Bashing Mexico and Mexicans has become quite fashionable in the United States over the last few years. I do quite a bit of Mexican bashing myself, but the Mexicans I bash are mostly my in-laws and in-law bashing has been an acceptable form of entertainment since the first Neanderthal couple walked down the aisle. Don't get me wrong – there is a lot to criticize about Mexico, but much of the anti-Mexico ranting one hears is not too terribly grounded in objectivity and fact. That especially applies to the latest anti-NAFTA rant from the Economic Policy Institute that has been picked up and given credibility by just about every left leaning news outlet in the United States.
The first clue that these guys' claim to "non-partisan" status is a bit dubious should be that Marxism Fresh Daily is in total agreement with them. In fact, the EPI is a mouthpiece for organized labor and never saw a government spending idea they didn't like. They are about as non-partisan when it comes to economics as these Mexican folks are when it comes to soccer.
The record on NAFTA needs to be set straight if we are going to have any sort of intelligent national discussion on trade.
In 2010 the USA imported $506.2 billion worth of goods and services from Canada and Mexico, while we exported $411.5, for a net trade deficit of $94.7 billion. True enough, but the mouthpiece for the unions leaves out the fact that we imported $116.2 billion worth of oil from our NAFTA partners – mostly from Mexico. Take away the oil and we are a net exporter as a result of NAFTA.
An ugly reality regarding NAFTA is that we are as over the top in agriculture as China is with manufacturing. I rant long and loud about China's blatantly unfair manufacturing trade policies and strategy, but a Mexican farmer can make just about every one of those claims, and more. Competing with incredibly subsidized American agriculture is a tough task. Not saying we should or should not under-write ag – just stating the fact.
Another bit of reality – much, maybe most, of the net import from Mexico and Canada in manufactured goods is actually Chinese in origin. Big US manufacturers – car companies especially – buy components from China, have them shipped to Mexico and Canada to the assembly plants – then bring the cars into the USA. Even the tier one suppliers adjacent to the big assembly plants are bringing quite a bit of their components in from China.
NAFTA is not really hurting US manufacturing much, if any. The USA can compete with anyone in the world on a truly free trade basis, but we have no free trade agreements with anyone but Mexico and Canada. By free trade, I mean 0% tariffs in and out – no currency games – just a level playing field. It is an abominable lie when people refer to our relationships with the likes of China, India and Brazil as 'free trade'. China tags our goods with 17% or better coming in, India 35%, Brazil 39%; and all the while we put duties in the 2-4% range on their exports to us. Compound that with currency manipulations and a blizzard of local laws to further hamstring US manufacturers and the deck is so stacked that manufacturers from developed countries are lucky to be able to ship anything into their countries.
Mexico and Canada are not our enemies. They are our friends, and friends don't let friends take a beating from the likes of the AFL-CIO, the Economic Policy Institute, or Marxism Fresh Daily. Mexico, in particular, is a favorite whipping boy for the unions because the ugly illegal immigration issue and the ongoing drug violence have Americans predisposed to side with anyone who wants to trash them. It is a canard, however – a smokescreen – a blatant attempt by the unions to get through legislation that which they cannot get on their own merits.
Today is a day for hoisting a Corona and wishing our troubled amigos to the south a feliz Cinco de Mayo, then tomorrow we can go back to bad-mouthing them.
Our oil imports from Canada are actually double those from Mexico.
Pemex, the Mexican government run oil company, has let their oil industry fall apart through lack of investment. They will soon be a net oil importer.
Our imports from Canada will likely continue to increase as they get better at oil sands production. The loss of imports from Mexico would be very BAD news for us because oil from North America carries far few geopolitical entanglements than imports from just about anywhere else. Hopefully Mexico will privatize their oil sector and become an even larger exporter to the US.