This morning the United States signed an agreement with Mexico that should significantly improve the competitiveness of U.S. telecommunications equipment in the important and growing Mexican market. In 2010, bilateral trade in these products totaled about $25 billion. 

In another demonstration of the value to U.S. manufacturers of the North American Free Trade Agreement (NAFTA), Mexico will no longer require that U.S. products be (redundantly) tested in Mexico to demonstrate they meet Mexican standards/technical requirements. Under the “Mutual Recognition Agreement (MRA) for Conformation Assessment of Telecommunications Equipment,” Mexico will allow recognized American testing facilities and laboratories to test products and  certify that they meet Mexican requirements, and vice versa. 

Not having to ship products to a Mexican facility and pay for testing should reduce costs for U.S. telecommunications equipment manufacturers.  It should be of particular value to smaller manufacturers for whom redundant testing can be a significant cost hurdle.  It should also speed product entry as U.S. equipment can be tested in one facility at the same time to both U.S. and Mexican standards.

The National Association of Manufacturers thanks the U.S. Trade Representative Ron Kirk for getting this agreement done, the first with a Latin American country.  The NAM has long supported Mutual Recognition Agreements as one way among many to reduce the expense and time associated with meeting foreign standards and technical regulations that may have only minor differences with U.S. requirements. We encourage USTR to continue to look for commercially meaningful MRAs with other trade partners to help enhance America’s competitive edge.  Well done!

Stephen Jacobs is senior director of international business policy, National Association of Manufacturers.

The Nov. 22 Financial Times, “Big trade opportunity for Mexico and Brazil,” reports that Mexico and Brazil have announced the start of negotiations that could lead to a Free Trade Agreement (FTA) between the two countries. Why do American manufacturers care?  Because Mexico and Brazil are the second and 8^th largest markets for U.S. exports globally. The deal would seriously affect U.S. competitiveness and exports to these two large and rapidly growing markets.

Consider Brazil.  Brazilian data show that it bought $22 billion of American manufactured goods and $3 billion from Mexico in 2008.  But in the three years since 2005, while U.S. manufactured goods have been losing market share in Brazil, Mexico’s manufactured goods exports to Brazil nearly quadrupled –- and that was without any trade preferences.

Both American and Mexican producers now have to pay significant import duties to sell to Brazil.  But once an FTA between Brazil and Mexico goes into effect, Mexican machinery and transportation equipment will enter Brazil duty-free, while comparable U.S. exports will face import duties of over 11 percent.  That means Mexican-made manufactured goods will have a significant price preference – large enough to divert American exports.

Also, while American manufacturers currently have duty-free access to the Mexican market while Brazilian manufacturers don’t, a Brazil-Mexico FTA would change that and make Brazilian products more competitive in Mexico – our second-largest market in the world.

The world is evolving, and countries are all making deals with each other. It is not just Mexico that seeks preferential access to the Brazilian market –- the huge European Union wants an agreement with Brazil as well. Yet here we sit, losing ground every month with the mythology that trade agreements are bad for us.

The only good news here is that Brazil and Mexico have only just started on the road to an FTA. There is still time for the Administration and the Congress to recognize that to sell overseas and double exports, we have to have competitive access to growing markets around the world – and that can only be done through trade agreements.

Those who oppose trade agreements probably don’t realize that in fact they are actually advocating a trade strategy of having American manufacturers be the only ones in the world facing tariffs and other trade barriers.  Hopefully when they think about this, they will increasingly see this is not really the path they want to be on.

Frank Vargo is the National Association of Manufacturers’ vice president for international economic affairs.

Mexican President Felipe Calderon is in town today on a state visit. He’ll bring a full slate of issues to discuss with President Obama. One expects he’ll raise the issue of Mexican trucking yet again, with hopes that someone senior in the Administration will provide more details on how we’re going to find resolution on it and remove the pernicious retaliatory tariffs that Mexico has (entirely within their rights under NAFTA, mind you) put on $2.4 billion worth of U.S. exports, the overwhelming majority on manufactured goods.

However, as noted earlier this week in this blog, despite repeated assurances by Transportation Secretary LaHood and other senior officials that some kind of proposed solution that will make everyone happy is imminent, we don’t expect to see any major breakthrough during President Calderon’s visit.

An earlier blog post charted Transportation Secretary LaHood’s exchanges with Sen. Patty Murray (D-WA) earlier this month and in March, where he told her that a proposal was “closer than soon” to being shared with Congress. We’ve heard that before.

According to Inside U.S. Trade [subscription], U.S. Trade Representative Kirk yesterday “expressed doubt that there would be a concrete U.S. proposal on solving the trucking dispute this week. He told reporters after a speech that he did not know if there would be a “deal” on trucking this week. “But I do know that [Transportation] Secretary Ray LaHood continues with work with Congress and others to see if we can find a way forward, ” he said.

And then, yesterday at a White House press briefing, we had this less-than-reassuring exchange:

Q: You mentioned the four meetings that the two Presidents have had. At each of those President Obama has pledged to resolve the trucking issue in accordance with the NAFTA treaty. Can you update us on what progress has been made, and just talk more generally about the trade issues that will be at the summit?

SENIOR ADMINSTRATION OFFICIAL: Certainly. And as I noted, kind of the economic competitiveness and mutual economic growth are things that we very much expect to discuss — the President discuss with President Calderón and the two teams to have an opportunity to exchange views and see how we can work together to reach a goal that both Presidents have very clearly laid out in their own countries to revitalize economic vitality and job creation in both countries. (continue reading…)

There are lots of urban legends we encounter and the one that seems most enduring is that nothing is made in America anymore.  Too many people refuse to see the reality that is shown in government data:  manufacturing output in the United States is at an all time high.  More is made here now than ever before.  

The U.S. manufacturing sector is dynamic and a major contributor to the high-tech economy that too many take for granted.  There are plenty of hurdles, though, that could drive this successful industry off the track.  In the global economy, there are other nations are trade blocs ready to seize the lead in global manufacturing.  In light of the global manufacturing marketplace, we surveyed manufacturers last fall to see how they thought North America stacked up. 

Those results are in.  Today The Manufacturing Institute, the National Association of Manufacturers (NAM), the Canadian Manufacturers and Exporters (CME)  and Deloitte Touche Tohmatsu released a report — Made in North America – that takes a look at manufacturing from a North American perspective:  the United State and two of its major trading partners, Canada and Mexico.  North American manufacturers consider the United States the most desirable country for expansion over the next three years and nearly 60 percent of U.S. manufacturers say they will become more competitive over the next five years across the board in sales, marketing, engineering and information technology.

Made in North America breaks new ground in several ways:

• manufacturers said that the North American Free Trade Agreement (NAFTA) was a net plus for them with only ten percent finding that it had hurt their business;
• nearly 40 percent said that they would expand R&D in the United States, with China and Canada as the next runners up with 20 percent and 18 percent, respectively;
• the top three barriers to competitiveness are labor costs, work rules and tax policy;
• the top three priorities survey respondents recommend for government action:  labor costs (including health care and pensions), tax policy and the availability of skilled labor.

The report is another reminder that the strong export performance of U.S. manufacturers this year is keeping the economy out of recession.  How much better we would be doing if a range of overseas barriers and tariffs to U.S. products were eliminated through trade agreements like NAFTA.  Candidates for public office should take a good look at this report and help keep U.S. manufacturing strong with their votes in Congress and state legislatures.  As this survey and news reports about it show, we’ve got too much to lose to ignore manufacturing.