Launching the U.S.- Mexico Regional Economic Competitiveness Forums 2014

The North American Research Partnership, together with USAID Mexico, the Council of State Governments West, the U.S. Congressional Border Caucus, and the Mexico Institute/Woodrow Wilson Center, is looking forward to the launch of the Regional Economic Competitiveness Forums (RECF) this week (March 20-21) in San Diego, California. The RECF are aimed at convening key regional stakeholders, to promote the exchange of information on strategies to improve the border region’s competitiveness, and develop local, state legislative, and executive branch recommendations to achieve the goals outlined during the events. Four regional economic competitiveness forums are planned and will be targeted along the following border sub-regions: California – Baja California; Arizona – Sonora; Texas -Chihuahua- New Mexico; and Texas– Coahuila- Nuevo Leon- Tamaulipas. These forums will take place in the spring and summer of 2014 and will build on the work completed during the first round of regional economic forums that took place in 2005, which led to the development of a white paper titled “A New Vision for Trade along the U.S. – Mexico Border Region.”

Erik Lee, NARP Executive Director, Rick Van Schoik, NARP Portfolio Director, and Christopher Wilson, Associate at the Mexico Institute of the Woodrow Wilson International Center for Scholars, have co-authored a thought paper summarizing the key topic points (Thought Paper RECF March 2014). The input gathered from each regional forum will be published in the weeks following each regional forum, but will also form part of a comprehensive report that will be presented to local, state and federal officials from both Mexico and the United States this fall in Washington D.C.

For more information and to register for the upcoming forum, please click here. 

Leaders pass test

The North American Leaders Summit was a success–despite many attempts to paint the new TPP trade deal as an even dirtier word than NAFTA. For many of us, it’s difficult to remember 20 years ago before NAFTA but Mexico had a number of issues of economic and political stability that it does not have today. Part of this can be attributed to NAFTA. While the negotiations and press conference this week showed each nation wanting its own means and ends, the North American region, especially as compared to the trans-Pacific region, won by remaining the most “competitive and dynamic” continent in the world. The dynamism of energy development and subsequent energy security was rarely mentioned but was the subtext to work in other areas, including everything from trade to climate to border cooperation.

Is Arizona stepping back into the game in Mexico City?

Arizona House Ad Hoc International Trade and Commerce Committee Meeting, February 10,2014

Arizona House Ad Hoc International Trade and Commerce Committee Meeting, February 10, 2014

The Arizona House Ad Hoc International Trade and Commerce Committee met February 10 to discuss the possibility of the state joining the City of Phoenix’s efforts in opening a trade office in Mexico City. Glenn Hamer, President & CEO Arizona Chamber of Commerce; Sandra Watson, CEO Arizona Commerce Authority; Margie Emmerman, Executive Director of the Arizona-Mexico Commission; and Hank Marshall, City of Phoenix Economic Development Director presented perspectives on the impact such an office would have on the the Arizona economy, citing Mexico as Arizona’s number one trading partner with $7 billion in exports and comprising 40% of its export market. Phoenix City Council members Sal DeCiccio and Michael Nowakowski emphasized the importance of the state’s involvement. Business owner Lorena Valencia, President of Reliance Wire & Cable, implored the committee to “Take the chance while you have the choice.” For Valencia’s business headquartered in Scottsdale, sitting on the sidelines when it comes to Mexico is not an option and an AZ trade office in Mexico City would provide much needed support.

The idea of having representation offices in foreign markets is not new to the State of Arizona. Arizona Commerce Authority CEO Sandra Watson noted that before the Great Recession, the state operated offices not only in Mexico, but also in Canada, Europe and Japan. The offices were closed for further evaluation due to poor return on investment coupled with the state’s budget shortfall.

Today, 22 other states and/or cities have some sort of representation in Mexico, either through a permanently staffed office or through a business consultant. States like Texas, Colorado, Georgia, Utah, Ohio, and others have invested in a long term political and economic relationship with Mexico. The City of San Antonio has several offices.

Supporters urged the committee to consider a long-term political and economic commitment from the state and other key stakeholders. Consensus among the state, as well as the City of Phoenix, Tucson and other stakeholders will be necessary in order to develop a long-term, phased-out plan with a clear set of goals and metrics for the state’s representation abroad.

By J. Alejandro Figueroa, Principal, Strategy International, LLC & Director, U.S. Operations at Bilateral Council and Ruth Soberanes, Research Analyst, North American Research Partnership

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.

 

 

Understanding Michoacán’s Grupos de Autodefensa

Note: Dr. Gabriella Sánchez is a postdoctoral researcher at Monash University’s Border Crossing Observatory who has written about immigration enforcement, border crossings, human smuggling and trafficking. She is originally from the Mexican state of Michoacán, which has emerged in the news lately in a conflict involving self-defense groups, criminal organizations and Mexican military and law enforcement. We asked her for her thoughts on the local roots of Michoacán’s current conflict.

Graphic images of tattooed, armed men wearing ski masks; of burn-down trucks along highways and of military vehicles occupying quaint towns afflicted by the alleged battles among drug trafficking organizations and vigilantes, have recently dominated the coverage of the violence in the Mexican state of Michoacan.

The state has been in the news lately given a series of violent events in what is known as Tierra Caliente, a region of this Southwestern state along the Pacific Coast. In mid-January, members of the Mexican military allegedly shot civilians who were attempting to defend the towns of Nueva Italia and Antunez from an incursion from drug traffickers, leaving at least three people dead. Protests and violent reactions ensued.

The people of Tierra Caliente, as in other regions throughout Michoacán, have been involved in generation-long conflicts over the control of natural resources and the intervention of corporations that exploit them – often illicitly. Many of these conflicts – and the struggles of community members to preserve and defend their lands – precede the presence and the activities of other groups or organizations in the state (namely, groups involved in drug trafficking operations such as La Familia Michoacana  and the ensuing Knights of Templar). As early as the 1980s, ejidatarios (those living and working on communal lands) and other concerned community members would head deep into the mountains’ forests in order to protect them from night time logging incursions.

Yet most reports on the current state of violence in Michoacán – a region under strain by high levels of outmigration, decreasing economic growth and weakened state powers— have until now failed to acknowledge the historical context surrounding the emergence of the Grupos de Autodefensa, favoring instead sensationalistic images and superficial analysis that characterize these community-based movements as violent, predatory  and  dangerous, while justifying their repression, as exemplified by January’s events.

The recent wave of violence involve the latest efforts on the part of local communities to prevent the illicit exploitation of water, land and forests, and the acts of violence that their members have been subjected to by multiple parties – not just the feared members of criminal groups, but also large corporations, the military and other state agencies of control.  The Catholic Church, primarily through Apatzingán’s bishop, has become a welcome interlocutor. Social media has also been an important vehicle for auto-defensas to avoid the media’s noise. Community responses will continue, and their impact at creating new forms of authority and control deserve close attention. While forecasts of civil war or widespread violence are premature, a closer, empirically-based analysis of the events taking place in Michoacán is needed in order to map the wider, even global significance of the emergence of local groups defending their land and resources.

 

The IBWC and climate change

When I taught international relations I often referred to a great model for other nations that the U.S and Mexico invented: the International Boundary and Water Commission (IBWC).  The IBWC was born when the U.S. and Mexico converted the old International Boundary Commission–which had completed surveys to determine the border and still maintained the border monuments between the two nations–into the more powerful and modernized International Boundary and Water Commission IBWC to adjudicate the 1944 water treaty they had just completed.Today we know so much more about water issues and it’s time for another revision.

At the time it was written, the treaty was the most forward-leaning water treaty in the world in anticipating eventual water shortages and issues. But when the treaty was written to demarcate the waters it did so following a particularly wet period in the southwest. The data used then was the only record of precipitation that we had, so we used it since we knew so little about tree ring and other data sets. We have not since seen a similar wet era since, and forecasts show even drier years ahead under climate change scenarios.

In fact, a few years ago while preparing a paper I accessed the latest models and judged that the U.S. would not meet its treaty obligations to Mexico on the Colorado River about once every three years. By the time the paper was published the likelihood was 9 of 10 years and we approach the first declared and negotiated shortage today.

The IBWC operates with ad hoc and local Technical Advisory Committees and local Citizen Forums (I served on the San Diego forum a decade ago). Neither is permanent or empowered. What has been advocated–and which is something I again call for–is a permanent Science Advisory Board that can sift through local, regional and national water and other environmental data and provide policy options for both sides when it comes to their shared waters and futures. Such a fix is easy, immediate in benefit and overdue.

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.