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Does it matter if imports from Mexico are actually made of U.S. stuff?

Excerpt

The following is from the Sept. 26, 2017, edition of The Houston Chronicle. Luisa del Rosal, executive director of the Mission Foods Texas-Mexico Center at SMU, provided expertise for this story.

October 4, 2017

By Lydia DePillis

Over the past few years, as the North American Free Trade Agreement has come under fire from candidate and now President Donald Trump, businesses that have offshored production have had a strong defense: All those imports coming in from Mexico aren't as bad as they look.

In fact, the stuff America buys from Mexico contains a lot of parts that were first made in the United States, like a car dashboard that gets exported to Mexico, put into a vehicle, and then shipped back to the United States.

"Forty cents of every dollar spent on imports from Mexico comes back to the U.S., a quantity 10 times greater than the 4 cents returning for each dollar paid on Chinese imports," wrote the Wilson Center, a Washington-based think tank, in 2011. The statistic has been repeated by reporters, and Dallas Federal Reserve president Robert Kaplan. 

So the business community got a jolt last week, when Commerce Secretary Wilbur Ross — who's a big player in the effort to re-negotiate NAFTA with Mexico and Canada — took aim at that wonky but important point in an  op-ed in the Washington Post, arguing that only 16 percent of what the United States imports from Mexico started in the U.S., and therefore those imports don't create many jobs here.

This debate matters, because Ross wants to tighten the rules on where parts can come from for the product to be tariff-free under NAFTA. For example, if most of the components come from China, and the product is then imported from Mexico to the U.S., it should be treated like an import from China.  . . . 

But NAFTA defenders say this is all beside the point. Luisa del Rosal, executive director of the Mission Foods Texas-Mexico Center at Southern Methodist University, says it doesn't matter where stuff is made. If it's cheaper for companies to make things in Mexico, that's better for everyone. 

"Consumers lose their ability to buy things if we aren't able to produce them in the most effective ways," del Rosal says. "There has to be a better way to measure what value it adds to our economy than what percentage is made in a certain country.

 

Read the full story.