Chinese Taipei, 2011
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The Trade Agreements offer benefits for
the countries that provide both the
consumer side and producers, whether
large, medium and small businesses.
The most visible benefit is the increase in
the international trade with partner
countries and regions. The following graph
shows the evolution of trade in Mexico to
the world and to the main partner regions.
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Mexico World Trade
(Millions of Dollars)
Imports
Exports
Mexico- North America Trade
(Millions of Dollars)
Exports
Imports
Total Trade
Total Trade
Mexico - European Union Trade
(Millions of Dollars)
Exports
Imports
Total Trade
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DYNAMIC OF OPERATION.
 Lower prices to
consumers
Preferential Entry
New market
niches
 Increases
the
profitability of
exports
Access to
Markets
 Reduction of
non-tariff
barriers
Fair conditions of
competence
Intellectual
Property
Protection
 Incentive for
technological
development
Tariff
Elimination
Clear legal
framework
 Encourages
competition
 Simple
Steps
 Certainty
to the
investor
Investment
Opportunities
 Attracting FDI
 Better Wages
 More Business
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Millions of dollars
Foreign
Investment
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Mexico has signed trade agreements on 3 continents, and
it stands as a gateway to a potential market of over one
million consumers and 60 percent of world GDP.
Mexico has a network of 11 free trade agreements covering
43 countries. Also has 6 Economic Complementation
Agreements. We have signed Agreements for the
Promotion and Reciprocal Protection of Investments (which
promote legal protection of capital flows to the productive
sector) with 25 countries and signed agreements to avoid
Double Taxation with more than 31 countries.
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EFTA FTA
Iceland
Liechtenstein
Norway
Switzerland
Entry
into
force of
the WTO
Mexico's
accession
to GATT
NAFTA
US
Canadá
FTA
Israel
FTA
Costa Rica
G3
Colombia
FTA
MERCOSUR
ALADI
(Framework
Agreement)
FTA
Nicaragua
FTA
Chile
FTA
EU
FTA
Uruguay
EPA
Japan
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1. I know that there is demand for my product in other NAFTA
countries, but I don´t know where to start looking for
customers. Where do I begin?
Each of the NAFTA countries has agencies or offices that help
businesses develop new international markets for their products.
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2. How do I find out whether my product is subject to a
duty in one of other NAFTA countries?
On January 1, 2008, the last scheduled duties and quotas
were eliminated. However, not every good shipped from one
country to another is eligible for duty-free treatment under the
NAFTA. In order to receive NAFTA treatment, the product must
meet the rule of origin. These rules underline the production
that must occur in order for a product to be eligible for NAFTA
treatment. For example, a product imported into one NAFTA
country from outside North America, then shipped onward to
another NAFTA country may not qualify for duty-free treatment.
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3. What is a Certificate of Origin?
The NAFTA Certificate of Origin is used by the United States,
Canada and Mexico to determine if imported goods are eligible
to receive reduced or eliminated duty as specified by the
NAFTA. For purposes of obtaining preferential tariff treatment,
this document must be completed legibly and in full by the
exporter and be in the possession of the importer at the time the
declaration is made. This document may also be completed
voluntarily by the producer for use by the exporter.
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4. I´d like to export, but I need help with financing. What
resources are available?
Each of the NAFTA countries has its own export financing
programs. In some cases, you may be eligible to receive
working capital, export insurance, or other assistance.
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THE LACK OF A STRATEGY
Our SMEs were not prepared for the opening of a globalized
world:
Organizational and technological problems
Effect of negative externality on manufacturing (among these
is the exchange rate with a tendency towards overvaluation and
facilities in tax refunds in the import of raw materials for export).
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Asymmetric
economic and financial conditions of operation
where smaller segments of manufacturing enterprises are not
encouraged to join the international competition
The ineffectiveness of the policies and plans for the promotion
of SMEs and impulse to an entrepreneurship
Coinvestment of manufacturing industry to the maquila model
Rapid
opening to imports of consumer goods, elimination of
prior import licenses and the unilateral reduction of tariffs,
resulted in the lack of care in keeping the proper tariff
consistency.
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 SMEs
in Mexico constitute a strategic sector for the
economic and social development of the country,
unfortunately in Mexico, this segment is under a constant
cycle of opening and bankruptcy that many times is
inevitable, because the current situation surrounding
them is characterized by requiring a high level of
adaptability to constant changes in their environment,
mainly in the macroeconomic field.
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Also they are surrounded by serious problems:
Limited access to financing sources
Higher interest rates in developed countries
Limited
participation in foreign trade, as there are not many
opportunities for companies to export and be competitive
Lack of linkage with Universities and R&DC
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Inefficient promoting programs
Lack of coordination among national programs
Weak structure in its organization and operation
Globalization, rapid technological changes and obsolescence
of technology, machinery and equipment
High
costs of raw materials and components, and limited
bargaining power
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Nowadays one of the greatest obstacles to the export
process of SMEs stems from the lack of knowledge,
by the entrepreneur, in how external markets behave,
which is reflected in the following aspects:
The mistakes in the adequacy of the product to the
requirements
of
the
external
market
and
competitiveness with major enterprises (via low-cost,
payment of wages and regulatory compliance)
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The lack of information about international markets
and financial inability to develop promotional
strategies in foreign markets (advertising, direct
marketing, public relations, sales promotion)
The
absence of training in access to appropriate
distribution channels and training in international
marketing
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 All these factors, cause that the useful life of SMEs,
become
short, bringing as a consequence: unemployment, low sales,
depreciation of enterprises, limited market resulting in
inability of international insertion, poor economy, low social
efficiency, low quality of life, among others.
 If this problem is not overcome, it is very unlikely that SMEs
take advantage of the great opportunities that the global
market offers.
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CHALLENGES OF FOREIGN TRADE
More SMEs
•
•
More regions
•
5 of 19 manufacturing
sectors concentrate
more than 70% of the
total exports
There are more than 37,000
exporting companies
500 firms concentrate 83%
of the exports
DEMOCRATIZATION
OF THE OPENING
More sectors
•
8 regions concentrate
more than ¾ parts of
the total exports
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1. Amount of exports
Although SMEs comprise the majority of firms in each of the
NAFTA countries, the majority of them do not export. SMEs
accounted for approximately 30 percent of U.S. merchandise
exports between 1997 and 2007. In 2007, only nine percent of
Canadian SMEs exported goods and services but 47 percent of
their total revenues came from those exports. In 2008, SMEs in
Canada were responsible for 35 percent of total value of exports.
Mexico indicated that 99 percent of Mexican companies are
classified as SMEs. They are responsible for 72 percent of
national employment, but less than six percent of Mexico´s SMEs
export.
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2. Access to information about foreign
markets
Access to information about foreign markets remains a challenge
for SMEs.
insufficient access to finance
complex and sometimes nontransparent
domestic and foreign
regulations
 rising and unpredictable transportation costs
 the small scale of SME production
tariff and nontariff barriers
time-consuming foreign customs procedures
language and cultural differences, and
 lack of knowledge of foreign markets.
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3. Access to financing
Access to financing plays an important role for SMEs. Lack of access to
trade financing can reduce trade and worsen economic downturns. The
financial crisis decreased the supply of available trade financing and
increased the perceived risk associated with international transactions.
Although all types of firms were hurt by the downturn, SMEs have been
particularly vulnerable because of their more limited access to funds.
Larger companies obtain much of their financing in equity and bond
markets –sources that smaller firms largely cannot access. Banks are the
main source of external finance for SMEs. During the downturn, bank
loans for smaller companies have been harder to obtain and more costly
than loans for larger firms, despite the greater importance of such
financing for small firms.
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4. Exports culture
When North America SMEs do begin to export, they are most likely to
export to a customer in one of the NAFTA countries . A 2005 Industry
Canada report noted that Canadian SMEs largely export to the United
States, regardless of their size, although evidence suggests that small
enterprises may be focusing more on new markets than their medium
and large counterparts. For Canadian SMEs, The United States and
Mexico represented 74 percent and one percent, respectively, of the total
value of SME exports in 2008. For U.S. firms, Canada and Mexico
represented 22 percent of total SME exports between 2002 and 2007.
The situation for Mexico is similar.
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a)
The parties developed “Opportunities for Small-and Medium-Sized
Enterprises in North America”, a brochure that answers basic
questions about exporting in North America and provides links to
helpful government resources.
b) To continue the work on competitiveness, which will drive down
costs for business of all sizes. Governments agreed to
consult with agencies responsible for export promotion and
small business development in order to explore the following
four areas:
•
Supporting for small business development centers and
creation of regional SME-to-SME initiatives to promote
matchmaking opportunities between businesses.
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•Training and export assistance programs for SMEs
•Promoting
export opportunities for competitive industries, including
increased SMEs engagement as suppliers and therefore indirect exporters
along North America supply chains, and
•Enhancing access to export financing for SMEs by sharing best practices.
c) Governments agreed to work with agencies responsible for small business
and export promotion in order to address one of the biggest hurdles to exporting:
•changing the mindset from focusing on domestic sales only to exporting.
•Identifying and contacting prospective buyers in other NAFTA countries should
be the first step that North American SMEs take to begin to export.
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(1) Increase efforts to disseminate information about the
NAFTA through engagement with SMEs.
(2) Explore regional cooperation mechanisms to formalize
cooperation in this matter and provide concrete results for
SMEs.
(3) Where appropriate, develop additional “plain language”
material for use by SMEs.
(4) Explore use of virtual networks to facilitate contact
between SMEs.
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SMALL AND MEDIUM-SIZED ENTERPRISES WILL BE
COMPETITIVE IF THEY SPECIALIZED AND BECOME
CONSCIOUS OF THE NECESITY TO ENGAGE IN
DIFFERENT FIELDS: RESEARCH AND DEVELOPMENT
INNOVATION;
USE
OF
NEW
PRODUCTIVE
AND
INFORMATION TECHNOLOGIES.
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PARTICIPATION IN GLOBAL PRODUCTION
CHAINS
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Mexico proposes to address the issue of
enhancing SMEs participation in global production
chains through:

Defining core principles that could be included,
on a voluntary basis, in the XXI century FTAs.

Developing capacity building activities, such as
carrying out a seminar to exchange
experiences
on
public
policies
and
collaboration between trading partners, to
incorporate SMEs in global production chains.
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APEC could promote the inclusion of a set of
recommendations in free trade agreements, to encourage
parties to cooperate in the promotion and development of
supporting industries in order to foster trade and investment in
the region. These recommendations could include:
To
assist private enterprises of either Party to enter
supporting industries market of the other Party through direct
investment or joint ventures.
To
assist private enterprises of supporting industries to
establish their business ties with other private enterprises of
supporting industries, as well as final goods suppliers.
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To
assist actual or potential private enterprises of
supporting industries trough financial and technological
support;
To exchange experts and information on best practices
and methodologies for the development of supporting
industries.
To
develop human resources on: entrepreneurial
incubation,
technical
skills,
and
industrial
standardization.
To
assist interested parties to enhance capabilities to
create policies to expand SMEs´ access to ICT.
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APEC economies that have developed programs to foster the
participation of SMEs as supporting industries to other enterprises
which participate trade could share their experiences both positive
and negative, so as to allow all APEC economies to learn from such
experiences.
The seminar could include items such as: public polices established
by governments to develop local providers to international trading
companies established within their territory; joint programs agreed
between parties of an FTA, both government to government and
government to private sector ; sectorial experiences; methodologies
to measure the results of those public policies and joint programs ;
case studies; among others.
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