Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
Border Mayors Association
Third Annual Meeting
Friday, August 24, 2012
San Diego, California
As prepared for delivery.
Thank you very much, Mayor Sanders, for that kind introduction, and for your leadership. Good afternoon honorable mayors, leaders, and distinguished guests. It’s a real pleasure for me to be here this afternoon to discuss the commercial and economic benefits of the U.S.-Mexico relationship and the critical role that our shared border plays in that dynamic partnership.
Mayors Cook and Bustamante, before I begin, I’d also like to recognize both of you for your leadership and for hosting the first two bi-national meetings of the Border Mayors Association. This organization’s mission, which is to help formulate “policies that affect border communities of Mexico and the United States,” is absolutely vital to the region’s future and to the future of both countries, and I’d like to commend all of you for these efforts and for shining a spotlight on the commercial potential of the U.S.-Mexico economic relationship. I want all of you to know that we welcome your ideas and support in developing sound policies to create a secure and prosperous 21st century border. As your charter notes, it is imperative that leaders of border communities be a part of the dialogue on how to improve the flow of commerce through the region. I look forward to learning about the recommendations that were developed in today’s mayoral breakout sessions related to public safety, border crossings, economic development and tourism, and immigration.
The U.S.-Mexico border region occupies a special place in my heart. I was born in Las Cruces, New Mexico just a few miles north of Ciudad Juarez. I lived in the Mesilla Valley, where my family has lived for generations, until I was a teenager, and I have many fond memories of growing up there. Members of my family still live along the border—they’re constituents of yours in El Paso, Mayor Cook—and the region is a place that I continue to care about very deeply.
As Assistant Secretary of Commerce in the International Trade Administration, I have the privilege and responsibility of traveling the globe and working with our international trading partners to deepen our strategic trade and commercial relationships worldwide. Among those relationships, there are few that are as important as the economic partnership between the United States and Mexico.
So I’m very pleased to be here today to have the opportunity to share with you what the Obama Administration is doing to promote cross border trade, and to engage you in our efforts to strengthen the border region and the border economy—a pillar of strength for both the United States and Mexico.
A Dynamic Economic Partnership
As everyone in this room well knows well, the border region is the staging point for the vast majority of U.S.-Mexico commercial activity. Approximately 80 percent of U.S. exports pass through or originate in the region.
That said, the impact of this bilateral relationship extends well beyond the border and into the heartland—into communities and businesses—in both countries. As President Obama has repeatedly observed, there is a uniquely strong bond between our two societies. This is reflected in the millions of Americans of Mexican ancestry who live in the U.S., as well as the tens of thousands of students, teachers, and researchers participating in exchanges between our schools and universities, and the one million people who cross our shared border every day. We are friends and partners who share more than a border—we share deep bonds and fundamental values.
Let me try to briefly put the scope and depth of the economic aspect of our relationship in perspective.
Last year, U.S. exports to Mexico, the country’s second largest export market, exceeded our exports to Brazil, Russia, India and China combined. In 2011, U.S. exports to Mexico totaled approximately $200 billion, which is roughly 13% of all U.S. exports. Two way trade in goods alone exceeded $460 billion—that’s roughly $1.3 billion each day. And that doesn’t even include trade in services, which would bring our dynamic partnership well in excess of a staggering half trillion dollars annually.
The trend in U.S.-Mexico trade is positive and keeps growing. Following a world-wide slowdown as a result of the global recession in 2009, bilateral trade increased 29% between 2009 and 2010. In 2011, U.S.-Mexico bilateral goods trade increased 17 percent over the prior year, and by all accounts we expect to see these positive trends continue. In fact, since the inception of NAFTA in 1994, U.S.-Mexico trade has more than quintupled.
But as impressive as these numbers are, they actually fail to capture the totality of Mexico’s contribution to the U.S. economy. Take for example the fact that apart from our exports, we imported about $263 billion in goods from Mexico last year. When you dig into the data, a remarkable fact emerges: our imports from Mexico actually drive our exports to Mexico. In fact, some 64% of all those Mexican goods sold in the U.S. contain U.S. inputs. It’s a synergistic relationship that benefits both countries. After all Mexico’s exports to the U.S. make up 22% of its GDP.
And of course we shouldn’t forget that Mexico is second only to Canada as a source of tourism in the United States. And those nearly 14 million annual Mexican visitors to the U.S. spend millions of dollars on U.S. goods and services every single day.
Now, for those of us who are from this region, some of these numbers may not come as a surprise. In this part of the country, it is difficult to not notice the symbiotic nature of cross-border trade.
In fact, the 10 U.S. and Mexican border states, with a combined population of nearly 100 million people, have been jointly described as the world’s fourth largest economy. On the U.S. side, border metropolitant statistical areas (“MSAs”) exported $55.3 billion in goods in 2010—that was up 27 percent over 2009. San Diego actually accounted for the highest amount of exports among these cities at $16.5 billion in 2010.
In the end all this data add up to one reality that matters most: and that’s the fact that this dynamic economic partnership puts millions of our people to work, providing for expanded opportunities for their families, and the kind of upward mobility that is the promise both nations seek for our citizens. And it’s your communities that drive this powerful economic engine.
The Border as a Driver of Economic Growth
As promising as the trade figures are, the truth is there is even more we can do together, and the border is the key to unlocking that growth.
As all of you know well, our countries share not just a border but a highly integrated economy with linked supply chains and high levels of industrial co-production, which means that large volumes of trade cross the border each day by truck. In fact, because of the extent of coproduction and economic integration, products or components often cross the border 3 to 4 times or more en route to final production.
Nevertheless, border regulations and current infrastructure capacity are generally ill-suited to dealing with the economic reality we face. Customs paperwork and documentation requirements are complicated, and the infrastructure capacity is failing to keep up with the increase in trade and related security requirements.
Many ports of entry (POEs) were built decades ago and have not been updated or maintained to keep up with the dramatic growth in trade that has resulted from NAFTA’s success. For example, the Mariposa POE in Nogales, Arizona was built to handle 300 trucks daily—today it handles 1,200 trucks each day.
Likewise, border delays hinder manufacturers’ dependence on reliable logistics for freight distribution. With today’s just-in-time supply chains, unpredictable wait times can act as a barrier to trade and a deterrent to cross-border investment. Border delays impact productivity, industrial competitiveness, and result in lost business income and reduction in gross output in both countries.
Earlier this week, I was in Indianapolis, Indiana, where I gave a keynote speech at the World Trade Club touting the benefits of U.S.-Mexico trade to the heartland of America—some 22 U.S. States count Mexico as their top export market. While there I visited a local company, Hoosier Gasket Corporation, that sells millions of dollars of product to Mexican manufacturers each year. Hoosier executives told me about an experience they had transporting their gaskets across the border. All of you live in the region, so you know exactly how hot the summer months can be down here—but commerce can’t stop when it’s hot. Well, on one occasion the company was transporting gaskets to meet an important order in Mexico. The truck carrying the gaskets experienced an unusually long delay at a particular border crossing, and with outside temperatures rising above 100 degrees, the temperature in the cargo bay rose to in excess of 160 degrees, warping the materials and destroying the product.
I suspect this is just another version of an old story that all of your are all too familiar with, but it illustrates the reality that border wait times and inefficiencies at border crossings affect a wide range of businesses on both sides. These inefficiencies can impose significant costs on our businesses and can hurt our global competitiveness. And that’s because increasingly the United States, Mexico and Canada are competing together as a regional economic platform in global markets.
I understand that the Border Mayors Association has made improving border trade facilitation a major focus of attention, and that you adopted a resolution on the issue at your inaugural summit in El Paso just over a year ago.
The Obama and Calderon Administrations have also been working hard on these issues, and I’d like to take just a few minutes to tell you a little bit about our efforts, which are embodied in a 21st Century Border Management Initiative.
a. A 21st Century Approach to Border Management
The 21st Century Border Management Initiative was launched in May 2010 on the occasion of President Calderon’s official state visit to Washington. Our leaders committed our nations to full and renewed cooperation based on the principles of joint border management, co-responsibility for cross-border security, and a shared commitment to the increasing the secure flow of legal commerce and travel.
The initiative is overseen by a bi-national Executive Steering Committee (ESC), of which my office in the Department of Commerce is a part, and is working to enhance economic competitiveness by supporting a bilateral border master plan process for infrastructure projects in order to increase capacity; expand trusted traveler and shipper programs; and explore opportunities for pre-clearance, pre-inspection, and pre-screening processes for commercial goods and travelers.
I’m pleased to report that we are already seeing positive results in each of these areas. We’ve seen new commercial crossings open in Arizona and Texas; expansions of existing facilities like the Laredo World Trade Bridge—one of the busiest commercial crossings in the nation—and, importantly, the groundbreaking for one of the first new transborder rail projects in more than a century at the West Rails Bypass Project in Brownsville, Texas. Clearly more needs to be done, and we’re determined to continue to push for the resources and support to make that happen.
We are also making significant progress on facilitating the secure flow of goods and people. For example:
- The Mexican government launched a new supply chain security and trusted shipper program called New Plan for Certified Businesses (Nuevo Esquema de Empresas Certificadas – NEEC). This program’s security standards and validation process align with the U.S. Customs-Trade Partnership Against Terrorism (C-TPAT) program, allowing for mutual recognition.
- The U.S. Customs and Border Protection (CBP) expanded the Global Entry trusted traveler program to Mexican citizens. The launch of Global Entry with Mexico effectively established a common vetting standard for trusted travelers between our two countries.
- Last July, CBP and its Mexican counterpart, Aduana, signed a Declaration of Principles to launch pre-screening and pre-inspection pilots in a few proposed locations: Laredo, Santa Teresa, and here locally in Otay Mesa.
As these important programs are initiated, we’re also keeping a close eye on other trade facilitation initiatives, including conducting important border wait time studies at critical border crossings to better understand how to increase efficiencies in cross border trade.
Within the framework of the 21st Century Border Management Initiative, much of the responsibility for the core infrastructure initiatives lies with CBP and other agencies. Our primary role at the Department of Commerce is to ensure that our efforts do not overly concentrate on just the security dimension of cross border management, but also include a robust focus on commerce and trade, and this means ensuring that the private sector, civil society and key border leaders have opportunities to give input into our joint border management efforts.
To that end, I personally have led multiple trips to the border region to discuss our efforts and solicit feedback. Just this past June, I led a week-long trip with other senior U.S. and Mexican Government officials to key points along the U.S.-Mexico border, including San Diego/Tijuana, where we were hosted by Mayor Bustamante, El Paso and Santa Teresa, where we were hosted by Mayor Cook, Laredo/Nuevo Laredo, and Monterrey, Mexico, as part of an ongoing effort to provide stakeholders with an opportunity to engage in the dialogue. I was joined by a delegation of senior U.S. officials as well as private sector representation from the U.S. Chamber of Commerce and several Chamber member companies. Throughout the trip we engaged with key local public and private stakeholders to advance border trade facilitation discussions and brought attention to the deep economic ties between businesses on both sides of the border. In particular, the delegation hosted three stakeholder meetings, one of which was convened by Mayor Cook in El Paso.
b. “Changing the Narrative” through the Border Export Strategy
Now a lot of important work is being done along the border to enhance and improve infrastructure, improve trade facilitation, and to increase the secure flow of goods and people. But in my view, that’s not enough. We’ve also got to change the narrative about what the border means for both countries and how it is a critical asset and driver of economic growth and prosperity. That’s why the Department of Commerce has launched a Border Export Strategy as one important element of President Obama’s National Export Initiative. As all of your experience daily, to the extent the national media and, as a result, our national discourse focus attention on Mexico and the border, they tend to focus on the worst and most sensational stereotypes and stories about gun running, cartel violence and illegal immigration. No doubt, security along the border is critically important, but lost in translation is the reality of the powerful economic engine that the border region represents. We speak of building walls and keeping people out, rather than focusing on what a truly extraordinary asset our economic partnership represents. A recent report issued by the Center for Trans-border Studies at Arizona State University characterized the border region as a critical national asset that is “hidden in plain sight,” and I couldn’t agree more.
That’s one of the reasons why I have made the promotion of cross-border trade a top priority during my tenure in office. I’ve taken numerous trips to Mexico and the border region, carrying this message and focusing a positive spotlight on this important asset. Through our Border Export Strategy, we are promoting trade, deepening our commercial ties, and working hard to call attention to the significant contributions the border region, border economies, and border communities make.
We’ve led trade missions to Mexico, we’ve partnered with economic development institutions along the border, and, as I mentioned earlier, I led a cross-border trade promotion trip to showcase companies, joint ventures and economic development initiatives that are contributing to the economic health of our nation. Part of this strategy also includes taking the message beyond the border to the rest of the nation, like Indiana earlier this week, a state that depends on trade with Mexico to support more than 64,000 jobs.
One of the key goals of the Border Export Strategy is help build a new national consensus on the importance of strengthening our bilateral economic relationship with Mexico and to remind the nation that, notwithstanding the very real challenges Mexico is facing, we have a robust and vibrant partnership that requires our sustained commitment. To that end, I’m pleased to announce that a major deliverable of the Border Export Strategy will be the convening of a two-day conference that we are co-hosting with the North American Center for Trans-border Studies at Arizona State University. The conference, entitled “Realizing the Economic Strength of Our 21st Century Border: Trade, Education, and Jobs,” will bring together academia, private and public sector leaders, and members of civil society to discuss strategies for strengthening cross-border trade and to share best practices for economic development. It is intended to be another step along the road towards our shared goal of building a stronger economic foundation that will drive commerce and create jobs on both sides of the border, and I sincerely hope to see many of you there. It will be held in Tempe, Arizona on September 23-25, and it should serve as a timely follow up to the discussion that we are having here today and as a vehicle for the formulation of a number of policy recommendations that will be developed and shared over the next year.
I value the experience and expertise of the border mayors, and I certainly hope that you will join us. I am happy to report that we have already received confirmation from several border mayors, including Mayor Stanton of Phoenix and Mayor Cook of El Paso. We also want to ensure that this is truly a bi-national conference, and we have already secured high-level participation from the Mexican government, including Under Secretary for International Trade, Francisco de Rosenzweig. I sincerely hope that many of the Mexican border mayors in attendance today will join us in Tempe as well.
Now in order to ensure that our discussions contribute to real action, ASU’s North American Center for Transborder Studies will be assembling a new coalition, known as the U.S.-Mexico Economic Advancement Council, which will be dedicated to advancing these important issues once the conference concludes. We certainly hope that members of the Border Mayors Association, along with private sector stakeholders, will participate in the Council.
Opportunities for Border Mayors Through the NEI’s Metropolitan Export Initiative
If you will indulge me just a few more minutes, I’d like to bring to your attention just one more aspect of the Obama Administration’s efforts to engage Mayors and municipal leaders in creating jobs through exports that I think is relevant to our discussion today.
I hope by now many of you are already familiar with the President’s National Export Initiative. The NEI has several goals, but chief among them is to double U.S. exports by 2014 and to dramatically improve our strategic engagement with our critical trading partners like Mexico. To achieve this, the President has asked us to redouble our efforts to open new markets for U.S. goods and services, substantially expand our trade promotion efforts, increase access to financing for those companies doing business overseas, and, importantly, to aggressively enforce our trade laws to ensure that our companies are able to compete on a level playing field. The President mobilized the entire government to support this effort through the Export Promotion Cabinet, and he also engaged captains of industry and other private sector leaders to help advise and support the effort through the President’s Export Council.
Among numerous other initiatives, the President’s directive to focus on exports prompted the Department of Commerce’s International Trade Administration to team up with the Brookings Institution to create the Metropolitan Export Initiative (or MEI), and this is an avenue that is ripe for closer collaboration between the Administration and all of you.
In short, the MEI is designed to help American cities develop sustainable and strategic plans to increase their exports. Commerce and Brookings are working to support local officials, as well as civic and business leaders, in creating and implementing customized Metropolitan Export Plans.
Commerce and Brookings have also recently collaborated to launch the Metropolitan Export Exchange, a program for metropolitan leaders to learn how to develop their own plans in a guided setting. This program is designed to help cities develop or improve their local global trade strategies. Information about the program can be found on the Brookings website, which also includes helpful technical assistance outlining the critical elements of a successful metropolitan export plan.
I’m pleased to inform you that several border cities have already expressed interest in participating in these programs. I also believe this initiative has relevance and application to our Mexican colleagues who are with us today, because, as we’ve discussed, cross border trade in both directions clearly benefits both nations.
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Let me conclude by simply reiterating what I hope has come through clearly in my remarks: this administration is fully committed to the U.S.-Mexico economic partnership, and to strengthening our cross border ties. Thank you again, Mayor Sanders, for giving me the opportunity to speak with all of you today about the U.S.-Mexico trade relationship. And thank you to the Border Mayors Association for the good work that you’ve done and are doing to help the Administration formulate meaningful border policy advancements.
Please know that the International Trade Administration and the Department of Commerce stand ready to work with you on strengthening the U.S.-Mexico commercial relationship and improving the quality of life for all citizens in the region.
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