To mark the twentieth anniversary of the North American Free Trade Agreement (NAFTA), the United States Trade Developments Report 2013-2014, prepared annually by the Washington Office of the Economic Commission for Latin America and the Caribbean (ECLAC), focuses on trade and investment ties between the U.S., Canada and Mexico. At the same time, presents the highlights of the economic relationship between the U.S. and Brazil, its second largest trading partner in the region.
NAFTA, the study says, has made significant strides in expanding trade and investment among the three countries and enhancing their integration through value chains. North America is now the market of more than 80% of Mexico's exports, 75% of Canada's exports and 31% of U.S. exports. Moreover, U.S. imports from Canada and Mexico contain a significant percentage of inputs from the United States, about 25% and 40%, respectively.
Cross-border investment among NAFTA countries was also increased. Since it came into force, Canada has become the fifth investor in the United States, and Mexico has increased investment in its northern neighbor in sectors as diverse as cement, bakery, dairy and retail. The United States, meanwhile, is the largest investor in Canada, and U.S. investment in Mexico has increased significantly in the manufacturing sector, especially in the automotive area.
The second largest trading partner of the U.S. in Latin America and the Caribbean is Brazil, which ranks eighth among its major partners in the world. The United States topped the list of major trading partners of Brazil until 2008, when it was surpassed by China. In 2001, the United States accounted for over 25% of Brazilian exports, in 2013 their share dropped to 10%.
Latin America represents about 20% of all U.S. direct investment abroad, with revenues of around US$ 869 million to the region in 2012. At 44%, holding companies absorb the most of the U.S. direct investment that goes into Latin America. The next top industry for U.S. direct investment into Latin America is the finance industry, which absorbed about 25% of U.S. direct investment into Latin America at $215 billion.
According to the report, five countries in Latin America and the Caribbean appear in the list of 20 top destinations for U.S. direct investment abroad between 2009 and 2012: Mexico (ranked 11th), Brazil (12), Chile (15), Barbados (18) and Venezuela (20).
The paper also presents a brief discussion about the Farm Bill 2014 passed in the United States, addresses the trade in organic agricultural products and includes cases of commercial disputes.