The share of US -produced content in manufactured goods imported by the United States from Mexico was only 16 percent in 2011, a sharp decline from 26 percent in 1995, the Commerce Department said in a statement. “The trend of Mexico and Canada using more non-U.S. -made parts and components may mean even more bad news for American producers”, he added.
Despite his remarks, as of 1430 BST the USA dollar was 0.60 lower versus the Mexican peso to 17.77, while against the Canadian dollar it was 0.16% lower at 1.2307.
These data debunk the claim that USA content in the form of parts is so high that we shouldn’t worry about headline gross-deficit figures.
In particular, the Trump administration wants to see more US content in auto imports, which make up the main source of USA trade deficits with Canada and Mexico.
A study to be released Friday by Anne Flatness and Chris Rasmussen of the Office of Trade and Economic Analysis within the Commerce Department proves its falsity.
“In the auto sector alone, the US has a $68 billion deficit with Mexico”, said Lighthizer. “Any disruption to the integrated supply chain that has been achieved under NAFTA could challenge the outperformance of the North American auto industry, including potential job losses for some of the almost 2 million auto industry positions in the United States, Canada and Mexico”, he said. The United States accounts for an overwhelming share of the total NAFTA auto market today – 83 percent, in fact – yet American workers are not reaping the benefits of that purchasing power. “Thousands of American factory workers have lost their jobs because of these provisions”.
He said one reason that the share of US parts has decreased is the agreement’s “rules of origin” requirements, which cited exact parts the rules applied to, some of which are no longer used. The NAFTA origin rules and content requirements are expected to be hot button issues during the third round of NAFTA renegotiation talks between the United States, Mexico and Canada, which get underway this Saturday in Ottawa and lasting through September 27.
U.S. Trade Representative Robert Lighthizer has said “rules of origin”, particularly on autos and auto parts, must require substantial U.S. content and higher content from NAFTA countries.
Autos and auto parts are particularly important because our combined trade deficit in autos and auto parts from Canada and Mexico is $84.6 billion annually, which is the vast majority of our total trade in goods deficit with our neighbors.