Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
"Realizing the Economic Strength of Our 21st Century Border: Trade, Education, and Jobs"
Monday, September 24, 2012
As prepared for delivery.
Thank you very much, Rick, for that kind introduction, and for your leadership. Good morning everyone; muy buenos dias y bienvenidos a todos.
Before I begin, I’d like to take a moment to express my deep appreciation to Rick and the entire team at ASU’s North American Center for Transborder Studies for the terrific partnership you’ve extended in making this conference happen. Thank you, also, President Crow, for your leadership and for the university’s important support. And thank you, Mayor Stanton, and others from Phoenix and Tempe, for hosting us today. Finally, let me express my sincere appreciation to our sponsors, including especially the U.S. Chamber of Commerce, the Fresh Produce Association of the Americas, and the Arizona Commerce Authority for their generous support.
But most of all let me express my heartfelt thanks to all of you, for taking time to be here and for the hard work you do each day to help us “Realize the Economic Strength of our 21st Century Border.” Quisiera dar una bienvenida muy calurosa a nuestros amigos Mexicanos que han viajado para participar y contribuir en esta conferencia binacional.
As I mentioned last night at the reception, it is a particular pleasure for me to be here this week for a number of reasons. Above all, 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 zona fronteriza, which is a place that I continue to care about very deeply. Fortunately for me, promoting the well-being of the border also happens to be a national priority for both countries.
Today’s conference marks the culmination of a vision we’ve had for some time. Two years ago, when President Obama launched the National Export Initiative, we knew that deepening our economic ties with Mexico would be central to achieving our goal to re-energize American exports as a key element of our economic recovery. That’s why the Administration launched the Border Export Strategy, to begin to showcase the benefits not just of the U.S.-Mexico trade relationship, which I’ll say more about in a moment, but of the border region specifically. With the media’s relentless focus on the negative accounts of insecurity, cartel violence and gun running, we knew that the full story wasn’t being told. We knew that the reality of the border economy—and the vibrant, diverse and talented communities who live here—were being drowned out in the torrent of negative media coverage that obscured a very important truth: that the border is a source of enormous strength for both countries, and is a place that merits investment, support and serious attention in Washington.
Fortunately, our work on a border strategy coincided with important contributions and calls for action being made in civil society and in the private sector, including important reports prepared by ASU’s North American Center for Transborder Studies, as well as others, like the U.S. Chamber of Commerce. We realized that there was a synergy of sorts occurring—a common consensus emerging that the U.S.-Mexico relationship generally, and the border region specifically, was an important asset that needed to be more fully leveraged. As we began to assess what we could do to support economic growth and job creation through cross-border trade, it became very clear that what was needed was a platform to convene critical stakeholders from all across the border to discuss key challenges, share best practices, and promote new initiatives not only to change the narrative about the border but, importantly, to develop and pursue a more comprehensive, border-wide strategy to build support for continued public and private investment in the region.
The result is this conference, which we hope and expect will be an important step in helping to forge a coalition and a new consensus on the importance of the border and its economic contribution to the U.S. and Mexican economies. In the next two days, you will hear substantive panel and plenary discussions that cover a wide range of topics central to strengthening the border economy. As the conference begins, however, I’d like to take a few minutes to put our work in the context of a broader economic reality, and to paint for you a different kind of picture about the economic strength and vitality of this dynamic binational partnership than the one you often hear or read about in the national press.
The Border as a Driver of Economic Growth
As this audience well knows, 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.
Many of you have a deep appreciation for the linkages between our two countries and are well-versed in our relationship. Nevertheless, I’d like to take a moment to put the scope and depth of the economic dimension of our relationship in perspective by sharing some data.
In 2011, U.S. exports to Mexico, the country’s second largest export market, exceeded our exports to Brazil, Russia, India and China combined. 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 not to 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, comprise a region that is comparable to the world’s fourth largest economy. On the U.S. side, border metropolitan statistical areas (“MSAs”) exported $55.3 billion in goods in 2010—that was up 27 percent over 2009. The Phoenix region actually accounted for a significant amount of exports among these cities at $10.9 billion in 2011.
All of this data adds up to one reality that matters most: it is the border that drives this dynamic economic partnership that puts millions of Americans and Mexicans to work and provides for the kind of upward mobility that is the promise of both nations.
What is more, it is vital to our shared competitiveness. And that’s because, increasingly, the United States, Mexico and Canada are competing together as a regional economic platform in global markets. In fact, with its open markets, low tariffs, strong protections for intellectual property, low energy costs, skilled work force, and, importantly, integrated supply chains, the North American platform is one of the most globally competitive regions in the world. Just last week, I’m sure many of you saw the Financial Times article highlighting the competitiveness of Mexico vis-à-vis China. In the United States, we too, are seeing a renaissance in manufacturing—in fact, for the first time in a decade U.S. manufacturing job growth is again on the rise. My point, ladies and gentlemen, is that the border is a key determinant to our global competitiveness.
Leveraging the Power of Our Proximity
Despite our success to date, there is even more we can do together. And the border is the key to achieving it. That’s why the Obama Administration believes this conference could not be more timely.
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 goods cross the border each day by truck. In fact, there is so much coproduction and such a great degree of economic integration that many products and components often cross the border several times en route to final production. In this respect, our shared border represents not a line that divides us, but a critical asset that contributes to our shared prosperity. Our challenge, then, is to leverage—in the words of Secretary Clinton—“the power and advantage of our proximity”.
Unfortunately, current infrastructure capacity is generally ill-suited to dealing with the economic reality that we face. It has failed to keep up with the dramatic increase in our trade as well as 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.
Most importantly, these issues matter not just to border cities and border states, but to the nation at large. In fact, some 22 U.S. States count Mexico as their first or second largest export market. Companies around the country depend on and utilize border infrastructure and, as a result, have a vested interest in what happens here. That is why, as part of our Border Export Strategy, I have traveled to the heartland of America promoting this region, making the case that they, too, have a vital interest in what happens along the border.
Just last month I traveled to Indianapolis, Indiana, where I gave a keynote speech at the World Trade Club explaining how U.S.-Mexico trade yields substantial benefits to Indiana. While there, I visited a local company, Hoosier Gasket Corporation, which 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. Most of you live in the border 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 many of you have heard, but it illustrates the reality that border wait times and inefficiencies at border crossings affect a wide range of businesses on both sides of the border. These inefficiencies can impose significant costs on our businesses throughout the country and can hurt our global competitiveness. And these are issues affecting not just Arizona, Texas, and the border states, but the nation at large.
A 21st Century Approach to Border Management
President Obama understands all of this; that is why he has made addressing U.S.-Mexico border issues in a comprehensive manner a top priority since the beginning of his presidency. Together with Mexican President Calderon, President Obama launched a new 21st Century Border Management Initiative, committing 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.
A bi-national Executive Steering Committee (ESC), of which my office in the Department of Commerce is a part, oversees the initiative. Through the ESC we are 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.
We have an entire panel discussion devoted to this initiative, so I won’t say a lot here except to note that we are seeing some significant progress across a wide range of 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.
We are also making significant progress on facilitating the secure flow of goods and people, including the launch of new supply chain security and trusted traveler and shipper programs. And, of course we are continuing to work together on critical security measures to ensure the safety and security of our people on both sides of the border.
Within the framework of the 21st Century Border Management Initiative, much of the responsibility for the core infrastructure initiatives lies on the U.S. side with the State Department, CBP, and other agencies, and let me say I think they are doing a terrific job. 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. That’s why I have spent so much time in this part of the country, leading repeated visits to key border communities, including a border-wide trade policy mission that criss-crossed the border from San Diego to Laredo, and, last month, an address to the bi-national border mayors at their annual summit in San Diego. And that’s why, ultimately, we’re here today, at this conference: to continue to engage all of you in this important work.
Now, it goes without saying that a building a 21st Century border requires us to go well beyond the topic of border infrastructure and trade facilitation. And, that’s why, as you review the conference agenda, you will see that we’ve included substantive discussions on issues ranging from workforce development and education to more effectively promoting foreign direct investment. We’ve included sector-specific panels addressing key growth markets, as well as a discussion on broadening cross-border tourism. And given that we are living in a time of constrained public resources, we’ve also included a panel devoted to the important topic of how best to develop effective public-private partnerships to meet the growing needs of this region.
In short, I hope we have succeeded in crafting a program for the next two days that will engage you and take full advantage of your experience and expertise to forge a new coalition and help build a new consensus on what we need to do, together, to realize the economic strength of our 21st Century Border.
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Let me conclude by saying what I hope is clear to you by now: the Obama Administration and the Department of Commerce are fully committed to the U.S.-Mexico economic partnership, and to strengthening our cross border ties. And we’re grateful to you for willingness to work together on this important initiative.
Thank you again, ASU, for hosting us for the next few days. And thank you to our other generous sponsors for your support and leadership.
I look forward to hearing from and meeting with many of you in the coming days.
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