WASHINGTON: An increasing amount of Chinese- a and Southeast Asian-made components are reaching the US market through Mexico and Canada, at the expense of American manufacturers, Commerce Secretary Wilbur Ross said Friday.
On the eve of the third round of talks aimed at revamping the 23-year-old North American Free Trade Agreement — which US President Donald Trump has vilified and repeatedly threatened to abandon — the US released figures showing how China is benefiting from the pact, replacing American-made material.
“That to me is the scariest part, the sharp growth is in parts coming in from outside NAFTA, from China, from Southeast Asia, from all those places,” Ross said on CNBC.
The share of US-produced content in manufactured goods imported by the United States from Mexico was only 16 percent in 2011, a sharp decline from 26 percent in 1995, the Commerce Department said in a statement.
But Chinese content in Mexican products imported into the US surged to six percent in 2011 from 0.3 percent in 1995, Commerce said, citing OECD trade data. At the same time, the share of content from all non-NAFTA sources doubled to 27 percent from 14 percent.
“When you think about it, the fundamental purpose of a trade agreement is to help countries inside not to make an easier market for countries outside,” Ross said.
US Trade Representative Robert Lighthizer is pushing for increased US content in NAFTA manufactured goods trade in the negotiations, which resume Saturday in Ottawa with Canadian Foreign Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo.
The share of US parts and components in imports from Canada fell to 15 percent in 2011 from 21 percent in 1995. Meanwhile, the share of Chinese content increased to three percent from 0.3 percent, and the share of content from all non-NAFTA sources jumped to 21 percent from 12 percent.