VZCZCXRO4467
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #2784/01 2681314
ZNR UUUUU ZZH
R 251314Z SEP 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 8359
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE

UNCLAS SECTION 01 OF 03 MEXICO 002784 
 
SIPDIS 
SENSITIVE 
 
STATE FOR WHA/MEX, WHA/EPSC 
STATE FOR EEB 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GWORD 
TREASURY FOR IA 
ENERGY FOR WARD, LOCKWOOD AND DAVIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD ENRG ELTN EAIR PGOV SENV MX
SUBJECT: Mexico Economic Weekly - September 25 
 
¶1.  (U) The Mexico Economic Weekly supplements reporting from 
Mission Mexico Consulates and the Embassy Mexico Economic Section to 
provide a sense of ongoing trends.  Please contact Adam Shub 
(shubam@state.gov) or Sigrid Emrich (emrichs@state.gov) for 
questions or comments about this report. 
 
¶2.  (U) Table of Contents: 
 
 
ENERGY: 
------- 
 
NEW REGULATIONS OPEN DOOR TO SOME PRIVATE SECTOR INVESTMENT IN 
DOWNSTREAM ACTIVITIES - Mexico City 
 
TRADE AND INVESTMENT: 
--------------------- 
 
TECHINT TO INVEST $800 MILLION U.S. IN NUEVO LEON - Monterrey 
 
EMBASSY SPONSORS IPR TRAINING FOR MEXICAN JUDGES - Mexico City 
 
MERCHANTS IN MCALLEN FEEL THE PINCH - Monterrey 
 
 
ECONOMY AND FINANCE: 
-------------------- 
 
BAJA CALIFORNIA MUNICIPALITIES FACE FISCAL CRISES - Tijuana 
 
DEMAND TO OUTSTRIP FINANCING OPTIONS IN JALISCO - Guadalajara 
 
EMPLOYMENT INCREASING IN NUEVO LEON'S CONSTRUCTION SECTOR - 
Monterrey 
 
DEPARTING GOVERNOR INCREASES DEBT - Monterrey 
 
 
INFRASTUCTURE 
------------- 
 
PUNTA COLONET AND MAYAN RIVIERA PROJECTS BACK ON - Mexico City 
 
 
------ 
ENERGY 
------ 
 
¶3.  (U) NEW REGULATIONS OPEN DOOR TO SOME PRIVATE SECTOR INVESTMENT 
IN DOWNSTREAM ACTIVITIES:   As part of the implementation of the 
2008 Energy Reform, the Secretariat of Energy on September 22 
published new regulations to update the legal framework governing 
Mexico's oil industry.  Under the new regulations, the private 
sector (domestic and international) may invest in the storage, 
distribution, and pipeline transportation of oil and fuels (i.e., 
gasoline, diesel, etc.) with the prior authorization of the Comisisn 
Reguladora de Energia (Energy Regulatory Commission).  The 
Regulations also eliminate reference to "refining activities" being 
limited only to PEMEX, therefore arguably opening the door to the 
possible participation of private investors in certain refining 
activities not specifically reserved by law to PEMEX.  Once the 
terms of this opening are defined by the Ministry of Energy, the 
degree to which the new regulations allow private investment in 
refining will be more clear. (Mexico City) 
 
 
-------------------- 
TRADE AND INVESTMENT 
--------------------- 
 
¶4.  (U) TECHINT TO INVEST $800 MILLION U.S. IN NUEVO LEON: 
Attending a signing ceremony in recognition of his multinational's 
$3 million U.S. endowment to the Tecnological Institute of Monterrey 
(ITESM), President of Italo-Argentine conglomerate Techint Paolo 
Rocco announced plans to invest $800 million U.S. in subsidiary 
Ternium's flat steel plant in Pesqueria, Neuvo Leon.  This 
investment will double the plant's capacity.  Rocco also announced 
plans to construct a steel tube plant for subsidiary Tenaris in 
Veracruz by the end of 2010.  Both investments are part of a five 
year investment plan of approximately $5 billion U.S. world-wide. 
According to Rocca, the decision to invest despite a loss in 
Techint's income reaching 67% in the third quarter, was made based 
 
MEXICO 00002784  002 OF 003 
 
 
on the prediction that oil would stabilize at $60-$70 U.S. per 
barrel, and that steel inventories in the U.S. would be very low by 
2010, stimulating significant demand for Techint products. 
(Monterrey) 
 
¶5.  (U) EMBASSY SPONSORS IPR TRAINING FOR MEXICAN JUDGES:  Embassy 
Mexico, together with the U.S. Patent and Trademark Office and El 
Colegio Nacional de Magistrados de Circuito y Jueces de Distrito del 
Poder Judicial de la Federacisn, is holding a four-day workshop on 
how to adjudicate IPR cases in Mexico City from September 21-24, 
¶2009.  The seminar is financed by USPTO grant money from State/INL. 
26 Mexican civil and criminal judges and magistrates are 
participating with U.S. District Court Judges Ronald Lew, Bernice 
Donald, and James Rosenbaum directing discussions.  The workshop 
focuses on promoting greater judicial enforcement of intellectual 
property law in Mexico as well as providing the participants with 
the necessary understanding and tools to do so.  Over four days 
participants will discuss copyright, patent, and trademark case 
studies, and will gain fresh insights as to how to handle their IPR 
caseload.  The workshop is part of a holistic approach to train 
Mexico's customs officials, public officials, prosecutors, and 
judicial officials, thereby fostering greater IP protection and 
enforcement in Mexico.  (Mexico City) 
 
¶6.  (U) MERCHANTS IN MCALLEN FEEL THE PINCH:  According to Luis 
Cantu, Vice President of International Relations of the McAllen 
Chamber of Commerce, merchants in McAllen have seen a fall in sales 
of 10% since January of this year.  Cantu attributed this fall to a 
decrease in demand from Mexican clients who cross the border to shop 
McAllen.  Cantu predicted an improvement, though not a full recovery 
in sales, within the next three months.  (Monterrey) 
 
------------------- 
ECONOMY AND FINANCE 
------------------- 
 
¶7.  (U) BAJA CALIFORNIA MUNICIPALITIES FACE FISCAL CRISES:   All 
five municipalities in the state are running severe fiscal deficits, 
according to the Baja California chapter of the Colegio de 
Economistas.   Like most municipalities in Mexico, the city 
administrations are dependent on the federal government for 20-30% 
of their revenue and have seen these transfers fall in the last six 
months.    Efforts to cut payrolls have been stymied, particularly 
in Tijuana, by public sector unions.   However, Baja city 
administrations have made efforts to look for alternative funding. 
For example the North American Development Bank is financing 
Tijuana's street re-paving program.   According to Jose Contreras, 
Vice President of the Colegio, municipal governments have been more 
adept at dealing with the global economic crisis than the federal 
government, spending more of their limited resources on 
infrastructure projects that bring long term economic growth on the 
one hand while attempting to cut administrative costs on the other. 
(Tijuana) 
 
¶8.  (U) DEMAND TO OUTSTRIP FINANCING IN JALISCO:  The president of 
the National Chamber of Housing Development and Promotion (Canadevi) 
announced that the demand for housing in Jalisco will not be met in 
¶2009.  The shortage is not the result of increased home-buying, but 
rather a credit shortage and a lack of affordable housing. 
Government agencies are financing over 75% of mortgages, with the 
National Fund for Workers' Housing (Infonovit) covering most of 
those.  Private financial institutions have only doled out 31% of 
their expected demand for the year and are likely to end the year 
having issued only half of the mortgages dispersed in 2008.  In 
addition, almost 70% of Infonavit borrowers require affordable 
housing from government tracts of land that the housing agency 
authorizes.  However, the housing Infonavit offers frequently lacks 
basic services that the buyer is expected to develop and is located 
in areas with poor infrastructure.  Once those services are 
developed the housing prices shoot up out of the borrowers' approved 
price range and the authorized credit cannot be utilized.  Adding to 
the problem, the construction sector is down almost 9% on the year. 
The shortage highlights a market failure and an inability of the 
government institutions to fill the gap.  With the budget of the 
state government's housing subsidy program "Esta es tu casa" likely 
to decrease next year prospects are dimming for working class 
homebuyers in Jalisco.  (Guadalajara) 
 
¶9.  (U) EMPLOYMENT INCREASING IN NUEVO LEON'S CONSTRUCTION SECTOR: 
According to statistics provided by IMSS, while formal employment in 
Nuevo Leon's construction industry has not recovered to last year's 
level, it has grown by 4.5% over the last quarter, registering 99, 
 
MEXICO 00002784  003 OF 003 
 
 
679 workers at the end of August.  Economist Abel Hibert credits 
this growth to an average increase of 30% spending among federal, 
state, and municipal governments.  Hibert noted growing deficits and 
falling oil revenues, and expressed skepticism that such spending 
could be maintained over the next year.  (Monterrey) 
 
¶10.  (U)  DEPARTING GOVERNOR INCREASES DEBT:  With less than two 
weeks remaining in his term, Governor of Nuevo Leon Jose Natividad 
Gonzalez Paras contracted another $373.5 million USD of public debt, 
bringing Nuevo Leon's total - attributed directly to the State, and 
to decentralized entities such as Water and Drainage, and the 
Institute of Vehicular Control - to $1.6 billion USD.  This 
represents a 74.2% increase in the public debt since Governor 
Gonzalez took office in 2003.  According to Nuevo Leon's Treasurer 
Ruben Martinez, this new debt will be paid back over the course of 
20 years, and the resulting funds will be used to stabilize state 
finances and refinance approximately $156.9 million USD of 
outstanding debt.  Nuevo Leon state revenues have fallen, Ruben 
explained, by $44.85 million USD this year alone, and the central 
government had provided the state $186.9 million USD less in 
disbursements than it had the previous year.  The new debt 
represents half of Neuvo Leon's annual budgeted revenues, the 
highest debt levels as a percentage of revenues among all Mexican 
states and the Federal District as well.  (Monterrey) 
 
------------- 
INFRASTUCTURE 
------------- 
 
¶11.  (U)  PUNTA COLONET AND MAYAN RIVIERA BACK ON:  The Under 
Secretary of Transportation Humberto Trevino said September 20 that 
the government's large infrastructure projects, Punta Colonet Port 
and the Riviera Maya airport will not be postponed again and added 
that the bidding process will move forward.  According to Trevino, 
bidding for the Mayan Riviera project will be launched in November. 
Secretary Molinar's team will meet with him to discuss the results 
of conversations held with the interested companies for Punta 
Colonet, and that project could be re-launched within weeks. 
Trevino explained that Punta Colonet will be exclusively a private 
project.  Thus, the government will provide neither financing nor 
guarantees.  (Mexico City) 
 
Williard