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Uncovering the Real Trade Darling - is it China or is it Mexico?
Uncovering the Real Trade Darling – is it China or is it Mexico?
By Patrick Osio, Jr./HispanicVista.com
China is the new darling of the trade community. The office of the U.S. Trade
Representative lauds America’s trade with China as a large and growing
market. It points out that China is the world’s second economy in real terms and a
vast and growing market for U.S. products and services. It adds that the rising
income of China’s nearly 1.3 billion consumers is fueling strong demand for
farm products, manufactured goods and technical services. It also adds that “
China is now the sixth largest market for U.S. exports and America’s third
largest trading partner overall — surpassing Japan in 2003.”
Here is a beauty extolled by the trade representative’s office: “In 2003 the
U.S. exported nearly $5 billion in agricultural goods to China, an increase
of more than 140 percent over 2002.” A beauty because in the United States it
is widely accepted that possibly as many as 85 percent of the agricultural
workers are in the country illegally. So while overall trade, with emphasis on
agriculture with China is lauded, Mexicans and to a lesser extent Central
Americans, who are seen as the backbone of domestic agriculture, are demonized. Go
Does it stop at demonizing Mexican workers? Nope. NAFTA is widely viewed as
an uneffective trade agreement that should be done away with.
So maybe it would serve us well to do a comparison between mighty China and
lowly Mexico and see how they each fare as our trade partners.
It is true that China sells a lot more to the United States than Mexico, and
of course, total U.S. purchase (import) figures are added to the total two-way
trade. It is this addition that has given China the status of being “America’
s third largest trading partner.” But when it comes to purchasing from the
United States, China falls to fifth place, behind Canada, Mexico, Japan and the
China purchased $28.4 billion from the United States in 2003. That same year,
Mexico purchased $97.4 billion. And 2003 was not an exception. In 2002 Mexico
purchased $97.5 billion in U.S. products while China rang up $22.1 billion in
merchandise. Not to be too picky, but a better than $69 billion and $75
billion difference is considerable, particularly since Mexico has been suffering,
along with the United States, a severe recession, while China’s economy has
expanded by 8 percent annually.
Now consider again that last year $5 billion of Chinese purchases were
agricultural goods — that’s 17 percent of the total, a total that Mexicans had a
large hand in making possible. So even there, the Mexican presence is most
Mexico’s greater purchasing from the United States will continue, as is
reflected by the 2004 figures through April. Mexico’s purchases are $35.3 billion
to China’s $11.7 billion. This places Mexico on route to purchase more than
$100 billion and China to reach about $35 billion. The ratio difference will be
Now we look at how much China and Mexico sell to the United States.
In 2003, China sold the United States $152.4 billion worth of goods,
providing a hefty U.S.-China trade imbalance of $124.1 billion. More than $22 billion
was computers and peripheral parts.
But in 2003, the United States also had a trade deficit with Mexico. Mexico
sold us $138.1 billion for a trade imbalance of $40.6 billion or about 32
percent of China’s. Certainly, the deficit with Mexico is hefty. But when
considering that the United States buys nearly $14 billion of oil from Mexico that it
must buy from somewhere, the trade imbalance shrinks by a third. Additionally,
nearly 2,000 U.S.-owned or U.S.-based companies have assembly/manufacturing
plants in Mexico. They send U.S.-made components to Mexico where they are
transformed and shipped back to the United States. So let’s say a U.S. component is
worth a dollar, sent to Mexico where through assembly labor the value
increases by 50 cents. When the piece is exported from Mexico to the U.S., its actual
import value is 50 cents but it is entered as $1.50.
Of course, there are those who would argue that the same holds true for the
dollar sale to Mexico — it shows as a Mexican import purchase, but in reality
it is not. And that is true, but there are benefits that overshadow this
The reason why the U.S. can sell China $5 billion of agricultural goods is
because of the low-cost labor supplied by Mexicans that allows those products to
Similarly the components sent to Mexico are then transformed into greater
value by lower cost labor, which in turn makes the returned piece competitive in
the U.S. market as well as for export markets. So the dollar sale to Mexico
and repurchase for $1.50 represents no less than 50 percent savings, without
which the product could not be competitive and would cease to be made altogether
in the United States.
It would seem that were we to stop the torrential mental-abuse on Mexico and
instead concentrate on the positive, we might be able to get our neighbor to
become a world-class economy that would resolve a continual source of friction
Patrick Osio Jr. is the Editor of HispanicVista.com (www.hispanicvista.com),
can be reached at posiojr@.... This article also appears on the San Diego
Metropolitan Magazine (www.sandiegometro.com) for which Mr. Osio writes The
Connection, a monthly column on US-Mexico issues.
Mass Deportation of Legal Residents
By Erika Robles
According to official figures, as of late January 2004, more than 63,000
immigrants have been detained over the past year. However, leading immigration
attorney, Richard Iandoli, estimates it at about 100,000. Of those numbers, the
Department of Homeland Security, says it has already deported as many as 70
percent, most of them being legal residents.
When Bilingual is Silver and Trilingual is Gold
By Domenico Maceri
"English gets boring sometimes" stated Donna Nguyen, a senior at James Lick
High School in San Jose, California… Donna does not get bored very often. She
can speak English, Spanish, and Vietnamese. She can also read and write these
languages. So when she graduated from high school, she received a recognition
for her fluency in the form of a newly-instituted bilingual certificate. Her
accomplishments are marked on her diploma as well as her transcripts… The
bilingual certificate is a new program available only in a small number of American
schools. It should be expanded to recognize and encourage multilingualism,
which is essential to make it in today's world.
Latinos and Education in America
By Manuel Hernández
While Latinos and education are at a crossroads to meet objectives, a vision,
which will consolidate, disciple and send our children on a greater path is
needed to embrace the educational issues that affect Latinos today. Latino
children will make up 25 percent of the school population in the United States in
Baghdad South of the Rio Bravo
By Richard N. Baldwin T.
Comparing México to present Iraq might seem to be stretching a bit, but to
most Mexicans there are indeed similarities. No, we haven't reached the bombing
stage yet and fundamentalist extremists or suicide bombers do not beset us
yet, but when it comes to a breakdown of law and order, we are pushing it.
¡Si! Embarrassing indeed!
By Ricardo Castañón
The conduct of the Mexican Defense Department in the events surrounding the
ceremonial burring of US Marine Lance Cpl. Juan Lopez Rangel, are shocking
enough to get men of good conscience shaking their heads and some of us out of
Michael Moore asks; Contreras Answers
By Raoul Lowery Contreras
Michael Moore exaggerates, dissembles and hates his country, our country. His
to-the-bone hatred of President George W. Bush and those who work with and
support him obviously derives from his lack of military service to our nation…
When in Europe Moore calls "Americans dumb."
COLUMN OF THE AMERICAS
By Patrisia Gonzales and Roberto Rodriguez
Declaring Independence from Fear
It's BRW vs. ABB. That's Bush, Right or Wrong vs. Anyone But Bush… That
pretty much sums up the upcoming November presidential elections… Feeling under
siege, the right wing believes that the whole world is unfairly ganging up on the
president and his inspired policies. The left, on the other hand, is
exasperated at the inability to drive a sharp distinction between Kerry and the
imposter they love to loathe.
By Carl Luna
Omaha Beach: June 17th. The 60th Anniversary festivities had come and gone by
the time my family and I got to Normandy. World leaders and the global media
had both moved on to other world events but the flags and banners
remained--America's displayed most prominently--from windows, walls and yards, whole
gardens replanted in red, white and blue, endless quantities of these gracing every
town across Normandy. We started our day on the beaches at Aromanches, in the
British Gold Beach Sector, at a museum commemorating the creation of the
incredible Mulberry artificial harbor system dreamed up by Churchill, developed by
US and British military personnel, and built under fire by allied troops in
under a week.
The Great Anti-Crime March - Mexican style.
By Richard N. Baldwin T.
The Great Anti-Crime March took place on 27 June. It is difficult to estimate
the number of marchers as they were strung out for miles and there were other
marches taking place. But two large independent universities estimated that
from a half million to over a million demonstrators took part. In fact, there
appeared to be just under a million people in the Zocalo, the downtown city
We Need to Learn to Negotiate
By Domingo Casañas
One of my mottos has always been…. You Never Know Until You Ask. This motto
has served me very well in many areas and it has been of special value when it
comes to buying something. From a new or used car to new or used furniture.
One of the negatives that I have seen from many Latino consumers is the lack of
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