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Foundry suppliers consider effects of NAFTA.

CISA Summer Meeting

"We need to be part of a regional bloc ... it's the natural byproduct of globalization |of markets~. A North American Free Trade Agreement with 362 million consumers and a GNP of $6 trillion is simply an idea whose time has come."

That's the way that Al Hetke, Intermet Corp., views the recently signed free trade agreement between the U.S., Mexico and Canada that would form the world's largest trading partnership. Hetke, offering the U.S. perspective, was one of three featured speakers during the summer meeting of the Casting Industry Suppliers Assn. (CISA) held July 16-19 in Oak Brook, Illinois.

He was joined by Canada's Donald P. Kennedy, executive director of the Canadian Foundry Assn., and Roberto Farias, CIFUNSA, who spoke on behalf of the Mexican Foundrymen's Society.

Addressing the U.S. need for the agreement, Hetke said NAFTA offers American businesses a competitive boost in the face of stiff competition from Pacific Rim nations and the new European Community. He called Mexican President Carlos Salinas de Gortari the architect of the "Mexican miracle" that has fostered unprecedented economic growth, and political and fiscal reforms that make that country an excellent addition to a free trade agreement that now includes Canada and the U.S.

Hetke said the fear of American jobs disappearing to Mexico is unfounded. High-paying jobs in Germany since the ratification of the EC in 1990 did not migrate to Spain or Portugal where labor rates are much lower, he added.

Effect on Foundries

How does the NAFTA affect CISA and the American metalcasting industry? According to Hetke, the industry is changing at an unprecedented rate and NAFTA will accelerate these changes.

He cited the domestic automotive industry, noting that it is leading the drive in changing to more frequent product cycles, new and improved materials utilization, and in selecting plant locations nearer to markets where production costs are low and quality high.

In reflecting the Canadian perspective, Kennedy quoted a major poll of Canadian businessmen regarding their position on NAFTA. Poll results showed that the business community would support NAFTA if it were certain that the Mexican economy would improve and have safeguards on the environment and on improved labor standards.

The poll also showed that Canadians want to see investment in Canada as one result of NAFTA, and that the Mexican market would be truly open to Canadian goods and services. The poll indicated that 40% of those currently opposed to NAFTA would then support the agreement.

Kennedy concluded that he and his countrymen want the agreement to survive and create positive results for all three countries. He also expressed hope that the agreement does not become wrecked on the shoals of what he considers nuisance lawsuits plaguing Washington, Mexico City and Ottawa.

Mexican View

Adding the Mexican perspective, Farias said it was a calculated political decision for his nation to end its dependence on foreign oil sales and reliance on imported goods in favor of a strategy that emphasizes exports and opening its markets to international investments.

In 1970, exports of food, liquor, tobacco and textiles comprised 60% of Mexico's trade with the U.S., he said. Since then, that rate has shrunk to 15%, while industrial products such as machinery and related industrial equipment have risen from about 20% to 60% of total exports to the U.S.

Farias said four main factors to justify support for NAFTA in the three countries involve:

* the success of the FTA between the U.S. and Canada;

* the present high degree of economic interaction between the three countries. Canada and Mexico already are the first and third largest commercial partners of the U.S.

* NAFTA is a defense against the consolidation of Asian and European markets;

* NAFTA will aid the balance of payments for all three countries.

Since Mexican foundries need to improve their technologies, the country represents a large and lucrative market for foundry equipment manufacturers and suppliers, Farias said.
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Title Annotation:North American Free Trade Agreement; Casting Industry Suppliers Association
Author:Kanicki, David P.
Publication:Modern Casting
Date:Sep 1, 1992
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