Delving further into the Brookings report discussed last week shows how important advanced manufacturing has become to North American trade. The NAFTA trade bloc exported over $1.2 trillion to the rest of the world last year with the bulk of exports represented by advanced industries such as electronics ($115 billion), transportation equipment ($100 billion), pharmaceuticals ($39 billion) and medical devices ($26 billion). Advanced industries accounted for 35% of all U.S. exports in 2011.
While it is difficult for the NAFTA countries to compete on cost vs other regions, particularly the U.S. and Canada, there is tremendous advantage in offering superior quality and value-added in advanced industries. Brookings states that for every dollar of manufacturing output, 19 cents of services such as logistics, advertising and engineering are required. In 2012, the U.S. economy realized a $200 billion trade surplus in services. Combined with lower wages in Mexico than China, according to BofA Merrill Lynch economist Carlos Capistran, the NAFTA zone is back on a cyclical upturn to make it more competitive than ever in global trade.