Project Unveiling: Zones of Hope: Challenges and Opportunities in Improving Border Economic Micro-Zones

Join us for a discussion on the critically important cross-border pedestrian environment:

Zones of Hope: Challenges and Opportunities for U.S.-Mexico Border Economic Micro-Zones

July 14, 2016, 3:00 – 4:30 pm

Connect Lounge, The San Diego Outlets at the Border
4463 Camino De La Plaza, San Ysidro, CA 92173
Please RSVP to rsvp@naresearchpartnership.org

The pedestrian environment adjacent to U.S.-Mexico land ports of entry is the least visible, most impacted and, until recently, the least attended of the three major types of crossings at ports of entry. Yet it is the most important for local commercial districts, neighborhoods and communities on both sides of the border.

So, how do we capitalize on the the binational fusion of people, culture and ideas taking place on the ground right at the U.S.-Mexico border?

San Diego’s Border Fusion Group recently commissioned the North American Research Partnership to conduct a study of Border Economic Micro-Zones to determine a) their economic potential and b) practical next steps for key stakeholders to take in order to realize this potential.

This event will feature a presentation of the research initiative as well as a panel discussion among private- and public-sector experts on the past, present and future of these complex economic areas. A detailed agenda will be forthcoming.

Seating is limited. Please RSVP to rsvp@naresearchpartnership.org.

We are grateful to Border Fusion Group and the following Founding Sponsors for their generous support for Phase I of this unique applied research project:

– Crystal Clean Car Washes
– Futuranet Transportation
– WG Wireless Communication
– GMI Integrated Facility Solutions
– Baja-Mex Insurance Services
– LAZ Parking Services

Many thanks to our event partners: San Ysidro Chamber of Commerce and San Ysidro Smart Border Coalition

Colin Robertson – Bolstering Canada’s International Reputation

NARP Advisory Board member Colin Robertson is a former Canadian diplomat; Senior Advisor, Dentons, LLP; and Vice President and Fellow, Canadian Global Affairs Institute. He writes a regular column for The Globe and Mail newspaper that analyzes Canada’s role in the world and often North America specifically. During 2016 we will reprint or excerpt selected recently written columns, which are posted with the permission of the author. The views and opinions expressed in this article are those of the the author and do not necessarily reflect a position of the North American Research Partnership.
 

Three things Trudeau can do to bolster Canada’s international reputation
Colin Robertson  The Globe and Mail Tuesday, Jan. 05, 2016

“It’s 3 a.m. There’s a phone in the White House and it’s ringing. … Who do you want answering that phone?” National security experience didn’t do it for Hillary Clinton in 2008, but this ad could do the trick in 2016. Public anxieties about security and a fragmenting international order are rising.

Assessing geopolitical risk is a booming business for diplomats, spies and money managers.

Continuing instability in the Middle East and North Africa tops the Council on Foreign Relations’ annual Preventative Priorities Survey. At the top of the list is the conflict in Syria and Iraq that creates refugees and breeds terrorists. Current tensions between Saudi Arabia and Iran are a piece of the deep, historical divisions between Shiite and Sunni, Persian and Arab.

Other top-tier contingencies include a crisis with North Korea; disruptive cyberattacks; a terrorist attack on the U.S. or an ally; political violence in Turkey; political instability in Egypt or Afghanistan. Lower-tier contingencies include more Russian aggression in Ukraine; Russia-NATO tensions; European Union divisions caused by the refugee influx; South China Sea confrontations sparked by China.

Nor can we count on prosperous times to assuage tensions. Economists predict another anemic year for China and Europe. Global trade, the engine of growth since 1945, has slowed.

Another challenge that should worry policy-makers: Global democratization is in retreat.

In its annual assessment of social, political and economic freedoms, Freedom House reports that the state of freedom worsened significantly in nearly every part of the world.” The bright spots last year were few: fair elections in Argentina and Tunisia, Aung San Suu Kyi’s victory in Myanmar.

With more governments censoring information and expanding surveillance, Internet freedom declined for a fifth-consecutive year. Not since the Cold War have nation states’ commitment to an international system built on democratic norms been less durable.

Other human rights watchdogs drew similar conclusions, warning that women are particular targets of Islamic terrorists, such as Islamic State and Boko Haram.

Amnesty International wants a “dramatic shift” in how the international community handles the 19.5 million refugees. Resettlement placement remains disappointingly low. Canada, it noted, provided inspiration in pledging to welcome 25,000.

To demonstrate that “Canada is back,” we can do more to support international order.

First, actively recommit to internationalism.

Prime Minister Justin Trudeau has rededicated Canada to multilateralism, and he actively engaged at the quartet of recent international summits (G20, Commonwealth, APEC, Climate). On climate change, Canada put up money and worked constructively to help close the Paris deal.

More effective than creating new democracy institutes is bringing vigour and accountability to existing multilateral programs. This should include our own Parliamentary Centre and our international youth leadership programs.

Second, identify those niches where we can make a difference.

Our expertise in international refugee matters should be reactivated, drawing on our successful experiment in pluralism. We can also demonstrate to the Trumpsters and scaremongers that a generous resettlement policy is good international citizenship and builds a stronger nation.

Containing nuclear proliferation is another niche where we can help. We have both experience and expertise that can also serve our commercial interests in a world that wants to wean itself off carbon.

The “Canadian vaccine” that helped contain the Ebola epidemic makes the case for continuing investment in collaborative scientific research.

Water will likely replace oil as the vital commodity of the 21st century. It’s already the source of regional conflicts. With a century trans-boundary water-management experience, we can help. Significant advances in effective water usage by our oil, gas and hydro industries have wider potential.

And third, let’s invest in the Canadian Forces, especially our navy.

In an era of recurrent humanitarian disasters, there will be frequent calls at 3 a.m. for first responders. The Canadian Forces have demonstrated proficiency, but they need both trained personnel and new kit.

The promised defence review must re-examine our procurement policies. What continuing premium are we prepared to pay, not just in dollars but in fleet readiness, to “Buy Canada”?

Earning our way back to a level of international engagement commensurate with our aspirations means activist diplomacy and Canadian Forces with muscle. This requires long-term investments in money and resources.

The post-Second World War institutions that guided international relations through decades of bipolarity and years of unipolarity are under intense stress.

Coping with the new multipolarity requires every nation, including Canada, to step up their commitment to multilateralism. Queen Elizabeth II got it right in her Christmas broadcast, saying: “It is better to light a candle than curse the darkness.”

The international scene will test Mr. Trudeau’s “sunny ways.” By finding our niches, we can demonstrate that “Canada is back.”

Recommendation 1 from Competitive Border Communities

Over the next several weeks, we will periodically take a closer look at the eight principal recommendations from our 2015 report, Competitive Border Communities: Mapping and Developing U.S.-Mexico Transborder Industries, a collaboration with our partners at the Mexico Institute. Today we look at the first recommendation. 

Our leadoff recommendation (you can find the full list of recommendations on pages 14-15 of the report) has to do with the key economic development role played by the two federal governments at what is a very delineated, securitized border (which could not be more different from Europe’s Schengen area). To wit:
The United States and Mexican federal governments must play an especially important role in cross-border economic development efforts. Given the fact that border economies have an international boundary running through the middle of them, stakeholder engagement efforts that build partnerships between federal agencies and local communities are invaluable in this process. U.S. and Mexican consulates can serve an expanded facilitating role in these cross-border economic development efforts.
In other words, because of the highly “securitized” nature of the U.S.-Mexico border, border communities’ independent spirit won’t be enough to get the job done. In addition, post-9/11 security enhancements along the U.S.-Mexico border by the U.S. Department of Homeland Security have—as we have argued elsewhere—have made it that much harder to do economic development in border communities (much of which should be cross-border economic development).

Therefore, if the two federal governments want to utilize the border as a platform for economic integration, development and growth by helping to build transborder industry clusters, they must play a significant role in local cluster-based economic development efforts. Specifically, U.S. and Mexican Consulates in border cities will need to be staffed with additional experts on trade and export promotion, customs processes, agricultural issues and related topics. In addition, they are in the best position to pull together the numerous federal agencies with a stake in border economic issues.  There is much to do and the work has just begun, but the return on investment is potentially enormous.

Arizona’s Emerging and Multidimensional Commercial Relationship with Mexico

We are about to get underway here in Rio Rico for our second U.S.-Mexico Regional Economic Competitiveness Forum. As we head into summer, we have been reflecting upon how 2014 is shaping up to be an extremely interesting year in Arizona on the issue of international trade. It is remarkable to see a number of developments around the state coming together at more or less the same time. They include the following:

  • The City of Phoenix issued a request for proposals earlier this year for a trade development specialist to be based in Mexico City.
  • The state of Arizona also plans to open an office in Mexico City.
  • Tucson Mayor Jonathan Rothschild was just awarded the Ohtli award by the Government of Mexico.
  • The state’s associations of government are beginning discussions with mayors in northern Sonora on creating a “megaregion” modeled on the CaliBaja megaregion comprising San Diego, Tijuana, the Imperial Valley and the Mexicali area.
  • The Joint Planning and Advisory Council of the state of Arizona’s associations of government is promoting an idea to make the entire state of Arizona accessible to Mexican Border Crossing Card holders, rather than just area between the border and Tucson.
  • Discussions continue with ProMéxico (the trade and investment promotion agency for the Government of Mexico) on a potential presence in Arizona for the agency.

Taken together this is really quite a remarkable turn of events, when you consider where the state was in 2010 in the wake of the highly controversial SB1070.

Beyond its diplomatic challenges with Mexico, Arizona’s current round of engagement with Mexico is linked to a realignment of the state’s economic priorities following the Great Recession. Much of this engagement proceeds from the assumption that increased international trade has the potential to drive future high-value added economic activity and create more high-paying jobs for the state’s citizens.

Activity around trade in the state takes place largely on four distinct yet related planes. The first plane is with our neighbors, Sonora and Sinaloa, which Southern Arizona economic stakeholders in particular continue to cultivate as vital, go-to customers in terms of crossborder trade (shopping, fruit and vegetable distribution, real estate).

The second plane of trade engagement is currently developing, is more long-distance in nature and comprises a type of trade diplomacy with political leaders and federal agencies in Mexico City (which makes sense, as Mexico’s tendency toward centralization is strong in all matters, including economic matters).

The third plane of engagement is in its infancy and has to do with linking existing Arizona companies as suppliers to the rapidly developing automotive and aerospace clusters in Mexico’s Bajío region.

The fourth plane of engagement is almost fully conceptual at this point but consists in cultivating Mexican foreign direct investment (FDI) in Arizona as Texas has successfully done. Currently, Mexican FDI in Arizona is utterly minimal but real movement on that plane would be an indicator that the state has moved into a new era.

All of Arizona’s rethinking and repositioning on trade with Mexico–its leading commercial partner–is taking place as a host of other U.S. states and cities as well as other nations intensify their presence in Mexico as that country enters an amazing and really unprecedented phase in its history of rapid and far-reaching economic reforms and international engagement.

What this means is that Arizona can no longer rely on geography as a natural advantage and instead must move toward diversifying its trading and diplomatic approach with Mexico, one of the world’s most important economies. Arizona leaders also need to understand that their discourse and policies on immigration are and will continue to be fundamentally tied to issues of economic development and particularly trade diplomacy, by Mexican partners. The state needs a safe and efficient border with Mexico but that approach in and of itself will need to be contemplated with a broader vision of all that it means to be fully pursuing a deep and sustainable commercial relationship with one of the planet’s most important emerging economies.

Michoacán and Public Policy: Never Let A Serious Crisis Go to Waste

Many thanks to Gabriella Sánchez for her interesting take on the local roots of the conflict in Michoacán, which serves not only as a dramatic example of public safety issues boiling over but also for the way it speaks to a number of public policy areas simultaneously, including environmental, agricultural and even fiscal policies, among others. Most directly, of course, the crisis brings attention on Mexican President Enrique Peña Nieto’s security policy, anchored by a focus on reducing violence, centralizing federal security efforts, a new communications policy and creating a national gendarmerie (I would highly recommend viewing analyst Alejandro Hope’s excellent review of the policy during the Mexico Institute’s recent event, “The State of Citizen Security in Mexico: The Pena Nieto Administration’s First Year in Review.”). In fact, watch the entire video.

The crisis in Michoacán has touched off a tremendous discussion in Mexico over what the next steps should be. The Saturday Los Angeles Times piece by Richard Fausset is one of the better articles in English on the crisis, with a focus on the difficult options for Mexican federal, state and local officials. To wit: How do federal forces work together with the grupos de autodefensa? Should Mexico incorporate some or all of the vigilante groups into formal law enforcement? What is to be done about the government officials who aided and abetted the Knights Templars? In other words, extremely tough public policy questions, but an impressive range of ideas from analysts that have the potential to impact the issues going forward. “Never let a serious crisis go to waste,” to quote Rahm Emanuel.

Though Michoacán is located hundreds of miles south of Mexico’s border with the United States and by no means has a direct impact on U.S. security, it does raise comparisons to the (binational) response to the violence in Tijuana and Ciudad Juárez during the truly dark days of 2009-2011. The security situation in Tijuana and Ciudad Juárez is now much improved; in both cities, the role of civic organizations and detailed state-federal political and policy agreements were critical factors in bringing the city back from the brink. The multi-issue, multi-level response to border security challenges is a clear indication that Mexico is more than capable of addressing security issues. These are solvable problems in the medium-term that require strong initial investment and then a willingness to take on significant institutional change.

Of course, a number of critically important security areas in Mexico need continuing attention, including public participation, police reform and judicial reform. Successfully addressing these issues will positively impact U.S.-Mexico border security, as Eric Olson and I wrote in our chapter on security in the State of the Border Report. Binational collaboration can help to a degree in certain specific areas, and through the Mérida Initiative, the United States has invested in rule of law efforts in Mexico, including trainings for Mexican judges, prosecutors, forensic experts and police coordinated by the Conference of Western Attorneys General. Our 2011 report on binational anti-human trafficking cooperation efforts highlighted some additional and important collaborative work on an issue of mutual importance to both governments.

Public security in Mexico is a complex topic of immense importance for Mexico and, indirectly, the United States and Central America. A quick list of recommended work in English in this area includes David Shirk’s recent policy piece on the state of public security in Mexico, Daniel Sabet’s Police Reform in Mexico: Informal Politics and the Challenge of Institutional Change and Robert Donnelly and David Shirk’s Police and Public Security in Mexico. In Mexico, the Instituto Mexicano para la Competitividad, CIDAC and México Evalúa are among many non-governmental groups doing important work in this area.

 

 

Robert Pastor

American University Professor Robert Pastor, a friend and colleague to many of us working on issues relating to North America, passed away last week after a long battle with cancer. Bob was very respected for his tremendous body of work on North America and Latin America; his most recent book, The North American Idea: A Vision of a Continental Future was simply the latest in a long and impressive list of publications. His advice and insights were always helpful and came from broad and deep experience. His colleagues, friends and former students were amazed at his tenacity and work ethic up until the very end of his life. For a full accounting of his interesting life—including his time as President Carter’s national security advisor on Latin American and Caribbean affairs—we highly recommend reading the Washington Post’s remarkable obituary. Rest in peace, Bob Pastor.

NARP Comments on the U.S.-Mexico High Level Economic Dialogue

The U.S.-Mexico High Level Economic Dialogue was inaugurated in Mexico City this past September by Vice President Joe Biden and Mexican Secretary of Finance Luis Videgaray and represents a concerted effort by the governments of the United States and Mexico to focus on the two nations’ enormous economic relationship, which now totals over a half trillion dollars annually in two-way trade of goods and services. The North American Research Partnership took advantage of an opportunity provided by the U.S. Department of Commerce to submit formal comment on the U.S.-Mexico High Level Economic Dialogue and its initial work plan.

The work plan’s three pillars are Promoting Competitiveness and Connectivity; Fostering Economic Growth, Productivity and Innovation, and Partnering for Regional and Global Leadership. In general we emphasized four principal points which we have summarized below:

a. Keep the big picture in mind. Economic security is real security. From the U.S. perspective, the raison d’être for the HLED is stated clearly in the Federal Register notice itself: “Mexico represents a critical strategic ally and partner of the United States.”
b. This effort will require numerous different types of expertise and a new way to work. This is a big challenge and calls for a type of “whole of government” (interagency) work for which there is no readily available and unanimously agreed upon, successful model. Other binational processes (Border 2020 and the 21st Century Border Management Executive Steering Committee) offer interesting lessons and ideas for the HLED.
c. Outreach will be key to the success or failure of the HLED. Stakeholders, policymakers and citizens need to understand the work of the HLED to appreciate its importance. Outreach on international trade is particularly challenging because as a topic it is simultaneously politically difficult, abstract and highly detailed, an unfortunate combination in public policy. Such a high-level dialogue will necessarily need to support and hear input from local- and state-level groups on a continuing basis; as such the HLED should consider a range of robust formal and informal mechanisms for outreach to these groups.
d. Selecting and communicating progress on real metrics will help the HLED and the two nations build better policy on economic engagement. Vice President Biden’s encouragement to reach two billion dollars per day in crossborder trade in 10 years is an ambitious but easily grasped starting point. Keep it simple.

We focused additional comments on specific topics within the second pillar, Fostering Economic Growth, Productivity, Entrepreneurship, and Innovation, which we look forward to sharing in future posts.

U.S.-Mexico Tourism and Taxes in the Media

Tourism is an underestimated economic driver for the U.S. and Mexico that tends to be taken for granted somewhat in the broader binational discussion. Two recent media reports highlight its importance. Associated Press reporter Elliot Spagat recently sought to draw out potential impacts to border communities from the Mexican government’s doing away with the preferential tax status of the border zone. On January 1, the federal value added tax was raised to the standard 16% after a decades-long policy of a reduced 11% rate in Mexico’s border region. As Spagat concludes, this is essentially an added incentive for Mexican crossborder shoppers to make their purchases in San Diego, El Paso, Tucson, Brownsville and other U.S. border communities rather than at retailers on the Mexican side of the border (retailers in the U.S. often have other advantages, including intense competition, generous return policies, and greater variety, particularly in apparel and electronics). Spagat quotes statistics from the University of Arizona’s widely cited 2008 study on the economic impact of Mexican visitors to Arizona; as the report notes, just over 48% of sales tax revenue in Santa Cruz County in southern Arizona are generated from sales to crossborder Mexican shoppers. This is a remarkable level of dependence on retail sales to Mexican consumers; some in southern Arizona believe that the real figure is even higher. As the Arizona Republic recently pointed out, policymakers at the local level throughout Arizona have become so interested in the potential economic value of Mexican shoppers that the Maricopa Association of Governments is spearheading an effort to include the entire state within the “border zone” (which currently extends 75 miles north of the border).

We have pointed out the importance of Mexican tourists to the U.S. economy at various times, including our March 2012 study, “Realizing the Full Value of Tourism from Mexico to the United States,” which we presented at an interagency meeting at the White House on travel and tourism to the United States. With the complete numbers for 2012 finally out, Mexico again tops the list of destinations for U.S. tourists, as the Los Angeles Times pointed out on January 1 in an article featuring the latest statistics on the issue from the U.S. Department of Commerce’s Office of Travel and Tourism Industries. Although the numbers of U.S. tourists to Mexico slipped somewhat in 2011 and 2012, Mexico still stands at the top of the list, ahead of Canada by a good eight million trips annually.

Mayors, Legislators, Governors and Trade Diplomacy in North America

The last couple weeks have brought some interesting news of state and local officials working on improving trade relations with Mexico. Today the San Diego Union Tribune reported on a trade delegation to Tijuana by California State Senator Lou Correa (D-Anaheim), Assemblymember Travis Allen, (R-Huntington Beach), and Assemblymember Rocky Chavez (R-Carlsbad) and retired state senator (and NARP board member!) Denise Moreno Ducheny from San Diego.  Other stories have included Tucson Mayor Jonathan Rothschild’s recent visit to Mexico City to meet with officials there, including Foreign Minister José Antonio Meade as well as a remarkably detailed Arizona Republic Fact Check of Phoenix Mayor Greg Stanton’s recent comments about the economic impact to Phoenix of air travelers from Mexico. And Nevada Gov. Brian Sandoval’s recent signing of an agreement with the state of Mexico to work together on issues that includes not only tourism but also manufacturing, mining and education is interesting for a number of reasons (perhaps chief among them that Nevada’s trade with Mexico has historically been so focused on Mexican tourism to the state).

The international impact of policies taken by state and local officials in North America is of particular interest to the North American Research Partnership as we analyze what works and what doesn’t work with the “bottom-up” models of governance and hence international engagement that are so strong in the West and Southwest.

Rick Van Schoik to speak at NPI tomorrow on North American energy

 

The possibility of North American energy self-sufficiency, aka security, through interdependence is as elusive today as it was in the past, the recently discovered reserves and technologies developed notwithstanding. One of the more active portfolios of both the North American Research Partnership and the US-Mexico Border Research Partnership is on energy. On Wed, July 24 Rick Van Schoik, director of NARP’s energy portfolio and Duncan Wood, director of the Mexico Institute, will share insights as respondents to Bill Richardson, Secretary of Energy for President Clinton when he speaks at an event in Washington sponsored by the New Policy Institute. Rick will talk about past failed energy initiatives across one or more borders and about eventual possible mechanisms  for moving forward on siting, environmental review, finance, and international permitting of energy projects and transmission infrastructure with emphasis on renewable and other clean energy sources.  Among the options he will describe is a regional/international greenhouse gas offset and reduction (RIGOR) program for North America. You can RSVP for the event here.