Professor Gary Gereffi's presentation at the South-Southeast Commission and FIDESUR covers:
- Trump’s Protectionism: the Current Context
- The Evolution of GVCs: 3 Eras
- GVC Competition for US Market: China vs. Mexico
- NAFTA’s Impact on the Mexican and U.S. Economies
1. Protectionism, NAFTA and U.S. – Mexico GVCs
1
Gary Gereffi
Director, Duke CGGC
Duke University
South-Southeast Commission and FIDESUR
Merida, Mexico
April 24, 2017
2. AGENDA
1. Trump’s Protectionism: the Current Context
2. The Evolution of GVCs: 3 Eras
3. GVC Competition for US Market: China vs. Mexico
4. NAFTA’s Impact on the Mexican and U.S.
Economies
10. Head-to-head competition in U.S. market
China is world’s leading exporter of many
manufactures, esp. consumer goods
China and Mexico are typically among the top
three exporters to the U.S. market in many
product categories
China is moving ahead of Mexico with
dominant market shares in the United States,
especially in 2000-2005 period
Mexico vs. China
10
11. Mexico's and China's Competing Exports to US Market, 2000-
2014
11
SITC
Category Product
Value
(billions)
Share of
US market
Value
(billions)
Share of
US market
Value
(billions)
Share of
US market
Mexico 6.4 11.5 5.6 9.6 13.5 16.6 -1.9 7.0
China 6.3 11.3 28.6 49.3 53.3 65.7 38.0 16.4
US Total 55.9 57.9 81.1
Mexico 9.1 20.6 10.8 13.6 12.1 10.2 -7.0 -3.4
China 4.6 10.3 29.6 37.3 68.7 58.0 26.9 20.8
US Total 44.3 79.5 118.4
Mexico 3.1 18.3 5.0 21.8 7.2 21.4 3.5 -0.4
China 2.0 11.9 6.1 26.6 11.2 33.2 14.7 6.6
US Total 17.1 23.1 33.7
Mexico 4.6 16.3 10.2 22.2 19.1 30.4 5.8 8.2
China 0.4 1.5 3.6 7.8 8.3 13.2 6.2 5.4
US Total 28.4 46.2 62.9
Mexico 3.2 16.9 4.6 13.6 7.6 18.3 -3.3 4.7
China 4.5 23.6 16.2 47.7 19.2 46.3 24.1 -1.4
US Total 18.9 33.9 41.5
Mexico 8.7 13.6 4.7 5.8 4.0 4.4 -7.8 -1.4
China 8.5 13.2 27.1 33.4 34.2 37.9 20.2 4.5
US Total 64.3 81.2 90.2
Source: US Department of Commerce (http://dataweb.usitc.gov), Downloaded Aug 26, 2015
84
Apparel and
Cothing
778
Electrical
Machinery
784 Auto Parts
2007
821 Furniture
752
Automatic Data
Processing
Machines
764
Telecom
Equipment
2014 Change in
Market Share
2007-2014
Change in
Market Share
2000-2007
2000
16. China is a lower-cost producer overall (labor
costs lower, but not transport & tariffs)
China has huge scale economies
China has a coherent and multidimensional
upgrading strategy – diversify and add high
value activities
China is using direct foreign investment to
promote “fast learning” in new industries
China uses access to its domestic market to
attract TNCs and promote knowledge spillovers
Why is China gaining U.S. market share over Mexico?
16
17. China’s Supply Chain Cities in Apparel
Source: David Barboza, “In roaring China, sweaters are
west of socks city,” New York Times, Dec. 24, 2004. 17
18. 18
What kinds of work are Chinese, Indian,
and American engineers actually doing?
• Answer: Not just product adaptation,
but cutting-edge research &
commercialization
China: More than 1,200 MNC R&D Centers
• GE’s China Technology Center:
Advanced research in energy storage,
environmental management
• Microsoft Research Asia: Cutting-edge
graphics & multimedia research
20. NAFTA: More than Free Trade
NAFTA: the world’s largest free trade agreement
Overall trade between 3 NAFTA partners: >$1.1 trillion in 2016
• Canada & Mexico account for 34% of US exports in 2016 (Canada, #1; Mexico,
#2)
• Canada & Mexico supplied 26% of US imports in 2016 (Canada, #2; Mexico,
#3)
NAFTA: cross-border FDI integrated & complementary supply
chains
Most trade between the US and its NAFTA partners in key US manufacturing
industries (autos, electronics, appliances, machinery) involves “production
sharing” in vertical supply chain relationships: US tends to keep higher
value-added components
US imports from NAFTA partners have a high percentage of US-made inputs
• 40% of US imports from Mexico are of US origin
21. Trump’s Proposals vis-à-vis NAFTA and Mexico
Recent trade-related proposals from President Trump
• Withdraw from NAFTA or renegotiate various provisions
• Impose a 20% border tax on all imports from Mexico
• Enact a 35% tariff on light vehicles imported from Mexico
Automotive and autoparts sector – largest NAFTA industry
• NAFTA countries produced 17.8 million light vehicles in 2016
• 16% of US exports to Canada and Mexico is auto-related
• Canada is #1 export market for US autoparts ($22b); Mexico is #2 ($20b)
• Within NAFTA, 80-90% of automotive trade is intra-industry
Estimated impact: U.S. 35% tariff on light vehicles imported from
Mexico*
• In 2015, Mexican vehicle exports contain an average of 40.3% US content
• US sales decline: 450,000 units; US job loss – 31,000 workers
*Source: Center for Automotive Research, “NAFTA Briefing: Trade benefits to the automotive industry and potential
consequences of withdrawal from the agreement,” January 2017.
22. Without NAFTA, China Is the Alternative
“China hasn’t developed a world-class automotive sector, and the fact that U.S.,
Canada and Mexico have worked so closely together is partly a reason for that”
(Gordon Hansen, UCSD)*
US imports from China vs. Mexico – major contrast
• Imports from China: final goods with low US content (mainly buyer-driven
chains)
• Imports from Mexico: intermediate & final goods with high US content
(producer-driven chains)
US goods imports (and trade deficit) in 2016:
• China: imports – $463 billion; trade deficit – -$347 billion
• Mexico: imports – $294 billion; trade deficit – -$63 billion
• Canada: imports – $278 billion; trade deficit – -$11 billion
* http://www.wbur.org/hereandnow/2016/04/27/economist-gordon-hanson-nafta
23. Beyond Protectionism
In a global value chain world, all imports are not the same
• Their impact depends on type of GVC and relationship between trade
partners
In the current global economy, value chains are becoming
increasingly regionalized and integrated supply chains are a
regional asset
• NAFTA, the European Union and East Asia – different regional models
A major driver of the protectionist sentiment that propelled
Trump’s election is that America’s blue collar workers feel left
behind by globalization
• Technological change (automation, new skills) is more important than
trade
• Trade agreements and immigration will be flash points for policy change
US hegemony has been replaced by a multipolar world
24. Gary Gereffi
ggere@soc.duke.edu
Center on Globalization, Governance &
Competitiveness (CGGC)
Grey Building, Suite 0010, Lower Level |
2020 W. Main St. | Durham, NC 27705
Notes de l'éditeur
See if we can include more examples – upgrading in the grain segment.
1) Governance\\\
2) Slide 14 - it is not clear what the blue shading means on the diagram
3) Slide 15 - there is quite a lot of text
4) Slide 17 - Its really difficult to read due to the large amount of information
5) Slide 21 - the message isn't immediately clear from the graphic
6) Slide 22 - circle the important data points in red
7) Slide 22, 23, & 24 - contains overwhelming amount of information
8) Slide 26 - 2nd point needs clarification
9) Slide 27 -
10) Slide 28 - Karina and I can work on this on the plane tomorrow to find a good way to present these methodologies on one slide.