Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
Southwest Maquila Association Meeting
Thursday, October 27, 2011
El Paso, New Mexico
As prepared for delivery.
Good morning everyone; Buenos dias y gracias por la calentosa bienvenida. Me complace estar con Uds.
Let me extend my appreciation to the Southwest Maquila Association for accommodating an early meeting before you proceed with your busy day. I am privileged to be here discussing border issues, which are extremely important to me personally and professionally: fully realizing the potential of the cities along the U.S.-Mexico border and their people just like the El Paso/Juarez region. I am also grateful to our friend and colleague from Economia, Juan Carlos Baker, who is here representing Mexican Under Secretary of Trade Francisco de Rozensweig. The Under Secretary wanted to be here with me today but had an unavoidable conflict. Juan Carlos and his colleagues in Economia have been great partners with the United States and the Department of Commerce, and we are thankful they are able to join us here on the border today.
I have big place in my heart for the border. I was born in nearby Las Cruces and lived there until I was a teenager. Members of my family live here in El Paso, and I have fond memories of the area from my youth—going shopping in Ciudad Juarez, eating at Chopes near La Union, and having dinner with friends and family around enchiladas made with fresh green, Hatch chilies. My beloved mother is buried not far from here in Santa Teresa. So this is a place I hold dearly and care greatly about.
As much as I love the culture here, it is the economic potential that amazes me today. Increasing U.S.-Mexico trade along the border will have a major impact on both economies and will help create more U.S. Jobs, so the border is an important part of my professional life.
As the Assistant Secretary of Commerce, I have the responsibility and privilege of working with our trading partners worldwide to advance the goals of the President’s National Export Initiative (or the “NEI” as we call it).
Like the American Jobs Act you heard in the President’s address to Congress last month, the NEI is a key component of the President’s economic recovery plan. Through the NEI, we are working hard to open new markets for U.S. goods and services, double our overall exports by 2014, and deepen our strategic trading relations around the world—all with the aim of growing the economy and putting millions of people back to work. My primary responsibilities under the NEI entail working to create the conditions and business climate -- I like to call it the “ecosystem” -- that foster and promote trade and investment as drivers of economic growth and prosperity. This includes working on policy initiatives to develop the legal and regulatory framework necessary to support trade and investment and to promote innovation and competitiveness. A big part of my job is to help business like yours overcome the barriers that keep you from competing effectively and growing your business.
And that’s what has brought me here today: to develop innovative solutions to grow cross-border trade and increase global competitiveness on both sides of the border.
The Promise of the US-Mexico Relationship
As President Obama said, the U.S.-Mexico relationship is evident every day in the strong bonds between our two societies. This is reflected in the tens of thousands of students, teachers, and researchers participating in exchanges between our schools and universities, and the one million people who cross our shared borders every day.
We are friends and partners who share a border, but, more importantly, we share fundamental values.
The U.S.-Mexico relationship is an important economic asset for both of our countries and I am personally committed to seeing it flourish.
- The U.S. is Mexico’s largest trading partner and Mexico is the U.S.’s third largest trading partner and our second largest export market.
- Our bilateral trade in goods and services totaled nearly $400 billion in 2010: that’s roughly $1.1 billion per day; and
- Our bilateral trade and investment relationship was a half trillion dollars in 2010.
To put the scope and depth of our relationship in perspective, consider that last year U.S. exports to Mexico exceeded our exports to Brazil, Russia, India and China combined.
Meanwhile, U.S. goods imports from Mexico in 2010 totaled $229.9 billion, accounting for 22 percent of Mexico’s GDP. But what’s most incredible is that those Mexican imports actually drive US exports: 64% of the content of Mexican goods sold in the US are made from U.S. inputs.
In 2010, U.S.-Mexico bilateral trade increased 29 percent over the prior year. Since the inception of NAFTA, U.S.-Mexico trade nearly quintupled.
Even so, we are a long way from reaching our potential – and keeping the momentum going is what I’d like to talk about today.
I think we’d all like the coming years to set new records for U.S.-Mexico trade.
We all know what that could mean to both sides of the border, especially as the Obama Administration fights to strengthen America’s still fragile recovery.
As you probably know, more than 2 million private sector jobs have been created over the past 15 months. But too many people in our nation continue to look for work. As the President has said, we have more to do.
That’s why this Administration is making unprecedented efforts to facilitate trade and help U.S. companies find commercial partners beyond our borders through the NEI.
The more goods and services U.S. businesses export, the more they will produce. And the more businesses produce, the more workers they need. And that means jobs. Jobs for both the United States and Mexico.
We’re already off to a good start. Exports have been a key driver of America's economic recovery. In 2010, U.S. exports of goods and services totaled $1.84 trillion, an increase of nearly 17 percent over 2009 levels.
And exports have been growing at a strong pace overall in the first six months of this year, up 17.9 percent over the same period last year.
In July, the International Trade Administration, or ITA, reported that U.S. exports supported an estimated 9.2 million jobs in 2010, up from 8.7 million in 2009.
And these are good-paying jobs – up to15 percent more than the typical wage in America. ...
…Exactly the type of jobs we need a lot more of.
In the first quarter of 2011, exports accounted for 13.4 percent of all U.S. economic output, which is the biggest portion of our economy since the Commerce Department began tracking quarterly figures in 1947.
But we can – and we must -- do more.
The Importance of a 21st Century Approach to Border Management
I understand there are particular issues that you face on a daily basis by conducting business so close to the border. I’d like to take just a few minutes to share with you what the administration is doing to address some of these challenges.
The first—and perhaps most important—issue you face is the need for improved infrastructure and clearance procedures at the border.
As close trading partners, the U.S. and Mexico share not just a border but highly integrated supply chains and co-production. Eighty-five percent of that incredible volume of trade I just described crossed the border each day by truck. And as this audience knows well, certain manufacturing processes regularly require crossing the border as many as 3 to 4 or more times. This means that delays at the border not only increase transportation costs but also interrupt manufacturing and delivery cycles.
Likewise, border delays hinder manufacturers and maquiladoras’ dependence on reliable logistics of freight distribution.
With today’s just-in-time manufacturing system, unpredictable wait times can act as barrier and deterrent to trade, inhibiting cross-border economic investment.
Border delays impact productivity, industry competitiveness, and result in lost business income and reduction in gross output in both the United States and Mexico.
Long-term costs can also accrue to companies and even industries through relocation pressures, requiring industries to move from their best location and optimum supply chain, and in turn altering investment, prices, and demand.
A 2006 San Diego Association of Governments study found that traffic congestion and delays at crossings between San Diego County and Baja California, costs the U.S. and Mexican economies an estimated $3.3 billion in gross output in 2005 and roughly 19,000 lost jobs due to the reduction in output.
Part of problem, of course, is inadequate infrastructure capacity, which is failing to keep up with the increase in trade and security requirements.
Many ports of entry (POEs) were built decades ago, while NAFTA trade has dramatically increased truck traffic across the U.S.-Mexico border. For example, the Mariposa POE in Nogales, which was built to handle 300 trucks daily, now handles 1,200.
Recognizing the critical role that cross border trade plays in the economic growth of our two nations, Presidents Obama and Calderon issued a Joint Declaration on 21st Century Border Management during President Calderon’s official state visit to Washington in May of 2010. Our leaders committed our nations to full and renewed cooperation based on the principles of joint border management, co-responsibility for cross-border crime, and a shared commitment to the efficient flow of legal commerce and travel.
The 21st Century Border Management initiative has three areas of focus that are overseen by a bi-national Executive Steering Committee (ESC), of which my office in the Department of Commerce is a part, and three working groups:
- Border Infrastructure;
- Secure Flows of Goods and People; and
- Corridor Security.
The ESC developed a 12-month action plan for the border region, which seeks to enhance economic competitiveness by supporting a bilateral border master plan process for infrastructure projects in order to increase capacity; expand trusted traveler and shipper programs; and explore opportunities for pre-clearance, pre-inspection, and pre-screening processes for commercial goods and travelers.
I’m pleased to report that we are already seeing positive results from our efforts:
- The San Luis II commercial crossing in San Luis, AZ and the Donna-Rio Bravo Bridge in Donna, TX were completed in late 2010;
- This year saw the completion of the construction for seven new northbound commercial lanes at the Laredo World Trade Bridge and the groundbreaking for the new West Rails Bypass project in Brownsville, Texas;
- And in July of this year, we celebrated the groundbreaking for the new Tornillo-Guadalupe international port of entry here in El Paso County (which is slated for completion by summer of 2013). This new six lane border crossing facility will be one of the largest in the nation and capable of serving vehicular, pedestrian and commercial traffic.
The ESC is also currently conducting wait time pilots at seven ports of entry. The end goal is to install the appropriate technology to measure wait times and provide real time information for customs officials, shippers, and travelers in order to inform operations and staffing decisions, as well as the redirection of traffic to other neighboring POEs that are less congested.
Our colleagues in the Customs and Border Protection department have been hard at work. But so have we in the Department of Commerce. Our main objective is to ensure that as we work towards improved border management, we are always careful to solicit, consider and include the voice of industry in the process. Stakeholder involvement is critical to our success, and that’s why we’ve formally reached out to industry with a request for comments concerning industry’s priorities along the border. And here’s what we’ve heard. Industry has called for the expansion or creation of:
- Mutual recognition of trusted trader programs;
- Pre-clearance and pre-inspection away from our borders;
- A single-window data platform for imports and exports; and
- Broad interagency and bilateral coordination at the border on inspections and processes.
We are now working with our colleagues in the US and Mexico to make sure these issues are addressed in our ESC Working Groups.
Deepening Trade With Mexico Through Enhanced Regulatory Cooperation and Export Promotion
An efficient and secure border is essential to our ability to grow our economies and create more jobs in both the U.S. and Mexico, but it’s not enough. That’s why we’re also working on other important initiatives that are important to advancing our overall trade relationship with Mexico.
High Level Regulatory Cooperation
One of the most important initiatives is our commitment to cooperate in the ways in which we adopt regulations that affect business activity. There’s no need for me to tell you how regulations – done poorly – can impact your businesses. Our administration is committed to streamlining our approach to regulation, making sure that we do not unnecessarily burden companies—especially small and mid-size businesses—with excessive regulations. Of course, there is a proper role for regulation, and we are committed to protecting the environment, public health, and public safety. But too often our governments take divergent and unnecessarily different approaches to regulation that only result in added burdens and increased transactions costs that get in the way of productivity, growth and job creation.
This is why, last May, President Obama signed an Executive Order directing all federal agencies to work to harmonize, simplify and coordinate rules to reduce the cost of regulations. So far, more than 500 reforms worth billions of dollars in savings have been identified. The Calderon administration in Mexico has undertaken a similar review and has made excellent progress in eliminating excessive regulations throughout the Mexican federal government.
But we can’t stop with considering the regulations that are already on the books. We have to ensure that our governments work closely together to ensure that we take more consistent approaches in the adoption of future regulations, especially those in emerging sectors that are highly innovative and can lead to economic growth and job creation. Given the highly integrated nature of our economies, regulatory divergence often achieves little substantive outcomes but can impose significant transactions costs on firms doing business on both sides of the border. If we can achieve better cooperation in our approach to developing regulations, including technical regulations that incorporate sometimes competing industry standards, we can go a long way to growing our trade relationship.
That’s why we have launched a bilateral High Level Regulatory Cooperation Council (“HLRCC”) with Mexico. The HLRCC has a mandate to ensure that our governments’ overall approach to regulation balances the need to promote economic growth, job creation, and benefits to our consumers and businesses as we endeavor to ensure the safety of our products, our people and our environment. The HLRCC will focus especially on cooperating on “up stream” regulations—working together to develop common, consistent approaches to developing new regulations in emerging sectors that don’t yet exist. This will ensure that our companies on both sides of the border will face fewer difficulties trying to get the same product to conform to two different regulatory schemes that are designed to achieve the very same thing. It will, we hope, save time and money without compromising public safety or health.
This HLRC is led on the U.S. side by the White House’s Office of Management and Budget. Our role in the Department of Commerce is to ensure that the business community and key stakeholders have an opportunity to participate fully in the process and to ensure that the impact of regulations on trade is fully considered. We have solicited feedback through a formal Request for Comment that was published in the Federal Register. The results from that solicitation pointed strongly to the need for greater cooperation on customs facilitation at the border, but also identified several sectors where enhanced regulatory cooperation and convergence could increase trade.
Mexico has undertaken a similar effort to solicit feedback from its industry, and now senior officials from the U.S. and Mexico are in the process of developing an action plan taking into account the input received in both countries.
Border Trade Promotion and Improved Market Access
In addition to our efforts to improve border customs and facilitation and pursue regulatory cooperation in emerging, high growth sectors, the Department of Commerce is also working hard to promote trade along the U.S.-Mexico Border in other ways.
First, we have launched a Border Export Strategy to promote trade on the border by enhancing commercial opportunities for U.S. companies, particularly SMEs that are almost export-ready and are doing business along the border. This strategy has two components:
The first is a Border Export Leaders Program, which is a pilot we started with the objective of partnering with communities to develop an export promotion training program model that better leverages resources, enhances community partnerships, and ultimately leads to program participant export successes for SMEs and new to export companies.
The second is a Cross-Border Business Development Program, which targets manufacturing plants on the border to develop export opportunities for U.S. companies interested in exporting to Mexican buyers and will be piloted right here in El Paso. Our plan is to target the top 150 manufacturing plants located in Ciudad Juarez and Ciudad Chihuahua, Mexico, develop relationships through sustained engagement with high-level company decision makers, and identify export opportunities for U.S. companies. We will then work closely with U.S. companies to help them take advantage of those opportunities.
Finally, we are committed to exploring how to deepen cross-border trade in emerging sectors of the economy that hold the most promise for growth and job creation. Perhaps the best example is renewable energy and energy efficiency, where we are exploring how to eliminate market access barriers to trade in these innovative products and services. In fact, later today I will be addressing the Border Energy Forum on this very subject.
Let me close with this: The fact that Mexico is our second largest export market and third largest trading partner, accounts for 13 percent of all U.S. exports, and that every day some one million people cross our border for business, pleasure, and to maintain family ties, speaks to the success of our bilateral relationship.
The imperative before us – even in a post-9/11 world in which our nations are working more closely than ever to improve security – is to enhance the legitimate flow of people, goods and services across our borders. Doing this means expanding our country’s and our region’s economic competitiveness in an increasingly competitive world.
More than ever, countries around the world are looking for anything that will give them a competitive edge. That’s why it’s critical that the United States and Mexico take full advantage of the edge we already have: our shared border and our shared values and priorities.
Anything less means letting down our people – folks counting on us to ensure that they have a shot at the very opportunity that calls people to our shores.
I want to thank Southwest Maquila Association again for the opportunity to discuss the U.S.-Mexico trade relationship, its importance for our shared border communities, and the need for continued regional collaboration in promoting new trade opportunities for businesses on both sides of the border.
Please know that the International Trade Administration and the Department of Commerce is eager to be a partner with you in strengthening the U.S.-Mexico commercial relationship and improving the quality of life for all citizens in the region.
I appreciate your patience this morning in allowing me to share with you the robust agenda we are pursuing to deepen our trade relationship along the border. Now I hope I can hear from you to understand your perspective concerning the challenges you face and the cross-border business opportunities you see in the region.
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