The chemical industry in Mexico hasserious problems competing on an international level.Mostly unaffected by the economic crisis, the industry has maintained its 40 sectors and has reported profits in personal care, cleaning, laboratories and food industries, although it has been hampered by the lack of raw materials and their high costs.

The chemical industry in Mexico plays an important role as it accounts for approximately 1.8% of gross domestic product (GDP); however, this figure is low when compared to the chemical industry in other countries where it generally represents approximately 4.6%.

The raw materials produced in Mexico are insufficient to meet the needs of the industry in addition to the high cost of importing themand the monopolies that exist.

The Economy Secretary published the, "Agreement to disclose the protocol of accession of the Republic of China to the World Trade Organization",in the Official Journal of the Federation last August 15, 2007. As of December 11, 2001, China became a member of the World Trade Organization (WTO) according to the terms and conditions set forth in the Protocol of Accession.

Upon completion of anti-dumping measures arising from the culmination of the Peace clause as of December 11, 2007, Mexico will eliminate all anti-dumping measures maintained on imports of Chinese products classified under tariff items listed in Annex 7 of the Protocol of Accession of China to the WTO and will not invoke the provisions of Annex 7 in the future to impose anti-dumping measures on Chines goods.No later than October 15, 2008, banning of Mexican dumping measures shall revoke the anti-dumping measures for goods classified under tariff items listed in Annexes 1 and 2 (953 tariff items) through adequate legal means, such as Presidential Decrees and Ministerial Decrees.

Investment in the Chemical Industry in 2010 was $572 million dollars compared to $643 million in 2009 which represents a significant decrease of 11%.

It is worth noting that due to the condition of PEMEX refineries, chemicals must be imported, often costing more than what they are able to produce.

This situation has caused a decline in the industry share of GDP, dropping from 5% since the mid-nineties.

The raw materials involved in the competitiveness of the chemical industry are natural gas and electricity, both at higher prices than in the U.S., a natural competitor in the industry.

We have always had very expensive gas; the Government has established a reference price based on the United States which applies to all gas sold in Mexico while only importing 14% of our needs.

The reference price stood at approximately $15 per million BTU's (thermal units per second) when it should be set at 2 or 3 dollars.

The price of gas has a double impact on the price of electricity since a large part of it is based on natural gas and this makes it expensive in comparison to the United States; the cost of energy in Mexico is 10 cents per kilowatt-hour (kWh) plus the cost of power failuressuch as power cuts and energy surges that make it 2 or 3 cents more expensive. In the U.S. the cost of energy is 6 cents per kWh.