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Latin America Investment News on Viva Tropical

Mexico Exporting Jobs to U.S.

Article Summary:

In recent years Mexico has been considered more of a drug smuggler rather than a job maker, but it’s time to reconsider this image. After all, Mexico and Canada, not China or the United Kingdom are the largest markets for U.S. exports and the jobs of six million Americans are dependent on trade with Mexico.

Photo Credit: WSJ-Online

Original Article Text From WSJ-Online via Google Translate :

Mexico creates jobs in U.S.

In recent years, Mexico has been considered more as a drug supplier jobs, but at a time when the U.S. prepares to welcome Mexican President Felipe Calderon and Canadian Prime Minister Stephen Harper, on April 2 in Washington, it’s time to reconsider that image. After all, Mexico and Canada, not China or the United Kingdom are the largest markets for U.S. exports and the jobs of six million Americans are dependent on trade with Mexico.

The equation is quite simple: new exports create new jobs in the U.S. This is the reason why President Barack Obama launched National Export Initiative with the goal of doubling exports by 2015 and is the reason why it is difficult to devise a strategy to create jobs that do not significantly strengthen regional cooperation the two neighbors in the U.S., which together receive one third of all exports.

Mexico absorbed 13% of U.S. exports. However, like many emerging economies, its GDP is growing faster than the U.S., 5.4% in 2010 and about 3.9% in 2011.

Unlike most emerging markets, Mexico buys the vast majority of imports to the U.S. As the country grows, so do imports from U.S. States that export to Mexico are not limited to Texas and California, but also include Michigan, Illinois and 16 other states that sell each over U.S. $ 1,000 million in goods to Mexico every year.

Similarly, trade between the U.S. and Mexico is fundamentally different from trade with any other major country except Canada. While Chinese imports are produced almost entirely (96%) with parts made outside the U.S., imports from Mexico have, on average, with 40% of U.S. components. This is because Mexico and the U.S. not only trade goods but working together to make them. In a process known as production sharing, the parties are sent and received on both sides of the border as the products are manufactured.

This preserves U.S. jobs as the main alternative to sending manufacturing jobs to Mexico is outsourcing it to Asia, where few parts made in USA be used. Through the production sharing, USA and Mexico can concentrate on the portion of production in which each one stands out by combining the comparative advantages of both countries and strengthen the competitiveness of regional manufacturing. This, in turn, increase exports and jobs for both U.S. and Mexico.

The main advantages of Mexico as a stable economic partner include its proximity to the U.S. work force increasingly capable and duty-free access to most major world economies. However, the increase in wages and volatile oil prices make it more difficult to measure the long-term production in Asia to the U.S. market.

Although many of the synergies between the U.S. and Mexico are natural barriers that inhibit that it is used to fund are not. The complicated customs requirements and documentation necessary to access the benefits of the NAFTA free trade discourage small and medium businesses, the engines of U.S. growth, trade with Mexico. U.S., Mexico and Canada should work together to solve these problems and stimulate trade. They should also harmonize the regulation of food, vehicles and other products, for the same items can be sold and used throughout North America.

Finally, the southwestern border of the country should be managed more efficiently. Nearly 80% of the billions of dollars generated daily trade between the two countries passes through the land border. The intensity of trade and the extensive use of production sharing seemingly imply that inefficiencies may have minor consequences of billions of dollars. Inadequate infrastructure and increased security measures have generated long and unpredictable waits for the trade.

The increased use of flyer and reliable transporters, which accelerate the passage of certain fleets and their loads, combined with modest infrastructure investments could significantly alleviate the pressure on officials at ports of entry. This will help secure the goods cross the border in an expeditious manner, while giving them U.S. agents more time to focus on people and hazardous cargo.

Bilateral efforts to improve border management, harmonizing regulations and reduce the burden for regional trade customs are under way, but better policies always involves overcoming political challenges. Progress, then, depends on a clear understanding that economic cooperation with Mexico strengthens U.S.

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From WSJ-Online

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