Study says U.S. undervalues its trade relationship with Mexico
By Jonathan Clark for NogalesInternational.com
Published on December 13, 2011
The extent and value of U.S.-Mexico trade is certainly no secret in Nogales, where commercial trucks, freight trains and livestock rumble steadily back and forth across the border, fueling a large part of the local economy in the process.
But for much of the United States, the country's crucial commercial relationship with Mexico - the third-ranked commercial partner of the U.S. and the second largest market for U.S. exports - is "hidden in plain sight," according to the authors of a new study titled "Realizing the Value of our Cross Border Trade with Mexico."
"There is no other relationship for the United States that is as dismissed and yet ironically as crucial for our country's well-being as the one with Mexico," says the study, developed by Arizona State University's North American Center for Transborder Studies and the Washington, D.C.-based New Policy Institute.
Even in Arizona, a state that in 2010 conducted $10.7 billion in trade with Mexico and where 235,700 jobs depend on that trade, full appreciation of the bilateral commercial relationship is limited mostly to the immediate border region, said ASU's Erik Lee, the primary author of the study.
"I think that awareness starts at the Gila River and goes south," Lee said during a conference call with reporters on Friday. "I think here in central Arizona, it is difficult for folks to imagine that cross-border exchange."
"The appreciation that you have there in Nogales, I think is unshared by 98 percent of the country," added Rick Van Schoik, co-author of the report and director of the North American Center for Transborder Studies.
Whether Americans are aware of it or not, the United States sells more products to Mexico than to Brazil, Russia, India and China combined, as well as to the combined bloc of Great Britain, France, Belgium and the Netherlands, the study says. Mexico is the number one or two export market for 22 U.S states, according to the report, and it is a top-five market for 14 other states.
What's more, Mexico's economy is growing faster than ours - 5.4 percent in 2010 and a projected 4 percent in 2011, compared to 2 percent for the United States - making it an ideal market to help pull the U.S. out of recession. "Hitching our success to a section of their future just makes sense," Van Schoik said.
And while the United States has a trade imbalance with Mexico (U.S.-Mexico trade totaled nearly $400 billion in 2010, $163 billion of which was U.S. sales to Mexico), it's a more acceptable trade imbalance than the one we have with China, the authors say. That's because for every dollar that Mexico makes from exporting its products to the United States, it spends 50 cents on U.S. products and services, compared to 4 or 5 cents spent by China.
"The United States urgently needs a sustained national conversation regarding how to realize greater value in our cross-border trade with Mexico," the study concludes. "As the export sector assumes more importance and the U.S. economy struggles to create high-quality jobs, our nation needs to discover every dollar of value in our relationship with our nation's number two export market: Mexico."
Ports of entry
To better realize the potential of the U.S.-Mexico trade relationship, the governments of both countries must improve infrastructure and capacity at border ports of entry, the study says.
"While land ports of entry between the two nations were first envisioned to process the legitimate crossing of people, goods and services across the border, security has taking an overwhelmingly dominant role in recent years, hampering the ability of agencies to efficiently manage border traffic," it says.
Still, there have been some encouraging developments in this area, the authors say, including the 21st Century Border Management Joint Declaration, signed by the United States and Mexico in May 2010, and the $200-million renovation project currently under way at the Mariposa Port of Entry.
"Definitely, the redesign and upgrade of the Nogales Mariposa port is critical to the development of Arizona's economy, as well as the local economy there in Nogales," Lee said. And he noted that the United States opened three additional ports of entry along its southwest border in 2010: the San Luis 2 commercial port in Arizona and two more in Texas.
However, he added, "during the decade from 2000 to 2009, there were zero new ports of entry opened up along the U.S-Mexico border, which is stunning in light of the fact that NAFTA trade between the two countries had grown exponentially.
"The two governments are behind on developing infrastructure along the border, but moving forward," Lee said.
Van Schoik agreed, saying that in the past, the Department of Homeland Security and General Services Administration were "disconnected" in their infrastructure development process from key players such as the U.S. Trade Representative and the Department of State. He called the 21st Century Border Management Joint Declaration "truly innovative" for its goal of promoting cooperation not only among U.S. agencies, but also between the U.S. and Mexican governments.
As for goals for their new study, the authors say they hope it will not only open Americans' eyes to the importance of trade with Mexico, but also provide a view of Mexico that isn't defined by drug violence.
"I think this will hopefully begin a process, or contribute to a process, of the country coming to understand what Mexico is, in a way that is more accurate and frankly more positive than I think is often seen in the national media," said Simon Rosenberg, president of the New Policy Institute.
Local response
Nogales Mayor Arturo Garino, who met with representatives from Maricopa and Pima counties on Monday to talk about the importance of cross-border trade to the Arizona economy, said afterward that many at the meeting had been surprised to hear of the extent of the commercial relationship.
He said he welcomes efforts like the new ASU-sponsored report that aim to create better awareness and appreciation of U.S.-Mexico trade ties.
"I think it's great to do studies like this," Garino said.
Juan Cordero, economic development director for Nogales, Sonora, said it's not just Americans who need to better understand the dynamic.
"I definitely agree that cross-border trade is underappreciated, but not only by the U.S. I think Mexico also under appreciates it too," he said.
As a result, Cordero said, the National Maquila Association, or CNIME, has launched a marketing campaign to better inform Mexican authorities of the importance of export - especially manufacturing exports, which are the nation's second-largest income generator after petroleum sales.
Cordero said business people from both sides of the border must engage in a sustained conversation about the U.S.-Mexico border's importance as a trade conduit.
"We shouldn't expect for the government to solve all the issues," he said. "The business people should constantly remind the government with factual data, and speak the process-improvement, dollars-and-cents language."
| ← Identifying the Total Cost of Outsourcing | COURT SAYS INADVERTENT ORIGIN DECLARATION CONSTITUTES NEGLIGENCE, AWARDS $40,000 PENALTY → |
|---|
| < Previous | Next > |
|---|