A leader of Mexico's largest plastics trade association said that despite widespread concern, the plastics sector in Mexico is "not at risk," and he urged executives to ignore “predictions of a catastrophe” about the industry’s future.
Meanwhile, as the Trump administration appears poised to move ahead with renegotiating the North American Free Trade Agreement, the leading chemical industry associations in the region issued an unusual joint statement March 1 defending NAFTA as a positive — but saying they were open to its “modernization.”
The nuanced statement from the largest chemical industry associations in Canada, Mexico and the United States came two days after the Trump aide seen as one of the leaders of any NAFTA renegotiation — Commerce Secretary Wilbur Ross — won Senate confirmation.
In his confirmation hearing in January, Ross said NAFTA would be an early focus of the Trump administration, and Trump has repeatedly said that NAFTA hurt the United States and benefited its trading partners, calling the deal a “catastrophe” that led to massive job losses.
In their March 1 statement, the American Chemistry Council in the U.S., the Chemical Industry Association of Canada and the Mexican Chemical Industry National Association all said NAFTA has had big economic benefits for the industry, leading to job growth and making the region more competitive globally.
“NAFTA’s success lies in the economic partnerships and supply chain synergies and efficiencies that have been created through reduced barriers to trade,” they said. “Over the past two decades, [NAFTA] has provided enormous benefit for the chemical sectors in Canada, Mexico and the United States.”
But the groups said they were also open to modernizing NAFTA, outlining priorities such as digital age updates for stronger cross border data protection, new standards for state-owned companies and closing inefficiencies in areas like rules of origin.
The three industry groups, however, made clear that they prefer that no changes be made to the duty-free trade regime that’s existed under NAFTA.
“Most importantly, all chemical products are traded duty free under NAFTA, and a modernized NAFTA should maintain this policy,” they said.
While it’s not at all clear what exactly the Trump administration will pursue in NAFTA talks, Washington has been debating border adjustment taxes on imports to the United States and other measures that would upset that duty-free arrangement.
The associations said trade in chemicals between the three NAFTA countries has grown from $20 billion in 1994 to $63 billion in 2014.
Anipac: 'Our industry is not at risk'
At a special meeting of the Mexican plastics industry Feb. 28 in Mexico City, the secretary of the plastics association Anipac suggested Mexico’s industry is prepared for any Trump-related contingency.
“In the worst-case scenario of the United States leaving NAFTA, we can defend ourselves within the rules of the World Trade Organization,” said Eduardo de la Tijera Coeto. “The government of Mexico is prepared and our associations are united. Our [plastics] industry is not at risk.”
Anipac, which stands for Asociación Nacional de Industrias del Plástico AC, is one of a number of major trade bodies in the country offering advice to the Mexican government as it prepares for renegotiation.
Talk of reopening NAFTA has sparked concern, even alarm, in some Mexican manufacturing circles, but De la Tijera said the United States is the major beneficiary in bilateral plastics trading with Mexico.
He said previously that Mexico imported 71 percent of the $16 billion worth of resins and end-products traded between the two countries from January through September 2016.
“In the United States our biggest shield against any change in NAFTA is in the area of plastics,” he said, noting that new U.S. Commerce Secretary Ross is also the founder and a former chairman of automotive injection molder IAC Group.
$11 billion trade surplus
Figures from the Plastics Industry Association in Washington showed that the U.S. plastics industry had an $11 billion trade surplus with Mexico in 2015, the last full year figures are available.
De la Tijera said the Mexican plastics sector is growing between 7-8 percent a year, driven primarily by internal consumption and exports of manufactured plastics goods.
The industry is investing $2 billion a year in new equipment, while “the vital signs of the U.S. economy continue to be good,” he said.
He urged his audience of about 100 to ignore “predictions of a catastrophe” about the industry’s future.
Oscar Albin, executive president of auto suppliers association INA (Asociación Nacional de Autopartes AC) told the conference, Perspectivas de la Industria del Plástico, that 500 supplier companies in Mexico work for the global automotive industry and many are involved with plastics processing.
“There’s a lot of uncertainty,” he said, adding that the industry remained calm, nonetheless, in the knowledge that “the United States and Canada need Mexico’s low-cost workforce.”