Beyond NAFTA: Framing the Future Landscape of the North American Economy

Transcription

1 Beyond NAFTA: Framing the Future Landscape of the North American Economy Pedro Noyola July 2015

2 Index A. Openness B. Integration and Competitiveness C. Competition and Transparency D. The Future: Framing the Paradigm 2

3 Trade liberalization in Mexico 80% Degree of trade openness (X+M/GDP, ) 70% 60% 50% 40% 30% 20% 10% 0% Closed Economy GATT PSE NAFTA OECD FTA BOLIVIA FTA COSTA RICA --FTA, FTA G FTA CHILE EUFTA -- FTA ISRAEL FTA AELC FTA URUGUAY FTA JAPAN FTA PERU -- FTA CENTRAL AMERICA Dependent variable: Annual variation of trade openness Variable Coefficient Std. Error t-statistic P value Dummy *GATT/PSE Dummy **NAFTA Dummy EUFTA AR(1) MA(1) MA(4) Y t = α 1 D GATT/PSE + α 2 D NAFTA + α 3 D EUFTA + AR(1) + MA(1)+MA(4) + u t Source: SAI Law & Economics with data from INEGI. 3

4 Index A. Openness B. Integration and Competitiveness C. Competition and Transparency D. The Future: Framing the Paradigm 4

5 Shared production 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 40% U.S. Content in U.S. imports (percentage) 25% 32% Mexico Canada Weighted average (Mex-Can) 4% China Production sharing (intra-industry trade: 40%) Pure outsourcing Source: Koopman et. al. (2011) Give credit where credit is due: tracing value added in global production chains, U.S. Department of Commerce andalix Partners, Costs and Complexity - Will China Remain the Low-Cost Country of Choice?. 5

6 Cycle coordination Manufacturing production from Mexico and the Unites States (annual growth,1981:t1-2013:t1) 15% 10% 5% 0% -5% -10% -15% -20% Corr: 0.21 Corr: 0.76 Johansen cointegration since Jan / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /01 US Mexico 1980:T1 1993:T4 Series: LOG(Man.Prod.MEX) LOG(Ind.ProdUSA) Likelihood Critical Value Critical Value Cointegrating Eigenvalue ratio 5% 1% Equations None At most 1 Johansen Cointegration test :T1 2012:T2 Series: LOG(Man.Prod.MEX) LOG(Ind.ProdUSA) Likelihood Critical Value Critical Value Cointegrating Eigenvalue ratio 5% 1% Equations None * At most 1 * Rejects the null hypothesis with a confidence level of 95%. **Rejects the null hypothesis with a confidence level of 99%. 1/ The test assumes a deterministic linear trend of data. Source: Analysis by SAI Law & Economics with data from INEGI and the US Federal Reserve. 6

7 Demographic competitiveness NAFTA population (2012) % 25% Labor force, from 15 to 64 years (accumulated annual change) China population (2012) Millions 20% 15% 10% 5% 0% -5% NAFTA China Source: SAI Law & Economics with data from U.S. Census Bureau and National Bureau of Statistics of China. 7

8 Green competitiveness Additional investment to reach 450 Scenario (% of GDP) 2.4% 2.0% 1.6% NORTH AMERICA CHINA 2.0% 1.2% 0.8% 0.4% 0.0% 0.3% 0.4% 0.5% 0.8% 0.8% 1.5% 1.2% The 450 Scenario analyzes different measures to bring energy related CO2 emissions down to a trajectory that would be consistent with ultimately stabilizing the concentration of all greenhouse gases in the atmosphere at 450 particles per million. Source: SAI Law & Economics with data from The International Energy Agency. 8

9 Index A. Openness B. Integration and Competitiveness C. Competition and Transparency D. The Future: Framing the Paradigm 9

10 Concentration Sectoral Herfindahl Index Oil 2,347 10,000 Electric 753 8,032 Telecom 3,189 7,998 Media 1,623 5,559 Transportation Airline 1,659 2,172 1,157 4,152 Mexico United Sates Construction 1,983 1,502 Banking 1,666 1,641-2,000 4,000 6,000 8,000 10,000 10

11 Concentration 8,000 Aggregate Herfindahl Index 7,000 7,130 6,000 5,000 4,000 3,000 2,000 2,060 1,000 - Mexico United States 11

12 Government procurement auctions Through February 2015 Total CFE IMSS PEMEX SEP Processes Line Items Auctions * Spend (Million USD) 8,412 4,306 3, Benefits (Million USD) Average Savings (%) 10% 11% 7% 46% 23% Adjudication Rate (%) 94% 96% 91% 99% 100% Average Number of Bidders ROI

13 Index A. Openness B. Integration and Competitiveness C. Competition and Transparency D. The Future: Framing the Paradigm 13

14 Intra-regional affairs Intra-regional Market access Dumping + ITEC 1 vs. common competition policy (Chapter 15) Seamless borders and transportation North America Logistics Program Energy synergies North American Energy Program Labor mobility vs. migration North American Labor Agreement 2012 Dependency ratio Country Ratio 2 Mexico US Canada NAFTA e/ Dependency ratio Country Ratio 2 Mexico US Canada NAFTA Dependency ratios 2012: NAFTA 11% smaller than that of the United States 2030e: NAFTA 10% smaller than that of the United States 1/ Interagency Trade Enforcement Center. 2/ 64+ age population/ labor force population (15-64 age). e/ Estimated. Source: SAI Law & Economics with data from U.S. Census Bureau and National Bureau of Statistics of China.. 14

15 Extra-regional affairs Extra-regional TPP Preservation of NAFTA for trade and investment flows from North America TTIP Regional negotiation vs. convergence 15

16 Shaping the future: a North American customs union Key issues A. Common tariff and revenue sharing (Chapter 5) B. Energy (Chapter 6) C. Agricultural and industrial standards (Chapters 7 and 9) D. Government procurement (Chapter 10) E. Trade in services (Chapters 12 to 14 and 16) F. Trade remedies and competition policy (Chapters 15 and 19) G. Labor mobility 16