Tag: NAFTA

NAFTA’s Boost to Manufacturing – 20 Years in the Making

Expanded manufacturing. Increased exports. Improved competitiveness, integration and partnership. That is the NAFTA story for U.S. manufacturers.

January 1, 2014 marks the 20-year anniversary of the North American Free Trade Agreement’s (NAFTA) implementation and there is strong evidence of the pact’s positive impact on manufacturing in the United States. Since 1993, value-added manufacturing in the United States has expanded from $1.06 trillion to $1.87 trillion in 2012. The increased exports, improved competitiveness and greater industry integration helped contribute to this 76 percent expansion in manufacturing output.

As U.S. manufactured exports more than doubled since 1993, the largest growth market for our manufactured exports has been our two NAFTA partners – Canada and Mexico, which purchase more from the United States than any other country. U.S. manufactured goods to Canada and Mexico more than tripled since 1993, growing some $173 billion through 2012 and accounting for over 18 percent of the total growth in U.S. manufactured exports over that period.

NAFTA Graph 01 01 14NAFTA’s impact on U.S. competitiveness in an increasingly challenging global economy has also been powerful. NAFTA has promoted greater integration, new partnerships and improved connectivity between our economies. U.S. cross-border investment grew five-fold to $453 billion in 2012, while Canadian and Mexican investment into the United States increased nearly six-fold, expanding to $240 billion. Underneath this investment are cross-border supply and production chains that are improving North American competitiveness, innovation and efficiency.  Notably, the Wilson Center estimates that some 40 percent of the content of U.S. imports from Mexico and 25 percent of the content of U.S. imports from Canada represents U.S. value-added manufacturing, meaning that imports from our neighboring countries actually support U.S. manufacturing jobs.

As we all take stock of NAFTA at 20, manufacturers are also looking forward. We are working with government officials in all three countries to expand efforts to reduce regulatory barriers and improve trade flows and cross-border mobility. All three countries are also back at the negotiating table as part of the Trans-Pacific Partnership (TPP) negotiations, which provide an important opportunity to improve the rules that govern trade between our countries.  And finally, manufacturers are working diligently to support Trade Promotion Authority so that new agreements that eliminate barriers and put in place even stronger rules can be completed and help level the playing field for America’s manufacturers.

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NAM’s Dempsey Moderates Panel on Trade and Manufacturing

Today, NAM Vice President for International Economic Affairs Linda Dempsey moderated a panel discussion on NAFTA and North American Manufacturing.

The panel, which was sponsored by the Washington International Trade Association, brought together business and government experts to look back and forward on NAFTA’s economic and business impact on North American manufacturing and economies of Canada, Mexico and the United States.

During the panel, Dempsey emphasized NAFTA was a “groundbreaking agreement” that helped pave the way for new trade liberalization and “sought to usher in a more a more integrated North American manufacturing sector to spur greater trade and investment flows between the three countries and improve the global competitiveness of manufacturers throughout North America.”

Dempsey also stressed the impact NAFTA has had on trade, noting that “U.S. trade with its NAFTA partners has more than tripled since the agreement took effect. It has increased more rapidly than trade with the rest of the world.”

Dempsey was joined by Ken Smith, the current Head of the Trade and NAFTA Office of the Ministry of the Economy of Mexico, Michael McAdoo, the Vice President for Strategy and International Business Development with Bombardier Aerospace, and Carlos Leitao, the Chief Strategist and Chief Economist for Laurentian Bank Securities.

 

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Manufactured Goods FTA Surplus On Track to Double This Year

The evidence keeps rolling in about the value of having free trade agreements (FTAs) that open up foreign markets to American exports.  The Commerce Department data on FTAs that the International Trade Administration just posted shows that we are on track for a fourth straight year of manufactured goods trade surpluses with our FTA partners.

Moreover, based on their data through October, that surplus has already reached a record $40 billion.  If that rate continues for November and December, the U.S. manufactured goods trade surplus with FTA partners will be $46 billion in 2011 – double the 2010 surplus of $23.4 billion.

The manufactured goods surplus with NAFTA is running at a $12 billion annual rate, and with CAFTA at a $3 billion annual rate. 

The record with FTA partners is in sharp contrast to U.S. manufactured goods trade with countries that do not have FTAs with us.  Based on January-October data, it looks like U.S. manufactured goods trade with non-FTA partners will register a deficit of close to $500 billion in 2011. 

The facts are clear -  we need more FTAs to let our manufactured goods into more foreign markets – and we need them as fast as we can get them.

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.

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Telecommunications Agreement with Mexico Will Help Manufacturers

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.

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Cross-Border Trucking, the Opportunities, the Lawsuits

The 30-day comment period ended Friday for the Federal Motor Carrier Safety Administration’s proposed rules to put into effect the long-delayed cross-border Mexican trucking program required under the North American Free Trade Agreement. (Docket: FMCSA-2011-0097).

The Riverside (Calif.) Press-Enterprise offered a thorough report on the issue, albeit with a headline one can argue over, “Cross-border trucking and tariffs — hard to balance.” To exporters of agricultural and manufactured goods, it doesn’t seem that hard at all. The tariffs tilted the scales heavily in a bad direction, and enacting the cross-border trucking program restores the balance.

Much of the effect in California has been on agricultural products, including dates, table grapes, lettuce and other crops grown in eastern Riverside County. Dave Kranz, a spokesman for the California Farm Bureau, said the tariff on table grapes, as high as 45 percent initially, cost growers 70 percent of their Mexican market.

Doug Goudie, director of international trade policy for the National Association of Manufacturers, said adding on that kind of tariff drives away customers and damages American producers. Goudie said he knows of one Mexican firm that is buying potato products grown in Canada, which he said was absurd because the products had to move through the U.S. to get to the destination.

“If you have to add 25 cents to every dollar for everything you’re trying to sell, pretty soon a Chinese or a Canadian product looks a lot better,” Goudie said.

Once the program is place, there will be more economic activity on both sides of the border. Increased opportunity, investment and wealth means trial lawyers will follow with bogus, hyped, shakedown lawsuits. (Where have we seen that before?) The American Association for Justice, the trial lawyer lobby, is setting the stage for litigation with its comments to the FMCSA, described in a news release, “Mexican-Based Trucks Should Carry Adequate Insurance: NAFTA Trucking Provisions Lack Protections for Motorists Injured in Accidents.

The important thing for the U.S. plaintiffs’ lawyers is to get their assertion on record that the insurance requirements are inadequate. Personal injury attorneys can then point to their regulatory submission to broaden the targets of their litigation from Mexican operators/insurers to more deep-pocket U.S. companies.

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Manufactured Exports to Free Trade Partners Lead March Growth

Commerce Department trade data for March 2011 released today show that the U.S. manufactured goods trade surplus with free trade agreement (FTA) partners is in its fourth year, and in fact is growing over 2010. The January-March 2011 manufactured goods surplus with FTA partners was $9.2 billion, compared to $5.6 billion for the year-earlier period.

The global deficit in U.S. manufactured goods trade for the first three months of 2011 was $100.1 billion, considerably larger than the $76.2 billion amount for the same period of 2010. The manufactured goods deficit with non-FTA partners for January-March 2011 was $109.3 billion, compared to $81.8 billion for the same period of 2010.

To conduct this detailed analysis of March trade figures, the National Association of Manufacturers relied on Census Bureau data from the North American Industrial Classification System (NAICS) Categories 31-33, which are comparable to U.S. production and domestic shipments data.

The January-March manufactured goods deficit with China was $67.7 billion, two-thirds of the global total. The comparable figure for 2011 was $56.7 billion. The manufactured goods deficit with the European Union also increased significantly, to $23.3 billion for January-March 2011 compared to $14.7 billion for the year-earlier period.
(continue reading…)

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Solving U.S.-Mexico Trucking Dispute Heralds Export Opportunities

Today’s Federal Register contains the Department of Transportation’s proposal for re-opening cross-border trucking with Mexico (Pilot Program on NAFTA Long-Haul Trucking Provisions). Once this plan is finalized, the retaliatory tariffs on $2.5 billion worth of U.S. manufactured goods and agricultural products will be cut in half. Those tariffs will be suspended completely once the first Mexican carrier is certified under the agreement.

This is a very welcome development and one that is overdue. For two years American manufacturers of a wide range of products have been paying 15-25 percent more than our competitors in Mexico, losing market share to manufacturers in China, Brazil, Canada, Japan, and other countries. These tariffs were put in place because the United States would not uphold its commitments made under North American Free Trade Agreement. The agreement published today will rectify this.

The National Association of Manufacturers has led efforts to repeal the ban on cross-border trucking for more than two years. The loss of exports to our second largest trading partner as a result of the tariff retaliation by Mexico forced manufacturers in America to cut production and lay off workers. Some may never recover their market share losses in Mexico.

This trade dispute did not need to happen. We are very pleased to see the end in sight as represented by today’s Federal Register notice. We urge the Obama Administration to sign the agreement after the 30-day comment period and move expeditiously to certify the Mexican carriers, and end the tariff retaliation.

Doug Goudie is director, international trade policy, for the NAM.

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Belated U.S.-Mexico Truck Deal Could Lift Tariffs, Boost Exports

President Obama and Mexican President Felipe Calderon announced a tentative agreements Thursday under which the United States would finally implement the cross-border trucking program required by U.S. signing of the North American Free Trade Agreement. The announcement is excellent news for U.S. farmers and manufacturerers whose products have suffered from retaliatory tarifs from Mexico.

As the National Association of Manufacturers’ Aric Newhouse said in a statement: “The United States is a global leader in ensuring enforcement of trade laws, and we need to lead by example – by coming into compliance with our NAFTA obligations on Mexican trucks. The NAM has led the effort in urging the Administration to reach an agreement to end these costly tariffs.”

Houston Chronicle and San Antonio Express News, “Deal would lift U.S. roadblock on Mexican trucks,” quotes two Texas business leaders talking about the positive, practical implications of the agreement.

“More than 15 years ago NAFTA was signed declaring free trade and removing obstructions to the flow of goods between Mexico and the United States,” Jeff Moseley, president and CEO of the Greater Houston Partnership, said in a statement. “With the compromise announced today, the full potential of NAFTA can come to fruition and Houston can hopefully grow its annual trade with Mexico currently at $16.2 billion.” …”We are pleased,” said Free Trade Alliance San Antonio president and CEO Kyle Burns. “It is unfortunate that it took billions of dollars in retaliatory tariffs to force the U.S. government into living up to its international obligations.

“We are hopeful that this latest program will lead to the successful conclusion of this issue, which should have been fully implemented in 2000. Mexico is showing good faith in our efforts. It is now up to the United States to follow through on our latest commitments and stop hiding behind safety concerns that are unfounded, as the initial pilot program proved.”

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Mexico’s Calderon Comes to Town, as Trucks Still Stalled

Mexican President Felipe Calderon is in town this week for a brief visit. Mexico is building toward its Presidential elections in July 2012, and the U.S.-Mexico relationship is always an issue in the election there as well as here. We don’t expect the lingering inability of the Obama Administration to resolve the NAFTA cross-border trucking dispute to be top of President Calderon’s list, but it will be up for discussion.

To recap, briefly: In the North American Free Trade Agreement, the United States signed on to allow cross-border trucking. As long as they meet U.S. safety and driver standards, Mexican and Canadian trucks under NAFTA should be able to cross the U.S. border, drop cargo and return home with cargo. They can’t engage in domestic deliveries. U.S. trucks are supposed to have the same rights. However, while this is in place between U.S. and Canada, implementation has been blocked for years between the U.S. and Mexico. Mexico won a NAFTA dispute settlement years ago, but declined to impose the retaliatory tariffs allowed by that process.

Until two years ago, that is, when Congress ended a pilot program for cross-border trucking and President Obama signed off on it. As a result of this, Mexico imposed retaliatory tariffs on billions of dollars worth of U.S. manufactured and agricultural exports. It has been nearly two years since this happened, and the Obama Administration has only very recently (January 2011) issued a “Concept Document” that lays out a foundation for discussions on re-establishing cross-border trucking. Little more has happened since that document was released, however, other than some “technical discussions.”

The Mexican government has indicated it is discussing the issue in good faith and that their U.S. counterparts are working hard. This is good news. However, the tariffs remain in place, harming American manufacturers who cannot ship their products to one of their largest markets without a massive markup that prices them out of the market. Many of these exporters are small & medium manufacturers – more than 90 percent of U.S. exporters to Mexico are SMMs. And waiting in the wings is a rotation of products on the retaliation list. We haven’t seen that list, but last time it was rotated, it put the bulls-eye on some major U.S. agricultural products, including pork and apples. Our bet is the next time it rotates, it’s going to focus squarely on manufactured goods instead. There’s not a lot of time left before we see this happen. We urge Secretary LaHood and his interagency team to buckle down and finish up their discussions. Tens of thousands of American jobs are at stake.

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Cross-Border Trucking Plan Boosts Manufacturing Exports to Mexico

We can’t say the Mexican trucking dispute is over, but we can now say that, at last, the end appears to be in sight. Almost two years after Mexico imposed retaliatory tariffs on billions of dollars of American manufactured goods exports, the Obama Administration has released a long-awaited “Concept Document” that provides a foundation that, if it can be successfully turned into a mutually acceptable proposal, will lead to compliance with our NAFTA commitments and the removal of Mexico’s retaliatory tariffs on billions of dollars of U.S. exports.

While release of the interagency document is an excellent development and very good news, we are not out of the woods just yet. It will take substantial effort on the part of the Obama Administration and Congress to work through the concepts in this proposal and create a final agreement acceptable to all parties. Public comments will be solicited. And, of course, the Mexican government will need to be an integral part of any agreement. A solution will need to ensure that Mexican and American cross-border trucking takes place in a manner similar to the existing cross-border trucking that has existed between the United States and Canada. The good news is that a successful solution will speed commerce and increase productivity and efficiency in supply chains.

But only after a final agreement is reached and we are compliant with our NAFTA commitments will the tariffs be removed. And Mexico’s retaliatory tariffs have had an significant impact on a wide variety of industrial sectors across the entire country. For two years, manufacturers around the United States have faced these retaliatory tariffs on their exports to Mexico. As a result, our competitors from Canada, Latin America, China and elsewhere have had an opportunity to increase their market share in Mexico at our expense. We need to move swiftly toward a solution so the tariffs can be eliminated.

Still, we appreciate the efforts put forth by the Administration in its interagency process to develop and release this concept document. The proposal released today will form the basis on which discussions between the United States and Mexico (with input from Congress and a public comment period) will take place. We strongly encourage all parties involved to buckle up, buckle down and get moving. Every day that passes means unnecessary barriers to American exports remain in place.

Department of Transportation release, “U.S. Cross-Border Trucking Effort Emphasizes Safety and Efficiency

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