Beyond NAFTA: Framing the Future Landscape of the North American Economy Pedro Noyola July 2015
Index A. Openness B. Integration and Competitiveness C. Competition and Transparency D. The Future: Framing the Paradigm 2
Trade liberalization in Mexico Degree of trade openness (X+M/GDP, 1981 - 2012) 80% 70% 60% 50% Closed FTA PERU -- FTA CENTRAL AMERICA Economy 40% FTA COSTA RICA --FTA, FTA G3 30% EUFTA -- FTA ISRAEL 20% FTA URUGUAY FTA BOLIVIA FTA JAPAN FTA CHILE FTA AELC 10% NAFTA OECD GATT PSE 0% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Dependent variable: Annual variation of trade openness Variable Coefficient Std. Error t-Statistic P value Dummy 1986-1987 *GATT/PSE 0.04734 0.02707 1.74853 0.09260 Dummy 1994-1995 **NAFTA 0.11561 0.01980 5.83892 0.00000 Dummy 2000-2001 EUFTA -0.01480 0.01558 -0.95014 0.35110 AR(1) 0.83738 0.14219 5.88911 0.00000 MA(1) -1.08588 0.02497 -43.48797 0.00000 MA(4) 0.37436 0.01526 24.52906 0.00000 Y t = α 1 D GATT/PSE + α 2 D NAFTA + α 3 D EUFTA + AR(1) + MA(1)+MA(4) + u t Source: SAI Law & Economics with data from INEGI. 3
Index A. Openness B. Integration and Competitiveness C. Competition and Transparency D. The Future: Framing the Paradigm 4
Shared production U.S. Content in U.S. imports (percentage) 45% 40% 40% 35% 30% 32% 25% 25% 20% 15% 10% 5% 4% 0% Mexico Canada Weighted China average (Mex-Can) Production sharing “Pure” (intra-industry trade: 40%) outsourcing Source: Koopman et. al. (2011) “Give credit where credit is due: tracing value added in global production chains”, U.S. Department of Commerce andAlix Partners, “Costs and Complexity - Will China Remain the Low-Cost Country of Choice?”. 5
Cycle coordination Manufacturing production from Mexico and the Unites States (annual growth,1981:T1-2013:T1) Corr: 0.76 Corr: 0.21 Johansen cointegration since Jan-94 15% 10% 5% 0% -5% -10% -15% US Mexico -20% 1981/01 1982/01 1983/01 1984/01 1985/01 1986/01 1987/01 1988/01 1989/01 1990/01 1991/01 1992/01 1993/01 1994/01 1995/01 1996/01 1997/01 1998/01 1999/01 2000/01 2001/01 2002/01 2003/01 2004/01 2005/01 2006/01 2007/01 2008/01 2009/01 2010/01 2011/01 2012/01 2013/01 Johansen Cointegration test 1 1994:T1 – 2012:T2 1980:T1 –1993:T4 Series: LOG(Man.Prod.MEX) LOG(Ind.ProdUSA) Series: LOG(Man.Prod.MEX) LOG(Ind.ProdUSA) Critical Value Critical Value Critical Value Critical Value Likelihood Cointegrating Likelihood Cointegrating Eigenvalue 5% 1% Eigenvalue ratio 5% 1% Equations ratio Equations 0.174543 16.594320 15.41 20.04 None * 0.115693 8.516043 15.41 20.04 None 0.031910 2.399811 3.76 6.65 At most 1 0.034156 1.876684 3.76 6.65 At most 1 * Rejects the null hypothesis with a confidence level of 95%. **Rejects the null hypothesis with a confidence level of 99%. 1/ The test assumes a deterministic linear trend of data. 6 Source: Analysis by SAI Law & Economics with data from INEGI and the US Federal Reserve.
Demographic competitiveness NAFTA population China population (2012) (2012) 100+ 100+ 95 - 99 90 - 94 95-99 85 - 89 90-94 80 - 84 85-89 75 - 79 80-84 70 - 74 75-79 65 - 69 70-74 60 - 64 65-69 55 - 59 60-64 50 - 54 55-59 45 - 49 50-54 40 - 44 45-49 35 - 39 40-44 30 - 34 35-39 25 - 29 30-34 20 - 24 25-29 15 - 19 20-24 10-14 15-19 5-9 0-4 10-14 5-9 20 10 0 10 20 0-4 60 40 20 0 20 40 60 Millions Labor force, from 15 to 64 years (accumulated annual change) 30% 25% 20% 15% 10% 5% 0% -5% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2020 2030 2040 NAFTA China Source: SAI Law & Economics with data from U.S. Census Bureau and National Bureau of Statistics of China. 7
Green competitiveness Additional investment to reach 450 Scenario (% of GDP) 2.4% 2.0% 2.0% NORTH AMERICA CHINA 1.6% 1.5% 1.2% 1.2% 0.8% 0.8% 0.8% 0.5% 0.4% 0.3% 0.4% 0.0% 2015 2020 2025 2030 The 450 Scenario analyzes different measures to bring energy related CO2 emissions down to a trajectory that would be consistent with ultimately stabilizing the concentration of all greenhouse gases in the atmosphere at 450 particles per million. Source: SAI Law & Economics with data from The International Energy Agency. 8
Index A. Openness B. Integration and Competitiveness C. Competition and Transparency D. The Future: Framing the Paradigm 9
Concentration Sectoral Herfindahl Index 10,000 Oil 2,347 8,032 Electric 753 7,998 Telecom 3,189 5,559 Media 1,623 4,152 Transportation 1,659 Mexico 2,172 United Sates Airline 1,157 1,983 Construction 1,502 1,666 Banking 1,641 - 2,000 4,000 6,000 8,000 10,000 10
Concentration Aggregate Herfindahl Index 8,000 7,000 7,130 6,000 5,000 4,000 3,000 2,000 2,060 1,000 - Mexico United States 11
Government procurement auctions Through February 2015 Total CFE IMSS PEMEX SEP Processes 64 6 49 6 3 Line Items 673 25 523 110 15 Auctions 995 25 876* 79 15 Spend (Million USD) 8,412 4,306 3,515 339 252 Benefits (Million USD) 879 453 271 155 76 Average Savings (%) 10% 11% 7% 46% 23% Adjudication Rate (%) 94% 96% 91% 99% 100% Average Number of Bidders 5 7 3 7 8 ROI 271 453 54 298 139 12
Index A. Openness B. Integration and Competitiveness C. Competition and Transparency D. The Future: Framing the Paradigm 13
Intra-regional affairs Intra-regional Market access Dumping + ITEC 1 vs. common competition policy (Chapter 15) Seamless borders and transportation North America Logistics Program Energy synergies 2030e/ Dependency 2012 Dependency North American Energy Program ratio ratio Ratio 2 Ratio 2 Country Country Labor mobility vs. migration North American Labor Agreement Mexico 17.45 Mexico 10.06 US 32.10 US 19.76 Canada 41.40 Canada 23.17 NAFTA 17.66 NAFTA 28.85 Dependency ratios • 2012: NAFTA 11% smaller than that of the United States • 2030e: NAFTA 10% smaller than that of the United States 1/ Interagency Trade Enforcement Center. 2/ 64+ age population/ labor force population (15-64 age). e/ Estimated. 14 Source: SAI Law & Economics with data from U.S. Census Bureau and National Bureau of Statistics of China..
Extra-regional affairs Extra-regional TPP Preservation of NAFTA for trade and investment flows from North America TTIP Regional negotiation vs. convergence 15
Shaping the future: a North American customs union Key issues A. Common tariff and revenue sharing (Chapter 5) B. Energy (Chapter 6) C. Agricultural and industrial standards (Chapters 7 and 9) D. Government procurement (Chapter 10) E. Trade in services (Chapters 12 to 14 and 16) F. Trade remedies and competition policy (Chapters 15 and 19) G. Labor mobility 16
Recommend
More recommend
