[gaijindabe]

Despite the advantages provided by the North American Free Trade Agreement, the Made in China label “has become the incarnation of the single greatest perceived threat to Mexico’s economic prosperity – and a symbol of the pitfalls of globalization,” wrote the authors of a recent McKinsey & Co. study. For decades, Mexico had used it proximity to U.S. markets to attract investment in its assembly-for-export maquiladora plants along the country’s northern border. But wages in Mexico have risen to levels far above those in China. Even Mexican officials have publicly complained that their manufacturers’ proximity to the U.S. no longer automatically makes up for that cost differential. For Mexico, it was an abrupt fall. Bilateral U.S.-Mexico trade jumped 189 percent to $235.4 billion in the first decade after NAFTA was enacted. From 2001 through 2004, U.S. exports to Mexico fell at an average annual rate of 4.4 percent, from $101.3 billion to $97.4 billion. During the same period, U.S. imports of goods and services from Mexico grew at an annual rate of only 0.6 percent. The U.S. International Trade Commission calculated that the average effective labor cost in China’s coastal region in 2002 was 88 cents per hour – including benefits – compared with $2.45 per hour in Mexico. Mexico has forged 11 free-trade pacts with 33 trading partners, including a bilateral pact with Japan. Mexico also needs to make long-overdue administrative and legal reforms, many critics say. Mexico’s telecommunications network remains inadequate. And Mexico’s ground, air, and sea transportation all need substantial upgrades – especially outside the northern border region – if Mexico is going to take full advantage of its proximity to the United States. (The Journal of Commerce, 2/21/2005.)