Tuesday, October 30, 2012

Upcoming Event: NAFTA Webinar

Below is the invitation from the US Department of Commerce, International Trade Administration for an upcoming webinar.  Follow this LINK to register.  

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NAFTA Webinar
Current Business Opportunities in North America


Tuesday, November 6, 2012
10:00am – 11:30am CST
Cost: $45.00


We are celebrating the 20th anniversary of the historic North American Free Trade Agreement (NAFTA). Join the U.S. Commercial Service and the International Trade Center to find out how to take advantage of NAFTA.  Current market overviews will be provided by our staff at the U.S. Embassies in Ottawa, Canada and Mexico City, Mexico.

Presenters:
Rick Ortiz, DSCO/Commercial Counselor
US Commercial Service – Canada
US Embassy Ottawa, Canada


John Howell, Principal Commercial Officer
US Commercial Service – Mexico
US Embassy Mexico City, Mexico



Topics include:
·         Communicate Directly with Market Experts
·         NAFTA Overview and Impacts in Canada and Mexico
·         Regulatory Environment and Market-Entry Strategies
·         Market Overview & Best Prospects for US Exporters
·         Best Market Opportunities & Trade Regulation

For more information:
e-mail Michael.Rosales@trade.gov or call (210)-228-9878

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Monday, October 29, 2012

Upcoming Event: Baja Aerospace Supplier Forum in Mexicali on November 15

Mark you calendars for the Baja Aerospace Supplier Forum this upcoming November 15.

The 3rd annual event in Mexicali, BC will bring suppliers and buyers to the area and provide them with an overview of business opportunities in this industry.

Web site provides more information.  Click here.
 

From Journel of Commerce: Freight Brokers Scramble As Sandy Approaches


Freight Brokers Scramble As Sandy Approaches

Wednesday, October 24, 2012

From The World Bank: Doing Business in Mexico

The World Bank, in their "Doing Business" analysis of countries around, has published their  report on 2013 Mexico.  118 pages in length, it is a wealth of information if you are thinking of starting a business south of the border.  Mexico is listed as 36th our of 185 in ease of starting a business.

Here is a direct link to the PDF document:  Doing Business In Mexico

From Imperial Valley Press: American farmers flourish in Mexico

http://articles.ivpressonline.com/2012-10-21/steve-scaroni_34633448


American farmers flourish in Mexico

October 21, 2012|By ANTOINE ABOU-DIWAN | Staff Writer

Vegetable farmer and packer Steve Scaroni has two words for people who cling to the idea that American produce is the best.

“Wake up.”

Between vegetable production and trucking, Scaroni has been in business for 25 years. Increasingly frustrated with a regulatory environment that he described as hostile, immigration policies that are out of touch with reality and the desire to diversify his operation, Scaroni ventured into international business. He expanded his business into Guanajuato in central Mexico. 

Scaroni is hardly the first American farmer to seek better opportunities on the other side of the border.

“American farmers have been going to Mexico for as long as I can remember,” said Tom Nassif, president and chief executive officer of Western Growers, a crop industry trade association.

“It seems to be cyclical,” Nassif said. “They go over there for a while because they have trouble getting labor. They go over there and have some success. The regulatory environment isn’t as strict.”

Chronic labor shortage was one of the reasons Scaroni invested in Mexico.

“I’m uneasy about the lack of a stable migrant labor supply,” he said. “We have to have a meaningful immigration solution. Legal or illegal — we are consistently short.”

How short? Scaroni said his U.S. operation is consistently short of labor by about 10 percent.

“We’re consistently working 10-hour days,” he said. “What we’re doing is not sustainable.”

Scaroni is quick to debunk the notion that doing business in Mexico is cheaper.

Farming is, by nature, a seasonal activity. Farmers plan their crops according to the season, weather conditions and soil conditions, and hope that extreme weather does not wipe out their investment.

“You go to Mexico to diversify geographical risk,” Scaroni said. If extreme weather destroys his crops in the Imperial Valley, he has his fields in Mexico to fall back on.

Why aren’t more farmers rushing to do business in Mexico?

‘Not for the faint of heart’

Simply put, it’s not easy.

“I got humbled,” Scaroni said. “I misestimated the cultural battle I would fight.”

Scaroni said his staff in Mexico did not work with a sense of urgency that is typical in American business. He described a “mañana” approach to work, where if it doesn’t get done today, it can wait for tomorrow. Maybe.

“Startup was extremely difficult; working against a culture that doesn’t lend itself to ‘just in time’ production,” he said. “There was a lack of a sense of urgency.”

Brawley farmer Larry Cox agrees.

“Productivity is not as good (as in the United States) here,” he said.

Cox’s catalyst for expanding into Mexico was the North American Free Trade Agreement, a trade agreement among Canada, the United States and Mexico which liberalized trade among the three countries.

“I lobbied against NAFTA,” Cox said. “I was concerned about competing with low-cost (labor).”

Cox grows, harvests and packs green onions, asparagus, celery, cauliflower and leeks on about 2,000 acres some 30 minutes south of Mexicali. And befitting the ease with which goods and services are traded across borders, many of his crops are planted in the United States before they are transplanted to his fields in Mexico. He started his Mexican operations on 150 acres.

“I asked myself ‘how much money can I afford to lose,’ and divided by three,” he said.

He initially invested $100,000 per year over three years into his venture in Mexico.

“I didn’t anticipate how much capital it would take to do things the right way,” Cox said. “I found myself stretched financially. It’s hard to know when it’s wise to stop and change direction.”

Cox said he should have doubled his initial investment.

Scaroni said starting up his operation in Mexico took four to five times more capital than he anticipated.

“Mexico is a tough deal,” he said. “It’s not for the faint of heart.”

Both farmers said their operations in Mexico have stabilized, and agree that expanding into Mexico was a good decision. Cox takes advantage of Mexico’s lower labor cost to focus on crops that are more labor-intensive. He has branched out into vegetable packaging and is in the process of expanding his packing shed. But things are still far from perfect. Cox doesn’t have a fixed planting schedule because Mexico is chronically short of water.

“There was no water in August last year,” he said.

The fruits of Scaroni’s and Cox’s investments in Mexico end their journeys on supermarket shelves and dinner tables in America. Both said the majority of their produce gets shipped into the United States. 

Scaroni’s venture into central Mexico meant substantial savings on freight.

“I’m closer to East Coast markets,” he said. “The cost to the border (Laredo, Texas) from central Mexico is about the same as out here, but I’m halfway across the country,” he said.

Staff Writer Antoine Abou-Diwan can be reached at 760-337-3454 or aabou-diwan@ivpressonline.com

Tuesday, October 23, 2012

FROM PLATTS: Mexico's new shale discoveries could double gas production



Mexico's new shale discoveries could double gas production: minister

Dubai (Platts)--23Oct2012/1225 pm EDT/1625 GMT

New shale discoveries could double Mexico's natural gas production, enabling it to transform itself from net importer to exporter. But how quickly those reserves are tapped will depend on how effectively a new administration, set to take office December 1, implements reforms to Mexico's energy sector, Mexican oil minister Jordy Herrera said Tuesday.

Herrera said in an interview on the sidelines of the World Energy Forum in Dubai that Mexico would need to invest more than $10 billion annually for the next 10 years to tap into its shale resources that could double the country's 6 Bcf/d production.

State-owned energy firm Pemex, which operates as a monopoly in Mexico, cannot afford that investment on its own, so the new administration will need to decide whether to open up Mexico's energy sector to outside investment and competition or allow some kind of public-private partnership with Pemex.

"We have to make big reforms for fiscal purposes," Herrera said. "In terms of developing the new fields in the Gulf of Mexico or the new fields for unconventional, I think there's going to be a big opportunity with a lot of investment. If that is going to be developed through Pemex, we're going to need a lot of public money that we don't have. It will depend on the kind of reform that the new administration is going to send out to Congress."

President-elect Enrique Pena Nieto of the Institutional Revolutionary Party (PRI) is scheduled to take office December 1. Pena Nieto has promised reforms that would allow the private sector to explore and produce oil -- the Mexican constitution currently bans such outside investments -- but his PRI will not have a majority in the next Congress, which also will be in place December 1. President Felipe Calderon of the Partido Accion Nacional (PAN), however, has voiced support for Pena Nieto's energy reform proposals.

While the shale gas revolution is already booming north of the border -- Texas alone has nearly 6,000 fracking wells in operation, for instance -- Mexico, which has just 12, is making its first tentative steps to study and analyze what resources it has.

With US gas cheap due to the American supply glut, Mexico's imports have soared, tamping down investment interest in developing Mexican resources. Mexico imports some 1.5 Bcf/d of US gas.

But Herrera, who was Director General of Pemex Gas and Basic Petrochemicals before joining the Calderon administration, said Mexico's growing economy would make investing in its domestic resources attractive from an energy security standpoint, though he estimated that gas prices would need to rebound to around $5/Tcf before shale gas development would make economic sense.

"Our economy has to grow a lot," he said. "We're going to need those resources for our own purposes. The restrictions [on development] will be related with [the availability of] public money, not with the industry itself."

Herrera said the country is spending $500 million to gather geological information on its shale deposits. These are mainly in the Eagle Ford formation that stretches from Texas into Mexico's northern region, where security amid drug smuggling and other problems is a general concern.

"Like in the United States, we knew about shale gas, but we never spent the right amount of money to determine where's the biggest potential with liquids that are needed to make that industry positive in terms of economic return," he said. "Pemex is starting to drill some of the first wells in the north area of the country, but we have to make a lot more than that."

--Herman Wang, herman_wang@platts.com --Kate Dourian, kate_dourian@platts.com --Jacinta Moran, jacinta_moran@platts.com --Edited by Carla Bass, carla_bass@platts.com

Monday, October 22, 2012

From POLITICO Opinion: Why risk Mexico trade war? - Mickey Kantor - POLITICO.com


Why risk Mexico trade war?
By: Mickey Kantor
October 19, 2012 04:35 AM EDT
Late in September, the Department of Commerce issued a preliminary decision to scrap a 16-year-old trade agreement governing the import of Mexican-grown tomatoes into the United States. That might seem like an obscure and prosaic federal government action to most people, but to those of us who have watched the evolution of the tomato market over the last few decades, it is really a startling departure whose impact could be devastating.

I say startling because the agreement, which the U.S. and Mexican governments adopted when I was Secretary of Commerce, has been one of the models of successful trade policy. Startling also because, if the U.S. government ultimately adopts the preliminary decision, it will reward a segment of the U.S. tomato growing industry that has simply not kept up with the innovation and quality of its counterparts in Mexico, likely set off a spiral of retaliation that will hurt American exporters of other commodities, and most certainly drive up the price of tomatoes here. What’s more, it will pick a fight with Mexico, one of our biggest trading partners, that we don’t need and can easily avoid.

This approach, in other words, seems to be guided by a simple, but misguided, principle: if it ain’t broke, break it, and break it bad.

I’m more than just a curious observer. Beyond my role in striking the 1996 agreement, my personal experience with the tomato industry goes back to 1968, when I was a young legal aid lawyer representing migrant workers who were literally slaving away in the tomato fields of Florida. I saw firsthand the conditions that led to the conviction of some Florida tomato growers for involuntary servitude — that’s right, slavery in the modern day. As journalist Barry Estabrook documented in his 2011 book “Tomatoland,” accusations of slave-like labor practices continued to plague the industry in recent years.

The Florida growers — who represent only a small fraction of the overall U.S. growers — have been trying for decades to block competition from Mexico. With the Florida growers in mind, we designed the ’96 agreement to protect them by preventing Mexico from flooding the U.S. market with tomatoes far below market price. Since then there have been no violations, and the price floor prescribed in the agreement has been revised twice to reflect changing conditions. Nearly everyone on both sides of the border will say that it has worked to their benefit.

And, since then, the Mexican growers have adopted new, innovative techniques to boost their production and quality and to create whole new market segments featuring special varieties that have been hugely popular with consumers. With savvy and hard work, the Mexican growers have figured out how to make it in America, the sort of fair and free market conditions we intended NAFTA to create and that a well-functioning global economy requires.

At the same time, Florida growers have continued to produce “gas green” tomatoes that they harvest when the fruit is still green and “ripen” with ethylene gas. The result is a product with little taste and relatively low levels of nutrients. Their product is losing with American consumers not because, as the Florida growers charge, the Mexicans are undercutting them on price. It’s losing because it’s simply just not as good and as rich in variety. So goes the free market that we Americans so strongly believe in.

A big loser in this emerging dispute will be American consumers. If the Commerce Department kills the agreement, observers expect it will impose tariffs on Mexican tomatoes, which will ravage supply and boost the cost at the cash register. How much? We can’t know for certain right now, but consider that when, in 2010, bad weather led to an approximate 20 percent drop in the total supply of tomatoes, prices shot up about 35 percent.

It could also mean that thousands of businesses and jobs on our side of the border (truckers, importers, wholesalers and retailers) will be threatened if fewer Mexican tomatoes flow into the U.S. and if, as it has hinted recently, the Mexican government decides to slap retaliatory tariffs on commodities such as pork from the Midwest, cheese from Wisconsin, apples from Washington state and cars and trucks from Michigan and Ohio.

America has never shied away from free and fair competition; indeed, that value is embedded in our culture. So why are we suddenly and rather recklessly changing the rules to a system that has been working well for everyone?

Mickey Kantor was Secretary of Commerce from 1996 to 1997 and U.S. Trade Representative from 1993 to 1996.

Thursday, October 18, 2012

Upcoming event: Tijuana Maquiladora Site Visit

News of an event of interest to those in Southern California:  The Institute of the Americas, located on the campus of University of California, San Diego is organizing a full day maquiladora site trip to Tijuana, BC Mexico.  Here is the text of the invitation:


Institute of the Americas Trade Program Site Visit: Maquiladora Industry in Tijuana 
November 9, 2012

Curious about Mexico’s maquiladoras? How have they evolved since NAFTA’s original implementation? Want to understand more about the cross‐border business in our mega‐region? Join the Institute of the Americas’ Trade Program on Nov. 9 as we take a first‐hand look into the unique maquiladora industry of the border.

Our 1‐day business tour will cover a number of topics of interest for enthusiasts of business and international affairs, ranging from bi‐national operations, near‐shoring, manufacturing processes, social responsibility, logistics, management and international strategy.

8:30 am   
Departure from Rady School

9:30 am   
Tour of DJO Global facilities


12:00 noon 
 Lunch


2:00 pm    
Tour of Plantronics facilities

4:00 pm   

Visit Tijuana EDC or US Consulate General 


6:30 pm   

Dinner at Villa Saverios


8:30 pm  
 Depart Tijuana 

9:30 pm   
Arrival at Rady School

The visit will feature visits to two manufacturing and design facilities, starting with DJO Global, which is a leading global provider of high‐quality, orthopedic devices, with a broad range of products used for rehabilitation, pain management and physical therapy. DJO also develops, manufactures and distributes a broad range of surgical reconstructive implant products and are the largest non‐surgical orthopedic rehabilitation device company in the United States and among the largest globally.

The second visit will be to Plantronics, an electronics company producing audio communications equipment for business and consumers. Its products provide unified communications, mobile use, gaming and music. They pioneered the lightweight headset, the mobile headset, noise‐canceling technology and the personal speakerphone.

The plant visits will begin with a general presentation about the company, followed by a guided tour of the production floor led by company managers. The group will then proceed to the other operational areas, which may include the call center, design center and laboratories.

Our tour will include a visit of their cutting‐edge engineering and design area as well as the production facility.

Business presentations by the US Consulate and the Tijuana EDC may be included, time permitting.

We will conclude the evening with a group dinner at Villa Saverios restaurant, a top‐ flight restaurant in Tijuana known for its elegant cuisine joining flavor of Baja California and the Mediterranean.

Our return border crossing will be expedited. 

For more information and to register, contact Chandler Martin or 858.453.5560 ext. 122. 

Wednesday, October 17, 2012

News From Bill Hay International: FIATA 2012

For the first time in 30 years, FIATA (International Federation of Freight Forwarders) held their yearly conference in the US.  Los Angeles, CA was the host city.  


BHI's Tom VanMouwerik attended the conference this year. Delegates travelled from all corners of the globe to network, participate in seminars and meetings, meet new contacts, reconnect with old ones, and even find time to socialize.  Mr. VanMouwerik mentioned that is was interesting hearing stories from an individual from Nepal having some of the same issues that we would have half a world away.  We have a lot more in common than most would think.

To learn more about FIATA, click the following LINK 

Below are some picture of this event. 





From The China Post: Mexico challenges Chinese textile and clothing support



Mexico challenges Chinese textile and clothing support

Wednesday, October 17, 2012
Reuters



GENEVA -- Mexico has accused China of breaking World Trade Organization (WTO) rules by giving tax breaks and other favorable deals to its own clothing and textile businesses, the global trade body said on Monday.


Mexico filed a complaint with the WTO saying Beijing was effectively subsidizing Chinese companies in those sectors by exempting them from income taxes, value-added taxes and municipal taxes, the organization said in a statement.

Other Chinese support that Mexico said broke WTO regulations included cash payments from government agencies and discounts on loans, land rights and electricity prices.

It was Mexico's fourth WTO complaint against China, a competitor in many sectors including clothing and textiles.

China's use of subsidies and its failure to disclose them to the WTO have been the subject of strong criticism, especially from the United States.

The brief WTO statement announcing the latest dispute did not provide details about the size of the alleged Chinese support or its impact on Mexico's trade.

Trade diplomats were not immediately available to comment on the case at the WTO's headquarters in Geneva.

Mexico's textile (CANAINTE--) and clothing industry (CANAIVE) associations, in a joint statement, called Mexico's official complaint “a highly important move.”

“The existence of subsidies in China, which violate WTO regulations, give producers from that country an unfair advantage, distort international markets and seriously damage Mexican industry,” they said.

Under WTO rules, China has 60 days to resolve the dispute by explaining its actions or changing its behavior. If no deal is reached, Mexico could ask the WTO to rule on the case.
In December 2011, Mexico and China signed off on a series of trade agreements that sought to protect Latin America's second largest economy from cheap Chinese imports.

The treaty — negotiated over a period of seven years — formed part of China's conditions for entering the WTO.

Under terms of the agreement, Mexico placed fixed tariffs of up to 1000 percent on products including textiles, shoes and toys, all vulnerable to being undercut by cheaper Chinese imports. The tariffs gradually decreased to zero by December 2011.

In January 2009, Mexico challenged grants, loans and incentives that Beijing offered Chinese companies. The United States and Guatemala filed identical cases against China at the time, but none progressed to the litigation stage.

In January this year, Mexico, together with the European Union and the United States, won a WTO case against China's restrictions on exports of raw materials.

Last month the United States launched a WTO complaint against Chinese car exports. China hit back with its own suit, saying U.S. duties targeting export-promoting subsidies themselves broke WTO rules.

Tuesday, October 16, 2012

From Forbes: The Mexican Miracle: Despite Drug War, Economy Is Booming

http://www.forbes.com/sites/nathanvardi/2012/10/15/the-mexican-mircale/print/


The Mexican Miracle: Despite Drug War, Economy Is Booming

Mexico fans hold up a Mexican flag ahead of th...
When Vikram Pandit, the chief executive of Citigroup, was asked on Monday to break down the emerging markets that had contributed to some good-looking financial results for the third-biggest U.S. bank, the first country he pointed to was Mexico.
Driven by Mexico, Citigroup’s Latin-American consumer banking revenue grew 7% year-over-year in the third quarter to $2.4 billion, while the bank’s revenue in Asia was down. “We think that Mexico is extremely well-poised for growth,” Pandit said on Citigroup’s earnings conference call. “I was just there not too long ago and with the leadership change there in addition to prospects for reforms and what you are seeing on the ground—that is a high spot definitely.” Citigroup’s stock was up 4% on Monday.
Not too long ago, the idea that big-shot American CEOs would be touting Mexico would have seemed unlikely. When the financial crisis hit the U.S. in 2008, FORBES predicted a “Mexican Meltdown.” The explosion of the drug war between the Mexican drug cartels and the government, coupled with the sure-to-come drop in exports to the contracting U.S. economy, seemed like it would derail Mexico again and ensure that other emerging markets like Brazil would keep passing it by. The U.S. Joint Forces Command lumped Mexico in the same category as Pakistan and worried it was becoming a failed state.
Mexico’s economy was hit very hard by the financial crisis and its recession was severe, but its recovery miraculously has been even stronger. Even with the weak U.S. recovery and the ongoing drug violence, Mexico has boomed. Top officials in the Mexican government predict the country’s economic growth could reach 5% in 2012, after gross domestic product increased by 3.9% and 5.5% in the last two years.
At the same time, Brazil’s economy has slowed and Mexico is starting to catch up to its regional rival. The Mexican stock market has performed well, with the benchmark IPC index up nearly 13% in 2012 and more than 20% in the last year. Pemex, the state-owned oil company that dominates the Mexican economy, recently announced deep-water oil discoveries in the Gulf of Mexico, suggesting the company might be able to slow the decline of its production.
Enrique Pena Nieto of the PRI has been ratified as the winner of the presidential election and the transfer of power appears to be going on with much less social unrest than when Felipe Calderon was elected in 2006. It’s not just U.S. banks that are benefiting from Mexico’s resurgent economy: Wal-Mart said its important Mexican stores increased monthly sales by 15.3% in September to $2.59 billion. Wal-Mart opened 20 Mexican stores in September alone.
Wal-Mart, of course, demonstrates both the opportunity and peril with which  foreign investors view Mexico. Wal-Mart’s Mexican unit is the company’s most important foreign subsidiary, but it has been embroiled in an embarrassing and costly bribery controversy that was first exposed by The New York Times. Indeed, foreign direct investment has remained weak. But if the new leadership in Mexico can open Mexico’s energy sector to foreign investment, even that statistic could soon turn around for Mexico.
The biggest evidence of Mexico’s recent relative success can probably been seen in the number of Mexicans who are staying or returning to Mexico. As Calderon recently noted in The Wall Street Journal, the net rate of migration of Mexican workers toward the United States has recently been zero. “We are in the middle of the rebirth,” he said.

Monday, October 15, 2012

From Bloomberg: Scotiabank Mexico Chief Says Middle Class Drives Growth

http://www.bloomberg.com/news/2012-10-15/scotiabank-mexico-chief-says-middle-class-drives-growth.html


Bank of Nova Scotia plans to take advantage of improved credit quality and a growing middle class to expand lending in Mexico, Latin America’s second-biggest economy.
“We see a lot of opportunity right now to really start to drive a lot more of the business, and take advantage of people’s credit health,” said Troy Wright, president and chief executive officer of Grupo Financiero Scotiabank Mexico.
Canada’s third-largest bank will extend credit to families looking to buy first homes, cars and furnishings, Wright said. Mexico’s economy will grow 3.8 percent this year, versus 2.1 percent in the U.S. and a contraction of 0.5 percent in the euro area, estimates compiled by Bloomberg show.
Mexico is “starting to get into a good period of time where we don’t have challenges” on loan losses, Wright said in an Oct. 12 telephone interview.
Scotiabank is Mexico’s seventh-largest bank by assets, with 710 branches. Wright, 47, was named to the position this month, replacing Nicole Reich De Polignac. Before this post, Wright was an executive vice president of retail distribution in Canada and had spent nine years in Mexico with the bank’s capital markets business.
“The story we were saying five, seven years ago has continued to materialize in Mexico,” he said. “There’s a lot of optimism in the growth of the economy in Mexico itself.”

International Banking

Mexico has the largest branch network among Scotiabank’s international banking businesses, which include operations in more than 50 countries. The international business had C$1.49 billion ($1.52 billion) in profit last year, representing about 28 percent of the lender’s 2011 earnings.
Scotiabank agreed in August to buy Mexico City-based Credito Familiar SA, buying a stake owned by Citigroup Inc. (C)’s Banamex unit. The price wasn’t disclosed. The purchase, expected to close by December, will allow Scotiabank to make $500 to $1,500 loans to families that may not have a credit history, Wright said.
The bank plans to run the 250 Credito Familiar branches separate from Scotiabank because of the different types of lending they provide. Customers have average salaries of $5,000 to $10,000 a year, and there are government programs distributed through Mexican banks that allow clients to apply for first mortgages, Wright said.

Credito Familiar

Scotiabank will “likely” keep the Credito Familiar name, said Wright, who holds a Bachelor of Arts degree with a major in economics from the University of Western Ontario, and completed an Advanced Management Program at Harvard Business School.
“It’s opening up a whole new segment,” said Wright. “As those customers build and grow and succeed over time, then of course they can potentially graduate up into our Scotiabank operations.”
Scotiabank will look at acquisition opportunities in Mexico, although its main focus will be organic growth, Wright said.
To contact the reporter on this story: Sean B. Pasternak in Toronto atspasternak@bloomberg.net
To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net

Friday, October 12, 2012

From The Texas Tribune: Border Welcomes First Rail Line in More Than a Century

http://www.texastribune.org/texas-economy/economy/border-welcomes-first-rail-line-more-century/



Border Welcomes First Rail Line in More Than a Century


Construction workers for the Mexican contracting company Coconao work on a segment of the new rail bridge that stands over the Rio Grande.
Construction workers for the Mexican contracting company Coconao work on a segment of the new rail bridge that stands over the Rio Grande.
The last time the Texas-Mexico border witnessed a ribbon cutting for a railway bridge, the United States had yet to witness two world wars or Prohibition. And Mexico had not yet seen its own country in the throes of revolution.
That is set to change in December, when officials from both sides of the Rio Grande expect the completion of the Brownsville West Rail Bypass International Bridge, an eight-mile project that traverses a rural part of Cameron County in Texas and runs into Tamaulipas State in Mexico. The bridge, which has taken more than 10 years to plan and build, will be the first across the border since the 1900s.
Business experts and local officials say the project should make the growing trade between Texas and Mexico easier and allow the Laredo Customs District to remain the country’s No. 1 inland port.
The bridge was designed, in part, to help alleviate the congestion caused by the current rail line between cities on both sides of the border.
“One of the problems that we have with the existing rail bridge is that we do not have a window with sufficient time to cross into Mexico,” said Pete Sepulveda, the Cameron County administrator, referring to the time when rail traffic does not intrude on vehicular and pedestrian traffic in urban areas.

“When we take it from an urban area to a rural area, that gives us the ability to extend that window,” Sepulveda said. “From an administrative standpoint, that gives us a good marketing tool.”
Rail traffic hauls about 6 percent of the goods that pass across the United States’ southern border under the North American Free Trade Agreement, said Nelson Balido, the president of the Border Trade Alliance, a nonprofit consortium of economists and private sector interests that represents more than 4.2 million members.
The Mexican government “predicts that in the next five years, it will increase to 35 percent,” Balido said.
Despite a global economic downturn and a level of violence in Mexico that has not been seen since its revolution in the early 20th century, trade between the United States and Mexico has increased steadily over the last few years.
During the first seven months of this year, commerce between the two countries totaled about $287 billion, according to United States census data analyzed by WorldCity, which tracks global trade patterns. That represents an increase of almost 10 percent over the same period in 2011. About $133 billion of that has passed through the Laredo Customs District, which includes the Port of Brownsville. The county has spent about $3.5 million on the project. The remaining $34 million was picked up by the state and federal governments, Sepulveda said. The Brownsville bridge project began in 2000 and moved slowly, in part because of it had to come out of its general revenue.  
International vehicular and pedestrian bridges, which often charge tolls and are managed by city officials, are significant sources of money for local governments. The revenue is partly spent on infrastructure projects or improvements. Rail lines are privately owned, however, and Union Pacific will own and manage the new line.
Sepulveda said the county would benefit instead from the economic development attached to the project, including a revamp of the area around the existing line.
“There is going to be about an eight-mile stretch inside the city of Brownsville that we’re going to be able to redevelop,” he said.
He added that the violence in Mexico had not been a deterrent.
“We knew we were planning for the future. We were aware,” he said. “We’re cognizant of the issues going on in Mexico, but we feel that given time, those issues will be resolved.”
“And when they do,” he added, “we want to be in a position to maximize the benefits."

From San Diego Union Tribune: Mexico plays role in U.S. economic growth


http://www.utsandiego.com/news/2012/oct/11/mexico-plays-role-in-us-economic-growth/

Mexico plays role in U.S. economic growth

In a Sept. 30 U-T article, reporter Sandra Dibble highlighted growth industries of Tijuana which contradict stereotypical views of the Mexican economy. The new driving industries include medical devices, automotive, aeronautic and information technology products, industries which will be on exhibit over the next two weeks at Tijuana Innovadora, an exposition celebrating the city’s vibrant economy and culture. The jobs created by these industries are not traditional low-skilled assembly-plant jobs. They require a higher-skilled workforce, which Mexico is producing from its engineering and technical colleges at the rate of 90,000 graduates per year.

San Diego Mayor Jerry Sanders and Tijuana Mayor Carlos Bustamante recently joined a group of regional business, academic and community leaders at a conference sponsored by the U.S. Department of Commerce and Arizona State University’s North American Center for Transborder Studies (NACTS). The conference brought together leaders from the 2,000-mile U.S.-Mexico border region to develop a deeper understanding of our evolving economic relationship with Mexico.

A study published earlier this year by NACTS and D.C.-based New Policy Institute, “Realizing the Full Value of Cross-border Trade with Mexico,” makes a forceful case for paying greater attention to the importance of our relationship with Mexico as a centerpiece for future economic growth.

A few key facts noted in that report:
• Mexico’s gross domestic product is now ranked 12th among all nations in the world, and Goldman Sachs predicts that by 2020 it will rank seventh.
• Mexico’s economy grew at a rate of 5.4 percent in 2010, and it is anticipated to continue to grow at a rate of 4 percent in this and coming years.
• The value of U.S. exports to Mexico is greater than the combined total of our exports to Brazil, Russia, India and China.
• U.S. exports to Mexico support over 6 million jobs in the U.S., including over 475,000 jobs in California.

The report also points out that while our trade with China has grown substantially in recent years, it is a relationship based more on imports than exports from the U.S. For every dollar we spend on imports from China, six cents is returned to us through purchases from the U.S. In contrast, for every dollar we spend purchasing products from Mexico, Mexicans spend 50 cents buying U.S. products.

The 10 U.S.-Mexico border states now represent a significant economic engine which, given proper support from both federal governments, can play a critical role in leading us out of the lingering hangover of the 2008-09 recession. Together these states have a combined GDP that ranks us fourth on the list of world economies, behind only the U.S., China and Japan. We now need to translate that economic power into effective public policy.

The 21st-century border economy is an increasingly integrated one. Production in the growth industries mentioned above is heavily dependent on cross-border supply chains, with products and equipment moving across the border multiple times before the final trip to market. All of this commercial activity results in 75,000 trucks crossing the U.S.-Mexico border each day.

However, our border-crossing infrastructure must keep up with this changing economy if we are to realize our full growth potential. Every hour that goods and workers must wait to cross our border costs millions of dollars.

Although technological improvements have aided commercial crossings in the last few years, locally we have not seen an expansion of capacity during the last 20 years. While plans to expand the current Otay Mesa crossing exist, and the land to do so has been acquired, design and construction remain unfunded. We are still waiting for the federal appropriation needed to complete the fully-approved and designed expansion of the San Ysidro Port of Entry, even though Mexico’s portion will be completed this fall. Frustrated by the federal government’s lack of commitment, SANDAG is pushing ahead with plans for a second Otay Mesa crossing to be funded with toll revenue.

Today, the U.S. does $1 billion in trade with Mexico, supporting 6 million U.S. jobs. How much more could it be if we had a truly efficient 21st-century border? As new presidential terms commence in both nations, residents of the 10 border states need to speak up with a united and forceful voice. It should be a top national priority to invest in the infrastructure needed to unleash the full potential of this powerful cross-border economic engine.
Ducheny, a former state senator, is senior analyst, Trans-Border Institute, University of San Diego.