Mexico continues to be among the top emerging market performers in terms of attracting foreign direct investment (“FDI”). Membership in NAFTA as well as 12 other free-trade agreements with most countries in Latin America, the European Union, Japan, Korea and Israel. Mexico is Latin America’s leading economy in terms of trade, being signatory to the largest number of free trade agreements of any country, makes Mexico a prime destination for foreign investment. In addition, Mexico has negotiated several bilateral investment treaties (BITs) with countries in Latin America, Europe and Asia.

Mexico received $23.23 billion USD in foreign direct investment in 2007, a rise of 22.7 percent over the previous year. Mexico is the fourth-largest foreign direct investment recipient among developing countries. It is the second largest destination in mining investment after China and last year was the biggest beneficiary of foreign investment in mining exploration in Latin America, ahead of Peru, Brazil and Chile. This represents a 40% increase over 2006 and ahead of China, South Africa, the United States and Russia.

Mexico is expecting an investment of 15 billion USD in mining related projects during the next 5 years of President Calderon’s administration. Additionally, its state owned energy company, PEMEX, is expecting to invest over 20 billion USD on various projects between 2009 and 2012. The current administration has made infrastructure development one of the centre pieces of its term earmarking $40 billion USD, mainly to go into energy, airports, highways, ports and waste and water related projects.

Canadian Investment in Mexico

From January 1994 to June 2008, Canada’s cumulative FDI in Mexico reached $7.8 billion USD, becoming the fourth largest foreign investor in Mexico. In June of 2008, more than 2,040 companies were doing business in Mexico with Canadian capital. These firms are concentrated in the services, manufacturing, retail and wholesale, and mining and extraction sectors.

As for Mexico-Canada trade, the value recorded at the end of last year’s first half was $12.8 billion USD, 13.7% higher than the figure shown in the same period in 2007. Furthermore, this value is six times higher than the trade number recorded in 1993 ($1.8 billion USD), representing an average annual growth rate of 13.7% since NAFTA.

These figures prove the high degree of confidence that NAFTA’s legal framework provides to Canadian investors.

Canadian Exports to Mexico

At the end of the first semester of 2008, Mexico became Canada’s fifth export market, surpassed only by the United States, the UK, China and Japan. During this same period, in terms of value, exports from Canada to Mexico reached $4.7 billion USD, 26.3% higher than exports in 2007

The average annual growth rate of exports from Canada into Mexico from June 1993 to June 2008 was 15.9%, being agricultural, aeronautics, automotive (auto-parts), steel and chemicals the main products imported into Mexico.

Top Current Sectors for FDI into Mexico

The top sectors for FDI in Mexico currently are financial services, consumer electronics, metallurgical and mining, automotive and the leisure sector, including tourism and hotels. Mexico continues to be an important destination for Canadian products, services and investments.

The most significant sectors are:

•    agriculture and agri-food
•    engineering and construction
•    mining
•    education and training
•    environmental products and services
•    industrial machinery and equipment [primarily oil and gas]

Key areas of opportunity are:

•    Infrastructure at a State and Federal levels;
•    Energy, (conventional and alternative);
•    Real Estate (housing, commercial and mixed);
•    Mining;
•    Environmental.