Mexico's economy minister sent China a formal letter last month expressing concern over unfair trade practices used by certain Chinese firms to avoid customs duties. In an email interview, Rhys Jenkins, a specialist in China's trade relations with Latin America at the University of East Anglia, discussed the trade relationship between China and Mexico.
WPR: What is the history of China-Mexico trade ties?
Rhys Jenkins: Trade between Mexico and China has grown spectacularly over the past decade from a little more than $3 billion in 2000 to almost $50 billion in 2010. The trade balance, however, has been massively in favor of China, with the value of Mexican imports running at 10 times that of exports to China, according to Mexican figures. China reports a much smaller trade surplus with Mexico, and the picture is confused by "triangulation," where goods pass through third countries, particularly the U.S. There is no doubt, though, that Mexico does register a large trade deficit with China since it has not developed significant exports to China, unlike some of the major South American countries.
WPR: What is the source of the current trade dispute between Mexico and China?
Jenkins: Trade conflicts between Mexico and China go back at least a decade. When China applied to join the World Trade Organization (WTO), Mexico was the last country to give its approval, in 2001. Mexican concerns were twofold: first, that the guaranteed access to the U.S. market that the WTO would give China would have a negative effect on Mexican exports to the north and, second, that Chinese imports would flood the Mexican domestic market. There was little that the Mexican government could do to prevent China's access to the U.S. market, and in 2003 Chinese exports to the U.S. exceeded those of Mexico for the first time. In order to reduce the impact of Chinese competition on the domestic market, Mexico insisted on arrangements that enabled it to maintain tariffs of between 100 percent and 1,100 percent on a range of Chinese imports for seven years as a condition for agreeing to China's WTO accession. When these arrangements were due to expire in 2008, the two countries agreed on a transition period that gave Mexican producers a further three years to adjust before restrictions are finally removed. These are due to end in December of this year.
The Mexican government has serious concerns over the large and growing bilateral trade deficit with China. Mexican manufacturers in a range of industries have long complained of unfair competition from Chinese imports. They claim that Chinese goods enter the market as contraband and that they avoid paying the appropriate import duties by underinvoicing or misclassifying goods, or by shipping them through third countries. China has been the main target for anti-dumping actions taken by Mexico at the WTO, accounting for 29 out of a total of 99 cases initiated since 1995.
WPR: What are the regional implications of Mexico's tough trade stance toward China?
Jenkins: Although other large Latin American countries such as Brazil and Argentina do not have such acute economic tensions with China, since their booming commodity exports have meant that they have not experienced large trade deficits, increased penetration of Chinese goods have nonetheless led to similar calls for protection from industrialists. China has been a principal target for anti-dumping actions in these countries too.
Source: www.worldpoliticsreview.com
WPR: What is the history of China-Mexico trade ties?
Rhys Jenkins: Trade between Mexico and China has grown spectacularly over the past decade from a little more than $3 billion in 2000 to almost $50 billion in 2010. The trade balance, however, has been massively in favor of China, with the value of Mexican imports running at 10 times that of exports to China, according to Mexican figures. China reports a much smaller trade surplus with Mexico, and the picture is confused by "triangulation," where goods pass through third countries, particularly the U.S. There is no doubt, though, that Mexico does register a large trade deficit with China since it has not developed significant exports to China, unlike some of the major South American countries.
WPR: What is the source of the current trade dispute between Mexico and China?
Jenkins: Trade conflicts between Mexico and China go back at least a decade. When China applied to join the World Trade Organization (WTO), Mexico was the last country to give its approval, in 2001. Mexican concerns were twofold: first, that the guaranteed access to the U.S. market that the WTO would give China would have a negative effect on Mexican exports to the north and, second, that Chinese imports would flood the Mexican domestic market. There was little that the Mexican government could do to prevent China's access to the U.S. market, and in 2003 Chinese exports to the U.S. exceeded those of Mexico for the first time. In order to reduce the impact of Chinese competition on the domestic market, Mexico insisted on arrangements that enabled it to maintain tariffs of between 100 percent and 1,100 percent on a range of Chinese imports for seven years as a condition for agreeing to China's WTO accession. When these arrangements were due to expire in 2008, the two countries agreed on a transition period that gave Mexican producers a further three years to adjust before restrictions are finally removed. These are due to end in December of this year.
The Mexican government has serious concerns over the large and growing bilateral trade deficit with China. Mexican manufacturers in a range of industries have long complained of unfair competition from Chinese imports. They claim that Chinese goods enter the market as contraband and that they avoid paying the appropriate import duties by underinvoicing or misclassifying goods, or by shipping them through third countries. China has been the main target for anti-dumping actions taken by Mexico at the WTO, accounting for 29 out of a total of 99 cases initiated since 1995.
WPR: What are the regional implications of Mexico's tough trade stance toward China?
Jenkins: Although other large Latin American countries such as Brazil and Argentina do not have such acute economic tensions with China, since their booming commodity exports have meant that they have not experienced large trade deficits, increased penetration of Chinese goods have nonetheless led to similar calls for protection from industrialists. China has been a principal target for anti-dumping actions in these countries too.
Source: www.worldpoliticsreview.com
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