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A business plan to fix the border

June 12, 2011

Steps to a 21st Century U.S.-Mexico Border
By U.S. Chamber of Commerce
Download the full report

The United States and Mexico share a border of nearly 2,000 miles, a cultural heritage, and a desire to grow both our economies through cooperation and hard work. The two nations also share an obligation to address a series of complex issues. Of course, it is immigration and, more recently, drug-related violence that so often dominate any conversation related to the U.S.-Mexico border. However, economic considerations, such as trade facilitation, travel and infrastructure, are equally important.

Since the passage of the North American Free Trade Agreement (NAFTA), Mexico has become the third-largest U.S. trading partner behind Canada and China. However, it is the second-largest export market for U.S. businesses, and some 22 states depend on Mexico as their No. 1 or No. 2 export market. The trade relationship between our two nations is vast, with $397 billion worth of products being traded last year alone. Eighty percent of it is carried across the border by truck.

This means that more than $1 billion in cross-border commerce is taking place every day—$45 million an hour—and virtually all of it tariff free under NAFTA. Mexico purchased $163 billion in U.S. goods in 2010 alone. Mexico is also the United States’ third-largest foreign provider of petroleum and the largest foreign supplier of fresh fruits and vegetables. The trading relationship is strong, and each country has a fundamental stake in the success of the other.

Trade between the United States and Mexico creates and supports jobs for millions of Americans and Mexicans. In 2010, 13% of all U.S. exports were destined to Mexican markets. Overall, nearly 31 million American jobs are supported by trade. That translates into more than one in every five U.S. jobs linked to the import and export of goods and services. Furthermore, exports generated nearly half of U.S. economic growth in 2010, adding well over a percentage point to GDP growth.

The U.S. manufacturing industry depends on NAFTA, sending more than half of its exports to either Canada or Mexico. Since NAFTA began, U.S. manufacturers have boosted their output by more than 50%. Contrary to popular belief, 97% of all exporters are small and medium-size businesses. Considering that these same companies create the vast majority of job growth, it is imperative to improve their ability to compete in global markets.

Despite the significance of the U.S.-Mexico relationship, delays and other inefficiencies at the border erode much of the competitive advantage that was accrued from NAFTA. According to SANDAG, congestion and delays at border crossings between San Diego County and Baja California cost the U.S. and Mexican economies an estimated $7.2 billion in foregone gross output and more than 62,000 jobs in 2007.

In President Obama’s 2010 State of the Union address, he expressed a goal to double exports within the next five years. Reaching this goal is going to require action from both the private and public sectors. NAFTA has already removed many of the statutory and regulatory impediments to trade across the U.S.-Mexico border. This means that the border represents a better opportunity for trade between the United States and Mexico, translating to job growth in both countries. Download the full report.

  
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