Friday, September 28, 2012

From Newsweek: U.S. to End Mexican Tomato Pact, Raising Risk of Trade War



U.S. to End Mexican Tomato Pact, Raising Risk of Trade War

By Brian Wingfield and Nacha Cattan on September 27, 2012
The U.S. decided to end an accord that for 16 years set prices for Mexican tomato imports, siding with Florida farmers over the objections of Mexico’s government and produce buyers who have warned of a trade war.
Florida tomato farmers joined by colleagues in other states said the 1996 deal, adopted in place of an anti-dumping investigation, is outdated and ineffective. Buyers of tomatoes such as Wal-Mart Stores Inc. (WMT), the world’s largest retailer, wanted to keep it in place, saying it promotes price stability.
The Commerce Department issued a preliminary decision today to end the pact, with final action next year. Without a deal, U.S. growers can seek duties on Mexican tomatoes, which may spark a trade war, said the Fresh Produce Association of the Americas. The Nogales, Arizona-based importers group this month said the decision was driven by election-year politics, a claim U.S. growers denied.
“The decision-making process certainly seems one-sided, and seems to be dictated by politics rather than policy,” Arturo Sarukhan, Mexico’s ambassador to the U.S., said today in an e-mailed statement.
The dispute re-opens a rift between the U.S. and its third- largest trading partner. The U.S. last year imported $8.5 billion in agriculture and livestock goods from Mexico, more than any other nation, according to the Commerce Department. The U.S. sent $8.7 billion of those products to Mexico.

Retaliatory Tariffs

Mexico would consider retaliatory tariffs on $1.9 billion worth of U.S. exports if, after exhausting all legal appeals, the tomato agreement isn’t reinstated, Mexican Deputy Economy Minister Francisco de Rosenzweig said in an interview today.
“These types of decisions generate uncertainties in prices and labor stability and also in bilateral relations,” he said.
The Commerce Department issued its decision a day before a scheduled meeting with growers from Mexico who are seeking a new pricing agreement.
“We’re completely stunned,” Martin Ley, who represents a consortium of produce growers’ organizations from Mexico, said today in a phone interview. He said his group still plans to “put a strong proposal on the table” at the meeting tomorrow.
Mexico exported $2.1 billion worth of tomatoes last year, 93 percent to the U.S., the nation’s Agriculture Ministry said in a Sept. 6 statement.

Nine Months

As part of the preliminary decision, the Commerce Department said it will close its investigation into whether Mexican tomatoes were sold in the U.S. market below cost. That probe was suspended when the pricing agreement was adopted. Ending the probe terminates the agreement, the agency said in a memo on its preliminary findings. A final decision is due within nine months, the agency said.
Mexico’s ambassador cited a 17-year conflict with the U.S. over cross-border trucking, in which Mexico imposed tariffs on $2.4 billion of American goods, to show the nation is prepared to challenge the U.S. decision.
“Mexico will respond: you should ask those who were in the Mexican cross-hairs over the trucking dispute,” Sarukhan said. “When Mexico aims, Mexico hits the target.”
The tariffs were lifted last year after a Mexican trucking company won a cross-border permit.
The U.S. decision is “welcome news to domestic growers and the workers who have suffered under an outdated and failed agreement,” Reggie Brown, executive director of the Florida Tomato Exchange, a growers’ group, said today in a statement.
“The domestic industry has jumped through every hoop put in our path by our opponents who simply want to protect the sweetheart deal that they’ve enjoyed for far too long,” Brown said.
To contact the reporters on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net; Nacha Cattan in Mexico City at ncattan@bloomberg.net
To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

Thursday, September 27, 2012

From Govt. Security News: Calculating wait times for commercial vehicles at the U.S.-Mexico border

Calculating wait times for commercial vehicles at the U.S.-Mexico border


Calculating wait times for commercial vehicles at the U.S.-Mexico border

Thu, 2012-09-27 09:53 AM
Nelson Balido
To take a tour of a port of entry connecting the U.S. and Canada or the U.S. and Mexico is to get a glimpse of the latest in cutting-edge technology.
For example, there are industrial strength X-ray machines -- called VACIS machines -- that can be mounted on a truck chassis to scan the contents of a container without popping it open. There areelectronic seals that can confirm that a container’s contents haven’t been tampered with in its journey from the factory or maquila. And there are various types of GPS and RFID technology to track a truck’s journey to the border and help to ensure that the driver hasn’t been taking any unnecessary detours.
In 21st century international trade, this is as it should be, and there are more gadgets and widgets in the pipeline. Not a week goes by where I don’t receive an email from a vendor touting the “latest and greatest” in supply chain security technology.
But in the year 2012, when you can easily determine when a truck has left the maquila, where the driver took a pit stop, whether the trailer was opened, and what speed the truck was traveling, you would think that you would also have a reliable, predictable way of determining how long your shipment will be expected to wait in line to enter the U.S. But you don’t.
That’s not to say that Customs and Border Protection (CBP), the agency charged with managing our ports of entry, isn’t trying to accurately track border wait times. CBP’s Website conveniently displays up-to-date information on commercial and passenger vehicle wait times for both borders, seven days a week, 24 hours a day.
But there’s concern within the trade community that there’s little uniformity in how the agency determines wait times from port to port, and when the agency starts the wait time clock. Is it when a driver first brings his truck to a strop because there is another truck in front of him? At bridges, does the clock start when a truck reaches the mid-point of the bridge? At some ports along our border with Mexico, the wait time is determined by the truck’s proximity to some landmark in Mexico, like a tree or fencepost. It might sound rudimentary, but it’s not an altogether bad way of calculating wait times. The trade community, however, simply wants a better sense of how the posted times are being arrived at, and whether there’s a way to promote some uniformity in calculation methods from port to port.
The Government Accountability Office in a July 2010 report on wait time data collection along the U.S.-Canada border discussed CBP’s wait time calculations for 28 northern border ports. According to the report’s executive summary, “CBP officials and the 13 border stakeholders, importers, and trade organizations GAO interviewed about wait times questioned the accuracy and reliability of CBP's wait times data.” And there’s the rub.
U.S. Sen. Kay Bailey Hutchison, Republican of Texas, recognizes the need to determine how wait times are being calculated while looking for ways to alleviate long lines.
In an April 2012 letter to the GAO, Sen. Hutchison directed the agency to undertake a study on the U.S.-Mexico border similar to the one completed on the U.S.-Canada border a couple years ago.
Item number 1 in her request to GAO reads, “How does CBP calculate wait times at southwest border ports of entry for cargo screening and inspections, including processing times for primary and secondary inspection, and how accurate are these data?”
The senator’s letter to GAO goes on to ask the government’s investigative arm to assess the roles that staffing, technology and infrastructure play in causing border delays; the extent to which CBP collaborates with private sector stakeholders; and the actions CBP has undertaken to reduce delays.
GAO is now in the early stages of its fact-finding work in this important task, and has been working closely with the Border Trade Alliance and our vice chairman, Jesse Hereford of San Antonio, a border infrastructure expert and former Senate aide, in getting a handle on the challenges facing the cross-border trade community.
If I were to hazard a guess, I’d bet the GAO’s findings will be both predictable and illuminating. Predictable in that many will find wait times at the border to be too long, but illuminating in that we’ll have a better sense of how CBP approaches this issue internally and what the agency’s goals are and the steps it is taking to reach them. The report’s findings will go a long way in establishing a baseline from which we can propose new policy solutions to facilitate cross-border trade and travel. It should make for an interesting read.
Nelson Balido is the president of the Border Trade Alliance. He can be reached at:
nelson@thebta.org

Tuesday, September 25, 2012

'Laredo Is Safe' campaign seeks to bring tourists back

'Laredo Is Safe' campaign seeks to bring tourists back: The border city of Laredo is trying to combat the stigma of drug cartel violence in its sister sister of Nuevo Laredo with a "Laredo is Safe" campaign that includes 17 yellow billboards around Texas.

From NPR: Mexico Labor Bill Would Loosen Hiring, Union Grip

http://www.npr.org/templates/story/story.php?storyId=161736026


Mexico Labor Bill Would Loosen Hiring, Union Grip


MEXICO CITY September 25, 2012, 08:50 am ET
MEXICO CITY (AP) — Mexico's main political parties agree that the country's dysfunctional labor laws need to be retooled. What they don't agree on is how, with a new proposal to loosen hiring and increase union democracy threatening to unleash a wave of labor unrest.
Advocates say the reform, which will allow part-time work, hourly wages and outsourcing, will help Mexico create the million new jobs per year it needs for young people and migrants returning from the United States. It is backed by both President Felipe Calderon, who submitted it to Congress this month, and President-elect Enrique Pena Nieto.
Opponents say Mexico's low wages in several industries already make its labor force more attractive than increasingly affluent countries like China and the last thing its workers need is a reform that would pare the meager benefits and job security they currently enjoy.
"Yes, we need a reform that allows labor productivity to increase, but not at the cost of workers' rights," said Jesus Zambrano, leader of the leftist Democratic Revolution party, which has vowed to oppose the bill, in the streets if necessary.
The problem is pressing: The country's 5.4 percent unemployment rate is probably a huge understatement, given the lack of unemployment insurance and the fact that jobless workers quickly slip into Mexico's vast, unregistered army of street vendors and day laborers. Officials say the lack of jobs is one reason why so many youths are drawn to Mexico's violent drug cartels.
Under Mexico's 1970's-era labor laws, workers earn as little as 60 pesos ($5) per day but still pay dues to pro-company "paper" unions they never see. About one-fifth of salaried workers in Mexico are unionized.
Bosses, meanwhile, complain that expensive severance and benefits packages, along with strict work and seniority rules, make it hard to create new jobs.
Added to that is a lengthy and arcane dispute resolution process that can hold up back-pay or severance cases for a decade.
Experts say loosening work and seniority rules to let employees perform different tasks and gain promotion based on ability would increase productivity.
In August, OECD Secretary General Angel Gurria said that labor reform, together with tax and other changes, could boost Mexico's GDP growth by 1 percentage point per year.
Everybody, even Zambrano, agrees that the proposal has some good points, such as secret ballots and external audits for notoriously corrupt and autocratic unions.
But given the odd alliances prevailing in Mexican politics, many fear the new proposal will actually decrease democracy in its unions.
Pena Nieto, who is scheduled to take office Dec. 1, said recently at a meeting of business leaders in Chile that the reform will "allow Mexico to have greater flexibility in its labor market, make hiring easier, without this necessarily meaning a step backward in labor rights."
But Pena Nieto's Institutional Revolutionary Party, or PRI, which constitutes the largest voting bloc in Congress, has for decades been supported by and protected the most antiquated, old-guard union groups in a system known as "corporativism."
Mexican unions are, at present, so undemocratic that, when opening new plants, employers will sometimes select a docile union for the new facility, and the first workers will enter with a labor contract already signed behind their backs.
While supporting the proposal, Pena Nieto seems loath to anger key supporters by approving the union transparency rules.
"I'm afraid that the PRI is going to defend the corporativist unions," said Carlos de Buen, a prominent labor lawyer.
And perversely, the new framework would actually make it much harder for upstart, democratic unions to challenge the old-guard "paper" unions. New rules would require such challenger unions to report the names of at least one-third of workers at a plant who support it — names that would be seen by the employer's representative on local labor boards.
"This has the effect of closing the door to legal recognition" for upstart unions, said Arturo Alcalde, a Mexico City labor lawyer. "Now it's going to be impossible for there to be a democratic union."
All the talk about union democracy raises some distrust in labor circles, in part because Calderon's conservative National Action Party has never been known as a friend of labor, and in part because business groups support the proposal so strongly.
"They're only talking about the nicest part" of the law, those concerning union democracy, said Jaime Moreno, 42, a secretary at a Mexico City high school and part of the National University Workers Union. "But they don't say anything about the total transformation of labor relations."
Francisco Lopez, 50, an out-of work computer programmer, says he's already seen what temp agencies and outsourcing means: Foreign "consulting" firms that hire programmers like himself, charge the employer twice what the worker actually gets, and quickly dump the employee when a job is finished.
"It's like human trafficking," Lopez said. "I'm a victim of the foreign outsourcing firms."
But business groups say the reform is necessary.
"A flexible labor market, that gives legal certainty to employers and employees, is indispensable if we want our economy to grow," said Alberto Espinosa, leader of the Mexican Employers Federation.
Calderon said the new law, by providing training, probationary and part-time work, could especially help create jobs for those who currently have the hardest time entering the labor market: women and young people.
But critics say Mexico's ongoing wave of drug violence, extortion and robbery of freight shipments play a greater role than labor rules in limiting investment here.
"Businessmen don't avoid hiring people in Mexico because it's expensive," Alcalde notes, "because they earn so much less."

Monday, September 24, 2012

From San Diego Union Tribune: Ben Stein: San Diego region ‘the next Hong Kong’

http://www.utsandiego.com/news/2012/sep/21/ben-stein-san-diego-region-the-next-hong-kong/


Ben Stein: San Diego region ‘the next Hong Kong’

 — San Diego could well be the next Hong Kong, economist, actor and author Ben Stein told business and political leaders on Friday, thanks to what he called a “miracle mix” of circumstances.
The region may end up leading the rest of the nation in the economic recovery, he added, because of its access to American capital and technology, paired with its proximity to what he called one of the best labor forces in the world: Mexico.

“You have all the cards in this game of capital and labor,” he said.

Stein, recognized by many for his role as an economics professor in the circa-1986 film “Ferris Bueller’s Day Off,” is also an economist in real life. He received both a graduate degree in economics and a law degree from Yale University, worked in the Department of Economics as an economist and as a trade regulation lawyer for the Federal Trade Commission. He served as speech writer and lawyer for former presidents Richard Nixon and Gerald Ford, later becoming a columnist for The Wall Street Journal and writing 30 books. He is now a finance commentator for CBS Sunday Morning and Fox News.

Stein shared his optimistic vision of the future in a keynote speech at the 22nd annual South County Economic Development Council Summit, held at the San Diego Convention Center. Even though he bookended his speech with jokes about economists and sobering realities of the nation’s slow economic recovery, his message for San Diego was positive.

“You have something here which is approaching the miraculous,” he told about 400 attendees over lunch. “Right across the border, very close to here, you have an enormous supply of hardworking, skilled, disciplined, eager workers.”

A lack of qualified workers is one of the most frequent complaints Stein hears from companies in his work as an economist, but he said San Diego doesn’t have that problem.

“You guys have access to absolutely the best labor force presently available. It’s as if you guys have miraculously brought China right next door to you.”

He also emphasized the large role hard work must play in any economic recovery, regardless of the raw materials and capital available.

“This country got to be a very, very rich country, and a very powerful country and a wonderful country from work,” he said. “From work, work, work.”

He added that the “overwhelming benefit” of having a China-like hub of economic activity next door should greatly outweigh any concerns people might have about possible breaches of border security due to increased travel between the countries.

Stein did not describe in detail what the hub might look like, or exactly what the exchange of goods and workers might look like; nor did he address possible solutions to some of the ongoing challenges that employers and workers from both countries alike face, including limited availability of guest-worker visas and long wait times at the ports of entry.

But in bridge terms, he said, this region is holding the ace of trump in its hand, and it’s time to play it on behalf of everybody on the continent.

“You’ve got American capital, American technology and fantastic labor across the border, and the mixture of these is just a miracle for your area and for the whole North American continent,” he said. “There’s no other industrial country in the world that has this benefit.”

“This area I see as the next Hong Kong. It’s just going to become a super boom town involving the cross-border movement of goods and services and labor and capital. It’s just going to be astonishing.”

Friday, September 21, 2012

from USA Today: Mexico may bid for 2026 World Cup – USATODAY.com

Mexico may bid for 2026 World Cup – USATODAY.com

A good story to end the week out on.



MEXICO CITY (AP) -- Mexico may bid for the 2026 World Cup, knowing it will face tough competition from the United States.
Mexico federation president Justino Compean said, at the least, he wants the event in CONCACAF, the region of North and Central America and the Caribbean.
"It's going to be a fight," Compean said. "I don't know if Mexico has the capacity to battle it out, although it's still 14 years away."
He said even if the United States wins the bid, Mexico will benefit.
"It will be a tough fight, but assuming the United States wins, we would also win because we are very close geographically, and there are millions of Mexicans there. This means we would be like the home team. Besides, it also means we would not have to face the United States in qualifying."
Compean has said Mexico is bidding for the 2017 Under-20 World Cup.

Wednesday, September 19, 2012

Tuesday, September 18, 2012

From CNBC: Mexico: Surprising Land of Opportunity



Mexico: Surprising Land Of Opportunity


Posted By: Mark Koba | Senior Editor
CNBC.com
| 18 Sep 2012 | 09:41 AM ET

Long considered a second cousin to its behemoth neighbor to the north — and a source of illegal immigration and drug violence — Mexico may have one of the most underrated and misunderstood roles in the global economy.

The reality, many analysts say, is that Mexico offers investors and businesses a land of opportunity that rivals any other emerging market.

"What's surprising — is how surprising it is that as an economic power, Mexico is under the radar for so many businesses and investors," says Jose Manuel Ramirez of tax audit firm KPMG who co-wrote a recent study on investing in Mexico.

"For many years, Mexico has been doing all it can to attract investors and has reached a high level of sophistication," Ramirez says. "There's really a lot of great possibilities there."

To make itself attractive to investors, Mexico has transformed from a small economy to an open and more diverse one. In the last 20 years, the Mexican government has made improvements to its infrastructure and fostered competition in sectors such as transportation, energy and telecommunications. (More: How to Get a Piece of Mexican Stocks)

As a result, Mexico has grown to be the 13th largest economy in the world — $2.4 trillion — and the 11th in purchasing power, according to the World Bank. The Mexican stock exchange — the Bolsa Mexicana de Valores — is valued at some $451 billion, second to only Brazil in Latin America and fifth in all of the Americas.

One of the biggest changes for Mexico has been its trade policies, says Antonio Garza, a former U.S. ambassador to Mexico and currently chairman of Vianovo Ventures, a business development firm.

"The North American Free Trade Agreement (NAFTA) in 1994 was critical to getting Mexico integrated into the global economy," Garza explains. "It opened their eyes to trade and the need to compete. It helped start the reforms and improvements to infrastructure and letting more foreign businesses come in."

With NAFTA, nearly 86 percent of Mexican exports and 50 percent of its imports are traded with the U.S. and Canada, making Mexico one of the leading exporting countries in the world. Policy changes are also making Mexico a manufacturing hub, as it's now the largest North American auto-producing nation, recently surpassing Canada and the U.S.

And investment dollars continue to pour in. General Motors has announced plans to invest $120 million in a plant in the central state of San Luis Potosi to produce the SUV crossover. And Coca Colawill invest more than $1 billion into its Mexican market this year as part of a $5 billion, 5-year investment plan for the country.

Proximity to the U.S. is a big reason for Mexico's attraction, says George Haley, professor of marketing and international business at the University of New Haven.

"Mexico's Pacific Coast port of Lazaro Cardenas is actually closer to New York and the U.S. east coast markets than Los Angeles and Vancouver in Canada," Haley adds. "Given this geography, it's easy to see that virtually all of Mexico is a candidate for investments seeking to serve U.S. markets."

Coupled with its geography as an attraction is Mexico's workforce. With a labor pool of some 78 million people, the World Trade Organization ranks Mexican workers among the hardest-working in the world, in terms of the amount of hours worked each year.

"Mexico has a large, generally educated and trainable number of workers," Haley explains. "That's paired with a large cadre of well-educated English-speaking professional managers."

Mexico's middle class has been expanding, as immigration across U.S. borders has slowed, mainly due to the sluggish American economy, say experts. (More: Crime Explodes — But an Economy Booms)

But even as the economy grows, many Mexicans are still struggling. Mexico has the second highest degree of economic disparity in the world between the very poor and the rich, just behind Chile, according to the Organization for Economic Co-operation and Development.

And possible changes to current Mexican working laws — like more flexibility in firing, eliminating mandatory benefit packages, as well as the ability to hire workers for fewer guaranteed hours — will be attractive to businesses (though not necessarily to employees).

"A lot of Mexicans are open to changing the labor laws to attract foreign business investment," says Peter Susser, chair of the international employment law practice group at Litter Mendelson. "But many others might not like the new rules and give up what they have."    

To help workers, many companies are making the transition into an industrialized world by offering old world perks, says Alejandro Bustamante, senior vice president of operations in Mexico for Plantronics , an electronics firm based in Santa Cruz, California, with a manufacturing plant in Tijuana that employs 2,300 people.

"We've created a school to teach our associates how to be parents to allow them more time to concentrate on their families," Bustamante explains. "We've also brought a museum and symphony to the plant and we try to get our workers involved in the community. We are very focused on our workers and other firms are doing the same."

There are of course, major caveats for any type of business investment in Mexico. While Mexico avoided a major setback from the global recession, it suffered a slowdown that could happen if another recession hits. That's because of its dual-edged sword of being tied to the U.S., says Antonio Garza.

"The U.S. economy is key for Mexico," Garza explains. "It's not the only factor, but to think that a neighboring country as big as the U.S. wouldn't have an impact on Mexico if there's economic trouble is wrong."

Besides outside forces, internal problems in Mexico can't be ignored, says Josh Miller, general manager in Mexico for Control Risks, a global risk consultancy firm.

"Corruption is still a huge problem for businesses in Mexico, as are extortion threats and hijacking along the production chain," Miller says. "Telecommunications is one of the worst sectors when it comes to corruption and payoffs. That raises prices and costs for firms."

And there's the deadly violence from the drug cartel wars that's killed some 48,000 people during the last five years. But the murders, as awful as they are, don't create a full picture of Mexico, says George Haley. (More: What's the Next Global Manufacturing Superpower?)

"It's having an affect and can't be dismissed, but it's limited to about five of the country's 31 states," Haley says. "Mexico is perceived as an extremely violent country but its crime rate, even with the cartel violence, is about middling for Latin America and the Caribbean."

For all its problems, experts say Mexico is still a good investment bet. A return of the Institutional Revolutionary Party (PRI) to presidential power has many believing the march toward business reforms will continue—as will the fight to control the drug lords.

Meanwhile the economy keeps growing. One analysis says Mexico's economy could surpass Brazil as the number one economy in Latin America in 10 years. Goldman Sachs has predicted that Mexico could be 5th largest economy in the world by 2050.

In the end, analysts say, the question is really not why — but why not? — invest in Mexico.
"There's a lot of reform ahead including labor, energy, along with more transparency and stability in the government," says Garza, former U.S. ambassador to Mexico. "If you ask me, the big risk for investors is not being in Mexico."

Monday, September 17, 2012

From San Antonio Express News: Donna holds out hope its bridge will pay off

http://www.mysanantonio.com/news/local_news/article/Donna-holds-out-hope-its-bridge-will-pay-off-3870246.php


Donna holds out hope its bridge will pay off

Updated 11:39 p.m., Sunday, September 16, 2012
  • Customs officers inspect a vehicle at the port of entry in Donna, Texas Tuesday Sept.4,2012. The Donna bridge had 2 lanes of inbound traffic lanes open. With up to 40,000 trucks and 100,000 cars going through the toll booths each month, the Pharr International Bridge generates about $900,000 monthly, and is the envy of other area bridge operators including Donna who would love a chunk of the cross border commercial traffic. Photo: Delcia Lopez, SPECIAL TO THE EXPRESS NEWS / DELCIA LOPEZ PHOTOGRAPHY©
    Customs officers inspect a vehicle at the port of entry in Donna, Texas Tuesday Sept.4,2012. The Donna bridge had 2 lanes of inbound traffic lanes open. With up to 40,000 trucks and 100,000 cars going through the toll booths each month, the Pharr International Bridge generates about $900,000 monthly, and is the envy of other area bridge operators including Donna who would love a chunk of the cross border commercial traffic.
     Photo: Delcia Lopez, SPECIAL TO THE EXPRESS NEWS / DELCIA LOPEZ PHOTOGRAPHY©
 DONNA — With room for eight lanes to carry traffic to and from Mexico, the Donna International Bridge could easily handle thousands of cars and heavy trucks daily, pouring toll money into city coffers.

But instead of the bustle and congestion of a typical South Texas border crossing, an orderly calm prevails here. At times, the afternoon traffic is so light that the single, bored toll collector has time to chat between arriving cars.
With its second anniversary approaching, the bridge is still losing thousands of dollars a day, and the multifaceted $900 million development complex planned for 1,000 acres on the U.S. side exists only in colorful, two-dimensional depictions.
This wasn't what folks had in mind when they borrowed $30 million to build a bridge across the Rio Grande. Instead of growth and money, so far it's only brought Donna the highest tax rate in Hidalgo County.
“It's like having a kid in college, in his freshman year. We're still paying for the books and all the expenses,” said City Manager Oscar Ramirez, who said city taxpayers are underwriting about $7,400 in bridge debt and operating costs each day.
“We have been working with factors beyond our control, but we are being responsible parents,” added Ramirez, who believes that, like a college graduate, the bridge will become an economic driver and revenue producer.
Set amid cane fields about 10 miles east of the prosperous Pharr International Bridge, the Donna Bridge provides an example of the risks, political complexities and financial uncertainties of tackling such an ambitious project.
For starters, no one anticipated that drug cartel violence would turn northern Mexico into a no-man's land about the time the bridge was completed, dramatically reducing crossings.
For Donna, a working-class community of only 16,500, there was little room for error.
“We're a small community, less than 10 square miles,” said Mayor David Simmons. “Our largest employer is the school district. The second largest is the city. So that tells you what we have right there.”
The mayor, who inherited the project, said car traffic has slowly increased since the bridge opened in December 2010 and jumps each time operating hours are extended.
At most Valley bridges, southbound trucks pay $20 and cars $3 to cross. But since the Donna Bridge does not carry trucks, the only revenue comes from the 1,200 cars that cross daily. City officials say 500 southbound trucks a day would put the bridge in the black.
“The city will recover after a while. We're really fighting to get that empty truck traffic. Eventually we want the full truck traffic. That's where the money is to be made, commercial traffic,” the mayor said
The city is even willing to pay for an inspection station so federal agents can process empty trucks, he said. “But will the federal government man this facility? We don't know.”
Trucking bonanza
The Donna Bridge is the newest of 11 spans that cross the Rio Grande between Brownsville and Roma. Together they record about 120,000 truck crossings and 1.8 million car crossings each month, and in some places compete with each other.
For example, operators of both the Donna Bridge and Anzalduas Bridge, which opened in 2009 near Mission, are eager to carry heavy truck traffic, something that hinges on federal approval.
The operators of the Pharr Bridge, 10 miles upstream, which has a monopoly on commercial traffic in this part of the Valley, are in no rush to share their bonanza of 40,000 paying trucks a month.
“We're far from being at capacity,” said Jesse Medina, director of the Pharr Bridge, who doesn't expect competition for at least five years. And by the time that happens, he said, Pharr will be fine, in part because of anticipated increases in shipping of Mexican produce.
“We can lose half our traffic and still do very well financially. And we're not just sitting on our seats. We're marketing the area for the perishables that can be exported to the United States on a fast-track basis,” he said.
Late last month, the Valley's bridge operators met for two days in Brownsville with state and federal transportation officials, as well as their Mexican counterparts, to work on a Border Master Plan.
The bi-national effort is intended to coordinate and prioritize border infrastructure development. Each bridge operator came with specific wants and needs, most of them dependent on federal money and staffing.
The master plan for the Rio Grande Valley, including a ranking of projects, will be published sometime late next spring, and will serve as a guide to federal agencies responsible for manning the international bridges and other ports of entry.
“The idea is to bring federal, state and local agencies together and come up with a list of prioritized projects, so scarce federal resources can be assigned appropriately,” said Jolanda Prozzi, an analyst with Texas Transportation Institute who is working on the plan.
While Donna has heard plenty of sharp criticism and second-guessing since its bridge opened, to some extent, it is a victim of unforeseeable circumstances.
When the project was being planned a few years ago, no one predicted that the violence in Mexico would cut private vehicle crossings on some Valley bridges in half, with Rio Bravo, the city just across the Rio Grande from Donna, becoming the scene of shootouts, kidnappings and assassinations.
Also unforeseen was the current scarcity of federal money needed for staff and inspection stations.
As the mayor and others have noted, the traffic and revenue forecasts made by Donna's various bridge consultants proved to be optimistic, as did the expectation that Donna would quickly handle heavy trucks.
“The Donna Bridge is not a bad idea. It's a great idea. The problem is they opened when people were not going to Mexico. The bottom had fallen out,” said Medina, director of the Pharr Bridge.
“And, they were expecting commercial traffic and I think they were taken advantage of there. They paid a lot of money for bad information, for pie in the sky,” he said.
Market forces
Competition among the bridge interests in the McAllen area is polite but intense, with each group having its own lobbyists and own agendas. And none are above mildly disparaging the others to an inquiring reporter.
McAllen City Manager Michael Perez, whose city owns about half the Anzalduas Bridge, said it's the obvious choice for increased commercial traffic because it sits between a large maquiladora complex in Reynosa and a foreign trade zone on the U.S. side.
“Hopefully, you'll let market forces dictate what happens. And if you were on the west side of Reynosa, what would cause you to drive to Donna or Pharr to cross?” he asked.
“It makes a lot of business sense, but we can't seem to convince the people in Washington on the political side,” he said.
In Donna, city leaders are sticking with their plan to steadily expand bridge services, and say someday the city will have truck traffic and reap the financial rewards. Until then, the bridge will have to be subsidized.
“We're not looking for vindication. We're professionals. We have a vision, and we're trying to make the wisest decisions to get ourselves there,” said Ramirez, the city manager.
“If we didn't have the bridge, we'd still be a sleepy town trying to bring in big business. A port of entry gives us an advantage other cities don't have.”
jmaccormack@express-news.net

Sunday, September 16, 2012

From CNN: Misreading Mexico




Misreading Mexico

By Ravi Agrawal, CNN
Ravi Agrawal is senior producer of Fareed Zakaria GPS. The views expressed are his own.
Here’s some trivia. Which of these countries has the highest average income: India, China, Brazil or Mexico? If you guessed Brazil, you’d be wrong. And if you guessed India or China, you’d be way off: even if you combine the incomes of the average Indian and Chinese you wouldn’t reach the $15,000 annual purchasing power of the average Mexican.
These numbers don’t fit with many people’s perception of America’s southern neighbor. Mexico, you see, has a PR problem. A quick Google search for news from Mexico throws up a set of results that usually includes the words violence, drugs, cartels, and migrants (or the 2010 oil spill in the Gulf of Mexico). But it’s not just the international media that seems to have it in for Mexico’s reputation. Mexicans themselves seem woebegone. A recent Pew survey found that only a third of Mexicans think they have a good national economic situation. Compare that with half of Indians, 65 percent of Brazilians, and 83 percent of Chinese. Or let’s go back to average citizens: 52 percent of Mexicans think they have a good personal economic situation, but for Indians, Chinese, and Brazilians, those numbers rise to 64 percent, 69 percent, and 75 percent respectively – and that’s despite the fact that in purchasing power terms, Mexicans actually earn more per capita than citizens of all three of those countries. And, unlike the others, Mexico’s growth rate is actually rising.
Indeed, Mexico’s economy has a number of strengths. It is the 14th largest in the world. If you take into account purchasing power, it is the 11th largest economy – larger than Canada, Turkey, and Indonesia. It is projected to grow 4 percent this year, and even faster in the coming decade, a rate that the financial services firm Nomura says will lead to Mexico overtaking Brazil as Latin America’s biggest economy within 10 years, despite the fact that Brazil’s economy is currently twice as large.
Still, there is a weakness in Mexico’s growth, as I saw for myself when I was there last month: the money hasn’t been trickling down. According to the Organization of Economic Cooperation and Development, Mexico has the highest rate of poverty among the group’s 34 member nations. If you consider inequality, the OECD ranks it the second most unequal, with only Chile more unequal.
So although the headline numbers might surprise, Mexico presents something of a mixed bag. Yet this hasn’t deterred investors taking a growing interest in this Latin-but-North American country. In a special report on investing in Mexico, theFinancial Times went as far as to call its macroeconomy “virtually bulletproof.” Move over BRICs – Brazil, Russia, India, China – it’s time for the MISTs – Mexico, Indonesia, South Korea, Turkey.
Part of Mexico’s appeal to investors is tied into what I think may be the country’s key weakness: inequality. You see, at the lowest-end, labor remains cheap. The Economist points out that in 2003, Mexican pay was three times China’s rates; now it is only 20 percent higher. So Mexican manufacturing is poised for a boom. And while in the past few years Mexico banked on its proximity to the U.S. (lower transport costs) and trade deals like NAFTA to compete with China, it will now be able to manufacture and price products at an advantage.
The big question, of course, is whether the export dollars will trickle down. But making this happen will require significant market reforms. In his recent bookBreakout Nations: In Pursuit of the Next Economic Miracles, Morgan Stanley’s Ruchir Sharma points out how the top 10 Mexican families account for more than a third of the country’s stock market value – an almost unheard of number. “Private cartels produce about 40 percent of the goods that Mexicans consume and charge prices that are 30 percent higher than international averages,” he writes. “Phones, services, soft drinks, and many foodstuffs cost more in Mexico than in the United States.”
One thing is clear – Mexico is not the war-torn wasteland it is often made out to be. Its people have a glorious history, and a hopeful future. This isn’t to say that Mexico is destined to be the next investment hotspot – that’s far too simplistic a way of looking at this. Instead, the numbers suggest the truth is somewhere in between. Mexico has enormous capacity to surprise on the economic stage. But to really shine, it needs to work on developing a vibrant – and bigger – middle class.