Below are some photos from our Christmas Party this year. Special guests of honor were company founders Bill and Mary Hay.
Friday, December 28, 2012
Thursday, December 20, 2012
From Big Bend Now: Dismay, economic concern greet USDA cattle inspection facility move « Big Bend Now
Dismay, economic concern greet USDA cattle inspection facility move « Big Bend Now
PRESIDIO, OJINAGA – Cattle crossing has been a high economic contributor to the Presidio, Texas and Ojinaga, Chihuahua, Mexico communities for nearly 80 years. The ports of entry are the oldest cattle import location in the United States and are currently the only direct entrance from the beef-rich state of Chihuahua.
But a recent United States Department of Agriculture (USDA) policy change has cattlemen on both sides of the border rattled.
The USDA Animal and Plant Health Inspection Service (APHIS) stopped sending inspectors to the Ojinaga veterinary cattle inspection facility on August 15. A temporary USDA facility in Presidio was opened October 2.
Previously, inspectors crossed the border from Presidio to Ojinaga to perform inspections. The move of the Ojinaga inspection facility into stateside Presidio followed the 2010 inspection port stateside moves at ports of entry in Eagle Pass, Laredo, and Pharr. USDA officials have cited security concerns as the reason for making the policy move.
“We work very closely with the U.S. Department of State to make decisions about closing facilities, and we do not make these decisions lightly. They are made with the safety and security of our employees in mind,” said APHIS media coordinator Lyndsay Cole.
“The facility in Ojinaga was closed August 15 due to repeated security concerns, local violence and information we received from the State Department. Because we recognize the critical importance of cattle trade to communities along the border, we took immediate steps to redirect cattle to other facilities in the area, and we also began construction of a temporary facility in Presidio,” she continued.
Some residents and business people on both sides of the border believe that the safety concerns are not valid for Ojinaga. To many, frustration with the security assessment is amplified by the negative economic impact.
Jess Burner Jr., operator of Presidio Stock Yards, said he does not believe that the individual veterinary inspectors fear for their safety, or should.
“We have not seen the violence,” Burner said of the level of drug cartel-related violence in Ojinaga as compared to other Mexican cities.
If offered, “they would go back this afternoon,” he said, referring to USDA inspectors who work in the area. Burner says he understands that some level of violence does exist and that safety should be taken into consideration for USDA inspectors.
“We don’t want to see anybody hurt or put in danger,” he said, though he does believe Ojinaga is much safer than other Mexican border cities. “We are blessed because of our remoteness.”
Baeza stands in the empty cattle inspection area at the OJinaga stockyard. USDA inspectors no longer use the large facility to inspect U.S. bound cattle from Mexico, a fact that Baeza laments.
The job is much harder for the veterinary inspectors at the Presidio location than at the Ojinaga inspection site, according to Burner. “They don’t have the manpower.” Burner said that the Ojinaga facility had about 40 employees backed up by a support team.
“At the Presidio facility, they have to do everything themselves,” he added.
Local USDA veterinarians, both active and retired, contacted for this story would not speak about the location change.
Presidio resident Salvador Baeza of Baeza Cattle Co., said that at the Ojinaga station, only one stop was necessary for cattle transportation. Now, importing cattle involves loading and unloading the cattle several times. The Presidio inspection facility is not heated or air-conditioned as the Ojinaga facility is. These delays and added stressors result in cattle shrinkage.
Father and son cattlemen Arturo Hernandez Attolini senior and junior have been exporting cattle through the Presidio and Ojinaga ports from their El Oasis Ranch for 30 years. Their ranch is about an hour and a half south of Ojinaga.
On Tuesday, November 27, the 70 head of cattle they were carrying had been kept in Ojinaga since the previous day. When reached after crossing, Attolini Jr. said that the Presidio facility is slower, smaller and in worse condition than the Ojinaga facility. The resulting delay brought a five percent decrease in cattle weight, costing the cattlemen $2,400. Attolini said that if conditions don’t improve, the father and son will have to consider taking their cattle to the much-longer route to the Santa Teresa, New Mexico port of entry in the future.
Attolini said that he comes to the Presidio/Ojinaga port about once every two weeks and has never felt any threat of violence.
Dr. Jesus Baca, who oversees the stockyard in Ojinaga as administrator of the Union Ganadera Regional de Chihuahua (UGRCH), said he has had to let go of 20 of his 50 employees. “That’s 20 families that don’t get to eat,” he said. He expects to lose five more. Baca said that he would expect to take back all of the employees if USDA inspectors returned to the Ojinaga facility.
When asked if the workers who were released from their employment had found more work, Dr. Baca responded with a shrug of his shoulders. Baeza, who also had to let go of two workers in his stockyard, interjected, “We have no real way of knowing if they have found more work,” he said, acknowledging that young men without work might turn to the drug trade. “Sometimes even a good, hardworking man with children to feed will get desperate. And they wonder why they sell drugs. That’s how it is around here.”
Presidio businessman Mario Nieto of M. Nieto Dept. Store in Presidio, expressed concern about the economic impact that occurs when cattle imports are stalled at the border. “I sell a lot of ranch supplies and a lot of veterinarian supplies. This time of year, that’s our bread and butter,” he said.
According to APHIS spokesperson Cole, in the three weeks since The International, The Big Bend Sentinel and BigBendNow began investigating this matter, the Presidio inspection facility has undergone several logistical improvements. Previously, cattle were not entered into the facility if they would be there overnight because they could not be fed. The facility now has the capacity to feed overnight. The facility has installed an improved, permanent cattle-dipping tick-eradication vat, replacing a lesser temporary vat. APHIS has hired three new employees to help push the cattle through. The workday is now starting earlier, as well, according to Cole, to address the time zone issue between Presidio and Ojinaga.
Records show a marked drop in head of cattle passing through the Presidio facility.
Ana Laura Miramontes Rohana of The Union Ganadera Regional de Chihuahua (UGRCH), sent statistics showing that a total of 25,445 head of cattle crossed in the months of September, October and November of this year, compared to a total of 51,246 for the same months in 2011 and 61,821 for the same months in 2010.
Cole states that the logistical improvements have had an immediate impact. The Presidio port passed 3,114 head of cattle between December 3 and 7.
She notes that only 1,000 to 2,000 had been passing in recent weeks.
When contacted Friday about the facility improvements, Burner said, “I’m definitely pleased with those changes. I think we are headed in the right direction.” He did express a desire for further improvements and maintained his confusion at the relocation. “It’s definitely better than it was. If they keep hiring help, it won’t be as good as it was before, but it will be something that we can live with.” He said that there are still problems. “Yesterday they cancelled 300 lot of cattle. They are making those cattle hold over until Monday. We had all those cattle on the list for export. We had three trucks that came from Amarillo. I think [the trucks] left here to go back to Amarillo. It’s part of doing business, but it sure is aggravating and expensive.”
Part of the dismay with the security assessment stems from the fact that USDA inspectors are allowed to enter Mexico from the Santa Teresa, New Mexico port for cattle inspections.
The cattle that haven’t been crossing at Presidio need to cross somewhere, and Burner, Baeza, and Baca say that business is being lost to Santa Teresa. They add that they don’t believe the Santa Teresa port, which is so close to Ciudad Juarez and where 50,000 cartel-related deaths have occurred the past few years, is any safer than the Presidio/Ojinaga border zone.
According to Cole, inspectors have a shorter distance in Mexico to travel from the U.S. side of the Santa Teresa crossing, 1.5 miles to the inspection facility as opposed to the 3.5 miles to the inspection facility in Ojinaga from Presidio.
But Baeza and Burner said that there is something more sinister at play. They allege that Edward Avalos, the Under Secretary for Marketing and Regulatory Programs at the USDA, and a New Mexico native and former New Mexico Department of Agriculture employee, has diverted cattle traffic away from Texas ports toward New Mexico ports for purely political reasons.
“Our enemy is in Washington, not in Ojinaga,” Burner said, raising his criticism of Avalos. Avalos could not be reached for comment.
Cole did respond to the allegations made against Avalos though, saying, “Unfortunately, I don’t have any additional information beyond what I have already provided. As I’ve said, decisions to close various ports are made with the safety of our employees in mind.”
In another communication from Cole regarding the security situation between the ports in Presidio and Santa Teresa, she responded, “I can’t get into the specifics of security assessments at the two facilities, but I can tell you that there are differences between them. We continually monitor the situation at all of our facilities and make decisions accordingly. Since 2010, every time we have received information about risks to our employees at a particular facility, we have taken immediate steps to close the facility while a security assessment could be performed. Operations have only resumed once a security assessment reflected it was safe, which in some cases meant relocating facilities to temporary sites with the U.S.”
When asked if there are any indicators or any timeline for allowing USDA inspectors to resume work at the Ojinaga facility, Cole stated, “We don’t have a timeline to determine that but we are working to determine those solutions.”
Presidio businessman Carlos Nieto, brother to Mario Nieto, has taken the complex issue to the highest level of the Mexican government. Nieto has formed a coalition of livestock brokers and businessmen in Presidio and Ojinaga to raise awareness of the economic impact the removal of USDA inspectors in Ojinaga has had on not only Presidio and Ojinaga, but in the entire tri-county area. Nieto, Baeza, and Burner have also reached out to Congressmen Francisco Canseco and Sylvester Reyes. However, neither congressman will return to Washington in January as both were defeated by political opponents this year.
“This has been our way of life here for over 80 years,” said Nieto. “If we lose our revenue stream from the cattle, it will be lost forever.”
Nieto also emphasized the unemployment on both sides of the border if the head count of the cattle continues to decline.
“The whole area is impacted,” Nieto said, “trucking, gas stations, hay producers, they all have a stake with the ranchers bringing their cattle through our port. We’ve had four or five generations of ranchers that have used the Presidio port. They like it here. It’s easy to get around; they know where the stockyards are, they know where to get the supplies they need. It’s also closer to a lot of them than Santa Teresa.”
The two cattlemen, Baeza and Burner, hope to see things go back to the way things were so they can continue to operate their small, but successful businesses.
There is a fear that exists. The fear that a centuries old identity shared between Texas and Chihuahua vaqueros may soon become extinct. The modern cowboy/vaquero identity is still alive in Baeza, Burner, Baca, and the Attolini father and son. They may be from different countries, but they speak each other’s language; they wear the same cowboy boots, and straw hats. The difference between Texas cowboys and Chihuahua vaqueros are far and few between. The only thing that separates the two is an international border, but their concerns for their families and livelihoods are shared.
Speaking to the security of Presidio and Ojinaga, Burner reiterated that he doesn’t want to put USDA inspectors in harm’s way, but stressed that Far West Texas and northern Chihuahua are as safe as can be.
“Where there is a legitimate security problem, shut it down,” Burner said.
“But don’t lie to us,” said Baeza.
Tuesday, December 18, 2012
The Colombia-Solidarity International bridge in Nuevo León is underused, despite being almost 10 times faster than the Bridge 3 crossing in Nuevo Laredo, Tamaulipas.
This according to Nuevo Leon Border Area Development Corporation (Codefront) Director Miguel Ángel Lozano Munguía, who said that the Colombia bridge on the Texas border takes 35 minutes to cross on average, compared to the 3.5 hours in Nuevo Laredo.
The Colombia-Solidarity bridge, is one of four crossings along the U.S.-Mexico border.
“There are (transport operators) who insist on crossing to the U.S. via Nuevo Laredo’s Bridge 3. We have to demonstrate to them that there it takes 3.5 hours to cross into Laredo, Texas,” he said.
The Colombia bridge has a competitive advantage, saving travelers and logistics companies time and money; though the two bridges are 21 kilometers (13 miles) apart, it remains unused.
Lozano Munguía said that approximately 5,800 trucks a day cross the border using one of the two bridges. Two thousand use the Colombia bridge and the rest cross in Nuevo Laredo. Only 240 passenger vehicles a day cross the Colombia Bridge, he added.
“We want to end the various negative myths that have been going around about the Colombia Bridge. To do this, we are conducting a study in partnership with the Monterrey University. The objective is to identify all the competitive advantages of using this crossing (the Colombia Bridge),” he said. Crossing times and service quality will be analyzed and results are expected in Jan. 2013, he continued.
Japanese investments in Mexico steady | The Japan Times Online
Japanese investments in Mexico remains steady, mainly in the auto and auto parts sectors, reflecting the growing vehicle production in the country and popularity of Japanese brand cars, said a researcher from the Japan External Trade Organization.
More than 400 Japanese firms operate in Mexico today, with 56 investment plans announced over the past two years. Most of these investments, including expansion of existing operations, were in the auto and auto parts production as well as related sectors, said Takao Nakahata, a researcher from the Latin American Division of the Japan External Trade Organization's Overseas Research Department.
Nakahata was speaking at a seminar organized by the Keizai Koho Cener on Nov. 20 to discuss the Mexican economy and recent trends in Japanese investments.
Vehicle production in Mexico has steadily increased over the past three decades to about 2.68 million units in 2011, with exports accounting for much of the increase. The output in 2011 rose 14 percent from the previous year, making the country the world's eighth-largest in terms of auto production.
Nissan Motor Co. has sharply increased its output in recent years to become the No. 1 car manufacturer in the country, followed by General Motors, Volkswagen, Ford and Chrysler. Japanese vehicles have become popular in the local market, with Nissan and other Japanese cars accounting for a combined market share of about 40 percent over the past two years, Nakahata said.
While production and exports continue to expand, domestic vehicle sales have not yet recovered from the slump following the global financial crisis, he pointed out. Domestic sales in 2011 were even lower than the level of a decade ago, as consumer spending remained sluggish, he said.
Still, Mexico remains the second-largest Latin American market after Brazil, he said. Its relatively young and growing population of 123 million has the potential of becoming a major consumer market, although the huge income gap between the rich and poor continues to weigh down consumer spending, he noted.
Not so long ago it made headlines as the centre of the drug war, a city in which hundreds were slain every year.
Nowadays, Tijuana is earning a reputation for something altogether more productive. It has transformed itself into the world's premier hub for making flat-screen televisions, and a site for aerospace and medical equipment manufacturing. Expensive bars and restaurants have followed, putting the city at the crest of a wave of optimism about Mexico's economic future.
"Tijuana is above and ahead of the rest of the country," says Noé Fuentes, an economist from the College of the Northern Frontier. "We can't call it a boom, but we are putting conditions in place for what we hope will be a boom later."
Few made such rosy predictions in Mexico back in 2009, when plummeting exports led the country into one of the worst recessions in the world with GDP shrinking by 6%. Still fewer thought that just three years later international financial experts would be saying the country was on the brink of making the leap into the big economic league that its size and resources have promised for so long.
"You hear it everywhere," says Mexico City economist Rogelio Ramírez de la O. "Right now we are in a sweet spot, but the challenge is to make it sustainable."
Part of the enthusiasm comes from markets finding glimmers of hope amid the global gloom in Mexico's projected fiscal deficit of about 2% this year, with inflation at about 4% and projected growth just under 4%. This follows 3.9% growth in 2011 and 5.5% in 2010.
At the same time Brazil's status as a darling of the emerging markets is beginning to look like a bubble on the point of bursting, leaving Mexico to fill its place as regional favourite.
The buoyant economy has resulted in stronger consumer confidence, even if the trickle-down effect is still limited. A range of statistics show that over the past 15 years ever more Mexican families have acquired the trappings of middle-class life such as cars, fridges, and washing machines, but about half of the population still lives in poverty and inequality rates are among the worst in the world.
"Oh no, we're not thinking of buying it," says Aidee Chaparo as she stares at an LG flat-screen TV in a electronics store with her husband. "We just came to have a look on our day off." The couple, with their combined monthly income of about £260, nevertheless consider themselves middle class because so many others are worse off.
Flat-screen TVs may be beyond reach for people like the Chaparos, but a surge in demand has been reported for other, more affordable products. "In the last few months we get people coming in here who you can tell aren't rich and they will blow a lot of money on these beers to show off to their girlfriends," says David Gómez, who sells expensive speciality craft beers.
Many economists give former president Felipe Calderón, who left office in November, much of the credit for the relative solidity and nascent signs of dynamism which, they say, is rooted in his dedication to fiscal prudence even during the recession. "Fortunately he resisted the sirens' call to overspend or close the economy," says Carlos Elizondo of the CIDE thinktank.
Elizondo also stresses that kickstarting the wider modernisation of the internal economy is a far more complex business than merely maintaining that discipline.
There is widespread agreement that generating the kind of jobs that would allow people such as Chaparo to start actually buying, rather than dreaming, requires forcing competition on the monopolies and oligopolies that keep prices for even basic goods and services higher in Mexico than they are in many developed countries. It also is accepted that the atrophied state-owned oil company must be reformed, sub-standard state education improved, corruption tackled and a strategy found to bring drug-related violence under control.
Part of today's optimism is based on the hope that the new president, Enrique Peña Nieto of the Institutional Revolutionary party, the PRI, is more likely to provide the bold political leadership necessary to do this than Calderón. Aside from his ill-fated offensive against the cartels, the former president was politically timid and almost never adroit.
The new government gained kudos from left and right last week with an education reform proposal that undercuts the power of the teachers' union leader, Elba Esther Gordillo, who had become a symbol of the way entrenched interests have gained more power in recent years.
Peña Nieto's ability to construct a honeymoon period – after an election mired in accusations of dirty tricks – is telling. He still faces determined opposition from the more radical left, but his apparent determination to make the most of the opportunity he inherited appears to be convincing even some of those who are uncomfortable with the return to power of the PRI, which governed Mexico from 1929 to 2000.
"They seem to be pretty serious to me and their authoritarian tendencies may even help them get things done," says Ramírez de la O, who was once floated as a possible finance minister in the event of a leftwing victory. "I think they have two, maybe three years. But if things aren't on track by then there will be a real problem of unfulfilled expectations."
Tuesday, December 11, 2012
IMF Survey: IMF Renews $73 Billion Credit Line for Mexico
The IMF’s Executive Board has approved the renewal of Mexico’s Flexible Credit Line (FCL) for $73 billion. In its latest assessment of the Mexican economy, the IMF said growth has remained resilient, noting the country’s strong fundamentals and sound policy frameworks and management.
The two-year credit line will support Mexico’s economic policies by providing a buffer against global risks. The FCL was created in 2009 for the IMF’s strongest performing members with a solid policy track record.
“The FCL will continue to support the authorities’ overall macroeconomic strategy, providing insurance against tail risks and bolstering market confidence,” said IMF First Deputy Managing Director David Lipton in a statement after the Board decision on November 30.
Resilient growth, but global risks remain
In its regular assessment of Latin America’s second largest economy, which was discussed by the IMF’s 24-member Executive Board on November 19, the IMF said that Mexico’s strong economic performance, despite the sluggish U.S. recovery and the persistent global uncertainty associated with Europe, attests to its strong fundamentals and sound policy management.
The report said Mexico’s growth has been resilient, supported by both external and domestic demand. Growth in 2011 and 2012 remained above potential—at nearly 4 percent. The country’s growth rate is expected to converge to 3½ in 2013—close to Mexico’s long-term potential growth rate. External demand is expected to contribute moderately while domestic demand is envisaged to maintain its momentum.
However, important risks to the global economic outlook remain, particularly from unsettled international financial markets, which pose continuing challenges even for strong emerging markets like Mexico. According to the report, the key short-term risks for Mexico are associated with unsettled external conditions, and longer-term risks from domestic structural challenges.
A significant U.S. slowdown or renewed global financial turmoil from Europe would affect Mexico, given its close integration with the U.S. economy and international capital markets. Longer-term issues include the need to advance reforms to boost growth and to address fiscal challenges associated with a decline in oil revenues and spending pressures from health and pensions.
The IMF said that the ongoing fiscal consolidation is welcome, and that stepping up consolidation efforts would be important to help restore Mexico’s fiscal buffers to precrisis levels, and put the debt ratio on a more sustained downward path.
At the same time, the possible end of oil windfalls that Mexico has enjoyed in recent years would pose new challenges for fiscal policy, underscoring the need for further enhancing the fiscal framework.
The monetary authorities remain appropriately vigilant, with the task ahead being to assess the right policy response to domestic and external developments.
According to the IMF’s assessment, a broad structural reform agenda would be needed to unleash Mexico’s growth potential.
Tax and subsidy reforms, including revenue mobilization efforts would be essential to address future pressures from declining oil revenues and population aging. In addition, reforms in the energy sector should be accompanied by competition, labor, and education reforms to ensure that productivity gains accrue to other sectors as well.
Monday, December 10, 2012
Interview with CEO of Mexican group that operates the Tijuana airport
Wednesday, November 28, 2012
TIJUANA — Fernando Bosque Mohino is chief executive of Grupo Aeroportuario del Pacifico (GAP), a holding company based in Guadalajara that operates the A.L. Rodríguez International Airport in Tijuana and 11 other airports across Mexico.
Bosque is a key player in the development of a privately owned, cross-border facility to be used exclusively by ticketed airline passengers who pay a toll. Those users would be allowed to cross directly between San Diego and Tijuana through a 525-foot pedestrian bridge linking the Tijuana airport to a 45,000-square-foot terminal in Otay Mesa.
Bosque was interviewed during a visit to Tijuana and San Diego this week. Despite some hurdles and delays, he said the plan is moving forward.
The U.S. company spearheading the project, Otay-Tijuana Ventures LLC, is in negotiations with U.S. Customs and Border Protection over issues that include who would pay the salaries of federal officers assigned to the facility.
In Tijuana, GAP has been fighting legal challenges from the municipal government: Mayor Carlos Bustamante has said he won’t grant a land-use permit for the airport terminal expansion to accomodate the project until the company pays overdue property taxes.
Bosque said the only permit he needs is from Mexico’s federal government, and that GAP hopes to begin construction by April.
Question: Why did GAP decide to participate in this project?
Answer: This is an idea that is more than 20 years old. It’s good for the region, it’s good for Tijuana to have more connections so that people can travel to more places. This is not just something that’s needed on one side of the border. It’s needed on both sides.
Q: On the U.S. side, the cross-border project would involve construction of the terminal in Otay Mesa and the binational bridge. What needs to happen on the Mexican side?
A: The Tijuana airport is simply adapting its facilities and facilitating the connection to the bridge. We’re going to invest more than $14.5 million to expand the airport’s existing international terminal.
Q: What’s your timetable?
A: We’ve already started the process. By the end of February, we should have final construction plans and submit them for the Mexican federal government’s approval in March. Construction would be completed by May or June 2014. We’d like to see operation begin by July 1, 2014.
Q: Who would use the cross-border facility?
A: There’s a large number of residents in the California region who have connections to Mexico. Fifty-nine percent of passengers who use the Tijuana airport are either coming from or going to California.
With the construction of this crossing, they would avoid the risk that U.S. citizens sometimes feel about entering Mexico. They would feel more comfortable, more secure, and save time.
Next year, the Tijuana airport expects to move 4 million passengers. We estimate that about half of them would benefit from this new border crossing. There still would be a certain number who prefer to cross by land (at the San Ysidro and Otay ports of entry).
Q: Do you anticipate that a cross-border facility would spur more people to use the Tijuana airport?
A: The Tijuana airport is much more economical than some of the airports in California. It will be convenient for travelers to buy cheaper tickets in Tijuana. It’s an opportunity for travelers and an opportunity for airlines.
Our expectation is that the project will spur a growth of perhaps 1 million additional passengers over the next 10 years. Without the cross-border facility, we would expect to grow to 5.5 million passengers in 10 years.
Q: Is there a plan at this point to expand to new markets?
A: One of the opportunities we’re looking at is the access from some destinations in Asia to Mexico and the United States, using Tijuana as an entry point. It’s a convenience that some companies in Asia — including China and Korea — could take advantage of, and it would relieve traffic in some airports in California.
Q: Has the proposal generated interest from airlines?
A: The airline that’s most interested is Aeromexico. Its market is the medium-premium market. The kind of customer expected to use the border crossing has greater spending capacity. The kinds of people who would use the crossing ... have property in the San Diego region and farther north. Those travelers from Mexico going to the United States would cross for shopping and tourism, and to visit family and friends.
Q: There have been complaints on the Mexican side that Tijuana residents won’t benefit from the bridge and related expansion of the airport, and that cross-border transportation companies stand to lose a lot of customers. What’s your response to that?
A: It does contribute to the community. It creates employment, it creates connections and access to the region and the entire country. The airport contributes 5 percent of its revenues to the federal government (about $2.3 million per year in concession fees) in addition to $4.6 million that it’s paying in federal taxes.
Q: Tijuana Mayor Carlos Bustamante has said that his administration won’t greenlight any airport expansion until your group pays municipal property taxes owed for years now. Your response?
A: Airports are federal property in Mexico. The GAP in Tijuana ... is using federal installations, and we are the operators managing the facilities. Any permits we need would come from Mexico’s Communications and Transportation Secretariat and no one else. We are not subject to property taxes or to city licensing and permits.
Friday, December 7, 2012
SAN ANTONIO — Nearly two decades after a pact initiated here created the world’s largest free trade area, economists are calling the North American Free Trade Agreement a resounding success, crediting it for fueling unprecedented trade and creating millions of jobs in the United States.
The agreement between the United States, Mexico and Canada, ratified 19 years ago Saturday, also made two of Texas’ land ports among the country’s busiest and delivered a multi-trillion-dollar cumulative gross domestic product for its member countries.
But unions and consumer-advocacy groups say Nafta has had negative effects in Mexico and the United States. They say that resulting outsourcing and lower wages have hurt the United States’ domestic economy and that Mexico’s rural industries have destabilized.
As economists look to build on Nafta’s momentum to improve trade relations between member nations, critics say they should look to past failures to avoid similar mistakes in the future.
Nafta, which was enacted in 1994, eliminated existing tariffs on more than half of the exports from Mexico to the United States and gradually phased out remaining tariffs between all member countries.
The pact has benefited all three members. In 2010, the United States had $918 billion in two-way trade with Canada and Mexico, according to the office of Ron Kirk, United States trade representative.
Economists say that progress has come despite enhanced global security measures following the Sept. 11 attacks and an eruption of drug-related violence in Mexico. During a recent symposium here, economists and policy makers celebrated Nafta’s success and brainstormed ways to build on it and bolster economic output. The symposium concluded with a clear message: the future is wide open.
“We must continue to build upon Nafta and think more as a region in order to be more competitive globally,” said Gerónimo Gutiérrez, the managing director of the North American Development Bank, which was created by the governments of Mexico and the United States after Nafta’s inception and helps finance and develop infrastructure projects on the border.
But critics of Nafta say ithas resulted in a loss of United States manufacturing and shipping jobs and in less production oversight. They say Nafta has also displaced Mexican agricultural workers into other sectors or forced them to immigrate illegally to the United States.
“There have been huge disparities in the number of people entering the work force and the number of jobs available,” said Timothy A. Wise, the policy research director at the Global Development and Environment Institute at Tufts University. “That resulted in the huge migration problem despite the increased enforcement.”
Supporters say Nafta was not conceived to solve domestic problems for any member country. Instead, they say, the growth in the nations’ G.D.P.’s speaks to the pact’s positive effects. They include the creation of six million jobs in the United States tied to Nafta policies, more than $500 billion in goods and services traded between the United States and Mexico, and the ports of Laredo and El Paso being among the United States’ busiest.
Through September, about $172.5 billion in trade with Mexico passed through the Laredo port and about $65 billion through El Paso, according to United States census data analyzed by WorldCity, which tracks global trade patterns. Canada remains the country’s top partner, with $462.3 billion in trade during the same time frame, ahead of China, which is at $389.7 billion and Mexico, with $369.5 billion.
“I don’t think that Nafta was created to alleviate every single social problem in Mexico. It could not, and it has not,” Mr. Gutiérrez said. “I think that Mexico would be worse off if it wasn’t for Nafta today.”
Public Citizen, a nonprofit advocacy group with offices in Washington and Austin, cites United States Department of Labor data to support what it says is a negative impact on the American work force because of rising imports or offshoring production.
In Texas alone, Public Citizen said, there have been almost 2,500 companies whose workers or union affiliates have filed petitions with the department for training or temporary assistance under its Trade Adjustment Assistance program.
Mr. Wise said that although Nafta had made Mexico a manufacturing giant, the pact provided examples of what countries with emerging economies should avoid. Free trade policies, commonly referred to in Mexico as neoliberalism, should be scrutinized less for the tariffs they eliminate and more for their use as development strategies, he said.
“It was a striking and dramatic failure compared to other countries that did not follow such paths,” he said. Mr. Wise acknowledged Mexico’s increase in manufacturing jobs, but he said they were not at the level needed to account for losses in other industries, like grain production.
“Foreign investment quadrupled. Trade over all tripled. So that’s a measure of success,” he said. “What it didn’t produce is jobs and development.”
The end result is that Mexico’s growth rates were lower than other emerging economies that were in similar stages of development, he said. A key reason is that while foreign investment surged, domestic investment in Mexico dipped.
“When everybody touts the benefits of foreign investment coming in, they discount the fact that domestic investment was displaced,” Mr. Wise said. “Investment in the economy was well below the levels that were needed to stimulate dynamic growth. In China they are investing 35 percent dynamic growth, and economists say you need 25 percent or more. Mexico is at 19 percent.”
Robert Pastor, the director at the Center for North American Studies at American University, said job losses and gains under Nafta could be attributed to a universal element in global commerce: competition.
“Nafta or globalization increases competition, which, by definition, has winners and losers,” he said. “The people who lose are those who are not very well educated. This is true, not just because of trade but because of automation and technological change and of a lot of structural change in the economy.”
Mr. Pastor said that despite dire predictions, the largest influx of growth in jobs in the United States occurred after the pact’s installation. “The period of greatest growth in trade among the Nafta countries coincided with the period of the largest growth in employment, of jobs in the United States, 23 or 24 million jobs,” he said. “Now, I wouldn’t credit Nafta for those creation of jobs, but you certainly can’t say the impact was a loss of jobs.”
Mr. Pastor said the focus for member nations should expand.
“I think we should shift our vision away from Nafta,” he said, “and accept that it’s complete and focus on the future.”
He said the need was to figure out how to get to a seamless market that would eliminate remaining tariffs.
Thursday, December 6, 2012
The rise of Mexico
America needs to look again at its increasingly important neighbour
NEXT week the leaders of North America’s two most populous countries are due to meet for a neighbourly chat in Washington, DC. The re-elected Barack Obama and Mexico’s president-elect, Enrique Peña Nieto, have plenty to talk about: Mexico is changing in ways that will profoundly affect its big northern neighbour, and unless America rethinks its outdated picture of life across the border, both countries risk forgoing the benefits promised by Mexico’s rise.
The White House does not spend much time looking south. During six hours of televised campaign debates this year, neither Mr Obama nor his vice-president mentioned Mexico directly. That is extraordinary. One in ten Mexican citizens lives in the United States. Include their American-born descendants and you have about 33m people (or around a tenth of America’s population). And Mexico itself is more than the bloody appendix of American imaginations. In terms of GDP it ranks just ahead of South Korea. In 2011 the Mexican economy grew faster than Brazil’s—and will do so again in 2012.
Yet Americans are gloomy about Mexico, and so is their government: three years ago Pentagon analysts warned that Mexico risked becoming a “failed state”. As our special report in this issue explains, that is wildly wrong. In fact, Mexico’s economy and society are doing pretty well. Even the violence, concentrated in a few areas, looks as if it is starting to abate.
Mañana in Mexico
The first place where Americans will notice these changes is in their shopping malls. China (with more than 60 mentions in the presidential debates) is by far the biggest source of America’s imports. But wages in Chinese factories have quintupled in the past ten years and the oil price has trebled, inducing manufacturers focused on the American market to set up closer to home. Mexico is already the world’s biggest exporter of flat-screen televisions, BlackBerrys and fridge-freezers, and is climbing up the rankings in cars, aerospace and more. On present trends, by 2018 America will import more from Mexico than from any other country. “Made in China” is giving way to “Hecho en México”.
The doorway for those imports is a 2,000-mile border, the world’s busiest. Yet some American politicians are doing their best to block it, out of fear of being swamped by immigrants. They could hardly be more wrong. Fewer Mexicans now move to the United States than come back south. America’s fragile economy (with an unemployment rate nearly twice as high as Mexico’s) has dampened arrivals and hastened departures. Meanwhile, the make-up of Mexican migration is changing. North of the border, legal Mexican residents probably now outnumber undocumented ones. The human tide may turn along with the American economy, but the supply of potential border-hoppers has plunged: whereas in the 1960s the average Mexican woman had seven children, she now has two. Within a decade Mexico’s fertility rate will fall below America’s.
Undervaluing trade and overestimating immigration has led to bad policies. Since September 11th 2001, crossing the border has taken hours where it once took minutes, raising costs for Mexican manufacturers (and thus for American consumers). Daytrips have fallen by almost half. More crossing-points and fewer onerous checks would speed things up on the American side; pre-clearance of containers and passengers could be improved if Mexico were less touchy about having American officers on its soil (something which Canada does not mind). After an election in which 70% of Latinos voted for Mr Obama, even America’s “wetback”-bashing Republicans should now see the need for immigration-law reform.
No time for a siesta
The least certain part of Mexico’s brighter mañana concerns security. This year has seen a small drop in murders. Some hotspots, such as Ciudad Juárez, have improved dramatically. A third of Mexico has a lower murder rate than Louisiana, America’s most murderous state. Nevertheless, the “cartels” will remain strong while two conditions hold. The first is that America imports drugs—on which its citizens spend billions—which it insists must remain illegal, while continuing to allow the traffickers to buy assault weapons freely. American politicians should heed the words of Felipe Calderón, Mexico’s outgoing president, who after six years and 60,000 deaths says it is “impossible” to stop the drug trade.
The second black spot is that Mexican policing remains weak. If Mr Peña is to keep his promise to halve the murder rate, he must be more effective than his predecessor in expanding the federal police and improving their counterparts at state level. That is just one of several issues that will test Mr Peña. He cannot achieve his ambition to raise Mexico’s annual growth rate to 6% by relying solely on export manufacturing. Upping the tempo requires liberalising or scrapping state-run energy monopolies, which fail to exploit potentially vast oil and gas reserves. Boosting Mexico’s poor productivity means forcing competition on a cosy bunch of private near-monopolies—starting with telecoms, television, cement and food and drink. That means upsetting the tycoons who backed his campaign.
This newspaper gave Mr Peña a lukewarm endorsement before July’s election, praising his economic plans but warning that his Institutional Revolutionary Party (PRI), which ran Mexico in an authoritarian and sometimes corrupt manner for most of the 20th century, has not changed much. Facing down interests within his own party may be Mr Peña’s hardest task. The head of the oil workers’ union is a PRI senator. The teachers’ union, which is friendly with the party, is blocking progress in education. A new labour reform has been diluted by PRI congressmen with union links.
Mr Peña, a good performer on the stump, should appeal beyond the PRI to a broad consensus for change among Mexicans. Time will tell if he measures up to the task. But the changes in Mexico go beyond the new occupant of Los Pinos. The country is poised to become America’s new workshop. If the neighbours want to make the most of that, it is time for them to take another look over the border.
From Kansas City Star: Bob Ray Sanders: Opportunity ripe for renewed relations with Mexico - KansasCity.com
Bob Ray Sanders: Opportunity ripe for renewed relations with Mexico - KansasCity.com
In 1997, I witnessed what I thought was the beginning of a new era of Texas and United States relations with Mexico, a strengthening partnership that was expected to result in cultural and economic benefits to both nations.
I, along with four other opinion writers from around the state, had been invited to coffee with Gov. George W. Bush, and it happened on the same day the governor was receiving Mexico's secretary of foreign affairs, Jose Angel Gurria Trevino.
Before our official meeting with Bush, we talked to him and Gurria about increased trade between Texas and Mexico and the southern neighbor's political shift toward what Gurria called a "deepening of democracy."
They also discussed candidly the then-recent rejection of former Massachusetts Gov. William Weld as nominee to be ambassador to Mexico. He was brought down by fellow Republicans in the Senate, led by North Carolina Sen. Jesse Helms, chairman of the Senate Foreign Relations Committee.
It was when I watched Bush interviewed by a Mexico television newsman, answering his questions in fluent Spanish, that I realized he was probably just the right person to help forge this renewed relationship.
When Bush was elected president three years later, with more than 40 percent of the Hispanic vote, many people on both sides of the border heralded what they believed was a perfect opportunity for our countries to work together on a host of issues.
But, after Sept. 11, 2001, practically everything took a back seat to the fight against terrorism. Mexico became an afterthought except in the areas of growing immigration, spiraling drug violence and severe economic woes that contributed to both.
After a decade of lost opportunity, the timing is right again for the United States and the state of Texas to begin rebuilding those relationships with a country that shares 2,000 miles of border.
A young former governor, 46-year-old Enrique Pena Nieto, was sworn in Saturday as Mexico's new president. Although representing the old Institutional Revolutionary Party (or PRI), Pena Nieto is promising to transform his country, which is greatly divided by the haves and have-nots, dominated by overreaching monopolies, engulfed in corruption and crumbling with old, neglected infrastructure.
Pena Nieto, as president-elect, visited with President Barack Obama in the White House, and Vice President Joe Biden attended the inauguration Saturday in Mexico City. Those are good signs, but this new relationship has to be more than show; there must be substance.
In addition to all the other ills facing his country, Mexico's new president - elected with only 38 percent of the vote - will face continued political opposition and mistrust from a large segment of society. Violent protests broke out in the capital and all over the country on his inauguration day.
We must pay attention to what is happening there, for we can't afford to ignore a country that has Latin America's second-largest economy.
Mexico is Texas' No. 1 trading partner, and the U.S.'s No. 3 trading partner. The U.S. is Mexico's largest trading partner and largest foreign investor, according to the U.S. Department of State.
The State Department notes on its website that "Mexico and the U.S. do as much business in just over a month as Mexico does with all 27 countries of the European Union combined in a year." About 80 percent of Mexico's total global exports of $230 billion go to the United States.
Texas ranchers and farmers certainly know the benefit of exporting goods to Mexico. Agriculture exports from Texas to Mexico in 2010 totaled $1.4 billion, according to the Texas Department of Agriculture.
And the 15 counties along the border understand the economic boost of $145 billion in goods being imported through their cities.
The time is ripe for this new international cooperation. We shouldn't allow anyone or anything to put it on hold again.
Read more here: http://www.kansascity.com/2012/12/06/3951265/bob-ray-sanders-opportunity-ripe.html#storylink=cpy
Port workers back on the job after deal ends costly strike
Thousands of longshore union members returned to work Wednesday at the ports of Los Angeles and Long Beach as terminal operators began clearing a backlog created by a weeklong strike, which ended late Tuesday night when union and management officials reached a deal with help from Mayor Antonio Villaraigosa.
Around 8 a.m. Wednesday, members of the International Longshore and Warehouse Union began unloading cargo from ships, many of which had been waiting in port since the union's small Office Clerical Unit set up picket lines. All 10 terminals at both ports struck by the unit Office Clerical Unitwere once again open, and many terminal operators were expecting to soon accept ships that had been anchored for several days off the coast of California, waiting for the strike to end.
"It's a little noisier today than it has been the past eight days," said Alan McCorkle, senior vice president of APM Terminals Pacific Ltd., the largest terminal operator at the Port of Los Angeles. "It's good to have the cargo back, and it's good to have the people back. It's good to get back to doing what we do."
The deal, announced by both sides at 10:30 p.m. Tuesday, still must be ratified by the Office Clerical Unit, a relatively small bargaining unit whose members handle a range of back-office duties for major terminal operators. An ILWU spokesman said the process likely will take several weeks - workers will need time to read the agreements, review them and ask questions - but it is expected that members will ratify the contracts.
The 800-member unit actually reached agreements with 14 separate employers. Unlike other longshore unions, who negotiate one agreement for all workers along the West Coast, the OCU negotiates contracts with each employer.
Sources involved in the negotiations say three main factors helped the sides settle. The first, they say, was Villaraigosa, who arrived at talks late Monday after returning from a nine-day trade mission to South America and stayed until late Tuesday morning. Negotiators on both sides say Villaraigosa, a former high-ranking union official, bounced from room to room, seeking to persuade both sides of their weaknesses and urging them to achieve a quick deal.
Sources also say that, behind the scenes, some members of the ILWU may have been pushing the clerical unit to settle. Most of the union's 10,000 members were not part of the strike - they were only honoring picket lines - and some wanted to start earning paychecks again, some close to the talks say.
The third factor was the arrival of George H. Cohen, director of the Federal Mediation and Conciliation Service in Washington, D.C. Union officials had resisted management calls for a mediator, but they eventually relented Tuesday morning after talks stalled.
Negotiators said they suspected the mediator might change the scope of talks, possibly forcing both sides to agree to more than each wanted. The sides were able to wrap up their deal just before Cohen was set to intervene.
Stephen Berry, lead negotiator for the 14 employers and an attorney at Paul Hastings LLP, said workers will receive pay increases of about $1 per hour, to about $42 per hour, along with generous increases in their company-funded pensions. He said the average total compensation, including benefits, for each clerical worker will increase from around $165,000 to $190,000.
In return, Berry said terminal operators will not need to replace every clerical unit worker who retires, takes a leave of absence or goes on vacation. Berry declined to say exactly how many workers will not need to be replaced, but a source close to the talks said terminal operators will still need to hire for most open positions.
"Both sides recognized that there was not going to be an agreement without some compromise," Berry said. "We're extremely pleased with the fact that the parties were able to reach an agreement that reopened the ports and allows cargo to flow."
The action at both ports began quickly.
About 10 minutes after Villaraigosa announced the deal, port pilot operators began assisting container vessels that had been at anchor into the empty berths and getting them ready for the dockworkers, Port of Los Angeles spokesman Phillip Sanfield said.
At Yusen Terminals in Los Angeles, President and Chief Executive Patrick Burgoyne watched at 8 a.m. as about 250 union members arrived to begin their first shifts in a week.
Burgoyne said it will take about seven to 10 days before operations return to normal.
"We're in direct contact with many of the cargo owners," he said. "They're delighted to see the ports opened again. Everyone is eager to get their containers moving and see their goods on the shelves."
J. Christopher Lytle, executive director of the Port of Long Beach, said terminal operators there were also seeking to return to normal operations soon. Three of six terminals had been closed in Long Beach since Nov. 28.
"We're encouraging terminals to increase their hours of operation so cargo can flow almost 24-7," Lytle said, adding that the port's gate is open from 6 p.m. to 3 a.m. "No other port in the U.S. has those kind of hours."
Nearby, Geraldine Knatz, executive director of the Port of Los Angeles, said she was similarly happy that cargo was moving. Seven of eight terminals there had been closed.
"I don't think there are words to describe how pleased I am," she said. "I can look up the Main Channel, and I can see a ship at every terminal."
At the ILWU dispatch hall in Wilmington, about 40 longshore workers waited Wednesday afternoon inside the cavernous building and in its parking lots, waiting to be called back to work. A security guard kept watch out front, keeping observers from peeking inside.
Several longshore workers said they were pleased to be going back to work, but noted that union officials had barred them from speaking publicly about the strike or the settlement.
Wednesday, December 5, 2012
Mexico's New Narrative
The inauguration of Mexico's new president Enrique Pena Nieto inspired a flurry of media chatter that Mexico's moment has arrived. Reports of his visit with President Obama last week praised his success in 'changing the subject' from violence and insecurity to happier thoughts of economic partnership and the new middle class. (He did this after his election on a visit to Brasilia as well) The FT, the Economist and pundits now argue that with the Mexican economy poised for a sustained recovery, it is time for Washington to get over its fixation on undocumented immigrants and cartel violence and instead focus more on commercial and energy opportunities. The subtext of this shift in narrative is that as Mexico becomes more competitive, thanks to low tax rates and higher labor costs in China, Brazil's star shines less brightly, thanks (in part) to onerous tax rates and to a slowing China.
In advancing Mexico's new narrative, Pena Nieto's team has clearly studied the cases of Brazil and Colombia. Brazil, which suffers from drug and police related violence as well, also figured out how to tell a positive story about its new middle class, energy, environmentalism, and until recently, its booming growth rates. All of those international rankings for doing business in Brazil remained poor throughout the very same period that capital poured into the country in search of good investments. The narrative about Colombia likewise pivoted swiftly over the last two years. Terrorism, insurgencies, homicide and drugs yielded in the public story to trade, investment, the middle class, cultural heritage and natural beauty. But poverty and inequality remain abysmal.
Of course, these transformations are not just spin. Mexico's economy is recovering and its middle class is growing, even as cartel violence continues. Colombia is ending its internal conflict and at last mounting a serious strategy to deal with rural land issues, long fuel for violent conflict there. And while local content requirements, lack of technical capacity, and infrastructure constraints have slowed the Brazilian economy, the scenario there is, as one Brazil business strategist confided, "neither as bad now as people think, nor was it as good as people were saying before." My guess? The same will be said of Mexico or Colombia a few years down the road if and when they too take even a small dip from their current trajectory.
The competition between Mexico and Brazil for Wall Street and Washington's blessing—with Colombia playing the self-described geographic and diplomatic middleman, has its own rationale, I guess. What I find irrational is how quickly the chattering classes embrace the most compelling, if incomplete storylines. In today's Latin America, democracy, insecurity and economic opportunity co-exist. Wall Street can deal with that complexity. But can Washington?
Tuesday, December 4, 2012