Arizona’s trade and border relationships

By Karl Reiner

In 2012, Arizona’s merchandise exports to India totaled $80.7 million.  During the first half of 2013, they reached $64.8 million.  In August, Governor Brewer India M 2led a trade mission to India to promote exports, investments and develop relationships with an emerging trading partner.  Although not developing as rapidly as China, India is one of the world’s expanding economies.  With a population of 1.2 billion, it has economic potential.

Exports also ship out of Arizona to countries closer to home.  For the first six months of 2013, the state sent $1.25 billion worth of goods to Canada.  During the same time period, Arizona’s exports to Mexico (the state’s largest export market) amounted to $3.46 billion. Tucson’s exporters ship about $2.5 billion in exports to Mexico per year.

The immigration bill passed by the U.S. Senate and stalled in the House includes over $46 billion for border security enhancement.  It adds lots of technology and US Capitolalmost doubles the number of border patrol agents.  Many analysts believe the bill provides more security funding than is needed. Congressman Grijalva thinks the definition of border security should be expanded to include humanitarian, environmental and economic issues.

Mexico has a historic dependence on exports to the U.S.  The country suffered a slump in the second quarter of 2013 as construction, mining and exports dipped.  As a consequence, the government has lowered its annual economic growth forecast from 3.1% to 1.8%.  The Mexican economy has the potential to rebound in the second half if the sluggish American recovery picks up a little speed.

Mexico has the lowest tax-collection rate of the 34 countries in the Organization for Economic Cooperation and Development (OECD).  Its informal economy, mex 4 12operating mostly out of government view, employs approximately 6 out of 10 workers.  About 60% of workers pay nothing in taxes.  The nation’s schools have higher  relative costs and produce poorer results than the schools in any other member of the OECD.

The Mexican government is attempting to address some of the structural problems that have long hindered economic growth.  It is considering allowing private investment in its inefficient oil industry for the first time in 50 years.  It is pushing fiscal reform which would raise income and other taxes, lessening the government’s dependence on oil revenue.  The country is beginning to grapple with the daunting task of improving the rickety educational system.

The Great Recession lasted officially from December 2007 to June 2009.  It destroyed $18.9 trillion of household wealth and vaporized over 8 million jobs in the U.S.  The recession also hit Mexico, the slow recovery in America is not helping things.  About 53 million Mexicans, about half of the population, lives in poverty.

In Nogales, Arizona, the Mariposa port of entry is undergoing $220 million in improvements that will speed up the flow of commercial traffic.  Across the border, Rev. Sean Carroll manages the Kino Border Initiative.  His charitable organization runs an aid center for deported migrants and a shelter for deported women and children. It deals with the problems migrants face after deportation, family separation issues, providing meals and aiding victims of violence.

Nearly 80% of the deportees moving through the Kino facilities gave lack of work as the primary reason they originally left home.  Securing the border is seen as important by many of Arizona’s politicians because of the high rate of migrant traffic.  At the present time, the Border Patrol apprehends 120,000 people per year in the Tucson sector.

Economic forces are the main reason people cross illegally. Our border security programs should address this primary driver of illegal migration.  Fostering economic development in Mexico and Central America needs to be part of the plan.  Arizona’s leaders ought to see to it that economic development gets added to the mix of proposed border solutions now bouncing around in Congress.

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