2011 NAFTA trade remained strong, increasing over 14%. Increases in
automobile manufacturing, pipeline activity and in Mexican manufacturing
attributed to the growth in NAFTA trade.
NAFTA trade between trade partners Canada, Mexico and US was
strong throughout 2011. Overall trade by value increased 14.3% to $904.1bn.
Since 2009, it has increased by 24.3%. Trade with Canada increased 14% whereas
Mexican NAFTA trade increased 14.6%. The increase can be attributed to increased
automobile manufacturing, pipeline activity and shifts in manufacturing to
Mexico from Asia.
North American automobile production increased 10% in 2011
due to healthy US sales. As a result, NAFTA trade benefited from this increase
as NAFTA trade in vehicles increased 12%. Railroads such as Kansas City
Southern and Canadian National accounted for much of the movement of
automobiles. Around 40% of NAFTA Canadian rail cargo and over 50% of Mexican
rail cargo comprise of vehicles.
Pipeline activity also noted increases throughout 2011. Among
the top five US petroleum import partners, Canada is number one and Mexico is
number three. Trade via pipeline increased over 28% due in part to increased
drilling and refinery activity in the US and Canada in particular.
Finally, according to a report from Maquila
Reference, “Manufacturers producing goods for the U.S.
market are reconsidering their manufacturing options in China, and looking at
Mexico’s dual benefits of low-cost labor and reduced tariffs under various
NAFTA clauses.” Due to catastrophes such as
the Japanese earthquake and tsunami along with the flooding in Thailand,
manufacturers are also looking to manage their supply chain risks as well as reduce
expenses such as transportation and labor by relocating facilities closer to
end markets.
Mexico’s GDP is expected to rise 4% in 2011,
despite the country’s problems with drug cartel violence, which hasn’t seemed
to slow foreign direct investment (FDI) in new manufacturing facilities in just
about all regions of the country. That’s because Mexico has a low inflation
rate and debt levels, and a large population of young people available to meet
employment demands of the big multinational companies.
Not only automobile manufacturers such as Nissan
and Honda expanded operations in Mexico but also Foxconn, Delphi and General
Electric continue to maintain a strong presence in the Mexican manufacturing
space.
