b'JULY 26 -AUGUST 22, 2021USMCA: ONE YEAR LATER 5(YEARcontinued fromAnotherbitofwelcomevices between the US, Mexico(CLASHEScontinued from page 4) news forMexico came withand Canada has become fric- page 4)transformation of auto indus- theannouncementinMaytionless.Longstandingdis- threads.Ifitstooonerous, try itself. that Canadian National (CN)putes remain, and will likelyautomakers will just pay the Focus among the US carandKansasCitySoutherncontinue well into the life of2.5% tariff.makers going forward is now(KCS) railroads would merge.theUSMCA.ThisincludesThedisputecomesafter squarely on electric vehicles.If approved, this will create aeverything from the softwoodthecarindustrywasalready Thattranslatesintoaradi- rail network that would stretchlumberquarrelbetweentheforced to close last year due to cal reordering of the vehiclefromMexicotoCanada.US and Canada to fights overCovid-19 and is dealing with value-creationproposition.NorthAmericanregionalwater on the border betweena crisis due to a shortage of Batteries and semiconductorstrade is consistently cited asthe US and Mexico.computer chips for vehicles.become critical components,an important rationale for theIdontthinkanyoftheMexico and Canada con-whileinternalcombustion David A. Gantz, law professor atroughly $30 billion deal.threegovernmentsentertainastantly jockey with China for engines(ICEs)andtrans- Rice University That development under- vision of accelerating integra- thestatusofAmericastop missions become redundant.scores a regional transporta- tionoftheNorthAmericantrade partners, with more than SupplychainsforelectricUSMCAAndi nVeSTMenT tion and shipping integrationeconomy. And there are a lot of$1 trillion in goods crossing vehiclesareexpressedinOntheotherhand,hethatbeganwiththeemer- barriers in the North Americanthebordersannually.The terms of essential raw mate- added, a lot of people weregenceofNAFTA.Allthateconomy,eventhoughwevetwoNorthAmericanneigh-rials such as nickel, lithium,sittingontheirinvestmentwevebeendoingforthehadNAFTAalltheseyears,bors are key to U.S. efforts to cobalt and graphite, not justhandsduringtheTrumplast 30 years to build out theconcludedGaryHufbauer,anconvince companies to invest steelandaluminum.Tech- administrationbecauseofinland infrastructure in Northeconomist and a senior fellowandreturnmanufacturingto nology trumps low cost pro- tradeuncertainties.Gantz,Americaservesusexceed- withthePetersonInstituteofthe region to be able to com-ductionand,indeed,tradeforone,believesthatsomeingly well, said Miller. International Economics.pete with China. The Trump agreements.of those parts makers experi- NAFTA triggered a mam- But Hufbauer, like others,administration fought a trade The rules of origin thatenced in the Mexican milieumothincreaseinregionalremain thankful the USMCAwarwiththeAsiannation, werenegotiatedinUSMCAand seeking to expand alreadytrade, something even its mostwassuccessfullyconcluded.includingplacingtariffson to some extent were fightingexistingfacilitiesmaygoardentcriticsmustconcede.Insteadofmassivedisrup- morethan$300billionof the last war, said Miller. ahead regardless of MexicosButthatdoesntmeanthetion,nowwehavetheseimports, which Biden has so Already,forexample,political and security climate. movement of goods and ser- smaller irritants, he said. far kept in place.semiconductorshortagesare causingseriousvehiclepro-ductiondelays.Evidenceof howinvestmentflowswillWE KNOWchangehasbecomemore apparentinrecentdays. TheTaiwanesesemiconduc-torgiantTSMCbegancon-structioninJuneona$12 billion semiconductor manu-facturingplantinArizona.PEOPLEIntel and Samsung also have announced plans to build new plants as well.Even more critical will be large-scalebatterymanufac-turing plants. China now dom-inatesproduction,although ajointventurebetweenGM and South Koreas LG Chem will see two multi-billion-dol-lar factories in the US, one in Ohio already under construc-tion and another announced in April for Tennessee.Thesesortsofchanges bode well for the US and, to a lesser degree, Canada. Mean-while,Mexicoisnowhere neartobeingpreparedto capturethisdevelopment,as investors in these critical com-ponentshaveshownabso-lutelynointerestinlocating there. Neither is it likely that Mexico will benefit from any move away from China.Clearlythereisgoing to be some shift of auto-parts productionsourcingfrom China, said David A. Gantz a law professor and the Clay-tonFellow,MexicoCenter/Baker Institute, at Rice Uni- Mexicomadeeasy.versity. Maybe it will go to Vietnam.Maybesomewill go to Indonesia. The logical placeinmanyrespectsfor high labor content auto parts wouldbeMexico,except thattheinvestmentclimate, in addition to concerns about electricityandgascosts,is discouraging. Likewise, said Gantz, the new rules of origin, especially wages-relatedrequirements, couldcreateareporting1000 Foust Rd., Brownsville, TX 78521(956) 831-45921-800-378-5395nightmare that may discour- portofbrownsville.comage smaller parts manufactur-ers from moving to Mexico.'