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Florida - Mexico Trade 1999 - 2000 (1st semester) Overview of Mexican Economic Performance The recovery in economic activity after 1996 was driven by higher exports and investment, but in 1999 the motor force was a rebound in private consumption. At the same time that international reserves increased, the external debt and debt service shrank as a percent of GDP. According to the IMF, the 12-month inflation rate fell to 12.3% in December 1999 (less than the official target of 13%) and declined further to 10.5% in February 2000. In fact, Mexico's economic indicators were so promising that the government decided to make payment to the IMF of SDR 2.3 billion (about US$3 billion) on August 30, thereby repaying all of its obligations to the IMF even though its Stand-By Arrangement did not expire until November 30. The Mexican government continued to pursue structural reforms in the banking sector with sales of public banks, improved accounting procedures and stronger capitalization of private banks. Tax reforms broadened and improved tax collections, and President Elect Vicente Fox instructed his transition team to work on developing a tax reform package. The World Bank has supported Mexico's reforms, as evidenced in an assistance strategy that provides up to $5.2 billion in loans through 2001 to improve social conditions for the poor, reinforce macroeconomic stability and strengthen reform of the government. The Bank's Mexico team presented 36 "policy notes" on every economic and social sector at a two-day meeting with the outgoing and incoming Mexican administrations before Fox's December 1 inauguration. Trade Between
Florida and Mexico Florida's total exports to Mexico in 1999 were $864.1 million. The total for 2000 is likely to be higher, given that the figure recorded for first semester 2000 was $464.7 million. Florida's main exports to Mexico in 2000 were: articles of jewelry; ADP machines; fertilizers; parts and accessories for typewriters; and diamonds. In 1999, motor vehicles were among the top performers. Florida imports from Mexico in 1999 totaled $803 million, tapering off to $311.2 million in first semester 2000. The leading products Florida imported from Mexico during the first half of 2000 were: motor cars; motor vehicles for the transport of goods; export of articles imported for repairs; and fresh fish. In 1999, ADP machines were also a top performer. The top 20 exports from Florida to Mexico made up 61% of total exports in both periods. This percentage is less than the norm for the smaller economies and is probably due to Mexico's size-it is the second biggest economy in Latin America-and its level of development, which combine to produce a more varied demand. None of the export items were huge in terms of value; articles of jewelry, at $71.2 million in 1999, was the largest. It was also the largest export in first semester 2000 but appears at the top in 1999 as the result of a surge from a 1,516% increase ($67.4 million). Mexico accounted for 53.4% of Florida exports of this item in 1999 and Florida's increase in exports of articles of jewelry was 45.4% (5.2% of total US exports). In third place in 1999, exports of ADP machines grew by $5 million (19%) from their $62 million total in 1999 to take second place in 2000. Florida's top 20 exports to Mexico have remained relatively stable; 16 of the top 20 were repeated in 1999 and 2000. Of the top 10 exports with the largest increase in value in 2000, paper and paperboard was first at $16.1 million, a whopping 2,247.8% increase, while in 1999 the honor went to the above-mentioned articles of jewelry. However, the largest percentage increase among the top 10 in 1999 was produced by diamonds, which marked a 3,174% increase ($51.5). In first semester 2000, the biggest percentage increase was achieved by paper and paperboard followed by photocopying apparatuses at 1,739.5% ($5.7 million). In terms of market dominance and increased share, the most impressive performances were in paper and paperboard (2000), with 40.8% of Florida's total exports going to Mexico and Florida's total exports growing by 38.3% compared to Mexico's 2,247%; while in 1999 diamonds exported to Mexico were 94.5% of total Florida exports of this item and Florida's exports grew by 29.7%, compared to exports to Mexico of 3,174%. Florida Imports from Mexico Florida's imports from Mexico show less diversity and more volatility than the state's exports to Mexico. In 1999 the top 20 imports represented 80% of total imports, a percentage that declined to 68% in first semester 2000. As mentioned previously, imports appeared to be on a declining trend in 2000 based on first semester data. Florida's imports from Mexico in 1999 were led by motor cars and other motor vehicles at $270.1 million, which accounted for three and a half times more than the second-place import, and exports of articles imported for repairs ($81 million). However, the former decreased by $491.4 million (-64.5%) and the latter increased by 33.6 million (70.9%). ADP machines were in third place at $50.3 million, but also were a major Florida export to Mexico. The first- and third-place imports showed a decrease in value from the prior period, and their market share was down for Mexico. The second-place import, exports of articles imported for repairs, showed substantial real and percentage increases, gaining market share for Mexico. Total Florida imports of this item were up only 2%. Imports from Mexico now represent 7.8% of total Florida imports of this item. Curiously, motor cars and other motor vehicles were still in first place in first semester 2000 even though imports of these items had fallen in value by an additional $201.1 million (-84%). At the same time, in second place, motor vehicles for the transport of goods, at $37.8 million, showed an increase of $38.8 million. (This suggests that US Customs may reclassify vehicles from one category to another from one year to the next). In third place in 2000 were exports of articles imported for repairs, at $20.3 million, which decreased by $21.1 million (-51%). The first- and third-place imports showed a decrease in value from the prior period, brining down their market share for Mexico. The second-place import is hard to evaluate owing to the possible reclassification mentioned above. In 1999, the three imports from Mexico into Florida with the largest increase over 1998 were: exports of articles imported for repairs; carbocylic acids, with a $13.1 million increase (no percentage can be given as there were no prior year imports); and electrical transformers, with a $12.3 million increase (1,239.5%). The second represented 64.3% of total Florida imports of this item and the third represented 12.5%. The fourth-place item, natural hormones, had the largest percentage growth-28,803%-among the top 10 imports with the largest increase, growing by $9.29 million to $9.32 million in 1999. The 1999 imports from Mexico with the largest dollar decrease in value were: motor cars and other motor vehicles, -$491 million (-64.5%); electromechanical appliances, -$14.3 million (-99.1%); and ammonia, -$13.6 million (95.5%). The largest percentage decrease in the bottom 10 was by optical fibers and bundles at -99.9% ($7.4 million). In first semester 2000, the three imports into Florida from Mexico with the largest increase over the same period in 1999 were: in first and second place, motor vehicles and ammonia; in third place, photographic film in rolls at $5.6 million, an increase of $4.7 million (551%); and in fourth place, coffee at $4 million, an increase of $3.3 million (503%). Of the latter two, coffee imports, although growing by a large percentage, did not represent even 2% of Florida's imports of this item. However, photographic film from Mexico represented 46.7% of Florida imports of this item; Mexico's market share grew as total Florida imports increased by 20.4% compared to Mexico's 551%. First semester 2000 imports from Mexico with the largest dollar decrease in value were: in first and second places, motor cars and vehicles to transport people (part of the $201 million decrease may be explained by a possible US Customs reclassification) and exports of articles imported for repairs. In third place were ADP machines, with a decrease of $15.2 million (-75%), and in fourth place were transmission apparatuses for radiotelephony, falling by $10.2 million (-66%). The largest percentage decrease in the bottom 10 imports was by motor cars and vehicles, -84% ($201 million), as mentioned earlier. Observations Geography may be destiny, at least as far as Florida-Mexico trade is concerned. Although one would expect states such as California and Texas to have greater trade with Mexico, the level of Florida's trade with this country, especially given the apparent decrease in imports in 2000 as compared to 1999, seems less than one would hope for. Mexico is the second leading market in Latin America and its economy is now well managed and in a stable growth mode. This should generate demand in Florida, but in fact the state's imports from Mexico are about one seventh the total of those from Brazil. FIU Center for Banking and Financial Institutions www.imf.org www.worldbank.org, www.mexico-trade.com (Note: If asked
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