At the opening of the NAFTA 2.0 conference held in San Antonio this past week to commemorate 20 years since the signing of the North America Free Trade Agreement (NAFTA), San Antonio Mayor Julian Castro, an rising superstar in the Democratic Party, along with leaders from Mexico and Canada, spoke of the vision for NAFTA into the future.
The surprise of the evening though was Mexican Ambassador Arturo Sarukhan’s announcement that in the next week, an announcement would be forthcoming from the Mexican government regarding the establishment of pre-inspection facilities in Mexico where goods entering that country headed for the United States would be inspected at these Mexican facilities and allowed to enter the U.S. without stopping at the border.
[pullquote_right] “We have $80 billion dollars worth of trade every single year coming through in this particular region. If we could increase that 10 percent, that’s billions of dollars that are coming back across our borders. Those are more jobs, that’s increased quality of life.”[/pullquote_right]
Companies would be pre-certified and vetted by the two governments in a tremendous leap toward erasing the United States border with Mexico and achieve one of NAFTA’s chief goals, to create a common economic and security perimeter, a true North American Economic Union.
Notwithstanding Sarukhans unfortunate choice of words which will have the immediate effect of inflaming the xenophobes, protectionists and isolationists and various “sunshine patriots”, A “North American Economic Union” makes perfect sense as the three countries working together could be an economic powerhouse to be reckoned with in this global economy.
Sarukhan’s call to modernize NAFTA by the three partners joining the Trans Pacific Partnership (TPP) took courage and conviction. Many leaders in North America openly worry about the threat of TPP upstaging and overshadowing NAFTA.
Ambassador Sarukhan instead encouraged them to embrace it. He acknowledged that security and political issues have caught up with NAFTA and that none of the tri-lateral leaders seem willing to expand NAFTA at this time, so he called the TPP a way strengthen NAFTA through the “back door.”
“I don’t think there’s the interest in expanding NAFTA, but the beauty of TPP is we can do it through the back door, by having Mexico, Canada, and the United States join the TPP and bring us up from the bootstraps,” revealed Sarukhan who wants to see NAFTA pushed further with what he called low hanging fruit like a single customs form and cabinet-level NAFTA czar within each government.
“It is my job to convince the Americans that this bilateral relationship with Mexico is the most important relationship it has on the face of the earth,” said a confident Sarukhan.
Canadian Consul General Paula Caldwell St.-Onge was quick to note that the trilateral relations launched under NAFTA ushered in a new age of prosperity for Canada, which is the top export destination for 35 states.
She warned, “We need to protect ourselves from protectionist views,” supporting Sarukhan’s sentiments. “When you say ‘Buy American’ you’re wrong. We should buy North American.”
SO WHAT IS THIS “INSPECTION FREE” PROCESS?
Anyone remember the Kansas City Super Port?? About the time the protectionists were raising hell about the Trans-Texas Corridor calling it a “Nafta Superhighway” being built to enable “10′s of 1000′s of Mexican trucks to come into the United States, unregulated, the same groups, mostly the Teamsters and OOIDA, hit upon the Kansas City Smart Port as enabling this “invasion” of the Mexican trucks. They also erroneously claimed that allowing Mexican Customs inspectors to be based at this inland port would be a surrendering of our national sovereignty to Mexico.
Total hogwash then and now, but the plan revealed by Ambassador Surukhan is basically the same but on a much smaller scale.
Sarukhan said there initially will be three inspection sites on the U.S.-Mexico border, and said U.S. Customs and Border Inspection (CBP) officers will be in stationed in Mexican territory conducting the cargo inspections. When asked specifically where, and if those sites included the border cities of Nuevo Laredo or Ciudad Juarez, which border Texas at Laredo and El Paso, respectively, the ambassador deferred the question for a future time.
“You will hear about them very, very soon,” he said. Companies have to apply and be vetted by both governments before they are approved, Sarukhan said.
However, considering that Laredo/Nuevo Laredo and El Paso/Cd. Juarez are the #1 and #2 crossings in volume respectively, it is a safe assumption this is where it will happen.
Through September 2012, about $172.5 billion in goods passed through the Laredo port and about $65 billion through El Paso, according to data from the Bureau of Transportation Statistics. That breaks down to about $1.2 billion dollars in daily trade between the two countries. Trade, import and export, equals JOBS on both sides of the border.
NAFTA & TRADE UNDER PRESIDENT-ELECT ENRIQUE NIETO
Mexico inaugurates a new President on December 1, 2012. President-Elect Enrique Peña Nieto will probably continue the efforts that have made Texas such a major factor in binational trade, according to Ambassador Sarukhan.
“I think the president-elect and his team have been very clear in what they see as the importance of NAFTA. I think they belong to a generation of Mexicans who are in many ways the NAFTA generation, and they have seen the positive impact NAFTA has generated,” he said.
Speaking about outgoing President Felipe Calderon, who he said had helped modernize and expand trade infrastructure like no president in recent history.
“No ports of entry [had] been built in over a decade,” he said. “We now have five that have been built in this administration. The latest one will be in Matamoros [across from Brownsville], so I think this is a very important trend,” he said.
EFFECT ON CROSS BORDER PILOT PROGRAM TRUCKS
This new policy of in-country inspections will not have any immediate effect on the participants in the ongoing Cross Border Pilot Program with Mexico since this pertains to cargo inspections and streamlines them at the point of loading and debarkation.
The Cross Border Pilot Program, completing it’s first year, now has 9 Mexican carriers participating. These 9 carriers are operating 17 vehicles, 20 drivers and have made 221 successful crossings under the pilot program. They’ve been inspected, as required under the rules of the pilot program 173 times with only minor issues arising.
After Some Sluggish Years, NAFTA Creates Border Boomtowns
While we’re on the subject of NAFTA, I ran across an interesting article in FRONTERAS DESK of the above title.
According to the article;
A study by the Federal Reserve Bank of Dallas released this summer shows that in the last decade per-capita income in Texas border cities has been rising faster than the national average. The study attributes two-thirds of that growth to cross-border trade. California is experiencing similar growth while Arizona and New Mexico are just waking up the economic opportunities of trade with Mexico.
“It’s a good transition overall for the economy,” said Roberto Coronado, who co-authored the study. “Service related jobs typically come with higher wages, higher standards of living and that’s exactly what we find in our analysis.”
This all tells us one thing, that despite the claims of the obstructionists, protectionists and others, NAFTA has been a success over the past 20 years. Jobs in the United States that have been lost due to technology which requires less workers and a better educated workforce have been blamed on NAFTA, but that has simply not been the case.
NAFTA is here to stay. The Trans Pacific Partnership is fast becoming a reality and Mexican trucks on US highways are a fact of life. Nothing is going to change that.