Wharton
Mar. 20, 2013
Throughout Latin America, imports of Chinese steel are surging. In October 2012 alone, for example, Chinese steelmakers exported US$3.515 billion worth of steel products to Latin America. According to a joint study recently undertaken by the steel associations of Mexico, Brazil, Colombia and Argentina, Chinese steel exports to Latin America “have grown in a significant way, so that they now threaten the value chain of the industry.â€
Nowhere has that threat become more an issue than in Mexico. According to Canacero, the Mexican steel manufacturers association, Mexican imports of rolled sheets from China rose 140.6%, year-on-year, between January and November 2012. “A considerable volume of the total of Mexican steel imports comes from countries with which Mexico has no free-trade agreements, and which practice unfair trade practices, such as China, Russia and Ukraine,†according to a statement by Canacero, which has filed anti-dumping charges against Chinese steelmakers on more than one occasion.
Why are Chinese steel exporters so attracted to Mexico? Does their expansion into Mexico portend that Chinese automakers will soon be assembling some of their own vehicles in Mexico, and exporting some of that output to the United States? Or will the Chinese be tempted to build their own automotive assembly plants in the U.S. in order to take advantage of trade preferences offered by the North American Free Trade Agreement (NAFTA)? In what ways are China’s trade and investment relationships with Mexico different from its ties with other emerging Latin American countries, such as Brazil and Colombia?
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http://knowledge.wharton.upenn.edu/article/naftas-uninvited-guest-why-chinas-path-to-u-s-manufacturing-runs-through-mexico/
