Chinese Imports and their Impact on the Spare Auto Parts Market in Mexico
Lourdes Álvarez and Liliana Cuadros

Trade between Mexico and China has grown rapidly, and currently China is our second most important trade partner after the United States. Bilateral trade with the United States tripled between 1995 and 2010, increasing from 119,018 to 383,364 million dollars, while bilateral trade with China increased 67 times, increasing from 736 to 49,805 million dollars. Nevertheless, in 2010, trade with the United States represented 63.93% of the total, while trade with China was only 8.1% of the total. This indicates how heavily dependent we are on trade with the United States, and that despite the growth of trade with China, we must still work to further diversify our trade partners

This perspective changes when we analyze the trade balance with the United States, characterized by a surplus, while we have a trade deficit with China that increased from 304 to 41,409 million dollars. The huge asymmetries in Mexico's trade with China can be explained primarily by the purchase of intermediate goods from the electronic, electric and informatics sectors, used in the production of vehicles and televisions that are later exported to the United States. This segment of imports represented 47.7% of Mexico's total imports in 2010 (Secretaría de Economía, 2011).

It is also worth noting that the portion of Mexico's total imports that correspond to the United States was 74.29% in 1995, and diminished to 48.10% by 2010, while the portion of imports from China increased from 0 .72 to 15.13% during the same period.

The tendency just described can be expected to continue, since in December of 2011 the Agreement on Trade Remedy Measures 2 will end, and the measures that still protect some industries will be eliminated, allowing for a further increase in imports from China. It has thus become vitally important to develop mechanisms that will help to regulate trade, and to implement actions for counteracting Mexico's growing trade balance deficit.

In order to counteract the deficit and confront the end of the agreement mentioned above, a number of authors propose that the two countries seek to complement each other. If China increases its foreign investment (FI) in Mexico and complies with the rules of origin, it can take advantage of preferential access to the United States, benefiting from tariff reduction (Martínez, 2010; Morales, 2010; Dussel, 2010a and 2010b). For example, in 2009 Mexico was required to pay an average tariff of 0.10% to export products to the US market, while China had a 3.64% tariff, which signified paying 36.4 times more in tariffs (Dussel, 2010b).

2 According to Morales (2010), when China was accepted into the World Trade Organization, it acquired the obligation to negotiate with Mexico a six-year extension of the time period during which compensatory duties would be in effect in the footwear industry and the textile and apparel chain. In 2008, at the end of this period, the Agreement on Trade Remedy Measures was negotiated, with temporary transitional measures applied, to be progressively eliminated until December 2011, when they would be totally eliminated.

3 It is important to clarify that there are significant differences between the statistics provided by the Chinese and Mexican governments (Dussel, 2005; 2006 and Morales, 2008).