VZCZCXRO1576
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #5240/01 2712217
ZNR UUUUU ZZH
P 282217Z SEP 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 9053
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 MEXICO 005240 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/MEX/WOLFSON AND EEB/TPP/ABT/CLEMENTS 
COMMERCE FOR ITA/OTEXA/DANDREA 
STATE PASS USTR FOR CAROYL MILLER 
 
E.O. 12958: N/A 
TAGS: KTEX MX
SUBJECT: INFO ON MEXICAN TEXTILES AND APPAREL PRODUCTION 
 
REF: STATE 114799 
 
Post has collected the below information in response to 
reftel questions regarding Mexico's textile and apparel 
industry: 
 
Total industrial production in USD value? 
 
According to the Mexican Government's official statistical 
bureau, Mexican manufacturing GDP in 2006 was worth 1,482.3 
billion pesos.  Dividing by the average exchange rate for 
2006 (1 USD = 10.9 pesos) results in a manufacturing GDP of 
USD 136 billion. 
 
Total textiles and apparel production in USD value? 
 
According to Mexico's National Chamber of the Textile 
Industry, textiles account for 3.2 percent of total Mexican 
manufacturing GDP and apparel for another 2.8 percent, for a 
combined total of 6 percent.  According to a study by the 
Secretariat of Economy, in 2005 textiles and apparel 
 
SIPDIS 
accounted for 1.2 percent of total GDP and 6.7 percent of 
manufacturing GDP, versus 1.6 percent of total GDP and 8.3 
percent of manufacturing GDP in 2000. 
 
Textile/apparel share of host country imports and exports? 
 
According to the Bank of Mexico, Mexico imported USD 635.47 
million in apparel, USD 1.687 billion in textiles, and USD 
200.9 million in chemical fibers in the first four months of 
¶2007.  The corresponding figures for the full year 2006 are 
USD 2.639 billion in apparel, USD 5.811 billion in textiles, 
and USD 609.5 million in chemical fibers.  According to the 
Mexican government's statistical bureau, in 2006 total 
Mexican imports were USD 256.7 billion.  For the first four 
months of 2007, 32 perecent of Mexican apparel imports, 74.2 
percent of Mexican textile imports, and 58.04 percent of 
chemical fiber imports came from the U.S. 
 
Regarding Mexican exports, according to the Mexican 
government's statistical bureau, in 2006 total Mexican 
exports were USD 250.5 billion.  We only have figures from 
the Secretariat of Economy for Mexican exports to the U.S., 
which account for more than 90 percent of Mexican apparel 
exports.  In the first half of 2006, Mexico exported USD 
547.1 million in textiles and USD 2.64 billion in apparel to 
the U.S.  In the first half of 2007, Mexico exported USD 537 
million in textiles and USD 2.253 billion in apparel to the 
U.S. 
 
Exports in textiles and apparel to the U.S. in USD Value 
(year on end)? 
 
According to the Mexican Secretariat of Economy, Mexico 
exported to the U.S. USD 547.1 million in textiles in the 
first half of 2006, falling to USD 537 million in the first 
half of 2007.  Mexico exported to the U.S. USD 2.64 billion 
in apparel in the first half of 2006, falling to USD 2.253 
billion in the first half of 2007. 
 
Total manufacturing employment? 
 
In 2005, total manufacturing employment (according to workers 
covered under the Mexican social security system) was around 
3.7 million. 
 
Total textiles and total apparel employment? 
 
According to the Mexican Social Security Institute, in 2007 
apparel employment in Mexico was 377,668, down from 381,745 
in 2006 and 639,774 in 2000.  Textiles employment in 2007 was 
125,069, up from 121,725 in 2006 but down from 168,052 in 
¶2000. 
 
Are host country producers receiving lower prices due to 
heightened international competition?  Have manufacturers 
received more, less, or the same number of orders as in years 
past?  Have foreign investors, particularly Asian investors, 
closed factories or otherwise pulled out of local production? 
 
Mexico's textile and apparel industry representatives claim 
that their lost market share both at home and in the U.S. 
market is due in large measure to low-cost competition from 
China, resulting in lost business.  We have heard that a 
number of investors in these sectors have left Mexico for 
Asia or other lower-cost areas. 
 
Have U.S. and EU restrictions on certain exports of textiles 
 
MEXICO 00005240  002 OF 003 
 
 
and apparel from China, effective through 2007/2008, affected 
export prospects for host country manufacturers? 
 
Post does not have breakdowns on how Mexican exports to the 
U.S. of apparel products that compete directly with Chinese 
exports subject to USG-initiated China textile-specific 
safeguards have fared. 
 
Has the host government implemented, or is it considering 
implementing, safeguards or other measures to reduce growth 
of imports of Chinese textile and apparel products into the 
host country? 
 
Mexico has for a number of years imposed very high 
anti-dumping duties on a wide range of Chinese textile and 
apparel imports.  As a result of bilateral negotations 
between China and Mexico related to the former's WTO 
accession process, China agreed to not challenge any Mexican 
anti-dumping cases on Chinese products in the WTO through 
December 11, 2007.  The Mexican Government is currently 
reviewing its existing anti-dumping penalties on imports from 
China, and will likely eliminate at least a portion of them. 
These high tariff barriers have certainly limited legal 
imports of Chinese textile and apparel products, but large 
amounts of Chinese goods enter the Mexican market as 
contraband.  Septel has more details. 
 
Does the host government have policies or programs in place 
to deal with any dislocated workers in the sector resulting 
from increased competition? 
 
Not to our knowledge. 
 
Has increased global competition affected local labor 
conditions by causing employers to reduce wages, seek 
flexibility from government required minimum wages, or 
adversely affected union organizing? 
 
Increased global competition has generated downward pressure 
on Mexican wages in these sectors, and has also led employers 
to either renege on collective bargaining agreements, choose 
to work only with more pliant unions, or look for non-union 
workers.  ConGen Ciudad Juarez reports that apparel makers 
cannot pay workers the wages that prevail along that part of 
the border, where higher value-added industries offer better 
remuneration, and still compete with Chinese and other Asian 
apparel producers. 
 
Has the host government or private industry taken action to 
increase the country's competitiveness, such as improving 
infrastructure, reducing bureaucratic requirements, 
developing the textiles (fabric production) industry, moving 
to higher value-added goods, or identifying niche markets? 
Does post think that the host government or private 
industry's strategy will be successful? 
 
There has been much discussion among government, industry, 
and unions about moving up the value-added chain in the 
textile and apparel sectors.  Industry sources claim that 
they have invested substantially in new technology, and the 
Mexican Government has unilaterally lowered tariffs on a 
number of inputs that are no longer produced in sufficient 
quantities domestically.  ConGen Cuidad Juarez reports that 
surviving local textile manufacturers there are moving to 
niche products like specialty pillows.  Mexico is also keen 
to begin implementation of the CAFTA-DR textiles cumulation 
mechanism, which would likely lead to increased textiles 
exports to Central American apparel makers. 
 
If your host government is a partner in a free trade 
agreement or a beneficiary of a preference program such as 
AGOA, CBTPA, CAFTA or ATPDEA, what impact does the program 
have on local sector industry competitiveness? 
 
NAFTA was a huge boon to Mexican textile and apparel 
manufacturers, giving them clear advantages over the global 
competition until 2000.  With China's accession to the WTO in 
2001, China and other Asian countries have steadily eroded 
Mexico's market share in the U.S. 
 
Overall, if not already addressed, does post think that the 
host country can be competitive in textiles and apparel 
exports given heightened global competition? 
 
Given competition from China and elsewhere, Mexico will 
almost certainly not regain its circa 2000 position in the 
U.S. market.  Nonetheless, the local textile and apparel 
industries are not going to disappear.  In fact, exports and 
 
MEXICO 00005240  003 OF 003 
 
 
employment in these sectors are still above where they were 
in 1993, before the half-decade boom resulting from NAFTA's 
trade diversion effect. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
BASSETT