The Montebello summit coincides with new data showing weak trade growth in North America.
BY CHRONICLE STAFF
As the leaders for the United States, Mexico and Canada meet in Montebello, Canada today and tomorrow to talk about the North American Free Trade Agreement (NAFTA) and other issues, new data shows that North American trade is growing at weak levels.
U.S. exports to Mexico grew by 0.6 percent to $67.0 billion in the first half of the year, while imports from Mexico increased by 2.9 percent to $100.9 billion, data from the U.S. Census Bureau shows.
The slowdown in US exports to Mexico is largely due to the low economic growth of that country. In the first half, GDP expanded by a mere 2.7 percent.
"The weakness in Mexico’s economic indicators has been generalized," Credit Suisse analyst Alonso Cervera said in a commentary Friday. "From a supply-side perspective, all major industries have grown at a slower pace than in the comparable period last year."
Credit Suisse is lowering its full-year GDP forecast to 2.9 percent from 3.4 percent. Meanwhile, a panel of leading economists predict 3.3 percent GDP growth for Mexico, according to the latest quarterly update of Latin America Outlook, the outlook survey from Latin Business Chronicle and the Inter-American Dialogues' Latin America Advisor. Both forecats are lower than the 3.4 percent GDP growth predicted by the International Monetary Fund in its latest World Economic Outlook in April.
That means U.S. exports to Mexico are growing more slowly than to the rest of Latin America. However, U.S. imports from Mexico are growing faster than from the rest of Latin America, according to an analysis by Latin Business Chronicle. Total U.S. exports to Latin America grew by 4.6 percent to $110.2 billion in the first half, while imports declined by 0.5 percent to $156.3 billion.
The first half figures also show a slowdown compared to last year as a whole, when U.S. exports to Mexico grew by 11.5 percent to $134.2 billion and U.S. imports from Mexico increased by 16.5 percent to $198 billion.
Canada's exports to Mexico reached 4.4 billion Canadian dollars (approximately US$4.2 billion), an increase of 303 percent, while Canadian imports from Mexico grew by 9.6 percent to 16.0 billion Canadian dollars (see Canada-Peru Trade Boom).
Mexico remains the third-largest U.S. trading partner worldwide after Canada and China. However, Mexico is the second-largest U.S. market for exports. The value of U.S. exports to Mexico was more than double compared to exports to China in the first half of the year. However, U.S. imports of goods from China were 46.7 percent higher than imports from Mexico, according to a Latin Business Chronicle analysis.
Montebello in Quebec will host Presidents George W. Bush from the United States and Felipe Calderon of Mexico and their host, Prime Minister Stephen Harper of Canada. The meeting is part of an annual process implemented since 2005, when the North American governments agreed to create the Security and Prosperity Partnership of North America (SPP) to increase security and enhance prosperity through greater cooperation and information sharing.
"Whatever the three leaders actually do in Montebello, there will be protests that they are doing too much, but the real problem is that they are doing too little," Robert Pastor, Latin America advisor to President Jimmy Carter and author of Toward a North American Community, argues in a commentary. "What the leaders should do is articulate a vision of a North American Community and sketch a blueprint for accomplishing it," he writes in the latest issue of FOCALPoint, a publication from the Canadian Foundation for the Americas (FOCAL) (See North American summit: More or Less?).
Pastor also criticizes the North American governments for being too defensive on the value of the SPP. "By their silence or defensiveness, they have allowed the relationship to be defined by an extremist fringe that fears any cooperative initiative is a slippery slope toward the dissolution of sovereignty."