Global Issue Paper No. 24
by Enrique Dussel Peters, November 2005
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Introduction
Both China and Mexico have been some of the most successful export-oriented nations in the past twenty years and a synonym for "development" in their respective regions as well as worldwide. In Latin America, Mexico’s integration into the world market since the 1980s and particularly through the North American Free Trade Agreement (NAFTA) has been also a test case for integration between nations with highly uneven socioeconomic conditions. China, on the other hand, has remained since the 1980s the nation growing the fastest in terms of GDP and GDP per capita and has become the most attractive destination in the current off-shoring process; in addition, substantial development in terms of poverty reduction and technological development has been achieved in China.
In this context, what have been the effects of China’s entry into the World Trade Organization (WTO) in 2002? China’s entry into the WTO has probably affected world trade like no other nation’s entry in terms of expectations, opportunities and threats according to different social movements, political parties, consultancies, firms, and associations, among other. As discussed later in the text, there are already several studies on this issue. However, the main contributions of this paper are twofold: to understand the strategies followed by China and Mexico and to give an overview of the new systemic effects of China on Mexico in the context of its WTO-entry in general terms as well as regarding Mexico’s development strategy and with respect to specific sectors. In addition, the paper questions the export-oriented strategy of both nations and the overall global sustainability –in ecological as well as socioeconomic terms- of such a strategy for other nations. This latter issue is being discussed as a result of the specificities of the Mexican and Chinese bilateral trade patterns, as well as with reference to third countries and markets.
As a result, the paper is divided into three sections. The first section will analyze Mexico’s and China’s strategy for integration into the world market in the last two decades and highlight similarities in terms of specialization patterns and employment challenges. While also showing substantial differences among both countries, the chapter will also discuss the effects of the competition among both countries in the world market for their respective long-term strategies. The second chapter provides a detailed analysis of the characteristics of China’s and Mexico’s integration into the world market, with an emphasis on the effects of China’s entry into the WTO in 2002.The first part of this chapter examines some of the benefits and commitments of China’s entry into the WTO, as well as its specific trade patterns.
The second part of the chapter elucidates Mexico’s general trade structure and specialization patterns with the country’s main trading partners, as well as bilateral trade. The third section of this chapter will briefly analyze some of the specific new conditions and challenges that have risen since China’s entry into the WTO for Mexico in the US-market, which has become increasingly significant for both nations. The fourth section of the chapter examines the yarn-textile-garment commodity chain which is significant for understanding Mexico’s –but also Central America’s -- export-orientation and world market integration since the late 1980s and the new challenges for Mexico’s socioeconomic strategy since then. The third chapter summarizes the main findings of this document and presents relevant policy issues for China-Mexico cooperation and overall "South-South" cooperation. The final chapter includes the references used in the document.
The document attempts to discuss the issue of the bilateral relationship between Mexico and China since China’s entry into the WTO in 2002. For this case-specific information, trade data and some theoretical and economic trade issues are necessary for understanding the richness and potential of this relationship, as well as its challenges. This specific case is illustrative beyond the bilateral relationship in terms of development, particularly as analyzed in chapters 1 (and particularly the first part of chapter 1), and 3.