Tag Archives: trade

U.S. NAFTA GOALS

A CONJECTURE

“We want to claim or reclaim some manufacturing employment that has settled itself in Mexico.”

John Magnus
June 23, 2017

CONTEXT

Like our last entry,  today’s is from the preliminary comments made by TradeWins president, John Magnus, acting as a panel moderator at GBD’s June 23 event. Earlier we shared with you his thumbnail estimation of the U.S. trade posture towards the European Union. He offered similar comments on America’s apparent goals for a revised NAFTA. The first round of NAFTA renegotiation got under way in Washington yesterday [June 16], beginning with a fairly challenging opening statement from the U.S. Trade Representative, Ambassador Robert Lighthizer. We shall turn to that in a moment.

First, though, this is as good a time as any to review the assessment that John Magnus offered back in June. “Okay, what about NAFT?,” he asked. These points were his answer:

Content, Rules of Origin. “We apparently would like to wring out non-North American content as fully as possible from the goods that have NAFTA eligibility.”

Jobs. “We want to claim or reclaim some manufacturing employment that has settled itself in Mexico.”

Trade Deficits. “And we would like to have a smaller, bilateral merchandize trade deficit with Mexico.”

Dairy. “We want to extract concession from Canada on some offensive issues, most notably dairy trade. I’ll let you decide what the word offensive modifies in all of that. It could be our behavior in relation to dairy trade.”

Investment and Trade Remedies. “We want to overhaul some of the NAFTA’s institutional provisions and dispute resolution provisions and most notably the ones that sit in chapters 19 and 11”.

Government Procurement. “We want to really have a new or continue our new mania for Buy American, meaning that we want to, apparently, refrain from deepening the NAFTA in regard to government procurement. And that matters because our NAFTA partners have some interesting requests and proposals in that category.”

The Cases. “And we seem to want to continue to treat even the highest profile trade remedy proceedings – examples: softwood lumber for Canada, sugar for Mexico – as basically matters of pure law enforcement as opposed to some part of our trade policy that we would be prepared to bargain over.”

COMMENT

Doubtless you have already read or read about Ambassador Lighthizer’s opening statement yesterday. Certainly, it was important, but its importance is bound to fade somewhat as the negotiations — and all that is said and written about them — move on to specific issues. But while it is still fresh, here are a few thoughts on the statement and on the negotiations now in their second day.

First, of course it was a tough statement. It had to be. It was the United States that called for these negotiations, and in a sense that was a fallback from President Trump’s threat to withdraw from NAFTA, to tear it up. And the essential toughness of the statement was in this paragraph:

“The views of the President about NAFTA, which I completely share, are well known. I want to be clear that he is not interested in a mere tweaking of a few provisions and an a couple of updated chapters. We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement.”

That was near the end of his statement. The beginning was somewhat different. There he talked about the many Americans who have benefited from NAFTA. “For many of our farmers and ranchers,” he said, “Canada and Mexico are their largest export markets.” And, he added, “Many are particularly vulnerable today because of low commodity prices.”

***

In short, at least as we read it, it was a tough speech with a major concession: America too needs NAFTA. Yes, there is some leverage in the belief if not the fact that the other two, Canada and Mexico, need NAFTA more. But America needs it. Think of NAFTA as a leaky lifeboat in an unforgiving sea. It’s three occupants — Canada, Mexico, and the United States — may have, will have, trouble agreeing on the best way to patch it. But agree they must. Scuttling it is unthinkable (or should be).

Much as we would like to end on that rhetorical flourish, it doesn’t quite capture the larger point. NAFTA may have been a mistake. A better set of policies set in motion in the 1990s might have preserved more U.S. manufacturing jobs and led to a stronger U.S. industrial base. The challenge for today’s NAFTA negotiators, however, isn’t to rewrite the 1990s. That can’t be done. Their challenge it is to improve a system that is now deeply embedded in the economies of all three countries and to do so without disrupting the lives and livelihoods of those who have successfully adapted to it.

SOURCES & LINKS

An Educated Guess is a link to the YouTube video of the Diplomatic Panel at the GBD EU Outreach event on June. This was the source of today’s featured quote.

Opening Statement takes you to Ambassador Lighthizer opening statement at the start of the first round of negotiations toward and an updated and revised NAFTA.

Objectives is a link the U.S. negotiating objectives for the new NAFTA negotiations, which USTR published on July 17, 2017.

About Dairy is the TTALK Quote for June 14, 2017, which focuses on the issue dairy in U.S.-Canada trade, beginning with comments from Shawna Morris of the U.S. Dairy Export Council.

Originally published on Augusut 17 as TTALK Quote No. 51 of 2017.

© 2017 The Global Business Dialogue, Inc.

 

WYDEN AT THE KAPLAN HEARING

THE TOUGH-TALK CONUNDRUM

So far in this administration, there’s been a lot of tough talk on trade enforcement, but there hasn’t been much in the way of action. And there is a real cost to all of the overhyped rhetoric when the follow-through isn’t there.”

Sen. Ron Wyden
August 3, 2016

Senator Ron Wyden of Oregon is the most senior Democrat, the Ranking Member, on the Senate Finance Committee.  On Thursday, August 3, the Committee held hearings on three nominees for positions in two quite different departments, namely, the Department of Commerce and the Department of Health and Human Services. Today’s featured quote is from Senator Wyden’s opening statement at that hearing.

Here is a longer excerpt from the same statement:

“So far in this administration, there’s been a lot of tough talk on trade enforcement, but there hasn’t been much in the way of action. And there is a real cost to all of the overhyped rhetoric when the follow-through isn’t there. For example, in response to all of the tough talk on steel, countries have shipped even more steel to the U.S. in a rush to get in ahead of any hike in tariffs.

“My friend Leo Gerard, President of the United Steelworkers, recently informed me that imports have surged 18% since the president launched his Section 232 investigation. Meanwhile, the administration appears to be backing off. This episode demonstrates how tough talk without a real strategy hurts American workers.

Mr. Kaplan’s background suggests he will be a tough trade enforcer, and that’s exactly what’s needed right now at ITA [the International Trade Administration].”

COMMENT

We have highlighted the statement about Mr. Kaplan’s background, not because it was the most important thing Senator Wyden said last Thursday, but because it underscores our impression that the hearing was not about whether Gilbert Kaplan should be confirmed as Under Secretary of Commerce for International Trade.  He seems to enjoy broad support on the Committee, and there is little doubt but that he will be the Under Secretary.  We will deal with the question of when below.

Rather than a yes-or-no on the nominees, the Committee’s August 3 hearing was about the other things. One was observing the necessary formalities for positions requiring Senate approval, i.e., “Advice and Consent.” The other was providing opportunities for Members of the Committee to obtain certain commitments from the nominees and to send messages to the Administration and their constituents on the issues they care about.

For the record, those other nominees are Matthew Bassett, who has been nominated to serve as Assistant Secretary for Legislation at the Department of Health and Human Services and Robert Charrow, who is in line to become the next General Counsel at HHS. Disparate as their respective areas of expertise and responsibility might seem, some of the discussion surrounding the HHS issues — starting with the implementation of the Affordable Care Act — more than held our interest. Beyond that, Mr. Charrow’s opening statement was a profound and profoundly useful discussion of the role of a general counsel in a U.S. Government agency and the interplay between law and regulation in the American system. We expect to come back to it sooner rather than later.

Steel and National Security. For this brief entry, however, we will confine ourselves to two of the trade issues raised by Senator Wyden. One is the challenge of steel imports, especially imports from China, and the fact that in April the Commerce Department opened an investigation into the question of whether such imports are a threat to America’s national security. This was under Section 232 of the Trade Expansion Act of 1962.  Senator Wyden is quite correct that the Administration had earlier led the world to believe that a decision — and potential action — was imminent, only to then, in effect, slow the process down. To date no report has been issued and no action taken.

Against that background, it did not surprise us to learn that some steel shipments to the United States had been accelerated, almost certainly to avoid new restrictions.

Those who care about this trade will judge from their own perspectives whether these are positive or negative developments. We would simply point out that there are other considerations. Yes, the increased likelihood of U.S. trade restrictions on a product will often accelerate the pace of foreign shipments. Exporters will want to get in under the wire if they can. But there are other effects. For example, the increased likelihood of a trade action will, more often than not, make buyers of imported commodities reluctant to commit to long term contracts. They don’t want to be left holding the bag of unaffordable or unattainable products. For that reason, the 232 threat may, by itself already have worked to the advantage of some American producers.

Then, there is the wider question of determining what in fact is good public policy. Surely, the fact that investigations like the current 232 investigation on steel raise the hopes of some and the fears of others does not mean such investigations should never be undertaken. Those uncertainties are a necessary cost of asking difficult questions. And the question of whether the United States should use Section 232 in the current instance is a difficult one, especially since whatever is done in steel will have repercussions for other sectors. We do not have a view as to how the Administration should come out on this, but if they have decided that they need a little more time on this one, they should take it.

Softwood Lumber. All that pine, it’s been an irritant in the U.S.-Canada trade relationship for a very long time, but a manageable one. The problem is that the most recent iteration of the U.S.-Canada Softwood Lumber Agreement (SLA), the principal management tool, expired in October 2015. And so America cranked up the trade defenses against softwood lumber imports from Canada, both antidumping and countervailing duty (anti-subsidy cases). Those cases are now coming to a head. Preliminary dumping and subsidy margins have been announced, and the plan is to consolidate them in a final ruling. This was explained in a Federal Register notice issued by the Commerce Department on April 28, which stated that:

“[T]he final CVD [countervailing duty] determination will issue on the same date as the final AD [anti-dumping] determination, which is currently scheduled to be issued no later than September 6, 2017, unless postponed.”

So those fairly stiff measures are rolling along. So too are the negotiations toward a new agreement. And, from the Canadian press one gets the impression that they may be quite close to a deal. Chrystia Freeland, Canada’s foreign minister, says she can “see the outlines of that agreement already.” Ah but when? That’s the question.

There are lots of reasons to get it done sooner rather than later. The NAFTA negotiations are set to begin next week. It would be nice to have softwood lumber settled before it wormed its way into the NAFTA talks. Then there are the looming final decisions on antidumping and countervailing duties. Those can only complicate the situation further.

But Senator Wyden and his colleagues on the Finance Committee don’t want things to go too fast. Specifically, they don’t want things to move so quickly that they leave the Finance Committee out of the picture. On July 24, Senator Wyden, Senator Mike Crapo, a Republican from Idaho, and five others Committee Members wrote to USTR Robert Lighthizer and Commerce Secretary Wilbur Ross forcefully, making just that point. They wrote:

“You must consult closely with Congress throughout any negotiation. The Senate Finance Committee must be briefed fully and regularly on the details of proposals before they are made to Canada.”

Senator Wyden made those same points even more forcefully in his exchange with Mr. Kaplan last week. And Mr. Kaplan made clear that it was his intention to be as cooperative as possible, but, of course, he has not yet been confirmed. As he put it

MR. KAPLAN
“Senator, I hear you loud and clear on that [consult closely and before sharing proposals with Canada] and I absolutely agree to do that. …

“I should mention that the date of the lumber final is September 6. So if I am privileged to be confirmed and confirmed before then, I’ll be more effective in that regard…”

SENATOR WYDEN
“That is a really clever argument for the United States Finance Committee to move quickly.”

SOURCES & LINKS

From Senator Wyden takes to the opening statement made by Senator Ron Wyden of Oregon on the Finance Committee hearing on August 3, which is discussed above. This was the source for today’s featured quote.

The Hearing is a link to the page of the Senate Finance Committee’s website on the August 3 confirmation hearing for Gilbert B. Kaplan and others. This includes a full video of the hearing as well as the opening statements of the Chairman, the Ranking Member, and each of the nominees.

The August Break is an article from Heavy.com with details of the House and Senate schedules from now until September 5, when both houses are expected to be back in full session.

The Letter is the text of the July 24 letter to Secretary Ross and Ambassador Lighthizer from seven member of the Senate Finance Committee. The authors of the letter were Sen. Ron Wyden (D OR), Sen. Mike Crapo (R ID), Sen. Michael Enzi (R WY), Sen. Debbie Stabenow (D MI), Sen. Johnny Isakson (R GA), Sen. Mark Warner (D VA), and Sen. Michael Bennet (D CO).

Outline in View is a recent article from The Star with Chrystia Freeland’s assessment of the softwood lumber negotiations.

-gbd-

Originally published on August 10 as TTALK Quote No. 49 of 2017.

© 2017 The Global Business Dialogue, Inc.

 

BREXIT – BEFORE THE NEGOTIATIONS

ON THE BREXIT OPTIONS

A sovereign decision has been taken to leave by the British people…..But from the perspective of EU member states, as long as the decision on the organization of the exit is not finalized, there is always the possibility of reopening the door.”

Emmanuel Macron
June 13, 2017

CONTEXT

French President Emmanuel Macron, who won a stunning victory in the French runoff election on May 7, welcomed UK Prime Minister Theresa May to Paris five days after her electoral setback in the UK’s snap election on June 8.  After their private meetings and before watching a football (soccer) match between the teams of France and England, the two leaders held a joint press conference.

Brexit was not their top priority then. Expressions of solidarity were the theme of the day, with Prime Minister May noting that “Both our countries have sadly experienced the horrors of terrorism all too recently.”

But Brexit did come up. How could it not? The serious work of the Brexit negotiations is set to begin on Monday, June 19, with a Frenchman, Michel Barnier, as chief negotiator for the EU, facing David Davis, the UK’s Secretary of State for Exiting the EU.

Mrs. May addressed the Brexit issue at the close of her statement. “On Brexit,” she said, “we have been very clear that we want to maintain a close relationship and a close partnership with the EU and individual member states into the future.”

Today’s featured quote is something President Macron said in response to a question. Here is a bit more of his answer to that Brexit question:

(As translated from the French)
“Evidently, the door remains open until negotiations come to an end. That said, a sovereign decision has been taken to leave by the British people, and I respect the sovereignty of all people, be it the French or the British when they make a decision for themselves. It is not for me to say whether or not this decision should be called into question. But from the perspective of EU member states, as long as the decision on the organization of the exit is not finalized, there is always the possibility of reopening the door. But we must be clear and, once underway, we need to all be aware that it is difficult to reverse.”

COMMENT

Well, actually, just a bit more background.

The Article 50 Trigger. On May 29, Prime Minister May formally invoked the provisions of Article 50 of the Treaty on European Union in a letter hand- delivered that day to Donald Tusk, the President of the European Council.

So the clock is ticking. The situation is succinctly described in a short article on the website of the European Union. The article poses the question, what happens next? Part of the answer is in these starkly clear sentences:

“During negotiations under Article 50, European Union Treaties and law continue to apply to the UK. If no agreement is reached within 2 years of the UK activating Article 50, the UK would leave the EU without any new agreement being in place.”

The British Election. When Prime Minister May called a snap election on April 18, her Conservative party had a majority of 12 in the 650-member House of Commons. Her goal was to increase that majority and thus give herself a stronger hand in the coming negotiations with the EU. Well, that didn’t work out. Though still the largest faction in the Commons, the Conservatives didn’t just lose seats, they lost their majority, and Mrs. May’s leadership now depends upon the alliance she has formed with the Democratic Unionist Party of Northern Ireland.

What does that mean for the Brexit talks? We don’t know and we doubt that anyone does. The June 8 election was not a do-over referendum on the UK’s membership in the EU. It was an election in which Brexit, though referenced, was largely taken off the table, with the parties jockeying for position on other issues. Arguably the Conservatives didn’t handle those other issues well, but it is hard to know what the results will mean for Brexit.

There are few if any parts of the globe that are totally unaffected by the UK-EU negotiations set to begin on Monday, and the problem is that the uncertainties they are meant to address will almost certainly become more acute over the next few months. Indeed the world may have to get awfully close to the March 2019 deadline for the negotiations before anyone has a sense of just how this will play out. That is because the nature of the beast is such that the party most willing to walk away is the party with the strongest hand. And that being the case, it is hard to imagine many early concessions from either Mr. Barnier or Mr. Davis.

RELATED EVENT

Endless Outreach: The EU’s Trade with the World and with North America. This event will lead off with a keynote address from Ambassador David O’Sullivan of the European Union and will include panel discussions from the diplomatic and business communities. While only a part of the story of the EU’s trading relationship, it is nevertheless an issue that is likely to come up. The event will be held at the St. Regis Hotel in Washington, and the title link will take you to the announcement for this program, including registration options.

SOURCES AND LINKS

The Press Conference is a link to a transcript of the May-Macron press conference on June 13 available on the U.K. government’s website.

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Originally published on June 16, 2017, as TTALK Quote No. 39 of 20717.   © 2017 the Global Business Dialogue, Inc.

 

MATHEMATICS – SCHOOL AND LIFE

THE LEARNING CONNECTION

“You can understand out the wazoo, but it’ll just disappear if you’re not practicing with it.”

Barbara Oakley
May 12, 2017 (publication date)

CONTEXT

Dr. Barbara Oakley is a member of the Engineering Faculty at Oakland University outside Detroit. She was not a child prodigy, at least not where the so-called STEM subjects are concerned. As she told James Taranto of The Wall Street Journal, “I flunked my way through elementary, middle and high school math and science.” To say the least, she is more comfortable with those subjects now, and her journey is a fascinating one.

We first learned of it from Mr. Taranto’s wonderful article on Barbara Oakley in the May 12 edition of the Journal. You will want to read the whole thing. The only parts we are going to steal from it are some of the things she said about the teaching of mathematics. For example:

“Because math is so sequential, if you fall off anywhere along the way, it’s hard to get back on.”

Today’s featured quote was taken from this passage:

In learning math and science through K-12, it’s long been held that practice and repetition will kill your creativity. … One mistake we make in the school system is we emphasize understanding. But if you don’t build those neural circuits with practice, it’ll all slip away. You can understand out the wazoo, but it’ll just disappear if you’re not practicing it.

We’ll finish with this paragraph from Mr. Taranto’s article:

Ms. Oakley notes that “many if not most” of her colleagues “are from countries that have educational systems completely antithetical to the education system in the United States.” In places like China and India, “practice and repetition and rote memorization are really important parts of education. She sees value in both methods: “There are real benefits for Western approaches—that it really does help with creativity. And there are also real benefits to Asian approaches—that it builds a solid foundation in the most difficult disciplines, math and science. The best education would actually be a combination of both approaches.”

COMMENT

We plead guilty. We advertised this TTALK entry as one that would deal with something other than trade policy. In a superficial sense, we were clearly telling the truth. In a more fundamental one, we lied. Education and learning have everything to do with trade.

Both Ann Wilson of the Motor and Equipment Manufacturers Association and Yuri Unno of Toyota brought up the issue in the question-and-answer session that concluded last month’s GBD panel on NAFTA and auto production.

From Ann Wilson of MEMA we heard:

The other thing we need to talk about is actually what the workforce is in this country. If you talk to our members, there’s a real serious concern about having the ability to have a trained workforce to be able to take up these jobs.

We’re not talking about necessarily even engineers and things like that, but we’re talking about people who are welders and some of the trained skilled workers that we need to have for manufacturing. So there are some very systemic issues that need to be addressed by this country before we can automatically say that it [the manufacturing that has left] can be reshored, [brought back].

From Yuri Unno of Toyota we heard:

I just want to add, [at Toyota] we’re always hiring. We can’t fill all the position because of the skill gap. And we have partnerships at the local community colleges at every single plant we have in the U.S. to continue to educate and help the community colleges tailor the programs so they educate and train the students in a way we could use right away when they graduate.

Also … we’re not decreasing our investment in the U.S. because of NAFTA; we’re actually increasing [it]. We just announced an additional $10 billion in investment over 5 years in the United States. And a big part of that is because NAFTA is helping us, [allowing] us to stay competitive for the world market.

Filling the Skills Gap.  And then of course there is the issue of U.S. companies feeling the need to rely on foreign talent, whether through H1 B visas or by doing more technical work abroad. Those are complex issues, but there does seem to be some irony in U.S. employers relying so heavily on those taught by methods the U.S. has largely rejected.

On the Front Line.  Like trade, education is an issue that is as emotionally charged as it can be complicated. We recently had a note from a woman who had read and liked Mr. Taranto’s article on Barbara Oakley. A fine mathematician in her own right, our correspondent has two young sons in public school and thinks a lot about the teaching of mathematics and how the kids respond. We’ll call her boys Doug and Tom.

The Mathematical Mother wrote:

I do think a problem with recent curriculum changes is that our schools are shifting even farther away from practice in math and towards a purely conceptual focus. It works pretty well for someone like Doug, who not only understands the concepts but then also enjoys playing with them in his mind and exploring how numbers work.

For Tom, though, it’s been a disaster. … [A high school teacher I know] said he’d discovered as a teacher that math is really the study of patterns. What I’ve realized through watching Tom struggle is that by focusing so much on concepts and … word problems, he misses the chance to discover the more basic patterns and really understand them.

***

We are not discouraged by any of the above. Every quote deals with people working through problems. And that is life at its best. Still, for a change the pace a and to show that we are not without sympathy for the non-mathematical, we’ll leave you with this …

Rhyme Composed in a Math Class

And I will fill my attics
With teachers of mathematics,
Adding six, and two, and four
And rapping regularly at the door.

They will learn the why of pi
And give dimension to the sky.

But if perchance they to learn to shout
And scream with senseless fright.
Well, then perhaps I’ll let them out.
Then perhaps, I might.

RKM 1961

SOURCES & LINKS

How a Polymath Mastered Math takes you to The Wall Street Journal article on Barbara Oakley that was the source for today’s featured quote.

From the Auto Panel takes you to the discussion of NAFTA and U.S. Automobile Production, organized by GBD and held at the National Press Club on May 25. The quotes from Ms. Wilson and Ms. Unno were both from the concluding portion of that event.

Barbara Oakley is a link to Dr. Oakley’s website.

The quotes from the Mathematical Mother are from unpublished, private correspondence.

Originally published as TTALK Quote No. 37 of 2017 on June 7, 2017.  © 2017 the Global Business Dialogue, Inc.

NAFTA – THE AUTOMOTIVE FACTOR, PART II

U.S. JOBS AND NAFTA – THE AUTO PARTS COMPONENT

“Motor vehicle suppliers are the largest employer of manufacturing jobs in the United States.”
Ann Wilson
May 25, 2017

CONTEXT

Ann Wilson is the Senior Vice President for Government Affairs at the Motor and Equipment Manufacturers Association, MEMA, and she was one of the four speakers on the auto panel at the May 25 GBD event NAFTA, From Cars to Carrots. The premise of her remarks was that, yes, NAFTA does need an upgrade, but that needs to be done with care because a lot of U.S. jobs – especially jobs among U.S. makers of auto parts – depend on NAFTA continuing largely as it is and has been for many years.

Citing a recent study, Ms. Wilson put the current number of jobs in the U.S. auto parts industry at 871,000. “That,” she said, “is a 19 percent increase over the last four years.” And, she said:

“NAFTA is part of the reason why U.S. employment in the supplier industry is so strong.”

Two-thirds of the technology in today’s automobiles, Ms. Wilson said, is developed by the U.S. auto parts companies in cooperation with their customers, the major automobile producers. She then turned back to the importance of NAFTA, saying:

Our industry … operates in a global environment. We are very dependent on NAFTA for both our supply base and our customer base and our ultimate customers, which are the purchasers of motor vehicles.

Free and fair trade is imperative for a strong domestic supply base, and it’s imperative for the supplier employment. And we recognize that we are central to the renegotiation and modernization of NAFTA.

… Not only has NAFTA been good for suppliers and our customers, the automobile industry and the trucking industry, but it’s also been good for the workforce we have. [In that context,] we are encouraging the Trump Administration to take a look at NAFTA and [NAFTA] modernization.

Yes, Ann Wilson has her wish-list for things that might be usefully included in an upgraded NAFTA. Like Charles Uthus before her, Ms. Wilson urged the negotiators to include provisions for recognizing U.S. certifications for auto parts, and she called for stronger protections for intellectual property rights. In the larger arena of intellectual property rights, the question of counterfeit goods looms particularly large for the auto parts makers. “Counterfeiting and anti-counterfeiting measures are really important to our members,” Ms. Wilson said.

That said, the issue she returned to most forcefully was the risk of losing the benefits the U.S. currently gets from NAFTA. To cast a cold eye on that issue, one needs to play the “what if” game. What if Mexico’s normal tariffs were re-introduced into U.S.-Mexico trade. The Boston Consulting Group, Ms. Wilson said, made some estimate of what the ensuing costs might be. Their projection: $16 to $27 billion additional costs to automobile producers in the United States. What would that mean to the industry? We’ll conclude with Ms. Wilson’s response to that question:

Those kinds of costs …how would they be absorbed? One of the things we think could happen is what we call the de-contenting of vehicles. – [Taking out some of those things that are not required by the Federal Government, for example.] — That could actually impact 25,000 to 50,000 jobs in the supplier industry.

COMMENT

Just three points.

U.S. Manufacturing Employment. Today’s featured quote is a dramatic one and underscores the importance of the auto parts industry to the U.S. economy. It should not detract from that point at all to note that the universe of American manufacturers is pretty big. Thus even the largest sectoral subset, namely auto parts, would appear to be roughly 7 to 8 percent of total manufacturing employment in the United States.

According to the Bureau of Labor Statistics manufacturing currently accounts for roughly 12,398,000 U.S. jobs.  Here is a short graph of America manufacturing employment, going back to 2007:

U.S. MANUFACTURING EMPLOYMENT, 2007-2017

That was quite a decline between 2007 and 2010, but things have been improving since. The question is, what effect will the NAFTA renegotiation have on the iterations of that graph for January 2018 and January 2019?

Mexico’s Elections. There were some sub-federal elections in Mexico yesterday (June 4), the most significant of which was the gubernatorial race in the State of Mexico, which surrounds Mexico City. Had the opposition candidate – Delfina Gómez Álvarez of the National Regeneration Movement (Morena) – won the day, it would have sent shock waves throughout North America as everyone tried to calculate the consequences of her victory for NAFTA and for the prospect of Morena’s leader Andrés Manuel Lópes Obrador in the general election in July 2018. But the PRI, the party of President Peña Nieto, held on. Their candidate, Alfredo del Mazo Maza, won. So, the reporting is as little more subdued, at least in quantity, but the question remains: how will Mexico’s politics (and Canada’s) feed into the NAFTA renegotiation process.

Another topic. Tomorrow’s TTALK Quote will be on an issue other than NAFTA, but we’ll pick up the NAFTA thread again soon.

SOURCES & LINKS

This is a link to the YouTube video of the May 25  panel discussion on Autos, Auto Parts and NAFTA.   Ms. Wilson’s remarks begin, roughly, at the 13:30 minute mark.

Mexico: The PRI Squeaks By takes you to a Reuters story on yesterday elections in Mexico, most notably the gubernatorial race in the State of Mexico, where the ruling party of President Peña Nieto, the PRI, managed to hold on, albeit by a slim margin.
On U.S. Manufacturing Employment is a link to the page on the website of the Bureau of Labor Statistics with the above graph and related data.

Originally published as TTALK No 36 of 2017.  © 2017 the Global Business Dialogue, Inc.