Mexico claims the largest trade deficit of plastics in the world. Guess who's No. 2 on the list? China.
That's according to a July 23 report from El Economista. The report says Mexico imported $22.3 billion of plastics in 2014 and exported just $8.62 billion, resulting in a $13.7 billion deficit.
The U.S. is the largest exporter to Mexico, with a share of 70.1 percent, many times more than the other leading suppliers including China (7.4 percent), South Korea (4.3 percent), Germany (3.3 percent) and Canada (2.6 percent), the report said.
The report notes that Mexico's major issue is the undersupply of domestically produced plastic resins in Mexico. (The $4.5 billion Ethylene XXI complex, under construction on Mexico's Gulf Coast, will help on that front. The complex is scheduled to go on stream in late 2015, and includes two polymerization plants will have a combined annual capacity of 750,000 metric tons of high density polyethylene. A third polymerization plant will produce 300,000 metric tons of low density PE annually.)
On the other side, the Society of the Plastics Industry Inc. had mentioned before that the U.S. plastics industry had its largest [yet] trade surplus with Mexico in 2013, at $10.8 billion. SPI said it was largely attributable to the North American Free Trade Agreement (NAFTA), as U.S. plastics companies continue to take advantage of duty-free access to Mexico's market.
The El Economista report also said China (-$8.4 billion) and Russia (-$8.3 billion) took second and third places on the ranking of the largest negative trade balances of plastics.
I wonder though, without knowing the details of the methodology behind the numbers, how to interpret them.
Suppose a Mexican firm makes auto parts using PP resin imported from the U.S. Those parts eventually go into assembled cars that are exported back to the U.S. If the plastic contents of cars are not singled out in customs data, a trade deficit is generated right here. But so what? Mexico turned plastics resin into higher-value-added products for another industry.
Due to the nature of the plastics industry, maybe we should take a grain of salt when looking at industry-specific data and zoom out to see the bigger picture.
