The bald facts of Mexico's trade with China make for uncomfortable reading. In the first five months of this year, Mexico exported US$232m worth of products to China. It imported US$3.085bn worth of products from the Asian powerhouse.
China has now replaced Japan as the country with which Mexico has its biggest trade deficit. The worrying point is that the deficit with China increased by 43% in the first five months of this year, compared with the same period of 2002. This is a huge increase, from a reasonable base, in such a short time.
It is sobering to note that 10 years ago, in the first five months of 1993, Mexico's deficit with China was a mere US$194m.
Mexican officials point out that the measly US$232m that the country sold in China in the first five months of this year was, in fact, a new record.
The big worry, however, is the effect China will have on Mexico's position in its key markets, such as the US. There is little doubt that Chinese products, not just manufactures, are undercutting and forcing Mexican products out of the US market.
Alejandro Moisés Ceja, vice-president responsible for international trade at the Consejo Nacional Agropecuario (CNA), claimed that China posed as great a threat to Mexico's agricultural exports to the US as it does to its manufactured exports.
To meet the potential threat from China, the Mexican government must, he said, provide incentives to help farmers improve their production quality. Ceja is not crying wolf. Figures from the US Department of Agriculture (USDA) show that food exports from China to the US have been growing fast over recent years.
This year. Ceja noted that, in the first four months of the year, Chinese food and agricultural exports to the US were equivalent to 17.5% of Mexican food exports to the US. What worries the CNA is that Chinese agricultural exports to the US are growing much faster than Mexican ones. In the first four months, Chinese exports were up by 31%, while Mexican exports were up by 10%.
There is even some evidence, from the USDA, to suggest that China has pulled ahead of Mexico in markets that Mexico imagined it owned, such as fruit juices.
Fruit juices. To be fair, some of the problems Mexican producers are facing may be temporary. Last year, Mexico's output of citrus fruit fell by 70% because of the drought. China stepped into the gap in the market. Mexican producers are finding it hard to claim back the market.
Figures from the USDA show that in the first four months of the year, Chinese exports of fruit juices were US$16m, or double Mexico's. Compared with the first quarter of 2002, China's exports of fruit juices have risen by 94%, while Mexico's have fallen by 31%.
Meat. Another major worry for Mexican ranchers is the increase in exports of red meat from China. These were up by 146% in the first four months of the year. China's exports of red meat are now half Mexico's in value terms.
Central America. The Chinese threat to maquiladora (assembly) industries in Central America is so acute that one expert has warned that the industry in the region could be wiped out within two years. This would have major implications, not only for the Central American economies but also for Mexico and the US, which would have to cope with more immigration.
Pedro Morazán, from a German research insitute, Southwind, argues that the Honduran maquiladora industry, which currently employs 120,000 people (mostly in textiles) could be gone by 2005. He said that the big problem was the ending of the Multifibre Agreement (MFA). Without the MFA, which distorts and shapes the world trade in textiles and clothes, China will be able to flood the world market. The MFA has allowed countries such as Honduras to process US cotton and cloth and to export it back to the US. Such niches will be obliterated. Without the MFA, China's cheap labour will be the decisive factor in the industry.
What bothers the Central Americans is that the US seems unwilling to let them use the free-trade deal it is negotiating with them, or the Free Trade Area of the Americas agreement, to protect them. The US line is that both those agreements must be on the principles agreed by the World Trade Organization.
Human rights workers point out that Chinese companies pay textile workers a fraction of what they earn in Central America, and Chinese workers have no rights to organise unions. These advantages have been magnified by huge foreign investment which left China with efficient plants with the capacity to supply a large chunk of the world market.
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