Globalization is often seen as an unstoppable, irreversible force. Analysts contend that trade between nations can only expand spatially and can only grow in complexity. By all measures, this perspective is largely accurate. However, the case of NAFTA and the impact it has had on trade in the U.S and its neighbours serves to show that the spatial expansion of trade between nations is not inevitable. We may call this focus on enhancement of trade between neighbouring countries “localization”, as opposed to globalization. This paper shows how the flow of trade between the Orients and the U.S shifted closer to home, to Mexico. It also shows the impact this shift has had on shipping and employment in the U.S states that border Mexico, as well as on Mexico itself.
U.S-Orient Flow of Cargo Traffic
As of 2012, two ports that were relatively mid-sized only two decades earlier had grown into the busiest in the country, El Paso, in the State of Texas, handled $65 billion worth of cargo during the first three quarters of 2012, while Laredo Port, also in the same state, handled $172.5 billion. This was not always the case; as of 2004, it was ports in Los Angeles, California, that handled the largest volumes in the U.S, catering to more than 7.3 million containers in that year. Los Angeles was followed not far behind by Long Beach ports, which together took care of 5.8 million containers. Taken together, in 2004 Los Angeles and Long Beach handled 68% of cargo traffic in the whole of the West Coast.
The large volumes handled by these ports in the West Coast can thus be attributed to the long growth in trade between the U.S and developed Asian economies such as Japan, as well as emerging economies such as Singapore and China. As the globalization pace picked up in the 1980s and accelerated through the 1990s, the volumes of imports from the Oriental economies grew exponentially. Japan exported to the U.S cars and advanced electronics such as television sets and computer parts, while Singapore and the other Asian tigers started off with textiles before advancing to higher-end products such as cell phones and TV sets. China became the source of basic manufactured goods of all sorts once the country joined the WTO around the turn of the millennium.
As the pace of trade with the Orients picked up steam, some of the concern with the whole arrangement had to do with the vast distances between the sources and the U.S West Coast destinations. The result has been that within the cost of the products from the Far East upon reaching the U.S West Coast, the largest component was the transportation cost, which beats out even the production cost. This difficulty has been somewhat addressed by the practice by suppliers of putting products into mobile containers right at the place of manufacture. This simple practice cuts out a lot of logistical bottlenecks, significantly reducing the cost of transport and logistics as a whole. It led to a steady increase in imports from...