NAFTA key to economic, social growth in Mexico

The Washington Times, 5/14/12

The North American Free Trade Agreement, which went into effect in 1994, has been the key driver of Mexico’s economic and social transformation of the past 20 years, analysts say. NAFTA at first brought an explosion of low-skill-labor factories to the Mexican side of the U.S. border. By the mid-2000s, the trade pact had triggered an increasingly sophisticated manufacturing base that now reaches across Mexico’s 31 states.

“What we’re seeing now is a growth of industry in Mexico that requires more engineers,” said Christopher Wilson, an associate with the Mexico Institute at the Washington-based Woodrow Wilson International Center for Scholars. “To put a name on it, specifically, we’re talking about automobiles and aerospace,” Mr. Wilson said. “Mexico is now graduating more engineers than Germany every year.”

A 40 percent jump in Mexico’s per capita gross domestic product since the inception of NAFTA has brought with it an increasingly robust middle class. “What that means is Mexicans are becoming more educated, and there is more investment in children, which is why you are able to see the development of an aerospace sector,” Mr. Wilson said.

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Audi to build factory in Mexico

Reuters, 4/18/12

Volkswagen’s Audi premium-car unit said on Wednesday it plans to build a factory in Mexico, a step designed to help foster growth of the German automotive group in North America.

The company plans to build sport utility vehicles in the Latin American country from 2016 and will decide later this year where exactly it will erect the plant, it said in a statement. “Good infrastructure, competitive cost structures and existing free trade agreements played a significant role in the choice of Mexico,” Audi Chief Executive Rupert Stadler said in a statement, without disclosing how much would be invested. Two people in Mexico familiar with the deal said the investment is worth some $2 billion.

A member of the North American Free Trade Agreement (NAFTA), Mexico has favourable wage costs and is exempt from import duties, which would allow Audi to avoid paying taxes on cars shipped to Europe.

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Nafta should look beyond its borders to the world

Financial Times, 4/16/12

International trade is under attack. Recession has tested commitments to keeping borders open as politicians beholden to domestic audiences have succumbed to the temptation of throwing up barriers for short-term economic benefit. But policymakers should remind themselves how important trade is for economic development. They need look no further than North America.

In the almost 20 years since the North American Free Trade Agreement (Nafta), the benefits are clear. Trade volumes are much larger than expected. Mexico is the second-largest supplier of non-oil goods to the US. It buys 13.3 per cent of US exports, more than Germany, the UK, Netherlands, France and Italy combined.

Nafta also produced convergence in quality, variety, price and availability of goods; convergence in investment in technologies and environmental standards in manufacturing in Mexico; and macroeconomic convergence so Canada and Mexico boast low debt and deficit, low inflation and sound monetary policies.

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NAFTA Partners Deserve Quick Entry into TPP Talks

Kezia McKeague, Americas Quarterly , 4/4/12

Assembled in the White House Rose Garden for a joint press conference on Monday, the “three amigos” of North America projected an image of trilateral comity in keeping with the depth of their countries’ relationships.

Yet Mexican President Felipe Calderón and Canadian Prime Minister Stephen Harper departed the one-day North American Leaders’ Summit without a firm commitment from U.S. President Barack Obama on their request to join the Trans-Pacific Partnership (TPP). Buried in the penultimate line of the lengthy joint statement was a coy response: “The United States welcomes Canada’s and Mexico’s interest in joining the TPP as ambitious partners.”

As President Obama acknowledged in the Rose Garden, TPP’s high-standards approach “could be a real model for the world.” Indeed, the goal of the original four TPP members—Brunei, Chile, New Zealand, and Singapore—was to create a uniquely comprehensive agreement to which like-minded countries on both sides of the Pacific could accede, thus linking Asia and the Americas.

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Snapping cameras, snappy rhetoric and a nod to the North American idea

iPolitics, 4/2/12

When Barack Obama welcomes Stephen Harper and Felipe Calderon into the Oval Office on Monday, the leaders will smile and the cameras will click.

But will there be anything more to report than the usual bromides about the need for greater co-operation and collaboration at this latest iteration of the three amigos?

Probably not. Sadly, the idea of closer economic integration creating an uber-North America — effectively a customs union between Canada, the U.S. and Mexico that would marry resources, labour and market — is on life-support.

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NAFTA Works – January 2012 Edition

Trade and NAFTA Office, Jan./2012

Recognizing trade as a powerful tool for economic growth, the Mexican government has undertaken a comprehensive customs modernization program aimed at enhancing trade facilitation and cost reduction. (…) Modernizing these processes has encompassed improvements to systems procedures, regulations, and organizational structure while also investments in infrastructure and equipment, resulting in a total expenditure of over $800 million. (…)

Read more on Mexico’s Single Window for Trade process (Ventanilla Única) inside this issue’s report “Making the Most of Mexico’s Customs Modernization“

Economic Ties Between the United States and Mexico

Shannon O’Neil, Council on Foreign Relations, 12/16/11

It is worth reading the Woodrow Wilson Center Mexico Institute’s new study by Christopher Wilson, entitled “Working Together: Economic Ties between the United States and Mexico.”

The report is packed with examples and statistical evidence of the deepening integration between the United States and Mexico since 1993 (the signing of NAFTA), and concisely explains why this relationship is so important and beneficial for the United States.

In terms of trade, for nearly half of U.S. states, Mexico is the number one or number two export destination. For border states such as Texas, New Mexico, and Arizona, up to a third of all exports head to our southern neighbor.

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Why China and Mexico matter

Salon, 11/29/11

One of the most tiresome games in Washington, D.C., is the search for a new American grand strategy.

According to the folklore of the foreign policy community, the American diplomat George Kennan came up with the grand strategy of containment of the Soviet Union that the U.S. followed through successfully until the end of the Cold War.

While Kennan indeed contributed the name “containment,” by the mid-1950s he had repudiated the policy and became in effect a conservative isolationist.  Nixonian realpolitik, Carter-style human rights diplomacy and Reagan’s renewed Cold War were quite different.

But the myth persists that some Kennan-like genius devised a new grand strategy, be it the “concert of democracies” favored by neocons and neoliberal hawks or the “offshore balancing” preferred by realists.

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Mexican Trucks In U.S. Still Face Political Long Haul

NPR, 10/29/11

The Port of Entry at Nogales, Ariz., is in the midst of a massive upgrade to ease congestion caused by up to 1,500 Mexican trucks crossing each day. Nearly two-thirds of the produce consumed in the U.S. and Canada during the winter come through here. These Mexican trucks stop at warehouses near the border to transfer their loads to U.S. trucks.

That’s the way it’s long been done. Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, says that adds cost.  “It’s probably 3, 4, 5 percent. It depends on the kind of product you’re shipping,” he says. On Oct. 21, a Mexican truck carrying a load of construction equipment from Mexico to Texas was the first truck allowed on U.S. interior highways since the North American Free Trade Agreement (NAFTA) authorized it almost two decades ago.

It took that long because labor and political interests delayed the program. The same forces are trying to stop it now that it’s begun. Hufbauer says letting these trucks on U.S. highways is long overdue and could help North American commerce. “This is the biggest single barrier to integration of the U.S.-Mexican market,” the trade expert says.

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Carriers disinterested in trans-border program (In Spanish)

El Economista, 10/27/11

El programa de transporte transfronterizo no está dentro del interés de las empresas afiliadas a la Cámara Nacional de Autotransporte de Carga (Canacar) en Baja California, pues hasta el momento ninguna se ha adherido, aseguró Alfonso Esquer Millán.

El delegado de la Canacar en Tijuana, Tecate y Ensenada, dijo no tener conocimiento de que alguna empresa transportista de la región se haya inscrito al programa transfronterizo, pues no representa un beneficio. “Entendemos que hay una empresa que hace movimiento por Tijuana, pero no tenemos la confirmación de que así sea. Al menos ningún afiliado a la Canacar en Baja California se ha inscrito en el programa y tampoco muestran interés por hacerlo”, expresó.

El delegado de la Canacar indicó que el programa establecido entre el gobierno mexicano y el estadounidense, como parte del Tratado de Libre Comercio de América del Norte (TLCAN), no dispone igualdad de condiciones para las empresas mexicanas.

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