Realizing the Value of Crossborder Trade With Mexico

On January 4th, of 2012 The New Policy Institute’s 21st Century Border Initiative  was proud to release a major new report researched by Arizona State University’s North American Center For Transborder Studies (NACTS), Realizing the Value of Crossborder Trade With MexicoFor the Spanish version of the report please click here.

Executive Summary

The United States urgently needs a sustained national conversation regarding how to realize greater value in our crossborder trade with Mexico, and the benefits of increasing efficiencies at our shared border. 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.

Trade With Mexico Hidden In Plain Sight
Trade is an important tool in policymakers’ economic development toolbox. Ever since the enactment of the North American Free Trade Agreement (NAFTA), and given the complementarity of the U.S. and Mexican economies, bilateral trade has grown exponentially, reaching a record high of nearly $400 billion in 2010. Mexico is now the third-ranked commercial partner of the U.S. and the second largest market for U.S. exports. Mexico spent $163 billion on U.S. goods in 2010, and trade with Mexico sustains six million jobs in the U.S.  This is economic value that for many in the U.S. remains “hidden in plain sight.”

To provide a better idea of what this commercial partnership means to our country, U.S. sales to Mexico are larger than all U.S. exports to the BRIC countries (Brazil, Russia, India and China) combined, as well as all combined sales to Great Britain, France, Belgium and the Netherlands. Twenty-two states count Mexico as their No. 1 or No. 2 export market, and it is a top-five market for 14 other states. American consumers and businesses import large quantities of jointly produced products and services from Mexico such as automobiles, produce, and petroleum, just to name a few. Still, for every dollar Mexico makes from exporting to the U.S., it will in turn spend 50 cents on U.S. products or services, which are a considerable benefit to our economy and demonstrates the truly unique quality of this trade or “joint production” relationship.

U.S.-Mexico Border Management: Building the Infrastructure for Future CompetitivenessSharing a 2,000-mile long border with Mexico needs to be recognized as both a challenge and an opportunity. Though improving, our border’s current infrastructure and capacity today reflect the needs of a bygone era. 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.

With this in mind, in May of 2010 the U.S. and Mexico signed the 21st Century Border Management Joint Declaration. Recognizing the importance of fostering the commercial relationship, both countries have agreed to coordinate efforts to enhance economic competitiveness by expediting lawful trade. The basic idea is that developing a modern and secure border infrastructure will give an added boost to our region’s safety and competitiveness in the world.

Much Opportunity, but the Real Work Has Only Just Begun
The poor infrastructure, the inadequate staffing levels and the heavy focus on security that prevails at the U.S. – Mexico border have cost both economies billions of dollars in gross output annually. It is past time for our shared border to begin to meet today’s demands, acting as a facilitator and conductor of lawful flows of goods, services and people across our nations so that we may capitalize on the full potential of our partnership. If a billion dollars’ worth of trade crosses the U.S.-Mexico border on a daily basis now while sustaining six million jobs, imagine what could be accomplished with a truly 21st century border.

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