Decade of NAFTA brings pains, gains

The Arizona Republic ^ | June 18, 2003 | Dawn Gilbertson and Jonathan J. Higuera

[Willie Green]

 U.S. Trade Balance with Mexico 
(billion dollars)

Year		1991		1992		1993		1994*		1995*		1996*		1997*		1998*		1999*		2000*		2001*		2002*
U.S. imports from Mexico		31.1		35.2		39.9		49.5		62.1		74.3		85.9		94.6		109.7		135.9		131.3		134.6
U.S. exports to Mexico		33.3		40.6		41.6		50.8		46.3		56.8		71.4		78.8		86.9		110.9		101.3		97.5
U.S. Trade Deficit (surplus)		(2.2)		(5.4)		(1.7)		(1.3)		15.8		17.5		14.5		15.8		22.8		25.0		30.0		37.1

* NAFTA went into effect January 1, 1994

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[stuartcr]

When everyone gets their $400.00 tax credit check in the mail and spends it...it should help employment in NAFTA countries.

[grb]

And although manufacturing jobs clearly were lost, NAFTA didn't create the giant sucking sound of jobs heading south, as presidential candidate Ross Perot famously predicted.

Wait a few more years and you may rethink this statement

[lelio]

the Federal Reserve's Orrenius said of lower-skill manufacturing job losses
Why stop at those jobs? Major companies have most of their backend accounts payable departments down there.

[lelio]

"We have such a huge economy that NAFTA didn't make as much of a difference," Orrenius said.
Tell that to the 800k (figure from the Economic Policy Institute) people that lost their jobs due to this.
Perhaps to Orrenius if someone looses their (relatively) high paying manufacturing job and takes a $6/hr "people greeter" one at Walmart that isn't really a difference as they're still employed.

[KantianBurke]

"It's a crying shame . . . that an American worker cannot go to work for a company and plan on retiring (there)," Martin said."

Its a crying shame the govt can't give me a free Mercedes too! (sarcasm off) Its capitalism. Get used to it. No free rides nor should there be.

[hedgetrimmer]

So far, they have been disappointed. Available data show that the flood of Chinese goods into Mexico and the U.S. continues unchecked [chart]. Right now, Mexico is the No. 2 exporter to the U.S. after Canada. But, barring a huge SARS-related setback, China will wrest away that title sometime this year. "Mexico's natural advantage as a manufacturing center for North America is dissipating quickly," says Robert Berges, director of Latin America Strategy for Merrill Lynch (NYSE:MER - News) & Co. and the author of two reports on the China threat to Mexico.

That's a devastating reversal of fortune for a country that for the past decade has enjoyed privileged access to the world's biggest market under the North American Free Trade Agreement. "We're in trouble. China is growing so fast. They have cheap labor, and they give companies a lot of incentives to invest there," says Oscar Garcia, manager of the Melco Display Devices plant in Mexicali. The factory, which is owned by Japan's Mitsubishi Corp. and churns out cathode-ray tubes used in computer monitors, will close at the end of July. That's because it can no longer compete with lower-priced Chinese production...

...Why can't Mexico steal a march on China? For starters, there's the wage issue. An assembly-line worker in Guadalajara earns $2.50 to $3.50 an hour; his counterpart in Guangdong makes 50 cents to 80 cents. Perhaps even more important, China has nurtured large supplier networks in industries such as electronics that Mexico cannot match. The presence of thousands of seasoned Hong Kong and Taiwanese companies on the mainland creates natural partners for multinationals. Besides, China is now a bona fide member of the global trading club, having joined the World Trade Organization (news - web sites) [WTO] in 2001. Factor in a 1.3 billion-strong consumer market, and the sum total is too powerful to resist.

That's why companies have deserted Mexico in droves. Employment in the maquiladora industry, the assembly plants that produce primarily for export to the U.S., has dropped nearly 20% from its peak of 1.4 million in 2000, though some losses stem from the global economic slowdown. "There are no jobs available, so people are migrating back to their hometowns in southern Mexico," says Ruben Parga, president of the Maquiladora Assn. in Ciudad Juarez, a sprawling city on the U.S. border that has lost more than 60,000 jobs in the past 2 1/2 years.

The rivalry between the two exporters is playing itself out in the all-important U.S. market. Mexico's exports to the U.S. grew just 1.2% last year; China's surged 19%. Mexico is most vulnerable in low-margin sectors such as furniture, toys, apparel, footwear, and certain types of electronics. It took China just three years to double its share of U.S. imports of laptop computers and components.

Textiles are another area where Mexico is losing ground. Just ask Jorge Garcia Fernandez. The executive director of top towel exporter Hilasal knew competition would stiffen once China joined the WTO and the U.S. began paring back textile quotas. What he didn't bank on was that Hilasal's exports would fall 43% in three years, or that his home market would be inundated with cheap Chinese imports, some of them contraband. "China's low costs are killing the textile industry," he says.

To understand how global forces are reshaping Mexico's manufacturing base, one need only look at Guadalajara, the capital of Mexico's electronics industry, which logged $10 billion in exports last year. Flextronics (NasdaqNM:FLEX - News), Jabil Circuit (NYSE:JBL - News), Sanmina-SCI (NasdaqNM:SANM - News), and Solectron (NYSE:SLR - News) have factories there. Today, their plants are operating at just 60% capacity. Production of low-cost items such as cellular handsets and personal digital assistants has largely shifted to China.

The Xbox (news - web sites) video-game console is a case in point. When Microsoft (NasdaqNM:MSFT - News) Corp. was preparing to launch the Xbox, in mid-2001, it chose to centralize production for the U.S. market at Flextronics' Guadalajara facility so its engineers could easily fly down for last-minute design tweaks. A year later, Microsoft transferred production to two Chinese plants. The main reason: "China is closer to our supply base. Most Xbox components come from the Far East," says Todd Holmdahl, Microsoft's general manager of Xbox hardware.

China -- even wounded by SARS -- is a ferocious competitor. But Mexico has done little to address its own deficiencies. The country ranked No.47 in technological development in the latest competitiveness ranking by the World Economic Forum (news - web sites) -- below Botswana. "NAFTA allowed our industry to modernize and adapt to a competitive world," says Luis Tellez, a former cabinet minister who is now an executive vice-president at Mexican auto-parts maker Grupo DESC (NYSE:DES - News) "But now we are facing a second phase of globalization."

http://story.news.yahoo.com/news?tmpl=story&u=/bw/20030529/bs_bw/b3835077mz014

Wondering just what this second phase of globalisation means for the US.

[kaktuskid]

A lot of those departments are in PHX.

[the gillman@blacklagoon.com]

Utter disaster.

[Willie Green]

Right now, Mexico is the No. 2 exporter to the U.S. after Canada. But, barring a huge SARS-related setback, China will wrest away that title sometime this year.

 U.S. Trade with China 
(billion dollars)

Year	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002
U.S. Imports	19.0	25.7	31.5	38.8	45.5	51.5	62.6	71.2	81.8	100.1	102.3	125.1
U.S. Exports	6.3	7.4	8.8	9.3	11.7	12.0	12.9	14.2	13.1	16.3	19.2	22.0
Trade Deficit	12.7	18.3	22.7	29.5	33.8	39.5	49.7	56.9	68.7	83.8	83.1	103.1

The big difference between Mexican and Chinese trade is the minimal exports TO China, resulting in a much greater Trade Deficit. China is a vast, economic black-hole, sucking the rest of the world down to its standard of living.

[Willie Green]

Its capitalism. Get used to it.

No, it's not capitalism.
Capitalists assume market risks, and with hard work and ingenuity (and a little luck), are deserving of the rewards they reap.
Global corporatists, OTOH, are risk averse.
They employ their resources to corrupt and subordinate the sovereignty of representative governments, manipulating policy and market conditions to their own advantage. They are undeserving of the term "capitalist".

[CanisMajor2002]

No, it's not capitalism.
Capitalists assume market risks, and with hard work and ingenuity (and a little luck), are deserving of the rewards they reap.
Global corporatists, OTOH, are risk averse.
They employ their resources to corrupt and subordinate the sovereignty of representative governments, manipulating policy and market conditions to their own advantage. They are undeserving of the term "capitalist".

The real beneficiary of NAFTA is the People's Republic of Mexico. Money comes into the country and the government, not the individual, collects. Their natural resources are nationalized (oil & gas: PEMEX), and oil companies can't compete to deliver those resources at market prices. Farmers raise chickens and send them north, only to receive pennies on the dollar and send the rest to the government. If Mexicans were allowed to keep what they earn, they wouldn't be running north.

[hedgetrimmer]

Look out because FTAA is coming!

SUMMIT OF THE AMERICAS Plan of Action

The "White Helmets Initiative" is based on the conviction that a concerted international effort of developing and developed countries can facilitate the eradication of poverty and strengthen the humanitarian rapid response capability of the international community to emergency humanitarian, social and developmental needs.

The blue helmets are dead! Long live the white helmets!

III. Initiatives in Which Public and Private Sector Partnerships Play an Important Role

Don't forget those socialistic Public/Private partnerships either!

[hedgetrimmer]

U.S. GOVERNMENT NEGOTIATING TEAM FOR THE FREE TRADE AREA OF THE AMERICAS

Ministerial Representative to the FTAA and Co-Chair of the Ministerial Meetings Ambassador Robert B. Zoellick United States Trade Representative Co-Chair of the Trade Negotiations Committee Ambassador Peter F. Allgeier Deputy United States Trade Representative Office of the United States Trade Representative 600 17th Street, NW Washington DC 20508 USA Tel: (202) 395-5114 Fax: (202) 395-3390 E-mail: Pallgeier@ustr.gov

[Willie Green]

The real beneficiary of NAFTA is the People's Republic of Mexico. Money comes into the country and the government, not the individual, collects.

Do not dismiss the corruptive and collusive role of transnational corporations in this oppression.

"Fascism should more appropriately be called corporatism because it is a merger of state and corporate power."

-- Benito Mussolini

[harpseal]

Does anybody in DC give a rat's hindquarters about the damage they are doing to the American people?

Attached is my link to the American President about one of those socialistic government/private partnership that takes tax dollars to export American jobs. they say on their web site they do not cost the American people anything but they keep getting higher appropriations. A letter to President Bush regarding the Economy

[hedgetrimmer]

Is this _really_ free trade??? This text is copied from the Summit of Americas initial "free trade" for the Americas dcoument.

****** III. ERADICATING POVERTY AND DISCRIMINATION IN OUR HEMISPHERE

Large segments of society in our Hemisphere, particularly women, minorities, the disabled, indigenous groups, refugees and displaced persons, have not been equipped to participate fully in economic life. Nearly one-half of the Hemisphere's population still lives in poverty. Expanded participation of the poor in the region's economies, access to productive resources, appropriate support for social safety nets and increased human capital investments are important mechanisms to help eradicate poverty. In pursuit of these objectives, we reaffirm our support for the strategies contained within the "Commitment on a Partnership for Development and Struggle to Overcome Extreme Poverty" adopted by the OAS General Assembly.

The World Summit for Social Development to be held in Copenhagen in March 1995, as well as the United Nations World Conference on Women in Beijing in September 1995, will provide unique opportunities to define strategies to promote social integration, productive employment and the eradication of poverty.

******* Why would the results of a UN conference on socialistic programs to eradicate poverty end up in a "free trade" treaty? I thought "free trade" was about tariffs and fees and such.

***** 18. Strengthening the Role of Women in Society

The strengthening of the role of women in society is of fundamental importance not only for their own complete fulfillment within a framework of equality and fairness, but to achieve true sustainable development. It is essential to strengthen policies and programs that improve and broaden the participation of women in all spheres of political, social, and economic life and that improve their access to the basic resources needed for the full exercise of their fundamental rights. Attending to the needs of women means, to a great extent, contributing to the reduction of poverty and social inequalities.

***** Well I know sustainable development does not support "free trade". Sustainable development is anti private property, and anti individual rights as has been noted over and over again on this forum.

The question becomes again, to all you free traitors out there, why do you so vehemently support these phony "free trade" treaties when you can see with your own eyes the treaties are predicated on creating global socialism and socialistic welfare programs for the underdeveloped countries. I post this isn't free trade, its expensive trade, and it comes at the expense of America's freedom.

[Xenalyte]

NAFTA didn't stem illegal immigration to the United States from Mexico; in fact, there's evidence it contributed to a surge in migration as millions of rural Mexican citizens, their crops virtually worthless, left their homeland in search of opportunity.

At the risk of sounding self-righteous, WE TOLD YOU THAT WOULD HAPPEN, Mr. Government Man!

(Not you, WG. The feds.)