border infrastructure aff and neg - wave 2 - michigan7 2013 pcvjf

8/10/2019 Border Infrastructure Aff and Neg - Wave 2 - Michigan7 2013 PCVJF

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***WAVE 2***


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Aff


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Nieto


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Nieto Education Reform ScenarioNietos education reform policy is necessaryMexicos education systemrig t no! suc"s#olton $% Gene Bolton is a Research Fellow at the Council on Hemispheric Affairs, (Gene, Off and Running ena !ieto"s Reform

Agenda#, Council on Hemispheric Affairs, $%&', http %%www)coha)org%'&*+&% %%R- .ith education reform shaping up to /e the staple of his first few months in office, it appeared as though e0a !ieto was ta1ing thenecessar2 steps to ma1e good on one of the reforms as outlined in the acto por 345ico ( act for 3e5ico the top6down legislationsigned /2 opposition parties A! and R7 in 7ecem/er of '8&') 9:; W et er &e'a Nietos actions !ere too(tain political capital or a sincere interest in t e countrys sc ools) Mexicoseducation system is in desperate need of reform t e +rgani,ation for Economic-o.operation and /e0elopment 1+E-/ ran"s it as t e !orst performing systemamong mem(er countries3 456 As an example of o! dysfunctional t e situation

as (ecome in recent years) t e go0ernment is una!are of o! many c ildren andteac ers actually exist in t is fragmented system3 9n an effort to correct these pro/lems) &e'aNietos education reform is designed to !ea"en t e grasp of t e unions a(ility to

ire and fire teac ers3 According to ?he @conomist, t e go0ernment as promised t at fromno! on teac ers 7o(s !ill no longer (e for sale) or in erited3 8eac ers ! o fail

assessments !ill face t e sac" )# 9&8; Additionally) t e education reform aims toincrease t e percentage of students graduating from middle and ig sc ool to 59and :9 percent respecti el2 ) as !ell as extending learning ours in appro5imatel2 8,888 pu/licschools)

Education Reform re;uires a strong commitment (y Nieto e !ill needmomentum in order to (rea" up corrupt teac er unions


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futures ) ?he2 will no longer feel that the2 ha e to /ri/e teachers so their 1ids can get an education)8 ey !ont feelt at t e only ope for t eir c ildren is to flee to t e ? nited S tates)= #rea"ing t isunions grip on Mexicos education system is a(solutely "ey to t e nationssur0i0al) "ey to its economic de0elopment) "ey to t e fig t against drug traffic"ing)and "ey to fixing t e illegal immigration pro(lem3 And you cant (rea" t e unionunless you start enforcing t e la! ! en it comes to t e top union (osses3 7uring se endecades of one6part2 rule /2 the >nstitutional Re olutionar2 art2, or R>,t e teac ers union 7oined ot ers)suc as t e petroleum !or"ers union) in manipulating t e political system (e indt e scenes3 Not ing appened !it out t eir appro0al3 All attempts at reformingMexicos economic and political system !ere (loc"ed (y t e union (osses3 ?he2 werethe er2 s2m/ols of corruption that ga e 3e5ico the /ad image that it is tr2ing to sha1e off e en toda2)= @ en after the R> lostpower in '888, t ese unions continued to (loc" meaningful reforms , which is wh2 the R> reall2ne er stopped running 3e5ico e en when it lost the presidenc2) .ith Gordillo"s arrest, things might actuall2 start to change) ?hegreat iron2 a/out this is that it is occurring under a R> president, @nriEue ena !ieto, after successi e administrations run /2 theconser ati e !ational Action art2 failed to 2ield results)= @arlier this wee1,&ena Nieto also announced a seriesof education reforms t at mar" t e most significant effort on t is front in decades38eac ers !ill (e re;uired to undergo regular assessments ) ?hat"s ne er happened /efore)>magine holding a Do/ where 2ou ne er had to answer for 2our performance) our power is a/solute) .hat an in itation forcorruption) >magine an education s2stem in which no/od2 chec1s to erif2 the education6attainment le el of the teacher /eing hired

&us ing for education reform is "ey for Nieto to pass ot er contro0ersialissues@ox Ne!s atino =$% Fo5 !ews atino reports a/out current e ents regarding the politics and the econom2 of atino countries,(3e5ico s @nriEue e0a !ieto Faces Bac1lash O er @ducation Reform#, Fo5 !ews atino, %& ,http %%latino)fo5news)com%latino%news%'8&$%8 %& %me5ico6enriEue6pena6nieto6faces6/ac1lash6o er6education6reform% %8 e fig t is dominating eadlines in Mexico and free,ing progress on a nationaleducation reform t at &e'a Nieto oped !ould (uild momentum to!ard morecontro ersial changes) ?hose includeopening t e state.o!ned oil company to foreign and pri0atein0estment and (roadening MexicoBs tax (ase , potentiall2 with the first6e er sales ta5 on food andmedicine)= &e'a NietoBs first ma7or legislati0e 0ictory after ta"ing office in /ecem(er

!as a constitutional amendment eliminating MexicoBs decades.old practice of (uying and selling teac ing 7o(s , and replacing it with a standardiIed national teaching test)8 atBs eresy to a radical splinter union of elementary and ig .sc ool teac ers in ntelligence, '8&$, http %%americasmi)com%enJ -%e5pertise%articles6trends%page%president6pena6nietos6reforms6and6what6the26mean6for6/ussiness6in6me5ico %%R-8 e education reform) passed (y -ongress in @e(ruary 29$%) as ma7orimplications for t e future of Mexicos economy3 Mexicos dismal educationsystem as long acted as a (ra"e on economic de0elopment3 3e5ican students" test scores areamongst the lowest of the O@C7"s rogram for >nternational -tudent Assessment ( >-A ) '= 8 e primary o(stacle toimpro0ements in education as (een t e tig t control !ielded (y t e !ational nion of@ducation .or1ers ( SN8E o0er education policy) staffing) and funding ) >ndeed, the -!?@ was incontrol of all teachers" hiring and firingKt e union repeatedly (loc"ed any attempts to administerany e0aluations of teac ers performance and all too often teac ing posts (ecame

ereditary or could (e (oug t from union po!er (ro"ers3 8 e mig t of t e SN8E !as suc t at t e go0ernment ad no official records of t e num(er of teac ers inMexico )


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>C to Nieto ReformReforms (y Nieto cannot (e enacted if t e &acto por Mexico falls apartsa/el 3artineI are reporters for Reuters, a we/site specialiIing in domesticand foreign economic and political affairs) (7a e, Ana >sa/el, !o tal1s on 1e2 3e5ico reforms until spat resol ed opposition#,Reuters, %$8, http %%www)reuters)com%article%'8&$%8 %$8%us6me5ico6reforms6opposition6id -BR@


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#order Security


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>n erency

-olla(orating !it ot er groups D t e etas !ill multiply t eir strengt Wasler $$ (Ra2 .alser, h)7) is a -enior olic2 Anal2st at ?he Heritage Foundation, >ran, 3e5ican Letas, and the -outhern?error @5press# Octo/er &', '8&& http %%/log)heritage)org%'8&&%&8%&'%iran6me5ican6Ietas6and6the6southern6terror6e5press%, R A

A persistent t reat scenario against t e ?3S3 as (een foreign terrorist organi,ationsacting independently or in cooperation !it 0iolent transnational criminalorgani,ations , and perhaps /ac1ed /2 anti6American regimes in the regionlaunching a terrorist attac1 from across oursouthern /order) = >t is a scenario the O/ama Administration has recogniIed /ut generall2 minimiIed) For e5ample, the )-) -tate7epartment"s '8&8 Countr2 Reports on ?errorism reported= ?he threat of a transnational terrorist attac1 remained low for mostcountries in the .estern Hemisphere) ?here were no 1nown operational cells of either al6Pa"ida6 or HiI/allah6related groups in thehemisphere, although ideological sympat i,ers in Sout America and t e -ari((eancontinued to pro0ide financial and moral support to t ese and ot er terroristgroups in t e Middle East and Sout Asia3 = 8 e continued unfolding of the>ran plot toassassinate t e Saudi am(assador in t e ?3S3 is alsoa reason to re0isit t e terrort reat in t e Americas3 >n the indictment and 2esterda2"s press conference, it /ecame clear that co6defendant 3anssor

Ar/a/siar, a naturaliIed >ranian li ing in ?e5as, tra eled repeatedl2 to 3e5ico in search of hired assassins willing to wor1 for >ranianpa2offs)= ?here Ar/a/siar thought he was enlisting the ser ices of 3e5ico"s deadliest, most ruthless criminal organiIation, the Letas,to carr2 out the contract assassination in e5change for Q&)+ million in >ranian cash)8 e etas) !it t eirparamilitary tactics and rut less disregard for uman life) !ould ma"e a perfectfit !it terror.minded >ranians )= ittle wonder ?ehran would see1 to enlist them as hired e5ecutioners to conductassassinations and wrea1 ha oc in .ashington, 7)C)= ?he unco ering of the >ran plot is a wa1e6up call here in the )-) /ut also inthe .estern Hemisphere) >t compels us ta"e an e0en toug er stance against t ose ! oeagerly em(race >ran and act as an >ranian conduit into t e Western Femisp ere3 Hugo Cha eI"s MeneIuelafollowed /2 nations li1e Boli ia, @cuador, !icaragua, and Cu/acertainl2 head the list and reEuire e er6increasing scrutin2)= ?he growing HeI/ollah threat has /een well6documented /2 Am/assador Roger F) !oriega and Nose R)Cardenas in ?he 3ounting HeI/ollah ?hreat in atin America# and /2 in estigati e Dournalist 7ouglas Farah) HeI/ollah wor1sclosel2 with >ran"s Re olutionar2 Guard and Pods Force, whose operati e, Gholam -ha1uri, was indicted along with Ar/a/siar in theplot)= )-) law enforcement is to /e applauded for foiling 2et another terrorist plot) ?he O/ama Administration should now follow upthe unra eling of the conspirac2 with strong international actions against >ran) >n the .estern Hemisphere, >ran"s allieswho opentheir doors to >ranian intelligence and terror operati esshould also feel more )-) and international heat)
http://blog.heritage.org/2011/10/12/iran-mexican-zetas-and-the-southern-terror-express/http://blog.heritage.org/2011/10/12/iran-mexican-zetas-and-the-southern-terror-express/http://blog.heritage.org/2011/10/12/iran-mexican-zetas-and-the-southern-terror-express/http://blog.heritage.org/2011/10/12/iran-mexican-zetas-and-the-southern-terror-express/


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Auto industry


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>mpacts


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..AirCNa0al &o!er

Auto >ndustry Gey 8o Feg D Air &o!er And Na0al &o!erRonis , 7irector Of 3/a rograms At .alsh College, :%&:%'89H 9-H@> A R,http %%www)uscc)go %hearings%'88 hearings%writtenJtestimonies%8 J8:J&:wrts%ronisJstatement)pdf;?he 73-3- data/ase is an e5ample of how /adl2 the industrial /ase is deteriorating) According to the Go ernment >ndustr2 7ata @5change rogram(G>7@ , in '88', &,+'$ manufacturers reported '+$,*$' 73-3- parts) According to the Air Force 73-3- Guide, >n toda2"s high6tech Air Force , the ultimateperformance of aircraft, missiles, and numerous other weapon s2stemsdepends on a multitudeof important and often comple5components) .hen one of these components (e)g) a microcircuit /ecomeso/solete or una aila/le, the impact can e5tend throughout the weapon s2stem affecting cost ands2stem readiness)# ?he ser ices are all tr2ing to lessen or eliminate the r is1s caused /2 parts non6a aila/ilit2 /efore the weapon s2stem isad ersel2 affected)#?he commercial manufacturers increasingl2 lose interest in supporting the militar2 mar1et /ecause it is so small)3an2 manufacturing companies find that it is not economicall2feasi/le to support er2 small olumes o er long periods of time) All the ser ices ha e 73-3- issues) As ane5ample for the 73-3- effort at the Air Force Research a/orator2 at .right6 atterson AFB, 73-3- impacts e er2 weapon s2stem in the in entor2S past, present and futureT)# ?he Air Force has said that 73-3- is dri en /2 man2 factors /ut one reason is the e5tended weapon s2stem"s life in the Air Force in entor2) For e5ample, B6+'s ma2 /e used more than < 2ears, C6&$8s, more than :< 2ears, C6&$+s, more than * 2ears and the F6&+, morethan +& 2ears) !one of these planes was designed to fl2 that long) -o, mission capa/le s2stems and readiness are put at ris1 if 73-3- issues are leftunresol ed) .hat is not alwa2s understood is the realit2 that the auto industr2 affects 73-3- at7o7 /ecause t e industrial infrastructure t at supports t e / epartment o f / efense is s ared

(y t e auto industry ) .hen a tier supplier to the automo/ile industr2 goes under whether it isa machine tool compan2 or in micro6electronics,it reduces 7o7"s a/ilit2 to function and sol eits 73-3- pro/lems ) .hen go ernment RU7 in estment in an industr2 deteriorates, it is onl2 amatter of time /efore an industr2 is in trou/le ) 3anufacturing RU7 /2 the federal go ernment is declining) According to3anufacturing !ews, in the mid &n addition, orders for )-) warships ha e declined 8 percent duringthe &8 2ears since the end of the Cold .ar)# oung people no longer iew wor1ing in a ship2ard as a ia/le wa2 to ma1e a li ing) ConseEuentl2,according to 7OC, sur e2 responses indicate that la/or shortages ha e reduced profits, impacted construction costs, and dela2ed proDect completionfor most ship2ards)# According to the stud2, the /asis for )-) ship6/uilding superiorit2 has /een the research and de elopment e5pertise that currentl2 resides in !a 2"s la/oratories, acEuisition commands, and certain ship/uilders and uni ersities) Collecti el2, these organiIations ha e concei ed anddesigned most of the state6of6the6art hull, mechanical, electrical, power proDection, air defense and undersea warfare capa/ilities that are operationaltoda2) .ith reduced research and de elopment /udgets, some of that capa/ilit2 now is /ecoming fragmented)#3an2 lower tiercompanies suppl2 to /oth the auto industr2 and ship/uilding, /ut the auto industr2 is muchlarger) ?his situation in ship/uilding also e5ists in other industries , such as machine tools, thehigh performance e5plosi es and e5plosi e components industr2, cartridge and propellantactuated de ice sector and weldingand all ofthese industries share the /ottom of the /ase with theauto industr2) .e need to maintain a capa/ilit2 to /e glo/all2 competiti e in product andprocess inno ation S we must regain our manufacturing prowess and leadership) .e cannot /ecome acountr2 that manufactures little) .e need to rein igorate the 3anufacturing @5tension artnership program at the !ational >nstitute of -tandards and?echnolog2) .e need to prioritiIe those technologies that are critical to regaining and then maintaining leadership and competiti e ad antage in theo erall industrial /ase so China does not /ecome the world"s leader in technologies we need to /e a superpower) China is /ecoming the manufacturingcapital of the world) A small e5ample is that Chinese officials ha e pu/licl2 stated the2 want to /ecome the foundr2 capital of the world to ha e a world6 wide monopol2 on cast parts) ?he Casting @missions Reduction rogram (C@R of the )-) Arm2 is an e5cellent e5ample of wa2s that Congress canpro ide mechanisms for industr2 and the militar2 to wor1 together to stem the erosion of the industrial /ase to e er2one"s /enefit) .e need to increaseour in estment in RU7 to produce the leading edge 1nowledge, capa/ilities and patents the countr2 must ha e to remain an economic and militar2

superpower) ?his means we must increase funding to the national la/oratories not onl2 from @nerg2, Commerce and 7efense /ut across the /oard) .ealso need to rethin1 our trade, offset and CF> - policies to encourage the maintenance of high alue6added Do/s inside the countr2 and we need toreform those national s2stems that are 1eeping our industr2 uncompetiti e including pension and health care, particularl2 in the auto industr2) ?he /an1ruptc2 of 7elphi is onl2 the first of man2 dominos to fall if we don"t do something dramatic a/out this situation) CF> - must /e completel2rethought) Ha ing General 3otors under the control of foreigners is not the answer) 3an2 foreign entities /u2 )-) assets not to use them, /ut todismantle them) @ en 7aimler"s ta1eo er of Chr2sler remo ed serious capa/ilities to German2, though no one will go on the record with specifics)?he 7 epartment of7 efense regularl2 implies that the )-) industrial /ase is health2) 7o7 does not ta1einto consideration all the s2stems that compose their piece of the industrial /ase, nor how theirs2stems interact with others such as autos) Cooperation /etween go ernment and industr2 is essential /ecause there areelements of the )-) industrial /ase that are disintegrating, and are putting the national securit2 of the nited -tates at ris1) nless we loo1 at theindustrial /ase as a s2stem, we do not e en see the pro/lem or the possi/le militar2 implications) .e also are not e en as1ing whether or not a )-)owned# industrial /ase matters, and we must e5plore this issue as a nation) ?he .hite House, Congress and the entire spectrum of the agencies and


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departments of the federal go ernment need to understand these issues) At the moment the2 do not) nless something changes,the )-) ma2cease to /e a superpower)

And) @lexi(le rapid reaction of ?S airpo!er is crucial to a0erting and de.escalating WM/ conflicts in t e &ersian ndia and &a"istanLalma2G ali,ad and >an esser , -enior Anal2sts at RA!7) -ources of Conflict in the '&st Centur2, &ndia6 a1istan, and the ersian Gulf) >n addition to con entional com/at, the demands of uncon entional deterrence will increasingl2 confront the )-) Air Force in Asia) ?heVorean peninsula, China, and the >ndian su/continent are alread2arenas of .37 proliferation ) .hile emergent nuclear capa/ilities continue to recei e the most pu/lic attention,chemicaland /iological warfare threats willprogressi el2 /ecome future pro/lems ) ?he deli er2 s2stems in the region areincreasing in range and di ersit2) China alread2 targets the continental nited -tates with /allistic missiles) !orth Vorea can threaten northeast Asia with e5isting -cud6class theater /allistic missiles) >ndia will acEuire the capa/ilit2 to produce >CB36class deli er2 ehicles, and /oth China and >ndia will acEuire long6range cruise missiles during the time frames e5amined in this report) ?he second 1e2 implication deri ed from the anal2sis of trendsin Asia suggests thatair and space power will function as a ital rapid reaction forcein a breaking crisis ) Currentguidance tas1s the Air Force to prepare for two maDor regional conflicts that could /rea1 out in the ersian Gulf and on the Vorean peninsula) >n otherareas of Asia, howe er, such as the >ndian su/continent, the -outh China -ea, -outheast Asia, and 32anmar, the nited -tates has no treat2 o/ligationsreEuiring it to commit the use of its militar2 forces) But as past e5perience has shown, American polic2ma1ers ha e regularl2 displa2ed thedisconcerting ha/it of disco ering strategic interests in parts of the world pre iousl2 neglectedafter conflicts have already broken out ) 3indful of thistrend, it would /ehoo e )-) Air Force planners to prudentl2 plan for regional contingencies in nontraditional areas of interest, /ecause na al and airpower willof necessit2 /e the primar2 instruments constituting the Americanresponse) -uch responses would /e necessitated /2three general classes of contingencies) ?he first in ol es the politico6militar2 collapse of a 1e2 regional actor, as might occur in the case of !orth Vorea,32anmar, >ndonesia, or a1istan) ?he second in ol es acute politicalmilitar2 crises that ha e a potential for rapid escalation, as ma2 occur in the?aiwan -trait, the -pratl2s, the >ndian su/continent, or on the Vorean peninsula) ?he third in ol es cases of prolonged domestic insta/ilit2 that ma2ha e either spillo er or contagion effects, as in China, >ndonesia, 32anmar, or !orth Vorea)


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..J8K Na0al &o!er

Gey to t e Na0yRonis 9H repared -tatement of 7r) -heila Ronis, 7irector, 3BA%3- rograms, .alsh CollegeK Mice resident, !ational 7efense ni ersit2Foundation, ?ro2, 3ichigan CH>!A"- >3 AC? O! ?H@ )-) A ?O A!7 A ?O AR?- >!7 -?R>@- H@AR>!G B@FOR@ ?H@ )-)CH>!A@CO!O3>C A!7 -@C R>? R@M>@. CO33>-->O! O!@ H !7R@7 !>!?H CO!GR@-- -@CO!7 -@-->O! JJJJJJJJJ Nul2 &:, '88http %%www)uscc)go %hearings%'88 hearings%transcripts%Dul2J&:%8 J8:J&:Jtrans)pdf >n 3a2 '88&, the )-) 7epartment of Commerce"s Office of -trategic >ndustries and @conomic -ecurit2, in partnership with the Carderoc1 7i ision ofthe !a al -urface .arfare Center, completed a three2ear national securit2 assessment of the )-) ship/uilding and repair industr2) -ome of thefindings were disconcerting though related to /oth 73-3- and the auto industr2) According to the stud2, emplo2ment in the industr2 has droppedsharpl2 since the earl2 &


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..Econ

And) Auto Reco0ery is essential to ?3S3 Economic reco0ery D t e autoindustry !ill dri0e ot er sectors and ensure 7o( gro!t?3S3 Ne!s 2"$2 (>s the )-) Auto >ndustr2 on ?rac1 for a Come/ac1W,# pg online Xhttp %%www)usnews)com%news%articles%'8&'%8&%8nternational Auto -how opened in 7etroit this wee1end for anine6da2 run, and man2 e2es are on the annual pow6wow for clues a/out what s in store for '8&') ?he initial signs loo1 good) ?hepast twomonths ha e seen decent sales num/ers, a trend that s li1el2 to continue as the Do/s outloo1 strengthens and Americans feel more financiall2 secure,experts say ) 7ecem/er was a good month for !issan and especiall2 the Big ?hree Che rolet,Chr2sler and G3all of which posted sales increases for the month and 2ear) 9Read !ew @conomic 7ata oints to Hope in '8&'); ?he econom2 issuch that people are feeling a little more comforta/le a/out their Do/ outloo1 and where the2 re going, sa2s Bruce BelIows1i, research scientist at

ni ersit2 of 3ichigan s ?ransportation Research >nstitute)Economists forecast ?3S3 auto sales !ill 7ump toa(out $%3 million in 29$2) up from &')* million last 2ear) .hile &$ or & million units sold certainl2 isn t /ad, BelIows1i sa2s it snot the &+ or & million units auto ma1ers used to enDo2 se eral 2ears ago)Still) t e auto industryBs reco0ery is

playing a significant role in (olstering t e (roader economic reco0ery in t e ? nitedS tates, primarily (ecause automoti0e manufacturing touc es so many ot er areas oft e economy , from manufacturing gas caps to 1eeping the diner ne5t to the plant open, sa2s AaronBragman, senior anal2st at >H- Glo/al >nsight)8 e resurgence in demand also (odes !ell for t e 7o(mar"et3 Auto ma1ers ha e alread2 re6hired nearl2 e er2one the2 laid off during the recession,Bragman sa2s, and if demand remains ele ated,companies are li"ely to ire more to "eep up !itproduction needs3 9-ee toda2 s /est photos); 7emand is li1el2 to sta2 ele ated, too) ?he a erage age of ehicles in the nited -tates is theoldest it s e er /een at more than &8 2ears old) .hile /u2ing a new car might /e a fun upgrade for some, for others it s /ecoming a necessit2) >n somecases people are loo1ing at 9their cars; and sa2ing, >t s Dust time, > need to turn the car in, as opposed to pre ious c2cles where it was largel2 desire6 /ased and not necessaril2 need6/ased, Bragman sa2s) Auto ma1ers are also releasing some new smaller6scale products, which wasn t entirel2une5pected) Americans ha e /een downsiIing from mega6siIed monster truc1s for awhile, and car ma1ers are responding /2 /roadening their selectionof mid6siIed cars and e en sprucing up smaller cars with lu5ur2 items that used to /e onl2 a aila/le on larger models) @ er2one has 1ind of steppeddown a notch, Bragman sa2s) artl2 due to the earthEua1e and tsunami that ra aged Napan last 2ear,itBs difficult to say ! et er?3S3 (rands can old onto t e mar"et s are t ey captured o0er t e past year )Furthermore, the landscape of the auto industr2 has changed dramaticall2 o er the past couple of 2ears as carma1ers ha e restructured and cut theirlosses on underperforming /rands) 9Read nemplo2ment Falls to *)+ ercent); G3 canceled four of its eight /rands and part of Che rolet s growth iscoming from the fact that the -aturn /rand is no longer here, Bragman sa2s)?he /ig Euestion remains whether Napanese /rands can ma1e up the mar1et share the2 lost due to last 2ear s natural disasters and t eincreased competiti0eness of ?3S3 (rands ) @ er2one is Dust so much more competiti e than the2 used to /e,Bragman sa2s, especiall2 when it comes to )-) /rands, which ha e completel2 re amped their /usiness models in some cases) ?he2 e got full2competiti e product, the2 e got full2 competiti e profita/ilit2, and now the2 e got people actuall2 interested in what the2 re selling) ?hat s going to /ehard for the Napanese)

Auto industry is "ey to t e economy. consumer goods and multiplier effectFill et al $9. -ustaina/le ?ransportation and Communities Group and roDect ead, roDect 3anager of the center for automoti e research,Research Associate at the center for automoti e research, (Vim, 7e//ie 3en1, Adam Cooper, Contri/ution of the Automoti e >ndustr2 to the@conomics of All Fift2 -tates and the nites -tates#, http %%www)oesa)org%7oc6Mault%>ndustr26>nformation6Anal2sis%CAR6@conomic6-ignificance6Report)pdf8)

?he auto industr2 is one of the most important industries in the nited -tates) >t historicall2hascontri/uted $ S $)+ percent to the o erall Gross 7omestic roduct (G7 )?he industr2 directl2emplo2s o er &): million people engaged in designing, engineering, manufacturing, andsuppl2ing parts and components to assem/le, sell and ser ice new motor ehicles) >n addition,theindustr2 is a huge consumer of goods and ser ices from man2 other sectors, including rawmaterials, construction, machiner2, legal, computers and semi6conductors, financial,ad ertising, and healthcare) ?he auto industr2 spends Q& to Q&* /illion e er2 2ear on research and product de elopment S


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manufacturing sectors,it is a maDor dri er of the &&)+Y manufacturing contri/ution to G7 ) .ithout theauto sector, it is difficult to imagine manufacturing sur i ing in this countr2)

Auto manufacturing "ey to econ. 0ital to 7o( gro!tFill et al $9. -ustaina/le ?ransportation and Communities Group and roDect ead, roDect 3anager of the center for automoti e research,Research Associate at the center for automoti e research, (Vim, 7e//ie 3en1, Adam Cooper, Contri/ution of the Automoti e >ndustr2 to the@conomics of All Fift2 -tates and the nites -tates#, http %%www)oesa)org%7oc6Mault%>ndustr26>nformation6Anal2sis%CAR6@conomic6-ignificance6Report)pdf8) ?he economic performance of the automoti e sector, and the /roader manufacturing sector, is e5tremel2important for the continued de elopment and growth of the national and regional economies, as itcomprises a large share of total )-) output (see Figures &)' and &)$ ) At the end of '88*, )-) automoti e output was ')'Y ofG7 , and o erall manufacturing contri/uted &&)+Y to G7)?he siIea/le contri/ution toeconomic output /2 the manufacturing industr2 is attri/uta/le to se eral factors, includinginternational trade opportunities that allow for the e5port of highl2 specialiIed manufacturedproducts) 3an2 of these products are high alue6added goods that are made through the use of s1illed la/orers and ad anced eEuipment)?hecomple5it2 of ma1ing these products contri/utes to the large Do/6creating multiplier effect ofmanufacturing within the )-)

Automoti0e industry is 0ital to t e econ and manufacturing3

Fill et al $9. -ustaina/le ?ransportation and Communities Group and roDect ead, roDect 3anager of the center for automoti e research,Research Associate at the center for automoti e research, (Vim, 7e//ie 3en1, Adam Cooper, Contri/ution of the Automoti e >ndustr2 to the@conomics of All Fift2 -tates and the nites -tates#, http %%www)oesa)org%7oc6Mault%>ndustr26>nformation6Anal2sis%CAR6@conomic6-ignificance6Report)pdf8) ?he automoti e industr2 is a er2 important industr2 in the )-) econom2Kno other single industr2 lin1s asclosel2 to the )-) manufacturing sector or directl2 generates as much retail /usiness and o erall emplo2ment)3anufacturing has /eenthe /ac1/one of the American econom2, and the automoti e industr2 is its heart) A loo1 at the entireproduction and suppl2 chain pro ides a rich narrati e of how a strongautomoti e industr2 historicall2 supports thegrowth and sta/ilit2 of man2 other industries, such as /asic materials suppliers of steel, plastic,ru//er and glass, which are used for ma1ing /odies, interiors and trim, tires, gas1ets and windows) Figure &) pro ides a comparison of the alue added per emplo2ee (measured in thousands of dollars per 2ear across se eralmanufacturing industries) ?he alue added per emplo2ee can /e thought of as the difference /etween the cost of materials and the sale price of thegood) @ffecti e deplo2ment of land, la/or, and capital create alueKin '88 , each emplo2ee in the motor ehicleassem/l2 industr2 created Q$'&,888 of alue in the final products shippedK fourth highestamongst manufacturing industries) An econom2 is reinforced /2 the siIe and Do/ creatingcapa/ilit2 of its manufacturing /ase) .ithin the /road manufacturing landscape of the )-), few industries are aslarge or pro ide so man2 indirect and ancillar2 opportunities for Do/ creation as the motor ehicle industr2 ) Figure &)+ highlights the sheer siIe of the motor ehicle assem/l2 and parts manufacturing industr2 which is the secondlargest emplo2er within the su/set of manufacturing) -ome industries inherentl2 create more Do/s than other industries) A high Do/screation multiplier tends to /e associated with industries that reEuire large amounts of inputsfrom other industries, source inputs from industries that ha e a high regional purchasecoefficient, or pa2 a/o e a erage wages)

Auto sector "ey to mo(ility and trade3Fill et al $9. -ustaina/le ?ransportation and Communities Group and roDect ead, roDect 3anager of the center for automoti e research,Research Associate at the center for automoti e research, (Vim, 7e//ie 3en1, Adam Cooper, Contri/ution of the Automoti e >ndustr2 to the@conomics of All Fift2 -tates and the nites -tates#, http %%www)oesa)org%7oc6Mault%>ndustr26>nformation6Anal2sis%CAR6@conomic6-ignificance6Report)pdf8) .hile not included in the economic modeling of the impact anal2sis,the manufacture of medium and hea 2 dut2 truc1sand parts is a 1e2 component of the motor ehicle industr2 , and here we pro ide an o er iew of the acti it2 of thissu/6sector of the industr2) 3edium dut2 truc1s include Classes $ to (&8,888 to ' ,888 l/s) and hea 2 dut2 truc1s include Classes to * (' ,88& too er $$,888 l/s )Currentl2 there are o er &8) million medium and hea 2 truc1s registered in the

nited -tates ) ' ?ogether, the medium dut2 and hea 2 dut2 truc1 mar1ets in the nited -tatessell $$,' $ units annuall2 $ and ha e a alue of Q&'+)+ /illion) Of the total )-) sales, o er

'8,888 are domesticall2 produced ehicles and nearl2 &$,888 are imported ehicles)?henited -tates is the largest medium and hea 2 dut2 truc1 mar1et in the world,accounting for $)+Y of the

world mar1et, followed /2 the Asia6 acific region with $8)*Y of the mar1et and @urope with &:) Y of the mar1et) + Figure &)< illustrates the
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distri/ution of the glo/al medium and hea 2 truc1 mar1et) ?he medium and hea 2 dut2 ehicles comprise slightl2 less than )+Y of all motor ehiclesales, with medium dut2 truc1s accounting for o er '+8,888 sales and hea 2 dut2 truc1s accounting for o er &*8,888 sales annuall2) primaril2 of class$ ehicles (o er +$Y of units sold while the hea 2 dut2 ehicle mar1et consists primaril2 of on6road interstate truc1s in the Class * categor2 (o er :$Yof units sold ) : ?a/le &)& contains sales data pertaining to the nited -tates truc1 mar1et) ?he annual production and sales of this class of ehicle arehighl2 c2clical)?he hea 2 dut2 ehicle sector, similar to that of light dut2 ehicles, is affected /2 theeconomic forces of the general econom2, /ut its c2cles are also affected /2 go ernmental regulation) 3ost recentl2, Class * salesha e /een on a downward trend since '88 , when their sales pea1ed at o er '*8,888 units) ?he pea1 was led /2 a need to replace the fleet of Class *rigs as the2 aged and /2 operators who wanted to purchase ehicles /efore new @ A pollution regulations on diesel engines too1 effect in that 2ear)-ince '88 , annual sales fell to Dust o er &+8,888 in '88: and continued to decrease to around &$$,888 units in '88*, similar to sales num/ers from'88& to '88$) < )-) production of hea 2 dut2 truc1s ranges from '88,888 to $88,888 units annuall2 with assem/l2 facilities emplo2ing Dust o er ' ,888 in '88n man2 states,large num/ers of Do/s are generated due to the state"s pro5imit2 to manufacturing or technical facilities located in a neigh/oring state) All states see maDoradditional impact from su/stantial num/ers of spin6off Do/s resulting from the spending of direct and indirectemplo2ees of the industr2)?he automoti e industr2 is a mature industr2 , with assem/l2 and parts manufacturing plants wellesta/lished throughout most of the states east of the 3ississippi, as seen in Figure ')&, which shows the top states for O@3 emplo2ment, as apercentage of state population) 3an2 states in the 3idwest are well 1nown for supporting a strong /ase ofmanufacturing) ?he entire 3idwest is connected /2 a strong and efficient networ1 of road andrail s2stems) ?his transportation integration pro ides intra6state and inter6state options forsourcing intermediate goods and supplies to manufacturing operations)>t is this /road, efficientnetwor1 ofsuppliers (located across man2 states which leads to the dispersion of total emplo2ment contri/utionsfrom manufacturing operations to all areas of the nation) Figure ')' /elow shows the impact of emplo2ment in theindustr2 for motor ehicle assem/lers, parts, s2stems and components manufacturers, motor ehicle dealerships, and the suppliers to these operations)?his map does not include e5penditure6induced emplo2ment) >t is a portra2al of the direct impacts of emplo2ment and suppliers to the industr2) As can /e seen, the industr2 pro ides significant num/ers of Do/s to e er2 state in the nation)@ach indi idual state"s economic impactis one effect of the total contri/ution of the industr2 to the nation)?hat is, Do/s in one state arenot onl2 attri/uta/le to in estment in that state, /ut are supported /2 the auto industr2"sin estments and acti ities in near/2 states as well) ?herefore, an emplo2ment multiplier is not calculated for an2 indi idualstate)@mplo2ment multipliers appl2 to the national econom2 and are not applica/le to, nor can /e deri edfrom, an2 one state"s econom2
http://www.oesa.org/Doc-Vault/Industry-Information-Analysis/CAR-Economic-Significance-Report.pdf0http://www.oesa.org/Doc-Vault/Industry-Information-Analysis/CAR-Economic-Significance-Report.pdf0http://www.oesa.org/Doc-Vault/Industry-Information-Analysis/CAR-Economic-Significance-Report.pdf0http://www.oesa.org/Doc-Vault/Industry-Information-Analysis/CAR-Economic-Significance-Report.pdf0http://www.oesa.org/Doc-Vault/Industry-Information-Analysis/CAR-Economic-Significance-Report.pdf0http://www.oesa.org/Doc-Vault/Industry-Information-Analysis/CAR-Economic-Significance-Report.pdf0


17/95

..Mexico Econ

Auto manufacturing is "ey to t e Mexican economy Rosas) $2 S 3aria Cristina, rofessor and researcher in the olitical and -ocial -ciences Facult2, !ational Autonomous ni ersit2 of 3e5ico(-uccess in 3otion,# !egocios ro 3e5ico, 3a2 '8&',http %%www)prome5ico)go/)m5%wor1%models%prome5ico%prom5J3agaIine%'&%pdfFileJ'&J!@8+&'J.@BJ- R@A7-)pdf?he importance of the automoti e industr2 for 3e5ico"s econom2 is unEuestiona/le) ?he sectorcontri/utes $) Y of the Gross 7omestic roduct (G7 ,'8)$Y of manufacturing G7 and '*) Y of the countr2"smanufacturinge5ports) >t is also one of the largest emplo2ers with o er 9)999 direct andindirect 7o(s3 ?he outloo1 for the 3e5ican automoti e industr2 in the short term is positi e) >t is estimated that in '8&', '): million ehicles will /e produced and domestic sales will reach appro5imatel2 n '8&8, 3e5ico was the ninth largest carproducer in the world and ser ed as an e5port platform for man2 of the maDor car manufacturers and their suppliers)B2 '8&&,3e5ico stood in eighth place among the top glo/al automoti e manufacturers)>nno ation is a 1e2 factorfor generating new technologies and intelligent solutions to address challenges such as protecting the en ironment) ?he training of human capital inthis new scenario is essential to strengthen the sustaina/ilit2 and competiti eness of /usinesses, the creation of Do/s and the impro ement of people"sincome and Eualit2 of life) >n that sense, aware of the opportunities this scenario generates and considering the installed capacit2 in addition to thehuman and material resources that the countr2 possesses, the 3e5ican authorities are read2 to enture into new product de elopment, meeting thereEuired Eualit2 le els to ensure thatt e automoti0e industry remains a (ac"(one of nationalde0elopment3


18/95

..Feg

8 e auto industry is 0ital to egemony and con;uering 2$ st century ri0als-lar") =5 6 retired Arm2 general and former supreme allied commander of !A?O, is a senior fellow at the Bur1le Center for >nternationalRelations at the ni ersit2 of California at os Angeles) (.esle2 V), .hat"s Good for G)3) >s Good for the Arm2#, !ew or1 ?imes, !o em/er & ,'88*, http %%www)n2times)com%'88*%&&%& %opinion%& clar1)htmlWJrZ$ %%CH A3@R>CA"- automo/ile industr2 is in desperate trou/le) Financial insta/ilit2, the credit sEueeIe and closed capital mar1ets are hurting domesticautoma1ers, while decades of competition from foreign producers ha e eroded mar1et share and consumer lo2alt2) -ome economists Euestion the wisdom of .ashington"s inter ening to help the Big ?hree, arguing that the automa1ers should pa2 the price for their own mista1es or that the mar1et will correct itself) But we must actaiding t e American automo(ile industry is not onl2 an economic imperati e, /ut also a national security imperati0e ) W en resident 7wight Eisen o!er o(ser0ed that Americas greatest strengt !asnt its military) (ut its economy) e must a0e adcompanies li"e < eneral M otors and @ord in mind3 -itting atop a ast p2ramid of tool ma1ers, steel producers, fa/ricatorsand component manufacturers, t ese companies not only produced t e tan"s and truc"s t at

elped !in World War >>) (ut also lent t eir tec nology to aircraft and s ipmanufacturing3 8 e ?nited States truly (ecame t e arsenal of democracy3 /uringt e $I 9s) ad ances in a iation, missiles, satellites and electronics made 7etroit seem a little old6fashioned in dealing with the threat of the-o iet nion)8 e Armys re;uests for ne! truc1s and other /asic transportation usually came out

a loser in (udget (attles against missile tec nolog2 and newmodifications for t e latestsupersonic 7et fig ter ) !ot onl2 were airplanes far se5ier /ut the2 also counted as part of our militar2 tooth,# while much of the landforces" needs were tail)# And in those da2s, more teeth, less tail# had /ecome a 1e2 concept in militar2 spending)#ut in $II$) t e&ersian


19/95

..J8K Feg

8 e auto industry is 0ital to egemony for se0eral reasons D

a3 Aerospace D t e auto industry fuels t e industrial (aseRonis) 9H S h)7, arge social s2stem /eha ior, 7istinguished Fellow and Mision .or1ing Group leader of the Congressionall2 mandatedroDect on !ational -ecurit2 Reform ( !-R , resident of ?he ni ersit2 Group, >nc), a management consulting firm and thin1 tan1 specialiIing in

strategic management, isioning, national securit2, and pu/lic polic2) (-helia R), @rosion of the )-) >ndustrial Base and i ts !ational -ecurit2>mplications#, Nul2 &:, '88 , http %%www)uscc)go %hearings%'88 hearings%writtenJtestimonies%8 J8:J&:wrts%ronisJstatement)pdf %%CH+ffs oring t e auto industry could ma"e t e ?3S3 military industrial (ase in the nited-tates completel2 una(le to comply !it American preference legislation (ecause theerosion of t e auto industrial (ase also erodes defense ) General 3otors, Ford, 7elphi, !orthrop6Grumman, Boeing, oc1heed 3artin S the2 all share the /ottom of the industrial /ase)8 e ?nited States cannot sustaint e "ind of gro!t it as en7oyed for the last se eral decadesif t e industrial (ase continues tosteadil2 erode3 >ncreasingl2, a num/er of ?3S3 companies in specific industries find it impossi(leto compete in !orld mar"ets )8 is is of particular concern for t e industrial (aset at supplies t e ?3S3 military) automoti0e and aerospace3 According to Alan ?onelson of the )-)Business and >ndustr2 Council, import penetration rate data is a critical metric that the )-) Go ernment needs to trac1, /ut does not) According to?onelson and eter Vim in aWashington Times article, in recent 2ears most industries producing goods in t e?nited States a0e (een steadil2losing t eir ome mar"et S the world"s /iggest, most important and mostcompetiti eD to products from o0erseas3 >n other words, numerous )-) industries are facing t e 1ind of importtide t at as pus ed < eneral M otors and @ord dangerously close to recei0ers ip ) 3oreo er)t is !ea"ness s o!s up in so6called smo"estac" and ig .tec industries ali"e )?nlesst is rising import penetration is re0ersed) t e nations long.time glo(al industrial leaders ipand all t e (enefits it as generated !ill (e irretrie0a(ly lost3

(3 Na0al po!er D t e auto industry sustains pro7ects t at are 0ital to !arfig tingcapa(ility +NR 9I S@5ecuti e /ranch agenc2 within the 7epartment of 7efense, the Office of !a al Research (O!R supports the resident s /udget) O!R pro ides technical ad ice to the Chief of !a al Operations and the -ecretar2 of the !a 2) (Office of !a al Research, O!R artners with Car >ndustr2 to?est @nerg26@fficient Mehicles#, 3arch &*, '88t s great to see people dri e /2 me, gi ing me the thum/ s up,and as1ing .here can > get oneW @uel cell 0e icle researc is clearl2a case ! ere t e Na0y andMarine -orps needs are propelling ad anced tec nology t at also as potential (enefit tot e pu(lic)O said Rear Adm) !e in Carr, chief of na al research) .ithin the !a 263arine Corps ?eam, +NR as researc edpo!er and energy tec nology for decades3 +ften the impro0ements to power generation and fuelefficienc2 for ships, aircraft, ehicles and installations a0e direct ci0il application for pu(lic (enefit ) ?here is nota drop of oil in it, e5plained -had Balch, a G3 representati e at Camp endleton) ?he electric motor pro ides ma5imum instant torEue right from theget go) ?he efficienc2 of a h2drogen6powered fuel cell ma2 pro e to /e twice that of an internal com/ustion engine, if not greater, added Balch) From

an operational perspecti e, the fuel cell ehicle is Euiet 2et powerful, emits onl2 water apor, uses fewer mo ing parts compared to a com/ustion engineand offers an alternati e to the logistics chain associated with current militar2 ehicles)8 e addition of fuel cell 0e icles toCamp endletonpro0ides a glimpse into t e future of ad ancedtransportation tec nology t atreduces reliance on petroleum and affords en ironmental stewardship /enefits such asreduced air pollution and a smaller car(on footprint for !a 2 and 3arine Corps /ases) &artnering !it t emilitary gi0es us critical feed(ac" from a trul2 uniEue application) 8 is !ill elp us as !e engineerour ne5t generation of fuel cell 0e icles) #alc 4) a


20/95

of where t e 0alue of in0estment in science and tec nology can really pay off , said Carlin)Besides the potential energ2 sa ings and increased power potential of fuel cell technolog2,t e researc and testing we are doing

!ill address c allenges li"e ydrogen production and deli0ery) dura(ility andrelia(ility) on (oard ydrogen storage and o0erall cost ) For e5ample, through its testing+NR asmade ad0ances in the storage necessar2 for ac ie0ing greater range in fuel cell automo(iles3 7a e -hifler, the program officer managing the alternati e fuels initiati es at O!R, emphasiIes that partnerships are essential when /ringing a new

technolog2 forward3 OWit t e rig t partners ips) you can accomplis almost anyt ing)Ostressed -hifler) OWe a0e teamed !it t e Army from t e (eginning on this research, s aringtec nical support) contracting support and usage of t e s Good for the Arm2#, !ew or1 ?imes, !o em/er & ,'88*, http %%www)n2times)com%'88*%&&%& %opinion%& clar1)htmlWJrZ$ %%CH!ow, though, as 7etroit mo es to plug6in h2/rids and electric6dri e technolog2, the scale pro/lem can /e remedied) Automa"ers arede0eloping inno0ati0e electric motors) many !it permanent magnet tec nology)t at !ill a0e immediate military use3 And only t e auto industry) !it its 0astpurc asing po!er) is a(le to esta(lis a domestic ad0anced (attery industry3

i"e!ise) domestic fuel cell production which will undou/tedl2 ha e man2 critical militar2 applications depends on a 0i(rant car industry ) ?o /e sure, the pu/lic should demand transformation and new standards in the autoindustr2 /efore pa2ing to 1eep it ali e) And we should insist that 7etroit"s goals include putting America in first place in h2/rid and electric automoti etechnolog2, reducing the emissions of the countr2"s transportation fleet, and strengthening our competiti eness a/road) ?his should /e no gi eawa2)>nstead, it is a historic opportunit2 to get it right in 7etroit for the good of the countr2) But Americans must (ear in mindt at any federal assistance plan !ould not (e 7ust an economic measure3 8 is is)fundamentally) a(out national security3
http://www.nytimes.com/2008/11/16/opinion/16clark.html?_r=3http://www.nytimes.com/2008/11/16/opinion/16clark.html?_r=3http://www.nytimes.com/2008/11/16/opinion/16clark.html?_r=3


21/95

..Semiconductors

8 e auto sector is 0ital to semiconductor tec gro!tFill et al $9. -ustaina/le ?ransportation and Communities Group and roDect ead, roDect 3anager of the center for automoti e research,Research Associate at the center for automoti e research, (Vim, 7e//ie 3en1, Adam Cooper, Contri/ution of the Automoti e >ndustr2 to the@conomics of All Fift2 -tates and the nites -tates#, http %%www)oesa)org%7oc6Mault%>ndustr26>nformation6Anal2sis%CAR6@conomic6-ignificance6Report)pdf8) ?he auto industr2 is one of the most important industries in the nited -tates) >t historicall2hascontri/uted $ S $)+ percent to the o erall Gross 7omestic roduct (G7 )?he industr2 directl2emplo2s o er &): million people engaged in designing, engineering, manufacturing, andsuppl2ing parts and components to assem/le, sell and ser ice new motor ehicles) >n addition,theindustr2 is a uge consumer of goods and ser0ices from man2 other sectors, including raw materials, construction, machiner2, legal, computers andsemi.conductors , financial, ad ertising, and healthcare)?he autoindustr2 spends Q& to Q&* /illion e er2 2ear on research and product de elopment S


22/95

..J8K Semiconductors

Semiconductors "ey to sol0e t e en0ironment D a,ardous !aste controlFoffman et al3 I S Hoffman, rofessor of @n ironmental @ngineering and @n ironmental Chemistr2K 3artin, rofessor of@n ironmental Chemistr2 at Har ardK Choi, h)7) rofessor) -chool of @n ironmental -cience U @ngineering) ohang ni ersit2 of -cience and?echnolog2K Bahnemann, Head of the 7epartment of hotoelectrochemistr2 and 3aterial Research at the >nstitute for -olar @nerg2 Research inHanno er (3ichael R) Hoffmann,\ -cot ?) 3artin, .on2ong Choi, and 7etlef .) Bahnemann, @n ironmental Applications of -emiconductor

hotocatal2sis#,Chemistry Review , &


23/95

..Steel

Gey to steel industry Agence @rance &resse) 9I (Glo/al steel industr2 awaits China, - auto turnaround#, April &', e5is

-teel is on edge and the glo/al industr2 is cutting /ac1 hard, hanging on for either a /udget /last from China, new credit for ast3iddle @astern /uilding schemes or resurrection of the - auto industr2 ) 7emand has dwindled andsteelma1ers, nota/l2 the giant of them all, Arcelor3ittal, are damping down surplus furnacecapacit2 while waiting for credit toflow, construction cranes to turn and factories to roll) A decision /2 Arcelor3ittal last wee1 to pursue temporar2 production cut/ac1s, slashing@uropean output /2 more than half from the end of April according to a union source, dramatises the e5traordinar2 ride and role of steel in the last few 2ears) >n Dust months the glo/al industr2 has gone from a /oom dri en largel2 /2 China, emerging mar1ets and a propert2 e5tra aganIa in the 3iddle@ast to a narrow line /etween e5cess capacit2 and the costs of waiting for reco er2) O er the past si5 months, demand forsteel has dropped dramaticall2 and, as a result, producers ha e /een cutting production, anal2sts atBarcla2s Capital said in a stud2 last wee1) >n another report, 3organ -tanle2 predicted the current demand shoc1 to lead toe5cess steel capacit2) ConseEuentl2, the /an1 said, steel plants should operate at rates /elow :+percent of capacit2 until '8&') ?he steel mar1et is not er2 different from /ase metals as a whole, /ut steel has reacted more rapidl2and dramaticall2 since -eptem/er, said commodities anal2st errine Fa2e of ondon6/ased Fast3ar1ets)-he said the future of thesteel industr2 depended on three factors 66 the impact of Chinese economic stimulus efforts, a pic16up in the 3iddle @ast constructionsector and

a re i al of the once might2 - auto industr2 ) Chinese imports and e5ports are at a standstill) @ er2one is waiting

for the Chinese stimulus pac1age to see if it will re i e demand) ?he Chinese go ernment last month announced a four6trillion62uan (+*86/illion6dollar pac1age of measures that it said could contri/ute &)+ to &)< percent to the countr2 s economic growth) >ndustr2 e5perts ha e meanwhile spo1enoptimisticall2 of China s prospects) ?homas Al/anese, chief e5ecuti e at steel ma1er Rio ?into, said earlier this 2ear that the compan2 foresaw a short,sharp slowdown in China, with demand re/ounding o er the course of '88t isencouraging that the in entor2 of steel products, especiall2 long products, which are mostl2 used in construction proDects, ha e started to fall (since theend of 3arch , li1el2 suggesting that end6demand is gathering momentum, Fran1 Gong, a Hong Vong6/ased economist for N 3organ, wrote in aresearch note) On6the6ground e idence suggested that the Chinese industr2 had /een re6stoc1ing in the first two months of the 2ear, followed /2 apause in 3arch /efore maDor infrastructure proDects were e5pected to start in the second Euarter, Gong wrote) >n the 3iddle @ast, according to Fa2e,the /ig pro/lem is a shortage of credit, nota/l2 for real estate de elopers and /uilders) Construction planners had counted on a higher price for oil andon credit to finance their huge proDects) >n addition, demand for such facilities, especiall2 in the Gulf, has died) ?he2 were hoping that Americans and@uropeans would /u2 apartments) But propert2 prices ha e collapsed in the 3iddle @ast as well) >n the nited Ara/ @mirates more than half the /uilding proDects, worth +*' /illion dollars or + per cent of the total alue of the construction sector, ha e /een put on hold, a stud2 /2 7u/ai6/asedmar1et research group roleads found in Fe/ruar2) >n 7u/ai, one of the states of the A@, prices in the real estate sector ha e slumped /2 an a erageof '+ percent from their pea1 in -eptem/er after rall2ing :< percent in the &* months to Nul2 '88*, according to 3organ -tanle2)Fa2e said thefate of the steel sector was in addition tied to that of the struggling - auto industr2, once athri ing steel mar1et /ut one in which two of its giant pla2ers, General 3otors and Chr2sler, arestaring at /an1ruptc2) ?he two companies are currentl2 limping along than1s to /illions ofdollars in go ernment aid) .e are waiting to see if the auto sector in the - will get out of thecrisis intact, she said)

American steel industry is "ey to ?S infrastructure) energy de0elopment)and t e military &rice et al) $9 (Alan H), law2er at .ile2 Rein and head of the firm"s international trade practice, \and ?imoth2 C) Bright/ill, N7, AdDunct

rofessor of aw at Georgetown ni ersit2 and a partner at .ile2 Rein , \and Christopher B) .eld, law2er at .ile2 Rein, \and ?essa M) Capeloto,law2er at .ile2 Rein, Octo/er '8&8, ?he Reform 32th How China is sing -tate ower to Create the .orld"s 7ominant -teel >ndustr2,#http %%www)steel)org%]%media%Files%A>->%GeneralY'87ocs%reformY'8m2th)ash5, 7NH>n estments li1e the Anshan in estment alsoraise national securit2 concerns) ?he )-) steelsector pla2s a critical role in our national defense, and in /uilding and maintaining the nation scritical infrastructure) ?he Anshan transaction could pro ide the Chinese go ernment with directaccess to, and information concerning, current and future )-) infrastructure, energ2 anddefense proDects that ma2 /e critical to national defense) 3oreo er, as Anshan itself has ac1nowledged,thein estment could pro ide the Chinese go ernment with potential new technologies in the steelproduction industr2 )

ExtinctionGagan) L . senior fellow at the Carnegie @ndowment for >nternational eace (Ro/ert, @nd of 7reams, Return of Histor2#, :%&


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?his is a good thing, and it should continue to /e a primar2 goal of American foreign polic2 to perpetuate this relati el2 /enign internationalconfiguration of power) ?he unipolar order with the nited -tates as the predominant power is una oida/l2 riddled with flaws and contradictions) >tinspires fears and Dealousies) ?he nited -tates is not immune to error, li1e all other nations, and /ecause of its siIe and importance in the internationals2stem those errors are magnified and ta1e on greater significance than the errors of less powerful nations) Compared to the ideal Vantian internationalorder, in which all the world s powers would /e peace6lo ing eEuals, conducting themsel es wisel2, prudentl2, and in strict o/eisance to internationallaw, the unipolar s2stem is /oth dangerous and unDust) Compared to an2 plausi/le alternati e inthe real world, howe er, it is relati el2 sta/le and less li1el2 to produce a maDor war /etweengreat powers) >t is also comparati el2 /ene olent, from a li/eral perspecti e, for it is more conduci e to the principles of economic and politicalli/eralism that Americans and man2 others alue) American predominance does not stand in the wa2 of progress toward a /etter world,therefore) >tstands in the wa2 of regression toward a more dangerous world) ?he choice is not /etween an American6dominated order and a world that loo1s li1e the @uropean nion) ?hefuture international order will /e shaped /2 those who ha e the power to shape it) ?he leaders of a post6 American world will not meet in Brussels /ut in BeiDing, 3oscow, and .ashington) ?he return of great powers and great games >f the world is mar1ed /2 the persistence of unipolarit2, it is ne ertheless also /eing shaped /2 the reemergence of competiti e national am/itions of the 1ind that ha e shapedhuman affairs from time immemorial) 7uring the Cold .ar, this historical tendenc2 of great powers to Dostle with one another for status and influenceas well as for wealth and power was largel2 suppressed /2 the two superpowers and their rigid /ipolar order) -ince the end of the Cold .ar, the nited-tates has not /een powerful enough, and pro/a/l2 could ne er /e powerful enough, to suppress /2 itself the normal am/itions of nations) ?his doesnot mean the world has returned to multipolarit2, since none of the large powers is in range of competing with the superpower for glo/al influence)!e ertheless, se eral large powers are now competing for regional predominance, /oth with the nited -tates and with each other) !ational am/itiondri es China s foreign polic2 toda2, and although it is tempered /2 prudence and the desire to appear as unthreatening as possi/le to the rest of the world,the Chinese are powerfull2 moti ated to return their nation to what the2 regard as itstraditional position as the preeminent power in @ast Asia) ?he2 do not share a @uropean, postmodern iew that poweris pass4K hence their now two6decades6long militar2 /uildup and moderniIation) i1e the Americans, the2 /elie e power, including militar2 power, is agood thing to ha e and that it is /etter to ha e more of it than less) erhaps more significant is the Chinese perception, also shared /2 Americans, thatstatus and honor, and not Dust wealth and securit2, are important for a nation)Napan, meanwhile, which in the past could ha e /een counted as anaspiring postmodern power 66 with its pacifist constitution and low defense spending 66now appears em/ar1ed on a moretraditional national course) artl2 this is in reaction to the rising power of China and concernsa/out !orth Vorea s nuclear weapons) But it is also dri en /2 Napan s own national am/ition to /e a leader in @ast Asia or at leastnot to pla2 second fiddle or little /rother to China) China and Napan are now in a competiti e Euest with each tr2ing to augment its own status andpower and to pre ent the other s rise to predominance, and this competition has a militar2 and strategic as well as an economic and politicalcomponent) ?heir competition is such that a nation li1e -outh Vorea, with a long unhapp2 histor2 as a pawn /etween the two powers, is once again worr2ing /oth a/out a greater China and a/out the return of Napanese nationalism) As Aaron Fried/erg commented, the @ast Asian future loo1s moreli1e @urope s past than its present) But it also loo1s li1e Asia s past)Russian foreign polic2, too, loo1s more li1e something from thenineteenth centur2) >tis /eing dri en /2 a t2pical, and t2picall2 Russian, /lend of national resentmentand am/ition ) A postmodern Russia simpl2 see1ing integration into the new @uropean order, the Russia of Andrei VoI2re , would not /etrou/led /2 the eastward enlargement of the @ and !A?O, would not insist on predominant influence o er its near a/road, and would not use itsnatural resources as means of gaining geopolitical le erage and enhancing Russia s international status in an attempt to regain the lost glories of the-o iet empire and eter the Great) But Russia, li1e China and Napan, is mo ed /2 more traditional great6power considerations, including the pursuit ofthose alua/le if intangi/le national interests honor and respect) Although Russian leaders complain a/out threats to their securit2 from !A?O and the

nited -tates, the Russian sense of insecurit2 has more to do with resentment and national identit2 than with plausi/le e5ternal militar2 threats) &Russia s complaint toda2 is not with this or that weapons s2stem) >t is the entire post6Cold .ar settlement of the &ndian Ocean and sees itself, correctl2, as an emerging great power onthe world scene) >n the 3iddle @ast there is >ran, which mingles religious fer or with a historical sense of superiorit2 and leadership in its region) &: >tsnuclear program is as much a/out the desire for regional hegemon2 as a/out defending >ranian territor2 from attac1 /2 the nited -tates) @ en the@uropean nion, in its wa2, e5presses a pan6@uropean national am/ition to pla2 a significant role in the world, and it has /ecome the ehicle forchanneling German, French, and British am/itions in what @uropeans regard as a safe supranational direction) @uropeans see1 honor and respect, too, /ut of a postmodern ariet2) ?he honor the2 see1 is to occup2 the moral high ground in the world, to e5ercise moral authorit2, to wield political andeconomic influence as an antidote to militarism, to /e the 1eeper of the glo/al conscience, and to /e recogniIed and admired /2 others for pla2ing thisrole) >slam is not a nation, /ut man2 3uslims e5press a 1ind of religious nationalism, and the leaders of radical >slam, including al Paeda, do see1 toesta/lish a theocratic nation or confederation of nations that would encompass a wide swath of the 3iddle @ast and /e2ond) i1e national mo ementselsewhere, >slamists ha e a 2earning for respect, including self6respect, and a desire for honor) ?heir national identit2 has /een molded in defianceagainst stronger and often oppressi e outside powers, and also /2 memories of ancient superiorit2 o er those same powers) China had its centur2 ofhumiliation) >slamists ha e more than a centur2 of humiliation to loo1 /ac1 on, a humiliation of which >srael has /ecome the li ing s2m/ol, which is

partl2 wh2 e en 3uslims who are neither radical nor fundamentalist proffer their s2mpath2 and e en their support to iolent e5tremists who can turnthe ta/les on the dominant li/eral .est, and particularl2 on a dominant America which implanted and still feeds the >sraeli cancer in their midst)Finall2, there isthe nited - tates itself) As a matter of national polic2 stretching /ac1 across numerous administrations, 7emocratic andRepu/lican, li/eral and conser ati e, Americans ha e insisted on preser ing regional predominance in @ast AsiaK the 3iddle @astK the .esternHemisphereK until recentl2, @uropeK and now, increasingl2, Central Asia) ?his was its goal after the -econd .orld .ar, and since the end of the Cold .ar, /eginning with the first Bush administration and continuing through the Clinton 2ears, the nited -tates did not retract /ut e5panded itsinfluence eastward across @urope and into the 3iddle @ast, Central Asia, and the Caucasus) @ en as it maintains its position as the predominant glo/alpower, itis alsoengaged in hegemonic competitions in these regions with China in @ast and Central Asia, with >ran in the 3iddle @ast and Central Asia, and with Russia in @astern @urope, Central Asia, and the Caucasus) ?he nited -tates, too, is more of a traditional than a postmodern power, and though Americans are loath toac1nowledge it, the2 generall2 prefer their glo/al place as !o) & and are eEuall2 loath to relinEuish it) Once ha ing entered a region, whether forpractical or idealistic reasons, the2 are remar1a/l2 slow to withdraw from it until the2 /elie e the2 ha e su/stantiall2 transformed it in their own image)


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?he2 profess indifference to the world and claim the2 Dust want to /e left alone e en as the2 see1 dail2 to shape the /eha ior of /illions of people aroundthe glo/e) ?he Dostling for status and influence among these am/itious nations and would6/e nations is a second defining feature of the new post6Cold .ar international s2stem) !ationalism in all its forms is /ac1, if it e er went awa2,and so is internationalcompetition for power, influence, honor, and status) American predominance pre ents theseri alries from intensif2ing 66 its regional as well as its glo/al predominance) .ere the nited - tatesto diminish its influence in the regions where it is currentl2 the strongest power, the othernations would settle disputes as great and lesser powers ha e done in the past sometimes throughdiplomac2 and accommodation /ut often through confrontation and wars of ar2ing scope, intensit2, and destructi eness)Oneno el aspect of such a multipolar world is that most of these powers would possess nuclear weapons ) ?hat could ma1e wars /etween them less li1el2, or it could simpl2 ma1e them morecatastrophic) >t is eas2 /ut also dangerous to underestimate the role the nited -tates pla2s in pro iding a measure of sta/ilit2 in the world e en as it also disrupts sta/ilit2)For instance, the nited -tates is the dominant na al power e er2where, such that other nations cannot compete with it e en in their home waters)?he2 either happil2 or grudgingl2 allow the nited -tates !a 2 to /e the guarantor of international waterwa2s and trade routes, of international accessto mar1ets and raw materials such as oil) @ en when the nited -tates engages in a war, it is a/le to pla2 its role as guardian of the waterwa2s) >n amore genuinel2 multipolar world, howe er, it would not) !ations would compete for na al dominance at least in their own regions and possi/l2 /e2ond)Conflict /etween nations would in ol e struggles on the oceans as well as on land) Armedem/argos, of the 1ind used in .orld .ar i and other maDor conflicts, would disrupt trade flowsin a wa2 that is now impossi/le) -uch order as e5ists in the world rests not merel2 on the goodwill of peoples /ut on a foundationpro ided /2 American power) @ en the @uropean nion, that great geopolitical miracle, owes its founding to American power, for without it the@uropean nations after .orld .ar ii would ne er ha e felt secure enough to reintegrate German2) 3ost @uropeans recoil at the thought, /ut e en toda2 @urope s sta/ilit2 depends on the guarantee, howe er distant and one hopes unnecessar2,that the nited - tates

could step in to chec1 an2 dangerous de elopment on the continent) >n a genuinel2 multipolar world, that would not /e possi/le without renewing the danger of !orld !ar3 eople who /elie e greatereEualit2 among nations would /e prefera/le to the present American predominance often succum/ to a /asic logical fallac2) ?he2 /elie e the order the world enDo2s toda2 e5ists independentl2 of American power) ?he2 imagine that in a world where American power was diminished, the aspects ofinternational order that the2 li1e would remain in place) But that s not the wa2 it wor1s) >nternational order does not rest on ideas and institutions) >t isshaped /2 configurations of power) ?he international order we 1now toda2 reflects the distri/ution of power in the world since .orld .ar ii, andespeciall2 since the end of the Cold .ar) A different configuration of power, a multipolar world in which the poles were Russia, China, the nited-tates, >ndia, and @urope, would produce its own 1ind of order, with different rules and norms reflecting the interests of the powerful states that wouldha e a hand in shaping it) .ould that international order /e an impro ementW erhaps for BeiDing and 3oscow it would) But it is dou/tful that it wouldsuit the tastes of enlightenment li/erals in the nited -tates and @urope) ?he current order, of course, is not onl2 far from perfect /ut also offers noguarantee against maDor conflict among the world s great powers)@ en under the um/rella of unipolarit2, regionalconflicts in ol ing the large powers ma2 erupt) .ar could erupt /etween China and ?aiwananddraw in /oth the nited -tates and Napan) .ar could erupt /etween Russia and Georgia, forcing the nited -tates and its @uropeanallies to decide whether to inter ene or suffer the conseEuences of a Russian ictor2) Conflict /etween >ndia and a1istanremainspossi/le, as does conflict /etween >ran and >srael or other 3iddle @astern states) ?hese, too, could draw

in other great powers, including the nited -tates) -uch conflicts ma2 /e una oida/le no matter what policies the nited -tates pursues)

But the2 are more li1el2 to erupt if the nited - tates wea1ens or withdraws from its positions ofregional dominance) ?his is especiall2 truein @ast Asia, wheremost nations agree that a relia/le Americanpower has a sta/iliIing and pacific effect on the region) ?hat is certainl2 the iew of most of China s neigh/ors) But e enChina, which see1s graduall2 to supplant the nited -tates as the dominant power in the region, faces the dilemma that an American withdrawal couldunleash an am/itious, independent, nationalist Napan)>n @urope, too,the departure of the nited - tates from the scene 66 e en if itremained the world s most powerful nation 66could /e desta/iliIing) >t could tempt Russia to an e en moreo er/earing and potentiall2 forceful approach to unrul2 nations on its peripher 2) Although some realisttheorists seem to imagine that the disappearance of the -o iet nion put an end to the possi/ilit2 of confrontation /etween Russia and the .est, andtherefore to the need for a permanent American role in @urope, histor2 suggests that conflicts in @urope in ol ing Russia are possi/le e en without-o iet communism)>f the nited - tates withdrew from @urope 66 if itadopted what some call a strateg2 of offshore /alancing66 this could in time increase the li1elihood of conflict in ol ing Russia and its near neigh/ors, which could in turn draw the nited - tates /ac1 in under unfa ora/le circumstances)>t is also optimistic toimagine that a retrenchment of the American position in the 3iddle @ast and the assumption ofa more passi e, offshore role would lead to greater sta/ilit2 there) ?he ital interest the nited -tates has inaccess to oil and the role it pla2s in 1eeping access open to other nations in @urope and Asia ma1e i t unli1el2 that American leaders could or wouldstand /ac1 and hope for the /est while the powers in the region /attle it out) !or would a more e en6handed polic2 toward >srael, which some see asthe magic 1e2 to unloc1ing peace, sta/ilit2, and comit2 in the 3iddle @ast, o/ iate the need to come to >srael s aid if its securit2 /ecame threatened)?hat commitment, paired with the American commitment to protect strategic oil supplies for most of the world, practicall2 ensures a hea 2 Americanmilitar2 presence in the region, /oth on the seas and on the ground) ?he su/traction of American power from an2 region would not end conflict /ut would simpl2 change the eEuation)>n the 3iddle @ast, competition for influence among powers /oth insideand outside the region has raged for at least two centuries) ?he rise of >slamic fundamentalismdoesn t change this) >t onl2 adds a new and more threatening dimension to the competition, whichneither a sudden end to the conflict /etween >srael and the alestinians nor an immediate American withdrawal from >raE would change)?he


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alternati e to American predominance in the regionis not /alance and peace) >t is furthercompetition)?he region and the states within it remain relati el2 wea1) A diminution of American influence wouldnot /e followed /2 a diminution of other e5ternal influences) One could e5pect deeperin ol ement /2 /oth China and Russia, if onl2 to secure their interests) &* And one could also e5pect the more powerful states ofthe region, particularl2 >ran, to e5pand and fill the acuum) >t is dou/tful that an2 American administration would oluntaril2 ta1e actions that couldshift the /alance of power in the 3iddle @ast further toward Russia, China, or >ran) ?he world hasn t changed that much) An American withdrawalfrom >raE will not return things to normal or to a new 1ind of sta/ilit2 in the region) >t will produce a new insta/ilit2, one li1el2 to draw the nited

-tates /ac1 in again) ?he alternati e to American regional predominance in the 3iddle @ast and elsewhere is not a new regional sta/ilit2) >n an era of /urgeoning nationalism, the future is li1el2 to /e one of intensified competition among nations and nationalist mo ements) 7ifficult as it ma2 /e toe5tend American predominance into the future, no one should imagine that a reduction of American power or a retraction of American influence andglo/al in ol ement will pro ide an easier path)


27/95

..A8K Auto >ndustry #ad

8urn D fuel efficiency coming no! (ut certainty in t e industry is "ey - appell HC$2C$2 indsa2 Chappell, Automoti e !ews, - automoti e industr2 see1s fuel6sa ing technologies osted &' Nune '8&'http %%www)prw)com%su/scri/er%headlines')htmlWcatZ&UidZ&8&

?he - auto industr2 has signed on to proposed federal mandates to dramaticall2 impro e ehicle fuel econom2 ) But for automa1ers to meet new standards, sometechnologies will ha e to /e in ented) ?heauto industr2 has agreed to meet targets that we don"t 1now how we"re going to meet,# said ?om Baloga, ice president ofengineering at B3. of !orth America) .e"re read2 to ma1e commitments to tough goals) W at !e need istime and !e need certainty )#?he O/ama administration , the @n ironmental rotection Agenc2 and the !ationalHighwa2 ?raffic -afet2 Administrationha e widespread industr2 support for reEuiring nominal fleet a eragesof + )+ mpg in '8' ) (Because of arious e5ceptions and credits, the real6world a erage li1el2 will /e in the low 8s) Current rules reEuire a'8&' model 2ear industr2 a erage of '


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>nternal lin"

8 e Auto industry is interdependent Wilson $2 9Christopher .ilson, Associate at the 3e5ico >nstitute of the .oodrow .ilson internatiaonal Center for -cholars,'8&', - competiti eness the 3e5ican Connection#, ni ersit2 of ?e5as at 7allas,http %%www)issues)org%'*) %pJwilson)html;%%?he massi e olume of commerce and in estment is important, /ut the depth of regionalintegration is the primar2 reason wh2 3e5ico contri/utes to )-) competiti eness) 3e5ico and the

nited -tates do not Dust trade products, the2 /uild them together) >n fact, to understand regional trade, it isnecessar2 to iew imports and e5ports in a different light) .hereas imports from most of the world are what the2 appear to /eforeign productsthe same cannot /e said of imports from 3e5ico)7uring production, materials and parts oftencross the southwest /order numerous times while )-) and 3e5ican factories each perform theparts of the manufacturing process the2 can do most competiti el2) Because of thecomplementar2 nature of the two economies, close geographic pro5imit2, and !AF?A, whicheliminated most tariff /arriers to regional trade, the )-) and 3e5ican manufacturing sectorsare deepl2 integrated) 7emonstrating this integration is the fact that 8Y of the alue of )-) imports from3e5ico comes from materials and parts produced in the nited -tates) ?his means that 8 centsof e er2 dollar the nited -tates spends on 3e5ican goods actuall2 supports )-) firms) ?he onl2other maDor trading partner that comes close to this amount is Canada, the nited -tates" other !AF?A partner, with '+Y )-)content) Chinese imports, on the other hand, ha e an a erage of onl2 Y )-) content, meaning that the purchase of imports fromChina does not ha e the same positi e impact on )-) manufacturers) ?he regional auto industr2 is a good e5ample of thisproduction6sharing phenomenon)?he nited -tates, 3e5ico , and Canadaeach produce and assem/le autoparts, sending them /ac1 and forth as the2 wor1 together to /uild cars and truc1s)Cars /uilt in!orth America are said to ha e their parts cross the nited -tates /orders eight times as the2are /eing produced, and /etween *8 and


29/95

the2 ma2 continue to mo e along the suppl2 chain until the2 reach the consumer andcreate a profit for the )-) firmand the econom2 )>n a Dust6in6time /usiness en ironment, the compan2 relies on an efficientprocess at the /order in order to get numerous 1e2 components shipped rapidl2 from 3e5ico)3e5ico has increasingl2 /ecome a strategic supplier to )-) industr2K 3e5ico"s intermediate e5ports contri/uteto /oth intermediate and finished goods in the )-) Capital goods traded /etween the )-) and 3e5ico alsopla2 animportant role in increasing regional competiti eness) ast 2ear, Q:8 /illion worth of machiner2, tools andeEuipment were traded /ilaterall2 to produce other goods that were in turn consumed locall2 or sold to foreign mar1ets as !orth American6made products)?he highl2 complementar2 nature of this trade illustrates the growingimportance of incorporating alue6added e er2 time a product crosses the /order for furtherprocessing) ?he interconnecti it2 /etween the suppl2 chains of /oth countries help )-)companies remain competiti e in the world mar1etplace /2 producing goods for worldwideconsumption at competiti e prices) 3e5ico"s pro5imit2 to the )-) allows production to ha e ahigh degree of )-) content in the final product which in turn helps create and sustain Do/s in /oth countries)

Specifically t e auto parts cross t e (order more t an 5 times Wilson $$ 9Christopher .ilson, associate with the 3e5ico >nstitute, .or1ing ?ogether @conomic ties /etween the nited-tates and 3e5ico# .oodrow .ilson Center, !o em/er '8&&, http %%www)wilsoncenter)org%sites%default%files%.or1ingY'8?ogetherY'8FullY'87ocumentJ8)pdf;%%?he /enefits of production sharing are a result of !orth American economic cooperation and integration)?he regional autoindustr2 is a good e5ample of the phenomenon of production sharing)?he nited -tates, 3e5icoand Canada each produce and assem/le auto parts, sending them /ac1 and forth as the2 wor1together to /uild complete cars)Cars /uilt in !orth America are said to ha e their parts cross the

nited -tates /orders eight times as the2 are /eing produced , and /etween *8Y and n fact, the 7etroit metropolitan area, a hu/ of the motor ehicleindustr2, e5ports more goods to 3e5ico than an2 other )-) cit2)& ?he 3e5ican auto and auto parts sectorse5perienced maDor growth o er the past two decades as a result of the elimination of tariffs and reduction of non6tariff /arriersafforded to the motor ehicle industr2 through !AF?A) '


30/95

Manufacturing


31/95

>n erency

/rug Violence is alting in0estment in (order regions Villarreal $9 93) Angeles Millarreal, -pecialist in >nternational ?rade and Finance, ?he 3e5ican @conom2 after the Glo/alFinancial Crisis# Congressional Research -er ice, -eptem/er nternational ?rade and Finance, ?he 3e5ican @conom2 after the Glo/alFinancial Crisis# Congressional Research -er ice, -eptem/er


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>nternal lin"

S;uo programs are not sufficient and ne! infrastructure is needed to spurt e manufacturing sector

Wilson $2 9Christopher .ilson, Associate at the 3e5ico >nstitute of the .oodrow .ilson internatiaonal Center for -cholars,'8&', - competiti eness the 3e5ican Connection#, ni ersit2 of ?e5as at 7allas,http %%www)issues)org%'*) %pJwilson)html;%%?he /order) Wit an integrated regional manufacturing sector) t e same goods crosst e ?3S3.Mexico (order se0eral times as t ey are (eing produced ) ConseEuentl2 ) t eeffects of any (arriers to trade) tariff or nontariff) are multiplied (y t e num(er of

(order crossings t at ta"e place during production )>n the !AF?A region, tariffs are nota significant trade /arrier , /ut the importance of ha ing efficient /order management and customs proceduresis difficult to o erstate) After !AF?A too1 effect and trade /arriers fell, /ilateral trade s12roc1eted, more

than tripling /2 '888

)But after

the terrorist attac1s of


33/95

accumulated total of Q&8$ /illion in foreign direct in estment holdings)$ As important as the intensit2 of )-)63e5ico economic integration is its Eualit2 ) 3ost people thin1 of imports and e5ports as goods made /2 one countr2and then purchased /2 another, /ut for the )-) and 3e5ico, cross/order trade often occurs in the conte5t ofproduction sharing) 3anufacturers in each nation wor1 together to create goods, and regionalsuppl2 chains crisscross the )-)63e5ico /order) 3an2 imports and e5ports are therefore of a temporar2 nature asan item is /eing produced)Cars /uilt in !orth America, for e5ample, are said to cross the nited -tates" /orders eight times during production, integrating materials and parts de eloped in 3e5ico and Canada)-e eralother )-) industries, including electronics, appliances and machiner2, all rel2 on the assistanceof 3e5ican manufacturers as well) >n fact, a full 8Y of the content of )-) imports from 3e5ico was originall2 made inthe nited -tates, and it is li1el2 that the domestic content in 3e5ican imports from the nited -tates is also er2 high) ?hatmeans despite an Hecho en 345ico or 3ade in 3e5ico# la/el, a large portion of the mone2 )-)consumers spend on 3e5ican imports actuall2 goes to )-) companies and wor1ers) ?he samecannot /e said for Chinese imports, which ha e onl2 Y )-) content, or for goods coming from an2 othercountr2 in the world, with the e5ception of Canada, where )-) content is '+Y)+ ?a1en together, goods from 3e5ico and Canadarepresent a full :+Y of all the domestic content that returns to the )-) as imports) ?his is /ecause onl2 3e5ico, Canadaand the Cari//ean Basin ha e production processes thatare deepl2 integrated with the nited -tates ?he-outhwest Border states are especiall2 integrated with 3e5ico, and the 3e5ican mar1etaccounts for a Euarter to more than a third of all e5ports for ?e5as, !ew 3e5ico, and AriIona):Howe er, states throughout the countr2 trade intensel2 with their southern neigh/or) 3e5ico is the top e5port destination for fi estates California, AriIona, !ew 3e5ico, ?e5as and !ew Hampshire, and is the second most important mar1et for another se enteenstates across the countr2) -e eral states in the )-) heartland ha e particularl2 close economic ties to 3e5ico, including !e/ras1a,>owa, Vansas, -outh 7a1ota, and 3ichigan)* >n fact, the 7etroit metropolitan area e5ports more goods to 3e5ico than other cit2 inthe nited -tates, a sign of the importance of 3e5ico and Canada to regional motor ehicle manufacturing)< At the end of thisreport, 2ou will find ta/les and graphs that show how much each state and se eral metropolitan areas depend on trade with 3e5icoand roughl2 what this means in terms of Do/6creation)

#order inefficiencies cause a multiplier effect on t e manufacturing sectoree and Wilson $2 9Christopher .ilson, Associate at the 3e5ican >nstitute, @ri1 ee, Associate 7irector at the !orth

American Center for ?rans/order -tudies at AriIona -tate ni ersit2, .hole nations .aiting#, -ite -election, Nul2 '8&',http %%www)siteselection)com%issues%'8&'%Dul%us6me56/order)cfm;%%?he Euantit2 of )-)63e5ico trade is impressi e, /ut its Eualit2 ma1es it uniEue) ?he nited -tates and3e5ico do not Dust sell goods to one another, the2 actuall2 wor1 together to manufacture them) ?hrough

production sharing, materials and parts often cross /ac1 and forth /etween factories on eachside of the /order as a final product is made and assem/led) As a result, )-) imports from 3e5icocontain, on a erage, 8 percent )-) content, and 3e5ico s imports from the )-) also ha e ahigh le el of 3e5ican content) ?his s2stem of Doint production has two important conseEuences) First, it means thatour economies are profoundl2 lin1ed) .e tend to e5perience growth and recession together, and producti it2gains or losses on one side of the /order generall2 cause a corresponding gain or loss incompetiti eness on the other side as well) -econd, the fact that goods often cross the /order se eraltimes as the2 are /eing produced creates a multiplier effect for gains and losses in /orderefficienc2) .hereas goods from China onl2 go through customs and inspection once as the2 enter the )-) or 3e5ico,products /uilt /2 regional manufacturers /ear the costs of long and unpredicta/le /order waittimes and significant customs reEuirements each time the2 cross the )-)63e5ico /order)

-ongestion "ills competiti0eness of Mexico and ?See and Wilson $2 9Christopher .ilson, Associate at the 3e5ican >nstitute, @ri1 ee, Associate 7irector at the !orth

American Center for ?rans/order -tudies at AriIona -tate ni ersit2, .hole nations .aiting#, -ite -election, Nul2 '8&',http %%www)siteselection)com%issues%'8&'%Dul%us6me56/order)cfm;%%

nfortunatel2, the infrastructure and capacit2 of the ports of entr2 to process goods andindi iduals entering the nited -tates has not 1ept pace with the e5pansion of /ilateral trade orthe population growth of the /order region) >nstead,the need for greater /order securit2 followingthe terrorist attac1s of


34/95

personal crossers ali1e)Congestion acts as a drag on the competiti enessof the region and of the nited -tates and 3e5ico in their entiret2 ) -olutions are needed that strengthen /oth /order securit2 and efficienc2

at the same time)?he integrated nature of the !orth American manufacturing sector ma1es eliminating /order congestion an important wa2 to enhance regional competiti eness) ?he glo/aleconomic crisis forced manufacturers to loo1 for wa2s to cut costs) After ta1ing into consideration factors such as rising fuel costs,increasing wages in China and the a/ilit2 to automate an e er greater portion of the production process, man2 American companiesdecided to nearshore factories to 3e5ico or reshore them to the nited -tates, ta1ing ad antage of strong human capital and shortersuppl2 chains) Bilateral trade dropped significantl2 during the recession /ut has since

border infrastructure aff and neg - wave 2 - michigan7 2013 pcvjf

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