Mexico Trade & FDI

Trade
FDI

Mexico Trade

Mexico is a major participant in international agricultural trade. In 2016, Mexico’s agricultural exports (to all countries) totaled about $26.8 billion (applying USDA’s definition of agricultural trade to the Mexican Government’s trade statistics). Mexico’s agricultural imports (from all countries) in 2016 totaled about $26.0 billion. The United States is Mexico’s largest agricultural trading partner, buying 79 percent of Mexican exports and supplying 70 percent of the country’s imports in this category.

A turning point in agricultural trade between Mexico and the United States came in the late 1980s, when Mexico emerged from a period of economic difficulties and adopted a series of trade reforms. In 1986, Mexico signed the General Agreement on Tariffs and Trade (GATT), the predecessor to the World Trade Organization (WTO). In the early 1990s, Mexico lowered a number of agricultural trade barriers, and in 1994, it joined Canada and the United States in implementing the North American Free Trade Agreement (NAFTA). Mexico also has free-trade agreements with about 40 other countries.

With a growing population, an expanding economy, and a more market-oriented agricultural sector, Mexico has become the United States’ second-largest agricultural trading partner, trailing only Canada in combined exports and imports. In 2016, Mexico accounted for 13.1 percent of U.S. agricultural exports and 17.8 percent of U.S. agricultural imports, as defined and categorized by USDA. Between 1993 (the year before NAFTA’s implementation) and 2016, U.S. agricultural exports to Mexico expanded at a compound annual rate of 7.2 percent, while agricultural imports from Mexico grew at a rate of 9.7 percent. Lower prices for many bulk agricultural commodities have caused the total value of U.S. agricultural exports to Mexico to experience little to no growth over the past 6 years (2012-16).

Source: USDA, Economic Research Service using data from U.S. Census Bureau, Foreign Trade Statistics, as compiled by USDA, Foreign Agricultural Service, Global Agricultural Trade System.

U.S.-Mexico agricultural trade is largely complementary, meaning that the United States tends to export different commodities to Mexico than Mexico exports to the United States. Grains, oilseeds, meat, and related products make up about three-fourths of U.S. agricultural exports to Mexico. Mexico does not produce enough grains and oilseeds to meet internal demand, so the country’s food and livestock producers import sizable volumes of these commodities to make value-added products such as meat, vegetable oil, and wheat products, primarily for the domestic market.

Note: Data are for calendar year 2016, when U.S. agricultural exports to Mexico equaled $17.8 billion. DDGS = distillers’ dried grains with solubles. HFCS = high fructose corn syrup.

Source: USDA, Economic Research Service, using data from U.S. Census Bureau, Foreign Trade Statistics, as compiled by USDA, Foreign Agricultural Service, Global Agricultural Trade System.

Roughly two-thirds of U.S. agricultural imports from Mexico consist of beer, vegetables, and fruit. These imports are closely tied to Mexico’s historical expertise in producing alcoholic beverages and a wide range of fruit and vegetables and to its growing seasons, which largely complement those of the United States. For example, many produce items that the United States does not grow in winter are grown during that time in Mexico.

Note: Data are for calendar year 2016, when U.S. agricultural imports from Mexico equaled $22.9 billion.

Source: USDA, Economic Research Service using data from U.S. Census Bureau, Foreign Trade Statistics, as compiled by USDA, Foreign Agricultural Service, Global Agricultural Trade System.

Selected U.S. agricultural exports to Mexico

Selected U.S. agricultural imports from Mexico

To view more U.S.-Mexico agricultural trade statistics, go to USDA Foreign Agricultural Service's Global Agricultural Trade System.

Mexico Foreign Direct Investment

Mexico is the third-largest host country (after Canada and the United Kingdom) for U.S. direct investment in the food and beverage industries, and it has also attracted U.S. direct investment in production agriculture. Many of these investments were initiated following implementation of the North American Free Trade Agreement (NAFTA) in 1994. The agreement contains provisions designed to facilitate foreign direct investment (FDI), including equal treatment of foreign and domestic investors and prohibition of certain performance standards (such as a minimum amount of domestic content in production) for foreign investments. However, Mexico really began to open up to foreign investment in the 1980s, when the country first relaxed and then eliminated rules for most sectors of the economy that limited foreign ownership of Mexican businesses.

According to the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA), the United States’ direct investment position in Mexico in 2016, on a historical-cost basis, was about $3.7 billion in the food industry, $3.8 billion in the beverage industry, and $1.6 billion in crop and animal production combined. Mexico also has substantial direct investment in the U.S. food industry—about $3.2 billion in 2016. (BEA defines “direct investment position at historical cost” as a “measure of the value of direct investors’ equity in, and net outstanding loans to, their affiliates in which the direct investors’ investment is valued at book value. It largely reflects prices at the time of the investment rather than prices of the current period and is not ordinarily adjusted to reflect the changes in the current costs or the replacement costs of tangible assets or in stock market valuations of firms.”)

U.S. direct investment in Mexico’s food and beverage industries has expanded greatly during the NAFTA period, growing from a total for the two industries of about $2.3 billion in 1993 to about $10.2 billion in 2012, before declining to about $7.5 billion in 2016 (see line graph below). Mergers and acquisitions in the beverage industry largely explain the recent decline. U.S. direct investment in Mexico’s beverage industry dropped from about $6.9 billion in 2012 to $3.3 billion in 2013, before climbing to $3.8 billion in 2016.

Note: Data are on a historical-cost basis. Some data are not published to avoid disclosure of data of individual companies.

Source: USDA, Economic Research Service, using data from U.S. Department of Commerce, Bureau of Economic Analysis.

U.S. direct investment in production agriculture in Mexico has climbed over the past 6 years, from $542 million in 2010 to $1.6 billion in 2016. Prior to 2010, U.S. statistics usually did not disclose the size of the U.S. investment position in Mexican production agriculture, presumably because such investments were concentrated in a few firms.

The composition of U.S. direct investment in the Mexican food industry parallels the composition of U.S. agricultural exports to Mexico, in which grains and oilseeds are among the most prominent commodities. As seen in the pie graph below, grain and oilseed milling accounted for nearly 70 percent of U.S. direct investment in Mexico’s food industry in 2016. Much of the growth in U.S. FDI in the Mexican food industry took place in grain and oilseed milling, where the U.S. direct investment position expanded from $378 million in 1999 to about $2.6 billion in 2016—an increase of more than 580 percent.

Note: Data are on a historical-cost basis.

Source: USDA, Economic Research Service using data from U.S. Department of Commerce, Bureau of Economic Analysis.