Tex-Mex Trade since the #USMCA
#Tex-Mex Trade and the advantages for Mexico in the New Trade agreement.
I live in Texas. I remember hauling my SCUBA gear down to Del Rio. Lake Amistad, which separates the US and Mexico with no wall in between, just patrol boats. (It is hard to build a wall in the middle of a lake.) Not unusual, we went as a small group across the border for the evening, parked our SUV to dine at a local restaurant/dinner theater. Our entertainment for that evening was “the Mexican Elvis” who belted out Elvis tunes. One could close ones eyes and think one was in Las Vegas, but we were in Acuna, Mexico. With just one’s driver’s license for ID, border crossings have always been non eventful. After all Texas was once a part of Mexico.
There is also the human aspect of trade with Mexico. A good portion of the Texas economy is dependent on trade with Mexico. Daily thousands of middle class and upper middle class Mexicans come to the USA to shop and purchase products at Best Buy, JC Penney, Target and many malls, often dropping thousands of US dollars (with Texas Sales Tax).
To support the Mexican government and it people, the #Mexican Peso has been dropping in value for over a year. American goods and services are more expensive with the current exchange rate in Mexico. It is much less expensive for Mexican citizens to buy their products in Texas, USA. That is why they are vacationing and buying in Texas. Does this also means that Mexican products, services and labor are going to be less expensive? As our third largest trading partner, Mexico. Will slightly lower costs and reap the extra dollars for its own economy. It needs to raise the standard of living with better health care services and more employment for all its people.
#The United States-Mexico-Canada Agreement #(USMCA), Trump forced Canada and Mexico to renegotiate the 1994 North American Free Trade Agreement, which underpins $1.2 trillion of regional trade, because he said the existing pact encouraged U.S. companies to move jobs to low-wage Mexico. If they are going to do it in North America, where are they going to do it? The cheapest place is Mexico. ---There is salary component, which does not exist in NAFTA, it was designed to bring more factories into the United States and Canada. However, salaries to be paid to management, research and engineering workers would be more price competetive in any factory work bid by Mexican factories. In fact entire factories could be built and operated at lower costs in Mexico.
Volkswagens have been manufactured in Mexico since about 1960. Automotive parts, machinery, produce, clothing and more more products are brought to the US via the border crossings manned by our customs agents and border patrol with drug sniffing dogs. North American trade is very interdependent. Bargaining for a better trade position is actually counterproductive. It is better to have a free flow of goods and services where the US can benefit from lower labor costs in Mexico. This was the purpose of NAFTA. Things do change and occasionally need to be renegotiated. However, what is the point of throwing out what works.
Some statistics:
#U.S.-Mexico Trade Facts, Office of the US Trade Representative
U.S. goods and services trade with Mexico totaled an estimated $615.9 billion in 2017. Exports to Mexico were $276.2 billion; imports were from Mexico $339.8 billion. The U.S. goods and services trade deficit with Mexico was $63.6 billion in 2017.
Trade is also increasing to both Canada and Mexico, while The U.S. data also reports a $17.1 billion goods deficit with Canada in 2017, and a $71 billion goods deficit with Mexico. Both countries, however, reported substantially larger U.S. goods surpluses in the same relationship. In 2017, Canada reported a $97.7 billion surplus, and Mexico a $132.4 billion surplus.
Mexico is currently our 3rd largest goods trading partner. According to the Department of Commerce, U.S. exports of Goods and Services to Mexico supported an estimated 1.2 million US jobs in 2015 (latest data available) (968 thousand supported by goods exports and 201 thousand supported by services exports).
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