AN IN-DEPTH LOOK AT NAFTA. August

Transcription

1 IMPLICATIONS OF U.S. TRADE POLICIES: AN IN-DEPTH LOOK AT NAFTA August

2 The U.S. auto industr y is highly competitive and thriving Light vehicle production Value (in $ millions) Units (in thousands) ,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 Source: OICA, BEA; U.S. Bureau of Labor Statistics. 2

3 Motor vehicles exports and auto parts imports (billion) GDP Auto Industry (billion) Economic integration promotes a vir tuous circle of regional growth U.S. auto industry GDP, U.S. motor vehicle exports and U.S. auto parts imports from Mexico ($ billion) U.S. Auto Industry GDP U.S. motor vehicles total exports U.S. auto parts imports from Mexico Source: Wisertrade and Bureau of Economic Analysis

4 Trade integration with Mexico is beneficial to U.S. auto industr y NAFTA vehicles production: 17.4 million in 2017 NAFTA vehicles exports: $173 billion in 2016 Motor Vehicles Global Production (in million units) Motor Vehicles Global Exports Share (in value) Canada United States Japan, 9.7 Other, 23.3 NAFTA, 22% Mexico 4.0 NAFTA, 17.4 China, 29.0 Japan-South Korea-China, 19% EU 28, 50% EU 28, 17.9 Other, 9% Source: SE with data from IMF, WTO, and OICA. 4

5 Mexico and the U.S. have developed a strong supply chain US-Mexico trade in Automobiles (Value in $ billion) US-Mexico trade in Auto Parts (Value in $ billion) US Exports to Mexico US Imports from Mexico US Exports to Mexico US Imports from Mexico Source: SE with import data from USDOC, using 3361 NAICS codes for automobiles and 3363 NAICS code for auto parts. Import data series is available from 2008 only. 5

6 Mexico s auto industr y is highly integrated to the U.S. industr y Germany 4% Canada 6% China 9% Foreign inputs in Mexico's vehicle exports to the U.S. Other 7% U.S. 74% Foreign inputs in Mexico's vehicle exports to Germany China 11% Other 21% Canada 12% U.S. 18% Germany 38% Value-Added in Mexican Exports of Motor Vehicles Canada 2% Other 16% U.S. 38% Mexico 45% Source: Harvard University, Job Market Paper, Alonso de Gortari (2017); INEGI and Banxico. 6

7 Expor ts to Mexico are impor tant to U.S. auto and auto par ts suppliers $8.3 Main US State Exports of Automotive Products to Mexico (2017, value in $ billions) $4.6 $3.3 $1.6 $1.5 $1.2 $0.7 $0.7 $0.6 $0.5 WA ME 15% 21% VT 2% $2 $79 MT ND 4% 3% MN $0.4 $0.5 $1 OR ID 62% 18% WI 2% 25% $14 WV NY NH $15 4% 2% $271 30% MI $9 9% MA 6% $4 SD $232 $97 $0.6 WY $1 28% RI 67% $25 $3,666 7% IA PA CT 29% $37 40% $0.2 NE 28% 13% IL OH $3234.2% NJ 20% $60 NV $46 IN UT $14-5.5% 14% 7.7% DE 6% $1 34% 30% CO $685 10% 46% MO $1,248$1,349 CA $174 KS 8% $2 7% 14% 20% 28% $26 MD 5% $6 VA 68% -6.7% $7 $8 $49 $454 KY DC 20% $0.1 $1,795 NC 33% 18% TN $306 AZ OK 10% AR -22.2% $488 NM 29% $10 12% $512 68% GA $291 82% $12 MS AL 17.5% SC 15% $82 13% 13% TX $166 $87 LA $13 AK 45% $1 U.S. Exports to Mexico by State: Auto Parts (% Share as export market, value in million dollars, 2017) 75% $7,059 27% $7 FL 7% $71 HI Source: WiserTrade, using NAICS. 7

8 Imposing tariffs on auto impor ts will hur t the U.S. auto industr y 195,000 U.S. workers would lose their jobs 25% tariff On all foreign automobiles & automobile parts Automobile imports would shrink by 5.29% Exports would drop by 2.53% Automobile production would decrease by 1.5% Mexico is an important and reliable United States partner, while its auto exports do 8 not pose a threat to U.S. national security.

9 U.S. and Mexico should continue to leverage the integrated market The North American automotive sector is a global success story that benefits U.S. consumers, manufacturers, and workers. The high level of integration: Opportunities for continued integration: Fosters innovation Collaboration on cross-border training Increases the economic wellbeing of the sector Develop appropriate incentives for OEMs and suppliers to further integrate and invest in the region Provides a reliable source of vehicles for all purposes (including national security and consumer demand) Further compete in the electronification of the auto industry 9

10 NAFTA

11 NAFTA Modernization requires par tners to compromise -Rules of Origin Automotive Industry -Labor Value Content Set appropriate targets and rules that maintain the competitiveness of the auto industry and promote job security and creation Sunset Clause Establishing such a clause can cause uncertainty and hurt investments Investment Protections Enhance investor protection rules, capabilities, and arbitration process Investor-State Dispute Settlement Ensure a high-level of legal certainty to foreign direct investment 11

12 NAFTA transformed the U.S. - Mexico bilateral relationship A robust economic agenda and trade diversification continues to be a high priority for Mexico A modernized NAFTA agreement will give North America the tools to compete in the 21 st century economy Trade is part of the solution to the challenges posed by globalization The global economy waits for no one 12

13 Guillermo Malpica Soto Trade and NAFTA Office SECRETARIA DE ECONOMIA MEXICO MX-US Trade More information: (202) Washington, DC 13