The renegotiation of the North American Free Trade Agreement (NAFTA) between Mexico, Canada and the United States continues to trudge on, with the fate of the agreement hanging in the balance. The U.S. government initiated the renegotiation at the behest of President Donald Trump, who has reiterated his willingness to abandon the pact on multiple occasions. But it appears that Mr. Trump is working himself into something of a political pickle, since if he actually made good on this threats and pulled the United States out of NAFTA, it could cause serious consequences for some bedrock sectors of his own party in the run-up to mid-term Congressional elections in the U.S. this year. This has not been lost on midwestern grain farmers, most of whom – we’re just going to go out on a limb and take a guess here – probably voted for Mr. Trump in the 2016 presidential election. Grain exports are very important to midwestern grain farmers in states such as Nebraska, Missouri and Iowa, for which Mexico ranks as either number one or number two export market for overall exports. Not all grain exports are used to produce animal feed, but lately we’ve been languidly gazing at statistics on livestock feed production to allay our vespertine torpor, and it looks to us like they paint a pretty clear picture about the impact of public policy on industry. Continue reading Animal feed industry eyes NAFTA talks warily
Now that the United States is loudly breaking up with Mexico on social, Mexico is suddenly on the prowl for hot rebound trade with other markets. This is how it looks from here anyway, with Mexican officials popping up all over the media saying some country or other is going to be a big new market for Mexican exports. The new U.S. administration’s threats to dismantle the North American Free Trade Agreement (NAFTA) are currently stoking the flames of economic terror in Mexico, but we all know that Mexico’s dependency on the U.S. export market has been the stuff of economists’ nightmares for decades. To put it in perspective, the share of Mexico’s annual exports shipped to the USA has not dropped below 79% since some time before 1993, if it ever has. From 1998 to 2001, the concentration of Mexican exports destined for the U.S. market hovered near a truly bloodcurdling 89%. So it’s not like we didn’t know we were exposed to risk from overdependence on one market, but after 25 years of trade-loving U.S. governments, we became accustomed to living in denial. Continue reading Mexico frantic to diversify export markets for some reason
As the U.S. economy doggedly continues to send mixed signals, events in the Middle East have the world biting its fingernails and Mexico’s internal problems capture headlines, the Mexican economy inexplicably appears to be doing better than it should. While weak points are numerous, positive signs still accrue: Official unemployment was set at 4.6% in March, the lowest level since December 2008. First quarter results brought indications of a revival of the domestic market, as heavy truck sales jumped 43% over 1Q10, auto sales rose 12% for the same period, and retail sales edged up over 1Q10 as well. The peso continued to pummel the dollar, with gains of 6.8% so far this year, but despite this exports have been strong. Exports of electric and electronic goods were up 16% through the first two months of the year over the same period in 2010, and interestingly, exports of pork to Japan are running 30% ahead of last year despite – or because of? – the earthquake and tsunami catastrophe. The IMF provided a rare moment of satisfaction for Mexican authorities this month by upgrading its GDP projection for the country to 4.6% for the current year – just slightly above the projection for Brazil, the heralded BRIC economy and Mexico’s archrival in Latin America. These details, of course, don’t by themselves add up to a shining panorama of unbridled optimism. But considering the unprecedented levels of violence brought on by the drug wars, you’d kinda think things would be going worse than they are economically. Let’s see what we’re saying about this topic a few months from now.