Transcript How to Tap Progress: The Role of Trade Openness

How to Tap Progress:
The Role of Trade
Openness
Raymond Robertson
Macalester College
Mexico’s recent trade policy
 The Apparel Experience
 North American Integration


Prospects for the future
Trade Policy in Three Parts
Trade Policy





Trade liberalization in early 1990s
GATT 1986
NAFTA 1994
WTO 1996
Trade Policy: TTBs
A Remarkable Transformation
FigureMexican
1: Mexican
Average
Average
Tariff Tariff
RatesRates
0
5
10
15
Ad Valorem (%)
1990
1995
2000
year
Trade Weighted
2005
2010
Simple Average
Mexico: A Liberalization Leader
Robertson, Raymond (2011) “Mexico: A Liberalization Leader?”
in Bown, Chad P. (ed) The Great Recession and Import
Protection: The Role of Temporary Trade Barriers. London, UK:
Mexican
Imports
FigureTotal
2: Total
Mexican
Imports
Billions 2000 US Dollars
250
225
200
175
150
125
100
75
50
25
0
1990
1995
2000
year
USA
Japan
Rest of World
2005
Germany
China
Increasing Trade Diversity
2010
Average Anti-dumping Duties Imposed
Country
China
Indonesia
Germany
Japan
India
EU
Ukraine
Netherlands
Brazil
Canada
Russia
Kazakhstan
USA
South Korea
Guatemala
Venezuela
Denmark
Spain
Taiwan
United Kingdom
Chile
Number of
Covered HS8
Categories
1113
1
5
4
2
5
13
5
35
6
16
2
77
5
2
2
2
4
4
Earliest Final
Dumping
Decision Date
25-May-92
4-Jul-03
29-Feb-88
25-Jun-90
17-Oct-91
13-Jul-90
1-Jul-95
25-May-92
29-Nov-88
19-Dec-95
1-Jul-95
29-Jun-99
4-Sep-87
9-Aug-93
13-Jan-03
23-Dec-91
28-Mar-00
3-Apr-89
11-Oct-90
1
1
23-Dec-09
20-Oct-94
Latest Final
Simple
Dumping
Average
Decision Date
Duty
16-Apr-09
210.49
4-Jul-03
182.05
28-May-07
149.46
30-Oct-00
97.70
7-Dec-95
60.05
23-Aug-99
50.94
9-Apr-08
49.81
19-Dec-95
48.43
24-Jan-06
47.36
9-May-05
41.17
8-Sep-05
39.69
29-Jun-99
34.00
7-Sep-05
29.61
28-Feb-02
28.81
13-Jan-03
25.87
28-Dec-95
25.02
17-Dec-07
24.98
12-Dec-03
16.41
14-Nov-03
15.57
23-Dec-09
8-May-06
5.91
0.14
Probit
Results
FigureAnnual
7: Annual
Probit
Results
0
Year Coefficient Estimates
-.0005
Peso Crisis
-.0025
-.002
Total
-.0015
-.001
U.S. Recession
Financial Crisis
1990
1995
2000
Year
2005
2010
Figure
5: AD Covered
byCountry
Country
Anti-Dumping
Covered Trade
Trade by
Billions 2000 US$
18
15
12
9
6
3
0
1990
1995
2000
year
China
Rest of World
2005
USA
2009
Figure
6: Annual
Probit
Results
Anti Dumping
Probit
by Country:
.2915
.2905
.2895
.05
.29
.0505
China
.291
.0515
.0525
USA
.051
.052
China and the United States
1990
1995
2000
Year
USA
2005
China
2010
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Mexico has largely embraced trade liberalization
Although USA remains important trading partner,
Mexico has aggressively pursued trade agreements
with other countries; trade has diversified
Mexican TTB measures began with notable focus on
China with large number of AD duties
Focus remains on the USA and China
Duration is often long
Very little evidence of increase during the crisis; crisis
measures fit into recent context rather than seeming
to be a break from past patterns
Main lesson: Hard to blame trade policy for lack of
growth
Trade Policy: Main Points
Apparel




Hanson, Gordon, and Robertson, Raymond
(2010) “China and the Manufacturing Exports of
Other Developing Countries” in Feenstra, Robert
and Shang-Jin Wei (Eds.) China's Growing Role in
World Trade, National Bureau of Economic
Research. Also NBER Working Paper 14497.
Overall, Mexican competition from China is
limited
In certain sectors, however, Chinese market
share rose while Mexico’s fell
Main example: Apparel
Big Picture
Star Tribune 14 September 2012 p. D1
Popular Perception
U.S. Apparel Imports
2000
Mexico
Hong Kong
Dominican Republic
Bangladesh
Taiwan
Philippines
Other
Source: OTEXA
China
Korea
Honduras
Indonesia
India
Thailand
U.S. Apparel Imports
Through July 2012
China
Indonesia
Mexico
Cambodia
El Salvador
Pakistan
Guatemala
Source: OTEXA
Vietnam
Bangladesh
India
Honduras
Sri Lanka
Nicaragua
Other
U.S. Apparel Imports from Mexico
0
50
100
150
200
250
Category Units (SME)
1990m1
1995m1
2000m1
Time
2005m1
2010m1
Apparel Exports: Change After MFA
Fitted values
Log Change in Total Apparel Exp
1.5
Botswana
1
Azerbaij
Vietnam
Cambodia
Bosnia a
China
Peru
Spain
Jor dan
Arg entin
Andorr a
M adagasc
Parag uay
Luxembou
.5
Banglade
India
Ger many
Nether la
Sweden
Austria
Czech Re
Kazakhst
Denmar k
Belgium
Switzer l
Colombia
F rance
F rench P
Bulgar ia
T urkey
M acedoni
Nor way
F inland
United K
Indonesi
Pakistan Sri Lank
Morocco
Poland
Bolivia
Estonia
Ecuador
Belarus
Lithuani
Ur uguay
Ukraine
Latvia
Romania
Chile
Ir an, Is
M alaysia
Slovenia
Albania
T hailand
Japan
0
Australi
Cr oatia
New Zeal
Portug al
Ir eland
Brazil
Iceland
Philippi
Singapor
Gr eece
M auritiu
Honduras
Hung ary
Costa Ri
Panama
Saint Vi
Mexico
Isr ael
Russian
Armenia
T rinidad
Canada
United S
-.5
M ongolia
Dominica
South Af
M acau, C
Korea, R
Hong Kon
Nepal
Swazilan
M alta
F iji
Guyana
Seychell
-1
Bahrain
Cyprus
-1.5
4
6
8
Log GDP per Capita
10
12
Lopez-Acevedo, Gladys and Raymond Robertson (eds) (2012) Sewing
Success? Employment, Wages, and Poverty Following the End of the
Multi-Fibre Arrangement, The World Bank, Washington, D.C.
Has Mexico moved beyond apparel and
into other goods?
 Yes
 Will apparel return to Mexico if Chinese
wages continue to rise?
 Unlikely: Other suppliers have much lower
costs and higher product responsiveness

◦ Bangladesh
◦ Cambodia
Implications
North American Economic
Integration
NAFTA’s goal: Increase trade and
investment among North America
 Trade and investment increased
 Restructuring of Mexico’s manufacturing:

◦ Integration into North American production
chain
◦ Continued emphasis on assembly operations
◦ Innovation?
Mexico’s Trade Strategy
1.1
1
.9
.8
1994Jan
1996Jan
1998Jan
US Prod Emp 94=1
MX Prod Emp 94=1
2000Jan
Time
2002Jan
2004Jan
2006Jan
MX NonProd Emp 94=1
U.S. and Mexican MFG Employment
Robertson, Raymond (2009) “Estimating International Labor
Complementarity: Some Preliminary Results”, in Soloaga, Isidro
(ed.) Sobre México: Temas actuales de política económica
Universidad Popular Autónoma del Estado de Puebla (UPAEP),
Puebla, Mexico, 53-70.
Manufacturing Employment
3.2
12
3
3.1
MXMFG
13
12.5
2.9
11.5
USMFG
13.5
3.3
14
Millions of Workers
2007q1
2008q1
2009q1
2010q1
time
USMFG
Source: BLS CES (US) and INEGI (Mexico)
2011q1
MXMFG
2012q1
Mexican Trade Balance
-5
0
5
10
Billions U.S. Dollars
1993m1
1998m1
2003m1
Time
USA
Europe
2008m1
China
2013m1
Employment and Exports to the US
40000 45000 50000 55000 60000
2009:4
2009:3
2009:2
2009:1
2008:4
2008:3
2008:2
2008:1
2007:4
2007:3
2007:2
2007:1
2400
Exports to US (1,000,000s)
2600
(Border States: Non-Tradable Sectors Only)
time
Total Empl (1,000s)
Exports to US (1,000,000s)
Employment and Wage Responses to Trade Shocks: Evidence from Mexico
during the 2008-09 U.S. Recession (2012 Working Paper)
David S. Kaplan (Inter-American Development Bank, [email protected])
Daniel Lederman (World Bank, [email protected])
Raymond Robertson (Macalester College, [email protected])

Prior to NAFTA, U.S. production workers
◦ and Mexican empleados were complements
◦ and Mexican obreros were substitutes

After NAFTA, U.S. production workers
◦ and Mexican empleados were substitutes
◦ and Mexican obreros were complements
We should think of North America as a
single production unit.
 But…

North American Integration
U.S. Manufacturing Employment
12000
14000
16000
18000
1982-2012
1980q1
1990q1
2000q1
Time
Source: U.S. BLS CES
2010q1
Integration into value chain has distinct
advantages
 Key to progress in the value chain context
is the ability to upgrade

◦ Process
◦ Products

Countries with directed policies towards
upgrading tend to have more success
Progress in the Value Chain
Context
Mexico has been a leader in trade
liberalization among developing countries
 Mexico merged into the North American
value chain
 Continued diversification important
 Key to success in value chain context is
directed policies to encourage upgrading

Conclusions