LOS ANGELES – The University of Southern California (USC) and the Institute of the Americas held conference titled “NAFTA at Twenty: Trade, Transformation and the China Factor” on USC campus on March 5, 2014. The event attracted nearly 100 business executives and academic scholars, as well experts from multi-national organizations such as the United Nations.
China’s role in the North American Free Trade Agreement (NAFTA) was the focus of the first panel. Dr. Enrique Dussel, director of the Institute for China-Mexico Studies at the National Autonomous University of Mexico (UNAM), divided NAFTA’s 20 years into two parts: between 1994 and 2000 there was increasing integration in terms of trade within North America; yet after 2000, China began to compete with both Mexico and US in the regional market, which could be seen as an “interruption” of the integration process of NAFTA.
Dr. Ralph Watkins from Americas Trade Analysis stated that Mexico’s maquiladora sector lost 288,000 jobs due to the China factor, yet China is not mainly to blame for the job loss in US because the imports from China were not high-value-added goods. Dr. Watkins raised the question of ways in which Mexico could compete with China. He suggested that Mexico lower transport costs and shorten the time from manufacture to market. According to Dr. Watkins, Mexico is competitive with China in products that require just-in-time deliveries, frequent changes in design and protections in intellectual property rights.
Amy Liang from Deloitte in Mexico City shared her experience in helping a Taiwanese company set up a maquiladora in Tijuana, Mexico in 1999. She recalled the language and cultural barriers of bringing technicians from Taiwan. She said translators and local managers were hired at the maquiladora for better communication and management. She stated that nowadays Chinese companies are focusing on ethical business practices in their global expansion, including in Latin American countries.
The second panel featured American Quarterly’s winter issue on “NAFTA @ 20”. Christopher Sabatini, Editor of American Quarterly, and Ambassador Arturo Sarukhan, former ambassador of Mexico to the United States, promoted the idea of “North American goods” instead of products from the three individual countries. According to Ambassador Sarukhan, the challenge is to re-engage the private sectors from the three countries. He expressed optimism that the Mexican energy reform will open new doors for this process. He promoted the Trans-Pacific Partnership (TPP), saying that it will be the way to bring up the idea of “North American goods” without mentioning NAFTA once again in the political debates.
Jeremy Martin, Energy Program Director of Institute of the Americas, also spoke at this panel and stated that while Mexico’s energy reform will be the big game changer for North America, Mexico still needs to embrace the opportunity in an international context. Martin commented that US-Canada is the world’s largest energy integration, and when coupled with Mexico’s energy reform, a self-sufficient North American energy market will be a driving force with strong competitiveness that will bring geo-political changes to the region.
Three representatives from Tijuana, Mexico, talked about innovation, relocation and human capital. Israel Lopez, from Universidad Technologica de Tijuana, said foreign firms are coming to the city to recruit future engineers for their companies. Flavio Olivieri, of the Tijuana Economic Development Corporation, gave a presentation on innovation and said Asia’s shift towards innovation creates added competition with Mexico. Rafael Solorzano, former Director of Secretariat of Economic Development, named the city of Wuhan as the Chinese Sister City of Tijuana and said that the Chinese investors are increasingly interested in the infrastructure financing opportunities in Mexico.
Dr. Juan Carlos Moreno-Brid director of the Mexico office of the U.N. Economic Commission in Latin America and the Caribbean (ECLAC) gave closing remarks for the half-day conference. He commented on the North American regional integration, and brought up topics of fiscal and banking reform and industrial policy adjustment for both Mexico and NAFTA.