Monday, August 19, 2013

Summary: Border Conference on the U.S.-Mexico Competitiveness Agenda

By Sofia Norten

Representatives from the public and private sectors highlighted ways to improve border trade in order to boost both the U.S. and Mexican economies.

Browse by conference panel:

Advancing the U.S.-Mexico Economic Relationship
Reform Agendas in Mexico and the United States: Views from the Legislative Branches
Stimulating U.S.-Mexico Competitiveness through Infrastructure Investment and Public/Private Partnerships
A Conversation on the Trade Relationship: 20 Years After NAFTA

Summary

On August 7, Council of the Americas held a conference at The University of Texas at El Paso on improving competitiveness on the U.S.-Mexico border. In opening remarks, speakers highlighted the importance of the border to the broader U.S. and Mexican economies. “It is the windpipe of our economy and when managed intelligently, it can be a massive asset to competitiveness to both our countries,” said Ambassador John Negroponte.

Opening Remarks

Diana Natalicio, President, The University of Texas at El Paso
John Negroponte, Chairman, Americas Society and Council of the Americas
Beto O’Rourke, U.S. Representative
John Steen, Texas Secretary of State

Watch video highlights of the conference.

<hr /> <a name="economic-relationship"></a>Advancing the U.S.-Mexico Economic Relationship Speakers: <ul style="margin-left: 40px;"> <li>Ambassador Eduardo Medina Mora, Ambassador of Mexico to the U.S.</li> <li>Ambassador E. Anthony Wayne, U.S. Ambassador to Mexico</li> <li>John Negroponte, Chairman, Americas Society and Council of the Americas (moderator)</li> </ul> The first panel focused on how the United States and Mexico strengthened economic ties since the North American Free Trade Agreement (NAFTA) went into effect, and the ways in which this relationship can be expanded. NAFTA’s consolidation of supply chains in North America has made U.S.-Mexico trade far more effective, speakers noted. Last year, bilateral merchandise and services trade reached half a trillion dollars. But Ambassadors Eduardo Medina Mora and E. Anthony Wayne noted that more can be done to advance the border relationship, especially by using input from civil society.  Medina Mora noted that the value added to products coming from Mexico to the United States is 40 percent higher than that of products coming from either Canada or Europe. In addition, the wage differential between Chinese and Mexican manufacturers has increasingly shifted in Mexico’s favor since 2000. Wayne underscored the importance of these developments by stating that there is “no relationship more important [for the United States] than the relationship with Mexico.” However, as the U.S.-Mexico partnership continues to make both countries more competitive, it is essential to focus public policy efforts on reducing transaction costs through investment, speakers noted. This will foster job growth and increase the overall quality of life on both sides of the border. Wayne explained that the potential for increased cooperation exists. When U.S. President Barack Obama traveled to Mexico in May, he and Mexican President Enrique Peña Nieto discussed ways to bolster border communities, enhance law enforcement cooperation, improve border infrastructure, and facilitate trade across the border. Medina Mora highlighted the need to invest in border infrastructure, saying: “We have twenty-first-century trade within a twentieth-century framework on top of a nineteenth-century infrastructure.” In addition, Ambassador John Negroponte added: “NAFTA is “a true success story. But I believe more can be done in our region.” Principal Take-Aways: <ul style="margin-left: 40px;"> <li>Dialogue between the United States and Mexico must focus on economic, rather than security issues. This is a crucial trade partnership and is key to regional competitiveness in an increasingly competitive global landscape.</li> <li>In order for this economic relationship to advance, both countries must invest in the border. Without better and more efficient infrastructure, the economies on both sides of the border could suffer.</li> <li>Civil society should be engaged in discussions about ways to improve the border. This will rally support for federal investments and encourage innovative solutions.</li> </ul> <hr /> <a name="reform-agendas"></a>Reform Agendas in Mexico and the United States: Views from the Legislative Branches Speakers: <ul style="margin-left: 40px;"> <li>Beto O’Rourke, U.S. Representative</li> <li>Javier Treviño, Member of Mexican Federal Congress</li> <li>Veronica Escobar, El Paso County Judge (moderator)</li> </ul> The second panel focused on policies to facilitate trade, as panelists explained that investing in the border region produces benefits for citizens all over the United States and Mexico. Mexican Congressman Javier Treviño praised the Peña Nieto administration’s efforts to boost economic growth and Mexico’s role on the global stage, but noted that some representatives from non-border regions may not grasp the border’s importance in relation to the larger economy. U.S. Congressman Beto O’Rourke agreed that the same tendency to overlook the significance of U.S.-Mexico trade exists in the U.S. legislature. He echoed Treviño’s desire to educate fellow representatives about the border and to encourage them to assume “a philosophy of the border as a region rather than as a line.” O’Rourke pointed out that while the United States has the funds to invest in the border, proposed immigration reform being discussed in the House of Representatives would funnel that investment towards militarization efforts rather than projects to boost trade. The congressman explained that constituents would benefit more from border infrastructure used to facilitate the flow of goods. Some of his colleagues in Washington, O’Rourke noted, see the border “more as a threat than an opportunity that we know it to be.” Treviño lamented that there is a lack of government resources for direct border investment on the Mexican side, and proposed alternate mechanisms to maximize border competitiveness, such as public-private partnerships. O’Rourke agreed that when coupled with clear and sound regulations, these partnerships can be a success but cautioned that they should only be used to supplement, rather than supplant, federal funds.  Principal Take-Aways: <ul style="margin-left: 40px;"> <li>It is imperative for American and Mexican lawmakers to be made aware of the impact that the border economy has on their constituents. This can be done through careful framing of policies and structuring of projects.</li> <li>When government funds are lacking, public-private partnerships can be useful tools. However, private-sector investments should not allow governments to shirk their responsibilities at the border. </li> </ul> <hr /> <a name="ppps"></a>Stimulating U.S.-Mexico Competitiveness through Infrastructure Investment and Public/Private Partnerships Speakers: <ul style="margin-left: 40px;"> <li>Bernardo Ayala, Vice President Mexico Markets, Union Pacific</li> <li>Geronimo Gutiérrez, Managing Director, North American Development Bank</li> <li>Enrique Norten, Principal, TEN Arquitectos</li> <li>Rolando Pablos, CEO, Borderplex Alliance (moderator)</li> </ul> Panelists agreed that when it comes to financing border infrastructure, funds need to be directed towards strategic port of entry and transportation projects. Without a higher level of commitment to development, the border region risks wasting its potential for competitiveness, they said.  One current challenge is a lack of coordination and project prioritization at the border.  For example, the Tornillo-Guadalupe Bridge between El Paso County and Juárez has been completed on the U.S. side, yet construction in Mexico has yet to begin. Gerónimo Gutiérrez called the project a “shame” that is “too costly for tax payers.” Then there are ports of entry, such as the Columbia Bridge, which only reach about 30 percent capacity on any given day. Other ports of entry are chronically over-capacity and under-staffed. The remedy would be a system in which the two governments coordinate their efforts to maximize limited resources, speakers noted.  Rolando Pablos and Enrique Norten explained that the border should be thought of as more than a geographical marker. Norten observed that economic competitivity is increasingly thought of in terms of a network of cities rather than separate countries. Because ports of entry act as places of connectivity to this urban grid, they merit more attention than they currently receive. He questioned U.S. investments in walls rather than bridges by asking: “What would happen if we had invested $40 billion in connectivity and not in separation? Principal Take-Aways: <ul style="margin-left: 40px;"> <li>The border plays a significant role in the economic vitality of both the U.S. and Mexican economies. Therefore, projects at the border need to be given careful, coordinated consideration by both governments.</li> <li>The border should be thought of as a place, rather than a line demarcating separation, for it to remain relevant in a changing landscape of global markets. </li> </ul> <hr /> <a name="nafta"></a>A Conversation on the Trade Relationship: 20 Years After NAFTA Speakers: <ul style="margin-left: 40px;"> <li>Eric Farnsworth, Vice President, Council of the Americas</li> <li>Amgad Shehata, Vice President for International Public Affairs, UPS</li> <li>Francisco Uranga, Corporate Vice President and Chief Business Operations Officer for Latin America, Foxconn</li> <li>Thomas Fullerton, Chair for the Study of Trade in the Americas, Professor of Economics, College of Business Administration, UTEP (moderator)</li> </ul> The final panel analyzed NAFTA’s accomplishments and remaining steps to maximize the agreement. NAFTA’s most significant economic impact has been to allow goods to flow more efficiently, speakers said. Because NAFTA has integrated North American trade, the border has the power to either boost or to hinder economies.  Eric Farnsworth noted that NAFTA was always an experiment, and there is still room for improvement. For example, technologies can be better applied to speed up supply chains. Francisco Uranga said that because both governments claim to have insufficient funds to build new ports of entry, it would be prudent to channel investments toward modernizing existing projects.  Panelists also focused on the need to rethink border relations within a broader context.  Uranga reiterated the idea that the health of the border economy affects the larger economy. He pointed out that in order to create new jobs and generate growth, companies need incentives such as more efficient border crossings for their goods. Farnsworth also said that North American countries should work together to become more competitive. Negotiations such as the Trans-Pacific Partnership and potential trade discussions between the United States and the European Union should include Mexico and Canada, he noted.  Principal Take-Aways: <ul style="margin-left: 40px;"> <li>NAFTA has been a success within the context of consolidating and expediting supply chains throughout North America. Still, the challenge remains to modernize existing infrastructure.</li> <li>The United States and Mexico must continue to work toward economic integration through bilateral cooperation and multilateral agreements.</li> </ul>

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Summary: Border Conference on the U.S.-Mexico Competitiveness Agenda

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