Two decades ago, Ross Perot, US presidential candidate and business mogul, predicted that the newly formed North American Free Trade Agreement (Nafta) would create a sucking sound because of the number of jobs leaving the US for Mexico. A recent report from Washington, DC-based think tank Brookings Institute has claimed, however, that the trade pact could result in a partnership between the US, Canada and Mexico that might actually reverse the decline in exports North America has experienced over the past two decades.
The report is called Metro North America: Metros as Hubs of Advanced Industries and Integrated Goods Trade. In it, authors Joseph Parilla and Alan Beruke have concluded that cities in metropolitan areas play a disproportionately large role in that sphere. They call for a balanced approach from national and sub-national leaders from government, business and civil society in all three countries to strengthen North American competitiveness.
This is because, after 20 years of Nafta, companies in advanced manufacturing (aerospace, automotive, electronics, machinery, pharmaceuticals and precision instruments) are extending their supply chains across the borders of the US, Canada and Mexico. Those supply chains are anchored by metropolitan hubs in all three countries.
“As it turns out, the largest trade flows occur between our largest metro areas, such as New York and Toronto, and Mexico City and Los Angeles, thereby reflecting their significant production and consumption capacities,” wrote Mr Parilla in a blog.
But he added that there is another set of metro areas, quintessentially North American in their trade profile, exchanging a large volume of their internationally traded goods with other metro partners across the continent. “Most are located well beyond the border, highlighting the nearly three-quarters of trade between our nations that happens outside the border states,” wrote Mr Parilla.
The report identified 10 US metro areas (some with cross-state influence) where trade with Canada and Mexico accounts for the largest share of total metro goods traded: Bakersfield, California; El Paso, Texas; Detroit-Warren-Livonia, Michigan; Jackson, Mississippi; Youngstown-Warren-Boardman, Ohio-Pennsylvania; Toledo, Ohio; Louisville, Kentucky-Indiana; Nashville-Davidson-Murfreesboro, Tennessee; Kansas City, Missouri-Kansas, and Tulsa, Oklahoma.
It also pointed out that the top 20 North American metro areas for trade in automotive, electronics and aerospace trade account for 15%, 18%, and 40%, respectively, of total trade between the US, Canada and Mexico in those commodities. The largest trading relationships involve Detroit and Toronto in automotive, San Jose and Mexico City in electronics, and Seattle and Montreal in aerospace.