trade | Fausta's Blog

February 2, 2017 By Fausta

Mexico: $27 billion in remittances UPDATED

While Mexico’s oil industry generated US$18.7 billion and tourism $17 billion in 2016, remittances reached $27 billion.

95% of those remittances come from the U.S.

Remittances to Mexico Hit Record $27 Billion in 2016U.S. President Trump said during his campaign that restrictions on remittances could be used to pressure Mexico into paying for a border wall

The money that Mexicans send home also supports domestic consumption, which was the main driver of the country’s 2.3% economic growth last year. Industrial production was virtually flat, and exports of manufactured goods fell 1.2% in the full year.

In other news, Mexico Says Nafta Negotiations Should Start in May

UPDATE

#Trump plans to implement a 20% tax on #Mexicanimports to pay for wall. This will worsen US relationship with Mex, an imp #trade partner. pic.twitter.com/1UHdvQVofE

— Prof. Steve Hanke (@steve_hanke) February 1, 2017

October 7, 2015 By Fausta

The TPP and the two unknowns

Donald Rumsfeld famously defined the two unknowns (emphasis added):

There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.

Read about The TPP and the two unknowns.

October 5, 2015 By Fausta

This just in: TPP signed

The LatAm countries are Mexico, Peru and Chile (which in turn are members of the Pacific Alliance):
U.S. Reaches Trans-Pacific Partnership Trade Deal With 11 Pacific Nations. Trans-Pacific Partnership created after bitter fights over automobile industry, intellectual property rights and dairy products. China is not included since it did not meet criteria. The TPP is yet to be approved by Congress,

But Mr. Obama faces a steep challenge in the months ahead to win approval for the deal in a deeply divided Congress. Only a handful of Democrats support Mr. Obama’s trade policy, and Republican support is unpredictable in the 2016 election year, depending on the stance of presidential candidates and new leadership in the House. As it is, the deal can’t go to a vote before Congress until early next year.

Ian Bremer commented on the TPP on Facebook – now on YouTube,

January 4, 2014 By Fausta

Latin America: Free trade vs. Mercosur

David Lhunow writes on The Two Latin Americas
A Continental Divide Between One Bloc That Favors State Controls and Another That Embraces Free Markets

In 2014, the Pacific Alliance trade bloc (consisting of Mexico, Colombia, Peru and Chile) is slated to grow an average of 4.25%, boosted by high levels of foreign investment and low inflation, according to estimates from Morgan Stanley. MS +1.55% But the Atlantic group of Venezuela, Brazil and Argentina—all linked in the Mercosur customs union—is projected to grow just 2.5%, with the region’s heavyweight, Brazil, slated to grow a meager 1.9%.

June 11, 2013 By Fausta

Mary O’Grady takes Joe Biden to the woodshed

Last week Joe Biden, after decades of blocking it, sang the praises of free trade as if he had been championing it all along. Mary O’Grady lets the record stand on Joe Biden’s Free-Trade Epiphany
He discovers Colombia’s decades-old export of cut flowers—and credits the Obama administration.

By April 2007, when the Bush administration sent the U.S.-Colombia free-trade agreement to Congress for ratification, the cut-flower export industry was thriving. One reason was preferential access to the U.S. market granted by Congress. Mr. Biden certainly is familiar with ATPA since he voted against its reauthorization in August 2002.

That year is memorable for Colombians because the country was being overrun by FARC terrorists, and Mr. Uribe was elected president. Over the next eight years the former governor of Antioquia, whose father had been murdered by the FARC, worked tirelessly and at great personal peril to restore order. As Mr. Biden notes in his op-ed, the road from Bogotá to flower farms was “impossibly dangerous ten years ago,” though he doesn’t give Mr. Uribe or the Colombian military the credit they deserve for that reversal of fortune.

In late December 2010 I had numerous conversations with Colombian officials who were sweating it out because a modified version of ATPA (called ATP-DEA) had not yet been renewed. The Obama administration was refusing to send the free-trade agreement to Congress for a vote, and Valentine’s Day—a crucial holiday for flower growers and by extension the economy—was less than two months away. An estimated 200,000 Colombian jobs were tied to the industry and a roughly equivalent number in the U.S.

Mr. Obama eventually signed the U.S.-Colombia free-trade agreement in late 2011 after sitting on it for 3½ years. A Colombian official told me last week that he believes it was only completed because Mr. Uribe—whom Mr. Obama’s international-socialist friends hated—was no longer in office. There were two other crucial developments, he said. Congressional Republicans insisted that it be voted on together with the pending Panama and South Korea free-trade agreements, and Sen. Max Baucus (D., Mont.) pushed for it in conjunction with the stipulation that Colombia would expand laws raising the cost of labor.

Mr. Biden voted against the U.S.-Chile free-trade agreement in 2003 and the Central American free-trade agreement in 2005. Mexican trucks still don’t have unfettered access to the U.S., in violation of the North American Free Trade Agreement, because the Teamsters and therefore Democrats won’t allow it. Mr. Biden doesn’t explain any of this.

He never will.

June 7, 2013 By Fausta

Mexico: Retailers Descend on Mexico

Compare and contrast: Retailers pay millions of dollars to leave Argentina, while they’re descending on Mexico

Spurred by Relaxation of Tariffs on Clothing, Youth-Oriented Stores Head South, among them H&M, Zara, and Gap, all aimed at the younger consumer (I do shop at Zara for its classic, yet updated, style)

Encouraging the retail newcomers is the relaxation of steep tariffs on imported clothing. For more than a decade, Mexico applied antidumping duties as high as 533% on Chinese-made apparel to bolster its domestic garment industry. But in December 2011, the country eliminated the last of those transitional duties on Chinese clothing, lowering that barrier to entry. Currently the top tariff is a more palatable 25%.

“Because Mexico is a huge aspirational market, the removal of import tariffs for apparel may well be the single most-important retail event in the country in the past few years,” says a report by analysts at Credit Suisse, CSGN.VX -3.34% which estimates that clothing in Mexico was previously at least 50% more expensive than clothing in the U.S.

It’s all part of Mexico’s market-friendly policy by decreasing trade barriers.

May 29, 2013 By Fausta