Key points for Mexico in 1999
Population: 96 million people
Evolution of the Gross Domestic Product (GDP): +3.7 per cent
Inflation rate: +16.6 per cent

Mexico is one of the members of the NAFTA (North American Free Trade Agreement) and has benefited from the dynamic economic growth of its USA partner. Mexico's textile and apparel industries have thus globally developed since 1996 mainly through apparel exports. But those textile firms that have not built export business are faced with a depressed national market and strong competition mainly from South East Asia.

The Mexican textile industry is very strongly vertically integrated; the main yarn producers are also weavers and very often garment manufacturers too. Mexican production uses mainly cotton and man-made fibres.

Textile exports in 1999 amounted to $2.5bn, an increase of over 24 per cent on 1998. Over 53 per cent of these textiles were exported to the USA. Exports to the European Union represented only two per cent of Mexico's exports and amounted to $59m only.

Imports reached $4.8bn in 1999, almost twice the value of exports, representing a 41 per cent increase compared with 1998. Import growth derived from the important development of garment manufacture subcontracting for American firms. Mexican textile imports have multiplied by five between 1990 and 1999.

After an adaptation period following the signing of the NAFTA agreement, during which the Mexican apparel industry was badly affected by US imports, the industry reacted in order to meet demands from the USA.

Many American firms moved their production activities to Mexico and Mexican subcontracting firms. The activities of the "maquilas" (Mexican subcontracting firms) grew quickly and employed in 1998 approximately 200,000 people.

Mexico has now become a key location for certain apparel market sectors such as jeans and ladies' lingerie. Between 1996 and 1999, Mexican apparel exports have doubled, reaching $7.8bn in 1999. The US is again the main export destination with 96.9 per cent (in value) of Mexico's woven apparel exports.

According to the World Trade Organisation, in 1999, Mexico's share of world apparel exports grew significantly and reached the figure of 4.2 per cent (in value). It is to be noted that the country's share stood at 0.5 per cent in 1990.

In 1999, Mexico was the main US apparel supplier with 13.5 per cent (in value) of global US apparel imports, just ahead of China (13.2 per cent). Mexican apparel imports represented $3.6bn in 1999. The trade balance for this sector is largely positive with a trade surplus of $4.2bn.

The trade with the European Union is at a very low level, but the free trade agreement between Mexico and the European Union since July 1 2000 should progressively improve this situation.

Marc de Laroche
Source : CTCOE (Paris)