfCoast of Mexico, and Ensenada, Lazaro Cardenas, Manzanillo and Puerto Madero onthe Pacific Coast. All these ports have the infrastructure and equipment to facilitateintermodal, door-to-door merchandise transportation. The President’s InfrastructureProgram also includes important projects to modernize and expand existing ports and tobuild a new port in Punta Colonet Baja California, to attract container movement intransit from Asia to the U.S. New multimodal corridors will be developed to connect Gulfand Pacific ports, and production and consumer centers, with NAFTA corridors.Transportation-logistic services are expensive in Mexico: it is estimated that about 8 to15 percent of product cost in Mexico is related to logistics, vis-à-vis 5 to 7 percent inmore developed countries.According to 2008 figures produced by the Secretaría de Comunicaciones yTransportes, a large portion of Mexican products shipped domestically travel by road(about 56.4%), followed by maritime (31.9%) and rail transportation (11.6%). WithinMexico there were 876 million tons of transported goods; 493.8 million tons transportedby highways, 279.7 million tons by ocean, 101.9 million tons by railroad, and .6 milliontons transported by air. Given this distribution, the goal of President Calderon’s team isto increase the volume of cargo using railroad transportation by at least 18-20 percent bythe year 2012. North-South NAFTA trade has tripled over the past decade, straining thelimit of Mexico’s old transportation infrastructure. The Mexican government is fullycommitted to develop the necessary infrastructure and to promote private participation inthe sectors that can help to make industry and exports more competitive.Selling Factors/TechniquesReturn to topIn addition to developing strong working relationships with Mexican partners, U.S. firmsshould use Spanish-language materials and speak Spanish whenever possible whiledoing business in Mexico. Hiring local staff can help facilitate these relationships andprovide U.S. companies with insight on selling to the Mexican market.

Electronic CommerceReturn to topE-commerce between organizations and companies, either business to business (B2B)or government to business (G2B), has been developing much faster than e-commercewith consumers (B2C). Companies and the Mexican Government are investing heavilyin their IT infrastructure to promote e-commerce between clients, suppliers, government,and individuals. Given that this market will grow in the future, there are greatopportunities for suppliers of specialized and segmented solutions based on economicactivity. The biggest market is enterprise solutions to help companies integrate andautomate their communications within their organizations as well as with businesspartners (clients and suppliers).Geographically, the three largest cities represent the highest density of Internet users inthe country. Mexico City, Guadalajara, and Monterrey concentrate over 50% of the 28.5million Internet users in Mexico. The most sought after products and services by Internetusers using an e-commerce site is the purchase of plane tickets, computers, showtickets, online bank transactions, and government services.The increased use of e-commerce by government, companies, and individuals has comefrom the fact that online transaction security mechanisms have improved dramatically.There are laws and government agencies that focus on online fraud, piracy, and dataprotection.AssociationsAMECE (Mexican Association of E-commerce):AMIPCI (Mexican Association of Internet):http://www.amece.org.mxhttp://www.amipci.org.mx/Financial InstitutionsVISA: http://www.visa.comBANCOMER: http://www.bancomer.com.mxBANAMEX:HSBC:http://banamex.com.mxhttp://www.hsbc.com.mxTrade Promotion and AdvertisingReturn to topCS Mexico provides on-line advertising for U.S. and Mexican companies under theBusiness Service Provider (BSP) and Featured U.S. Exporter (FUSE) programs. Formore information:CS Mexico BSP Directory:https://www.buyusa.gov/mexico/en/business_service_providers.htmlIn order to have a better understanding of the Mexican market, it is also important toparticipate in industry trade events, seminars, and/or conferences in Mexico.Participating in such events gives you the opportunity to talk to suppliers, industryexperts, and end users. It also provides business exposure and brand recognition.

The following companies organize trade shows in Mexico:AMFAR:http://www.amfar.com.mxAsociación Nacional de Productos Naturales A.C.: http://www.anipron.org.mxCentro Impulsor de la Construcción y la Habitación A.C.: http://www.cihac.com.mxEJ Krause de México S.A. de C.V.:http://www.ejkrause.com.mxExpo Convenciones:http://www.expoconvenciones.comExpo México, S. A. de C. V.:http://www.expomexicosadecv.com.mxExpopublícitas:http://www.expopublicitas.comGavsa Exposiciones:http://www.gavsa.comGrupo MFV:http://fif.com.mxGrupo Salpro, S.A. de C.V.:http://www.mexicandesign.comRemex:http://www.remexexpos.com.mxTradex Exposiciones Internacionales:http://www.tradex.com.mxPricingReturn to topU.S. exporters should look carefully at import duties for agricultural products, brokers’fees, transportation costs, and taxes to determine if the product/service can be pricedcompetitively. U.S. companies shipping goods not made in the United States will besubject to appropriate duties and tariffs.The import duty, if applicable, is calculated on the U.S. plant value (f.o.b. price) of theproduct, plus the inland U.S. freight charges to the border and any other costs listedseparately on the invoice and paid by the importer. These can include charges such asexport packaging, inland freight cost, and insurance.Value Added Tax (IVA)Mexican Customs collects a value-added tax (IVA) from the importer on foreigntransactions upon entry of the merchandise into Mexico. This IVA is assessed on thecumulative value consisting of the U.S. plant value (f.o.b. price) of the product(s), plusthe inland U.S. freight charges, and any other costs listed separately on the invoice suchas export packing, insurance, plus the duty, if applicable.The IVA is 11% for products exported to the “border zone,” defined as 20 km from theU.S.-Mexico border. For final shipping points, other than the border zone, a 16% IVA ischarged. The importer will pay other IVA fees for such services as inland Mexico freight,warehousing, and custom brokerage fees, if applicable. The IVA typically is recoveredat the point of sale when the product is sold. Sales of real property (real estate) withinthe border zone are taxed at the 16% IVA rate.To avoid dumping practices, the Mexican authorities have set minimum prices for a widerange of imported products, including textiles, clothing, leather products, shoes, somemetals, stationary products, tools, some glass products, bicycles, children’s accessories,and others. These minimum prices will be taken as the base for calculating any duty ortax, if applicable, for all products imported under certain Harmonized System Codes.More information can be obtained by contacting:http://www.export.gov/exportbasics/ticredirect.asp

Sales Service/Customer SupportReturn to topService and price are extremely important to Mexican buyers. In many industries, thedecision to select a supplier depends on the demonstrated commitment to service afterthe sale has been made. This has been the most effective tool that third countrymanufacturers, mostly Japanese, have used to penetrate the market. They offer to havetheir maintenance personnel at the clients' plant in no more than 48 hours after a servicecall is made.Mexican customers are demanding uniform quality control, compliance with internationalstandards, productivity, lower production costs, just-in-time deliveries, and above all,reliable local service and maintenance programs. This last factor has become, in manyinstances, even more important than pricing or financing. Many Mexican firms employEnglish-speaking staff, but it is a good idea for the U.S. company to employ Spanishspeakingsales representatives. Providing appropriate training, product support, andtimely supply of spare parts is critical for success. The U.S. exporter should alsoschedule annual visits of Mexican personnel to the U.S. companies for training. AllMexicans traveling to the United States for training or other business purposes need avisa – more information on the visa process is provided in Chapter 8. Another factor toconsider is financing, as the commercial and industrial sectors’ resources are limited dueto high interest rates.Protecting Your Intellectual PropertyReturn to topSeveral general principles are important for effective management of intellectualproperty rights in Mexico. First, it is important to have an overall strategy to protect IPR.Second, IPR is protected differently in Mexico than in the U.S. Third, rights must beregistered and enforced in Mexico, under local laws. Companies may wish to seekadvice from local attorneys or IP consultants. The U.S. Commercial Service can providea list of local lawyers upon request.It is vital that companies understand that intellectual property is primarily a private rightand that the U.S. government generally cannot enforce rights for private individuals inMexico. It is the responsibility of the rights' holders to register, protect, and enforce theirrights where relevant, retaining their own counsel and advisors. While the U.S.Government is willing to assist, there is little it can do if the rights holders have not takenthe fundamental steps necessary to securing and enforcing their IPR in a timely fashion.Moreover, in many countries, rights holders who delay enforcing their rights on amistaken belief that the US Government can provide a political resolution to a legalproblem may find that their rights have been eroded or abrogated due to doctrines suchas statutes of limitations, laches, estoppel, or unreasonable delay in prosecuting a lawsuit. In no instance should US Government advice be seen as a substitute for theobligation of a rights holder to promptly pursue their case.It is always advisable to conduct due diligence on partners. Negotiate from the positionof your partner and give your partner clear incentives to honor the contract. A goodpartner is an important ally in protecting IP rights. Keep an eye on your cost structureand reduce the margins (and the incentive) of would-be bad actors. Projects and salesin Mexico require constant attention. Work with legal counsel familiar with Mexico laws

to create a solid contract that includes non-compete clauses and confidentiality/nondisclosureprovisions.It is also recommended that small and medium-size companies understand theimportance of working together with trade associations and organizations to supportefforts to protect IPR and stop counterfeiting. There are a number of theseorganizations, both Mexico or U.S.-based. These include:- The U.S. Chamber and the American Chamber of Commerce in Mexico- National Association of Manufacturers (NAM)- International Intellectual Property Alliance (IIPA)- International Trademark Association (INTA)- The Coalition Against Counterfeiting and Piracy- International Anti-Counterfeiting Coalition (IACC)- Pharmaceutical Research and Manufacturers of America (PhRMA)- Biotechnology Industry Organization (BIO)- Institute for the Protection of Intellectual Property and Legal Commerce (IPPIC)- Mexican Association of Research Pharmaceutical Industries (AMIIF)- Mexican Association of Phonogram Producers (AMPROFON)IPR ResourcesA wealth of information on protecting IPR is freely available to U.S. rights holders.Some excellent resources for companies regarding intellectual property include thefollowing:- For information about patent, trademark, or copyright issues -- includingenforcement issues in the U.S. and other countries -- call the STOP! Hotline: 1-866-999-HALT or register at www.StopFakes.gov.- For more information about registering trademarks and patents (both in the U.S.as well as in foreign countries), contact the U.S. Patent and Trademark Office (USPTO)at: 1-800-786-9199.- For more information about registering for copyright protection in the US, contactthe U.S. Copyright Office at: 1-202-707-5959.- For information on obtaining and enforcing intellectual property rights and marketspecificIP Toolkits visit: www.StopFakes.gov This site is linked to the USPTO websitefor registering trademarks and patents (both in the U.S. as well as in foreign countries),the U.S. Customs & Border Protection website to record registered trademarks andcopyrighted works (to assist customs in blocking imports of IPR-infringing products) andallows you to register for Webinars on protecting IPR.- The U.S. Commerce Department has positioned IP attachés in key marketsaround the world. To contact the official IP Attaché who covers Mexico, please email:dorian.mazurkevich@mail.doc.gov . The Commercial Specialist covering these issuesmay be reached at: Jesus.Gonzalez@mail.doc.gov.IPR Climate in MexicoMexico continues to suffer from rampant commercial piracy and counterfeiting. TheCalderon Administration has committed to strengthening protection of IPR, and therelevant federal agencies are working in a more integrated and aggressive manner, bothamong themselves and with a number of state and municipal governments.Nonetheless, a number of barriers to effective enforcement remain, including legislativeloopholes, an unwieldy judicial system, and widespread public acceptance of illicit

commerce. Mexico is working closely with the U.S. government and other partners toaddress these and other areas of mutual concern.Two different laws provide the core legal basis for protection of intellectual propertyrights (IPR) in Mexico -- the Industrial Property Law (Ley de Propiedad Industrial) andthe Federal Copyright Law (Ley Federal del Derecho de Autor). Multiple federalagencies are responsible for various aspects of IPR protection in Mexico. The Office ofthe Attorney General (Procuraduría General de la Republica, or PGR) has a specializedunit that pursues criminal IPR investigations. The Mexican Institute of Industrial Property(Instituto Mexicano de la Propiedad Industrial, or IMPI) administers Mexico’s trademarkand patent registries and is responsible for handling administrative cases of IPRinfringement. The National Institute of Author Rights (Instituto Nacional del Derecho deAutor) administers Mexico’s copyright register and also provides legal advice andmediation services to copyright owners who believe their rights have been infringed.Mexico Customs Service (Aduana México) plays a key role in ensuring that illegal goodsdo not cross Mexico’s borders.Mexico is a signatory of at least fifteen international treaties, including the ParisConvention for the Protection of Industrial Property, NAFTA, and the WTO Agreementon Trade-related Aspects of Intellectual Property Rights. Although Mexico signed thePatent Cooperation Treaty in Geneva, Switzerland in 1994, which allows for simplifiedpatent registration procedure when applying for patents in more than one country at thesame time, it is necessary to register any patent or trademark in Mexico in order to claiman exclusive right to any given product. A prior registration in the United States does notguarantee its exclusivity and proper use in Mexico, but serves merely as support for theauthenticity of any claim you might make, should you take legal action in Mexico.An English-language overview of Mexico's IPR regime can be found on the WIPOwebsite at: http://www.wipo.int/about-ip/en/ipworldwide/pdf/mx.pdf.Although a firm or individual may apply directly, most foreign firms hire local law firmsspecializing in intellectual property. The U.S. Embassy’s Commercial Section maintainsa list of such law firms in Mexico at:http://mexico.usembassy.gov/sacs_legal_info.htmlhttp://www.buyusa.gov/mexico/en/business_service_providers.htmlDue DiligenceReturn to topU.S. firms are strongly advised to conduct due diligence on a Mexican firm or individualbefore entering in any type of agreement. In Mexico’s larger cities, it is possible to find alocal consulting or law firm that can find information on a firm or individual. Also, localchambers and associations can assist U.S. firms in locating economic reports on aparticular firm.There are only a few private firms that conduct due diligence countrywide. U.S. firmsshould know that the U.S. Commercial Service has a service called InternationalCompany Profile (ICP) that can be ordered from our domestic U.S. Export AssistanceCenters or our offices in Tijuana, Monterrey, Guadalajara, and Mexico City. The ICP is areport in English that includes financial and commercial information on a Mexican firm.

Web ResourcesReturn to topU.S. GovernmentU.S. Commercial Service Mexico:http://www.buyusa.gov/mexico/en/U.S. Department of Commerce IPR Portal: http://www.stopfakes.govU.S. Embassy Mexico IPR Toolkit: http://mexico.usembassy.gov/mexico/IPR.htmlMexican GovernmentMexican Government Procurement Portal:The Mexican Institute of Industrial Property:http://www.compranet.gob.mxhttp://www.impi.gob.mxInternational and Private IndustryAmerican Chamber of Commerce in Mexico: http://amcham.com.mxConfederation of the Industry for MarketingCommunication:http://www.cicom.org.mx/The World Intellectual Property Organization: http://www.wipo.intInternational Intellectual Property Alliance: http://www.iipa.com/International Trademark Association:http://www.inta.org/National Association of Manufacturers: http://www.nam.org/s_nam/index.aspCoalition Against Counterfeiting and Piracy:http://www.thecacp.com/portal/counterfeiting/defaultInternational Anti-Counterfeiting Coalition: http://www.iacc.org/Pharmaceutical Research and Manufacturers ofAmerica:http://www.phrma.org/Biotechnology Industry Organization:http://www.bio.org/Mexican Association of Research Pharmaceutical Industries:http://www.amiif.org.mx/Mexican Association of Phonogram Producers: http://www.amprofon.com.mx/Mexican Maquila Information Center:http://www.maquilaportal.comAmerica’s Data Systems Global:http://www.maquilamarket.comIndustrial Directories:http://www.solunet-infomex.comMexico’s Industrial Magazine:http://www.twin-plant-news.comReturn to table of contents

Return to table of contentsChapter 4: Leading Sectors for U.S. Export and InvestmentCommercial Sectors• Agribusiness• Automotive Parts and Supplies• Education and Training Services• Energy Sector• Environmental Sector• Franchising Sector• Hotel and Restaurant Equipment• Housing and Construction• Internet and IT Services• Packaging Equipment• Security and Safety Equipment and Services• Telecommunications Equipment• Transportation Infrastructure Equipment and Services• Travel and Tourism Services• Agricultural Sector

AgribusinessOverviewReturn to top2008 2009 2010 (estimated)Total Market Size 218,686,451 263,646,429 267,601,125Total Local Production 200,457,153 233,827,729 237,335,145Total Exports 154,197,810 179,867,484 182,565,496Total Imports 83,778,945 64,488,641 65,455,971Imports from the U.S. 26,665,995 22,017,957 22,348,226Source: Secretaria de Economia-SIAVIMexico is among the top 15 world leaders in the agribusiness industry with 27,300hectares of permanent cropland. Mexico is also 10 th in the world in terms of meatproduction, providing a total of 4,911 metric tons of red meat alone. For poultryproduction, Mexico is rated 3 rd globally. 2008 was one of the most dynamic years for theMexican agribusiness industry due to a steady influx of new technologies, machinery,and fertilizers from American, Canadian, and European firms.The sub-sectors that registered the most dynamic growth are the cattle and dairy sectorat 5.8%, followed by corn processing at 2.8%, and wheat processing at 2.6%. Accordingto the Mexican Secretariat of Agriculture (SAGARPA) each sector will have an estimatedgrowth of at least 2% in 2010, despite the current world economic crisis. This is due tothe growing demand for processed foods and corn for ethanol; this estimated growthtranslates into approximately USD $8 billion.The growing agribusiness sector demands modern agricultural machinery, more efficienttechnology, fertilizers, enhanced pesticides to protect crops, animal feed, and packagingequipment.Best Prospects/ServicesReturn to topWhile the agribusiness industry is not the greatest contributor to the national GDP at 5%,it is a sector with continuous expansion and an average annual growth of 2%. It is alsoresponsible for 9% of the nation’s foreign direct investment. The government’sinvestment plan has provided the sector with over USD $700 million in the past 5 years.Modern Agricultural Machinery: This particular sector presents suppliers with strongopportunities, as 70% of Mexican agriculture is still harvested through manual laborutilizing rudimentary tools. Less than 20% of croplands are irrigated, leaving cropsdependent on seasonal rains or irrigation through mobile water pumps. Federalgovernment infrastructure development programs have provided this sector with USD$300 million for this purpose alone.Fertilizers: Mexico has no national fertilizer industry which results in farmers eitherfertilizing their crops with traditional products or not fertilizing at all. During 2008, farmerscontinued to express their discontent with the high price of imported fertilizers.Affordable fertilizers have strong market potential for U.S. firms in the agricultural sector.

Pesticides: Pesticides is another sector with virtually no national competition, and withharvestable land increasing yearly, there is strong market demand. These products havealso received heavy subsidies by the federal government for small producers.Packaging Equipment: General packaging equipment has also had a veryconsiderable increase in demand due to producers’ desire to begin packaging their ownproducts. This is the case for the poultry and meat processing industry. Exports requirestandardized packaging and labeling requirements, which needs advanced technologyand machinery that is not produced in Mexico.OpportunitiesReturn to topThere is virtually no national competition for agribusiness technology and equipmentsince 90% of products in this sector are imported, presenting an enormous opportunityfor U.S. firms. U.S. products are most often the first choice for Mexican companies, duein large part to the U.S. product reputation for excellent quality, innovation, andefficiency.The performance of the Mexican economy is one of the most important factors affectingfuture agribusiness related purchases. The large number of free trade agreements thatMexico signed has created a more open and globalized economy, affecting localproducers’ demand and ability to compete with international and subsidized products.The global economic crisis has forced most agribusiness companies to freeze theirbudgets for immediate equipment purchases. However, analysts predict that purchaseswill increase in 2010.ResourcesReturn to topSecretaria de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentaciónhttp://www.sagarpa.gob.mx/Comisión Federal para la Protección contra Riesgos Sanitarioshttp://cofepris.salud.gob.mx/Asociación Nacional de Comercializadores de Fertilizanteshttp://www.anacofer.com.mx/Administración General de Aduanashttp://www.aduanas.sat.gob.mxFor more information on the agribusiness sector in Mexico, please contact:Mr. Juan Herrera, Commercial SpecialistU.S. Commercial Service, U.S. Consulate GuadalajaraJuan.Herrera@mail.doc.govTel: (011-52-33) 3615-1440 ext. 103Fax: (011-52-33) 3615-7665

Automotive Parts and SuppliesOverviewReturn to topAuto Parts Production for OEM and Aftermarket2008 2009 (estimated) 2010 (estimated)Total Market Size 39.7 30.3 38.7Total Local Production 26.1 18.5 23.6Total Exports 18.7 11.9 15.2Total Exports to the US 25.8 18.1 23.1Total Imports 18.5 13.6 17.4Total Imports from the US 13.8 11.7 14.9Figures in USD billions. 2009 * Estimates reflect a composite of World Trade Atlas Statistics andinformation provided by the National Auto Parts Industry Association (INA)Total Number of Vehicles – Automobiles and Trucks2008 2009 (estimated) 2010 (estimated)Total Units Produced 2,102,801 1,507,527 1,854,258Total Units Sold in Country 1,025,520 754,918 928,549Total Units Imported 611,267 730,000 897,900Total Units Exported 1,665,133 1,226,513 1,508,610Source: Mexican Association of Automotive Industry (AMIA) and Secretary of EconomyTotal Value Vehicles – Automobiles and Trucks2008 2009(estimated)2010(estimated)Mexican Exports of Vehicles to the U.S. 22.0 17.5 21.5Mexican Imports of Vehicles from the 4.8 2.2 2.7U.S.Figures in USD billions. 2009* Estimates reflect a composite of Transportation and Machinery OfficeStatistics, U.S. Department of Commerce (OTM)Mexico ranks as the 10 th largest vehicle producer in the world, which accounts for 17.6%of the manufacturing sector and 3% of national GDP. Mexico’s auto parts industry isclosely related to the U.S. industry. There are currently seven manufacturers in Mexicoproducing 40 brands in 20 manufacturing plants. Mexico produces around 2 million carson a yearly basis. Out of this number, 79% of production is devoted to exports and theremaining 21% for the local market. The National Auto Parts Industry Association (INA)reported a decrease in the auto parts industry from 2008 to 2009.In 2009, the Mexican automotive industry experienced a significant slowdown and rapiddecrease in profitability due to several factors including the sagging global economy,28% reduction in local vehicle production because of lower demand not only by theinternal market but also a drop of 26% in exports, increased competition and higher priceof raw materials such as steel and oil. The market realities have led to new trends in carmanufacturing, including smaller car sizes and increased fuel efficiency.The spare parts market is expected to increase after Mexico imposed new duties on theimportation of used vehicles in 2009. As a result, repairing and maintenance of usedvehicles will require varied parts. In addition, other opportunities exist for U.S. exporters

of spare parts, equipment and new technologies to reduce costs. Parts, equipment andfirst and second-tier components from the U.S. might experience an increase in exportsdue to forecasted Mexican production of new models that have shifted from U.S.assembly plants.The economic outlook for 2010 is conservative. Eduardo Solis, Chairman of the MexicanAuto Association, acknowledged that the industry’s situation is linked to the economyand financial environment and forecasts recovery in 2010 would be slow with a slightgrowth in car sales of five percent by the end of the year. To offset the fall in sales, theindustry and government will have to develop other strategies to target niches in thedomestic market. The industry is currently working with the government to reduce taxesfor purchasing and owning a car, and an old car replacement program. Despite thedecline in demand and production, some automotive companies announced largeinvestments in Mexico last year. This is due to Mexico’s advantage in low labor costsand recent technological development in the auto industry. In addition, companies arelooking for lower manufacturing and export costs.Best Prospects/ServicesReturn to topThe greatest opportunities include: spare and replacement parts for gasoline and dieselengines, electrical parts, collision repair parts, gear boxes, drive axles, catalyticconverters, and steering wheels. In the first and second-tier supply chain sector,opportunities include: OEM parts and components, precision assembly devices,machined parts, hybrid vehicle components, suspension systems, and pre-assemblycomponents such as small and progressive stampings. Other products in demandinclude electronic components, specialized tooling, systems that eliminate waste andgreen technologies such as new combustion systems to reduce gas emission and oilconsumption.OpportunitiesReturn to topGiven the economic slowdown, lack of financing, high interest rates and competition, themarket has become more price-sensitive. In Mexico, 70 percent of new cars arepurchased on credit. Because of the credit shortage, new car sales have decreased andmany consumers choose to maintain their vehicles for a longer period of time. As aresult, OEMs located in Mexico will continue to reduce production along withimplementing strategic changes in their brand vehicles, including new technologies tomake them more efficient and less expensive.The number of used vehicles being imported, especially after the NAFTA allowance fornewer models, provides opportunities for exports of repair equipment and replacementparts. Effective January 2009, Mexico imposed a 10 percent duty on imports of usedvehicles, which was decreased to 3 percent in March 2009. U.S. companies still facesome barriers when exporting to Mexico. The most significant requirements includehaving a Certificate of Origin, and the 3 percent tariff based on a minimum estimatedprice, or “reference price” for the given year, make, and model of the car. Importers ofused vehicles must post a guarantee representing any difference in duties and taxes ifthe declared customs value is less than the established reference price. U.S. exportersare advised to work closely with their importers and customs brokers to ensure that allspecific requirements are met.

ResourcesState of Jalisco Auto-parts Distributors Association:National Auto parts Industry Association:Mexican Association of Automobile Distributors:Mexican Association of Automotive Industries:Office of Transportation and MachineryReturn to tophttp://www.rujac.comhttp://www.ina.com.mxhttp://www.amda.org.mxhttp://www.amia.com.mxhttp://www.trade.gov/autoFor more information on automotive parts and supplies in Mexico, please contact:Ms. Monica Martinez, Commercial AssistantU.S. Commercial Service, Mexico CityMonica.Martinez@mail.doc.govTel: (011-52-55) 5140-2628Fax: (011-52-55) 5566-1111

Education and Training ServicesOverviewReturn to top2007-2008 2008-2009 2010 (estimated)Total Number of Mexican 14,837 14,850 14,850StudentsPercentage of Total2.5% 2.2% 2%Foreign Students in U.S.Source: Open Doors 2009, Educational Sector PublicationMexico remains the seventh leading country of origin for students studying in the UnitedStates, with over 14,000 Mexican students enrolled mainly in undergraduate programs.About 50% of Mexican students who decide to study abroad choose the U.S. because ofthe strong commercial ties between the countries, as well as the prestige of the highereducation system.Percentage of Mexican Students inU.S.Undergraduate6 % 5.4 %Graduate30.6 %58.8%OtherOptional PracticalTraining*Source: Open Doors 2009There is growing demand for English language competency within Mexican highereducation. In order to increase the knowledge of a second language in this competitivemarket, several Mexican private universities use the TOEFL Institutional exam as arequirement for students in all fields of study. It is estimated that about 5% of MexicanESL students travel abroad for intensive English programs.Training Services:As a result of the competition in the global market, forward-looking companies andinstitutions are developing and promoting a new working culture that increases personaland professional development opportunities for their employees.Due to slowed economic growth in 2009, the demand for educational programs withincompanies has been negatively affected; therefore, it is important to develop a strategythat includes more distance learning/training options.Best Prospects/ServicesReturn to top• Short term ESL Programs for students;• Recruitment of students to study in the U.S. in areas such as engineering,business administration, environment and health programs;

• Corporate training programs in management, as well as executive-level languageproficiency programs;• Dual-degree programs / collaborative programs in international business andmanagement, engineering programs, environmental technology, robotics,nanotechnology, biotechnology, etc. (Undergraduate and graduate level);• Technical programsOpportunitiesReturn to topMexican public and private colleges are focusing on alliances and agreements withforeign schools to provide joint programs, dual certification and exchange programs forstudents and professors. These programs have become more important as Mexico hasbecome a key player in the world economy.Also, technical programs for the automotive, health and services industries have strongpotential in Mexico.ResourcesReturn to topEducation USA – Mexico:http://www.usembassy-mexico.gov/educationusaSecretaría de Educación Pública:http://www.sep.gob.mxAsociación Nacional de Universidades y Escuelas de Educación Superior:http://www.anuies.mxConsejo Nacional de Ciencia y Tecnología:http://www.conacyt.mxFor more information on the education/training sector in Mexico, please contact:Ms. Martha Sanchez, Commercial AssistantU.S. Commercial Service, U.S. Embassy Mexico CityMartha.Sanchez@mail.doc.govTel: (011-52-55) 5140-2621Fax: (011-52-55) 5566-1111

Energy SectorOverviewReturn to topEnergy Market2008 2009** 2010 (estimated)Total Market Size 11,745.0 10,608.0 10,823.8Total Local Production 5,627.0 5,120.6 5,171.8Total Exports 14,112.0 13,124.2 13,517.9Total Imports 20,230.0 18,611.6 19,169.9Imports from the U.S. 14,120.0 13,416.0 13.952.6Oil and Gas Market2008 2009** 2010 (estimated)Total Market Size 6,725.0 6,151.5 6,616.7Total Local Production 2,115.0 1.924.6 1.963.0Total Exports 1,430.0 1,329.9 1,369.8Total Imports 6,040.0 5,556.8 5,723.5Imports from the U.S. 4,163.0 3,954.9 4,073.5Electrical Power and Renewable Energy Market2008 2009** 2010 (estimated)Total Market Size 5,200.0 4,456.5 4,507.1Total Local Production 3,240.0 3,196.0 3,208.8Total Exports 12,270.0 11,794.3 12,148.1Total Imports 14,230.0 13,054.8 13,446.4Imports from the U.S. 9,950.0 9,461.1 9,879.1Figures listed in USD millions. * Exchange rate: 1 USD = 12.92 pesos** Based on statistics available from January to November 2009 (11 months). Source of information:BANCOMEXT, -Mexican Import/Export Bank statistics, Secretary of Economy Statistics. 2010 figures areestimated based on projections provided by Mexico’s Central Bank officials, PEMEX and CFE andinterviews with members of the Mexican College of Petroleum Engineers, from the National Energy SavingsCommission, and representatives of U.S. companies in Mexico.As illustrated above, in 2010, world-wide imports into Mexico of energy-relatedequipment and services will increase by approximately 3 percent. During the sameperiod, U.S. exports to Mexico will grow by an estimated 4 percent. U.S. companiescurrently supply almost two thirds of all imported energy-related equipment and servicesinto Mexico.Energy production and infrastructure will continue to be a priority for Mexico’s federalgovernment during the period 2010-2012. State-owned energy companies, PetroleosMexicanos (PEMEX), and the Comision Federal de Electricidad (CFE), have beengranted a 2010 budget of USD 21 billion for new energy infrastructure and themaintenance of existing power plants, refineries, oil and gas pipelines, etc.Although the Mexican energy market has been slow to open to new renewabletechnologies, there is movement in the government towards the establishment ofrenewables as part of the National Energy Plan. In 2007, President Felipe Calderonproposed that by 2012, 8% of all electricity would come from renewable energies,

excluding large hydroelectric projects. The U.S. Trade and Development Agency willconduct in 2010 a study to identify and highlight projects that will offer good opportunitiesfor U.S. exports and investment.Best Prospects/ServicesReturn to topEnergy sub-sectors: Oil and Gas (OGM), Electric Power Systems (ELP), and RenewableEnergy Equipment and Services continue to grow and represent opportunities for U.S.exporters.PEMEX will continue to make large investments in oil exploration and production in orderto maintain falling production levels. PEMEX already relies heavily on imported productsand services and is expected to spend heavily in developing deepwater reserves as wellas advanced extraction of maturing on shore fields. Also, natural gas capture at wellheads is an opportunity for U.S. companies.CFE has been given control via presidential decree of electricity distribution in MexicoCity that was previously property of Luz y Fuerza del Centro (LyFC). It is expected thatCFE will make significant upgrades to the Mexico City grid to bring it in line with the restof the network. In renewable energy, wind appears to offer good prospects given itslower start-up costs and already installed capacity.OpportunitiesReturn to topA number of major projects will drive investment in the sector and offer U.S. companiesopportunities either as contractors, sub-contractors, or suppliers:Natural Gas Distribution: Tamazuchale: 250 km natural gas pipeline project from SanLuis de la Paz - San Jose Iturbide;Oil Exploration and Production: Five wellhead platforms: Maloob-D, Kull-A, Ek-A, Balam-A, and Tsimin-A;Refineries Maintenance: New refinery in Tula; Diesel phase of the clean fuels project:Catalytic reforming unit in Minatitlan Refinery; Salamanca Refinery reconfiguration; ElMisterio1 Oil pumping station;Electrical Power Generation: Agua Prieta II Project (with Solar Field); SalamancaCogeneration Project; Norte II Combined Cycle Project; Valle de Mexico II and IIICombined Cycle Project.ResourcesSecretariat of Energy:Mexican oil company- PEMEX:Federal Electricity Commission:Energy Regulatory Commission:College of Petroleum Engineers of Mexico:National Infrastructure Plan:Nat’l Commission for the Efficient Use of EnergyReturn to tophttp://www.energia.gob.mxhttp://www.pemex.gob.mxhttp://www.cfe.gob.mxhttp://www.cre.gob.mxhttp://www.cipm.org.mxhttp://www.infraestructura.gob.mxhttp://www.conuee.gob.mx

For more information please contact:Mr. Francisco Ceron, Senior Commercial Specialist (Energy)Commercial Service, U.S. Embassy in Mexico CityFrancisco.Ceron@trade.govTel: (011-52-55) 5140-2640Fax: (011-52-55) 5566-1111Mr. Arturo Dessommes, Commercial Specialist (Electric Power)Commercial Service, U.S. Embassy in Mexico CityArturo.Dessommes@trade.govTel: (011-52-55) 5140-2638Fax: (011-52-55) 5535-1139

Environmental SectorOverviewReturn to topEnvironmental Equipment and Supplies2008 2009** 2010 (estimated)Total Market Size 6,340.0 5,872.5 6,026.7Total Local Production 2,720.0 2,529.6 2,580.2Total Exports 1,250.0 1,137.5 1,168.3Total Imports 4,870.0 4,480.4 4,614.8Imports from the U.S. 3,512.0 3,371.5 3,455.8Figures listed in USD millions. *Exchange rate: 1 USD_12.92 pesos** Based on statistics available from January to November 2009 (11 months). Source of information:BANCOMEXT, -Mexican Import/Export Bank statistics, Secretary of Economy Statistics; statistics from theSecretariat for the Environment and Natural Resources –SEMARNAT; statistics from the National Council ofEnvironmental Executives- CONIECO and interviews with importers, distributors and end-users ofenvironmental equipment and services.The total market for the environmental sector is estimated to grow by 2.6% in 2010 andU.S. exports to Mexico are expected to increase by 2.5% during the same period.Investment in water supply, wastewater treatment, and solid waste management willdrive this increase.Wastewater: Mexico continues to build wastewater treatment plants with a view tomeeting its goal of 100% water treatment by 2012 (current wastewater treatment levelnation-wide is about 50% and 10% in Mexico City). The National Water Commission,together with state and municipal environmental authorities, have announced multipleplans to implement water supply and wastewater projects that have been postponedduring the last two years due to adverse effects of the economic crisis.Solid Waste: Of the total waste generated daily, 87 percent is collected and 13 percent isdumped illegally. Of the 87 percent collected, 64 percent goes to landfills and controlledareas and 33 percent is sent to open air landfills with no control. The Secretariat of theEnvironment of Mexico has stated that the country needs at least 50 new sanitarylandfills to meet the existing demand of the 105,000 tons of solid waste generated daily.Best Prospects/ServicesReturn to topThe best prospects for U.S. companies are in the sub-sectors of pollution controlequipment (POL) and water resources equipment and services (WRE). See“Opportunities” below.OpportunitiesReturn to topWater projects remain a priority within the Mexico’s National Infrastructure Program2007- 2012. Major projects will drive the investment in this sector.Water Supply:Falcon Matamoros 260 km Aqueduct Project for water supply to nine localities situatedalong the Bravo River Basin, State of Tamaulipas;Zapotillo 140 km Aqueduct Project, State of Guanajuato and State of Jalisco;Desalination Plants in Ensenada, Puerto Penasco and La Paz

Wastewater Treatment:Construction of Atotonilco, State of Hidalgo (near Mexico City), Latin America’s largestwastewater treatment plant;New plants Agua Prieta and el Ahogado for Guadalajara, Jalisco and for cities ofHermosillo, Sonora; Juarez, Chihuahua; Celaya, Guanajuato; Pachuca, Hidalgo;Fresnillo, Zacatecas; and Matehuala, San Luis Potosi.Waste Management:Construction of sanitary landfills for various cities in the States of Tlaxcala; Colima; SanLuis Potosi; State of Mexico;Closure of the Bordo Poniente Landfill in Mexico City;Construction of a solid and industrial waste recycling facility in Mexico City;ResourcesSecretariat of the Environment & Natural Resources:National Water Commission:National Institute of Ecology:Attorney General for Environmental Protection:Mexican Institute for Water Technology:National Council of Environmental Executives:National Bank for Public Works:Return to tophttp://www.semarnat.gob.mx/http://www.cna.gob.mxhttp://www.ine.gob.mx/http://www.profepa.gob.mx/http://www.imta.gob.mx/http://www.conieco.org/http://www.banobras.gob.mx/For more information on the environmental sector, please contact:Mr. Francisco Ceron, Senior Commercial SpecialistCommercial Service, U.S. Embassy in Mexico CityFrancisco.Ceron@trade.govTel: (011-52-55) 5140-2640Fax: (011-52-55) 5566-1111

Franchising SectorOverviewReturn to top2008 2009 2010(estimate)Number of Franchise750 820 900Concepts in Mexico* Source: Asociación Mexicana de FranquiciasIn the last five years the Mexican franchise sector has maintained constant growth ofbetween 10 and 17 percent. Since 2008, the World Franchise Council has rankedMexico as the 7th leading nation in franchise development due to market maturity, legalframework, support from the government, number of franchise concepts in the country,and certification programs.Even with the difficult economic situation, the industry showed a growth of about 8% in2009, proving that it continues to be one of the most important sectors in the country’seconomic growth, generating over 550 thousand jobs and 55 thousand points of salescountrywide.Franchise Concepts in Mexico4% 2%Mexico7%24%70%U.S.24%Spain 4%*Source: Asociación Mexicana de FranquiciasDue to the importance of the franchise industry to the Mexican economy, both in termsof job creation and percentage of GDP, the Mexican government has made numerouslegislative changes to strengthen the legal framework for franchises. In 2006, theMexican Congress amended the Law of Industrial Property to provide a clearer definitionof a franchise, mandate requirements for franchise agreements, and provide standardsfor pre-sale franchise disclosures. These amendments help to protect franchisees whoreport abuse from franchisors when executing or terminating agreements. This hasallowed further expansion of the franchise sector as the previous lack of regulationlimited growth.Because of the economic downturn, the industry expects a conservative growth in 2010,specifically for concepts that require large investments and big operational requirements.Investors will be more cautious analyzing business opportunities, taking intoconsideration investment conditions, finance opportunities, and the franchisor’scommitment and support.

Best Products/ServicesReturn to topAlthough the food/restaurant sector in the franchise industry in Mexico has always beena very popular business model, the services sub-sector showed significant growth, evensurpassing the food industry. Services such as entertainment concepts for children,personal care services, home care services, among others have a great potential in theMexican market.OpportunitiesReturn to topMexico is a diverse country that offers excellent business opportunities especially forU.S. franchise concepts due to the commercial ties between the countries and therecognition and acceptance of U.S. brands by the Mexican population. Low costinvestment franchise concepts will be in demand in the next few years, as investors willbe looking for innovative concepts to open in secondary markets.U.S. franchises must be aware that since the Mexican market is dominated by localconcepts, a requirement for a successful franchise business in Mexico is to adapt, andcustomize the concept and characteristics to Mexican tastes.The Mexican Franchise Association (AMF) has worked very closely with the Ministry ofthe Economy to develop the National Franchise Program (PNF). This program promotesthe development of franchise concepts in Mexico with the goal of increasing employmentand investment in the country. It provides opportunities to Mexican entrepreneurs tocreate or re-engineer a franchise concept, which not only supports growth andmodernization of existing franchises, but provides support to investors looking to acquireinternational franchise concepts. So far in 2009, the Mexican government, through thePNF, has distributed nearly 200 million pesos of the 350 million budgeted for 2009. Thisprogram is an extraordinary opportunity for U.S. brands looking to either enter or expandtheir presence in the Mexican market.ResourcesAsociación Mexicana de Franquicias:Feria Internacional de Franquicias:Secretaria de Economia:Return to topwww.franquiciasdemexico.orgwww.fif.com.mxwww.franquicia.org.mxFor more information on the franchising sector in Mexico, please contact:Ms. Martha Sanchez, Commercial AssistantU.S. Commercial Service, U.S. Embassy Mexico CityMartha.Sanchez@mail.doc.govTel: (011-52-55) 5140-2621Fax: (011-52-55) 5566-1111

Hotel and Restaurant EquipmentOverviewReturn to top2008 2009 (estimated) 2010 (estimated)Total Market Size 1,799 750 765Total Local Production 905 773 788Total Exports 1,245 1,431 1,459Total Imports 2,138 1,408 1,436Imports from the U.S. 808 633 645Figures in USD Millions. (World Trade Atlas figures available in dollars – no exchange rate needed).Sources: ProMexico, Mexican Secretariat of Economy (SIEM System) and National Chamber of Restaurantsown estimates.The Mexican restaurant industry is always evolving and therefore there is a constantdemand for new technology. In 2009, the market size was an estimated US $1.4 billion,a decrease from 2008 due to the economic slowdown. The lack of technology (especiallyin cold-chain equipment) in Mexico and the increasing sophistication of the Mexicanconsumer, generate business opportunities for U.S. restaurant equipment exporters.The Mexican restaurant industry represents 2.2 percent of the national GDP, and 24percent of the tourism GDP. It further consists of approximately 35,000 restaurants inMexico City and 243,000 nationwide, of which 96 percent are micro and smallenterprises, and the remaining four percent consist of large restaurants. The industrygenerates more than 850,000 direct jobs and more than two million indirect jobsthroughout Mexico. Geographically, the industry is spread across the northeastern to thecentral part of the country, with almost 45 percent of the industry concentrated inMonterrey, Guadalajara and Mexico City.A limited number of ovens and refrigerators are manufactured in Mexico, but mostspecialized restaurant equipment is imported from the United States and other countries.Local production consists of meat grinders, slicers, refrigerators, freezers, coffeemakers, ovens, kitchen furniture and utensils, and generally lack the quality andtechnological level of U.S.-made equipment. The Mexican manufacturers are mainlysmall to medium-sized companies with less than 50 employees. More complex andlarge-scale machinery is not produced locally, which leaves a market for U.S. exporters.The global economic slowdown and the H1N1 flu affected the restaurant industry’sgrowth, which showed a decrease of 10 percent in 2009, according to estimatesprovided by the National Chamber of the Restaurant Industry (CANIRAC). Therefore, theindustry has explored new ways to attract consumers through promotions and cuisinefestivals to generate more business. In 2008, the total market for this sector was nearlyUSD $1.8 billion. Imports from the United States during 2009 decreased 50% comparedto 2008 for the period January - September. Competition for this market exists primarilyfrom Chinese, Taiwanese, German, Italian, and Spanish manufacturers.The economic outlook for 2010 is conservative with 2 percent growth, which is less thanexperienced in the last few years. It is expected that the hotel and restaurant industrywill grow slowly during the first months of 2010, but will recover its dynamism during thelast quarters, based on the global economy and its effect in the Mexican market.

Best Products/Services• Bakery equipment• Food warmers• Food – temperature measurers• Coffee equipment• Display cabinets• Shelving equipmentOpportunitiesReturn to top• Stainless steel utensils andcookware• Catering equipment• Tabletop centerpieces• Tray products and carts• Cup and glass keepers• Storage and transport casesReturn to topUnder NAFTA, most equipment for hotels and restaurants manufactured in the UnitedStates can be imported duty-free into Mexico. However, some products for this industryare included in the retaliation measure issued by the Mexican government against theUnited States for the cancellation of the Cross-Border Trucking Demonstration Program(see table below). The complete listing of all 89 products is available at the following link:HS Number(Mexico’s Schedule)Informal HS DescriptionRetaliatoryDuties39241001 Tableware and kitchenware of plastics 20%70134903 Glassware used for table (other than drinking glasses) 20%or kitchen, except vitroceramic, of soda-lime glass84181099 Combined refrigerator-freezers fitted with separated 15%external doors, over 200 kgs per unit weight84182101 Refrigerators, household use, compression type 20%84198101 Coffeemakers 20%84221101 Dishwashing machines, household types 15%84501201 Other laundry machines with centrifugal dryer, for home 20%use84501299 Other laundry machines, with built-in centrifugal dryer 20%Mexico Retaliation: NAFTA Trucking Dispute: http://www.ita.doc.gov/td/industry/otea/301alert/mx_ret.htmlU.S. companies offering products for the hotel and restaurant equipment sector shouldincrease efforts to introduce new products into the Mexican market. Interestedcompanies should be aware that certain segments of the market are price sensitive.ResourcesNational Chamber of Restaurants:World Trade Atlas-Mexico:Secretariat of Economy:Return to topwww.canirac.org.mxwww.promexico.gob.mxwww.economia.gob.mxFor more information on the restaurant sector, please contact:Ms. Monica Martinez, Commercial AssistantU.S. Commercial Service Mexico CityMonica.Martinez@mail.doc.govTel: (011-52-55) 5140-2628Fax: (011-52-55) 5566-1111

Housing and Construction ServicesOverviewReturn to top2008 2009 2010 (estimated)Total Market Size 7678.46 6910.61 6979.72Total Local Production 8591.63 7732.46 7809.79Total Exports 3542.17 3329.64 3396.23Total Imports 3928.05 3574.52 3646.02Imports from the U.S. 2847.41 2591.14 2642.96Sources: INEGI Import/Exports statistics, Mexico Central Bank Import/Export statistics, Secretary of theEconomy, BANCOMEXT, CONAVI, and interviews with CMIC officials, CNEC officials and CANADEVIrepresentatives.ConstructionIn 2009, Mexico’s government pledged to stimulate the construction sector as a way tospur economic growth. Government investment, estimated in 2009 at $100 billiondollars, has helped the construction sector’s performance not fall as drastically as itcould have with the current economic crisis. The government’s infrastructureinvestments are aimed not only at stimulating the economy but also addressing the lackof infrastructure investment projects in the past and increasing the competitiveness ofthe country. Inflation affected construction costs by nearly 8% in 2009, according to theIndex of Builder’s Prices from the Bank of Mexico, which expects an inflation rate of 6%in 2010. While the Mexican construction industry contracted 7% in 2009, official sourcespredict the industry will grow by 2.3% in 2010.The total value of the construction sector in 2009 was $44,500 million dollars. The majorportion (50%) was allocated to PEMEX investment projects, the construction of housesand multi-use buildings (18%), and highways (11%). The Mexican states that receivedthe major investments from the federal government were: Mexico City (20%), NuevoLeon (15%), Jalisco (8.0%), Veracruz (6%), and Campeche (4.7%).HousingUnder the Administration of President Calderon, housing initiatives and projectsthroughout Mexico are considered priorities. Federal, state, and municipal governmentsare working closely to strengthen the housing industry in order to solve Mexico’s 500million housing unit deficit. All housing agencies, both government and private, arepromoting projects and seeking private investment in order to counter the country’shousing deficit.For U.S. firms interested in entering Mexico’s construction industry, one of the bestoptions is to sign a joint venture agreement with a Mexican housing developer orconstruction firm that is active in the housing industry. Mexican companies’ knowledgeof the market, labor, and legal aspects involved in this industry is invaluable to U.S.firms.

Best Products/ServicesReturn to top- Aluminum doors and windows - Bathroom and kitchen fixtures- Windows and window frames - Doors and door frames- Electrical fixtures - Electrical insulating tubes- Steel and iron doors and windows - Parquet panels - wood- Plumbing fixtures - Plastic doors and windows- Roofing products - Tubes and pipes - copperOpportunitiesReturn to topConcessions, projects founded by the Federal Government, private public partnerships,and highway assets (projects supported by FARAC funds), are the most commonchannels that the Mexican government uses to promote private investment ininfrastructure projects. These projects are supported by the Mexican governmentfunding institutions, as well as international funds such as: BANOBRAS, FONADIN, localand foreign banks, the North American Development Bank, Interamerican DevelopmentBank, World Bank, OPIC, USTDA, ExIm Bank, and USAID.The largest Mexican housing developers listed on the stock market announced anexpected 4% income growth in 2010. Representatives from Mexico’s main housingstakeholders: INFONAVIT, ARA, GEO, HOMEX, URBI, and SARE; believe that housingin Mexico will continue to grow, with the best market existing for houses between theprice of U.S. $28,000 - $50,000. Additionally, the low-income housing market (USD$12,000 - $27,000) will grow due to Federal, State, and Municipal incentives.Although the housing sector to date has not been overly affected by the currenteconomic crisis due to government spending, the crisis is beginning to affect in theconstruction industry in Mexico. The crisis will cause the delay in private constructionprojects and government postponement of projects due to the increased cost of cement,steel, and glass.ResourcesNational Chamber for Housing:National Housing Council:Mexican Chamber for the Construction Industry:Construction and Housing Development Center:National Institute for Geography and Statistics:Institute of National Housing Fund for Workers:Secretariat of Communications and Transports:Return to tophttp://www.canavi.org.mxhttp://www.conavi.org.mx/http://www.cmic.orghttp://www.cihac.com.mxhttp://www.inegi.gob.mxhttp://infonavit.gob.mxhttp://sct.gob.mxFor more information on the housing and construction industry in Mexico, please contact:Mr. Adrián Orta, Commercial SpecialistU.S. Commercial Service - Mexico CityAdrian.Orta@mail.doc.govTel: (011-52-55) 5140-2619Fax: (011-52-55) 5566-1111

Internet and IT ServicesOverviewReturn to topTRENDS IN THE INTERNET MARKETS2008 2009 2010 (estimated)Total Market Size 1,804 2,074 4,989Total Local Production 1,804 2,074 4,989Figures are in millions of U.S. dollars. Source: Total Market Size figures – Selected figures. All otherfigures are estimates.TRENDS IN THE IT SERVICES2008 2009 2010 (estimated)Total Market Size 3,600 4,140 5,382Total Local Production 2,340 2,691 3,498Total Exports 720 828 1,076Total Imports 540 621 807Imports from the U.S. 216 250 325Figures are in millions of U.S. dollars. Source: Same as above.The Mexican Internet Association, AMPICI, has reported additional growth in the use ofInternet in their May 2009 study. At the end of the year, the estimated number of Internetusers reached 28 million with a penetration rate of people 6 years or older over 30%.Internet users in Mexico have grown in double digits. 2005-2006: 17%, 2006-2007: 18%,and 2007-2008: 16%. This growth translates into an increasing infrastructure ofconnected PCs, 93% of Broadband Internet connectivity, and a diverse population ofInternet users. All demographic and socio-economic sectors are participating in Mexico’sdigital revolution. Men, women, children, and adults use Internet for personal andprofessional purposes. Internet is mainly used as a tool for communication andcollaboration. The main uses are sending emails, chat rooms, instant messaging, news,video gaming, music downloads, and increasingly social networks. Access points vary,but half of the users access the net at home, followed by 34% in public places such asInternet Cafes, and lastly 19% in the office and 11% in schools. A full report on Internetinfrastructure and user habits is available at the Mexican Internet Association’s website(in Spanish only). Please visit: www.amipci.org.mx/estudiosThe growth of broadband infrastructure in the last 18 months has been phenomenal.ISPs, Cable TV operators and wireless carriers have invested heavily in modernizingtheir networks in order to deliver higher broadband speeds through Fiber-To-The-Home(FTTH) and third generation, 3G, networks, and WiMAX deployments. Today, residentialcustomers can contract Internet speeds from 1 Mbps to 10 Mbps and even 50 Mbps.Fiber networks are bringing more capacity to users, however, pricing is still higher thanin other countries. A 5 Mbps connection in Telmex is $77. A Cable TV Triple PlayPackage with 2 Mbps and 200 channels is $88 with Cablevisión of Monterrey.Cablevisión in Mexico City offers a Triple Play Package with 2 Mbps and 250 channelsfor about $66.Enterprise connectivity is also becoming increasingly essential in business in Mexico asmore IT Services firms are developing the small, medium and corporate as well asgovernment sectors. In 2009 the IT industry began a move to outsourcing services,cloud computing, and virtualization. Corporate users and governments are deciding to

contract leased services for their IT and telecommunications needs. In the last two yearsHP acquired EDS and 3Com, Dell acquired Parot Systems, setting a “services industry”for the future. Mexico is seeing an increase by attracting participation of local and foreignfirms, particularly from the U.S. and India, in this sector. Services include maintenance,warranties, upgrades, security, software and application development, among others.Best Products/ServicesReturn to topThere is also a great market for video games in Mexico. The development, publishingand distribution of video games represent a very good business opportunity.• Internet/Broadband Services• IT Services• Digital Media/ Video Game PublishingOpportunitiesReturn to top2010 will provide good opportunities for those companies offering tools, software,solutions, and devices to support IT services to many industries such as telecom,financial services, retail, manufacturing, housing and construction, security, utilities,among others.• Green IT for Monitoring, Supervision and Automation• VoIP & IPTV Applications• Digital Media Applications• Integrated IT Solutions• Customer Service Solutions• Contact Center SolutionsResourcesISPshttp://www.cablevision.net.mxhttp://www.cablevision.com.mxhttp://www.megacable.com.mxhttp://www.axtel.com.mxReturn to tophttp://www.maxcom.com.mxhttp://www.alestra.com.mxhttp://www.metrored.com.mxhttp://www.prodigy.com.mxRegulators / Governmenthttp://www.cofetel.gob.mxhttp://www.sct.gob.mxChambers / Associations / Government Programshttp://www.amiti.org.mxFor more information on the internet and IT services industry in Mexico, please contact:Mr. Juan Carlos Prieto, Commercial SpecialistU.S. Commercial Service - Mexico CityJuan Carlos.Prieto@mail.doc.govTel: (011-52-55) 5140-2634Fax: (011-52-55) 5566-1111

Packaging EquipmentOverviewReturn to topHISTORIC PACKAGING EQUIPMENT FIGURES AND FORECAST FOR 2010(Production) 2008 2009 2010 (estimated)Estimated Total Market Size $ 641.7 $ 653.9 $ 663.7Estimated Total Local$ 96.2 $ 98.1 $ 99.57ProductionTotal Exports $ 6.26 $ 6.38 $ 6.48Total Imports $ 545 $ 556 $ 564.34Imports from the U.S. $ 114.45 $ 116.76 $ 118.51Figures are in millions of U.S. dollars. Sources: http://www.census.gov/foreigntrade/statistics/product/enduse/exports/c2010.html,http://www.trademap.org/Index.aspx,http://www.pmmi.orgHISTORIC PACKAGING FIGURES AND FORECAST FOR 2010 (metal, plastics,wood, cardboard, etc)(Production) 2008 2009 2010 (estimated)Estimated Total Market Size $11,005 $11,226 $11,394.45Estimated Total Local$8,475.4 $8,807.5 $8,939.5ProductionTotal Exports $1,073.1 $1,094.5 $1,110.9Total Imports $2,371.1 $2,428.5 $2,454.8Imports from the U.S. $1,951.05 $1,990.07 $2,019.92Figures are in millions of U.S. dollars. Sources: http://www.census.gov/foreigntrade/statistics/product/enduse/exports/c2010.html,http://www.trademap.org/Index.aspx, AMEE, with data from CANAFEM, CNIPC, INEGI and SHCPAccording to reports from the Packaging Machinery Manufacturers Institute (PMMI),Mexico is the second largest buyer of equipment from the U.S. in the packaging industry,only preceded by Canada. It is estimated that in 2008 alone, the importation market forpackaging equipment and spare parts reached an average of US$ 472 million. Spareparts contributed an estimated US$ 67 million, making the total value of the equipmentand spare parts for this industry over a half billion dollars. In 2009 the Mexican economygrew 0.9%, despite the world financial crisis. This was boosted by external demand aswell as local market growth, especially in the industrial sector. In 2009 exports,manufacturing production, and construction made an important impact in the expansionof the industry as a whole. Mexican IRS (Secretaria de Hacienda y Credito Publico) hasdeclared that the expected Economic growth for Mexico in 2010 will be 2% as result ofthe expected growth of 1.9% in the U.S. and the recovering oil prices.According to the Mexican Association of Packaging (AMEE), Packaging sales during2008 increased 5.2 % when compared to 2007, reaching a total value of US$ 8.2 billionand 8,634,843 tons.

In 2008, Mexico manufactured 8.6 million tons of containers, with a production value ofUS$ 8.47 billion, and imported U.S. $ 2.3 billion. The total market value for packagingmachinery and spare parts in Mexico reached US$ 539 million in 2008.The Mexican packaging market is very dynamic. The breakdown in sub-sectors is asfollows:The cardboard and paper packaging sector represented 36.3 % of total sales in theindustry for 2008. There was an increase of 1.4 % compared to 2007, which translatesto US$ 3 billion, according to AMEE’s records.The metal packaging sector had a small increase of 0.6 % growth in this period,representing over US$ 1.5 billion.The glass-packaging sector represents 17.8% of all sales in the industry and is one ofthe most important sub-sectors for the packaging industry in Mexico. According toAMEE, the glass-packaging sector decrease by -1% in 2008, or US$ 1.4 billion. Thiswas one of the most prosperous sub sectors, especially considering that Mexico is theworld’s third largest beer producer and second largest soda consumer, but New Mexicantaxation policies have increased the cost of these products and there has been a slightdecrease in consumption. Therefore, the soda equipment market is roughly 12% of allthe packaging equipment market (around US$ 2 billion).The Plastic Packaging Sector (bags, films, boxes, bottles, containers) represents26.4% of all sales in the industry, and decreased -0.8% in 2008, reaching US$ 2.18billionWood Packaging Sector represents 0.6% of all sales in the industry and decreased -0.1%, reaching US$ 49.6 million, which is due in large part to the agribusiness sectorBest Products/ServicesReturn to topFood processing not only accounts for 19% of manufacturing GDP, but also for 40% ofsales from the packaging industry, making it the biggest buyer sector for the packagingindustry and accounting for a total industry value of over US$ 60 billion (excluding beer,tobacco and coffee). The food-processing sector has also demonstrated continuousannual growth for the last 3 years with an average year on year growth of 3.7%.The pharmaceutical industry is also one of the major correlated industries, representingalmost 10% of the total demand. They are also one of the largest buyers for packagingequipment, with an annual average growth rate of 7% in the last 3 years.Cosmetics and Personal Care Products is the third most relevant sector /client for thepackaging industry, with 10% of the overall demand for packaging equipment.OpportunitiesReturn to topMexico strives to provide excellent quality in the packaging sector. The glass packagingindustry has become the main focus for companies, because of its competitive prices ascompared to plastic containers, and its environmentally friendly manufacturing process.

With this boom in the packaging sector, machinery is more in demand, and the U.S. isdefinitely the first option for Mexican companies when acquiring new technologies.There is also a strong tendency to purchase new equipment in the sector and 85% of theequipment is imported, which represents an enormous opportunity for U.S. firms.The performance of the Mexican economy is one of the most important factors affectingfuture packaging machinery purchases. The large number of free trade agreements thatMexico has negotiated has created a more open and globalized economy. However, theglobal economic crisis has forced most packaging equipment users to freeze thebudgets for future equipment purchases, due in part to the instability of the peso inregards to both the USD and the Euro accentuated by the lack of realistic growthforecast and high interest rates for most loan suppliers.ResourcesPackaging Machinery Manufacturers InstitutePackaging Expo in Mexico:Mexican Packaging Association:Institute of Packaging Professionals:Mexican Institute of Packaging Professionals:Empaque Performance E-MagazineReturn to tophttp://www.pmmi.org/http://www.expopack.com.mx/http://www.amee.org.mxhttp://iopp.orghttp://www.envaseyembalaje.com.mx/http://empaqueperformance.com.mxFor more information on the packaging sector in Mexico, please contact:Mr. Juan Herrera, Commercial SpecialistU.S. Commercial Service, U.S. Consulate GuadalajaraJuan.Herrera@mail.doc.govTel: (011-52-33) 3615-1440 ext. 103Fax: (011-52-33) 3615 7665

Security and Safety Equipment and ServicesOverviewReturn to top2008 2009 (estimated) 2010 (estimated)Total Market Size 41,225 34,225 39,358Total Local Production 1,770 1,646 1,892Total Exports 40,542 29,398 33,807Total Imports 39,485 32,579 37,465Imports from the U.S. 9,930 7,213 8,294Figures in Millions of US dollars. Safety and Security equipment and service falls into many different industrysectors, the above information represents an estimate and partial market assessment.Sources: World Trade Atlas (WTA).Despite Mexico’s economic downturn in 2009, the demand for security and safetyproducts and services remained stable throughout the year. The presence of severaldomestic challenges, as well as many government-sponsored programs for socialassistance, education and labor opportunities, supported an overall increase of 15percent in this sector, driven by steady consumption by the public and private sectors.The private sector considered 2009 a good year for the industry, perhaps with lessdynamism during the first semester, but with moderate gains in the last few months. Asin any other industry, results were differentiated among the companies by their size andresources, but 2010 offers a moderate optimistic outlook.Opportunities for government procurement contracts are also expected to continuethroughout the coming year. The combined federal budget for the three main lawenforcement agencies (Defense, Navy, and the Attorney General), is estimated at USD$5.4 billion. Both the Ministry of Defense and the Navy have taken an active role in thefight against drug traffickers and drug cartels, mainly cooperating with the Ministry ofPublic Security.The safety industry in Mexico is also an important market. Although the culture ofaccident prevention has been growing, as well as the development of updated safetystandards, work-related accidents occur with some frequentcy. In 2008, more than302,000 employees suffered accidents at work, and natural emergencies required theaction of first-responders. As attitudes toward personal and workplace culture continueto change, national industries are incorporating more safety training and equipment intheir contingency planning and fiscal budgeting.Best Products/ServicesReturn to topBest prospects for products and services in the security and safety sector include:Government:• Armored solutions (vehicles,plates, clothes, doors, walls)• Electronic devices for mobilephones• Biometric solutions• Access control• Tactical equipment• Personal protection products• Communications systems(wireless, internet, GPS, etc.)

• Integrated security solution(compatibility/integrationservices)Commercial:• CCTV• Armored services• Perimeter protection solutions• Access controlOpportunities• Night vision tactical equipment• Infra-red cameras• Alarms• Digital system (analog systemsare being displaced)Return to topThe scope of security and safety products is diverse, but the consumption of personalprotection products, CCTV, residential protection solutions, armored products isexpected to increase significantly in the commercial market. Government purchasescontinue to be large in body protection equipment, combat systems, CCTV, personalGPS (chip), vehicles and maintenance, as well as for military equipment.ResourcesLatin America Security Association Mexico Chapter:Citizen Institute of Insecurity StudiesAmerican Assoc. for Industry Security Mexico Chapter:National Council of Private SecuritySociety of Competitive Intelligence ProfessionalsReturn to tophttp://www.alas.org.mxhttp://www.icesi.org.mxhttp://www.asis.org.mxhttp://www.cnsp.org.mxwww.scip.orgFor more information on the security and safety sectors in Mexico, please contact:Ms. Claudia Salgado, Commercial Assistant (Safety)U.S. Commercial Service, Mexico CityClaudia.Salgado@mail.doc.govTel: (011-52-55) 5140-2639Fax: (011-52-55) 5566-1111Ms. Silvia Cárdenas, Commercial Specialist (Security, Defense)U.S. Commercial Service, Mexico CitySilvia.Cardenas@mail.doc.govTel: (011-52-55) 5140-2670

Telecommunications EquipmentOverviewReturn to top2008 2009 (estimated) 2010 (estimated)Total Market Size 10,230 11,050 12,708Total Local Production 6,460 6,977 8,024Total Exports 3,760 4,061 4,670Total Imports 6,735 7,274 8,365Imports from the U.S. 4,050 4,374 5,030Figures in US dollars . Source: The Competitive Intelligence Unit.Technological convergence has used broadband connectivity as the main focal point inthe telecommunications industry worldwide, and the Mexican telecom market is noexception. Fixed, Wireless and Cable TV (CATV) providers are integrating voice, dataand video services in Triple Play packages. Today the fixed telecom market is definedby fixed carriers such as, dominant player, Telmex; as well as smaller traditional playerssuch as Axtel, which focusing on increasing coverage and deploying WiMAXinfrastructure; Alestra seeking to brand itself as a corporate provider of Value AddedServices, and Maxcom increasing its position as a residential provider of QuadrupleServices (fixed voice, data, video, and wireless). However, with technological advancesand number portability regulation, CATV companies such as Megacable, Cablevisiónand Cablemás, are also together successfully providing fixed telephone services toalmost 500 thousand residential subscribers. Unfortunately, 2009 had many factors thataffected the sector for additional investment and the growth of both in revenues andsubscribers, such as number portability, reduction of rates, and Triple/Quadruple Playpackages, and as a result Mexico continues to keep the same 20 million fixed lines.2009 also was the worst year for industry growth in the last 5 to 6 years. This sector hadbeen growing at double digits, and it is expected that at the end of 2009, the telecomsector will close with an 8% growth with an estimated value of US$43 billion.The wireless industry is Mexico is one of the most dynamic sectors in the Mexicaneconomy reaching a total of 81 million users by the end of 3Q09, representing MX$51.9billion pesos that represent almost US$4 billion with an exchange rate of 13.26 pesosper dollar. However the strong growth rates both in revenues and users are showingsigns of decreased acceleration given by market maturity, but also by regulatory andfiscal initiatives recently implemented. The Ministry of Finance and Public Credit (SHCP)has passed a 3% special tax on telecom services plus an additional 1% of Value AddedTax (IVA). As of 3Q09 Mexico reached a penetration rate of 76% is smaller whencompared to other Latin American markets, such as Argentina with 117%, Brazil with87% and Chile with 91%. Despite the challenges, experts agree that Mexico is hasplenty room to grow in rural connectivity and estimate that other 30 million subscriberscan be targeted in the near future.Best Products/ServicesReturn to topAs in 2008 we maintain our expectation that the best products will remain in the ICTconvergence area, led by:

CATV: Today 30% of homes have pay-TV services, and more than 11 million homesare passed by cable.Wireless: WiMAX equipment, Green IT solutions, Data Center equipment, andbusiness intelligence solutions, and mobile broadband applications.High Definition Broadcasting Equipment: Mexico recently approved a newbroadcasting law, which will motivate investment in HD equipment by TV and Radiobroadcasters. Mexico has adopted U.S. ATSC HDTV Standards.Network infrastructure: We see significant investment in expanding and upgradingfixed-line networks. The national utility company, CFE, is today a licensed carrier-ofcarriersby offering its extensive network for transport to telecom operators.VoIP: VoIP is growing in demand and will continue to expand into small and mediumsizebusinesses.OpportunitiesReturn to topThe greatest opportunities for 2010 in the Telecom Equipment Sector are in:• Green IT equipment for Data Centers• Cloud computing & Virtualization tools• VoIP & IPTV applications• WiMAX equipment, 3G and LTE (4G) equipment for mobile carriers• Security appliancesResourcesReturn to topComisión Federal de Telecomunicaciones (Regulator): www.cofetel.gob.mxCámara Nacional de la Industria Electrónica de Telecomunicaciones e Informática:www.canieti.orgAsociacion Mexicana de Internet (Mexican Internet Association): www.amipci.org.mxCámara Nacional de la Industria de Televisión por Cable: www.canitec.orgFor more information on the telecommunications sector in Mexico, please contact:Mr. Juan Carlos Prieto, Commercial SpecialistU.S. Commercial Service - Mexico CityJuan Carlos.Prieto@mail.doc.govTel: (011-52-55) 5140-2634Fax: (011-52-55) 5566-1111

Transportation Infrastructure Equipment and ServicesOverviewReturn to top2008 Jan-Oct. 2009 2010 (estimated)Total Market Size 1,955.41 1,144.99 1,558.00Total Local Production 1,345.37 672.50 1,076.00Total Exports 941.76 381.37 645.60Total Imports 1,551.80 853.86 1,127.00Imports from the U.S. 955.53 473.07 676.20Source: 2008-09 import statistics by harmonized system code, Bancomext. Includes trucks for semi-trailers.The Mexican transportation sector is facing one of the most important challenges in itshistory. The huge increase in Mexican foreign trade, in addition to the increase in trafficof merchandise arriving at Mexican ports with final destinations to the U.S. and Canada,are requiring a quick response from the transportation sector to improve efficiency, costsavings, and cargo security.Although railroads have increased their participation in the transportation sector, theystill have a low participation in cargo movement in Mexico. In 2008, about 56.4% ofcargo was moved by trucks, 11.6% by railroads, and about 31.9% through maritimeports. Currently, Mexico has 74 intermodal terminals operating, including 30 interiormultimodal terminals, 18 railroad terminals, 18 port terminals, and eight privateautomotive terminals. The goal of President Calderon’s team is to increase the volumeof cargo using railroad transportation by at least 18-20% by the year 2012, and to buildnine new interior cargo terminals, two new port terminals, one new private automotiveterminal, and 10 new multimodal corridors.However, most of these projects were severely affected by the economic crisis. Manyprojects were in standby mode during 2009 and some were delayed until the last quarter of2009, waiting to see how the economy would react to the crisis. Some private projects weredeveloped, but at a slower pace. This impacted domestic production and imports, whichwere reduced by about 40% during 2008.For 2010, the Federal Government is planning to continue with the Infrastructure Planannounced by President Calderon in July 2007, which proposes investments of 6 billion USDfor the construction of five new ports (some are new terminals at current ports) and 22modernization projects. It also includes projects for new cargo facilities at several airports,the construction and modernization of 17,000 kilometers of roadways, USD 4 billion toincrease rail track speeds from 25 to 40 km/hour on key routes, the implementation of 10new multimodal corridors, the construction of 12 new intermodal terminals, and themodernization of existing terminals. The development of these projects could incentivize thesector again, and promote a recovery in imports and domestic production. However, it willtake several years to recover the impetus that existed prior to the downturn.It is expected that most maritime ports will continue expanding their facilities. The Port ofManzanillo just awarded a concession to build and operate a second container terminal. ThePort of Guaymas inaugurated two new terminals in 2009, one for minerals and one for fluids.The port of Veracruz continues with its expansion project, and other ports are also improving

and expanding facilities and services. The Mexican Pacific Coast ports are trying to offer analternative to U.S. importers using the ports of Los Angeles and Long Beach.Some companies are trying to develop new logistics services for pharmaceutical andmedical supply chains that need special conditions for transportation, warehousing andhandling. This niche represents important opportunities for U.S. companies that offerthese services or offer products for this kind of specialized logistics service.Additionally, most transportation entities are looking for the best technologies to improvetheir services, increase customer satisfaction, assure cargo security, and promote anefficient transportation system that supports Mexico’s competitiveness in a global worldeconomy. Even with the current economic crisis, these trends have resulted in animportant demand for all kinds of equipment and services that can help increase theefficiency of the transportation and logistical sector in Mexico.Best Products/ServicesReturn to topDomestic production comprises low-tech equipment (such as front loaders, nonsophisticatedtraffic control systems, open and closed freight cars, and rail track fixtures)and strong production of trucks and trailers, including international corporations such asChrysler, Freightliner, Mercedes Benz, International, and Kenworth. However, all highcapacitycranes, railroad and lifting equipment are imported. Under NAFTA, mostequipment for intermodal transportation manufactured in the U.S. is imported duty free.Products having the best prospects in this market include: frame, mobile and rotarycranes, self-propelled cranes on tires, front loaders with a capacity of over 7 tons, mobileplatforms, traffic- control equipment, diesel electric locomotives, railway maintenanceservice vehicles, rail and tramway freight cars, automatic unloading wagons, coveredand closed cars, assemblies for railway vehicles, containers, chassis, and trailers.OpportunitiesReturn to topFrom January to October 2009, the U.S. supplied 55% of the sector’s total imports. Thisshare could be increased if American firms take full advantage of NAFTA conditions andbecome more aggressive in the sector. The U.S. Commercial Service can provideinformation on new projects and support introduction of products into this market.ResourcesReturn to topSecretary of Communications and Transportation: www.sct.gob.mxNational Association of Private Transportation:http://www.antp.org.mx/National Cargo Transportation Chamber of Commerce: www.canacar.com.mxExpo Transporte:http://www.expotransporteanpact.com.mx/For more information on the transportation sector in Mexico, please contact:Ms. Alicia Herrera, Senior Commercial SpecialistU.S. Commercial Service, Mexico CityAlicia.Herrera@mail.doc.govTel: (011-52-55) 5140-2629Fax: (011-52-55) 5566-1111

Travel and Tourism ServicesOverviewReturn to top2008 2009 (estimated) 2010 (estimated)Total Arrivals from Mexico 13.7 12.0 12.4Percent Change -4% -12% 3%Total Air Arrivals 1.71 1.50 1.55Percent Change -9% -12% 3%Source: Figures in millions. U.S. Department of Commerce, ITA, Office of Travel and Tourism Industries;Bureau of Economic Analysis.The United States is the top destination for Mexican travelers. In 2008, 13.7 millionMexicans traveled to the United States, representing almost a quarter of the total foreignarrivals to the country. Despite Mexico’s decline in 2008 and anticipated decline in 2009,the country is the second source of international travelers to the United States just afterCanada.In 2008, spending by Mexican travelers totaled $9.7 billion. Approximately 75% of thistotal spending is tied to the 1.7 million Mexicans who traveled to the United States viaair. According to the U.S. Department of Commerce’s Office of Travel and TourismIndustries, in 2009 the Mexican market will post a decline of 12%, and in fact,preliminary figures for 2009 show a 12% decrease in travelers from Mexico to the UnitedStates. This reality makes more compelling the need to actively promote U.S.destinations.Nevertheless, 2010 is looking better as the Mexican economy shows signs ofrebounding. In 2010, Mexican travelers to the U.S. should rise by 3% to reach 12.4million.Best Products/ServicesReturn to topIt is important to differentiate between those Mexican visitors traveling by land and air tothe United States. Mexican land tourists usually travel to the southern states for a shorttime period in order to visit relatives or friends and to shop. In contrast, air travelersusually stay longer and buy packages that include transportation, lodging, shopping, andrecreational activities. These tourists are particularly lucrative since they are the oneswho generate most of the travel and tourism receipts to the United States.The Mid-Atlantic and the Pacific regions maintain the largest market shares for Mexicantravelers to the United States. The top four “first intended” destinations, that are notstrictly border visits, are California, Texas, Arizona, and Nevada. The list also includesNew Mexico, Colorado, New York, Illinois and Georgia.OpportunitiesReturn to topMexicans are drawn to the United States because of its variety of destinations,accommodations and modern infrastructure, and excellent travel and tourism services.In particular, Mexicans enjoy destinations that offer shopping, gaming, entertainment,amusement parks, and a cosmopolitan environment. Natural parks and other outdoor

destinations are typically not popular among Mexico with skiing being the notableexception – Mexicans flock to resorts in Colorado and New Mexico in the winter monthsto ski.Wholesale operators in Mexico continue to be an important distribution channel in theMexican travel and tourism market. Wholesalers sell their packages to the travel agentswho provide their services to the end consumers. Mexicans prefer to make their travelarrangements through a travel agent, due to apprehension about providing their creditcard information through the internet. U.S. wholesalers and tour operators are becomingkey players in the Mexican market since they negotiate directly with U.S. travel andtourism services companies and are able to offer better prices and packages.Wholesalers in Mexico are now buying products and services from receptive touroperators in the United States to save money and facilitate processes.ResourcesOffice of Travel and Tourism Industries:U.S. Travel Association:Visit USA Committee Mexico:ExpoVacaciones USA Trade Show:Return to tophttp://tinet.ita.doc.govhttp://www.tia.orghttp://www.visitusa.com.mxhttp://www.expovacacionesusa.netFor more information on the travel and tourism sector, please contact:Mr. Juan Carlos Ruiz, Commercial AssistantU.S. Commercial Service, U.S. Embassy Mexico CityJuanCarlos.Ruiz@trade.govTel: (011-52-55) 5140-2654Fax: (011-52-55) 5535-1139

Agricultural SectorsReturn to topOverviewReturn to topUnder NAFTA, Mexico has become one of the largest and fastest growing markets forU.S. agricultural products and one of the best opportunities in the world for U.S.exporters of food products. However, Mexico’s economic performance fell significantlyin 2009, due in part because of Mexico’s dependence on the U.S. economy as well asthe initial effects of the global financial crisis. On average, real GDP growth for 2009decreased by an estimated -8.0 percent, compared to the modest 1.4 percent growthrate recorded in 2008. Experts predict that Mexico’s GDP will rebound by approximately2.8 percent in 2009. Likewise, the Mexican peso has already lost approximately 25percent of its value relative to the dollar over the past year and uncertainty remainsabout the peso’s future stability. Since the end of October 2008, the peso fell from 10pesos to 13.50 pesos per U.S. dollar despite the Central Bank of Mexico’s interventions.The Mexican peso remains around 13 pesos per dollar and many experts expect thepeso to hover near this exchange rate for the near future. While foreign currencyremittances will benefit some families due to this depreciating exchange rate, overallremittances from the United States and Europe were 20 percent lower in 2009 than in2008 and are expected to remain down as migrant labor returns to Mexico. ForeignDirect Investment (FDI) reached $18.8 billion in 2008, but FDI that Mexico had receivedbetween January and September 2009 summed $9.75 billion dollars, a decline of 37%over the same period last year.Overall demand for U.S. agricultural products is expected to remain relatively stable in2010 until there is an upturn in the Mexican economy. Mexican consumers have lessmoney to spend, due to the economic slowdown and decline in foreign remittances fromMexican workers in the United States and Spain. The Mexican agricultural sectoraccounts for approximately 3.8 percent of GDP.Despite the exchange rate effect, overall market share is not likely to be affected, as thegeographic and tariff advantages that the U.S. enjoys in Mexico are likely to continue tomake the U.S., by far, the best import option for most major agricultural goods. Theproducts most likely to be affected are high-value agricultural products, such as redmeats and some processed products. The only products likely to sufferdisproportionately are those affected by Mexico's imposition of punitive tariffs due to theU.S. Government's suspension of the U.S.-Mexico Cross-Border TruckingDemonstration Project.While it is too early to predict the value of agricultural trade in Calendar Year (CY) 2010,trade is most likely to remain relatively stable, although growth will be less than theaverage annual growth rates in agricultural trade seen under NAFTA, of 9 percent peryear, and well below the 25 percent growth seen in Fiscal Year (FY) 2008. Agriculturaltrade is not expected to increase until a recovery is posted, which is not predicted untilthe end of the first quarter of 2010 or later.Total U.S. agricultural, fishery, and forestry exports for CY 2008 reached $16.6 billion,an increase of 25 percent over the previous year’s level exports. However, due to theeconomic and financial crisis which began in late 2008, U.S. exports to Mexico in 2009are down 22.3 percent (January through October comparison) compared to 2008.

The United States’ major agricultural exports to Mexico from January to October 2009were ($US Billion): red meat ($1.3), coarse grains ($1.5), soybeans and meal ($1.5),poultry meat ($0.47), dairy products ($0.53), fresh fruits and vegetables ($0.39), wheat($0.4), cotton ($0.3)m, and feeds and fodder ($.3).The following tables summarize the market situation of commonly exported U.S.agricultural products:1.- Dairy Products (1000 Metric Tons)2007 2008 2009Total Market Size 1/ 11,854 12,039 12,285Total Local Production 11,480 11,686 11,940Total Exports 8 17 15Total Imports 374 353 345Imports from the U.S. 2/ 316 327 3001/ PSD Post Statistics, Foreign Agricultural Service2/ World Trade AtlasNon-fat dry milk (NFDM) exports from the U.S. to Mexico increased a moderate 4percent in 2009. The large increase of U.S. exports to Mexico witnessed in 2008 was adirect result of NAFTA being fully implemented. Many factors continue to weigh on theMexican dairy sector such as the financial crisis and the presence of noncompetitivedairy producers. Given the current poor economic situation and the politicalenvironment, LICONSA, a state-run dairy enterprise, will continue to increase purchasesof domestically produced milk and reduce its imports of non-fat dry milk (NFDM).However, since dairy products are basic ingredients in the Mexican diet, Mexico’s fluidmilk production is expected to continue to grow, leading to increased production ofcheese, butter, powdered milk, and other dairy products.2.- Red Meat (1000 Metric Tons)1/ PSD Post Statistics, Foreign Agricultural Service2007 2008 2009Total Market Size 1/ 3,641 3,704 3,677Total Local Production 2,787 2,761 2,777Total Exports 122 133 131Total Imports 854 943 900Imports from the U.S. 2/ 525 605 6312/ World Trade AtlasDue to the international economic crisis, weak demand, a volatile exchange rate andlower gross family incomes, the rate of growth for red meat consumption in Mexico isexpected to decline. Many middle and lower income consumers are expected to switchaway from red meats to cheaper protein sources. U.S. beef exports to Mexico weredown 83 percent in 2009. Live calf and red meat exports are forecast to increase in themedium term. 2009 was a difficult year for pork in Mexico due to the H1N1 outbreak.Early on during the outbreak, the Mexican press consistently used the term “swine flu,”which increased fears and resulted in lower consumption and domestic production.However, lower prices, an effective media consumption campaign, and increased

availability of pork products could stimulate demand, and therefore production, onceagain.3.- Poultry Meat (Chicken & Turkey) (1000 Metric Tons)2007 2008 2009Total Market Size 1/ 3,295 3,506 3,516Total Local Production 2,698 2,868 2,825Total Exports 9 4 5Total Imports 597 638 691Imports from the U.S. 2/ 542 587 5901/ PS&D Post Statistics, Foreign Agricultural Service 2/ World Trade AtlasThe United States continues to be the largest supplier of poultry products to Mexico,supplying approximately 90 percent of total poultry imports. Currently, the only othersupplier active in Mexico is Chile, with approximately 10 percent of the poultry importmarket. The top three products imported by Mexico are fresh or chilled mechanicallydeboned chicken meat, fresh and chilled turkey parts, and frozen chicken leg quarters,although imports of poultry products are increasingly diversified. Most of these importsare used in food manufacturing. Mexican chicken meat production declined about 1.5percent in 2009. Such a decline has not occurred for over a decade and is attributed tothe economic downturn, industry consolidation, imported grain prices, and continuedcompetition from poultry imports. The typical Mexican consumer continues to enjoychicken, turkey, and egg products at competitive prices.4.- Soybeans (1000 Metric Tons)2007 2008 2009Total Market Size 1/ 3,583 3,360 3,610Total Local Production 76 160 160Total Exports 0 0 0Total Imports 3,507 3,200 3,450Imports from the U.S.1/ 3,507 3,200 3,4501/ PSD Post Statistics, Foreign Agricultural ServiceU.S. soybean exports to Mexico are expected to increase in 2009/2010 as result ofincreased demand from the livestock sector, mainly poultry. The poultry sectorcontinues to be the major consumer of soybean meal in Mexico, and it is expected thatproduction will increase in 2010, even in light of the financial crisis. Although theweakening of the Mexican peso relative to the U.S. dollar has affected U.S. exports, anincrease in feed usage continues to drive the soybean market.Soybean oil production in 2009/2010 is expected to increase as a result of reducedcrush and an increase in soybean imports from the United States. Soybean oilcontinues to be the dominant oil consumed in Mexico, capturing 65 percent of themarket share. Likewise, imports of soybean meal for 2009/2010 are also expected toincrease due to strong demand from the poultry sector.

5.- Fresh Fruit (apples, pears, grapes) (1000 Metric Tons)2006/07 2007/08 2008/09Total Market Size 1/ 1,037 1,154 1,094Total Local Production 678 796 715Total Exports (grapes) 112 177 156Total Imports 359 358 380Imports from the U.S. 2/ 233 308 3421/ PSD Post Statistics, Foreign Agricultural Service2/ World Trade AtlasThe United States is the largest supplier of apples to the Mexican market, in spite ofantidumping duties, and this trend is projected to continue. However, apple imports for2009/2010 are expected to decrease about 13 percent from previous levels as a result oflower demand for imported fruit and expected higher prices. Apple import levels willdepend heavily on the peso/dollar exchange rate. The domestic supply of pears is alsosupplied by imports, primarily from the United States and this trend is expected tocontinue. In addition, the United States is the main exporter of table grapes to Mexico,but U.S. table grape exports will suffer this year due to the 45-percent tariff imposed inretaliation for cancellation of the U.S.-Mexico Cross-Border Trucking DemonstrationProject.Best Products/ServicesReturn to topMexico imported US$16.6 billion of U.S. agricultural, fish, and forestry products in 2008.This figure for 2009 is expected to be lower, approximately $13 billion, as importscontinue to be affected by the economic downturn and the adverse exchange rate. Thedecrease in U.S. exports has occurred across many product categories such as wheat;coarse grains; soybeans and products including meal and oil; feeds and fodders(excluding pet foods); animal fats; sugars, sweeteners and beverage bases; snackfoods; poultry meat; dairy products; fresh fruits and vegetables; fruit and vegetablejuices; wine and beer; logs and chips; softwood and treated lumber; salmon and salmonproducts; crab and crabmeat. However, 2010 imports of many products could see animportant turnaround if the Mexican economy comes out of the recession as expected.

Mexico - Imports from the U.S.(In millions of U.S. Dollars; Calendar Year Information)PRODUCT 2006 2007 2008 Jan-Oct2009Wheat 418.7 631.7 1,028.1 414.5Wheat Flour 10.7 17.9 17.5 17.2Coarse Grains 1,403.8 1,822.3 2,671.2 1,503.0Rice 204.5 242.2 353.0 283.4Soybeans 906.8 1,160.8 1,783.6 1,100.5Peanuts 24.7 40.6 37.5 42.8Soybean Meal 376.9 438.9 560.8 444.9Soybean Oil 60.3 136.1 286.0 135.0Feeds and Fodders (excl. Pet 178.9 261.3 402.0 319.3Foods)Live Animals 59.9 77.6 120.0 67.2Animal Fats 197.7 363.5 391.7 269.6Sugars, Sweeteners and 234.4 334.0 338.1 231.0Beverage BasesSnack Foods (excl nuts) 244.1 248.8 350.9 266.4Poultry Meat 456.5 489.3 572.1 465.5Dairy Products 444.3 858.5 928.1 526.0Fresh Fruit 284.8 333.2 429.9 271.8Fresh Vegetables 120.9 136.8 171.5 119.4Fruit and Vegetable Juices 29.9 35.2 54.8 42.7Wine/Beer 84.0 97.9 107.4 82.5Logs and Chips 13.1 28.9 16.7 7.9Softwood and Treated Lumber 109.9 117.3 113.7 78.7Salmon Whole and Canned 1.9 4.4 4.1 2.2Crab and Crabmeat 1.1 2.2 3.7 0.9Source: USDA bulk, intermediate, and consumer-oriented agricultural product data.Other products that have steady sales in the market include:Other Mexico Imports from the U.S.(In millions of U.S. Dollars; Calendar Year Information)PRODUCT 2006 2007 2008 Jan-Oct2009Cotton 412 422 475.3 330.0Red Meats1,634 1,584 2,021.7 1,294.7(fresh/chilled/frozen)Processed Fruits and 432 426 465.3 353.8VegetablesSource: USDA bulk, intermediate, and consumer-oriented agricultural product data.

ResourcesReturn to topThe USDA’s Foreign Agricultural Service offices in Mexico, including Agricultural TradeOffices in Mexico City and Monterrey and the Office of Agricultural Affairs at the U.S.Embassy in Mexico City, publish more than 100 publicly accessible market reportsannually. The reports can be accessed at:http://www.fas.usda.gov/scriptsw/AttacheRep/default.aspReturn to table of contents

Return to table of contentsChapter 5: Trade Regulations and Standards• Import Tariffs• Trade Barriers• Import Requirements and Documentation• U.S. Export Controls• Temporary Entry• Labeling and Marking Requirements• Prohibited and Restricted Imports• Customs Regulations and Contact Information• Standards• Trade Agreements• Web ResourcesImport TariffsReturn to topUnder the terms of the NAFTA, Mexico eliminated tariffs on all remaining industrial andmost agricultural products imported from the United States on January 1, 2003. Theremaining tariffs and non-tariff restrictions on corn, sugar, milk powder, orange juice, anddried beans were phased out as of January 1, 2008.Nevertheless, in reaction to the U.S. Congress halted the Cross-Border Trucking PilotProgram, Mexico imposed duties ranging from 10 to 20 percent on a variety of U.S.exports as of March 19, 2009. Products affected by these duties include onions,almonds, dates, peanuts, cherries, wine, beauty products, tooth paste and other oralcare products, plastic and glass ware, yarn, jewelry, and household appliances.A number of U.S. exports are subject to antidumping duties that limit access to theMexican market. Products subject to these duties currently include beef, apples,epoxidized soy oil, liquid caustic soda, monoethylene glycol mono butyl ether,ammonium sulfate, stearic acid, partially hydrogenated fatty acid, bond paper, andwelded carbon steel pipe. The United States exempted Mexico from the now expiredsafeguard action on steel.Mexico also has implemented what are called “Sectoral Promotion Programs(PROSEC)” which reduce MFN tariffs to 0 or 5 percent on a wide range of importantinputs needed by Mexico’s export manufacturing sector. This program includes some 20different industry sectors and affects 16,000 tariff line items. Mexican companies mustbe registered under this program to participate, and it can be difficult to qualify.All NAFTA-compliant products imported definitively into Mexico no longer need to paythe customs processing fee (CPF). Products temporarily imported for processing andre-export may be subject to the CPF since the imports are not considered “definitive.”Mexico has, in addition, a value-added tax (IVA) on most sales transactions, includingsales of foreign products. The IVA is 11 percent for products staying in the Mexican

order region and 16 percent for products that enter the interior of Mexico. Basicproducts such as food and drugs (but not processed foods) are exempt from the IVA.A special tax on production and services (IEPS) is assessed to the importation ofalcoholic beverages, cigarettes and cigars, among others. This tax may vary from 25 to160 percent depending on the product.Where an "arms length" transaction does not exist between seller and importer, such asintra-company sales or transfers, Mexico applies valuation rules that are compatible withthe Brussels Customs Valuation Code. Goods for which the NAFTA preferential tarifftreatment is not requested are valued on a C.I.F. basis.Trade BarriersReturn to topUnder the NAFTA, there are virtually no tariff barriers for U.S. exports to Mexico, with theexception as noted above.U.S. companies do, however, face certain non-tariff barriers when exporting to Mexico.In November 1992, Mexico published a list of goods (with several subsequent updatesand expansions previously susceptible to fraudulent customs under-valuation andestablished a "minimum estimated price" for such goods.Minimum estimated prices, also referred to as a “reference price”, no longer affect goodsother than used cars, as per resolution published in the Diario Oficial on April 21, 2008.Please refer to the automotive industry best prospects section for further details.Certain sensitive products must obtain an import license for which the difficulty variesaccording to the nature of the product. Periodically, the Mexican government publisheslists that identify the different items that have a specific import control. Items areidentified according to their Harmonized System (HS) code number; therefore, it isimportant that U.S. exporters have their products correctly classified. U.S. exporters areencouraged to check with customs brokers as to the accurate classification of theirproducts.The following are examples of import licenses required and the Mexican governmentagencies that administer the particular licenses. Note that this is not a complete list.• The Secretariat of Economy requires import licenses for weapons and ammunition,used goods, and refurbished equipment, among others.• The Secretariat of Agriculture (SAGARPA) requires prior import authorization forsome leather and fur products, fresh/chilled and frozen meat, and agriculturalmachinery among others.• The Secretariat of Health (SSA) requires either an “advance sanitary importauthorization” or “notification of sanitary import" for medical products and equipment,pharmaceuticals, diagnostic products, toiletries, processed food, and certainchemicals. Food supplements and herbal products are highly regulated in Mexico,unlike in the United States. In some cases only pharmaceutical-like companies maybe eligible to import them.

• The Secretariat of the Environment (SEMARNAT) requires import authorizations forproducts made from endangered species such as eggs, ivory, certain types of wood,furs, etc.• Toxic and hazardous products have to comply with import authorization from aninteragency commission called CICOPLAFEST which has representation from thefour agencies mentioned above. This list includes a large number of organic andinorganic chemicals.Commercial samples of controlled products shipped by courier are also subject to theseregulations. In the case of liquid, gas or powdered products, as of June 2008, they areno longer eligible to be shipped by courier, even in small quantities. Instead, theseproducts must be shipped as a regular full-scale shipment would, with the consequentialuse of a customs broker. Some special treatment may apply in the case of samplesintended for research, product registration or certification. Unless returned at thesender's expense, Customs often confiscates or destroys samples lacking the properdocumentation.Import Requirements and DocumentationReturn to topFor tax purposes, all Mexican importers must apply and be listed on the “Padrón deImportadores” maintained by the Secretariat of Finance and Public Credit (Hacienda). Inaddition, Hacienda maintains special sector registries. To be eligible to import morethan 400 different items, including agricultural products, textiles, chemicals, electronics,and auto parts, Mexican importers must apply to Hacienda to be listed on these specialindustry sector registries. Infrequently, U.S. exporters have encountered problems whenproducts are added to the list without notice or importers are summarily dropped fromthe registry without prior notice or subsequent explanation.The basic Mexican import document is the "pedimento de importación." This documentmust be accompanied by a commercial invoice (in Spanish), a bill of lading, documentsdemonstrating guarantee of payment of additional duties for undervalued goods (see"Customs Valuation") if applicable, and documents demonstrating compliance withMexican product safety and performance regulations (see "Standards"), if applicable.The import documentation may be prepared and submitted by a licensed Mexicancustoms house broker or by an importer with sufficient experience in completing thedocuments.Products qualifying as North American must use the NAFTA Certificate of Origin in orderto receive preferential treatment. This must be issued by the exporter and does nothave to be validated or formalized.Unless the importer is accredited to act as Mexican customs broker, the participation ofa professional customs broker is necessary to ensure compliance with Mexico's customsregulations. Mexican customs law is very strict regarding proper submission andpreparation of customs documentation. Errors in paperwork can result in fines and evenconfiscation of merchandise as contraband. Exporters are advised to ensure thatMexican clients employ competent, reputable Mexican importers or customs housebrokers. Because customs brokers are subject to sanctions if they violate customs laws,some have been very restrictive in their interpretation of Mexican regulations andstandards.

U.S. Export ControlsReturn to topMexico is not subject to any special U.S. export control regulations, and is designated asa Category I country (the least restrictive) for receipt of U.S. high technology products.Temporary EntryReturn to topTemporary imports for manufacturing, transformation, and repair under the Maquila andPitex programs are subject to payment of duties, taxes and compensatory fees. At theend of 2006, the Pitex program was transformed into IMEX (Industria Maquiladora paraExportacion.) Other temporary imports from the United States, however, do not payimport duties, taxes or compensatory fees, but they must comply with all otherobligations set forth in Article 104 of the Mexican Customs Law. There are differenttypes of temporary imports into Mexico, including:a) Temporary imports to be returned in the same condition;b) Instruments of foreign artists;c) Temporary imports for cultural and sporting events;d) Temporary imports for conventions, congresses and trade shows; ande) Temporary imports for the press, journalism, and cinematography.The procedures for category (a) are as follows: Category (a) applies to temporaryimports that remain in Mexico for a limited time and with a specific purpose and arereturned to the U.S. in the same condition and within the time limits established in theLaw (Art. 106). Such is the case of demonstration equipment that is temporarilyimported into Mexico for exhibitions or sales visits. In such cases, U.S. representativesdo not need to contract the services of a Mexican customs broker, and may themselvesdo the declaration of the products to Mexican Customs, using the declaration lane at thetime of entry. Overlooking this requirement may result in the confiscation of the productswithout possibility of recovery, unless a high penalty fee is paid to the MexicanGovernment. Temporary imports may remain in Mexico for up to six months.In the case of medical devices, interested parties need to request an import permit forthe specific show. The request needs to be submitted by a Mexican companyauthorized to sell/distribute medical devices in Mexico.The import is processed under a temporary importation form and there are basicrequirements to obtain the clearance from Customs, including:1. A list of the products for temporary importation into Mexico;2. A letter from the U.S. company stating that the product(s) is for temporary entryinto Mexico and that it will not be sold;3. A letter from the Mexican partner or company indicating that they take fullresponsibility for ensuring that the products are returned to the United Stateswithin the period allowed. The letter should also indicate that there is a businessrelationship between the Mexican party and the importer;4. Preparation of a Temporary Customs Entry form (Pedimento de ImportaciónTemporal);

5. The list of the products to be temporarily imported into Mexico must also bepresented to U.S. Customs before the equipment enters Mexico in order tofacilitate the duty free return to the U.S.For temporary imports related to the manufacture, transformation, or repair under theMaquila and IMEX programs, exporters should obtain expert advice from a Mexicancustoms broker or other consultant with expertise in this area. More detailed informationon this and the other categories of temporary imports may be obtained from the IndustrySector Analysis report, “Customs Procedures for Exporting to Mexico (March 2002)”available from the internet on www.buyusa.com, or by contacting the U.S. CommercialService office in Tijuana (see contact list in Chapter 9).Labeling and Marking RequirementsReturn to topAll products intended for retail sale in Mexico must bear a label in Spanish prior to theirimportation to Mexico. Products that must comply with commercial andcommercial/sanitary information NOM's must follow the guidelines as specified in theapplicable NOM.For more detailed information see the “Labeling and Marking” in the Standards sectionbelow.Prohibited and Restricted ImportsReturn to topImport and/or export of the following products are prohibited in Mexico:1211.90.02 Marijuana (Cannabis indica)1302.11.02 Opium (bulk or powder)1302.19.02 Cannabis extracts2903.59.03 1,2,3,4,10,10-Hexachloro-1,4,4a,5,8,8a-hexahydro-endo-endo-1,4:5,8-dimethanenaftalene (Isodrin)2910.90.01 1,2,3,4,10,10-Hexachloro-6,7-epoxy-1,4,4a,5,6,7,8,8a-octahydroendo,endo-1,4:5,8-dimethanenaftalene (Endrin)2925.19012931.00.05 O-(4-bromo-2,5-dichlorophenyl) O-methyl phenylphosphonothioate(Leptophos)2939.11.01 Heroin3003.40.01 Preparations based on Cannabis3003.40.02 Preparations based on Acetyl Morphine its salts or derivatives3004.40.02 Preparations based on Cannabis (retail)4908.90.05 Garbage Pail Kids decals4911.91.05 Garbage Pail Kids cardsSource: Mexican Custom’s List of Prohibited and Restricted Items:http://www.aduanas.sat.gob.mx/aduana_mexico/2008/pasajeros/139_16781.htmlIn the case of medical devices and health care products, besides complying withapplicable standards, foreign manufactured products need to have a legally appointedrepresentative/distributor in Mexico and be registered with the Secretariat of Health(SSA), prior to being sold in Mexico. With the exception of blood, blood derivate products

and organs, almost all medical products can be imported into Mexico, if they comply withthe regulations.Customs Regulations and Contact InformationReturn to topU.S. exporters continue to be concerned about Mexican customs administrationprocedures, including insufficient prior notification of procedural changes, inconsistentinterpretation of regulatory requirements at different border posts, and unevenenforcement of Mexican standards and labeling rules. Complaints have been increasingrecently for certain products, in spite of the fact that Mexican Customs has been puttingprocedures in place to address issues of non-uniformity at border ports of entry.Agricultural exporters note that Mexican inspection and clearance procedures for someagricultural goods are long, burdensome, non-transparent and unreliable. Customsprocedures for express packages continue to be burdensome, though Mexico has raisedthe de minimus level to fifty dollars from one dollar. However, Mexican regulation stillholds the courier 100 percent liable for the contents of shipments.Contact Information:Servicio de Administración TributariaRepresentation OfficeEmbassy of Mexico1911 Pennsylvania Ave. NWWashington DC 20006Tel. (202) 728-1621Fax. (202) 728-1664Administración General de Aduanas (General Customs Administration)From the U.S. 1 877 448 8728www.aduanas.sat.gob.mxStandardsReturn to top• Overview• Standards Organizations• Conformity Assessment• Product Certification• Accreditation• Publication of Technical Regulations• Labeling and Marking• ContactsOverviewReturn to topTraditionally, the Government of Mexico (GOM) had been the primary actor indetermining product standards, labeling and certification policy, with little input from theprivate sector and less from consumers. As a result, independent standards andcertification organizations like those in the United States were virtually non-existent inMexico. In 1992, the Ministry of Economy (SE-Secretaria de Economía) initiated effortsto reverse this situation, shifting the responsibility for the formulation of voluntarystandards to the private sector or to mixed commissions.

In 1992, the Mexican Government undertook an ambitious project to revamp its entiresystem for formulating product standards, testing, and labeling and certificationregulations. The cornerstone of this review is the Federal Law of Standardization andMetrology (Ley Federal de Metrología y Normalización-LFMN) enacted on January 26,1988 and updated in 1992. It provided for greater transparency and access by thepublic and interested parties to the standards development process, and has resulted ina reduction of obligatory product standards. This process is not without its problems, butthe Mexican Government has been receptive to U.S. concerns and willing to resolvethese problems.The SE (Ministry of Economy), through its General Bureau of Standards (DGN –Dirección General de Normas), is the organization with the authority to manage and tocoordinate the standardization activities in the country. Its authority derives from theLFMN. The implementing regulations (Reglamento de la Ley Federal sobre Metrología yNormalización) were published in the Official Gazette (Diario Oficial, DOF) on January14, 1999. In accordance with the Federal Law, the Law of Metrology andStandardization and its Regulation (Reglamento de la Ley Federal sobre Metrología yNormalización), the National Program of Standardization (Programa Nacional deNormalización, PNN) is published annually in the Diario Oficial (DOF), which is theofficial document used to plan, inform and coordinate the standardization activities, bothpublic and private, carried out by the Mexican Government.Finally, two definitions are important to keep in mind:1. NOMs – literally: Mexican Official Standards – these are Technical Regulations,including labeling requirements, issued by government agencies and ministries.Compliance is mandatory.2. NMX – Mexican “Voluntary” Standards – these are voluntary standards issued byrecognized national standards-making bodies. Compliance is mandatory only when aclaim is made that a product meets the NMX, when a NOM specifies compliance, andwhenever applicable in government procurement.Standards OrganizationsReturn to topIn addition to the General Bureau of Standards (DGN) of the Ministry of Economy,organizations that develop NOMs – Technical Regulations include:• ECONOMIA (Commerce)• SAGARPA (Agriculture)• STPS (Labor)• SCT (Communications & Transportation)• SECTUR (Tourism)• SEDESOL (Social Development)• SEMARNAT (Environment)• SENER (Energy)The DGN (Dirección General de Normas) publishes the National Standardization Plan(PNN – Plan Nacional de Normalización) twice a year. It is available on the DGNwebsite. Contact information is listed at the end of this chapter.

Organizations that develop NMX – Mexican “Voluntary” Standards include:• ANCE (Electrical)• IMNC (Quality Systems)• INNTEX (Textiles)• ONNCCE (Construction)• NORMEX (Food Products and Quality Systems)• NYCE (Electronics)NIST Notify U.S. ServiceMember countries of the World Trade Organization (WTO) are required under theAgreement on Technical Barriers to Trade (TBT Agreement) to report to theWTO all proposed technical regulations that could affect trade with other Membercountries. Notify U.S. is a free, web-based e-mail subscription service that offersan opportunity to review and comment on proposed foreign technical regulationsthat can affect your access to international markets. Register online at InternetURL: http://www.nist.gov/notifyus/NIST Notify U.S. ServiceMember countries of the World Trade Organization (WTO) are required under theAgreement on Technical Barriers to Trade (TBT Agreement) to report to theWTO all proposed technical regulations that could affect trade with other Membercountries. Notify U.S. is a free, web-based e-mail subscription service that offersan opportunity to review and comment on proposed foreign technical regulationsthat can affect your access to international markets. Register online at InternetURL: http://www.nist.gov/notifyus/Conformity AssessmentReturn to topUnder the NAFTA, Mexico was required, starting January 1, 1998, to recognizeconformity assessment bodies in the United States and Canada on terms no lessfavorable than those applied in Mexico. Recently, after years of negotiation, two U.S.certification bodies have finally been accredited, with others expected to follow suit.Based on agreements with other agencies, as well as with other certificationorganizations, the General Bureau of Standards (DGN) of the Ministry of Economy hasestablished procedures for the certification of products to both Technical Regulations(NOMs) and Voluntary Standards (NMXs).Conformity Assessment procedures issued by the SE/DGN tend to be more fullydeveloped and cover a significantly greater range of NOMs than those of other ministrieswho develop NOMs.Product CertificationReturn to topFor the purposes of the certification procedure, the following definitions are issued:Product Certification: Proof of compliance with the applicable Mexican standard. Anaccredited certification body must issue these certificates.

DGN: General Bureau of Standards, Ministry of Economy (SE). This agency authorizesthe operation of certification and calibration laboratories and verification units, accordingto the Federal Law of Standardization and Metrology.Accredited Laboratory: Institutions authorized to test or calibrate products subject toMexican standards.Accredited Unit for Sampling Verification: Third-party authorized inspection and productsampling.NOM: Technical Regulation (mandatory)NMX: Mexican Standard (voluntary)Product Certification Organization: Product Certification Organization accredited by DGNthrough EMA (Entidad Mexicana de Acreditación – Mexican Accreditation Agency)Quality System Certification Organization: Organization accredited by DGN throughEMA to certify Quality Assurance Systems.MRAs (mutual recognition agreements)There is a significant number of MRAs (mutual recognition agreements) betweenMexican and U.S. organizations. However, at present, none of these agreementsexempt U.S. products from complying with all applicable Mexican technical regulationsand product certification requirements. MRAs are mainly to recognize testingprocedures. U.S. exporters should check with the appropriate Mexican certification bodyas to the existence of any MRAs.AccreditationReturn to topIn 1999, the Mexican government authorized the first private organization to accreditconformity assessment bodies (calibration laboratories, certification bodies, testlaboratories, and verification/inspection units). This private non-profit institution is knownas EMA (Entidad Mexicana de Acreditación - Mexican Accreditation Entity).Calibration Laboratories:Calibration laboratories are responsible for transferring the precision of referencestandards to the measurement instruments used in the commercial and industrialsectors. The calibration laboratories can be sponsored by public or privateorganizations, including universities, professional associations and private companies.Individuals interested in performing calibration activities can obtain certification aftermeeting the certification requirements set by law.Committees, made up of technicians and specialists in metrology, evaluate applicationsfor certification as calibration laboratories. These committees make recommendations tothe DGN for final decisions on certification. The committees also establish the technicalspecifications for the evaluation of calibration laboratories, set the precisionrequirements for the calibration chains and set the methods for comparison of standards.

Certification Bodies:EMA has accredited several organizations for certifying compliance in different specificfields. These organizations include:ANCE – Asociación de Normalización y Certificación (product certification body for theelectric sector NOMs)CALMECAC - Calidad Mexicana Certificada, A.C. (Certified Mexican Quality).CNCP - Centro Nacional Para la Calidad del Plástico (Mexican Center for the Quality ofPlastic).CRT - Consejo Regulador Del Tequila (Tequila Regulation Council).IMNC - Instituto Mexicano De Normalización y Certificación, A.C. (Mexican Institute ofStandardization and Certification).INNTEX - Instituto Nacional De Normalización Textil, A.C. (Mexican Institute of TextileStandardization).NORMEX - Sociedad Mexicana de Normalización y Certificación, S.C. (Mexican Societyof Standardization and Certification).NYCE - Normalización y Certificación Electrónica (Electronic Standardization andCertification).ONNCCE - Organismo de Normalización y Certificación de la Construcción y Edificación(Building and Construction Standardization and Certification Body)UL de Mexico - Underwriters Laboratories de Mexico, S.A. de C.V.(Product certification body for electric and electronic equipment)Intertek (Product certification body for electric and electronic equipment)The DGN procedures currently in effect are those published on June 14, 1994.However, the procedures reflect current practices, except where noted as "notimplemented." A list of products by tariff number that must comply with a NOM waspublished in the Diario Oficial on July 6, 2007. See section 2.4 for the complete list.Test Laboratories:Test laboratories are responsible for certifying that products meet Mexican standardsand are normally commercial entities that make a profit from the testing of samples. TheDGN through EMA is responsible for granting authorizations to test laboratories afterreceiving the recommendations of the Test Laboratory Evaluating Committees (Comitésde Evaluación de Laboratorios de Pruebas).Each committee oversees a group of evaluators who visit the test laboratories, reviewtheir organization, capabilities, staffs, etc. Test laboratories must fully comply withstandard NMX-CC-13-1992 and Standard NMX-CC-14-1992, which set the proceduresfor approval of test laboratories. Once the evaluators have made their review, theysubmit a report to the committee. Then, the committee writes its recommendations to

the DGN, which, in turn, informs the laboratory of the results. Those applicants notreceiving authorization are permitted to make the necessary modifications to theirfacilities in order to comply with standards NMX-CC-13-1992 and NMX-CC-14-1992.After the committee verifies that the laboratory meets the requirements, a second reportis prepared for the DGN.Authorizations as Test Laboratories are valid for two years and can be renewed uponwritten request. Test laboratories are required to maintain their technical capabilities andto make any modifications that the committee may set. Test laboratories must notify theDGN of any change in equipment, location, and administration. Laboratories have theoption to withdraw their certification.Verification Units:Verification or inspection units check and provide a report or proof of compliancecorroborated either visually or by sampling, measuring, testing in laboratories, orexamining documents. Labeling NOMs, for example, do not require products to obtain acertificate of compliance; however, verification units can determine whether or not atechnical regulation has been correctly applied.On June 18, 2001, the Mexican standard NMX-EC-17020-IMNC-2000 (equivalent toISO/IEC 17020:1998) entered into force in order to make the accreditation process ofverification units consistent with international standards. Therefore, as of January 2002,the procedure to evaluate and accredit verification units became effective.Publication of Technical RegulationsReturn to topNational Gazette: The Mexican national gazette is the Diario Oficial de la Federación.Publication of Proposed Technical Regulations:In accordance with the Regulation of the Federal Law of Metrology and Standardization(Reglamento de la Ley Federal sobre Metrología y Normalización, LFMN), the NationalProgram of Standardization (Programa Nacional de Normalización, PNN) is the officialdocument used to plan, inform and coordinate the standardization activities, both publicand private, carried out by the Mexican government. The PNN is made up of a list oftopics that will be developed into Official Mexican Standards (NOMs), technicalregulations, Mexican Standards (NMX’s), and Reference Standards (NRF’s)--as well asapproximate a working calendar for each respective topic. The program is equallycomposed of information from the National Consulting Standardization Committees(Comités Consultivos Nacionales de Normalización), which are responsible for thecreation of NOMs; the Technical Committees of National Standardization (ComitésTécnicos de Normalización Nacional) and the National Standardization Bodies(Organismos Nacionales de Normalización), both of which are responsible for thecreation of NMXs; and 2 Standardization Committees (Comités de Normalización),responsible for the creation of NRF’s - standards created by governmental entities forgovernment procurement.The PNN is annually developed by the Technical Secretariat of the NationalStandardization Commission, revised by the Technical Council of the aforementionedentity, and approved by the National Standardization Commission (CNN, ComisiónNacional de Normalización) in its first meeting of every year.

The LFMN and its Regulation establish a time frame for each step of the NOM-makingprocess (development, draft publication in the Official Gazette (DOF), and publication ofmodified and definitive technical regulations and standards) and within the PNNframework, the accomplishment of these tasks is limited to the span of a year. Theactual NOM-making period, however, is contingent upon various factors, including thecomplexity of the topic and the uncertain period between each step (i.e. publishingperiod in the Official Gazette (DOF)—draft, response, comments, and final technicalregulation and standard). Therefore, evaluations of the PNN indicate, more often thannot, that the standardization process requires more than a year in order to adequatelymeet its objectives.U.S. entities can participate in the process in several ways. They can:• Review the PNN with the objective of learning about the topics to be standardized.• Request to be included in the applicable working group directly from the appropriateoffice (requires physical presence).• Present commentaries during the 60-day public consultation period.Solicit the making, modification, or cancellation of technical regulations and standards(NOM and NMX) to the appropriate government office or to a National StandardizationBody.Labeling and MarkingReturn to topAll products intended for retail sale in Mexico must bear a label in Spanish prior to theirimportation to Mexico. Products that must comply with commercial andcommercial/sanitary information NOMs must follow the guidelines as specified in theapplicable NOM. Most NOMs require commercial information to be affixed, adhered,sewn, or tagged onto the product, with at least the following information in Spanish:• Name or business name and address of the importer,• Name or business name of the exporter,• Trademark or commercial name brand of the product,• Net contents (as specified in NOM-030-SCFI-2006 DOF November 4, 2006),• Use, handling, and care instructions for the product as required,• Warnings or precautions on hazardous products.This information must be attached to the product, packaging or container, depending onthe product characteristics. This information must be affixed to products as prepared forretail sale. Listing this information on a container in which a good is packed for shipmentwill not satisfy the labeling requirement.NOMs do not explicitly state that country of origin is required on the label prior toimportation. However, Mexican fiscal regulations do require country of origindesignation, and the U.S. Department of Commerce recommends that exporters includethis information, in Spanish, on the labels they are preparing for goods destined for retailsale in the Mexican market. Along this line, including the importer's taxpayer number(commonly known as RFC) is recommended.

The commercial and commercial-sanitary NOMs currently in force are:NOM-003-SSA1-1993, Environmental health - Sanitary requirements with which paints,inks, varnishes, lacquers, and enamels must comply, published in the DOF on August12, 1994.NOM-004SCFI-2006, Commercial Information - Labeling of textile products, garmentsand accessories, published in the Diario Oficial de la Federación (DOF) onJune 21,2006.NOM-015-SCFI-2007, Commercial Information - Labeling of toys, published in the DOFon April 17, 2008.NOM-020-SCFI-1997, Commercial Information - Labeling of leather and leather-likegoods, shoes and accessories published in the DOF on April 27, 1998.NOM-024-SCFI-1998, Commercial Information for packaging, instructions, andwarranties of electric and electronic products and appliances, published in the DOF onJanuary 15, 1999.NOM-046-SSA1-1993, Pesticides - products for household use - labeling, published inthe DOF on October 13, 1995.NOM-050-SCFI-2004, Commercial information- General labeling of products, publishedin the DOF on June 1, 2004.NOM-051-SCFI-1994, General labeling specifications for pre packed food products andnon-alcoholic beverages, published in the DOF on January 24, 1996.NOM-055-SCFI-1994, Commercial Information - Fire retardants or inhibitors - publishedin the DOF on December 8, 1994.NOM-072-SSA1-1993, Labeling of medicines, published in the DOF on April 10, 2000.NOM-084-SCFI-1994, Commercial Information - Commercial and sanitary informationspecifications for pre packed tuna and bonito food products, published in the DOF onSeptember 22, 1995.NOM-116-SCFI-1997, Automotive industry - Commercial information of lubricant oils forgasoline or diesel engines, published in the DOF on May 4, 1998NOM-120-SCFI-1996, Commercial Information - Labeling of agricultural products -Grape, published in the DOF on November 22, 1996.NOM-128-SCFI-1998, Commercial Information - Labeling of agricultural products -Avocado, published in the DOF on August 31, 1998.NOM-129-SCFI-1998, Commercial Information - Labeling of agricultural products -Mango, published in the DOF on August 31, 1998.

NOM-137-SSA1-2008 Regulatory information - general labeling specifications formedical devices, whether or not imported, published in the DOF on December 12, 2008.NOM-139-SCFI-1999, Commercial Information - Labeling of vanilla extract, derivativesand substitutes, published in the DOF on March 22, 2000.NOM-141-SSA1-1995, Goods and services - Labeling of pre packed perfumery andbeauty products, published in the DOF on July 18, 1997.NOM-142-SSA1-1995, Goods and services. Alcoholic beverages. Sanitaryspecifications. Sanitary and commercial labeling published in the DOF on July 9, 1997.NOM-189-SSA1/SCFI-2002, Products and services. Labeling and packaging ofhousehold cleaning products, published in the DOF on December 2, 2002.ContactsReturn to topThe following is key contact information for the most relevant organizations in both thepublic and private sectors. For additional organizations, please contact the post.Mexican Public Sector:SE-Secretaria de Economía (Ministry of Economy)DGN-Dirección General de NormasURL: http://www.economia.gob.mx/?P=85SEMARNAT- Secretaria de Medio Ambiente y Recursos Naturales (Ministry of theEnvironment and Natural Resources)URL: http://www.semarnat.gob.mxSCT – Secretaria de Comunicaciones y Transportes (Ministry of Communications andTransportation)URL : http://www.sct.gob.mxCOFEPRIS (FDA's Mexican Counterpart)URL: http://www.cofepris.gob.mx/wb/cfp/inglesMexican Private Sector:ANCE – Asociación de Normalización y Certificación del Sector Eléctrico, A.C.(National Association for the Standards & Certification of the Electrical Sector)URL: http://www.ance.org.mxCOMENOR - Consejo Mexicano de Normalización y Evaluación de la Conformidad, A.C.(Mexican Council of Standardization and Conformity Assessment)URL: http://www.comenor.org.mxNYCE – Normalización y Certificación Electrónica, A.C.(Electronic Standards & Certification)URL: http://www.nyce.org.mx

INMC – Instituto Mexicano de Normalización y Certificación, A.C.(Mexican Standards & Certification Institute)URL: http://www.imnc.org.mxNORMEX – Sociedad Mexicana de Normalización y Certificación, S.C.(Mexican Standards & Certification Society)URL: http://www.normex.com.mxONNCCE – Organismo Nacional de Normalización y Certificación de la Construcción yEdificación, S.C. (National Body for the Standardization and Certification ofConstruction and Buildings)URL: http://www.onncce.org.mxINNTEX- Instituto Nacional de Normalización Textil, A.C.(National Institute of Textile Standards)URL: http://www.cniv.org.mx/inntexPost Standards Contacts:U.S. Embassy – U.S. Commercial ServiceJesus S. Gonzalez, Commercial SpecialistLiverpool 31, Col. Juárez06600 México, D.F.Tel: (011-52-55) 5140-2627 + Fax: (011-52-55) 5535-1139E-mail: Jesus.Gonzalez@mail.doc.govURL: http://www.BuyUSA.gov/mexico and http://www.export.govU.S. Embassy – U.S. Department of AgricultureGarth Thorburn, Director, Agricultural Trade OfficeLiverpool 31, Col. Juárez06600 México, D.F.Tel: (011- 52-55) 5140-2611 + Fax: (011-52-55) 5535-8357E-mail: Garth.Thorburn@usda.govURL: http://www.mexico-usda.com/Trade AgreementsReturn to topThe most outstanding feature of the U.S.-Mexico bilateral relationship in recent historyhas been the North American Free Trade Agreement (NAFTA), which created a freetrade zone for Mexico, the United States, and Canada. Since the enactment of NAFTAin January 1994, Mexico’s imports from the United States have grown exponentially,totaling over $141 billion in 2008. The U.S. share of Mexico’s trade has likewiseincreased with NAFTA, accounting for nearly 75 percent of Mexico’s total trade. U.S.exports to Mexico are greater than U.S. exports to the rest of Latin America combined.NAFTA continues to boost trade between the three member countries and improveMexico’s overall economic standing. Since the enactment of NAFTA in January 1994,Mexico’s exports have increased by over 220 percent, breaking a new record for totalexports each year, except 2001 (a recession year). During the same period, Mexico’simports have grown by nearly 165 percent. The U.S. share of Mexico’s trade haslikewise increased with NAFTA.

Mexico is the country with the largest number of free trade agreements (FTA’s) in theworld. Including the most recent trade agreement negotiated with Japan, Mexico hasFTA’s with 43 countries (officially), including the European Union, European Free TradeArea, Israel, and 10 countries in Latin America. The agreement with the EuropeanUnion was modeled after NAFTA and provides EU goods with rough NAFTA parity from2003 onwards. Mexico is holding free trade discussions with additional Latin Americanand trading partners including Peru, Brazil, Argentina, and Panama. The significance ofthis for U.S. exporters is that many of our strongest international trade competitors enjoyduty free access to the Mexican market equivalent to that provided by NAFTA – or if theydo not today, they might in the near future. Mexico’s membership in the WTO, theAPEC, the OECD, the Free Trade Area of the Americas (FTAA) negotiations, and itspursuit of bilateral investment treaties give further testimony to Mexico’s commitment toeconomic liberalization.Web ResourcesReturn to topThe following is key contact information for the most relevant organizations’ websites inboth the public and private sectors. For additional organizations, please contact CSMexico.Mexican Public Sector:Secretaria de Economia (Ministry of Economy)DGN-Direccion General de Normas–Text of NOMs:http://www.economia.gob.mxhttp://www.economia.gob.mx/?P=85http://www.economia-noms.gob.mx--Under secretariat of International Trade Negotiationshttp://www.economia.gob.mx/?P=5100SAGARPA (Agriculture):SCT – Secretaria de Comunicaciones y Transportes:http://www.sagarpa.gob.mxhttp://www.sct.gob.mx–NOMs, regulations, and requirements for telecomm equipment:http://www.cofetel.gob.mxSECTUR (Tourism):SEDESOL (Social Development):http://www.sectur.gob.mxhttp://www.sedesol.gob.mxSEMARNAT – Secretaria de Medio Ambiente, Recursos Naturales:http://www.semarnat.gob.mxSENER (Energy) also SEDE:SSA (Health)–NOMs, regulations and more of the Ministry of Health:STPS (Labor):http://www.sener.gob.mxhttp://www.ssa.gob.mxhttp://www.stps.gob.mx

Mexican Private Sector:Asociación de Normalización y Certificación del Sector Eléctrico, A.C.(National Assoc. for Standards & Certification of the Electrical Sector)http://www.ance.org.mxNormalización y Certificación Electrónica, A.C.:Instituto Mexicano de Normalización y Certificación, A.C.(Mexican Standards & Certification Institute)Focus areas: general and quality systems:http://www.nyce.org.mxhttp://www.imnc.org.mxNORMEX – Sociedad Mexicana de Normalización y Certificación, S.C.(Mexican Standards & Certification Society)Focus areas: foods, beverages, packaging, packages, and quality systemshttp://www.normex.com.mxONNCCE – Organismo Nacional de Normalización y Certificación de la Construcción yEdificación, S.C.(National Body for the Standardization and Certification of Constructions and Buildings)Focus area: construction:http://www.onncce.org.mxU.S. Standards Bodies with Representation in Mexico:ASTM—American Society for Testing and Materials:Intertek Testing Services de México, S.A. de C.V.:NEMA— Electrical Equipment Standards:NFPA—National Fire Protection Association:UL— Underwriters Laboratories Inc.:http://www.astm.orghttp://www.intertek.comhttp://www.nema.orghttp://www.nfpa.orghttp://www.ul.comReturn to table of contents

Return to table of contentsChapter 6: Investment Climate• Openness to Foreign Investment• Conversion and Transfer Policies• Expropriation and Compensation• Dispute Settlement• Performance Requirements and Incentives• Right to Private Ownership and Establishment• Protection of Property Rights• Transparency of Regulatory System• Efficient Capital Markets and Portfolio Investment• Corporate Social Responsibility• Political Violence• Corruption• Bilateral Investment Agreements• OPIC and Other Investment Insurance Programs• Labor• Foreign Direct Investment Statistics• Web ResourcesOpenness to Foreign InvestmentReturn to topMexico is open to foreign direct investment (FDI) in most economic sectors and hasconsistently been one of the largest recipients of FDI among emerging markets. Inrecent years, Mexico has become increasingly aware of its loss of competitivenessrelative to other emerging economies, notably China and India, as it has failed toaddress serious crime and safety issues or pass much needed reforms. Recentgovernment successes in the reform agenda have improved business confidence,underpinning increases in foreign investment. Mexico has significantly increased thetempo of efforts against organized crime, but rising narcotics-related violence remains acause for concern. Mexico will need progress on both fronts to regain competitivenessas an FDI destination, particularly for non-U.S. investors. The current internationaleconomic downturn adds to the challenge, as FDI continues to be scarce and investorsremain cautious.Foreign investment in Mexico has largely been concentrated in the northern states closeto the U.S. border where most maquiladoras are located, and in the Federal District(Mexico City) and surrounding states. The Yucatan peninsula, historically an area fortourism investment, has seen industry in other sectors grow due in part to the ability toquickly send goods from its ports to the United States. Manufacturing, retail/commerce,and financial services have received the largest amounts of U.S. investment in the pastfew years. Historically, the United States has been the largest source of FDI in Mexico.U.S. investors provided 40 percent of FDI in 2008.In June 2007, President Calderon created ProMexico, a federal entity charged withpromoting Mexican exports around the world and attracting foreign direct investment to

Mexico. Through ProMexico, federal and state government efforts, as well as relatedprivate sector activities, are coordinated with a goal of harmonizing programs, strategiesand resources aimed at common objectives and priorities while supporting theglobalization of Mexico's economy. ProMexico maintains an extensive network of officesabroad as well as a multi-lingual website (http://www.promexico.gob.mx) which providesinformation on establishing a corporation, rules of origin, labor issues, owning real estatein Mexico, the maquiladora industry, and sectoral promotion plans, among other topics.ProMexico will coordinate Mexico's hosting of the 2010 World Conference of TradePromotion Agencies in Riviera Nayarit.The Secretariat of Economy (SE) also maintains a bilingual website(www.economia.gob.mx) offering an array of information, forms, links and transactions.Among other options, interested parties can download import/export permit applications,make on-line tax payments, and chat with on-line advisors who can answer specificinvestment and trade related questions. State governments have also passed smallbusiness facilitation measures to make it easier to open businesses.It now takes on average 13 days to complete all paperwork required to start a businessin Mexico, equal to the average OECD number of days, according to a World Bankstudy. However, starting a business in Mexico requires 8 procedures and costs 11.70 %GNI per capita; the OECD average is 5.7 procedures and 4.7% GNI per capita. TheEmbassy advises potential investors to contact ProMexico for detailed information oninvesting in Mexico.The 1993 Foreign Investment Law is the basic statute governing foreign investment inMexico. The law is consistent with the foreign investment chapter of NAFTA (the NorthAmerican Free Trade Agreement). It provides national (i.e. non-discriminatory) treatmentfor most foreign investment, eliminates performance requirements for most foreigninvestment projects, and liberalizes criteria for automatic approval of foreign investment.The Foreign Investment Law identifies 704 activities, 656 of which are open for 100percent FDI stakes. There are 18 activities in which foreigners may only invest 49percent; 13 of which require Foreign Investment National Commission approval for a 100percent stake; 5 reserved for Mexican nationals; and 10 reserved for the Mexican state.Below is a summary of activities subject to investment restrictions.SECTION 1: SECTORS RESERVED FOR THE STATE IN WHOLE OR IN PARTA) Petroleum and other hydrocarbons;B) Basic petrochemicals;C) Telegraphic and radio telegraphic services;D) Radioactive materials;E) Electric power generation, transmission, and distribution;F) Nuclear energy;G) Coinage and printing of money;H) Postal service;I) Airports;J) Control, supervision and surveillance of ports and heliports.

SECTION 2: SECTORS RESERVED FOR MEXICAN NATIONALSA) Retail sales of gasoline and liquid petroleum gas;B) Non-cable radio and television services;C) Credit Unions, Savings and Loan Institutions, and Development Banks;D) Certain professional and technical services;E) Domestic transportation for passengers, tourism and freight, except for messenger orpackage delivery services.U.S. and Canadian investors generally receive national and most-favored-nationtreatment in setting up operations or acquiring firms. Exceptions exist for investments forwhich the Government of Mexico recorded its intent in NAFTA to restrict certainindustries to Mexican nationals. U.S. and Canadian companies have the right underNAFTA to international arbitration and the right to transfer funds without restrictions.NAFTA also eliminated some barriers to investment in Mexico, such as trade balancingand domestic content requirements. Local governments must also accord nationaltreatment to investors from NAFTA countries. Mexico is also a party to several OECDagreements covering foreign investment, notably the Code of Liberalization of CapitalMovements and the National Treatment Instrument.Approximately 95 percent of all foreign investment transactions do not requiregovernment approval. Foreign investments requiring applications and not exceedingUSD 165 million are automatically approved, unless the proposed investment is in asector subject to restrictions by the Mexican constitution and Foreign Investment Lawthat reserve certain sectors for the state and Mexican nationals (see Section 1 above).The National Foreign Investment Commission determines whether investments inrestricted sectors may go forward and has 45 working days to make a decision. Criteriafor approval include employment and training considerations, technologicalcontributions, and contributions to productivity and competitiveness. The Commissionmay reject applications to acquire Mexican companies for national security reasons. TheSecretariat of Foreign Relations (SRE) must issue a permit for foreigners to establish orchange the nature of Mexican companies.Despite Mexico's relatively open economy, a number of key sectors in Mexico continueto be characterized by a high degree of market concentration. For example, thetelecommunications, electricity, television broadcasting, petroleum, cement, beer, andtortilla sectors feature one or two or several dominant companies (some private, otherspublic) with enough market power to restrict competition. The Mexican Congressstrengthened the enforcement powers of the Federal Competition Commission (CFC) in2006 and is considering stiffer penalties for anti-competitive conduct, but the CFCremains weak relative to its OECD counterparts in terms of enforcement. CFCCommissioner Eduardo Perez Motta and leading members of the CalderonAdministration, including the President, have publicly committed to opening up theMexican economy to greater competition. For more information on competition issues inMexico visit CFC's bilingual website at: www.cfc.gob.mx.ENERGYThe Mexican constitution reserves ownership of petroleum and other hydrocarbonreserves for the Mexican state. The energy reform package approved by the MexicanCongress October 2008 did not address this prohibition, and oil and gas exploration andproduction efforts remain under the sole purview of Pemex, Mexico's petroleum

parastatal. The energy reform package has not been fully implemented. The Mexicangovernment is developing new performance based contracts which it hopes will attractmore international oil companies to bid on exploration and production projects.The constitution also provides that most electricity service may only be supplied by thestate-owned company the Federal Electricity Commission (CFE). (The second stateowned power company, Central Power and Light (LYFC), was absorbed by CFE in 2009– see Political Violence below.). There has been some opening to private capital. Privateelectric co-generation and self-supply are now allowed. Private investors may buildindependent power projects but all of their output must be sold to CFE in wholesaletransactions. Private construction of generation for export is permitted. In 1995,amendments to the Petroleum Law opened transportation, storage, marketing anddistribution of natural gas imports and issued open access regulations for Pemex'snatural gas transportation network. Retail distribution of Mexico's natural gas is open toprivate investment, as is the secondary petrochemical industry. Since the government'sannouncement in August 2001 that national and foreign private firms will be able toimport liquefied petroleum gas duty-free, LNG terminals in Tamaulipas state and BajaCalifornia have begun operations, and CFE plans to build a third in Manzanillo, onMexico's Pacific Coast.Finance Public Works Contracts (COPFs), formerly Multiple Service Contracts (MSCs)designed to comply with the country's constitution, mark Mexico's most ambitious effortto attract private companies to stimulate natural gas production by developing nonassociatednatural gas fields. Under a COPF contract, private companies will beresponsible for 100 percent of the financing of a contract and will be paid for the workperformed and services rendered. However, the natural gas produced in a specific fieldremains the property of Pemex. Examples of work that contractors can perform includeseismic processing and interpretation, geological modeling, fields engineering,production engineering, drilling, facility design and construction, facility and wellmaintenance, and natural gas transportation services. Some Mexican politicians stilloppose COPFs as a violation of the Mexican constitution's ban on concessions. Somecontracts have failed to attract any bids, demonstrating the limited success of COPFs.TELECOMMUNICATIONSMexico allows up to 49 percent FDI in companies that provide fixed telecommunicationsnetworks and services. This includes the Cable TV (CATV) industry, with one exception:companies can issue Neutral or "N" stocks up to 99 percent, which can be owned by aforeign company. In fact, one CATV company operates under this ownership scheme.There is no limit on FDI in companies providing cellular/wireless services. However,Telmex and Telcel (América Móvil) continue to reign as the dominant telecom fixed andwireless powers and wield significant influence over regulatory and government decisionmakers. Mexico's dominant landline and wireless carriers are traded on the New YorkStock Exchange. An initiative is currently in the Mexican Congress that wouldcompletely open fixed telephony to FDI. Congress is also considering a reciprocityclause to open its market only to countries that offer the same level of opening toMexican companies.Several large U.S. and international telecom companies are active in Mexico, partneringwith Mexican companies or holding minority shares. Following a 2004 WTO ruling,international resellers are authorized to operate in Mexico and some companies are alsolooking to sell wholesale minutes to resellers. Telcel (technically independent, butmajority owned by Telmex owner's Grupo Carso - Carso Global Telecom) still retains a

majority share (about 75 percent) of the cellular market. However, Spain's TelefonicaMovistar, among others, continues to grow and challenge the status quo. They havedeployed extensive mobile infrastructure to increase coverage across the country.Telmex continues to dominate the market in Long Distance (domestic and international),Internet access through DSL, and bundle services. Mexico’s Presidency andtelecommunications regulators have made clear to Telmex that the company will notreceive a license to offer TV services until it complies with government demands to allowa broader opening to competition in telephony. CATV operators (including TV duopolistTelevisa's Cablevision) are allowed to independently offer Triple Play Service (VoIP-Telephony, Data-Internet and TV-Video). CATV operators have used this opening topost fast-growing customer numbers, albeit from a small base.As in telecommunications, there are concerns that the two dominant televisioncompanies -- Televisa and TV Azteca, who share duopoly status in the sector -- continueto exercise influence over Mexican judicial, legislative and regulatory bodies to preventcompetition. However, in August 2007 the Mexican Supreme Court ruled against themost blatant anti-competition measures of the April 2006 Radio and Television Law.Among other decisions, the Court ruled that it was unfair for broadcasting companies tokeep and use at no cost analog spectrum freed by the digitalization process. Currentlythe Mexican Congress is working on a new media law based on the Supreme Court'sruling.U.S. firms remain unable to penetrate the Mexican television broadcast market, despitethe fact that both Televisa and TV Azteca benefit from access to the U.S. market.REAL ESTATEInvestment restrictions still prohibit foreigners from acquiring title to residential realestate in so-called "restricted zones" within 50 kilometers (approximately 30 miles) of thenation's coast and 100 kilometers (approximately 60 miles) of the borders. In all, therestricted zones total about 40 percent of Mexico's territory. Nevertheless, foreignersmay acquire the effective use of residential property in the restricted zones through theestablishment of a 50-year extendible trust (called a fideicomiso) arranged through aMexican financial institution that acts as trustee.Under a fideicomiso the foreign investor obtains all rights of use of the property,including the right to develop, sell and transfer the property. Real estate investorsshould, however, be careful in performing due diligence to ensure that there are no otherclaimants to the property being purchased. Fideicomiso arrangements have led to legalchallenges in some cases. U.S. issued title insurance is available in Mexico and a fewmajor U.S. title insurers have begun operations here. Additionally, U.S. lendinginstitutions have begun issuing mortgages to U.S. citizens purchasing real estate inMexico.TRANSPORTThe Mexican government allows up to 49 percent foreign ownership of 50-yearconcessions to operate parts of the railroad system, renewable for a second 50-yearperiod. The Mexican Foreign Investment Commission and the Mexican FederalCompetition Commission (CFC) must approve ownership above 49 percent. In apositive sign for competition, the CFC in June 2006 struck down a proposed mergerbetween two of the three major railroad companies, and in June 2009 imposed a fine on

the same companies for monopolistic practices. Under NAFTA, foreign investors fromthe U.S. and Canada are now permitted to own up to 100 percent of local trucking andbus companies, however, several companies have encountered long wait times andlegal tie-ups when trying to obtain permits. U.S. trucking companies authorized to travelMexican highways under a bi-national cross-border trucking pilot program retained theiraccess when the U.S. Congress cancelled the program in March 2009.CINTRA, the government holding company for the Mexican flag carriers, Mexicana andAeromexico, sold Grupo Mexicana to Grupo Posadas in December 2005. GrupoAeromexico was sold to a consortium led by Citibank-owned Banamex in October 2007.The emergence of low-cost domestic airlines such as Volaris and Interjet have increasedcompetition and led to lower prices. Foreign ownership of Mexican airlines remainscapped at 25 percent. Foreign ownership in airports is limited to 49 percent. Foreignexpress delivery service companies continue to complain that Mexican legislationunfairly favors Mexican companies by restricting the size of trucks international carriersare allowed to use.INFRASTRUCTUREMexican infrastructure investment, with certain previously noted exceptions, is open toforeign investment. The Mexican government has been actively seeking an increase inprivate involvement in infrastructure development in numerous sectors, includingtransport, communications, and environment. Improvements to the nationalinfrastructure are seen as a key element in strengthening economic competitiveness andattracting investment to disadvantaged regions of the country. In July 2007, PresidentCalderon presented the National Infrastructure Program 2007-2012 a key aspect ofwhich is an increase in private investment through means of Service Lending Projects(public-private partnerships) and concessionary schemes. In January 2009, PresidentCalderon reiterated his commitment to the National Infrastructure Program as acountercyclical tool in the face of a slowing economy. Several large projects have beenscaled back or delayed. Difficulty raising private capital in the 2009 recession has led togreater support from multilateral banks. President Calderon recently submitted a bill forpublic-private partnership to facilitate and attract more private investment ininfrastructure projects. The bill, yet to be approved by Congress, would streamlineprocedures and give more legal certainty and protection to investors. The Office of thePresident provides an English language copy of the plan at:www.infraestructura.gob.mx.Conversion and Transfer PoliciesReturn to topMexico has open conversion and transfer policies as a result of its membership inNAFTA and the OECD. In general, capital and investment transactions, remittance ofprofits, dividends, royalties, technical service fees, and travel expenses are handled atmarket-determined exchange rates. Peso/dollar foreign exchange is available on sameday,24- and 48-hour settlement bases. Most large foreign exchange transactions aresettled in 48 hours. In June 2003, the U.S. Federal Reserve Bank and the Bank ofMexico announced the establishment of an automated clearinghouse for cross-borderfinancial transactions. The International Electronic Funds Transfer System (TEFI) beganoperating in 2004 and commissions on transfers through the system have droppedrapidly.

Expropriation and CompensationReturn to topUnder NAFTA, Mexico may not expropriate property, except for a public purpose and ona non-discriminatory basis. Expropriations are governed by international law, and requirerapid fair market value compensation, including accrued interest. Investors have the rightto international arbitration for violations of this or any other rights included in theinvestment chapter of NAFTA.There have been twelve arbitration cases filed against Mexico by U.S. and Canadianinvestors who allege expropriation, and other violations of Mexico's NAFTA obligations.Details of the cases can be found at the Department of State Website, Office of theLegal Advisor (www.state.gov/s/l).Dispute SettlementReturn to topChapter Eleven of NAFTA contains provisions designed to protect cross-borderinvestors and facilitate the settlement of investment disputes. For example, each NAFTAParty must accord investors from the other NAFTA Parties national treatment and maynot expropriate investments of those investors except in accordance with internationallaw.Chapter Eleven permits an investor of one NAFTA Party to seek money damages formeasures of one of the other NAFTA Parties that allegedly violate those and otherprovisions of Chapter Eleven. Investors may initiate arbitration against the NAFTA Partyunder the Arbitration Rules of the United Nations Commission on International TradeLaw ("UNCITRAL Rules") or the Arbitration (Additional Facility) Rules of the InternationalCenter for Settlement of Investment Disputes ("ICSID Additional Facility Rules").Alternatively, a NAFTA investor may choose to use the registering country's courtsystem.The Mexican government and courts recognize and enforce arbitral awards. TheEmbassy has heard of no actions taken in the Mexican courts for an alleged Chapter 11violation on behalf of U.S. or Canadian firms.There have been numerous cases in which foreign investors, particularly in real estatetransactions, have spent years dealing with Mexican courts trying to resolve theirdisputes. Often real estate disputes occur in popular tourist areas such as the Yucatan.American investors should understand that under Mexican law many commercialdisputes that would be treated as civil cases in the U.S. could also be treated as criminalproceedings in Mexico. Based upon the evidence presented a judge may decide to issuearrest warrants. In such cases Mexican law also provides for a judicial official to issue an"amparo" (injunction) to shield defendants from arrest. U.S. investors involved incommercial disputes should therefore obtain competent Mexican legal counsel, andinform the U.S. Embassy if arrest warrants are issued.Performance Requirements and IncentivesReturn to topThe 1993 Foreign Investment Law eliminated export requirements (except formaquiladora industries), capital controls, and domestic content percentages, which areprohibited under NAFTA. Foreign investors already in Mexico at the time the law

ecame effective could apply for cancellation of prior commitments. Foreign investorswho failed to apply for the revocation of existing performance requirements remainedsubject to them.The Mexican federal government has eliminated direct tax incentives, with the exceptionof accelerated depreciation. A fiscal reform package was passed in September 2007 thatincludes a Flat Rate Corporate Tax (IETU). This tax limits the deductions thatcompanies are allowed, though changes made at the behest of the business communitystill allow some credits for previous inventories and investments, as well as forcompanies that fall under the maquiladora scheme. In 2009, the IETU will increase from16.5% to 17%, and to 17.5% in 2010. Investors should follow IETU developmentsclosely.In 2009, the Mexican Congress raised the general value added tax (IVA) from 15 to 16percent, or from 10 to 11 percent at the border. The income tax (ISR) increased to 30percent, and will fall to 29 percent in 2013, and to 28 percent in 2014. In addition,companies that deferred tax payments as part of their consolidation strategy will have toannually calculate the tax on benefits obtained in consolidation after five years. Theactual payment will then be made in the following terms: 25 percent in the following year(year 6) and then four payments of 25, 20, 15 and 15 percent in each of the years 7,8,9and 10.Most taxes in Mexico are federal; therefore, states have limited opportunity to offer taxincentives. However, Mexican states have begun competing aggressively with eachother for investments, and most have development programs for attracting industry.These include reduced price (or even free) real estate, employee training programs, andreductions of the 2 percent state payroll tax, as well as real estate, land transfer, anddeed registration taxes, and even new infrastructure, such as roads. Four northernstates -- Nuevo Leon, Coahuila, Chihuahua and Tamaulipas -- have signed anagreement with the state of Texas to facilitate regional economic development andintegration. Investors should consult the Finance, Economy, and EnvironmentSecretariats, as well as state development agencies, for more information on fiscalincentives. Tax attorneys and industrial real estate firms can also be good sources ofinformation.U.S. Consulates have reported that the states in their consular districts have had tomodify their incentive packages due to government decentralization. Many states havealso developed unique industrial development policies. Sonora, for example, is workingto expand the free entry area for tourists (south from the border to the port of Guaymas.)Sonora is one state that has implemented long-term agriculture and infrastructuredevelopment plans. The government of Yucatan provides information and support topotential investors and business entrepreneurs through several programs that targetdifferent industries such as technology, agroindustry and energy exploration. Severalstates are competing to attract manufacturing in the aerospace industry.A government-owned development bank, Nacional Financiera, S.A. (www.nafin.com),provides loans to companies in priority development areas and industries. It is active inpromoting joint Mexican-foreign ventures for the production of capital goods. NacionalFinanciera offers preferential, fixed-rated financing for the following types of activities:small and medium businesses; environmental improvements; studies and consultingassistance; technological development; infrastructure; modernization; and capital

contribution. The Mexican Bank for Foreign Trade, Bancomext, offers a variety of exportfinancing and promotion programs (www.bancomext.com).Mexico's maquiladora and PITEX (Program for Temporary Imports to produce Exports)programs aim to stimulate manufactured exports and operate in largely the samemanner. The first focuses on companies that specialize in in-bond manufacturing andexport, while the second is for companies that may have significant domestic sales. InNovember 2006, the maquiladora and PITEX programs were combined into therenamed IMMEX (Industria Manufacturera, Maquiladora y Servicios de Exportacion)program. The IMMEX program adds services, such as business process outsourcing, tothe maquila scheme and also simplifies and streamlines the processes under the twoprevious schemes. The new program continued to exempt companies from importduties and applicable taxes (e.g. VAT) on inputs and components incorporated intoexported manufactured goods. In addition, capital goods and the machinery used in theproduction process are tax exempt, but are currently subject to import duties.Companies interested in investing in industrial activity in Mexico need to follow the newIMMEX guidelines closely, preferably in close consultation with locally based legaladvisors. Two export programs implemented during the 1990s, ALTEX (EmpresasAltamente Exportadoras) and ECEX (Empresas de Comercio Exterior), also allowexpedited VAT returns and financing from government-owned development banks.Please refer to the Secretariat of Economy's IMMEX program website atwww.economia.gob.mx.In order to maintain competitiveness of maquiladora and PITEX companies and complywith NAFTA provisions, since 2001 Mexico has applied "Sectoral Promotion Programs"(PROSEC). Under these programs, most favored nation import duties on listed inputsand components used to produce specific products are eliminated, or reduced to acompetitive level. These programs comply with NAFTA provisions because import dutyreduction is available to all producers, whether the final product is sold domestically or isexported to a NAFTA country. Currently PROSECs support 22 sectors, includingelectronics and home appliances, automotive and auto-parts, textile and apparel,footwear, and others. The lists of inputs and components incorporated under eachPROSEC are not exhaustive, and the Mexican government regularly consults withindustries to include more goods. In December 2008, President Calderon issued in theOfficial Gazette (Diario Oficial) an immediate and gradual reduction of import duties inorder for companies to obtain inputs at competitive prices. The GOM also announcedlast year the simplification of foreign trade procedures, such as the gradual elimination ofPROSECs by 2011. In December 2009, the GOM announced the latest tranche of tariffreductions would be temporarily postponed due to the economic crisis and in order tohelp some of the most injured sectors.In the last four years the Secretariat of Economy conducted, in partnership with theprivate sector, 12 studies of the country's most important sectors according to theirlevels of exports, employment and FDI, called "Programs for Sectoral Competitiveness."These studies are currently available at the website of the Secretariat of Economy(www.economia.gob.mx)Right to Private Ownership and EstablishmentReturn to topForeign and domestic private entities are permitted to establish and own businessenterprises and engage in all forms of remunerative activity in Mexico, except those

enumerated in Section 1 Table 1. Private enterprises are able to freely establish, acquireand dispose of interests in business enterprises. The two most common types ofbusiness entities are corporations (Sociedad Anonima) and limited partnerships(Sociedad de Responsibilidad Limitada). Under these legal entities a foreign companymay operate an independent company, a branch, affiliate, or subsidiary company inMexico. The rules and regulations for starting an enterprise differ for each structure.CORPORATION (SOCIEDAD ANONIMA)A) Can be up to 100 percent foreign-owned;B) Must have a minimum of 50,000 Mexican pesos in capital stock to start;C) Must have minimum of 2 shareholders, with no maximum. Board of Directors can runthe administration of the company;D) The enterprise has an indefinite life span;E) Free transferability of stock ownership is permitted;F) Operational losses incurred by the Mexican entity or subsidiary may not be used bythe U.S. parent company;G) Limited liability to shareholders.LIMITED LIABILITY COMPANY (SOCIEDAD DE RESPONSIBILIDAD LIMITADA)A) Can be up to 100 percent foreign-owned;B) Must have a minimum of 3,000 Mexican pesos in capital stock to start;C) Must have a minimum of 2 partners to incorporate a corporation with limited liability.The partners must manage the company;D) Exists only while there is a business purpose and partners remain the same;E) Restricted transferability of partnership shares. Any changes in the partnershipcomposition may cause the partnership to be liquidated;F) If structured properly, it may offer tax advantages by allowing operational lossesincurred by the Mexican entity to be used by the U.S. parent company;G) Limited liability is afforded the partners.Protection of Property RightsReturn to topTwo different laws provide the core legal basis for protection of intellectual propertyrights (IPR) in Mexico -- the Industrial Property Law (Ley de Propiedad Industrial) andthe Federal Copyright Law (Ley Federal del Derecho de Autor). Multiple federalagencies are responsible for various aspects of IPR protection in Mexico. The Office ofthe Attorney General (Procuraduría General de la Republica, or PGR) has a specializedunit that pursues criminal IPR investigations. The Mexican Institute of Industrial Property(Instituto Mexicano de la Propiedad Industrial, or IMPI) administers Mexico's trademarkand patent registries and is responsible for handling administrative cases of IPRinfringement. The National Institute of Author Rights (Instituto Nacional del Derecho deAutor) administers Mexico's copyright register and also provides legal advice andmediation services to copyright owners who believe their rights have been infringed.The Mexican Customs Service (Aduana México) plays a key role in ensuring that illegalgoods do not cross Mexico's borders.Despite strengthened enforcement efforts by Mexico's federal authorities over the pastseveral years, weak penalties and other obstacles to effective IPR protection have failedto deter the rampant piracy and counterfeiting found throughout the country. The U.S.

Government continues to work with its Mexican counterparts to improve the businessclimate for owners of intellectual property.Mexico is a signatory of at least fifteen international treaties, including the ParisConvention for the Protection of Industrial Property, the NAFTA, and the WTOAgreement on Trade-related Aspects of Intellectual Property Rights. Though Mexicosigned the Patent Cooperation Treaty in Geneva, Switzerland in 1994, which allows forsimplified patent registration procedure when applying for patents in more than onecountry at the same time, it is necessary to register any patent or trademark in Mexico inorder to claim an exclusive right to any given product. A prior registration in the UnitedStates does not guarantee its exclusivity and proper use in Mexico, but serves merely assupport for the authenticity of any claim you might make, should you take legal action inMexico.An English-language overview of Mexico's IPR regime can be found on the WIPOwebsite at: http://www.wipo.int/about-ip/en/ipworldwide/pdf/mx.pdf.Although a firm or individual may apply directly, most foreign firms hire local law firmsspecializing in intellectual property. The U.S. Embassy's Commercial Section maintainsa list of such law firms in Mexico at:http://www.buyusa.gov/mexico/en/business_service_providers.html.Transparency of Regulatory SystemReturn to topThe Federal Commission on Regulatory Improvement (COFEMER) under themanagement of the Secretariat of Economy is the agency responsible for reducing theregulatory burden on business. The Mexican government has made progress in the lastfew years. On a quarterly basis, these agencies must report to the Presidency onprogress achieved toward Presidential goals for reducing the regulatory burden. InDecember 2006, President Calderon replaced the Regulatory Moratorium Agreement,issued by the previous administration to ensure agencies streamline their regulatorypromulgation processes, with the Quality Regulatory Agreement. The new agreementintends to allow the creation of new regulations only when agencies prove that they areneeded because of an emergency, because of the need to comply with internationalcommitments, or because of obligations established by law.The federal law on administrative procedures has been a significant investment policyaccomplishment. The law requires all regulatory agencies to prepare an impactstatement for new regulations, which must include detailed information on the problembeing addressed, the proposed solutions, the alternatives considered, and thequantitative and qualitative costs and benefits and any changes in the amount ofpaperwork businesses would face if a proposed regulation is to be implemented. Despitethese measures, many difficulties remain. Foreign firms continue to list bureaucracy,slow government decision-making, lack of transparency, a heavy tax burden, and a rigidlabor code among the principal negative factors inhibiting investment in Mexico. TheMexican government, with the OECD, the private sector and several think tanks, iscurrently working to implement a project to streamline bureaucracy and procedures.The Secretariat of Public Administration has made considerable strides in improvingtransparency in government, including government contracting and involvement of theprivate sector in enhancing transparency and fighting corruption. The Mexican

government has established several Internet sites to increase transparency ofgovernment processes and establish guidelines for the conduct of government officials."Normateca" provides information on government regulations; "Compranet" allows foron-line federal government procurement; "Tramitanet" permits electronic processing oftransactions within the bureaucracy thereby reducing the chances for bribes; and"Declaranet" allows for on-line filing of income taxes for federal employees.Efficient Capital Markets and Portfolio InvestmentReturn to topThe Mexican banking sector has strengthened considerably since the 1994 Peso Crisisleft it virtually insolvent. Since the crisis, Mexico has introduced reforms to buttress thebanking system and to consolidate financial stability. These reforms include creating amore favorable economic and regulatory environment to foster banking sector growth byreforming bankruptcy and lending laws, moving pension fund administration to theprivate sector, and raising the maximum foreign bank participation allowance. Thebankruptcy and lending reforms passed by Congress in 2000 and 2003 effectively madeit easier for creditors to collect debts in cases of insolvency by creating Mexico's firsteffective legal framework for the granting of collateral. Thanks to the strengthening ofthe legal framework in the past years, good asset risk management, and largerpreventive reserves, Mexican banks remained solid and solvent with a low nonperformingloan index and high capitalization levels after the economic and financialcrisis of 2008/2009. Pension reform allows employees to choose their own pensionplan. Allowing banks or their holding companies to manage these funds providesadditional capital to the banking sector, while the increased competition focuses fundmanagers on investment returns. In December 2007, the Mexican Congress approvedamendments to the Law of Credit Institutions (LIC) that include creating a new limitedbanking license and transferring power from Hacienda to the Banking and SecuritiesCommission (CNBV), the primary banking regulator.The financial profile of the banking sector has improved due to the reduction in theproblem assets brought about by write-offs, problem loan sales, and the conclusion ofmost debt-relief programs. These developments, combined with more stringent capitalrequirements, have contributed to an improvement in the level and composition of capitalacross the banking system, particularly among the larger institutions.The banking sector remains highly concentrated, with a handful of large bankscontrolling a significant market share, and the remainder comprised of regional playersand niche banks. Hacienda has approved the opening of several new banks since 2006,including Wal-Mart Bank and Prudential Bank, but the sector's competitive dynamics andcredit quality are still being driven by the six large banks—five of which are foreignowned. The newcomers are mostly focused on the unbanked population (D, E marketsegments) and will present only limited competition to the group of old banks.Bank lending, especially consumer lending and mortgages, grew rapidly in 2005 and2006, fueled by lower interest rates and historically low inflation. The boost of consumerlending, particularly through credit cards, slowed down in 2008 and 2009, largely due tothe negative impact of the global crisis. However, it is expected that consumptionlending will gradually recover in 2010. Small- and medium-sized businesses stillcomplain of a lack of access to credit, but government-owned development banks haveexpanded their lending to this sector. In an effort to provide more liquidity to financialintermediaries, development banks have recently expanded their guarantees programs

to banks and non-bank banks. Despite the expansion, such lending remains low as apercentage of GDP. Private banks argue that due diligence in lending to such businessis difficult given the large amount of revenue they keep off the books to avoid increasedtax liability.Commercial loans to established companies with well-documented accounts areavailable in Mexico, but many large companies utilize retained earnings to fund growth.Supplier credit is the main source of financing for many businesses. The largestcompanies are able to issue debt for their financing needs, tapping into a growing pool ofpension funds looking for investment options. Non-bank financing is generally available,however, only to large companies with strong credit ratings and important commercialties with their suppliers -- i.e., companies that could easily procure bank financing. Themain challenges and opportunities for the financial and banking sector is to increaselending to the private sector since it currently represent 16% of GDP, and expandingbanking services. Mexico recently authorized the operation of corresponding banks,which is expected to help expanding banking services throughout the country.The Secretariat of Finance and Public Credit sets regulatory policy and oversees theCNBV. Mexico's central bank, the Bank of Mexico (BOM), also has a regulatory role inaddition to setting monetary policy. The Institute for the Protection of Bank Savings(IPAB) handles deposit insurance.Reforms creating better regulation and supervision of financial intermediaries andfostering greater competition have helped strengthen the financial sector and capitalmarkets. These reforms, coupled with sound macroeconomic fundamentals, havecreated a positive environment for the financial sector and capital markets, which haveresponded accordingly.The implementation of NAFTA opened the Mexican financial services market to U.S. andCanadian firms. Banking institutions from the U.S. and Canada have a strong marketpresence, holding approximately 70 percent of banking assets. Under NAFTA's nationaltreatment guarantee, U.S. securities firms and investment funds, acting through localsubsidiaries, have the right to engage in the full range of activities permitted in Mexico.Foreign entities may freely invest in government securities. The Foreign Investment Lawestablishes, as a general rule, that foreign investors may hold 100 percent of the capitalstock of any Mexican corporation or partnership, except in those few areas expresslysubject to limitations under that law (Table I). Regarding restricted activities, foreigninvestors may also purchase non-voting shares through mutual funds, trusts, offshorefunds, and American Depositary Receipts. They also have the right to buy directly limitedor non-voting shares as well as free subscription shares, or "B" shares, which carryvoting rights. Foreigners may purchase an interest in "A" shares, which are normallyreserved for Mexican citizens, through a neutral fund operated by a MexicanDevelopment Bank. Finally, state and local governments, and other entities such aswater district authorities, now issue peso-denominated bonds to finance infrastructureprojects. These securities are rated by international credit rating agencies. This marketis growing rapidly and represents an emerging opportunity for U.S. investors.

Corporate Social ResponsibilityReturn to topIn recent years, businesses operating in Mexico have embraced the idea of corporatesocial responsibility and have publicly committed themselves to pursuing such activities.CSR is encouraged by several professional and non-governmental organizations inMexico committed to the economic, sustainable development of Mexico. Responsibleenvironmental practices are particularly supported by the Mexican government, and theSecretary of the Environment and Natural Resources (SEMARNAT) as well as theFederal Environment Protection Agency (PROFEPA) regularly recognize businesses forparticipating in their environmental audits and other programs.Political ViolenceReturn to topPotential investors should not find political violence a source of major concern. Peacefulmass demonstrations are common in the larger metropolitan areas such as Mexico City,Guadalajara, and Monterrey. Political violence generally takes the form of local conflictsand inter-communal disputes and has occurred mostly in limited regions of Mexico'ssouthern states. Since the initial January 1994 uprising of the Zapatista NationalLiberation Army (EZLN) in the state of Chiapas, government forces and the EZLN haveclashed only once, although Chiapas has also experienced unrelated local violence. ThePopular Revolutionary Army (EPR) and the Revolutionary Army of the People'sInsurgency (ERPI) emerged in June 1996 and June 1998, respectively. They havecarried out a number of small attacks, principally confined to the state of Guerrero.In November 2006, the EPR claimed responsibility for three explosions in Mexico City,one of which damaged a branch of Scotia Bank. On two occasions in the summer of2007, the EPR also claimed responsibility for bombings of PEMEX pipelines in the statesof Guanajuato and Veracruz. While no injuries were reported, there was extensiveproperty damage and temporary disruption to flows of oil and natural gas alongdamaged pipelines, negatively impacting up to 1000 businesses. Economic losses werereported to be in the hundreds of millions of dollars.In 2009, small and weak anti-social groups perpetrated isolated acts of vandalism withthe intention of disrupting commercial stability and raising awareness of their cause.From May to August, the animal liberation front, ALF, claimed responsibility for attackingbanks and commercial sites throughout Mexico’s capital city using propane tank bombs.Three bombs were discovered unexploded, while another three caused propertydamage but no casualties. To date, American businesses have not been the target ofthese groups and the disruptions remain relatively small scale concentrating solely onMexican businesses.The last half of 2006 saw intense protests in the state of Oaxaca demanding, principally,the state governor's resignation. The capital city of Oaxaca was under siege bydemonstrators for more than five months. Businesses -- particularly those in the touristsector -- reported millions of dollars in losses and many Western countries, including theUnited States, issued travel warnings advising their citizens to avoid the area. At least11 civilian deaths, including that of an American journalist, occurred as a direct result ofthe violence in Oaxaca and hundreds more were injured and/or arrested. State policeforces were accused of denying due process to protestors and using excessive force tobreak-up the demonstrations. In response to the escalating violence, the federal

government sent the sent the Federal Protective Police to restore order. In 2008,Oaxaca remained calm for the most part and experienced only sporadic disturbances.In 2009 the Government of Mexico dissolved the highly inefficient Luz y Fuerza delCentro (LFC), an electricity distributor associated with the oldest labor union in thecountry, the Sindicato Mexicano de Electricistas (SME), folding it into the main stateownedelectricity provider. Over 44,000 individuals lost their jobs, and the unionassociated with the company launched a series of protests and demonstrations,including several that seriously interrupted traffic in Mexico City. Although nearly 2/3 offormer electricity workers accepted a generous severance package, an increasinglyangry minority continues to exercise its rights to civil disobedience and disruption. Mostof the workers will not be re-hired in the electricity sector. The leftist political parties havestood with the former workers, but even their support has waned as the conflict movesthrough Mexico’s courts and rulings are handed down against the union’s claims. Theprecedents set in this case could be very significant in modernizing and reforming otherpowerful unions in the near future. The President took responsibility for the action andreceived public support and no significant backlash from opposition political parties.The action, however, resulted in several mass, peaceful protests in the capital thataffected local business only. Most of the workers have been rehired by the governmentand now are not part of any organized labor union.While political violence has been relatively minimal, narcotics and organized criminalviolence has spiked over the past three years. As President Calderon continues a fullcourtpress against the five major cartels operating in Mexico, kingpins have lashed backwith violent acts unprecedented both in number and nature. In 2009 the killings relatedto narcotics violence increased to 7,800 continuing the trend for the previous two years.2008 set a new record for organized crime-related homicides with some 5,500 killings,more than double the previous record of approximately 2,500 reached in 2007. Violencehas been endemic across the country, but particularly severe in cities bordering theUnited States. 48 percent of all killings took place in Chihuahua and Baja Californiastates and were concentrated in large urban areas, presenting new challenges to theMexican military and law enforcement's efforts to control violence. Cartel tactics evolvedas well – victims were tortured or mutilated, and then left in public venues to intimidateothers. Journalistic reporting of violence is also an area of concern, and Mexico ranks6th in the world for attacks against journalists.Frustrated traffickers have turned to kidnappings and extortion to compensate forincreased pressure from the Mexican government, targeting those innocent of anyinvolvement in narcotics trafficking. Although only 33 kidnappings were reported in2009, the unofficial number is considerably higher and kidnapping prevention is a majorconcern of local and state governments.The United States is working with Mexico more closely than ever to combat organizedcrime and drug trafficking. The Merida Initiative was signed into law in June 2008 andprovides $1.1 billion dollars for Mexico. The funding supplements Government ofMexico efforts and provides assistance for helicopters and surveillance aircraft, nonintrusiveinspection equipment, and technical advice and training to strengthen justiceinstitutions to help bolster Mexico's interdiction, eradication, and administration of justice.The United States Government and the Government of Mexico are developing asustainable framework in order to continue this program of assistance and support intothe foreseeable future.

Though not political in nature, the Embassy has noticed that general security concernsremain an issue for companies looking to invest in the country. Many companies find itnecessary to take extra precautions for the protection of their executives. They alsoreport increasing security costs for shipments of goods. The Overseas SecurityAdvisory Council (OSAC) monitors and reports on regional security for Americanbusinesses operating overseas. Eligible companies should become OSAC members.OSAC constituency is available to any American-owned, not-for-profit organization, orany enterprise incorporated in the U.S. (parent company, not subsidiaries or divisions)doing business overseas (https://www.osac.gov/).The Department of State maintains a Travel Alert for U.S. citizens traveling and living inMexico, available at: http://travel.state.gov/travel/cis_pa_tw/pa/pa_3028.html.CorruptionReturn to topCorruption, including bribery, raises the costs and risks of doing business. Corruptionhas a corrosive impact on both market opportunities overseas for U.S. companies andthe broader business climate. It also deters international investment, stifles economicgrowth and development, distorts prices, and undermines the rule of law.It is important for U.S. companies, irrespective of their size, to assess the businessclimate in the relevant market in which they will be operating or investing, and to have aneffective compliance program or measures to prevent and detect corruption, includingforeign bribery. U.S. individuals and firms operating or investing in foreign marketsshould take the time to become familiar with the relevant anticorruption laws of both theforeign country and the United States in order to properly comply with them, and whereappropriate, they should seek the advice of legal counsel.The U.S. Government seeks to level the global playing field for U.S. businesses byencouraging other countries to take steps to criminalize their own companies’ acts ofcorruption, including bribery of foreign public officials, by requiring them to uphold theirobligations under relevant international conventions. A U.S. firm that believes acompetitor is seeking to use bribery of a foreign public official to secure a contractshould bring this to the attention of appropriate U.S. agencies, as noted below.U.S. Foreign Corrupt Practices Act: In 1977, the United States enacted the ForeignCorrupt Practices Act (FCPA), which makes it unlawful for a U.S. person, and certainforeign issuers of securities, to make a corrupt payment to foreign public officials for thepurpose of obtaining or retaining business for or with, or directing business to, anyperson. The FCPA also applies to foreign firms and persons who take any act infurtherance of such a corrupt payment while in the United States. For more detailedinformation on the FCPA, see the FCPA Lay-Person’s Guide at:http://www.justice.gov/criminal/fraud/docs/dojdocb.html.Other Instruments: It is U.S. Government policy to promote good governance, includinghost country implementation and enforcement of anti-corruption laws and policiespursuant to their obligations under international agreements. Since enactment of theFCPA, the United States has been instrumental to the expansion of the internationalframework to fight corruption. Several significant components of this framework are theOECD Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions (OECD Antibribery Convention), the United Nations Conventionagainst Corruption (UN Convention), the Inter-American Convention against Corruption(OAS Convention), the Council of Europe Criminal and Civil Law Conventions, and agrowing list of U.S. free trade agreements.OECD Antibribery Convention: The OECD Antibribery Convention entered into forcein February 1999. As of December 2009, there are 38 parties to the Conventionincluding the United States (see http://www.oecd.org/dataoecd/59/13/40272933.pdf).Major exporters China, India, and Russia are not parties, although the U.S. Governmentstrongly endorses their eventual accession to the Convention. The Convention obligatesthe Parties to criminalize bribery of foreign public officials in the conduct of internationalbusiness. The United States meets its international obligations under the OECDAntibribery Convention through the U.S. FCPA. Mexico is a party to the OECDConvention.UN Convention: The UN Anticorruption Convention entered into force on December 14,2005, and there are 143 parties to it as of December 2009 (seehttp://www.unodc.org/unodc/en/treaties/CAC/signatories.html). The UN Convention isthe first global comprehensive international anticorruption agreement. The UNConvention requires countries to establish criminal and other offences to cover a widerange of acts of corruption. The UN Convention goes beyond previous anticorruptioninstruments, covering a broad range of issues ranging from basic forms of corruptionsuch as bribery and solicitation, embezzlement, trading in influence to the concealmentand laundering of the proceeds of corruption. The Convention contains transnationalbusiness bribery provisions that are functionally similar to those in the OECD AntibriberyConvention and contains provisions on private sector auditing and books and recordsrequirements. Other provisions address matters such as prevention, internationalcooperation, and asset recovery. Mexico is a party to the UN Convention.OAS Convention: In 1996, the Member States of the Organization of American States(OAS) adopted the first international anticorruption legal instrument, the Inter-AmericanConvention against Corruption (OAS Convention), which entered into force in March1997. The OAS Convention, among other things, establishes a set of preventivemeasures against corruption, provides for the criminalization of certain acts ofcorruption, including transnational bribery and illicit enrichment, and contains a series ofprovisions to strengthen the cooperation between its States Parties in areas such asmutual legal assistance and technical cooperation. As of December 2009, the OASConvention has 33 parties (see http://www.oas.org/juridico/english/Sigs/b-58.html)Mexico is a party to the OAS Convention.Free Trade Agreements: While it is U.S. Government policy to include anticorruptionprovisions in free trade agreements (FTAs) that it negotiates with its trading partners, theanticorruption provisions have evolved over time. The most recent FTAs negotiated nowrequire trading partners to criminalize “active bribery” of public officials (offering bribes toany public official must be made a criminal offense, both domestically and transnationally)as well as domestic “passive bribery” (solicitation of a bribe by a domesticofficial). All U.S. FTAs may be found at the U.S. Trade Representative Website:http://www.ustr.gov/trade-agreements/free-trade-agreements. [Insert information as towhether your country has an FTA with the United States: Mexico has a free tradeagreement (FTA) in place with the United States, named NAFTA, which came into forceJanuary 1 st , 1994.

Local Laws: U.S. firms should familiarize themselves with local anticorruption laws, and,where appropriate, seek legal counsel. While the U.S. Department of Commerce cannotprovide legal advice on local laws, the Department’s U.S. and Foreign CommercialService can provide assistance with navigating the host country’s legal system andobtaining a list of local legal counsel.Assistance for U.S. Businesses: The U.S. Department of Commerce offers severalservices to aid U.S. businesses seeking to address business-related corruption issues.For example, the U.S. and Foreign Commercial Service can provide services that mayassist U.S. companies in conducting their due diligence as part of the company’soverarching compliance program when choosing business partners or agents overseas.The U.S. Foreign and Commercial Service can be reached directly through its offices inevery major U.S. and foreign city, or through its Website at www.trade.gov/cs.The Departments of Commerce and State provide worldwide support for qualified U.S.companies bidding on foreign government contracts through the CommerceDepartment’s Advocacy Center and State’s Office of Commercial and Business Affairs.Problems, including alleged corruption by foreign governments or competitors,encountered by U.S. companies in seeking such foreign business opportunities can bebrought to the attention of appropriate U.S. government officials, including local embassypersonnel and through the Department of Commerce Trade Compliance Center “ReportA Trade Barrier” Website at tcc.export.gov/Report_a_Barrier/index.asp.Guidance on the U.S. FCPA: The Department of Justice’s (DOJ) FCPA OpinionProcedure enables U.S. firms and individuals to request a statement of the JusticeDepartment’s present enforcement intentions under the antibribery provisions of theFCPA regarding any proposed business conduct. The details of the opinion procedureare available on DOJ’s Fraud Section Website at www.justice.gov/criminal/fraud/fcpa.Although the Department of Commerce has no enforcement role with respect to theFCPA, it supplies general guidance to U.S. exporters who have questions about theFCPA and about international developments concerning the FCPA. For furtherinformation, see the Office of the Chief Counsel for International Counsel, U.S.Department of Commerce, Website, at http://www.ogc.doc.gov/trans_anti_bribery.html.More general information on the FCPA is available at the Websites listed below.Exporters and investors should be aware that generally all countries prohibit the briberyof their public officials, and prohibit their officials from soliciting bribes under domesticlaws. Most countries are required to criminalize such bribery and other acts ofcorruption by virtue of being parties to various international conventions discussedabove.Anti-Corruption ResourcesSome useful resources for individuals and companies regarding combating corruption inglobal markets include the following:• Information about the U.S. Foreign Corrupt Practices Act (FCPA), including a “Lay-Person’s Guide to the FCPA” is available at the U.S. Department of Justice’sWebsite at: http://www.justice.gov/criminal/fraud/fcpa.

• Information about the OECD Antibribery Convention including links to nationalimplementing legislation and country monitoring reports is available at:http://www.oecd.org/department/0,3355,en_2649_34859_1_1_1_1_1,00.html. Seealso new Antibribery Recommendation and Good Practice Guidance Annex forcompanies: http://www.oecd.org/dataoecd/11/40/44176910.pdf• General information about anticorruption initiatives, such as the OECD Conventionand the FCPA, including translations of the statute into several languages, isavailable at the Department of Commerce Office of the Chief Counsel forInternational Commerce Website: http://www.ogc.doc.gov/trans_anti_bribery.html.• Transparency International (TI) publishes an annual Corruption Perceptions Index(CPI). The CPI measures the perceived level of public-sector corruption in 180countries and territories around the world. The CPI is available at:http://www.transparency.org/policy_research/surveys_indices/cpi/2009. TI alsopublishes an annual Global Corruption Report which provides a systematicevaluation of the state of corruption around the world. It includes an in-depthanalysis of a focal theme, a series of country reports that document majorcorruption related events and developments from all continents and an overview ofthe latest research findings on anti-corruption diagnostics and tools. Seehttp://www.transparency.org/publications/gcr.• The World Bank Institute publishes Worldwide Governance Indicators (WGI).These indicators assess six dimensions of governance in 212 countries, includingVoice and Accountability, Political Stability and Absence of Violence, GovernmentEffectiveness, Regulatory Quality, Rule of Law and Control of Corruption. Seehttp://info.worldbank.org/governance/wgi/sc_country.asp. The World BankBusiness Environment and Enterprise Performance Surveys may also be of interestand are available at: http://go.worldbank.org/RQQXYJ6210.• The World Economic Forum publishes the Global Enabling Trade Report, whichpresents the rankings of the Enabling Trade Index, and includes an assessment ofthe transparency of border administration (focused on bribe payments andcorruption) and a separate segment on corruption and the regulatory environment.Seehttp://www.weforum.org/en/initiatives/gcp/GlobalEnablingTradeReport/index.htm.• Additional country information related to corruption can be found in the U.S. StateDepartment’s annual Human Rights Report available athttp://www.state.gov/g/drl/rls/hrrpt/.Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report,which provides indicators for 92 countries with respect to governance and anticorruption.The report highlights the strengths and weaknesses of national level anticorruptionsystems. The report is available at: http://report.globalintegrity.org/.Corruption in MexicoCorruption has been pervasive in almost all levels of Mexican government and society.President Calderon has stated that his government intends to continue the fight against

corruption and government agencies at the federal, state and municipal levels areengaged in anti-corruption efforts. Aggressive investigations and operations haveexposed corruption at the highest levels of government. In 2008, Calderon launched"Operacion Limpieza," investigating and imprisoning alleged corrupt government officialsin enforcement agencies. The Secretariat of Public Administration has the lead oncoordinating government anti-corruption policy.Other government entities, such as the Superior Audit Office of the Federation (ASF, theequivalent of the GAO), have been playing a role in promoting sound financialmanagement and accountable and transparent government with limited success as mostMexican external audit institutions (mostly at the state level) lack the operational andbudgetary independence to protect their actions from the political interests of thelegislators they serve.Mexico ratified the OECD convention on combating bribery in May 1999. The MexicanCongress passed legislation implementing the convention that same month. Thelegislation includes provisions making it a criminal offense to bribe foreign officials. Abribe to a foreign official cannot be deducted from Mexican taxes. Mexico is also a partyto the OAS Convention against Corruption and has signed and ratified the UnitedNations Convention against Corruption.The government has enacted strict laws attacking corruption and bribery, with averagepenalties of five to ten years in prison. A Federal Law for Transparency and Access toPublic Government Information Act, the country's first freedom of information act, wentinto effect in June 2003 with the aim of increasing government accountability. Mexico's31 states have passed similar freedom of information legislation that mirrors the federallaw and meets international standards in this field. Five years after its passage,transparency in public administration at the federal level has noticeably improved, butaccess to information at the state and local level has been slow.Mexico is ranked 89th in international NGO Transparency International's CorruptionPerception Index for 2009, lower than China, India, and Brazil. The NGO's 2008 BribePayer's Index also named Mexican firms as some of the most likely to use bribes whendoing business abroad. Local civil society organizations focused on fighting corruptionare still developing in Mexico. USAID continues to work with various with Mexican civilsociety and federal and state audit institutions to coordinate and promote anti-corruptionactivities. The Mexican branch of Transparency International also operates in Mexico.The best source of Mexican government information on anti-corruption initiatives is theSecretariat of Public Administration (www.funcionpublica.gob.mx).Bilateral Investment AgreementsReturn to topNAFTA governs U.S. and Canadian investment in Mexico. In addition to NAFTA, most ofMexico's eleven other free trade agreements (FTAs) cover investment protection, with anotable exception being the Mexico-European Union FTA. The network of Mexico'sFTAs containing investment clauses encompasses the countries of Bolivia, Chile, CostaRica, Colombia, El Salvador, Guatemala, Honduras, Japan, and Nicaragua.Mexico has enacted formal bilateral investment protection agreements (APPRIs-Agreements for Investment Promotion and Protection) with 27 countries: 14 EuropeanUnion Countries (Austria, Belgium, Luxemburg, Denmark, Finland, France, Germany,

Greece, Italy, Netherlands, Portugal, Spain, Sweden, United Kingdom), as well asAustralia, Argentina, China, Cuba, Iceland, India, Panama, Slovakia, South Korea,Switzerland, Trinidad and Tobago, and Uruguay. An agreement with Slovakia has still tobe ratified by the Senate. Mexico continues to negotiate bilateral investment treaties withRussia, Saudi Arabia, Malaysia, Singapore, and the Dominican Republic.The United States and Mexico have a bilateral tax treaty to avoid double taxation andprevent tax evasion. Important provisions of the treaty establish ceilings for Mexicanwithholding taxes on interest payments and U.S. withholding taxes on dividendpayments. The implementation of the IETU on January 1, 2008 has led to questions asto whether the new tax meets the requirements of the bilateral tax treaty. The U.S.Internal Revenue Service presently allows businesses to credit the IETU against theirU.S. taxes. However, businesses should continue to monitor this issue.Mexico and the United States also have a tax information exchange agreement to assistthe two countries in enforcing their tax laws. The Financial Information ExchangeAgreement (FIEA) was enacted in 1995, pursuant to the Mutual Legal Assistance Treaty.The agreements cover information that may affect the determination, assessment, andcollection of taxes, and investigation and prosecution of tax crimes. The FIEA permitsthe exchange of information with respect to large value or suspicious currencytransactions to combat illegal activities, particularly money laundering. Mexico is amember of the financial action task force (FATF) of the OECD and has made progress instrengthening its financial system through specific anti-money-laundering legislationenacted in 2000 and 2004.OPIC and Other Investment Insurance ProgramsReturn to topIn August of 2004, Mexico and the U.S. Overseas Private Investment Corporation(OPIC) finalized an agreement that enables OPIC to offer all its programs and servicesin the country. Since then, OPIC has aggressively pursued potential investment projectsin Mexico, and the country rapidly became one of the top destinations for projects withOPIC support. As of September, 2008, OPIC was actively providing over $730 million infinancing and political risk insurance support to 17 projects in Mexico.In addition, OPIC-supported funds are among the largest providers of private equitycapital to emerging markets. Since 1994, OPIC has committed (as of FY2008) almost3.2 billion USD in funding to 43 private equity funds. The OPIC funds which arecurrently investing in Mexico include Alsis Latin America Fund, Darby-BBVA LatinAmerica Private Equity Fund, Darby ProBanco II Fund, Latin Power Trust III, andPaladin Realty Latin America Investors II. For a more detailed description of these fundsincluding fund contact information and investment strategy, please consult OPIC'swebsite at www.opic.gov.LaborReturn to topMexico's Federal Labor Law, enacted in 1931 and revised in 1970, is based on article123 of the Mexican constitution. Under the law, Mexican unions enjoy the rights toassociate, collectively bargain, and strike. Mexico has a three-tiered minimum wagestructure, and workers in the formal economy must be paid MX$57.46 (geographic AreaA), MX$55.84 (geographic Area B), or MX$54.47 (geographic Area C) per day in 2010.

All three levels are below the average cost of living in Mexico’s cities, and most salariesare discussed in terms of multiple minimum wages: one minimum wage, two to fiveminimum wages, or more than five minimum wages. Wages have not kept up withinflation over the past several years, so Mexican workers have taken a heavy cut in realwages. The law sets a standard six-day workweek with one paid day off. For overtime,workers must be paid twice their normal rate and three times the hourly rate for overtimeexceeding nine hours per week. Employees are entitled to most holidays, paid vacation(after one year of service), vacation bonuses, and an annual bonus equivalent to at leasttwo weeks pay. Companies are also responsible for these additional costs. These costsusually add about 30 to 35 percent to an average employee salary. Employers must alsocontribute a tax-deductible two percent of each employee's salary into an individualretirement account. Most employers are required to distribute ten percent of their pre-taxprofits for profit sharing. Speaking on behalf of the current administration, the LaborSecretary has repeatedly affirmed that labor reform is and remains one of the toppriorities of President Calderon's government.There is a large surplus of labor in the formal economy, largely composed of low-skilledor unskilled workers. On the other hand, there is a shortage of technically skilled workersand engineers. Mexican manufacturing operations are experiencing stiff wagecompetition from Central America, China, India, and elsewhere in low technology work,such as textile and garment manufacture, but changing global circumstances havebrought some industries back to “near shore” operations along the border.For the past several years, with the possible exception of the mining industry, strikeshave been limited and usually settled quickly. Strikes that are more difficult will usuallydraw government mediators to help the settlement process. Labor-managementrelations are uneven and depend upon the unions holding contracts and the industriesconcerned. Information on unions registered with federal labor authorities is now partiallyavailable to the public via Internet (www.stps.gob.mx), but this database is incomplete.The government is coming under increasing pressure about its control over unionleadership, exercised through official recognition of union election results. This processis seen by independent unions as a violation of autonomy, and it has been at the core ofrecent government-union tension.Foreign Direct Investment StatisticsReturn to topForeign Direct Investment in Mexico (USD Million)2004 2005 2006 2007 2008Total FDI Inflow: 23,725 22,106 19,471 27,094 22,517New Investments 14,106 10,979 5,815 13,288 7,888EarningsReinvestment2,520 4,029 7,750 8,056 7,512Inter-companyInvestment7,099 7,098 5,906 5,750 7,117

Foreign Direct Investment Realized in Mexico By Industrial Sector Destination(USD Million)2004 2005 2006 2007 2008Total FDI Inflow: 23,725 22,106 19,471 27,094 22,517Agriculture 22 10 22 132 33Extractive 210 224 393 1,763 4,297Manufacturing 13,233 11,124 9,954 12,027 6,941Electricity and Water 202 202 (87) 166 414Construction 389 298 390 1,874 804Retail 1,274 2,837 565 1,449 1,613Transport andCommunication1,658 2,869 637 825 810Financial Services 5,731 1,642 4,753 6,746 4,296Others 1,006 2,900 2,843 2,112 3,309Foreign Direct Investment Inflows Realized By Country/Economy of Origin(USD Million)5 year2004 2005 2006 2007 2008 TotalsTotal FDI Inflow: 23,725 22,106 19,471 27,094 22,517 114,913United States 8,632 11,671 12,426 11,423 9,151 53,303Spain 7,856 1,198 1,615 5,303 4,338 20,310Holland 3,338 2,484 2,781 4,376 1,461 14,440France 227 364 121 201 112 1025United Kingdom 292 1,330 1,263 577 1,050 4,512Virgin Islands 56 2,051 292 1,095 1,455 4,949Canada 555 443 540 362 2,523 4,423Switzerland 1,157 321 559 602 354 2,993Germany 409 337 238 540 359 1883Argentina 11 542 22 21 1 597South Korea 48 97 72 41 398 656Brazil 48 50 50 22 80 250Taiwan 10 25 22 10 -5 62China 12 5 4 8 -1 28Japan 391 166 -1424 403 179 -285Notes FDI Investment Charts:A) Sources: Inflow - Mexican Secretariat of Economy, Director General of Foreign Investment.B) Period: 2008 data (January through December)C) Data: Millions of U.S. Dollars (USD), unless noted.D) The Secretariat of Economy has recalculated values for past years. All values for past years are the mostup to date data provided by the Secretariat of Economy.

E) With the passage of the IMMEX law integrating Maquila and Pitex industries, "Maquiladora Investment inFixed Assets" is no longer reported separately and is included in the category "Inter-company Investments".F) Yearly amounts may differ from 5 year totals due to rounding error.FDI Inflow as a Percentage of GDP2004 2005 2006 2007 2008GDP 759,422 849,030 952,340 1,025,428 1,088,128FDI Inflow 23,725 22,106 19,471 27,094 22,517Percent of GDP 3.1 2.6 2.0 2.6 2.1Notes on "FDI as a Percentage of GDP" chart: GDP figures are taken from the International Monetary Fund,IMF. Figures in millions of dollars at current market prices.U.S. FDI Flow and Stock in Mexico (USD Millions)2005 2006 2007 2008U.S. FDI Flow inMexico9,596 9,444 11,226 7,170U.S. FDI Stock inMexico73,687 82,965 91,259 95,618Notes: U.S. FDI Flow and stock in Mexico chart. Source: U.S. Department of Commerce Bureau ofEconomic Analysis.Mexico FDI Flow and Stock in U.S. (USD Millions)2005 2006 2007 2008Mexico FDI Flowin U.S.(19) 2,265 161 1,672Mexico FDI Stockin U.S.3,595 5,310 6,287 7,948Notes: U.S. FDI Flow and stock in Mexico chart: A) Source: U.S. Department of Commerce Bureau ofEconomic Analysis.In 2009 the U.S. and other nations' companies announced several large investments, including:A) The Executive Council of Global Companies (CEEG), USD 6.3 billionB) Coca-Cola Co., USD 5 billion during the next 5 yearsC) Nestlé, USD 500 million in QueretaroD) General Electric, USD 24 million in QueretaroE) Bell Helicopter (Textron Intl.), USD 85 million in ChihuahuaF) Cessna Aircraft, USD 21 million in ChihuahuaWeb ResourcesReturn to topProMexico: www.promexico.gob.mxFederal Competition Commission: www.cfc.gob.mxDepartment of State Legal Advisory: www.state.gov/s/lNacional Financiera Development Bank: www.nafin.comSec. of Economy's IMMEX Program: www.economia.gob.mxWIPO: www.wipo.int/about-ip/en/ipworldwide/pdf/mx.pdfReturn to table of contents

Return to table of contentsChapter 7: Trade and Project Financing• How Do I Get Paid (Methods of Payment)• How Does the Banking System Operate• Foreign-Exchange Controls• U.S. Banks and Local Correspondent Banks• Project Financing• Web ResourcesHow Do I Get Paid (Methods of Payment)Return to topU.S. exporters should be aware that Mexican lending rates are significantly higher thanin the U.S., ranging from 15 - 20% per year. Requiring payment either by ConfirmedLetter of Credit or Cash In Advance can cost U.S. exporters sales opportunities. Whilefavorable payment terms are important, U.S. companies should consider all financingoptions available in order to be as competitive as possible.The economic downturn has put increased pressure on Mexican importers to requestlonger payment terms as they struggle to finance their operations. In the case ofexisting contracts, many importers are defaulting on payment deadlines, paying 30 to 45days late. Exporters are advised to protect themselves from the risk of default byobtaining foreign buyer financing or export insurance from the U.S. ExIm Bank (seebelow for more information).It can be difficult to collect from Mexican buyers in cases of non-payment. The U.S.Commercial Service Mexico is currently assisting dozens of U.S. companies in theirefforts to obtain payment for products/equipment delivered. It is often necessary totravel to Mexico to meet with the buyer and in many cases to hire a lawyer to handle thecase. In fact, the state-owned oil company, Pemex, announced in November 2009 athree-month freeze on payments to vendors/contractors in response to adverse financialconditions. This type of decision, by the largest company in the country, creates aripple effect throughout the economy and only compounds the problem.More than ever, U.S. exporters are advised to be cautious and seek counsel whennegotiating contracts in Mexico. Once negotiated, be prepared for the unexpected asMexico and its companies struggle to dig out from a severe recession that has madetight credit even tighter.A detailed report on financing and payment mechanisms is available at:http://www.buyusainfo.net/docs/x_4118633.pdfHow Does the Banking System OperateReturn to topCommercial Banks:Mexico's commercial banks offer a full spectrum of services ranging from depositaccounts, consumer and commercial lending, corporate finance, trusts and mutualfunds, to foreign exchange and money market trading. Currently, 41 banks are

operating in Mexico; six of them have 83% market share by total assets and five newbanks are linked with retail stores.Mexico's commercial banking sector has been opened to foreign competition. The NorthAmerican Free Trade Agreement (NAFTA) permits U.S. and Canadian banks or anyother foreign bank with a subsidiary in the United States or Canada to establish whollyowned subsidiaries in Mexico. Further, they are allowed to undertake financial intermediationor to solicit customers for their parent bank. Almost all major banks, with theexception of Banorte, are under the control of foreign banks.Following the 1994 peso crisis, banks in Mexico have been very cautious in theirlending, preferring to provide loans only to their most sound customers. However, nowbanks are beginning to implement programs for lending to a wider range of companies,although at relatively high rates. In general, small and medium enterprises (SMEs) havetrouble accessing credit. The Mexican Government has enacted several incentives toencourage more lending to SMEs, and banks have followed suit with new lendingpolicies, but it remains to be seen whether the largest segment of the Mexican economywill gain better access to credit.The Secretariat of Finance, the National Banking and Securities Commission, and theBank of Mexico are the principal regulators of the banking system. The Secretariat ofFinance is concerned with institutional issues such as licensing and sets credit and fiscalpolicies. The Bank of Mexico (the Central Bank) implements these policies and alsooperates inter-bank check clearing and compensation systems. The Institute for theProtection of Bank Savings (IPAB, replacing the former institution FOBAPROA) acts asa deposit insurance institution. The National Banking and Securities Commission, asemi-autonomous government agency, is responsible for supervision and vigilance. TheMexican Banking Association (ABM) represents the interests of Mexico's banks.Development Banks:The mission of development banks is to fill financing shortfalls in the commercial bankingsector. Mexico has seven government-owned development banks that provide servicesto specific areas of the economy. The dominant institutions are Nacional Financiera(Nafinsa) and the Foreign Trade Bank (Bancomext). These institutions have becomeprimarily second-tier banks that lend through commercial banks and other financialintermediaries such as credit unions, savings and loans, and leasing and factoringcompanies. Nafinsa's primary program funds micro, small and medium-sizedbusinesses. Nafinsa also undertakes strategic equity investments and contributes equityto joint ventures. Bancomext provides financing to Mexican exports and to small andmedium-sized companies. It also offers working capital, project lending, and training tofirms in several specific sectors that require support, such as textiles and footwear.The other Mexican development banks are BANOBRAS (Public Works InfrastructureBank), FINANCIERA RURAL (Rural Agriculture Bank), BANSEFI (National Savings andFinancial Services Bank), BANJERCITO (Mexican Army, Air Force and Navy Bank) andHIPOTECARIA FEDERAL (which finances Mexican homeownership through financialintermediaries).New Non-Banks:The non-traditional banking sector in Mexico is comprised generally of newcomers thatdid not exist fifteen years ago. These recently developed institutions are lending to

individuals who are equally new to the industry – people that have little, poor or no credithistory.Most of these newly developed lending institutions are members of the MexicanAssociation of Specialized Financial Entities (AMFE), which encompasses two maintypes of non-traditional lenders: Limited Purpose Financial Institutions (SOFOL’s) andMultiple Purpose Financial Institutions (SOFOM’s). Most of the newest firms in themarket are SOFOL’s due to the inherently decreased credit risk present when theborrower’s specific activities are known and by law, they must convert to a SOFOM or atraditional lending institution within seven years.As of October 2009, the AMFE collective network of SOFOL’s and SOFOM’s has over7.5 million loans issued. Delinquency in consumer loans increased from 3% to 9% overthis period. The mortgage sector is the most affected by the financial crisis.Foreign-Exchange ControlsReturn to topThere are no controls on the transfer of U.S. dollars into and out of Mexico. This meansthat profits can be repatriated freely.U.S. Banks and Local Correspondent BanksReturn to topThere are many U.S.-based banks active in the Mexican market, particularly U.S.brokers and banks working with ExIm programs. The U.S. Commercial Service Mexicomaintains a list of these banks. Please contact Sylvia Montano,Sylvia.Montano@trade.gov for more information.Project FinancingReturn to topBanks, investor groups, large institutional investors such as insurance companies, publicofferings of bonds, and other capital market instruments often provide financing. Suchfinancing is in its infancy in Mexico as the Government of Mexico (GOM) has previouslybeen the owner of these types of projects. The financing required by the GOM has beenhandled either through large international loan syndication direct to the federalgovernment or its operating entities or through multilateral credits.Mexico has entered a new era in granting concessions for seaports, airports, railroads,satellite communications, power generation plants, and natural gas distribution systems.In general, Mexican and foreign firms that win bids and tenders need to finance majorpurchases of both equipment and services.U.S. ExIm Bank http://www.exim.govThe Export-Import Bank of the United States (ExIm Bank), an independent agency of thefederal government, offers various short, medium and long-term export finance andinsurance programs. Of specific interest to U.S. exporters are the guarantees formedium-term loans to foreign buyers of capital equipment. Most loans are made by U.S.banks with ExIm Bank’s guarantee. ExIm has approximately $7 billion USD in exposurein Mexico making it one of ExIm Bank’s top markets.

Much of ExIm Bank’s activity is under so-called bundling facilities. A bundling facility is alarge medium-term loan made to a Mexican bank by a U.S. bank with the guarantee ofExIm Bank. The Mexican bank then makes loans for the purchase of American capitalgoods to Mexican companies. There also are a number of U.S.-based banks thatextend ExIm Bank credits in Mexico. The major Mexican commercial banks have signedagreements with ExIm Bank to grant lines of credit to Mexican firms that purchase U.S.-made products. Many major Mexican banks (Santander Serfin, BBVA-Bancomer,Banamex and others) have Master Guarantee Agreements. Such credits generally areavailable only to Mexican blue chip companies and to their suppliers with firm contracts.ExIm has made financing for renewable energy a top priority since the inception of itsEnvironmental Exports Programs in 1994 offering competitive financing terms (up to 18years in some cases) to international buyers for the purchase of U.S.-originatingenvironmental goods and services.Overseas Private Investment Corporation http://www.opic.govOverseas Private Investment Corporation, OPIC, provides medium- to long-term fundingthrough direct loans and loan guaranties to eligible investment projects in developingcountries and emerging markets. By complementing the private sector, OPIC canprovide financing in countries where conventional financial institutions often are reluctantor unable to lend on such a basis.OPIC also offers insurance to U.S. investors, contractors, exporters and financialinstitutions involved in international transactions. Political risk insurance can covercurrency inconvertibility, expropriation and political violence, and is available forinvestments in new ventures, expansions of existing enterprises, privatizations andacquisitions with positive developmental benefits.Typically, OPIC requires that U.S. investment in a given project represent at least 25%of the total investment value in order to be eligible for assistance. The Overseas PrivateInvestment Corporation (OPIC) offers its full range of programs services in Mexico andhas approved over $250 million worth of projects in 2009.U.S. Trade and Development Agency http://www.ustda.govThe U.S. Trade and Development Agency (USTDA) provides funding for feasibilitystudies and other forms of technical assistance to help promote U.S. exports. Byassisting U.S. firms to become involved in the early stages of project development,USTDA leverages U.S. exports during the implementation stages. USTDA works closelywith the various development banks, including the World Bank and the Inter-AmericanDevelopment Bank, to help U.S. firms take advantage of those banks’ projects.Additionally, in the case of a competitive bid for a large infrastructure project, USTDAcan offer a de minimus training grant, or another form of technical assistance, to help theU.S. company or consortium make their bid more attractive. USTDA has an activeprogram in Mexico, funding projects in a wide range of sectors.In 2008, USTDA provided over $2 million in support of priority infrastructure projects thatfurther the objectives of the Mexico’s National Infrastructure Program, includingfeasibility studies for the modernization of three airports. During 2009, USTDA funded afeasibility study to develop a new airport in Ensenada and sent a project identificationmission to evaluate new grant opportunities in the Mexican aviation sector. During 2010,USTDA is sponsoring a project identification mission for the Mexican renewable energy

sector, which is expected to uncover new grant opportunities for clean energy projectsthat will require significant U.S. inputs - both technology and services.U.S. Small Business Administration http://www.sba.gov/oit/The U.S. Small Business Administration (SBA) provides financial and businessdevelopment assistance to encourage and help small businesses in developing exportmarkets. The SBA assists businesses in obtaining the capital needed to explore,establish, or expand international markets. SBA’s export loans are available underSBA’s guaranty program. Prospective applicants should tell their lenders to seek SBAparticipation, if the lender is unable or unwilling to make the loan directly.SBA also offers an Export Revolving Line of Credit (ERLC) program that is designed tohelp small businesses obtain short-term financing to sell their products and servicesabroad. The program guarantees repayment to a lender in the event an exporterdefaults. The ERLC protects only the lender from default by the exporter; it does notcover the exporter should a foreign buyer default on payment. Lenders and exportersmust determine whether foreign receivables need credit risk protection.Inter-American Development Bank http://www.buyusa.gov/idb/.The Inter-American Development Bank (IDB) finances public sector projects in Mexicoand the other 25 borrowing countries in Latin America and the Caribbean. Currentapproved loans in Mexico exceed $3 billion USD. The IDB has focused its lendingprograms on infrastructure needs in Mexico, while the World Bank has favored humanresource development and structural reform initiatives.U.S. companies are eligible to compete for contract awards from public sector executingagencies. However, in contrast to trade finance institutions, U.S. companies do not applydirectly to the IDB. U.S. companies interested in competing for public sector projectsfinanced by the IDB may maximize their chances of winning by contracting a localpartner in Mexico. The U.S. Commercial Service maintains an office in the IDB to assistU.S. companies in taking advantage of IDB funded projects.World Bank www.worldbank.orgThe World Bank is a multi-lateral development bank that provides loans to developingcountries with the stated goal of reducing poverty. World Bank is comprised of twoinstitutions: the International Bank for Reconstruction and Development (IBRD) and theInternational Development Association (IDA). IBRD is active in Mexico, supportinglarge-scale infrastructure projects such as highways, airports, and power plants. TheWorld Bank’s total program for Mexico reached $3.4 billion in 2009. Particularly giventhe tight credit market, it is common for governments to leverage financing from severalsources, (The World Bank, Export Credit Agencies, private equity funds, etc.) whendeveloping large projects.Web ResourcesReturn to topExport-Import Bank of the United States: http://www.exim.govCountry Limitation Schedule: http://www.exim.gov/tools/country/country_limits.htmlOPIC:http://www.opic.govTrade and Development Agency:http://www.tda.gov/SBA's Office of International Trade:http://www.sba.gov/oit/USDA Commodity Credit Corporation: http://www.fsa.usda.gov/ccc/default.htm

U.S. Agency for International Development: http://www.usaid.govExport-Import Bank of the United States: http://www.exim.govNational Commission for Protecting and Defending Users of Financial Services (Mexico)www.condusef.gob.mxFederal Trade Commission:www.ftc.govWorld Bank:www.worldbank.orgReturn to table of contents

Return to table of contentsChapter 8: Business Travel• Business Customs• Travel Advisory• Visa Requirements• Telecommunications• Transportation• Language• Health• Local Time, Business Hours and Holidays• Temporary Entry of Materials and Personal Belongings• Web ResourcesBusiness CustomsReturn to topMexican businesspeople in major cities give a great deal of importance to appearancesand therefore we advise wearing professional attire.Participation in business lunches is very important to succeed in Mexico. Beforebeginning a business discussion, it is common to discuss family, recent events or othersocial themes. Mexicans are accustomed to smoking and drinking freely at businessmeals. Business lunches can span two hours.Patience is key to doing business in Mexico. Business meetings in Mexico will oftentake longer than they would in the United States. Etiquette often includes small talkbefore business.Mexican social etiquette makes it difficult to say no. Therefore, yes does not alwaysmean yes. In conversation, Mexicans emphasize tactful and indirect phrasing, and maybe more effusive than Americans with praise and emotional expressions. Do not beoverly aggressive while negotiating; it is considered rude.The concept of time is flexible in Mexico. Guests to social events (except in the case ofcities in the North) can arrive up to an hour late. However, punctuality is observed formost business and government appointments.Business cards are used extensively. Come with a large supply.Travel AdvisoryReturn to topFor detailed information about travel advisory information from the State Department,please click on: http://travel.state.gov/travel/cis_pa_tw/cis/cis_970.html

Visa RequirementsReturn to topAs of March 1, all U.S. citizens must have a passport or passport card to enter Mexico(beyond the immediate border zone)There is a single visa form for tourist and business visitors, valid for 30 days upon entrywith no fee. This form is normally distributed on all arriving aircraft. Business visitorsmust be careful not to enter as a tourist if their reason for visiting includes any of thefollowing activities:• Business meetings• Trade events• Consulting• Technical support• MarketingContracts and other business agreements entered into while an American visitor toMexico is traveling on tourist rather than business status are not legal. There have beenrare instances of immigration authorities detaining visitors doing business while ontourist status, resulting in fines up to USD$2,000. Immigration officials also have theauthority to bar such travelers from obtaining visas in the future.Immigration status can be adjusted fairly easily while in country for tourists who later findthey want to do business. In Mexico City, visa status can be converted at the followingimmigration office, located not far from several major business hotels:Delegación RegionalInstituto Nacional de Migracion (INM)Lic. Mario Velazquez SantiagoAvenida Ejercito Nacional No. 862Col. Los Morales, Polanco11570 Mexico, D.F.Phone: 2581-0100 x 32005If a U.S. businessperson wants to reside in Mexico and work on a more permanentbasis, it is necessary to obtain an FM-3 immigration form. This form may be obtainedwith validity up to one year, renewable up to a total of five years. The cost is aboutUSD$165 at the current exchange rate.To obtain the FM-3 the traveler must present any of the following documents:• Valid passport, or• Proof that the traveler is engaged in international business and that he willreceive his income from the U.S. company (e.g. a letter from the U.S. employer).A verbal declaration may be acceptable.IMPORTANT NOTE: All foreign visitors should keep their Visitor Card (FormaMigratoria) bearing the official "FEE PAID" stamp as it must be surrendered upondeparture from the country.

For further information please visit the Mexican Ministry of Tourism web site at:http://www.sectur.gob.mx/.U.S. Companies that require travel of foreign businesspersons to the United Statesshould be advised that security options are handled via an interagency process. Visaapplicants should go to the following links.State Department Visa Website: http://travel.state.gov/visa/index.htmlUnited States Visas.gov: http://www.unitedstatesvisas.gov/TelecommunicationsReturn to topTelephone Services:Telephone service is usually reliable and most parts of Mexico have direct dialing to theUnited States. Telephone service is heavily taxed in Mexico, and fees are relatively high.MCI, and AT&T calling cards may be used in Mexico. Cellular telephones are availableand widely used.While traveling throughout Mexico, the two main mobile carriers, Telcel and TelefónicaMóviles have national coverage and international roaming services. Best reception isfound in federal highways and the top 50 cities in the country, including beach resorts.Nevertheless, the CDMA operator Iusacell has countrywide coverage and roamingagreements in the U.S. with Sprint and Verizon. If you bring your mobile phone, chancesare that you will be able to use it while traveling to Mexico, regardless of the companyand technology (GSM, CDMA or PTT) you use.For mobile office device users (Blackberry, Palm, etc.) roaming services not only applyfor voice services, but also for data services. This means you can also receive email onyour mobile phone if you have contracted such a service in the U.S. However, if you donot have an international plan, (voice and data) roaming fees can be substantial.Local Mobile Operators are:Telcel (GSM / TDMA):http://www.telcel.comMóviStar (GSM / CDMA):http://www.telefonicamovistar.com.mxIusacell (CDMA / 3G):http://www.iusacell.com.mxNextel – Trunking Services:http://www.nextel.com.mxComisión Federal de Telecomunicaciones: http://www.cofetel.gob.mxInternet Services:Tourist and business hotels provide Internet services, sometimes wirelessly, in rooms, orat a minimum, in business centers. Internet hotspots are now becoming more common.Because Internet penetration in residential areas is relatively low, Mexico has aproliferation of Internet Cafés that offer Internet access.TransportationReturn to topMexico City has frequent direct and non-stop flights from major U.S. cities. Americancarriers to Mexico include: American, Continental, Delta, America West, U.S. Airways,

United and Northwest. Mexican carriers providing scheduled service within Mexicoinclude Mexicana, Aeromexico, and several feeder carriers.The Mexico City Benito Juarez International Airport offers a fixed price (depending ondestination) taxi service to any point in the city. Tickets are purchased at a booth justoutside the baggage claim area. This taxi service is regulated and monitored by thegovernment. For security reasons, it is recommended that travelers do not use anyother private taxi services offered on-site.LanguageReturn to topSpanish is the official language of Mexico. While many people in the large cities speaksome English, it may be difficult for them to conduct detailed discussions. Non-Spanishspeakingvisitors to Mexico may wish to hire an interpreter. It is considered courteousfor U.S. business people to speak a few words of Spanish. Many mid and high-levelgovernment officials and business executives speak English, and many are U.S.-educated.HealthReturn to topA high standard of medical care is available in the principal cities from private hospitalsand doctors. Many private Mexican doctors have U.S. training and speak English.In Mexico City, U.S. Embassy staff requiring urgent medical care generally visit the ABCHospital (tel: 5230-8000; emergency ward 5230-8161-4). Other good private hospitalsand clinics located around the city include the Angeles Group (various locations); MedicaSur (south Mexico City), and Clinica Londres (central).Visitors should follow standard international dietary precautions in Mexico. It is best todrink bottled beverages without ice. Bottled water is readily available. Raw saladsshould not be consumed, all fruits should be peeled, only pasteurized dairy productsshould be consumed, and meat should be ordered well done. Hotels and businessrestaurants in general cater to foreign visitors and fulfill all sanitary requirements. ManyAmerican fast food chains have franchises in Mexico with similar standards as in theUnited States.Air pollution in the Valley of Mexico (Mexico City and adjacent areas) is chronic.Contaminants in excess of U.S. and Mexican standards pollute the air many days duringthe year. Air pollution is at its peak from November to April, during the dry season, andmay aggravate allergy and cardiopulmonary problems. The relatively high altitude ofMexico City, a long winter dry season, and air pollution can cause irritation of therespiratory tract, nose, and eyes - the latter especially for those who use contact lens.Visitors to Mexico City should remember the high altitude and be prepared to moveslowly, getting sufficient rest, until they have adjusted. Upon arrival in Mexico City,increased respiration, rapid heart rate, and mild dizziness may occur while visitorsacclimatize to the higher altitude. Insomnia, fatigue, circulatory problems, symptoms ofdehydration, and nausea are common, but pass quickly. Alcoholic beverages have astronger effect. Newcomers may find it beneficial to drink plenty of water.

Local Time, Business Hours, and HolidaysReturn to topMexico spans several time zones, as does the United States. From the YucatánPeninsula to Tijuana, there is a three-hour time difference. Mexico City and CentralMexico is Central Standard Time (CST).Listed below are Mexican holidays for 2010. On these days, banks will not open andmost businesses will be closed. Be aware of the popular "puentes" or bridges. Whenholidays fall near the weekend, they are rapidly converted into long weekends and arenot a good time to schedule business trips.2010 Mexican Holiday ScheduleDate Day of Week HolidayJanuary 1 Friday New Year’s DayFebruary 1 Monday Anniversary of the Mexican ConstitutionMarch 15 Monday Birthday of Benito JuarezApril 1 Thursday Holy ThursdayApril 2 Friday Good FridayMay 1 Saturday Mexican Labor DayMay 5 Wednesday Anniversary of the Battle of PueblaMay 10 Monday Mother’s DaySeptember 16 Thursday Mexican Independence DayNovember 2 Tuesday All Souls’ DayNovember 15 Monday Anniversary of the Mexican RevolutionDecember 25 Saturday Christmas DayTemporary Entry of Materials and Personal BelongingsReturn to topTemporary imports for manufacturing, transformation, and repair under the Maquila andPitex programs are subject to payment of duties taxes and compensatory fees. Othertemporary imports from the U.S., however, do not pay import duties, taxes or fees, butthey must comply with all other obligations set forth in Article 104 of the MexicanCustoms Law. Please see Chapter 5, Temporary Entry, for more details.Web ResourcesReturn to topState Department Travel Advisory: http://travel.state.gov/travel/cis_pa_tw/cis/cis_970.htmlMexican Embassy in the U.S.: http://www.embassyofmexico.orgMexican Ministry of Tourism: http://www.sectur.gob.mxState Department Visa Website: http://travel.state.gov/visa/index.htmlUnited States Visas:http://www.unitedstatesvisas.gov/U.S. Embassy in Mexico, visa information:http://mexico.usembassy.gov/mexico/evisas.htmlU.S. Embassy in Mexico, U.S. citizens:http://mexico.usembassy.gov/mexico/citizen_services.htmlCenters for Disease Control and Prevention:http://wwwnc.cdc.gov/travel/destinations/mexico.aspxReturn to table of contents

Return to table of contentsChapter 9: Contacts, Market Research, and Trade Events• Contacts• Market Research• Trade EventsContactsReturn to topMrs. Ann BacherMinister Counselor for Commercial AffairsUnited States Trade CenterLiverpool # 31Col. Juárez06600 México, D.F.Phone: (011-52-55) 5140-2601Fax: (011-52-55) 5705-0065Mail: P.O. Box 9000Brownsville, TX 78520-0900E-mail: ann.bacher@mail.doc.govhttp://www.buyusa.gov/mexico/Mr. Adam ShubActing Minister Counselor for Economic AffairsEmbassy of the United States of AmericaPaseo de la Reforma # 305, Piso 4Col. Juárez06500 México, D.F.Phone: (011-52-55) 5080-2810Fax: (011-52-55) 5080-2394Mail: P.O. Box 9000Brownsville, TX 78520-0900Email: shubam@state.govhttp://www.usembassy-mexico.govMr. Allan P. MustardMinister Counselor for Agricultural AffairsEmbassy of the United States of AmericaPaseo de la Reforma # 305, Piso 2Col. Juárez06500 México, D.F.Phone: (011-52-55) 5080-2847Fax: (011-52-55) 5208-2130/2776Mail: P.O. Box 9000Brownsville, TX 78520-9000Email: agmexico@usda.govhttp://www.usembassy-mexico.gov

Mr. Garth ThorburnDirector, U.S. Agricultural Trade OfficeUnited States Trade CenterLiverpool # 31Col. Juárez06600 México, D.F.Phone: (011-52-55) 5140-2611Fax: (011-52-55) 5535-8357Mail: P.O. Box 9000Brownsville, TX 78520-0900Email: atomexico@usda.govhttp://www.mexico-usda.com/Mr. Richard BattagliaDirector, U.S. Agricultural Trade Office, MonterreyBlvd. Diaz Ordáz # 140 Torre 2, Floor 7Col. Santa María64650 Monterrey, Nuevo LeónPhone: (011-52-81) 8333-5289Fax: (011-52-81) 8333-1248Mail: P.O. Box 9002Brownsville, TX 78520-9002E-mail: atomonterrey@usda.govhttp://www.mexico-usda.com/Mr. Geoffrey BogartPrincipal Commercial OfficerU.S. Consulate General, MonterreyAv. Constitución # 411 Pte.64000 Monterrey, Nuevo LeónPhone: (011-52-81) 8047-3223 / 8047-3100Fax: (011-52-81) 8047-3188 / 8047-3355Mail: P.O. Box 9002Brownsville, TX 78520-9002E-mail: Geoffrey.Bogart@mail.doc.govhttp://ww.buyusa.gov/mexicoMs. Lora BakerPrincipal Commercial OfficerU.S. Consulate General, GuadalajaraWorld Trade CenterAv. Mariano Otero # 1249 Torre Pacífico, Piso 444530 Guadalajara, JaliscoPhone: (011-52-33) 3615-1140Fax: (011-52-33) 3615-7665Mail: P.O. Box 9001Brownsville, TX 78520-0901E-mail: lora.baker@mail.doc.govhttp://www.buyusa.gov/mexico/

Ms. Monica RosasU.S. Consulate General, TijuanaTapachula # 96Col. Hipódromo22420 Tijuana, Baja CaliforniaPhone: (011-52-664) 622-7450Fax: (011-52-664) 622-7643E-mail: Monica.Rosas@mail.doc.govhttp://www.buyusa.gov/mexico/GOVERNMENT OF MEXICO:Secretaría de Economía (SE)(Former SECOFI-Secretariat of Commerce and Industrial Development):http://www.economia.gob.mxInstituto Mexicano de la Propiedad Industrial (IMPI)(Mexican Institute of Industrial Property and Technological Development):http://www.impi.gob.mxSecretaría de Educación Pública (SEP)(Secretariat of Public Education): http://www.sep.gob.mxSecretaría de Energía (SENER)(Secretariat of Energy): http://www.energia.gob.mxSecretaría de Medio Ambiente, Recursos Naturales (SEMARNAT)(Secretariat of the Environment, Natural Resources): http://www.semarnat.gob.mxSecretaría de Comunicaciones y Transportes (SCT)(Secretariat of Communications and Transport): http://www.sct.gob.mxCHAMBERS OF COMMERCE:American Chamber of Commerce in Mexico, A.C.: http://www.amcham.com.mxU.S.- Mexico Chamber of Commerce: http://www.usmcoc.orgCámara de Comercio Hispana de los Estados UnidosUnited States Hispanic Chamber of Commerce: http://www.ushcc.comCámara Nacional de Comercio de la Ciudad de México (CANACO)(National Chamber of Commerce of Mexico City): http://www.ccmexico.com.mxConfederación de Cámaras Nacionales de Comercio, Servicios y Turismo(Confederation of National Chambers of Commerce): http://www.concanacored.comCámara Nacional de la Industria de la Transformación(National Manufacturing Industry Chamber): http://www.canacintra.org.mxConfederación de Cámaras Industriales de los Estados Unidos Mexicanos(Confederation of Industrial Chambers of Mexico): http://www.concamin.org.mx

Asociación Nacional de Importadores y Exportadores de la República Mexicana, A.C.Association of Importers and Exporters of Mexico: http://www.anierm.org.mxIt should be noted that there are hundreds of specialized and regional associations andchambers in Mexico, which could not be included here.Market ResearchReturn to topTo view market research reports produced by the U.S. Commercial Service please go tothe following website: http://www.export.gov/marketresearch.html and click on Countryand Industry Market Reports.Please note that these reports are only available to U.S. citizens and U.S. companies.Registration to the site is required, but free of charge.Trade EventsReturn to topPlease click on the link below for information on upcoming trade events.http://www.export.gov/tradeevents.htmlFor a listing of trade events in Mexico:http://www.buyusa.gov/mexico/en/trade_events.htmlReturn to table of contents

Return to table of contentsChapter 10: Guide to Our ServicesThe U.S. Commercial Service offers customized solutions to help your business enterand succeed in markets worldwide. Our global network of trade specialists will workone-on-one with you through every step of the exporting process, helping you to:• Target the best markets with our world-class research• Promote your products and services to qualified buyers• Meet the best distributors and agents for your products and services• Overcome potential challenges or trade barriersFor more information on the services the U.S. Commercial Service offers U.S.businesses, please go to:http://www.buyusa.gov/mexico/en/business_opportunities_mexico.htmlReturn to table of contentsU.S. exporters seeking general export information/assistance or country-specific commercialinformation should consult with their nearest Export Assistance Center or the U.S. Departmentof Commerce's Trade Information Center at (800) USA-TRADE, or go to the following website:http://www.export.govTo the best of our knowledge, the information contained in this report is accurate as of the datepublished. However, The Department of Commerce does not take responsibility for actionsreaders may take based on the information contained herein. Readers should always conducttheir own due diligence before entering into business ventures or other commercialarrangements. The Department of Commerce can assist companies in these endeavors.