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Mexico seeks to solidify rank as top U.S. trade partner, push further past China
- ggm 3y agoMexico gdp per capita, $10,000 USA: $70,000 It's going to be a heinously asymmetric exchange. Good longterm trade demands equity. Not equality, but some basic equity. Australia's experience with US trade negotiations is that it's highly distorted and suits America better. The TPP was shedloads better without the US, for everyone else. I'm not saying it's a bad aspiration, just "be careful what you wish for" That said, NAFTA wasn't bad for Mexico. There's hope.
- midoridensha 3y ago>The TPP was shedloads better without the US, for everyone else. The US shouldn't have been allowed to negotiate anything in the TPP; they should have just been allowed to sign on or not, after everything had been negotiated among all the other nations.
- BurningFrog 3y agoThe first thing to understand about trade is that it is always beneficial for both parties. Because each side can simply decline a transaction that doesn't help them.
- Mountain_Skies 3y agoCountries aren't Borg ships. Trade between countries have beneficiaries and victims in both countries. The victims usually have zero say in the trade so, no, they can't simply decline a transaction that harms them.
- worrycue 3y agoThey can decline the whole agreement. Thus the agreement has to be a win for them too else there is no reason to sign.
- sidkshatriya 3y agoThis is assuming that every trade delegation can accurately predict all the impacts into the future. This is especially difficult now because the pace of change in the world is only increasing. In general trade is a good thing. It must be encouraged but everything is not so open and shut.
- worrycue 3y agoInaccurate predictions go “both ways” and applies to both countries.
- notnaut 3y agoThe benefits and consequences of which are entirely asymmetrical. There’s a reason poor people engage in significantly higher rates of some of the worst “trade decisions” in the form of gambling. On top of that, when your pool of resources are closer to skim, poor trade decisions result in health-harmful effects, which continue to contribute to poor decision making.
- BurningFrog 3y agoWho are the victims when someone buys something from someone in another country? How is that different from when they buy from someone in the same country?
- syntaxing 3y agoTrade is always better without the US until someone needs the US military. Then if the US doesn’t step in, someone is gonna complain about the morality of it. You can’t have it both ways.
- threeseed 3y agoEvery trading relationship will favour the stronger side. EU and China in particular have been far more aggressive than the US has in pursuing their interests against smaller countries. Australia in particular has been subject to unprecedented economic coercion and manipulation by China. It's not pretty. But still trading ultimately does benefit both sides.
- roenxi 3y agoYeah, for example China's position of overwhelming strength vs. weak little USoA meant that China's wages have risen by an order of magnitude and their technology catapulted into the present century, building them in to the world's largest economy. China has gotten far more out of trading with the US than the US has, and that is accounting for the significant amount of free stuff that China effectively donated to the US in exchange for worthless paper. Trade relations favour the side who adopts the most liberal economic posture.
- twelve40 3y agoi don't necessarily disagree, but why do you think it absolutely has to be symmetric in order for both parties to gain? When Japan was allowed on the US market, around 1960, their GDP per capita was like $400 vs. $3000 in the US. both turned out alright.
- ggm 3y agoIf referring to me I said equity not equality. The gdp difference makes it implausible for the balance of trade to reflect domestic patterns. It will be cheap labour in Mexico and goods imported to the USA at lower tarrifs. Like NAFTA, it will have internal opposition.
- JumpCrisscross 3y ago> I said equity not equality I have never seen these terms used in international relations. In American English, I take them to be synonymous with equality outcome versus equal opportunity. How does that map to entire nations?
- didibus 3y agoNormally equity refers to everyone getting their fair share. It's never been synonymous with equality of outcomes. For example, equal opportunity might dictate that you consider both women and men for a job position, giving women equal opportunity. But equity demands that they'd be paid the same for the same work.
- JumpCrisscross 3y ago> equity demands that they'd be paid the same for the same work Which is equality of outcomes. (What “fair” means is the entire debate. Redefining fair as equitable doesn’t move us forward. Maybe we have this contortion because equality of outcomes became synonymous with communism, so now we get equity and equality with no bearing for those terms’ histories.) This redefinition of “equity” is modern and regional to parts of America. It sounds like it’s based on equity in law [1], but it’s not. That newness and regionality makes it difficult to predict what someone launching it into a new domain, like international relations, means, hence why I asked. [1] https://en.m.wikipedia.org/wiki/Equity_(law) https://en.m.wikipedia.org/wiki/Equity_(law)
- wslh 3y ago> Mexico gdp per capita, $10,000 USA: $70,000 Honest and direct question: how much drug trafficking adds to the GDP of a country? [1] I think we need a realpolitik/freakonomics approach to these discussion to get the whole picture and take decisions. [1] https://www.washingtonpost.com/politics/2019/06/24/do-mexican-drug-cartels-make-billion-year/ https://www.washingtonpost.com/politics/2019/06/24/do-mexica...
- alephnerd 3y ago> Honest and direct question: how much drug trafficking adds to the GDP of a country $0. The underground economy isn't included in GDP calculations. This was a major reason why China and India both tried to force cashless transactions so as to tamp down on the more egregious forms of tax evasion.
- wslh 3y agoI mean, the real GDP. I understand that the GDP does not include illegal activities. Even if not, money laundering is included in the GDP [1]. [1] The Relationship between Economic Growth and Money Laundering, a Linear Regression Model
- alephnerd 3y ago> the real GDP Probably somewhere around a 30-50% increase in true GDP based on similar investigations done in India and China.
- ochoseis 3y agoAs Mexico develops their economy and skills specialize, then wages will go up (they can’t even refine their own oil right now). Low skill manufacturing will then push farther south. Overall a win for the western hemisphere.
- ftyers 3y agoIsn't there a refinería at Salina Cruz?
- ethagknight 3y agoSimilar to poor southern US states being forced to do business with Californians and NY because all the copyrights and government blessings are controlled by Californians and New Yorkers. Want to borrow money? Got to get permission from NY. Want to use software? Got to pay a certain couple company's tax. Parody of course... but highlights the complexities of trade arrangements as well as the absurdity of simply writing off a trade agreement as only harmful to the poorer entity.
- jxf 3y agoThose states are also huge net receivers of federal investment, too.
- Slava_Propanei 3y ago[dead]
- lotsofpulp 3y agoNot similar at all. The federal government is very clear that only they can affect interstate commerce. Businesses can register in however many states they want, and state governments have no say on how the business is conducted in other states.
- aristus 3y agoIn reality, producing different product variants is infeasible and so bigger states drive standards. That's why cars used to be marketed as having "California emissions", and why textbook companies kowtow to Texas.
- lotsofpulp 3y agoThat is not the same as a poor southern state having to pay CA or NY. That is a business deciding to choose certain economies of scale. And California and New York’s population is not that big, the US south has quite a lot of people, and the #2 and #3 states in terms of population, so I doubt the premise that CA/NY standards are “taxing” consumers in the US south as implied earlier.
- dudeinjapan 3y agoChina did pretty well in last 30 years despite inequality with US. Trade with the US and those GDP gaps tend to narrow in the long term.
- e12e 3y ago> Mexico gdp per capita, $10,000 > USA: $70,000 China: $12,000?
- cmrdporcupine 3y agoThe biggest loser out of this isn't necessarily the US, it's Canada, who was US's biggest trading partner until 2014 when China displaced us. I guess this makes us 3rd. The two economies are highly integrated, especially in the auto sector where parts move back and forth multiple times for a single vehicle, and manufacturing plants in Ontario playing the role of slightly-cheaper-skilled labour integrated into a continent-wide system. But the trend in the last 20 years has been a one-two-punch with the movement of manufacturing capital to China, but also to Mexico, putting Canadian workers in secondary industries at a disadvantage. Didn't help that the previous conservative government heavily promoted primary industry (primarily raw oil exports) over secondary; pushing resource exports over manufacturing, letting the dollar rise, etc. And then after that, Trump stirred up a trade war around steel and other exports, etc. That has improved, and with a weaker dollar, Biden in power, and cooling relations with China... manufacturing has started to improve here again. But it's not a long term good situation, I think.
- fithisux 3y ago[flagged]
- onetokeoverthe 3y ago[dead]
- moralestapia 3y agoAs expected, this is not due to trade with Mexico increasing, but due to trade with others decreasing. Is it because the US economy is becoming stale or because it is diversifying its trade partners? Also, this is just another sign that the world is indeed shifting to a multipolar order.
- FredPret 3y agoThe US (and world) economy has been pumping out geometrically increasing amounts of wealth for centuries now. This is due to frosty relations with China decreasing trade with them.
- deleted 3y ago[deleted]
- neither_color 3y agoThe US economy is not stale, it is growing faster than Europe. I raise this comparison because the Euro block was the most similar thing to it in terms of development for the past decade. Other emerging economies have been developing faster and their percentage of trade with the US may be decreasing, but I don't see any sign of the US stalling. “In 2008 the EU’s economy was somewhat larger than America’s: $16.2tn versus $14.7tn. By 2022, the US economy had grown to $25tn, whereas the EU and the UK together had only reached $19.8tn. America’s economy is now nearly one-third bigger. It is more than 50 per cent larger than the EU without the UK.” Source: https://www.ft.com/content/80ace07f-3acb-40cb-9960-8bb4a44fd8d9 https://www.ft.com/content/80ace07f-3acb-40cb-9960-8bb4a44fd...
- jltsiren 3y agoComparisons based on nominal exchange rates are misleading, because the rates fluctuate a lot. The 2008 numbers in particular are not based on the strength of the EU economy but on the weakness of the US dollar during the financial crisis. Back then, €1 was worth $1.5 to $1.6 for a while, while the long-term average is closer to $1.2. And right now, the real year-on-year GDP growth rate in the EU is ~10% (when measured in US dollars), because the euro was particularly weak a year ago.
- 29athrowaway 3y agoThe problem with Mexico is that their government has deep ties with organized crime.
- bradleyjg 3y agoI think that’s backwards. The problem is the extremely powerful cartels, one consequence is the subverted governments.
- galangalalgol 3y agoI'd love to read a great book about that chicken or egg problem and what role the US leadership and populace has played in forming or altering it.
- xtracto 3y ago[Mexican living in Mexico here] There's a GREAT book about a lot of that, at least the Mexico side. It is called "Narcoland: Mexican Lords and Their-Godfathers" (original name "Los Señores del Narco) by Anabel Hernandez. She is a renowned journalist in Mexico who has lived threatened to death for several years, by several narcos and government officers. The book shows how the real "Lords" or "Godfathers" of Drug Trafficking are not some illiterate-uneducated kid from a small town in the middle of nowere in Mexico who becomes a "drug kingpin" with all connections and whatnot (CEOs and Cofounders who have struggled doing real word/legal relationships know that's a fairy tale), but rich people in Mexico, members of the elite class. That's why nothing real happens with cartels. The real bosses are people who have the real power, they control the government, control the narcos and control the money in Mexico. It's no conspiracy theory, everything is documented in that book. Here in Mexico society just "knows it". "Secreto a voces" they say it is, every state and city knows their narcos. To give you an example, in the "La Laguna" area of Durango, an ex-mayor, prominent businessman in the region and VERY rich guy named Carlos Herrera Araluce has been known to be a narco and in relationship with narcos. He was an elected officer (city mayor!!) with everybody knowing what he was doing. And the same is "known" in each state. You just have to ask some of the locals.
- pm2222 3y agoReroute through Mexico, right? Just like Russian oil through India back to EU, or is this misinformation?
- jncfhnb 3y agoRussian revenues are tanked.
- 71a54xd 3y agoThey'll need to work on the cartel / illegal immigration problem if they want this to happen. I'm still surprised some kind of "economic zone" south of the border hasn't been created to allow US companies to engage with non-citizen workers from mexico. Seems like a win-win. In 2023 many of my friends from asia and india who went through the process to legally become citizens or acquire work authorization have voiced highly negative opinions of the current admin and migrants who cross the border illegally.
- local_issues 3y agoIndians and East Asians are sprinting to the Right because of this, DEI, and the movement to neuter schools. It’s not a huge thing yet - i still see a truly enormous amount of second gen Boba Liberals - but it will be.
- decremental 3y ago[dead]
- pc86 3y agoIs it all that surprising that people who go through the legal immigration process will have a visceral distaste for people who immigrate illegally?
- 71a54xd 3y agoNot at all, I could not imagine being in their position. Literally sacrificing a decade of your life and nearly $100k to do things the right way - only to be told by "morally superior" lefties that you need to let someone in from latin america or africa because "they deserve it" when migrants also add zero value to the economy other than a small percentage that choose to work.
- skulk 3y agoYou're completely off the mark with your last sentence. Migrants make up almost 1/5 of the US civilian labor force, and Hispanics are a half of that [0]. If that's a "small percentage" of migrants, then I guess the has more migrants than citizens. Also from that source > Foreign-born men continued to participate in the labor force at a considerably higher rate in 2022 (77.4 percent) than their native-born counterparts (66.0 percent). You simply couldn't be more wrong. [0]: https://www.bls.gov/news.release/pdf/forbrn.pdf https://www.bls.gov/news.release/pdf/forbrn.pdf
- deleted 3y ago[deleted]
- dontmobile 3y ago[dead]
- ChumpGPT 3y agoI hope everyone realizes that this doesn't mean less trade with China and Mexico is filling the gap. The Chinese continue to use Mexico to by pass US import controls and send products and materials through to the USA. Stainless Steel, Aluminum, Rubber, etc. How many of these factories in Mexico that are exporting to the US Chinese? What we need to look at is how much trade has risen between Mexico and China, that will give us a better indication of what really is going on.
- synergy20 3y agoThat's absolutely true and it's a national strategy in China to get around. Not just Mexico, Chinese companies set up offshore entities everywhere, from Vietnam to Singapore to Canada, Mexico, etc. Basically everywhere. They then ship components there, assembly there and ship the full product to US. I dare to claim 80% or even more trade increase between Mexico and US is done that way.
- JumpCrisscross 3y ago> What we need to look at is how much trade has risen between Mexico and China Total trade between America and Mexico rose from $613bn in 2019 to $779bn in 2022, an increase of $166bn [1]. Total trade between China and Mexico was $100bn in 2019 and 2021 [2][3]. America's trade with Mexico in the last three years grew by more than Mexico trades with China altogether. It seems unlikely that Mexico's trade growth with America is being driven by playing middle man to China. (Keep in mind: Mexican manufacturing wages are lower than China's [4].) The contrast is particularly poignant today, with China's announcement of a surprise July export decline of "14.5 per cent year on year in dollar terms...the steepest fall since the outset of the coronavirus pandemic in February 2020" [5]. Mexico, meanwhile, seems to be fine. [1] https://www.census.gov/foreign-trade/balance/c2010.html https://www.census.gov/foreign-trade/balance/c2010.html [2] https://journals.sagepub.com/doi/full/10.1177/18681026211038339 https://journals.sagepub.com/doi/full/10.1177/18681026211038... [3] https://mexiconewsdaily.com/business/exports-from-china-to-mexico-up-28-percent-2022/ https://mexiconewsdaily.com/business/exports-from-china-to-m... [4] https://www.china-briefing.com/news/reshoring-from-china-to-mexico-how-prevalent-is-it-really/ https://www.china-briefing.com/news/reshoring-from-china-to-... [5] https://www.ft.com/content/6318c973-1ff7-44b6-9f4b-177e0706f1e2 https://www.ft.com/content/6318c973-1ff7-44b6-9f4b-177e0706f...
- Slava_Propanei 3y ago[dead]
- javier_e06 3y agoThis is bad news for the elite class in Mexico. They abhor their populist president (AMLO) and USA demands cheap labor which aligns with AMLO populist movement. The question is, who is going to replace him?
- alephnerd 3y agoWhy do HN commentators assume Mexico is a 3rd world shithole? It's kind of surprising how a country that China has only just caught up to in GDP per Capita [3] and HDI [4] is assumed to be a shitshow of an economy. Hell, the household income in China [0] (~$4,000) is still 30-50% of Mexico's [1] (~$12,000) Mexico has it's problems, but most of that stems from the Peso Crisis in the 1990s, which was similar to the recession China is faced during COVID. [0] - http://www.stats.gov.cn/english/PressRelease/202201/t20220118_1826649.html http://www.stats.gov.cn/english/PressRelease/202201/t2022011... [1] - https://www.economia.gob.mx/datamexico/es/profile/geo/mexico https://www.economia.gob.mx/datamexico/es/profile/geo/mexico [2] - https://data.worldbank.org/indicator/NY.GDP.PCAP.CD https://data.worldbank.org/indicator/NY.GDP.PCAP.CD [3] - https://hdr.undp.org/data-center/country-insights#/ranks https://hdr.undp.org/data-center/country-insights#/ranks
- whinenot 3y ago> Mexico has it's problems Like being completely compromised by the drug cartels and effectively a narco-state?[0] [0]https://www.nbcnews.com/news/latino/mexico-s-former-defense-secretary-arrested-lax-mexico-s-foreign-n1243690 https://www.nbcnews.com/news/latino/mexico-s-former-defense-...
- alephnerd 3y agoThat level of criminalization and corruption is no different than any other middle income countries sadly. For example, the ex-Interior Minister in China getting arrested for corruption in 2014 as $14.5 Billion in assets were found [0] Or $20 Billion in Russian investments being laundered in 2010-17 by the Laundromat [1] Or the Odenbrecht Scandal in Brazil that toppled Dima Roussef due to $0.5 Billion in bribes [2] Or the 2G Spectrum Allocation scandal in India that caused the govt to lose $25 Billion [3] There is a whole subfield related to this which I did some research and policywork in. [0] - https://www.reuters.com/article/us-china-corruption-zhou/exclusive-china-seizes-14-5-billion-assets-from-family-associates-of-ex-security-chief-sources-idUSBREA2T02S20140330 https://www.reuters.com/article/us-china-corruption-zhou/exc... [1] - https://www.occrp.org/en/laundromat/ https://www.occrp.org/en/laundromat/ [2] - https://en.m.wikipedia.org/wiki/Odebrecht_Case https://en.m.wikipedia.org/wiki/Odebrecht_Case [3] - https://en.m.wikipedia.org/wiki/2G_spectrum_case https://en.m.wikipedia.org/wiki/2G_spectrum_case
- deleted 3y ago[deleted]
- xtracto 3y agoTheres a dead comment by @dontmobile that I think is worth it: The industriousness of the Chinese can't be replaced. Mexico will never be as good as china in terms of speed, volume and capability. It will overall be an inferior partner, but because of this, it will never be a threat either. This has some truth. People should have a look at the story of 3DFX [1] : basically they acquired a manufacturer in Mexico who couldn't deliver enough quality. I love my country , but it is a fact that China has invested REALLY heavily in technology education. Mexico has about 30 years of catchup, in addition to solving our narco, corruption and political problems. [1]https://level2.vc/a-short-story-of-3dfx/ https://level2.vc/a-short-story-of-3dfx/