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***Mexico Aff***
Gonzaga Debate Institute 2013
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1AC
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Contention 1: Status Quo
Current border infrastructure investment is lagging behind export growth
O’Neil, Senior Fellow for Latin American Studies for the Council on Foreign
Relations, 13
[Shannon K., 6-18-13, Council on Foreign Relations, “Refocusing U.S.-Mexico Security
Cooperation,” http://www.foreign.senate.gov/imo/media/doc/ONeil_Testimony.pdf, accessed
6-26-13, GSK]
Initiatives to modernize the border and build resilient communities (pillars three and four of
the Merida Initiative) are further behind. Though some innovative border management
programs, such as the Customs Trade Partnership Against Terrorism—which helps trusted
businesses avoid extensive border checks—have improved efficiency, the overall tenor of U.S.
policy has been to increase barriers, slowing flows of legal commerce. Financially, investment
in border crossings and infrastructure has not matched the exponential increase in trade
crossing the border each year. Investment has lagged not only for new construction, but also
for basic maintenance on existing infrastructure, leading to overwhelmed and at times
downright dangerous facilities (the San Ysidro border crossing roof collapsed in 2011, injuring
seventeen people). Stressed infrastructure has also led to traffic jams lasting up to eight hours,
and has cost billions of dollars in trade losses, without drastically discouraging or disrupting
illegal flows.
Inadequate infrastructure on the U.S.-Mexican border causes massive delaysincreasing operational capacity is key to competitiveness
Figueroa, Research and Policy Analyst at the North American Center for
Transborder Studies, et al 11
[Alejandro, Erik Lee, Associate Director of NACTS, and Rick Van Schoik, Director of NACTS,
December 2011, New Policy Institute and North American Center for Transborder Studies,
“Realizing the Full Value of Crossborder Trade with Mexico,”
http://21stcenturyborder.files.wordpress.com/2011/12/realizing-the-value-of-crossbordertrade-with-mexico2.pdf, pgs. 13-15, accessed 6-25-13, JB]
U.S. - Mexico Border Management: Building World Class Infrastructure for Competitiveness The
U.S. and Mexico will be successful at enhancing a prosperous bilateral relationship to the extent
that both federal governments and stakeholders are capable of coordinating the development
of their border management and infrastructure. The massive and highly complex U.S. and
Mexican economies interact and even create value at our shared border. According to a study
conducted by Accenture for the U.S. Department of Commerce, today’s level of demand
exceeds the physical infrastructure and operating capacity of our ports of entry. Wait times
are projected to increase across the five busiest U.S. - Mexico border crossings if volumes
continue to grow as expected and if infrastructure and operations remain the same. By 2017, it
is estimated that the average wait time will be nearly 100 minutes — an increase of 60%. ¶ “A
key component of our global competitiveness is creating a border for the 21st¶ Century...We
must develop it and manage it in a holistic fashion and in ways that facilitate¶ the secure,
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efficient and rapid flow of goods and people and reduce the costs of doing¶ business between
our two countries.Ӧ Ѧ Joint Statement from President Barack Obama and President Felipe
Calderón, May 2010¶ Sharing a 2,000 - mile long border needs to be recognized as both a
challenge and an opportunity. While land ports of entry between the two nations were first
envisioned to process the legitimate crossing of people, goods and services across the border,
security has taken a dominant role in recent years, hampering the ability of federal agencies to
efficiently manage border traffic. Advances in border infrastructure simply did not happen
during the last decade, which is astounding given the greatly expanded post - NAFTA
binational commercial relationship. Our border’s infrastructure and capacity today reflects the
needs of a bygone era. This became evident as never before when on September 1 4, 2011, the
San Ysidro, California port of entry — the busiest land port of entry in the world — had to shut
down its 24 north - bound lanes due to the collapse of part of its roof, injuring several people and
damaging vehicles trying to cross into the U.S. from Tijuana, Mexico. ¶ According to a report by
the San Diego Association of Governments, inadequate infrastructure capacity just at the
border crossings between San Diego County and the state of Baja California creates traffic
congestion and delays that cost both the U.S. and Mexican economies on average an
estimated $7.2 billion in forgone gross output and more than 62,000 jobs on an annual basis.
These border delays could cause $86 billion in output losses over the next ten years.
1) Thus the plan: The United States federal government should authorize the
North American Development Bank to substantially increase investment in
infrastructure improvement projects on the U.S.-Mexico border.
2) Thus the plan: The United States Congress should expand the mandate of the
North American Development Bank to include funding for infrastructure
improvement projects along the U.S.-Mexico border.
3) Thus the plan: The United States federal government should expand the
mandate of the North American Development Bank and provide the necessary
funds to improve land ports of entry along the U.S.-Mexico border.
4) Thus the plan: The United States federal government should fully fund the
Trusted Travelers’ Program and expand the mandate of the North American
Development Bank to include infrastructure improvement projects on the U.S.Mexico border.
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Advantage 1: Regional Integration
Scenario 1: U.S. Economic Growth
Multiple indicators prove that growth has come to a halt
The Market Oracle, 6-29
[6-29-13, The Market Oracle, “Dismal U.S. Consumer Spending to Drag U.S. Back into
Recession,” http://www.marketoracle.co.uk/Article41170.html, accessed 7-6-13, GSK]
After the first estimates of gross domestic product (GDP) for the U.S. economy came out, a
wave of optimism struck and stock markets rallied. It seemed as if everything was headed in the
right direction.¶ Sadly, they were wrong.¶ In its third and final revision of GDP, the Bureau of
Economic Analysis (BEA) reported that the U.S. economy grew at just 1.8% in the first quarter
of 2013 from the fourth quarter of 2012—that is 25% lower than its previous (second)
estimates, when the BEA said the U.S. economy grew 2.4%, and 28% lower from its first
estimate of 2.5%. (Source: Bureau of Economic Analysis, June 26, 2013.)¶ The primary reasons
behind the decline in GDP growth are that domestic consumer spending and exports from the
U.S. declined.¶ Going forward, I see continued dismal consumer spending in the U.S. economy.
There’s no rocket science behind my reasoning, just one simple economic concept. Economics
101: when interest rates increase, consumer spending declines, because it costs the consumer
more to borrow, so they step back from buying.¶ Remember: consumer spending is the
backbone of any growth in the U.S. economy. If it decreases, our economic growth becomes
questionable.¶ What we have seen in the past few weeks are skyrocketing yields on U.S.
bonds—suggesting long-term interest rates are rising. The effects of this will eventually trickle
down to places where consumers in the U.S. economy borrow to buy. One example of this type
of place is the automobile sector.¶ Consider this: car and light truck sales are on path to increase
beyond 15 million units this year in the U.S. economy—in 2009, they stood at 10.4 million.
(Source: Wall Street Journal, June 26, 2013.) Will consumer spending on cars be the same if
interest rates on car loans start to increase? I doubt it. ¶ And there’s another threat to consumer
spending—unemployment. In May, there were 1,301 mass layoffs in the U.S. economy,
involving 127,821 workers, an increase of 8.5% over April. (Source: Bureau of Labor Statistics,
June 21, 2013.) When a person is unemployed, their spending is down and large credit
purchases like cars are unlikely.¶ If consumer spending in the U.S. economy continues to
struggle, it will start to show up in the corporate earnings of companies on key stock indices that
are currently able to buy back their own shares and cut expenses to make their numbers appear
better. Looking at the prospects of anemic consumer spending in the U.S., I remain skeptical.
The optimism I see now is based on nothing but hope. Once the hangover from easy money
goes away, I wouldn’t be surprised to see U.S. GDP numbers turn negative. Yes, that means
back to recession.
Economic vulnerability from slow growth risks global economic collapse
Roubini, Professor at NYU’s Stern School of Business, 13
[Nouriel, 1-21-13, Project Syndicate, “The Economic Fundamentals of 2013,”
http://www.project-syndicate.org/commentary/the-global-economy-s-rising-risks-in-2013-bynouriel-roubini, accessed 7-12-13, ML]
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The global economy this year will exhibit some similarities with the conditions that prevailed in
2012. No surprise there: we face another year in which global growth will average about 3%,
but with a multi-speed recovery – a sub-par, below-trend annual rate of 1% in the advanced
economies, and close-to-trend rates of 5% in emerging markets. But there will be some
important differences as well. ¶ Painful deleveraging – less spending and more saving to reduce
debt and leverage – remains ongoing in most advanced economies, which implies slow
economic growth. But fiscal austerity will envelop most advanced economies this year, rather
than just the Eurozone periphery and the United Kingdom. Indeed, austerity is spreading to the
core of the Eurozone, the United States, and other advanced economies (with the exception of
Japan). Given synchronized fiscal retrenchment in most advanced economies, another year of
mediocre growth could give way to outright contraction in some countries. ¶ With growth
anemic in most advanced economies, the rally in risky assets that began in the second half of
2012 has not been driven by improved fundamentals, but rather by fresh rounds of
unconventional monetary policy. Most major advanced economies’ central banks – the
European Central Bank, the US Federal Reserve, the Bank of England, and the Swiss National
Bank – have engaged in some form of quantitative easing, and they are now likely to be joined
by the Bank of Japan, which is being pushed toward more unconventional policies by Prime
Minister Shinzo Abe’s new government.¶ Moreover, several risks lie ahead. First, America’s
mini-deal on taxes has not steered it fully away from the fiscal cliff. Sooner or later, another ugly
fight will take place on the debt ceiling, the delayed sequester of spending, and a congressional
“continuing spending resolution” (an agreement to allow the government to continue
functioning in the absence of an appropriations law). Markets may become spooked by another
fiscal cliffhanger. And even the current mini-deal implies a significant amount of drag – about
1.4% of GDP – on an economy that has grown at barely a 2% rate over the last few quarters. ¶
Second, while the ECB’s actions have reduced tail risks in the Eurozone – a Greek exit and/or
loss of market access for Italy and Spain – the monetary union’s fundamental problems have not
been resolved. Together with political uncertainty, they will re-emerge with full force in the
second half of the year. ¶ After all, stagnation and outright recession – exacerbated by frontloaded fiscal austerity, a strong euro, and an ongoing credit crunch – remain Europe’s norm. As
a result, large – and potentially unsustainable – stocks of private and public debt remain.
Moreover, given aging populations and low productivity growth, potential output is likely to be
eroded in the absence of more aggressive structural reforms to boost competitiveness, leaving
the private sector no reason to finance chronic current-account deficits. ¶ Third, China has had to
rely on another round of monetary, fiscal, and credit stimulus to prop up an unbalanced and
unsustainable growth model based on excessive exports and fixed investment, high saving, and
low consumption. By the second half of the year, the investment bust in real estate,
infrastructure, and industrial capacity will accelerate. And, because the country’s new leadership
– which is conservative, gradualist, and consensus-driven – is unlikely to speed up
implementation of reforms needed to increase household income and reduce precautionary
saving, consumption as a share of GDP will not rise fast enough to compensate. So the risk of a
hard landing will rise by the end of this year. ¶ Fourth, many emerging markets – including the
BRICs (Brazil, Russia, India, and China), but also many others – are now experiencing
decelerating growth. Their “state capitalism” – a large role for state-owned companies; an even
larger role for state-owned banks; resource nationalism; import-substitution industrialization;
and financial protectionism and controls on foreign direct investment – is the heart of the
problem. Whether they will embrace reforms aimed at boosting the private sector’s role in
economic growth remains to be seen.¶ Finally, serious geopolitical risks loom large. The entire
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greater Middle East – from the Maghreb to Afghanistan and Pakistan – is socially, economically,
and politically unstable. Indeed, the Arab Spring is turning into an Arab Winter. While an
outright military conflict between Israel and the US on one side and Iran on the other side
remains unlikely, it is clear that negotiations and sanctions will not induce Iran’s leaders to
abandon efforts to develop nuclear weapons. With Israel refusing to accept a nuclear-armed
Iran, and its patience wearing thin, the drums of actual war will beat harder. The fear premium
in oil markets may significantly rise and increase oil prices by 20%, leading to negative growth
effects in the US, Europe, Japan, China, India and all other advanced economies and emerging
markets that are net oil importers. ¶ While the chance of a perfect storm – with all of these risks
materializing in their most virulent form – is low, any one of them alone would be enough to
stall the global economy and tip it into recession. And while they may not all emerge in the
most extreme way, each is or will be appearing in some form. As 2013 begins, the downside
risks to the global economy are gathering force.
That causes nuclear war
Harris, counselor for the National Intelligence Council, and Burrows, PhD of
European History at Cambridge, 9
[Mathew and Jennifer, April 2009, The Washington Quarterly, “Revisiting the Future:
Geopolitical Effects of the Financial Crisis,”
http://www.ciaonet.org/journals/twq/v32i2/f_0016178_13952.pdf]
Increased Potential for Global Conflict Of course, the report encompasses more than economics and indeed believes the future is
likely to be the result of a number of intersecting and interlocking forces. With so many possible permutations of outcomes, each
with ample Revisiting the Future opportunity for unintended consequences, there is a growing sense of insecurity. Even so, history
may be more instructive than ever. While we continue to believe that the
Great Depression is not likely to be
repeated, the lessons to be drawn from that period include the harmful effects on
fledgling democracies and multiethnic societies (think Central Europe in 1920s and
1930s) and on the sustainability of multilateral institutions (think League of Nations in the same
period). There is no reason to think that this would not be true in the twenty-first as much as in the twentieth century. For that
reason, the ways in which the potential
for greater conflict could grow would seem to be even
more apt in a constantly volatile economic environment as they would be if change would be steadier.
In surveying those risks, the report stressed the likelihood that terrorism and nonproliferation will remain priorities even as resource
issues move up on the international agenda. Terrorism’s appeal will decline if economic growth continues in the Middle East and
youth unemployment is reduced. For those terrorist groups that remain active in 2025, however, the diffusion of technologies and
scientific knowledge will place some of the world’s most dangerous capabilities within their reach. Terrorist
groups in
2025willlikely be a combination of descendants of long established groups inheriting organizational structures, command and
control processes, and training procedures necessary to conduct sophisticated attacks and newly emergent collections of the angry
and disenfranchised that become
self-radicalized, particularly in the absence of economic
outlets that would become narrower in an economic downturn. The most dangerous
casualty of any economically induced drawdown of U.S. military presence would almost
certainly be the Middle East. Although Iran’s acquisition of nuclear weapons is not inevitable, worries about a nuclear-armed Iran
could lead states in the region to develop new security arrangements with external
powers, acquire additional weapons, and consider pursuing their own nuclear
ambitions. It is not clear that the type of stable deterrent relationship that existed between the great powers for most of the
Cold War would emerge naturally in the Middle East with a nuclear Iran. Episodes of low intensity conflict and terrorism
taking place under a nuclear umbrella could lead to an unintended escalation and
broader conflict if clear red lines between those states involved are not well
established. The close proximity of potential nuclear rivals combined with underdeveloped
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surveillance capabilities and mobile dual-capable Iranian missile systems also will produce inherent difficulties in
achieving reliable indications and warning of an impending nuclear attack. The lack of strategic depth in neighboring states like
Israel, short warning and missile flight times, and uncertainty
of Iranian intentions may place more
focus on preemption rather than defense, potentially leading to escalating crises. 36
Types of conflict that the world continues to experience, such as over resources, could
reemerge, particularly if protectionism grows and there is a resort to neo-mercantilist practices.
Perceptions of renewed energy scarcity will drive countries to take actions to assure
their future access to energy supplies. In the worst case, this could result in interstate
conflicts if government leaders deem assured access to energy resources, for example,
to be essential for maintaining domestic stability and the survival of their regime. Even actions short of war, however, will
have important geopolitical implications. Maritime security concerns are providing a rationale for naval buildups and modernization
efforts, such as China’s and India’s development of blue water naval capabilities. If the fiscal stimulus focus for these countries
indeed turns inward, one of the most obvious funding targets may be military. Buildup of regional naval capabilities could lead to
increased tensions, rivalries, and counterbalancing moves, but it also will create opportunities for multinational cooperation in
protecting critical sea-lanes. With water also becoming scarcer in Asia and the Middle East, cooperation
to manage
changing water resources is likely to be increasingly difficult both within and between
states in a more dog-eat-dog world.
Infrastructure investment is necessary to expand U.S.-Mexican integrationtheir comparative advantage relies on efficient movement of goods
Avendano, Research Associate at the Organization for Economic Cooperation
and Development, 7
[Rolando, 10-7-07, OECD Development Center, “Latin America’s Asian Opportunity,”
http://www.oecd.org/brazil/39564143.pdf, accessed 06-28-13, LV]
Between 1992 and 2002, Mexican exports almost doubled¶ their market share in the United
States, the country’s¶ main export destination. Since then, market share has¶ decreased by
nearly 10 per cent. At the same time,¶ Mexico’s comparative advantage in manufacturing has¶
been diminishing, leading some to fear that the export¶ model itself is at risk.¶ Latin America
lacks infrastructure, and this explains some¶ of Mexico’s problems. Further down the
continent, only¶ 5 per cent of Brazilian roads are paved and both railroad¶ and fluvial systems
are underdeveloped. Port efficiency differs¶ drastically across the region, and most ports are
dramatically¶ surpassed by those of Hong Kong, China and Singapore.¶ These handicaps may
have mattered less in the past but¶ the rise of China, and its competitive exports, represents¶ a
new challenge. Some concern is certainly justified.¶ Mexico’s annual export growth rate would
have been¶ 3 percentage points higher in the early 2000s, if Chinese¶ export capabilities had
remained unchanged.¶ Yet, for most Latin American countries, growth in Asia¶ primarily
represents an opportunity. The latest Latin American¶ Outlook from the OECD Development
Centre looks at¶ 34 countries and shows that for the most part, Latin American¶ economies are
much less exposed to Chinese competition¶ than are other emerging economies. This also
applies to¶ India. In both cases, Paraguay, Chile, Venezuela and Bolivia¶ figure among the
countries least exposed to competition,¶ which is no surprise, since these are exporters of
natural¶ resources. Mexico’s exports are similar to those of China,¶ which is why it is likely to
face a greater challenge.¶ Somewhere in the middle are Brazil, Argentina and Colombia¶ both in
relation to China and to India.¶ Despite the visibility of raw-materials exports, the trade¶
opportunities for Latin America are not limited to¶ commodities. Both the Asian giants have
growing¶ domestic markets for Latin American exports, not all of¶ them being exploited. Mexico
exports telecommunications¶ and electrical circuit equipment, sectors where China’s¶ and
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India’s imports are also high, but where little trade is¶ currently taking place. Argentina, Brazil,
Chile and Uruguay¶ all have established agricultural industries with expansion¶ potential.
Exploiting these opportunities, however, involves¶ ensuring the necessary investments in
infrastructure and¶ innovation, and avoiding excessive specialisation in the¶ commodity
sectors.¶ A comparison of trade patterns between 2000 and 2005¶ suggests that Latin American
comparative advantage in¶ soft commodities (grains, sugar) and hard commodities¶ (metals, oil)
has increased. Manufacturing sectors have¶ weakened, overall, as exemplified by the Mexican
case,¶ while in Venezuela, Ecuador, Bolivia and Chile, product¶ concentration in exports has
increased substantially (see¶ figure). This specialisation can have negative effects on¶ the other
sectors of the economy, so-called “Dutch¶ disease”, unless it is managed by responsible¶
macroeconomic policies and well-functioning institutions. The growth of the Chinese and Indian
economies and their¶ increased participation in international trade has brought¶ into sharp
relief the need for Latin American countries to¶ invest in infrastructure and innovation for the
noncommodity sectors to prosper. For countries facing export¶ competition, such as Mexico, it
is important and urgent to¶ build infrastructure that will enable efficient trade. In¶ sectors and
products where distance and time are key¶ competitive assets, the urgency is acute if
exporters are to¶ continue to capitalise on their extraordinary geographical¶ advantage.
Trade with Mexico is vital to the economy- almost 6 million U.S. jobs rely on
Mexico and our supply lines are entwined
Negroponte, Senior Fellow at the Brookings Institute, 13
[Diana Villiers, 5-2-13, former trade lawyer and professor of history, Brookings Institute: Up
Front, “Obama’s Mexico Trip: Putting Trade and Investment at the Top of the Agenda,”
http://www.brookings.edu/blogs/up-front/posts/2013/05/02-obama-mexico-trip-tradeinvestment-negroponte, accessed 6-25-13, JB]
We agree that exports to Mexico both maintain and create jobs in the United States. The U.S.
government estimates that each additional billion dollars in new exports supports more than
6,000 new jobs. According to the U.S. Chamber of Commerce, almost 6 million U.S. jobs rely
on trade with Mexico, the consequence of which is the potential creation of 107,000 new U.S.
jobs. ¶ Furthermore, individual states benefit from exports to Mexico such as Arizona,
California and Texas, which hold Mexico as their main export destination. Mexico is also the
second destination for exports from 20 other states and is ranked among the top five export
destinations for 34 states. ¶ Investment flows are also mutually beneficial. According to the U.S.
Trade Representative’s office, sales of services in Mexico by majority U.S. owned affiliates were
$34.4 billion in 2010. Sales of services in the United States by majority Mexico-owned firms were
$4.8 billion. According to the U.S. Embassy in Mexico, the United States currently provides 41
percent of all foreign direct investment in Mexico, benefiting more than 21,139 companies. ¶
Beyond the numbers, the reality of trade and investment is that the United States and Mexico
compete together in the global economy. Production and supply chains in North America are
deeply integrated with the U.S. content of Mexico exports to the United States estimated at
40 cents on the dollar. This compares to 25 cents for Canadian exports to the United States and
4 cents for China and 2 cents for the European Union, according to a Wilson Center report. In
short, there exists a growing integrated manufacturing platform that takes advantage of
geography, time zones and cultural affinity.
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Scenario 2: Mexican Stability
Mexico’s economy is suffering due to failing infrastructure
Pastor, Director of the Center for North American Studies, 8
[Robert, January 2008, Office of International Affairs at American University, “The Solution to
North America’s Triple Problem: The case for a North American Investment Fund,”
http://www.american.edu/sis/cnas/upload/triple_problem_pastor.pdf, accessed 6-27-13, ML]
Others have pointed to Mexico’s declining competitiveness and attribute that to ¶ Mexico’s
inability or unwillingness to undertake essential tax and fiscal, labor, energy ¶ and electricity
reforms. An IMD World Competitiveness Survey attributed declining ¶ competitiveness to poor
infrastructure. Of the 30 largest economies in terms of their ¶ infrastructure, the IMD survey
found that in just three years – 2000-03 – Mexico had ¶ slipped from 18th to 29th, while the U.S.
infrastructure competitiveness remained the top ¶ ranking and Spain slipped from 9th to 10th
(IMD, 2004). ¶ The World Bank initially viewed large infrastructure projects as key to ¶
development and, after its start in 1960, the Inter-American Development Bank also ¶ invested
heavily in infrastructure. But beginning in the mid-1970s, there was a gradual ¶ shift away from
such projects toward those aimed at education, health, and poverty reduction. More recently,
the World Bank has begun to re-evaluate the importance of ¶ infrastructure and a number of
studies have concluded that lagging performance in ¶ infrastructure “has cascading negative
effects throughout the economy. It¶ increases¶ the cost of doing business, decreases
international competitiveness, and hinders¶ the country’s growth and poverty alleviation
prospects” (World Bank, 2003: 1).¶ Mexico has long under-invested in infrastructure but
government investment¶ in infrastructure as a percentage of GDP fell precipitously from about
8 percent in¶ 1980 to 1.2 percent in 2003. In 1960, Korea had less than half of Mexico’s paved
road¶ density. In 2005, it had 11 times that of Mexico. Similarly, in 1969, Korea had one third¶
the power infrastructure per capita of Mexico but, in 2005, it had three times as¶ much. While
the comparison with Korea is particularly sharp, Mexico also compares¶ poorly with other major
Latin American countries. For example, Mexico’s road density¶ is currently about one-half that of
Brazil. Moreover, the costs of railways and ports¶ in Mexico are higher than in Brazil and the U.S
(World Bank and Inter-American¶ Development Bank, 2005; World Bank, 2005; Rodríguez
Barocio, 2005: 15).¶ The lack of infrastructure and its poor quality and reliability have added
significantly¶ to the cost of doing business in Mexico. It also has encouraged foreign
investment¶ to concentrate on the border. Therefore, one effective way to reduce¶
geographical disparities within Mexico while reducing pressures for out-migration¶ would be to
improve the road system from the U.S. border to the center and southern¶ parts of the country.
Because of foreign investment, the northern border economy is¶ booming and attracting labor
from the poorer parts of the country. However, in many¶ cases, workers stay on the Mexican
side of the border only long enough to learn¶ how to cross into the United States, where they
can earn a lot more. U.S. firms do not¶ like to invest in the border area because of the pollution
and the inefficiencies associated¶ with such a high turnover rate, but they do so because the
roads from the¶ border to the center of the country are bad or non-existent.
Investment in strengthening interoperability of U.S. and Mexican roads is key to
Mexican economic growth
Drake and Roho, professors at the Donahue Graduate School of Business, 8
[Matthew J. and Diaz, August 2008, Duquesne University, The Journal of International
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Management Studies, “The Current State of Mexican Logistics Operations,”
http://academia.edu/168323/The_Current_State_of_Mexican_Logistics_Operations, Volume 3,
Number 2, pg. 94]
By most accounts, the logistics infrastructure (i.e., quality and extent of roads, rails, airports,
seaports, and pipelines) in Mexico, and most of Latin America for that matter, lags behind that
of the United States, Canada, and Europe. The development of the Mexican road network in the
Twentieth Century was focused domestically to connect cities with Mexico City instead of
necessarily establishing road links with the United States. State ownership of the railroads, only
recently discontinued, and the focus on trucking instead of rail transportation left the Mexican
rail system neglected for decades (Ciccantell, 2002). The road network in Mexico is such that
53-foot trailers that are common in the United States cannot legally travel on Mexican roads
because they are too large and too heavy. This limits carriers’ efficiency in cross-border
shipments to Mexico because either smaller trailers must be used from the start or the freight
must be transloaded onto smaller trailers at the border for final delivery in Mexico. Logistics
operations consistently rank high on managers’ lists of challenges and frustrations of doing
business in Mexico (Fawcett and Smith, 1995; Fawcett et al., 1995). The lack of a reliable
logistics infrastructure makes it difficult for Mexican transportation providers to satisfy their
customers because buyers consistently rank “delivery date reliability” as a top priority for
transportation mode selection in international transactions (Murphy and Daley, 1994). ¶ At first
glance, transportation infrastructure may not seem like a major macroeconomic issue, but it
can have a large effect on a country’s economy as a whole. Calderon and Serven (2004)
established a significant positive relationship between the quality and extent of a country’s
infrastructure and the nation’s long-term economic growth. This study shows that prudent
investment in infrastructure can have long-reaching implications for a nation’s economy.
India, another country with a reputation for poor transportation infrastructure, has committed
to investing more thanUS$450 billion between 2007 and 2012 to improve its logistics networks
(Leahy, 2008). With that, we now investigate Mexico’s annual freight traffic and aggregate
expenditures on infrastructure in the nine years after the implementation of NAFTA. The annual
domestic freight traffic by mode, along with those of Canada and the United States for
comparison purposes, are provided in Tables 1-4.While international shipments obviously utilize
these modes of transportation as well, we feel that looking at the domestic freight traffic
provides a reasonable proxy for the overall figure. The accompanying annual expenditures on
infrastructure by mode are given in Tables 5-8.
Mexican economic growth is the key internal link to dismantle Mexican drug
cartels—current policies solve other alternative causes
Brown, Major at the School of Advanced Military studies, 10
[Matthew M., 12-2-10, The School of Advanced Military Studies, “Engaging the Borderlands:
Options for the Future of U.S.-Mexican Relations,” pgs. 56-57, GSK]
The criminality of the DTOs and the economic conditions that facilitate their support render
militarization a less then optimal option. Rather a multi-faceted policy involving domestic and
multinational approaches are a better option. This approach must target both the DTOs and
the conditions that facilitate their existence. The two key avenues of approach should be to
improve economic conditions for the impoverished while reducing the freedoms of movement
and sanctuary which the DTOs currently enjoy.¶ The U.S. domestic approach should consist of
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increased apprehension efforts, supported by judicial action and incarceration to act as a
deterrent, increasing the “Cost” of illegal crossings of personnel and goods. This approach will, if
applied correctly, balance barriers, technology and manpower along the lines of the Secure
Border Initiative to reduce the flow of illegal traffic to manageable levels. This coupled with
aggressive law enforcement targeted at DTO activity will disrupt ongoing activities, while
simultaneously restricting their lines of supply from Mexico. The Southwest Border Security Bill
passed in the summer of 2010 and signed into law by President Barrack Obama, provides an
additional 600 million dollars in supplemental funds to indicate that our law and policy makers
concur that this approach is both viable and feasible. Combined U.S.-Mexican efforts also need
to be expanded. While information sharing and coordination between the two nations has
increased, the effectiveness afforded through combined operations and info sharing cannot be
understated. Only with coordinated efforts on both sides of the border can DTO freedom of
movement be eliminated.¶ Most importantly, any domestic efforts must be enhanced by parallel
Mexican efforts. As the U.S. increases its capacity and border security, Mexico must increase
its law enforcement capacity and economic support for border areas. The increased capacity
the Merida Initiative provides will allow greater effects and more effective operations
targeting DTOs. Law enforcement successes attributed to Merida Initiatives should be
reinforced with increased support. Only increased security and control will facilitate government
efforts to implement economic measures that will enhance the lives and prosperity of affected
regions. ¶ While the Merida Initiative has increased capacity of both the U.S. and Mexican
border security apparatus’ to target and impact DTO activity, it will ultimately fail unless
supported by economic development. Until there are social services and economic
opportunities provided, narcotics and illegal immigration will continue to be the default
source of revenue for impoverished people.
Drug cartels cause nuclear terrorism- alliances with countries like Mexico act as
a deterrent
Shanker, New York Times Pentagon correspondent, 13
[Thom, 5-30-13, New York Times, “Globalization Creates a New Worry: Enemy Convergence,”
http://atwar.blogs.nytimes.com/2013/05/30/globalization-creates-a-new-worry-enemyconvergence/?ref=drugtrafficking&_r=0, accessed 6-29-13, JC]
Drug cartels along America’s southern border, whose smuggling operations move contraband
and people into the United States, might come to make common cause with terrorist or
militant organizations to bring in weapons or bomber makers.¶ “I think that’s a very possible
and very dangerous business model, and you have to prevent narco-businessmen crossing
those streams with the terrorists,” Admiral Stavridis said.¶ “What the narco-confederacies offer
are routes, the trafficking capabilities — moving materiel and people,” he added. “If you can
move 10 tons of cocaine into the U.S. in a small, semi-submersible vessel, how hard do you
think it would be to move a weapon of mass destruction?Ӧ Although it had long been assumed
that drug traffickers would not want to adopt political or militant activities for fear of bringing
down even harsher American might to suppress their for-profit operations, Admiral Stavridis
said that “for the right level of inducement — for the right amount of money — it could
happen.”¶ He said there were signs already of operatives “with a foot in both camps, including
Hezbollah.Ӧ For example, American law enforcement officials have said they thwarted an
Iranian-backed plot in 2011 to co-opt members of a Mexican drug gang to kill the Saudi
ambassador to Washington. And the Taliban underwrite their operations in Afghanistan via the
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poppy trade. ¶ Admiral Stavridis also sketched a scenario in which a country like North Korea,
seeking to attack the United States or its allies without the clear and obvious attribution of a
missile launch, might contract with a smuggling ring to move a weapon into a major port
somewhere in the world.¶ Those assessments on future national security risks will be carried by
Admiral Stavridis to his next job, in academia, as dean of the Fletcher School of Law and
Diplomacy at Tufts University.¶ Assessing other significant transformations to the modern way of
war, Admiral Stavridis underscored the sea change in the amount and movement of information
on the battlefield.¶ “My smartphone has more communications capability, and can manage
more information than the $500 million destroyer I first sailed in 1977,” he said. “And that’s by
orders of magnitude.”¶ He gave the military only a “B+” grade for its abilities to leverage the
revolution of information, including the emergence of social networks, in reshaping the ways
local populations interact among themselves and with their governments. ¶ Also worrisome, he
said, is how adversaries show great agility in using information against the United States and
its allies. The future of security for the United States is to build up its own physical networks of
alliances, coalitions and partnerships, he said. ¶ “The 20th century was all about building walls:
The Maginot Line, the Siegfried Line, the Iron Curtain, the Bamboo Curtain and the Berlin Wall
— we built walls everywhere,” Admiral Stavridis said. “How did that work for us? Sixty million
dead in two world wars, a continent destroyed in Europe and much of Asia destroyed, as well.Ӧ
For the 21st century, he said, “We cannot create security with walls. You have to build bridges.
It will be all about alliances and coalitions. And the military has to build bridges to the civilian
sectors to create security.
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Advantage 2: Hegemony
There’s potential for reshoring now—Mexico is gaining on China but border
improvements are key
Rozental, former deputy foreign minister of Mexico, et al 12
[Andres, Margaret Myers, director of the China and Latin America program at The Dialogue,
James R. Jones, former ambassador to Mexico, Felipe Canales, no qualifications available, 9-1812, The Dialogue, “Are Mexican Factories Gaining an Upper Hand Against China's?”
http://www.thedialogue.org/page.cfm?pageID=32&pubID=3087, accessed 7-8-13, GSK]
Q: With the rising cost of wages in China, manufacturers are increasingly considering Mexico
an attractive location to 'reshore' production, McClatchy reported Sept. 10. Is Mexico gaining a
competitive edge over China in terms of manufacturing? Or will other low-wage countries
come to replace both China and Mexico as manufacturing destinations? What are the challenges
and benefits of moving production facilities to Mexico? Can Mexico leverage the low cost of
wages into more sustainable growth? ¶ A: Andrés Rozental, member of the Advisor board,
president of Rozental & Asociados in Mexico City and senior fellow at the Brookings Institution:
"Low wages have never been the sole determining factor for companies to decide in which
country to site manufacturing facilities; otherwise countries such as Haiti or Bangladesh would
be the manufacturing capitals of the world. Many other factors, such as availability of skilled
labor, infrastructure, certainty of rules and regulations and fairness of the justice system, all
play a significant role. True, China's wages are rising and no longer represent an overwhelming
advantage for labor-intensive industries, but salaries in Mexico and other middle-income
countries are also climbing. Studies show that the all-in cost for an average factory worker in a
Chinese industrial zone is more or less equal to a Mexican working in a maquiladora near the
U.S. border. Where Mexico does have a clear advantage over China-and this is what is driving
companies to relocate facilities to our country-is in our geographic proximity to one of the
largest consumer markets in the world, economic and political stability, ability to provide justin-time sourcing and a relatively transparent regulatory framework in which to do business. One
shouldn't forget that Mexico is fundamentally a sophisticated manufacturing economy that is
growing at a very acceptable rate when compared to other emerging market economies. While
it is true that we depend enormously on the strength of the U.S. economy because of NAFTA
and our huge bilateral trade and investment relationship, it is equally true that Mexico, together
with Canada, will always be the first to benefit from an economic recovery in our neighbor. Tens
of thousands of companies have taken advantage of Mexico's benefits and foreign direct
investment flows continue to show robustness even in the face of the insecurity and violence
that affect parts of the country as a result of the fight against organized crime and drug
trafficking."¶ A: Margaret Myers, director of the China and Latin America program at the InterAmerican Dialogue: "China is indeed being priced out of labor-intensive manufacturing in
certain cases. Rising wages and renminbi appreciation have made production in China's famed
Pearl River Delta much more costly in recent years. Firms once dependent on cheap, low-skilled
Chinese labor are now seeking less expensive options in China's poorer inland provinces,
elsewhere in Asia (Vietnam and Bangladesh, for example) and in countries like Mexico, which
saw an upsurge in manufacturing in 2011. Mexico does appear to have gained a competitive
edge over China in manufacturing over the past two years, though specifically in that of the
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low-skilled, labor-intensive variety. In addition to low wages, well-trained workers and proximity
to the United States make Mexico an attractive destination for global producers. Mexico is of
growing interest to Chinese firms, even, who seek to benefit from NAFTA-related preferential
tariffs. Despite Mexico's labor-intensive manufacturing 'comeback,' China still maintains a
competitive edge in investment-intensive, high-technology manufacturing. Furthermore, China's
decline in low-skilled manufacturing is largely attributable to national efforts to reduce
dependence on low-value-added, export-oriented production. To this end, China has major
plans to restructure and promote key industries and to further develop the country's services
sector. Sustainable growth in Mexico will require more than an upswing in labor-intensive
production. As in China, it will require policies promoting intermediate and high-value
manufacturing. It will also require efforts to further position the nation as a hub for regional
trade, as well as progress on security, infrastructure, financing and corruption-related
challenges. Mexico's manufacturing sector has a skilled workforce and geography on its side,
but additional progress will be largely policy-dependent."¶ A: James R. Jones, member of the
Advisor board and co-chair of Manatt Jones Global Strategies: "Mexico is clearly regaining its
manufacturing base that was lost to China around the turn of this century. Then it was a
question of wages as substantially lower Chinese wage rates versus Mexican labor costs
attracted auto parts, electronics and other manufacturing away from Mexico. A combination of
higher Chinese wages over the last decade, costs and timeliness of transportation and vastly
improved quality of production in Mexico is quickly reversing that trend. A dozen years ago,
China was distributing advertising pamphlets to U.S. automobile producers that substantially
undercut the costs of auto parts produced in Mexico. But it became apparent that the quality
and reliability of Mexican production were much better. While labor costs were comparable,
transportation costs gave Mexican producers an edge. Today, automobile manufacturing is one
of Mexico's fastest growing sectors. Mexico's manufacturing base is also growing in other
sectors such as aviation and electronics. This trend will continue, especially if the Canadian, U.S.
and Mexican governments find ways to improve regulatory efficiencies and border
infrastructure."
Now is key- infrastructure development is key to prevent crowd-out by China in
global markets
Robinson, Research Scientist at the Department of Sociology at the University
of Michigan, 10
[Ian, Fall 2010, New Labor Forum, “The China Road: Why China Is Beating Mexico in the
Competition for U.S. Markets,” Volume 10, Number 3,
http://muse.jhu.edu/journals/new_labor_forum/v019/19.3.robinson.html, accessed 7-9-13, ML]
Does Mexico have the time it needs to realize the kinds of human and infrastructure investment
required to save its electronics and auto sectors, and (perhaps) regain some of its rapidly
shrinking apparel sector? Maybe, if China allows the yuan to appreciate to more appropriate
levels. This seems quite possible over the next year. Chinese wages are now rising faster than
Mexico's, which will also help, though (as argued earlier) the importance of wage differences
and trends to overall competitiveness should not be exaggerated.¶ But Mexico's policymakers
must resolve to take full advantage of the window of opportunity such shifts would create to
begin making the investments necessary for either a mixed or a high-road competitive
strategy. If they fail to do this—and the current trade regime remains in place—it's only a
matter of time until most of Mexico's manufacturing exports are crowded out of the U.S.
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market by China and/or other countries following its strategic lead. Which path Mexico pursues
will largely depend on choices made in Mexico and the United States, rather than in China.
Mexico depends upon the U.S.A. for about 85 percent of its exports and imports, not to mention
jobs for some 10 percent of its people who send back remittances roughly equal in value to the
sum of all Mexican manufacturing exports.¶ The Obama administration could make a big
difference in enabling Mexico to adopt a successful high-road strategy, although—at present—
it shows no signs of abandoning the neoliberal model of continental economic integration. The
administration's support—for stronger worker rights and higher worker compensation in all
three NAFTA countries, and backing for Mexican infrastructure development on the model of
the European Union's social funds—would enable the Mexican government to move in this
direction. If the United States government shows no such commitment, we must hope that
ongoing struggles to improve the quality of Mexican democracy yield a government that is
willing to put the matter to the test. Many Mexican activists are making great sacrifices to this
end, but progress is slow and uneven. Unfortunately, on the international economic front, time
is not on their side.
Offshoring causes the U.S. to lose sophisticated manufacturing and innovation
capabilities
Pisano and Shih, Professors at Harvard Business School, 9
[Gary P. and Willy C., July 2009, Harvard Business Review, “Restoring American
Competitiveness,” http://hbr.org/2009/07/restoring-american-competitiveness/ar/1, accessed
7-10-13, ML]
For much of the past two decades, the stunning growth of the U.S. economy was widely hailed
in academic, business, and government circles as evidence that America’s competitiveness
problem was as obsolete as leg warmers and Jazzercise. The data suggest otherwise. Beginning
in 2000, the country’s trade balance in high-technology products—historically a bastion of U.S.
strength—began to decrease. By 2002, it turned negative for the first time and continued to
decline through 2007. (See the exhibit “A Sign of Trouble.”) Even more worrisome, average real
weekly wages have essentially remained flat since 1980, meaning that the U.S. economy has
been unable to provide a rising standard of living for the majority of its people. This
undoubtedly is one reason Americans have attempted to borrow their way to prosperity, a
strategy that clearly is no longer tenable.¶ What, then, was actually happening when it seemed
things were going so well? Companies operating in the U.S. were steadily outsourcing
development and manufacturing work to specialists abroad and cutting their spending on
basic research. In making their decisions to outsource, executives were heeding the advice du
jour of business gurus and Wall Street: Focus on your core competencies, off-load your lowvalue-added activities, and redeploy the savings to innovation, the true source of your
competitive advantage. But in reality, the outsourcing has not stopped with low-value tasks
like simple assembly or circuit board stuffing. Sophisticated engineering and manufacturing
capabilities that underpin innovation in a wide range of products have been rapidly leaving
too. As a result, the U.S. has lost or is in the process of losing the knowledge, skilled people,
and supplier infrastructure needed to manufacture many of the cutting-edge products it
invented.
Mexico is uniquely key for US reshoring – boosts competitiveness
Weitzman, Staff Writer for the Financial Times, 12
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[Hal, Financial Times, 6-2-12, "Mexico Most Popular for US Reshoring,”
http://www.ft.com/cms/s/0/ec164996-ad23-11e1-bb93-00144feabdc0.html, accessed 7-12-13,
AR]
Mexico remains a far more popular destination than the US for “reshoring”
manufacturing to supply North American demand, according to research by a global
business advisory firm. ¶ The report, to be published on Monday by AlixPartners, could
damp the hopes generated by US cheerleaders for reshoring – where jobs previously
outsourced to low-cost emerging economies are brought back home.¶ US job creation
slowed in May, according to official data on Friday that showed employers created
69,000 posts last month, well below average expectations of about 150,000, while the
unemployment rate rose to 8.2 per cent from 8.1 per cent.¶ Barack Obama, US president,
has cited reshoring as an example of the country’s increasing economic
competitiveness in the face of competition from emerging markets. However, the
trend, although real, may not benefit the US as much as some expect, the survey
suggests.¶ Nearly half the manufacturers surveyed by AlixPartners said they saw
reshoring as a good opportunity, but half also said Mexico was their top choice for
relocating factories designed to supply the US market. However, that is down from 70
per cent last year. In addition, 35 per cent said the US was the most attractive place to
reshore production – up from 21 per cent last year.¶ Some 15 per cent of respondents said
they could relocate factories elsewhere in Latin America or the Caribbean, up from 8 per
cent last year.¶ “A lot has been written of late about America’s manufacturing rebound,
and there certainly has been a very impressive rebound,” said Foster Finley, co-head of
AlixPartners’ transport practice. “However, Mexico still remains the near-shoring
locale of choice for companies looking to overcome the higher costs of doing
business today in places like China.”¶ Chas Spence, one of the report’s authors, said
relatively low wages continued to make Mexico attractive. “Despite the logistic attraction
of the US, the labour arbitrage is still a monumental hurdle for the US to overcome,” he
said. “Labour costs are such a big part of the equation.”¶ Russell Dillion, his co-author,
said Mexico was particularly competitive in low-skill assembly work. “US workers can
bring more productivity to the table, so that shrinks the gap between the US and
Mexico. But in some industries – such as auto – the productivity and quality gap is not as
large as it was two decades ago,” he said. ¶ Mr Spence noted that Mexico had superior
infrastructure to support relocating factories. “They have an entire industry dedicated
to serving a manufacturing transition,” he said. “The US doesn’t have that to the same
extent, because we’ve never really done it – reshoring is a new thing.”¶ Of the companies
that said they were considering bringing production closer to the US, almost 90 per cent
said they were likely to relocate within three years.¶ About half the companies surveyed
were from the automotive or aerospace industries. Respondents said the chief attraction
of relocating from Asia was lower freight costs, followed by improved speed to market
and lower inventory costs.
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Lack of infrastructure improvements on the border decimates U.S.
competitiveness
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-Being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
Accessed 6-25-13, ML]
Commerce between the United States and Mexico is one of the great—yet underappreciated—¶
success stories of the global economy. In fact, in 2011 U.S.-Mexico goods and services trade ¶
probably reached the major milestone of one-half trillion dollars with virtually no recognition.1¶
The United States is Mexico’s top trading partner, and Mexico—which has gained¶
macroeconomic stability and expanded its middle class over the last two decades—is the ¶
United States’ second largest export market and third largest trading partner. Seventy percent
¶ of bilateral commerce crosses the border via trucks, meaning the border region is literally ¶
where “the rubber hits the road” for bilateral relations. This also means that not only California
¶ and Baja California, but also Michigan and Michoacán, all have a major stake in efficient and ¶
secure border management. ¶ Unfortunately, the infrastructure and capacity of the ports of
entry to process goods and ¶ individuals entering the United States has not kept pace with the
expansion of bilateral trade or ¶ the population growth of the border region. Instead, the need
for greater border security ¶ following the terrorist attacks of 9/11 led to a thickening of the
border, dividing the twin cities ¶ that characterize the region and adding costly, long and
unpredictable wait times for ¶ commercial and personal crossers alike. Congestion acts as a
drag on the competitiveness of ¶ the region and of the United States and Mexico in their
entirety. Solutions are needed that ¶ strengthen both border security and efficiency at the same
time. The development of the 21st¶ Century Border initiative by the Obama and Calderón
administrations has yielded some ¶ advances in this direction, but the efforts need to be
redoubled.
Loss of economic primacy causes major war
Lieberthal & O’Hanlon, foreign policy scholars at the Brookings Institution, 12
[Kenneth and Michael, 6-6-12, The Fremont Tribune, “The Real National Security Threat:
America’s Debt,” http://fremonttribune.com/news/opinion/columnists/the-real-nationalsecurity-threat-america-s-debt/article_52706e86-c775-11e1-8cbd-0019bb2963f4.html]
Last, American economic weakness undercuts U.S. leadership abroad. Other countries sense
our weakness and wonder about our purported decline. If this perception becomes more
widespread, and the case that we are in decline becomes more persuasive, countries will begin
to take actions that reflect their skepticism about America’s future. Allies and friends will
doubt our commitment and may pursue nuclear weapons for their own security, for example;
adversaries will sense opportunity and be less restrained in throwing around their weight in
their own neighborhoods. The crucial Persian Gulf and Western Pacific regions will likely
become less stable. Major war will become more likely. When running for president last time,
Obama eloquently articulated big foreign policy visions: healing America’s breach with the
Muslim world, controlling global climate change, dramatically curbing global poverty through
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development aid, moving toward a world free of nuclear weapons. These were, and remain,
worthy if elusive goals. However, for Obama or his successor, there is now a much more urgent
big-picture issue: restoring U.S. economic strength. Nothing else is really possible if that
fundamental prerequisite to effective foreign policy is not re-established.
Competitiveness is key to hegemony
Martino, Senior Fellow at the Foreign Policy Research Institute, 7
[Rocco, Spring 2007, Foreign Policy Research Institute, “A Strategy for Success: Innovation Will
Renew American Leadership,” pg. 267,
http://www.fpri.org/orbis/5102/martino.innovationamericanleadership.pdf]
Much of the foreign policy discussion in the United States today is focused upon the dilemma
posed by the Iraq War and the threat posed by Islamist terrorism. These problems are, of
course, both immediate and important. However, America also faces other challenges to its
physical security and economic prosperity, and these are more long-term and probably more
profound. There is, first, the threat posed by our declining competitiveness in the global
economy, a threat most obviously represented by such rising economic powers as China and
India. There is, second, the threat posed by our increasing dependence on oil imports from
the Middle East. Moreover, these two threats are increasingly connected, as China and India
themselves are greatly increasing their demand for Middle East oil. The United States of
course faced great challenges to its security and economy in the past, most obviously from
Germany and Japan in the first half of the twentieth century and from the Soviet Union in the
second half. Crucial to America’s ability to prevail over these past challenges was our
technological and industrial leadership, and especially our ability to continuously recreate it.
Indeed, the United States has been unique among great powers in its ability to keep on
creating and recreating new technologies and new industries, generation after generation.
Perpetual innovation and technological leadership might even be said to be the American way
of maintaining primacy in world affairs. They are almost certainly what America will have to
pursue in order to prevail over the contemporary challenges involving economic
competitiveness and energy dependence. There is therefore an urgent need for America to
resume its historic emphasis on innovation. The United States needs a national strategy
focused upon developing new technologies and creating new industries. Every successful
strategy must define an objective or mission, determine a solution, and assemble the means
of execution. In this case, the objective is economic superiority; the solution is new industries,
which build upon the contemporary revolution in information technology; and the means of
execution will have to include a partnership of industry, government, and people.
That solves nuclear escalation
Friedberg, professor of politics and international relations at Princeton
University’s Woodrow Wilson School, and Schoenfeld, visiting scholar at the
Witherspoon Institute, 8
[Aaron and Gabriel, 10-21-08, The Wall Street Journal, “The Dangers of a Diminished America,”
http://online.wsj.com/article/SB122455074012352571.html]
With the global financial system in serious trouble, is America's geostrategic dominance likely
to diminish? If so, what would that mean? ¶ One immediate implication of the crisis that began
on Wall Street and spread across the world is that the primary instruments of U.S. foreign
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policy will be crimped. The next president will face an entirely new and adverse fiscal
position. Estimates of this year's federal budget deficit already show that it has jumped $237
billion from last year, to $407 billion. With families and businesses hurting, there will be calls
for various and expensive domestic relief programs. ¶ In the face of this onrushing river of red
ink, both Barack Obama and John McCain have been reluctant to lay out what portions of
their programmatic wish list they might defer or delete. Only Joe Biden has suggested a
possible reduction -- foreign aid. This would be one of the few popular cuts, but in budgetary
terms it is a mere grain of sand. Still, Sen. Biden's comment hints at where we may be headed:
toward a major reduction in America's world role, and perhaps even a new era of financiallyinduced isolationism.¶ Pressures to cut defense spending, and to dodge the cost of waging two
wars, already intense before this crisis, are likely to mount. Despite the success of the surge,
the war in Iraq remains deeply unpopular. Precipitous withdrawal -- attractive to a sizable
swath of the electorate before the financial implosion -- might well become even more
popular with annual war bills running in the hundreds of billions.¶ Protectionist sentiments are
sure to grow stronger as jobs disappear in the coming slowdown. Even before our current
woes, calls to save jobs by restricting imports had begun to gather support among many
Democrats and some Republicans. In a prolonged recession, gale-force winds of
protectionism will blow.¶ Then there are the dolorous consequences of a potential collapse of
the world's financial architecture. For decades now, Americans have enjoyed the advantages
of being at the center of that system. The worldwide use of the dollar, and the stability of our
economy, among other things, made it easier for us to run huge budget deficits, as we counted
on foreigners to pick up the tab by buying dollar-denominated assets as a safe haven. Will this
be possible in the future?¶ Meanwhile, traditional foreign-policy challenges are multiplying.
The threat from al Qaeda and Islamic terrorist affiliates has not been extinguished. Iran and
North Korea are continuing on their bellicose paths, while Pakistan and Afghanistan are
progressing smartly down the road to chaos. Russia's new militancy and China's seemingly
relentless rise also give cause for concern. ¶ If America now tries to pull back from the world
stage, it will leave a dangerous power vacuum. The stabilizing effects of our presence in Asia,
our continuing commitment to Europe, and our position as defender of last resort for Middle
East energy sources and supply lines could all be placed at risk. ¶ In such a scenario there are
shades of the 1930s, when global trade and finance ground nearly to a halt, the peaceful
democracies failed to cooperate, and aggressive powers led by the remorseless fanatics who
rose up on the crest of economic disaster exploited their divisions. Today we run the risk that
rogue states may choose to become ever more reckless with their nuclear toys, just at our
moment of maximum vulnerability.¶ The aftershocks of the financial crisis will almost
certainly rock our principal strategic competitors even harder than they will rock us. The
dramatic free fall of the Russian stock market has demonstrated the fragility of a state whose
economic performance hinges on high oil prices, now driven down by the global slowdown.
China is perhaps even more fragile, its economic growth depending heavily on foreign
investment and access to foreign markets. Both will now be constricted, inflicting economic
pain and perhaps even sparking unrest in a country where political legitimacy rests on
progress in the long march to prosperity.¶ None of this is good news if the authoritarian
leaders of these countries seek to divert attention from internal travails with external
adventures.¶ As for our democratic friends, the present crisis comes when many European
nations are struggling to deal with decades of anemic growth, sclerotic governance and an
impending demographic crisis. Despite its past dynamism, Japan faces similar challenges.
India is still in the early stages of its emergence as a world economic and geopolitical power. ¶
What does this all mean? There is no substitute for America on the world stage. The choice
we have before us is between the potentially disastrous effects of disengagement and the stiff
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price tag of continued American leadership. ¶ Are we up for the task? The American economy
has historically demonstrated remarkable resilience. Our market-oriented ideology,
entrepreneurial culture, flexible institutions and favorable demographic profile should serve
us well in whatever trials lie ahead. ¶ The American people, too, have shown reserves of
resolve when properly led. But experience after the Cold War era -- poorly articulated and
executed policies, divisive domestic debates and rising anti-Americanism in at least some
parts of the world -- appear to have left these reserves diminished.¶ A recent survey by the
Chicago Council on World Affairs found that 36% of respondents agreed that the U.S. should
"stay out of world affairs," the highest number recorded since this question was first asked in
1947. The economic crisis could be the straw that breaks the camel's back.
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Contention 2: Solvency
Restructuring NADBank key to solve—boosts FAST lanes, customs agents and
physical infrastructure
O'Neil, Senior Fellow of Latin American Studies @ Council on Foreign Relations,
12
[Shannon K, 12-1-2012, Council on Foreign Relations, “Refocusing U.S.-Mexico Security
Cooperation”, http://www.cfr.org/mexico/refocusing-us-mexico-security-cooperation/p29595,
accessed 7-12-13, GSK]
In addition, U.S. and Mexican joint efforts should concentrate on realizing the other so-farneglected pillars of the Merida Initiative, particularly modernizing the border and engaging
citizens and communities. On the border, the United States should upgrade its roads, bridges,
and FAST lanes (express lanes for trusted drivers), as well as increase the number of U.S.
customs officers, agricultural specialists, and support staff to help facilitate legal trade and
identify and keep out illicit goods. To finance the multibillion dollar cost of modernizing the
border, the U.S. Congress should pass the NADBank Enhancement Act (H.R. 2216) or similar
legislation, to allow the North American Development Bank to support infrastructure projects
in the border regions; currently the bank is limited primarily to environmental initiatives. And it
should also reauthorize and refund the Coordinated Border Infrastructure Program, which
managed federal funds dedicated for border area roads and infrastructure.
Use of the North American Development Bank solves- expansion develops
infrastructure projects that streamline the flow of U.S.-Mexican trade
Beam, Lieutenant Commander in the US Navy, 11
[Patrick, 10-28-11, Joint Military Operations Department at the Naval War College, “Economics
and Migration: NAFTA’s Impact on Mexico,” http://w.dtic.mil/cgibin/GetTRDoc?Location=U2&doc=GetTRDoc.pdf&AD=ADA555126ww, accessed 6-25-13, JB]
A strong Mexican economy equates to a more competitive trading partner and a better ¶
destination for U.S. investment. Only one eighth of one percent, or $28 million in USAID ¶
worldwide bilateral economic aid funds in FY 2010 were dedicated to Mexican development ¶
and reform initiatives. This is far less than required to make substantive change. The U.S. ¶
should expand the North American Development Bank (NADBank) and the Border ¶
Environment Cooperation Commission (BECC) to programs that include transportation and ¶
infrastructure projects throughout the whole of Mexico. Additionally, targeted economic ¶
assistance will aid in transitioning Mexico’s state owned oil sector and monopolized ¶ companies
into more competitive industries. Furthermore, the U.S. must address the root ¶ cause of illegal
immigration, which is the economic disparity between the U.S. and Mexico. ¶ Current U.S.
policies are resulting in the opposite desired effect. The U.S. must also target ¶ employers who
hire undocumented migrants, which promotes illegal immigration and ¶ undermines the
provisions of NAFTA. Finally, infrastructure improvements would not only ¶ streamline the flow
of trade between Mexico and the U.S., it would aid in securing the over ¶ 2,000-mile border
between the two countries.
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NADBank’s current objective excludes infrastructure projects- U.S. expansion of
its mandate solves economic development on the border
Hereford, Chair of the Border Trade Alliance Transportation Committee, et al 11
[Jesse, and Nelson Balido, President, Sam F. Vale, Chair of Board of Directors, Border trade
Alliance, August 9, 2011, Letter to Rep. Spencer Bachus and Rep. Barney Frank, “Border Trade
Alliance, NADBank expansion,” http://www.thebta.org/wpcontent/uploads/file/NADBank%20expanded%20mandate%20-%20Hinojosa%20bill%20%20ltrhd.pdf, [Accessed 6/29/20113], JB.
We write to you to urge you to support H.R. 2216, a bill introduced by Rep. Rubén Hinojosa that
would expand the authority of the North American Development Bank (NADBank). This bill
would authorize changes to the agreement between the United States and Mexico that
established the NADBank, allowing it to finance a broader array of infrastructure projects in the
U.S.-Mexico border region that promote trade and foster economic development and job
growth in the region. Over the past sixteen years of operation, the NADBank has been vitally
important to improving basic services in the border region by financing numerous water,
wastewater, solid waste and street paving projects, among others. To date, NADBank has
provided approximately US$1.24 billion in loans and grants to support 149 infrastructure
projects in the border region, which represents a total investment of US$3. 26 billion and will
benefit more than 12.8 million residents of the region. One particularly notable accomplishment
is the significant improvement in wastewater treatment coverage on the Mexican side of the
border. In 1995, it was estimated that 27 percent of wastewater generated in border
communities was being treated. According to Mexico’s National Water Commission (CONAGUA),
wastewater treatment coverage has now reached approximately 85 percent. This dramatic
improvement is in large part due to the work of NADBank. The bank remains limited, however,
in the projects it can finance. Its charter permits the bank only to get involved in projects
deemed to have a significant positive environmental impact. There have been cases where the
NADBank has taken interest in projects involving international ports of entry that would
benefit an area’s economy and create new jobs. Yet the bank has been unable to deliver
financing to such projects over the objections of its board of directors, for not demonstrating a
sufficient environmental benefit to merit NADBank financing. H.R. 2216 seeks to rectify these
constraints on the NADBank by allowing the bank to engage in projects that are broader in their
scope than what the bank traditionally finances, including projects that promote increased
trade and commerce between the U.S. and Mexico and sustainable economic development.
Many infrastructure projects benefiting efficiencies at our ports of entry are outside the
boundaries of metropolitan planning organizations. Therefore, there are no funding categories
available for planning projects for these communities. Without the ability to fund planning
expenses, the communities cannot fund transportation projects. This legislation would give
those border communities a chance to do advance planning, including environmental impact
studies, project development, traffic studies, schematics and feasibility studies. This is not a
question of whether to fund NADBank. The Bank does not require additional funding. Nor
would the bill increase the federal deficit. Rather, the bill will help ensure NADBank’s existing
capital is more fully utilized for the benefit of the U.S.-Mexico border region, and ultimately
for the benefit of both the United States and Mexico. Please join border communities from San
Diego to Brownsville in supporting H.R. 2216. The NADBank is a critical element of a thriving,
more prosperous border community, but we must expand its ability to engage in other areas
in order to ensure its continued contributions to the U.S.-Mexico border region.
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*Inherency*
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SQUO
Commerce between the US and Mexico has decreased due to congestion and
lack of infrastructure- investing to re-stimulate trade between Mexico and the
U.S. must be a priority
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
Accessed 6-25-13, NM]
Commerce between the United States and Mexico is one of the great—yet
underappreciated—success stories of the global economy. In fact, in 2011 U.S.-Mexico goods
and services trade probably reached the major milestone of one-half trillion dollars with
virtually no recognition. The United States is Mexico’s top trading partner, and Mexico—which
has gained macroeconomic stability and expanded its middle class over the last two decades—is
the United States’ second largest export market and third largest trading partner. Seventy
percent of bilateral commerce crosses the border via trucks, meaning the border region is
literally where “the rubber hits the road” for bilateral relations. This also means that not only
California and Baja California, but also Michigan and Michoacán, all have a major stake in
efficient and secure border management. Unfortunately, the infrastructure and capacity of the
ports of entry to process goods and individuals entering the United States has not kept pace
with the expansion of bilateral trade or the population growth of the border region. Instead,
the need for greater border security following the terrorist attacks of 9/11 led to a thickening
of the border, dividing the twin cities that characterize the region and adding costly, long and
unpredictable wait times for commercial and personal crossers alike. Congestion acts as a drag
on the competitiveness of the region and of the United States and Mexico in their entirety.
Solutions are needed that strengthen both border security and efficiency at the same time.
The development of the 21st Century Border initiative by the Obama and Calderón
administrations has yielded some advances in this direction, but the efforts need to be
redoubled.
Demand for Mexican exports is rapidly increasing
Reuters 6-26
[Reuters, 6-26-13, “Mexico Factory Exports, Consumer Imports Up in May,”
http://www.reuters.com/article/2013/06/26/mexico-economy-idUSL3N0F22RH20130626,
accessed 6-26-13, ABS]
Factory exports rise 3.99 percent vs. April* Non-oil consumer goods imports up 2.25 percent
MEXICO CITY, June 26 (Reuters) - Mexican-made factory exports rose in May, while imports of
consumer goods also gained steam, in a welcome bright spot for Latin America's second-biggest
economy. Manufactured exports such as cars and TVs rose 3.99 percent compared with the
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previous month in seasonally adjusted terms, while consumer goods imports picked up 2.25
percent compared with April, suggesting stronger consumer demand. Mexico's economy
slowed in the first quarter, prompting the government to cut its full-year growth outlook to 3.1
percent from 3.5 percent, down from 3.9 percent last year Mexico posted a $1.103 billion
trade deficit in May when adjusted for seasonal swings, the national statistics agency said on
Wednesday. Mexico's trade balance with the United States oscillates between slight deficits
and surpluses. In non-seasonally adjusted terms, Mexico posted a trade deficit of $470 million.
US-Mexican border infrastructure has reached its functional capacity
North American Center for Transborder Studies, 8
[6-2-08, Arizona State University, “U.S. Mexico Infrastructure a Pending Agenda,”
http://nacts.asu.edu/news/events/2008/06/02/us-mexico-infrastructure-a-pending-agenda,
accessed 6-28-13, NM]
NACTS, in collaboration with the Woodrow Wilson Center’s Mexico Institute, sponsored a oneday conference analyzing the needs for infrastructure investment in Mexico, as well as ways
for generating public and private investment in infrastructure and managing shared
infrastructure resources. The first in a series of meetings on developing long-term agendas for
infrastructure cooperation between the two countries, the conference brought together
information and insights to illuminate innovative mechanisms for binational (trinational and
continental even) investment in the roadways, railways, and multi-model ports of entry to
enable significant development south of the border. The Mexico Institute at the Woodrow
Wilson Center in Washington, D.C. and the North American Center for Transborder Studies at
Arizona State University have joined capacities (policy and research, respectively) to examine
the two regions as a complementary exercise in examining the numerous daunting challenges
facing Mexico and the U.S. The increasing economic interdependence between Mexico,
Canada, and the United States has created important opportunities for cooperation in
promoting investment in infrastructure. The growth in trade has heightened the burden on
existing infrastructure in the border region between Mexico and the United States and
requires urgent attention in order to eliminate hidden barriers to trade and improve the
quality of life in border communities themselves. It has also become increasingly clear that
while most areas in North America have benefited from the deepening of market integration,
some regions have been unable to participate effectively in the North American market. This
is particularly true for some regions in the center and south of Mexico, which are poorly linked
to global markets generally and the North American market specifically.
Previous mandate expansions don’t solve
NADBank 12
[12-10-12, “Information Statement,” pg. 1,
http://www.nadbank.org/BondsAndInvestment/PDF/2012Information%20StatementDec10.pdf,
[Accessed 6/30/13], JB]
SUMMARY General. The North American Development Bank is a binational development
financing institution established by the United States of America (“United States” or “U.S.”) and
the United Mexican States (“UMS” or “Mexico”) to finance environmental infrastructure
projects in the U.S. - Mexico border region. The Bank’s financing activities historically focused
on creating and sustaining drinking water supplies and developing wastewater treatment and
municipal solid waste management facilities. In 2000, its mandate was expanded by the
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Bank’s Board of Directors (the “Board”) to include other sectors that have environmental
and/or health benefits for the residents of the border region, including air quality, clean
energy, energy efficiency, public transportation and water management. As part of this
expanded mandate, the Bank participated in its first loan to a solar energy project in 2011,
followed in the first three quarters of 2012 by two additional solar energy project loans and one
wind energy project loan. Additionally, the Bank is currently working on financing seven
additional projects (three wind energy, two solar energy, one air quality, and one water). The
financing agreements for these projects are in various stages of development (some are in final
negotiations while others are executed and actively disbursing), and all are expected to be
executed by the end of 2012. The technical feasibility and environmental impact of, and public
participation with respect to, all projects to be financed by the Bank are required to be
evaluated and certified by the Border Environment Cooperation Commission (“BECC”).
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Congestion High
Current screening processes result in delays that halt trade on the Mexican
border
Uribe, Senior Field Correspondent for Fronteras Desk, 12
[Monica, 10-8-12, Fronteras Desk, “NAFTA Traffic, Security Creates Long Lines At Border
Bridges," http://www.fronterasdesk.org/news/2012/oct/01/nafta-traffic-security-long-linesborder-bridges/, accessed 6-24-13, JC]
LAREDO, Texas -- Every day, more than a billion dollars worth of goods moves across the
border between Mexico and the United States. Trade between the two countries quintupled in
the last two decades. ¶ The World Trade Bridge in Laredo, Texas is the most important
commercial crossing along the southern border. About one third of all goods traded between
the U.S. and Mexico travel through this port of entry. That equals about 5,000 trucks per day
moving everything from cornflakes, to weed eaters, to Volkswagen Beetles.¶ Gene Garza is in
charge field operations in South Texas for U.S. Customs and Border Protection.¶ "World Trade
Bridge was actually opened in April 2000," Garza said. "Prior to that there was no bridge here,
there was nothing out here, this was just farm land."¶ The bridge is a testament to the postNAFTA boom when most tariffs between the United States and Mexico were eliminated. Since
NAFTA, the number of trucks crossing through Laredo has tripled. But even before this bridge
celebrated its 10th birthday, traffic had already outgrown capacity.¶ Last year border
authorities nearly doubled the number of lanes to 15. Still, wait times can be inconsistent,
which is a problem for manufacturers.¶ Carlo Jose is a Mexican driver who has been crossing
trucks through this border for seven years.¶ "Sometimes it's difficult sometimes you spend five
to six hours to cross the border," Jose said.¶ A five-hour-plus wait time is a worse case scenario.
On good days, drivers may wait just one hour. If they are accredited under a Customs and
Border Protection Trusted Traveler Program their wait could be less than an hour.¶ The main
hold up at the border is security. After the terrorist attacks of Sept. 11, 2001, the inspection
process at the border intensified. Every vehicle that crosses through U.S. borders is subject to a
thorough screening. That could be an X-ray of both the truck and trailer, or a manual inspection
where the entire contents of a trailer is unloaded and checked.¶ "We have to facilitate the
commercial traffic coming in but we also have to make sure that our borders are secure,"
Garza said.¶ Infrastructure at the border also affects wait times. The biggest obstacle to
updating the current ports of entry and building new ones is insufficient federal funding. It’s
especially tough now when the country is recovering from an economic recession and Congress
has failed to approve a new budget.¶ Chris Wilson researches binational trade for the Woodrow
Wilson Center in Washington D.C.¶ “Customs and Border Protection has identified a $6 billion
deficit between where we are now and where we need to be to keep up with all the people and
goods that are flowing across the border everyday,” Wilson said.
Border crossing delays make trucking unreliable, and congestion will more than
double in the next 10 years
TMW Systems, no date
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[TMW Systems, “US-Mexico Border Delays Impact Carriers' Regional Distribution Activities,”
http://appian.tmwsystems.com/industry-news/us-mexico-border-delays-impact-carriersregional-distribution-activities, accessed 6-25-13, JB]
While border crossing rules and regulations between the United States and Mexico have long
been points of contention for lawmakers, new research from Bloomberg shows the average
wait for commercial vehicles is just over an hour and much longer at peak travel times. As
U.S.-Mexico trade experiences a surge in growth, traffic congestion at border crossings is
causing more transit delays. These extended wait times make truck scheduling less
predictable. Longer border wait times can also offset the many operational and efficiency gains
that fleets have realized with recent investments in technologies like route optimization
software.¶ US-Mexico trade growing rapidly¶ Trade between the U.S. and Mexico has
blossomed in recent years. Many companies have moved manufacturing facilities to Mexico
rather than outsourcing to Asia, thanks to the country's low labor costs and relatively close
proximity to American markets, which cuts down on transportation time and expenses.¶
According to Bloomberg, more than 5.1 million trucks passed over the border at the six largest
commercial checkpoints in 2012, a significant increase from the 2.9 million seen in 1995. This
number is only expected to grow, with analysts predicting 7.3 million commercial vehicles will
pass through these major ports of entry by 2020.¶ Border delays cause concern for many
businesses¶ American politicians are focused on securing the border and curbing illegal
immigration, along with slowing drug smuggling from Mexico. As a result, they have cracked
down on border security, which may have had unintended consequences for businesses and the
vehicles that carry goods between the U.S. and Mexico.¶ As they try to cope with increased
security, drivers are finding it takes longer for them to carry cargo across the border. The
Houston Chronicle revealed waits can take more than five hours during peak crossing times.
Bloomberg estimated these delays cost the American economy $7.8 billion in 2011 alone, and
these costs could skyrocket to nearly $15 billion per year by 2020 if trade increases as much as
anticipated.
Borders are congested now—improvements are politically popular and vital to
economic growth and competitiveness
North American Center for Transborder Studies, 13
[January 2013, North American Center for Transborder Studies, Arizona State University,
“Report on the Inaugural Conference,”
http://nacts.asu.edu/sites/default/files/NACTSDOC%20Sept%202012%20Conference%20Report
%20final.pdf, accessed 6-26-13, GSK]
Principal Conference Takeaways¶ 1. We cannot afford to continue to be ignorant about our
important commercial relationship with Mexico. ¶ One of the most profound takeaways is that,
as ASU President Michael Crow insisted upon, we remain “purposefully ignorant” about the
enormously important commercial relationship the United States enjoys with ¶ Mexico. This
ignorance is a critical weakness that prevents us from gaining even greater economic benefits
¶ from this relationship. With unemployment still at unacceptably high levels and the global
economy experiencing ever-changing balances of power, we need to focus on what works. ¶
2 . U.S. global competitiveness depends on a strong Mexico.¶ The intense and highly
collaborative nature of our bilateral commerce, including our highly integrated supply ¶ chains
and joint production, means that what is good for Mexico is in large part good for the United
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States. ¶ 3 . There is remarkable multi-partisan support for increasing bilateral trade. ¶
Representatives from across the political spectrum in both nations insisted on the importance
of binational ¶ trade, demonstrating that the possibility for agreement and moving forward on
key issues related to trade ¶ already exists. ¶ 4. We have congested ports of entry that need
major attention.¶ With waits for both commercial and passenger vehicles often reaching
multiple hours, congested border ¶ crossings are a key impediment to trade and raise the cost
of North American supply chains, which are critical ¶ for the competitiveness of U.S. and
Mexican firms.
Current border infrastructure is insufficient- security bottlenecks and
congestion destroy competitiveness
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
accessed 6-25-13, ML]
Commerce between the United States and Mexico is one of the great—yet underappreciated—
¶ success stories of the global economy. In fact, in 2011 U.S.-Mexico goods and services trade ¶
probably reached the major milestone of one-half trillion dollars with virtually no
recognition.1¶ The United States is Mexico’s top trading partner, and Mexico—which has
gained¶ macroeconomic stability and expanded its middle class over the last two decades—is
the ¶ United States’ second largest export market and third largest trading partner. Seventy
percent ¶ of bilateral commerce crosses the border via trucks, meaning the border region is
literally ¶ where “the rubber hits the road” for bilateral relations. This also means that not only
California ¶ and Baja California, but also Michigan and Michoacán, all have a major stake in
efficient and ¶ secure border management.¶ Unfortunately, the infrastructure and capacity of
the ports of entry to process goods and ¶ individuals entering the United States has not kept
pace with the expansion of bilateral trade or ¶ the population growth of the border region.
Instead, the need for greater border security ¶ following the terrorist attacks of 9/11 led to a
thickening of the border, dividing the twin cities ¶ that characterize the region and adding
costly, long and unpredictable wait times for ¶ commercial and personal crossers alike.
Congestion acts as a drag on the competitiveness of ¶ the region and of the United States and
Mexico in their entirety. Solutions are needed that ¶ strengthen both border security and
efficiency at the same time. The development of the 21st¶ Century Border initiative by the
Obama and Calderón administrations has yielded some ¶ advances in this direction, but the
efforts need to be redoubled.
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Demand High
Inadequate border infrastructure causes massive delays- it wasn’t built for large
trade quantities
Figueroa, Research and Policy Analyst at Nactis, et al 11
[Alejandro, Erik Lee, Associate Director of NACTS, and Rick Van Schoik, Director of NACTS,
December 2011, New Policy Institute and North American Center for Transborder Studies,
“Realizing the Full Value of Crossborder Trade with Mexico,”
http://21stcenturyborder.files.wordpress.com/2011/12/realizing-the-value-of-crossbordertrade-with-mexico2.pdf, pgs. 13-15, accessed 6-25-13, JB]
U.S. - Mexico Border Management: Building World Class Infrastructure for Competitiveness The
U.S. and Mexico will be successful at enhancing a prosperous bilateral relationship to the extent
that both federal governments and stakeholders are capable of coordinating the development
of their border management and infrastructure. The massive and highly complex U.S. and
Mexican economies interact and even create value at our shared border. According to a study
conducted by Accenture for the U.S. Department of Commerce, today’s level of demand
exceeds the physical infrastructure and operating capacity of our ports of entry. Wait times
are projected to increase across the five busiest U.S. - Mexico border crossing s if volumes
continue to grow as expected and if infrastructure and operations remain the same. By 2017, it
is estimated that the average wait time will be nearly 100 minutes — an increase of 60%. ¶ “A
key component of our global competitiveness is creating a border for the 21st¶ Century...We
must develop it and manage it in a holistic fashion and in ways that facilitate¶ the secure,
efficient and rapid flow of goods and people and reduce the costs of doing¶ business between
our two countries.Ӧ Ѧ Joint Statement from President Barack Obama and President Felipe
Calderón, May 2010¶ Sharing a 2,000 - mile long border needs to be recognized as both a
challenge and an opportunity. While land ports of entry between the two nations were first
envisioned to process the legitimate crossing of people, goods and services across the border,
security has taking a dominant role in recent years, hampering the ability of federal agencies to
efficiently manage border traffic. Advances in border infrastructure simply did not happen
during the last decade, which is astounding given the greatly expanded post - NAFTA
binational commercial relationship. Our border’s infrastructure and capacity today reflects the
needs of a bygone era. This became evident as never before when on September 1 4, 2011, the
San Ysidro, California port of entry — the busiest land port of entry in the world — had to shut
down its 24 north - bound lanes due to the collapse of part of its roof, injuring several people and
damaging vehicles trying to cross into the U.S. from Tijuana, Mexico. ¶ According to a report by
the San Diego Association of Governments, inadequate infrastructure capacity just at the
border crossings between San Diego County and the state of Baja California creates traffic
congestion and delays that cost both the U.S. and Mexican economies on average an
estimated $7.2 billion in forgone gross output and more than 62,000 jobs on an annual basis.
These border delays could cause $86 billion in output losses over the next ten years.
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As stress from trade increases, need for infrastructure investment on the
border multiplies
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
accessed 6-25-13, ML]
As a final point to introduce this macro view of U.S.-Mexico trade, it must be emphasized that
¶ this trade relationship requires major infrastructure to function effectively. The largest trade
¶ corridor often referred to as the NASCO corridor, links central and eastern Mexico to Texas, the
¶ American Midwest, Northeast, and Ontario, utilizing the key Laredo-Nuevo Laredo ports of ¶
entry (POEs). Other important trade arteries include the CANAMEX Corridor, which connects ¶
western Mexico to the intermountain United States and Canadian province of Alberta, as well ¶
as the shorter but high-volume I-5 corridor connecting California to Baja California. As the ¶
economies of both the U.S. and Mexico grow, it is likely that this network of freight ¶
transportation infrastructure—and the land ports of entry that serve as nodes in this
network—¶ will experience added stress (see Figure 2 on the next page).
Current border investment insufficient to meet rising trade
USA Today, 13
[5-2-13, “U.S., Mexico to Talk Trade Barriers During Obama Visit,”
http://www.usatoday.com/story/news/world/2013/05/01/mexico-obamaeconomy/2126239/?utm_medium=referral&utm_source=t.co, accessed 7-9-13, GSK]
MEXICO CITY — Delivery trucks from Mexico line up early in the morning at the border
crossing in Tijuana, where 20 million flat-screen TVs were manufactured last year.¶ Traffic
studies found cargo trucks, even empty ones, wait 90 minutes on average to cross into the USA
as U.S. Customs agents check vehicles for contraband, and then spend at least an hour waiting
to get back into Tijuana.¶ "Trucks that are a critical element of a competitive supply chain may
spend three to four hours waiting in line during a day," says Kenn Morris, president of the
Crossborder Group, a San Diego consultancy, which commissioned the traffic studies. "These
kinds of delays are both too typical and really strangle border economies … and put more
barriers between what should be two strong economic partners."¶ Improving on the way goods
flow from Mexico to the USA is what President Enrique Peña Nieto intends to emphasize
Thursday when President Obama visits Mexico City.¶ The U.S. Justice Department says Mexico's
drug lords are establishing greater control over criminal activities in the USA, but Peña Nieto,
elected in December, has pushed such security concerns to the side in favor of economic issues.¶
U.S.-Mexican trade has risen as Mexico becomes an increasingly attractive locale for U.S.
manufacturers that are seeing the cost to produce goods in China go up. Trade between
Mexico and the USA topped $500 billion in 2012.¶ Analysts here say Obama should take up
Mexico on its offer since closer economic ties benefit both the U.S. and Mexico, especially now
that Mexico is seeking greater access to U.S. suppliers to keep its assembly lines expanding.¶
Mexico's economy grew by less than 2% annually during the six-year administration of former
president Felipe Calderón that ended in 2012. But it is forecast to grow by 3.5% in 2013,
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according to Mexico's government.¶ Shannon O'Neil, analyst at the Council on Foreign Relations
and author of the book Two Nations Indivisible, says the challenge for the two countries is "how
do you make it so that things cross the border more easily?"¶ Border crossing takes so long in
large part because of inadequate infrastructure and inadequate staffing for the amount of
traffic, she says. It also results from significant bureaucracy – duplicate customs forms and
other procedures.¶ The capacity of the border entry points to clear trade traffic into the USA
has not kept pace with the increase in trade in the border region. In addition, the 9/11 attacks
in 2001 prompted added security measures, which slow things down and raise expenses for
businesses.¶ Among the ideas to improve commercial traffic are better use of shipper
screening programs that allow low-risk shipments and carefully investigated shippers faster
access over the border, say analysts, and should be on the agenda of the two presidents.
Border wait times increasing now—reform key to reshoring
Althaus, Houston Chronicle's bureau chief in Mexico, 12
[Dudley, 8-2-12, Houston Chronicle, “Border Trade Strong, but Delays are a Challenge,”
http://www.chron.com/news/houston-texas/article/Border-trade-strong-but-delays-are-achallenge-3758615.php, accessed 7-9-13, GSK]
"The trade relationship between the United States and Mexico is not just coming back - it's
coming back strong," Anthony Wayne, the U.S. ambassador to Mexico, told several hundred
trade professionals gathered in Mexico City. "But the increase in bilateral trade also brings with
it a new set of challenges our two countries must be prepared to address."¶ Hosted by the San
Antonio-based Border Trade Alliance and Mexico Now, a Mexican publication focused on trade
and manufacturing, the meeting aimed to evaluate and perhaps influence the risks and
opportunities posed by the new six-year Mexican administration that begins with Enrique Peña
Nieto's inauguration on Dec. 1.¶ Gangland violence, which has killed some 60,000 people in six
years, at various times has besieged and continues threatening Ciudad Juarez, Nuevo Laredo,
Tijuana, Monterrey, and other industrial and border ports. But many companies simply have
enhanced security measures and factored the costs in to their business plans.¶ Five hours or
more¶ A more pressing issue, many speakers argued, is improving border crossing times for
consumers, cargo trucks and rail cars along the entire border. Depending on the hour and the
location, crossing cargo from Mexico into Texas and other U.S. border states can take five hours
or more.¶ As in any business, time is money.¶ "Logistics are many more times important than
manufacturing," said Sam Vale, a McAllen businessman and the trade alliance's chairman,
whose family owns one of two privately held bridges spanning the Rio Grande. "That's what this
is all about."¶ Seen as a priority¶ Though recognizing those concerns, U.S. officials say that
securing the border against the threat of terrorists, violent drug gangs and undocumented
migrants has to be a priority.¶ "While we all want people and goods to transit the border
swiftly, we know that efficiency cannot come at the expense of security," Ambassador Wayne
told the gathering.¶ Sharing both a border and time zones with the United States, Mexico
holds a distinct advantage for U.S. companies over Chinese and other Asian operations in the
speed and cost of shipping as well as communications between factories and home offices.¶
"Being close to markets is critical for all manufacturers, in that sense Mexico has become
much more competitive than it used to be," said Luis Sada, a vice president of business
development for FINSA, which operates industrial parks in cities bordering South Texas. "China
has become much a less competitive opportunity or option for manufacturers."¶ But Mexico's
logistics advantage can be nearly erased by Asia's cheaper labor and other costs. And the
competition will stiffen as well with the pending completion of the widening of the Panama
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Canal's locks to serve larger container ships.¶ That will greatly lower shipping costs from across
the Pacific to the U.S. Gulf and East Coast ports, warned Jaime Roberts, president of the
Mexican Association of Industrial Parks.
Border investment insufficient now
TECMA, consulting group for US companies manufacturing in Mexico, 13
[2-18-13, “U.S.- Mexico Logistics: Speeding the Wheels of Commerce Means Present and Future
Trade Prosperity,” http://www.tecma.com/us-mexico-logistics-speeding-the-wheels-ofcommerce/, accessed 7-9-13, GSK]
It is common knowledge that the economic relationship between Mexico and the United States
is significant in terms of its scope and the diverse nature of the activities that it entails. It also
represents a significant dollar value on an annual basis. Most of the trade that transpires
between the two nations does so on eighteen wheels. After Canada, Mexico is the second
largest export market for U.S. goods according 2012 numbers published by the Department of
Commerce’s Census Bureau, Foreign Trade Division. On a granular level, it is interesting to note
that in 2010, the U.S. and Mexico conducted daily bi-lateral trade in goods that valued
approximately US $1 billion. In that same year, twenty-six states in the Union shipped exports
totaling more than one billion dollars to Mexico, while NAFTA-related trade has added 1.7
million jobs to the U.S. economy since its inception. All of the above clearly evidences the
present and future value of maintaining and expediting the smooth terrestrial flow of
commerce and trade between the U.S. and Mexico. Although U.S. – Mexico logistics and cross
border trade is substantial and highly lucrative for both countries, there are certain limiting
factors that have the potential to prevent the trade relationship from realizing its substantial
long term promise.¶ A major fly in the U.S.-Mexico trade ointment today has to do with the
issue of the time it takes commercial carriers to cross their product filled conveyances from
Mexico into the U.S. and vice versa. For those that are not involved in the business of cross
border trade this may be surprising, but congestion at U.S.-Mexico ports of entry results in long
wait times. The cost of these wait times and delays ultimately get built into the price of
products sold in the marketplace. In essence, the added cost of products due to delays in
shipping at the U.S. – Mexico border might be considered to be a “congestion tax,” of sorts
that makes goods more expensive to consumers, and items shipped from the region to other
parts of the globe less competitive.
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Infrastructure Inefficient
Border infrastructure investment is lagging behind export growth
O’Neil, Senior Fellow for Latin American Studies for the Council on Foreign
Relations, 13
[Shannon K., 2013, Council on Foreign Relations, “Refocusing U.S.-Mexico Security
Cooperation,” http://www.foreign.senate.gov/imo/media/doc/ONeil_Testimony.pdf, accessed
6-26-13, GSK]
Initiatives to modernize the border and build resilient communities (pillars three and four of
the Merida Initiative) are further behind. Though some innovative border management
programs, such as the Customs Trade Partnership Against Terrorism—which helps trusted
businesses avoid extensive border checks—have improved efficiency, the overall tenor of U.S.
policy has been to increase barriers, slowing flows of legal commerce. Financially, investment
in border crossings and infrastructure has not matched the exponential increase in trade
crossing the border each year. Investment has lagged not only for new construction, but also
for basic maintenance on existing infrastructure, leading to overwhelmed and at times
downright dangerous facilities (the San Ysidro border crossing roof collapsed in 2011, injuring
seventeen people). Stressed infrastructure has also led to traffic jams lasting up to eight hours,
and has cost billions of dollars in trade losses, without drastically discouraging or disrupting
illegal flows.
Poor infrastructure causes delays on the border- it’s not adequate to meet
current or future demands
Figueroa, Research and Policy Analyst at Nactis et al 11
[Alejandro, Erik Lee, Associate Director of NACTS, and Rick Van Schoik, Director of NACTS,
December 2011, New Policy Institute and North American Center for Transborder Studies,
“Realizing the Full Value of Crossborder Trade with Mexico,”
http://21stcenturyborder.files.wordpress.com/2011/12/realizing-the-value-of-crossbordertrade-with-mexico2.pdf, pgs. 13-15, accessed 6-25-13, LV]
The U.S. and Mexico will be successful at enhancing a prosperous bilateral relationship to the ¶
extent that both federal governments and stakeholders are capable of coordinating the ¶
development of their border management and infrastructure.¶ The massive and highly
complex U.S. and Mexican economies interact and even create value at ¶ our shared border.
According to a study conducted by Accenture for the U.S. Department of ¶ Commerce, today’s
level of demand exceeds the physical infrastructure and operating capacity¶ of our ports of
entry. Wait times are projected to increase across the five busiest U.S.-Mexico ¶ border
crossings if volumes continue to grow as expected and if infrastructure and operations ¶
remain the same. By 2017, it is estimated that the average wait time will be nearly 100
minutes ¶ —an increase of 60%. Sharing a 2,000-mile long border needs to be recognized as
both a challenge and an ¶ opportunity. While land ports of entry between the two nations were
first envisioned to ¶ process the legitimate crossing of people, goods and services across the
border, security has ¶ taking a dominant role in recent years, hampering the ability of federal
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agencies to efficiently ¶ manage border traffic. Advances in border infrastructure simply did
not happen during the last ¶ decade, which is astounding given the greatly expanded postNAFTA binational commercial ¶ relationship. Our border’s infrastructure and capacity today
reflects the needs of a bygone era. ¶ This became evident as never before when on September
14, 2011, the San Ysidro, California¶ port of entry —the busiest land port of entry in the
world—had to shut down its 24 northbound lanes due to the collapse of part of its roof,
injuring several people and damaging ¶ vehicles trying to cross into the U.S. from Tijuana,
Mexico. According to a report by the San Diego Association of Governments, inadequate
infrastructure ¶ capacity just at the border crossings between San Diego County and the state
of Baja California ¶ creates traffic congestion and delays that cost both the U.S. and Mexican
economies on ¶ average an estimated $7.2 billion in forgone gross output and more than
62,000 jobs on an ¶ annual basis. These border delays could cause $86 billion in output losses
over the next ten ¶ years. These delays are significant for a number of reasons, not the least of
which is that American ¶ firms are constantly attempting to reduce their inventory costs in an
attempt to remain ¶ competitive. While importing from China to the U.S. may require a company
to hold more than ¶ 100 days of inventory, if efficiently managed, our proximity to Mexico can
provide American ¶ firms with a constant and predictable flow of goods that may reduce
inventory costs and ¶ provide firms the ability to respond rapidly and effectively to sudden
market changes. With this ¶ fundamental fact in mind, in May of 2010 the U.S. and Mexico
signed the 21st Century Border ¶ Management Joint Declaration. Recognizing the importance of
fostering the commercial ¶ relationship, both countries have agreed to coordinate efforts to
enhance the economic ¶ competitiveness by expediting lawful trade. The idea is that
development of modern and secure border infrastructure will give an added boost to our
region’s competitiveness in the world and ¶ at the same time increase our access to a wider,
more affordable and ever improving quality set ¶ of goods.
Current border infrastructure is insufficient—delays prevent increased growth
Camuñez, Assistant Secretary for ITA’s Market Access and Compliance, 12
[Michael, 9-24-12, International Trade Administration, “Realizing the Economic Strength of Our
21st Century Border: Trade, Education, and Jobs,”
http://trade.gov/press/speeches/2012/camunez-092412.asp, accessed 6-26-13, GSK]
Unfortunately, current infrastructure capacity is generally ill suited to dealing with the
economic reality that we face. It has failed to keep up with the dramatic increase in our trade
as well as related security requirements. ¶ Many ports of entry (POEs) were built decades ago
and have not been updated or maintained to keep up with the dramatic growth in trade that
has resulted from NAFTA’s success. For example, the Mariposa POE in Nogales, Arizona was built
to handle 300 trucks daily—today it handles 1,200 trucks each day. ¶ Likewise, border delays
hinder manufacturers’ dependence on reliable logistics for freight distribution. With today’s
just-in-time supply chains, unpredictable wait times can act as a barrier to trade and a
deterrent to cross-border investment. Border delays impact productivity, industrial
competitiveness, and result in lost business income and reduction in gross output in both
countries.
Obama pledged to double exports to Mexico, but there is no infrastructure that
can support rapid trade expansion
NAFTA Works, 10
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[11-10-10, NAFTA Works, “Improving Borders to Make the Most of Opening Markets,”
http://www.naftamexico.net/wp-content/uploads/2010/11/nov10.pdf, accessed 6-25-13, LV]
Another key element relies on expanding and improving border ¶ infrastructure to
accommodate the growing bilateral trade in ¶ coming years. For example, President Obama’s
National Export ¶ Initiative alone pledges to double US exports in the next five ¶ years;
therefore a significant expansion of current infrastructure ¶ along the US-Mexico border will
be much needed in order to more ¶ efficiently conduct an increase in the flows of products.
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AT- SSP Solves
SPP was the last attempt to stimulate economic engagement with Mexico –
discontinuity has left a void for cooperation
Brodie, Canada Research Chair in Political Economy and Social Governance at
the University of Alberta, 10
[Janine, 2-17-10, “Mobility Regimes: Reflections on the Short Life and Times of the Security and
Prosperity Partnership of North America,”
http://events.hss.kennesaw.edu/cancon2010/docs/papers_brodie.pdf, accessed 6-25-13, ABS]
The SPP project had been crafted as a strategic bargain, which fused Mexican and Canadian
anxieties about diminished access to the American market onto the United States’
preoccupation with national security in t he wake of the collapse of the twin towers. But, by
2009, it was apparent that this strategic maneuver had backfired, but, as discussed later in this
chapter, only partially, and perhaps only for Canadian business leaders. The SPP may be officially
dead but it has left an indelible imprint on the form and scale of North American governance. In
what follows, I will focus on the Canadian experience to advance three propositions: first, the
SPP represented an experimental mobility regime, designed to perform and regularize North
America as a distinct economic and security space within an increasingly fluid and multicentric global economy; second, the spatial imaginaries and processes of regularization
advanced by the SPP has resulted in a fragmented and partial post - national governing order;
and, third, strategic actors are engaged in a variety of reflexive practices to better position
themselves in relation to the new geographies of regulation that the SPP has inscribed on
North American space.
SSP set up a framework but lacked concrete action
Craik, Director of the School of Environment at University of Waterloo, 11
[Neil, 4-20-11, “Bundled Transgovernmentalism: North American Climate Governance and the
Lessons Learned From the Security and Prosperity Partnership,”
http://www.sciencedirect.com/science/journal/18770428/14/supp/C, accessed 6-25-13, ABS]
The approach to cooperation is eclectic with cooperative activities including the harmonization
of regulatory standards; research and development cooperation, infrastructure cooperation,
carbon pricing measures, trade-related measures, and financing. For example, harmonization
efforts have focused on matters such as energy efficiency standards and labeling for appliances
and fuel economy standards for vehicles. In 2007, the three North American governments
signed a trilateral energy science and technology agreement, which is, in effect, a framework
agreement that sets out the overall objectives and areas for research cooperation, but
anticipates that specific initiatives, whether tri-lateral or bi-lateral, will require a further
implementing agreement (see Agreement for Cooperation in Energy Science and Technology
[ACESA], 2007, arts. 2&3). Under this framework, the US and Canada announced their intention
to create a U.S. - Canada CCS Collaboration. The bilateral “Clean Energy Dialogue” between
Canada and the US also supports research and development cooperation and specifically
identifies cooperation in carb on capture and storage, electricity grid improvements, and clean
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energy. The U.S. and Mexico have announced the formation of a bilateral framework on clean
energy and climate change, which will build on existing programs, such as the Border 2012
program, and provide a framework for capacity building and clean energy development (see The
White House, Office of the Press Secretary, 2009, April). The emergence of sub-regional
emission trading programs and the introduction of federal legislation in the U.S. Congress
imposing national emission reduction targets and associated cap-and-trade programs
(potentially pre-empting the sub-regional programs) has brought questions of a continental
carbon market into the fore ground, particularly at the national level. All three North American
states have indicated a desire to cooperate on emissions trading (North American Leaders’
Declaration on Climate Change and Clean Energy, 2009).
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AT- CIR Solves
Immigration reform doesn’t solve—investment and specificity
Fernholz, no quals available, 6-6
[Tim, 6-6-13, Yahoo! Finance, “Why Fixing the World’s Busiest Border Crossing Could Save the
U.S. Billions,” http://finance.yahoo.com/news/why-fixing-world-busiest-border193054447.html, accessed 6-26-13, GSK]
Instead, the bill’s shortcomings have less to do with securing the border and more to do with
boosting the Mexican economy, which would reduce the number of future, unauthorized
immigrants. Here’s why: ¶ Border crossings are getting choked¶ ¶ The North American Free Trade
Agreement, which went into effect in 1994, led to a massive increase in trade between the US
and Mexico as businesses in the two countries integrated their supply chains. But the US
government estimates a $6 billion deficit in infrastructure investment at the border, meaning
goods and people trying to come over the border often have to wait for hours at the most
trafficked crossings, which costs money on both sides. Part of the problem was the reaction to
9/11, which led to a focus on security over access. ¶ “Only in the last few years has the space
opened up to where we can say, we’re not just in a post 9-11 world, we’re also in a postrecession world,” Christopher Wilson, a Mexico expert at the Wilson Center, says. “It’s clear now
that economic security is part our national security.Ӧ Long waits = less work, and more
migrants¶ Economic performance is a key driver of illegal border crossings. When the US
economy is stronger than Mexico’s, unauthorized immigration goes up as more immigrants
seek work across the border. A logical way to keep Mexicans from illegally crossing the border
for American jobs, then, would be to boost job creation in Mexico. And a good way to do that is
to speed up cross-border trade between Mexico and the US. By contrast, deadlock at border
crossings means fewer jobs in both Mexico and the US.¶ For example, a three hour wait is a drag
on productivity for people crossing the border for business. That’s especially true for short-haul
truckers who make multiple trips daily across the border, since US and Mexican truckers can’t
operate legally in the opposite country. Delays mean the difference between three trips a day
and four or five. The inefficiency adds up quickly, especially as more factories stock less
inventory in favor of just-in-time deliveries.¶ Estimates of the cost of all that waiting (PDF, p. 76)
vary, but it’s in the range of billions of dollars and thousands of jobs each year. (A modest
estimate is $12 billion for both countries combined.)¶ What the bill does, and where it falls
short¶ The current bill attempts to address the waiting issue, mostly by hiring 3,500 additional
customs officers. But it doesn’t do enough to address much-needed infrastructure updates to
add or extend additional lanes of road, gates and pedestrian walkways. In particular, San
Ysidro—the crossing between San Diego, California and Tijuana, Mexico and the world’s
busiest border crossing—could use that investment. 100,000 people switch sides at San Ysidro
each day. The US and Mexico agreed to an expansion there, and while Mexico has added new
infrastructure, it remains unused because the US lags behind, waiting for government
funding.¶ “A $500 million investment is inhibiting a $6 billion gain in the region,” Mario Lopez,
the City of San Diego’s director of binational affairs, says. There are similar cases in Texas and
Arizona.
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Border investment is key to economic growth—immigration reform only makes
the issue worse
Rathbone, editor of Latin American issues for The Financial Times, 6-27
[John Paul, 6-27-13, The Financial Times, “Border: Bottleneck at Frontier Chokes Opportunities
to Boost Trade,” http://www.ft.com/cms/s/0/dcd40966-c79c-11e2-9c5200144feab7de.html#axzz2XT6mPCEU, accessed 6-27-13, GSK]
Goods sat. Produce rotted. Flowers wilted. A near-fiesta of street vendors – selling chewing
gum, soft drinks and statuettes of the Virgin of Guadalupe – did little to relieve the tedium of
waiting in the sun among petrol fumes for up to four hours to cross US immigration. Even
members of trusted traveller and shipper programmes such as SENTRI – which allows prevetted individuals and companies expedited passage – were waiting hours to cross a border
suffering from infrastructure that, on average, is 40 years old.¶ Eduardo Salcedo, general
manager at DJO Global, a California-based prosthetics maker with $1bn of sales a year that has
its manufacturing operations in Mexico, is just one Tijuana businessman who rues the difficulty
that crossing times have on his business and broader investment.¶ Like many peers, he
complains that the state of the US border – a lack of checkpoints, for one – is a trade
bottleneck that represents a growing economic cost to both countries.¶ “The length of the
crossing can make people think twice about investing here. Even our own executives in Vista
California sometimes have to wait hours when they visit,” he says.¶ Analysts agree. One
California study in 2006 estimated that cargo border waits between Tijuana and San Diego cost
the US and Mexico $6bn in lost output a year. A broader 2008 study by the US Department of
Commerce estimated that every minute of delay at the border costs the US $100m and more
than 500 jobs .¶ DJO Global’s example illustrates how booming bilateral trade can work the
other way. The relocation of its manufacturing activities to Mexico several years ago helped
save the company from bankruptcy – and thus preserved 2,000 high-end jobs in the US. But
more efficient border crossing could create more jobs still.¶ “Tijuana is a cradle of world
manufacturing,” says Mr. Salcedo. “Every big company has a presence here, one way or
another.Ӧ The reason why even small border glitches can have large effects is because of the
depth of US-Mexican economic integration. Close-knit manufacturing supply chains, and the
widespread use of “just in time” inventory management, means that goods often cross the
border several times while being produced. This frequent crisscrossing multiplies the effects of
gains and losses in border efficiency.¶ That being so, why has not more money been ploughed
into better infrastructure? The US Customs and Border Protection estimates $6bn is required to
“fully modernise” land ports of entry along the border. One reason, as the Wilson Centre’s
Mexico Institute in Washington points out, is because it requires co-ordination between local
and federal governments within and between each country. Without “strong and coordinated
planning, infrastructure investments on one side of the border or in one region can simply feed
traffic into a bottleneck in another area,” said the 172-page report.¶ Another reason is a
continued US focus on border security over cross-border trade. This can be seen in the gleaming
new fences and infrared cameras along the linea, as the border is known, and in the quintupling
of US Border Patrol staff since the 1990s.¶ Yet net migration from Mexico to the US has fallen to
zero, according to a Pew Research Centre Study last year, and illegal immigrant seizures have
tumbled. Last year, San Diego apprehensions were 28,461 versus a peak of 565,581 in 1992.
“While it is difficult to predict the future flow of migrants, overall we seem to be at or past a
point of diminishing returns in terms of border patrol staffing,” the report adds.¶ Nonetheless, a
new US bill that would reform immigration laws has earmarked $6.5bn for enhanced border
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security. In an era of restricted federal budgets and high US debt, however, there is not a
similar provision for enhanced border crossings.¶ To be sure, poor infrastructure is not a huge
problem for all of Mexico’s maquiladoras.¶ “We can still import parts that we need in two
hours,” says Raul Perez, general manager of Zodiac Aerospace, which makes cabin furniture for
planes. High energy costs and long shipping times also look set to continue the “re-shoring” of
manufacturing to the Americas from China.¶ “It takes 23 days to ship goods from China versus
three hours from Tijuana,” said Martin Gutierrez, spokesperson for TPV Technology, a leading
manufacturers of flat screen televisions.¶ “That is why we are expanding capacity here.” Yet if
the US and Mexico want yet faster and more efficient economic growth, investing in border
infrastructure seems a no-brainer. “The best way for the US to boost growth is to boost
trade,” says Federico Serrano, president of Tijuana’s maquiladora association. As things stood,
he added, the US was “investing in the wrong place”.
Immigration reform makes the issue worse—increased security directly trades
off with funding for improvements
Crawford, Bloomberg reporter, 13
[Amanda J., 5-14-13, Bloomberg, “Border Delays Cost U.S. $7.8 Billion as Fence Is Focus,”
http://www.bloomberg.com/news/2013-05-15/border-delays-cost-u-s-7-8-billion-as-fence-isfocus.html, accessed 6-28-13, GSK]
Delays at U.S.-Mexico border crossings cost the U.S. economy $7.8 billion in 2011, as
improvements have lagged behind traffic growth and the political focus has been on securing
the rest of the border.¶ The toll could balloon to $14.7 billion annually if the value of U.S.-Mexico
truck trade reaches $463 billion by 2020 as predicted, according to data compiled by
Bloomberg.¶ As the U.S. Senate debates an overhaul of the nation’s immigration system, the
focus on fencing and securing remote stretches of the southern border has overshadowed
long-needed improvements in technology, infrastructure and staffing at the land ports, said
Matthew Hummer, a senior transportation analyst for Bloomberg Government.¶ “I think the
most important issue here is stabilizing the two economies, and the ports of entry do that: They
facilitate trade and create job opportunities,” said Hummer, the author of a Bloomberg
Government report on the border. “If Mexicans have jobs in Mexico they are less likely to come
to the U.S.Ӧ Net Mexican migration dropped to zero from 2005 to 2010, amid strengthening
economic conditions in Mexico, heightened border enforcement and other factors, according to
a Pew Research Center study last year. The Mexican economy has grown at about twice the
pace of the U.S. since the end of 2009.¶ Remote Areas¶ U.S. investment has remained focused
on controlling the rest of the border between the crossings, including remote areas such as the
Arizona desert. In the past decade, the number of Border Patrol agents more than doubled
while the number of Customs and Border Protection officers, who staff the ports of entry, has
remained at about the same level, according to a report by the Washington-based Woodrow
Wilson Center’s Mexico Institute and partner institutions.¶ Congressional funding for the areas
between the ports has eclipsed that for the authorized entry points since 2007, even though
the crossings have faced enhanced security requirements, increasing trade and evidence that
drugs and dangerous individuals are more likely to cross there, according to the Mexico
Institute report.¶ That focus continues in the current immigration debate in the Senate. The plan
crafted by the so-called Gang of Eight bipartisan senators, which is being considered by the
Judiciary Committee today, aims to secure Republican support by tying immigrants’ path to
citizenship to the ability of the U.S. Border Patrol to stop 90 percent of illegal traffic across the
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southern border between the official ports of entry. There is no similar metric for the efficiency
or security of the land ports.¶ ‘Less Attention’¶ “The way the border is currently run is costing
the U.S. a lot in terms of jobs and the economy,” said Christopher Wilson, an associate with the
Mexico Institute and co-author of his group’s report on border trade. “In the context of the
current immigration debate, we are very focused on what is going on between the ports of
entry while this major issue, which is about security but also about jobs and the economy, is
getting a lot less attention.Ӧ Focusing politically on the rest of the border is easier than facing
the challenges of running effective ports of entry, said Steven Camarota, director of research for
the Center for Immigration Studies, a Washington-based group critical of increased immigration.
While the land ports probably do need more investment in infrastructure, there also should be
much more stringent security, including entry and exit checks to catch those who overstay legal
visits, he said.¶ “It seems to some extent we put too much emphasis on the ease of movement
across the border,” Camarota said. “The border is not simply an obstacle to be overcome by
businesses and travelers. It is the part where our country begins, and it is vitally important for
security and immigration control.”¶ Modernizing Ports¶ Modernizing land ports of entry, which
average more than 40 years old and were built before the increased security requirements
implemented after the terrorist attacks of Sept. 11, 2001, would cost $6 billion according to a
2011 Customs and Border Protection report. About half of that cost would be for the southern
border, according to the Bloomberg Government analysis.¶ The Senate bill includes funding for
3,500 additional Customs officers and earmarks $6.5 billion for border security. With the bill’s
metrics tied to security elsewhere on the border, though, that’s where most of the money will
probably go, Hummer said.¶ “Achieving the security metrics in the Gang of Eight bill will likely
divert funds away from land ports of entry,” Hummer said.
Immigration reform is insufficient—security absorbs all the funding
Transportation Topics, 13
[5-15-13, Transportation Topics, “U.S.-Mexico Border Delays Costing Economy Billions,”
http://www.ttnews.com/articles/basetemplate.aspx?storyid=32008, accessed, 6-28-13, GSK]
Delays at U.S.-Mexico border crossings cost the U.S. economy $7.8 billion in 2011 as
improvements lagged behind traffic growth, Bloomberg News reported Wednesday.¶ And the
cost could rise to almost $15 billion annually if the value of U.S.-Mexico truck trade reaches
$463 billion by 2020 as predicted, according to data compiled by Bloomberg.¶ The Senate’s
debate of an overhaul of the nation’s immigration system is focused on securing remote
stretches of the border instead of long-needed improvements in technology, infrastructure
and staffing at border crossings, according to Matthew Hummer, a senior transportation
analyst at Bloomberg Government.
CIR doesn’t solve—Cornyn amendment failure means funding is insufficient
Taylor, Editor at the Rio Grande Guardian, 6-20
[Steve, 6-20-13, Rio Grande Guardian, “Texas Border Coalition Saddened to See Cornyn's Border
Security Amendment Die,”
http://www.riograndeguardian.com/rggnews_story.asp?story_no=18, accessed 6-30-13, GSK]
McALLEN, June 20 - Members of the Texas Border Coalition say they are saddened and
disappointed to learn U.S. Sen. John Cornyn’s border security amendment to the Senate
immigration reform bill has been tabled.¶ “Hearing the announcement, you feel like the rug is
being pulled from under you. For us border communities, it is a big blow,” said San Juan Mayor
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San Juanita Sanchez.¶ Sanchez and other border leaders learned of the amendment’s demise
during the TBC’s quarterly meeting at the McAllen Convention Center on Thursday. Ana Maria
Garcia, Cornyn’s district director in the Rio Grande Valley, interrupted proceedings to break the
news. She had learned that the amendment had been tabled via a text from Cornyn’s
Washington, D.C. office.¶ The Senate vote to table the amendment was 54 to 43.¶ Garcia said
that with the amendment being tabled, there would be less funding for local law enforcement,
less Customs and Border Protection officers, less investment in infrastructure at land ports of
entry, and fewer public-private partnerships to reduce port of entry wait times.¶ “Everything,
for ports of entry, was just washed out,” Garcia said at the TBC meeting. “We were not given
the ability for an up or down vote. It was tabled. As far as what is next, we are not certain. I do
not believe we saw this coming.”¶ Under Cornyn’s amendment to S.744, the Department of
Homeland Security and others would have to certify that certain “triggers” are met before
undocumented immigrants can start to become legal residents. There would have to be 100
percent situational awareness, with monitoring capability at every segment of the southern
border. That would have been difficult because in the Big Bend area, for example, Border
Patrol’s radios do not work. There would also have to be operational control, which Cornyn
defined as at least a 90 percent apprehension rate along the southern border. There would also
have to be a biometric exit system at all air and sea ports, and a nationwide E-Verify system.¶
What the TBC particularly liked about the Cornyn amendment was a provision that $1 billion
per year be spent over six years for land port of entry infrastructure improvements and
personnel. TBC members also liked the fact that CBP officers would have been increased by
10,000 over five years. The group also supported Cornyn’s efforts to get DHS to enter into
public-private partnerships to reduce port of entry wait times.
Immigration reform doesn’t solve—insufficient investment and planning
Rosenburg, political advisor in past two presidential elections, 6-27-13
[Simon, NDN, “Celebrating the Passage of the Senate Immigration Reform Bill,”
http://ndn.org/blog/2013/06/celebrating-passage-senate-comprehensive-immigration-reformbill, accessed 6-30-13, GSK]
The infrastructure which facilitates this exploding trade relationship, however, was designed
for an era of trade much less robust than what we are seeing today. Wait times on the Mexican
side of far too many ports are unacceptable today, let alone what they may be in 5 to 10 years
as Mexico continues to grow and modernize.¶ The US needs a more aggressive plan to ensure
that the economic opportunity these trade flows offers our businesses and workers can be
realized. Doing so is going to require investment. Investment in ports will provide significant
return by creating millions of jobs on both sides of the US-Mexico border, something that new
border strategy of the Senate bill threatens rather than supports. ¶ There are at least three
things Congress can do with the $40-$50 billion of new spending on the border that would be
far more beneficial to the US than the current plan. First, Congress can increase the number of
customs agents from the proposed 3,500 to an additional 10,000. These agents will help
facilitate the increased levels of trade and tourism while providing more security at all our ports.
¶ Second, Congress can provide $10 billion over 10 years to the port of entry infrastructure
grant program in the current Senate bill. ¶ Third, Congress can adopt Senator John Cornyn’s
thoughtful proposal to open up ports to public-private partnerships, deploying private capital
to help grow and maintain this vital national infrastructure.
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The aff is a prerequisite to effective immigration reform—border infrastructure
can’t handle more immigrants in the status quo
Adami, staff writer for the Morning Call, 5-2
[Chelcey, 5-2-13, The Morning Call, “Border Infrastructure Tied to Immigration Reform,”
http://www.mcall.com/topic/ivp-border-infrastructure-tied-to-immigration-reform-20130502,
0,5128896.story, accessed 6-30-13, GSK]
CALEXICO — Two U.S. representatives visited with some of those most directly affected by
long border wait times earlier this week and said when they consider port of entry expansion
funding, they must also consider immigration reform. ¶ U.S. Rep. Loretta Sanchez and U.S. Rep.
Juan Vargas, along with U.S. Customs and Border Protection representatives, met with the
Border Ad Hoc Committee in Calexico on Tuesday.¶ Committee Chairman Carlton Hargrave
asked about the status of bills introduced that would allow public-private partnerships to fund
port of entry infrastructure since traditional funding sources have dried up for the time being.
¶ Sanchez said that, for a large extent, “much of those bills are going nowhere” due to the
ongoing discussion of immigration reform. ¶ Depending how the estimated millions of people
illegally in the country will be handled in immigration reform will correspondingly have a large
impact on the already insufficient border infrastructure, she explained. ¶ The country can’t
even consider allowing that large of a volume of people to start moving through the border
legally if they “don’t make the gate larger to pass through,” she said.
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*Solvency*
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Generic
Mexico’s clawing back market share in export from China but only by a narrow
margin- more investment is needed
Kamil, Senior Economist at the IMF’S Western Hemisphere Department, 13
[Herman, March 2013, “The Comeback,” Finance & Development, Volume 50, Number 1,
http://www.imf.org/external/pubs/ft/fandd/2013/03/kamil.htm, accessed 6-25-13, JB]
China was able to crowd out Mexican exports in the U.S. market because Mexico lost its
advantage in several labor-intensive manufacturing sectors in which it specialized—including
apparel, office machinery, furniture, and photographic and optical equipment. Looking for
cheaper labor, many of these manufacturers, including those in the famed maquiladora
industries (which assemble mostly imported parts into finished products for export to the
United States), relocated their operations from Mexico to China.-¶ But almost as quickly as it
stumbled, Mexico regained its footing and began to claw its way back. Over the past seven
years, Mexican manufacturing exports rose from about 11 percent of the U.S. import market
to an all-time high of 14.4 percent—at first elbowing out such competitors as Japan and
Canada, but in recent years gaining market share at the expense of China. Between 2005 and
2010, both Mexico and China gained market share in the United States. Since 2010, however,
Mexico’s gains in the U.S. import market coincided with a decline in China’s market
participation.-¶ The return of Mexico¶ Mexico’s rebound has been driven primarily by exports of
electronics, telecommunications, and transportation equipment. Since 2005, Mexico’s share of
U.S. imports of transportation and communications products increased steadily to 18 percent,
accounting for 76 percent of total Mexican manufacturing exports in the first half of 2012. But
starting in 2009, most manufacturing sectors—20 of the 26 manufacturing import categories—
showed gains, jointly accounting for 80 percent of total Mexican exports. Only a handful of
industries lost market share, including electrical equipment (still a major sector, accounting for
14 percent of Mexican exports) and apparel.-¶ The automotive sector has contributed the most
to the increase in aggregate market share, explaining half of the rise between 2005 and 2012.
Mexico’s market share in U.S. imports of autos, auto parts, and accessories (excluding trucks)
increased almost 9 percentage points over this period, particularly since 2009. Mexico accounts
for a fifth of the total U.S. imports of autos and auto parts—the second-biggest foreign supplier
of auto-related products to the United States, close behind Canada. The automotive sector
accounts for one-quarter of all Mexican manufacturing exports to the United States. This large
increase in production capacity and exports has been underpinned by a continued flow of
foreign direct investment into the sector—mostly from the United States, but recently also
from Japan and Germany.¶ Chart 2 shows the changes in Mexico’s market share of U.S. imports
against those of China in each of the 26 manufacturing sectors, for the periods 2005–07 and
2010–12. We excluded 2008 and 2009 because the global economic crisis distorted trade
worldwide. In each panel, the upper left quadrant (red bubbles) represents sectors in which
China’s market share increased while Mexico’s fell; the lower right quadrant (green bubbles)
plots sectors (if any) in which Mexico’s share increased and China’s fell. The other two
quadrants depict sectors in which the shares for both countries either fell or increased
simultaneously. The size of the bubbles is proportional to each sector’s contribution to the
overall change in market share in each period. During 2005–07 (top panel) there was no sector
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in which Mexico’s share increased and China’s simultaneously decreased. In fact, Mexico was
losing share in several sectors in which China was gaining participation. In contrast, during
2010–12 (bottom panel) there are several sectors in which Mexico’s share increased while
China’s fell. In addition, the number and relative importance of sectors in which China’s share
went up and Mexico’s declined in the most recent period.­¶ We calculated the fraction of
Mexico’s increase in market share that can be associated with China’s reduction, controlling for
changes in the shares of the other competitors (based on a methodology developed by Jorge
Chami Batista, 2008). During 2010–12, 40 percent of Mexico’s dollar gains in the sectors in
which it increased market share can be attributed to China’s loss of share—some of which
could reflect China’s shift to exports of a different set of goods. Mexico’s largest gains over
China in market share were in a diverse range of goods—including electrical machinery and
building materials. In contrast, during 2005–07, half of Mexico’s increase in market share is
explained by reductions by Canada and Japan and none by China.-¶ Mexico’s increased
competitiveness¶ Mexico’s comeback in the U.S. market reflects both its improved
competitiveness and developments that are making Chinese exports relatively more
expensive. Most important among these developments are a narrowing gap in labor costs
between Mexico and China, increased productivity gains in Mexico, and rising transoceanic
shipping costs. Mexico’s protection of proprietary rights and commitment to free trade also play
a role in encouraging manufacturers to locate there.-¶ Chart 3. Coming closer¶ Wages in the
manufacturing sector in China increased at an average annual rate of 14 percent in renminbi
terms from 2003 to 2011, and close to 20 percent annually in dollar terms (which reflects both
nominal wage growth and the appreciation of the Chinese currency). In contrast, average wages
in the Mexican manufacturing sector have remained fairly constant in dollar terms, underpinned
by moderate wage growth and a depreciation of the peso. In 2003, average dollar wages in
Mexico were six times higher than those in China; in 2011 wages were only 40 percent higher
(see Chart 3). This has reduced the competitive advantage that China had as a low-cost supplier
of manufacturing goods to the United States in the early part of the 2000s. (Because reliable
data on unit labor costs in the Chinese manufacturing sector are not available, we could not
account for changes in productivity in manufacturing and how much they contributed to wage
changes.)-¶ We also found that during 2010–12, Mexico gained market share relative to China in
sectors in which labor played a bigger role than capital, such as in the manufacture of furniture
and of plumbing, heating, and lighting fixtures. This appears consistent with the notion that
Mexico’s recent gains in market share vis-à-vis China were driven in part by improved relative
labor costs. In contrast, over the period 2005–07, Chart 4. Efficient enterprises there was no
systematic relationship between changes in relative market share and the relative importance of
labor in the production process.-¶ In addition, strong productivity increases underpinned by
significant investment in the manufacturing sector in Mexico have helped lower the cost of labor
per unit of output and increase the competitiveness of manufacturing production (see Chart
4).-¶ Locational luck¶ Mexico has also benefited mightily from being close to the United States.
The price of oil increased from $25 a barrel in the early 2000s to more than $100 in February
2013, which substantially raised transoceanic freight costs. This proximity has given Mexico a
competitive edge over China, particularly when it comes to trendy time-sensitive goods and
heavy and bulky items.-¶ For example, in 2009 Mexico became the world’s leading exporter of
flat-screen TVs, surpassing South Korea and China. According to the Global Trade Atlas (Global
Trade Information Services), the country is also the leading manufacturer of two-door
refrigerators. Proximity, as a proxy for speed-to-market, has also gained importance because
U.S. companies increasingly buy inputs (such as parts) rather than making them and, to hold
down the costs of maintaining inventory, have adopted just-in-time manufacturing—which
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requires precise and timely delivery of those inputs. That is far easier for Mexican suppliers to
achieve.-¶ Chart 5. Cheapest of all¶ According to the 2011 U.S. Manufacturing-Outsourcing Cost
Index (AlixPartners, 2011), goods produced in Mexico had the lowest landed costs (that is, their
price at a California port) for U.S. importers in 2010 of all key low-cost outsourcing countries
(see Chart 5). At the same time, U.S. producers have begun to “near-shore” their inputs—that is,
buy them from a close, rather than distant, source, which enhances Mexico’s advantage as a
nearby manufacturing hub. Non-U.S. companies have also pulled up stakes in China and
relocated their production to Mexico.-¶ Mexico’s strong commitment to the protection of
proprietary technologies has also helped it attract foreign direct investment, with its beneficial
impact on efficiency. Mexico has a strong reputation for protecting international intellectual
property, patent, and trademark rights and is a party to several international treaties, including
the World Intellectual Property Organization Copyright Treaty. This has helped minimize the risk
of piracy, counterfeiting, and other intellectual property infringements, which is especially
important in high-technology sectors and in manufacturing sectors whose technologies have
military applications. In January 2012 Mexico joined the Wassenaar Arrangement on Export
Controls for Conventional Arms and Dual-Use Goods and Technologies, which opened up new
possibilities for U.S. and European firms to invest in high-tech sectors in Mexico, including those
that involve semiconductors, software, aerospace, lasers, sensors, and chemicals.-¶ Mexico’s
manufacturing base has also been buttressed by the economy’s openness. Mexico’s trade
agreement network is one of the world’s largest; it has free trade or preferential trade
agreements with 44 countries and has shown a strong commitment to avoiding the use of trade
restrictions and ensuring unrestricted access to markets and intermediate inputs to companies
operating in Mexico. Moreover, Mexico has signed international standards and quality
agreements that facilitate the participation of local manufacturing companies in global supply
chains, particularly in the automotive and aerospace industries.-¶ A number of the factors that
have contributed to Mexico’s increased competitiveness and its recovery of U.S. market share
are likely to be long lasting—or structural, as economists say. These include the locational
advantage, improved unit labor costs from enhanced manufacturing productivity and increased
labor participation, and trade openness that appear to have underpinned Mexico’s improved
competitiveness in the U.S. market in recent years. Nevertheless, China is expected to remain a
low-cost manufacturing powerhouse for many goods the United States imports because of its
mature manufacturing capability and the significant switching costs of moving production
overseas (AlixPartners, 2011). For this reason, structural reform efforts in Mexico to further
boost productivity and investment would help sustain the dynamism of manufacturing
exports and boost potential GDP growth. These efforts should include such things as taking
measures to increase competition and labor flexibility, improve education, and strengthen the
rule of law.-
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Solvency- Lower Costs
Reducing Barriers Will Reduce Transportation Costs and Allow For Economies of
Scale
Barbee, Master of Arts in International Affairs at American University, 12
[Inveer, 4-9-12, American University, “The Path to Customs Union: The European Experience and
North American Integration,” http://www.american.edu/sis/usfp/upload/Barbee-Path-toCustoms-Union.pdf, accessed 6-27-13, ABS]
It is true that this would be a shift in U.S. foreign economic policy, as traditionally it has favored
multilateral free trade over regional agreements. But as the U.S. learned with the 1965 Auto
Pact, the 1987 Canada-U.S. Free Trade Agreement (CUSFTA) and NAFTA in 1994, regional free
trade agreements have substantial trade creating effects because they often reduce barriers
to trade much faster than at the international level. Furthermore, because Canada and Mexico
are the largest markets for U.S. exports, reducing barriers to trade to the contiguous
neighbors creates lower transportation and transaction costs, the possibilities for economies
of scale, as well as more consumer choice.
Infrastructure investment solves bottlenecks that currently cost the U.S. and
Mexico billions of dollars
Uribe, senior field correspondent for Fronteras, 6-6
[Monica, 6-6-13, Fronteras Desk, “Delays in Border Trade Cost the US Billions,”
http://www.fronterasdesk.org/news/2013/jun/06/delays-border-trade-cost-us-billions,
accessed 6-26-13, ML]
At our southern border time is money. The United States and Mexico trade more than a billion
dollars in goods every day. All that commerce comes through land crossings that spread from
California to Texas. The problem is once that commercial traffic reaches the border, it runs into
long bottlenecks that result in costly delays.¶ At a warehouse near the border highway, a man
on a forklift hauls long cardboard boxes from a truck trailer. Inside the boxes are plastic
mannequins, the kind you see in clothing stores. These mannequins just made a five-hour
journey from a factory in the Mexican border city of Juárez. They spent 2.5 of those hours stuck
at the international bridge that links Juárez to El Paso.¶ "At this warehouse we receive the
material that is manufactured in Mexico and from this location it gets distributed world wide,"
said manager Sergio Cano.¶ Cano's warehouse is no more than 20 miles from the factory across
the border, but deliveries, like the one he just received, can take hours. ¶ "Well a lot of the stuff
is time sensitive and the delays on the bridge hinder both us in getting our job done here and
then the final customer," he said.¶ Delays cut into everyone's bottom line. A late delivery to an
auto manufacturer in Michigan, for example, can shut down an entire production line.¶ "So I'll
have sometimes guys working overtime waiting for this material to cross," Cano said. "Then we
usually have to pay the driver while he's waiting here to get the stuff out and so on. It can get
expensive."¶ Just how expensive? A study by Bloomberg calculated that delays at the border
cost the U.S. economy $7.8 billion in 2011. Too much for freshman Congressman Beto
O’Rourke, whose district is in El Paso. He thinks the country needs to look at the border in a
new way.¶ "The preponderance of the focus has been on securing the border, locking it down,
controlling it," he said.¶ By Mónica Ortiz Uribe¶ Trucker Alejandro Rivera fills out paperwork after
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delivering a load from a factory in Ciudad Juárez to a warehouse in El Paso.¶ In the last decade,
as border security has become a priority, the number of border patrol officers more than
doubled while the amount of customs officers remains about the same.¶ "We are trying to
show that there needs to be a balance," O'Rourke said. "We also need to facilitate trade,
mobility and the flow of people who end up spending their money in our communities."¶ So
O’Rourke is on a mission to educate his fellow U.S. Representatives on the importance of crossborder trade nationwide.¶ "There seems to be a direct correlation between how close you are
physically to the U.S.-Mexico border and your understanding of the priority of trade in our
economy," he said.¶ O'Rourke and his staff rove the U.S. Capital halls, distributing information to
select delegations — like the one from Montana.¶ "Montana alone has more than $80 million in
trade with Mexico and that supports 22,000 jobs," he said.¶ As a member of the House
Homeland Security Committee, O’Rourke added nine trade-friendly amendments to the
committee’s latest border security bill. The amendments call for things like technology that
could speed up commercial traffic as well as the creation of a system to better measure border
wait times. The bill may be absorbed into a larger House bill on immigration.¶ “We really need a
multi-pronged approach," said Chris Wilson, who studies trade and economics at the Woodrow
Wilson Center in Washington D.C.¶ Read More¶ Delays At The Border, Delays For Business¶
Wilson said the solution to reducing the border bottleneck has three main components:
updating infrastructure at the ports of entry, boosting the number of customs officers and
improving trusted traveler programs that expedite crossing times.¶ "We need to realize that
the ability of the United States to succeed in the world is based on our ability to compete
economically," he said. "We need to find ways to stand up to the challenge of some of the rising
economies of the world, like China, India and Vietnam. We need to be working with Mexico. We
need to have a border that functions."
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Solvency- Congestion
US investment on the border key now
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
accessed 6-25-13, ML]
The state of the border is dynamic. The 1990s were the decade of NAFTA and skyrocketing ¶
trade. The 2000s saw security concerns grow and recession struck. The new decade has only ¶
just begun, but the potential is there for a resurgence of competitiveness and regional ¶
integration. While important policies have recently been developed by both federal ¶
governments in their attempts to catch up with global economic realities and both economic ¶
and security developments on the ground, clearly the two nations need to intensify their
efforts ¶ to make the U.S.-Mexico border an engine for growth. The Declaration of the 21st
Century ¶ Border by the White House and Los Pinos has provided our nations with a framework
for the ¶ future, breaking down the false choice between security and economy in border
management. ¶ There are strong ideas—including trusted traveler and shipper programs,
preclearance, ¶ customs harmonization, and public-private partnerships—that have enormous
potential. The ¶ challenge is now for heterogeneous and geographically disperse border
communities to find a ¶ way to speak with a common voice, for policymakers in Washington and
Mexico City to guide ¶ strategic planning for regional competitiveness, and for all stakeholders
to engage vigorously in ¶ binational dialogue and cooperation.
US investment in border infrastructure key to reduce congestion and access
economic benefits
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
accessed 6-25-13, ML]
Port of Entry Infrastructure¶ One of the most obvious and often cited ways to reduce
congestion at the POEs is to update ¶ and expand border crossing infrastructure, and credit is
certainly due to U.S. government and ¶ border communities for significant recent advances.
After a decade with no new ports of entry ¶ built, three new crossings were opened in 2010:
Anzalduas, San Luís II, and Donna-Rio Bravo.13¶ In 2011, seven new lanes were opened on the
World Trade Bridge, the most important crossing ¶ point for commercial traffic between the
United States and Mexico. Significant expansions are ¶ also underway at San Ysidro, the most
trafficked crossing for individuals, and at Nogales Mariposa. Despite these important advances,
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much work remains to be done. Average U.S. land ¶ POEs are more than forty years old, with
some over seventy years old.14 Customs and Border ¶ Protection believes that “federal
appropriations have not kept pace with needs,” noting $6billion dollars of investment are
needed to “fully modernize” the land ports of entry along the ¶ United States southern and
northern borders.15¶ Given the fact that POE improvements offer significant and tangible
monetary benefits to ¶ border communities and trade-dependent industries, state, local and
private entities are often ¶ willing to contribute funding to border infrastructure projects.
Under the current budgetary ¶ constraints, it makes sense for federal agencies to take full
advantage of these alternative¶ funding sources. Along the Texas-Mexico border, the majority
of POEs are owned by the city or ¶ county in which they are located. This model for
infrastructure investment could be expanded ¶ along other parts of the U.S.-Mexico border, but
changes to current federal legislation appear ¶ to be necessary to allow CBP to “accept
reimbursement from sources other than Congress.”16¶ As demonstrated above, additional
staffing is and will be increasingly necessary as trade ¶ increases. With the active support of
border stakeholders across the region, a proposal along ¶ these lines designed in collaboration
with federal agencies could likely garner legislative ¶ support and could open significant
opportunities for investment despite tough budgetary times.
US-Mexican border congestion kills trade – Infrastructure is key to solve
Wilson, fellow at the Woodrow Wilson International Center for Scholars, 11
[Christopher E., November 2011, Mexico Institute at the Woodrow Wilson International Center
for Scholars, “Working Together,”
http://www.Wilsoncenter.Org/Sites/Default/Files/Working%20Together%20Full%20Document.
Pdf, accessed 6-28-13, AR]
More than a line dividing the two countries, the nearly 2,000-mile Southwest Border connects
the United States and Mexico. More than half a million people and a little less than a billion
dollars in goods cross the border each day. But as important as the region’s local economy is
the role it plays as the gateway for the vast majority of U.S.-Mexico economic transactions.
Nearly 80% of the goods traded with Mexico by all fifty states cross the border by land, making
the efficient operation of the border by officials in both countries key to keeping U.S. exports
competitive and imports cheap. Well-managed borders are vital to a healthy North American
economy. The intensity of commerce, and especially the widespread nature of production
sharing (with products crisscrossing the border several times as they are produced) mean that
seemingly minor inefficiencies in border management can have profound effects on the
national economies of the U.S. and Mexico. The complex set of security challenges faced by the
United States complicates border management, but maintaining a safe border does not
necessarily imply sacrifices in commercial and social cross-border links. Unfortunately, in the
past decade increased attention to border security appears to have come at a cost. Analysts
have identified what they describe as a “thickening” of the border since the terrorist attacks of
September 11, 2001.83 After experiencing a significant increase in the 1990s, the number of
individuals crossing the Southwest Border has plummeted.84 Legal crossings reached a recordsetting 295 million entries from Mexico in 2000, but since then they have steadily declined to
only 190 million entries in 2009. While the complete causes and effects of this change are
unclear, it seems that Mexicans living in border cities, who make up the vast majority of the
daily cross-border traffic, have reduced the number of trips they make into the U.S. for
shopping, education, business and recreation. Thankfully, the number of trucks crossing the
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border to deliver goods has not experienced the same level of decline, although many of the
same pressures that deter and disrupt the crossing of individuals also apply to commercial
flows. Cross-border production sharing operations have come to depend on what is known as
just-in-time delivery, a technique that allows nimble production and minimizes the amount of
capital invested in inventory. If the delivery of a part from a Mexican subsidiary or partner is
unexpectedly delayed, a U.S. manufacturer may be forced to temporarily shut down production
to wait for parts. Or, if such delays are common, manufacturers may simply be forced
to maintain more inventory than would otherwise be necessary. The benefits of just-in-time
supply chain management, production sharing, and even U.S.-Mexico trade more generally, are
therefore put at risk by unpredictable and long wait times at the border. But increased security
measures are hardly the only cause of thickening U.S. borders, and certainly no one wants his or
her personal safety sacrificed in the name of trade facilitation. Both the growth in U.S.-Mexico
trade and the increasingly complex security situation instead demand investment and creative
problem solving to simultaneously improve security and promote economic growth. While
significant investments in border infrastructure have been made in recent years, including the
opening of three new border crossings in 2010, still more are demanded. The San Diego
Association of Governments estimated that in 2007, inadequate border infrastructure
caused congestion and delays that cost the California-Baja California region $7.2 billion and
more than 62,000 jobs.85 El Colegio de la Frontera Norte, a Tijuana-based university, performed
a similar study that focused specifically on the costs of extended border wait times to Mexican
border cities. While the economic impact on the United States in not calculated, one must
assume that a portion of the costs are passed on to U.S. buyers. The results, shown in the table
on page 31, make clear that transportation bottlenecks at the border are a drag on regional
production.
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NADBank
NADBank solves border security and trade
Beam, Lieutenant Commander in the US Navy, 11
[Patrick, 10-28-11, Joint Military Operations Department at the Naval War College, “Economics
and Migration: NAFTA’s Impact on Mexico,” http://w.dtic.mil/cgibin/GetTRDoc?Location=U2&doc=GetTRDoc.pdf&AD=ADA555126ww, accessed 6-25-13, JB]
A strong Mexican economy equates to a more competitive trading partner and a better ¶
destination for U.S. investment. Only one eighth of one percent, or $28 million in USAID ¶
worldwide bilateral economic aid funds in FY 2010 were dedicated to Mexican development ¶
and reform initiatives. This is far less than required to make substantive change. The U.S. ¶
should expand the North American Development Bank (NADBank) and the Border ¶
Environment Cooperation Commission (BECC) to programs that include transportation and ¶
infrastructure projects throughout the whole of Mexico. Additionally, targeted economic ¶
assistance will aid in transitioning Mexico’s state owned oil sector and monopolized ¶ companies
into more competitive industries. Furthermore, the U.S. must address the root ¶ cause of illegal
immigration, which is the economic disparity between the U.S. and Mexico. ¶ Current U.S.
policies are resulting in the opposite desired effect. The U.S. must also target ¶ employers who
hire undocumented migrants, which promotes illegal immigration and ¶ undermines the
provisions of NAFTA. Finally, infrastructure improvements would not only ¶ streamline the
flow of trade between Mexico and the U.S., it would aid in securing the over ¶ 2,000-mile
border between the two countries.
NADBank solves
Mosqueda, Bachelor’s degree in journalism, 12
[Priscila, 7-18-12, The Texas Observer, “Sister Organizations Continue to Improve Infrastructure
Along Border: Binational Institutions Fund Projects to Encourage Economic Growth,”
http://www.texasobserver.org/sister-organizations-continue-to-improve-infrastructure-alongborder/, accessed 6-26-13, JB]
Despite the incidents of violence unfolding across parts of the border, there’s still some
production to counteract the destruction along the frontera.¶ The Border Environment
Cooperation Commission and the North American Development Bank, sister organizations
created under NAFTA nearly 20 years ago, continue to respectively certify and finance
environmental infrastructure projects along the border. The organizations announced in a
press release Tuesday six more projects their board approved for a total of $180 million in loans
and grants.¶ The projects include the construction or rehabilitation of 15 roadways and six
overpasses in Juarez, one of many border towns with limited paved roads that result in air
pollution. The decision also allows for the financing of two water, wastewater and paving
infrastructure projects in Nuevo Laredo that will help reduce pollution and provide more than
1,000 households with access to water and about 5,000 households with access to wastewater
for the first time.¶ Another project was approved for Miguel Aleman, Tamaulipas, and another in
Matamoros. The final project the board approved Tuesday is in Starr County, Texas where a
$450,000 grant was given to finance a solid waste transfer station. Before Starr County, the bank
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funded 45 projects in Texas, making it the state with the highest number of infrastructure
projects in either country.¶ The transfer station marks the 200th project certified by the Border
Environment Cooperation Commission, most of which have been financed by the North
American Development Bank for a total of $3.5 billion. The bank receives equal funding from
the U.S. and Mexican governments, but has also received millions from the EPA over the
years.¶ Projects are partially funded by the Bank, with local, state and federal governments
making up most of the remainder of expenses.¶ “The bank serves as a catalyst to bring that
other investment to the table; we don’t seek to be the sole financier of any infrastructure
project,” spokesperson Juan Antonio Flores says. “The local community needs to be invested in
it.Ӧ The core mission of the bank, he says, is to provide environmental infrastructure that will
improve communities’ quality of life as well as promote economic growth.¶ “When you have a
cleaner environment, conditions all around improve for a community in terms of the quality of
life,” he says. “A clean environment makes a community a desirable place to live, so if
companies want to relocate and grow in an area you want that to be a place with a clean
environment; access to a sustainable potable water source is key for economic development.Ӧ
With this in mind, the bank and commission have expanded the scope of the projects they help
kick-start from water and wastewater to air quality, road improvement, solar energy and other
renewable energy projects. In December 2011 the board approved a 20-megawatt solar energy
park in Picture Rocks, Arizona, which according to a press release was expected to generate
electricity for about 3,500 homes in Tuscon.¶ The commission is headquartered in Juarez and the
bank in San Antonio. The latter is out of the reach of the organization’s help, however, since
eligible projects are limited to a 100 km, or roughly 62 mi distance from the border. In Mexico,
the limit extends to 300 km, or roughly 186 miles, from the border due to the greater difficulty
of securing financing in those smaller towns.¶ “The whole idea behind the bank is you can’t have
increased trade and commerce between two countries without having some mechanism in
response to deal with what was for a long time a neglected environmental challenge along the
border,” Flores says.
NADBank solves infrastructure investment
NADB 13
[5-9-13, North American Development Bank, “NADB Loan Policies and Procedures,” pg. 3,
http://www.nadb.org/pdfs/publications/LoanPolicies.pdf, accessed 6-26-13, JB]
I. INTRODUCTION The primary purpose of the North American Development Bank (NADB) is to
provide financing for environmental infrastructure projects certified by the Border
Environment Cooperation Commission (BECC). This document describe s the basic policies and
procedures that NADB follows in providing loan financing to BECC - certified projects. The loan
policies and procedures are based on the Agreement between the Government of the United
States of America and the Government of the United Mexican States Concerning the
Establishment of a Border Environment Cooperation Commission and a North American
Development Bank (the “Charter”). The Charter also authorizes NADB to provide financing in the
form of loan guaranties for BECC - certified projects and establishes basic requirements for such
guaranties. NADB currently does not have an active guaranty program, but may issue additional
guidelines for such financing in response to future client demand. II. CHARTER PRINCIPLES The
Charter sets forth the following key principle s governing NADB loan financing: BECC
Certification. NADB may provide loans only to environmental infrastructure projects certified by
BECC. Board of Directors. NADB and BECC have a common Board of Directors (the “Board of
Directors”). The Board of Directors determines whether to certify a project and whether to
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authorize loan financing for that project. BECC may certify environmental infrastructure
projects in the U.S. - Mexico border region, which is defined as the area in the United States
that is within 100 kilometers of the international border between the U.S. and Mexico, and
the area in Mexico that is within 300 kilometers of that border. BECC may also certify an
environmental infrastructure project outside the border region if the Board of Directors
determines that the project would remedy a transboundary environmental or health problem.
Specific Projects. NADB loans must be for specific projects. Eligible Entities. NADB may make
loans to the federal governments of the United States or Mexico, to any agency or political
subdivision of such governments, or to any entity in the territory of the United States or
Mexico. Private Sector. NADB may make loans to supplement private investment when private
capital is not available on reasonable terms and conditions. NADB encourages the investment
of public and private capital in the environmental infrastructure projects for which it provides
loan financing
NADBank’s abilities include funding projects that contribute to economic
development- that includes the plan
NADB 13
[5-9-13, North American Development Bank, “NADB Loan Policies and Procedures,” pg. 3,
http://www.nadb.org/pdfs/publications/LoanPolicies.pdf, accessed 6-26-13, JB]
D. Eligible Sectors. The Charter defines environmental infrastructure projects that may be
certified by BECC and financed by NADB as projects that will prevent, control or reduce
environmental pollutants or contaminants, improve the drinking water supply, or protect flora
and fauna so as to improve human health, promote sustainable development or contribute to
a higher quality of life. The Charter gives preference to projects relating to water pollution,
wastewater treatment, water conservation, municipal solid waste and related matters. The
general characteristics of projects eligible for BECC certification and NADB financing are
described, below:¶ ELIGIBLE SECTORS 1. Priority Sectors a) Water pollution projects encompass
facilities for the collection, transportation, treatment, storage and distribution of potable water
from the sources of supply (groundwater or surface water) to the user. Facilities include, but are
not limited to, buildings, structures, equipment and other appurtenances for: the collection of
surface water or groundwater supplies, storage facilities such as natural impoundments or
reservoirs; transportation of water by aqueducts, whether open channel, pipelines, or tunnels;
treatment systems necessary to meet potable water standards; distribution systems to meet the
requirements for domestic, commercial, industrial and fire fighting purposes, including pipe
systems and networks, pumping stations, storage facilities, fire hydrants, service connections,
meters and other appurtenances; and storage, handling, treatment, recycling or reclamation
systems for solids resulting from the treatment of water.¶ b) Wastewater treatment projects
encompass facilities for the collection, conveyance, treatment and disposal of wastewater and
solids derived from the treatment of such wastewater. Wastewater is water carrying wastes
from residential, commercial or industrial buildings that is a mixture of water and dissolved or
suspended solids, liquids or gases. Facilities include, but are not limited to, buildings, structures,
equipment, and other appurtenances for: sewers (gravity, pressure, or vacuum); interceptors;
force mains; pumping and lift stat ions; treatment systems for primary, secondary or tertiary
treatment of wastewater necessary to meet treatment standards; industrial and commercial
pretreatment; storage, handling, treatment, recycling or reclamation of solids resulting from the
treatment of wastewater; and systems for the disposal of effluent or solids.¶ c) Municipal solid
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waste projects encompass facilities that are designed to collect or dispose of municipal solid
waste (i.e., waste generated by households and commercial establishments, but excluding
construction and hazardous wastes). A municipal solid waste project could include purchase of
garbage collection and disposal equipment, closure of disposal sites, or facilities for transfer or
disposal of municipal solid waste, or for recycling or recovering useful material from municipal
solid waste. ¶ d) Related matters has been defined by the Board of Directors to include:
industrial and hazardous waste projects, water conservation projects, water and wastewater
hookups for housing, and recycling and waste reduction projects. 2. Expanded Mandate Sectors
Additional types of projects that may qualify as environmental infrastructure projects under
the Charter include, but are not limited to, projects that improve air quality, public
transportation projects, projects related to clean and efficient energy, and projects that
improve municipal planning, development and water management. In this document, these
projects are referred to as “expanded mandate”
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Solvency- Funding
They have the money
NADB 13
[5-9-13, North American Development Bank, “NADB Loan Policies and Procedures,” pg. 3,
http://www.nadb.org/pdfs/publications/LoanPolicies.pdf, accessed 6-26-13, JB]
The total authorized capital of NADB is $3 billion with equal commitments from the United
States and Mexico. Each country authorized the subscription of 150,000 shares of the bank’s
capital stock with a par value of $10,000 per share. Fifteen percent of the authorized capital is
in the form of paid-in capital and the remaining 85 percent is in the form of callable capital.
NADBank can do the plan- mission statement
NADB 13
[5-9-13, North American Development Bank, “NADB Loan Policies and Procedures,” pg. 3,
http://www.nadb.org/pdfs/publications/LoanPolicies.pdf, accessed 6-26-13, JB]
NADB offers direct financing in the form of loans and grants to public and private entities for
the implementation of their projects. NADB verifies that the proposed projects are financially
feasible and works closely with the sponsors and other funding partners to structure
appropriate and affordable financing packages to meet the specific needs of each community
and project.¶ In addition, NADB works with local governments and other project sponsors to help
them implement sound financial and business practices that provide a basis for well-managed
debt financing. As part of this strategy, NADB also promotes a comprehensive, long-term
approach to infrastructure planning and project finance, as well as offers technical assistance
to build institutional capacity and support the development of sustainable infrastructure
NADBank possible
Villarreal, analyst in International Trade and Finance, 10
[M. Angeles, 6-3-10, Congressional Research Service, “NAFTA and the Mexican Economy,”
http://www.fas.org/sgp/crs/row/RL34733.pdf, accessed 06-25-13, LV]
A possible option to address Mexico’s income disparities with the United States is to consider
¶ expanding the mandate of the North American Development Bank (NADBank). NADBank and
¶ its sister institution, the Border Environment Cooperation Commission (BECC), were created ¶
under a bilateral side agreement to NAFTA called the Border Environmental Cooperation ¶
Agreement. The objective of NADBank and BECC is to help U.S.-Mexico border communities
plan and finance environmental infrastructure projects. Some Members of Congress and
elected ¶ officials from Mexico have informally discussed the possibility of expanding the mission
of the ¶ NADBank to go beyond environmental and border issues. One possibility would be to
expand ¶ NADBank projects to include transportation and other types of infrastructure
projects. Another ¶ option would be to expand eligible projects to the entire region of Mexico
instead of just the ¶ border area. Some policymakers have suggested the possibility of creating
an infrastructure fund ¶ that would be managed by NADBank to provide investment in
infrastructure, communications, or ¶ education.¶
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Solvency- Empirics
They’ve done things like the plan in the past
NADB 13
[5-9-13, North American Development Bank, “NADB Loan Policies and Procedures,” pg. 3,
http://www.nadb.org/pdfs/publications/LoanPolicies.pdf, accessed 6-26-13, JB]
Mexico City, Mexico – The North American Development Bank (NADB) and the private company,
Concesionaria y Operadora del Puente Internacional Cucapá, S.A. de C.V. (Cucapá), signed a loan
agreement for up to $138.5 million pesos (currently valued at about US$9.4 million) to build a
second international crossing between San Luis Rio Colorado, Sonora and San Luis, Arizona.
The new crossing, which will be solely for commercial vehicles, will be located outside the
urban area, greatly reducing traffic congestion and thus air pollution caused by idling diesel
trucks. ¶ The loan agreement was signed by NADB Managing Director Jorge C. Garcés and
Cucapá Chairman Ubaldo de Azpiazu de Campo, in the presence of Juan José Erazo García Cano,
Director of Intermodal Projects for the Toll Roads Unit of the Mexican Ministry of
Communications and Transportation (SCT). ¶ The new crossing will be built at the eastern end of
the city of San Luis Rio Colorado and will cost a total of US$165 million pesos (US$11.2 million at
the current exchange rate). The most modern and efficient processing systems for border
crossings will be used to expedite commercial traffic flows at the new crossing, thus reducing
idling times, fuel consumption and exhaust emissions. ¶ “Helping move this project forward is
very important for NADBank, since it is expected to greatly reduce air pollution emissions
generated by long waits at the border crossing,” stated Mr. Garcés. “Building and modernizing
border crossings throughout the region is urgently needed to improve air quality conditions
along our shared border.” ¶ According to a recent study conducted by the U.S. Department of
Transportation, northbound traffic from Mexico to the United States experiences an average 1.8
hour delay per commercial vehicle, resulting in substantial air pollutant emissions from idling
diesel engines. ¶ The main components of the new commercial port consists of the
construction of a 400-meter (1,300-foot) vehicular crossing and port facilities, including
parking areas, offices, toll booths, and control booths. Approximately 50,000 m2 (538,195 ft2) of
roadways will also be paved to control traffic flows for the new crossing.¶ In addition, the
Mexican port will include a truck anti-idling/electrification station (TAS). Trucks in the TAS area
will be able to connect their systems to available power outlets and thus turn off their engines
while waiting to pass through to the inspection area.
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NADBank Says Yes
NADB will say yes
NADB 13
[5-9-13, North American Development Bank, “NADB Loan Policies and Procedures,” pg. 3,
http://www.nadb.org/pdfs/publications/LoanPolicies.pdf, accessed 6-26-13, JB]
Among other officials present to celebrate this event were NADB Managing Director Gerónimo
Gutiérrez, the Mexican Secretary of Communications and Transportation, Juan Francisco
Molinar; the Mexican Ambassador to the United States, Arturo Sarukhan; the U.S. Consul
General in Nogales, John Walter Dinkelman; and the mayor of San Luis Río Colorado, Manuel de
Jesús Baldenebro. The new commercial port built at the eastern end of the city will benefit
residents in both San Luis Rio Colorado and in San Luis, Arizona, by greatly reducing a source of
heavy pollution generated by idling diesel trucks and other commercial vehicles waiting to cross
the border. ¶ The project entailed building the vehicle crossing, port facilities and toll booths, as
well as paving approximately 540,000 square feet of roadway to provide access to the new
crossing. In addition, state-of-the-art processing systems for border crossings were installed,
which will expedite commercial traffic flows at the new crossing, thus reducing idling times, fuel
consumption and exhaust emissions. “NADB is pleased to be a part of this important project
for San Luis Río Colorado that, in addition to mitigating environmental pollution, will help
spark greater competitiveness in the region,” stated Mr. Gutiérrez. “Building new ports of
entry and modernizing existing ones must be a priority for this region, not only to improve air
quality but also to support economic development.”
NADB Can Do the Plan
NADB 13
[5-9-13, North American Development Bank, “NADB Loan Policies and Procedures,” pg. 3,
http://www.nadb.org/pdfs/publications/LoanPolicies.pdf, accessed 6-26-13, JB]
NADB and BECC are actively promoting the development of environmental infrastructure along
the U.S. border in a variety of sectors, including water supply and wastewater treatment, solid
waste management, roadway improvements and public transportation, and renewable energy,
among others,” stated Alex Hinojosa, NADB Deputy Managing Director. ¶ In the United States,
BECC and NADB can support both public and private projects located within 100 kilometers
(about 62 miles) of the U.S.-Mexico border, an area that covers 37 counties in the
aforementioned states and is home to more than 8.7 million residents.
NADBank can do the plan
Federal Highway Administration, 11
[February 2011, U.S. Department of Transportation, Federal Highway Administration, “Greening
Transportation at the Border,” pg. 17,
http://www.borderplanning.fhwa.dot.gov/greenborderrpt/green_border_final.pdf, accessed 629-13, JB]
Financing Infrastructure Investment A number of public agencies and institutions are actively
financing investment in transportation infrastructure to address congestion and environ -
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mental issues in the U.S./Mexico border region. For example, the North American Development
Bank (NADBANK), which was established in 1994 under the NAFTA, is supporting efforts in
municipalities, such as Chihuahua, Mexico, to develop more sustainable transportation
systems by investing in bus rapid transit systems. NADBANK’s mission is to enhance the
affordability, financing, long- term development, and effective operation of infrastructure that
promotes a clean, healthy environment for the citizens of the region. Additionally, the BECC
supports capacity expansion projects at ports of entry designed to reduce border-crossing
times and improve air quality. The BECC is taking steps to finance the modernization of
existing bridges at Puerto Mexico to enhance the capacity of the border crossing to process
vehicles. Regulatory reforms could allow bi-national debt financing instruments that would
enable sub-national governments to coordinate across the border to issue bonds for projects
that address border issues. Socially responsible financial products could attract individual and
commercial investors to invest in environmental infrastructure projects.
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Mexico Says Yes
Nieto himself said that he wants to have more investment and trade with the
US
Nieto, President of Mexico, 13
[Peña, 5-2-13, Palacio Nacional, “Remarks by President Obama and President Pena Nieto of
Mexico in a Joint Press Conference,” http://www.whitehouse.gov/the-pressoffice/2013/05/02/remarks-president-obama-and-president-pena-nieto-mexico-joint-pressconf, KB]
Ladies and gentlemen, good afternoon, everyone. First and foremost, after the bilateral
meeting, I would like to extend the warmest welcome to President Barack Obama, his team
joining him. Once again, we would like to welcome all of you with open arms, and we hope you
feel at home.¶ We appreciate your will to have upon this meeting a relation built on mutual
respect, collaboration for the benefit of our peoples. ¶ Before we cover the areas that we have
shared during our bilateral meeting, on behalf of the Mexican people, I would like to reiterate
our solidarity for the regretful acts that were committed in your country -- in Boston and in
West, in Texas. Unfortunately, it took the lives of American citizens. ¶ If you allow me, I would
like to share with the audience and the members of the media the areas that we have addressed
with President Obama during the meeting that we just have had. ¶ First of all, we have reached
an agreement that the relation between Mexico and the United States should be broad in
terms of the areas that it covers. It should open up opportunity and collaboration spaces in
different arenas, with a very clear purpose in mind to make the North American region a more
productive and competitive region that will, end result, trigger the enormous potential that our
peoples have, that our nations have. And we're well aware of the fact that we can take stock of
our bilateral relation within the framework of the agreements made, we have reached a new
level of understanding as our two new administrations that began roughly at the same time -the second term of President Obama and my administration. ¶ Among the items that we
covered I can speak for how relevant trade and commerce is in Mexico-U.S. relation. We have
dimension of all the achievements made upon the free trade agreement and the benefits that
our economies have received from it. The exports made from the U.S. to its top trade partners,
Mexico and Canada, this represents one-third out of each three products that are exported
from the U.S. and only the relation with Mexico is higher than the one the U.S. has with
European countries like the U.K., France, the Netherlands all together, or the exports sent to
China and Japan together doesn’t reach the level that the U.S. has with Mexico. ¶ I must stand
out that the integration of our economies in the last years has shown to be relevant and the
content of exports sent from Mexico have 40 percent of U.S. input. Therefor I can conclude
that the more growth Mexico shows and the more capacity to export, the more benefit the
U.S. gets. Jobs are created in Mexico; therefore jobs are created in the United States. ¶
Therefore, one of the first agreements that we have made was to create a high-level dialogue
that, within its framework, will foster trade and commerce with the United States. This means
that for the first time -- and probably this is unprecedented -- we will have the Mexican
economic cabinet with their counterparts from various government agencies from the United
States, as well as high-ranking officials. And we've heard from the President that in this group,
the Vice President of the United States will participate in order to set a dialogue that will result
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in arrangements in terms of how the government can support all the efforts made by the private
sector in order to have stronger economic integration.
Mexico says yes – would benefit much from investment
Rivera, Senior Multimedia Journalism Major at the University of Texas, 12
[Kristopher, 9-19-12, Scripps Howard Foundation Wire, “U.S.-Mexico Partnership to Remain
Close When PRI Returns to Power,” http://www.shfwire.com/us-mexico-partnership-remainclose-when-pri-returns-power, accessed 7-10-13, KB]
In the past, PRI distrusted the United States. However, Peña Nieto has been telling supporters
he respects the law, supports free markets and will not return to the past.¶ Howard Campbell,
anthropology professor at the University of Texas at El Paso, said that, for the United States, it
is a lot easier to have PRI in charge than Calderón’s party, the National Action Party. He said
PRI is more predictable than PAN, which was new to the U.S. in the 12 years it has governed
Mexico. ¶ “The U.S. has dealt with leaders of the PRI before, for almost a century, so they’re
used to it.” Campbell said. “The wild card of course is the drug trafficking. There’s no telling
what’s going to happen.”¶ Poiré said it is important to transform and improve local police
officers, prosecutors and the courts. A constitutional amendment passed in 2008 reformed
Mexico’s judicial system at the federal and state level. The goal is to have judicial reform run by
every Mexican state by 2016. Four have fully executed this plan, including Chihuahua, which
includes Ciudad Juarez, and is across the U.S. border from west Texas and New Mexico.¶ Poiré
said there is a much higher rate of conviction and tougher sentences, which he said is helping
the federal government’s effort to lower the levels of violence and other crimes in Ciudad
Juárez.¶ Campbell said, however, that he has found that violence has shifted to other places,
such as the Gulf of Mexico region.¶ Napolitano said the U.S. is working with law enforcement in
Mexico to help trace weapons from the U.S. that are recovered in Mexican crime investigations.
She said DHS will accelerate the ability to trace weapons to see if the agency can identify a
source within the United States that can be prosecuted.¶ Fast and Furious, a failed gun-tracking
program, allowed suspected gun smugglers to purchase large caches of weapons in the U.S. Law
enforcement officials tried to track them to high-ranking Mexican drug cartel members.
However, the Bureau of Alcohol, Tobacco, Firearms and Explosives lost track of many of the
firearms. Several of these firearms have been linked to crimes, including the murder of Border
Patrol Agent Brian Terry in December 2010.¶ “In terms of illegal financial transactions, money
laundering, it’s really one of the major enablers of narcotics trafficking in particular,” Napolitano
said. “We have been working very closely on a joint project on money laundering and identifying
suspect transactions that I think will really produce fruit over the next couple of years.Ӧ
Secretary of State Hillary Clinton and Mexican Foreign Secretary Patricia Espinosa review U.S.Mexico partnership and progress with the Mérida Initiative, a 2008 program to fight crime. They
met at the State Department on Tuesday. SHFWire photo by Kristopher RiveraAt a press
conference Tuesday, Secretary of State Hillary Clinton and Mexican Foreign Secretary Patricia
Espinosa said a close partnership between the U.S. and Mexico will continue.¶ “We believe
strongly that presidential administrations may change, elections will come and go,” Clinton
said, “but we have established a firm foundation for cooperation that has already benefitted
both of our countries and which will continue to benefit both of our countries for many years
ahead.”
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President Nieto wants to bolster economic ties with the US – says yes
Seelke, Specialist in Latin American Affairs, 13
[Clare, 1-16-13, Congressional Research Service, “Mexico’s New Administration: Priorities and
Key Issues in U.S.-Mexican Relations,” pg. 14
http://www.fosterquan.com/content/documents/policy_papers/2013/MexicosNewAdmin.pdf,
accessed 7-10-13, KB]
Since taking office, President Peña Nieto has announced a reformist agenda aimed at
improving ¶ security, fighting poverty, and boosting competitiveness. He has also convinced
leaders from the ¶ two main opposition parties—the conservative PAN and the leftist Party of
the Democratic ¶ Revolution (PRD) — to sign a “Pact for Mexico” agreement aimed at
implementing that agenda. ¶ The success of Peña Nieto’s presidency is likely to be judged, at
least in part, by the extent to ¶ which that agenda gets implemented. With significant labor and
education reforms having ¶ recently been enacted, many analysts assert that the prospects for
reform are good, as the PRI and ¶ the PAN in particular share similar goals. ¶ As Mexico is
experiencing a major domestic shift in power, U.S.-Mexican relations could also be ¶ in for some
changes. This year marks the first time in 12 years that U.S. and Mexican presidential ¶ terms are
beginning at roughly the same time. While President Barack Obama and President Peña ¶ Nieto
both face a full slate of domestic challenges, analysts have urged both leaders to work ¶
together on issues that are of critical importance to both countries, particularly those aimed
at ¶ boosting trade and job creation. At a pre-inaugural meeting in late November 2012,
President ¶ Obama embraced President Peña Nieto’s desire to bolster economic ties and to
focus on a broad ¶ array of bilateral issues rather than focusing predominantly on security
issues.3
Nieto wants to improve efficiency along the border through the plan – says yes
Seelke, Specialist in Latin American Affairs, 13
[Clare, 1-16-13, Congressional Research Service, “Mexico’s New Administration: Priorities and
Key Issues in U.S.-Mexican Relations,” pg. 14
http://www.fosterquan.com/content/documents/policy_papers/2013/MexicosNewAdmin.pdf,
accessed 7-10-13, KB]
Most analysts expect Mexico’s trade policy under the Peña Nieto Administration to be
relatively ¶ similar to that of the Calderón government, albeit with a more aggressive emphasis
on ¶ diversifying Mexico’s trade partners. President Peña Nieto has put forth proposals for
deepening ¶ North American integration (such as the establishment of a North American
infrastructure fund) ¶ and improving efficiency at the U.S.-Mexican border. He also supports
Mexico’s active ¶ participation in negotiations for a Trans-Pacific Partnership (TPP) trade
agreement.34 At the same ¶ time, Peña Nieto has also vowed to bolster Mexico’s trade ties with
China, Europe, and Latin ¶ America, including trade with the Pacific Alliance (Chile, Peru, and
Colombia) and Brazil.
Nieto fully supports US investment
Lewis, B.A. in Political Science, 12
[Michael, 11-30-12, The Motley Fool, “Mexico's New President Offers Much to U.S. Investors,”
http://www.fool.com/investing/general/2012/11/29/mexicos-new-president-offers-much-tous-investors.aspx, accessed 7-10-13, KB]
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For a few years now, Mexico has become an increasingly attractive location for both U.S.
companies and foreign investors. The country boasts a strong economy, including very little
inflation and debt. In July of this year, Mexico elected a new president -- Enrique Peña Nieto.
Peña Nieto's biggest goals are to curtail the rampant drug-related violence that has left 65 ,000
dead in the last six years, and boost the already strong economy, all while increasing ties with
the United States. What impact will Peña Nieto have on Mexico, its public companies, and your
stocks? Party rebirth¶ President-elect Peña Nieto comes from the Institutional Revolutionary
Party, or PRI. This is a political group to the left of President Felipe Calderón, a conservative
leader who spearheaded the country's major effort to capture or kill drug cartel leaders, which,
at the same time, greatly increased drug-related violence in the country. The result was a
tarnished international image that gave people an idea of a crime-ridden, dangerous Mexico.¶
Peña Nieto, on the other hand, is not interested in hunting down the cartel leaders as the
method to decrease drug production and trafficking, but to first and foremost decrease
violence. Following this, the focus shifts to strengthening Mexico's economy in the
international arena, and attract greater direct foreign investment. Much of this has to do with
Mexico's relationship with the United States, its largest trading partner.¶ Strong ties¶ In an
opinion piece by Nieto in The Washington Post last week, the leader highlighted the immense
trade that takes place between the two nations. He cited that the North American Free Trade
Agreement links 441 million people "producing trillions of dollars in goods and services, making
it the largest trading bloc in the world." The effort couldn't come at a better time.¶ Mexico's
economy is projected to grow 4% this year, above the global average. And, as China's growth
slows, and the outsourcing of jobs to the region becomes less attractive, Mexico is emerging as
a new leading destination for manufacturing. Plenty of U.S. and international companies already
have manufacturing facilities in the country, including Coca Cola (NYSE: KO ) , General Motors
(NYSE: GM ) , and Audi AG (AUDVF.PK). These companies are able to produce more cheaply than
in their own countries and, for the U.S.-based companies, expenses have a built-in discount with
the geographic proximity. Peña Nieto fully supports foreign manufacturing interest, which
helps build infrastructure and generates thousands of jobs inside Mexico.¶ Energy production is
also a big focus for the incoming president. Mexico's energy business is somewhat of a national
pride, and the country holds the fifth largest shale gas reserve on the planet, but current laws
prevent much direct foreign investment in the sector. In 2011, foreign investment in Mexico
totaled $20 billion. Economists believe this number could double if efforts are successful in
encouraging additional foreign capital.¶ Under this new leadership, things are expected to
change as the laws are repealed, opening the doors to greater investment, and contributing to
the future of an energy independent North America.
And there have been informal talks
Villarreal, Specialist in International Trade and Finance, 6-3
[M. Angeles, 6-3-13, Congressional Research Service, “NAFTA and the Mexican Economy,” pg. 18
http://www.fas.org/sgp/crs/row/RL34733.pdf]
A possible option to address Mexico’s income disparities with the United States is to consider
expanding the mandate of the North American Development Bank (NADBank). NADBank and its
sister institution, the Border Environment Cooperation Commission (BECC), were created under
a bilateral side agreement to NAFTA called the Border Environmental Cooperation Agreement.
The objective of NADBank and BECC is to help U.S.-Mexico border communities plan and finance
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environmental infrastructure projects. Some Members of Congress and elected officials from
Mexico have informally discussed the possibility of expanding the mission of the NADBank to
go beyond environmental and border issues. One possibility would be to expand NADBank
projects to include transportation and other types of infrastructure projects. Another option
would be to expand eligible projects to the entire region of Mexico instead of just the border
area. Some policymakers have suggested the possibility of creating an infrastructure fund that
would be managed by NADBank to provide investment in infrastructure, communications, or
education
Mexico says yes
Fernandez, Assistant Professor of Environmental and Resource Economics at
University of California, and Castro, Professor the Department of Economics at
the University of California, 2
[Linda and Richard T., July 2002, Both Sides of the Border Transboundary Environmental
Management Issues Facing Mexico and the United States, pgs. 487-488, LV]
Spalding identifies environmental problems as well as conducts an assessment of the¶ range of
institutions aimed at border environmental issues. Key factors for expanding the¶ financing of
environmental improvement at the border are recognizing that the production and¶ trade
arrangements benefit all consumers, and the tax base at the border is too small for current¶
needs, much less for projected growth. Therefore, Spalding suggests that national and
binational¶ policies that channel funds to finance border environmental infrastructure are the
most viable.¶ Spalding’s suggestion is echoed by what governors of Mexico’s border states, who
would like to¶ require maquiladora operators to contribute to the costs of providing some
infrastructure, such as¶ roads, water and sewage treatment and solid waste disposal (Treat
and Kourous, 2001). While¶ some maquiladoras make annual donations (e.g., $15 per employee
per year in Ciudad Juarez) to¶ local governments to help them pay for infrastructure projects,
many critics say those¶ contributions are small compared to maquiladora’s profits. The
Commissioner warns that border¶ economic growth is coming to a halt, stalled by the myriad
of infrastructure problems that have¶ accompanied the region’s explosive growth and rapid
industrialization. Spalding does address¶ native groups in terms of their political rights, and
attempts to recognize their role in managing¶ the environment. He also suggests ways to change
the border environmental institutions from¶ reactive to proactive entities through broader
planning and regulatory structure. The transparency¶ of the decision making process through
public hearings and meetings has been valuable in¶ involving the border community in a tangible
way. A July 2001 public meeting of a¶ BECC/NADBank project in Tijuana for the rehabilitation
of sewage lines throughout Tijuana¶ drew strong public participation by a broad spectrum of
Tijuana residents (Saldana, 2001). Carter and Ortolano analyze border institutions created
under NAFTA for the¶ environment. The institutional design of each of these, in terms of the
political economic¶ framework, calls into question whether there are adequate checks and
balances to prevent overutilization¶ of depletable financial and environmental resources. As
more politicians support¶ expanding the geographic and subject scope of BECC and NADBank,
it is imperative to sustain¶ the financial and technical resources to carry out even their initial
mandate. The current¶ allocation by NADBank to low-income communities of grant funding in
greater measure than¶ loans, is likely to continue given the requirements for repayment in terms
of interest rate and¶ payback period. Some factions argue that NADBank, rather than seeking
new areas for lending, ¶ should find a way to lower its rates (Ellingwood, 2001). The sewer and
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water systems projects produce unreliable returns in communities that are only learning how to
set rates and collect fees¶ for public works utilities. Currently, President Fox and the
Commissioner have suggested that¶ NADBank’s mandate be expanded to permit involvement
in transportation, energy, and¶ communications in order to address what Mexico needs first in
terms of economic development¶ as well as in environmental projects (Mandel, 2001). The
Commissioner hopes NADBank funds¶ could be supplemented by other entities to build the
highways, railroads, airports, and seaports¶ needed in Mexico to sustain economic growth in
an expanded area of 180 miles on either side of¶ the border instead of the current 60 miles
(Treat and Kourous, 2001). Mexican President,¶ Vicente Fox sees the need to expand
NADBank’s role in addressing development similar to what¶ the InterAmerican Development
Bank and World Bank have done to spark foreign direct¶ investment (Schrader, 2001). The
intent is to increase employment opportunities in Mexico so¶ that Mexicans stay in Mexico,
thereby reducing immigration stresses. Expanding the¶ NADBank’s mission beyond border
pollution projects means the topic of consistent financing by¶ the U.S. and Mexican
governments must be addressed. In the Presidential meeting it was agreed¶ that immediate
measures were needed to strengthen the performance of the NADBank and¶ BECC. Such
measures would include convening a binational working group to consult with¶ national
legislatures, Border States, communities, and other stakeholders in order to develop joint¶
recommendations for changes at the end of October 2001 (White House, 2001).
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Congress Key
Only congress can decouple NADBank funding from BECC certification
Reed, Project Director of Texas Center for Policy Studies, and Kelly, Executive
Director, 2K
[Cyrus and Mary, July 2000, Texas Center for Policy Studies, “Expanding the Mandate: Should
the Border Environment Cooperation Commission and North American Development Bank go
Beyond Water, Wastewater and Solid Waste Management Projects and How Do They Get
There?: Comments on Utilizing the Lending Capacity of the NADB,“ pgs. 6-7,
http://www.texascenter.org/publications/expansion.pdf, accessed 6-30-13, JB]
The Charter establishing BECC and NADBank is clear and unambiguous: outside of the
community adjustment programs in the U.S. and Mexico, 5 NADBank can only finance projects
that are first certified by the BECC. 6 It is our position that legally and politically; any change
from this procedure would require Congressional authorization in the U.S.¶ While it is true that
the “Parties” (i.e. the U.S. and Mexican governments) can modify or add to the BECC/NADBank
agreement, 7 the ability for the parties to do so without Congressional approval appears to be
limited to four specific areas, none of which would let the Parties authorize NADBank funding
of environmental or other infrastructure projects not certified by BECC. 8 Specifically, the
Charter provides:¶ Article II¶ Amendment¶ The Parties may agree on any modification of or
addition to this Agreement. In particular, the Parties shall from time to time consider whether to
make such modifications of or additions to this Agreement as would be necessary to:¶ Expand
the functions of the Commission to include other kinds of environmental or other projects 9;¶
Expand the geographic scope of the Commission;8¶ Give the Commission the capacity to raise
capital so that it might issue loans or guarantees for environmental or other infrastructure
projects; or¶ Change the environmental preferences expressed in Article II, Section 2(b) of
Chapter I of this Agreement.¶ When so agreed, and approved in accordance with the applicable
legal procedures of each Party, a modification or addition shall constitute an integral part of this
Agreement.
Congress is key
Reed, Project Director of Texas Center for Policy Studies, and Kelly, Executive
Director, 2K
[Cyrus and Mary, July 2000, Texas Center for Policy Studies, “Expanding the Mandate: Should
the Border Environment Cooperation Commission and North American Development Bank go
Beyond Water, Wastewater and Solid Waste Management Projects and How Do They Get
There?: Comments on Utilizing the Lending Capacity of the NADB,“ pgs. 6-7,
http://www.texascenter.org/publications/expansion.pdf, accessed 6-30-13, JB]
The Charter establishing BECC and NADBank is clear and unambiguous: outside of the
community adjustment programs in the U.S. and Mexico, 5 NADBank can only finance projects
that are first certified by the BECC. 6 It is our position that legally and politically; any change
from this procedure would require Congressional authorization in the U.S.¶ While it is true that
the “Parties” (i.e. the U.S. and Mexican governments) can modify or add to the BECC/NADBank
agreement, 7 the ability for the parties to do so without Congressional approval appears to be
limited to four specific areas, none of which would let the Parties authorize NADBank funding
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of environmental or other infrastructure projects not certified b y BECC. 8 Specifically, the
Charter provides:¶ Article II¶ Amendment¶ The Parties may agree on any modification of or
addition to this Agreement. In particular, the Parties shall from time to time consider whether to
make such modifications of or additions to this Agreement as would be necessary to:¶ Expand
the functions of the Commission to include other kinds of environmental or other projects 9;¶
Expand the geographic scope of the Commission;¶ Give the Commission the capacity to raise
capital so that it might issue loans or guarantees for environmental or other infrastructure
projects; or¶ Change the environmental preferences expressed in Article II, Section 2(b) of
Chapter I of this Agreement.¶ When so agreed, and approved in accordance with the applicable
legal procedures of each Party, a modification or addition shall constitute an integral part of this
Agreement.
Mandate from Obama is key to building roads to solve border congestionMexican private sector will construct them
Negroponte, Senior Fellow at Brookings Institute, 5-2
[Diana, former trade lawyer and professor of history, 5-2-13, Up-Front, “Obama’s Mexico Trip:
Putting Trade and Investment at the Top of the Agenda,” http://www.brookings.edu/blogs/upfront/posts/2013/05/02-obama-mexico-trip-trade-investment-negroponte, accessed 6-25-13,
JB]
Related to the growth in two-way trade is the need to facilitate movement of trucks across the
U.S.-Mexico border. Despite an increased use of pre-clearance procedures, Mexican trucks must
line up several kilometers from the border while they wait their turn to reach the fast lane
that leads up to and through the U.S. border. Public-private partnerships are needed to
construct the access roads some 10 kilometers from the border so that pre-cleared vehicles
can move rapidly through the border zone. Currently, GPS vehicle trackers are used to link the
sending and receiving manufacturers with U.S. Customs and Border Patrol (CBP). Before the
truck even reaches the border post, CBP will know the content and value of the merchandise, as
well as specifications on the cab and its driver. Only if tampering is detected will CBP stop the
truck for secondary inspection, otherwise the truck sails through the border and onto its final
destination. The Mexican private sector has demonstrated interest in constructing those
access roads, but it needs presidential mandates from both governments to support the
projects, as well as Mexican government purchase of necessary land.
Government intervention is key to economic integration with Mexico
Andreas, professor of political science and IR at Brown University, 4
[Peter, December 2004, Wilson Center, “U.S.-Mexico Border Control in a Changing Economic
and Security Context,” http://www.wilsoncenter.org/sites/default/files/U.S.Mexico%20Border%20Control%20in%20a%20Changing%20Economic%20and%20Secuiry%20Co
ntext.pdf, accessed 6-24-13, GSK]
The upside of the new security context, however, has been far greater U.S. and Mexican
recognition of the need to more closely coordinate and creatively integrate enforcement and
facilitation strategies in managing cross-border flows. Due to the high stakes ¶ involved, there
has been growing policy awareness that the economic integration process cannot be
maintained simply by the spontaneous logic of the market but requires active government
intervention and management to avoid being slowed down or even derailed ¶ in the new
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security environment. 4¶ As the task of border controls has become more difficult, looking for
answers beyond physical borderlines has been an increasingly attractive way to enhance
security while encouraging economic integration. This is most clearly articulated in the U.S.Mexico ¶ Border Partnership Agreement (better known as the Smart Border Accord), signed on ¶
March 22, 2002. The 22-point agreement calls for the creation of the “smart border” for the
21st century, focusing on the safe and secure flow of people and goods and major
improvements in border infrastructure. This should be viewed not only as a bilateral
agreement but as a distinct approach to border control that, if fully pursued, would be a major
departure from the inefficiencies and impracticality of traditional borderline inspections. The
Smart Border Accord promotes various forms of pre-inspection and presorting to reduce
congestion and separate out low risk from higher risk border flows. ¶ This “risk management”
strategy, heavily based on the use of new tracking and ¶ surveillance technologies, is designed to
allow inspectors to focus more of their attention ¶ on higher risk cases. Some of these
innovations were in place before 9-11, but have ¶ received renewed attention and are being
expanded. ¶ For example, border control strategists have developed a number of innovative new
¶ cargo-tracking systems, inspection technologies, and traffic management strategies to ¶ extend
policing beyond ports of entry. These measures are designed to both ease border ¶ congestion
and enhance security at the same time. For example, regular business travelers ¶ can be
prescreened and provided with an identification card with biometric information ¶ (such as
handprint or retina information), and their vehicles can be equipped with ¶ electronic
transponders. To facilitate border inspections and ease congestion, passenger ¶ information can
be transmitted to border agents in advance. Manufacturers and transport ¶ companies can beef
up internal security measures to seal their cargo and can use new ¶ information and tracking
systems to assure the accountability of drivers and shipments. ¶ The entire inspection process
could potentially even be pushed away from the physical ¶ border into a joint NAFTA
inspection facility.3¶ Granted, the Smart Border Accord is still very much a general “wish list”
that is at an ¶ early stage of implementation, but it represents an important departure from the
past in ¶ that it explicitly recognizes that more effective border controls requires pushing such ¶
controls beyond the border (essentially a “de-bordering” of border controls) through a ¶ multilayered layered monitoring and inspection strategy that by its very nature requires ¶ much
greater U.S.-Mexico cooperation. For example, in the case of travel, it calls for ¶ consultation on
visa policies and greater screening of third country nationals, the ¶ development of pre-clearance
procedures and provision of advanced passenger ¶ information, and the creation of compatible
databases that foster information sharing ¶ between U.S. and Mexican authorities.
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Tech Assistance Key
NADBank’s Ground Game key- funding alone isn’t enough
Rodriguez, Managing Director and CEO of NADBank, 5
[Raul, January 2005, The Woodrow Wilson Center’s Mexico Institute, “Parameters of Partnership
in U.S. - Mexico Relations- Challenges in Competitiveness: Infrastructure Development,” pgs. 1011 www.wilsoncenter.org/sites/default/files/Infrastructure.Rodriguez.doc, accessed 6-30-13, JB]
Infrastructure finance in the developing world is beset by challenges in design, groundwork
tasks, procurement, administration, and control. Oftentimes, a project’s constraint is not
financial. Conditions to fund and disburse are frequently lacking. This calls for institutional
strengthening and technical assistance. At the Border Environment Cooperation Commission
and the NADBank, this has become an effort of substantial importance to financing along the
border. ¶ The NADBank is striving to transfer successful experiences in the U.S. to the Mexican
side regarding city and utility management and municipal finance. It is engaged in over 100
border communities, assisting with utility and project development and providing training. Its
Utility Management Institute is enhancing the managerial, financial and leadership
capabilities necessary to operate a successful utility. The curriculum focuses on day-to-day
issues faced and articulated by border utility professionals, with the additional goal of
developing a binational network with them in order to plan together, cooperate, and consult
with one another as issues arise.
Normal means would be technical assistance- key to solvency
Thomas, Reporter, 03
[Mike W., 12-14-03, San Antonio Business Journal: The Essential Business Tool. “NADBank's
History Underscores the Challenges of Global Economy,”
http://www.bizjournals.com/sanantonio/stories/2003/12/15/story1.html?page=all, accessed 71-13, JB]
Technical assistance But doling out grants and low - interest loans is just one part of the work
that NADBank does, Rodriguez says. Perhaps even more important to the long - term success
of the projects is the technical assistance that NADBank provides. "A fundamental
responsibility of the bank is to make sure that the things that are being built will be managed
properly," Rodriguez says. "Our technical assistance program works with the community
leaders to improve the way that they manage their finances. We have to change the way their
utilities are built and run. We have to change their efficiencies." A big challenge facing
NADBank as it tackles each new project is finding experienced people to operate and manage
the utility systems under construction. The tenure among utility managers in many of these
border communities is sometimes as little as two years. In order to address this shortage of
institutional knowledge and experience, NADBank operates a training institute that tailors its
courses to the specific needs of each community. "(The training institute) has proven to be an
effective and useful part of our services," Rodriguez says. Since its inception, the training
institute has produced 410 graduates in 96 communities. Jorge Garces, deputy managing
director of NADBank, says by bringing all the utility managers together for a training program, it
allows them to do networking in many cases for the first time. "You would be surprised by how
little communication there is between some of these facilities," Garces says. "Facilities within
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100 miles of one another facing the same problems and using the same watershed have little or
no interaction in many instances."
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AT- Not Enough Funds
NADBank investment serves as a catalyst for other investment- means they
don’t have to pay for the whole program
Mosqueda, Bachelor's in journalism, 12
[Priscila, 7-18-12, Texas Observer, “Sister Organizations Continue to Improve Infrastructure
Along Border: Binational Institutions Fund Projects to Encourage Economic Growth,”
http://www.texasobserver.org/sister-organizations-continue-to-improve-infrastructure-alongborder/, accessed 6-26-13, JB]
Projects are partially funded by the Bank, with local, state and federal governments making
up most of the remainder of expenses.¶ “The bank serves as a catalyst to bring that other
investment to the table; we don’t seek to be the sole financier of any infrastructure project,”
spokesperson Juan Antonio Flores says. “The local community needs to be invested in it.”¶ The
core mission of the bank, he says, is to provide environmental infrastructure that will improve
communities’ quality of life as well as promote economic growth.
NADBank can raise money from loans against their callable capital- allows them
to leverage funding.
NADBank 11
[2011, “ANNUAL REPORT: NADBank,”
http://www.nadbank.org/pdfs/publications/2011AnnualReport.pdf, JB]
FUNDING RESOURCES Capitalization The total authorized capital of NADB is US$3 billion with
equal commitments from its two member countries, the United States and Mexico. Each
government authorized the subscription of 150,000 shares of the Bank’s capital stock with a par
value of US$10,000 per share. Fifteen percent of NADB’s authorized capital is in the form of
paid-in capital; with the remaining eighty-five percent is callable capital. Paid-in capital
consists of cash funds contributed to NADB by the two governments. As of May 2009, the Bank
had received all paid-in capital contributions from the U.S. and Mexico, totaling US$450
million. As set forth in its Charter at inception, 10% of the paid-in capital and associated callable
capital subscribed by each country went to finance the domestic programs. Therefore, of the
US$450 million in paid-in capital, US$45 million was transferred to the domestic programs for
community adjustment and investment, leaving US$405 million for NADB's international
program. The paid-in capital for the domestic programs was divided equally between the two
countries with each receiving US$22.50 million for its respective program. The balance of paid-in
capital and related earnings for the Mexican domestic program was subsequently transferred to
the Mexican federal government as of June 1999. In the case of the U.S. domestic program,
NADB continues to hold and administer the balance of its paid-in capital and related earnings. As
of December 31, 2011, US$8.11 million in paid-in capital was allocated to USCAIP and held in the
Bank’s General Reserve. Callable capital totaling US$2.55 billion—with US$250 million related
to the domestic programs and the remaining US$2.30 billion to the international program—is
composed of funds that must be provided to NADB by the two governments if required to
meet its outstanding debt obligations or guaranties. Callable capital may not be used for loans
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or investments and constitutes, in effect, backing for the Bank’s outstanding indebtedness and
guaranties. Any capital call must be made uniformly to both member countries, but the
obligations of the U.S. and Mexico to make payment of the callable portion of their capital
subscriptions to the Bank are independent of each other. As a result, the failure of one member
country to make payment on any such call would not excuse the other member from its
obligation to make payment and, if necessary, the Bank may make successive calls on the nondefaulting member, up to its subscribed callable capital limit. Neither member country may be
required to pay more than the unpaid balance of its capital subscription. The United States’
subscription of US$1.275 billion of callable capital stock has been authorized by the U.S.
Congress but not yet appropriated. Further action by Congress would be required to enable
the Secretary of the U.S. Treasury to pay any portion of this amount. Similarly, Mexico’s
subscription of US$1.275 billion of callable capital stock has been fully authorized by its
legislature, but payment upon a call would be subject to an allocation of Mexican budgetary
resources for such purposes.
Nafta can make loans- catalyzes other capital.
NADBank 5-9
[5-9-13, North American Development Bank, “NADB Loan Policies and Procedures,” pg. 3,
http://www.nadb.org/pdfs/publications/LoanPolicies.pdf, accessed 6-26-13, JB]
I. INTRODUCTION The primary purpose of the North American Development Bank (NADB) is to
provide financing for environmental infrastructure projects certified by the Border
Environment Cooperation Commission (BECC). This document describe s the basic policies and
procedures that NADB follows in providing loan financing to BECC - certified projects. The loan
policies and procedures are based on the Agreement between the Government of the United
States of America and the Government of the United Mexican States Concerning the
Establishment of a Border Environment Cooperation Commission and a North American
Development Bank (the “Charter”). The Charter also authorizes NADB to provide financing in the
form of loan guaranties for BECC - certified projects and establishes basic requirements for such
guaranties. NADB currently does not have an active guaranty program, but may issue additional
guidelines for such financing in response to future client demand. II. CHARTER PRINCIPLES The
Charter sets forth the following key principle s governing NADB loan financing: BECC
Certification. NADB may provide loans only to environmental infrastructure projects certified by
BECC. Board of Directors. NADB and BECC have a common Board of Directors (the “Board of
Directors”). The Board of Directors determines whether to certify a project and whether to
authorize loan financing for that project. Geographic Limitations. BECC may certify
environmental infrastructure projects in the U.S. - Mexico border region, which is defined as
the area in the United States that is within 100 kilometers of the international border
between the U.S. and Mexico, and the area in Mexico that is within 300 kilometers of that
border. BECC may also certify an environmental infrastructure project outside the border
region if the Board of Directors determines that the project would remedy a transboundary
environmental or health problem. Specific Projects. NADB loans must be for specific projects.
Eligible Entities. NADB may make loans to the federal governments of the United States or
Mexico, to any agency or political subdivision of such governments, or to any entity in the
territory of the United States or Mexico. Private Sector. NADB may make loans to supplement
private investment when private capital is not available on reasonable terms and conditions.
NADB encourages the investment of public and private capital in the environmental
infrastructure projects for which it provides loan financing.
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Plan solves deficit—increased revenue
Texas Border Coalition, 12
[1-12-12, Texas Border Coalition, “Without Strategy: America’s Border Security Blunders
Facilitate and Empower Mexico’s Drug Cartels,”
http://webcache.googleusercontent.com/search?q=cache:T2_04YAbzfEJ:www.texasbordercoali
tion.org/Texas_Border_Coalition/Welcome_files/TBC%2520Report-Without%2520StrategyFinal.pdf+&cd=1&hl=en&ct=clnk&gl=us, accessed cached copy 7-10-13, GSK]
U.S. manufacturers and consumers depend on ready access to Mexican market sand goods.
U.S. exporters serve the Mexican market and profit from foreign sales. Border region
businesses in Arizona, California, New Mexico, and Texas tie their livelihoods to trade and
create jobs for American workers. Mexico is America’s third largest trading partner behind
only Canada and China. ¶ U.S.-Mexico trade totals $400 billion, a nearly fivefold increase since
the enactment of the North American Free Trade Agreement (NAFTA), with most goods crossing
via commercial truck. More than 13,000 trucks bring over $630 million worth of goods into the
U.S. from Mexico every day. U.S. exports to Mexico total $163 billion.7¶ As a matter of general
strategy, America cannot solve our budgetary problems solely by cutting expenses. We must
increase our revenues. Making our border crossings more efficient in conducting legal trade
with both Canada and Mexico will increase our national revenues and give us the resources to
fight the other problems we face in our borders.
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*Regional Integration Advantage*
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UQ- Trade Low
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Trade Barriers
Multiple barriers exist to US-Mexico trade in the status quo
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
accessed 6-25-13, LV]
Commerce between the United States and Mexico is one of the great—yet underappreciated—
success stories of the global economy. In fact, in 2011 U.S.-Mexico goods and services trade
probably reached the major milestone of one-half trillion dollars with virtually no recognition.
The United States is Mexico’s top trading partner, and Mexico—which has gained
macroeconomic stability and expanded its middle class over the last two decades—is the
United States’ second largest export market and third largest trading partner. Seventy percent
of bilateral commerce crosses the border via trucks, meaning the border region is literally where
“the rubber hits the road” for bilateral relations. This also means that not only California and
Baja California, but also Michigan and Michoacán, all have a major stake in efficient and secure
border management. Unfortunately, the infrastructure and capacity of the ports of entry to
process goods and individuals entering the United States has not kept pace with the
expansion of bilateral trade or the population growth of the border region. Instead, the need
for greater border security following the terrorist attacks of 9/11 led to a thickening of the
border, dividing the twin cities that characterize the region and adding costly, long and
unpredictable wait times for commercial and personal crossers alike. Congestion acts as a drag
on the competitiveness of the region and of the United States and Mexico in their entirety.
Solutions are needed that strengthen both border security and efficiency at the same time. The
development of the 21st Century Border initiative by the Obama and Calderón administrations
has yielded some advances in this direction, but the efforts need to be redoubled. Moderate
investments to update infrastructure and to fully staff the ports of entry are certainly needed,
as long lines and overworked staff promote neither efficiency nor security. But in a time of tight
federal budgets, asking for more resources cannot be the only answer. Strategic efforts that do
more with less, improving efficiency and reducing congestion, are also needed.
Integration with Mexico low
Peters, Professor at the Graduate School of Economics, Universidad Nacional
Autónoma de México (UNAM), 9
[Enrique, 11/09, Enrique Dussel Peters is a Professor at the Graduate School of Economics,
Universidad Nacional Autónoma de México (UNAM), “NAFTA,”
http://www.bu.edu/pardee/files/2009/11/Pardee-Report-NAFTA.pdf, accessed 6-28-13, LV]
Second, the integration process within NAFTA, and concretely between Mexico ¶ and the
United States, has been weakening steadily since 2000. From a Mexican ¶ perspective, the
share of trade with the United States fell from levels above 86 ¶ percent in the 1990s to 73
percent in 2008. In manufacturing the fall has been ¶ more substantial, with Mexico’s share of
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U.S. manufacturing imports dropping ¶ from levels above 80 percent in the 1990s to 45
percent in November 2008. ¶ Similarly, as measured by the Grubel-Lloyd Index that calculates
the percent of ¶ trade that is within industries, intra-industry trade (at the four-digit level of the
¶ Harmonized Tariff System) reached its highest level in 1998 with 48 percent and ¶ fell since
then to levels below 43 percent. This trend is a clear indicator of declining economic
integration between Mexico and the United States.
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Relations Low
Tensions now- intelligence sharing
Fox News 13 July 5, 2013
[7-5-13, Fox News: Latino, “U.S. Wants More Intelligence Cooperation With Mexico, White
House Report States,” http://latino.foxnews.com/latino/news/2013/07/05/us-wants-moreintelligence-cooperation-with-mexico-white-house-report-states/, accessed 7-6-13, JB]
While the U.S. report touts a need for greater cooperation, new Mexican security policies
could hamper that.¶ A recent decision by the Mexican government has ordered a halt in direct
communications between American intelligence agencies and their counterparts south of the
border. Now instead of directly consulting local law enforcement, agencies like the DEA and FBI
will have to contact Mexico's Interior Ministry before being passed along through the proper
channels.¶ Intelligence sharing, however, was a major talking point when President Barack
Obama met with his Mexican counterpart back in May. Despite scarce details about the
meeting, the two leaders discussed border security and the use of drones along the 1,954-mile
shared border.
Relations low now- fights over jurisdiction and the direction of the drug war
Archibold, New York Times bureau chief for Mexico, 13
[Randal C, 5-1-13, The New York Times, “Mexico’s Curbs on U.S. Role in Drug Fight Spark
Friction,” pgs. 1-2, http://www.nytimes.com/2013/05/01/world/americas/friction-between-usand-mexico-threatens-efforts-on-drugs.html?pagewanted=1&_r=0, accessed 7-6-13, JB]
But shortly after Mexico’s new president, Enrique Peña Nieto, took office in December,
American agents got a clear message that the dynamics, with Washington holding the clear
upper hand, were about to change.¶ “So do we get to polygraph you?” one incoming Mexican
official asked his American counterparts, alarming United States security officials who consider
the vetting of the Mexicans central to tracking down drug kingpins. The Mexican government
briefly stopped its vetted officials from cooperating in sensitive investigations. The Americans
are waiting to see if Mexico allows polygraphs when assigning new members to units, a senior
Obama administration official said.¶ In another clash, American security officials were recently
asked to leave an important intelligence center in Monterrey, where they had worked side by
side with an array of Mexican military and police commanders collecting and analyzing tips and
intelligence on drug gangs. The Mexicans, scoffing at the notion of Americans’ having so much
contact with different agencies, questioned the value of the center and made clear that they
would put tighter reins on the sharing of drug intelligence.¶ There have long been political
sensitivities in Mexico over allowing too much American involvement. But the recent policy
changes have rattled American officials used to far fewer restrictions than they have faced in
years.¶ Asked about security cooperation with Mexico at a news conference on Tuesday,
President Obama said: “We’ve made great strides in the coordination and cooperation between
our two governments over the last several years. But my suspicion is, is that things can be
improved.”¶ Mr. Obama suggested that many of Mexico’s changes “had to do with refinements
and improvements in terms of how Mexican authorities work with each other, how they
coordinate more effectively, and it has less to do with how they’re dealing with us, per se.” He
added, “So I’m not going to yet judge how this will alter the relationship between the United
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States and Mexico until I’ve heard directly from them to see what exactly are they trying to
accomplish.Ӧ Mr. Obama is scheduled to visit Mexico on Thursday and Friday on a mission
publicly intended to broaden economic ties. But behind the scenes, the Americans are coming
to grips with a scaling back of the level of coordination that existed during the presidency of
Felipe Calderón, which included American drones flying deep into Mexican territory and
American spy technology helping to track high-level suspects.¶ In an interview, Mexico’s interior
minister, Miguel Ángel Osorio Chong, made no apologies. He defended the moves, including
the creation of a “one-stop window” in his department to screen and handle all intelligence, in
the name of efficiency and “a new phase” in fighting crime.¶ In a country worn down by tens of
thousands of people killed in a drug war, he said Mexico needed to emphasize smart intelligence
over the militarized “combating violence with more violence” approach of the Calderón years.¶
But American officials here see the changes as a way to minimize American involvement and
manage the image of the violence, rather than confronting it with clear strategies. ¶ The lack of
certainty over Mexico’s plans and commitment has jeopardized new security assistance from
the United States. Plans to release $246 million, the latest installment of a $1.9 billion anticrime
package known as the Merida initiative, have been held up by Senator Patrick J. Leahy,
Democrat of Vermont. His office has been waiting for months for more details from the State
Department and the Mexican government on how the money would be spent and what it might
accomplish.¶ A senior administration official, speaking on the condition of anonymity to provide
a more candid assessment, said a recent visit by Mr. Osorio Chong to Washington helped calm
some fears. A delegation of Mexican officials is also expected to visit in the coming weeks to
explain the country’s plans to members of Congress. ¶ But there is growing anxiety that the
violence has not diminished, with daily killings hovering around 50 since last fall. Some
American officials say they are increasingly worried by public and private signs suggesting that
Mr. Peña Nieto, the young face of the Institutional Revolutionary Party, which ran Mexico for 71
years, is putting the government’s crime-fighting image above its actions.¶ “The cosmetics —
that’s what they care about,” one American official said, insisting on anonymity so as not to
worsen already tense relations.¶ “The impression they seem to want to send is ‘We got this,’ ”
one former American official said, asking for anonymity because he was discussing private
conversations. “But it’s clear to us, no, they don’t. Not yet.”¶ A senior administration official,
asked for a sign of progress or a recent accomplishment in security matters, struggled with the
question until pointing to the extradition to the United States of a few men on drug charges,
conceding they were not big fish. Other extradition requests appear stalled; there were 155 last
year, mostly for drug offenses, the highest in nearly a decade.¶ Tuesday evening, less than 48
hours before Mr. Obama’s arrival and with mounting questions on whether Mexico would go
after kingpins, Mexico announced it had captured Inés Coronel, the father-in-law of the mostwanted capo, Joaquín Guzmán Loera, known as El Chapo. It was unclear if the United States
played a role in the arrest.¶ If so, it would represent a step beyond the Mexican discomfort with
Americans operating on their turf that emerged in December, just after Mr. Peña Nieto’s
inauguration. It solidified after an explosion on Jan. 31 at the office complex of the state oil
company, Pemex, in which 37 people died and more than 120 were injured.¶ Agents with the
Bureau of Alcohol, Tobacco, Firearms and Explosives were invited to help investigate. But after
they suggested in a preliminary assessment that a bomb might have caused the blast, the
agency’s role in the investigation was cut short, American officials said, adding that Mexican
officials canceled a visit by a team of investigators from the United States.¶ An administration
official said that while American explosives experts were not allowed to contribute as much as
they could have to the investigation, creating a sense that the Mexicans were rushing to
conclude that the blast was an accident.¶ On Feb. 4, the attorney general of Mexico announced
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that the cause was an unexplained buildup of gas, possibly methane, that was ignited by a spark
in the basement of one of the buildings.¶ The American ambassador was invited to the news
conference on the findings, but a State Department official said the level of American
involvement in the investigation did not warrant the ambassador’s presence. With the American
agents leaving the cooperative center in Monterrey, which was first reported by The
Washington Post on Sunday, and the development of the one-stop intelligence mechanism, the
United States is worried and is seeking more information.¶ “We’re still figuring out what that
means,” a senior administration official said of the new intelligence arrangement.¶ But the fear
is that it will diminish the access that American law enforcement and intelligence agencies
have established with branches of the Mexican police and military. Those hard-fought
relationships could disintegrate if American agents have to go through a central office to
communicate and share knowledge with their Mexican counterparts, some American officials
say.
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UQ- U.S. Econ Low
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Decline Now
Economic decline now—low growth and exports
The Market Oracle, 13
[6-29-13, The Market Oracle, “Dismal U.S. Consumer Spending to Drag U.S. Back into
Recession,” http://www.marketoracle.co.uk/Article41170.html, accessed 7-6-13, GSK]
After the first estimates of gross domestic product (GDP) for the U.S. economy came out, a
wave of optimism struck and stock markets rallied. It seemed as if everything was headed in the
right direction.¶ Sadly, they were wrong.¶ In its third and final revision of GDP, the Bureau of
Economic Analysis (BEA) reported that the U.S. economy grew at just 1.8% in the first quarter
of 2013 from the fourth quarter of 2012—that is 25% lower than its previous (second)
estimates, when the BEA said the U.S. economy grew 2.4%, and 28% lower from its first
estimate of 2.5%. (Source: Bureau of Economic Analysis, June 26, 2013.)¶ The primary reasons
behind the decline in GDP growth are that domestic consumer spending and exports from the
U.S. declined.¶ Going forward, I see continued dismal consumer spending in the U.S. economy.
There’s no rocket science behind my reasoning, just one simple economic concept. Economics
101: when interest rates increase, consumer spending declines, because it costs the consumer
more to borrow, so they step back from buying.¶ Remember: consumer spending is the
backbone of any growth in the U.S. economy. If it decreases, our economic growth becomes
questionable.¶ What we have seen in the past few weeks are skyrocketing yields on U.S.
bonds—suggesting long-term interest rates are rising. The effects of this will eventually trickle
down to places where consumers in the U.S. economy borrow to buy. One example of this type
of place is the automobile sector.¶ Consider this: car and light truck sales are on path to increase
beyond 15 million units this year in the U.S. economy—in 2009, they stood at 10.4 million.
(Source: Wall Street Journal, June 26, 2013.) Will consumer spending on cars be the same if
interest rates on car loans start to increase? I doubt it.¶ And there’s another threat to consumer
spending—unemployment. In May, there were 1,301 mass layoffs in the U.S. economy,
involving 127,821 workers, an increase of 8.5% over April. (Source: Bureau of Labor Statistics,
June 21, 2013.) When a person is unemployed, their spending is down and large credit
purchases like cars are unlikely.¶ If consumer spending in the U.S. economy continues to
struggle, it will start to show up in the corporate earnings of companies on key stock indices that
are currently able to buy back their own shares and cut expenses to make their numbers appear
better. Looking at the prospects of anemic consumer spending in the U.S., I remain skeptical.
The optimism I see now is based on nothing but hope. Once the hangover from easy money
goes away, I wouldn’t be surprised to see U.S. GDP numbers turn negative. Yes, that means
back to recession.
US econ low now- multiple factors
Craft, reporter for Forbes, 13
[Matthew, 6-15-13, Denver Post, “Disappointing Reports Help Push U.S. Stocks Down,”
http://www.denverpost.com/business/ci_23465104/disappointing-reports-help-push-u-sstocks-down, accessed 7-7-13, ML]
Disappointing reports about the U.S. economy helped push the stock market lower on Friday.¶
Concerns that the Federal Reserve could announce plans to cut back its stimulus program next
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week also weighed on the mood.¶ Americans’ confidence in the economy weakened in June
and was lower than economists had estimated, according to the Thomson Reuters/University of
Michigan survey out Friday. Another report said factories weren’t as busy as expected.¶ The
International Monetary Fund, a global lender, offered no help. The IMF said Friday that U.S.
government spending cuts that kicked in March 1 were “ill-designed” and slowed the
economy down.¶ The Standard & Poor’s 500 index sank 9.63 points, or 0.6 percent, to 1,626.73.
Media company Gannett fell the most, dropping $1.61, or 6 percent, to $24.99.¶ “There was just
no good news today,” said Cam Albright, a director at Wilmington Trust Investment Advisors in
Wilmington, Del. Add the handful of economic reports out Friday to the anxiety over the Fed’s
stimulus program, “and you have the recipe for a soft market to finish the week,” he said.¶ The
Dow Jones industrial dropped 105.90 points, or 0.7 percent, to 15,070.18. American Express led
the Dow lower, losing $2.24, or 3 percent, to $72.97.¶ Market indexes flitted from slight gains to
losses in morning trading, a contrast to the sudden lurches in previous days. All three major
indexes lost 1 percent or more this week.¶ Trading has been volatile since late May as traders
try to figure out when the Fed will dial back its aggressive support for the U.S. economy. This
week was no different: The Dow slumped a total of 243 points on Tuesday and Wednesday then
jumped 180 points Thursday. The blue-chip average has made moves of 100 points or more in
seven of the last 10 trading days.¶ The Fed buys $85 billion in bonds every month as part of a
campaign to keep interest rates extremely low. The aim is to encourage borrowing, spending
and investing. Some investors worry that long-term interest rates could spike when the Fed
pulls back, raising borrowing costs and threatening the economic recovery. Higher yields for
government bonds have already started pushing mortgage rates up.¶ Policymakers at the Fed
will start a two-day meeting Tuesday to discuss the central bank’s next steps. After the meeting
wraps up, the bank will release its policy statement and Fed Chairman Ben Bernanke will hold
another news conference.¶ The S&P 500 hit a record high of 1,669 on May 21. The next day, Fed
officials said they would consider pulling back on their stimulus program once the economy
looks healthy enough. The S&P 500 has lost 2 percent since.¶ In other Friday trading, the Nasdaq
composite index lost 21.81 points, or 0.6 percent, to 3,423.56.
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Collapse
US economy headed for a massive collapse now—multiple experts predict
Money News, 7-11
[7-11-13, Money News, “Economist Caution: Prepare For 'Massive Wealth Destruction,'”
http://www.moneynews.com/MKTNews/Massive-wealth-destructioneconomy/2013/06/20/id/511043/?promo_code=13E5C-1&utm_source=taboola, accessed 7-1213, GSK]
That’s exactly what many well-respected economists, billionaires, and noted authors are telling
you to do — experts such as Marc Faber, Peter Schiff, Donald Trump, and Robert Wiedemer.
According to them, we are on the verge of another recession, and this one will be far worse
than what we experienced during the last financial crisis. ¶ Marc Faber, the noted Swiss
economist and investor, has voiced his concerns for the U.S. economy numerous times during
recent media appearances, stating, “I think somewhere down the line we will have a massive
wealth destruction. I would say that well-to-do people may lose up to 50 percent of their total
wealth.” ¶ When he was asked what sort of odds he put on a global recession happening, the
economist famous for his ominous predictions quickly answered . . . “100 percent.” ¶ Faber
points out that this bleak outlook stems directly from Federal Reserve Chairman Ben
Bernanke’s policy decisions, and the continuous printing of new money, referred to as
“quantitative easing” in the media. ¶ Faber’s pessimism is matched by well-respected
economist and investor Peter Schiff, the CEO of Euro Pacific Capital. Schiff remarks that the
stock market collapse we experienced in 2008 “wasn’t the real crash. The real crash is
coming.” ¶ Schiff didn’t stop there. Most alarming is his belief that daily life will get dramatically
worse for U.S. citizens. ¶ “If we keep doing this policy of stimulus and growing government, it’s
just going to get worse for the average American. Our standard of living is going to fall . . .
People who are expecting Social Security can’t get all that money. People expecting
government pensions can’t get all their money . . . We simply can’t afford to pay them.” ¶
Equally critical of the current government and our nation’s economy is real estate mogul and
entrepreneur Donald Trump, who is warning that the United States could soon become a largescale Spain or Greece, teetering on the edge of financial ruin. ¶ Trump doesn’t hesitate to point
out America’s unhealthy dependence on China. “When you’re not rich, you have to go out and
borrow money. We’re borrowing from the Chinese and others.” ¶ It is this massive debt that
worries Trump the most. ¶ “We are going up to $16 trillion [in debt] very soon, and it’s going to
be a lot higher than that before he gets finished,” Trump says, referring to President Barack
Obama. “When you have [debt] in the $21-$22 trillion [range], you are talking about a [credit]
downgrade no matter how you cut it.” ¶ In a recent appearance, Trump went to so far as to say
the dollar is “going to hell.”¶ Where Trump, Faber, and Schiff see rising debt, a falling dollar,
and a plunging stock market, investment adviser and author Robert Wiedemer sees much
more widespread economic destruction. ¶ In a recent interview to talk about his New York
Times best-seller Aftershock, Wiedemer says, “The data is clear, 50 percent unemployment, a
90 percent stock market drop, and 100 percent annual inflation… starting in 2013.” ¶ Before
you dismiss Wiedemer’s claims as impossible or unrealistic, consider this: In 2006, Wiedemer
and a team of economists accurately predicted the collapse of the U.S. housing market, equity
markets, and consumer spending that almost sank the United States. They published their
research in the book America’s Bubble Economy.¶ When the interview host questioned
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Wiedemer’s latest data, the author unapologetically displayed shocking charts backing up his
allegations, and then ended his argument with, “You see, the medicine will become the
poison.Ӧ The interview has become a wake-up call for those unprepared (or unwilling) to
acknowledge an ugly truth: The country’s financial “rescue” devised in Washington has failed
miserably.
Economic vulnerability from slow growth risks global economic collapse
Roubini, Professor at NYU’s Stern School of Business, 13
[Nouriel, 1-21-13, Project Syndicate, “The Economic Fundamentals of 2013,”
http://www.project-syndicate.org/commentary/the-global-economy-s-rising-risks-in-2013-bynouriel-roubini, accessed 7-12-13, ML]
The global economy this year will exhibit some similarities with the conditions that prevailed in
2012. No surprise there: we face another year in which global growth will average about 3%,
but with a multi-speed recovery – a sub-par, below-trend annual rate of 1% in the advanced
economies, and close-to-trend rates of 5% in emerging markets. But there will be some
important differences as well. ¶ Painful deleveraging – less spending and more saving to reduce
debt and leverage – remains ongoing in most advanced economies, which implies slow
economic growth. But fiscal austerity will envelop most advanced economies this year, rather
than just the Eurozone periphery and the United Kingdom. Indeed, austerity is spreading to the
core of the Eurozone, the United States, and other advanced economies (with the exception of
Japan). Given synchronized fiscal retrenchment in most advanced economies, another year of
mediocre growth could give way to outright contraction in some countries. ¶ With growth
anemic in most advanced economies, the rally in risky assets that began in the second half of
2012 has not been driven by improved fundamentals, but rather by fresh rounds of
unconventional monetary policy. Most major advanced economies’ central banks – the
European Central Bank, the US Federal Reserve, the Bank of England, and the Swiss National
Bank – have engaged in some form of quantitative easing, and they are now likely to be joined
by the Bank of Japan, which is being pushed toward more unconventional policies by Prime
Minister Shinzo Abe’s new government.¶ Moreover, several risks lie ahead. First, America’s
mini-deal on taxes has not steered it fully away from the fiscal cliff. Sooner or later, another ugly
fight will take place on the debt ceiling, the delayed sequester of spending, and a congressional
“continuing spending resolution” (an agreement to allow the government to continue
functioning in the absence of an appropriations law). Markets may become spooked by another
fiscal cliffhanger. And even the current mini-deal implies a significant amount of drag – about
1.4% of GDP – on an economy that has grown at barely a 2% rate over the last few quarters. ¶
Second, while the ECB’s actions have reduced tail risks in the Eurozone – a Greek exit and/or
loss of market access for Italy and Spain – the monetary union’s fundamental problems have not
been resolved. Together with political uncertainty, they will re-emerge with full force in the
second half of the year. ¶ After all, stagnation and outright recession – exacerbated by frontloaded fiscal austerity, a strong euro, and an ongoing credit crunch – remain Europe’s norm. As
a result, large – and potentially unsustainable – stocks of private and public debt remain.
Moreover, given aging populations and low productivity growth, potential output is likely to be
eroded in the absence of more aggressive structural reforms to boost competitiveness, leaving
the private sector no reason to finance chronic current-account deficits. ¶ Third, China has had to
rely on another round of monetary, fiscal, and credit stimulus to prop up an unbalanced and
unsustainable growth model based on excessive exports and fixed investment, high saving, and
low consumption. By the second half of the year, the investment bust in real estate,
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infrastructure, and industrial capacity will accelerate. And, because the country’s new leadership
– which is conservative, gradualist, and consensus-driven – is unlikely to speed up
implementation of reforms needed to increase household income and reduce precautionary
saving, consumption as a share of GDP will not rise fast enough to compensate. So the risk of a
hard landing will rise by the end of this year. ¶ Fourth, many emerging markets – including the
BRICs (Brazil, Russia, India, and China), but also many others – are now experiencing
decelerating growth. Their “state capitalism” – a large role for state-owned companies; an even
larger role for state-owned banks; resource nationalism; import-substitution industrialization;
and financial protectionism and controls on foreign direct investment – is the heart of the
problem. Whether they will embrace reforms aimed at boosting the private sector’s role in
economic growth remains to be seen.¶ Finally, serious geopolitical risks loom large. The entire
greater Middle East – from the Maghreb to Afghanistan and Pakistan – is socially, economically,
and politically unstable. Indeed, the Arab Spring is turning into an Arab Winter. While an
outright military conflict between Israel and the US on one side and Iran on the other side
remains unlikely, it is clear that negotiations and sanctions will not induce Iran’s leaders to
abandon efforts to develop nuclear weapons. With Israel refusing to accept a nuclear-armed
Iran, and its patience wearing thin, the drums of actual war will beat harder. The fear premium
in oil markets may significantly rise and increase oil prices by 20%, leading to negative growth
effects in the US, Europe, Japan, China, India and all other advanced economies and emerging
markets that are net oil importers. ¶ While the chance of a perfect storm – with all of these risks
materializing in their most virulent form – is low, any one of them alone would be enough to
stall the global economy and tip it into recession. And while they may not all emerge in the
most extreme way, each is or will be appearing in some form. As 2013 begins, the downside
risks to the global economy are gathering force.
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Recession
Double-dip recession by 2013
Fieldhouse, expert in Tax and Budget Policy, 12
[Andrew, 6-10-12, Economic Policy Institute, “Avoiding a Double-Dip Recession Doesn’t Require
Extending the Bush Tax Cuts,” http://www.epi.org/publication/avoiding-double-dip-recessiondoesnt-require, accessed 7-4-13, AR]
Politicians, pundits, and the press corps are turning their attention to the so-called “fiscal
cliff,” the host of expiring tax provisions and scheduled spending cuts that will collectively
push the U.S. economy into a double-dip recession in the first half of 2013 if they all
materialize. The “fiscal cliff,” however, is a terrible metaphor—it implies an all-or-nothing
choice between continuing all current budget policies and running smack into the
legislated trajectory for fiscal policy. As explained in our new briefing paper, a better
framework for understanding the impending drags is a “fiscal obstacle course.”Running
into certain hurdles would all but guarantee a double-dip recession, whereas some
other policies would only act as speed bumps moderately slowing growth—and
policymakers can choose à la carte how to navigate this path. More critically,
policymakers can fully (or more than) offset any of the adverse economic impacts associated
with implementing long-term deficit reduction; particularly tax increases, with more
efficient temporary fiscal support. Economic growth will largely be determined by fiscal
policy over the next few years, but currently, fiscal policy is poised to stifle recovery . The
Congressional Budget Office projects that the economy will shrink 0.5 percent in 2013
under current law, weighed down by a 2.9 percent contraction in the first half of the year. The
Federal Reserve has exhausted its conventional policy levers and is no position to
cushion fiscal economic headwinds of this magnitude. Growth is paramount to both
economic recovery and fiscal sustainability, but the economy must expand at a sufficient
clip—2.5 percent annually as a rule of thumb—to lower the unemployment rate and alleviate
the persisting jobs crisis. So how can policymakers best keep fiscal policy from sparking a
double-dip recession and instead help restore full employment? Understanding the economic,
rather than budgetary, impacts of the fiscal choices ahead of Congress is critical for sustaining
economic recovery, but expensive policies are regrettably being assumed to be effective
policies. Much of the fiscal cliff discourse is narrowly focused on the expiration of the
Bush-era tax cuts and the automatic “sequestration” spending cuts scheduled to be
triggered in 2013 by the Budget Control Act (BCA), i.e., last summer’s debt ceiling deal.
Concern with the economic impact of the former is unfounded and overhyped while
concern with the latter is merited but insufficient; meanwhile, warranted concern is illadvisedly missing from several substantial fiscal drags, notably expiring fiscal stimulus.
Avoiding a double-dip recession does not necessitate extending the Bush tax cuts;
despite their huge budgetary cost, the tax cuts offer minimal economic support, were
never designed as fiscal stimulus, and have a dismal economic track record. Maintaining
the remaining ad hoc fiscal stimulus—the payroll tax cut, emergency unemployment
benefits, and recent expansions of refundable tax credits—would add 1.4 percentage
points to growth relative to current law. This would be enough to mitigate roughly half
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the economic slide projected for the first half of 2013. Reversing the spending cuts from
the BCA would add another 1.1 percentage points to growth, but it’s important to note
that over one-third of this impact comes from the (widely ignored) discretionary
spending caps rather than the higher-profile looming automatic sequestration cuts.
These parts of the fiscal obstacle course have the biggest economic impacts per dollar,
and we project that collectively dodging them would sustain real GDP growth of 2.0
percent for 2013—a faster pace than the 1.8 percent annualized growth rate for the first
half of 2012. Maintaining the Bush-era tax cuts, on the other hand, would add only a
meager 0.5 percentage points to growth, most of which comes from more targeted
provisions for lower-income households (the 10 percent bracket and refundable
credits). Allowing the upper-income tax provisions and estate and gift tax cuts to expire
on schedule would shave a trivial tenth of a percentage point from growth (while saving
$1.4 trillion over the next decade). The other handful of current budget policies typically
renewed on an annual basis (patching the alternative minimum tax, extending business
tax cuts, and preventing Medicare physician reimbursement cuts) would similarly add
0.5 percentage points to growth. Continuing only the Bush tax cuts and these other
routinely renewed budget policies would produce anemic growth of just 0.5 percent for the
year, with a likely contraction of 1.9 percent for the first half of the year. This menu,
however, is in no way exhaustive of the fiscal choices ahead of Congress. Enacting more
targeted fiscal stimulus, such as infrastructure investments and aid to state
governments, could smooth over any of these fiscal drags—particularly the smaller headwinds
from the pending expiration of tax cuts. Well-targeted fiscal stimulus can deliver more than
four times the economic boost per dollar as poorly targeted economic policies (e.g., Bush
income tax cuts). Consequently, well-targeted fiscal stimulus could produce the same
economic benefit of dodging all of these fiscal obstacles for roughly $318 billion (43
percent) less than their budgetary cost. There are three major takeaways from this
decomposed fiscal obstacle course. First, extending the upper-income Bush-era tax cuts
would do next to nothing in terms of avoiding a double-dip recession—yet expiration would
produce substantial savings over the coming decade. Second, the expiration of temporary,
targeted stimulus and the implementation of BCA spending cuts both pose substantial
impediments to growth that should be mitigated as cost-effectively as possible. Lastly, various
fiscal drags from implementing long-term deficit reduction, particularly on the tax side, can
easily be offset with efficient temporary fiscal support. The current law fiscal trajectory would,
if followed, induce a recession in 2013.However, panic over this scenario (which nobody
thinks will come to pass) should not be allowed to be exploited politically to maintain
tax policies that provide only minimal support to the economy while turning a blind eye
to the real threats to economic and employment growth over the coming year.
Slow economic recovery has followed the Recession
Glasier, regional reporter for the News Herald, 13
[David S., 6-30-13, The News Herald, “US Economy ‘in a new paradigm' With Slow Recovery,”
http://www.news-herald.com/articles/2013/06/30/news/nh7184239.txt?viewmode=fullstory,
Accessed 7/7/13, ML]
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"The economy is incrementally better than it was one year ago, but not far better," Victor said.¶
"The depth of the ‘Great Recession' was probably worse than anyone wanted to
acknowledge,'' Victor said.¶ "With that, it will take us longer to achieve full recovery. We're in a
new paradigm."¶ Trebar is dean of the School of Business at Lake Erie College in Painesville.¶
"This is an atypical recovery,'' Trebar said.¶ "Usually, the steeper and deeper the downturn, the
steeper and quicker the upturn. This hasn't been the case this time."¶ Victor and Trebar cited
the underlying cause of the September 2008 economic meltdown — the collapse of major
financial institutions holding mortgage-based securities — as the main reason why this
recovery has proceeded so slowly.¶ "Had the (George W.) Bush and Obama administrations not
intervened after what happened in September 2008, our financial system would have collapsed
and we'd be in far worse shape than we are now," Victor said.¶ The hole was so deep, Trebar
explained, that it extended the timetable for climbing out of it.¶ "The usual length of a business
cycle, from peak to peak or trough to trough, is 41⁄2 to five years," Trebar said.¶ "Typically, we'd
be much further than we are into recovery in terms of GDP (gross domestic product) and growth
rate of the economy. You'd expect the economy to be growing at a rate of 31⁄2 to 4 percent a
year by now," Trebar added.¶ "Instead, we're at 2 percent. It's taking much longer than usual to
get back to the pre-recession level than any recovery in this century." To gauge the progress of
the recovery or lack thereof, one must wade through a dizzying array of indicators that
includes stock market gains and losses, employment and unemployment figures, index of
consumer confidence, average household wealth, retail sales, mortgage rates, interest rates,
retail sales figures and durable goods orders.¶ This is the most-analyzed recovery in the history
of the U.S. economy, too.¶ "We didn't have all-news cable channels, cable news channels
devoted strictly to business and the economy, Twitter and Facebook in prior economic
downturns or upturns," Trebar said.¶ "Couple the prolonged recession and prolonged recovery
with growing income inequality and that brings out emotional, politically oriented reactions that
get a lot of airtime," Trebar added.
US recession coming now—multiple warrants
Kodesh, Ivy League PhD active in program and curriculum development, 6-12
[Emmet, 6-12-13, Seeking Alpha, “2014 Recession? Outlook And Allocation,”
http://seekingalpha.com/article/1498052-2014-recession-outlook-andallocation?source=google_news, accessed 7-6-13, GSK]
In a June 11 interview, Fred Goodwin, Global Macro Strategist for State Street Bank confirmed
the main points on the economy and markets that my columns have been articulating for
several months, especially the past few weeks. The global risk-on trade for equities is being
driven by US markets, which in turn reflect expectations on QE. The upshot of Goodwin's
analysis and the other sources I have cited and discussed is that a recession by 2014 is likely.
This column reviews main indicators for that outcome and offers thoughts on allocation of
assets. Before closing I also will mention factors that could prevent or mitigate a recession.¶
Goodwin points to some of the same key data I have noted: ISM - PMI declining since July 2009
and now below 50, indicating economic contraction ("general economy seems sluggish and
pensive"), 7 quarters of recession in Europe and a 2-1 ratio of US tax increases to spending
cuts like that undertaken last year in France and Italy. As I did in my June 10 piece explicitly,
reiterating the point and using bold to ensure it was heeded, he stated that uncertainty about
continued Fed debt creation, yield suppression and asset inflation has become a key negative
factor in markets. I do not expect this fear-inducing quality to diminish: clearly it is part of the
socio-fiscal package. Those kept on their toes with bated breath lose power to those upon
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whose words and hints they hang. Healthy markets riding an organically strengthening economy
will not live or die on interpretation of hints from policy makers. That is what happens as power
is concentrated.
Recession coming now—all major indicators prove
Seymour, no qualifications available, 6-25
[Jeff, 6-25-13, Wall Street Sector Selector, “U.S. Recession Forecast,”
http://wallstreetsectorselector.com/2013/06/u-s-recession-forecast/#, accessed 7-7-13, GSK]
I rely on the Chicago Fed’s National Activity Index (CFNAI), ECRI’s WLI, and some other factors
in forecasting broad U.S. economic growth rates. My latest forecast is for the U.S. economy to
begin contracting in August (September at the latest).¶ By the end of August, the CFNAI will
likely show a running total of economic damage in the -4.0 neighborhood. The latest data
came out this morning and showed a -0.43 for May (use the 3-month average, not the single
month), and a total running economic damage of -2.35.¶ Perilously close the to reading seen
when the U.S. last entered recession in December 2007.¶ The previous recession began with
the CFNAI running total economic damage at -2.42 in December 2007. That’s right. Unless
there’s an epic bounce in economic activity this month, it’s a slam-dunk that the CFNAI will
post a running total with a lower number than was seen when the last recession started.
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Slow Growth
US economy low now- slow growth and productivity.
Baker, Co-director of the Centre for Economic and Policy Research, 13
[Dean, 7-5-13, The Guardian, “Upbeat June Jobs Report Still Leaves US Economy in a Deep Hole,”
http://www.guardian.co.uk/commentisfree/2013/jul/05/june-jobs-report-us-economy,
accessed 7-6-13, ML]
Of course, the weakness of the job market is not a surprise. The economy has been growing at
less than a 2% annual rate for the last three years. In this context, it is surprising that we are
seeing job growth of even 100,000 a month. Most analysts put the economy's trend rate of
growth in the range of 2.2-2.5%. This means that the economy has to grow at this pace just to
keep the unemployment rate from rising.¶ The reason that we have been able to able to achieve
above-trend growth in employment in an economy growing much slower than its trend path is
that the rate of productivity growth has fallen through the floor. Productivity growth has
averaged less than 1% in the last three years, as opposed to 2.5% in the decade preceding the
downturn.
Economic confidence remains low – fiscal cliff
Mendes, Deputy Managing Editor at Gallup, 13
[Elizabeth, 1-8-13, Gallup, “U.S. Economic Confidence Remains Low Post-Fiscal Cliff Deal,”
http://www.gallup.com/poll/159734/economic-confidence-remains-low-post-fiscal-cliffdeal.aspx, accessed 6-27-13, AR]
SHINGTON, D.C. -- Gallup's U.S. Economic Confidence Index was -21 for the week ending Jan. 6,
similar to the -22 in the week prior. Americans' confidence in the economy has worsened amid
the fiscal cliff debate after improving in November. Last week's reading encompasses the days
during which lawmakers reached a final agreement on resolving the fiscal cliff, culminating in
President Obama's signing the bill on Wednesday, Jan. 2. Americans' confidence in the economy
climbed to a four-year high in November, before uncertainty surrounding the fiscal cliff
apparently caused it to worsen. Although down, confidence has not dropped nearly as low as
the August 2011 weekly reading of -54, which came in the aftermath of the debt ceiling debate.
Americans' lower economic confidence is due to worsening views of current conditions and a
souring outlook for the future. The -18 economic outlook rating is down significantly from -1 in
early November, with 39% of Americans now saying the economy is getting better and 57%
saying it is getting worse. Sixteen percent of Americans say the economy is excellent or good
and 40% say it is poor, resulting in a -24 current conditions rating, down from -18 in early
November.
Gonzaga Debate Institute 2013
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Unemployment
Unemployment high now- our evidence takes into account more accurate
studies
Diamond, Contributor at Forbes, 13
[Dan, 7-5-13, Forbes, “Why The 'Real' Unemployment Rate Is Higher Than You Think,”
http://www.forbes.com/sites/dandiamond/2013/07/05/why-the-real-unemployment-rate-ishigher-than-you-think/, accessed 7-6-13, ML]
First, when the latest jobs report was released on Friday morning. It was generally heralded as a
good report — for good reason. According to initial Bureau of Labor Statistics estimates, the U.S.
gained nearly 200,000 jobs in June, and another 70,000 jobs appear to have been discovered in
April and May. As a result, the nation’s official unemployment rate held steady at 7.6%; not
great, but miles better than the 10% unemployment rate that the U.S. flirted with between
2009 and 2010.¶ But the “official” unemployment rate doesn’t count men and women like G. —
discouraged workers who have settled for part-time jobs or have given up looking altogether.
Tracking those individuals, under what’s called the “U-6″ rate, gives a very different measure
of the nation’s unemployment rate: 14.3%.¶ And unlike other jobs figures, the U-6 rate actually
got worse in June — it went up by 0.5 percentage points.¶ There’s a strong argument that given
the Great Recession’s damage to the economy, and because millions of Americans like G. have
simply given up their job search, the U-6 rate is a more accurate reflection of national
employment. Like the “official” rate, the U-6 essentially doubled between 2007 and 2009;
unlike the official rate, it’s not coming down as fast.¶ But most news organizations don’t cover
the U-6 rate, and many economists don’t focus on it. (Donald Marron of the Brookings
Institution was among the few economists who regularly monitored it through the recession and
the recovery; when we spoke last year, Marron told me that the U-6 offered a broader look at
where the nation stood.)
Unemployment high now- their evidence doesn’t take into account those who
have given up the job search
Baker, Co-director of the Centre for Economic and Policy Research, 13
[Dean, 7-5-13, The Guardian, “Upbeat June Jobs Report Still Leaves US Economy in a Deep Hole,”
http://www.guardian.co.uk/commentisfree/2013/jul/05/june-jobs-report-us-economy,
accessed 7-6-13, ML]
Of course, the weakness of the job market is not a surprise. The economy has been growing at
less than a 2% annual rate for the last three years. In this context, it is surprising that we are
seeing job growth of even 100,000 a month. Most analysts put the economy's trend rate of
growth in the range of 2.2-2.5%. This means that the economy has to grow at this pace just to
keep the unemployment rate from rising.¶ The reason that we have been able to able to achieve
above-trend growth in employment in an economy growing much slower than its trend path is
that the rate of productivity growth has fallen through the floor. Productivity growth has
averaged less than 1% in the last three years, as opposed to 2.5% in the decade preceding the
downturn.
The 195,000 new jobs reported for June was somewhat better than most economists had
expected. The job gains, together with upward revisions to the prior two months' data, raised
Gonzaga Debate Institute 2013
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average growth for the last three months to 196,000. While this may lead some to be dancing in
the streets, those who actually care about the economy may want to hold off.¶ First, it is
important to remember the size of the hole the economy is in. We are down roughly 8.5 million
jobs from our trend growth path. We also need close to 100,000 jobs a month to keep pace
with the underlying growth rate of the labor market. This means that even with the relatively
good growth of the last few months, we were only closing the gap at the rate of 96,000 a
month. At this pace, it will take up more than seven years to fill the jobs gap.¶ It is easy to miss
the size of the jobs gap since the current 7.6% unemployment rate doesn't seem that high.
However, the main reason that the unemployment rate has fallen from its peak of 10% in the
fall of 2009 is that millions of people have dropped out of the labor force and stopped looking
for jobs. These people are no longer counted as being unemployed.¶ If we look at the
employment to population ratio – the percentage of people who have jobs – this has risen just
0.5 percentage points from the low-point of the downturn. It is still down by more than 4.0
percentage points from its pre-recession level, and by 6.0 full percentage points from the peak
hit in the boom of 2000.¶ After severe downturns in the 1970s and 1980s, we had months in
which the economy created over 400,000 jobs. And this was in a labor market that was more
than one-third smaller. That is the sort of job growth that we should be seeing after a recession
like the one we saw in 2008-2009. Unfortunately, such growth is nowhere in sight.
Unemployment high now- new jobs are only part-time
Davis, Blog Writer at Opposing Views, 6/11/13
[Ashley, 6-11-13, Opposing Views, “Obamacare is Blamed For High Unemployment Rate In U.S.,”
http://www.opposingviews.com/i/health/obamacare-blamed-high-unemployment-rate-us,
accessed 7-6-13, ML]
The current unemployment rate is 7.6 percent and the labor market is said to be weak.¶ In 2009,
President Obama and Congress passed a $800 billion stimulus they hoped would bring the
unemployment rate to 5.1 percent by the end of 2013. But now, the percentage of employed
Americans is 58.6 percent. Before the recession, that number was 63.4 percent. ¶ Many jobs
that have been added to the market recently are summer ones taken by teenagers and young
adults.¶ Underemployment rates are even worse, as those who work part-time and want fulltime jobs continue to rise in numbers. If they are included in the unemployment rate, the
number jumps to 13.8 percent.
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UQ- Mexican Econ Low
Gonzaga Debate Institute 2013
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Growth Down
Mexican economy low now- multiple indicators prove
Harrup, Correspondent for Dow Jones Newswires, 13
[Anthony, 7-1-13, Dow Jones, “Mexican Economic Data Point to a Sluggish Second Quarter,”
http://www.4-traders.com/news/Mexican-Economic-Data-Point-to-a-Sluggish-Second-Quarter-17062739/, accessed 7-6-13, ML]
Economists continue to ratchet down their expectations for Mexico's economic growth in
2013, with recent data suggesting that the weakness seen at the start of the year continued
well into the second quarter.¶ The Mexican Institute of Finance Executives, or IMEF, said
Monday that its manufacturing index fell in June to 47.3, its second month below the 50 level
which marks the threshold between expansion and contraction. IMEF's non-manufacturing
index, which measures activity in services, rose slightly to 51.7 after eight consecutive months of
declines.¶ "The June results suggest that weakness will remain in the second quarter in both
manufacturing and services," IMEF said. The institute said it saw mixed signals in the U.S.
economy, a big driver of Mexican activity, with fairly robust private demand offsetting the
negative effects of lower government spending.¶ Bill Adams, senior international economist at
PNC Financial Services, said downside risks are increasing for Mexican economic growth.
"While real GDP is unlikely to contract in the second quarter, Mexico's economy is undeniably
weak. Tepid growth would be an argument for a Banco de Mexico rate cut if the peso weren't
already stinging from the last two months' selloff," he said.¶ The Bank of Mexico has kept its
benchmark overnight lending rate at 4% after lowering the rate by a half percentage point in
March.¶ Mr. Adams said Mexico still retains some of the competitive advantages that helped the
economy outperform others in the recovery from 2008-2009 global downturn, with the
recovery also supported by low interest rates and credit growth.¶ Private economists surveyed
last month by the Bank of Mexico lowered their full-year 2013 gross domestic product estimate
to 2.8% from 3% the previous month. The Finance Ministry cut its growth forecast to 3.1% from
3.5% in May following a disappointing first quarter, when GDP expanded just 0.8% from a year
earlier because of weaker export demand and a negative calendar effect.¶ Bank of
America/Merrill Lynch recently reduced its Mexico growth estimate to 2.5% from 2.9%, but
expects an acceleration in the second half on faster U.S. expansion, a pickup in Mexican
government spending, and solid demand for Mexican auto exports linked to a U.S. old-vehicle
replacement cycle.¶ Mexican domestic demand, while holding up better than manufacturing,
has also faltered in the first part of the year, with retail sales practically flat in the January-April
period.¶ Family remittances from Mexicans working abroad, which are widely thought to fuel
consumer demand, were down 10% through May to just under $8.8 billion, the Bank of Mexico
reported Monday.¶ Mr. Adams of PNC said a reduction in migration to the U.S. has kept the
number of remittances roughly unchanged compared with a year earlier, and attributed the
9.5% drop in the average amount per transfer to the negative effect on low-income earners of
the two-percentage-point increase this year in the U.S. payroll tax.¶ Analysts at Banorte-Ixe
predict that remittances will begin to recover in the second half of the year, given the declining
unemployment rate among migrant workers in the U.S.
Mexican economy slowing now—GDP growth and foreign investment
The Economist, 5-25
Gonzaga Debate Institute 2013
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[5-25-13, The Economist, “Reality Bites,”
http://www.economist.com/news/americas/21578440-lacklustre-growth-shows-need-reformreality-bites, accessed 7-5-2013, GSK]
The immediate catalyst for the change of mood is the economy. In December, just as President
Enrique Peña Nieto came to power promising to increase Mexico’s growth potential, the
country’s strong recovery from the 2008-09 global financial crisis hit the skids. In the first
quarter of 2013 sluggish sales to the United States, by far Mexico’s largest export market,
helped reduce growth to a modest 0.8% compared with the same period in 2012. A fall in
public spending as a new party took power contributed to the dip.¶ The government blamed
part of the weakness on the early Easter holiday (it had previously blamed poor December
numbers on the fact that Christmas fell at mid-week). Nevertheless, on May 17th it lowered its
growth forecast for the year to 3.1% from 3.5%.¶ Other economic data in recent days have
added to the worries. Foreign direct investment last year plunged to $12.7 billion, from an
average of around $23 billion during the past decade, according to CEPAL, a UN-linked research
organisation. It said the figure was affected by one-offs, such as a decision by Spain’s Banco
Santander to list its Mexican subsidiary, raising $4 billion. That counted as an outflow of foreign
investment. Some economists pointed to concerns that high levels of drug-related crime may
also be taking a toll on investment, notably in tourism. Last year Mexico slipped out of the top
ten of global tourist destinations.
Mexican economy declining now—all key indicators show weakness
Harrup, staff writer for the Wall Street Journal, 7-1
[Anthony, 7-1-13, The Wall Street Journal, “Mexican Economic Data Point to a Sluggish Second
Quarter,” http://online.wsj.com/article/BT-CO-20130701-709139.html, accessed 7-5-13, GSK]
MEXICO CITY--Economists continue to ratchet down their expectations for Mexico's economic
growth in 2013, with recent data suggesting that the weakness seen at the start of the year
continued well into the second quarter.¶ The Mexican Institute of Finance Executives, or IMEF,
said Monday that its manufacturing index fell in June to 47.3, its second month below the 50
level which marks the threshold between expansion and contraction. IMEF's nonmanufacturing index, which measures activity in services, rose slightly to 51.7 after eight
consecutive months of declines.¶ "The June results suggest that weakness will remain in the
second quarter in both manufacturing and services," IMEF said. The institute said it saw mixed
signals in the U.S. economy, a big driver of Mexican activity, with fairly robust private demand
offsetting the negative effects of lower government spending.¶ Bill Adams, senior international
economist at PNC Financial Services, said downside risks are increasing for Mexican economic
growth. "While real GDP is unlikely to contract in the second quarter, Mexico's economy is
undeniably weak. Tepid growth would be an argument for a Banco de Mexico rate cut if the
peso weren't already stinging from the last two months' selloff," he said.¶ The Bank of Mexico
has kept its benchmark overnight lending rate at 4% after lowering the rate by a half percentage
point in March.¶ Mr. Adams said Mexico still retains some of the competitive advantages that
helped the economy outperform others in the recovery from 2008-2009 global downturn, with
the recovery also supported by low interest rates and credit growth.¶ Private economists
surveyed last month by the Bank of Mexico lowered their full-year 2013 gross domestic product
estimate to 2.8% from 3% the previous month. The Finance Ministry cut its growth forecast to
3.1% from 3.5% in May following a disappointing first quarter, when GDP expanded just 0.8%
from a year earlier because of weaker export demand and a negative calendar effect.
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Competitiveness Low
Mexico’s competitiveness is declining – infrastructure is key to revitalize
Mexican economy
Villarreal, Specialist in International Trade and Finance, 12
[M. Angeles, 7-3-12, Congressional Research Service, “Mexico’s Free Trade Agreements,”
http://www.fas.org/sgp/crs/row/R40784.pdf, pg. 23, accessed 6-24-13, AR]
The United States continues to be the dominant export market for Mexican goods, despite
Mexico’s efforts to liberalize trade with other countries. The reliance of Mexico on the United
States as an export market makes the country more susceptible to economic conditions in the
United States. The global financial crisis, which resulted in a downturn in the U.S. economy,
resulted in the deepest recession in the Mexican economy since the 1930s. However, the
economy has rebounded in the past two years and GDP growth for 2012 is projected to be 3.7%.
Mexico has been facing increasing competition from China and other Asian economies in the
manufacturing sector. In 2003, China replaced Mexico as the second-highest source of U.S.
imports. Some economists argue that Mexico has fallen behind in its comparative advantage in
exporting in industries with intermediate wages and technological sophistication.55 They
argue that Mexico must invest more in education and telecommunications infrastructure to
increase productivity and remain competitive . Others argue that Mexico should make more
progress in scientific research to attract and create high-tech industries, such as China has done.
They maintain that Mexico’s approach has been a combination of fiscal and customs policies to
enhance its comparative advantage of sharing a 2000-mile border with the United States, but
that Mexico has not done enough to promote scientific and technical research. Mexico has
made an effort to make trade agreements a tool for promoting economic development and
combating poverty, but it is only part of the overall effort of the Mexican government to address
these issues.
Mexican economy low due to poor infrastructure
Pastor, Director of the Center for North American Studies, 8
[Robert, January 2008, Office of International Affairs American University, “The Solution to
North America’s Triple Problem: The case for a North American Investment Fund,” accessed 627-13, http://www.american.edu/sis/cnas/upload/triple_problem_pastor.pdf, ML]
Others have pointed to Mexico’s declining competitiveness and attribute that to ¶ Mexico’s
inability or unwillingness to undertake essential tax and fiscal, labor, energy ¶ and electricity
reforms. An IMD World Competitiveness Survey attributed declining ¶ competitiveness to poor
infrastructure. Of the 30 largest economies in terms of their ¶ infrastructure, the IMD survey
found that in just three years – 2000-03 – Mexico had ¶ slipped from 18th to 29th, while the U.S.
infrastructure competitiveness remained the top ¶ ranking and Spain slipped from 9th to 10th
(IMD, 2004). ¶ The World Bank initially viewed large infrastructure projects as key to ¶
development and, after its start in 1960, the Inter-American Development Bank also ¶ invested
heavily in infrastructure. But beginning in the mid-1970s, there was a gradual ¶ shift away from
such projects toward those aimed at education, health, and poverty reduction. More recently,
the World Bank has begun to re-evaluate the importance of ¶ infrastructure and a number of
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studies have concluded that lagging performance in ¶ infrastructure “has cascading negative
effects throughout the economy. It¶ increases¶ the cost of doing business, decreases
international competitiveness, and hinders¶ the country’s growth and poverty alleviation
prospects” (World Bank, 2003: 1).¶ Mexico has long under-invested in infrastructure but
government investment¶ in infrastructure as a percentage of GDP fell precipitously from about 8
percent in¶ 1980 to 1.2 percent in 2003. In 1960, Korea had less than half of Mexico’s paved
road¶ density. In 2005, it had 11 times that of Mexico. Similarly, in 1969, Korea had one third¶
the power infrastructure per capita of Mexico but, in 2005, it had three times as¶ much. While
the comparison with Korea is particularly sharp, Mexico also compares¶ poorly with other major
Latin American countries. For example, Mexico’s road density¶ is currently about one-half that of
Brazil. Moreover, the costs of railways and ports¶ in Mexico are higher than in Brazil and the U.S
(World Bank and Inter-American¶ Development Bank, 2005; World Bank, 2005; Rodríguez
Barocio, 2005: 15).¶ The lack of infrastructure and its poor quality and reliability have added
significantly¶ to the cost of doing business in Mexico. It also has encouraged foreign
investment¶ to concentrate on the border. Therefore, one effective way to reduce¶
geographical disparities within Mexico while reducing pressures for out-migration¶ would be to
improve the road system from the U.S. border to the center and southern¶ parts of the country.
Because of foreign investment, the northern border economy is¶ booming and attracting labor
from the poorer parts of the country. However, in many¶ cases, workers stay on the Mexican
side of the border only long enough to learn¶ how to cross into the United States, where they
can earn a lot more. U.S. firms do not¶ like to invest in the border area because of the pollution
and the inefficiencies associated¶ with such a high turnover rate, but they do so because the
roads from the¶ border to the center of the country are bad or non-existent.
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Manufacturing Low
Mexico Manufacturing Sector Booming now but investment in US-Mexico
transportation ensure the industries maintain output
Esenaro, Mexican Legal Activist and News Publisher, 13
[Alberto, 4-22-13, Mexican Law Blog, "Mexico's Manufacturing Sector Booming Thanks to
Infrastructure Development," http://mexicanlawblog.com/mexicos-manufacturing-sectorbooming-thanks-to-infrastructure-development/, accessed 6-26-13, JC]
In a move that is exactly surprising to industry leaders and economic growth experts, Mexico’s
manufacturing sector is bringing back jobs to North America that left the continent for China
in the 1990s and 2000s. What is partially responsible for the boom, other than the
industriousness of Mexicans and their solid work ethic, is the Spanish-speaking country’s
concerted effort to ensure that infrastructure can provide the factories with inexpensive and
plentiful energy along with the transportation networks to get the manufactured goods to
market.¶ Wages in Mexico are now a little bit higher than the wages that their counterparts in
China receive; however, the highly skilled workers can produce higher quantities of quality
goods, which is one thing that is influencing companies to set up base there. Mexico has now
become the go-to country for industries like automotive manufacturers and automotive parts
makers. But the one thing that is seriously making business owners want to go to Mexico is the
fact that the country is scrambling to implement energy infrastructure projects in order to take
advantage of one thing China doesn’t have: cheap oil and gas that is found in Mexico and also is
imported from new energy giant the United States. While the price of energy has gone up
considerably in the world, this energy bonanza is making Mexico more attractive than ever for
investors in the manufacturing sector.¶ The energy reserves of both Mexico and the United
States are said to be large enough to handle growth for well over a century, and both countries
are building new pipelines in order to get those manufacturing jobs back to North America as
quickly as possible.¶ But that’s not all; other massive infrastructure projects that are benefitting
Mexico’s manufacturing are transportation projects. Rail lines connecting manufacturing
powerhouses in Mexico to markets in the United States and Canada are being built in order to
keep up with the manufacturing output. Expansion in the transportation infrastructure will let
the manufacturing industries grow with next to no limits; in other countries that lack the
roads and rail links, goods get held up in warehouse facilities and cannot get to market quickly
enough. Furthermore, some experts are saying that Mexico will also be improving public
infrastructure such as national roads as well in order to fuel economic growth in the domestic
markets.¶ Deregulation may also occur in another of Mexico’s key industries:
telecommunications. As of now a single company holds a monopoly on this key sector; if
proposed deregulation occurs, manufacturing could enjoy another massive boost in telecom
equipment as international telecom companies also pour in to set up shop in what could be a
massive market.¶ Opportunities abound in Mexico right now; along with a booming
manufacturing industry, transit links between Mexico, the United States, Central America and
South America need to be further developed; railways, roads, trucking and maritime links are
all +being upgraded or will be upgraded in the future. All of this construction of the
infrastructure need to support the manufacturing boom will also need energy, as mentioned
above. Telecoms could also prove to bring handsome profit to smart investors.¶ Mexico is
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growing and is poised to become the next economic powerhouse in Latin America; those who
do not invest now will be bound to regret it when it’s too late in the next few years.
Mexican manufacturing low now
Reuters 13
[6-11-13, “Mexico April Industrial Output Dips to Four-Month Low,”
http://www.reuters.com/article/2013/06/11/mexico-economy-idUSL3N0EN2Q320130611,
accessed 6-25-13, AR]
MEXICO CITY, June 11 (Reuters) - Mexican industrial output dropped in April by the most in
four months, on weakness in construction, manufacturing and mining, the national statistics
agency said on Tuesday. Compared to the previous month, April industrial activity contracted
1.67 percent, well below expectations in a Reuters poll for a 0.5 percent increase. The figure
was also below March's downwardly revised 0.39 percent contraction. The data followed dreary
numbers from Mexico's biggest trading partner, the United States, whose factories often move
in lock step with their southern neighbors. The U.S. manufacturing sector contracted in May,
driving activity to the lowest level in nearly four years, in the latest sign the economy is
encountering a soft patch. Manufacturing, which provides the bulk of Mexico's non-oil exports
and is a component of the industrial output figures, dropped 1.16 percent compared to last
month, the biggest dip since August 2012. Among the other components in the index, mining
fell 2.91 percent compared with last month, construction eased 3.13 percent, and utilities rose
1.13 percent versus March. Solid U.S. demand supported Mexican factories amid sluggish global
growth last year, allowing Latin America's No. 2 economy to notch 3.9 percent growth in 2012,
but the pace of expansion is seen slowing to 3.1 percent this year. Higher taxes in the United
States and the $85 billion in across-the-board U.S. government spending cuts that took effect
March 1 may weigh on American demand for Mexican goods. Industrial output rose 3.3 percent
in April from a year earlier, missing expectations for a 5.5 percent expansion in a Reuters survey
but well above March's upwardly revised 4.8 percent contraction.
Mexican manufacturing failing now
Peters, Professor at the Graduate School of Economics, Universidad Nacional
Autónoma de México (UNAM), 9
[Enrique, 11/09, Enrique Dussel Peters is a Professor at the Graduate School of Economics,
Universidad Nacional Autónoma de México (UNAM), “NAFTA,”
http://www.bu.edu/pardee/files/2009/11/Pardee-Report-NAFTA.pdf, accessed 6-28-13, LV]
First, Mexico´s manufacturing share in GDP has fallen constantly since the end ¶ of the 1980s,
from levels above 23 percent to levels below 19 percent in the last quarter of 2008 (and since
2001). In terms of formal permanent employment, the ¶ conditions have been harsher: from
1994 to March 2009 manufacturing´s share ¶ of total formal and permanent employment fell
from 33 to 26 percent. Since ¶ its peak in October 2000, the sector lost 1.04 million permanent
jobs through ¶ March 2009—or 25 percent. In the recent economic crisis, manufacturing has ¶
been hit particularly hard, suffering 59 percent of the country’s total employment losses from
October 2008 to March 2009.
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UQ- NAFTA Failing
Gonzaga Debate Institute 2013
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Negative Perception
Positive perception of NAFTA is declining with increases in trade agreementsinfrastructure investment is key to reinvigorate North American trade
Villarreal, Specialist in International Trade and Finance, 10
[M. Angeles, 4-31-10, “U.S.-Mexico Economic Relations: Trends, Issues, and Implications,”
http://www.fas.org/sgp/crs/row/RL32934.pdf, accessed 6-25-13, ABS]
Given the increasing number of regional trade agreements throughout the world and the
ongoing ¶ Trans-Pacific Partnership (TPP) free trade negotiations, one general question that
policymakers ¶ may consider in forming future trade policy is whether or not NAFTA has lost
its relevance. The ¶ numerous FTAs that the United States, Mexico, and Canada have put into
effect have given other ¶ countries the same preferences to the U.S. market that Canada and
Mexico benefit from under ¶ NAFTA. Similarly, these FTAs have lessened the preferences the
United States has in other ¶ markets. ¶ Both proponents and critics of NAFTA agree that the
three countries should look at what the ¶ agreement has failed to do as they look to the future
of North American trade and economic ¶ relations. Policies could include strengthening
institutions to protect the environment and worker ¶ rights; considering the establishment of a
border infrastructure plan; increasing regulatory ¶ cooperation; promoting research and
development to enhance the global competiveness of North ¶ American industries; investing in
more border infrastructure to make border crossings more ¶ efficient; and/or creating more
efforts to lessen income differentials within the region.
Increasing trade agreements threaten successful NAFTA perception- an
integrated trade agenda key.
Villarreal, Specialist in International Trade and Finance, 10
[M. Angeles, 4-31-10, “U.S.-Mexico Economic Relations: Trends, Issues, and Implications,”
http://www.fas.org/sgp/crs/row/RL32934.pdf, accessed 6-25-13, ABS]
The rising number of bilateral and regional trade agreements throughout the world and the
rising ¶ presence of China in Latin America could have implications for U.S. trade policy with its
NAFTA ¶ partners. Some proponents of open and rules-based trade maintain that a further
deepening of ¶ economic relations with Canada and Mexico will help promote a common trade
agenda with ¶ shared values and generate economic growth. Some opponents argue that the
agreement has ¶ caused worker displacement and that NAFTA needs to be reopened. One
possible way of doing ¶ this is through the proposed TPP. The ongoing TPP negotiations,
launched in the fall of 2008, ¶ may not result in a reopening of NAFTA, but could alter some of
the rules and market access ¶ commitments governing North American trade and investment.
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Chinese Competition
NAFTA quintupled bilateral trade, but is now being threatened by increased
border security and Chinese competition
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
Accessed 6-25-13, NM]
Two major events have transformed the dynamics of bilateral trade and border management ¶
over the past few decades, and an important third one may be underway. The implementation ¶
of the North American Free Trade Agreement (NAFTA) in 1994 eliminated most tariffs and ¶
caused bilateral trade to skyrocket. Merchandise trade has more than quintupled since NAFTA
¶ was put in place, but its growth has not been entirely steady. After the terrorist attacks of
9/11 ¶ and the accession of China to the WTO in 2001, regional trade and manufacturing
sputtered.
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I/L- NAFTA- Infrastructure Solves
Infrastructure investment is the only way to resolve structural factors inhibiting
NAFTA’s success
Lederman, World Bank senior economist at the Office of the Chief Economist
for Latin America and the Caribbean, 3
[Daniel, 12-17-03, The World Bank, “NAFTA is Not Enough,”
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/0,,contentMDK:20146214~p
agePK:146736~piPK:146830~theSitePK:258554~isCURL:Y,00.html, accessed 7-2-03, ML]
The main lesson is that a free-trade agreement is not a substitute for a development strategy.
It is but one of the ingredients in a much broader development framework.¶ According to one of
our estimates, without NAFTA, Mexico’s GPD per capita would have been 4 to 5 percent less
than it was at the end of 2002. This indicates that NAFTA had a net positive effect on the
economy, but a rather small one after almost a decade of implementation.¶ NAFTA alone
hasn’t been enough to propel Mexico onto a path of fast-paced and sustainable long-term
economic growth. There are some structural factors, related to domestic policies that are
impeding its development.¶ Three key factors are constraining the country’s ability to catch up
to the levels of development in the United States and Canada. They center around the quality of
institutions, a lack of innovation, and deficiencies in infrastructure.¶ The institutional gaps in
North America—levels of corruption, the lack of law and order—observed in Mexico relative to
its Northern neighbors are limiting the country’s ability to grow faster.¶ When comparing levels
of innovation and technological progress we found that Mexico not only lags behind its NAFTA
trading partners, but it is lagging behind the typical (median) country with Mexico's economic
characteristics. Moreover, Mexico lags behind several developing countries that seem to be
superstars in terms of their level of investment in research and development (R&D), such as
South Korea, Taiwan, and even China and India.¶ Finally, another key problem includes a lack of
access to infrastructure, especially to telecommunications in the poorest Southern states of
Chiapas, Oaxaca, and Guerrero, which impedes growth in those areas. This, together with the
education of the labor force, were the main reasons why these states performed less favorably
than other Mexican regions during the 1990s.¶ What do these NAFTA lessons mean for pending
Free Trade Area of the Americas (FTAA)? The report’s lessons that a trade agreement alone is
not enough is probably accurate for other countries in the region. Most of them have a glaring
deficit in their investment levels in research and development (R&D) and inefficiencies in their
innovation systems. Institutional gaps are present as well; Mexico isn’t the worst case. The
lessons regarding the infrastructure gaps are also relevant.
Infrastructure investment attracts more investors.
Pastor, Director at the Center for North American Studies at American
University, 5
[Robert A., 3-14-05, American University, “The Paramount Challenge for North America: Closing
the Development Gap,” http://www1.american.edu/ia/cnas/pdfs/NADBank.pdf, Accessed 6-3013, ML]
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Why infrastructure? One effective way to reduce geographical disparities ¶ within Mexico
while reducing pressures for out-migration would be to improve the ¶ road system from the
U.S. border to the center and southern parts of the country. ¶ Because of foreign investment,
the northern border economy is booming and attracting ¶ labor from the poorer parts of the
country. However, in many cases, workers stay on the ¶ Mexican side of the border only long
enough to learn how to cross into the United States ¶ where they can earn a lot more. U.S. firms
do not like to invest in the border area ¶ because of the pollution and the inefficiencies
associated with such a high turnover rate, ¶ but they do so because the roads from the border to
the center of the country are bad. ¶ If roads were built or improved from the border to the
center of the country, ¶ investors would locate there for three reasons. First, the center and
south of the country – ¶ from Oaxaca, Zacatecas, Michoacan, Guanajuato – have the highest
rates of ¶ unemployment and, indeed, are the principal sources of immigrants to the border
and to ¶ the United States. Secondly, the wage level is much lower in these areas, and the ¶
workers are no less educated than those on the border. Indeed, they are often the same ¶
workers. Finally, the region is not the polluted, cramped border. The government has ¶
incentive systems to encourage investors to locate there, but the problem is a lack of ¶
infrastructure – roads, electricity, etc. Build them, and investors would come, ¶ immigration
levels would decline and so would disparities in income.
A strong investment climate fortifies NAFTA
Lederman, World Bank senior economist at the Office of the Chief Economist
for Latin America and the Caribbean, 3
[Daniel, 12-17-03, The World Bank, “NAFTA is Not Enough,”
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/0,,contentMDK:20146214~p
agePK:146736~piPK:146830~theSitePK:258554~isCURL:Y,00.html, accessed 7-2-03, ML]
The report’s main conclusion regarding NAFTA is that the treaty has helped ¶ Mexico get closer
to the levels of development of its NAFTA partners. The research ¶ suggests, for example, that
Mexico’s global exports would have been about 25% lower ¶ without NAFTA, and foreign direct
investment (FDI) would have been about 40% less ¶ without NAFTA. Also, the amount of time
required for Mexican manufacturers to adopt ¶ U. S. technological innovations was cut in half.
Trade can probably take some credit for ¶ moderate declines in poverty, and has likely had
positive impacts on the number and ¶ quality of jobs. However, NAFTA is not enough to ensure
economic convergence among ¶ North American countries and regions. This reflects both
limitations of NAFTA’s design ¶ and, more importantly, pending domestic reforms. ¶ An FTAA
designed along the lines of NAFTA will offer new opportunities for ¶ growth and development
in LAC, particularly if improvement is achieved on some ¶ aspects of NAFTA – such as the
distorting rules of origin and the anti-dumping and ¶ countervailing duties. However, significant
policy and institutional reforms will be ¶ necessary in most countries to seize those
opportunities. In particular, the reforms will ¶ need to focus on reducing macroeconomic
instability, improving the investment climate ¶ and the institutional framework, and putting in
place an education and innovation system ¶ capable of fostering technological advancement
and productivity growth. In addition, ¶ regional trade integration will have to be accompanied
by unilateral, bilateral and ¶ multilateral actions on other trade fronts to maximize the gains
from trade liberalization ¶ and reduce the possible costs from trade diversion caused by the
FTAA.
¶
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Infrastructure investment key to free trade agreements
Giordano et al., Trade Economist in the Integration and Trade Sector at the
Inter-American Development Bank, 5
[Paolo, 8-5-05, Inter-American Development Bank, “Asymmetries in Regional Integration and
Local Development,” http://www.iadb.org/intal/intalcdi/PE/2007/00090.pdf, Accessed 7-2-13,
ML]
In this light, one of the most relevant policy questions is how does one link¶ global governance
(trade and integration policies) with national governance¶ (territorial policy) to reduce
asymmetries and promote an equitable socioeconomic insertion into globalization? Table 1–1
provides a simple analytical way of looking at this issue. Nowadays, most LAC countries can be¶
described as regimes of increasing asymmetries (Type 1), characterized by¶ lack of territorial
policies at the national level and lack of compensatory¶ mechanisms at the regional level.¶ The
contributions to this volume consistently support the conclusion that the LAC region should
move toward a regime of decreasing asymmetries (Type 4), characterized by the simultaneous
implementation of¶ consistent policies at the national and regional levels. Therefore, the
question is not whether but how to achieve the transition. In particular, which¶ policy
sequencing is appropriate to ensure the shift from Type 1 to 4? Certain pioneering experiences
in the region suggest that governments have¶ moved on the national front, prompting the
evolution from Type 1 to 3. The missing piece is, therefore, the adoption of an ambitious
strategy on the regional front. One can, therefore, muse about the ingredients of such a strategy
by highlighting key issues for the governance of LAC regional integration.¶ Trade and regional
integration have emerged as an increasingly¶ important strategic objective for LAC. The
demand to intensify the insertion into the global economy has often advanced faster than the
institutional capacity to formulate effective strategies, trade policies, and institutions ¶ (Devlin
and Vodusek 2004). Under these circumstances, it is not surprising¶ that trade-related capacity
building has increasingly gained the attention¶ of governments and donors alike. In order to link
territorial development¶ and regional integration, it is therefore crucial to include local actors in
the¶ delivery systems of trade-related capacity building. Hence, it is important¶ to include a
local dimension in the needs assessment exercises conducted¶ throughout the region and raise
donor awareness of the challenges local¶ communities face in the process of implementing
increasingly complex,¶ demanding trade agreements.¶ Regional collective institutions can play a
key role in the consolidation of regional markets, where local economic actors can successfully
implement the first steps of their internationalization processes. They may also function as
institutional “anchors”; that is, they restrain national policies¶ that create asymmetries (e.g.,
government subsidies for private business—a¶ long-time, key instrument of territorial
development policy—which resulted¶ in wars between territorial units of a country and
neighboring countries).¶ Finally, as the European Union (EU) example illustrates, regional
collective¶ institutions can pursue top-down approaches to stimulate bottom-up initiatives,
promote horizontal learning and exchange between regions, and¶ effectively pool resources to
ensure greater efficiency in the delivery of technical and financial assistance. LAC policymakers
can learn much from examining this evolution, thereby abbreviating their own learning curves.¶
In this context, LAC’s biggest challenge is how to devise effective¶ and ambitious policy
instruments to promote the adjustments required to¶ minimize the social cost of the
transition to free trade. Iglesias (2004) clearly¶ identified the key issues:¶ • macroeconomic
stability,¶ • sectoral adjustments,¶ • investments in infrastructure and human capital,¶ • poverty
reduction and equity, and¶ • good governance.
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Solvency- U.S. Economy
NAFTA boosts manufacturing though improved wages, benefits, and jobs
Barufaldi, Bachelor’s Degree in Economics from Cornell University, global
business development consultant, 9
[Dan, 2-26-09, Investopedia, “NAFTA’s Winners and Losers,”
http://www.investopedia.com/articles/economics/08/north-american-free-tradeagreement.asp, accessed 7-2-13, ML]
U.S. economic winners and losers under NAFTA vary with company size, type of industry or
sector, and geographical location. Sectors affected positively include planes, trains and
automobiles, large agri-businesses, appliance makers and energy corporations. Clearly, large
multi-national companies with investment capacities, world-market savvy and capital
resources have benefited from protected investment and cheap labor. These companies
enhanced management performance-based compensation while putting downward pressure
on production-worker wages and benefits, collective bargaining clout and available jobs,
especially in manufacturing. Many view their actions as a major contributor to compensation
inequality. (To read more about how income inequality is determined, and its importance, read
The Gini Index: Measuring Income Distribution.)
NAFTA causes growth in manufacturing- increases jobs and output
Griswold, associate director of the Center for Trade Policy Studies at the Cato
Institute, 3
[Daniel T., 7-2-03, West Chester University, “NAFTA Benefits Arizona,”
http://courses.wcupa.edu/rbove/eco338/030Trade-debt/NAFTA/030702benefits.txt, Accessed
7-2-13, ML]
In the past decade, the people of Arizona have experienced first-hand the ¶ benefits of free
trade with Mexico. Since enactment of the North American Free ¶ Trade Agreement in 1994,
trade, jobs, and income in your state have all been ¶ heading north.¶ NAFTA, of course, was the
historic agreement among the United States, Mexico, ¶ and Canada, to eliminate barriers to
trade among the three nations. Opponents of ¶ the freedom to trade have tried to blame NAFTA
for a host of problems, real and ¶ imagined. But the agreement has been a great success for
Arizona, the United ¶ States, and neighboring Mexico.¶ Opponents of NAFTA warned of a "giant
sucking sound" of jobs and investment ¶ heading south if the agreement were enacted, but all
the evidence points the ¶ other way. Since 1994, Arizona's exports to Mexico and Canada have
doubled, ¶ including more than $1.5 billion in computer and software exports to Mexico in ¶
2001 alone. Arizona's farm exports to Mexico have also soared. ¶ Claims that NAFTA has
destroyed jobs in Arizona do not stand the laugh test. ¶ Since NAFTA was enacted in 1994, your
state has added a net 700,000 new jobs and ¶ real wages have risen. The state's unemployment
rate today is lower than it was ¶ before NAFTA. About 25,000 mostly well-paying jobs in Arizona
are directly tied ¶ to exports to Mexico and Canada, and thousands more jobs in transportation,
¶ banking, and finance are indirectly connected. NAFTA has stimulated the growth ¶ of tourism in
the Southwest and created investment opportunities for small and ¶ medium-sized Arizona
companies to reach new markets. ¶ Nationwide, NAFTA helped to stimulate America's longest
post-war economic ¶ expansion. During much of the 1990s, when imports and trade deficits
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were both ¶ rising rapidly, so too were domestic employment, manufacturing output, and real ¶
wages. Between 1994 and 2000, civilian employment in the U.S. economy rose by a ¶ net 12
million and the unemployment rate fell from 6 percent to 4 percent. ¶ During that same period,
U.S. manufacturing output rose by 40 percent while the ¶ volume of imported manufactured
goods doubled during that same period. ¶ Meanwhile, real compensation rose for American
families up and down the income ¶ scale. ¶ In the first eight years of NAFTA (1994-2001)
manufacturing output in the United ¶ States rose at an annual average rate of 3.7 percent, 50
percent faster than ¶ during the eight years before the agreement took effect. Manufacturing ¶
employment has fallen in the past few years because of our homegrown economic ¶ slowdown,
but that cannot in any plausible way be blamed on NAFTA. In fact, the ¶ number of Americans
employed in manufacturing grew by half a million in the ¶ first five years of NAFTA. ¶ American
factories are not pulling up and moving wholesale to Mexico. U.S. ¶ manufacturers invest an
average of about $2 billion a year in Mexico, compared ¶ to almost $200 billion invested
annually in our domestic manufacturing capacity. ¶ U.S. companies currently own more direct
manufacturing investment in the tiny ¶ Netherlands ($34.7 billion) than they do in Mexico ($19.7
billion).¶ Finally, NAFTA has been good for Mexico and our bilateral relations with our ¶ southern
neighbor. NAFTA helped Mexico recover from its own homegrown peso ¶ crisis in 1994-95.
While it took a full seven years for U.S. exports to Mexico ¶ to recover after the debt crisis of
1982, it took only 17 months for our exports ¶ to rebound after the peso crisis. Since 1995,
incomes in Mexico have been rising ¶ and its economy has been one of the most stable and
dynamic in Latin America.¶ The economic competition from NAFTA has helped to till the soil in
Mexico for a ¶ more open and competitive political system. It is no coincidence that a few ¶ short
years after the enactment of NAFTA, Mexicans were able to end seven ¶ decades of one-party
rule by electing opposition candidate Vicente Fox as their ¶ president. NAFTA has also
encouraged higher regulatory standards in Mexico and ¶ more cross-border cooperation on
sensitive environmental issues.¶ For the people of Arizona, NAFTA has delivered good-paying
jobs for workers and ¶ export and investment opportunities for local companies. Across the
border, ¶ NAFTA has helped to create a more stable, friendly, and democratic Mexico. By ¶ every
reasonable measure, NAFTA has been a success for people north and south of ¶ the border.
Increased NAFTA trade between the US and Mexico is essential to US economic
growth
Villarreal, Specialist in International Trade and Finance, 10
[M. Angeles, 4-31-10, “U.S.-Mexico Economic Relations: Trends, Issues, and Implications,”
http://www.fas.org/sgp/crs/row/RL32934.pdf, accessed 6-25-13, NM]
Since NAFTA, the automotive, textile, and apparel industries have experienced some of the
more noteworthy changes in trading patterns, which may also have affected U.S. employment
in these industries. U.S. trade with Mexico has increased considerably more than U.S. trade
with other countries, and Mexico has become a more significant trading partner with the
United States since NAFTA implementation. In the automotive industry, the industry
comprising the most U.S. trade with Mexico, NAFTA provisions consisted of a phased
elimination of tariffs, the gradual removal of many non-tariff barriers to trade including rules
of origin provisions, enhanced protection of intellectual property rights, less restrictive
government procurement practices, and the elimination of performance requirements on
investors from other NAFTA countries. These provisions may have accelerated the ongoing
trade patterns between the United States and Mexico. Because the United States and Canada
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were already highly integrated, most of the trade impacts on the U.S. automotive industry
relate to trade liberalization with Mexico. Prior to NAFTA Mexico had a series of government
decrees protecting the domestic auto sector by reserving the domestic automobile market for
domestically produced parts and vehicles. NAFTA established the removal of Mexico’s
restrictive trade and investment policies and the elimination of U.S. tariffs on autos and auto
parts. By 2006, the automotive industry has had the highest dollar increase ($41 billion) in
total U.S. trade with Mexico since NAFTA passage. The main NAFTA provisions related to
textiles and apparel consisted of eliminating tariffs and quotas for goods coming from Mexico
and eliminating Mexican tariffs on U.S. textile and apparel products.
NAFTA results in growth in manufacturing
Kose et al., Assistant to the Director in the IMF Research Department, 4
[M. Ayhan, April 2004, International Monetary Fund, “How Has NAFTA Affected the Mexican
Economy? Review and Evidence,” http://www.readbag.com/imf-external-pubs-ft-wp-2004wp0459, Accessed 7-3-13, ML]
Mexico’s export base shifted toward manufactured goods following NAFTA’s ¶ introduction.
Although the share of manufactures in total exports had been increasing since at ¶ least 1980,
the pace of diversification accelerated after the inception of NAFTA, as the ¶ average
manufacturing share increased to more than 80 percent during the post-NAFTA ¶ period
(1994–2002) from around 37 percent in the pre-NAFTA period (1980–93) ¶ (Figure 5a). As a
result, Mexico’s export and import base has become one of the most ¶ diversified among
emerging market economies (Table 2). ¶ Vertical specialization—i.e., the value of a country’s
imports that are embodied in its ¶ exports—has increased among the NAFTA partners. Hummels,
Ishii, and Yi (2001) focus on ¶ the maquiladora trade and conclude that vertical specialization
played an important role in ¶ the growth of Mexico’s exports since 1979. Maquiladora firms,
which are mostly located ¶ along Mexico’s northern border, import inputs from the United
States, process them, and reexport back to the United States. These firms specialize in the
manufacture of electronics, ¶ auto parts, and apparel industries. Maquiladora firms grew
substantially after the early 1980s, ¶ with the share of maquiladora exports in total exports of
Mexico rising from 15 percent in ¶ 1980 to roughly 50 percent in 2001 (Figure 5b). ¶ The growth
of maquiladora industry accelerated during the 1990s. The average ¶ growth rate of real value
added produced by the maquiladora sector was around 10 percent in ¶ the period 1990–2002,
over three times the average growth of real GDP during the same ¶ period (Hanson, 2002).
Although there was a significant increase in employment during the ¶ first five years of NAFTA,
recent research suggests that this increase reflected cyclical ¶ factors rather than the tariff
preference afforded by NAFTA (Gruben, 2001). Indeed, the ¶ maquiladora sector has been going
through a recessionary period since the early 2001 ¶ (Gruben, 2004), which is explored further in
Section VIII. Intra-industry trade between Mexico and its NAFTA partners rose significantly.
Intraindustry trade, which is defined as trade in similar but differentiated products, is also
closely ¶ associated with maquiladora trade. OECD (2002) reports that the share of intraindustry trade ¶ in Mexico’s manufacturing sector rose from 62.5 percent in 1988–91 to 73.4
percent in the ¶ period 1996–2000.13 OECD also argues that most of the increase in intraindustry trade flows ¶ was related to NAFTA. Clark, Fullerton, and Burdorf (2001) find that a
number of ¶ manufacturing industries registered substantial increases in intra-industry trade
flows ¶ between Mexico and the United States after the inception of NAFTA. ¶ NAFTA also
boosted intra-firm trade in the region. Intra-firm trade is defined as ¶ cross-border trade
between multinational companies and their affiliates. In the case of ¶ Mexico, most of these
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affiliates are maquiladora firms. OECD (2002) reports that intra-firm ¶ exports from Mexico to
the United States rose by more than 3 percent in the period 1992–99 ¶ and accounted for more
than two-thirds of total exports in 1999. ¶ NAFTA also resulted in a substantial increase in the
variety of products traded ¶ between Mexico and its partners. Hillbery and McDaniel (2002)
analyze the impact of ¶ increase in the variety of products on the volume of trade between
Mexico and the United ¶ States. They find that almost 25 percentage points of the 190 percent
increase in Mexico’s ¶ exports to the United States was attributable to the increase in the
number of traded good ¶ varieties while more than 8 percentage points of the 93 percent
increase in the exports of the ¶ United States to Mexico was accounted for by the growth of
product variety. In a related ¶ paper, Kehoe (2003) documents that the sectors with very small
trade in 1988 have ¶ experienced the largest increases in exports in the period 1988–99. For
example, the share of ¶ the “motor cars for transport of passenger and engines” sector in total
Mexican exports to the ¶ United States increased from under 1 percent in 1988 to 15 percent in
1999.
NAFTA boosts US manufacturing- Mexico is attractive for low-cost labor and its
strategic position
Roberson, senior analyst with Transport Intelligence, a research company for
the global logistics and supply chain industry, 12
[Cathy Morrow, 3-1-12, Global Supply Chain Insights, “2011 NAFTA trade increases 14.3%,”
http://americaslogistics.blogspot.com/2012/03/2011-nafta-trade-increases-143.html, Accessed
7-3-13, ML]
NAFTA trade between trade partners Canada, Mexico and US was strong throughout 2011.
Overall trade by value increased 14.3% to $904.1bn. Since 2009, it has increased by 24.3%.
Trade with Canada increased 14% whereas Mexican NAFTA trade increased 14.6%. The increase
can be attributed to increased automobile manufacturing, pipeline activity and shifts in
manufacturing to Mexico from Asia.¶ North American automobile production increased 10%
in 2011 due to healthy US sales. As a result, NAFTA trade benefited from this increase as NAFTA
trade in vehicles increased 12%. Railroads such as Kansas City Southern and Canadian National
accounted for much of the movement of automobiles. Around 40% of NAFTA Canadian rail
cargo and over 50% of Mexican rail cargo comprise of vehicles.¶ Pipeline activity also noted
increases throughout 2011. Among the top five US petroleum import partners, Canada is
number one and Mexico is number three. Trade via pipeline increased over 28% due in part to
increased drilling and refinery activity in the US and Canada in particular.¶ Finally, according to a
report from Maquila Reference, “Manufacturers producing goods for the U.S. market are
reconsidering their manufacturing options in China, and looking at Mexico’s dual benefits of
low-cost labor and reduced tariffs under various NAFTA clauses.” Due to catastrophes such as
the Japanese earthquake and tsunami along with the flooding in Thailand, manufacturers are
also looking to manage their supply chain risks as well as reduce expenses such as
transportation and labor by relocating facilities closer to end markets.¶ sold their goods and
services in Canada and Mexico in 2009.
NAFTA key to the US economy—exports and job growth
US Chamber of Commerce, 12
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[November 2012, “NAFTA Triumphant: Assessing Two Decades of Gains in Trade, Growth and
Jobs,” http://www.uschamber.com/sites/default/files/reports/1112_INTL_NAFTA_20Years.pdf,
accessed 7-9-13, GSK]
Above all, two decades of economic integration under NAFTA have made it less and less
relevant ¶ to look at North American trade through a mercantilist lens. As officials and business
leaders ¶ in Canada, Mexico, and the United States have pointed out with growing frequency,
North ¶ Americans increasingly “make things together,” employing “global value chains” that
cross ¶ national borders. ¶ This approach leads to efficiencies that have proven vital to the
global competitiveness ¶ of North American industry. In the highly integrated auto sector, for
example, it is ¶ common for cars assembled in the Great Lakes region to cross the U.S.-Canada
border ¶ half a dozen times as they are assembled. ¶ One study found that “one-quarter of U.S.
imports from Canada consist of value added ¶ from the United States itself, and a huge 40% of
U.S. final good imports from Mexico ¶ consist of its own [U.S.] value added.”4¶ As Mexican
Ambassador to the United States ¶ Arturo Sarukhan has pointed out, “for every dollar that
Mexico earns from exports, 50 ¶ cents are spent on American goods.”5¶ Nonetheless, foes of
NAFTA for years have emphasized the U.S. trade balance in their ¶ criticisms. Of note, the labor
union-funded Economic Policy Institute (EPI) has issued ¶ regular reports that lead with the
contention that NAFTA produced trade deficits that ¶ in turn destroyed U.S. jobs. For example,
the latest of these reports, issued in May 2011, ¶ contends that 682,900 U.S. jobs have been “lost
or displaced” due to the agreement and ¶ the resulting trade deficit.6¶ EPI has attracted local
media coverage by providing state-bystate breakdowns of these supposed job losses.¶ There are
a number of problems with this line of argument, but one is a simple matter ¶ of fact: In its
trade with Canada and Mexico, the United States in 2011 registered ¶ a $14.5 billion trade
surplus in manufactured goods,7¶ a $40 billion trade surplus in ¶ services,8¶ and a $2.6 billion
trade surplus in agricultural products.9¶ The United States did register a $61 billion combined
trade deficit with Canada and ¶ Mexico in 2011. Driving this deficit were U.S. imports of crude
oil from Canada and Mexico, ¶ which reached $68 billion and $40 billion, respectively,
representing about one-third of total ¶ U.S. crude imports. While these statistics suggest the
U.S. federal government should lift its ¶ widespread limits on oil and gas production on federal
lands and the U.S. continental shelf, they ¶ say nothing about U.S. trade policy.
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Solvency- Mexican Economy
NAFTA key to Mexican economy—foreign investment, exports and employment
Taylor, State Department correspondent for the Washington Times, 12
[Guy, 5-14-13, The Washington Times, “NAFTA key to economic, social growth in Mexico,”
http://www.washingtontimes.com/news/2012/may/14/nafta-key-to-economic-social-growthin-mexico/?page=all, accessed 7-8-13, GSK]
CHIHUAHUA CITY, Mexico — The North American Free Trade Agreement, which went into effect
in 1994, has been the key driver of Mexico’s economic and social transformation of the past 20
years, analysts say.¶ NAFTA at first brought an explosion of low-skill-labor factories to the
Mexican side of the U.S. border. By the mid-2000s, the trade pact had triggered an
increasingly sophisticated manufacturing base that now reaches across Mexico’s 31 states.¶
“What we’re seeing now is a growth of industry in Mexico that requires more engineers,” said
Christopher Wilson, an associate with the Mexico Institute at the Washington-based Woodrow
Wilson International Center for Scholars.¶ “To put a name on it, specifically, we’re talking about
automobiles and aerospace,” Mr. Wilson said. “Mexico is now graduating more engineers than
Germany every year.”¶ A 40 percent jump in Mexico’s per capita gross domestic product since
the inception of NAFTA has brought with it an increasingly robust middle class.¶ “What that
means is Mexicans are becoming more educated, and there is more investment in children,
which is why you are able to see the development of an aerospace sector,” Mr. Wilson said.¶
Poverty rate nearly halved¶ About 47 percent of Mexico’s 115 million people live in poverty,
down dramatically from the 80 percent rate half a century ago. Today, 98 percent of homes
have electricity, and more than 4 million people study at the university level each year.¶
Through early 2012, the nation of 112 million had an unemployment rate of roughly 5 percent.
NAFTA key to US and Mexican economies—multiple warrant
US Chamber of Commerce, 12
[11-16-12, “U.S. Chamber President Hails NAFTA’s Contributions to U.S. Jobs, Growth,”
http://www.uschamber.com/press/releases/2012/november/us-chamber-president-hailsnafta%E2%80%99s-contributions-us-jobs-growth, accessed 7-9-13, GSK]
WASHINGTON, D.C. — In his keynote address today before the “NAFTA20” North American
Summit in San Antonio, Texas, U.S. Chamber President and CEO Thomas J. Donohue hailed the
benefits of the North American Free Trade Agreement (NAFTA) over the past two decades.¶
“The bottom line is that NAFTA has supported millions of good jobs, raised standards of living,
and enhanced the competitiveness of North American industry in a rapidly changing global
economy,” said Donohue. “NAFTA’s tremendous benefits for American workers, farmers, and
companies are hidden in plain sight. Today more than ever, we need the millions of jobs and
the huge boost to our competitiveness that NAFTA has provided. However, the United States
can’t rest on its laurels. Elected officials and business leaders in Canada, Mexico, and the
United States must work together to build on this foundation in the years ahead.”¶ “North
America is experiencing a renaissance in energy production of epic proportions,” he added.
“The potential in the United States alone is tremendous. Unconventional oil and natural gas
development will attract manufacturing back to the United States, boost exports, expand our
tax base and revenues, and reduce our dependence on unfriendly or risky suppliers. When you
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add up the potential of all three countries, our energy resources are truly staggering. We must
do everything in our power to seize the extraordinary energy opportunity in North America.Ӧ In
conjunction with Donohue’s participation in the NAFTA20 Summit, the Chamber released a new
report entitled NAFTA Triumphant: Assessing Two Decades of Gains in Trade, Growth, and Jobs.¶
Among the report’s key findings:¶ Since NAFTA entered into force in 1994, trade with Canada
and Mexico has risen three-and-one-half fold to $1.2 trillion, and the two countries buy about
one-third of U.S. merchandise exports.¶ Trade with Canada and Mexico supports nearly 14
million U.S. jobs, and nearly 5 million of these net jobs are supported by the increase in trade
generated by NAFTA, according to a comprehensive economic study commissioned by the U.S.
Chamber.¶ The expansion of trade unleashed by NAFTA supports tens of thousands of jobs in
each of the 50 states—and more than 100,000 jobs in each of 17 states.¶ Canadians and
Mexicans purchased $428 billion of U.S. manufactured goods in 2011, generating $36,000 in
export revenue for every American factory worker.¶ NAFTA has been a bonanza for U.S. farmers
and ranchers, with one in every ten acres on American farms planted for export to Canada and
Mexico.¶ With new market access afforded by NAFTA, U.S. services exports to Canada and
Mexico have tripled, rising from $27 billion in 1993 to $82 billion in 2011.¶ Canada and Mexico
are the top two export destinations for U.S. small and medium-size enterprises, more than
116,000 of which sold their goods and services in Canada and Mexico in 2009.
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Solvency- Latin American Relations
NAFTA boosts Mexican relations- encourages higher regulatory standards and
cooperation
Griswold, associate director of the Center for Trade Policy Studies at the Cato
Institute, 3
[Daniel T., 7-2-03, West Chester University, “NAFTA Benefits Arizona,”
http://courses.wcupa.edu/rbove/eco338/030Trade-debt/NAFTA/030702benefits.txt, Accessed
7-2-13, ML]
Finally, NAFTA has been good for Mexico and our bilateral relations with our ¶ southern
neighbor. NAFTA helped Mexico recover from its own homegrown peso ¶ crisis in 1994-95.
While it took a full seven years for U.S. exports to Mexico ¶ to recover after the debt crisis of
1982, it took only 17 months for our exports ¶ to rebound after the peso crisis. Since 1995,
incomes in Mexico have been rising ¶ and its economy has been one of the most stable and
dynamic in Latin America.¶ The economic competition from NAFTA has helped to till the soil in
Mexico for a ¶ more open and competitive political system. It is no coincidence that a few ¶
short years after the enactment of NAFTA, Mexicans were able to end seven ¶ decades of oneparty rule by electing opposition candidate Vicente Fox as their ¶ president. NAFTA has also
encouraged higher regulatory standards in Mexico and ¶ more cross-border cooperation on
sensitive environmental issues.¶ For the people of Arizona, NAFTA has delivered good-paying
jobs for workers and ¶ export and investment opportunities for local companies. Across the
border, ¶ NAFTA has helped to create a more stable, friendly, and democratic Mexico. By ¶
every reasonable measure, NAFTA has been a success for people north and south of ¶ the
border.
Emphasis on cooperation and trade boosts US-Latin American relations- Good
Neighbor policy proves
Office of the Historian, US Department of State, no date
[US Department of State, “Good Neighbor Policy, 1933,”
http://history.state.gov/milestones/1921-1936/GoodNeighbor, Accessed 7-3-13, ML]
President Franklin Delano Roosevelt took office determined to improve relations with the
nations of Central and South America. Under his leadership the United States emphasized
cooperation and trade rather than military force to maintain stability in the hemisphere. In his
inaugural address on March 4, 1933, Roosevelt stated: "In the field of world policy I would
dedicate this nation to the policy of the good neighbor--the neighbor who resolutely respects
himself and, because he does so, respects the rights of others." Roosevelt's Secretary of State,
Cordell Hull, participated in the Montevideo Conference of December 1933, where he backed a
declaration favored by most nations of the Western Hemisphere: "No state has the right to
intervene in the internal or external affairs of another". In December Roosevelt stated, "The
definite policy of the United States from now on is one opposed to armed intervention." In 1934
at Roosevelt's direction the 1903 treaty with Cuba (based on the Platt Amendment) that gave
the United States the right to intervene to preserve internal stability or independence was
abrogated. Although domestic economic problems and World War II diverted attention from the
Western Hemisphere, Roosevelt's Good Neighbor policy represented an attempt to distance the
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United States from earlier interventionist policies, such as the Roosevelt Corollary and military
interventions in the region during the 1910s and 1920s.
Strong Latin American support for NAFTA- represents new US policy. That’s key
to relations
Golden, NY Times foreign correspondent, 93
[Tim, 10-19-93, The New York Times, “Salinas Calls Nafta a Test of US Relations With All Latin
America,” http://www.nytimes.com/1993/10/19/world/salinas-calls-nafta-a-test-of-usrelations-with-all-latin-america.html, Accessed 7-3-13, ML]
Reflecting strong and growing support in Latin America for the North American Free Trade
Agreement, President Carlos Salinas de Gortari said today that the region would feel
"cheated" if the United States Congress were to vote the agreement down.¶ In an interview on
his return from a meeting of leaders from 12 Latin American nations in Chile, Mr. Salinas said
that the fate of the trade accord had become a fundamental test of American relations not
only with Mexico but also throughout the hemisphere.¶ "When negotiations for the treaty
began, many people thought Mexico was turning its back on Latin America, and events have
shown the opposite to be true," Mr. Salinas said. "For Latin America, the free trade agreement
has come to mean a different policy of the United States toward the region."¶ Mr. Salinas's
remarks echoed a strong statement in favor of the accord on Friday by the leaders at the
meeting in Chile. The agreement is expected to come to a vote in the United States House of
Representatives as early as Nov. 17, and President Clinton acknowledged again on Sunday that
the votes to pass it were not yet there. Latin Nations Close Ranks The implementation of Nafta
will be a decisive test" of the United States' role in the region, the participants in the Chile
meeting said. "Latin America hopes that the United States will define by its actions whether
from here on it will have a new attitude, constructive and respectful, toward its neighbors of
the continent."¶ Caribbean and Central American countries, particularly, had expressed alarm
that they could lose foreign trade and investment to Mexico under the agreement, which would
gradually reduce tariffs and other barriers between the United States, Mexico and Canada.
Larger nations like Brazil have feared that the pact would tip the regional balance of power in
Mexico's favor.¶ But more recently -- and in part because of strong lobbying by Mexico -- those
countries have closed ranks with nations like Chile and Colombia that have welcomed the pact
and sought to enter it. Under a so-called access clause, other nations can join the accord if they
are willing to lower their tariffs and other barriers accordingly.¶ In a message to the Latin
American leaders gathered in Santiago, the Chilean capital, President Clinton promised that
American approval of Nafta would be "the first step" in achieving a goal of freer trade
throughout the region. They answered by emphasizing "the transcendence of the treaty for
the whole continent."¶ Speaking in his offices at the Mexican presidential residence, Los Pinos,
Mr. Salinas was quick to interpret the Latin American consensus as another sign that a rejection
of the agreement would have significant foreign-policy costs for the United States. 'A
Declaration of Actions'¶ "The message of these heads of state is that if that happens, Latin
America would feel cheated -- they used the term rejected," he said.¶ "Traditionally, the
initiatives of the United States toward Latin America have been little more than speeches," he
added, citing the Good Neighbor Policy that Franklin D. Roosevelt proclaimed at his first
inaugural in 1933 and the Alliance for Progress in the 1960's as notable exceptions. "They see in
Nafta a declaration of actions."¶ Mr. Salinas reiterated that Mexico would not accept a
renegotiation of the accord or its postponement beyond Jan. 1, when it is to take effect. But a
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senior Mexican official who spoke on the condition that he not be identified said that if the
House endorsed the agreement this year, Mexico would have "no problem" with a vote early
next year in the Senate, where its support is stronger.
NAFTA models a path for development and democratization- key to
community-building and relations with Latin America
IDW, no date
[International Democracy Watch, “North American Free Trade Agreement,”
http://www.internationaldemocracywatch.org/index.php/north-american-free-tradeagreement, Accessed 7-3-13, ML]
Another important effect of NAFTA has been the model it has offered the rest of Latin
America. At present, Central America, Chile, and the Caribbean have signed free trade
agreements with NAFTA. This offers poorer countries in Latin America an important path to
development and support for national democratization. By gaining access to larger markets
and opening economic and political institutions, development is also enhanced. However,
without basic infrastructural development many countries in Latin America will still find it
difficult to compete. This indicates successful regional integration for poorer countries requires
development funds similar to those the EU provided southern and eastern European countries.
If the goal of Mexican president Vincente Fox of a common market is to be realized, fiscal
transfers will have to precede the free movement of goods, services, and people in order to
make it politically palatable. According to Fox: "Our forecast and our idea is to sell a long-term
project where we can move upwards from a trade agreement to a community of nations
agreement or a North American common market. To move in that direction implies more than
just trading, more than just facilitating the transit of merchandises, products, services, and
capital. It has to imply the free flow of citizens, and it has to imply long-term monetary policies,
maybe a common currency 20, 30, 40 years from now. Should this path for NAFTA materialize, it
is sure to influence the rest of the Western Hemisphere and further integration may depend on
it.
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I/L- Trade- Infrastructure Solves
Infrastructure is needed to expand integration and export competition
Avendano, Research Associate at the OECD Development Centre, 7
[Rolando, 10-7-07, OECD Development Centre, “Latin America’s Asian Opportunity,”
http://www.oecd.org/brazil/39564143.pdf, accessed 06-28-13, LV]
Between 1992 and 2002, Mexican exports almost doubled¶ their market share in the United
States, the country’s¶ main export destination. Since then, market share has¶ decreased by
nearly 10 per cent. At the same time,¶ Mexico’s comparative advantage in manufacturing has¶
been diminishing, leading some to fear that the export¶ model itself is at risk.¶ Latin America
lacks infrastructure, and this explains some¶ of Mexico’s problems. Further down the
continent, only¶ 5 per cent of Brazilian roads are paved and both railroad¶ and fluvial systems
are underdeveloped. Port efficiency differs¶ drastically across the region, and most ports are
dramatically¶ surpassed by those of Hong Kong, China and Singapore.¶ These handicaps may
have mattered less in the past but¶ the rise of China, and its competitive exports, represents¶
a new challenge. Some concern is certainly justified.¶ Mexico’s annual export growth rate
would have been¶ 3 percentage points higher in the early 2000s, if Chinese¶ export capabilities
had remained unchanged.¶ Yet, for most Latin American countries, growth in Asia¶ primarily
represents an opportunity. The latest Latin American¶ Outlook from the OECD Development
Centre looks at¶ 34 countries and shows that for the most part, Latin American¶ economies are
much less exposed to Chinese competition¶ than are other emerging economies. This also
applies to¶ India. In both cases, Paraguay, Chile, Venezuela and Bolivia¶ figure among the
countries least exposed to competition,¶ which is no surprise, since these are exporters of
natural¶ resources. Mexico’s exports are similar to those of China,¶ which is why it is likely to
face a greater challenge.¶ Somewhere in the middle are Brazil, Argentina and Colombia¶ both in
relation to China and to India.¶ Despite the visibility of raw-materials exports, the trade¶
opportunities for Latin America are not limited to¶ commodities. Both the Asian giants have
growing¶ domestic markets for Latin American exports, not all of¶ them being exploited. Mexico
exports telecommunications¶ and electrical circuit equipment, sectors where China’s¶ and
India’s imports are also high, but where little trade is¶ currently taking place. Argentina, Brazil,
Chile and Uruguay¶ all have established agricultural industries with expansion¶ potential.
Exploiting these opportunities, however, involves¶ ensuring the necessary investments in
infrastructure and¶ innovation, and avoiding excessive specialisation in the¶ commodity
sectors.¶ A comparison of trade patterns between 2000 and 2005¶ suggests that Latin American
comparative advantage in¶ soft commodities (grains, sugar) and hard commodities¶ (metals, oil)
has increased. Manufacturing sectors have¶ weakened, overall, as exemplified by the Mexican
case,¶ while in Venezuela, Ecuador, Bolivia and Chile, product¶ concentration in exports has
increased substantially (see¶ figure). This specialisation can have negative effects on¶ the other
sectors of the economy, so-called “Dutch¶ disease”, unless it is managed by responsible¶
macroeconomic policies and well-functioning institutions. The growth of the Chinese and Indian
economies and their¶ increased participation in international trade has brought¶ into sharp
relief the need for Latin American countries to¶ invest in infrastructure and innovation for the
noncommodity sectors to prosper. For countries facing export¶ competition, such as Mexico, it
is important and urgent to¶ build infrastructure that will enable efficient trade. In¶ sectors and
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products where distance and time are key¶ competitive assets, the urgency is acute if
exporters are to¶ continue to capitalise on their extraordinary geographical¶ advantage.¶
Innovation is the key to long-term, diversified growth, and¶ Latin American countries need to be
in the forefront. Chile¶ has proven to have an effective strategy in this area. In¶ the last three
decades the share of minerals in total exports¶ has halved, although copper is still a significant
export.¶ Together with the fiscal discipline required to acquire a¶ certain commodity
independence, governments in Santiago¶ have consistently focused on innovation, allowing
other¶ industries to develop, including wine, fresh fruit and salmon.¶ Moreover, the example of
Fundación Chile, one of the frontrunners in innovation partnerships, illustrates the¶
achievements in technological transfer that can occur in¶ certain industries. Elsewhere,
countries like Brazil, have¶ started to focus on potential synergies between science¶ and
technology promotion, R&D support and trade¶ competitiveness.¶ Strong commodity demand is
clearly driving the profitable¶ relationship between the Asian giants and most of Latin¶ America,
but strategies to deal with the aftermath of the¶ boom are urgently needed. Where
commodities are not¶ the driving force, or not the only one, competitiveness could¶ be at risk
from complacency and lack of attention to¶ infrastructures and innovation. In the end, both
groups of¶ countries are in the same boat: without better¶ infrastructures and enhanced
innovation initiatives, the¶ continent risks running off course.¶ When there is so much to gain,
that would be a shame.
US investment key to bilateral economic integration.
Pastor, Director of the Center for North American Studies, Vice President of
International Affairs, Professor of International Relations at American
University, 8
[Robert, January 2008, Office of International Affairs American University, “The Solution to
North America’s Triple Problem: The case for a North American Investment Fund”, Accessed 627-13, http://www.american.edu/sis/cnas/upload/triple_problem_pastor.pdf, ML]
While the development of Mexico and its integration with¶ its neighbors is the focus of the
proposal, a new cooperative relationship among the¶ three governments is a prerequisite to
achieving that goal. The vision needed to begin¶ moving in this direction is not one of a union or
even a common market. A common¶ market requires the free movement of labor but that is not
possible, given the¶ income gap, and a union suggests a merging of sovereignties and all three
governments¶ oppose that.¶ A “North American Community” may be the best option. It
evinces an idea that¶ is more than three separate nations but it allows its members to define
what “more”¶ they want. The premise of such a community is that each of the three countries
benefits¶ from its neighbors’ success and pays a price for its neighbors’ failure, crisis, or
setback.¶ At some level, this is widely understood and explains why the U.S. helped¶ Mexico deal
with its debt crisis in 1982 and peso crisis in 1994-1995. Of course, Canada¶ and Mexico are
directly affected by events in the United States, whether a countervailing¶ duty or 9/11. In the
post- NAFTA world, the economies of the three countries¶ are so inter-connected that a
recession in one country will harm the others and a¶ boom in one will lift the others.¶ When
the value of a neighbor’s house rises, that has a positive effect on one’s own¶ house. When a
neighbor’s house burns or is vandalized, then all the houses in the¶ community are in danger.
Those are the two sides of a vision of a North American Community.¶ Increasing
interdependence requires more active involvement by all three¶ governments to ensure that
the public is protected from a more integrated but less¶ regulated market.
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Streamlined US-Mexican border vital to improved economic partnership
Mares, professor of political science at UC San Diego, and Canovas, professor at
El Colegio de México, 9+
[David R. and Gustavo Vega, “The U.S.-Mexico Relationship: Towards a New Era?”
http://usmex.ucsd.edu/assets/024/11646.pdf, accessed 6-26-13, GSK]
The most useful place to discern the future of the bilateral relationship is on the U.S.-¶
Mexican border (3,326 kilometers) since improving its management is the most likely path to
progress toward a closer economic partnership. We divide the border management question
into two parts, the inspection of agricultural products, and the inspection of all other products. ¶
An indication of drifting apart comes from customs inspections along the border. After
September 11, 2001 new security measures were implemented that cause delays and
complicate the process of inspection. In order to facilitate and prevent future disruption of
cross-border trade, the three countries negotiated in 2001- 2002 new agreements on “smart
borders” aimed: to secure the infrastructure and the flow of people and goods at the North
American borders As part of the Smart Border accords, they created the Free and Secure Trade
(FAST) Programs to permit the rapid and secure passage of legitimate commerce through the
North American Borders. However, so far only a minimum proportion of North American firms
on the Mexican side have registered into this program.¶ Importers and exporters everywhere
regard customs services as an irritation especially now that most provisions of NAFTA have been
implemented. One study estimates that a border crossing can take as much as between 7 and
17 hours and the total costs for a border crossing may reach as much as between 10 to 20% of
total transportation costs.xii According to a 2007 study by the American Transportation
Research Institute …inefficiencies at the [US Canadian border] have increased costs by 10 to 15
percent…The main costs impacts derive from border delays, either real or anticipated. …[and]
the cost of duties, broker fees, custom administration….[amounting] to total costs representing
2.7 percent of merchandise trade totaling US $ 382 billion in 2001 (Kergin and Matthiesen,
2008,). ¶ Virtually all the truck traffic between Canada, Mexico and the United States crosses
fewer than 10 ports of entry, and these were totally congested even before September 11. It is
simply not feasible to expand the inspection lanes and holding areas at these 10 ports
adequately to cope with the needs of just in time deliveries across borders and security
inspections.
Border Infrastructure investment key to US-Mexico Trade Relations - solves US
and Mexico Econ and job creation
Immigration Policy Center, Legal Action Center, 13
[Immigration Policy Center, 5-12-13, "A Border Fence Will Hurt the Economic Relationship of
Mexico and U.S.,” http://www.voxxi.com/border-fence-economic-relation-mexicous/#ixzz2XUdlRZDh, accessed 6-28-13, JC]
Mexico is the United States’ third largest trading partner, after Canada and China, in terms of
total trade in goods, while the U.S. is Mexico’s largest trading partner. As such, the economic
ties of the U.S. and Mexico are significantly important to the economy and society in both
countries.¶ Further, the U.S.-Mexico border is not a static line drawn on a map, but a dynamic
and ever-evolving place along which substantial daily interaction takes place. Yet the resounding
refrain we repeatedly hear from some members of Congress is that building a 1,969-mile fence
to separate us from one of our largest economic partners, and the eleventh largest economy in
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the world, is a key component to solving the issues presented by an outdated immigration
system and a requirement that must be completed before moving forward with proposed
immigration reforms. To be clear, there is a need for secure borders, but there is also a need for
further streamlining and efficiently facilitating the daily cross-border flows of people, goods
and services important to the bi-national economic relationship of the United States and
Mexico—an economic relationship the following facts highlight.¶ The United States and Mexico
have an enormous trading partnership¶ In calendar year 2011, the United States had a total
trade in goods with Mexico of $460.6 billion. And in 2012, the total amount of goods traded was
even larger at $494 billion. Only trade with Canada and China were greater.¶ Combined, total
trade in goods and services between Mexico and the United States totaled more than $500
billion in 2011. And in 2012, that number was up to $535.9 billion. As such, six million American
jobs depend upon the U.S. trade relationship with Mexico.¶ In 2012, Mexico was the United
States’ second largest goods export market, with $216.3 billion in goods exported to Mexico
that year. 2012 saw a 9.1 percent increase in goods exports from the U.S. to Mexico from 2011
and an increase of 121.9 percent from 2002. The major categories of goods the U.S. exported to
Mexico in 2012 include machinery, electrical machinery, mineral fuel and oil, vehicles and
plastic, and major industry sectors include computer and electronic products, transportation
equipment, chemicals, electrical equipment, appliances and agricultural goods.
Infrastructure investment strengthens US-Mexico trade
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
Accessed 6-25-13, AR]
A key component of how the U.S.-Mexico border functions to facilitate trade has to do with ¶
transportation planning because in its absence infrastructure investments on one side of the ¶
border or in one region can simply feed traffic into a bottleneck in another area. This process is¶
largely managed by the Joint Working Committee, a binational entity comprised of ¶
representatives from the two countries’ transportation agencies, the State Department, ¶
Mexico’s Foreign Ministry, other federal agencies and state departments of transportation, but ¶
as border communities felt themselves increasingly affected by decisions made in Washington ¶
and Mexico City, their insistence in r lead stakeholder discussions on border ¶ infrastructure
priorities. While this process makes sense from a U.S. perspective (in the absence ¶ of a
national transportation plan, state DOTs essentially manage and spend federal ¶
transportation dollars), this process is somewhat of a mismatch for Mexico’s more centralized
¶ political system. The system seems to work better in certain cross-border communities, as is ¶
seen with California and Baja California’s award-winning master plan.
Infrastructure investment improves US-Mexico trade relations
Barry, Reporter for TransBorder Project Policy, 13
[Tom, 5-2-13, NACLA: “Changing Perspectives on U.S.-Mexico Relations,”
https://nacla.org/news/2013/5/2/changing-perspectives-us-mexico-relations, accessed 6-25-13,
AR]
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Both presidents will likely commit their governments to facilitating cross-border commerce
and improving the infrastructure necessary for vibrant, profitable trade and investment. That’s
important, but Obama and Peña Nieto will be remiss if they do not first situate their discussion
about economic integration within the context of the entire region. The North American Free
Trade Agreement (NAFTA) of 1994 fell far short of delivering the broadly shared economic
development and employment gains promised by its promoters. It was little more than a trade
and investment agreement, whose labor and environmental side accords and associated
institutions had little enforcement power and limited reach. Even before NAFTA, the economies
of Canada, United States, and Mexico were increasing their structural integration not just in
trade but also in such now highly integrated sectors as energy resources, electricity, agriculture,
and manufacturing (including highly integrated automotive and aviation production). Since 1994
regional trade has tripled and foreign investment increased six times. Mexico is the second
largest importer of U.S. goods, following Canada; moreover, the United States is by far the
leading market for Mexican exports. Both Mexico and the United States are currently engaged
in another economic liberalization initiative called the Trans-Pacific Partnership (TPP), involving
more than a dozen other nations, mostly Asian but also including Chile and Canada. Many of the
concerns and criticisms about the corporate-driven character of NAFTA are also highly relevant
to the TPP negotiations. However, the main problem of the new, Asia-oriented focus of U.S. and
Mexican trade/investment initiatives is the failure to appreciate, leverage, and improve the
highly integrated North American economy. The Obama and Peña Nieto trade teams should
recognize the mutual benefits of including Canada in talks about smart borders, trade
infrastructure, educational visas, security perimeters, immigration, and further economic
liberalization—as should the Canadian government. Presidents Obama and Peña Nieto should
embrace the concept—and the reality—of a North American community (a concept heralded by
Robert Pastor and other scholars and visionary policy analysts) shaped by demographic trends
and economic integration. Whether structured or not by new regulations and institutions, the
emergence of a North American community is evident in existence of some 30 million Mexican
Americans in the United States. The NAFTA institutions such as the North American
Development Bank and the North American Commission for Environmental Cooperation as well
as such important bilateral initiatives as Border 2020 (which emerged from the 1983 La Paz
environmental agreement) should not be left to wither away, but seized upon as the building
blocks of a more sustainable regional community that extends beyond economic liberalization.
Such institutions are among the first steps of recognizing and shaping the south-north
community. Focusing on Asia is looking away from our own region’s complementarity and
common future. Both governments will surely point to fundamental importance of the
two nations as trading partners.
Infrastructure is Key to Revitalize US-Mexico Relations
Selee, Vice President for Programs and Senior Advisor to the Mexico Institute,
and Wilson, Associate at the Mexico Institue, 12
[Andrew and Christopher, November 2012, Wilson Center, “A New Agenda with Mexico,”
November 2012,
http://www.wilsoncenter.Org/Sites/Default/Files/a_New_Agenda_with_Mexico.Pdf, accessed
6-27-13, AR]
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Summary The depth of economic ties with Mexico, together with declines in illegal immigration
and organized crime violence in Mexico, Open up an opportunity for U.S. policymakers to
deepen the economic relationship with Mexico and to engage Mexico more on major global
issues. Security cooperation, especially strengthening institutions for rule of law and disrupting
money laundering, will remain important to the relationship, and there are clear opportunities
to reform the U.S. legal immigration system over the next few years, which would have
important implications for the relationship with Mexico. The strongest engagement , going
forward, is likely to be on the economic issues that can help create jobs for people on both
sides of the border, and on the shared global challenges that both countries face Few countries
will shape America’s future as much as Mexico. The two countries share a 2,000 mile border,
and Mexico is the second largest destination for U.S. exports and third source of oil for the U.S.
market. A quarter of all U.S. immigrants are from Mexico, and one in ten Americans are of
Mexican descent. Joint security challenges, including both terrorist threats and the violent
operations of drug cartels, have forced the two governments to work more closely than ever.
What’s more, cooperation has now extended to a range of other global issues, from climate
change to economic stability. Nonetheless, the landscape of U.S.-Mexico relations is changing.
Illegal immigration is at the lowest level in four decades, and organized crime violence, which
has driven much of the recent cooperation, is finally declining. Violence will remain a critical
issue, but economic issues—bilateral and global—have risen to the fore as both countries
struggle to emerge from the global slowdown. Trade has increased dramatically, connecting the
manufacturing base of the two countries as never before, so that gains in one country benefit
the other.To keep pace with these changes, U.S. policymakers will need to deepen the agenda
with Mexico to give greater emphasis to economic issues, including ways to spur job creation,
and they will have opportunities to strengthen cooperation on global issues. Security
cooperation will remain critical, and determined but nuanced follow through to dismantle the
operations of criminal groups on both sides of the border will be needed to continue the drop in
violence. With less illegal immigration, it will be easier to address legal migration in new ways.
However, economic issues are likely to dominate the bilateral agenda for the first time in over a
decade. In most trading relationships, the U.S. simply buys or sells finished goods to another
country. However, with its neighbors, Mexico and Canada, the U.S. actually co-manufactures
products. Indeed, roughly 40 percent of all content in Mexican exports to the United States
originates in the United States. The comparable figures with China, Brazil, and India are four,
three, and two percent respectively. Only Canada, at 25 percent, is similar. With the economies
of North America deeply linked, growth in one country benefits the others, and lowering the
transaction costs of goods crossing the common borders among these three countries helps
put money in the pockets of both workers and consumers. Improving border ports of entry is
critical to achieving this and will require moderate investments in infrastructure and staffing, as
well as the use of new risk management techniques and the expansion of pre-inspection and
trusted shipper programs to speed up border crossing times. Transportation costs could be
further lowered — and competitiveness further strengthened — by pursuing an Open Skies
agreement and making permanent the cross-border trucking pilot program. While these are
generally seen as border issues, the benefits accrue to all U.S. states that depend on exports and
joint manufacturing with Mexico, including Michigan, Ohio, Nebraska, Iowa, South Dakota, New
Hampshire, and Georgia, to name just a few.
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Solvency- Mexican Growth
Infrastructure is vital to Mexican competitiveness and economic growth
Horcasitas, Secretary of Communication and Transportation of Mexico, 9
[Juan, October 29, 2009, Americas Society/Council of the Americas, “Strategic Infrastructure in
Latin America: A Key Pillar of Competitiveness and Economic Growth,” http://www.ascoa.org/articles/strategic-infrastructure-latin-america-key-pillar-competitiveness-and-economicgrowth, accessed 6-27-13, AR]
In his keynote speech, Secretary Horcasitas focused on three topics: the role of Mexico’s
Secretariat of Communication and Transportation; short and long-term goals for Mexican
infrastructure investment; and major projects underway in the country. Highlighting the
importance of infrastructure to economic growth, Horcasitas explained how the Secretariat’s
role is fundamental for the development of a broad range of infrastructure projects in a
manufacturing country like Mexico. Horcasitas noted that President Felipe Calderón’s
government has taken significant steps to demonstrate its commitment to infrastructure
development, including an economic policy centered on increased public spending. In 2007,
President Felipe Calderón launched the National Infrastructure Program (NIP) to boost the
expansion, quality, and the competitiveness of Mexico’s infrastructure. The NIP includes more
than 700 highways, 12 bypasses, and port development. When finished, the port of Lázaro
Cárdenas will be the second biggest in Latin America. The secretary also explained that the
government plans to submit a new bill to Mexico’s Congress in order to better regulate and
facilitate PPPs. These partnerships are expected to result in infrastructure investments of as
much as $8 billion for 2010 and 2011 in Mexico. During the panel, The World Bank’s Jordan
Schwartz explored how infrastructure promotes growth and generates employment. But in
terms of infrastructure’s expenditure, he warned, Latin America lags behind other regions of
the world. Historically, it has dedicated around 2 to 3 percent of GDP on infrastructure, while
East Asian economies average between 6 to 10 percent. CVCI’s Enrique Bascur noted, however,
that infrastructure investment remains one of the largest economic activities in emerging
countries. Schwartz also noted that, despite a 20 percent decrease in infrastructure investment
in the second quarter of 2008, the region’s governments are committed to increase investment
by 25 percent through 2010. Speakers also noted that almost the entire region is witnessing a
return to economic growth; domestic demand is improving and commodity prices are
stabilizing. Panelists observed that, for most countries, public investment remains the primary
source of financing for infrastructure. Private sector participation in infrastructure should
increase as private investors bring much needed capital—often more than what governments
can provide on their own. Attracting private sector investment requires stronger regulatory and
institutional frameworks, more transparent contracting, and innovative financing structures that
make projects less risky and improve returns. HSBC’s Duncan Caird stressed that the ability to
assure predictably rests at the core of attracting private investment. In conclusion, speakers
agreed that the region must focus on increasing investment in infrastructure from both the
public and private sectors. Creating avenues to increase investment presents considerable
challenges but the potential payoffs make it well worth the effort in terms of growth,
competitiveness, and quality of life.
Gonzaga Debate Institute 2013
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Lack of infrastructure limits Mexican competitiveness
Institute for International Economics, 10
[11-27-10, Institute for International Economics, “Recommendations for North American
Economic Integration,”
http://www.piie.com/publications/chapters_preview/332/09iie3349.pdf, accessed 6-27-13, ML]
While NAFTA encouraged structural reform of the three economies, it¶ left the task of managing
the adjustment process to each government.¶ National adjustment programs have been
generally limited and under-¶ funded. In the United States, inadequate adjustment policies
continue to¶ feed worker discontent about globalization in general and US trade policies in
particular. In Mexico, the adjustment burden was far greater and the¶ resource constraints
severe. Mexico compounded these problems by failing to use the opportunities NAFTA
opened to build new infrastructure and create adequate alternative employment for the
agricultural work-¶ force. The Mexican political system has been unable to produce tax and
energy reforms, which would generate new resources to fund investments in¶ physical
infrastructure and social services, especially education. As a result, Mexico continues to suffer
from a high "TECC" problem: high transport, energy, and capital costs. These factors have
limited Mexico's ability to take full advantage of NAFTA and have put Mexican industries at a
competitive disadvantage against foreign competitors, particularly China.
US infrastructure investment key to an improved Mexican perception and
economy
Pastor, Director at the Center for North American Studies, 8
[Robert, January 2008, Center for North American Studies, “The Solution to North America’s
Triple Problem: The Case for a North American Investment Fund,”
http://www.american.edu/sis/cnas/upload/triple_problem_pastor.pdf, accessed 6-27-13, ML]
The formula both for narrowing the development gap and creating a genuine ¶ partnership in
North America is defined as “a community of interests,” in which all three ¶ contribute in their
respective ways. How will the United States and Canada benefit from ¶ such a program? In the
short term, Canadian and U.S. companies will have new ¶ opportunities to build the
infrastructure in Mexico. For every dollar of growth in the ¶ Mexican economy, trade with the
U.S. and Canada will increase by about 40 cents. If ¶ Mexico’s growth rate increases from 3
percent to 6 percent, that means $20 billion more ¶ 8¶ for a superb analysis of the tax issue, see
Ramirez de la O, 2004, p. 9. For the economy and $8 billion more in trade with its two neighbors
in the one year. Compounded annually for a decade, which will not only contribute to
Mexico’s ¶ development but to North America’s. ¶ This will not affect undocumented
migration in the short-term but it is the only ¶ solution in the long-term. It will take decades to
close the gap but if Mexico begins to ¶ grow faster than its northern neighbors; this will affect
the perceptions of people in all ¶ three countries. Mexicans might begin to believe in their
country’s future and, instead of ¶ calculating ways to cross the border; they might invest in
their region.
Infrastructure investment key to increasing Mexican competitiveness
Pastor, Director at the Center for North American Studies, 8
Gonzaga Debate Institute 2013
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[Robert, January 2008, Center for North American Studies, “The Solution to North America’s
Triple Problem: The Case for a North American Investment Fund,”
http://www.american.edu/sis/cnas/upload/triple_problem_pastor.pdf, accessed 6-27-13, ML]
Others have pointed to Mexico’s declining competitiveness and attribute that to ¶ Mexico’s
inability or unwillingness to undertake essential tax and fiscal, labor, energy ¶ and electricity
reforms. An IMD World Competitiveness Survey attributed declining ¶ competitiveness to poor
infrastructure. Of the 30 largest economies in terms of their ¶ infrastructure, the IMD survey
found that in just three years – 2000-03 – Mexico had ¶ slipped from 18th to 29th, while the U.S.
infrastructure competitiveness remained the top ¶ ranking and Spain slipped from 9th to 10th
(IMD, 2004). ¶ The World Bank initially viewed large infrastructure projects as key to ¶
development and, after its start in 1960, the Inter-American Development Bank also ¶ invested
heavily in infrastructure. But beginning in the mid-1970s, there was a gradual ¶ shift away from
such projects toward those aimed at education, health, and poverty reduction. More recently,
the World Bank has begun to re-evaluate the importance of ¶ infrastructure and a number of
studies have concluded that lagging performance in ¶ infrastructure “has cascading negative
effects throughout the economy. It¶ increases¶ the cost of doing business, decreases
international competitiveness, and hinders¶ the country’s growth and poverty alleviation
prospects” (World Bank, 2003: 1).¶ Mexico has long under-invested in infrastructure but
government investment¶ in infrastructure as a percentage of GDP fell precipitously from about 8
percent in¶ 1980 to 1.2 percent in 2003. In 1960, Korea had less than half of Mexico’s paved
road¶ density. In 2005, it had 11 times that of Mexico. Similarly, in 1969, Korea had one third¶ the
power infrastructure per capita of Mexico but, in 2005, it had three times as¶ much. While the
comparison with Korea is particularly sharp, Mexico also compares¶ poorly with other major
Latin American countries. For example, Mexico’s road density¶ is currently about one-half that of
Brazil. Moreover, the costs of railways and ports¶ in Mexico are higher than in Brazil and the U.S
(World Bank and Inter-American¶ Development Bank, 2005; World Bank, 2005; Rodríguez
Barocio, 2005: 15). ¶ The lack of infrastructure and its poor quality and reliability have added
significantly¶ to the cost of doing business in Mexico. It also has encouraged foreign
investment¶ to concentrate on the border. Therefore, one effective way to reduce¶
geographical disparities within Mexico while reducing pressures for out-migration¶ would be to
improve the road system from the U.S. border to the center and southern¶ parts of the country.
Because of foreign investment, the northern border economy is¶ booming and attracting labor
from the poorer parts of the country. However, in many¶ cases, workers stay on the Mexican
side of the border only long enough to learn¶ how to cross into the United States, where they
can earn a lot more. U.S. firms do not¶ like to invest in the border area because of the pollution
and the inefficiencies associated¶ with such a high turnover rate, but they do so because the
roads from the¶ border to the center of the country are bad or non-existent.
Investment in strengthening interoperability of Mexican roads with US ones
would bolster the Mexican economy- statistically proven- the current systems
causes delays for transloading that destroy consumer confidence- not willing to
deal with someone who can’t guarantee delivery.
Drake and Roho, professors at the Donahue Graduate School of Business, 8
[Matthew J. and Diaz, August 2008, Duquesne University, The Journal of International
Management Studies, “The Current State of Mexican Logistics Operations,”
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http://academia.edu/168323/The_Current_State_of_Mexican_Logistics_Operations, Volume 3,
Number 2, pg. 94]
By most accounts, the logistics infrastructure (i.e., quality and extent of roads, rails, airports,
seaports, and pipelines) in Mexico, and most of Latin America for that matter, lags behind that
of the United States, Canada, and Europe. The development of the Mexican road network in the
Twentieth Century was focused domestically to connect cities with Mexico City instead of
necessarily establishing road links with the United States. State ownership of the railroads, only
recently discontinued, and the focus on trucking instead of rail transportation left the Mexican
rail system neglected for decades (Ciccantell, 2002). The road network in Mexico is such that
53-foot trailers that are common in the United States cannot legally travel on Mexican roads
because they are too large and too heavy. This limits carriers’ efficiency in cross-border
shipments to Mexico because either smaller trailers must be used from the start or the freight
must be transloaded onto smaller trailers at the border for final delivery in Mexico. Logistics
operations consistently rank high on managers’ lists of challenges and frustrations of doing
business in Mexico (Fawcett and Smith, 1995; Fawcett et al., 1995). The lack of a reliable
logistics infrastructure makes it difficult for Mexican transportation providers to satisfy their
customers because buyers consistently rank “delivery date reliability” as a top priority for
transportation mode selection in international transactions (Murphy and Daley, 1994). ¶ At first
glance, transportation infrastructure may not seem like a major macroeconomic issue, but it
can have a large effect on a country’s economy as a whole. Calderon and Serven (2004)
established a significant positive relationship between the quality and extent of a country’s
infrastructure and the nation’s long-term economic growth. This study shows that prudent
investment in infrastructure can have long-reaching implications for a nation’s economy.
India, another country with a reputation for poor transportation infrastructure, has committed
to investing more thanUS$450 billion between 2007 and 2012 to improve its logistics networks
(Leahy, 2008). With that, we now investigate Mexico’s annual freight traffic and aggregate
expenditures on infrastructure in the nine years after the implementation of NAFTA. The annual
domestic freight traffic by mode, along with those of Canada and the United States for
comparison purposes, are provided in Tables 1-4.While international shipments obviously utilize
these modes of transportation as well, we feel that looking at the domestic freight traffic
provides a reasonable proxy for the overall figure. The accompanying annual expenditures on
infrastructure by mode are given in Tables 5-8.
US-Mexico economic cooperation strengthens US economy, competitiveness,
and manufacturing
Wilson, Associate at the Mexico Institute of the Woodrow Wilson International
Center for Scholars, 11
[Christopher, Issues in Science and Technology: “U.S. Competitiveness: The Mexican
Connection,” http://www.issues.org/28.4/p_wilson.html, accessed 6-25-13, AR]
A “giant sucking sound” was the memorable description made by presidential candidate Ross
Perot during the 1992 campaign of the impact that the North American Free Trade Agreement
(NAFTA) would have, as businesses and jobs moved from the United States to Mexico. The reity
is that economic cooperation with Mexico has been a boon for U.S. industry and has
strengthened the country’s competitive position in ways that have produced broad economic
benefits. Today, as China and other Asian countries have emerged as major economic
Gonzaga Debate Institute 2013
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challengers , expanding economic cooperation with Mexico is one of the best ways for the
United States to improve its global competitiveness . Regional integration between the
United States and Mexico is already vast and deep. As the United States’ second largest
export market and third largest trading partner, Mexico is clearly important to the U.S.
economy. Merchandise ade has more than quintupled since NAFTA went into effect in 1994,
and in 2011, bilateral goods and services trade reached approximately a half-trillion dollars for
the first time. The U.S. Chamber of Commerce has calculated that the jobs of six million
American workers depend on U.S.-Mexico trade. Many of those jobs are in border states,
which have especially close ties to Mexico, but Mexico is also the top buyer of exports from
states as far away as New Hampshire (mostly computers and electronics). In fact, 20 states,
from Michigan to Florida, sell more than a billion dollars’ worth of goods to Mexico each year,
and Mexico is the first or second most important export market for 21 states. The United
States and Mexico are also major investors in one another. In fact, combined foreign direct
investment holdings now total more than $100 billion. According to the most recent count by
the Department of Commerce, U.S.-owned companies operating in Mexico created $25 billion in
value added and employed nearly a million workers. Mexican investment in the United States is
less than U.S. investment in Mexico, but it is has been growing rapidly in recent years. Several of
Mexico’s top companies, which are increasingly global operations, have made significant
investments in the United States. Mexico’s Cemex, for example, is North America’s largest
maker of cement and concrete products. Grupo Bimbo, which owns well-known brands such as
Entenmanns’s, Thomas’s English Muffins, and Sara Lee, is the largest baked goods company in
the Americas. Even Saks Fifth Avenue and the New York Times Company are supported by
significant Mexican investment. The massive volume of commerce and investment is important,
but the depth of regional integration is the primary reason why Mexico contributes to U.S.
competitiveness. Mexico and the United States do not just trade products, they build them
together. In fact, to understand regional trade, it is necessary to view imports and exports in a
different light. Whereas imports from most of the world are what they appear to be—foreign
products—the same cannot be said of imports from Mexico. During production, materials and
parts often cross the southwest border numerous times while U.S. and Mexican factories each
perform the parts of the manufacturing process they can do most competitively. Because of
the complementary nature of the two economies, close geographic proximity, and NAFTA,
which eliminated most tariff barriers to regional trade, the U.S. and Mexican manufacturing
sectors are deeply integrated. Demonstrating this integration is the fact that 40% of the value
of U.S. imports from Mexico comes from materials and parts produced in the United States. This
means that 40 cents of every dollar the United States spends on Mexican goods actually
supports U.S. firms. The only other major trading partner that comes close to this amount is
Canada, the United States’ other NAFTA partner, with 25% U.S. content. Chinese imports, on the
other hand, have an average of only 4% U.S. content, meaning that the purchase of imports
from China does not have the same positive impact on U.S. manufacturers.
Gonzaga Debate Institute 2013
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Solvency- Mexican Manufacturing
Increased border delay leads US to source internally, kills Mexican
manufacturing.
Blank, Professor of International Management at the Lubin School of Business,
Pace University, et al 06,
(Stephen, Senior Research Analyst at Arizona State University’s North American Center for Transborder Studies, Adjunct Research
Scholar, Center for Energy, Marine Transport and Public Policy at Columbia University; and Senior Fellow, Centre for International
Governance Innovation in Waterloo, Ontario. He is Co-Chair of the North American Transportation Competitiveness Research
Council, Stephanie R. Golob, Associate Professor of Political Science at Baruch College and the CUNY Graduate Center, Guy Stanley,
McGill University, 5/1/06, Faculty Working Papers, Lubin School of Business at Pace University, “SPP and the Way Forward for North
American Integration,” p. 6,
http://digitalcommons.pace.edu/cgi/viewcontent.cgi?article=1073&context=lubinfaculty_workingpapers&seiredir=1&referer=http%3A%2F%2Fscholar.google.com%2Fscholar%3Fq%3Dnafta%2Btransportation%2Binfrastructure%2Bstephen%2
Bblank%26bav%3Don.2%2Cor.r_cp.r_qf.%26biw%3D1953%26bih%3D1061%26um%3D1%26ie%3DUTF8%26lr%3D%26cites%3D5613239909229911042#search=%22nafta%20transportation%20infrastructure%20stephen%20blank%22,
[Accessed 7/1/13], JB).
Warning flags are up. Mary Brooks from Dalhousie University, Halifax, Nova Scotia, a specialist
on road and rail transportation, warned the Study Group that “there is a danger of stalling the
integration of the manufacturing sector if transport harmonization is further delayed. Rising
security concerns post 9/11 have resulted in increased border delay, which has damaged the
credibility of the just-in-time system. The result has been to boost buffer stocks, and force
just-in-time supply chain managers to re-examine their sourcing options; it is of concern to
Canada that many US companies will source domestically rather than within NAFTA due to
border uncertainty.”
Border Trade key to Mexican Manufacturing
Buch, immigration and border affairs reporter, San Antonio Express-News, 11,
(Jason, May 3, 2011, MySA: San Antonio’s Home Page, “Despite drug war, trade with Mexico is
booming: Businesses have had to make adjustments in their operations,”
http://www.mysanantonio.com/news/mexico/article/Despite-drug-war-trade-with-Mexico-isbooming-1360569.php [Accessed 6/26/13], JB).
Production workers in the U.S. make about $15 an hour, according to data from the U.S. Bureau
of Labor Statistics. Industrial workers in Mexico make about $3.50 an hour, as opposed to $3
an hour in China, according to a report from the National Council of Maquiladora and Export
Manufacturing Industry.
But the savings in labor are eroded with the higher cost of shipping from Southeast Asia. It
costs $4,300 to ship a 40-foot container from Hong Kong to San Antonio via Long Beach, Calif.,
and will take 24 to 26 days to get there, according to DHL Global Forwarding. It costs $1,800 to
drive a 40-foot trailer from Ciudad Juárez to San Antonio, and the trailer will get there in eight
to 10 hours.
The result is that 95 percent of goods manufactured in Mexico end up being shipped north of
the Rio Grande, Cañas said. And border cities are popular among foreign manufacturers
because higher-wage employees like engineers and managers can live on the U.S. side of the Rio
Grande and commute to work.
Gonzaga Debate Institute 2013
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Mexican Manufacturing strengthens Mexican competitiveness and growth
Wilson, associate @ the Mexico Institute of the Woodrow Wilson International
Center for Scholars , Olson, Associate Director of the Latin American Program
@ the Woodrow Wilson International Center, Salazar , Public Affairs Specialist
for the Latin American Program's Mexico Institute @ the Woodrow Wilson
International center, Selee, Wilson Center's Vice President for Programs,
Director of the Mexico Institute, Wood 13 ( Christopher E., Eric L. , Miguel R. , Andrew,
Duncan, 1-13 , Woodrow Wilson International Center for Scholars , "New Ideas for a New Era: ¶
Policy Options for the Next Stage ¶ in U.S.-Mexico Relations" ,
http://www.wilsoncenter.org/sites/default/files/new_ideas_us_mexico_relations.pdf, 6/27/13 ,
JC)
For years, Mexico oriented its economy toward the U.S. in hopes of harnessing the growth of
the world’s ¶ largest market. Now, at a time when Mexico is growing around four percent a
year – faster than the ¶ United States – Mexico can return the favor and provide a boost to the
U.S. economy. Measures of the country’s manufacturing sector are showing record-high
growth, a clear sign of strengthening ¶ competitiveness, and the country is building ever more
complex products like cars while leaving behind ¶ simpler industries like textiles and
shoemaking. Mexico’s large and growing middle class has become an ¶ increasingly important
market for U.S. products and a force for many of the economic and political ¶ reforms needed to
unleash Mexico’s full economic potential. Altogether, Mexico’s new ¶ government inherited a
very solid ¶ economic outlook despite the ¶ complex global environment, and ¶ the recent
passage of important ¶ labor and education reforms ¶ suggest that the political gridlock ¶ that
blocked the passage of ¶ several key economic reforms in ¶ congress for years may have ¶ finally,
if perhaps only ¶ temporarily, become unstuck. ¶ Recent optimism regarding the ¶ Mexican
economy has attracted ¶ significant foreign investments, ¶ and the United Nations expects ¶ FDI in
Mexico in 2013 to reach a ¶ record $38 billion dollars.6¶ The ¶ Peña Nieto administration ¶
currently looks poised to manage ¶ a period of robust growth, and ¶ while global developments
or a failure to measure up to high expectations could create downward ¶ pressures on
Mexico’s growth, if Congress passes key energy, fiscal and accountability reforms, the ¶ outlook
could become even brighter.
Manufacturing k2 Mexican Econ
Global Trade, published by Abundant Life Media, 7/4/13
(“Mexico Set to Become Manufacturing Powerhouse,” http://globaltrademag.com/mexico-setto-become-manufacturing-powerhouse/, [Accessed 7/8/13], JB).
Within five years, higher manufacturing exports due to a widening cost advantage over China
and other major economies could add $20 billion to $60 billion in output to Mexico’s economy
annually.
And, says The Boston Consulting Group (BCG), US manufacturers of component parts and
assemblies for everything from automobiles to computers assembled in Mexico can thank the
North America Free Trade Agreement (NAFTA) as they also stand to benefit from the forecasted
growth south of the border.
“Mexico is in a strong position to be a significant winner from shifts in the global economy,”
said BCG Senior Partner, Harold Sirkin. “That is good news not only for Mexico, which relies on
exports for around one-third of its GDP. It’s also good for America, since products made in
Mexico contain four times as many US-made parts, on average, as those made in China.”
Gonzaga Debate Institute 2013
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Solvency- U.S. Growth
Due to its proximity, Mexico trade key to the US economy.
Villarreal, Analyst in International Trade and Finance at the CRS, 5
(M. Angeles, July 11, 2005, Congressional Research Service, “US-Mexico Economic Relations:
Trends, Issues, and Implications”, http://fpc.state.gov/documents/organization/50161.pdf,
Accessed 6/25/13, ML)
Mexico has a population of slightly over 100 million people making it the most¶ populous
Spanish-speaking country in the world and the third most populous country¶ in the Western
Hemisphere (after the United States and Brazil). The bilateral¶ economic relationship with
Mexico is among the most important for the United¶ States because of Mexico’s proximity
and because of the large amount of trade and¶ investment interactions. The most significant
feature of the relationship is the North¶ American Free Trade Agreement (NAFTA), through
which the United States,¶ Mexico, and Canada form the world’s largest free trade area, with
about one-third the¶ world’s total gross domestic product (GDP). ¶ The United States and Mexico
share common interests and are closely tied in¶ areas not directly related to trade and
investment. The two countries share a 2,000¶ mile border and have extensive interconnections
through the Gulf of Mexico. There¶ are links through migration and tourism, environment and
health concerns, and¶ family and cultural relationships. Mexican President Vicente Fox and
President¶ George W. Bush have held a number of talks over the past few years to strengthen¶
the relationship.1¶ The economic relationship with Mexico is important to U.S. national
interests¶ and to the U.S. Congress for many reasons. As the United States considers free
trade¶ initiatives with other Latin American countries, the effects of NAFTA may provide¶
policymakers some indication of how these initiatives might affect conditions in the¶ overall
U.S. economy.
Mexico is key to the US economy- NAFTA bolstered the trade relationship
between the two countries 3-fold
Villarreal 12
(M. Angeles Villarreal, researcher for the Congressional Research Service and Specialist in
International Trade and Finance, US-Mexico Economic Relations: Trends, Issues, and
Implications, http://www.fas.org/sgp/crs/row/RL32934.pdf) Cut by Nate Muramatsu, GDI
Scholars, Pointer/Lundeen/Spraker
The bilateral economic relationship with Mexico is of key interest to the United States because
of Mexico’s proximity, the high volume of trade with Mexico, and the strong cultural and
economic ties between the two countries. Mexico is one of the United States’ key trading
partners, ranking second among U.S. export markets and third in total U.S. trade (imports plus
exports). Under the North American Free Trade Agreement (NAFTA), the United States and
Mexico have developed significant economic ties. Trade between the two countries has more
than tripled since the agreement was implemented in 1994. Through NAFTA, the United States,
Mexico, and Canada form the world’s largest free trade area, with about one-third of the
world’s total gross domestic product (GDP). Mexico has a population of 114 million people,
making it the most populous Spanish speaking country in the world and the third-most populous
country in the Western Hemisphere (after the United States and Brazil). The United States and
Gonzaga Debate Institute 2013
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Mexico share many common interests related to trade, investment, and regulatory
cooperation. The two countries share a 2,000-mile border and have extensive interconnections
through the Gulf of Mexico. There are also links through migration, tourism, environmental
issues, health concerns, and family and cultural relationships.
US and Mexico’s economies are extremely dependent on bilateral trade
relations.
Lee and Wilson, Associate Director at the North American Center for Transborder Studies,
former assistant director at the Center for US-Mexican Studies at the University of California,
San Diego **AND Associate at the Mexico Institute of the Woodrow Wilson International Center
for Scholars, expert on US-Mexico relations, Mexico Analyst for the US military, 12
[Erik AND Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The
State of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region”,]
The six Mexican and four U.S. border states have especially close bilateral economic ties, but ¶
what is often unappreciated is that this economic value extends far beyond the border region. ¶
Mexico, for example, is the top buyer of exports from states as far away as New Hampshire ¶
(mostly computers and electronics). In fact, Mexico is the first or second most important
export ¶ market for twenty-one states from Colorado to Ohio, and twenty U.S. states sell more
than a ¶ billion dollars’ worth of goods to Mexico each year. The United States in an even
more ¶ important market for Mexican exports. Seventy-nine percent of Mexican exports are
sold to the ¶ United States, including products produced in the border region and throughout
the country.3¶ Crude oil, for example, which is mostly produced in Mexico’s Gulf Coast states, is
the top single ¶ export to the United States, but automobiles and auto-parts, which make up an
even greater ¶ share of exports when taken together, are mainly made in the center and north of
the country.4¶ The quantity of U.S.-Mexico trade is impressive, but its quality makes it
unique. The United ¶ States and Mexico do not just sell goods to one another, they actually
work together to ¶ manufacture them. Through a process known as production sharing,
materials and parts often ¶ cross back and forth between factories on each side of the border as
a final product is made ¶ and assembled. As a result, U.S. imports from Mexico contain, on
average, 40 percent U.S. ¶ content, and Mexico’s imports from the U.S. also have a high level of
Mexican content. 5¶ This system of joint production has two important consequences. First, it
means that our ¶ economies are profoundly linked. We tend to experience growth and
recession together, and ¶ productivity gains or losses on one side of the border generally cause a
corresponding gain or ¶ loss in competitiveness on the other side as well. In sum, we will largely
succeed or fail together ¶ and must therefore join forces to increase the competitiveness of
the region. Second, the fact ¶ that goods often cross the border several times as they are
being produced creates a multiplier ¶ effect for gains and losses in border efficiency. Whereas
goods from China only go through ¶ customs and inspection once as they enter the U.S. or
Mexico, products built by regional ¶ manufacturers bear the costs of long and unpredictable
border wait times and significant ¶ customs requirements each time they cross the U.S.-Mexico
border.
The US Needs to Capitalize on the Proximity of Mexico For Trade Costs
Beck, International Business at University of Phoenix and Maquiladora
Specialist, 12
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(Allan, 2012, International Business and Economic Research Journal, “Forces Driving
Maquiladoras Along The Border Of Mexico And The United States: A Short Communication”, 627-13, ABS)
Mexico and the maquiladora industry are at a crossroad of where the path should be moving forward. There is
argument for many paths, including high-tech, proximity, process improvement, and
modernization (Carrillo & Zarate, 2009). Manufacturing is an important section of the Mexican
economy and caution must be used to preserve the sector served by maquiladoras. Proximity
to the United States should be maximized as a competitive advantage to preserve a significant
part of the United States market for Mexico.
Strong Mexican exports are key to US-Mexico trade relations – solves US
economy in the long-term
Roseman, Research Associate, 12 (Ethan, 12-17-12, Council On Hemispheric Affairs,
“Enhanced Reciprocity for the U.S.-Mexico Relationship?” http://www.coha.org/enhancedreciprocity-for-the-u-s-mexico-relationship/, accessed 6/25/13, AR)
The economy in the United States is currently in turmoil, as evident by the “fiscal cliff”
negotiations that may result in an overall tax adjustment. As such, a stronger bilateral trade
relationship with Mexico might turn out to be a vital factor in the restoration of the U.S.
economy in the months to come. President Obama’s relentless efforts to find a solution to the
deficit problem may be more productively directed towards a collaborative relationship with
newly elected Mexican President, Enrique Peña Nieto. This revived North American relationship
between the two leaders, tied together by increasing cross-border trade, has the potential to
mutually stimulate both the United States and Mexican economies. However, as the Mexican
economy continues to rise, it is likely that powerful Mexican drug cartels, along with
perpetuated violence and corrupt public officials associated with these criminal organizations,
could witness a concurrent expansion as well. On December 2, Enrique Peña Nieto assumed
office as the President of Mexico and began the tedious process of reestablishing Mexico as a
country of economic distinction and global importance, rather than continue to bear its current
stigma as a narco-state that has seen nearly 60,000 drug related deaths since 2006.[1] In an
attempt to redirect international focus away from the bloodshed, President Peña Nieto has
been showcasing the brighter side of Mexico while on a recent White House visit in which
President Obama praised him for his “ambitious reform agenda”. Domestically, Peña Nieto has
been promoting this own 13-point plan that emphasizes his party’s focus on optimistic
economic growth in Mexico’s future, rather than one in the hands of corrupt agencies and drug
cartels. Peña Nieto’s optimism about his country’s future is a product of increased trade and
the volume of industrial exports to Mexico’s northern friend and ally. In 2011, with nearly 80
percent of all Mexican goods being exported to the United States, Mexico became the second
largest oil supplier to the North American superpower. Numerous factors contribute to this
relationship, specifically: a 2,000-mile border that facilitates 1 million daily travelers, an
internationally recognized free trade agreement (NAFTA), numerous bi-national organizations
and agreements, upwards of 18,000 U.S. invested companies with over $145 billion USD
invested in Mexico and an overall average equal to $1.25 billion USD in reciprocal trade per
day.[2] As Mexico experiences increases in international investment, there will be an increasing
parallel in levels of Mexico’s reliability. The rise of bi-lateral corporations forces an increasingly
clear dependability that is needed in Mexico in order to maintain the millions of USD invested
through these companies. A continued rise in the Mexican-American commercial relationship
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is one of the defining factors that will be necessary to contribute to the projected mutual
economic progress of both countries.
Improved border logistics would lead to 25 billions in savings- also means
Mexico can woo manufacturing from China.
Drake and Roho 08, (Matthew J., Palumbo and Donahue Schools of Business, Duquesne
University, Diaz, Donahue Graduate School of Business, Duquesne University, “The Current State
of Mexican Logistics Operations The Journal of International Management Studies, Volume 3,
Number 2, August, 2008 p. 92)
For all of the prosperity that NAFTA has clearly brought to the three North American economies,
Mexico still has many opportunities for improvement. Many of these opportunities are related
to logistics operations, which facilitate international trade both with NAFTA partner nations
and those on other continents. In fact, one study estimated that improving various aspects of
the Mexican logistics system could generate US$25 billion in cost savings (Anonymous,2004).
Even if these exact estimates are somewhat dubious, many experts acknowledge a large
potential benefit in improving the Mexican logistics system. Economic opportunities for
Mexico through international trade are likely to increase even further in the short term as
some American companies are rethinking their global sourcing model in light of exorbitant
fuel costs (Rohter, 2008). These companies may naturally look to Mexican suppliers as a lowercost source of components and finished goods from a holistic total cost of ownership
perspective. Procuring products from Mexico can also help American companies to create more
responsive supply chains because the goods often have a much shorter transit time than those
coming to the United States from Asian suppliers.
US-Mexico trade supports US jobs and business.
Office of the US Trade Representative, Executive Office of the President in the US
government, 10
[2/9/10, Executive Office of the President, “Weekly Trade Spotlight: US-Mexico Trade Relations”,
http://www.ustr.gov/about-us/press-office/blog/2010/february/weekly-trade-spotlight-usmexico-trade-relations, Accessed 6/25/13, ML)
Today, Mexico is America's third largest trading partner - and it is the number one trading
partner for 22 American states. In 2008, $367 billion dollars worth of imports and exports
crossed the Mexican-American border - that's more than $1 billion dollars every single day.¶
That trade supports countless American jobs and businesses all across the country. There's the
Mobile, Alabama company with 150 American employees that contracts with the Mexican
dredging industry. There's the West Texas tire retreading company with 1,200 employees and
strong annual sales in Mexico. There's the Louisiana company with 125 employees that caters to
the Mexican market for hearing aids. And there are many more.¶ Since the implementation of
the North American Free Trade Agreement in 1994, U.S. exports to Mexico have more than
doubled to $160 billion in 2008 alone. In 2007, the U.S. maintained an $8.2 billion dollar services
trade surplus with Mexico. Mexico was the number one market for US exports of rice, beef,
soybean meal and dry beans according to the USDA. In 2008, the U.S. also exported $353 million
in rice to Mexico.¶ As Ambassador Kirk said last month at the inauguration of the U.S.-Mexico
Anzaldúas border crossing, "That trade makes us all stronger."
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US jobs rely on US-Mexico trade relations.
Negroponte, Senior Fellow at the Brookings Institution specializing in Latin America, 5/2
(Diana, 5/2/13, Brookings Institute, “Obama’s Mexico Trip: Putting Trade and Investment at the
Top of the Agenda”, http://www.brookings.edu/blogs/up-front/posts/2013/05/02-obamamexico-trip-trade-investment-negroponte, Accessed 6/25/13, ML)
President Obama recognizes that security is a pervasive problem in the bilateral relationship
between the U.S. and Mexico. But in his April 30 press conference prior to setting out for
Mexico, Obama highlighted the U.S.-Mexico trade relationship:¶ “A lot of the focus is going to
be on economics. We’ve spent so much time on security issues between the United States and
Mexico that sometimes I think we forget this is a massive trading partner responsible for huge
amounts of commerce and huge numbers of jobs on both sides of the border. We want to see
how we can deepen that, how we can improve that and maintain that economic dialogue over a
long period of time.Ӧ Beyond the statistics of expanding trade, what more should the presidents
discuss?¶ Total two-way trade reached $494 billion in 2012, which according to Mexican
Ambassador Medina-Mora means more than $1.3 billion per day; almost $1 million dollars per
minute. In absolute terms, Mexico is America’s third largest trading partner, and in 2012 U.S.
exports to Mexico were $216.3 billion. According to Medina-Mora this is more than the
combination of U.S. exports to all the countries with which the United States has a trade
agreement in place – except for Canada. Surprisingly, it is more than U.S. exports to Japan and
China combined, that is $180.6 billion.¶ We agree that exports to Mexico both maintain and
create jobs in the United States. The U.S. government estimates that each additional billion
dollars in new exports supports more than 6,000 new jobs. According to the U.S. Chamber of
Commerce, almost 6 million U.S. jobs rely on trade with Mexico, the consequence of which is
the potential creation of 107,000 new U.S. jobs.¶ Furthermore, individual states benefit from
exports to Mexico such as Arizona, California and Texas which hold Mexico as their main export
destination. Mexico is also the second destination for exports from 20 other states and is ranked
among the top five export destinations for 34 states.
Mexico matters- they’re our second largest trade partner and money paid there
recirculates into our economy.
Figueroa, Research and Policy Analyst at Nactis et al 2011,
(Alejandro, and Erik Lee, Associate Director of NACTS, and Rick Van Schoik, Director of NACTS,
New Policy Institute and North American Center for Transborder Studies, “Realizing the Full
Value of
Crossborder Trade with Mexico,”
http://21stcenturyborder.files.wordpress.com/2011/12/realizing-the-value-of-crossbordertrade-with-mexico2.pdf, p. 3, [Accessed 6/25/13], JB)
The United States urgently needs a sustained national conversation regarding how to realize
greater value in our crossborder trade with Mexico, and the benefits of increasing efficiencies at
our shared border. As the export sector assumes more importance and the U.S. economy
struggles to create high - quality jobs, our nation needs to discover every dollar of value in our
relationship with our nation’s number two export market: Mexico. Trade with Mexico: An
Abundance of Value That Is “Hidden In Plain Sight” Trade is an important tool in policymakers’
economic development toolbox. Ever since the enactment of the North American Free Trade
Agreement (NAFTA), and given the complementarity of the U.S. and Mexican economies,
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bilateral trade has grown exponentially, reaching a record high of nearly $400 billion in 2010.
Mexico is now the third - ranked commercial partner of the U.S. and the second largest market
for U.S. exports . Mexico spent $163 billion on U.S. goods in 2010 , and trade with Mexico
sustains six million jobs in the U.S. This is economic value that for many in the U.S. remains
“hidden in plain sight.” To provide a better idea of what this commercial partnership means to
our country, U.S. sales to Mexico are larger than all U.S. exports to the BRIC countries (Brazil,
Russia, India and China) combined, as well as all combined sales to Great Britain, France,
Belgium and the N etherlands. Twenty - two states count Mexico as their No. 1 or No. 2 export
market , and it is a top - five market for 14 other states. American consumers and businesses
import large quantities of jointly produced products and services from Mexico such as
automobiles, produce, and petroleum, just to name a few. Still, for every dollar Mexico makes
from exporting to the U.S., it will in turn spend 50 cent s on U.S. products or services, which
are a considerable benefit to our economy and demonstrates the truly unique quality of this
trade or “joint production” relationship . U.S. - Mexico Border Management: Building the
Infrastructure for Future Competitiveness Sharing a 2,000 - mile long border with Mexico needs
to be recognized as both a challenge and an opportunity. Though improving, our border’s
current infrastructure and capacity today reflect the needs of a bygone era. While land ports of
entry between the two nations were first envisioned to process t he legitimate crossing of
people, goods and services across the border, security has taking a n overwhelmingly dominant
role in recent years, hampering the ability of agencies to efficiently manage border traffic.
A stronger Mexican economy spills over- almost 6 million US jobs rely on
Mexico and our supply lines are entwined.
Negroponte, senior fellow at Brookings Institute, 5/2,
(Diana Villiers, May 2, 2013, former trade lawyer and professor of history, Previously a senior
scholar at the U.S. Institute of Peace, doctorate from Georgetown University, Brookings
Institute: Up Front. “Obama’s Mexico Trip: Putting Trade and Investment at the Top of the
Agenda,”. http://www.brookings.edu/blogs/up-front/posts/2013/05/02-obama-mexico-triptrade-investment-negroponte. [Accessed 6/25/13], JB).
We agree that exports to Mexico both maintain and create jobs in the United States. The U.S.
government estimates that each additional billion dollars in new exports supports more than
6,000 new jobs. According to the U.S. Chamber of Commerce, almost 6 million U.S. jobs rely
on trade with Mexico, the consequence of which is the potential creation of 107,000 new U.S.
jobs.
Furthermore, individual states benefit from exports to Mexico such as Arizona, California and
Texas which hold Mexico as their main export destination. Mexico is also the second destination
for exports from 20 other states and is ranked among the top five export destinations for 34
states.
Investment flows are also mutually beneficial. According to the U.S. Trade Representative’s
office, sales of services in Mexico by majority U.S. owned affiliates were $34.4 billion in 2010.
Sales of services in the United States by majority Mexico-owned firms were $4.8 billion.
According to the U.S. Embassy in Mexico, the United States currently provides 41 percent of all
foreign direct investment in Mexico, benefiting more than 21,139 companies.
Beyond the numbers, the reality of trade and investment is that the United States and Mexico
compete together in the global economy. Production and supply chains in North America are
deeply integrated with the U.S. content of Mexico exports to the United States estimated at
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40 cents on the dollar. This compares to 25 cents for Canadian exports to the United States and
4 cents for China and 2 cents for the European Union, according to a Wilson Center report. In
short, there exists a growing integrated manufacturing platform that takes advantage of
geography, time zones and cultural affinity.
Mexican trade is key to the US economy- Accounts for more than $1 Billion in
Trade every day. 80% is carried across the border by truck.
US Chamber of Commerce and American Chamber of Commerce of Mexico,
nonprofit, 11.“Steps to a 21st Century U.S.-Mexico Border: A US Chamber of Commerce
Border Report.” p. 5,
http://www.uschamber.com/sites/default/files/reports/2011_us_mexico_report.pdf , [Accessed
7/1/13], JB).
Since the passage of the North American Free Trade Agreement (NAFTA), Mexico has become
the third-largest U.S. trading partner behind Canada and China. However, it is the secondlargest export market for U.S. businesses, and some 22 states depend on Mexico as their No. 1
or No. 2 export market. The trade relationship between our two nations is vast, with $397
billion worth of products being traded last year alone. Eighty percent of it is carried across the
border by truck.
This means that more than $1 billion in cross-border commerce is taking place every day—$45
million an hour—and virtually all of it tariff free under NAFTA. Mexico purchased $163 billion in
U.S. goods in 2010 alone. Mexico is also the United States’ third- largest foreign provider of
petroleum and the largest foreign supplier of fresh fruits and vegetables. The trading
relationship is strong, and each country has a fundamental stake in the success of the other.
Trade between the United States and Mexico creates and supports jobs for millions of
Americans and Mexicans. In 2010, 13% of all U.S. exports were destined to Mexican markets.
Overall, nearly 31 million American jobs are supported by trade. That translates into more than
one in every fi ve U.S. jobs linked to the import and export of goods and services.
Furthermore, exports generated nearly half of U.S. economic growth in 2010, adding well over
a percentage point to GDP growth.
The U.S. manufacturing industry depends on NAFTA, sending more than half of its exports to
either Canada or Mexico. Since NAFTA began, U.S. manufacturers have boosted their output by
more than 50%. Contrary to popular belief, 97% of all exporters are small and medium-size
businesses. Considering that these same companies create the vast majority of job growth, it is
imperative to improve their ability to compete in global markets.
Despite the signifi cance of the U.S.-Mexico relationship, delays and other inefficiencies at the
border erode much of the competitive advantage that was accrued from NAFT A. According to
SANDAG, congestion and delays at border crossings between San Diego County and Baja
California cost the U.S. and Mexican economies an estimated $7.2 billion in foregone gross
output and more than 62,000 jobs in 2007.
In President Obama’s 2010 State of the Union address, he expressed a goal to double exports
within the next fi ve years. Reaching this goal is going to require action from both the private
and public sectors. NAFTA has already removed many of the statutory and regulatory
impediments to trade across the U.S.-Mexico border. This means that the border represents a
better opportunity for trade between the United States and Mexico, translating to job growth
in both countries.
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Impact- Bilateral Trade Good
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Laundry List
Bilateral trade relations good- laundry list
Villarreal, Analyst in International Trade and Finance at the CRS, 12
[M. Angeles, 8/9/12, Congressional Research Service, “US-Mexico Economic Relations: Trends,
Issues, and Implications”, http://fpc.state.gov/documents/organization/50161.pdf, accessed
6/25/13, ML]
The bilateral economic relationship with Mexico is of key interest to the United States
because of ¶ Mexico’s proximity, the high volume of trade with Mexico, and the strong
cultural and economic ¶ ties between the two countries. Mexico is one of the United States’
key trading partners, ranking ¶ second among U.S. export markets and third in total U.S. trade
(imports plus exports). Under the ¶ North American Free Trade Agreement (NAFTA), the
United States and Mexico have developed ¶ significant economic ties. Trade between the two
countries more than tripled since the agreement ¶ was implemented in 1994. Through NAFTA,
the United States, Mexico, and Canada form the ¶ world’s largest free trade area, with about
one-third of the world’s total gross domestic product ¶ (GDP). Mexico has a population of 114
million people, making it the most populous Spanish speaking country in the world and the
third-most populous country in the Western Hemisphere ¶ (after the United States and Brazil). ¶
The United States and Mexico share many common interests related to trade, investment, and
¶ regulatory cooperation. The two countries share a 2,000-mile border and have extensive ¶
interconnections through the Gulf of Mexico. There are also links through migration, tourism,
¶ environmental issues, health concerns, and family and cultural relationships.1¶ During the ¶
remainder of the 112th Congress, policymakers will likely maintain an active interest in Mexico ¶
on issues related to cross-border trade between the two countries, Mexico’s participation in the
¶ Trans-Pacific Partnership (TPP) agreement negotiations, economic conditions in Mexico, ¶
migration, and border issues. Congress may also take an interest in the economic policies of ¶
President-elect Enrique Peña Nieto of Mexico, who was elected in July 2012. ¶ Mexican
President-elect Enrique Peña Nieto is expected to enter into office for a six-year term on ¶
December 1, 2012. During his campaign, he advocated a 10-point economic plan that includes, ¶
among other measures, implementing recently passed legislation to counter monopolistic ¶
practices, passing fiscal reform, opening up the oil sector to private investment, making farmers
¶ more productive, and doubling infrastructure investments. Peña Nieto also endorses an active ¶
international trade policy aimed at increasing Mexico's trade with Asia, South America, and
other ¶ markets. His government is likely to take an active role in the negotiations for a TPP.2¶
This report provides an overview of U.S.-Mexico trade and economic trends, the Mexican ¶
economy, the effects of NAFTA, and other major economic and trade issues between the United
¶ States and Mexico.
Expanding economic ties good- laundry list.
Nieto, Mexican President, 12
(Enrique, 11/21/12, Washington Post, “US, Mexico should build on their economic ties”,
Accessed 6/25/13, http://articles.washingtonpost.com/2012-1123/opinions/35511831_1_energy-independence-renewable-energy-energy-resources, ML)
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Both Mexico and the United States held presidential races this year, and the results offer an
opportunity to redirect our countries’ bilateral relationship. The U.S. election demonstrated the
growing demographic bonds that connect our countries’ futures. The election in Mexico
heralded a new era of change and reform, as much as a new style of governing, based on
pragmatism and results.¶ To build a more prosperous future for our two countries, we must
continue strengthening and expanding our deep economic, social and cultural ties. It is a
mistake to limit our bilateral relationship to drugs and security concerns. Our mutual interests
are too vast and complex to be restricted in this short-sighted way. When I meet with President
Obama on Tuesday — just days before my inauguration — I want to discuss the best way to
rearrange our common priorities. After all, our agenda affects millions of citizens in both
countries.¶ Ads by Google¶ Environmental ScienceEarn an Environmental Science Degree Online
at APU. Enroll Now. www.APUS.edu/Environment¶ Perhaps the most important issue is finding
new ways to bolster our economic and trade relationship to attain common prosperity in our
nations. The United States is already Mexico’s largest trading partner. As a result of the North
American Free Trade Agreement (NAFTA), our economic ties have grown to an unprecedented
degree. NAFTA links 441 million people producing trillions of dollars in goods and services
annually, making it the largest trading bloc in the world. Consequently, in NAFTA we have a
solid foundation to further integrate our economies through greater investments in finance,
infrastructure, manufacturing and energy. Together, we must build a more competitive and
productive region.¶ Another relevant bilateral issue relates to Mexico’s status as an
increasingly desirable and dependable manufacturing location. My country is the secondlargest supplier of electronic goods to the United States. Coca-Cola, DuPont, GM, Nissan, Honda,
Mazda, Audi and many others are seizing the opportunity to manufacture within our borders.
We seek to continue offering U.S. consumers better products and better prices.¶ Energy
production is another emerging area that can enhance our nations’ potential. I plan to open
Mexico’s energy sector to national and foreign private investment. Mexico holds the fifth-largest
shale gas reserve in the world, in addition to large deep-water oil reserves and a tremendous
potential in renewable energy. We will not surrender Mexico’s ownership over its energy
resources, and we will not privatize our state-run oil company, Petroleos Mexicanos (Pemex).
We will, however, welcome new technologies, new partnerships and new investments.
Together with the United States and Canada, this may well contribute to guaranteeing North
American energy independence — something from which we would all greatly benefit.¶
Above all, our mutual interest lies in our intertwined peoples. More than 1 million U.S. citizens
live in Mexico, and my country remains the largest source of immigrants to the United States.
Some analysts detect new momentum for comprehensive immigration reform since the U.S.
presidential election. All Mexicans would welcome such a development.¶ Both of our nations
are seriously affected by organized-crime activities and drug trafficking. Working against them
must be a shared responsibility. I will continue the efforts begun by President Felipe Calderón,
but the strategy must necessarily change. I set as a public goal slashing violent crime
significantly, proposing a sizable increase in security spending and doing away with redundant
police levels. I will improve coordination among crime-fighting authorities, expand the federal
police by at least 35,000 officers and bolster intelligence-gathering and analysis. It is also
important that our countries increase intelligence-sharing and crime-fighting techniques and
promote cooperation among law enforcement agencies.
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Impact- U.S. Economic Collapse
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Global Collapse
US Econ collapse results in global econ collapse
Dees, Principal Economist at the European Central Bank, and Saint-Guilhem,
Economist at European Central Bank 10 [Stephane and Arthur, 10-9-10, Journal of
Economic Literature, "The Role of the United States in the global economy and its evolution over
time" , pgs. 574-575, JC]
The U.S. economy is very often seen as “the engine” of the world economy. As a result, any
sign of slowdown in the United States rises concerns about harmful spillovers to the other
economies. As the recent global economic recession has shown, the history of past U.S.
recessions usually coincides with significant reductions in global growth. Figure 1 shows the
relatively strong correlation of U.S. real GDP growth and that of the rest of the world. In addition
to a large correlation (45%), it seems that in some periods, the U.S. cycle tends to lead the rest
of the world one. Indeed, the correlation between the U.S. and the rest of the world growth
rates lagged by one or two quarters increases to 49%. While this topic has been widely studied
in the literature, it has received renewed attention recently. The increasing economic
integration at the world level and the resulting emergence of large economic players, like China,
is likely to have weakened the role of the U.S. economy as a driver of global growth. For
instance, Dees and Vansteenkiste (2007) note that while the U.S. business cycle still leads the
world’s, Asia, where China’s rise is helping the region to establish business cycles largely
independent of its main trading partners, is a notable exception. Hence, when the United States
entered into recession at the end of 2007, one has questioned the ability of the global
economy to “decouple” from U.S. cyclical developments. While there were some signs of
decoupling in the first quarters following the U.S. downturn, they disappeared rapidly toward
the end of 2008, when the crisis became more global and the economic cycles turned out to
be more synchronous across the world. Overall, the U.S.’s influence on other countries’
economies remains larger than direct trade ties would suggest, owing to third-market effects
together with increased financial integration that tends to foster the international
transmission of cyclical developments. Estimating the source and the size of spillovers across
industrialized countries, Bayoumi and Swiston (2009) show that the U.S. shocks generate
significant spillovers, while those from the euro area and Japan are small. They also show that
financial effects tend to dominate the international spillovers. Analyzing the results for two
subperiods (1970–1987 and 1988–2006), they finally show the importance of the great
moderation in U.S. output fluctuations and associated financial stability in lowering output
volatility elsewhere. As the study over two subperiods might hide recent changes, this article
aims at showing the evolution over time of the role of the United States in the global economy.
Based on a Global VAR (GVAR) modeling approach, this article shows first that the economies
with a large trade exposure with the U.S. economy have a relatively larger sensitivity to U.S.
developments. However, even for countries that do not trade so much with the U.S., they are
largely influenced by its dominance through other partners’ trade. Moreover, while no clear
trend seems to emerge, it seems that the role of the U.S. in the global economy has changed
over time. Overall, for most countries— the latest recession excluded—a change in U.S. GDP had
weaker impacts—though more persistent—for most recent periods. The latest recession,
however, led to some renewed increase in the sensitivity of the economies to U.S.
developments. Section 2 presents the modeling strategy chosen to study the international
transmission of changes in U.S. economic activity. Section 3 shows the empirical results by
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distinguishing an analysis over the sample 1979–2009 and a time-varying analysis to identify any
change in the degree of transmission over time. Section 4 concludes.
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War
Economic decline leads to war
Royal, Director of Cooperative Threat Reduction at the U.S. Department of
Defense, 10
[Jedediah, “Economic Integration, Economic Signaling and the Problem of Economic Crises,” in
Economics of War and Peace: Economic, Legal and Political Perspectives, ed. Goldsmith and
Brauer, p. 213-215]
Less intuitive is how periods of economic decline may increase the likelihood of external conflict. Political
science literature has contributed a moderate degree of attention to the impact of economic decline and the security and defence
behaviour of interdependent states. Research in this vein has been considered at systemic, dyadic and national levels. Several
notable contributions follow. First, on the systemic level, Pollins (2008) advances Modelski and Thompson's (1996) work on
leadership cycle theory, finding that rhythms
in the global economy are associated with the rise and fall
of a pre-eminent power and the often bloody transition from one pre-eminent leader to the
next. As such, exogenous shocks such as economic crises could usher in a redistribution of relative
power (see also Gilpin. 1981) that leads to uncertainty about power balances, increasing the risk of miscalculation
(Feaver, 1995). Alternatively, even a relatively certain redistribution of power could lead to a
permissive environment for conflict as a rising power may seek to challenge a declining power (Werner. 1999).
Separately, Pollins (1996) also shows that global economic cycles combined with parallel leadership cycles impact the likelihood of
conflict among major, medium and small powers, although he suggests that the causes and connections between global economic
conditions and security conditions remain unknown. Second, on a dyadic level, Copeland's (1996, 2000) theory of trade expectations
suggests that 'future
expectation of trade' is a significant variable in understanding economic
conditions and security behaviour of states. He argues that interdependent states are likely to gain pacific benefits
from trade so long as they have an optimistic view of future trade relations. However, if the expectations of future
trade decline, particularly for difficult to replace items such as energy resources, the likelihood for conflict
increases, as states will be inclined to use force to gain access to those resources . Crises could
potentially be the trigger for decreased trade expectations either on its own or because it triggers protectionist moves
by interdependent states.4 Third, others have considered the link between economic decline and
external armed conflict at a national level. Blomberg and Hess (2002) find a strong correlation
between internal conflict and external conflict, particularly during periods of economic downturn.
They write: The linkages between internal and external conflict and prosperity are strong and mutually reinforcing. Economic conflict
tends to spawn internal conflict, which in turn returns the favour. Moreover, the presence
of a recession tends to
amplify the extent to which international and external conflicts self-reinforce each other.
(Blomberg & Hess, 2002. p. 89) Economic decline has also been linked with an increase in the likelihood
of terrorism (Blomberg, Hess, & Weerapana, 2004), which has the capacity to spill across borders and lead to external tensions.
Furthermore, crises generally reduce the popularity of a sitting government. “Diversionary theory" suggests that,
when facing unpopularity arising from economic decline, sitting governments have increased
incentives to fabricate external military conflicts to create a 'rally around the flag' effect. Wang (1996), DeRouen
(1995). and Blomberg, Hess, and Thacker (2006) find supporting evidence showing that economic decline and use of force are at
least indirectly correlated. Gelpi (1997), Miller (1999), and Kisangani and Pickering (2009) suggest that the
tendency
towards diversionary tactics are greater for democratic states than autocratic states, due to the fact that
democratic leaders are generally more susceptible to being removed from office due to lack of domestic support. DeRouen (2000)
has provided evidence
showing that periods of weak economic performance in the United States, and thus
weak Presidential popularity, are statistically linked to an increase in the use of force. In summary, recent
economic scholarship positively correlates economic integration with an increase in the frequency of economic crises, whereas
political science scholarship links economic decline with external conflict at systemic, dyadic
and national levels.5 This implied connection between integration, crises and armed conflict has not featured prominently in
the economic-security debate and deserves more attention. This observation is not contradictory to other perspectives that
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link economic interdependence with a decrease in the likelihood of external conflict, such as those
mentioned in the first paragraph of this chapter. Those studies tend to focus on dyadic interdependence instead
of global interdependence and do not specifically consider the occurrence of and conditions
created by economic crises. As such, the view presented here should be considered ancillary to those views.
Economic collapse causes nuclear war
Harris and Burrows, PhD of European History at Cambridge, 9 [Mathew, counselor
in the National Intelligence Council, Jennifer, “Revisiting the Future: Geopolitical Effects of the
Financial Crisis” http://www.ciaonet.org/journals/twq/v32i2/f_0016178_13952.pdf, accessed
7/6/13, AR]
Increased Potential for Global Conflict Of course, the report encompasses more than economics and indeed believes the future is
likely to be the result of a number of intersecting and interlocking forces. With so many possible permutations of outcomes, each
with ample Revisiting the Future opportunity for unintended consequences, there is a growing sense of insecurity. Even so, history
may be more instructive than ever. While we continue to believe that the
Great Depression is not likely to be
repeated, the lessons to be drawn from that period include the harmful effects on fledgling
democracies and multiethnic societies (think Central Europe in 1920s and 1930s) and on the
sustainability of multilateral institutions (think League of Nations in the same period). There is no reason to think
that this would not be true in the twenty-first as much as in the twentieth century. For that reason, the ways in which the
potential for greater conflict could grow would seem to be even more apt in a constantly
volatile economic environment as they would be if change would be steadier. In surveying those risks, the report
stressed the likelihood that terrorism and nonproliferation will remain priorities even as resource issues move up on the
international agenda. Terrorism’s appeal will decline if economic growth continues in the Middle East and youth unemployment is
reduced. For those terrorist groups that remain active in 2025, however, the diffusion of technologies and scientific knowledge will
place some of the world’s most dangerous capabilities within their reach. Terrorist groups in 2025willlikely be a combination
of descendants of long established groups inheriting organizational structures, command and control processes, and training
procedures necessary to conduct sophisticated attacks and newly emergent collections of the angry and disenfranchised that
become self-radicalized, particularly in the absence of economic outlets that would become
narrower in an economic downturn. The most dangerous casualty of any economically
induced drawdown of U.S. military presence would almost certainly be the Middle East. Although Iran’s
acquisition of nuclear weapons is not inevitable, worries about a nuclear-armed Iran could lead states in the region to
develop new security arrangements with external powers, acquire additional weapons, and
consider pursuing their own nuclear ambitions. It is not clear that the type of stable deterrent relationship that
existed between the great powers for most of the Cold War would emerge naturally in the Middle East with a nuclear Iran. Episodes
of low intensity conflict and
terrorism taking place under a nuclear umbrella could lead to an
unintended escalation and broader conflict if clear red lines between those states involved are
not well established. The close proximity of potential nuclear rivals combined with underdeveloped
surveillance capabilities and mobile dual-capable Iranian missile systems also will produce inherent difficulties in
achieving reliable indications and warning of an impending nuclear attack. The lack of strategic depth in neighboring states like
Israel, short warning and missile flight times, and uncertainty
of Iranian intentions may place more focus on
preemption rather than defense, potentially leading to escalating crises. 36 Types of conflict
that the world continues to experience, such as over resources, could reemerge, particularly if
protectionism grows and there is a resort to neo-mercantilist practices. Perceptions of renewed energy
scarcity will drive countries to take actions to assure their future access to energy supplies. In
the worst case, this could result in interstate conflicts if government leaders deem assured
access to energy resources, for example, to be essential for maintaining domestic stability and the survival of
their regime. Even actions short of war, however, will have important geopolitical implications. Maritime security concerns are
providing a rationale for naval buildups and modernization efforts, such as China’s and India’s development of blue water naval
capabilities. If the fiscal stimulus focus for these countries indeed turns inward, one of the most obvious funding targets may be
military. Buildup of regional naval capabilities could lead to increased tensions, rivalries, and counterbalancing moves, but it also will
create opportunities for multinational cooperation in protecting critical sea lanes. With water also becoming scarcer in Asia and the
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Middle East, cooperation
to manage changing water resources is likely to be increasingly difficult
both within and between states in a more dog-eat-dog world.
The perception of economic weakness causes war
Lieberthal and O’Hanlon, Global Economy and Development at the Brookings
Institution, 12 [Kenneth, Director of Research and Senior Fellow in Foreign Policy at the
Brookings Institution, Visiting Lecturer at Princeton University, “The Real National Security
Threat: America's Debt”, http://www.brookings.edu/research/opinions/2012/07/10-economyforeign-policy-lieberthal-ohanlon, accessed 7/6/13, AR]
chronic economic decline would undercut what has been70 years of strong
national political consensus in favor of an activist and engaged American foreign policy. One
reason the United States was so engaged through the Cold War and the first 20 years of the post-Cold War
world was fear of threats. But the other reason was that the strategy was associated with improvements in
our quality of life as well. America became even more prosperous, and all major segments of
society benefited. Alas, globalization and automation trends of the last generation have increasingly called the American
Second, such a
dream into question for the working classes. Another decade of underinvestment in what is required to remedy this situation will
make an isolationist or populist president far more likely because much of the country will question whether an internationalist role
makes sense for America — especially if it costs us well over half a trillion dollars in defense spending annually yet seems correlated
with more job losses. Lastly, American
economic weakness undercuts U.S. leadership abroad. Other
countries sense our weakness and wonder about our purported decline. If this perception
becomes more widespread, and the case that we are in decline becomes more persuasive, countries will begin
to take actions that reflect their skepticism about America's future. Allies and friends will
doubt our commitment and may pursue nuclear weapons for their own security, for example;
adversaries will sense opportunity and be less restrained in throwing around their weight in
their own neighborhoods. The crucial Persian Gulf and Western Pacific regions will likely become less stable. Major
war will become more likely. When running for president last time, Obama eloquently articulated big foreign policy
visions: healing America's breach with the Muslim world, controlling global climate change, dramatically curbing global poverty
through development aid, moving toward a world free of nuclear weapons. These were, and remain, worthy if elusive goals.
However, for Obama or his successor, there is now a much more urgent big-picture issue: restoring U.S. economic strength. Nothing
else is really possible if that fundamental prerequisite to effective foreign policy is not reestablished.
Economic strength prevents great power war
Baru 9 [Sanjaya, March, Singapore Geopolitical Implications of the Current Global Financial
Crisis, Strategic Analysis, Volume 33, Issue 2, pages 163 – 168, accessed 7/6/13, AR]
Hence, economic policies and performance do have strategic consequences.2 In the modern
era, the idea that strong economic performance is the foundation of power was argued most
persuasively by historian Paul Kennedy. 'Victory (in war)', Kennedy claimed, 'has repeatedly
gone to the side with more flourishing productive base'.3 Drawing attention to the
interrelationships between economic wealth, technological innovation, and the ability of
states to efficiently mobilize economic and technological resources for power projection and
national defense, Kennedy argued that nations that were able to better combine military and
economic strength scored over others. 'The fact remains', Kennedy argued, 'that all of the major
shifts in the world's military-power balance have followed alterations in the productive
balances; and further, that the rising and falling of the various empires and states in the
international system has been confirmed by the outcomes of the major Great Power wars,
where victory has always gone to the side with the greatest material resources'.4 In Kennedy's
view, the geopolitical consequences of an economic crisis, or even decline, would be
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transmitted through a nation's inability to find adequate financial resources to simultaneously
sustain economic growth and military power. The classic 'guns versus butter' dilemma. Apart
from such fiscal disempowerment of the State, economic under-performance would also
reduce a nation's attraction as a market, as a source of capital and technology, and as a
'knowledge power'. As power shifted from Europe to America, so did the knowledge base of the
global economy. As China's power rises, so does its profile as a 'knowledge economy'. Impressed
by such arguments, the China Academy of Social Sciences developed the concept of
Comprehensive National Power (CNP) to get China's political and military leadership to focus
more clearly on economic and technological performance than on military power alone in its
quest for Great Power status.5 While China's impressive economic performance, and the
consequent rise in China's global profile, has forced strategic analysts to acknowledge this link,
the recovery of the US economy in the 1990s had reduced the appeal of the Kennedy thesis in
Washington, DC. We must expect a revival of interest in Kennedy's arguments in the current
context.
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Warming
Economic Decline causes shift away from public and private investment in
environmental projects - causes warming
Richard University of Ottawa L.L.L. and J.D. ,8 [ Michael Graham, 10-10--8, Huffington
Post , ¶ “4 Reasons Why Recession is BAD for the Environment” ,
http://www.huffingtonpost.com/michael-graham-richard/4-reasons-why-recessioni_b_133564.html , 7-3-13, JC]
1) When squeezed companies will reduce their investments into research & development and
green programs. These are usually not short-term profit centers, so that is what's axed first.
Some progress has been made in the past few years, it would be sad to lose ground now. 2)
Average people, when money is tight, will look for less expensive products (duh). Right now,
that usually means that greener products won't make it. Maybe someday if we start taxing
"bads" instead of "goods" (pollution, carbon, toxins instead of labor, income, capital gains) the
least expensive products will also be the greenest, but right now that's not the case. 3) There's
less money going into the stocks markets and bank loans are harder to get, which means that
many small firms and startups working on the breakthrough green technologies of tomorrow
can have trouble getting funds or can even go bankrupt, especially if their clients or backers
decide to make cuts. 4) During economic crises, voters want the government to appear to be
doing something about the economy (even if it's government that screwed things up in the first
place). They'll accept all kinds of measures and laws, including those that aren't good for the
environment. Massive corn subsidies anyone? Don't even think about progress on global
warming...
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Impact- Mexican Economic Collapse
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Terrorism
Mexican economic decline causes terrorism
Brown, Undersecretary of Emergency Preparedness and Response in the
Department of Homeland Security, 9
[Michael, 1-14-09, Michael Brown Today, “Border Control: Collapse of Mexico Is A Homeland
Security & National Security Issue,” http://michaelbrowntoday.com/journal/2009/1/15/bordercontrol-collapse-of-mexico-is-a-homeland-security-nat.html, accessed 6-27-13, AR]
By failing to secure the borders and control immigration, we have opened ourselves up to a
frightening scenario. The United States could face a flood of refugees from Mexico if it were to
collapse, overwhelming state and local governments along the U.S.-Mexico border. During a
time of economic duress, the costs would be overwhelming and would simply add to the
already burgeoning costs at the federal level. Immigration and border control never was nor
should it ever be about racism. Immigration and border control are national security and
homeland security issues. Sleeper cells from numerous terrorist groups could, and probably
already have, infiltrated the United States, just laying in wait to attack at an appropriately
vulnerable time.
Terrorist groups penetrate the US-Mexico border - leads to Bioterror attacks
Timmerman, Correspondent for Newsmax, 10 [Ken , 3-18-10 , Newsmax, "FBI Director
Mueller: Al-Qaida Still Wants Nuclear Bomb" , http://newsmax.com/Newsfront/mueller-fbialqaida-nuclear/2010/03/18/id/353169 , 7-6-13 , JC]
In February, Sheikh Abdullah al-Nasifi, a known al-Qaida recruiter in Kuwait, boasted on al
Jazeera television that Mexico’s border with the United States was the ideal infiltration point
for terrorists seeking to attack America.¶ “Four pounds of anthrax – in a suitcase this big –
carried by a fighter through tunnels from Mexico into the U.S., are guaranteed to kill 330,000
Americans within a single hour if it is properly spread in population centers there,” al-Nasifi
said. ¶ "There is no need for airplanes, conspiracies, timings and so on. One person, with the
courage to carry four pounds of anthrax, will go to the White House lawn, and will spread this
'confetti' all over them, and then will do these cries of joy. It will turn into a real 'celebration,'"
al-Nasifi said. "9/11 will be small change in comparison. Am I right?"¶ Mueller echoed those
threats in his congressional testimony Wednesday, reminding lawmakers that a 2008 National
Intelligence Estimate on the threat of a terrorist WMD attack “concluded that it remains the
intent of terrorist adversaries to seek the means and capability to use WMD against the United
States at home and abroad.Ӧ Citing the final report of the bipartisan Commission on the
Prevention of WMD Proliferation and Terrorism issued in December 2008, he warned that “the
risks are growing faster than our multilayered defenses” to prevent such an attack.¶ The WMD
commission report warned that without urgent and decisive action, “it was more likely than not
that terrorists would attack a major city somewhere in the world with a weapon of mass
destruction by 2013.Ӧ Although not discounting a possible terrorist nuclear attack, the
commission concluded that “terrorists are more likely to obtain and use a biological weapon
than a nuclear weapon,” and noted that this “conclusion was publicly affirmed by then Director
of National Intelligence Mike McConnell.”
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Latin American Terrorism undermines governance and stability in the region results in WMD trafficking and WMD warfare against the US
Farah, Senior Fellow at the International Assessment and Strategy Center’s
Financial Investigations and Transparency Studies, 12 [Douglas, 8-12, Strategic
Studies Institute, "Transnational Organized Crime, Terrorism, and Criminalized States in Latin
America: An Emerging Tier-One National Security Priority,” pgs. vii - viii, JC]
The emergence of new hybrid (state and nonstate) ¶ transnational criminal and terrorist
franchises in Latin ¶ America poses a tier-one security threat for the United ¶ States. These
organizations operate under broad state ¶ protection and undermine democratic governance, ¶
sovereignty, growth, trade, and stability. Similar hybrid franchise models are developing in
other parts ¶ of the world, which makes understanding their new ¶ dynamics essential, as they
are an important element ¶ in the broader global security context.¶ This threat goes well beyond
the traditional nonstate transnational organized crime (TOC) activity, ¶ which includes drug
trafficking, money laundering, ¶ and human trafficking. It also encompasses trafficking in and
the use of weapons of mass destruction ¶ (WMD) by designated terrorist organizations and ¶
their sponsors.¶ These activities are carried out with the support of ¶ regional and extraregional state actors whose leadership is deeply enmeshed in criminal activity, yielding
billions of dollars in illicit revenues every year ¶ in the region, and trillions globally. Leaders of
these ¶ organizations share a publicly articulated doctrine to ¶ employ asymmetric warfare
against the United States ¶ and its allies that explicitly endorses the use of WMD ¶ as a
legitimate tactic.¶ The threat centers around an improbable alliance ¶ of groups that often
seem to have irreconcilable world ¶ views and ideologies; e.g., Iran, a conservative Islamist
theocracy and primary state sponsor of Hezbollah and the Bolivarian alliance espousing 21stcentury ¶ socialism, led by Venezuela’s Hugo Chávez. Such alliances, in turn, offer material and
political support to viii¶ the Marxist Revolutionary Armed Forces of Colombia (Fuerzas Armadas
Revolucionarias de Colombia ¶ [FARC]). This group, designated as a terrorist organization by the
United States and the European Union, ¶ produces more than two-thirds of the world’s cocaine
¶ and is rapidly strengthening its ties to Mexican cartels.¶ Such illicit forces in Latin America
within criminalized states have begun using tactical operations ¶ centers as a means of pursuing
their view of statecraft. ¶ That brings new elements to the “dangerous spaces” ¶ where
nonstate actors intersect with regions characterized by weak sovereignty and alternative
governance ¶ systems. This new dynamic fundamentally alters the ¶ structure underpinning
global order.
Terrorist Nuclear Attack causes US retaliation - escalates into global nuclear war
Ayson, Professor and Director of the Centre for Strategic Studies at New
Zealand , 10 [Robert, 7-21-10, "After a Terrorist Nuclear Attack: Envisaging Catalytic Effects.
Studies in Conflict and Terrorism" , Studies in Conflict & Terrorism, Volume: 33, pgs. 571-593, JC]
Washington's early response to a terrorist nuclear attack on its own soil might also raise the
possibility of an unwanted (and nuclear aided) confrontation with Russia and/or China. For
example, in the noise¶ and confusion during the immediate aftermath of the terrorist nuclear
attack, the U.S. president might be expected to place the country's armed forces, including its
nuclear arsenal, on a higher stage of¶ alert. In such a tense environment, when careful
planning runs up against the friction of reality, it¶ is just possible that Moscow and/or China
might mistakenly read this as a sign¶ of U.S. intentions to use force (and possibly nuclear
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force) against them. In that situation, the temptations to preempt such actions might grow,
although it must be admitted that any preemption would probably still meet with a
devastating response. As part of its initial response to the act of nuclear terrorism (as
discussed earlier) Washington¶ might decide to order a significant¶ conventional (or nuclear)
retaliatory or disarming attack against the leadership of the terrorist group and/or states seen
to support that group. Depending¶ on the identity and especially the location of these targets,
Russia and/or China might interpret such action as being far too close for their comfort, and
potentially as an infringement on their spheres of influence and even on their sovereignty.
One far-fetched but perhaps not impossible scenario might¶ stem from a judgment in
Washington that some of the main aiders and abetters of the terrorist action resided
somewhere such as Chechnya, ¶ perhaps in connection with what Allison claims is the
“Chechen insurgents' … long-standing interest in all things nuclear.”42 American pressure on
that part of the world would almost certainly raise alarms in Moscow that …might require a
degree of advanced ¶ consultation from Washington that the latter found itself unable or
unwilling to provide.
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Global Collapse
Mexican economic crisis tanks the global economy
Rangel, fellow at the Monterrey Bureau, 95
[Enrique, 11-28-95, “Pressure on the Peso,” Dallas Morning News, Lexis]
All year long, thousands of foreign investors have nervously watched Mexico’s volatile
financial markets as the Clinton administration and congressional leaders debated the pros and
cons of bailing out a battered currency. With the exception of 1982 - when Mexico defaulted on
its foreign debt and a handful of giant New York banks worried they would lose billions of dollars
in loans - few people abroad ever cared about a weak peso. But now it’s different, experts say.
This time, the world is keeping a close eye on Mexico’s unfolding financial crisis for one simple
reason: Mexico is a major international player. If its economy were to collapse, it would drag
down a few other countries and thousands of foreign investors. If recovery is prolonged, the
world economy will feel the slowdown. “It took a peso devaluation so that other countries
could notice the key role that Mexico plays in today’s global economy,” said economist Victor
Lopez Villafane of the Monterrey Institute of Technology. “I hate to say it, but if Mexico were to
default on its debts, that would trigger an international financial collapse” not seen since the
Great Depression, said Dr. Lopez, who has conducted comparative studies of the Mexican
economy and the economies of some Asian and Latin American countries. “That’s why it’s in
the best interests of the United States and the industrialized world to help Mexico weather its
economic crisis,” he said. The crisis began last December when the Mexican government
devalued the currency. Last March, after weeks of debate, President Clinton, the International
Monetary Fund and a handful of other countries and international agencies put together a $ 53
billion rescue package for Mexico. But despite the help - $ 20 billion in guarantee loans from the
United States - Mexico’s financial markets have been volatile for most of the year. The peso is
now trading at about 7.70 to the dollar, after falling to an all-time low of 8.30 to the dollar Nov.
9. The road has been bumpy, and that has made many - particularly U.S. investors - nervous. No
country understands better the importance of Mexico to the global economy than the United
States, said Jorge Gonzalez Davila, an economist at Trinity University in San Antonio. “Despite
the rhetoric that you hear in Washington, I think that most people agree - even those who
oppose any aid to Mexico - that when Mexico sneezes, everybody catches a cold,” Mr.
Gonzalez said. “That’s why nowadays any talk of aid to Mexico or trade with Mexico gets a lot
of attention,” he said. Most economists, analysts and business leaders on both sides of the
border agree that the biggest impact abroad of a prolonged Mexican fiscal crisis may be on the
U.S. economy, especially in Texas and in cities bordering Mexico.
Research proves that causes flashpoint use of nuclear weapons
Ockham Research 08,
[independent research branch of Financial Market Management Inc, (Nov 17th, “Economic
Turmoil Begets Geopolitical Risks”, http://wallstreetpit.com/2008/11/economic-turmoil-begetsgeopolitical-risks/]
The economic turmoil roiling world markets right now brings with it plenty of pain. Jobs are being lost, people’s savings
decimated, retirement plans/goals thrown out the window, etc. Hard times bring with them harsh consequences. However, it is
perhaps useful to be mindful of the geopolitical risks that accompany economic dislocation. Many analysts
are eager to compare the difficulties now confronting the global economic system with those of the Great Depression. While I
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do not believe that the world is facing a second Great Depression, it might be worthwhile to recall from history that the
Great Depression spawned geopolitical turmoil that lead to the Second World War. The
incoming Obama administration—and Democratic members of Congress who talk of implementing massive defense
cutbacks—may want to remember the lessons of the past as they stand on the threshold of power. The
hardship and turmoil which impacted the world during the Great Depression provided fertile ground for the rise of fascist,
expansionistic regimes in Germany, Italy and Japan. Hard times also precluded the Western democracies from a more muscular
response in the face of growing belligerence from these countries. The United States largely turned inward during the difficult
years of the 1930s. The end result was a global war of a size and scale never seen by man either before or since.
Economic
hardship is distracting. It can cause nations to turn their focus inward with little or no regard for
rising global threats that inevitably build in tumultuous times. Authoritarian regimes
invariably look for scapegoats to blame for the hardship affecting their populace. This
enables them to project the anger of their citizenry away from the regime itself and onto
another race, country, ideology, etc. Looking at the world today, one can certainly envision
numerous potential flashpoints that could become problematic in a protracted economic
downturn. Pakistan, already a hotbed of Islamic extremism and armed with atomic weapons,
has been particularly hard hit by the global economic crisis. An increasingly impoverished Pakistan will be harder and
harder for its new and shaky democratically-elected government to control. Should
Pakistan’s economic troubles cause its political situation—always chaotic—to spin out of control,
this would be a major set-back in the global war on terror. Russia, whose economy, stock markets and
financial system have literally imploded over the past few months, could become increasingly problematic if
faced with a protracted economic downturn. The increasingly authoritarian and aggressive Russian regime is
already showing signs of anger projection. Its invasion of Georgia this summer and increasing willingness to confront the West
reflect a desire to stoke the pride and anger of its people against foreign powers—particularly the United States. It is no
accident that the Russians announced a willingness to deploy tactical missile systems to Kaliningrad the day after Barack
Obama’s election in the U.S. This was a clear “shot across the bow” of the new administration and demonstrates Russian
willingness to pursue a much more confrontational foreign policy going forward. Furthermore, the collapse in the price of oil
augers poorly for Russia’s economy. The Russian budget reputedly needs oil at $70 per barrel or higher in order to be in balance.
Russian foreign currency reserves, once huge have been depleted massively over the past few months by ham-fisted attempts
to arrest the slide in both markets and the financial system. Bristling
with nuclear weapons and nursing an
ego still badly bruised by the collapse of the Soviet Union and loss of superpower status, an
impoverished and unstable Russia would be a dangerous thing to behold. China too is threatened by
the global economic downturn. There is no doubt that China has emerged during the past decade as a major economic power.
Parts of the country have been transformed by its meteoric growth. However, in truth, only about a quarter of the nation’s
billion plus inhabitants—those living in the thriving cities on the coast and in Beijing—have truly felt the impact of the economic
boom. Many of these people have now seen a brutal bear market and are adjusting to economic loss and diminished future
prospects. However, the vast majority of China’s
population did not benefit from the economic boom and could
become increasingly restive in an economic slowdown. Enough economic hardship could
conceivably threaten the stability of the regime and would more than likely make China more
bellicose and unpredictable in its behavior, with dangerous consequences for the U.S. and
the world.
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Instability
Mexican Econ Growth K2 preventing Mexican collapse and instability
Barnes, Fellow at the James A. Baker III Institute for Public Policy at Rice
University, 11 (Joe, 4-29-11, Baker Institute, "Oil and U.S. - Mexico Bilateral Relations" ,
http://bakerinstitute.org/publications/EF-pub-BarnesBilateral-04292011.pdf , 6/29/13 , JC)
In summary, the slow decline of Mexican oil production, in and of itself, is unlikely to have a
dramatic impact on international petroleum markets or prompt any dramatic response from the
United States. There is, however, one set of circumstances which this decline would capture
Washington's attention. That is the extent to which it contributes to significant instability in
Mexico.¶ There is already a short- to medium-term risk of substantial instability in Mexico. As
noted, the country is enduring extremely high levels of drug-related violence. Even if the
Mexican government eventually succeeds in its efforts to suppress this violence, the process is
likely to be expensive, bloody, and corrosive in terms of human rights. A period of feeble
economic growth, combined with a fiscal crisis associated with a drop in revenues from Pemex.
could create a "perfect storm" south of the border. If this were to occur, Washington would
have no choice but to respond.¶ In the longer-term, the United States has a clear interest in
robust economic growth and fiscal sustainability in Mexico/4 There is at least one major
example of the U.S. coming to Mexico's aid in an economic emergency. In 1994, the United
States extended US520 billion in loan guarantees to Mexico when the peso collapsed, in large
part to make U.S. creditors whole/5 Not least, a healthy Mexican economy would reduce the
flow of illegal immigration to the United States. To the extent that prospects for such growth
and sustainability are enhanced by reform of Pemex. the United States should be supportive. It
might be best, in terms of U.S. economic and commercial interests, were Pemex to be fully
privatized, but even partial reforms would be welcome. Not all national oil companies are
created equal: Pemex's development into something like Norway's Statol would mark an
important improvement.'6
Mexican Collapse causes global instability and US Isolationism
Westhawk, Former global research director for an Investment Firm and US
Marine Corps officer, 8 (Robert, 12-21-8 , "Now that would change
everything",http://westhawk.blogspot.com/2008/12/now-that-would-change-everything.html ,
6/29/13 , JC)
The Mexican possibility may seem less likely, but the government, its politicians, police, and
judicial infrastructure are all under sustained assault and pressure by criminal gangs and drug
cartels. How that internal conflict turns out over the next several years will have a major
impact on the stability of the Mexican state. Any descent by the Mexico into chaos would
demand an American response based on the serious implications for homeland security alone.¶
Yes, the “rapid collapse” of Mexico would change everything with respect to the global
security environment. Such a collapse would have enormous humanitarian, constitutional,
economic, cultural, and security implications for the U.S. It would seem the U.S. federal
government, indeed American society at large, would have little ability to focus serious
attention on much else in the world. The hypothetical collapse of Pakistan is a scenario that has
already been well discussed. In the worst case, the U.S. would be able to isolate itself from
most effects emanating from south Asia. However, there would be no running from a Mexican
collapse.¶
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Mexican economic collapse causes instability
Barnes 11 – (4/29/11, Joe, Bonner Means Baker Fellow James A. Baker III Institute for Public
Policy Rice University, “Oil and U.S.-Mexico Bilateral
Relations,” http://bakerinstitute.org/publications/EF-pub-BarnesBilateral-04292011.pdf)
There is already a short- to medium-term risk of substantial instability in Mexico. As noted, the country is
enduring extremely high levels of drug-related violence. Even if the Mexican government eventually succeeds in its efforts to
suppress this violence, the process is likely to be expensive, bloody, and corrosive in terms of human rights. A period of feeble economic growth,
combined with a fiscal crisis associated with a drop in revenues from Pemex, could create a “perfect storm” south of the border. If
this were to occur, Washington would have no choice but to respond. In the longer-term, the United States
has a clear interest in robust economic growth and fiscal sustainability in Mexico. There is at least one major
example of the U.S. coming to Mexico’s aid in an economic emergency. In 1994, the United States extended US$20 billion in loan guarantees to Mexico when the peso
collapsed, in large part to make U.S. creditors whole. Not least, a healthy Mexican economy would reduce the flow of illegal immigration to the United States. To the extent
that prospects for such growth and sustainability are enhanced by reform of Pemex, the United States should be supportive. It might be best, in terms of U.S. economic and
commercial interests, were Pemex to be fully privatized, but even partial reforms would be welcome. Not all national oil companies are created equal: Pemex’s development
into something like Norway’s Statol would mark an important improvement.
Mexican instability leads to a global arms race and US isolationism
Haddick, contractor @ US Special Operations Command, 10
[Robert, 9-10-2010, Foreign Policy, “This Week at War: If Mexico Is at War, Does America Have
to Win It?”,
http://www.foreignpolicy.com/articles/2010/09/10/this_week_at_war_if_mexico_is_at_war_d
oes_america_have_to_win_it, accessed 7-1-13, GSK]
I note that Clinton used the phrase "We [the United States] face an increasing threat ...," not
"they [Mexico]." The cartels are transnational shipping businesses, with consumers in the
United States as their dominant market. The clashes over shipping routes and distribution
power -- which over the past four years have killed 28,000 and thoroughly corrupted Mexico's
police and judiciary -- could just as well occur inside the United States. Indeed, growing anxiety
that southern Arizona is in danger of becoming a "no-go zone" controlled by drug and human
traffickers contributed to the passage of Arizona's controversial immigration enforcement
statute earlier this year.¶ Both Clinton and Mexican officials have discussed Colombia's struggle
against extreme drug violence and corruption, revealing concerns about how dreadful the
situation in Mexico might yet become and also as a model for how to recover from disaster.
Colombia's long climb from the abyss, aided by the U.S. government's Plan Colombia
assistance, should certainly give hope to Mexico's counterinsurgents. But if the United States
and Mexico are to achieve similar success, both will have to resolve political dilemmas that
would prevent effective action. Clinton herself acknowledged as much when she remarked that
Plan Colombia was "controversial ... there were problems and there were mistakes. But it
worked."¶ Isolating Mexico's cartel insurgents from their enormous American revenue base -- a
crucial step in a counterinsurgency campaign -- may require a much more severe border
crackdown, an action that would be highly controversial in both the United States and Mexico.
Plan Colombia was a success partly because of the long-term presence of U.S. Special Forces
advisers, intelligence experts, and other military specialists inside Colombia, a presence which
would not please most Mexicans. And Colombia's long counterattack against its insurgents
resulted in actions that boiled the blood of many human rights observers.¶ Most significantly, a
strengthening Mexican insurgency would very likely affect America's role in the rest of the
world. An increasingly chaotic American side of the border, marked by bloody cartel wars,
corrupted government and media, and a breakdown in security, would likely cause many in the
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United States to question the importance of military and foreign policy ventures elsewhere in
the world.¶ Should the southern border become a U.S. president's primary national security
concern, nervous allies and opportunistic adversaries elsewhere in the world would no doubt
adjust to a distracted and inward-looking America, with potentially disruptive arms races the
result. Secretary Clinton has looked south and now sees an insurgency. Let's hope that the
United States can apply what it has recently learned about insurgencies to stop this one from
getting out of control.
Mexican instability leads to anti-US insurgencies
Rothkopf, Editor-at-Large of Foreign Policy, 10
[David, 9-9-2010, Foreign Policy, “Clinton's bluntness on Mexico was right”,
http://rothkopf.foreignpolicy.com/posts/2010/09/09/clintons_bluntness_on_mexico_was_right
, accessed 7-1-2013, GSK]
In her well-received remarks at the Council on Foreign Relations yesterday, Secretary of State
Hillary Clinton let slip a statement that immediately sent the inter-American affairs semantic
fashion police scurrying. She referred to the on-going threat posed by Mexican drug cartels
and their allies to Mexican society as an "insurgency."¶ This comment was immediately disputed
by Mexican President Felipe Calderon's administration, which argued that they were not
becoming another Colombia and that they were doing what was necessary to keep its political
system from being co-opted, corrupted and battered into ineffectiveness or worse. It also made
some in the State Department and in the -- very conventionally-minded and cautious -- U.S.
Latin American policy community squirm.¶ All those reactions are reasons why Clinton's remarks
are exactly on target. It is hard for Mexico to make the case that it has its arms around the
problem, when news of its third mayor to be killed in the past several weeks is breaking. It is
hard when, as quoted in an excellent Los Angeles Times story on the subject, one senior U.S.
immigration and customs official cites the fact that the Mexicans have "lost an ‘astronomical'
number of police officers and soldiers." In short, it is hard for them to argue that everything is
under control when it is clearly not.¶ Sometimes diplomacy is the art of varnishing unpleasant
truths. But sometimes it is the art of stripping away the varnish. In this case it is the latter,
because while the Calderon administration has struggled valiantly with this issue, they are
losing ground -- and the worse things get, the more they go from being primarily a Mexican
problem to being a North American problem. President Calderon may not like it, but this is
already a political issue in the U.S. Simply shifting troops to our southern border will not be
enough if pockets of Mexico become even more lawless, and in turn even more dangerous
staging grounds for threats to the U.S.¶ Whether the crises in Mexican provinces -- locked in
struggles with brutal gangs of drug dealers -- technically fulfills the definition of an insurgency is
immaterial. In fact, Clinton's language was actually quite nuanced: "We face an increasing
threat from a well-organized network, a drug-trafficking threat that is, in some cases,
morphing into or making common cause with what we would consider an insurgency."¶
Sometimes just a word can be a wake-up call. In this case, if it is not one for the Mexicans -whether for reasons of pride or denial -- it must be for the Obama team, who have from the
beginning recognized that instability in Mexico -- for whatever reason -- is among the most
serious, complex, and difficult to tackle threats the U.S. faces today.
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Impact- Mexican Manufacturing
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Pharmaceuticals
Manufacturing drives innovation and pharmaceuticals
Swezey, Project Director for Energy and Climate Policy at Breakthrough
Institute, and McConaghy, 11 [Devon and Ryan, Breakthrough Institute , October 11 ,
Breakthrough Institute, "ADVANCED MANUFACTURING AND THE FUTURE OF THE AMERICAN
ECONOMY" , http://thebreakthrough.org/blog/BTI_Third_Way_Idea_Brief__Manufacturing_Growth_.pdf , 7-10-13, JC]
New manufacturing thrives on and drives innovation. Manufacturing is a core component of
the nation’s innovation ecosystem. Firms engaged in manufacturing re-invest a significant
portion of revenues in research and development (R&D). Overall, the manufacturing sector
comprises two-thirds 9 of industry investment in R&D and employs nearly 64% of the
country’s scientists and engineers. 10 Manufacturers also have unique opportunities to apply
new technologies for specialized functions and achieve economies of scale at the plant or firm,
11 making the return on manufacturing R&D significant. The transition to advanced
manufacturing will enhance the sector’s role in fostering innovation and developing and
commercializing new technologies. Advanced manufacturing industries, including
semiconductors, computers, pharmaceuticals, clean energy technologies, and nanotechnology,
play an outsized role in generating the new technologies, products, and processes that drive
economic growth. Advanced manufacturing is also characterized by the rapid transfer of science
and technology into manufacturing processes and products, which in and of itself drives
innovation. The research-to-manufacturing process is cyclical, with multiple feedbacks between
basic R&D, pre-competitive research, prototyping, product development, and manufacturing.
This opens new possibilities for product development and manufacturing. 12
Mexican pharmaceuticals are key
North American Production Sharing Incoporated 13 [ 4-11-13, NAPS , "The Medical
Device Industry Manufacturing in Mexico has a Clean Bill of Health" ,
http://www.napsintl.com/news/index.php/2013/04/11/the-medical-device-industrymanufacturing-in-mexico-has-a-clean-bill-of-health/ , 7-10-13 , JC]
Medical device companies manufacturing in Mexico continue to exhibit steady growth with no
sign of a slow down in sight. As costs in the United States and Eastern Europe continue to rise,
especially with the implementation of “Obamacare” and its direct impact on medical device
companies, more organizations are considering manufacturing in Mexico as a viable solution.
No other place in Mexico is this more evident than in Tijuana, where they now claim the largest
concentration of medical device companies in all of North America. The ability to provide both
timely deliveries and consistently high quality products are a few reasons why medical device
manufacturers are choosing Mexico. Also, there is a tremendous base of talented labor with
experience in medical device, automotive, electronics, aerospace and other sophisticated
industries to support the growth of manufacturing in Mexico. Furthermore, the labor laws in
Mexico provide companies much more flexibility in terms of compensation, scheduling and
seasonality, which plays an important roll on profitability. Another factor drawing medical
device manufacturers to Mexico is the government’s enforcement, and employee’s respect, for
intellectual property. Unlike many other low-cost manufacturing countries, Mexico is known for
its low piracy rates, which cost companies billions of dollars a year. One of the challenges facing
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these companies is understanding the business landscape and culture in Mexico, which is why
many of these firms are choosing to outsource their administration and compliance
management to shelter companies. A good shelter company will handle 100% of the
administration, including Human Resources in Mexico, Payroll in Mexico, Accounting in Mexico,
Import/Export in Mexico and Environmental, Health & Safety in Mexico, allowing the
manufacturer to focus on production and quality control. “We are receiving a record number of
inquires from medical device manufacturers around the world who want to explore Mexico as a
competitive solution,” said Scott Stanley, Sr. Vice President of North American Production
Sharing, Inc. (NAPS), Tijuana’s largest and most sophisticated shelter service provider. “NAPS
guides these companies through the process of feasibility by providing all the facts and figures
about expanding into Mexico so sound business decisions can be made. Thereafter, we
essentially become partners and typically work together for many years.” With an increase in
demand for medical device products, not only in the United States but also within Mexico’s
public health sector, Mexico will continue to be the primary choice for medical device
manufacturing.
Pharmaceuticals is key to the development of DOD non-lethal chemical
weapons
The Sunshine Project, International NGO against biological warfare and military
abuse , 3 [2-11-3 , "Pentagon perverts Pharma with New Weapons" ,
http://web.archive.org/web/20130120220549/http://www.sunshineproject.org/publications/pr/pr110203.html, 7-10-13 , JC]
The conventional view is that pharmaceutical research develops new ways to treat disease and
reduce human suffering; but the Pentagon disagrees. Military weapons developers see the
pharmaceutical industry as central to a new generation of anti-personnel weapons. Although
it denied such research as recently as the aftermath of the October theater tragedy in Moscow,
a Pentagon program has recently released more information that confirms that it wants to
make pharmaceutical weapons. And on February 5th, US Secretary of Defense Donald Rumsfeld
went a big step further. Rumsfeld, himself a former pharmaceutical industry CEO (1), announced
that the US is making plans for the use of such incapacitating biochemical weapons in an
invasion of Iraq (see News Release, 7 February 2003). The Joint Non-Lethal Weapons
Directorate (JNLWD) and the US Army's Soldier Biological Chemical Command (SBCCOM) are
leading the research. Of interest to the military are drugs that target the brain's regulation of
many aspects of cognition, such as sense of pain, consciousness, and emotions like anxiety and
fear. JNLWD is preparing a database of pharmaceutical weapons candidates, many of them
off-the-shelf products, and indexing them by manufacturer. It will choose drugs from this
database for further work and, according to Rumsfeld, if President Bush signs a waiver of
existing US policy, they can be used in Iraq. Delivery devices already exist or are in advanced
development. These include munitions for an unmanned aerial vehicle or loitering missile, and a
new 81mm (bio)chemical mortar round. Many of the Pentagon’s so-called "nonlethal"
(bio)chemical weapons candidates are pharmaceuticals. Different names are used for these
weapons ("calmatives", "disabling chemicals", "nonlethal chemicals", etc.). Used as weapons, all
minimally aim to incapacitate their victims. They belong to the same broad category of agents
as the incapacitating chemical that killed more than 120 hostages in the Moscow theater. That
agent was reported to be based on fentanyl, an opiate that is also among the weapons being
assessed by JNLWD. In the US, pharmaceutical fentanyl is sold by Johnson & Johnson’s
subsidiary Janssen Pharmaceutica. Remifentanil, a closely related drug, is a GlaxoSmithKline
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product. US military contractors have identified a host of other agents manufactured by a
Who's Who list of the pharmaceutical industry. In 2001 weapons researchers at the Applied
Research Laboratory of Pennsylvania State University assessed the anesthetic drugs isoflurane
and sevoflurane, produced by Syngenta and Abbott Laboratories, respectively. The same Penn
State team recommended other drugs for "immediate consideration," some of which are in the
chart below. The Pentagon is also interested in industry’s new ways to apply (bio)chemicals
through the skin and mucous membranes, which could bring previously impractical drug
weapons closer to reality by overcoming technical hurdles related to delivery of certain agents.
Bioterrorism coming now — no impediments to deployment
Glassman, Executive director of the George W. Bush Institute , 12 [James, 4-4-12 ,
"We're Letting Our Bioterrorism Defense Down" ,
http://www.forbes.com/sites/jamesglassman/2012/04/04/were-letting-our-bioterrorismdefenses-down/print/ , 7-10-13 , JC]
A little over three years ago, a commission of experts, established by Congress, concluded that
the chances were better than 50-50 that a weapon of mass destruction would be used in a
terrorist attack somewhere in the world by 2013. And, said the Commission on the Prevention of WMD
Proliferation and Terrorism, that weapon is more likely to be biological than nuclear.¶ Both Michael
Chertoff, former secretary of Homeland Security, and Admiral Mike McConnell, former director
of national intelligence, have said that bioterror – not a nuclear weapon – was their greatest
fear when they were in office. “In terms of catastrophic attacks, bio was at the top of the list,”
said Chertoff, who served from 2005 to 2009¶ Bacillus anthracis, via Wikipedia¶ But we haven’t
heard much about bioterrorism since the anthrax incidents that closely followed 9/11, a little
over a decade ago. The truth is that America remains vulnerable to an attack that could kill
hundreds of thousands. Terrorists could spray Bacillus anthracis from crop-dusters over
football stadiums. Or they could send intentionally infected fanatics out to spread the
smallpox virus through a crowded city, doing far more damage than a brigade of suicide
bombers.¶ While biological warfare dates back centuries (cadavers were used to contaminate
the water supplies of enemies), the United States was paying scant attention to bio-defense
until a few years before the airplane attacks on the World Trade Center and the Pentagon.
Despite a relatively swift mobilization after 9/11, severe problems remain.¶ A “Bio-Response Report
Card” study, issued last October by the Bipartisan WMD Terrorism Research Center, concluded,
“The nation does not yet have adequate bio-response capability to meet fundamental
expectations during a large-scale biological event.” The study gives grades of “D” to “detection
and diagnosis” and “medical counter-measure availability” for a major bioterror attack.¶
Biological weapons have been called the “poor man’s atom bomb.” They are nowhere near as
difficult to manufacture as nuclear weapons, and their return address is hard to assess, making
them ideal for non-state actors like Al Qaeda, which, in fact, has been seeking to acquire biological
WMD since at least 1999.¶ A report 12 years ago concluded, “Individuals, with no background in
the development and production of bioweapons and no access to the classified information
from the former U.S. bio-weapons program, were able to produce a significant quantity of
high-quality weaponized Bacillus globigii Рa close cousin to the well-known threat, Anthrax.Ӧ
Colonies of Baccilus subtilis, via Wikipedia¶ In the spring of 2001, a Defense Science Board
report, co-authored by Nobel Prize winner Joshua Lederberg and George Whiteside, former
chair of the Harvard chemistry department, concluded that “major impediments to the
development of biological weapons…have largely been eliminated in the last decade by the
rapid spread of biotechnology.¶ Later that year, five Americans were killed by anthrax powder,
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carried in letters. The FBI is convinced that the letters came from a civilian employee of the U.S.
Army. If so, then “a single employee with no work experience in the weaponization of
pathogens,… using equipment that could be readily purchased over the Internet, was able to
produce very high-quality, dry-powdered anthrax,” said the Bio-Response Report Card.
But manufacturing solves – sensors and encryption tools
Morgan et al, East Texas Baptist University , 3 [Sarah , Silverio Colon, Arizona State
University Department of Bioengineering College of Engineering and Applied Sciences, Judith A.
Ruffner and John A. Emerson Organic Materials Department, Ramona L. Myers, Nuclear Safety
Assessment Department, 9-3, "Biomanufacturing: A State of the Technology Review" ,
http://www.che.ncsu.edu/academics/concentrations/documents/BiomanufacturingAStateofTechRev.pdf , 7-10-13 , JC]
Perhaps the most unique and advantageous aspect of biomanufacturing is the excellent control
that may be afforded during fabrication. In particular, sequence-by-sequence building of
polymeric materials may be possible. Biological species can be used to synthesize polymers of
more uniform chain lengths or chain branching than those produced by conventional synthesis
techniques. Additionally, biosynthesis could be used to produce specialty copolymers that are
not available through traditional synthesis methods. These applications are of particular interest
to SNL as we strive to understand polymers and nanoparticles in terms of their thermal,
mechanical, optical, and electrical properties for use in nuclear weapons, satellites, and
homeland defense applications. Other biomanufacturing areas of interest include fabrication of
sensors and encryption tools. It may be possible to utilize this technology to manufacture
sensors that offer superior recognition of chemical and biological agents. Currently, it is
possible to manufacture sensors that are able to detect only one or a few agents. However,
development of the appropriate bioprocessing techniques will enable manufacture of sensors
that are able to detect all materials of interest at once. This is of tremendous interest in
detecting and neutralizing potential terrorist attacks using these agents. Additionally, it may be
possible to use biosequencing to provide encryption and subsequent decoding of complex,
sensitive data. Biomanufacturing has the potential to be one of the defining technologies in the
upcoming century. Research, development, and applications in the fields of biotechnology,
bioengineering, biodetection, biomaterials, biocomputation and bioenergy will have dramatic
impact on both the products we are able to create, and the ways in which we create them.
Sandia National Laboratories has the expertise to contribute to any one of these fields.
Those cause extinction
Matheny, Department of Health Policy and Management, 7
[Jason G. , Risk Analysis , "Reducing the Risk of Human Extinction" , Volume: 27, Number 5, JC]
Of current extinction risks, the most severe may be bioterrorism. The knowledge needed to
engineer a virus is modest compared to that needed to build a nuclear weapon; the necessary
equipment and materials are increasingly accessible and because biological agents are selfreplicating, a weapon can have an exponential effect on a population (Warrick, 2006; Williams,
2006). 5 Current U.S. biodefense efforts are funded at $5 billion per year to develop and
stockpile new drugs and vaccines, monitor biological agents and emerging diseases, and
strengthen the capacities of local health systems to respond to pandemics (Lam, Franco, &
Shuler, 2006).
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Impact- Cooperation
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Warming
Infrastructure provides a framework for broader US-Mexico energy cooperation
Wood, Director of Mexico at Woodrow Wilson Institute, 13 (Duncan, Woodrow
Wilson Institute, “Growing Potential for U.S.-Mexico Energy Cooperation”,
http://wilsoncenter.org/sites/default/files/woodGrowing%20Potential%20for%20U.S.Mexico%20Energy%20Cooperation, accessed 6/30/13, AR)
• Regulatory cooperation between the energy and environmental agencies of both countries
is urgently needed. As transboundary oil and gas reserves are exploited, the two nations should
harmonize their standards and regulations for hydrocarbons exploration and production.• The
question of cross border electricity transmission has been a feature of bilateral talksss since
2010 but little has yet been achieved. It is vital that the bilateral mechanism is given a sense of
urgency and importance from both governments• The development of a Smart Grid for
electricity transmission and distribution in Mexico is an issue that would benefit from further
bilateral cooperation. M U.S. funding for initial research into the building of a smart grid should
now be followed by increased technical cooperation. • The huge advances in energy efficiency in
the United States in recent years presents a model that Mexico would do well to study. Some
work has already been done in Mexico to put in place an energy efficiency strategy, and
collaboration with U.S. agencies would be of great benefit.• Long term discussions should
begin between Mexico, the United States and Canada over the questions of carbon emissions,
carbon pricing and a carbon tax. Although the possibility of a national carbon tax or cap and
trade system in the U.S. appears distant, it is important that all three of the NAFTA partners
understand the others’ approach to this issue and monitor future policy developments
closely.1668 Looking ahead to the next six years of interaction between governments of Mexico
and the United States, there is the potential for an enormously fruitful relationship in energy
affairs. Much of this depends on two key factors, political will and the internal changes that
are underway in Mexico’s energy sector. In the past, political sensitivities concerning U.S.
involvement in the Mexican hydrocarbons industry have limited the extent of collaboration in
the oil and gas sectors. This continues to be a cause for concern in any U.S.-based discussion
(from either the public or private sectors) of Mexican energy policy and the potential for
collaboration, but in recent years there has been a relaxation of sensitivity in this area. Partly in
response to the perceived need for international assistance in resolving Mexico’s multiple
energy challenges, and partly as a result of a productive bilateral institutional relationship
between federal energy agencies, there is now a greater potential for engagement than at any
time in recent memory. We can identify three main areas in which bilateral energy cooperation
holds great promise in the short to medium-term. First, given the importance of the theme for
both countries, there is great potential in the oil and gas industries. This lies in the prospects for
investment, infrastructure and technical collaboration. Second, we can point to the electricity
sector, where the creation of a more complete cross-border transmission network and working
towards the creation of a market for electric power at the regional level should be priorities for
the two countries. Third, in the area of climate change policy, existing cooperation on
renewable energies and the need for a strategic dialogue on the question of carbon-emissions
policy are two issues can bring benefits for both partners. Underlying all three of these areas
are broader concerns about regional economic competitiveness and the consolidation of
economic development in Mexico. The first of these concerns derives from the hugely important
comparative advantage that the North American economic region has derived in recent years
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from low-cost energy, driven by the shale revolution. In order to maintain this comparative
advantage, and to ensure that the integrated manufacturing production platform in all three
countries benefits from the low-cost energy, the gains of recent years must be consolidated by
fully developing Mexico’s energy resources. With regards to the second concern, economic
development, a number of commentators, analysts and political figures in Mexico have
identified energy reform as a potential source for driving long-term economic growth and job
creation, and the potential opportunities for foreign firms are considerable. While the United
States cannot play an active role in driving the reform process, the implementation of any
future reform will benefit from technical cooperation with the U.S. in areas such as pricing,
regulation and industry best practices.
Plan solves Mexican infrastructure -- expertise sharing
Wood, Director of Mexico at Woodrow Wilson Institute, 13 (Duncan, Woodrow
Wilson Institute, “Growing Potential for U.S.-Mexico Energy Cooperation”,
http://wilsoncenter.org/sites/default/files/woodGrowing%20Potential%20for%20U.S.Mexico%20Energy%20Cooperation, accessed 6/30/13, AR)
The Evolving Energy Context The past 5 years have seen a revolution in the energy sector
globally, with the advent of shale gas and tight oil production dramatically altering the supply
outlook. In the case of gas, the success of American firms in drilling for gas in shale formations
across the continental United States has meant a flood of new supplies that have caused a major
decline in gas prices. From a Henry Hub spot price of over $13 per million British Thermal Units
(mmBTUs), the price has fallen to just ove r $2 per mmBTU by the end of 2012. This, in turn, has
greatly reduced the cost of generating electricity in the United States and has encouraged
utilities to switch to gas from other fuel sources. The United States has also increased its
domestic oil produ ction by more than 800,000 barrels per day (bpd) through the exploitation of
tight oil reserves in places such as North Dakota, applying latest drilling and hydraulic fracturing
(fracking) 39 technologies. Although we have seen this jump in supply in the U.S. , oil prices have
remained high due to global demand pressures and the international, rather than regional
nature of oil pricing. At the same time as U.S. production has risen, Mexican oil has
experienced a precipitous decline. From a level of 3.4 million bpd in 2004, Mexico’s oil
production has fallen to only 2.55 million bpd. The stagnation of the national oil company, the
prohibition on foreign or private investment and participation in the sector, and the end of
easy oil in Mexico has meant that a change in thinking is desperately needed in Mexican
hydrocarbons policy. Oil and gas As noted above, the history of cooperation between the
United States and Mexico on oil issues has been limited by the historical sensitivity of Mexico’s
government and people to any hint of interference from the U.S. in what has traditionally been
seen as a central element in the nation’s sovereignty. Nonetheless, recent years have shown a
softening on this sensitivity, in part due to generational change, in part due to politi cal
change, and in part due to the success of negotiating a Transboundary Hydrocarbons
Agreement in 2012. That agreement laid out a framework for determining the management and
exploitation of cross - border oil reserves, and was hailed as a positive develop ment. It was
quickly ratified in the Mexican Senate, but is has yet to be ratified in the United States, and so
has not yet come into force. Before moving on to discuss new areas of cooperation, it is
important that this existing agreement is ratified. It is widely expected that the government of
Enrique Peña Nieto will present an energy reform initiative to the Mexican Congress early in
2013. While it is still unknown how ambitious that reform proposal will be, it is thought that the
government will presen t an initiative that will be aimed at opening the sector to greater levels
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of private participation in refining, petrochemicals and even in exploration and production. Such
an opening will of course offer significant possibilities for foreign as well as Me xican firms,
and will also open the door to new areas of technical and regulatory collaboration between
the two countries. Mexico’s energy establis hment, and increasingly it seems, the government,
hope that private investment will occur in unconventional hydrocarbons sector. For Mexico
the most interesting plays in the future will be found in the deep waters of the Gulf of Mexico, in
the as yet untap ped shale reserves that are found throughout the east of the country, and in
the geologically - complex fields of Chicontepec, where Pemex has been consistently failing to
meet production targets over the past four years. The application of cutting - edge tech
nologies and techniques from U.S. firms would likely be important in all three of these areas,
and the experience of American firms in shale plays would provide them with an advantage in
the event of an opening in that area. It is widely expected that the government of Enrique
Peña Nieto will present an energy reform initiative to the Mexican Congress early in 2013.
Such an opening will of course offer significant possibilities for foreign as well as Mexican
firms, and will also open the door to new areas of technical and regulatory collaboration
between the two countries. 40 Of particular interest in this regard is the experience of U.S.
firms in the hydraulic fracturing (fracking) business. The ability to extract shale oil and gas in
areas that suffer from water shortages (such as Texas) will be crucial to developing shale
resources in Mexico, particularl y in the north of the country. In fact existing knowledge of the
geological characteristics of the Eagle Ford formation will also be crucial in exploiting its oil
and gas reserves in Coahuila, where the formation extends. One Mexican company, Alfa, has
alr eady worked extensively with U.S. partners in the shale industry north of the border, and
we can expect higher levels of private sector collaboration to develop.
That’s key to spur development of renewables
Wood, Director of Mexico at Woodrow Wilson Institute, 13 (Duncan, Woodrow
Wilson Institute, “Growing Potential for U.S.-Mexico Energy Cooperation”,
http://wilsoncenter.org/sites/default/files/woodGrowing%20Potential%20for%20U.S.Mexico%20Energy%20Cooperation, accessed 6/30/13, AR)
The Calderon administration was notable for its emphasis on questions of climate change and
renewable energy. Calderon was personally committed to the question of finding a post-Kyoto
bargain at the international level, and at the domestic level succeeded in passing ambitious
carbon-emissions legislation in 2012. During his tenure Mexico also saw the rapid expansion of
renewable energy sourced electricity. At the present time the cross-border transmission
infrastructure is highly limited and talks between the two countries aimed at facilitating new
cross-border projects have achieved little real progress since eneration with the large scale
wind power developments in Oaxaca, and the beginnings of other developments in Baja
California, Tamaulipas and Nuevo Leon. Presidents Obama and Calderon signed a Bilateral
Framework for Clean Energy and Climate Change agreement during President Obama’s April
2009 visit to Mexico City. Thus far it does not appear that climate change or renewable
energies are a high priority for the Pena Nieto government, but the potential for meaningful
collaboration should not be underestimated. Given the continuing shift in the U.S. towards
cleaner energy and energy efficiency (much of which has been driven by the shale revolution),
it is now not unthinkable that the U.S. will be able to meet Kyoto-style emissions targets within
the next few years. At the level of the states, with California at the cutting edge, we are seeing
the development of not only renewable portfolio standards for electricity generation, but also
the emergence of cap and trade schemes. If other states adopt similar measures, there are a
number of implications for Mexico. The first is simply an extension of discussions that already
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exist about Mexico sourcing renewable energy projects for U.S. consumption. The potential
for wind power in the states of Baja California and Tamaulipas is both huge and economically
competitive, although it is currently held back by the crossborder transmission challenges
discussed above. Ample investment opportunities exist for U.S. firms in both wind power
generation and in supplying the equipment for wind farms. What’s more, an integrated
production structure for turbines that sees equipment being produced in both countries makes
eminent sense.
Renewables solve warming better than any other solution – this is comparative
evidence
Bergeron, Science writer at Stanford University News, 8 (Louis, “Wind, water and sun
beat other energy alternatives, study finds”,
http://news.stanford.edu/news/2009/january7/power-010709.html, accessed 6/30, AR)
The best ways to improve energy security, mitigate global warming and reduce the number of
deaths caused by air pollution are blowing in the wind and rippling in the water, not growing
on prairies or glowing inside nuclear power plants, says Mark Z. Jacobson, a professor of civil
and environmental engineering at Stanford. And "clean coal," which involves capturing carbon
emissions and sequestering them in the earth, is not clean at all, he asserts. Jacobson has
conducted the first quantitative, scientific evaluation of the proposed, major, energy-related
solutions by assessing not only their potential for delivering energy for electricity and vehicles,
but also their impacts on global warming, human health, energy security, water supply, space
requirements, wildlife, water pollution, reliability and sustainability. His findings indicate that
the options that are getting the most attention are between 25 to 1,000 times more polluting
than the best available options. The paper with his findings will be published in the next issue
of Energy and Environmental Science but is available online now. Jacobson is also director of the
Atmosphere/Energy Program at Stanford. "The energy alternatives that are good are not the
ones that people have been talking about the most. And some options that have been proposed
are just downright awful," Jacobson said. "Ethanol-based biofuels will actually cause more harm
to human health, wildlife, water supply and land use than current fossil fuels." He added that
ethanol may also emit more global-warming pollutants than fossil fuels, according to the latest
scientific studies. The raw energy sources that Jacobson found to be the most promising are, in
order, wind, concentrated solar (the use of mirrors to heat a fluid), geothermal, tidal, solar
photovoltaics (rooftop solar panels), wave and hydroelectric. He recommends against nuclear,
coal with carbon capture and sequestration, corn ethanol and cellulosic ethanol, which is made
of prairie grass. In fact, he found cellulosic ethanol was worse than corn ethanol because it
results in more air pollution, requires more land to produce and causes more damage to wildlife.
To place the various alternatives on an equal footing, Jacobson first made his comparisons
among the energy sources by calculating the impacts as if each alternative alone were used to
power all the vehicles in the United States, assuming only "new-technology" vehicles were being
used. Such vehicles include battery electric vehicles (BEVs), hydrogen fuel cell vehicles (HFCVs),
and "flex-fuel" vehicles that could run on a high blend of ethanol called E85. Wind was by far
the most promising, Jacobson said, owing to a better-than 99 percent reduction in carbon and
air pollution emissions; the consumption of less than 3 square kilometers of land for the
turbine footprints to run the entire U.S. vehicle fleet (given the fleet is composed of batteryelectric vehicles); the saving of about 15,000 lives per year from premature air-pollution-related
deaths from vehicle exhaust in the United States; and virtually no water consumption. By
contrast, corn and cellulosic ethanol will continue to cause more than 15,000 air pollution-
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related deaths in the country per year, Jacobson asserted. Because the wind turbines would
require a modest amount of spacing between them to allow room for the blades to spin, wind
farms would occupy about 0.5 percent of all U.S. land, but this amount is more than 30 times
less than that required for growing corn or grasses for ethanol. Land between turbines on wind
farms would be simultaneously available as farmland or pasture or could be left as open space.
Indeed, a battery-powered U.S. vehicle fleet could be charged by 73,000 to 144,000 5-megawatt
wind turbines, fewer than the 300,000 airplanes the U.S. produced during World War II and far
easier to build. Additional turbines could provide electricity for other energy needs. "There is a
lot of talk among politicians that we need a massive jobs program to pull the economy out of
the current recession," Jacobson said. "Well, putting people to work building wind turbines,
solar plants, geothermal plants, electric vehicles and transmission lines would not only create
jobs but would also reduce costs due to health care, crop damage and climate damage from
current vehicle and electric power pollution, as well as provide the world with a truly
unlimited supply of clean power." Jacobson said that while some people are under the
impression that wind and wave power are too variable to provide steady amounts of electricity,
his research group has already shown in previous research that by properly coordinating the
energy output from wind farms in different locations, the potential problem with variability can
be overcome and a steady supply of baseline power delivered to users. Jacobson's research is
particularly timely in light of the growing push to develop biofuels, which he calculated to be the
worst of the available alternatives. In their effort to obtain a federal bailout, the Big Three
Detroit automakers are increasingly touting their efforts and programs in the biofuels realm,
and federal research dollars have been supporting a growing number of biofuel-research efforts.
"That is exactly the wrong place to be spending our money. Biofuels are the most damaging
choice we could make in our efforts to move away from using fossil fuels," Jacobson said. "We
should be spending to promote energy technologies that cause significant reductions in
carbon emissions and air-pollution mortality, not technologies that have either marginal
benefits or no benefits at all". "Obviously, wind alone isn't the solution," Jacobson said. "It's got
to be a package deal, with energy also being produced by other sources such as solar, tidal,
wave and geothermal power." During the recent presidential campaign, nuclear power and
clean coal were often touted as energy solutions that should be pursued, but nuclear power and
coal with carbon capture and sequestration were Jacobson's lowest-ranked choices after
biofuels. "Coal with carbon sequestration emits 60- to 110-times more carbon and air
pollution than wind energy, and nuclear emits about 25-times more carbon and air pollution
than wind energy," Jacobson said. Although carbon-capture equipment reduces 85-90 percent
of the carbon exhaust from a coal-fired power plant, it has no impact on the carbon resulting
from the mining or transport of the coal or on the exhaust of other air pollutants. In fact,
because carbon capture requires a roughly 25-percent increase in energy from the coal plant,
about 25 percent more coal is needed, increasing mountaintop removal and increasing noncarbon air pollution from power plants, he said. Nuclear power poses other risks. Jacobson said
it is likely that if the United States were to move more heavily into nuclear power, then other
nations would demand to be able to use that option. "Once you have a nuclear energy facility,
it's straightforward to start refining uranium in that facility, which is what Iran is doing and
Venezuela is planning to do," Jacobson said. "The potential for terrorists to obtain a nuclear
weapon or for states to develop nuclear weapons that could be used in limited regional wars
will certainly increase with an increase in the number of nuclear energy facilities worldwide."
Jacobson calculated that if one small nuclear bomb exploded, the carbon emissions from the
burning of a large city would be modest, but the death rate for one such event would be twice
as large as the current vehicle air pollution death rate summed over 30 years. Finally, both coal
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and nuclear energy plants take much longer to plan, permit and construct than do most of the
other new energy sources that Jacobson's study recommends. The result would be even more
emissions from existing nuclear and coal power sources as people continue to use
comparatively "dirty" electricity while waiting for the new energy sources to come online,
Jacobson said. Jacobson received no funding from any interest group, company or government
agency. Energy and vehicle options, from best to worst, according to Jacobson's calculations:
Best to worst electric power sources: 1. Wind power 2. concentrated solar power (CSP) 3.
geothermal power 4. tidal power 5. solar photovoltaics (PV) 6. wave power 7. hydroelectric
power 8. a tie between nuclear power and coal with carbon capture and sequestration (CCS).
Best to worst vehicle options: 1. Wind-BEVs (battery electric vehicles) 2. wind-HFCVs (hydrogen
fuel cell vehicles) 3.CSP-BEVs 4. geothermal-BEVs 5. tidal-BEVs 6. solar PV-BEVs 7. Wave-BEVs
8.hydroelectric-BEVs 9. a tie between nuclear-BEVs and coal-CCS-BEVs 11. corn-E85
12.cellulosic-E85. Hydrogen fuel cell vehicles were examined only when powered by wind
energy, but they could be combined with other electric power sources. Although HFCVs require
about three times more energy than do BEVs (BEVs are very efficient), HFCVs are still very clean
and more efficient than pure gasoline, and wind-HFCVs still resulted in the second-highest
overall ranking. HFCVs have an advantage in that they can be refueled faster than can BEVs
(although BEV charging is getting faster). Thus, HFCVs may be useful for long trips (more than
250 miles) while BEVs more useful for trips less than 250 miles. An ideal combination may be a
BEV-HFCV hybrid.
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Green Leadership
US-Latin American Relations allows for cooperation in environmental initiatives
- solves alt energy sources, warming , and US green leadership
Barshefsky et al , senior international partner at Wilmer Cutler Pickering Hale
and Dorr LLP, 8 [Charlene, James T. Hill , four-star general in the U.S. Army, Shannon K.
O'Neil, Senior Fellow for Latin America Studies, Julia E. Sweig , Nelson and David Rockefeller
Senior Fellow for Latin America Studies and Director for Latin America Studies , Council on
Foreign Relations, May 2008 , " U.S.-Latin America¶ Relations:¶ A New Direction¶ for a New
Reality " , pg. 54 , JC ]
As the United States and other nations look to diversify their energy¶ sources and reduce
dependence on oil, Latin America presents a unique¶ opportunity for engagement and
cooperation. Latin America already¶ leads the United States in the production and use of
hydroelectric¶ power, which supplies 23 percent of its energy needs (as compared to¶ less than
3 percent in the United States).50 The region has also made¶ investments in solar- and windpowered technologies, particularly in¶ Argentina, Brazil, and Chile. Cooperation on alternative
energy research¶ and production could become an important component of U.S.-Latin¶
America relations in the years ahead. Partnering with Latin American¶ nations in the
development of alternative energy sources would allow¶ the United States to build and
deepen diplomatic relationships through¶ joint initiatives on development, climate change,
and environmental¶ sustainability. Two areas in particular—biofuels and nuclear energy—¶
present important and immediate opportunities.¶ Only in the past several years have scarcity in
oil markets, environmental¶ awareness, scientific advances, and proactive subsidy policies¶
combined to make biofuels, notably ethanol and biodiesel, reasonably¶ price competitive with
petroleum products on a wider scale. Biofuels¶ now provide an opportunity for Latin America
and the United States¶ to assume global leadership in a sector of future competitive and
environmental¶ value (namely, decreased greenhouse gas emissions).
US Green Leadership and Initiatives ensures US Primacy and solves warming
Klarevas ,Professor in the Center for Global Affairs at New York University, 9
[Louis, 12-15-9, Huffington Post, "Securing American Primacy While Tackling Climate Change:
Toward a National Strategy of Greengemony" , http://www.huffingtonpost.com/louisklarevas/securing-american-primacy_b_393223.html , 7-3-13, JC]
As national leaders from around the world are gathering in Copenhagen, Denmark, to attend the
United Nations Climate Change Conference, the time is ripe to re-assess America's current
energy policies - but within the larger framework of how a new approach on the environment
will stave off global warming and shore up American primacy. By not addressing climate
change more aggressively and creatively, the United States is squandering an opportunity to
secure its global primacy for the next few generations to come. To do this, though, the U.S.
must rely on innovation to help the world escape the coming environmental meltdown.
Developing the key technologies that will save the planet from global warming will allow the
U.S. to outmaneuver potential great power rivals seeking to replace it as the international
system's hegemon. But the greening of American strategy must occur soon. The U.S., however,
seems to be stuck in time, unable to move beyond oil-centric geo-politics in any meaningful
way. Often, the gridlock is portrayed as a partisan difference, with Republicans resisting action
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and Democrats pleading for action. This, though, is an unfair characterization as there are
numerous proactive Republicans and quite a few reticent Democrats. The real divide is instead
one between realists and liberals. Students of realpolitik, which still heavily guides American
foreign policy, largely discount environmental issues as they are not seen as advancing national
interests in a way that generates relative power advantages vis-à-vis the other major powers in
the system: Russia, China, Japan, India, and the European Union. Liberals, on the other hand,
have recognized that global warming might very well become the greatest challenge ever faced
by mankind. As such, their thinking often eschews narrowly defined national interests for the
greater global good. This, though, ruffles elected officials whose sworn obligation is, above all,
to protect and promote American national interests. What both sides need to understand is
that by becoming a lean, mean, green fighting machine, the U.S. can actually bring together
liberals and realists to advance a collective interest which benefits every nation, while at the
same time, securing America’s global primacy well into the future. To do so, the U.S. must
reinvent itself as not just your traditional hegemon, but as history's first ever green hegemon.
Hegemons are countries that dominate the international system - bailing out other countries in
times of global crisis, establishing and maintaining the most important international institutions,
and covering the costs that result from free-riding and cheating global obligations. Since 1945,
that role has been the purview of the United States. Immediately after World War II, Europe
and Asia laid in ruin, the global economy required resuscitation, the countries of the free world
needed security guarantees, and the entire system longed for a multilateral forum where global
concerns could be addressed. The U.S., emerging the least scathed by the systemic crisis of
fascism's rise, stepped up to the challenge and established the postwar (and current) liberal
order. But don't let the world "liberal" fool you. While many nations benefited from America's
new-found hegemony, the U.S. was driven largely by "realist" selfish national interests. The
liberal order first and foremost benefited the U.S. With the U.S. becoming bogged down in
places like Afghanistan and Iraq, running a record national debt, and failing to shore up the
dollar, the future of American hegemony now seems to be facing a serious contest: potential
rivals - acting like sharks smelling blood in the water - wish to challenge the U.S. on a variety of
fronts. This has led numerous commentators to forecast the U.S.'s imminent fall from grace.
Not all hope is lost however. With the impending systemic crisis of global warming on the
horizon, the U.S. again finds itself in a position to address a transnational problem in a way that
will benefit both the international community collectively and the U.S. selfishly. The current
problem is two-fold. First, the competition for oil is fueling animosities between the major
powers. The geopolitics of oil has already emboldened Russia in its 'near abroad' and China in
far-off places like Africa and Latin America. As oil is a limited natural resource, a nasty zero-sum
contest could be looming on the horizon for the U.S. and its major power rivals - a contest which
threatens American primacy and global stability. Second, converting fossil fuels like oil to run
national economies is producing irreversible harm in the form of carbon dioxide emissions. So
long as the global economy remains oil-dependent, greenhouse gases will continue to rise.
Experts are predicting as much as a 60% increase in carbon dioxide emissions in the next
twenty-five years. That likely means more devastating water shortages, droughts, forest fires,
floods, and storms. In other words, if global competition for access to energy resources does
not undermine international security, global warming will. And in either case, oil will be a culprit
for the instability. Oil arguably has been the most precious energy resource of the last halfcentury. But "black gold" is so 20th century. The key resource for this century will be green gold
- clean, environmentally-friendly energy like wind, solar, and hydrogen power. Climate change
leaves no alternative. And the sooner we realize this, the better off we will be. What
Washington must do in order to avoid the traps of petropolitics is to convert the U.S. into the
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world's first-ever green hegemon. For starters, the federal government must drastically
increase investment in energy and environmental research and development (E&E R&D). This
will require a serious sacrifice, committing upwards of $40 billion annually to E&E R&D - a far cry
from the few billion dollars currently being spent. By promoting a new national project, the U.S.
could develop new technologies that will assure it does not drown in a pool of oil. Some
solutions are already well known, such as raising fuel standards for automobiles; improving
public transportation networks; and expanding nuclear and wind power sources. Others,
however, have not progressed much beyond the drawing board: batteries that can store
massive amounts of solar (and possibly even wind) power; efficient and cost-effective
photovoltaic cells, crop-fuels, and hydrogen-based fuels; and even fusion. Such innovations will
not only provide alternatives to oil, they will also give the U.S. an edge in the global competition
for hegemony. If the U.S. is able to produce technologies that allow modern, globalized societies
to escape the oil trap, those nations will eventually have no choice but to adopt such
technologies. And this will give the U.S. a tremendous economic boom, while simultaneously
providing it with means of leverage that can be employed to keep potential foes in check. The
bottom-line is that the U.S. needs to become green energy dominant as opposed to black
energy independent - and the best approach for achieving this is to promote a national
strategy of greengemony.
Warming is conclusively real and anthropogenic – acting now key to avert
disaster
Beinecke President of the Natural Resources Defense Council 8-1-12
(Frances, “Connecting the Dots on Climate Change,” http://www.huffingtonpost.com/francesbeinecke/connecting-the-dots-on-cl_b_1728809.html)
On Wednesday, the Senate Environment and Public Works committee takes up the important issue of climate change science and
adaptation. Hopefully, it's a first step toward some real solutions to address record heat, drought, storms and other effects of
climate change that we're now all experiencing first-hand. When
it comes to connecting the dots between
climate change and extreme weather, the lines are now clear. What's also clear is that we can
do something -- a lot of things, actually -- to prevent more of the climate-change related weather disasters we're
experiencing. First, we can reduce carbon dioxide and other polluting emissions that are heating our
planet, intensifying our weather disasters and harming our health. Stronger national and
international emissions standards could cut billions of tons of heat-trapping, stormintensifying carbon dioxide from our atmosphere . Two solutions championed by the Obama administration
exemplify what we can do. Raising automobile mileage standards to 54.5 MPG will reduce carbon emissions from new vehicles by
half by 2025. Limiting
harmful emissions from new power plants will cut carbon pollution even
more, helping calm our climate. But we can do much more. Cleaning up emissions from existing,
outdated dirty power plants , ending counterproductive policies like subsidies for oil, gas and
coal companies, and stopping climate-altering undertakings like the Keystone XL tar sands
pipeline, which will only increase our carbon-intensive use of tar sands and court more
weather disasters, are important next steps . State and local governments, meanwhile, can
better prepare for the effects of climate change -- whether it's sea level rise or drought or
heat-related health problems. Washington, D.C., for instance, is implementing environmentally friendly stormwater
control systems that will help reduce flooding and protect water quality in a changing climate -- an example that other cities can
follow. And as individuals, we cannot sit on the sidelines while our planet and our neighbors suffer through climate change and
extreme weather. Making
the right choices in our homes and in our communities when it comes to where we get
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our energy will not only help heal our planet, it also will help improve our finances. We must also hold our lawmakers
accountable. Countless surveys show that Americans want and expect Congress to address climate change, to increase clean energy
and to protect our health and environment. Yet our current Congress so far has done the exact opposite, taking an unprecedented
number of votes against environmental protections while simultaneously launching politically motivated witch hunts every time a
clean energy company stumbles. Our lawmakers should protect our health and welfare, not follow the dictates of lobbyists for big
polluters. Most importantly, we must stop ignoring the problem -- and start ignoring those who deny the truth. We now know what
climate change looks like, and what it causes. If we couldn't figure it out ourselves from the freak derecho storm that crippled the
Washington area; from the devastating wildfires in Colorado; from the hottest January-June in U.S. history or one of the worst U.S.
droughts ever, science once again has shown us the connections. In the
N ational O ceanic and A tmospheric
A dministration 's "State of the Climate in 2011" report, 378 scientists from 48 countries concluded that
extreme weather events are connected to human-induced climate change. This human-induced
climate change, the NOAA report found, dramatically increased the odds of heat waves in Texas, wide
temperature fluctuations in the United Kingdom and devastating storms in Australia and elsewhere around the
globe last year. Only those with ulterior motives and those they can persuade will continue denying that human-caused
climate change is beginning to wreak havoc on our planet and on our lives. We should not allow this minority to prevent us from
taking the steps we can and must take to help heal our climate. And we
would be wise to act now -- before the next
weather disaster strikes.
Warming is the largest risk of extinction
Deibel 7
(Terry L., professor of IR at National War College, “Conclusion: American Foreign
Affairs Strategy Today Anthropogenic – caused by CO2,” Foreign Affairs Strategy,
2007)
Finally, there
is one major existential threat to American security (as well as prosperity) of a nonviolent nature, which,
though far in the future, demands urgent action. It is the threat of global warming to the stability of the climate upon
which all earthly life depends. Scientists worldwide have been observing the gathering of this threat for three decades now, and
what was once a mere possibility has passed through probability to near certainty. Indeed not
one of more than 900
articles on climate change published in refereed scientific journals from 1993 to 2003 doubted that
anthropogenic warming is occurring. “In legitimate scientific circles,” writes Elizabeth Kolbert, “it is virtually
impossible to find evidence of disagreement over the fundamentals of global warming.” Evidence from a vast international scientific
monitoring effort accumulates almost weekly, as this sample of newspaper reports shows: an international panel predicts “brutal
droughts, floods and violent storms across the planet over the next century”; climate change
could “literally alter
ocean currents, wipe away huge portions of Alpine Snowcaps and aid the spread of cholera and
malaria”; “glaciers in the Antarctic and in Greenland are melting much faster than expected, and…worldwide, plants are
blooming several days earlier than a decade ago”; “rising sea temperatures have been accompanied by a significant global increase
in the most destructive hurricanes”; “NASA scientists have concluded from direct temperature measurements that 2005 was the
hottest year on record, with 1998 a close second”; “Earth’s warming climate is estimated to contribute to more than 150,000 deaths
and 5 million illnesses each year” as disease spreads; “widespread bleaching from Texas to Trinidad…killed broad swaths of corals”
due to a 2-degree rise in sea temperatures. “The world is slowly disintegrating,” concluded Inuit hunter Noah Metuq, who lives 30
miles from the Arctic Circle. “They call it climate change…but we just call it breaking up.” From the founding of the first cities some
6,000 years ago until the beginning of the industrial revolution, carbon dioxide levels in the atmosphere remained relatively constant
at about 280 parts per million (ppm). At present they are accelerating toward 400 ppm, and by 2050 they will reach 500 ppm, about
double pre-industrial levels. Unfortunately, atmospheric CO2 lasts about a century, so there is no way immediately to reduce levels,
only to slow their increase, we are thus in for significant global warming; the only debate is how much and how serous the effects
will be. As the newspaper stories quoted above show, we
are already experiencing the effects of 1-2 degree
warming in more violent storms, spread of disease, mass die offs of plants and animals, species extinction, and
threatened inundation of low-lying countries like the Pacific nation of Kiribati and the Netherlands at a warming of
5 degrees or less the Greenland and West Antarctic ice sheets could disintegrate, leading to a sea level of rise
of 20 feet that would cover North Carolina’s outer banks, swamp the southern third of Florida, and inundate Manhattan up to
the middle of Greenwich Village. Another catastrophic effect would be the collapse of the Atlantic thermohaline circulation that
keeps the winter weather in Europe far warmer than its latitude would otherwise allow. Economist William Cline once estimated the
damage to the United States alone from moderate levels of warming at 1-6 percent of GDP annually; severe warming
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could cost 13-26 percent of GDP. But the most frightening scenario is runaway greenhouse warming, based on positive
feedback from the buildup of water vapor in the atmosphere that is both caused by and causes hotter surface temperatures. Past
ice age transitions, associated with only 5-10 degree changes in average global temperatures, took place in just
decades, even though no one was then pouring ever-increasing amounts of carbon into the atmosphere.
Faced with this specter, the best one can conclude is that “humankind’s continuing enhancement of the natural greenhouse effect is
akin to playing Russian roulette with the earth’s climate and humanity’s life support system. At worst, says physics professor Marty
Hoffert of New York University, “we’re just going to burn everything up; we’re going to heat the atmosphere to the temperature it
was in the Cretaceous when there were crocodiles at the poles, and then everything will collapse.” During the Cold War, astronomer
Carl Sagan popularized a theory of nuclear winter to describe how a thermonuclear war between the Untied States and the Soviet
Union would not only destroy both countries but possible end life on this planet. Global
warming is the post-Cold War era’s
equivalent of nuclear winter at least as serious and considerably better supported scientifically. Over the long run it
puts dangers from terrorism and traditional military challenges to shame. It is a threat not only to the security
and prosperity to the United States, but potentially to the continued existence of life on this planet.
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AT- NAFTA Bad
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Big Business
Free trade offers everyone access to a wider market.
Lopez, expert in public policy and economics at Duke University, 9
[Jackie, Spring 2009, Duke University, “The Campaign Against NAFTA: An Irrational Attack on
Free Trade”, Accessed 6/29/13, http://econ.duke.edu/uploads/assets/dje/2009/Lopez.pdf, ML]
A wide variety of advocacy groups claimed that NAFTA represented the advancement of ¶
corporate interests at the expense of ordinary Americans. The five arguments above all refute ¶
this statement. In reality, free trade raises per capita wages as well as the overall standard of ¶
living. It also allows Americans access to a wider market that offers diversity in goods and
lower ¶ prices. Free trade helps the nation as a whole, not just powerful companies
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Economic Growth
NAFTA good- spurs economic growth for members.
IIE, research institution, 10
[Institute for International Economics, 11/27/10, “Recommendations for North American
Economic Integration, Accessed 6/27/13,
http://www.piie.com/publications/chapters_preview/332/09iie3349.pdf, ML)
NAFTA is unique among US free trade agreements. It involves two of¶ America's largest trading partners—
countries that share long land bor-¶ ders with the United States. Geography gives NAFTA enormous
regional¶ coherence, while presenting the opportunity and challenge of closer ties ¶ that are
advantageous to all three parties.¶ As this volume has documented, NAFTA has succeeded in
advancing¶ economic integration in North America, In some dimensions, it has sur-¶ passed
expectations. North American trade has increased much more¶ rapidly than forecast by most
economic models. Liberalization in the auto¶ sector has sparked a movement toward
specialization, with productivity¶ improving in all three countries. Direct investment in
Mexico has been ro-¶ bust. Trade disputes have been well managed, albeit with a few notable¶
exceptions.
Free trade boosts economic growth through competitiveness and innovation.
Eiras, Economic Policy Analyst for Latin America, 4
[Ana I., 5/24/04, The Heritage Foundation, “Why America Needs to Support Free Trade”,
Accessed 6/29/13, http://www.heritage.org/research/reports/2004/05/why-america-needs-tosupport-free-trade, ML]
Free trade, however, is good for America, and for a very simple reason: It allows American
workers to specialize in goods and services that they produce more efficiently than the rest of
the world and then to exchange them for goods and services that other countries produce at
higher quality and lower cost.¶ Specialization and free trade allow the U.S. to become more
competitive and innovative. Innovation constantly provides new technologies that allow
Americans to produce more, cure more diseases, pollute less, improve education, and choose
from a greater range of investment opportunities. The resulting economic growth generates
better-paying jobs, higher standards of living, and a greater appreciation of the benefits of
living in a peaceful society.¶ New technologies bring about change, which, as U.S. economic
history shows, benefits society as a whole. In the process, however, some sectors suffer until
they can adapt to the new changes and begin to benefit from them. Today, Americans are
experiencing some of that "suffering" because new technologies are challenging old methods of
production.¶ This change is especially visible in the manufacturing sector, just as it was in the
agricultural sector 100 years ago. But in the same way that it adapted then to a new, more
industry-based society, America will adapt again to a new, more knowledge-based society.¶ The
Bush Administration should support free trade by all means at its disposal. Keeping America
free of protectionism and special favors helps to generate opportunities and fosters economic
growth. Economic growth is of particular importance today because eliminating the large
federal budget deficit requires either growth to generate tax revenues or something even
harder to come by--the political will to cut spending.¶ To promote economic growth, the
Administration should advance more free trade agreements and lead negotiations at the World
Trade Organization to eliminate agricultural subsidies, antidumping measures, and other
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protectionist policies that benefit a very small group of Americans at the expense of most
other citizens. In addition, instead of threatening to impose barriers against inexpensive
imports, the Administration should lower the tax and regulatory burden on U.S. companies so
that they can be more competitive. Moving toward greater, not less, economic freedom benefits
all Americans.
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Environment
Under NAFTA environmental laws will be more strongly enforced and industry
will be relocated from Mexico City- boosts the environment
Krugman, Professor of Economics at MIT, 93
[Paul, November 1993, Foreign Affairs, “The Uncomfortable Truth about NAFTA;
It's Foreign Policy, Stupid”,
http://www.lexisnexis.com/hottopics/lnacademic/?verb=sr&csi=7984&sr=HLEAD(The+Uncomfo
rtable+Truth+about+NAFTA%3A+It's+Foreign+Policy%2C+Stupid)%2BAND%2BDATE%2BIS%2B19
93, Accessed 7/8/13, ML]
Aside from job fears, the most effective argument against NAFTA has been the claim that the
agreement will hurt the environment because industry will move south to take advantage of lax
Mexican environmental laws and, especially, enforcement of those laws. And there is no
question that a Mexican factory typically does more damage to the environment than its U.S.
counterpart.¶ But that is the wrong comparison. Since NAFTA will not lead to a shift of jobs from
the United States to Mexico (or vice versa), the relevant question is not whether the Mexican
factories that will emerge under NAFTA will be less friendly to the environment than equivalent
U.S. plants, but whether they will do more damage than the factories in which Mexican workers
would otherwise have been employed.¶ This is not a question with an obvious answer, but
there are at least two reasons to think that on balance NAFTA will be good for Mexico's
environment.¶ One reason is simply that the United States has made the environment an issue,
and as a result Mexico will enforce its environmental laws more strictly than it otherwise
would have. Despite this fact, Mexican factories will still look pretty bad compared with those in
the United States, but that is irrelevant. The point is that they will be cleaner than they would
otherwise have been.¶ A more surprising environmental benefit of NAFTA will be the
relocation of Mexican industry. Before 1980 Mexican industrialization, focused on its own
domestic market, was largely concentrated in and around Mexico City. Anyone who has been
there knows why that presents an environmental problem of literally breathtaking proportions.
By contrast, the new export-oriented factories built since Mexico began to follow its new,
export-oriented policies are mostly in the north of the country. They may not be models of
green production, but at least they are not in the middle of an enclosed valley, a mile above
sea level, with 20 million residents.
NAFTA stimulates demand for environmental standards.
Lopez, expert in public policy and economics at Duke University, 9
[Jackie, Spring 2009, Duke University, “The Campaign Against NAFTA: An Irrational Attack on
Free Trade”, Accessed 6/29/13, http://econ.duke.edu/uploads/assets/dje/2009/Lopez.pdf, ML]
Many opponents of NAFTA argued that the treaty would cause irreparable damage to our ¶
environment. However, this argument has no basis. Data shows no correlation between open ¶
trade policies and environmental damage. Environmental problems stem from a lack of
property ¶ rights and abuse of the commons. Environmental policies, not trade policies should
address these ¶ issues. ¶ Trade does increase industrial production which leads to more industrial
pollution. ¶ However, it also increases productivity and prosperity. Clean air is a luxury that poor
nations ¶ find themselves unable to afford. The best way to stimulate demand for cleaner air
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and a cleaner ¶ environment remains increasing national wealth. A trade agreement such as
NAFTA has the ¶ ability to raise prosperity, helping Mexico to find resources to improve their
environmental ¶ standards. In this way, if NAFTA has any environmental effect it is to create
stricter ¶ environmental regulations in Mexico. In Free Trade Under Fire, Irwin analyzes the
environmental argument directly in the ¶ context of the NAFTA debate. He claims that the
argument that industries will race to Mexico to ¶ take advantage of lax environmental standards
completely lacks empirical basis. He explains, ¶ “There is no ' race to the bottom' in
environmental standards because the costs of abating ¶ pollution are not a significant
determinant of industries location, and consequently not a ¶ significant determinant of trade
flows.” Further, before NAFTA, Mexico enjoyed a comparative ¶ advantage in unskilled-labor
intensive goods. Therefore, free trade could in fact force dirtier, ¶ capital-intensive industries to
contract in the face of US and Canadian competition ( Irwin, 58).
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Illegal Immigration
Increased standards of living diminish desire for illegal immigration.
Lopez, expert in public policy and economics at Duke University, 9
[Jackie, Spring 2009, Duke University, “The Campaign Against NAFTA: An Irrational Attack on
Free Trade”, Accessed 6/29/13, http://econ.duke.edu/uploads/assets/dje/2009/Lopez.pdf, ML]
Many opponents of NAFTA also argued that the trade agreement would increase the flow 13¶ of
goods, adding to border confusion. The more open trade policies and increased volume of ¶
trade would then have the effect of increasing illegal immigration. However, these opponents ¶
miss a crucial point. Open trade increases the standard of living in both countries. As the ¶
standard of living in a country rises the desire to leave that country declines. Further, any
border ¶ control issues remain separate from trade policy issues. Government should use
border control ¶ legislation to fix those problems not protectionist trade policies.
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Other Industries
Alternate industries will adapt and improve- Industrial Revolution proves.
Eiras, Economic Policy Analyst for Latin America, 4
[Ana I., 5/24/04, The Heritage Foundation, “Why America Needs to Support Free Trade”,
Accessed 6/29/13, http://www.heritage.org/research/reports/2004/05/why-america-needs-tosupport-free-trade, ML]
America as a whole is better off with free trade; but with new technologies evolving
continuously at home and abroad, open economies are constantly challenged to change the
way they do business. In the process of adapting to change, some sectors suffer until they can
adapt to the new changes and begin to benefit from them. For example, during the Industrial
Revolution, workers in the agricultural sector had to adapt to the "new industrial economy,"
competing with machines that could do the same work more efficiently. Eventually, the
agricultural workers trained themselves to use machinery and seized the opportunity to be
part of the new industrial economy.
Gonzaga Debate Institute 2013
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Rural Farming
NAFTA helps rural Mexican farmers- accesses a larger US export market
Porter, Economic Policy columnist at the NY Times, 8
[Eduardo, 2/11/08, The New York Times, “Nafta Is a Sweet Deal, So Why Are They So Sour?”,
http://www.nytimes.com/2008/02/11/opinion/11mon4.html?_r=2&, Accessed 7/8/13, ML]
But despite their shared fears, the two sides of this divide will be affected by Nafta in very
different ways. American sugar barons are right to be afraid. Free trade in sugar within North
America will allow cheaper Mexican sugar to flood in, undercutting the government system of
sugar supports, which guarantees farmers high prices and costs consumers about $1.5 billion a
year. Mexico’s rural poor, even if they don’t believe it now, are likely to come out ahead.¶
Mexican farmers fear that a flood of cheap agricultural imports from the United States will take
away their meager livelihoods, and end a centuries-old way of life revolving around small-scale
farming of corn. Nafta has already shaken up Mexican farming — mostly for the better. The
value of agricultural imports from the United States has doubled since 1994, when tariffs started
to gradually decline. Imports of corn have more than doubled by volume.¶ But this isn’t
displacing Mexico’s small-scale farmers. Most corn from the United States is used for feed and
doesn’t compete with white corn farmed in Mexico. Mexican corn production is about a third
higher than before Nafta came into effect. And cheap American corn is providing cheap feed
to Mexico’s livestock farmers.¶ Mexico confronts a daunting challenge in dealing with rural
poverty. One in five Mexicans depends on agriculture, and of those, a third live in extreme
poverty. But farming corn on tiny plots will not provide the solution.¶ The Mexican government
must revamp its own system of supports that now favors mainly big farmers, and provide small
farmers with access to credit and know-how. Rural Mexico needs investment to increase yields
and move out of corn and into more lucrative crops that are better suited to the country’s arid
and mountainous terrain. And Nafta will help, providing a market for Mexican agricultural
exports.¶ America’s sugar barons have been pressing hard to stop the opening of Nafta’s sugar
trade. They first cut a deal with Mexico’s sugar barons that would have created a new system
limiting trade in sugar and other sweeteners — a direct refutation of Nafta’s spirit and rules.
Last week, the sugar lobby announced that it was dropping that idea. Yet the sugar support
system is still in place in the United States — which means the government may have to start
picking up the tab — and the fight isn’t over.¶ Opening up the sugar trade with Mexico will be
good news for Americans: it will lead to lower sugar prices for everybody, from confectionary
manufacturers to regular consumers. And Nafta will be good news for Mexico’s consumers and
many of its farmers.¶ The political fight in Mexico isn’t over either. While the government will
have to help some of its farmers adapt to a more competitive world, its main agricultural
challenge is to keep food prices low to feed a growing urban population. It will also need to help
more rural Mexicans find jobs outside agriculture. On all these fronts, Nafta is likely to help.
Gonzaga Debate Institute 2013
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U.S. Job Loss
Alt causes to jobs- business cycles, market policies.
Lopez, expert in public policy and economics at Duke University, 9
[Jackie, Spring 2009, Duke University, “The Campaign Against NAFTA: An Irrational Attack on
Free Trade”, Accessed 6/29/13, http://econ.duke.edu/uploads/assets/dje/2009/Lopez.pdf, ML]
NAFTA will cause a “giant sucking sound” of jobs being pulled out of the country: ¶ Ross Perot,
unions and advocacy groups all claimed the treaty would cause massive US ¶ job loss. This
represents a very common misconception about free trade. Free trade increases 11¶
competition and forces some industries out of business, leading to some job loss. However, free
¶ trade also allows new industries to form and others to expand their production. This process
of ¶ expansion and formation creates jobs. Notably then, free trade both cuts and creates
employment ¶ opportunities. Further, the trend with free trade is the loss of low wage jobs and
the expansion of ¶ higher wage employment. ¶ Despite this balance of loss and creation, this
argument proves largely irrelevant. Trade ¶ policy alone does not determine the net number
of jobs. The total net jobs in the economy ¶ depends on much bigger factors such as the
business cycle, number of workers and labor market ¶ policies. The most important effect of
trade remains the creation of more productive ¶ employment that in turn raises the standard of
living and prosperity of workers. Empirical ¶ evidence proves this negligible effect of trade on
unemployment rates. Data from the Council of ¶ Economic Advisors shows that from 1950 to
2000 higher ratios of imports of goods and services ¶ ( increased trade) as a percentage of GDP
do not correlate to higher unemployment rates. If ¶ anything, since the 1980s unemployment fell
as imports rose ( Irwin 96). The graph below ¶ illustrates the relative data from the Council and
gives a visual representation of this evidence.
Gonzaga Debate Institute 2013
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Wage Decline
Perception of Mexican growth decreases gap between northern neighbors.
Pastor, Director of the Center for North American Studies, Vice President of International
Affairs, Professor of International Relations at American University, 8
[Robert, January 2008, Office of International Affairs American University, “The Solution to
North America’s Triple Problem: The case for a North American Investment Fund”, Accessed
6/27/13, http://www.american.edu/sis/cnas/upload/triple_problem_pastor.pdf)
The formula both for narrowing the development gap and creating a genuine ¶ partnership in
North America is defined as “a community of interests,” in which all three ¶ contribute in their
respective ways. How will the United States and Canada benefit from ¶ such a program? In the
short term, Canadian and U.S. companies will have new ¶ opportunities to build the
infrastructure in Mexico. For every dollar of growth in the ¶ Mexican economy, trade with the
U.S. and Canada will increase by about 40 cents. If ¶ Mexico’s growth rate increases from 3
percent to 6 percent, that means $20 billion more ¶ 8¶ For a superb analysis of the tax issue, see
Ramirez de la O, 2004, p. 9. 16¶ 16¶ for the economy and $8 billion more in trade with its two
neighbors in the one year. ¶ Compounded annually for a decade, that will not only contribute
to Mexico’s ¶ development but to North America’s. ¶ This will not affect undocumented
migration in the short-term but it is the only ¶ solution in the long-term. It will take decades
to close the gap but, if Mexico begins to ¶ grow faster than its northern neighbors, this will
affect the perceptions of people in all ¶ three countries. Mexicans might begin to believe in
their country’s future and, instead of ¶ calculating ways to cross the border, they might invest
in their region.
Bridging the US-Mexico wage gap key to stronger Mexican wage levels.
Shurtleff, policy analyst with the National Center for Policy Analysis, 8
[D. Sean, 1/18/08, National Center for Policy Analysis, “Economic Freedom and Economic
Growth in Mexico”, Accessed 6/28/13, http://www.ncpa.org/pub/ba605]
Over the last 25 years, the wage gap between Mexico and the United States has grown
progressively wider, making U.S. jobs increasingly attractive. This is a major reason for the
increasing influx of immigrants from Mexico to the United States. As the figure shows, after
adjusting for inflation:¶ America's real gross domestic product (GDP) per capita grew from
roughly $21,700 in 1980 to $36,100 in 2004, while Mexico's rose only slightly from $7,200 to
almost $8,200.¶ Wage rates closely track per capita GDP; this means that average pay in
America rose from being 3.0 times higher than Mexico's in 1980 to nearly 4.5 times higher in
2004.¶ Wage levels are determined by the growth of a country's economy and population.
Although Mexico's population has grown faster than the United States', most of the increasing
disparity is due to faster economic growth in the United States.
Productivity correlates with higher wages.
Lopez, expert in public policy and economics at Duke University, 9
[Jackie, Spring 2009, Duke University, “The Campaign Against NAFTA: An Irrational Attack on
Free Trade”, Accessed 6/29/13, http://econ.duke.edu/uploads/assets/dje/2009/Lopez.pdf, ML]
Gonzaga Debate Institute 2013
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NAFTA, and in particular trade with Mexico, will lower wages and depress the ¶ standard of living
in America: ¶ Free international trade actually has the opposite effect. Both wages and the
standard of ¶ living in a nation positively correlate to its productivity level. Trade directly raises
productivity ¶ and therefore raises wages and the standard of living as well. Free trade
increases productivity ¶ in two main ways. First, it facilitates the importation of foreign
technologies that enhance ¶ productivity. Second, it increases competition which works to
remove the least productive ¶ producers and forces those that remain to adopt the most
productive processes available. The ¶ acknowledgment of this trend goes all the way back to
19th century economist John Stuart Mill 8¶ who spoke of, “ the tendency of every extension of
the market to improve the processes of ¶ production. A country which produces for a larger
marker than its own can introduce a more ¶ extended division of labour, can make greater use of
machinery, and is more likely to make ¶ inventions and improvements in the processes of
production”(Mill 351).¶
Foreign Trade Raises Wages in Mexico with No Tradeoff to US Wages
Baldwin and Robert-Nicoud, Professors of International Economics at the
Graduate Institute, Geneva, 07
(Richard, Frederic, March 2007, National Bureau of Economics Research, “OFFSHORING:
GENERAL EQUILIBRIUM EFFECTS ON WAGES, PRODUCTION AND TRADE”, 6-26-13, ABS)
One interesting special case is where the coordination costs for all tasks are zero (all χ’s are unity). In this
case, all tasks are offshored and Home’s superior technology completely displaces Foreign
technology (all Foreign labourers work in the offshoring sector). The outcome is exactly like a technology transfer from
Home to Foreign that brings the Foreign economy to the technology frontier. In this extreme case, Home wages are
unchanged (controlling for terms of trade effects) but Foreign wages rise to Home levels. This tells us that
the wage-offshoring relationship is thus non-monotonic. A modest lowering of coordination
costs produces offshoring that raises advanced-nation real incomes (as per Proposition 1), but a very
large reduction could return them to the pre-offshoring level, while raising the backward
nation’s factor prices to those of the
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*Hegemony Advantage*
Gonzaga Debate Institute 2013
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UQ- Manufacturing Low
Despite minor periods of growth, US manufacturing is low now
Philips, associate editor for Bloomberg Businessweek, 7/1/13
[Matthew, 7/1/13, Bloomberg Businessweek Global Economics, “US Manufacturing is Still Weak,
but it’s Better Than China’s”, http://www.businessweek.com/articles/2013-07-01/u-dot-s-dotmanufacturing-is-still-weak-but-its-better-than-china, Accessed 7/7/13, ML]
U.S. manufacturing activity grew ever so slightly last month, with the June Institute for Supply
Management Purchasing Manager’s Index notching up a small gain to 50.9. (The PMI is
considered the best indicator of manufacturing activity. Anything above 50 indicates growth.)
Manufacturing activity has now expanded in five of the first six months of 2013.¶ While June’s
PMI is the best number since March, there are plenty of weak spots.¶ Most notable,
manufacturing employment fell to 48.7, its first contraction since September 2009. That could
spell trouble for Friday’s June payrolls number. Manufacturing employment has diverged from
broader private-sector job growth since 2011. After leading the economy out of the recession in
2009 and 2010, creating more than 500,000 jobs along the way, manufacturing employment
has essentially turned into a headwind. For more than a year, the number of people employed
by manufacturers has basically been flat. Since March, manufacturers have shed 17,000 jobs.
Modest growth keeps US manufacturing prospects low
AFP, French cooperative news agency, 7/2/13
[Agence France-Presse, 7/2/13, Rappler, “US manufacturing rebounds in June but still weak”,
http://www.rappler.com/business/economy-watch/32696-us-manufacturing-rebounds-in-junebut-still-weak, Accessed 7/7/13, ML]
US manufacturing activity rebounded in June from a contraction in May, but remained
lackluster, according to a closely watched report released Monday (Tuesday, July 2 in Manila).¶
The Institute for Supply Management (ISM) said its purchasing managers index for
manufacturing rose to 50.9 in June, up 1.9 points from May's contraction-territory level of 49.¶ A
PMI reading above 50 indicates expansion, while one below reflects contraction.¶ Of the 18
manufacturing industries surveyed, 12 reported growth.¶ "Comments from the panel generally
indicate slow growth and improving business conditions," said Bradley Holcomb, chair of the
survey committee.¶ Manufacturing grew for all but one month in the first half of 2013, according
to ISM data.¶ The June rebound was stronger than the 50.5 reading expected by analysts but at
just above 50 indicated continuing weakness in the manufacturing sector, which has been
bleeding jobs amid a feeble economic recovery.¶ "The manufacturing sector is recording such
modest growth that surveys cannot tell the difference from stagnation," said Michael
Montgomery of IHS Global Insight.¶ The PMI index on new orders jumped by 3.1 percentage
points to 51.9, and the production index surged 4.8 points to 53.4.¶ But in a grim look at
manufacturing job prospects, the employment index contracted for the first time since
September 2009, by 1.4 points to 48.7.¶ "Slow growth continues to choke the recovery. We are
not out of the woods yet by any stretch of the imagination," a chemicals industry
representative told ISM.
Gonzaga Debate Institute 2013
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US manufacturing growth has stalled despite government stimulus
Tonelson, Research Fellow at the US Business & Industrial Council Educational
Foundation, 7/1/13
[Alan, 7/1/13, Bloomberg, “Why Celebrate a False U.S. Manufacturing Renaissance?”,
http://www.bloomberg.com/news/2013-07-01/why-celebrate-a-false-u-s-manufacturingrenaissance-.html, Accessed 7/7/13, ML]
The repeated claims that U.S. manufacturing is enjoying, or is on the verge of, a renaissance
have been undermined again. The latest reality checks were provided by official statistics on
manufacturing output.¶ The Commerce Department’s first report on domestic industry’s fullyear 2012 performance showed an impressive increase in U.S. manufacturers’ output. Yet the
figures released June 6 were hardly profound, even by the standards of the previous decade,
which no one considered a golden age for U.S. industry.¶ President Barack Obama and other
proponents of a manufacturing renaissance got even more bad news June 14, when the
Federal Reserve’s industrial-production data for May showed that the sector’s rebound from
the recession had just about stalled. Manufacturing output remains smaller than when the
last recession began in 2007, despite the huge government stimulus since then.¶ U.S.
manufacturing’s 6.2 percent inflation-adjusted growth in 2012 was much faster than the 2.5
percent growth of the economy as a whole, and considerably faster than manufacturing’s 2.5
percent real expansion in 2011. Even so, we are nowhere near a renaissance. In 2010, early in
the current recovery, the sector recorded real growth of 6.9 percent; it showed an 8.2 percent
expansion in 2004, and grew 6.4 percent in 2000.¶ Slowing Momentum¶ Moreover, not only has
U.S. manufacturing previously surpassed the 2012 number, it doesn’t appear that it will stay at
these levels. According to the Fed’s May report, industry’s real year-on-year growth rate is
about 2.4 percent, the worst showing since the recession ended in June 2009. And the
momentum has slowed since January.¶ It’s true that manufacturing growth has outpaced the
overall economy during the recovery. Doesn’t that reverse a longtime trend? In particular,
doesn’t that relative strength signal progress toward Obama’s worthy goal of creating an
economy “built to last,” one based on producing and earning, instead of borrowing and
spending?¶ The data don’t support this optimistic reading, either. Manufacturing’s robust
growth last year did raise its percentage of inflation-adjusted total economic output to 12.5
percent. That’s a big change from its nadir of 11.5 percent in 2009. But this improvement is only
a return to levels that industry reached regularly during the previous bubble decade, when
manufacturing is widely thought to have atrophied in relative terms largely in response to the
financial sector’s bloat.¶ In fact, the new statistics -- along with the latest monthly results from
regional Fed banks and private-sector surveys -- show that the manufacturing-renaissance
skeptics have been right all along. Industry’s recent surge is a direct result of the magnitude of
this highly cyclical sector’s recessionary decline. From the recession’s onset in 2007 through its
bottom in 2009, domestic manufacturing output fell almost 15 percent after inflation. Overall
output fell, too, but only by 3.9 percent.¶ Since 2009, real manufacturing production has
rebounded by 16.4 percent, more than twice as fast as the 6.4 percent growth for the entire
economy. Nonetheless, domestic industry still hadn’t quite regained its pre-recession peak by
the end of 2012. The full economy, meanwhile, had erased all of its real gross-domestic-product
losses by 2011.¶ The new data aren’t the only reason to doubt the renaissance claims. Job
creation in the sector has turned negative in the past three months, and the pace of recovery
in manufacturing has been less than one-third as fast as the overall employment recovery. The
manufacturing trade deficit set a record of $686 billion (in pre-inflation terms -- the only official
data available) in 2012 and is headed toward another record high this year.
Gonzaga Debate Institute 2013
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US manufacturing’s stagnant.
Gardner, part of a team that won a Pulitzer Prise July 5, 2013.
(Greg, MBA from Wayne State and undergrad degree in economics, part of a team that won a
Pulitzer Prize for coverage of Sir James Goldsmith’s attempted takeover of Goodyear Tire and
Rubber Co. Detroit Free Press: A Gannett Company. “Economy added 195,000 jobs in June, but
manufacturing employment fell.”
http://www.freep.com/article/20130705/BUSINESS07/307050121/economy-jobs-junemanufacturing, [Accessed 7/6/13], JB).
U.S. manufacturing employment fell by 6,000 in June while service industries hiring part-time
workers accounted for the majority of a better-than-expected creation of 195,000 nonfarm jobs
last month.
Automakers and some parts suppliers added about 5,100 jobs, but that was more than offset
by losses in manufacturing of other goods, according to the U.S. Labor Department’s Bureau of
Labor Statistics. The national unemployment rate remained at 7.6%.
A robust housing market helped drive growth of 13,000 construction jobs. But the bulk of the
new jobs — 75,000 — came in leisure and hospitality, a sign that more consumers are optimistic
enough to travel and take vacations than in recent years. The other big job-generating
categories were business and professional services (up 53,000) and retail trade (up 37,100).
“There is a decline in public investment in construction, roads, bridges and the like, which all
create demand for materials and manufactured goods,” said Scott Paul, president of the Alliance
for American Manufacturing. “The other disturbing trend is the drop in exports. You add that
together and you have a very stagnant picture for manufacturing.”
While investors welcomed the Friday report, along with upward revisions of jobs created in April
and May, there were 322,000 people who took part-time jobs for economic reasons, and a
240,000-job drop in the number of people employed 35 hours or more each week.
“That may reflect these reports we’ve read about that a lot of employers are looking for parttime people to avoid the costs of the new health care law,” said Donald Grimes, a University of
Michigan economist. “I can’t prove it, but that’s consistent with the anecdotal evidence of what
businesses are doing.”
Earlier this week the Obama administration delayed for one year a provision of the Affordable
Care Act that would have mandated all businesses with more than 50 employees offer health
care coverage for their workers by Jan. 1, 2014.
Grimes said that manufacturing is not adding jobs now because it was one of the few sectors
that added jobs between 2011 and 2012 when the broader economy struggled to gain traction.
But AAM’s Paul disagreed.
“Over the last 12 months, it’s been basically zero job growth in manufacturing,” Paul said. “For
a while we had an export advantage because the dollar was reasonably valued. But that has
disappeared as Europe remains weak and the Japanese yen has fallen.”
Manufacturing low- that kills the economy
Shapiro, Business Writer at the Huffington Post, 11,
(Lila. 9/7/11. Huffington Post. “U.S. Manufacturing, Once Recovery's Leader, Edges Back To
Decline,” http://www.huffingtonpost.com/2011/09/08/us-manufacturing-jobs-recoverydecline_n_952983.html, [Accessed 7/6/13], JB).
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In January, manufacturing was praised by economists as the "shining star" in the economy's
slow creep out of the Great Recession. In 2010, for the first year in more than a decade, U.S.
manufacturing created more jobs than it eliminated, with the auto industry leading the way.
Manufacturing -- and the good jobs it provided -- was coming back, and the revival, experts
forecast, would lead the way toward robust economic revival.
But the last several months have seen that promise begin to drain away. In August, the
manufacturing sector shed 3,000 jobs, according to the Bureau of Labor Statistics' monthly
employment snapshot -- the first net loss in almost a year. Additionally, new orders -- generally
the best predictor of future growth -- shrank in July and August, according to the Institute for
Supply Management's "Report On Business."
"I don't see any reasons to be optimistic that we're going to be creating manufacturing jobs as
fast as we saw the first four months of this year and last year," said Scott Paul, executive
director of the Alliance for American Manufacturing, a pro-labor research and advocacy
organization. "This is very unfortunate because manufacturing in many ways was playing an
outsized role in the recovery, and I don't think that's the case anymore."
Economists say the manufacturing sector often gives the initial spark to recovery during hard
times. Unlike jobs in the retail sector, which has also been growing, manufacturing jobs offer
higher wages and benefits, which provide additional stimulus to the economy.
Although manufacturing has been on a long-term decline, experts say the causes of the recent
slowdown are more acute: declining consumer spending, a slowing gross domestic product
and growing fears among business owners that the United States may slip back into another
recession.
"What we're looking at now is not the long-term story of manufacturing jobs. What we're
looking at is the economic crisis and what the financial crisis has done to us," said Suzanne
Berger, an MIT professor who chaired a recent panel on the future of American manufacturing.
"The decline in confidence about the economy has really been significant, and that is the story
of the last six months."
Businesses hire when they see demand going up. And the current economic climate -- both
nationally and globally -- does not suggest that demand will be increasing any time soon.
Manufacturing Declining
Bloomburg May 15, 2013
Shobhana Chandra, reporter. “Production Falls as U.S. Feels Global Weakness: Economy,”
http://www.bloomberg.com/news/2013-05-15/industrial-production-in-u-s-declines-by-mostin-eight-months.html. [Accessed 7/6/13], JB).
Industrial production declined in April by the most in eight months, indicating American
manufacturers will provide little support for an economy beset by weaker global markets and
federal budget cuts.
The larger-than-forecast 0.5 percent decrease in output at factories, mines and utilities
followed a revised 0.3 percent gain that was weaker than first reported, Federal Reserve
figures showed today in Washington. An increase in homebuilder optimism indicated housing
remains the economy’s bright spot.
Gonzaga Debate Institute 2013
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UQ- Competitiveness Low
US competitiveness declining from lack of infrastructure at the border
Lee, Associate Director at the North American Center for Transborder Studies,
and Wilson, Associate at the Mexico Institute of the Woodrow Wilson
International Center for Scholars, 12
[Erik and Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The State
of Trade, Competitiveness and Economic Well-Being in the US-Mexico Border Region,” Accessed
7/10/13, ML]
Commerce between the United States and Mexico is one of the great—yet underappreciated—¶
success stories of the global economy. In fact, in 2011 U.S.-Mexico goods and services trade ¶
probably reached the major milestone of one-half trillion dollars with virtually no recognition.1¶
The United States is Mexico’s top trading partner, and Mexico—which has gained¶
macroeconomic stability and expanded its middle class over the last two decades—is the ¶
United States’second largest export market and third largest trading partner. Seventy percent
¶ of bilateral commerce crosses the border via trucks, meaning the border region is literally ¶
where “the rubber hits the road” for bilateral relations. This also means that not only California
¶ and Baja California, but also Michigan and Michoacán, all have a major stake in efficient and ¶
secure border management.¶ Unfortunately, the infrastructure and capacity of the ports of
entry to process goods and ¶ individuals entering the United States has not kept pace with the
expansion of bilateral trade or ¶ the population growth of the border region. Instead, the
need for greater border security ¶ following the terrorist attacks of 9/11 led to a thickening of
the border, dividing the twin cities ¶ that characterize the region and adding costly, long and
unpredictable wait times for ¶ commercial and personal crossers alike. Congestion acts as a
drag on the competitiveness of ¶ the region and of the United States and Mexico in their
entirety. Solutions are needed that ¶ strengthen both border security and efficiency at the same
time. The development of the 21st¶ Century Border initiative by the Obama and Calderón
administrations has yielded some ¶ advances in this direction, but the efforts need to be
redoubled.
US competitiveness declining now
Lavelle, Associate Editor for Bloomberg Businessweek, 5/15,13
[Louis, Bloomberg Businessweek, “HBS to U.S.: Competitiveness Continues to Erode”,
http://www.businessweek.com/articles/2013-05-15/hbs-to-u-dot-s-dot-competitivenesscontinues-to-erode, Accessed 7/9/13, ML]
More than 200 leaders are gathering in Boston today to hear a sobering message courtesy of
Harvard Business School: U.S. competitiveness is on the decline, and reversing the trend will
require a herculean effort.¶ HBS professors Michael Porter and Jan Rivkin will present details of
the latest survey of nearly 7,000 HBS alumni who—by a more than two-to-one margin—foresee
a decline in U.S. competitiveness in coming years. Unsustainable federal spending, high tax
rates, deteriorating infrastructure, a subpar K-12 education system, and immigration hurdles
for high-skill workers were just some of the problems cited in the research authored by Porter,
Gonzaga Debate Institute 2013
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Rivkin, and HBS professor Rosabeth Moss Kanter.¶ “We know many of the steps that
government and business must take to allow firms in the U.S. to win in the global marketplace
while lifting the living standards of the average American,” the researchers wrote in their report.
“If U.S. competitiveness continues to wane, we will have only ourselves to blame.”
US competitiveness declining-global trends prove
Lounsbury, publisher of GEI, 12
[John, 9/6/12, Global Economic Intersection, “US Competitiveness Declines”,
http://econintersect.com/b2evolution/blog1.php/2012/09/06/u-s-competitiveness-declines,
Accessed 7/9/13, ML]
The U.S. slipped to seventh place in the ranking of economic competitiveness in the 2012
ranking published by the WEF (World Economic Forum). Last year the U.S. ranked fifth. The
current result marked the fourth year of decline for the country that used to rule the
competitiveness roost. The Global Competitiveness Report 2012-2013 assesses the
competitiveness landscape of 144 economies, providing insight into the drivers of their
productivity and prosperity. For the fourth year in a row Switzerland topped the list. Six of the
top ten countries are in Europe, three in Asia and one in the Americas.¶ Follow up:¶ The U.S.
ranks behind sixth place Germany and just ahead of the UK, Hong Kong and Japan which round
out the top ten. Hong Kong was new to the top ten, up from #11 last year. Denmark fell from
the top ten, #8 in 2011 to #12 this year. Some other placements are Canada (14), Australia (20),
France (21), China (29), Turkey (43), Brazil (48) and India (59). The summary discussion for the
U.S. from the report (emphasis added by Econintersect):¶ The United States continues the
decline that began a few years ago, falling two more positions to take 7th place this year.
Although many structural features continue to make its economy extremely productive, a
number of escalating and unaddressed weaknesses have lowered the US ranking in recent
years. US companies are highly sophisticated and innovative, supported by an excellent
university system that collaborates admirably with the business sector in R&D. Combined with
flexible labor markets and the scale opportunities afforded by the sheer size of its domestic
economy—the largest in the world by far—these qualities continue to make the United States
very competitive.¶ On the other hand, some weaknesses in particular areas have deepened since
past assessments. The business community continues to be critical toward public and private
institutions (41st). In particular, its trust in politicians is not strong (54th), perhaps not
surprising in light of recent political disputes that threaten to push the country back into
recession through automatic spending cuts. Business leaders also remain concerned about the
government’s ability to maintain arms-length relationships with the private sector (59th), and
consider that the government spends its resources relatively wastefully (76th). A lack of
macroeconomic stability continues to be the country’s greatest area of weakness (111th,
down from 90th last year). On a more positive note, measures of financial market development
continue to indicate a recovery, improving from 31st two years ago to 16th this year in that
pillar, thanks to the rapid intervention that forced the deleveraging of the banking system from
its toxic assets following the financial crisis.
US competitiveness declining- reversal of current trends requires infrastructure
investment
Slaughter, Business Professor at Dartmouth College, 11
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[Matthew, Spring 2011, Tuck School of Business at Dartmouth College, “Building
Competitiveness: American Jobs, American Infrastructure, American Global Competitiveness”,
http://www.ofii.org/docs/OFII_Infrastructure_Paper.pdf, Accessed 7/9/13, ML]
SECOND, the magnitude of recovery still needed ¶ in the U.S. labor market remains sobering.¶
About 25 million Americans—about one in six in ¶ the entire labor force—remain unemployed or
¶ under-employed. Today’s 108.6 million privatesector jobs is the same number America had
nearly ¶ 12 years ago, in June 1999. And the last¶ time America had just 11.7 million
manufacturing jobs, like we do today, was in¶ April of 1941. All forecasts are that it will¶ take
several years of economic growth for¶ the American labor market to fully recover.¶ THIRD, and
most fundamentally, the World Financial¶ Crisis and Great Recession did not eliminate the¶
reality that today the United States is in a new era of¶ global competition to attract, retain,
and grow the¶ dynamic jobs of globally engaged companies. Long¶ before the Crisis, dozens
of other countries were making¶ dramatic improvements in the policies and overall ¶
economic environment that attract the world’s leading¶ companies. These improvements
have not been simply¶ a matter of tax abatements and other financial subsidies.¶ Rather, these
improvements have been widespread,¶ together redefining where in the world firms can create¶
high-paying jobs based on innovation, capital ¶ investment, and export activity.¶ Indeed, the
Crisis and Recession have expanded America’s¶ competitiveness challenge because so many
dynamic¶ emerging economies have sustained high growth rates in¶ recent years. While
America’s GDP fell by 2.6% in 2009,¶ GDP in India grew by 5.7% and in China by 9.1%--rates that¶
accelerated to about 10% in 2010. The International¶ Monetary Fund calculates that 2010 GDP
growth averaged¶ 7.1% for all emerging and developing economies. The challenge facing
America today is not just building an economic¶ recovery. It is building an economic recovery
that also¶ advances America’s global competitiveness. A globally ¶ competitive America must
fundamentally mean the success of American workers: success in creating globally competitive,
high-productivity, good-paying jobs by all companies¶ operating in America. American workers
and their families¶ need dynamic jobs with rising earnings and thus rising standards of living.¶
Historically, rising U.S. standards of living have been driven¶ by successful companies becoming
more productive—i.e.,¶ raising their output per worker by creating new products¶ and processes.
Nobel laureate in economics Paul Krugman¶ describes the importance of productivity thus:¶
Productivity isn’t everything, but in the long run it is¶ almost everything. A country’s ability to
improve its¶ standard of living over time depends almost entirely on¶ its ability to raise its output
per worker… Compared with¶ the problem of slow productivity growth, all our other¶ long-term
economic concerns … are minor issues. Or¶ more accurately, they matter only to the extent that
they¶ have an impact on our productivity growth.1¶ The competitive success of the United States
over much of¶ the 20th century was based on extended periods of strong¶ productivity growth
and resulting growth in average earnings. For example, in the post World War II generation of¶
1948 to 1973, annual growth of productivity in the non-farm¶ business sector averaged 2.8%. It
then slowed dramatically,¶ averaging just half that rate for the generation from 1973 to¶ 1995.
The low productivity of this generation brought many¶ economic and political challenges, such as
poor real and relative earnings growth for many Americans. Productivity¶ growth and earnings
rebounded in the late 1990s and early¶ 2000s, but slowed again in the years leading up to the¶
Crisis and Recession.¶ HISTORICALLY, ONE OF THE KEY FOUNDATIONS OF AMERICA’S
COMPETITIVE SUCCESS HAS BEEN INFRASTRUCTURE. U.S. airports, bridges,¶ electrical grid,
ports, railroads, roads, and water systems¶ have long facilitated the flow of people, goods,
and ideas¶ that has built American jobs and rising standards of living.¶ A large body of
research has documented the many economic benefits America has derived from building
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and¶ maintaining its infrastructure. A recent report from the¶ U.S. Treasury and Council of
Economic Advisers summarized the evidence as follows.¶ Many studies have found evidence of
large privatesector productivity gains from public infrastructure¶ investments, in many cases
with higher returns than ¶ private capital investment. Research has shown that¶ well designed
infrastructure investments can raise ¶ economic growth, productivity, and land values, while¶
also providing significant positive spillovers to areas¶ such as economic development, energy
efficiency, public¶ health, and manufacturing.2¶ Today there is much uncertainty about the
global competition facing American workers. Can America re-create a¶ dynamic environment
creating millions of high-productivity, high-wage jobs? It can. But achieving this critical goal¶ will
require an expansive vision in terms of both companies and policies.
Perfect storm coming- Eroding transportation infrastructure at the border can’t
keep up with congestion, destroys competitiveness.
Blank, Professor of International Management at the Lubin School of Business,
Pace University, et al 08
(Stephen, Senior Research Analyst at Arizona State University’s North American Center for
Transborder Studies, Adjunct Research Scholar, Center for Energy, Marine Transport and Public
Policy at Columbia University; and Senior Fellow, Centre for International Governance
Innovation in Waterloo, Ontario. He is Co-Chair of the North American Transportation
Competitiveness Research Council, Stephanie R. Golob, Associate Professor of Political Science
at Baruch College and the CUNY Graduate Center, Guy Stanley, McGill University, Dec 18, 2008,
“A North American Transportation Infrastructure Strategy,” p. 13, http://www.gatewaycorridor.com/roundconfpapers/documents/Blank_Golob_Stanley_Winnipeg.pdf , JB)
3. Public policy and regulatory barriers to effective adaptation of the t ransportation system
Many transportation specialists in industry and in the research com munity believe that a
"perfect storm" is beginning to build that puts our freight transportation system at serious risk
and endangers North America’s competitiveness. The transportation infrastructure upon
which all of this depends is becoming growth limiting.
By the early 2000s, it was becoming clear that the increase in volumes of goods flowing across
North America’s internal borders was outrunning the capacity of our highways, bridges,
railroads, marine and air transport infrastructure and border crossings. Today, North
America’s transportation and border infrastructure provides little margin for future
expansion. UPS CEO Mike Eskew states, “What’s shocking, quite frankly, is the inability of our
transportation infrastructure to keep up with the normal day -- to - day stresses imposed upon
it. Our highways, waterways, railroads and aviation network are simply not keeping up with
ordinary demands.” 20
A report from the Brookings Institute earlier this year sums up the situation:
“Because the ability to compete and thrive in the emerging global economy now depends on
the strengths of a nation’s freight system, this dynamic situation generates one crucial
question: Can U.S. infrastructure handle the volumes and adequately extract economic value
from goods movement? ... The congestion and delays in the U.S. freight system in 2004 would
indicate that U.S. freight infrastructure is in crisis despite massive investment in certain
elements” 21
Observers point to three forces that are working together to erode the quality of the system
and with it the competitive advantage the transportation system provides.
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UQ- China Crowd Out
America is Losing Influence In Mexico and China is Moving in to Fill the Power
Vacuum
Santibañesa, Department of War Studies, King's College, 9
(Francisco De, 10 Feb 2009, Sage Publications, “An End to U.S. Hegemony? The Strategic
Implications of China's Growing Presence in Latin America”, Volume 28, Issue 1, 6-27-13, ABS)
The American influence, however, was not limited to security matters. Latin American nations also received
investments from U.S. companies, while their governments acquired, on a regular basis, credits from financial
institutions in which Washington was the main shareholder. Even more, access to the consumer market of the
United States fueled the growth of many economies, including those of Mexico and Brazil, while the
dollar became the currency of choice both for individuals and central banks to save their assets. Naturally, all these links
made Latin Americans vulnerable to foreign pressure. Then, the collapse of the socialism, as the only
alternative to capitalism, created the conditions for the economic reforms of the 1990s. The Washington consensus—as the sum of
these policies were call—promoted free trade and the reception of investments from the developed world. From then on, decisions
taken by the Federal Reserve Board could reduce, just in a few hours, the flow of short-term capital to the region and threaten the
stability of entire countries. These transformations strengthened U.S.–Latin American relations even more. But now
the status
quo seems to be changing. China's increasing demand for commodities is promoting the
economic growth of many Latin American nations, especially those situated at its Southern Cone, making
them less dependent of the Americans. The People's Republic of China (PRC) is, as a matter of fact,
becoming a more important trade partner for some of these economies than the U.S. is today,
while the political and military links between the continent and China have also gained
momentum, as the number of visits paid by Chinese political and military officials shows.
Unchecked, China Presence is Mexico Will Disrupt American Hegemony
Santibañesa, Department of War Studies, King's College, 9
(Francisco De, 10 Feb 2009, Sage Publications, “An End to U.S. Hegemony? The Strategic
Implications of China's Growing Presence in Latin America”, Volume 28, Issue 1, 6-27-13, ABS)
The presence of China in the Western Hemisphere might, indeed, be seeding the field for a series of political
alliances that, once unleashed, would endanger American security. As a result of the reduction in Washington's
involvement in the region, disputes among Latin American states have grown dramatically. If this trend continues, some
nations might be tempted to change their loyalties from the Americans to the Chinese in
search of the financial and military resources they might need to strengthen their positions.
This scenario would allow the PRC to counterbalance the American presence in Northeast Asia
by having its own allies in the Western Hemisphere. Actually, we might be moving toward a continent divided
into two camps: a northern region that will remain under the economic and political control of the United States and a Southern
Cone more inclined to join China's sphere of influence. Whether this will happen will depend, to a great degree, on the willingness
American policymakers to implement a coherent and active policy toward their hemisphere.
Chinese Influence in Mexico could crowd out US as regional Hegemon
Menenzez, economist and principal of Cordoba Group International LLC, 13,
(Fernando, China-US Focus- Published by the published by the China-United States Exchange
Foundation, a Hong Kong non-profit, “The Counterbalance in America’s Backyard,”
http://www.chinausfocus.com/foreign-policy/the-counterbalance-in-americas-backyard-2/.
[Accessed 6/25/13] JB).
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From the perspective of Latin America’s foreign policy makers, China is undeniably a welcome
economic, and potentially political, counterbalance to the U.S., especially given the objectives
of some Latin American countries. Writing in the Guardian on October 2, 2012, journalist Raúl
Zibecki cites one of Brazil’s top diplomats, Samuel Pinheiro Guimares, explaining:
“… Brazil’s strategy sought to prevent the ‘removal’ of Chávez through a coup, to block the
reincorporation of Venezuela into the North American economy, to extend Mercosur with the
inclusion of Bolivia and Ecuador and to hinder the U.S. project to consolidate the Pacific Alliance,
which includes Chile, Colombia, Mexico and Peru.”
Despite its preoccupation with the Middle East and its recent economic troubles, the U.S.
remains a predominant actor in the region, and only the presence of a country capable of
projecting superior economic and political power could significantly shift the balance of forces
away from the current hegemon. Moreover, unlike the former Soviet Union – once described as
a third world country with nuclear weapons – China has the economic resources to create an
alternative locus of financing, trade and development.
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UQ- Reshoring Now
Businesses looking to reshore to Mexico now—US and China costs are too high
Weitzman, writer for the Financial Times, 12
[Hal, June 3, 2012, “Mexico most popular for US ‘reshoring’”,
http://www.ft.com/cms/s/0/ec164996-ad23-11e1-bb93-00144feabdc0.html#axzz2Ykjax5n4,
accessed 7-10-13 BLE]
Mexico remains a far more popular destination than the US for “reshoring” manufacturing to
supply North American demand, according to research by a global business advisory firm. The
report, to be published on Monday by AlixPartners, could damp the hopes generated by US
cheerleaders for reshoring – where jobs previously outsourced to low-cost emerging economies
are brought back home. US job creation slowed in May, according to official data on Friday that
showed employers created 69,000 posts last month, well below average expectations of about
150,000, while the unemployment rate rose to 8.2 per cent from 8.1 per cent. Barack Obama,
US president, has cited reshoring as an example of the country’s increasing economic
competitiveness in the face of competition from emerging markets. However, the trend,
although real, may not benefit the US as much as some expect, the survey suggests. Nearly half
the manufacturers surveyed by AlixPartners said they saw reshoring as a good opportunity, but
half also said Mexico was their top choice for relocating factories designed to supply the US
market. However, that is down from 70 per cent last year. In addition, 35 per cent said the US
was the most attractive place to reshore production – up from 21 per cent last year. Some 15
per cent of respondents said they could relocate factories elsewhere in Latin America or the
Caribbean, up from 8 per cent last year. “A lot has been written of late about America’s
manufacturing rebound, and there certainly has been a very impressive rebound,” said Foster
Finley, co-head of AlixPartners’ transport practice. “However, Mexico still remains the nearshoring locale of choice for companies looking to overcome the higher costs of doing
business today in places like China.” Chas Spence, one of the report’s authors, said relatively
low wages continued to make Mexico attractive. “Despite the logistic attraction of the US, the
labour arbitrage is still a monumental hurdle for the US to overcome,” he said. “Labour costs
are such a big part of the equation.” Russell Dillion, his co-author, said Mexico was particularly
competitive in low-skill assembly work. “US workers can bring more productivity to the table, so
that shrinks the gap between the US and Mexico. But in some industries – such as auto – the
productivity and quality gap is not as large as it was two decades ago,” he said. Mr Spence noted
that Mexico had superior infrastructure to support relocating factories. “They have an entire
industry dedicated to serving a manufacturing transition,” he said. “The US doesn’t have that
to the same extent, because we’ve never really done it – reshoring is a new thing.” Of the
companies that said they were considering bringing production closer to the US, almost 90 per
cent said they were likely to relocate within three years. About half the companies surveyed
were from the automotive or aerospace industries. Respondents said the chief attraction of
relocating from Asia was lower freight costs, followed by improved speed to market and lower
inventory costs.
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Businesses reshoring to Mexico now because of wage differences—Chrysler
proves
The Economist, 13
[January 19, 2013, “Reshoring manufacturing--Coming home”,
http://www.economist.com/news/special-report/21569570-growing-number-americancompanies-are-moving-their-manufacturing-back-united, accessed 7-10-13 BLE]
One answer is to invest in other low-cost countries, of which there is no shortage. Myanmar, for
instance, is attracting interest now that the West is lifting economic sanctions. But the scale, skill
and productivity of the labour force there, and in countries such as Vietnam and Cambodia,
nowhere near matches China’s, argues Mr Sirkin. And workers in those countries, too, are
demanding better pay and rights. Mexico, which has the huge advantage of bordering the
United States, is increasingly attracting production destined for the Americas that would
formerly have gone to China. Average pay for Mexican manufacturing workers is now only
slightly higher than for Chinese ones, and the time it takes for goods to travel to North
America is measured in days not months. Some firms, such as Chrysler, a car company, are
even using Mexico as a base to supply the Chinese market. The country has become an
important production hub for the aerospace industry. But Mexico’s poor infrastructure and
highly publicised drugs-related violence may deter some firms.
Companies reshoring to Mexico now—rising costs in China
Bowman, Journalist for Supply Chain Brain, 12
[Robert J., November 26, 2012, “U.S. Celebrates Re-shoring, But Mexico Crashes the Party”,
http://www.supplychainbrain.com/content/blogs/think-tank/blog/article/font-size2uscelebrates-re-shoring-but-mexico-crashes-the-partyfont/, accessed 7-10-13 BLE]
On its way back to the U.S. from China, might manufacturing take a detour into Mexico? Does
our neighbor south of the border stand ready to quash the Great American Industrial Revival?
On paper, Mexico would seem to offer an attractive balance between low labor cost and
proximity to U.S. markets. The latest survey of senior manufacturing executives by
AlixPartners finds Mexico the top choice for re-sourcing of production that’s fleeing the rising
cost and complications of doing business in China. The U.S. garnered 35 percent of the vote,
up from 21 percent in a survey taken last year, versus Mexico’s hefty 50 percent. “The U.S.,
China and Mexico wage differential has shrunk to competitive levels,” said Michael Burns,
chief commercial officer with Pacer Transportation Solutions, Inc. But let’s not repeat the
mistake that manufacturers made when they shifted production from the U.S. to China in the
first place, and focus solely on labor cost. A number of other factors need to be taken into
account. One is the skill level of the resident labor force. Mexico’s is relatively high, Burns said
during a panel discussion at the annual meeting of the National Industrial Transportation League
in Anaheim, Calif. Other potential advantages of producing in Mexico, according to Burns: the
position of the peso against the yuan, an intermodal and rail infrastructure that has “vastly
improved” over the past decade, and “negligible” supply-chain disruptions arising from security
issues. (Maybe. We’ll get to that in a minute.) Bridgestone Corp. is a big believer in Mexico as a
place to manufacture for the North American market. In 1980, it opened a facility in Cuernavaca
for the making of light-truck and passenger-vehicle tires. Expanded in 2007, the operation now
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turns out approximately 4,000 tires a day with a workforce of 240, said Dan Vits, general
manager of transportation with Bridgestone Americas, Inc.. Between 60 and 70 percent of the
plant’s production is for the U.S. market. Bridgestone doubled down on Mexico with the
opening in 2007 of a plant in Monterrey. It averages around 8,000 high-performance tires a day,
all of which are sold in the U.S. Why Mexico? Cheap labor, naturally. Between 2003 and the end
of 2011, Vits said, the cost of U.S. manufacturing labor increased from $34.50 to $39.32 an
hour. During that same period, Mexican labor expense slid from $16.73 to $11.26. And China’s
rose from $6.90 to $11.83. Now add in the savings incurred by not having to ship finished
goods across an ocean, or keep high levels of safety stock in the event of a supply-chain
disruption thousands of miles away from end markets, and Mexico becomes an increasingly
compelling source of production.
Rising wages and lack of intellectual property protection in China incentivize
reshoring to Mexico
USA Today, 5/18/13
[5/18/13, USA Today, “Some manufacturers say 'adios' to China”,
http://www.usatoday.com/story/news/world/2013/03/18/manufacturing-mexicochina/1997883/, Accessed 7/10/13, ML]
MEXICO CITY — Robert Moser moved the manufacturing of his company's lines of cleaning
products and kitchen gadgets to China during the last decade. Now his company is moving its
manufacturing again — to Mexico.¶ "When you look at total costs, you're pretty much at parity,"
says Moser, president of Casabella, based in Congers, N.Y.¶ Companies like Casabella couldn't
move out of Mexico fast enough a decade ago, sending production to China to take advantage
of the cheaper wages and prices in a country keeping its currency artificially low.¶ But the cost
of doing business in China has been rising steadily, say companies that have returned to
Mexico. Salaries are surging there. The Chinese currency, the yuan, has risen in value, making
goods more expensive to export. Shipping costs have risen as well, making a move to Mexico
even more attractive to companies whose primary markets are in the Western hemisphere.¶
The Mexican peso this week rallied on optimism about the country's economic prospects
following an unexpected rate cut last week. The peso has risen 2.8% in 2013.¶ Recently installed
President Enrique Pena Nieto, meanwhile, has promised changes to Mexico's tax system and
reforms of its government-run energy sector to attract more outside investors and businesses
from the USA and elsewhere.¶ "Mexico is a stable country, close by, but unfortunately with
cheap wages," says Eduardo Garcia, publisher of online business journal Sentido Común.¶ Wages
were six times higher in Mexico a decade ago, but only 40% higher than those paid in China in
2011, according to a recent report by the International Monetary Fund. Mexico is part of more
than 40 free trade agreements, which tends to reduce costs further. Then there is the
weariness of doing business in China what with the midnight telephone conferences and 16hour flights to Beijing — says Ed Juline, whose Guadalajara-based company, Mexico
Representation, consults and represents manufacturers moving to Mexico.¶ "I have a dozen
projects on my plate" of companies that want to get out of China, Juline says.¶ The upswing in
manufacturing — about 20% of Mexico's GDP — is driving the Mexican economy. Mexico says it
expects its economy to expand by 3.5% in 2013.¶ It's a reversal of fortune for Mexico, which lost
manufacturing jobs to China during the last decade and watched rival Brazil boom by selling
boatloads of raw materials to the emerging Asian economy.¶ "Mexico was uncompetitive,"
Juline says.¶ But China was gaming the system against places such as Mexico, he says. Along with
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keeping its currency low, China has subsidized fixed costs to benefit its commercial activity,
which hurt Mexico, he says.¶ Meanwhile, lead times for Chinese factories are increasing and
manufacturers there are showing less interest in handling smaller orders, says Mike Rosales,
whose Los Angeles-based company, Manufacturing Marvel, makes toys and trinkets in both
China and Mexico.¶ Rosales says that shipping costs for him jumped when oil prices hit $100 a
barrel, and the lack of protection in China for industrial and intellectual property became
problematic.¶ "They would ship your product out the front and your product with someone
else's name out the back," he says.¶ Some of the merchandise being made in Mexico ranges
from figurines to flat-screen TVs, along with advanced items such as aerospace parts and
automobiles — 2.8 million of which were assembled south of the border last year.¶ Some here
say more manufacturing in Mexico benefits U.S. businesses because it offers them suppliers
on both sides of the border. Jim Raptes, custom sales manager at Deco Products, which makes
zinc castings in Decorah, Iowa, says his Mexican business has increased from 1% of total sales to
10% over the past five years, due to orders from manufacturers in Mexico.¶ Security remains a
concern in Mexico, Juline says. But he feels the violence, due largely to drug wars, has given few
companies pause about coming south.¶ Executives won't travel to Mexico, he says. "But the
Americans who do come down here secretly love it."
Potential for reshoring now—Mexico is gaining on China, border improvements
are key
Rozental, former deputy foreign minister of Mexico, et al, 12
[Andres, Margaret Myers, director of the China and Latin America program @ The Dialogue,
James R. Jones, former ambassador to Mexico, Felipe Canales, no qualifications available, 9-182012, The Dialogue, “Are Mexican Factories Gaining an Upper Hand Against China's?”, accessed
7-8-13, GSK]
Q: With the rising cost of wages in China, manufacturers are increasingly considering Mexico
an attractive location to 'reshore' production, McClatchy reported Sept. 10. Is Mexico gaining a
competitive edge over China in terms of manufacturing? Or will other low-wage countries
come to replace both China and Mexico as manufacturing destinations? What are the challenges
and benefits of moving production facilities to Mexico? Can Mexico leverage the low cost of
wages into more sustainable growth? ¶ A: Andrés Rozental, member of the Advisor board,
president of Rozental & Asociados in Mexico City and senior fellow at the Brookings Institution:
"Low wages have never been the sole determining factor for companies to decide in which
country to site manufacturing facilities; otherwise countries such as Haiti or Bangladesh would
be the manufacturing capitals of the world. Many other factors, such as availability of skilled
labor, infrastructure, certainty of rules and regulations and fairness of the justice system, all
play a significant role. True, China's wages are rising and no longer represent an overwhelming
advantage for labor-intensive industries, but salaries in Mexico and other middle-income
countries are also climbing. Studies show that the all-in cost for an average factory worker in a
Chinese industrial zone is more or less equal to a Mexican working in a maquiladora near the
U.S. border. Where Mexico does have a clear advantage over China-and this is what is driving
companies to relocate facilities to our country-is in our geographic proximity to one of the
largest consumer markets in the world, economic and political stability, ability to provide justin-time sourcing and a relatively transparent regulatory framework in which to do business. One
shouldn't forget that Mexico is fundamentally a sophisticated manufacturing economy that is
growing at a very acceptable rate when compared to other emerging market economies. While
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it is true that we depend enormously on the strength of the U.S. economy because of NAFTA
and our huge bilateral trade and investment relationship, it is equally true that Mexico, together
with Canada, will always be the first to benefit from an economic recovery in our neighbor. Tens
of thousands of companies have taken advantage of Mexico's benefits and foreign direct
investment flows continue to show robustness even in the face of the insecurity and violence
that affect parts of the country as a result of the fight against organized crime and drug
trafficking."¶ A: Margaret Myers, director of the China and Latin America program at the InterAmerican Dialogue: "China is indeed being priced out of labor-intensive manufacturing in
certain cases. Rising wages and renminbi appreciation have made production in China's famed
Pearl River Delta much more costly in recent years. Firms once dependent on cheap, low-skilled
Chinese labor are now seeking less expensive options in China's poorer inland provinces,
elsewhere in Asia (Vietnam and Bangladesh, for example) and in countries like Mexico, which
saw an upsurge in manufacturing in 2011. Mexico does appear to have gained a competitive
edge over China in manufacturing over the past two years, though specifically in that of the
low-skilled, labor-intensive variety. In addition to low wages, well-trained workers and proximity
to the United States make Mexico an attractive destination for global producers. Mexico is of
growing interest to Chinese firms, even, who seek to benefit from NAFTA-related preferential
tariffs. Despite Mexico's labor-intensive manufacturing 'comeback,' China still maintains a
competitive edge in investment-intensive, high-technology manufacturing. Furthermore, China's
decline in low-skilled manufacturing is largely attributable to national efforts to reduce
dependence on low-value-added, export-oriented production. To this end, China has major
plans to restructure and promote key industries and to further develop the country's services
sector. Sustainable growth in Mexico will require more than an upswing in labor-intensive
production. As in China, it will require policies promoting intermediate and high-value
manufacturing. It will also require efforts to further position the nation as a hub for regional
trade, as well as progress on security, infrastructure, financing and corruption-related
challenges. Mexico's manufacturing sector has a skilled workforce and geography on its side,
but additional progress will be largely policy-dependent."¶ A: James R. Jones, member of the
Advisor board and co-chair of Manatt Jones Global Strategies: "Mexico is clearly regaining its
manufacturing base that was lost to China around the turn of this century. Then it was a
question of wages as substantially lower Chinese wage rates versus Mexican labor costs
attracted auto parts, electronics and other manufacturing away from Mexico. A combination of
higher Chinese wages over the last decade, costs and timeliness of transportation and vastly
improved quality of production in Mexico is quickly reversing that trend. A dozen years ago,
China was distributing advertising pamphlets to U.S. automobile producers that substantially
undercut the costs of auto parts produced in Mexico. But it became apparent that the quality
and reliability of Mexican production were much better. While labor costs were comparable,
transportation costs gave Mexican producers an edge. Today, automobile manufacturing is one
of Mexico's fastest growing sectors. Mexico's manufacturing base is also growing in other
sectors such as aviation and electronics. This trend will continue, especially if the Canadian, U.S.
and Mexican governments find ways to improve regulatory efficiencies and border
infrastructure."
Mexico is the #1 choice for reshoring
AlixPartners, 12
[6/4/12, AlixPartners, “Mexico Continues To Be Top Choice for Manufacturing ‘Near-Shoring,’
Says AlixPartners Study
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Even as the U.S. advances significantly in attractiveness”,
http://www.alixpartners.com/en/MediaCenter/PressReleaseArchive/tabid/821/articleType/Arti
cleView/articleId/238/Mexico-Continues-To-Be-Top-Choice-for-Manufacturing-Near-ShoringSays-AlixPartners-Study.aspx, Accessed 7/10/13, ML]
Reflecting continued rising labor and other manufacturing costs for imports from faraway
places like China, “near-shoring” continues to be seen as an opportunity to serve U.S. demand
by about half of C-level and other senior executives of manufacturing-oriented companies, and
while 35% of that number view manufacturing inside the U.S. as the most attractive choice for
such re-sourcing, up from 21% in a similar survey a year ago, 50% view last year’s top choice,
Mexico, as the No. 1 choice again this year. That’s according to a survey of C-level and other
senior executives in manufacturing-oriented companies that sell into the U.S. market released
today by AlixPartners, the global business advisory firm.¶ Results from the survey also suggest
that rising domestic demand in developing countries such as China may encourage even more
near-shoring and “re-shoring” in the West in the future, as companies in China and other
developing markets redirect their capacity toward local consumption rather than export. More
than a third of the executives surveyed – 34% -- predicted that would be the case.¶ “A lot has
been written of late about America’s manufacturing rebound, and there certainly has been a
very impressive rebound; however, Mexico still remains the near-shoring locale of choice for
companies looking to overcome the higher costs of doing business today in places like China,”
said Foster Finley, managing director at AlixPartners and co-lead of the firm’s Transportation
Practice. “As manufacturing costs have increased in China and elsewhere in Asia, the cost and
time factors involved in shipping goods across vast distances are magnified and, whether it’s in
Mexico or the U.S., any company that’s not at least considering alternative manufacturing
sources closer to their home market is certainly missing an opportunity.”¶ As in last year’s
survey, lower freight costs and improved speed-to-market were the two most-cited
advantages expected from the decision to near-shore. Thirty-seven percent of executives cited
hoped-for lower freight costs, up from 34% in the 2011 survey, and 31% pointed to speed-tomarket, up from 28% a year ago. Significantly, and perhaps hand-in-hand with both of those,
26% cited lower inventory costs as the biggest expected advantage, up from 20% last year.¶
“While total cost parity certainly doesn’t exist today, the gap between manufacturing in North
America and in places like China has narrowed dramatically, especially when shipping and
inventory carrying costs are factored into the equation,” said Russ Dillion, a director at
AlixPartners. “Company leaders, at an increasing rate, are realizing that customers don’t have
the patience to wait three to four weeks for their products to cross the ocean. Today’s speed
of business usually won’t allow for that.”
Businesses are considering reshoring, but are discouraged be the US’s poor
business environment
Economist, 1/19/13
[1/19/13, The Economist, “Coming home”, http://www.economist.com/news/specialreport/21569570-growing-number-american-companies-are-moving-their-manufacturing-backunited, Accessed 7/10/13, ML]
IN 2005, A START-UP company from California called ET Water Systems decided to move its
manufacturing operations to China. At the time there was a general exodus to Asia in search of
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lower costs, recalls Mark Coopersmith, the firm’s chief executive. ET Water Systems, which
builds sophisticated irrigation devices for businesses, quickly started losing money, not least
because it had so much capital tied up in big shipments of goods which took weeks to cross the
oceans. Innovation suffered from the distance between manufacturing and design, and quality
became a problem too.¶ When five years later Mr Coopersmith investigated the difference
between the total cost of production in China and America, including the cost of shipping,
customs duties and other fees, he was amazed to find that California was only about 10% more
expensive than China. And that was just on the immediate numbers, without allowing for the
intangible benefits of making the devices almost next door. ET Water Systems’ new
manufacturing partner, General Electronics Assembly, is in San Jose. As it happens, the firm’s
owner has a Chinese background and a large portion of its employees are of South-East Asian
origin.¶ Special report¶ Here, there and everywhere¶ The story so far¶ Coming home¶ Staying put¶
Herd instinct¶ On the turn¶ The next big thing¶ Rise of the software machines¶ Shape up¶ Sources
& acknowledgments¶ Reprints¶ Related topics¶ Labour market¶ Economic indicators¶ Latin
American economy¶ Chinese economy¶ Industries¶ The number of firms known to have
“reshored” manufacturing to America is well under 100. Doubtless many more are doing so
quietly. Examples range from the tiny, such as ET Water Systems, to the enormous, such as
General Electric, which last year moved manufacturing of washing machines, fridges and heaters
back from China to a factory in Kentucky which not long ago had been expected to close. Google
has attracted a great deal of attention for deciding to make its Nexus Q, a new media streamer,
in San Jose.¶ The reshoring movement has to be kept in proportion. Most of the
multinationals involved are bringing back only some of their production destined for the
American market. Much of what they had moved over the past few decades remains
overseas. And for many of the biggest firms the amount of work that they are still sending
abroad outweighs the amount that they are bringing back onshore. Caterpillar, for example, is
opening a new factory in Texas to make excavators, but has also just announced that it will
expand its research and development activities in China.¶ According to a survey conducted by
Harvard Business School last year, many firms are still deciding against basing activities in
America. Professors Michael Porter and Jan Rivkin asked HBS alumni who were running
businesses about their choices of location and found that many of them were deciding to leave
because they thought wages abroad were lower than at home. Another important reason,
though, was to be near customers in big new markets, which this report does not see as
offshoring in the conventional sense. Messrs Porter and Rivkin argue that firms are now ready to
reconsider offshoring. They realise that in many cases they overdid it, and are discovering
hidden costs in moving production a long way from home. But, the authors argue, America’s
government is not making the country’s business environment attractive enough for
companies to want to come back.
Now is the window of opportunity- Chinese competitiveness declining
Paris Tech Review, 12
[12/20/12, Paris Tech Review, “Reshoring, Really?”,
http://www.paristechreview.com/2012/12/20/reshoring-really/, Accessed 7/10/13, ML]
These comparative advantages are significant when compared with countries with similar levels
of development. But what happens with China, where so many U.S. manufacturers have
relocated the manufacturing of their products in the 1990s?¶ A more recent BCG survey suggests
that one third of U.S. industrial CEOs (from firms with more than a billion dollar turnover)
manufacturing today in China are planning to bring their production facilities back to the
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United States or are considering to do so.¶ This is an enormous figure that needs to be
explained. Several factors come into play. First, some of the comparative advantages that
attracted these firms to China have vanished over the years: wages have increased by 15% to
20% per year while in the United States, they have stagnated. China suffers a shortage of skilled
labor, which dramatically raised the salaries of local executives.¶ Moreover, during almost thirty
years, the rural exodus has offered a very cheap workforce to companies operating in China.
New generation migrants are more demanding and less willing to be considered as secondclass citizens who can be underpaid because of their poor protection by the labor law. This is
good news for the Chinese people, but it certainly has a cost. According to the DNS Bank of
Singapore, China has managed to control its labor costs until 2006, but since 2007, wages are
increasing as fast – or faster – than productivity. Morgan Stanley estimates that rising labor
costs in China will cause an overall additional cost of 1,500 billion over the 2012-2017 period for
the industrial firms located in this country.¶ In 2005, as explained by BCG, it would cost 30% less
to manufacture in China than in developed countries. By 2013, this gap will be reduced to
16%. With such a small gap – and it may very likely shrink to naught – risks of offshoring the
production facilities will appear increasingly greater and more dissuasive: the rising price of oil,
which adds endless transport costs; delivery times, too long for short-cycle products; difficulties
in the coordination of teams located remotely; quality issues and non-compliance of the final
product and the negative impact on the corporate image; corporate espionage and copycatting;
import taxes and quotas. Not to mention other factors, foreseeable or not, that affect the
decision of managers and investors: risks for intellectual property, piracy, natural disasters like
the tsunami in Japan and floods in Thailand – the long list of accidents that may occur along the
supply chain when it comes to crossing oceans.¶ A last factor can be pointed: the rise of “mass
customization”: an increasing number of products are manufactured only when ordered – i.e.
manufactured once the client has chosen his or her specifications. In this business model, it may
be useful to get closer to the domestic market and minimize delivery times.¶ It is also
recommended for companies that are often launching new products with short life-cycles. The
Spanish fashion brand Zara never relocated its production to China and for analysts, this
decision largely explains its outstanding success: it was able to capture – copy, according to
forked tongues – trends in an extremely reactive way, by adapting its products faster than any
competitors. In clothing, furniture, household appliances, where you must constantly renew
products, reducing the time gap between design, production and distribution of products has
become a major competitive edge and reshoring is sometimes the easiest way to regain
control.¶ It is only when considering all of these factors that one can truly evaluate the pros and
cons of reshoring industrial activities. Surely, the movement is underway. But what will be the
next move?
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I/L- Integration
Economic cooperation enhances competitiveness and creates jobs and growth.
Wilson, Associate at the Mexico Institute of the Woodrow Wilson International Center for
Scholars, former Mexico Analyst for the US Military, former consultant with the Mexico Institute
on US-Mexico economic relations, 11
(Christopher, November 2011, Woodrow Wilson International Center for Scholars, “Working
Together: Economic Ties Between the United States and Mexico”, Accessed 6/25/13,
http://www.wilsoncenter.org/sites/default/files/Working%20Together%20Full%20Document.pd
f, ML)
The Mexico Institute is pleased to present its newest publication, Working Together: Economic
Ties between the United States and Mexico. The report looks at the ways in which regional
economic cooperation can enhance competitiveness, stimulate growth and create jobs.¶
Mexico already buys more U.S. products than any other nation except Canada, but more than
just an export market, Mexico and the United States are partners in manufacturing. Through a
process known as production sharing, the two countries actually work together to build
products. Imports from Mexico are therefore unlike imports from any extra-continental
partner in the way they support U.S. jobs and exports. A full 40% of the content in U.S. imports
from Mexico is actually produced in the United States (See page 17 of the report). This means
that forty cents of every dollar spent on imports from Mexico comes back to the U.S., a
quantity ten times greater than the four cents returning for each dollar paid on Chinese
imports.¶ There is no doubt that the economies of the United States and Mexico are facing
serious challenges. While some of the risk is due to external pressures, whether increasing
competition from Asia or fears of crisis in Europe, much of the solution lies in strengthening
regional competitiveness. The path forward, then, must be based in a clear understanding
that the United States and Mexico are ultimately partners rather than competitors.¶
Investment: U.S. investment in Mexico has grown nearly six-fold since NAFTA was put in place,
but the story of Mexico’s burgeoning investments in the United States is less understood.
Though still a fraction of the size of U.S. investment in Mexico, Mexican companies have
increased their FDI holdings in the U.S. from $1.2 billion in 1993 to $12.6 billion in 2010. The
report explores the U.S. investments and job creation of some of Mexico’s largest companies,
including Cemex, Bimbo, América Móvil, Lala, Gruma, and others.
Integration solves US competitiveness
Pastor, Director, Center for North American Studies, vice-president for
international affairs, and professor, School
of International Service, The American University, Washington, D.C , 13
[Robert A, 03/13, “Shortcut to US Economic Competitiveness: A Seamless North American
Market,” http://www.cfr.org/north-america/shortcut-us-economic-competitiveness-seamlessnorth-american-market/p30132, accessed 06/25/13, LV]
There is no better path to stimulate the U.S. economy, increase U.S. competitiveness, and
bolster U.S. influence in emerging markets in Asia and Europe than by deepening integration
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with Canada and Mexico. The three countries already trade more than $1 trillion in goods and services each year. A small
but vocal group in the United States opposes any further integration, but by and large the public supports freer trade in North
America. Leadership is
needed from President Barack Obama, the U.S. business community, and
border states and communities. Mexico's new president has already expressed support for
bolder initiatives to integrate the continent. Canada is more reluctant, but would not want to be left
out if there was clear leadership from its neighbors. The place to start is the next North American Leaders
Summit, which Mexico will host this year. The three leaders should articulate a clear vision and pledge to create a single continental
market of mostly harmonized regulations in which nearly all products, produce, and services would transit borders without
impediment.
Loss of Mexico Poses Biggest Threat to US Security and Global Hegemony
Santibañesa, Department of War Studies, King's College, 9
(Francisco De, 10 Feb 2009, Sage Publications, “An End to U.S. Hegemony? The Strategic
Implications of China's Growing Presence in Latin America”, Volume 28, Issue 1, 6-27-13, ABS)
The most difficult region for U.S.–Chinese relations is Asia. The first objective of China in its
search for security is to become the hegemon force of Northeast Asia, and this is making its
neighbors feel threatened. A sign of this phenomenon is that the U.S., Taiwan, and Australia all have taken steps to
strength their military alliances and balance, in this way, China's raising power. 9 Nevertheless, and however well calculated these
steps might be, there
is always the danger that growing misconceptions and misperceptions about
the nature of the actions states are taking might create high levels of uncertainty, and that
this will ultimately result in a conflict. An action that might be defensive in its nature, such as China's construction of
a large submarine fleet, might, for example, be perceived by Taiwan as an offensive move that can start a war that was not wished
by anyone. 10 But a
conflict between China and the U.S. might not be limited to Asia or the Middle
East and could, eventually, reach Latin America. In fact, perceiving itself as a victim of the system of
alliances created by Washington in Northeast Asia, Beijing might try to do the same in the
Western Hemisphere by selecting a key ally to disrupt America's regional hegemony. Authors such
as John Mearsheimer, have mentioned Mexico, Brazil, and Argentina as three states that, in the future, might be
able to balance U.S. power.
US-Mexican integration is vital to maintain US competitiveness—border
improvements are key and current investments don’t solve
Wilson, associate at the Mexico Institute of the Woodrow Wilson International
Center for Scholars in Washington, 12
[Christopher, 6-26, Issues in Science and Technology, “U.S. Competitiveness: The Mexican
Connection”, http://www.issues.org/28.4/p_wilson.html, accessed 6-28-13, GSK]
A “giant sucking sound” was the memorable description made by presidential candidate Ross Perot during the 1992 campaign of the
impact that the North American Free Trade Agreement (NAFTA) would have, as businesses and jobs moved from the United States
to Mexico. The reity is that economic
cooperation with Mexico has been a boon for U.S. industry and
has strengthened the country’s competitive position in ways that have produced broad economic
benefits. Today, as China and other Asian countries have emerged as major economic
challengers, expanding economic cooperation with Mexico is one of the best ways for the
United States to improve its global competitiveness.¶ Regional integration between the United States and Mexico is
already vast and deep. As the United States’ second largest export market and third largest trading partner, Mexico is clearly
important to the U.S. economy. Merchandise ade has more than quintupled since NAFTA went into effect in 1994, and in 2011,
bilateral goods and services trade reached approximately a half-trillion dollars for the first time. The U.S. Chamber of Commerce has
calculated that the jobs of six million American workers depend on U.S.-Mexico trade. Many of those jobs are in border states, which
have especially close ties to Mexico, but Mexico is also the top buyer of exports from states as far away as New Hampshire (mostly
computers and electronics). In fact, 20 states, from Michigan to Florida, sell more than a billion dollars’ worth of goods to Mexico
each year, and Mexico is the first or second most important export market for 21 states.¶ The United States and Mexico are also
major investors in one another. In fact, combined foreign direct investment holdings now total more than $100 billion. According to
the most recent count by the Department of Commerce, U.S.-owned companies operating in Mexico created $25 billion in value
added and employed nearly a million workers. Mexican investment in the United States is less than U.S. investment in Mexico, but it
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is has been growing rapidly in recent years. Several of Mexico’s top companies, which are increasingly global operations, have made
significant investments in the United States. Mexico’s Cemex, for example, is North America’s largest maker of cement and concrete
products. Grupo Bimbo, which owns well-known brands such as Entenmanns’s, Thomas’s English Muffins, and Sara Lee, is the largest
baked goods company in the Americas. Even Saks Fifth Avenue and the New York Times Company are supported by significant
Mexican investment.¶ The massive volume of commerce and investment is important, but the
depth of regional
integration is the primary reason why Mexico contributes to U.S. competitiveness. Mexico and
the United States do not just trade products, they build them together. In fact, to understand regional trade,
it is necessary to view imports and exports in a different light. Whereas imports from most of
the world are what they appear to be—foreign products—the same cannot be said of imports
from Mexico. During production, materials and parts often cross the southwest border numerous times
while U.S. and Mexican factories each perform the parts of the manufacturing process they
can do most competitively. Because of the complementary nature of the two economies, close
geographic proximity, and NAFTA, which eliminated most tariff barriers to regional trade, the U.S. and Mexican
manufacturing sectors are deeply integrated.¶ Demonstrating this integration is the fact that 40% of the value of
U.S. imports from Mexico comes from materials and parts produced in the United States. This means that 40 cents of every
dollar the United States spends on Mexican goods actually supports U.S. firms. The only other major trading
partner that comes close to this amount is Canada, the United States’ other NAFTA partner, with 25% U.S. content. Chinese imports,
on the other hand, have an average of only 4% U.S. content, meaning that the purchase of imports from China does not have the
same positive impact on U.S. manufacturers.¶ The regional auto industry is a good example of this production-sharing phenomenon.
The United States, Mexico, and Canada each produce and assemble auto parts, sending them back and forth as they work together
to build cars and trucks. Cars built in North America are said to have their parts cross the United States borders eight times as they
are being produced, and between 80 and 90% of the U.S. auto industry trade with its North American partners is intra-industry, both
of which signal an extremely high level of vertical specialization. As a result, Detroit exports more goods to Mexico than any other
U.S. city, and the North American auto industry has proven much more resilient than many expected. Although several of North
America’s largest automakers nearly collapsed during the financial crisis in 2008 and 2009, a robust recovery is now under way.
Mexico and the United States have each experienced the sharpest rise in vehicle production of the world’s top 10 auto producers
during the past two years, growing 51 and 72%, respectively, between 2009 and 2011.¶ From competitors to partners¶ The United
States and Mexico once worked relatively independently to manufacture goods and export them, but now they work together to
produce goods that are sold on the global market. With their economies so intimately linked, the United States and Mexico now
experience the cycle of growth and recession together. If they ever were economic competitors, it is clear that they have now
become partners that will largely sink or swim together. Because
they are in the same boat, the United States and
Mexico should develop a joint strategy to increase regional competitiveness vis-à-vis the rest
of the world.¶ The groundwork is already laid, and several recent trends are in North America’s
favor. To begin with, Mexico and the United States are among the most open economies in the world. Through their extensive
networks of free trade agreements, the two countries have tariff-free access to more than 50 countries, including the large
economies of the European Union and Japan. This presents a tremendous opportunity for jointly produced goods to be exported
around the world, something that could create jobs and improve the trade balance of the United States. The key, of course, is
getting costs sufficiently low and productivity sufficiently high that North American goods are competitive with their European and
Asian competitors.¶ Labor
costs in China are rising while oil prices are increasing transportation
costs, and new advanced manufacturing techniques are making labor an ever-smaller portion of the total cost of making a
product. These factors have led to what the Economist recently called the boomerang effect: Some
companies that chased cheap wages in China in the previous two decades have reconsidered their decision to
move production offshore. Some are now more interested in either increasing production in
Mexico or moving it back to the United States.¶ What is amazing is that North America is recovering its
competitiveness without much of a strategy. Imagine how much more could be done if
policymakers fully understood and took advantage of this opportunity. Instead of simply enjoying the moderate
recovery of the manufacturing sector, the United States, Mexico and Canada should work as partners to develop policies that could
lead to a real resurgence of the region.¶ Without a doubt, each country must address a number of domestic challenges. Many, such
as education and fiscal reform, are needed in Mexico and the United States. Mexico also needs to strengthen the rule of law,
increase competition, and improve productivity in the energy sector, and the United States needs to revamp its immigration system
so that it can continue to attract the most motivated and talented individuals to contribute to its economy. The regional policy
options outlined below go hand in hand with these domestic efforts, and together they have the power to truly revitalize the
regional economy.¶ Policy for a competitive region¶ The border. With an integrated regional manufacturing sector, the
same
goods cross the U.S.-Mexico border several times as they are being produced. Consequently,
the effects of any barriers to trade, tariff or nontariff, are multiplied by the number of border crossings
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that take place during production. In the NAFTA region, tariffs are not a significant trade barrier, but the importance of
having efficient border management and customs procedures is difficult to overstate.¶ After NAFTA took effect and trade barriers
fell, bilateral trade skyrocketed, more than tripling by 2000. But after the terrorist attacks of 9/11, a new approach to
homeland security led to a “thickening” of the border. Trade and passenger travel ground to a near
halt. Although trade has been moving since then, the new security concerns have meant that there was never a return
to the status quo. Between 2000 and 2010, legal entries of commercial trucks into the United States at the southern border
dropped by 41%. Since then, several studies have attempted to estimate the cost of increased border
wait times on the regional economy, particularly of border communities. The results are varied, but there is
widespread agreement that border-related congestion has had a multibillion-dollar effect on
the U.S. and Mexican economies.¶ Seeking to mitigate these costs, the U.S. and Mexican governments
developed the 21st Century Border initiative, which is based largely on the idea that neither security nor efficiency
has to be sacrificed to improve the other. By expediting the flow of safe and legal border crossers and cargo, officials can focus more
of their attention on seeking dangerous people and goods. This is the concept behind the trusted traveler (SENTRI) and trusted
shipper (FAST and C-TPAT) programs in place at the Mexican border. Frequent border crossers prove they are low risk by undergoing
an extensive background check and interview process. In return, they get to use special lanes to quickly cross the border.¶ There
is no silver bullet in border management, but these programs are the closest thing . They make the
border safer while lessening the need for building more vehicle lanes at entry ports and increasing the number of border staff.
They should be expanded and vigorously promoted. Where they are in place, the United States should work
with Mexican officials to ensure that use of the dedicated express lanes significantly reduces waiting times, so that there is an
incentive to join the programs.¶ Moderate
infrastructure investments are also needed, because although trade
has quintupled, relatively few entry ports have seen any major upgrades or expansions. Public/private
partnerships are an important mechanism to bring needed funding to the border area, and the Department of Homeland Security
should work with Congress to create secure and appropriate mechanisms to encourage their use, if it determines that the current
legal environment excessively limits such use. Such partnerships have been successful in some areas, but many border communities
and businesses would be willing to commit more resources to facilitate travel and commerce.
US-Mexican trade relations boost jobs, innovation, competitiveness and
exports—now is the critical time
Kaufman, Staff Writer for IIP Digital (US Dept. of State), 13
[Stephen, 1-23, IIP Digital, “U.S. Seeking Deeper Trade Relationship with Mexico”,
http://iipdigital.usembassy.gov/st/english/article/2013/01/20130123141355.html#axzz2XGQXo
7ra, accessed 6-25-13, GSK]
Washington — U.S. Assistant Secretary of State for Economic and Business Affairs Jose
Fernandez says the United States endorses Mexican President Enrique Peña Nieto’s call for
increased economic integration in North America and that more bilateral partnership will
increase the business competitiveness of the continent on the global stage.¶ Speaking January
18 at the Washington Foreign Press Center, Fernandez said he is leading a U.S. delegation to
Mexico during the week of January 21 to find ways the United States and Mexico can expand
what he said is already a “broad and deep economic relationship” between the two countries.¶
“We will explore how we can support the government of Mexico’s ... efforts to improve
economic competitiveness, how we can enhance business-to-business ties, how we can
promote innovation, and how we can enhance cooperation in areas like transportation,
infrastructure and trade,” Fernandez said.¶ In 2012, bilateral trade levels reached $460 billion,
or about $1.25 billion per day, and Fernandez said Mexico is the second-largest U.S. export
market and its third-largest source of imports, as well as its third-largest supplier of energy. He
added that trade levels have quadrupled since the North American Free Trade Agreement
(NAFTA) between Mexico, Canada and the United States came into force in 1994.¶ All three
countries are also participating in the Trans-Pacific Partnership (TPP) and can use each other’s
supply chains to export goods to the other eight participating TPP countries, he said.¶ With
Latin America, and Mexico in particular, “we are at a unique point in our relationship,” and
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Fernandez said it is “a moment of opportunity” to increase economic integration among
NAFTA partners in order to make NAFTA “much more competitive on a global basis.”¶ U.S.
officials “very much endorse … President Peña Nieto’s call to make economic, trade, investment
issues real core components of a bilateral relationship,” he said.¶ Through trade relations,
Mexican and U.S. companies have integrated many products by combining components from
both countries in the assembly of products, adding value, and selling the finished goods to each
other.¶ “This is a partnership where we make things together. We are partners in an integrated
enterprise whose fortunes depend on the successful collaboration with one another,”
Fernandez said.¶ U.S.-Mexico trade must be based upon mutual advantage in order to serve as
the basis for a lasting relationship, with both governments working together to create mutual
advantages and jobs for their citizens, he said.¶ “Trade creates jobs, and if we can make it easier
for countries to trade, if we can make it easier for countries to invest, if we can make it easier
for countries to produce goods that have competitive advantages with other parts, other
regions of the world, we will help both countries,” Fernandez said.
US-Mexican trade boosts competitiveness and growth—border efficiency is key
Levey, writer for the International Trade Administration’s office of public
affairs, 07
[David, May, “Increasing U.S.–Mexico Competitiveness: The Way Forward”, International Trade
Administration, http://trade.gov/press/publications/newsletters/ita_0507/mexico_0507.asp,
accessed 6-25-13, GSK]
In 2006, the United States was Mexico’s largest trading partner. For the United States, trade
with Mexico is larger than trade with all of South America, Central America, and the Caribbean
combined (with enough left over to also include all trade with India). Put another way, U.S.
trade with Mexico today is as large as our trade with the entire world 30 years ago.¶ Growth and
Competition¶ Although there is much to celebrate in the trade and economic progress between
the two countries that has been made in recent years, Lavin remarked during his visit that
competition from other regions of the world continues unabated. Neither Mexico nor the
United States can be satisfied with what they have accomplished so far.¶ Speaking at the
American Chamber of Commerce in Mexico City on May 8, 2007, Lavin noted, “Mexico’s middle
class has grown significantly since the North American Free Trade Agreement [NAFTA] was put
into force, with nearly 10 million households—40 percent of the population—part of the middle
class today. More Mexicans own their own homes today than ever before, a sign that a vibrant
domestic consumer market for imported goods is being created. Indeed, Mexico today is the
second-largest export market for the U.S.Ҧ This growth is due, in large part, to a dramatically
improved business environment in Mexico. In a recent report, Doing Business 2007: How to
Reform, the World Bank ranks Mexico as one of the world’s top three economic reformers
among the 175 countries it measured. According to the report, Mexico jumped more than 20
rankings, and it now ranks favorably with economies such as Spain and Taiwan. This change is
quite an improvement from 20, 10, or even 5 years ago.¶ Factory Visit Highlights Challenges¶
According to the World Bank, one of the regions that is most open for business is the central
Mexican state of Querétaro, which is located about 120 miles north of Mexico City. Lavin visited
the city of Querétaro on May 9, 2007, touring a state-of-the-art glass making facility for
Guardian Industries. In a speech to Querétaro’s business leaders, Lavin remarked that the
United States has to improve border crossings, to update trucking rules, to enact immigration
reform, and to extend the benefits of free trade to other nations in the Western Hemisphere.
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Passage of the pending free trade agreements already negotiated with Colombia, Panama, and
Peru is also an important priority for the Bush administration.
US-Mexican trade vital to US economic recovery and competitiveness—
infrastructure investment is key
Camuñez, Assistant Secretary for ITA’s Market Access and Compliance, 11
[Michael, 10-31, US Dept. of Commerce, “Trading Across the Border – The United States and
Mexico’s $1 Billion per Day Relationship”, http://www.commerce.gov/blog/2011/10/31/tradingacross-border-%E2%80%93-united-states-and-mexico%E2%80%99s-1-billion-day-relationship,
accessed 6-26-13, GSK]
Two-way trade between the United States and Mexico amounts to more than $1 billion a day.
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.
Remarkably, even our imports from Mexico support U.S. jobs—64% of the content of the
Mexican goods we import include U.S. inputs. The continued growth of this relationship is
vital to the America’s economic recovery. ¶ And that is exactly why I went to the border—to
discuss how infrastructure investments and improvements in customs procedures can
facilitate increased trade.¶ To emphasize the need for a shared approach, I asked Juan Carlos
Baker, Director General of Mexico’s Secretariat of Economy, to join me. Together, we met with
many of the principal exporters on both sides of the border—maquiladora executives
representing the Mexican private sector and U.S. small and medium sized business owners who
comprise the maquiladoras’ supply chain. We had excellent discussions with both groups and
received useful feedback, which we will incorporate into our respective government’s efforts to
grow trade along our southern border.¶ ¶ We also visited The Bridge of the Americas, one of the
busiest ports of entry on the entire U.S.-Mexico border where we were briefed by senior U.S.
Customs and Border Protection officials regarding the challenges of advancing our dual
interests: security and commerce. We communicated industry concerns and gained useful
information that will inform our efforts on behalf of our respective private sectors.¶ Along the
way, we also discussed some of the untapped potential of the border region, particularly that in
renewable energy. I spoke at the U.S.-Mexico Border Energy Forum Plenary Session, where I
offered insight into Commerce’s efforts to develop this sector.¶ What is most important is that
we not lose sight of the importance of the U.S.-Mexico border to the U.S. economy and to our
global competitiveness. We share much more than a border with Mexico. Our societies and
cultures are inextricably linked—I should know, my family came from Mexico generations ago
and settled in the border region, right near El Paso. Those ties present an enormous
opportunity from which we must not be distracted.
Strong US-Mexican economic cooperation key to offset declining US influence
Mares, professor of political science at UC San Diego, and Canovas, professor at
El Colegio de México, 09+
[David R. and Gustavo Vega, “The U.S.-Mexico Relationship: Towards a New Era?”,
http://usmex.ucsd.edu/assets/024/11646.pdf, accessed 6-26-13, GSK]
The U.S. needs to develop a strategy to deal with its continued movement out of
manufacturing enterprises, a falling dollar, the economic rise of China, growing demands on
energy that result in price increases, and the violent backlash against globalization which
targets the U.S. as its chief promoter. The U.S. undoubtedly still retains sufficient advantages
to bungle its way through the short term but an adjustment that will sustain the country’s
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standard of living over the medium term will require important decisions concerning the
relative incentives facing investors and the social infrastructure undergirding the development
of human capital. The US has to rationalize its demand for energy in order to stay on the cutting
edge of industrial technology and to divert national income from purchasing ever increasing
quantities of oil and gas towards investing in the nation’s productivity. ¶ In this revised national
strategy Mexico and Canada will play important roles. The US must remember that NAFTA not
only helped to prevent negative shocks from spreading to the US border states but also made
Mexico an important contributor to US economic well being. A similar response at the present
time can assist both countries in surmounting their domestic crises while helping the Mexican
government to win its battle against organized crime.
Regional integration increases US competitiveness vis a vis china.
WILSON , associate at Mexico Instutute, Woodrow Wilson Center, 2012
( CHRISTOPHER, Summer 2012, Issues in Science and Technology Online, Publication of National
Academy of Sciences, National Academy of Engineering, Insitute of Medicine, University of Texas
at Dallas, “U.S. Competitiveness: The Mexican Connection,”
http://www.issues.org/28.4/p_wilson.html, [Accessed 6/26/13], JB).
A “giant sucking sound” was the memorable description made by presidential candidate Ross
Perot during the 1992 campaign of the impact that the North American Free Trade Agreement
(NAFTA) would have, as businesses and jobs moved from the United States to Mexico. The reity
is that economic cooperation with Mexico has been a boon for U.S. industry and has
strengthened the country’s competitive position in ways that have produced broad economic
benefits. Today, as China and other Asian countries have emerged as major economic
challengers, expanding economic cooperation with Mexico is one of the best ways for the
United States to improve its global competitiveness.
Regional integration between the United States and Mexico is already vast and deep. As the
United States’ second largest export market and third largest trading partner, Mexico is clearly
important to the U.S. economy. Merchandise ade has more than quintupled since NAFTA went
into effect in 1994, and in 2011, bilateral goods and services trade reached approximately a halftrillion dollars for the first time. The U.S. Chamber of Commerce has calculated that the jobs of
six million American workers depend on U.S.-Mexico trade. Many of those jobs are in border
states, which have especially close ties to Mexico, but Mexico is also the top buyer of exports
from states as far away as New Hampshire (mostly computers and electronics). In fact, 20
states, from Michigan to Florida, sell more than a billion dollars’ worth of goods to Mexico each
year, and Mexico is the first or second most important export market for 21 states.
The United States and Mexico are also major investors in one another. In fact, combined foreign
direct investment holdings now total more than $100 billion. According to the most recent
count by the Department of Commerce, U.S.-owned companies operating in Mexico created
$25 billion in value added and employed nearly a million workers. Mexican investment in the
United States is less than U.S. investment in Mexico, but it is has been growing rapidly in recent
years. Several of Mexico’s top companies, which are increasingly global operations, have made
significant investments in the United States. Mexico’s Cemex, for example, is North America’s
largest maker of cement and concrete products. Grupo Bimbo, which owns well-known brands
such as Entenmanns’s, Thomas’s English Muffins, and Sara Lee, is the largest baked goods
company in the Americas. Even Saks Fifth Avenue and the New York Times Company are
supported by significant Mexican investment.
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The massive volume of commerce and investment is important, but the depth of regional
integration is the primary reason why Mexico contributes to U.S. competitiveness. Mexico and
the United States do not just trade products, they build them together. In fact, to understand
regional trade, it is necessary to view imports and exports in a different light. Whereas imports
from most of the world are what they appear to be—foreign products—the same cannot be said
of imports from Mexico. During production, materials and parts often cross the southwest
border numerous times while U.S. and Mexican factories each perform the parts of the
manufacturing process they can do most competitively. Because of the complementary nature
of the two economies, close geographic proximity, and NAFTA, which eliminated most tariff
barriers to regional trade, the U.S. and Mexican manufacturing sectors are deeply integrated.
Demonstrating this integration is the fact that 40% of the value of U.S. imports from Mexico
comes from materials and parts produced in the United States. This means that 40 cents of
every dollar the United States spends on Mexican goods actually supports U.S. firms. The only
other major trading partner that comes close to this amount is Canada, the United States’ other
NAFTA partner, with 25% U.S. content. Chinese imports, on the other hand, have an average of
only 4% U.S. content, meaning that the purchase of imports from China does not have the
same positive impact on U.S. manufacturers.
The regional auto industry is a good example of this production-sharing phenomenon. The
United States, Mexico, and Canada each produce and assemble auto parts, sending them back
and forth as they work together to build cars and trucks. Cars built in North America are said to
have their parts cross the United States borders eight times as they are being produced, and
between 80 and 90% of the U.S. auto industry trade with its North American partners is intraindustry, both of which signal an extremely high level of vertical specialization. As a result,
Detroit exports more goods to Mexico than any other U.S. city, and the North American auto
industry has proven much more resilient than many expected. Although several of North
America’s largest automakers nearly collapsed during the financial crisis in 2008 and 2009, a
robust recovery is now under way. Mexico and the United States have each experienced the
sharpest rise in vehicle production of the world’s top 10 auto producers during the past two
years, growing 51 and 72%, respectively, between 2009 and 2011.
From competitors to partners
The United States and Mexico once worked relatively independently to manufacture goods and
export them, but now they work together to produce goods that are sold on the global market.
With their economies so intimately linked, the United States and Mexico now experience the
cycle of growth and recession together. If they ever were economic competitors, it is clear that
they have now become partners that will largely sink or swim together. Because they are in the
same boat, the United States and Mexico should develop a joint strategy to increase regional
competitiveness vis-à-vis the rest of the world.
The groundwork is already laid, and several recent trends are in North America’s favor. To begin
with, Mexico and the United States are among the most open economies in the world. Through
their extensive networks of free trade agreements, the two countries have tariff-free access to
more than 50 countries, including the large economies of the European Union and Japan. This
presents a tremendous opportunity for jointly produced goods to be exported around the
world, something that could create jobs and improve the trade balance of the United States.
The key, of course, is getting costs sufficiently low and productivity sufficiently high that North
American goods are competitive with their European and Asian competitors.
Labor costs in China are rising while oil prices are increasing transportation costs, and new
advanced manufacturing techniques are making labor an ever-smaller portion of the total cost
of making a product. These factors have led to what the Economist recently called the
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boomerang effect: Some companies that chased cheap wages in China in the previous two
decades have reconsidered their decision to move production offshore. Some are now more
interested in either increasing production in Mexico or moving it back to the United States.
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I/L- Congestion
Eliminating border congestion is key to competitiveness.
Lee and Wilson, Associate Director at the North American Center for Transborder Studies,
former assistant director at the Center for US-Mexican Studies at the University of California,
San Diego **AND Associate at the Mexico Institute of the Woodrow Wilson International Center
for Scholars, expert on US-Mexico relations, Mexico Analyst for the US military, 12
[Erik AND Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The
State of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region”,
https://www.google.com/#sclient=psyab&q=internal+link+examples+policy+debate&oq=internal+link+examples+policy+debate&gs_l=
hp.3..33i29i30.10414.12412.1.12511.13.13.0.0.0.0.95.992.13.13.0...0.0.0..1c.1.17.psyab.PjoPDb_tx_Y&pbx=1&bav=on.2,or.r_qf.&bvm=bv.48340889,d.cGE&fp=a71812ce8ab1fefa&bi
w=1366&bih=681, Accessed 6/25/13, ML)
The recent economic crisis has drawn attention to the serious need for efforts to increase the
¶ competiveness of regional industry that could lead to a renewed emphasis on the trade ¶
facilitation portion of the Customs and Border Protection mission. The integrated nature of
the ¶ North American manufacturing sector makes eliminating border congestion an
important way¶ to enhance regional competitiveness. The global economic crisis forced
manufacturers to look ¶ for ways to cut costs. After taking into consideration factors such as
rising fuel costs, increasing ¶ wages in China and the ability to automate an ever greater portion
of the production process, ¶ many American companies decided to nearshore factories to
Mexico or reshore them to theUnited States, taking advantage of strong human capital and
shorter supply chains. Bilateral ¶ trade dropped significantly during the recession but has since
rebounded strongly, growing ¶ significantly faster than trade with China.8¶ As demonstrated in
the above map (Figure 2), the¶ growth of trade adds pressure (and has the potential to add
additional pressure) on the already ¶ strained POEs and transportation corridors.
Congestion at the border is costing US and Mexico billions per year.
Lee and Wilson, Associate Director at the North American Center for Transborder Studies,
former assistant director at the Center for US-Mexican Studies at the University of California,
San Diego **AND Associate at the Mexico Institute of the Woodrow Wilson International Center
for Scholars, expert on US-Mexico relations, Mexico Analyst for the US military, 12
[Erik AND Christopher, June 2012, Woodrow Wilson International Center for Scholars, “The
State of Trade, Competitiveness and Economic Well-being in the US-Mexico Border Region,”
Accessed 6/25/13, ML)
Despite growing trade, the number of trucks crossing the border has remained relatively
stable ¶ since the year 2000. As shown in Figure 3 above, personal vehicle and pedestrian traffic
shows ¶ an even starker contrast, with a clear inflection point around the turn of the century.
Several ¶ studies have attempted to quantify the costs of border area congestion to the
economies of the ¶ United States and Mexico. In what is perhaps a testimony to the
fragmented and geographically ¶ disperse nature of the border region, most ofthese studies
¶
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have focused on particular NorthSouth corridors of traffic and trade rather than taking a
comprehensive, border-wide approach. ¶ The specific results of the studies (summarized in
Table 2, on next page) are quite varied, and ¶ too much value should not be placed on any single
number. Nonetheless, one message comes ¶ through quite clearly—long and unpredictable wait
times at the POEs are costing the United
States and Mexican economies many billions of dollars each year.
Border costs billions due to security and delay – fixing it key to competitiveness
New Policy Institute, a non-partisan think tank based in Washington D.C. Their
mission is to imagine and build a 21st century America capable of meeting the
challenges of our time, 11
[12/12, “Realizing the Full Value of Crossborder Trade with Mexico,”
http://21stcenturyborder.files.wordpress.com/2011/12/realizing-the-value-of-crossbordertrade-with-mexico2.pdf, date accessed: 06/28/13, LV]
Sharing a 2,000-mile long border with Mexico needs to be recognized as both a challenge and
an ¶ opportunity. Though improving, our border’s current infrastructure and capacity today
reflect the needs ¶ of a bygone era. While land ports of entry between the two nations were first envisioned to process
the ¶ legitimate crossing of people, goods and services across the border, security has taking an¶ overwhelmingly
dominant role in recent years, hampering the ability of agencies to efficiently manage ¶ border
traffic.¶ With this in mind, in May of 2010 the U.S. and Mexico signed the 21st Century Border Management Joint ¶ Declaration.
Recognizing the importance of fostering the commercial relationship, both countries have ¶
agreed to coordinate efforts to enhance economic competitiveness by expediting lawful trade.
The basic ¶ idea is that developing a modern and secure border infrastructure will give an
added boost to our ¶ region’s safety and competitiveness in the world.¶ Much Opportunity, but the Real
Work Has Only Just Begun¶ The poor infrastructure, the inadequate staffing levels and the heavy focus on security that prevails at¶
the U.S. – Mexico
border have cost both economies billions of dollars in gross output annually. It
is past ¶ time for our shared border to begin to meet today’s demands, acting as a facilitator
and conductor of ¶ lawful flows of goods, services and people across our nations so that we
may capitalize on the full ¶ potential of our partnership. If a billion dollars’ worth of trade crosses the U.S.Mexico border on a daily ¶ basis now while sustaining six million jobs, imagine what could be accomplished with a truly 21st century
¶ border.
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I/L- Exports
Bilateral trade with Mexico key to jobs, innovation, competitiveness and
exports
Fernandez, U.S. Assistant Secretary of State for Economic and Business Affairs,
13
[Jose, 1-18, “Highlighting the U.S.-Mexico Economic Relationship”, US Department of State,
http://fpc.state.gov/203048.htm, accessed 6-25-13, GSK]
And the reason for this is that we think that we are in Latin America and also and – but
especially with Mexico as well, we are at a unique point in our relationship with Latin America.
It’s what President Obama and Secretary Clinton have called a moment of opportunity. And this
was recognized by President Pena Nieto when he was here, because one of the things that he
talked about was focusing on economic reforms and the need to try and increase economic
integration among NAFTA partners, not just to – because it’s good to do but also to make
NAFTA much more competitive on a global basis.¶ And this is something that we
wholeheartedly endorse. We very much endorse his call – President Pena Nieto’s call to make
economic, trade, investment issues real core components of a bilateral relationship. And if
there is anything that we can communicate as part of this trip, it’s exactly that point. We have
heeded the call. We understand the call. We share the call for turning our economic relations in
what is already a wonderful relationship with Mexico a core component.¶ And I think that this
places the economics as at the center, clear evidence that we put economics together with the
other issues that we deal with Mexico at the center of our relationship. And we really look
forward to working with our colleagues and friends in the Mexican cabinet as well as with
Mexican business leaders, because we will be meeting with the private sector as well in Mexico,
in order to continue to talk about strengthening or deepening our economic relations.¶ And one
of the – as we try and – that was – we speak about increasing economic relations, we have to
keep in mind how good, how vibrant, the economic relations already are, right? We have 400
and – I’m going to get this number wrong – $462 billion a year of trade between our two
countries. If you break that down, that’s about one and a quarter billion dollars a day in trade.
Mexico is our second largest export market. Mexico is our third largest source of imports.
Mexico is our third supplier of energy anywhere in the world. The bilateral trade, the 460 billion,
not 462, 460 billion of trade in 2012 between our two countries is four times the trade that
existed at the time of NAFTA.¶ And something that is sometimes lost in the details is the fact that
what we sell to Mexico and what Mexico sells to us and what’s counted as exports sometimes,
what we sell to Mexico has a lot of Mexican content that we take, we assemble or we put
together, we add value, and we sell it back to Mexico, and the other way around. What Mexico
sells to us includes a lot of U.S. components.¶ So this is – you have heard many, many times
diplomats talk about partnerships. Everybody likes to talk about partnerships. It’s an overused
term. But this is a real true partnership. This is a partnership where we make things together.
We are partners in an integrated enterprise whose fortunes depend on the successful
collaboration with one another. And you see it in the numbers, not just the $460 billion but the
fact that Mexico – that U.S. companies have over $90 billion worth of investments in Mexico,
the fact that Mexican investment in the West continues to grow and it’s now at about $13
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billion.¶ And when you get away from the numbers, what this all means is jobs and trade and a
closer relationship between our two countries. And it also has, in the case of our NAFTA
partners, has an added benefit, and that benefit is that by working together we strengthen our
common competitiveness of the North American business.¶ We recently welcomed Mexico into
the Trans-Pacific Partnership, the TPP. And with all three NAFTA partners now participating in
the TPP, what we have now is the ability to use each other’s supply chains to export goods into
the other eight TPP countries.
Integration of Mexican supply chains is key to US export competitiveness.
Figueroa, Research and Policy Analyst at Nactis et al 2011,
(Alejandro, and Erik Lee, Associate Director of NACTS, and Rick Van Schoik, Director of NACTS,
New Policy Institute and North American Center for Transborder Studies, “Realizing the Full
Value of
Crossborder Trade with Mexico,”
http://21stcenturyborder.files.wordpress.com/2011/12/realizing-the-value-of-crossbordertrade-with-mexico2.pdf, p. 12, [Accessed 6/25/13], JB)
Trucks Crossing into the U.S. From Mexico S ource : U.S. DOT, RITA, Bureau of Transportation
Statistics, TransBorder Freight Data. U.S. & Mexico’s Highly Complementary Economies The
close economic ties between the U.S. and Mexico illustrate the dynamics of a 21st century
supply chain as inputs cross the border multiple times, accumulating value added to the goods
being exported and imported through our shared border. The automotive, electronics and
aeronautic industries, among others, are examples of the highly integrated supply chains
between U.S. and Mexican industries that have successfully faced global competition. The
North American auto industry has become highly integrated since the original Auto Pact
between Detroit and Ontario that began cross-border manufacturing in North America. Today,
vehicles made in Mexico have a high U.S. content, while at the same time vehicles
manufactured in the U.S. use a large number of Mexican-made auto parts. Supply chains are
critical to businesses’ underlying value, growth potential, and economic competitiveness.
Unfortunately, supply chains often come to a stop due to border delays, security concerns, and
infrastructure constraints. These issues create an environment of uncertainty in the business
community, which deters investment, job creation and economic prosperity. Exports clearly
create jobs, but what is less apparent is that exports rely on imports. When U.S. firms build
and produce things together with firms in Mexico, it is imperative for them to get key
components across the border as fast as possible back into their facilities. The sooner they are
in, the sooner they may continue to move along the supply chain until they reach the
consumer and create a profit for the U.S. firm and the economy. In a just -in - time business
environment, the company relies on an efficient process at the border in order to get
numerous key components shipped rapidly from Mexico. Mexico has increasingly become a
strategic supplier to U.S. industry; Mexico’s intermediate exports contribute to both
intermediate and finished goods in the U.S. Capital goods traded between the U.S. and Mexico
also play an important role in increasing regional competitiveness. Last year, $70 billion worth
of machinery, tools and equipment were traded bilaterally to produce other goods that were
in turn consumed locally or sold to foreign markets as North American - made products. The
highly complementary nature of this trade illustrates the growing importance of incorporating
value - added every time a product crosses the border for further processing. The
interconnectivity between the supply chains of both countries help U.S. companies remain
competitive in the world marketplace by producing goods for worldwide consumption at
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competitive prices. Mexico’s proximity to the U.S. allows production to have a high degree of
U.S. content in the final product, which in turn helps create and sustain jobs in both countries.
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Solvency- Heg
Strong export market key to heg—foreign debt and primacy of the dollar
Du Boff, Professor of economics at Bryn Mawr college, 03
[Richard, December, “U.S. Hegemony: Continuing Decline, Enduring Danger”, Monthly Review,
http://monthlyreview.org/2003/12/01/u-s-hegemony-continuing-decline-enduring-danger,
accessed 6-25-13, GSK]
Since 1971, when the United States had a deficit in its trade in goods (merchandise) for the
first time in seventy-eight years, exports have exceeded imports only in 1973 and 1975. A
nation can run deficits in its trade in goods and still be in overall balance in its dealings with
foreign countries. Deficits in trade in goods can be offset by having a positive balance in sales
of services abroad (financial, insurance, telecommunications, advertising and other business
services) and/or income from overseas investments (profits, dividends, interest, royalties, and
the like). But the U.S. merchandise deficit has become too big to be paid for by services sold to
foreigners plus remittances on investments. The U.S. current account (the sum of the balances
in trade in goods and services plus net income from overseas investment), almost constantly in
surplus from 1895 to 1977, is now deteriorating sharply; the merchandise deficit has become
too big to be paid for by services sold to foreigners. And since 1990, the positive balance on
investment income has been shriveling as foreign investment in the United States has grown
faster than U.S. investment abroad. In 2002, the balance turned negative: for the first time the
United States is paying foreigners more investment income from their holdings here than it
receives from its own investments abroad.¶ Like most gaps between income and expenses, the
current account deficit is covered by borrowing. In 2002, the United States borrowed $503
billion from abroad, a record 4.8 percent of GDP. When foreigners receive dollars from
transactions with U.S. residents (individuals, companies, governments), they can use them to
buy American assets (U.S. Treasury bonds, corporate bonds and stocks, companies, and real
estate). This is how the United States turned into a debtor nation in 1986; foreign-owned assets
in the United States are now worth $2.5 trillion more than U.S.-owned assets abroad. By mid2003, foreigners owned 41 percent of U.S. Treasury marketable debt, 24 percent of all U.S.
corporate bonds, and 13 percent of corporate stock. U.S. companies are continuing to invest
abroad, but unlike the British Empire in the decades before the First World War, the United
States is unable to finance those investments from its current account. By contrast, Great
Britain’s current account was in surplus, averaging 3 to 4 percent of GDP every year from 1850
to 1913, when income from services and foreign investment was larger than its merchandise
trade deficits.3¶ So far the global investor class has seemed willing to finance America’s
external deficits, but it may not be forever. The deficits are exerting a downward drag on the
dollar, arousing suspicion that the United States favors a cheaper dollar to help pay off its
ballooning trade deficit. As the dollar declines in value, the return to foreign investors on dollardenominated assets falls. German investments in choice office properties in New York, San
Francisco, and elsewhere were cut back sharply in 2003. While the buildings were becoming
cheaper in euros, rents were shrinking when converted from dollars back home. “We can get
the same return in Britain and the Nordic countries, so why go to the United States, where the
currency risk is greater?” asked the chief investment officer of a Munich-based property fund.4
Until recently all Organization of Petroleum Exporting Countries (OPEC) sold their oil for dollars
only; Iraq switched to the euro in 2000 (presumably terminated with extreme prejudice in
March 2003), and Iran has considered a conversion since 1999. In a speech in Spain in April
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2002, the head of OPEC’s Market Analysis Department, Javad Yarjani, saw little chance of
change “in the near future…[but] in the long run the euro is not at such a disadvantage versus
the dollar. The Euro-zone has a bigger share of global trade than the US and…a more balanced
external accounts position.” Adoption of the euro by Europe’s principal oil producers, Norway
and Britain, could create “a momentum to shift the oil pricing system to euros.” Thus, concluded
Yarjani, “OPEC will not discount entirely the possibility of adopting euro pricing and payments in
the future.”5¶ If foreign investors get cold feet, ceasing to invest in U.S. industries or selling off
their dollar holdings, the dollar would start falling faster. Interest rates in the United States
might surge, borrowing money would become harder, and consumers would pay more for
imported goods, draining income from other purchases and dampening the economy. A dollar
rout could cause skittish investors to dump U.S. stocks and bonds, sending Wall Street into a
dive. In any event the dollar is now perceived to be as risky an asset as the euro and possibly
two or three other currencies (yen, sterling, Swiss franc).
Regional markets key to heg—natural resources and labor
Ciccantell, professor of sociology @ Western Michigan University, 01
[Paul, Winter, Canadian Journal of Sociology Vol. 26 No. 1, “NAFTA and the Reconstruction of
U.S Hegemony: The Raw Materials Foundations of Economic Competitiveness”, pp. 58-59,
http://www.jstor.org/stable/3341511, accessed 6-28-13, GSK]
Labour costs, market access, and the economies of scale of continental operations are all
central components of this hegemonic reconstruction stra-tegy. This paper focuses attention
on another central component: U.S. raw materials supply systems. A key factor in U.S.
hegemonic decline was reliance on raw materials supply networks developed in the late 1800s
and early 1900s. Declining competitiveness in extraction, processing, and particularly transport
costs relative to its main competitors helped cause the productivity growth¶ slowdown in the
U.S. At the same time, the U.S.' competitors employed¶ systems created in the 1960s and 1970s,
utilizing large scale, low cost mines,¶ processing facilities with low cost energy sources, and huge
economies of scale¶ in ocean shipping. In conjunction with the oil price increases of 1973-74
and¶ 1979-80 that eliminated the cheap energy on which the U.S. was dependent,¶ U.S.
economic competitiveness declined sharply.¶ What does this have to do with NAFTA and the
CUSFTA? When an¶ economy matures, and especially in the global context of the late twentieth¶
century and the shift toward a postindustrial, service-based economy, raw¶ materials access
would appear to be at best a minor concern for states and¶ firms. This paper argues that this
appearance is deceptive and that raw mate-rials access remains a central concern. The U.S.
state and U.S.-based global-izing firms used the CUSFTA and NAFTA as building blocks to
reverse the¶ real decline of U.S. power and the apparent onset of a multipolar world order of
competing states and firms. The construction of what then-President Bush¶ referred to as a
"New World Order" rested on lowering production costs for¶ U.S.-based globalizing firms to
make them more competitive. Part of this¶ effort focused on increasing investment
opportunities to access lower cost¶ labour and to open new markets, issues widely recognized
by analysts of¶ regional and global trade and investment agreements. The other part of this¶
strategy, and the key to initial U.S. interests in regional agreements, sought to¶ resolve the
problem of increasingly costly and insecure supplies of the raw¶ materials that provided the
physical building blocks of and fuel for the U.S.¶ economy. Concerns about raw materials were
a key U.S. interest in the¶ negotiation of the CUSFTA and NAFTA, even though these industries
were no¶ longer leading sectors of the U.S. economy, and access to oil, natural gas, and¶ other
Canadian and Mexican natural resources would greatly reduce the¶ instability of price and
supply of oil and other energy sources.
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I/L- Manufacturing
NAFTA boosts US manufacturing- Mexico is attractive for low-cost labor and its
strategic position
Roberson, senior analyst with Transport Intelligence, a research company for
the global logistics and supply chain industry, 12
[Cathy Morrow, 3/1/12, Global Supply Chain Insights, “2011 NAFTA trade increases 14.3%”,
http://americaslogistics.blogspot.com/2012/03/2011-nafta-trade-increases-143.html, Accessed
7/3/13, ML]
NAFTA trade between trade partners Canada, Mexico and US was strong throughout 2011.
Overall trade by value increased 14.3% to $904.1bn. Since 2009, it has increased by 24.3%.
Trade with Canada increased 14% whereas Mexican NAFTA trade increased 14.6%. The increase
can be attributed to increased automobile manufacturing, pipeline activity and shifts in
manufacturing to Mexico from Asia.¶ North American automobile production increased 10%
in 2011 due to healthy US sales. As a result, NAFTA trade benefited from this increase as NAFTA
trade in vehicles increased 12%. Railroads such as Kansas City Southern and Canadian National
accounted for much of the movement of automobiles. Around 40% of NAFTA Canadian rail
cargo and over 50% of Mexican rail cargo comprise of vehicles.¶ Pipeline activity also noted
increases throughout 2011. Among the top five US petroleum import partners, Canada is
number one and Mexico is number three. Trade via pipeline increased over 28% due in part to
increased drilling and refinery activity in the US and Canada in particular.¶ Finally, according to a
report from Maquila Reference, “Manufacturers producing goods for the U.S. market are
reconsidering their manufacturing options in China, and looking at Mexico’s dual benefits of
low-cost labor and reduced tariffs under various NAFTA clauses.” Due to catastrophes such as
the Japanese earthquake and tsunami along with the flooding in Thailand, manufacturers are
also looking to manage their supply chain risks as well as reduce expenses such as
transportation and labor by relocating facilities closer to end markets.
Supply chains key to manufacturing, competitiveness, and growth but border
delays and lack of infrastructure ruin it
New Policy Institute, a non-partisan think tank based in Washington D.C. Their
mission is to imagine and build a 21st century America capable of meeting the
challenges of our time, 11
[12/12, “Realizing the Full Value of Crossborder Trade with Mexico,”
http://21stcenturyborder.files.wordpress.com/2011/12/realizing-the-value-of-crossbordertrade-with-mexico2.pdf, date accessed: 06/28/13, LV]
The close economic ties between the U.S. and Mexico illustrate the dynamics of a 21st century
¶ supply chain as inputs cross the border multiple times, accumulating value added to the
goods¶ being exported and imported through our shared border.¶ The automotive, electronics
and aeronautic industries, among others, are examples of the ¶ highly integrated supply chains
between U.S. and Mexican industries that have successfully ¶ faced global competition. The North
American auto industry has become highly integrated since¶ the original Auto Pact between Detroit and Ontario that began crossborder manufacturing in ¶ North America. Today, vehicles made in Mexico have a high U.S. content, while at the same¶ time vehicles
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manufactured in the U.S. use a large number of Mexican-made auto parts.¶ Supply
chains are critical to businesses’
underlying value, growth potential, and economic ¶ competitiveness. Unfortunately, supply
chains often come to a stop due to border delays, ¶ security concerns, and infrastructure
constraints. These issues create an environment of ¶ uncertainty in the business community,
which deters investment, job creation and economic ¶ prosperity. Exports clearly create jobs,
but what is less apparent is that exports rely on imports. When U.S. ¶ firms build and produce
things together with firms in Mexico, it is imperative for them to get ¶ key components across
the border as fast as possible back into their facilities. The sooner they ¶ are in, the sooner
they may continue to move along the supply chain until they reach the ¶ consumer and create
a profit for the U.S. firm and the economy. In a just-in-time business ¶ environment, the
company relies on an efficient process at the border in order to get numerous ¶ key
components shipped rapidly from Mexico.¶ Mexico has increasingly become a strategic supplier to U.S. industry;
Mexico’s intermediate ¶ exports contribute to both intermediate and finished goods in the U.S. Capital goods traded ¶
between the U.S. and Mexico also play an important role in increasing regional ¶
competitiveness. Last year, $70 billion worth of machinery, tools and equipment were traded
¶ bilaterally to produce other goods that were in turn consumed locally or sold to foreign
markets ¶ as North American-made products.¶ The highly complementary nature of this trade
illustrates the growing importance of ¶ incorporating value-added every time a product
crosses the border for further processing. The ¶ interconnectivity between the supply chains of
both countries help U.S. companies remain ¶ competitive in the world marketplace by
producing goods for worldwide consumption at ¶ competitive prices. Mexico’s proximity to the U.S.
allows production to have a high degree of ¶ U.S. content in the final product which in turn helps create and sustain jobs in both
countries.
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I/L- Nearshoring
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Infrastructure Key
A lack of infrastructure investment kills competitiveness. Other evidence
doesn’t take infrastructure quality into consideration
Nordas, senior trade policy analyst at the OECD Trade and Agriculture
Directorate, and Piermartini, senior economist at the WTO, 4
[Hildegunn Kyvik and Roberta, August 2004, WTO Economic Research and Statistics Division,
“Infrastructure and Trade”, www.wto.org/english/res_e/reser_e/ersd200404_e.doc, Accessed
7/10/13, ML]
A second dimension of transaction costs is time. The proverbial "time is money" suggests a
linkage between monetary outlays and the time dimension, but time also plays a role in its own
right. This is particularly the case in industries that have adopted just-in-time business
practices and have an international supply network. Just-in-time business practices imply that
producers have small inventories of intermediate goods and the entire production process
would come to a halt if one input was missing. Under such circumstances delays in delivery of
intermediate inputs would have a disproportionate impact on the importing firms' total costs.
In fact, if the production plant has to stop production due to a missing part, emergency
transport at a cost that by far exceeds the price of the good transported is not uncommon. As
with transport costs, delivery time is partly determined by distance between the trading
partners. However, geography and the quality of infrastructure probably matter even more for
timeliness than for freight rates. Gravel roads, for example become impassable after rain
storms. Poor port infrastructure or inadequate port handling capacity may cause long delays
that are not necessarily reflected in the monetary outlays on transport services. The same goes
for red tape at customs. ¶ Uncertainty about delivery time is an important determinant of total
transaction costs. The more uncertain is delivery, the more inventory is needed as a buffer
stock if demand fluctuations are unrelated to fluctuations in delivery time. Inventories are
expensive both because they bind up capital and because the value of the stored goods may
depreciate over time. Fashion clothing and electronic components, for example, depreciate
rapidly and firms typically aim at keeping inventories to a minimum. Again we argue that
uncertainty of delivery time is related to the quality of infrastructure. Weather conditions can
wreck havoc on infrastructure and delay delivery in unpredictable ways when infrastructure is
poor. In addition poor infrastructure combined with poor quality transport equipment often
result in vehicle break down and further delays. ¶ Uncertainty is an important dimension of
trade cost not only in terms of uncertainty about when a shipment is delivered but also in what
conditions it arrives at its destination. The uncertainty about to which extent the quality and the
quantity of the shipment upon arrival correspond to the one loaded at departure is part of the
cost of transport and depends on the quality of infrastructure. A poor quality of infrastructure
is likely to be associated to a higher risk of damaging the cargo and therefore higher losses
and insurance costs. ¶ A forth dimension of transaction costs is the opportunity cost of lack of
access to a good transport or telecommunication service. For example, large trucks would
bypass villages whose roads cannot carry them. Large ships would bypass harbours with
inadequate facilities. Similarly, anecdotal evidence suggests that lack of access to a good
telecommunication network can create barriers between those connected and those not
connected. For example, traders in Ghana regularly travel to visit suppliers of agricultural
products in order to purchase their produce. Some of the traders have recently acquired mobile
phones and started to contact suppliers beforehand to check what they have on offer. In some
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cases they have stopped visiting those suppliers who could not be contacted over the telephone
(Overå, 2004). ¶ As these examples have shown, time to market and delivery reliability depends
as much on the infrastructure behind the borders as the transport services between the
borders. This is a dimension that is not captured in standard gravity equations which establish
the relation between relative market size and distance between trading partners. It is to some
extent picked up in estimates that use country fixed effects, but in these estimates it is of
course not possible to distinguish the impact of infrastructure from other country-specific
factors. The quality of infrastructure is also highly correlated with GDP per capita. Thus,
gravity models that incorporate GDP per capita and find a positive and significant coefficient
may well pick up the quality of infrastructure. But again these estimates do not provide
explicit information about the link between trade flows and the quality of infrastructure. ¶
Previous studies that looked at the relationship between trade and infrastructure have found a
positive and significant impact of quality of infrastructure on trade (Clark et al., 2004; Wilson
et al., 2003; Limão and Venables, 2001). For example, Clark et al. (2004) estimate that if a
country like Peru or Turkey improved sea port efficiency to the level similar to Iceland or
Australia, it would be able to increase trade by roughly 25 per cent. However, these studies have
focused either on an overall measure of infrastructure quality or on maritime transport
infrastructure. ¶ This paper aims at shedding more light on the role of behind the border
infrastructure for bilateral trade flows, using an augmented gravity model. The main
contributions of the paper is first to develop indicators of the quality of infrastructure. We
develop three types of indicators. First we construct an index for each type of infrastructure
(rail, roads, telecommunications, ports, airports and time for customs clearance) that positions
each country relative to the sample average. The individual indicators are next aggregated into
one measure of overall quality of infrastructure. The methodology adopted is the same as in
Limão and Venables (2001), but we add more individual indicators. Both the individual and the
aggregate indicators are used in the regressions. Therefore, our approach allows us to
disentangle and estimate the role of the different modes of transport in supporting trade.
Finally, we construct two bilateral quality of infrastructure dummy variables for each category
and for the aggregate. The first of these variables is a dummy that takes the value of one if both
trading partners have above average quality and zero otherwise. The rationale for this variable is
that countries that have similar behind the border infrastructure may also be more likely to have
similar transport services. Countries with good infrastructure are, for example, more likely to
use containers and seamless multi-modal transport than countries with poor infrastructure. The
second bilateral dummy takes the value of one if the country pair has a quality of infrastructure
above the average of all pairs and zero otherwise. This dummy indicates whether there is a
threshold combined quality of infrastructure. ¶
Due to underinvestment in infrastructure, Mexico has lost global market share
to Asian competitors
Starr, Director of the US-Mexico Network and University Fellow at the USC
Center on Public Diplomacy, 9
[Pamela K, April 2009, Pacific Council on International Policy, “Mexico and the ¶ United States: ¶ A
Window of Opportunity?”, http://www.pacificcouncil.org/document.doc?id=35, Accessed
7/9/13, ML]
At the same time, Mexico faces a broad range of policy challenges that could damage ¶
democracy and threaten political and economic stability if left unattended. The violence ¶ and
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insecurity caused by warring drug cartels could jeopardize political stability, economic growth,
and popular confidence in democracy. The collateral impact of the U.S. economic ¶ crisis in a
country deeply integrated into the U.S. market is predicted to produce a deep and ¶ protracted
recession. Beyond these immediate crises, the Mexican economy and political ¶ system suffer
from a variety of structural weaknesses that impair its global competitiveness ¶ and effective
governance. In the economy, these include archaic labor laws, an inefficient ¶ regulatory
environment, the dominance of monopolies and oligopolies, and years of ¶ underinvestment in
human and capital infrastructure. As a result, Mexican manufacturers ¶ have lost global
market share to more agile Asian competitors, and production in the national ¶ oil company has
fallen sharply. The ability of Mexican policymakers to deal effectively with ¶ these problems,
even in good times, is constrained by a political system that tends to promote ¶ legislative
stalemate. Election law in Mexico helps sustain three large yet internally divided ¶ parties whose
members are more responsive to party demands than to constituent needs. ¶ When coupled
with sharp programmatic and personal disputes, this party structure makes ¶ it difficult to form
the congressional majorities needed to approve legislation. Consequent ¶ government inaction
on key issues in combination with the institutional weaknesses ¶ endemic in Mexican democracy
– a lack of accountability, weak rule of law, corruption, ¶ crime, and politicians whose lack of
attention to popular demands creates the perception ¶ that government does not serve the
people – have weakened popular support for democratic ¶ governance. Only 23 percent of
Mexicans express satisfaction with the performance of their ¶ democratic government, a drop of
18 percentage points in two years and lower than all but ¶ two other Latin American and
Caribbean countries (Corporación Latinobarómetro, Informe¶ 2008).
Increase in nearshoring to Mexico coming, but preventing congestion is key.
Burnson, Executive Editor, 11,
(Patrick. August 01, 2011. Logistics Management. “Near-Shoring/Right-Shoring Strategies:
Weighing the risks of global sourcing.” http://www.logisticsmgmt.com/article/nearshoring_right-shoring_strategies_weighing_the_risks_of_global_sourcing, [Accessed 7/10/13],
JB).
Near-shoring: Advantage Mexico
According to a recent poll of 80 C-level executives across more than 15 industries by
AlixPartners LLP, a global business and supply chain advisory firm, 63 percent of senior
executives chose Mexico as the most attractive locale for re-sourcing manufacturing
operations closer to the U.S. market, compared with just 19 percent who would re-source to
the U.S.
According to the findings, respondents highlighted geographical proximity and improvements
in transportation services between the borders as the key driver in this decision. The survey
also found that 9 percent of executives surveyed have already taken efforts to near-shore
manufacturing operations, and another 33 percent plan to do so within the next three years.
Additionally, just 19 percent of those surveyed have experienced supply-chain disruptions in
Mexico due to security issues.
“While safety and security in Mexico are certainly issues to be taken very seriously, our survey
suggests that many companies believe these issues can be effectively dealt with,” says Foster
Finley, managing director at AlixPartners and head of its logistics and distribution practice. “As
companies think about near-shoring production that was previously off-shored to respond to
rising labor costs overseas and exchange-rate changes, Mexico is obviously high on their
lists.”??
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According to the survey, Mexico’s average ranking for attractiveness among those U.S.
executives likely to near-shore was more than seven times that of Brazil’s and countries in
Central America combined.
The survey also polled executives on plans to off-shore current U.S. operations, and found that
37 percent of respondents have already completed or are in the process of off-shoring, while 27
percent expect to off-shore U.S. operations within the next three years. Of those who have
off-shored or plan to off-shore, Mexico also topped the list as the most attractive locale,
beating out the much-touted BRIC countries (Brazil, Russia, India and China).
“Despite security concerns in Mexico, the country has a lot of appeal right now because of its
proximity to North American demand and the continuing need of many companies to improve
their working-capital positions,” says Chas Spence, a director in the Latin American
manufacturing practice at AlixPartners. “That appeal could grow if fuel prices continue to rise
globally.”??
In terms of the expected advantages to be gained from near-shoring, lower freight costs,
improved speed-to-market times, and lower inventory costs were the top three reasons cited
on average. Other reasons included “time-zone advantages” (easier management coordination)
and improved “cultural alignment” with North American managers.??
“In-transit inventory, in particular, was a high priority among those interviewed,” says Russ
Dillion, a vice president in the Latin American manufacturing practice at AlixPartners.
“Obviously, shipping products in from long distances eats up a lot of inventory expense, and
that’s something companies would like to improve if possible.”??
Lack of infrastructure at the border creates significant costs for businesses
http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_15011550/ab_1545_cfa_20120529_181926_asm_floor.html
- no idea how to cite this, sorry!
Mexico is California's largest trading partner, with exports of ¶ products to Mexico of $26 billion
(16% of total state exports) ¶ in 2011. One barrier to the continued expansion of trade and ¶ binational commerce is the deficit in border infrastructure, ¶ which has not kept pace with
increases in trade and transit ¶ since ratification of the North American Free Trade Agreement.
¶ Goods movement supports employment, business profit, and state ¶ and local tax revenue.
California businesses rely heavily on ¶ the state's air/sea ports and their related transportation ¶
systems to move manufactured goods. Firms rely on fast, ¶ flexible, and reliable shipping to
link national and global ¶ supply chains and bring products to the retail market. ¶
Transportation breakdowns and congestion can idle entire global ¶ production networks. As a
result, the capacity and efficiency ¶ of seaports, airports, and multimodal linkages have
become ¶ critical factors in global trade.¶ For California, expanded supply chains for
manufacturing and ¶ product distribution have resulted in congested seaports, where ¶ cargo
ships are often delayed for extended periods of time ¶ waiting to unload. Truck access is often
cited for the delays. ¶ At international airports, truck access is also a problem, and ¶ expansion of
major airports is severely limited by urbanization, ¶ ground access, air quality impacts, and local
opposition.¶ California's land-based border crossing with Mexico is ¶ particularly congested
and inhibits trade and commerce within ¶ the region and its access to global markets. There
are six land ¶ crossings referred to as Points of Entry (POEs). The San Diego ¶ CountyTijuana/Tecate region is home to the San Ysidro-Puerta ¶ México, the Otay Mesa-Mesa de Otay,
and the Tecate-Tecate POEs ¶ while the Imperial County-Mexicali region hosts the ¶ CalexicoMexicali, Calexico East-Mexicali II, and Andrade-Los ¶ Algodones POEs. ¶ U.S. firms with
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significant business passing through the three ¶ Imperial Valley POEs report that their
logistics-supply chain is ¶ highly time sensitive. Long wait times at border crossings ¶ result in
delays in receiving intermediary goods and ultimately ¶ lead to problems in the
manufacturing chain. Long wait times ¶ between Mexico and the U.S. along the Imperial County
- Baja ¶ California border accounted for an estimated output loss of $1.4 ¶ billion and 11,600 lost
jobs nationally in 2007. In California ¶ losses were estimated at $436 million and 5,639 jobs
Infrastructure investment key to catch up to Chinese competitivenessalternatives fail
Robinson, Research Scientist at the Department of Sociology at U Mich, 10
[Ian, Fall 2010, New Labor Forum, Vol. 19 No. 3, “The China Road¶ Why China Is Beating Mexico
in the Competition for U.S. Markets”,
http://muse.jhu.edu/journals/new_labor_forum/v019/19.3.robinson.html, Accessed 7/9/13,
ML]
The analysis, so far, has several important implications. First, Mexican labor repression was not
sufficient to win the competition against China for U.S. markets; nor was it necessary, even in
the apparel sector. If the Mexican government had adopted policies that matched China's
improvements in the areas noted by the World Bank survey and the Financial Times, wages in
the sector could have increased significantly without undermining Mexico's competitiveness,
because of the competitive advantage deriving from its devaluations. Second, what is true for
the highly labor-intensive apparel industry holds even more forcefully for more capital-intensive
industries, such as electronics and auto, where worker compensation is a smaller share of
production costs.¶ So Chinese competition is hurting Mexican exports to the United States and
elsewhere. But the main source of that competitiveness is not low Chinese wages, and Mexico
cannot recover its competitiveness by pushing domestic wages lower or making them more
"flexible."¶ It follows that Mexican governments and manufacturing sector employers are not
forced by RTB dynamics emanating from China to continue suppressing worker rights and wage
increases. If they persist in such policies, rather than investing in the sorts of human and
infrastructure development that have made Chinese competition so formidable, they must
bear the responsibility for this choice.
Now is key- infrastructure development key to prevent crowd-out by China in
global markets
Robinson, Research Scientist at the Department of Sociology at U Mich, 10
[Ian, Fall 2010, New Labor Forum, Vol. 19 No. 3, “The China Road¶ Why China Is Beating Mexico
in the Competition for U.S. Markets”,
http://muse.jhu.edu/journals/new_labor_forum/v019/19.3.robinson.html, Accessed 7/9/13,
ML]
Does Mexico have the time it needs to realize the kinds of human and infrastructure investment
required to save its electronics and auto sectors, and (perhaps) regain some of its rapidly
shrinking apparel sector? Maybe, if China allows the yuan to appreciate to more appropriate
levels. This seems quite possible over the next year. Chinese wages are now rising faster than
Mexico's, which will also help, though (as argued earlier) the importance of wage differences
and trends to overall competitiveness should not be exaggerated.¶ But Mexico's policymakers
must resolve to take full advantage of the window of opportunity such shifts would create to
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begin making the investments necessary for either a mixed or a high-road competitive
strategy. If they fail to do this—and the current trade regime remains in place—it's only a
matter of time until most of Mexico's manufacturing exports are crowded out of the U.S.
market by China and/or other countries following its strategic lead.19¶ Which path Mexico
pursues will largely depend on choices made in Mexico and the United States, rather than in
China. Mexico depends upon the U.S.A. for about 85 percent of its exports and imports, not to
mention jobs for some 10 percent of its people who send back remittances roughly equal in
value to the sum of all Mexican manufacturing exports.¶ The Obama administration could make
a big difference in enabling Mexico to adopt a successful high-road strategy, although—at
present—it shows no signs of abandoning the neoliberal model of continental economic
integration. The administration's support—for stronger worker rights and higher worker
compensation in all three NAFTA countries, and backing for Mexican infrastructure
development on the model of the European Union's social funds—would enable the Mexican
government to move in this direction. If the United States government shows no such
commitment, we must hope that ongoing struggles to improve the quality of Mexican
democracy yield a government that is willing to put the matter to the test. Many Mexican
activists are making great sacrifices to this end, but progress is slow and uneven. Unfortunately,
on the international economic front, time is not on their side.
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Key to Competitiveness
Reshoring is vital to maintain ecomomic competitiveness
Pelluru, Member of Integration Unit within the Energy, Communications and
Services, 13
[Deepak 5/14, Infosys Blogs,
http://www.infosysblogs.com/leadership/2013/05/american_competitiveness_and_r.html,
accessed 7/12/13, AR]
In the past few months the terminology called as "Re-Shoring" has been catching up in the
American corporate circles. There have been several discussions in the American Universities,
think tanks and corporates alike on how to bring back the work that has been "Outsourced" to
Emerging markets like India and China back to the United States. Re-Shoring in simple terms is
all about getting back work that has been Off-Shored to foreign destinations by the US back to
the US. This is primarily aimed at the Manufacturing industry and also applies to some of the
Services sectors like the IT industry.¶ In the lines that follow I will attempt to talk about 'ReShoring' and what its implications are to the United States as well as for emerging markets like
India and China.¶ ¶ 1. Re-Shoring vs. Right-Shoring: Like apparel vendors like Zara have shown
us it is always good to do manufacturing close to the markets where the demand is so that the
changing market trends and the customer pulse can be quickly incorporated in the innovation
cycles. For American MNCs that have operations all over the world, it is a good strategy to have
manufacturing close to the markets. This means that the manufacturing hubs for the US
markets must be in US and similarly manufacturing hubs for emerging markets like India and
China must be in that geography. So it is all about right shoring than just re-shoring as that will
drive the responsiveness to the changing market dynamics¶ ¶ 2. Access to the Global Talent Vs.
Labor Arbitrage: The gap in the wages between the emerging markets and US is on the wane
and more so for niche technological and management positions. Keeping this in view the targets
of the US MNCs must be re-calibrated to aim at penetration of the global pool of talented
resources and the access to the best in class talent globally for high value adding and high skill
activities rather than looking at the emerging markets only from a "labor arbitrage" perspective.
With the talent pools in emerging markets matching with the best in class talent available in US,
it will only do good for the MNCs to be able to exploit this broadened talent pool. If a BioTech
company wants to set up a research center in China or an IT product company wants to set up
an R&D center in India the target should be only to broaden their access to the best in class
talent pool available.¶ ¶ 3. Emergence of shale reserves as a means to reduce costs: The
emergence of technology to profitably extract the gas trapped in the shale gas reserves in US
will go a long way in making the US economy more energy independent and also will go a long
way in terms of reducing the input fuel costs for the energy hungry manufacturing industry. The
resulting economics will support the re-shoring initiatives in a big way by making it more viable
and cost effective to manufacture goods in the United States. However reliance on a natural
resource as a source of competitive advantage is not a good strategy and US firms need to
establish differentiation and nicheness in their manufacturing processes that will help them
sustain the competitive advantage even beyond just the economic advantage shale gas
provides.¶ ¶ 4. Remaining Independent of the Supply Chain: Today Apple depends to a large
extent on FoxConn for the manufacturing of its high end devices like iPhones and iPads.
FoxConn is the key to the success of Apple and thereby would have a significant bargaining
power. The complex supply chain that brings together hundreds of parts and circuits that go into
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the making of an iPhone is mainly governed by FoxConn with its strong and powerful networks
with the other firms in China and Taiwan. For Apple an "effective and smooth supply chain
without disruptions and with desired agility and flexibility" is definitely the competitive
advantage. In case of Apple both the 'Supply Chains' as well as the 'Excellence in the
Manufacturing Process' which are its competitive advantages have been outsourced. American
companies in future might take care not to fall into this 'dependency mode' and might want to
maintain their complete independence as well as retain control on their supply chains.¶ ¶ 5.
Leveraging Robotics as a competitive advantage: A small company called Kiva has made waves in
the retailing industry by deploying thousands of robots in the warehouses of leading American
Retailers like Staples, Gap, Walgreens, Toys R Us etc and ensuring that these robots carry out all
the manual tasks like walking among the shelves and picking the products. About 70% of a
typical worker's day was spent only on this job in the past which has now been automated by
these bots. While Retailing is one industry which is immune to outsourcing due to obvious
reasons there are a number of lessons that manufacturers can learn from this industry and the
measures they have taken to stay profitable despite the usual challenges in the economy¶ ¶
6. Adapting to the changing dynamics of the demand for manufactured goods: The consumer
demand for types of goods and the categories of goods changes depending on the economic
cycles and the fiscal and monetary measures that are in place at any point in time. For example
the Quantitative easing unleashed by the FED after the 2008 crisis changed the demand profile
for the goods and hence certain goods which were in demand before the crisis were no longer in
demand now and vice-versa. What is key is to cross skill and cross train workers to move from a
low demand industry to a high demand industry so that we have twin benefits of solving the
unemployment problem as well as increasing the supply of goods in demand which in turn will
solve the "supply side" issues associated with growth¶ ¶ 7. Building an eco-system that will
enhance Competitiveness: A country is called as competitive as long as its firms are able to
compete effectively in the international markets while at the same continuously increasing the
standard of living for its citizens. From a macro-economic perspective the government needs to
strengthen the policy environment, political institutions, health care and education systems etc.
From a micro economic perspective what is needed are investments for re-skilling work force,
R&D in Advanced Manufacturing/Service capabilities, building the component supplier eco
system locally around the Manufacturing/Services hubs, building innovation value chains that
starts at the universities and goes on to incubations and then to the corporates. This is not only
true for America but also for emerging markets like India and China.¶ ¶ 8. Harnessing the Game
Changing Process improvements: Most of the large American corporates have outsourced a
substantial part of the Manufacturing and Production value chain to other countries due to
labor arbitrage. What has happened as a result is that while the design and the other high value
adding activities still remain with the US the feedback loop between the design and the
manufacturing/production processes has broken down which in turn has made the American
firms lose their insights and visibility into the actual production process. The weakening of
feedback loop between design and production make the game changing process improvements
in the manufacturing process very difficult. Thus it is becomes imperative that American
corporates bring back some of the vital elements of the manufacturing process to the US so
that the critical parts of the value chain are fully visible and game changing improvements in
the various parts of the production life cycle which can eventually become a competitive
advantage are possible. However the remaining non-strategic parts of the production life cycle
can still remain outsourced as they are not a part of the 'Competitive Advantage'.¶ ¶ ¶ In
Summary re-shoring and re-calibration of the outsourcing strategies by the American firms need
not be a matter of concern for the firms in emerging markets. There is enough opportunity for
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firms in the emerging markets by virtue of being closer to the large domestic markets and
customers who are spending more. Also there is enough work that can be safely outsourced
without the risk of losing the competitive advantage. Eventually there will be a good balance
between the work and activities done in America and that done overseas and the sheer size of
the pie ensures that it is a win-win for all the parties involved.¶
Multiple examples prove that reshoring is necessary for American companies to
retain competitive edge
McMeekin and & McMackin, professor and chairman of the Department of
Journalism at Boston University, 12
[Bill and Emily, November, “Reshoring U.S. Manufacturing: A Wave of the Present”,
http://businessclimate.com/blog/wp-content/uploads/2012/09/Reshoring.pdf, accessed
7/12/13, AR]
¶ The obituary for U.S. manufacturing has been written and under continuous revision since as
far back as ¶ ¶ the late 1970s. From legacy industries such as steel, automobiles, tires to
chemicals, apparel and sporting ¶ ¶ goods, U.S. manufacturers shed millions of jobs, often
outsourcing manufacturing to lower-wage locales, ¶ ¶ first in Mexico and the Caribbean basin
and then to Asia.235t its peak in mid-1977, the U.S. manufacturing sector numbered around
19.5 million jobs, 22 percent of all ¶ ¶ nonfarm employment. After that pivotal year,
manufacturing employment began a steady erosion through ¶ ¶ the 1980s and 1990s before
plummeting at the start of the 21st century. By 2010, U.S. manufacturing ebbed ¶ ¶ to under 12
million jobs and under 9 percent of the total workforce. ¶ ¶ But before its obituary could be
completed, manufacturing made a comeback in the United States. Not ¶ ¶ only is it no longer on
life support, it is actually growing. A compelling part of its revival is linked to the ¶ ¶ decision
by a number of U.S. companies to repatriate production to U.S. locations that had been done
in ¶ ¶ foreign countries, particularly China.¶ ¶ If the numbers of announced jobs and
investment are not enough to call reshoring a trend, perhaps the ¶ ¶ attention being given to it
by politicians and policy makers is. ¶ ¶ From the State of the Union address to presidential
debates, reshoring has proved an increasingly popular topic. ¶ ¶ President Barack Obama met
with executives from more than a dozen companies in 2012 to ask them how the ¶ ¶ United
States can build on the reshoring momentum. New tax proposals on the table would reward
companies ¶ ¶ for creating jobs in the United States and possibly eliminate tax advantages for
moving them overseas.¶ ¶ What’s driving the momentum in reshoring? What will it take
beyond the “Made in America” stamp ¶ ¶ to keep the reshoring momentum going? And how
do communities, regions and states create the ¶ ¶ environment and infrastructure to
encourage manufacturing investment and build reshoring strategies ¶ ¶ into their economic
development initiatives.¶ ¶ u.S. manufacturing EmploymEnt¶ ¶ ¶ In his 1982 best-seller
Megatrends, author John Naisbitt predicted a transformational shift in the United States ¶ ¶
from an industrial society to an information society, which he predicted would erase national
borders and create ¶ ¶ a truly global economy where things could be made and sold
anywhere.¶ ¶ A popular notion, beginning in the early 1980s and continuing for the next couple
decades, was that the ¶ ¶ U.S. didn’t need to be as concerned about its manufacturing sector
because it held a dominating advantage ¶ ¶ in technology and innovation, and whatever it
needed could be made cheaper someplace else.¶ ¶ No doubt, the nation has shifted to a
knowledge economy. But there’s also no doubt that manufacturing ¶ ¶ is a key component of
the knowledge economy and the nation is better off – and more secure – making ¶ ¶ things
than not making things.235 Manufacturing drives research and innovation. It promotes skills
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development. And it pays better than ¶ ¶ many other job classifications. The average hourly
pay for a factory worker making durable goods was ¶ ¶ $20.15 in January, almost a dollar an
hour more than the broad service category.¶ ¶ And now rapidly rising labor costs in what had
been considered low-wage havens in China and elsewhere in ¶ ¶ Asia, lower real estate and
construction costs in the United States, higher productivity from U.S. workers, and ¶ ¶ rising
energy and transportation costs have prompted some companies to bring manufacturing
operations ¶ ¶ back from overseas locations.¶ ¶ Mullican Flooring, for example, a major highquality hardwood flooring manufacturer, decided in late 2011 to ¶ ¶ expand its manufacturing
operations to a 309,000-square-foot facility in Johnson City, Tenn., replacing part of ¶ ¶ the
company’s production capacity that was coming from Asia. ¶ ¶ “We believe we’re on the
leading edge of a trend by U.S. manufacturers to shift jobs back to American soil,” ¶ ¶ says
Neil Poland, Mullican Flooring president.¶ ¶ Indeed, Mullican is just one example of a wave of
companies that have reshored manufacturing that had been ¶ ¶ done overseas. Among those
companies are some of the world’s best-known brands and products – such ¶ ¶ as appliances,
outdoor equipment and sporting goods – thought to be facing extinction in the American ¶ ¶
manufacturing experience. ¶ Executives at companies of ¶ ¶ more than $1 billion planning ¶ ¶
or considering reshoring¶ ¶ Executives from more than 100 ¶ ¶ companies in a broad range of
¶ ¶ industries who said they were ¶ ¶ actively considering reshoring¶ ¶ Executives at
companies with ¶ ¶ revenue of $10 billion or more ¶ ¶ who are planning or actively ¶ ¶
considering reshoring¶ ¶ ¶ In a March 2012 study, The Boston Consulting Group said reshoring
could add 2 million to 3 million ¶ ¶ jobs and an estimated $100 billion in annual output in a
range of industries by the year 2015. The study ¶ ¶ identified seven key industries in which the
rising costs of producing in China would make it more ¶ ¶ economical to shift to the United
States the manufacture of goods consumed in the United States.¶ ¶ According to the study,
products that were more likely candidates for reshored manufacturing are:¶ ¶ • Appliances and
electrical equipment including refrigerators and dishwashers, as well as lighting ¶ ¶ systems and
small appliances such as microwaves ¶ ¶ • Computers and electronics¶ ¶ • Transportation
products, plastics and rubber ¶ ¶ • Heavy machinery including air conditioning and heating
systems, office machinery and ¶ ¶ agricultural equipment¶ ¶ • Expensive items subject to
frequent changes in consumer demand or changes in color ¶ ¶ or style, like high-end clothing
and home furnishings ¶ ¶ • Products where safety concerns are vital including food products or
baby formula.236n a September 2012 study (A Homecoming for U.S. Manufacturing?),
PricewaterhouseCoopers honed in on ¶ ¶ six key areas influencing U.S. manufacturing trends:¶
¶ 1) Energy costs, the impact on transportation costs and protection against supply chain
disruptions: As global ¶ ¶ energy demand has surged so have global energy prices, making it
more expensive to ship products from ¶ ¶ greater distances. At the same time, companies that
make products far away from their customer base risk ¶ ¶ supply chain lags and disruptions
(such as with the tsunami that devastated Japan in March 2011.)¶ ¶ 2) Currency fluctuations:
The general depreciation of the U.S. dollar against other currencies has helped ¶ ¶ narrow the
gap between domestic production and production in China. The effect can be seen in the ¶ ¶
value of U.S. exports, which rose nearly 29 percent between 2007 and 2011.¶
Mexico is uniquely key for US reshoring – boosts competitiveness
Weitzman, Staff Writer for Financial Times, 12
[Hal, Financial Times, June 2, "Mexico most popular for US ‘reshoring’",
http://www.ft.com/intl/cms/s/ec164996-ad23-11e1-bb93-
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00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2
F0%2Fec164996-ad23-11e1-bb93-00144feabdc0.html&_i_referer=#axzz2YpVkHuqj
Mexico remains a far more popular destination than the US for “reshoring” manufacturing
to supply North American demand, according to research by a global business advisory firm.¶
The report, to be published on Monday by AlixPartners, could damp the hopes generated by US
cheerleaders for reshoring – where jobs previously outsourced to low-cost emerging economies
are brought back home.¶ US job creation slowed in May, according to official data on Friday that
showed employers created 69,000 posts last month, well below average expectations of about
150,000, while the unemployment rate rose to 8.2 per cent from 8.1 per cent.¶ Barack Obama, US
president, has cited reshoring as an example of the country’s increasing economic
competitiveness in the face of competition from emerging markets. However, the trend,
although real, may not benefit the US as much as some expect, the survey suggests.¶ Nearly half
the manufacturers surveyed by AlixPartners said they saw reshoring as a good opportunity, but
half also said Mexico was their top choice for relocating factories designed to supply the US
market. However, that is down from 70 per cent last year. In addition, 35 per cent said the US
was the most attractive place to reshore production – up from 21 per cent last year.¶ Some 15 per
cent of respondents said they could relocate factories elsewhere in Latin America or the
Caribbean, up from 8 per cent last year.¶ “A lot has been written of late about America’s
manufacturing rebound, and there certainly has been a very impressive rebound,” said Foster
Finley, co-head of AlixPartners’ transport practice. “However, Mexico still remains the nearshoring locale of choice for companies looking to overcome the higher costs of doing
business today in places like China.”¶ Chas Spence, one of the report’s authors, said relatively
low wages continued to make Mexico attractive. “Despite the logistic attraction of the US, the
labour arbitrage is still a monumental hurdle for the US to overcome,” he said. “Labour costs are
such a big part of the equation.Ӧ Russell Dillion, his co-author, said Mexico was particularly
competitive in low-skill assembly work. “US workers can bring more productivity to the
table, so that shrinks the gap between the US and Mexico. But in some industries – such as
auto – the productivity and quality gap is not as large as it was two decades ago,” he said.¶ Mr
Spence noted that Mexico had superior infrastructure to support relocating factories. “They
have an entire industry dedicated to serving a manufacturing transition,” he said. “The US doesn’t
have that to the same extent, because we’ve never really done it – reshoring is a new thing.”¶ Of
the companies that said they were considering bringing production closer to the US, almost 90 per
cent said they were likely to relocate within three years.¶ About half the companies surveyed
were from the automotive or aerospace industries. Respondents said the chief attraction of
relocating from Asia was lower freight costs, followed by improved speed to market and lower
inventory costs.
Reshoring solves competitiveness and the trade deficit – AMP proves
IEEE-USA Staff 13
[Todays Engineer, January, “Reshoring and the Resurgence of U.S. High-Tech
Manufacturing”,
http://www.todaysengineer.org/2013/Jan/reshoring.asp#sthash.eI0ZAnUz.dpuf,
accessed 7/12/13, AR]
If you aren’t yet familiar with the term “reshoring,” you may soon be. Reshoring, sometimes
called backshoring, onshoring or insourcing, is the reclamation of manufacturing jobs that had
been previously lured away to other countries that offered lower wages or other incentives to
U.S. manufacturers to move their operations or outsourcing overseas. In what many are hoping
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is a lasting trend, more and more American businesses are deciding to bring manufacturing jobs
back from places like China, Mexico and Central America — and more importantly, high-paying,
skilled manufacturing jobs.¶ Experts are cautiously optimistic that the reshoring phenomenon
will continue to gain momentum, and many — including the Obama Administration — are
betting that a rejuvenated, hi-tech manufacturing base will help to create much-needed jobs
for skilled American workers, and help to offset the nation’s growing trade deficit. In June
2011, the President launched the Advanced Manufacturing Partnership (AMP), a national
effort to bring together industry, universities, and the federal government to make strategic
investments in the development of emerging technologies that will create high-quality
manufacturing jobs and enhance U.S. global competitiveness. The federal government has a
natural role in supporting manufacturing, because manufacturing is vital to our national
security and economy.¶ The AMP National Program Office (NPO), which is hosted by the
National Institute of Standards and Technology (NIST), coordinates all federal agencies involved
in U.S. manufacturing: Department of Energy (DOE), Department of Commerce, Department of
Defense, the National Science Foundation, and NASA. The NPO also provides a central link to the
growing number of partnerships among manufacturers, universities, state and local
governments, and other manufacturing-related organizations.¶ In order to create an economy
built to last, America needs to make more of what it consumes and more of what the rest of the
world wants to buy. After losing millions of good manufacturing jobs in the years before and
during the deep recession, the economy has added nearly 500,000 manufacturing jobs since
February 2010—the strongest period of sustained job growth since the 1990s — and more
companies are making the decision to bring jobs back to the United States and make products
here.¶ To capitalize on this trend, the president’s FY 2013 budget has a strong focus on
strengthening advanced manufacturing capabilities and calls for $2.2 billion for federal
advanced manufacturing R&D at the National Science Foundation, Departments of Defense,
Energy, and Commerce and other agencies, a 19 percent increase from fiscal year 2012 and over
a 50 percent increase from fiscal year 2011.¶ In October, the Obama administration announced
that 10 public-private partnerships across America will receive $20 million in total awards to
help revitalize American manufacturing and encourage companies to invest in the United
States.¶ The 10 partnerships were selected through the Advanced Manufacturing Jobs and
Innovation Accelerator Challenge, which is a competitive multi-agency grant process announced
in May 2012 to support initiatives that strengthen advanced manufacturing at the local level.
These public-private partnerships consist of small and large businesses, colleges, nonprofits and
other local stakeholders that “cluster” in a particular area. The funds will help the winning
clusters support local efforts to spur job creation through a variety of projects, including
initiatives that connect innovative small suppliers with large companies, link research with the
start-ups that can commercialize new ideas, and train workers with skills that firms need to
capitalize on business opportunities. ¶ “A strong manufacturing base in America is critical to
the health of the U.S. economy, and these awards further demonstrate the Obama
administration’s commitment to keeping this country on the cutting edge of innovation in
manufacturing,” said Acting U.S. Commerce Secretary Rebecca Blank. “This investment will help
accelerate and unleash the most promising ideas in advanced manufacturing, and bring those
ideas to market. This will lead to good jobs for American workers, increase the nation’s
competitiveness, and strengthen an economy that’s built to last.”¶ “By partnering across the
federal government, these grants will help us leverage resources and ensure that training
programs for advanced manufacturing careers provide the skills, certifications and credentials
that employers want to see from day one,” Secretary of Labor Hilda L. Solis said.¶ “If we were to
lose manufacturing we would lose our capacity to do R&D,” said NIST Director Patrick Gallagher
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told scientist, industry leaders and public officials who attended The Atlantic's “From Inspiration
to Innovation Summit,” held at Ronald Reagan Washington National Airport in Arlington, Va.,
last May. “We’ve got to make this an imperative.”¶
Quick times to market are the key internal link to reshoring.
Vinas and Selko 12,
(Adrienne and Vinas, Mar 10, 2012. Industry Week. “Nearshoring Fuels Mexican Manufacturing
Growth: Security concerns don't yet appear to be putting a major dent in Mexico's appeal to
manufacturers. Here's why.” http://www.industryweek.com/global-economy/nearshoring-fuelsmexican-manufacturing-growth, [Accessed 7/10/2013], JB).
Even with those concerns, Mexico continues to benefit from U.S. companies and other foreign
investors who see it as an attractive manufacturing destination. In fact, 63% of those surveyed
by AlixPartners, a business advisory firm, named Mexico the most attractive country for siting
manufacturing operations closer to the United States. Only 19% of the companies reported
supply-chain disruptions in Mexico as a result of security issues. And 50% reported they expect
things to improve over the next five years.
Mexico's proximity to the United States solves the most pressing issue facing manufacturers,
which is speed to market, according to Rich Bergmann, global lead for manufacturing for
Accenture. "The stability of the time schedule of supply has become paramount in
manufacturing. Whether we like it or not, a 12-month forecast, steady-state demand is no
longer a reality. Everyone is running lean supply chains and inventories. Being close to
customers is key to reducing lead time. Add to that the overall total landed cost and that
explains why reshoring is occurring in Mexico," he says.
Absent congestion we’re poised for a resurgence in Mexico-based
manufacturing- a host of factors help narrow the cost differential, but just-intime manufacturing is the key internal link.
MFI International, a flexible manufacturing company in Mexico, 12
(May 10, 2012. “Understanding how Mexican manufacturers manage labor law issues.”
http://info.mfiintl.com/blog/?Tag=manufacturing+in+mexico&BBPage=1, [Accessed 7/10/13],
JB)
Approximately a decade ago, China began to make its mark on the scene of the world
manufacturing industry. As capitalization caused its economy to grow by leaps and bounds,
China’s share of the international production trade also expanded exponentially, driven by a
massive workforce ready to provide inexpensive labor to companies from around the globe.
Although China’s growth was a boon for many, such as the commodity-rich South American
countries that were ready to feed this burgeoning industrial superpower, it looked to be a
death knell for the manufacturing industry in Mexico that did not appear to be able to match
China in terms of costs.
But as Fiat’s recent $550 million investment in the Fiat 500 production line in Mexico shows,
these trends are starting to change. What’s especially telling about this new facility, expected
to produce 120,000 vehicles a year, is that while the majority of these units are destined for
North and South America, at least some will be headed east. As Felipe Calderon, the country’s
president said in a recent Financial Times article, “I think it is the first time that a Mexican
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vehicle, at least in recent times, is to be exported to China.” In fact, not only is Mexico holding
its ground against China, it is even beginning to gain ground in its market share of total US
imports, which is the world’s largest importer. The United Nations Commodity Trade Statistics
Database notes that in 2010 Mexico accounted for 12.3 percent of all of the non-oil imports
into the United States, up from 10.6 percent in 1999.
What has helped drive this sea change? Part of this is that China’s exceptionally low labor costs
has proven to be unsustainable, helping to narrow the gap between the cost of manufacturing
in Mexico and China. While Mexican wages were 237 percent higher than Chinese in 2002, this
figure has shrunk to an estimated 14 percent today, with Chinese worker wages expected to
eclipse their Mexican counterparts within the next few years. Even more importantly, rising fuel
costs have further eroded into China’s market savings as it has become increasingly expensive
to ship materials and finished goods long distances.
However, just as in real estate, location is also a big factor. Mexico’s proximity to the United
States means faster shipping times---two to seven days as opposed to the 20 to 40 needed for
transport from China. This is key for U.S. companies as they rely on third-party advice to guide
their just-in-time manufacturing, a strategy that allows companies to reduce costs by
shrinking their inventories. Mexico’s geography has also allowed it to be open to trade
agreements with other countries. It’s 44 international trade agreements mean that companies
can open manufacturing plants and source materials from a wide range of countries while
avoiding hefty duties. Mexico’s prime location pays off in other ways as well; for one thing,
there is less of a culture-clash for U.S. executives when working with Mexico, and Mexico shares
the same time zones in the United States. This makes it easier for different business partners to
communicate, aided by the fact that most university-educated people in Mexico speak English.
Overall, Mexico’s setting provides a real edge to companies who are already realizing that the
conventional wisdom---that China is the place for inexpensive manufacturing---may no longer
apply.
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Congestion Reduction
Congested infrastructure displeases businesses and spurs reshoring to Mexico
TeleTech, 12
[3/9/12, TeleTech, “U.S. Companies Look South for New Outsourcing Destinations”,
http://www.teletech.com/news/enterprise-management/u-s-companies-look-south-for-newoutsourcing-destinations-800726708/, Accessed 7/10/13, ML]
As the global business process outsourcing market continues to broaden, many U.S. companies
are looking to Latin America to host technology, IT, and BPO services. Clients are attracted to
the proximity, cultural familiarity, and surmountable language barriers that these markets
offer.¶ Mexico is a particularly vibrant outsourcing market, by virtue of its shared border with
the U.S. and its rising economic position within the global marketplace.¶ "Mexico has made
important advances," Javier Allard, president of the Mexican IT industry trade group AMITI, told
Smart Planet. "We don't want to compete with India, China, or the Philippines. There are many
niches."¶ U.S.-based clients are diversifying their portfolio of IT and business service suppliers,
and companies that had been shipping the majority of their business to outsourcing hubs in
Asia are now beginning to tap the Latin American markets.¶ Climbing labor costs, attrition and
congested infrastructure have made markets such as China and India more problematic to U.S.
companies. India, with its massive population and firmly embedded market of contact centers,
remains the world's outsourcing leader, but Mexico is rising and is already at the top of the Latin
American sector.
Congested infrastructure causes businesses to consider alternate optionsreshoring to Mexico proves
Villagran, correspondent for Mexico City at the Associated press, 12
[Lauren, 3/8/12, SmartPlanet, ‘Near shore’ outsourcing gains momentum in Mexico”,
http://www.smartplanet.com/blog/global-observer/-8216near-shore-outsourcing-gainsmomentum-in-mexico/4707, Accessed 7/10/13, ML]
U.S. companies looking to outsource IT services and business processes are increasingly eyeing
Latin America, and Mexico in particular.¶ It’s “near shore” versus offshore in action.¶ Closer to
home than India or China, often with a deeper cultural affinity (especially among Southwestern
states), Mexico has become an increasingly competitive option in the past five years.¶ “Mexico
has made important advances,” said Javier Allard, president of the Mexican IT industry trade
group AMITI. “We don’t want to compete with India, China or the Philippines. There are many
niches.Ӧ Neoris, a Mexico-based company that provides IT and business process outsourcing
(BPO) services in Mexico, Argentina and elsewhere around the globe, is one of the companies
seeing gains, as demand for near shore outsourcing from U.S. companies grows.¶ Neoris handles
the e-commerce portal for a major home improvement retail chain; manages “enterprise
resource planning,” or ERP, for an auto parts manufacturer and oversees the integration of
distribution systems for a shipping company and its clients.¶ “The U.S. customer is diversifying
their portfolio of (IT services) suppliers,” said Carlos Díaz, director of Neoris outsourcing
services. “Companies that had all their eggs in the Asia basket, mainly India, are diversifying to
Latin America.”¶ It’s part of a trend toward diversification, according to Softtek, another IT and
BPO near shore services provider with operations in Mexico.¶ Climbing labor costs, attrition and
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congested infrastructure in India have motivated companies to look elsewhere for alternatives
or complementary IT outsourcing over the past five years, according to a 2011 Softtek white
paper.¶ With its massive, highly trained labor pool, India remains the global leader in outsourced
IT services by far. But Mexico ranks at the top of Latin American countries, Díaz said.¶ Mexico has
an IT labor pool of around 600,000 people, Díaz said. That compares with 250,000 in Brazil, the
second largest market. Argentina and Chile come next, with 70,000 and 20,000 IT professionals,
respectively.¶ Each year, Mexico graduates around 65,000 IT professionals, Díaz said.¶ Mexico
has proximity going for it. There are around 300 flights daily between the U.S. and Mexico. The
country operates in Pacific, Mountain and Central time zones, meaning that business hours are
roughly the same. Plus, the countries have nearly two decades of business relationships built
upon NAFTA, signed in 1994.¶ “There is a very important cultural affinity,” said Allard. “In
business, we know each other and we understand each other.Ӧ NAFTA provides two other
benefits: The pact ensures that intellectual property law similarly covers U.S. companies in
Mexico and vice versa, and it provides for easily obtaining business visas to work between the
two nations.
Congestion drives up business costs- deters business in China
Lafond, News Editor at the Boston Consulting Group, 7
[Anita, 5/9/07, Boston Consulting Group, “Supply Chain Congestion Can Make China Sourcing
Undesirable For Some U.S. And European Companies”,
http://www.manufacturing.net/news/2007/05/supply-chain-congestion-can-make-chinasourcing-undesirable-for-some-us-and-european-companies, Accessed 7/10/13, ML]
Sourcing to China might not necessarily be the most cost-effective solution, considering the
congestion at North America's West Coast ports and continuing capacity problems at major
European ports, and companies might want to consider alternatives such as Mexico and Central
and Eastern Europe, according to a new report, “Surviving the China Riptide: How to Profit from
the Supply Chain Bottleneck,” from the Boston Consulting Group (BCG).¶ ¶ Companies in both
the U.S. and Europe should evaluate how these transportation bottlenecks can affect their
profits, and should possibly reconsider their manufacturing and distribution allocations, said
George Stalk Jr., a BCG senior partner based in Toronto, and Kevin Waddell, a partner in BCG's
Warsaw office.¶ ¶ Although labor and costs are much higher than in China, U.S. companies might
be better off moving manufacturing operations to Mexico or even keeping them in the states,
and West European companies that now source from China may want to switch all or part of
their manufacturing operations to Central and Eastern Europe, said Stalk and Waddell.¶ ¶
According to the report, many companies fall into the trap of believing that sourcing from
China will result in lower product costs. In actuality, the supply chain dynamics can, in many
situations, drive up overall costs and reduce profitability.¶ ¶ While there is still some excess
capacity at major European ports, and steps are being taken to expand capacity, the situation in
the U.S. is far more serious and far more complicated - with many ports experiencing virtual
gridlock. Because there is no politically viable solution, the effective result is "a giant non-tariff
trade barrier," noted Stalk and Waddell.¶ ¶ The report suggests that companies should take a
“second look” at their China outsourcing operations and offers several options including:
explore shipping alternatives, such as air freight; improving the ability to move goods quickly
and efficiently past congestion; and manufacturing products domestically, accepting higher
production costs as a tradeoff for lower supply chain costs and reliable delivery schedules.
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Congestion at the border incentives trade shift to China- infrastructure
investment key
Pastor, Director of the Center for North American Studies at American
University, 5/22/13
[Robert A., 5/22/13, Council on Foreign Relations, “Shortcut to U.S. Economic Competitiveness:
A Seamless North American Market”, http://www.isn.ethz.ch/DigitalLibrary/Articles/Detail/?id=163965, Accessed7/9/13, ML]
North America was on track to create a competitive market in the 1990s. The most rapid job
expansion in recent U.S. history occurred between 1993 and 2001. This coincided with the onset
of NAFTA and the end of most trade and investment barriers between the United States,
Canada, and Mexico. Trade tripled and foreign direct investment grew fivefold. But 2001 proved
to be a turning point for North America just as the outlines of a continental market were
becoming visible. Growth in trade has since declined by two-thirds and foreign investment by
half.¶ There are multiple causes for the decline. China entered the World Trade Organization
(WTO) and rapidly expanded its exports to all three countries in North America. Post-9/11
restrictions significantly raised the cost of moving products back and forth across North
American borders. There has been little investment in common infrastructure, resulting in
long wait times at borders and slower movement of commercial goods. But the main cause
was simply the failure of leaders in the three countries to build on NAFTA’s foundation and
create a seamless market.¶ Deepening North American integration is more productive than
widening it to add more free trade agreements (FTAs), but it will require the United States to
address numerous domestic issues with its neighbors. Regulatory requirements should be
meshed so as to eliminate trade protection while also ensuring safety and environmental
concerns. National infrastructure grids—roads, railroads, electricity, and natural gas pipelines—
should be built and connected. Repetitive and unnecessary border inspections should be
eliminated. Labor market needs should be addressed on a continental basis.
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Impact- Manufacturing
A strong manufacturing base is key to advanced manufacturing and innovation
systems
Lind, Policy director of New America’s Economic Growth Program, 12
(Michael, “Value Added: America’s Manufacturing
Future,” http://growth.newamerica.net/sites/newamerica.net/files/policydocs/Lin
d,%20Michael%20and%20Freedman,%20Joshua%20-%20NAF%20%20Value%20Added%20America%27s%20Manufacturing%20Future.pdf,
accessed 7/7/13, AR )
In the United States, private sector manufacturing is the¶ largest source of R&D. The private
sector itself accounts for¶ 71 percent of total R&D in the United States, and although¶ U.S.
manufacturing accounts for only 11.7 percent of GDP¶ in 2012, the manufacturing sector
accounts for 70 percent¶ of all R&D spending by the private sector in the U.S.15 And¶ R&D
and innovation are inextricably connected: a National¶ Science Foundation survey found that
22 percent of manufacturers¶ had introduced product innovations and the¶ same percentage
introduced process innovations in the¶ period 2006-2008, while only 8 percent of
nonmanufacturers¶ reported innovations of either kind.16 Even as the¶ manufacturing
industry in the United States underwent¶ major changes and suffered severe job losses during
the¶ last decade, R&D spending continued to follow a general¶ upward growth path.¶ A
disproportionate share of workers involved in R&D are¶ employed directly or indirectly by
manufacturing companies;¶ for example, the US manufacturing sector employs¶ more than a
third of U.S. engineers.17 This means that¶ manufacturing provides much of the demand for
the U.S.¶ innovation ecosystem, supporting large numbers of scientists¶ and engineers who
might not find employment if¶ R&D were offshored along with production.¶ Why America
Needs the¶ Industrial Commons¶ Manufacturing creates an industrial commons, which spurs¶
growth in multiple sectors of the economy through linked¶ industries. An “industrial
commons” is a base of shared¶ physical facilities and intangible knowledge shared by a¶
number of firms. The term “commons” comes from communally-¶ shared pastures or fields in
premodern Britain.¶ The industrial commons in particular in the manufacturing¶ sector includes
not only large companies but also small and¶ medium sized enterprises (SMEs), which employ
41 percent¶ of the American manufacturing workforce and account for¶ 86 percent of all
manufacturing establishments in the U.S.¶ Suppliers of materials, component parts, tools, and
more¶ are all interconnected; most of the time, Harvard Business¶ School professors Gary
Pisano and Willy Shih point out,¶ these linkages are geographic because of the ease of
interaction¶ and knowledge transfer between firms.18 Examples of¶ industrial commons
surrounding manufacturing are evident¶ in the United States, including the I-85 corridor from¶
Alabama to Virginia and upstate New York.19¶ Modern economic scholarship emphasizes the
importance¶ of geographic agglomeration effects and co-location synergies.¶ 20 Manufacturers
and researchers alike have long¶ noted the symbiotic relationship that occurs when
manufacturing¶ and R&D are located near each other: the manufacturer¶ benefits from the
innovation, and the researchers¶ are better positioned to understand where innovation¶ can
be found and to test new ideas. While some forms of¶ knowledge can be easily recorded and
transferred, much¶ “know-how” in industry is tacit knowledge. This valuable¶ tacit knowledge
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base can be damaged or destroyed by the¶ erosion of geographic linkages, which in turn
shrinks the¶ pool of scientists and engineers in the national innovation¶ If an advanced
manufacturing core is not retained, then¶ the economy stands to lose not only the
manufacturing¶ industry itself but also the geographic synergies of the¶ industrial commons,
including R&D. Some have warned¶ that this is already the case: a growing share of R&D by¶
U.S. multinational corporations is taking place outside of¶ the United States.21 In particular, a
number of large U.S.¶ manufacturers have opened up or expanded R&D facilities¶ in China
over the last few years.22¶ Next Generation Manufacturing¶ A dynamic manufacturing sector
in the U.S. is as important¶ as ever. But thanks to advanced manufacturing technology¶ and
technology-enabled integration of manufacturing¶ and services, the very nature of
manufacturing is¶ changing, often in radical ways. What will the next generation¶ of
manufacturing look like?¶ In 1942, the economist Joseph Schumpeter declared that “the¶
process of creative destruction is the essential fact about capitalism.Ӧ By creative destruction,
Schumpeter did not mean¶ the rise and fall of firms competing in a technologically-static¶
marketplace. He referred to a “process of industrial mutation—¶ if I may use that biological
term—that incessantly revolutionizes¶ the economic structure from within, incessantly¶
destroying the old one, incessantly creating the new one.” He¶ noted that “these revolutions
are not strictly incessant; they¶ occurred in discrete rushes that are separated from each other¶
by spaces of comparative quiet. The process as a whole works¶ incessantly, however, in the
sense that there is always either¶ revolution or absorption of the results of revolution.”23¶ As
Schumpeter and others have observed, technological¶ innovation tends to be clustered in
bursts or waves, each¶ dominated by one or a few transformative technologies¶ that are
sometimes called “general purpose technologies.”¶ Among the most world-transforming
general pur-¶ pose technologies of recent centuries have been the steam¶ engine, electricity,
the internal combustion engine, and¶ information technology.24¶ As epochal as these earlier
technology-driven innovations¶ in manufacturing processes and business models proved¶ to
be, they are rapidly being superseded by new technology-¶ driven changes as part of the
never-ending process of¶ Schumpeterian industrial mutation.¶ The latest wave of innovation
in industrial technology has¶ been termed “advanced manufacturing.” The National¶ Science
and Technology Council of the Executive Office of¶ the President defines advanced
manufacturing as “a family¶ of activities that (a) depend on the use and coordination of¶
information, automation, computation, software, sensing,¶ and networking, and/or (b) make
use of cutting edge materials¶ and emerging capabilities enabled by the physical and¶ biological
sciences, for example, nanotechnology, chemistry,¶ and biology. It involves both new ways to
manufacture¶ existing products and the manufacture of new products¶ emerging from new
advanced technologies.”25¶ Already computer-aided design (CAD) and computer-aided¶
manufacturing (CAM) programs, combined with computer¶ numerical control (CNC), allow
precision manufacturing¶ from complex designs, eliminating many wasteful¶ trials and steps in
finishing. CNC is now ubiquitous in¶ the manufacturing sector and much of the employment¶
growth occurring in the sector requires CNC skills or training.¶ Information technology has
allowed for enterprise¶ resource planning (ERP) and other forms of enterprise¶ software to
connect parts of the production process (both¶ between and within a firm), track systems, and
limit waste¶ when dealing with limited resources. Other areas in which¶ advanced
manufacturing will play a role in creating new¶ products and sectors and changing current ones
are:¶ Supercomputing. America’s global leadership in¶ technology depends in part on whether
the U.S.¶ can compete with Europe and Asia in the race¶ to develop “exascale computing,” a
massive augmentation¶ of computer calculating power that¶ has the potential to revolutionize
predictive sci--¶ ences from meteorology to economics. According¶ to the Advanced Scientific
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Computing Advisory¶ Committee (ASCAC), “If the U.S. chooses to be¶ a follower rather than a
leader in exascale computing,¶ we must be willing to cede leadership”¶ in industries including
aerospace, automobiles,¶ energy, health care, novel material development,¶ and information
technology.26¶ Robotics: The long-delayed promise of robotics¶ is coming closer to fulfillment.
Google and¶ other firms and research consortiums are testing¶ robotic cars, and Nevada
recently amended¶ its laws to permit autonomous automobiles.27¶ Amazon is experimenting
with the use of robots¶ in its warehouses.28¶ Nanotechnology may permit manufacturing at¶
extremely small scales including the molecular¶ and atomic levels.29 Nanotechnology is also a
key¶ research component in the semiconductor indus-¶ industry,¶ as government funding is
sponsoring projects¶ to create a “new switch” capable of supplanting¶ current semiconductor
technology.30¶ Photonics or optoelectronics, based on the conversion¶ of information carried
by electrons to¶ photons and back, has potential applications in¶ sectors as diverse as
telecommunications, data¶ storage, lighting and consumer electronics.¶ Biomanufacturing is
the use of biological processes¶ or living organisms to create inorganic structures,¶ as well as
food, drugs and fuel. Researchers at MIT¶ have genetically modified a virus that generates¶
cobalt oxide nanowires for silicon chips.31¶ Innovative materials include artificial
“metamaterials”¶ with novel properties. Carbon nanotubes,¶ for example, have a strength-toweight ratio that¶ no other material can match.32¶ Advanced manufacturing using these and
other cuttingedge¶ technologies is not only creating new products and¶ new methods of
production but is also transforming¶ familiar products like automobiles. The rapid growth in¶
electronic and software content in automobiles, in forms¶ like GPS-based guidance systems,
information and entertainment¶ technology, anti-lock brakes and engine control¶ systems, will
continue. According to Ford, around 30 percent¶ of the value of one of its automobiles is
comprised¶ by intellectual property, electronics and software. In the¶ German automobile
market, electronic content as a share¶ of production costs is expected to rise from 20-30
percent¶ in 2007 to 50 percent by 2020.33¶
Advanced manufacturing technology deters war
Paone, 66th Air Base Wing Public Affairs for the US Air Force, 09 (Chuck, 8-10-09,
“Technology convergence could prevent war, futurist
says,”http://www.af.mil/news/story.asp?id=123162500, accessed 7/7/13, AR)
The convergence of "exponentially advancing technologies" will form a "super-intelligence" so
formidable that it could avert war, according to one of the world's leading futurists. ¶ Dr. James
Canton, CEO and chairman of the Institute for Global Futures, a San Francisco-based think tank,
is author of the book "The Extreme Future" and an adviser to leading companies, the military
and other government agencies. ¶ He is consistently listed among the world's leading speakers
and has presented to diverse audiences around the globe. ¶ He will address the Air Force
Command and Control Intelligence, Survelliance and Reconnaissance Symposium, which will be
held Sept. 28 through 30 at the MGM Grand Hotel at Foxwoods in Ledyard, Conn., joining Air
Force Chief of Staff Gen. Norton Schwartz and a bevy of other government and industry
speakers. ¶ He offered a sneak preview of his symposium presentation and answered various
questions about the future of technology and warfare in early August. ¶ "The superiority of
convergent technologies will prevent war," Doctor Canton said, claiming their power would
present an overwhelming deterrent to potential adversaries. While saying that the U.S. will
build these super systems faster and better than other nations, he acknowledged that a new
arms race is already under way. ¶ "It will be a new MAD for the 21st century," he said,
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referring to the Cold War-era acronym for Mutually Assured Destruction, the idea that a nuclear
first strike would trigger an equally deadly response. It's commonly held that this knowledge has
essentially prevented any rational state from launching a nuclear attack. ¶ Likewise, Doctor
Canton said he believes rational nation states, considering this imminent technology explosion,
will see the futility of nation-on-nation warfare in the near future. Plus there's the "socioeconomic linking of the global market system." ¶ "The fundamental macroeconomics on the
planet favor peace, security, capitalism and prosperity," he said. Doctor Canton projects that
nations, including those not currently allied, will work together in using these smart
technologies to prevent non-state actors from engaging in disruptive and deadly acts. ¶ As a
futurist, Doctor Canton and his team study and predict many things, but their main area of
expertise -- and the one in which he's personally most interested -- is advanced and emerging
technology. ¶ "I see that as the key catalyst of strategic change on the planet, and it will be for
the next 100 years," he said. He focuses on six specific technology areas: "nano, bio, IT, neuro,
quantum and robotics;" those he expects to converge in so powerful a way. ¶ Within the
information technology arena, Doctor Canton said systems must create "meaningful data,"
which can be validated and acted upon. ¶ "Knowledge engineering for the analyst and the
warfighter is a critical competency that we need to get our arms around," he said. "Having an
avalanche of data is not going to be helpful." ¶ Having the right data is. ¶ "There's no way for
the human operator to look at an infinite number of data streams and extract meaning," he
said. "The question then is: How do we augment the human user with advanced artificial
intelligence, better software presentation and better visual frameworks, to create a system
that is situationally aware and can provide decision options for the human operator, faster
than the human being can?" ¶ He said he believes the answers can often be found already in
what he calls 'edge cultures.' ¶ "I would look outside of the military. What are they doing in
video games? What are they doing in healthcare? What about the financial industry?" ¶ Doctor
Canton said he believes that more sophisticated artificial intelligence applications will transform
business, warfare and life in general. Many of these are already embedded in systems or
products, he says, even if people don't know it.
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Impact- Conflict
Collapse of heg causes great power conflict
Kagan, senior fellow at the Brookings Institute, 12
[Robert, 1-11, The New Republic, “Not Fade Away”,
http://www.newrepublic.com/article/politics/magazine/99521/america-world-powerdeclinism?passthru=ZDkyNzQzZTk3YWY3YzE0OWM5MGRiZmIwNGQwNDBiZmI&utm_source=E
ditors+and+Bloggers&utm_campaign=cbaee91d9d-Edit_and_Blogs&utm_medium=email#,
accessed 6-29-13, GSK]
BUT THERE IS a danger. It is that in the meantime, while the nation continues to struggle,
Americans may convince themselves that decline is indeed inevitable, or that the United States
can take a time-out from its global responsibilities while it gets its own house in order. To many
Americans, accepting decline may provide a welcome escape from the moral and material
burdens that have weighed on them since World War II. Many may unconsciously yearn to
return to the way things were in 1900, when the United States was rich, powerful, and not
responsible for world order.¶ The underlying assumption of such a course is that the present
world order will more or less persist without American power, or at least with much less of it;
or that others can pick up the slack; or simply that the benefits of the world order are
permanent and require no special exertion by anyone. Unfortunately, the present world
order—with its widespread freedoms, its general prosperity, and its absence of great power
conflict—is as fragile as it is unique. Preserving it has been a struggle in every decade, and will
remain a struggle in the decades to come. Preserving the present world order requires constant
American leadership and constant American commitment.
US hegemony key to democracy, economic growth and the absence of great
power wars
Kagan, senior fellow at the Brookings Institute, 12
[Robert, 2-11, Wall Street Journal, “Why the World Needs America”,
http://online.wsj.com/article/SB10001424052970203646004577213262856669448.html,
accessed 6-28-13, GSK]
With the outbreak of World War I, the age of settled peace and advancing liberalism—of
European civilization approaching its pinnacle—collapsed into an age of hyper-nationalism,
despotism and economic calamity. The once-promising spread of democracy and liberalism
halted and then reversed course, leaving a handful of outnumbered and besieged democracies
living nervously in the shadow of fascist and totalitarian neighbors. The collapse of the British
and European orders in the 20th century did not produce a new dark age—though if Nazi
Germany and imperial Japan had prevailed, it might have—but the horrific conflict that it
produced was, in its own way, just as devastating.¶ Would the end of the present Americandominated order have less dire consequences? A surprising number of American intellectuals,
politicians and policy makers greet the prospect with equanimity. There is a general sense that
the end of the era of American pre-eminence, if and when it comes, need not mean the end of
the present international order, with its widespread freedom, unprecedented global
prosperity (even amid the current economic crisis) and absence of war among the great
powers.¶ American power may diminish, the political scientist G. John Ikenberry argues, but "the
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underlying foundations of the liberal international order will survive and thrive." The
commentator Fareed Zakaria believes that even as the balance shifts against the U.S., rising
powers like China "will continue to live within the framework of the current international
system." And there are elements across the political spectrum—Republicans who call for
retrenchment, Democrats who put their faith in international law and institutions—who don't
imagine that a "post-American world" would look very different from the American world.¶ If
all of this sounds too good to be true, it is. The present world order was largely shaped by
American power and reflects American interests and preferences. If the balance of power
shifts in the direction of other nations, the world order will change to suit their interests and
preferences. Nor can we assume that all the great powers in a post-American world would
agree on the benefits of preserving the present order, or have the capacity to preserve it, even
if they wanted to.
Collapse of heg causes endless great power wars—miscalculation and
competition
Kagan, senior fellow at the Brookings Institute, 12
[Robert, 2-11, Wall Street Journal, “Why the World Needs America”,
http://online.wsj.com/article/SB10001424052970203646004577213262856669448.html,
accessed 6-28-13, GSK]
Most commentators who welcome this scenario imagine that American predominance would
be replaced by some kind of multipolar harmony. But multipolar systems have historically
been neither particularly stable nor particularly peaceful. Rough parity among powerful
nations is a source of uncertainty that leads to miscalculation. Conflicts erupt as a result of
fluctuations in the delicate power equation.¶ War among the great powers was a common, if
not constant, occurrence in the long periods of multipolarity from the 16th to the 18th
centuries, culminating in the series of enormously destructive Europe-wide wars that followed
the French Revolution and ended with Napoleon's defeat in 1815.¶ The 19th century was
notable for two stretches of great-power peace of roughly four decades each, punctuated by
major conflicts. The Crimean War (1853-1856) was a mini-world war involving well over a
million Russian, French, British and Turkish troops, as well as forces from nine other nations; it
produced almost a half-million dead combatants and many more wounded. In the FrancoPrussian War (1870-1871), the two nations together fielded close to two million troops, of
whom nearly a half-million were killed or wounded.¶ The peace that followed these conflicts
was characterized by increasing tension and competition, numerous war scares and massive
increases in armaments on both land and sea. Its climax was World War I, the most destructive
and deadly conflict that mankind had known up to that point. As the political scientist Robert W.
Tucker has observed, "Such stability and moderation as the balance brought rested ultimately
on the threat or use of force. War remained the essential means for maintaining the balance
of power."¶ There is little reason to believe that a return to multipolarity in the 21st century
would bring greater peace and stability than it has in the past. The era of American
predominance has shown that there is no better recipe for great-power peace than certainty
about who holds the upper hand.¶ President Bill Clinton left office believing that the key task for
America was to "create the world we would like to live in when we are no longer the world's
only superpower," to prepare for "a time when we would have to share the stage." It is an
eminently sensible-sounding proposal. But can it be done? For particularly in matters of
security, the rules and institutions of international order rarely survive the decline of the
nations that erected them. They are like scaffolding around a building: They don't hold the
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building up; the building holds them up.¶ Many foreign-policy experts see the present
international order as the inevitable result of human progress, a combination of advancing
science and technology, an increasingly global economy, strengthening international
institutions, evolving "norms" of international behavior and the gradual but inevitable triumph
of liberal democracy over other forms of government—forces of change that transcend the
actions of men and nations.¶ Americans certainly like to believe that our preferred order
survives because it is right and just—not only for us but for everyone. We assume that the
triumph of democracy is the triumph of a better idea, and the victory of market capitalism is the
victory of a better system, and that both are irreversible. That is why Francis Fukuyama's thesis
about "the end of history" was so attractive at the end of the Cold War and retains its appeal
even now, after it has been discredited by events. The idea of inevitable evolution means that
there is no requirement to impose a decent order. It will merely happen.¶ But international
order is not an evolution; it is an imposition. It is the domination of one vision over others—in
America's case, the domination of free-market and democratic principles, together with an
international system that supports them. The present order will last only as long as those who
favor it and benefit from it retain the will and capacity to defend it.¶ There was nothing
inevitable about the world that was created after World War II. No divine providence or
unfolding Hegelian dialectic required the triumph of democracy and capitalism, and there is no
guarantee that their success will outlast the powerful nations that have fought for them.
Democratic progress and liberal economics have been and can be reversed and undone. The
ancient democracies of Greece and the republics of Rome and Venice all fell to more powerful
forces or through their own failings. The evolving liberal economic order of Europe collapsed in
the 1920s and 1930s. The better idea doesn't have to win just because it is a better idea. It
requires great powers to champion it.¶ If and when American power declines, the institutions
and norms that American power has supported will decline, too. Or more likely, if history is a
guide, they may collapse altogether as we make a transition to another kind of world order, or
to disorder. We may discover then that the U.S. was essential to keeping the present world
order together and that the alternative to American power was not peace and harmony but
chaos and catastrophe—which is what the world looked like right before the American order
came into being.
U.S. Failure on the competitiveness question results in retrenchment and Great
Power Conflict — economic growth is vital to prevent the collapse of U.S.
hegemony.
Khalilzad, Counselor at the Center for Strategic and International Studies, 11
[Zalmay, 02/08, “The Economy and National Security,” National Review,
http://www.nationalreview.com/articles/print/259024, Accessed 02-08-2011]
Today, economic and fiscal trends pose the most severe long-term threat to the United States’
position as global leader. While the United States suffers from fiscal imbalances and low
economic growth, the economies of rival powers are developing rapidly. The continuation of
these two trends could lead to a shift from American primacy toward a multi-polar global
system, leading in turn to increased geopolitical rivalry and even war among the great powers . The
current recession is the result of a deep financial crisis, not a mere fluctuation in the business cycle. Recovery is likely to be
protracted. The crisis was preceded by the buildup over two decades of enormous amounts of debt throughout the U.S. economy —
ultimately totaling almost 350 percent of GDP — and the development of credit-fueled asset bubbles, particularly in the housing
sector. When the bubbles burst, huge amounts of wealth were destroyed, and unemployment rose to over 10 percent. The decline
of tax revenues and massive countercyclical spending put the U.S. government on an unsustainable fiscal path. Publicly held national
debt rose from 38 to over 60 percent of GDP in three years. Without faster economic growth and actions to reduce deficits, publicly
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held national debt is projected to reach dangerous proportions. If interest rates were to rise significantly, annual interest payments
— which already are larger than the defense budget — would crowd out other spending or require substantial tax increases that
would undercut economic growth. Even worse, if
unanticipated events trigger what economists call a “sudden
stop” in credit markets for U.S. debt, the United States would be unable to roll over its
outstanding obligations, precipitating a sovereign-debt crisis that would almost certainly
compel a radical retrenchment of the United States internationally. Such scenarios would reshape
the international order . It was the economic devastation of Britain and France during World War II, as well as the rise of
other powers, that led both countries to relinquish their empires. In the late 1960s, British leaders concluded that they lacked the
economic capacity to maintain a presence “east of Suez.” Soviet economic weakness, which crystallized under Gorbachev,
contributed to their decisions to withdraw from Afghanistan, abandon Communist regimes in Eastern Europe, and allow the Soviet
Union to fragment. If the
U.S. debt problem goes critical, the United States would be compelled to
retrench , reducing its military spending and shedding international commitments. We face this
domestic challenge while other major powers are experiencing rapid economic growth. Even though
countries such as China, India, and Brazil have profound political, social, demographic, and economic problems,
their economies are growing faster than ours, and this could alter the global distribution of power .
These trends could in the long term produce a multi-polar world . If U.S. policymakers fail to
act and other powers continue to grow, it is not a question of whether but when a new
international order will emerge . The closing of the gap between the United States and its rivals
could intensify geopolitical competition among major powers , increase incentives for local
powers to play major powers against one another, and undercut our will to preclude or
respond to international crises because of the higher risk of escalation. The stakes are high . In
modern history, the longest period of peace among the great powers has been the era of U.S.
leadership. By contrast, multi-polar systems have been unstable , with their competitive
dynamics resulting in frequent crises and major wars among the great powers . Failures of
multi-polar international systems produced both world wars. American retrenchment could
have devastating consequences . Without an American security blanket, regional powers
could rearm in an attempt to balance against emerging threats. Under this scenario, there
would be a heightened possibility of arms races, miscalculation, or other crises spiraling into
all-out conflict . Alternatively, in seeking to accommodate the stronger powers, weaker powers may shift their geopolitical
posture away from the United States. Either way, hostile states would be emboldened to make aggressive
moves in their regions. As rival powers rise, Asia in particular is likely to emerge as a zone of greatpower competition. Beijing’s economic rise has enabled a dramatic military buildup focused on acquisitions of naval, cruise,
and ballistic missiles, long-range stealth aircraft, and anti-satellite capabilities. China’s strategic modernization is aimed, ultimately,
at denying the United States access to the seas around China. Even as cooperative economic ties in the region have grown, China’s
expansive territorial claims — and provocative statements and actions following crises in Korea and incidents at sea — have roiled its
relations with South Korea, Japan, India, and Southeast Asian states. Still, the United States is the most significant barrier facing
Chinese hegemony and aggression. Given
the risks, the United States must focus on restoring its economic
and fiscal condition while checking and managing the rise of potential adversarial regional
powers such as China. While we face significant challenges, the U.S. economy still accounts for over 20 percent of the
world’s GDP. American institutions — particularly those providing enforceable rule of law — set it apart from all the rising powers.
Social cohesion underwrites political stability. U.S. demographic trends are healthier than those of any other developed country. A
culture of innovation, excellent institutions of higher education, and a vital sector of small and medium-sized enterprises propel the
U.S. economy in ways difficult to quantify. Historically, Americans have responded pragmatically, and sometimes through trial and
error, to work our way through the kind of crisis that we face today. The policy question is how to enhance economic growth and
employment while cutting discretionary spending in the near term and curbing the growth of entitlement spending in the out years.
Republican members of Congress have outlined a plan. Several think tanks and commissions, including President Obama’s debt
commission, have done so as well. Some consensus exists on measures to pare back the recent increases in domestic spending,
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restrain future growth in defense spending, and reform the tax code (by reducing tax expenditures while lowering individual and
corporate rates). These are promising options. The key remaining question is whether the president and leaders of both parties on
Capitol Hill have the will to act and the skill to fashion bipartisan solutions. Whether we take the needed actions is a choice, however
difficult it might be. It is clearly within our capacity to put our economy on a better trajectory. In garnering political support for
cutbacks, the president and members of Congress should point not only to the domestic consequences of inaction — but also to the
geopolitical implications. As the United States gets its economic and fiscal house in order, it should take steps to prevent a flare-up
in Asia. The United States can do so by signaling that its domestic challenges will not impede its intentions to check Chinese
expansionism. This can be done in cost-efficient ways. While China’s economic rise enables its military modernization and
international assertiveness, it also frightens rival powers. The Obama administration has wisely moved to strengthen relations with
allies and potential partners in the region but more can be done. Some Chinese policies encourage other parties to join with the
United States, and the U.S. should not let these opportunities pass. China’s military assertiveness should enable security cooperation
with countries on China’s periphery — particularly Japan, India, and Vietnam — in ways that complicate Beijing’s strategic calculus.
China’s mercantilist policies and currency manipulation — which harm developing states both in East Asia and elsewhere — should
be used to fashion a coalition in favor of a more balanced trade system. Since Beijing’s over-the-top reaction to the awarding of the
Nobel Peace Prize to a Chinese democracy activist alienated European leaders, highlighting human-rights questions would not only
draw supporters from nearby countries but also embolden reformers within China. Since
the end of the Cold War, a
stable economic and financial condition at home has enabled America to have an expansive
role in the world. Today we can no longer take this for granted. Unless we get our economic
house in order, there is a risk that domestic stagnation in combination with the rise of rival
powers will undermine our ability to deal with growing international problems. Regional
hegemons in Asia could seize the moment, leading the world toward a new, dangerous era of
multi-polarity .
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Impact- Protectionism
Collapse of heg leads to protectionism and mercantilism
Kagan, senior fellow at the Brookings Institute, 12
[Robert, 2-11, Wall Street Journal, “Why the World Needs America”,
http://online.wsj.com/article/SB10001424052970203646004577213262856669448.html,
accessed 6-28-13, GSK]
What about the economic order of free markets and free trade? People assume that China and
other rising powers that have benefited so much from the present system would have a stake
in preserving it. They wouldn't kill the goose that lays the golden eggs.¶ Unfortunately, they
might not be able to help themselves. The creation and survival of a liberal economic order
has depended, historically, on great powers that are both willing and able to support open
trade and free markets, often with naval power. If a declining America is unable to maintain its
long-standing hegemony on the high seas, would other nations take on the burdens and the
expense of sustaining navies to fill in the gaps?¶ Even if they did, would this produce an open
global commons—or rising tension? China and India are building bigger navies, but the result
so far has been greater competition, not greater security. As Mohan Malik has noted in this
newspaper, their "maritime rivalry could spill into the open in a decade or two," when India
deploys an aircraft carrier in the Pacific Ocean and China deploys one in the Indian Ocean. The
move from American-dominated oceans to collective policing by several great powers could
be a recipe for competition and conflict rather than for a liberal economic order.¶ And do the
Chinese really value an open economic system? The Chinese economy soon may become the
largest in the world, but it will be far from the richest. Its size is a product of the country's
enormous population, but in per capita terms, China remains relatively poor. The U.S., Germany
and Japan have a per capita GDP of over $40,000. China's is a little over $4,000, putting it at the
same level as Angola, Algeria and Belize. Even if optimistic forecasts are correct, China's per
capita GDP by 2030 would still only be half that of the U.S., putting it roughly where Slovenia
and Greece are today.¶ As Arvind Subramanian and other economists have pointed out, this will
make for a historically unique situation. In the past, the largest and most dominant economies
in the world have also been the richest. Nations whose peoples are such obvious winners in a
relatively unfettered economic system have less temptation to pursue protectionist measures
and have more of an incentive to keep the system open.¶ China's leaders, presiding over a
poorer and still developing country, may prove less willing to open their economy. They have
already begun closing some sectors to foreign competition and are likely to close others in the
future. Even optimists like Mr. Subramanian believe that the liberal economic order will
require "some insurance" against a scenario in which "China exercises its dominance by either
reversing its previous policies or failing to open areas of the economy that are now highly
protected." American economic dominance has been welcomed by much of the world because,
like the mobster Hyman Roth in "The Godfather," the U.S. has always made money for its
partners. Chinese economic dominance may get a different reception.¶ Another problem is that
China's form of capitalism is heavily dominated by the state, with the ultimate goal of
preserving the rule of the Communist Party. Unlike the eras of British and American preeminence, when the leading economic powers were dominated largely by private individuals or
companies, China's system is more like the mercantilist arrangements of previous centuries.
The government amasses wealth in order to secure its continued rule and to pay for armies
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and navies to compete with other great powers.¶ Although the Chinese have been beneficiaries
of an open international economic order, they could end up undermining it simply because, as
an autocratic society, their priority is to preserve the state's control of wealth and the power
that it brings. They might kill the goose that lays the golden eggs because they can't figure out
how to keep both it and themselves alive.
And, protectionism causes nuclear war
Panzner 08, Instructor New York Institute of Finance, (Michael J.-, Financial Armageddon:
Protecting Your Future from Four Impending Catastrophes, P. 136-138)
Continuing calls for curbs on the flow of finance and trade will inspire the United States and other nations to spew forth
protectionist legislation like the notorious Smoot-Hawley bill. Introduced at the start of the Great Depression, it triggered a series of titfor-tat economic responses, which many commentators believe helped turn a serious economic downturn into a prolonged and devastating global
disaster. But if
history is any guide, those lessons will have been long forgotten during the next collapse. Eventually, fed by a mood of
desperation and growing public anger, restrictions on trade, finance, investment, and immigration will almost certainly
intensify. Authorities and ordinary citizens will likely scrutinize the cross-border movement of Americans and outsiders alike, and lawmakers may
even call for a general crackdown on nonessential travel. Meanwhile, many nations will make transporting or sending funds to other countries
exceedingly difficult. As
desperate officials try to limit the fallout from decades of ill-conceived, corrupt, and reckless policies,
they will introduce controls on foreign exchange. Foreign individuals and companies seeking to acquire certain American
infrastructure assets, or trying to buy property and other assets on the cheap thanks to a rapidly depreciating dollar, will be stymied by limits on
investment by non-citizens. Those efforts will cause spasms to ripple across economies and markets, disrupting global payment, settlement, and
In a world of lockouts
and lockdowns, any link that transmits systemic financial pressures across markets through arbitrage or
clearing mechanisms. All of this will, of course, continue to undermine business confidence and consumer spending.
portfolio-based risk management, or that allows diseases to be easily spread from one country to the next by tourists and wildlife, or that otherwise
facilitates unwelcome exchanges of any kind will
be viewed with suspicion and dealt with accordingly. The rise in
isolationism and protectionism will bring about ever more heated arguments and dangerous
confrontations over shared sources of oil, gas, and other key commodities as well as factors of
production that must, out of necessity, be acquired from less-than-friendly nations. Whether involving
raw materials used in strategic industries or basic necessities such as food, water, and energy, efforts to secure adequate supplies will
take increasing precedence in a world where demand seems constantly out of kilter with supply.
Disputes over the misuse, overuse, and pollution of the environment and natural resources will
become more commonplace. Around the world, such tensions will give rise to full-scale military
encounters, often with minimal provocation. In some instances, economic conditions will serve as a
convenient pretext for conflicts that stem from cultural and religious differences. Alternatively, nations
may look to divert attention away from domestic problems by channeling frustration and
populist sentiment toward other countries and cultures. Enabled by cheap technology and the
waning threat of American retribution, terrorist groups will likely boost the frequency and scale
of their horrifying attacks, bringing the threat of random violence to a whole new level. Turbulent conditions will encourage
aggressive saber rattling and interdictions by rogue nations running amok. Age-old clashes will
also take on a new, more heated sense of urgency. China will likely assume an increasingly belligerent
posture toward Taiwan, while Iran may embark on overt colonization of its neighbors in the Mideast.
Israel, for its part, may look to draw a dwindling list of allies from around the world into a growing number of conflicts. Some observers, like John
Mearsheimer, a political scientist at the University of Chicago, have even speculated that an “ intense
confrontation” between the
United States and China is “inevitable” at some point. More than a few disputes will turn out to be almost wholly ideological.
Growing cultural and religious differences will be transformed from wars of words to battles soaked
in blood. Long-simmering resentments could also degenerate quickly, spurring the basest of
human instincts and triggering genocidal acts. Terrorists employing biological or nuclear
weapons will vie with conventional forces using jets, cruise missiles, and bunker-busting bombs to cause widespread
destruction. Many will interpret stepped-up conflicts between Muslims and Western societies as the beginnings of a
new world war.
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Impact- Offshoring
Offshoring kills innovation and competitiveness
Overby, writer for Infoworld, 11
[Stephanie, 7/22/11, InfoWorld, “IT outsourcing: How offshoring can kill innovation”,
http://www.infoworld.com/d/the-industry-standard/it-outsourcing-how-offshoring-can-killinnovation-167855?page=0,0, Accessed 7/10/13, ML]
IT service providers are touting the benefits of outsourcing's increasingly higher-value and more
complex IT work to lower-cost locales. And IT customers still hyper-focused on cost cutting in
today's economic doldrums are more than willing to consider the pitch. But Harvard Business
School professors David Pisano and Willy Shih argue that "moving up the value chain" with
offshoring can irreversibly damage a company's -- and a country's -- competitiveness and
ability to innovate.¶ The two researchers made headlines with their 2009 article, "Restoring
American Competitiveness," asserting that the America's relentless outsourcing of
manufacturing operations had not only hurt the United States' trade balance and job
prospects for its citizens, but also hindered its ability to innovate. CIO.com talked to Pisano and
Shih about how their research applies to IT offshoring and what CIOs can do to retain their
competitive advantage while cutting costs offshore.¶ ¶ CIO.com: You assert that as U.S.
companies were steadily outsourcing development and manufacturing work abroad and
cutting spending on basic research, American competitiveness and innovation eroded. What's
the most conclusive evidence of that?¶ Willy Shih, Professor of Management Practice, Harvard
Business School: The troubling thing that our research turned up is that offshoring can lead to
damage to what we call the industrial commons -- a set of capabilities embodied in your
supplier network, your workforce, the educational infrastructure associated with a technology
area. For example, in the 1960s Kodak gave up making sophisticated film cameras, and the U.S.
consumer electronics companies offshored their product manufacturing and development. So
the industrial commons for consumer electronic and optoelectronic devices in the U.S. withered
away. So when the digital camera revolution came along -- even though Kodak invented the first
digital camera in the 1970s -- there was no longer any capability base in the U.S. to develop or
manufacture such products.¶ Gary Pisano, Harry E. Figgie, Jr. Professor Of Business
Administration, Harvard Business School: Just look at what has happened in the mobile
communications industry today. A lot of PC companies first gave up manufacturing, and then
design. They became reliant on third party suppliers. Now we see what Apple has done with
the iPad, and it seems to me there are an awful lot of PC manufacturers scrambling to find an
"off- the-shelf" design to compete in the tablet computing space. The problem is, from my
perspective, there is nothing unique about any of those designs. They have not competed well
against the iPad.
Due to outsourcing, the US is losing sophisticated manufacturing capabilities
and innovation- that destroys competitiveness
Pisano and Shih, Professors at Harvard Business School, 9
[Gary P. and Willy C., July 2009, Harvard Business Review, “Restoring American
Competitiveness”, http://hbr.org/2009/07/restoring-american-competitiveness/ar/1, Accessed
7/10/13, ML]
Gonzaga Debate Institute 2013
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For much of the past two decades, the stunning growth of the U.S. economy was widely hailed
in academic, business, and government circles as evidence that America’s competitiveness
problem was as obsolete as leg warmers and Jazzercise. The data suggest otherwise. Beginning
in 2000, the country’s trade balance in high-technology products—historically a bastion of U.S.
strength—began to decrease. By 2002, it turned negative for the first time and continued to
decline through 2007. (See the exhibit “A Sign of Trouble.”) Even more worrisome, average real
weekly wages have essentially remained flat since 1980, meaning that the U.S. economy has
been unable to provide a rising standard of living for the majority of its people. This
undoubtedly is one reason Americans have attempted to borrow their way to prosperity, a
strategy that clearly is no longer tenable.¶ What, then, was actually happening when it seemed
things were going so well? Companies operating in the U.S. were steadily outsourcing
development and manufacturing work to specialists abroad and cutting their spending on
basic research. In making their decisions to outsource, executives were heeding the advice du
jour of business gurus and Wall Street: Focus on your core competencies, off-load your lowvalue-added activities, and redeploy the savings to innovation, the true source of your
competitive advantage. But in reality, the outsourcing has not stopped with low-value tasks
like simple assembly or circuit-board stuffing. Sophisticated engineering and manufacturing
capabilities that underpin innovation in a wide range of products have been rapidly leaving
too. As a result, the U.S. has lost or is in the process of losing the knowledge, skilled people,
and supplier infrastructure needed to manufacture many of the cutting-edge products it
invented.
Gonzaga Debate Institute 2013
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*Border Security Advantage*
Gonzaga Debate Institute 2013
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UQ- Security Fails
Ineffective border infrastructure ensures security failures at ports of entry
Sanchez, chairwoman of the Subcommittee on Border, Maritime, and Global
Counterterrorism, 09
[Loretta, 10-22-2009, Subcommittee on Border, Maritime, and Global Counterterrorism,
“CARGO SECURITY AT LAND PORTS OF ENTRY: ARE WE MEETING THE CHALLENGE?”,
http://www.gpo.gov/fdsys/pkg/CHRG-111hhrg57596/html/CHRG-111hhrg57596.htm, accessed
7-10-13, GSK]
With those numbers in mind, it is important to facilitate ¶ trade and to ensure that cargo and
truck crossings are secure, ¶ and that is the challenge that we will examine today.¶ This hearing
comes at a time when our ports of entry are ¶ experiencing infrastructure limitations and staff
shortages ¶ that result in overworked offices. This hearing--also, a new ¶ wave of violence has
hit many of our major ports, such as the ¶ recent shootings that we saw at the Port of San Ysidro
in San ¶ Diego, which were linked to a human trafficking attempt. In ¶ addition, there has been
an increase in cocaine and cash ¶ trafficking between the United States and Canada.¶ With the
volume of trucks and railcars entering and exiting ¶ the country, it is imperative that we have
means to ensure that ¶ they are secure and that we inspect them as needed. As a ¶ sovereign
nation, we need to be able to control the ingress and ¶ the egress from our country, not just
the people, but of cargo, ¶ and that is why I am interested in hearing from both of our ¶
government and industry witnesses today about what is and what ¶ is not working.¶ Also, I am
interested in hearing from ICE about ¶ investigations into truck-related seizures that originate in ¶
Mexico or Canada but are found in the United States. I believe ¶ that we must improve our
overall border infrastructure to ¶ accommodate the growing amount of commerce and
increasing ¶ number of people who really do cross back and forth on the ¶ border today--and I
saw Mr. Cuellar, and I know that he has ¶ talked to me about this over and over--because we
need to avoid ¶ delays and we need to make sure that trade is going on in a ¶ smooth manner.¶
Considering many of the primary inspections of trucks ¶ crossing into the United States are
done by CBP officers, there ¶ is a valid argument to be made that staff shortages at ports of ¶
entry facilitate the importation of narcotics into this ¶ country. I have always advocated for an
increase in officer ¶ staff. I know that Chief Aguilar, in particular, has been very ¶ interested in this
issue, and we have worked on it together, ¶ and I hope that we will take a look at a CBP
authorization bill ¶ that might address some of these problems. That is also one of ¶ the reasons
why I wanted to hold this hearing today.
Infrastructure investment key—outdated facilities make new equipment
unusable
Texas Border Coalition, collection of border mayors, county judges and
economic development commissions, 12
[1-12-2012, “Without Strategy: America’s Border Security Blunders Facilitate and Empower
Mexico’s Drug Cartels”,
http://webcache.googleusercontent.com/search?q=cache:T2_04YAbzfEJ:www.texasbordercoali
tion.org/Texas_Border_Coalition/Welcome_files/TBC%2520Report-Without%2520StrategyFinal.pdf+&cd=1&hl=en&ct=clnk&gl=us, accessed cached copy 7-10-13, GSK]
Gonzaga Debate Institute 2013
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Reports from the Government Accountability Office (GAO) have described the situation at the
border crossings as inadequate to the task of protecting the nation. GAO found that managers
at 19 of 21 border crossing offices cited examples of anti-terrorism activities not being carried
out, new or expanded facilities that were not fully operational, and radiation monitors and
other inspection technologies not being fully used because of staff shortages. At seven of the
eight major border crossings GAO visited, officers and managers told of not having sufficient
staff, which contributes to morale problems, fatigue, lack of backup support, and safety issues
when officers inspect travelers – “increasing the potential that terrorists, inadmissible
travelers, and illicit goods could enter the country.”28¶ Although they refused to make the data
publicly available for years because they classified it as law enforcement sensitive, DHS officials
recently acknowledged publicly that for the border crossings to successfully complete their
mission, the agency needs 6,000 additional personnel and $6 billion in funding for
infrastructure and technology.29¶ In response, Congress has allocated zero dollars to border
crossing infra-structure in fiscal 2011 and is likely to refuse to add funds in fiscal 2012. House
and Senate appropriators have both approved adding 350 new CBP inspectors in fiscal 2012,
but acknowledge that declining customs revenues will force a reduction of an equal number
available to the agency, making the added personnel a net of zero. While technology is in the
pipeline for delivery to the border crossings, a lack of adequate electric infrastructure often
makes new equipment useless.
Gonzaga Debate Institute 2013
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I/L- Infrastructure Key
Border infrastructure investment key to security—congestion ensures poor
standards
Lee, Associate Director at the North American Center for Transborder Studies
(NACTS) at Arizona State University, and Wilson, Associate at the Mexico
Institute of the Woodrow Wilson International Center for Scholars, 12
[Erik and Christopher E, June 2012, Wilson Center, “The State of Trade, Competitiveness and
Economic
Well-being in the U.S.-Mexico Border Region”,
http://www.wilsoncenter.org/sites/default/files/State_of_Border_Trade_Economy_0.pdf,
accessed 7-10-13, GSK]
Moderate investments to update infrastructure and to fully staff the ports of entry are
certainly ¶ needed, as long lines and overworked staff promote neither efficiency nor security.
But in a ¶ time of tight federal budgets, asking for more resources cannot be the only answer.
Strategic ¶ efforts that do more with less, improving efficiency and reducing congestion, are
also needed. ¶ Trusted traveler and shipper programs (i.e.the Global Entry programs, which
includes programs ¶ such as SENTRI, FAST, C-TPAT) allow vetted, low-risk individuals and
shipments expedited ¶ passage across the border. Improving these programs and significantly
expanding enrollment ¶ could increase throughput with minimal investments in infrastructure
and staffing—all while ¶ strengthening security by giving border officials more time to focus on
unknown and potentially ¶ dangerous individuals and shipments.
Overburden borders compromise security—infrastructure investment is key
Harwood, Media relations associate @ ACLU, 07
[Matthew, 11-6-2007, Security Management, “Report: Border Security Shoddy at Land Ports of
Entry”, http://www.securitymanagement.com/news/report-border-security-shoddy-land-portsentry, accessed 7-9-2013, GSK]
A new report released yesterday by the Government Accountability Office has found
weaknesses at the nation's land borders that increase the likelihood terrorists and other
undesirable persons and goods could cross into the United States.¶ Although information
deemed sensitive by the Department of Homeland Security, parent agency of the U.S. Customs
and Border Protection's (CBP), has been redacted in the public report, the GAO, the
government's watchdog, gave a broad outline of the problems it discovered.¶ The GAO reports
that procedures, physical infrastructure, and staffing levels used by CBP—responsible for
inspecting travelers at air, land, and sea ports of entry— have increased "the potential that
national security may be compromised."¶ During GAO inspections, investigators found CBP
agents not verifying the traveler's citizenship or admissibility to enter the country, duties
required by law.¶ Such weaknesses included officers not stopping vehicles for inspection and
pedestrians crossing the border without any visual or verbal contact from a CBP officer despite
operating procedures that required officers to do so.¶ CBP management tried to address these
procedural issues by holding meetings with senior management to stress the importance of
effective inspection protocols and training supervisors and officers in inspection standards in the
summer of 2006. However, GAO inspectors twice found—in October 2006 and January 2007—
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the same weaknesses previously reported. At two ports of entry, the GAO reports, investigators
were not even asked to provide the CBP agent with proof of identity.¶ Another area the GAO
report concentrates on is weaknesses in the CBP's physical infrastructure. ¶ At several ports of
entry that we examined, barriers designed to ensure that vehicles pass through a CBP
inspection booth were not in place, increasing the risk that vehicles could enter the country
without inspection.¶ The CBP responded that it is aware of infrastructure weaknesses and says
it needs $4 billion in further funds to make the necessary capital investments at all 163 land
crossings for which it is responsible.
Infrastructure at ports of entry is the critical weakness in border security
National Immigration Forum, lobbying group, 2012
[“What Does Smart and Effective Border Security Look Like?”,
http://www.immigrationforum.org/images/uploads/2013/Smart_Border_Enhancements_Brief.
pdf, accessed 7-10-13, GSK]
Resources at the Ports of Entry¶ Trade and commerce at U.S. land ports of entry have been
increasing exponentially, especially ¶ across the southwestern border. In 2010, the value of
cross-border travel at the U.S. land ports ¶ and exports with Mexico and Canada totaled more
than $791 billion5 and more than 13,000 ¶ trucks bring over $630 million worth of goods into
the U.S. from Mexico every day. Meanwhile,¶ three out of four of all legal entries into the U.S.
occur at an official border crossing, which also translates into billions spent on tourism.¶ 6 The
revenue gained from trade at the border generates¶ jobs for Americans not just in border-states
but all over the nation where land exports and ¶ imports reach. Customs and Border Patrol Field
Operations, which oversees the flow of ¶ commerce at the ports, is under staffed. There are
often long wait times to cross the border, ¶ which can detract from efficient commerce
exchange and lead to billions of dollars in spoiled ¶ goods. A 2012 Texas Border Coalition report
found that, because enforcement resources have ¶ been so focused between ports of entry,
individuals illegally entering the U.S. between the land ¶ ports of entry have a 90 percent
probability of being apprehended, but those entering illegally ¶ through a land port have a 28
percent chance of being apprehended7. The understaffing also ¶ leaves land ports more
susceptible to transnational drug and weapons smuggling.
Border infrastructure improvements key to security
Texas Border Coalition, collection of border mayors, county judges and
economic development commissions, 12
[1-12-2012, “Without Strategy: America’s Border Security Blunders Facilitate and Empower
Mexico’s Drug Cartels”,
http://webcache.googleusercontent.com/search?q=cache:T2_04YAbzfEJ:www.texasbordercoali
tion.org/Texas_Border_Coalition/Welcome_files/TBC%2520Report-Without%2520StrategyFinal.pdf+&cd=1&hl=en&ct=clnk&gl=us, accessed cached copy 7-10-13, GSK]
The United States government spent about $90 billion over the past decade to secure the U.S.Mexico border.1 The results are mixed, with apprehension rates up to 90 percent for
undocumented persons seeking to cross the frontier between designated U.S.-Mexico border
crossings, yet the Mexican drug cartels continue to enjoy commercial success smuggling more
drugs than ever into the country through the legal border crossings.2¶ A significant part of the
$90 billion government expense has been the deployment of U.S. military forces, including the
National Guard, to supplement Border Patrol and Customs and Border Protection forces on the
Mexican border. A recent Government Accountability Office briefing on the costs and benefits of
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the Department of Defense role in securing the Southwest land border reported that DOD
officials “are concerned that there is no comprehensive southwest border security strategy”
and the National Guard’s role has been “ad hoc.”3¶ As the U.S. spent $90 billion seeking to
secure the Southwest border, the Mexican cartels have continued to smuggle cocaine, heroin,
and methamphetamine through the legal border crossings in California and South Texas, and
marijuana between border crossings in remote areas of Arizona.4 They generally smuggle
smaller loads of cocaine, heroin, and methamphetamine in non-commercial vehicles (cars, SUVs,
and pickup trucks) to blend in with cross-border traffic.5¶ As the Mexican drug cartels flourish in
the face of $90 billion spent to secure the border through which they conduct their trade, the
U.S. continues to focus on border security tactics grounded in operation that began in the
1990s when an anti-immigration backlash fueled crackdowns code-named “Operation
Gatekeeper” and “Operation Hold-the-Line.” Debates in Congress focus on building more
fences and walls and whether to snuff environmental protections for public lands on the
Southwest and Northern borders.¶ As reported by the Department of Defense and the
Government Accountability Office, America’s border security effort lacks strategic direction and
operates on an ad hoc basis. Without a strategy, America will continue to lose the border
security war to the better financed, equipped, more mobile and agile drug cartels. Our
national success depends on defining and executing a strategy to defeat the cartels attacking
our nation.¶ The legal border crossings on the U.S. southwestern border have become
America’s weakest border security link. Since the cartels choose to smuggle most of their
products through the border crossings, a sensible strategy would be to attack their trade
where it occurs and anticipate where their smuggling operations might move in response. Yet,
the Department of Homeland Security has chosen to ignore these developments and refused
to develop a strategy to confront them.¶ Budget forecasts by Department of Homeland Security
officials suggest no new funding for border security infrastructure at the official border
crossings for many years and personnel accounts will essentially remain static during that time.6
While new equipment may become available, some cannot be utilized because the electrical
facilities at the border crossings are outdated and inadequate to support the expensive new
tools.¶ Congress and the Administration confront a choice when considering strategic directions
for securing the U.S-Mexican border. At a minimum, the Texas Border Coalition recommends
that Congress and the President have a strategy rather than addressing this challenge ad hoc.¶
The strategic paths forward offer a choice between closing the gaps between the border
crossings, where criminals face a 90 percent likelihood of apprehension, or addressing the
inadequate infrastructure, technology and law enforcement personnel at the southwest border
crossings where criminals are less challenged by an apprehension rate of merely 28 percent. ¶
The Texas Border Coalition suggests that the only reasonable path forward is to refocus our
border security priorities where our nation is most vulnerable: at the legal border crossings.
Spending additional billions of dollars on more Border Patrol agents, fencing-walls or exempting
the Border Patrol from the rule of law should be lower priorities compared to making the official
border crossings functional in securing our borders.¶ To choose the other path and continue to
fight the border security war where it has been won (between the border crossings) and to
continue to surrender the war where we are losing (at the border crossings) is to threaten our
national and border security and resign our nation to defeat.
Gonzaga Debate Institute 2013
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Border infrastructure key—28% apprehension rate now
Texas Border Coalition, collection of border mayors, county judges and
economic development commissions, 12
[1-12-2012, “Without Strategy: America’s Border Security Blunders Facilitate and Empower
Mexico’s Drug Cartels”,
http://webcache.googleusercontent.com/search?q=cache:T2_04YAbzfEJ:www.texasbordercoali
tion.org/Texas_Border_Coalition/Welcome_files/TBC%2520Report-Without%2520StrategyFinal.pdf+&cd=1&hl=en&ct=clnk&gl=us, accessed cached copy 7-10-13, GSK]
According to the most recent data released by the DHS, only 28 percent of “major violators”
attempting to enter the U.S. at the official border crossings are detected and apprehended.22
In addition, CBP reports only 50 to 74 percent success in improving the targeting, screening,
and apprehension of high-risk international cargo and travelers to prevent terrorist attacks,
while providing processes to facilitate the flow of safe and legitimate trade and travel.23 The
Department, under the claim that the statistics are “law enforcement sensitive,” has not
released more recent data.
Gonzaga Debate Institute 2013
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Solvency- Cartels
Infrastructure buildup key to security—cartels shift to legal crossing to avoid
security
Texas Border Coalition, collection of border mayors, county judges and
economic development commissions, 12
[1-12-2012, “Without Strategy: America’s Border Security Blunders Facilitate and Empower
Mexico’s Drug Cartels”,
http://webcache.googleusercontent.com/search?q=cache:T2_04YAbzfEJ:www.texasbordercoali
tion.org/Texas_Border_Coalition/Welcome_files/TBC%2520Report-Without%2520StrategyFinal.pdf+&cd=1&hl=en&ct=clnk&gl=us, accessed cached copy 7-10-13, GSK]
These criminal organizations are capable of discovering and exploiting weaknesses between
the border crossings, but the Border Patrol has developed tactical mobility and agility to
identify and respond to such threats. When presented with a choice between one path that
presents a less than 30 percent risk of failure and another that presents an up to 90 percent
risk of capture, the cartels naturally choose the less risky path. In the present environment, the
cartels are choosing to conduct their trade across the bridges and highways, through the
sanctioned border crossings and are rejecting the risk of crossing the Rio Grande and open
desert between the border crossings.
All significant crimes passes through legal crossings
Texas Border Coalition, collection of border mayors, county judges and
economic development commissions, 12
[1-12-2012, “Without Strategy: America’s Border Security Blunders Facilitate and Empower
Mexico’s Drug Cartels”,
http://webcache.googleusercontent.com/search?q=cache:T2_04YAbzfEJ:www.texasbordercoali
tion.org/Texas_Border_Coalition/Welcome_files/TBC%2520Report-Without%2520StrategyFinal.pdf+&cd=1&hl=en&ct=clnk&gl=us, accessed cached copy 7-10-13, GSK]
According to the U.S. Department of Justice National Drug Threat Assessment2010, nearly 90
percent of cocaine, methamphetamine, marijuana, heroin, and MDMA smuggled into the U.S.
enters through the border crossings. A joint project on U.S.-Mexico Security Cooperation
coordinated by the Mexico Institute at the Woodrow Wilson Center and the Trans-Border
Institute at the University of San Diego indicates that bulk cash to fuel the Mexican drug
cartels’ illicit and violent activities transits through the border crossings. And while data on
the smuggling of firearms is incomplete, available information points to border crossings as
the overwhelming point of entry into Mexico.
The conclusion is irrefutable that nearly all of the drugs smuggled into the U.S., and the guns
and bulk cash smuggled into Mexico, transits via the border crossings, a strategic choice made
by the Mexican cartels because the likelihood of being detected or apprehended is three times
more likely between the border crossings than at them.
Gonzaga Debate Institute 2013
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AT- Border Patrol
Border patrol transfer fails—different training and roles
Texas Border Coalition, collection of border mayors, county judges and
economic development commissions, 12
[1-12-2012, “Without Strategy: America’s Border Security Blunders Facilitate and Empower
Mexico’s Drug Cartels”,
http://webcache.googleusercontent.com/search?q=cache:T2_04YAbzfEJ:www.texasbordercoali
tion.org/Texas_Border_Coalition/Welcome_files/TBC%2520Report-Without%2520StrategyFinal.pdf+&cd=1&hl=en&ct=clnk&gl=us, accessed cached copy 7-10-13, GSK]
The operational roles of the Border Patrol and CBP inspection officers are not
interchangeable. Few recommend attempting to solve the imbalance between the two forces
by reassigning Border Patrol agents to the border crossings. Besides weakening security
between the border crossings, the training and outlook of the two forces does not qualify
Border Patrol agents to substitute for CBP officers. The primary activity of a Border Patrol
agent is to Line Watch: to detect, prevent, and apprehend terrorists, undocumented aliens and
smugglers. The Border Patrol does not recognize any legitimate activity in crossing the border
between the border crossings.
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Impact- Terrorism
Empirics prove—terrorists exploit border insecurity to infiltrate the US
Judicial Watch, no qualifications available, 10
[5-28-2010, “Feds Warn Of Terrorists Sneaking Into U.S. Through Mexico”,
http://www.judicialwatch.org/blog/2010/05/feds-warn-terrorists-sneaking-through-mexico/,
accessed 7-10-13, GSK]
The Department of Homeland Security has warned Texas law enforcement agencies that a
renowned Al Qaeda terrorist is planning to sneak into the U.S. through Mexico, illustrating
that Middle Eastern extremists continue to exploit the porous southern border in their quest
to harm Americans.¶ While alarming, this case is hardly unique but rather part of a growing
trend among Islamic terrorists to slip into the U.S. through a notoriously vulnerable 2,000-mile
stretch. Mexican drug cartels and Middle Eastern extremists have for years joined forces to
smuggle weapons and terrorists into the U.S., though the mainstream media coverage has
largely ignored it to focus on the humble, poverty-stricken Mexicans who simply come to seek a
better life.¶ A few years ago the Drug Enforcement Agency (DEA) revealed details of how Islamic
terrorists and violent Mexican drug gangs have teamed up to successfully penetrate the U.S.
as well as finance terror networks in the Middle East. Additionally, the top Homeland Security
official in Texas confirmed that indeed terrorists—with ties to Hezbollah, Hamas and Al
Qaeda—have been arrested crossing into the state through the Mexican border.¶ This proves
that the U.S. government has known for years that terrorists are using Mexico as a pathway
into the country. In this week’s alert, Homeland Security officials warn Houston authorities to
be on the lookout for a member of a Somalia-based Al Qaeda group called Al Shabab who plans
to cross the Mexican border. Evidently, he has ties to a Somali man in Texas who was recently
indicted for operating a large-scale enterprise that smuggled hundreds of Somalis with terrorist
ties from Brazil, through South America and across the Mexican border.
UN study proves—terrorists use illegal immigration routes to enter the US
Darby, columnist, 7-7
[Brandon, 2013, Breitbart, “UN WARNS: MEXICAN BORDER 'GLOBAL PATHWAY' TO U.S. FOR
ILLEGALS FROM HORN OF AFRICA”, http://www.breitbart.com/BigGovernment/2013/07/07/UN-Warns-Mexican-Border-Global-Pathway-to-U-S-for-Illegals-fromAsia-Africa-and-Terror-State, accessed 7-10-13, GSK]
The United Nations Office on Drugs and Crime (UNODC) recently released a report,
"Transnational Organized Crime in Central America and the Caribbean," that identifies both
Mexican cartels and street gangs as conduits for individuals from Africa and Asia entering the
U.S illegally. The report identifies the Islamic terrorist haven of Somalia as being one of the
nations from which the illegal U.S. bound border-crossers are originating. ¶ The UN Threat
Assessment--which refers to illegal aliens as “irregular migrants”--states:¶ Central Americans are
not the only ones being smuggled through Mexico to the United States. Irregular migrants from
the Horn of Africa (Eritrea, Somalia, and Ethiopia), as well as South Asia (Bangladesh, Nepal,
India), China, and other African and Asian states are being smuggled through Central America.¶
The National Counter-Terrorism Center (NCTC), which serves as the primary organization in
the United States Government for integrating and analyzing all intelligence pertaining to
counterterrorism, states that much of Somalia was taken over by Al-Shabaab, the militant
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wing of the Somali Council of Islamic Courts, before it entered a phase of on-and-off control of
various key regions of the failed nation.¶ Similarly, the nonpartisan Council on Foreign Relations
in-depth analysis of Somalia states:¶ Its porous borders mean that individuals can enter without
visas, and once inside the country, enjoy an almost complete lack of law enforcement. Somalia
has long served as a passageway from Africa to the Middle East based on its coastal location on
the Horn of Africa, just a boat ride away from Yemen. These aspects make Somalia a desirable
haven for transnational terrorists, something Al-Qaeda has tried to capitalize on before, and is
trying again now.¶ The UN report reveals that it costs approximately $7,500 for an individual to
reach the U.S. from Somalia illegally. The report further reveals that once someone from Africa
or Asia enters Central America, their journey into the U.S. follows the same paths and
methods used by Mexicans to enter the U.S. illegally.
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*Add-Ons*
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BECC Good
Going through NADBank uniquely means there’ll be special attention paid to
the environmental impact because it will get scrutinized by the BECC- key to
sustainability in the border region.
Reed, Project Director, and Kelly, Executive Director, 2K
(Cyrus and Mary, July 2000, Texas Center for Policy Studies, “Expanding the Mandate: Should
the Border Environment Cooperation Commission and North American Development Bank go
beyond Water, Wastewater and Solid Waste Management Projects and How Do They Get
There?: Comments on Utilizing the Lending Capacity of the NADB,“ p.17
,http://www.texascenter.org/publications/expansion.pdf, [Accessed 7/9/13], JB).
No matter what type of expansion into "related matters" or "environmental infrastructure
projects" or even "other infrastructure projects" might occur, the Charter requires -- and many
interested parties desire -- that the BECC certification process be applied to these new
projects. Thus, BECC certification should continue to be a prerequisite for NADBank financing.
If not, the danger is that like most development banks, environmental assessments will be a
cursory review rather than a fundamental part of the process, and that concepts of
sustainability, appropriate technology and public participation and approval will not be
considered.
BECC and NADbank will continue working together through expansion—
empirically proven and both rely on each other
Reed, writer for Texas Center, 2k
[Cyrus, July 11, 2000, “Summary of Annual Meeting of NADBANK”,
http://www.texascenter.org/bordertrade/nadbank.htm, accessed 7-9-13 BLE]
Mr. Rodriguez also emphasized how NADB lending capacity is virtually untapped, which is the
reason the BANK and its board are pursuing the possibility of mandate expansion. He
reiterated that BECC and NADBANK would be working on this together. Thus far, NADB loans
have made up less than 5% of total financing of water and wastewater projects, which
Rodriguez compared with other insitutions such as the World Bank (2.85% in water and
wastewater), BANOBRAS (11.14%) and the European Development Bank (3.25%). For the
foreseeable future, NADBANK does not anticipate increasing its lending for these sectors due
to financial and legal barriers in both countries. Instead, the Board in November of 1999 asked
the Management to explore mechanisms and sectors for expansion in order to maximize the
lending capacity of the bank. Mr. Rodriguez stressed they would still maintain water,
wastewater and solid waste as the priority -- as per the agreement establishing BECC and
NADBANK --but need to pursue other avenues. He also mentioned the general consensus for
expansion that existed in a workshop sponsored by the NADBANK the previous day, at which 30
experts gave testimony.
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BECC key to an effective NADBank
Miramontes, Former Managing Director and CEO of The North American
Development Bank, 2
[Victor, May 2, 2002, “The Testimony of Victor Miramontes”,
http://financialservices.house.gov/media/pdf/050202vm.pdf, accessed 7-9-13 BLE]
The NADBank and the BECC have developed projects that are financially and environmentally
sustainable. Both institutions have focused on the fundamentals of public governance, from
local democratic openness to fiscal responsibility. The work of these institutions has been with
a long-term vision to ensure that the ongoing operations and maintenance of these projects
will remain adequate and affordable for the communities they serve. The Bank can point to its
record with its Institutional Cooperation Development Program (IDP) and its Utility
Management Institute (UMI). Just last week I attended a meeting in Mississippi where the
Department of Health‘s water quality enforcement officer stated that a new law requires all
rural water system board members to be trained on the fundamentals of system management
and governance. In her opinion, it is a requirement that has truly improved the long-term
viability of Mississippi‘s water systems and its public‘s health. These programs work. They aim
to develop and enhance the institutional capacity of the utilities that must sustain the longterm operations and maintenance of the projects the Bank finances. In my opinion, this work
is among the Bank‘s most important. The creditworthiness of the communities in which the
Bank provides financing can only be enhanced long-term if there is a continued commitment
to institutional development programs at the Bank.
NADBank infrastructure expansion would most likely involve the BECC
Reed, writer for Texas Center, 2k
[Cyrus, July 11, 2000, “Summary of Annual Meeting of NADBANK”,
http://www.texascenter.org/bordertrade/nadbank.htm, accessed 7-9-13 BLE]
We believe that a specific list of the types of projects that would be considered in these
categories—at least over the next few years—is essential for a policy, political and efficiency
reasons. If this is not done, BECC and NADBank risk giving border communities the idea that
any project might make it through and that would lead to a lot of wasted time and effort on
both the part of the institutions and border communities. Moreover, Congress and the public
are going to want to know what priorities the institutions have for certifying and financing
projects and why those priorities are appropriate for the border’s conditions at this point. That
was clearly the point of the GAO’s recommendation that the BECC approach the infrastructure
issues with a clear “Border Infrastructure Strategic Plan.”14 Even if it were to be argued that
the Agreement gives the Parties authority to modify the Agreement beyond the four specific
areas laid out, without Congressional approval, it would seem politically unwise to pursue such a
course of action. Congressional discussions surrounding the BECC and NADBank focused on
two things: environmental infrastructure needs at the border and the need for adjustment aid
in communities adversely affected by NAFTA. Extending the functions to such areas as housing
mortgages would seem to go far beyond what was contemplated in Congressional discussion
and authorization of the Agreement and its allocation of funds to NADBank and BECC. It is our
position that certification and financing of “other infrastructure” projects cannot be done until
the Parties formally agree to modify the Agreement. From a political perspective in the U.S.,
that would seem to require at least Congressional discussion, if not Congressional approval.
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And, for that to occur, it seems to us that the BECC and NADBank will have to be specific about
exactly which “other” infrastructure projects they want to consider certifying and financing.
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War on Drugs
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UQ- Violence High
Despite the US-Mexico crackdown on drugs, drug-related violence and trade
persists
Rawlins, Production Editor at Council on Foreign Relations, 1/11/13
[Aimee, 1/11/13, Council on Foreign Relations, “Mexico’s Drug War”,
http://www.cfr.org/mexico/mexicos-drug-war/p13689, Accessed 7/7/13, ML]
In 2006, former Mexican president Felipe Calderón launched a massive crackdown against
drug trafficking organizations, in conjunction with the United States. Since then, more than
40,000 people have been killed in drug-related violence. While the United States has supplied
funding and labor to increase Mexico's institutional capacity to address drug trafficking, its
primary focus has been on cross-border policing and targeting U.S. drug users. Analysts differ on
how to address Mexico's growing internal strife, but a growing number agree that the U.S. war
on drugs is a failure and necessitates a new approach. Enrique Peña Nieto, who succeeded
Calderón as president in December 2012, has announced intentions to shift Mexico's drug war
strategy to quell violence against civilians rather than targeting cartel leaders. Meanwhile,
gradual moves have been made on the U.S. state level toward legalization and decriminalization
of marijuana, one of the primary substances involved in the drug war, raising new questions
about overall policy.¶ For decades, drug trafficking organizations used Mexico's entrenched
political system to create "a system-wide network of corruption that ensured distribution rights,
market access, and even official government protection for drug traffickers in exchange for
lucrative bribes," according to a March 2011 CFR report. However, it was not until the late 1980s
that Mexican organizations rose to their current prominence, in the wake of the United States'
successful dismantling of Colombia's drug cartels. As the Colombian route was disrupted,
Mexican gangs shifted from being "mere couriers" for Colombia to wholesalers, explains an
August 2012 Congressional Research Service report (PDF).¶ By the time Calderón took office in
2006 with a pledge to eradicate trafficking organizations, drug violence was already on the rise,
says University of San Diego Mexico expert David Shirk. "Moving very aggressively to promote a
law and order agenda was a deliberate strategy to cope with this chaotic moment," Shirk says of
the Calderón administration.¶ Mexico is a major supplier of heroin to the U.S. market, and the
largest foreign supplier of methamphetamine and marijuana. Mexican production of all three
of these drugs has increased since 2005, as has the amount of drugs seized at the southwest
border, according to the U.S. Department of Justice (PDF). While assessments vary as to how
much of the marijuana originates in Mexico, a 2010 Rand Corporation report (PDF) estimated it
at anywhere from 40 to 67 percent. An estimated 95 percent of cocaine now travels through
Mexico (PDF) into the United States, up from 77 percent in 2003. Overall, the U.S. State
Department found that U.S. drug users send between $19 and $29 billion annually into the
coffers of Mexican drug cartels.
A legacy of corruption and poor working standards has led to lack of success
with the war on drugs
Rawlins, Production Editor at Council on Foreign Relations, 1/11/13
[Aimee, 1/11/13, Council on Foreign Relations, “Mexico’s Drug War”,
http://www.cfr.org/mexico/mexicos-drug-war/p13689, Accessed 7/7/13, ML]
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From 2006 to 2012, Calderón sent more than 50,000 soldiers onto Mexico's streets, invested
billions of dollars on equipment and training, attempted to vastly reform the police and judicial
systems, and strengthened Mexico's partnership with the United States (PDF). But a legacy of
"political manipulation of law enforcement and judicial branches, which limited
professionalization and enabled widespread corruption" has left the government with "only
weak tools to counter increasingly aggressive crime networks," writes CFR's Shannon O'Neil in
America's Quarterly.¶ The police are easily bought, in part because in many cities, they earn
less than teachers or even burrito vendors. On the website InSight Crime, Patrick Corcoran
notes that "an underpaid officer could double or triple his salary by simply agreeing to look the
other way." The CFR report notes police agencies "suffer from dangerous and deplorable
working conditions, low professional standards, and severely limited resources."¶ "It is
ultimately the great shame of the last decade that we've made all this effort, we've lost all of
these lives, and at the end of the day, we've made no real substantive progress in reducing the
availability of drugs, and the cost is extraordinary violence." --David Shirk¶ The Calderón
administration attempted to counter police corruption by dramatically increasing the role of the
military in the fight against drug cartels. Not only have tens of thousands of military personnel
been deployed to supplement, and in many cases replace, local police forces, they have also
been heavily recruited to lead civilian law enforcement agencies (PDF).¶ Mexico's judicial
system—with its autocratic judges and lack of transparency—is also highly susceptible to
corruption. The Congressional Research Service report noted that even when public officials are
arrested for working with a cartel, they are rarely convicted.¶ Calderón's militarization strategy
also resulted in accusations of serious human rights abuses. A November 2011 report by Human
Rights Watch found that "rather than strengthening public security in Mexico, Calderón's 'war'
has exacerbated a climate of violence, lawlessness, and fear in many parts of the country."
The report, which looked at five states, documented more than one hundred and seventy cases
of torture, thirty-nine disappearances, and twenty-four extrajudicial killings.¶ Despite the
problems associated with the militarization of Mexican law enforcement, the administration has
heralded the successes of its offensive against the cartels. Through bilateral cooperation with
the United States, the government killed or captured twenty-five of the top thirty-seven most
wanted drug kingpins in Mexico.
Drug trade on the border is increasing- the war on drugs has failed
Spagat, writer at Associated Press, 6/28/13
[Elliot, 6/28/13, The Associated Press, “Meth floods across U.S.-Mexico border crossing”,
http://www.pjstar.com/free/x606636607/Meth-floods-across-U-S-Mexico-bordercrossing?zc_p=0#axzz2YOSA4gd4, Accessed 7/7/13, ML]
Children walk across the U.S.-Mexico border with crystal methamphetamine strapped to their
backs or concealed between notebook pages. Motorists disguise liquid meth in tequila bottles,
windshield washer containers and gas tanks.¶ The smuggling of the drug at land border
crossings has jumped in recent years but especially at San Diego's San Ysidro port of entry,
which accounted for more than 40 percent of seizures in fiscal year 2012. That's more than
three times the second-highest — five miles east — and more than five times the third-highest,
in Nogales, Ariz.¶ The spike reflects a shift in production to Mexico after a U.S. crackdown on
domestic labs and the Sinaloa cartel's new hold on the prized Tijuana-San Diego smuggling
corridor.¶ A turf war that gripped Tijuana a few years ago with beheadings and daytime
shootouts ended with the cartel coming out on top. The drugs, meanwhile, continue flowing
through San Ysidro, the Western hemisphere's busiest land border crossing with an average of
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40,000 cars and 25,000 pedestrians entering daily.¶ "This is the gem for traffickers," said Gary
Hill, assistant special agent in charge of the U.S. Drug Enforcement Administration in San Diego.
"It's the greatest place for these guys to cross because there are so many opportunities."¶
Customs and Border Protection officers seized 5,566 pounds of methamphetamine at San
Ysidro in the 2012 fiscal year, more than double two years earlier, according to Immigration
and Customs Enforcement's Homeland Security Investigations unit. On the entire border,
inspectors seized 13,195 pounds, also more than double.¶ From October 2012 through March,
seizures totaled 2,169 pounds at San Ysidro and 1,730 pounds at Otay Mesa, giving San Diego 61
percent of the 6,364 pounds seized at Mexican border crossings. Much of the rest was found in
Laredo, Texas; Nogales; and Calexico, Calif.¶ San Ysidro — unlike other busy border crossings —
blends into a sprawl of 18 million people that includes Los Angeles, one of the nation's top
distribution hubs. By contrast, El Paso is more than 600 miles from Dallas on a lonely highway
with Border Patrol checkpoints.¶ Rush-hour comes weekday mornings, with thousands of
motorists clogging Tijuana streets to approach 24 U.S.-bound inspection lanes on their way to
school or work. Vendors weave between cars, hawking cappuccinos, burritos, newspapers and
trinkets.¶ A $732 million expansion that has created even longer delays may offer an extra
incentive for smugglers who bet that inspectors will move people quickly to avoid criticism for
hampering commerce and travel, said Joe Garcia, assistant special agent in charge of ICE
investigations in San Diego.
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I/L- Relations
US-Latin American Relations key to fighting the War on Drugs, strengthening
Latin American democracies, and opening Latin American economies
Barshefsky et al , senior international partner at Wilmer Cutler Pickering Hale
and Dorr LLP, 8 [Charlene, James T. Hill , four-star general in the U.S. Army, Shannon K.
O'Neil, Senior Fellow for Latin America Studies, Julia E. Sweig , Nelson and David Rockefeller
Senior Fellow for Latin America Studies and Director for Latin America Studies , Council on
Foreign Relations, May 2008 , " U.S.-Latin America¶ Relations:¶ A New Direction¶ for a New
Reality " , pg. 10 , JC ]
Recent strains in the U.S.-Latin America relationship, although real,¶ are less a result of alleged
U.S. policy failings than a product of deeper¶ changes: while the basic tenets of U.S. policy
have not changed, Latin¶ America has. Opening economies, strengthening democracies, and¶
fighting drug production and trafficking remain important priorities.¶ But continuing to build
U.S. policy on these pillars alone reflects a¶ mistaken sense of what U.S. policy can realistically
achieve and a¶ failure to recognize where Washington can meaningfully bolster Latin¶ Americans’
efforts to improve their own quality of life, providing a¶ new foundation for U.S.-Latin America
relations in the process. Achieving¶ U.S. objectives and protecting U.S. interests in the Western
Hemisphere¶ requires an unsentimental and reality-based assessment of the¶ complex and
dynamic changes under way in Latin America and in¶ U.S.-Latin America relations—and of the
ways in which the United¶ States can influence those changes for the better.¶ The Task Force
has identified four emerging and urgent priorities¶ that should provide the basis of U.S. policy
toward Latin America: 1)¶ poverty and inequality; 2) citizen security; 3) migration; and 4) energy¶
security and integration. These four priorities bear directly on U.S.¶ interests, as their fate will
have repercussions on regional stability, democratic¶ consolidation, economic growth and
development, and counternarcotics¶ efforts. As important, these four priorities also represent
important¶ opportunities for the region and for U.S. policy, opening avenues¶ of dialogue on
issues of mutual interest to Latin America and the¶ United States.
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I/L- Wage Inequality
Low income and poor living conditions attract impoverished Mexicans to enter
the drug trade
Gilrain, GIS/CADD Tech at Timmons Group, 12 (Will ,6-28-12, Timmons Group, "GIS
Analysis of the Mexican Drug War" at the IAFIE conference,
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=23&cad=rja&ved=0CD8
QFjACOBQ&url=http%3A%2F%2Fwww.iafie.org%2Fresource%2Fresmgr%2F2012_conference%2
Fa_gis_analysis_of_the_mexic.pptx&ei=9vPNUdr7FcTXigKxuYHADw&usg=AFQjCNGniaPge8E66B
R1zgIsk1AvP1Pd8A&sig2=046hvSUluKLi5QqDkNe4Dg&bvm=bv.48572450,d.cGE, slide 3,
6/28/13 , JC)
Drug trafficking is the fifth largest employer in the country. Recent estimates show that in
Mexico, there are 468,000 people who work in the drug industry, a figure equivalent to almost
three times the number of employees of PEMEX, the largest state-owned company in Mexico
and the fourth most important oil company in the world.¶ In 2007 Mexico had 31 million
hectares designated to agriculture. Out of these, 9 million were used for growing marijuana
and poppies. This means that Mexico produced more marijuana than corn.¶ Small fields, the
protection and harvest of the poppy and marijuana fields is also very labor intensive, which
leads to more employment opportunities ¶ While one kilogram of corn has a market value of
four pesos, drug smugglers pay up to 10,000 pesos for one kilogram of opium. In fact,
marijuana is six times better business than vanilla (the most well-paid agricultural product of
Mexico), and sixteen times better than almond (the second-best legitimate product)¶ Peasants
are paid a lump sum fee of 400 thousand pesos, 300 pesos for each day of labor, and… offer
peasants a service of ‘social security’ by paying some proportion of the merchandise value if the
harvest gets ruined by natural uncontrollable conditions. In contrast, a corn merchant offers a
lump sum fee of only 12 thousand pesos with a daily salary of 54 pesos and, of course, no social
security¶ Cartels pay Urban youth 10-12 thousand pesos per month and train them in the use
of violence to protect their business. They also receive more money coming from human
trafficking, extortions, kidnapping, and other crimes.¶ Another reason for participating in the
drug trade is that the people want to make money quickly to get out of their poor living
conditions. They do not want to wait around going to school in order to get a higher paying legal
job. They also have high levels of entrepreneurial ability, preferences for autonomy, and low
levels of rick aversion. Young drug dealers are 11%-21% more likely to choose self-employment
in later years than are young non-drug-dealers, all else equal.
Trade Relations Alleviate Mexico’s Wage Inequalities
Hanson, Associate Professor, Department of Economics and School of Business
Administration, University of Michigan, and Harrison, Assistant Professor,
Graduate School of Business, Columbia University, 99
(Gordon, Ann, Jan 1999, Industrial and Labor Relations Review, Vol. 52, No. 2, “Trade
Liberalization and Wage Inequality in Mexico”, 6-28-13, ABS)
During the 1980s, Mexico experienced a dramatic increase in wage inequality. The wages of moreeducated, more-experienced workers rose relative to those of less-educated, less-experienced
workers. While such events are interesting in their own right, what makes the change in Mexico's wage structure particularly
note-worthy is that it coincided with a sweeping liberalization of trade. In 1985, Mexico announced that it was
joining the General Agreement on Trade and Tariffs (GATT), bringing an end to four decades of import- substitution
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industrialization. The
government proceeded to drastically reduce most trade barriers in the
following three years. It was in 1985 that wage inequality in Mexico began to rise.
Economic Openness Has Been Positively Proven to Raise Wages in Developing
Sectors
Hanson, Associate Professor, Department of Economics and School of Business
Administration, University of Michigan, and Harrison, Assistant Professor,
Graduate School of Business, Columbia University, 99
(Gordon, Ann, Jan 1999, Industrial and Labor Relations Review, Vol. 52, No. 2, “Trade
Liberalization and Wage Inequality in Mexico”, 6-28-13, ABS)
In this paper, we analyze data on 2,354 Mexican manufacturing plants for 1984-90 together with Mexican Industrial Census data for
1965-88 to assess the extent to which the increase in the skilled-unskilled wage gap in Mexico was associated with the opening of
the Mexican economy. The motivation for studying the Mexican case is to understand the apparent global trend to- ward greater
wage inequality. Since the 1970s, the
wages of skilled workers have increased relative to those of
unskilled workers in the United States and in Great Britain. Several recent studies link the rise in
wage inequality to the increased openness of the U.S. economy, arguing that competition
from low-wage countries has reduced the relative demand for unskilled workers and caused
their wages to fall relative to those of skilled workers (Leamer 1993, 1998; Wood 1994; Feenstra and Hanson
1996a). Other studies instead associate rising wage inequality with technological change (Davis and Haltiwanger 1991; Bound and
Johnson 1992; Lawrence and Slaughter 1993; Berman, Bound, and Griliches 1994). The reasoning is that the advent of computer
technology has made skilled workers increasingly important in the workplace.
Increased Trade Relations Makes Mexico a Prime Model for Wage Increases
Hanson, Associate Professor, Department of Economics and School of Business
Administration, University of Michigan, and Harrison, Assistant Professor,
Graduate School of Business, Columbia University, 99
(Gordon, Ann, Jan 1999, Industrial and Labor Relations Review, Vol. 52, No. 2, “Trade
Liberalization and Wage Inequality in Mexico”, 6-28-13, ABS)
The focus of the literature has so far been on developed economies. Wage changes in middle- and low-income
countries have received little attention. This is unfortunate. If trade is contributing to wage changes
in developed countries, then we should observe the opposite wage movements in developingcountry relative wages. If global skill-biased technical change is the cause of relative-wage changes, then we should
observe similar relative wage movements in high-wage and low-wage countries. Given Mexico's proximity to the
United States and its recent opening to trade, the country is an ideal candidate in which to
look for such changes.
US-Mexico Trade Relations Increase Wages and Decrease Unemployment in
Mexico
Hanson, Associate Professor, Department of Economics and School of Business
Administration, University of Michigan, and Harrison, Assistant Professor,
Graduate School of Business, Columbia University, 99
(Gordon, Ann, Jan 1999, Industrial and Labor Relations Review, Vol. 52, No. 2, “Trade
Liberalization and Wage Inequality in Mexico”, 6-28-13, ABS)
This story is consistent with either of two hypotheses. The first is that Mexico has a wealth of skilled labor and a
dearth of unskilled labor relative to the rest of the world. In its reserves of skilled labor, Mexico is far behind
the United States, of course, but it may have a decisive edge over low- income countries, such as China. The second hypothesis is
that under
import substitution Mexico extended trade protection preferentially to industries
that make relatively intensive use of unskilled labor. Trade liberalization would then have a
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disproportionately large impact on non-skill-intensive sectors. Although such a policy would seem at odds
with Mexico's presumed comparative advantage in low-skill activities, political considerations may have led the government to
protect these industries. In either case, the
Stolper-Samuelson explanation for the observed wage
changes implies that (1) the relative prices of skill- intensive goods have increased, and (2)
there has been a shift in employment to- ward skill-intensive sectors.
Increases in Demand for Mexican Labor Has A Larger Impact on Increasing
Wages
Hanson, Associate Professor, Department of Economics and School of Business
Administration, University of Michigan, and Harrison, Assistant Professor,
Graduate School of Business, Columbia University, 99
(Gordon, Ann, Jan 1999, Industrial and Labor Relations Review, Vol. 52, No. 2, “Trade
Liberalization and Wage Inequality in Mexico”, 6-28-13, ABS)
One source of relative-wage changes is shifts in the demand for different skill categories. An
increase in the relative demand for skilled labor would cause an increase in both the wages
and employment levels of skilled workers relative to those of unskilled workers. 12 Table 3
shows the ratio of white-collar to blue-collar employment for the SECOFI sample. Between 1984
and 1990, there was virtually no aggregate change in relative employment. The ratio of whitecollar to blue-collar employment increased from 0.431 to 0.433; the ratio of white-collar to bluecollar hours worked decreased from 0.427 to 0.421. Industry- level data also fail to indicate
substantial changes in relative employment. Unreported figures show that four (of nine) twodigit industries experienced an increase in the relative employment of white-collar labor, while
five two-digit industries experienced a decline. No industry showed large changes in either
direction.
US-Mexico Trade Relations Increase Demand for Skilled Labor in Mexico
Hanson, Associate Professor, Department of Economics and School of Business
Ad- ministration, University of Michigan, and Harrison, Assistant Professor,
Graduate School of Business, Columbia University, 99
(Gordon, Ann, Jan 1999, Industrial and Labor Relations Review, Vol. 52, No. 2, “Trade
Liberalization and Wage Inequality in Mexico”, 6-28-13, ABS)
The link that standard trade theory identifies between trade and wages is embodied in the
Stolper-Samuelson (1941) theorem and its generalizations (Ethier 1984). The Stolper-Samuelson logic is that
trade affects relative factor rewards by changing relative prices. To explain wage changes in Mexico with
this logic, we would need a succession of events such as the following. Trade liberalization causes the prices of
skill-intensive goods to rise relative to those of non-skill-intensive goods. The price changes
reduce the demand for labor in non-skill-intensive industries and increase the demand for
labor in skill-intensive industries. The resulting shift in employment toward skill-intensive
industries con- tributes to an increase in the relative demand for skilled workers, which causes
their wages to increase relative to those of un- skilled workers.
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I/L- Mexican Econ Growth
Mexican economic growth is the key internal link to dismantle Mexican drug
cartels—current policy solves alt causes
Brown, US ARMY Major, 10
[Matthew M, 12-2-2010, “Engaging the Borderlands: Options for the Future of U.S.-Mexican
Relations”, School of Advanced Military Studies, p. 56-57, GSK]
The criminality of the DTOs and the economic conditions that facilitate their support render
militarization a less then optimal option. Rather a multi-faceted policy involving domestic and
multinational approaches are a better option. This approach must target both the DTOs and
the conditions that facilitate their existence. The two key avenues of approach should be to
improve economic conditions for the impoverished while reducing the freedoms of movement
and sanctuary which the DTOs currently enjoy.¶ The U.S. domestic approach should consist of
increased apprehension efforts, supported by judicial action and incarceration to act as a
deterrent, increasing the “Cost” of illegal crossings of personnel and goods. This approach will, if
applied correctly, balance barriers, technology and manpower along the lines of the Secure
Border Initiative to reduce the flow of illegal traffic to manageable levels. This coupled with
aggressive law enforcement targeted at DTO activity will disrupt ongoing activities, while
simultaneously restricting their lines of supply from Mexico. The Southwest Border Security Bill
passed in the summer of 2010 and signed into law by President Barrack Obama, provides an
additional 600 million dollars in supplemental funds to indicate that our law and policy makers
concur that this approach is both viable and feasible.186¶ Combined U.S.-Mexican efforts also
need to be expanded. While information sharing and coordination between the two nations has
increased, the effectiveness afforded through combined operations and info sharing cannot be
understated. Only with coordinated efforts on both sides of the border can DTO freedom of
movement be eliminated.¶ Most importantly, any domestic efforts must be enhanced by parallel
Mexican efforts. As the U.S. increases its capacity and border security, Mexico must increase its
law enforcement capacity and economic support for border areas. The increased capacity the
Merida Initiative provides will allow greater effects and more effective operations targeting
DTOs. Law enforcement successes attributed to Merida Initiatives should be reinforced with
increased support. Only increased security and control will facilitate government efforts to
implement economic measures that will enhance the lives and prosperity of affected regions.¶
While the Merida Initiative has increased capacity of both the U.S. and Mexican border security
apparatus’ to target and impact DTO activity, it will ultimately fail unless supported by
economic development. Until there are social services and economic opportunities provided,
narcotics and illegal immigration will continue to be the default source of revenue for
impoverished people.
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Impact- Laundry List
The War on Drugs only squeezes the supply for an increasing demand - benefits
the drug trade which causes a laundry list of impacts
Rolles et al , Transform Drug Policy Foundation's information office, 12 (Steve ,
George Murkin, Transform Drug Policy Foundation writer, Martin Powell, Transform Drug Policy
Foundation, Jane Slater, Transform Drug Policy Foundation,6-26-12 , Transform Drug Policy
Foundation, "The Alternative World Drug Report : Counting the Cost on the War on Drugs" ,
http://www.countthecosts.org/sites/default/files/AWDR.pdf , 6/28/13 , JC)
-Enforcement spending trades off with Mexican Public Expenditure and other policing priorities
-corruption -regional conflicts -sector volatility -unfair competition -deters investment -deters
tourism -destabilizes Mx. Econ -violence -underdevelopment -terrorism -deters aid -HIV -disease
-ecosystem collapse -Human rights violations
Ever-expanding drug law enforcement budgets have ¶ squeezed supply while demand has
continued to grow. ¶ The result is inflated prices and creation of a profit ¶ opportunity that has
fuelled the emergence of a vast ¶ illegal trade controlled by criminal entrepreneurs. This ¶ has a
range of negative impacts on local and global ¶ economies.¶ • Estimating global spending on
drug law enforcement ¶ is difficult (due to poor data, inclusion criteria ¶ etc), but likely to be well
in excess of $100 billion ¶ annually¶ • In terms of achieving the stated aims of enforcement ¶
efforts, this spending has been extremely poor value ¶ for money (displacement – rather than
eradication ¶ – of illegal activities, drug prices falling, and ¶ availability rising)¶ • Enforcement
spending incurs opportunity costs ¶ in other areas of public expenditure, including ¶ other
police priorities and drug-related health ¶ interventions¶ • The illegal trade is estimated to turn
over more than ¶ $330 billion annually¶ • Profits from this trade undermine the legitimate ¶
economy through corruption, money laundering, ¶ and the fuelling of regional conflicts –
problems ¶ most evident in already vulnerable regions where ¶ the illicit drug activity is
concentrated¶ • The illicit drug trade creates a hostile environment ¶ for legitimate business
interests, deterring ¶ investment and tourism, creating sector volatility ¶ and unfair
competition (associated with money ¶ laundering), as well as wider, destabilising ¶
macroeconomic distortions ¶ • There are some economic benefits from the illicit ¶ trade,
although profits are mostly accrued in ¶ consumer countries and by those at the top of the ¶
criminal hierarchies. Key beneficiaries of the war on ¶ drugs are military, police and prisons
budgets, and ¶ related technological and infrastructural interests¶ 2. Undermining development
and ¶ security, fuelling conflict¶ Criminal drug producers and traffickers naturally seek to
operate in marginal and underdeveloped regions, ¶ where vulnerable populations can be
exploited and ¶ weak authorities kept at bay. The corruption, violence, ¶ conflict and instability
that follow undermine social and ¶ economic growth and can lock regions into a spiral of ¶
underdevelopment. ¶ • Illegal drug markets are characterised by violence ¶ between criminal
organisations and police or ¶ military, or between rival criminal organisations ¶ – problems only
made worse by the intensification ¶ of enforcement efforts. Drug profits also provide ¶ a ready
supply of income for various insurgent, ¶ paramilitary and terrorist organisations¶ • Criminal
organisations seeking to protect and ¶ expand their business invest heavily in corrupting ¶ – and
further weakening – all levels of government, ¶ police and judiciary ¶ • Investment is deterred
from affected regions, ¶ while limited aid budgets are directed into drug ¶ law enforcement and
away from health and ¶ development¶ • Resulting underdevelopment contributes to the ¶
spread of HIV and wider health costs ¶ • Fragile ecosystems are destroyed by producers in ¶
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order to grow drug crops, and by chemical crop ¶ eradications carried out by law enforcement¶
• Human rights violations in the name of drug control ¶ become commonplace ¶ While there are
some marginal economic benefits from ¶ the illicit drug trade in producer and transit regions, ¶
these are hugely outweighed by the wider negative ¶ development costs. The development
impacts of the ¶ global war on drugs are frequently overlooked. This ¶ needs to change, and
domestic governments, UN agencies ¶ and NGOs working on development and security issues ¶
have a key role in making this happen.
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Impact- Instability
Mexican drug cartels promote instability and risk Mexico becoming a failed
state
Hawley, USA Today Writer, 10 (Chris, 2-10-10, USA Today, "Drug cartels threaten Mexican
stability" ,http://usatoday30.usatoday.com/news/world/2010-02-10-mexicocartels_N.htm?csp=usat.me, 6/29/13 , JC)
Crime 'has become defiant,' president says, as police and politicians are forced to face 'the
bribe or the bullet'¶ The drug cartels of Mexico have grown into such a massive criminal
enterprise that they have supplanted the government in whole regions and threaten to turn
the country into a narco-state like 1990s-era Colombia, say law enforcement and criminal
experts.¶ Attempts by the United States and Mexico's federal government have failed to stem
the power of the cartels, which economists say employ as much as one-fifth of the people in
some Mexican states.¶ "We are approaching that red zone," said Edgardo Buscaglia, an expert
on organized crime at the Autonomous Technological University of Mexico. "There are pockets
of ungovernability in the country, and they will expand."¶ For the past decade, large parts of
Mexico have been sliding toward the lawlessness Colombia experienced in which drug
traffickers in league with left-wing rebels controlled small towns and large parts of the interior
through drug-funded bribery and gun-barrel intimidation, Buscaglia and others say.¶ Even
President Felipe Calderón, who a year ago angrily rebutted suggestions that Mexico was
becoming a "failed state," is now describing his crackdown as a fight for territory and "the
very authority of the state."¶ "The crime has stopped being a low-profile activity and has
become defiant. ... Plainly visible and based on co-opting or intimidating the authorities," he
told a group of Mexican ambassadors last month. "It's the law of 'the bribe or the bullet.' "¶ In
places such as Tancitaro, the battle may already be lost.¶ In the past year, gunmen in this
western town of 26,000 had killed seven police, murdered a town administrator and kidnapped
others, said Martin Urbina, a city official. Drug traffickers were apparently demanding the
removal of certain officers, he said.¶ When the traffickers kidnapped the two officials' fathers
on Nov. 30, it was the last straw.¶ "If someone comes and puts a pistol to your head, what are
you going to do?" said Gustavo Sánchez, who was appointed by the Michoacán state governor
as interim mayor after the mass resignation.¶
Mexico becoming a failed state causes Nuclear War
Debusman , World Affairs columnist, 9 (Bernd, 1-9-9, New York Times, "Among top U.S.
Fears: A Failed Mexican state" , http://www.nytimes.com/2009/01/09/world/americas/09ihtletter.1.19217792.html?_r=0 , 6/29/13 , JC )
WASHINGTON — What do Pakistan and Mexico have in common? They figure in the
nightmares of U.S. military planners trying to peer into the future and identify the next big
threats.¶ The two countries are mentioned in the same breath in a just-published study by the
United States Joint Forces Command, whose jobs include providing an annual look into the
future to prevent the U.S. military from being caught off guard by unexpected developments.¶
"In terms of worst-case scenarios for the Joint Force and indeed the world, two large and
important states bear consideration for a rapid and sudden collapse: Pakistan and Mexico,"
says the study - called Joint Operating Environment 2008 - in a chapter on "weak and failing
states." Such states, it says, usually pose chronic, long-term problems that can be managed
over time.¶ But the little-studied phenomenon of "rapid collapse," according to the study,
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"usually comes as a surprise, has a rapid onset, and poses acute problems." Think Yugoslavia
and its disintegration in 1990 into a chaotic tangle of warring nationalities and bloodshed on a
horrific scale.¶ Nuclear-armed Pakistan, where Al Qaeda has established safe havens in the
rugged regions bordering Afghanistan, is a regular feature in dire warnings. Thomas Fingar, who
retired as the chief U.S. intelligence analyst in December, termed Pakistan "one of the single most challenging places on the planet."¶ This is fairly routine language for Pakistan, but not for
Mexico, which shares a 2,000-mile, or 3,200-kilometer, border with the United States.¶
Mexico's mention beside Pakistan in a study by an organization as weighty as the Joint Forces
Command, which controls almost all conventional forces based in the continental United States,
speaks volumes about growing concern over what is happening south of the U.S. border.¶
Vicious and widening violence pitting drug cartels against each other and against the Mexican
state have left more than 8,000 Mexicans dead over the past two years. Kidnappings have
become a routine part of Mexican daily life. Common crime is widespread. Pervasive
corruption has hollowed out the state.¶ In November, in a case that shocked even those (on
both sides of the border) who consider corruption endemic in Mexico, the former drug czar Noé
Ramírez was charged with accepting at least $450,000 a month in bribes from a drug cartel in
exchange for information about police and anti-narcotics operations.¶ A month later, a Mexican
army major, Arturo González, was arrested on suspicion that he sold information about
President Felipe Calderón's movements for $100,000 a month. González belonged to a special
unit responsible for protecting the president.¶ Depending on one's view, the arrests are
successes in a publicly declared anticorruption drive or evidence of how deeply criminal mafias
have penetrated the organs of the state.¶ According to the Joint Forces study, a sudden collapse
in Mexico is less likely than in Pakistan, "but the government, its politicians, police, and judicial
infrastructure are all under sustained assault and pressure by criminal gangs and drug cartels.
How that internal conflict turns out over the next several years will have a major impact on
the stability of the Mexican state."¶ It added: "Any descent by Mexico into chaos would
demand an American response based on the serious implications for homeland security
alone."¶ What form such a response might take is anyone's guess, and the study does not spell it
out, nor does it address the economic implications of its worst-case scenario. Mexico is the third
biggest trade partner of the United States (after Canada and China) and its third-biggest supplier
of oil (after Canada and Saudi Arabia).¶ No such ties bind the United States and Pakistan. But the
study sees a collapse there not only as more likely but as more catastrophic.¶ It would bring
"the likelihood of a sustained violent and bloody civil and sectarian war, an even bigger haven
for violent extremists and the question of what would happen to its nuclear weapons. That
'perfect storm' of uncertainty alone might require the engagement of U.S. and coalition forces
into a situation of immense complexity and danger." The study then warns of "the real
possibility that nuclear weapons might be used."
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Impact- Terrorism
Major terrorist organizations are dependent on drug trade for financing –
without this revenue terrorism would collapse
Hendin, writer for CBS, 8(Robin, 7-18-8, CBS, "DEA Digging Into Al Qaeda Drug Links" ,
http://www.cbsnews.com/stories/2008/07/18/cbsnews_investigates/main4274339.shtml,
6/29/13, JC)
The 2004 Madrid train bombings that killed 191 people cost a mere $70,000 and were financed
primarily through the sale of hashish and ecstasy in Spain. US officials say increasingly the sale
of illegal drugs is the financing of choice for terrorists. "Nothing generates money like
drugs...it is the most lucrative illicit commodity that's trafficked,” Michael Braun, the Chief of
Operations for the US Drug Enforcement Administration (DEA) told a panel in Washington. In
fact, of the 43 groups identified as known terrorist organizations by the US State Department,
19 are linked to the drug trade. While the men who carried out the Madrid plot had
connections to Al Qaeda, they did most of the fundraising on their own. Al Qaeda central, as the
Osama Bin Laden group is known, has a history of relying on drug money for support, primarily
because of protection granted by the Taliban in --Afghanistan. Now US authorities say they are
seeing a more direct connection between drug money and funding for Al Qaeda terror activities.
Braun pointed out that more than 40% of the Taliban's money comes from the illicit trade of
opium made from the widespread growth of poppy plants in Afghanistan, where the Taliban is
based. But beyond the Taliban, "we are seeing more and more of an unequivocal connection
with respect to Al Qaeda being involved in drug trafficking activities," he said. He told reporters
the DEA has many open investigations into the connection, but would not provide further
details. While terror operations themselves are cheap, the maintenance of a terror
organization on the whole is quite expensive. Recruiting, training, arms, fake documents, safe
houses, and movement can cost hundreds of millions of dollars, and that's why many groups,
including the leftist Colombian terror group, the FARC, and Mideast terror groups such as
Hamas and Hezbollah have turned to drug trafficking to finance operations. A recent UN
report, shows that $322 billion was made last year by the global drug trade. $65 billion of that
was from American drug users. With so much of the world's cocaine coming from South
America and Colombia in particular, the FARC is very involved in every aspect of the cocaine
trade around the globe, and according to Braun the organization has become "the single largest
cocaine trafficker in the world." The FARC makes money by taxing the drug cartels, drug
smugglers and drug farmers. Braun says the Taliban has picked up on the FARC's techniques and
is now following the same model. Braun called groups like the FARC, the Taliban, Hamas and
Hezbollah: "hybrids -- They are one part terrorist organization and are becoming one part global
drug trafficking cartel." To combat the growing nexus between the international drug trade and
terrorism, the DEA says it relies heavily on human sources on the ground in many different
countries and has more federal agents stationed overseas than any other US law enforcement
agency. "This the face of 21st century organized crime," Braun stated. "But they are meaner
and uglier than anything we've seen before."
Drug Cartels fund and allow Hezbollah infiltration through the US-Mexico
border
Quinn, Writer for Intelligence Overwatch, 12 [Victor, 8-31-12 , Intelligence Overwatch,
"Hezbollah Using Mexican Cartels to Infiltrate USA " ,
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http://www.intelloverwatch.com/2012/08/31/hezbollah-using-mexican-cartels-to-infiltrate-usa/
, 7-1-13 , JC]
The Administration has admitted that terrorist groups are infiltrating the USA using the
porous southern border to their advantage. Homeland Security Secretary Janet Napolitano
revealed the national security weakness to the House Homeland Security Committee after Rep.
Ron Barber (D-AZ) asked Napolitano: ”…is there any credible evidence that these reports are
accurate and that terrorists are, in fact, crossing our southern border with the intent to do harm
to the American people?”¶ Napolitano said, “What I can tell you…is that…the U.S.-Mexico border
is heavily, heavily staffed at record amounts of manpower, materiel, infrastructure and the like,
and we are constantly making sure we’re doing all we can to make that border as safe as
possible.”¶ The fact is, Shi’a Muslim terrorist group Hezbollah has established another home
base across the border in Mexico. Recognized by many experts as the ‘A’ team of Muslim
terrorist organizations, they certainly have had successes in homicide bombings, shelling of
Israeli cities across the border, as well as the U.S. embassy in Beirut and Israeli embassy in
Argentina. The group is now active along the 1200-mile US-Mexico border.¶ Since 9-11, U.S.
policy has focused on al-Qaida and its offshoots. However, Hezbollah has been setting up shop
in Mexico for 15 or 20 years. Hezbollah operatives are far more skilled than the disparate
groups that make up al-Qaeda. Personally, I consider Hezbollah much more dangerous
because of strategic, long-term thinking.¶ Hezbollah (along with their erstwhile ally Hamas) has
operated in South America for decades, moved north to Central America and now the group is
blending into Shi’a Muslim communities in Mexico, including Tijuana. Other pockets along the
U.S.-Mexico border region remain largely unidentified as U.S. intelligence agencies are focused
on the drug trade.¶ They have been trained in how to live in foreign hostile territories. The
Hezbollah-Hamas agents are in it for the long haul, “assimilating” into the culture and everyday
life of a region. Having spent years deep undercover in Mexico, I know Hezbollah is partnering
with drug organizations like Los Zetas, Sinaloa and Juárez Cartels. Hezbollah receives cartel
cash and protection in exchange for their counter-insurgent expertise in money laundering,
firearms training and explosives. For example, we tracked, along with Mexican intelligence, two
Hezbollah operatives in safe houses in Tijuana and Durango. We confirmed that cartel members
and Hezbollah operatives were living and operating out of there.¶ Tunnels the cartels have built
that cross from Mexico into the U.S. have grown increasingly sophisticated. Recently three drug
smuggling tunnels equipped with lighting, ventilation, and one even including a railcar system,
were discovered along the U.S.-Mexico. The latest signs that cartels are building sophisticated
passages to escape heightened detection above ground. The Mexican army detained three
people, bus did not say what affiliations they had. Where are the knowledgeable tunnel
builders? Certainly in the Middle East.¶ Hezbollah/Hamas is prepared to start blowing stuff up –
if they wanted to. However, for now, the terrorist groups see Mexico’s narco-terrorism as their
“cash cow,” with many senior Hezbollah leaders being wealthy businessmen.¶ The money they
are sending back to Lebanon is too important right now to jeopardize those operations. The real
concern is the group’s long-term goal of radicalizing Muslim communities. They’re focusing on
developing and infiltrating communities within North America. The influence of Muslim
teachings in prison confirms this thesis, since who better and easier to indoctrinate than career
criminals?
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Hezbollah will attempt to proliferate nuclear weapons - ability to do so
determined by funding and support by drug cartels
Berman, Vice President of the American Foreign Policy Council, 11 [Ilan, 7-7-11 ,
Government Printing Office , "Hezbollah in Latin America - Implications for U.S. Homeland
Security" , pg. 18 , JC]
One thing both Hezbollah and the FARC have is common is a demonstrated willingness to work
with outside groups that do not share their same ideology or theology, but who share a
common enemy. ¶ An important element in the criminalized relationships among all these
groups ¶ are the ‘‘pipelines’’ or series of overlapping pipelines that these state and non-state ¶
actors need to move products, money, weapons, personnel, and goods virtually anywhere and
at anytime, without detection and for enormous profits.8¶ These pipelines are perhaps best
understood as a series of recombinant chains ¶ whose links can couple and de-couple as
necessary to meet the best interests of the ¶ networks involved. In the current context I am
discussing state and non-state criminal/terrorist organizations who are able to move goods
from Iran across the northern ¶ tier of South America, through Central America and Mexico and
penetrate our borders with impunity. ¶ The criminalization of multiple states in our hemisphere,
acting in concert, is a ¶ threat across many obvious and less obvious fronts. But the seriousness
of the ¶ threat grows enormously when the central element these governments and their ¶
armed non-state proxies Hezbollah and the FARC share is a hatred for the United ¶ States and a
publicly stated desire to inflict significant damage on the homeland. ¶ This is the reality we
face. These groups together, as have access to hundreds of ¶ millions of dollars in illicit
revenues annually, and billions of dollars more in state ¶ revenues that are allocated without
transparency or internal supervision and accountability in respect of their nominally
democratic host polities. ¶ As I will describe in detail, they share a doctrine of asymmetrical
warfare against ¶ the United States that embraces the use of weapons of mass destruction,
massive ¶ civilian casualties as acceptable collateral damage and the underlying belief that the
¶ acquisition of nuclear weapons to destroy the United States is a moral or religious ¶
imperative. This is not a statement of capacity, but a clear statement of intention. ¶ The first
does not necessarily imply the ability to accomplish the latter, but it is ¶ an indication that these
intentions need to be taken seriously, particularly given the ¶ level of resources available to
them. Hezbollah, viewed by many in our intelligence ¶ community as the most effective, wellstructured, and militarily proficient terrorist ¶ group in existence, brings a host of skills and
abilities to bear in this regard. While ¶ these capabilities had been deployed in our hemisphere
before with lethal effect (the ¶ 1994 AMIA bombing), they have not been previously deployed
under the protection ¶ of a network of friendly governments, with access to diplomatic status
and immunity and operational freedom
Hezbollah-cartel alliances key to fundraising and a launching point for attacks
against the US
Washington Times, 09
[3-27-2009, “EXCLUSIVE: Hezbollah uses Mexican drug routes into U.S.”,
http://www.washingtontimes.com/news/2009/mar/27/hezbollah-uses-mexican-drug-routesinto-us/?page=all, accessed 7-2-13, GSK]
Hezbollah is using the same southern narcotics routes that Mexican drug kingpins do to
smuggle drugs and people into the United States, reaping money to finance its operations and
threatening U.S. national security, current and former U.S. law enforcement, defense and
counterterrorism officials say.¶ The Iran-backed Lebanese group has long been involved in
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narcotics and human trafficking in South America’s tri-border region of Paraguay, Argentina and
Brazil. Increasingly, however, it is relying on Mexican narcotics syndicates that control access
to transit routes into the U.S.¶ Hezbollah relies on “the same criminal weapons smugglers,
document traffickers and transportation experts as the drug cartels,” said Michael Braun, who
just retired as assistant administrator and chief of operations at the U.S. Drug Enforcement
Administration (DEA).¶ “They work together,” said Mr. Braun. “They rely on the same shadow
facilitators. One way or another, they are all connected.¶ “They’ll leverage those relationships
to their benefit, to smuggle contraband and humans into the U.S.; in fact, they already are
[smuggling].”
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Impact- Narcoterrorism
Narcotrafficing vital to Hezbollah operations
Levitt, Director of the Stein Program on Counterterrorism and Intelligence @
The Washington Institute, 5-15
[Matthew, 5-15-2013, Washington Institute, “South of the Border, a Threat from Hezbollah”,
http://www.washingtoninstitute.org/uploads/Documents/opeds/Levitt20130515-JISA.pdf,
accessed 7-2-13, GSK]
The Fadel arrest cast new light, and fresh international attention, on a long-running ¶
phenomenon. Over the past decade, policymakers have been concerned about Hezbollah
activities in Latin America, particularly its relations with drug cartels along the ¶ U.S.-Mexico
border and efforts to fundraise, recruit operatives, and launder money. The ¶ organization
maintains a robust support network in the region—drawn from the large ¶ Shi’a and Lebanese
expatriate communities on the continent—to serve as logisticians ¶ in its criminal operations.
And today, faced with dwindling support from once-reliable ¶ patrons in Iran and Syria,
Hezbollah increasingly has relied on a range of criminal ¶ activities, from counterfeiting
schemes to trafficking weapons and narcotics, to shore ¶ up its financial reserves and stock its
arsenals.
Narcoterror alliances pivotal to carrying out a bioterrorist attack against the US
Washington Times, 09
[6-3-2009, “EXCLUSIVE: Al Qaeda eyes bio attack from Mexico”,
http://www.washingtontimes.com/news/2009/jun/03/al-qaeda-eyes-bio-attack-via-mexicoborder/, accessed 7-2-13, GSK]
U.S. counterterrorism officials have authenticated a video by an al Qaeda recruiter threatening
to smuggle a biological weapon into the United States via tunnels under the Mexico border,
the latest sign of the terrorist group’s determination to stage another mass-casualty attack on
the U.S. homeland.¶ The video aired earlier this year as a recruitment tool makes clear that al
Qaeda is looking to exploit weaknesses in U.S. border security and also is willing to ally itself
with white militia groups or other anti-government entities interested in carrying out an
attack inside the United States, according to counterterrorism officials interviewed by The
Washington Times.¶ The officials, who spoke only on the condition they not be named because
of the sensitive nature of their work, stressed that there is no credible information that al Qaeda
has acquired the capabilities to carry out a mass biological attack although its members have
clearly sought the expertise.¶ The video first aired by the Arabic news network Al Jazeera in
February and later posted to several Web sites shows Kuwaiti dissident Abdullah al-Nafisi telling
a room full of supporters in Bahrain that al Qaeda is casing the U.S. border with Mexico to
assess how to send terrorists and weapons into the U.S.
Reducing Mexican drug cartel influence key to fight narcoterror
Brown, US ARMY Major, 10
[Matthew M, 12-2-2010, “Engaging the Borderlands: Options for the Future of U.S.-Mexican
Relations”, School of Advanced Military Studies, p. 29-31, GSK]
While it is natural to gravitate to the specific illicit narcotics threat posed by Mexican DTOs,
their threats run deeper than just the trafficking and impact of narcotics. As their operations
continue to grow, they spawn supplemental lines of criminal effort and violence. DTOs are
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driven by greed. Mimicking legitimate corporations, they “strive to make money, expand
markets, and move as freely possible in the political jurisdictions within and between which
they work.”97 Continuing to evolve from their role as smugglers for the Columbian cartels,
Mexican DTOs have diversified taking on an ever-larger role in the processes from production to
distribution. ¶ This evolution has metastasized into the smuggling of humans as well. With
screening efforts and capabilities growing at ports of entry, the DTOs have increasingly
expanded their activities into the human smuggling trade to supplement their income. Charging
between $1,200- $2,500 for Mexican illegal aliens and $45,000-$60,000 for foreign nationals,
the DTOs can generate billions of dollars per year for relatively low risk, as most captured
aliens and their smugglers are most often not prosecuted and returned to their country of
origin. 98 DTOs, seeing not only the receipt of fees paid for transit, by controlling the smuggling
routes, also utilize the aliens as either narcotic carrying mules or large groups as diversion,
drawing the attention of law enforcement resources as large shipments are being transported
elsewhere.99¶ With much of the attention in the Southwest Border region focused on the
current DTO related violence, it is important not to lose focus on a greater threat and stated
priority of The National Security Strategy, that of terrorist and their materiel’s entry into the
U.S. homeland. While awareness and efforts to prevent this from occurring have increased since
2001, one cannot discount the potential impacts of a dangerous alliance between terror
organizations and DTOs, specifically unaccounted entry points. With their increasing
expansion and DTO control in the human struggling industry, and the increased apprehension
of other than Mexican immigrants, specifically those from special interest countries known to
support terrorism, one can infer increased collaboration between DTOs and terror
organizations.100 Terrorist networks seeking clandestine entrance into the country are a matter
of concern for U.S. officials. Although much of the conclusive evidence of this is undoubtedly
classified, the U.S. Border patrol reports a 41% increase in arrests of special interest aliens
since September 11, 2001. While these could simply be benign individuals, the House
Committee on Homeland Security has reported that members of Hezbollah have already
entered the U.S. across the southwest border. The same report states that ICE investigations
reveal aliens have been smuggled from the Middle East to staging points in Central and South
America for entry into the U.S.101 This parallels efforts described by former Director of the FBI
Robert Mueller’s testimony that “there are individuals from countries with known Al-Qaida
connections who are changing their Islamic surnames to Hispanic sounding names and
obtaining false Hispanic identities, learning to speak Spanish and pretending to be Hispanic
immigrants.”102 Al Qaida itself is using a Mexican Border scenario in a 2009 recruiting
message.103 These efforts reinforced by the contemporary examples of narco/terror
relationships such as the poppy trade supported Taliban translate into a serious gap in our
efforts to combat the entry of terrorists.
Narcoterror key to North Korean nuclear program
Farah, editor-in-chief of World Net Daily, 03
[Joseph, 7-23-2003, World Net Daily, “NARCO-TERROR FUELING FUTURE NUCLEAR TERROR?”,
http://www.wnd.com/2003/07/19867/, accessed 7-1-2013, GSK]
U.S. interests should be more focused on narco-terrorism in the Western hemisphere. It is
difficult, though, to separate between Western narco-terrorism dangers and those in other
parts of the world.¶ An intelligence expert specializing in narcotics told G2B clearly the
tentacles of the narco-octopus know no boundaries. He used the example of North Korea,
which together with its traditional blackmail diplomacy is using drug trade to finance plans for
weapons of mass destruction. The Australian law-enforcement establishment has proved this
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connection by intercepting and arresting drug dealers importing their deadly goods on North
Korean cargo ships.
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AT- Disads
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Politics
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AT- Case Turn
No turns-- progress on areas like the plan are possible without CIR
Graybeal, 11
[Michael Graybeal is the program coordinator for the Americas Program. He joined CSIS in May
2010 after receiving his M.A. in Latin American studies from Georgetown University. “Mexico's
Economic Policy and Migration
Dealing with the Causes” MAY 12, 2011 Center for Strategic and International Studies
http://csis.org/files/publication/110509_Graybeal_MexicoEconPolicy_Web.pdf, accessed 7-1013 BLE]
The United States must reexamine the assumption that immigration reform is the
precondition for making progress on other fronts. Doris Meissner, senior fellow at the
Migration Policy Institute, argued that immigration reform may or may not happen, but most
likely not in the short term. Instead, while continuing to push for immigration reform,
advocates must think in new terms, focusing on the interconnectedness of the United States
with Mexico and Central America. By increasing the focus on this dynamic, policymakers will
increasingly recognize that immigration is a regional issue and best addressed through the
lens of long-term competitiveness. By doing so, more effort could be made to address building
up the region’s human capital infrastructure.
Gonzaga Debate Institute 2013
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Link Turn
It’s popular with a host of US house members.
Govtrack.us No Date
“H.R. 2216 (112th): NADBank Enhancement Act of 2011: 112th Congress, 2011–2013. Text as of
Jun 16, 2011 (Introduced).”
http://www.govtrack.us/congress/bills/112/hr2216/text
H. R. 2216
To amend the North American Free Trade Agreement Implementation Act to allow for
amendments to the Border Environment Cooperation Agreement to promote infrastructure
projects financed by the North American Development Bank in the border region to promote
growth in trade and commerce between the United States and Mexico, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
June 16, 2011
Mr. HINOJOSA (for himself, Mr. CUELLAR, Mrs. DAVIS of California, Mr. DREIER, Mr.
FARENTHOLD, Mr. FILNER, Mr. GONZALEZ, Mr. GENE GREEN of Texas, Mr. GRIJALVA, Mr.
PASTOR of Arizona, Mr. REYES, Mrs. NAPOLITANO, Mr. PIERLUISI, Mr. BACA, Mr. FRANK of
Massachusetts, Mr. MEEKS, Ms. VELAZQUEZ, Ms. ZOE LOFGREN of California, Mr. POLIS, and
Mr. LUJAN) introduced the following bill; which was referred to the Committee on Financial
Services
Plan popular- economic incentives create political pressure.
Chase, Assistant Professor of Political Science at Tufts University, 5
[Kerry A., 11/2/05, The University of Michigan Press, Trading Blocs: States, Firms, and Regions in
the World Economy, “Chapter 6- NAFTA The Politics in the United States”, Accessed 6/28/13,
http://www.press.umich.edu/pdf/047209906X-ch6.pdf, pg. 220-221, ML]
Technological changes after 1970, along with Mexican and Canadian trade and¶ industrial
practices, encouraged the pursuit of regional free trade in industries¶ such as automobiles,
computers and office equipment, electronic components,¶ telecommunications, chemicals, and
farm and construction machinery. Once¶ Canadian and Mexican tariffs declined, U.S.
multinationals that had invested¶ in inefficient-scale facilities to serve protected markets
became vulnerable to¶ foreign competition. With these "miniature replica" factories a major
burden,¶ multinational companies could benefit from streamlining operations, specializing
plants for particular product lines, and closing down inefficient production. Many firms also
had outsourced intermediate manufacturing to Mexican¶ maquiladoras, which increased
intrafirm trade across North American borders. As production sharing expanded, so did the
incentives to eliminate the remaining barriers to cross-border trade and investment. These
two trends gave¶ rise to political pressure in the United States for free trade with Canada
and¶ Mexico.
GOP supports NAFTA- overwhelming vote cote.
Morlino, no quals, 6
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[Rob, 4/13/06, Media Matters, “O’Reilly falsely claimed ‘most Republicans didn’t want’ NAFTA”,
Accessed 6/29/13, http://mediamatters.org/research/2006/04/13/oreilly-falsely-claimed-mostrepublicans-didnt/135411, ML]
During the April 11 edition of Fox News’ The O’Reilly Factor, host Bill O’Reilly falsely claimed that
“[m]ost Republicans didn’t want” the 1993 North American Free Trade Agreement (NAFTA),
which was signed by the United States, Mexico, and Canada. In fact, in both the House and the
Senate, congressional Republicans voted overwhelmingly in favor of the agreement: In the
House, 132 Republicans voted in favor and 43 opposed, and in the Senate, 34 Republicans
voted in favor and 10 against. O’Reilly's guest, New York City Councilman Charles Barron (D),
noted that Democrats and Republicans supported the legislation. Democrats in the Senate voted
against NAFTA (with 28 opposed and 27 in favor), as they did in the House (with 156 opposed
and 102 in favor).
The House supports NAFTA- clear majority.
Cooper, journalist specializing in government, politics, and social post, 93
[Kenneth J., 9/18/93, The Washington Post, “House Approves US-Canada-Mexico Trade Pact on
234 to 200 Vote, Giving Clinton Big Victory”, Accessed 6/29/13,
http://www.washingtonpost.com/wp-srv/politics/special/trade/stories/tr111893.htm, ML]
The House approved the North American Free Trade Agreement last night by a comfortable
234 to 200 vote, giving President Clinton a crucial victory after a bitter debate that crisscrossed
party and ideological lines for most of the fall.¶ ¶ Clinton and his House allies came from behind
to wipe out a substantial lead that NAFTA opponents held as the week began. A bipartisan
coalition of 132 Republicans and 102 Democrats prevailed over the opposition of 156
Democrats, 43 Republicans and one independent.
¶
Increasing public support for free trade.
Pew Research Center, nonpartisan fact tank, 9
[4/28/09, Pew Research Center, “Support for Free Trade Recovers Despite Recession”, Accessed
6/29/13, http://www.people-press.org/2009/04/28/support-for-free-trade-recovers-despiterecession/2/, ML]
Despite the economic recession, public support for free trade agreements has recovered after
declining a year ago. Currently, 44% say that free trade agreements like NAFTA and the policies
of the World Trade Organization are good for the country, up from 35% a year ago. Slightly
more than a third (35%) say that such agreements and policies are bad for the country, down
from 48% in April 2008.
Public supports foreign trade for economic growth.
Pew Research Center, nonpartisan fact tank, 9
[4/28/09, Pew Research Center, “Support for Free Trade Recovers Despite Recession”, Accessed
6/29/13, http://www.people-press.org/2009/04/28/support-for-free-trade-recovers-despiterecession/2/, ML]
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Other recent national surveys also have found increases in support for foreign trade over the
past year. In a survey conducted April 3-5 by CNN/Opinion Research Corp., 56% said they
viewed foreign trade “more as an opportunity for economic growth through increased U.S.
exports,” while 40% said they viewed foreign trade as “a threat to the economy from foreign
imports.” In June 2008, a narrow majority (51%) said that foreign trade represented more of a
threat rather than an opportunity for the U.S. economy.¶ In an April 1-5 survey by CBS
News/New York Times, 66% said “that trade with other countries – both buying and selling
products” is good for the U.S. economy. Fewer (58%) expressed that view in March 2008.
Increasing low-income family and Democratic support for NAFTA.
Pew Research Center, nonpartisan fact tank, 9
[4/28/09, Pew Research Center, “Support for Free Trade Recovers Despite Recession”, Accessed
6/29/13, http://www.people-press.org/2009/04/28/support-for-free-trade-recovers-despiterecession/2/, ML]
The latest national survey by the Pew Research Center for the People & the Press, conducted
March 31-April 21 among 3,013 adults interviewed on cell phones and landlines, finds people
with low family incomes and Democrats are much more supportive of free trade agreements
than they were a year ago.¶ Nearly half of Democrats (47%) now say that NAFTA and other
free trade agreements, and the policies of the World Trade Organization are a good thing for
the United States compared with 30% who view these agreements and policies negatively. In
April 2008, only about a third of Democrats (34%) viewed free trade agreements positively while
50% expressed a negative opinion. More independents also express a positive opinion of free
trade agreements (up eight points since last year), while opinion among Republicans has
remained more stable; currently, 41% of Republicans see free trade agreements as a good thing
while 38% view them as a bad thing.
NAFTA REFORM is popular
Peters 9, a Professor at the Graduate School of Economics, Universidad
Nacional Autónoma de México (UNAM), 9
[Enrique, 11/09,
Enrique Dussel P eters is a Profess or at the Graduate S chool of E conomics, ¶ U niversida d Naci onal Autónoma de México (U NAM). H e coordinates t he Ce nter ¶ for Chinese -Me xica n Studies at the National Autonomous University of M exi co. ¶ Publications include : Polarizi ng Mexi co: T he Impact of Li beralizat ion Strategy ¶ (Lynne Rien ner Publisher s, 2000 ); I nversión e xtranjera dire cta en Mé xico: de sempeñ o y poten cial (200 7, with Mi cha el Mortimore, Lui s Miguel Galindo Paliza ¶ and Eduar do Loría); E conomic Opportunities a nd Challenges P ose d by Chi na for ¶ Me xico and Central Ameri ca (Bonn, 200 5, with assistance fr om Liu X ue Dong); ¶ China y Méxi co: impli caci ones de una nueva relaci ón (2007, with Y olanda T rá-¶ paga Delfín); Oportunidades en la relaci ón e conómi ca y comer cial entre Chi na y ¶ México (Mé xico, 200 7). ¶ Kevin P. Gallagher is an As sociate Professor
of Inter national Relations at Boston ¶ U niversity, where he dire cts the Gl obal Economi c Governa nce I nitiative at the ¶ University’s Frederick S. Pardee Center for the Study of the Longer-Range Fut ure. ¶ He is also s enior resear cher at the Gl obal Development and E nvironment Institute at Tufts U niversity. Profes sor Gallagher is the a uthor of The E nclave E conomy: F oreign Invest ment and Sustaina ble Developme nt in Mexi co’s Silicon Valley¶ (with Lyuba Zarsky), and Free Trade and the Environme nt: Mexi co, NAFTA, and ¶ Beyond. He has bee n the editor or co -edit or of a number of books, includi ng ¶ Ret hinking Foreign Inve stme nt for Sustaina ble Developme nt: Le ssons fr om Latin ¶ America , and P utting Development First: the I mportance of P olicy Spa ce in the ¶ WT O and IFI s. He writes a monthly column on globalization and development ¶ for The G uardian (UK ) new spaper.¶ Rodolfo García Za mora is a Profes sor of Developme nt Studies at the U niversity ¶ of Zacateca s in Me xico. He is an e xpert on international migration, re mittance s, ¶ and devel opment.
His books i nclude: Migraci ón, Remesas y Desarroll o Rural¶ (University of Zacateca s, 2005 ); Migraci ón Inter nacional, Re mesa s, y Desarrollo ¶ Local e n Améri ca Latina y el Caribe (edited with Ma nuel Oroz co, 20 09); Ca mbiando perspe ctivas: de la gestión de fl ujos hacia la construcci ón de políticas de ¶ mig ración con e nfoque de de sarrollo (with Sin Fr onteras, 20 08). Profess or García ¶ is also a visiting profes sor at several universities and serves as a n advisor to the ¶ I beroa merican Se cretary General.8 6 A Pardee Ce nter Task Force Rep ort | November 200 9 The Future of N orth Ameri can Trade Policy: Less ons from NAFTA 87¶ Ke nneth C. Shadle n is a Senior Resear ch Fellow with the GDAE’ s Globali zation ¶ and S ustainable Devel opment Progra m in the Gl obal Development and E nvironmental Institute at Tufts U niversity. He is also a seni or lecturer (ass ociate pr ofes sor ) of D evelopment Studie s at the London School of E conomi cs and Political ¶ Scie nce . He is the co-editor of The P olitical Economy of He mispheric Integration: ¶ Res ponding to Gl obalization in the
Americas (Palgrave Macmillan, 200 8) a nd the ¶ author of D emocratization Without Repre sentation: The P olitics of Small Industry in Me xico (P enn State University Pres s, 2004 ). His current res earch a ddres ses ¶ the politics of intellect ual property (IP) a nd N orth-South e conomi c integration, ¶ focusing on the implications of the new global regime for IP on industrialization ¶ and also publi c health (especially HIV/AIDS treatment ) in the devel oping worl d. ¶ The working title of his new book is The New P olitics of Intellect ual Property in ¶ Lat in America. ¶ Robert K. Stumberg is a Profe ssor of Law at Georget own University Law Center, ¶ where he also dire cts the Harrison Institute for P ublic Law. The I nstitute is a ¶ teaching and service program that w orks with publi c offi cials and nonprofit ¶ organizations . His past positions incl ude policy dire ctor at the Center for P olicy ¶ Alternatives and legislative counsel for Montgomery County, MD. Most recently, ¶ he has studied the i mpa ct of trade agreeme nts on state and local government, ¶ incl uding e nergy, water
services, pre scription drugs , foreig n investor rights, ¶ and agricultural s ubsi dies. Profes sor Stumberg’s work on trade policy incl udes : ¶ Procurement and D ece nt Work (I LO, forthcoming 20 09); The W TO, Services & ¶ the Environment (in Ha ndbook on Trade & Environme nt, Kevin Gallagher, e d., ¶ 2008 ); GATS & Electricity (N CSL 2 005 ); Federalis m & Political Accountability ¶ Under Gl obal Trade Rules (Publius, 2 001, with Matthew P orterfield); Pre emption ¶ & H uman Rig hts (Law & P olicy in Internati onal Busine ss, 200 0); I nternational ¶ Investor Rights & Local E conomic Development (1 999, with Willia m Schweke); ¶ and Sovereignty by Subtra ction: T he Multilateral Agreeme nt on Invest ment, ¶ (Cor nell Journal of Inter national Law, 1 998 ).¶ Gus Van Harte n is an Ass ociate Profes sor at Osg oode Hall Law School of York ¶ University in Tor onto, Canada. Hi s research spe cialties are international investment la w and administrative law. His book, I nvestme nt Treaty Arbitration and ¶ Public Law (Oxford U niversity Press, 200 7), offers a critique of the system of ¶
investment arbitration a nd its implications for poli cy space and as a gover ning arrange ment. He als o advocates the establi shment of a regional invest ment ¶ court base d on i nstitutionaliz ed principle s of j udicial indepe nde nce to a ddres s ¶ perce ptions of pro-i nvestor bias i n investment arbitration. He ha s publis hed 8 6 A Pardee Center Task Force Rep ort | November 200 9 The Future of N orth Ameri can Trade Policy: Les sons from NAFTA 87¶ articles on invest ment law in the I nternational and Comparative Law Quarterly,¶ the European Journal of International Law, the Review of I nternational Political ¶ E conomy, a nd Arbitration Internati onal, and has contributed chapters on the ¶ subject to various collected w orks and confere nces . He also con ducts research ¶ on the procedur es of public inquiries and on close d procee dings in the national ¶ se curity context. ¶ Christ ian E. Weller is a Seni or Fellow at the Center for America n Progre ss and ¶ an As sociate Profess or of P ubli c Policy at the U ni versity of Mas sachusetts Boston. ¶ His expertise is in the area of
retirement income security, macr oeconomi cs, ¶ money and banking, a nd international fina nce . He is also a Resear ch Scholar at ¶ the University of Ma ssachusetts A mherst’ s Political E conomy Resear ch Institute ¶ and an Institute Fellow at the University of Mas sachusetts Bost on’s G erontol ogy ¶ Institute. Prior to joining the Center, he was on the resear ch staff at the Economi c ¶ Policy Institute, where he re mains a Resear ch Ass ociate. Dr. Weller is the coauthor (with E. W olff) of Retirement I ncome : The Cr ucial Role of Social Se curity¶ (Was hington: Economic Policy Institute, 2005 ) and the co-e ditor (wi th T. Ghilarducci ) of Employee Pe nsions: P olicies, Proble ms and Possibilities (Ithaca, NY: Cornell U niversity Press, 200 7). I n 2006, he was awarde d the Outstanding S cholarPra ctitioner Award from t he Labor and E mpl oyme nt Relations Association. ¶ Ti mothy A. Wise is Dire ctor of the Research and Policy P rogram at the Global ¶ Devel opment and Environment I nstitute, Tufts University, where he also dire cts ¶ the institute’s Globalization and S ustainable
“The Future of North American
Trade Policy: Lessons from NAFTA,” http://www.bu.edu/pardee/files/2009/11/Pardee-ReportNAFTA.pdf, date accessed: 06/28/13, LV]
Since being elected to office President Obama has reiterated the need to rethink ¶ NAFTA and
to change the template for U.S. trade agreements. Perhaps more ¶ important, Obama’s statements have reinvigorated constituents across the ¶ NAFTA countries who have long been critical of NAFTA. In addition to numerous
civil society efforts, in June 2009 lawmakers from Canada, Mexico, and the ¶ United States
who represent a task force of legislators in the three countries ¶ calling for NAFTA
renegotiation sent a letter to the NAFTA Presidents pledging ¶ their commitment to work for a
different NAFTA. In the United States, reformers ¶ introduced the Trade Reform,
Accountability, Development and Employment Act ¶ (TRADE Act) of 2009 in the summer of
2009, with an initial set of more than 100 ¶ co-sponsors from both chambers of the U.S.
Congress. The TRADE Act requires a ¶ review of existing trade pacts, including NAFTA, and sets
Development Progra m. His pri ncipal re search i s on the i mpa ct of trade li beralization on rural livelihoods. He has ¶ written exten sively on U.S. agricultural and trade policie s, particularly the role ¶ of far m subsidie s in lowering inter national commodities pri ces. Mr. Wi se is the ¶ co-aut hor of Confr onting Globalization: Economic I ntegration and Popular Re sistance in Me xico (K umarian Press, 2 003 ). He is also the co -author of A Survey of ¶ Sustainable D evelopment: S ocial and E conomic Di men sions (Isla nd Pres s, 200 0). ¶ Prior to j oining the Gl obal Development and E nvironment Institute, Mr. Wise ¶ dire cted the internati onal aid agen cy, Grassr oots Inter national.,
forth instruments that ¶ should be included in the template for future agreements. ¶
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Congressional support for Mexico investment—economic issues bolster
relationship
Villarreal, Specialist in International Trade and Finance, 13
[M. Angeles, Congressional Research service, March 19, 2013, “U.S.-Mexico Economic Relations:
Trends, Issues, and Implications”, http://www.hsdl.org/?view&did=734614, accessed 7-8-13
BLE]
The 113th Congress will likely maintain an active interest in Mexico on issues related to
crossborder trade, Mexico’s participation in the Trans-Pacific Partnership (TPP) agreement
negotiations, economic conditions in Mexico, migration, and border issues. Congress also will
likely take an interest in the economic policies of Mexico’s new President, Enrique Peña Nieto,
who entered into office for a six-year term on December 1, 2012. During his campaign, Peña
Nieto advocated a 10-point economic plan that includes, among other measures, implementing
recently passed legislation to counter monopolistic practices, passing fiscal reform, opening up
the oil sector to private investment, making farmers more productive, and doubling
infrastructure investments. He began his presidency with an ambitious reform agenda, which
includes potential reforms in the energy sector and the telecommunications industry. The
bilateral economic and trade relationship with Mexico is of interest to U.S. policymakers
because of Mexico’s proximity to the United States, the high level of bilateral trade, and the
strong cultural and economic ties that connect the two countries. Also, it is of national interest
for the United States to have a prosperous and democratic Mexico as a neighboring country.
Mexico is the United States’ third-largest trading partner, while the United States is, by far,
Mexico’s largest trading partner. Mexico ranks third as a source of U.S. imports, after China and
Canada, and second, after Canada, as an export market for U.S. goods and services. The United
States is the largest source of foreign direct investment (FDI) in Mexico.
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No Link
PC not key—Obama involvement ensures CIR fails, political capital is only
effective when the legislation isn’t going to pass
Klein, columnist for the Washington Post, 7-10
[Ezra, 2013, Bloomberg, “Obama’s Big Problem Is Obama”,
http://www.bloomberg.com/news/2013-07-10/obama-s-big-problem-is-obama.html, accessed
7-10-13, GSK]
For the White House, immigration reform perfectly encapsulates the most frustrating reality of
President Barack Obama’s second term: If it’s to be a success, Obama needs to stay out of the
lawmaking process.¶ That’s the message he’s gotten from Democratic and Republican
legislators alike. In the New Yorker, Democratic Senator Robert Menendez of New Jersey
recounted a White House meeting at which he told Obama how Republicans would respond to
public appeals on immigration. “Right now, if you put out your bill, they will feel like they’re
being cornered,” he said.¶ Obama wasn’t happy, Menendez recalled. “He basically said, ‘After
you guys pushed me so hard in not so subtle tones, being critical at times about lacking
leadership, now you’re asking me to hold off?’ And so we took the browbeating for a little
while and then I went back and said, ‘I understand why you’re upset and how you might feel this
way.’”¶ That’s Obama’s second term in one quote. In a matter of months, he went from
stomping the Republican Party in the election to being told by a key ally that he would have to
stay in the background if he wants his top priority to succeed. The worst part for White House
staff is that Menendez is right -- and they know it.¶ Polarizing Figure¶ As the effective leader of
one of two political parties, the president is inevitably a polarizing figure. And Obama himself
is a special case. Last year, a Gallup Inc. poll found a difference of 76 percentage points in how
Republicans and Democrats assessed his administration. That tied the gap measured in the
fourth year of George W. Bush’s term as the most polarizing on record.¶ Frances Lee, a political
scientist at the University of Maryland, has studied the effect of presidential polarization on the
U.S. Congress. In her book “Beyond Ideology,” she shows that when the president announces
his position on an issue -- even an uncontroversial one -- it increases the likelihood of a partyline vote.¶ “Whatever people think about raw policy issues, they’re aware that presidential
successes will help the president’s party and hurt the opposing party,” Lee told me. “It’s not to
say they’re entirely cynical, but the fact that success is useful to the president’s party is going to
have an effect on how members respond.”¶ That effect is not, from the president’s perspective,
all bad. It makes it easier for him to corral members of his own party, as Obama discovered
from 2009 to 2010, when Democrats controlled the House and Senate and passed the stimulus,
health-care reform, Dodd-Frank financial regulations and much more.¶ Today’s intense
polarization means that any bill associated with Obama is automatically targeted for defeat by
Republicans. So in Obama’s second term, in which Democrats have no real shot of recapturing
control of Congress, the single biggest impediment to Obama’s agenda might be ... Obama.
Jonathan Favreau, who in February stepped down as Obama’s chief speechwriter, said that
dealing with the Republican Party’s reflexive opposition is a pervasive reality in the White
House. “People take a very realistic approach to it,” he said. “They’re not frustrated or upset. It’s
more, ‘This is just the way things are and this is how we’ll deal with it.’ The strategy always
comes to ‘What gives us the best chance to get something passed?’”¶ That process begins with
taking Congress’s temperature. “If it looks like there’s a path to something passing, then, as in
immigration reform, he’s got to step back,” Favreau said. That doesn’t mean Obama has to
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keep mum. But he does have to keep himself out of the headlines. “All of our immigration
speeches have been very toned down,” noted Favreau.¶ Comfortable Paralysis¶ There is still
plenty the White House wants to accomplish that has no chance of passing Congress. That’s
when the speechwriting team can unleash the rhetoric -- and the president. “When it doesn’t
look like there’s a path forward, you light a fire under these guys by going to the public and
making your case,” Favreau said. “That hasn’t worked as much. But when you have a situation
where you don’t see the votes for something passing, there’s no other option than going to
the public.”¶ Global warming fits that category. “We don’t have time for a meeting of the Flat
Earth Society,” the president railed in a recent speech. You won’t hear Obama use that kind of
derisive language when he talks about immigration. A presidential put-down is generally
indicative of a legislative lost cause.¶ Yet the background strategy hardly guarantees success. In
fact, in most cases, failure is probable, which simply underscores that in a highly polarized era,
divided government makes big, new laws unlikely.¶ It hasn’t always been that way. Historically,
divided government has achieved as much as unified government. But the current era defies
that trend. The 112th Congress -- which served from January 2011 to January 2013 -- passed
220 laws, making it the least productive Congress on record. So far, this Congress is on track to
be even less productive.
No link- NADBank doesn’t require mass financing
Hereford, Chair of the Border Trade Alliance Transportation Committee, et al 11
(Jesse, and Nelson Balido, President, Sam F. Vale, Chair of Board of Directors, Border trade
Alliance, August 9, 2011, Letter to Rep. Spencer Bachus and Rep. Barney Frank, “Border Trade
Alliance, NADBank expansion,” http://www.thebta.org/wpcontent/uploads/file/NADBank%20expanded%20mandate%20-%20Hinojosa%20bill%20%20ltrhd.pdf, [Accessed 6/29/20113], JB.
We write to you to urge you to support H.R. 2216, a bill introduced by Rep. Rubén Hinojosa that
would expand the au thority of the North American Development Bank (NADBank) . This bill
would authorize changes to the agreement between the United States and Mexico that
established the NADBank, allowing it to finance a broader array of infrastructure projects in the
U.S. - Me xico border region that promote trade and foster economic development and job
growth in the region. Over the past sixteen years of operation, the NADBank has been vitally
important to improving basic services in the border region by financing numerous wat er,
wastewater, solid waste and street paving projects, among others. To date, NADBank, has
provided approximately US$1.24 billion in loans and grants to support 149 infrastructure
projects in the border region, which represents a total investment of US$3. 26 billion and will
benefit more than 12.8 million residents of the region. One particularly notable accomplishment
is the significant improvement in wastewater treatment coverage on the Mexican side of the
border. In 1995, it was estimated that 27 percent of wastewater generated in border
communities was being treated. According to Mexico’s National Water Commission (CONAGUA),
wastewater treatment coverage has now reached approximately 85 percent. This dramatic
improvement is in large part due to the work of NADBank. The bank remains limited, however,
in the projects it can finance. Its charter permits the bank only to get involved in projects
deemed to have a significant positive environmental impact. There have been cases where the
NADBank has taken int erest in projects involving international ports of entry that would
benefit an area’s economy and create new jobs. Yet the bank has been unable to deliver
financing to such projects over the objections of its b oard of d irectors, for not demonstrating a
sufficient environmental benefit to merit NADBank financing. H.R. 2216 seeks to rectify these
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constraints on the NADBank by allowing the bank to engage in projects that are broader in
their scope than what the bank traditionally finances, including projects that promote
increased trade and commerce between the U.S. and Mexico and sustainable economic
development. Many infr astructure projects benefiting efficiencies at our ports of entry are
outside the boundaries of metropolitan planning organizations. Therefore, there are no
funding categories available for planning projects for these communities. Without the ability
to fund planning expenses, the communities cannot fund transportation projects. This
legislation would give those border communities a chance to do advance planning, including
environmental impact studies, project development, traffic studies, schematics and fe asibility
studies. This is not a question of whether to fund NADBank. The Bank does not require
additional funding. Nor would the bill increase the federal deficit . Rather, the bill will help
ensure NADBank’s existing capital is more fully utilized for the benefit of the U.S. - Mexico
border region, and ultimately for the benefit of both the United States and Mexico. Please join
border communities from San Diego to Brownsville in supporting H.R. 2216. The NADBank is a
critical element of a thriving, more prosperous border community, but we must expand its
ability to engage in other areas in order to ensure its continued contributions to the U.S. Mexico border region.
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China Economy
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N/U- Decline Inevitable
Chinese slowdown inevitable- aging labor force, state-funded distortions of the
market, rising debt, and shadowbanking.
Schuman 4/28/13
(Michael April 28, 2013, Time: Business and Money. “The Real Reason to Worry About China”
http://business.time.com/2013/04/28/the-real-reason-to-worry-about-china/, [Accessed
7/8/13], JB).
The world is worried about China, but not for the right reasons. Global financial markets were
roiled after the world’s second largest economy notched only a 7.7% boost to GDP in the first
quarter — a drool-worthy performance for most nations, but a disappointment for a country
that routinely jumped 10% or more over the past three decades. Economists are busily debating
the usual: Will China have a hard or soft landing? Will the government step in and stimulate
growth? Those questions miss the bigger picture. The reality is that China is unlikely to witness
those astronomical growth rates, at least for some time. We may never see them again.
The recent slowdown is not a temporary cyclical blip or solely the knockoff effect of the tepid
global recovery. China’s growth model is broken and can’t be so easily fixed. Since the start of
capitalist reforms in the 1980s, China excelled by throwing tons of resources into a modernizing
economy — mountains of cash to build factories, roads and apartment towers, and millions of
poor people into making iPads, blue jeans and cars. Under China’s “state capitalism,”
bureaucrats often directed the cash into massive infrastructure projects or favored industries.
However, this growth engine can’t keep purring indefinitely. The pools of idle labor that filled
Foxconn’s assembly lines are drying up — China’s one-child policy made sure of that, by aging
the population more rapidly. The workforce has already started to shrink. Even more worrying,
the state-led, investment-obsessed system spawns too much debt and too many factories,
leading to wasted resources and a debased financial sector.
That’s what is happening in China today. Everywhere you look, the signs of rot are apparent. In a
mad-cap quest to dominate green energy, China’s banks pumped billions into solar-panel
manufacturing, creating hundreds of factories and vaulting China into the world’s largest
producer. Now the sector has become a victim of its own excess: companies are failing,
symbolized by the recent bankruptcy of market leader Suntech Power. Steel companies
continue to invest in new capacity even though debt is rising and losses mounting. Each mill is
backed by local officials eager to create jobs but dismissive of the larger costs. The investments
top up GDP, but not the health of the overall economy. Inefficient, subsidized state-owned
enterprises gobble up credit while more nimble private firms starve. The froth on China’s
booming property market defies government efforts to calm it down. Facing meager investment
options in China’s controlled financial markets, couples are choosing divorce to sidestep
restrictions and taxes on apartments deals. Most frightening, debt has risen precipitously.
Rating agency Fitch says credit relative to GDP reached 198% at the end of 2012, a startling
increase from 125% in 2008. Local government debt has escalated in recent years, to an
estimated $2 trillion, or 25% of GDP. The risks have been heightened by the emergence of
“shadow banking” — mysterious, unconventional sources of lending often kept off the banks’
balance sheets — which George Soros recently warned could be as risky as the toxic subprimemortgage securities that tanked Wall Street.
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Where is this all headed? “Panda huggers” (the optimists) believe that China’s leadership is
tackling these problems and there is no threat to economic stability. “Dragon slayers” (the
pessimists) warn that similar surges of debt have toppled other economies into financial crises.
Everyone, however, agrees the current situation can’t last. The economy requires more and
more debt to produce the same amount of output. In order for China to keep its current
growth model running, therefore, debt levels must continue to rise — to ever more dangerous
levels.
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N/U- Trade Inevitable
China trade to Mexico inevitablea.) Auto Industry
Wharton ‘13 (Wharton Universia- Public Policy and Management, Mexican political think tank “NAFTA’s ‘Uninvited
Guest’: Why China’s Path to U.S. manufacturing Runs Through Mexico” 3/20/13
http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=2324&language=english) Accessed 7/9-DG
Opportunities for Chinese steel manufacturers in Mexico have been expanding
because of strong demand for steel in the Mexican automotive sector. Companies
such as Honda, GM, Nissan and Ford all operate plants in Mexico whose output is largely exported to
the United States. Fausto Cuevas Mesa, director of the Mexican automotive
industry association (AMIA), predicted recently that the output of the Mexican auto sector
will continue to grow over the next five years at an annual pace of 8% to 10%, reaching 3.9 million
units by 2016. Mexican automotive output was projected to reach 2.86 million in 2012, according to LMC Automotive, a
research firm, because of strong demand for vehicles in the United States. In September, luxury automaker Audi
Most of
Mexico’s auto output is exported to its NAFTA partners, the United States and
Canada. Only 990,000 to 1 million locally assembled vehicles were sold in Mexico in 2012, said Cuevas Mesa -- slightly
announced it will build a US$1.3 billion plant in Puebla, its first production facility in the Americas.
higher than in 2011. Cuevas Mesa predicted that in coming years at least three more auto assemblers could come to
Mexico, not just from Germany. Will any of those additional automakers be coming from China? During the
administration of former Mexican President Felipe Calderon, Mexico and China announced that they were about to
become “strategic partners.” But the meaning of their emerging partnership was only vaguely defined, notes Margaret
Myers, director of the China-Latin America program of the Inter-American Dialogue, a non-profit policy research center in
For Chinese exporters of steel and other industrial inputs, Mexico
has become a natural opportunity because of its proximity to the United States,
says Myers, and the fact that Mexico’s transportation networks and industrial
supply chains are closely integrated into those of the U.S. and Canada, the other
Washington, D.C.
members of NAFTA. “In a way, China is a part of NAFTA because China contributes a lot to the goods that wind up” in the
United States and Canada, says Myers.
b.) FDI on Infrastructure
Wharton ‘13 (Wharton Universia- Public Policy and Management, Mexican political think tank “NAFTA’s ‘Uninvited
Guest’: Why China’s Path to U.S. manufacturing Runs Through Mexico” 3/20/13
http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=2324&language=english) Accessed 7/9-DG
If Chinese automakers calculate that they cannot meet NAFTA rules of origin by assembling those vehicles in Mexico, they
can opt to build such a plant in the United States. In such a case, more of the steel they use to build those cars could wind
up being sourced from the U.S. – or exported to Mexico, and then shipped to U.S. auto assembly plants. “The [Chineseowned] plants don’t have to be in Mexico,” noted Dussel Peters. Like Honda, Toyota, Hyundai and other Asia automakers,
the next wave of
Chinese exports to Mexico may well include finished vehicles, but he argues
that those Chinese-built cars are more likely to be assembled in Mexico than in
the U.S. “There will be Chinese automotive manufacturing plants in Mexico
before there are any such plants in the U.S. because the costs are lower [in
Mexico], and it is harder to operate a plant in the U.S., where there are so many
regulations.” Nevertheless, Gallagher worries about whether Mexico’s transportation infrastructure is up to the task
of handling huge, additional volumes of goods made within the country’s own borders. To overcome the
significant gaps in Mexico’s industrial and transportation infrastructure,
Gallagher suggests that Mexico approach the China Development Bank for
he said, the Chinese could locate those plants in the United States. Gallagher predicts that
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loans that would be used to construct and expand Mexican seaports and highspeed highways. That way, Mexico could smoothly accommodate additional
volumes of imported Chinese raw materials and components that would flow
from the decision by Chinese firms to build automotive plants inside Mexico.
Between 2008 and 2010, China’s First Automobile Works exported a low-cost sedan to Mexico, but its sales figures in
Mexico were so weak, FAW’s initial plans to build a factory in Mexico were shelved entirely. However, wage rates in
China’s major industrial areas have continued to rise in recent years, while wage rates in Mexico have barely risen, so that
“the cost of labor in Mexico is now very similar [in Mexico] to that in the Pearl River Delta [of China],” notes Myers.
Moreover, as Chinese auto producers improve their quality control and upgrade their automotive technology, FAW or
another Chinese automaker may want to take the plunge into assembling in Mexico.
Chinese involvement empirically undermines US efforts and poses the risk of cyber attacks
(this should go in China file)
Ellis 6/7 (Evan Ellis- professor at the Center for Hemispheric Defense Studies in Washington, D.C., is an analyst of Latin
American economic, political and security issues, with a research focus on Latin America’s relationships with China and
other extraregional actors “US-China Competitions Heats Up as Chinese President Xi Tours Latin America”
http://www.manzellareport.com/index.php/world/687-u-s-china-competition-heats-up-as-chinese-president-xi-tourslatin-america
Chinese money and markets have undercut the U.S. policy agenda
across the region in areas such as financial accountability, human rights, and
corruption. Argentina was able to remain financially solvent in the years following its 2001 debt default, in part,
Beyond ALBA,
because of its massive export-oriented soy industry, which sells 75 percent of its output to the PRC. In Suriname, when
China Dailan modernized the nation’s highway infrastructure, the human rights record of its President Desi Bouterse was
never an issue. In Guyana, the Chinese government did not appear to be concerned that a key telecommunication contract
given to Huawei appeared to be a vehicle to give a national telecommunications monopoly to the son of a close political
China’s presence in the region also has a
strategic significance beyond economics and policy objectives. The critical
posture by the U.S. Department of Defense regarding Chinese cyberattacks is a
reminder that hostilities between the U.S. and China, while highly improbable
and undesirable, are not unthinkable. In such a conflict, PRC-operated ports,
airports, telecommunications infrastructure, and other parts of the Chinese
commercial presence in Latin America represent potential assets in a global
asymmetric warfare campaign against the United States.
ally of the country’s president, Bharrat Jagdeo.
Sino –Mexico trade inevitable- manufacturing proves
Althus ‘13 (Dudley Althus-
Senior Correspondent for The Global Post “What does Xi see in Mexico?” 6/5/13
http://www.globalpost.com/dispatch/news/regions/americas/mexico/130604/mexican-china-trade-xi-latin-america-visit) Accessed
7/9-DG
MEXICO CITY, Mexico — As Mexican business executives and President Enrique Peña Nieto host Chinese leader Xi Jinping for two
days of meals, meetings and sightseeing, they might do well to keep an eye on their plates. Because China has been eating Mexico's
enchilada for more than a decade. China's craving for commodities played a key role in the export-driven economic boom that's
swept oil, mineral and grain-rich South America in the past dozen years. But the relationship has been far less beneficial to Mexico,
which serves more as a market for Chinese factories than a source of their raw materials. On his swing through the hemisphere, Xi
shunned China's larger Latin American trading partners, visiting Costa Rica and energy-rich Trinidad and Tobago before arriving in
Mexico City Tuesday afternoon. He meets Friday with US President Barack Obama in southern California. Chinese leaders “want to
repeat, emphasize, underscore that their interests in Latin Americaare economic, not political,” said Lynne Walker, director of the
China-Americas Program at La Jolla, California's Institute of the Americas. “These are very interesting times, particularly for China
and Mexico,” Walker added. On his visit now, coming just seven weeks after meeting with Peña Nieto in China, Xi might be looking
Like
other Latin American countries, Mexico wants more access to Chinese markets
for its manufactured goods. "China has become a source of economic growth
and a factor of international stability," Peña Nieto said in a welcoming
for more of Mexico's 1.5 million barrels of daily oil exports, most of which now goes to the US refineries, analysts say.
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ceremony for Xi this afternoon. "Mexico wants to tighten its relationship." ChinaMexico trade rocketed from about $3 billion in 2001, when Beijing signed on to the World Trade Organization, to nearly $63 billion
Mexican consumers gobbled up
$57 billion worth of Chinese electronics, toys and assorted geegaws last year,
while businesses here sold barely a 10th that sum in minerals and farm
produce, tacos and tequila to China. A poll Tuesday in the Mexico City newspaper Reforma reported nearly
last year. But so far China has claimed the tiger's share of that expanding pie.
three-quarters of Mexican business executives and analysts view China as a competitor rather than a partner. That fear is helping
where goods
could be ordered from hundreds of showrooms for direct delivery from China.
fuel opposition to a massive permanent trade show — the Dragon Mart — proposed for the Cancun area,
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Link Turn
Link-turn- the the plan incentivizes quick transition to a healthier economy
thorough reform- the status quo means they won’t transition fast enough,
causes economic collapse.
Schuman 4/28/13
(Michael April 28, 2013, Time: Business and Money. “The Real Reason to Worry About China”
http://business.time.com/2013/04/28/the-real-reason-to-worry-about-china/, [Accessed
7/8/13], JB).
There is also consensus on the solution. Economists have been warning for years that China
must decrease its dependence on investment for growth and “rebalance” to allow
consumption to play a bigger role. Government officials point out signs of progress — firstquarter GDP was driven upward more by consumption than investment, for instance. But
progress is, at best, at a crawl. Private consumption relative to GDP in China is still the lowest
among major economies. The government has simply balked at the reforms necessary to change
that. Feeble health care and pension systems force households to save; then controls on interest
rates keep returns on bank deposits meager, punishing them for saving. If anything, much
government policy has reinforced China’s old growth model — including the heralded stateheavy stimulus program launched after the 2008 financial crisis. Businessmen in China speak of
a “lost decade” of stalled reform.
Even if China reforms more quickly, the economy is likely to slow as it transitions to more
consumption-heavy growth. But if China drags its feet on reform, growth will likely be slower
anyway, as its old model sputters and creaks. That means that under just about every scenario,
the world can’t count on a supercharged China to hold up global growth while the U.S. and
Europe remain mired in debt and joblessness. But a slower China may actually be a good thing.
A reformed, rebalanced Chinese economy will be a less risky, more stable force in the global
economy. The much bigger risk comes from a China that doesn’t discard its failing growth
model. That could push China into a financial crisis. Now that’s really something to worry
about.
Improving ports of entry at the border would break the current gridlock over
border security for CIR.
Litan director of research at Bloomberg Government..13,
(Robert E., former senior fellow at the Brookings Institute, former vice president of research and
policy at the Ewing Marion Kauffman Foundation. March 20, 2013. Bloomberg. “An Innovative
Third Way to Break Immigration Gridlock.” http://go.bloomberg.com/bgovbriefs/2013/03/20/an-innovative-third-way-to-break-immigration-gridlock/, [Accessed 7/10/13],
JB).
Securing the southern border stands as one of the biggest obstacles to immigration overhaul.
Most Republicans, before they endorse a substantive legislative solution, want an impenetrable
border to stanch the flow of undocumented workers into the U.S. Most Democrats want to
move forward without waiting for the border to be completely sealed.
A recent Bloomberg Government analysis authored by Matthew Hummer may offer an
innovative third way to break the gridlock.
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So far both sides agree on two central elements of any bill: citizenship, or at least green cards,
for 11 million illegal immigrants; and additional work visas for highly skilled immigrants, many of
them educated at American universities. But until the government can demonstrate effective
control over the Mexican border, this surprising bipartisan consensus may be for naught.
Hummer’s research points to a clever compromise that would defuse this controversy by taking
account of several fundamental forces driving illegal immigration and Washington’s newfound
budget austerity.
The solution: Spend several billion dollars now to improve border infrastructure and to help
boost U.S.-Mexico trade. A modest amount spent to encourage exports would create more
jobs in Mexico, decreasing emigration, and prove more cost-effective than spending tens of
billions of dollars to gain control of remote border areas.
This conclusion follows from three propositions. First, economic factors are potentially more
important than heightened border control efforts in limiting illegal immigration. BGOV
research shows a tight correlation between apprehensions of illegal immigrants at the
southern border and the ratio of gross domestic product growth rates in the U.S. and Mexico.
When that ratio increased during the 1980s, border apprehensions rose to 1.7 million in 1986
from 760,000 in 1980. Conversely, when the GDP ratio falls, as it did during most of the post1986 period, apprehensions decline.
The trend has become even more pronounced since 2006, when the Mexican economy
outperformed the U.S. economy in all but one year. That led to a precipitous decline in
apprehensions to fewer than 400,000 in 2012 from more than 1 million in 2006.
Second, border security is expensive. The Customs and Border Protection Agency spent about
$11.6 billion on border enforcement in fiscal year 2012, increasing more than 30 percent from
the average annual amount spent during President George W. Bush’s second term. Better
border control driven by more security spending won’t necessarily reduce apprehensions to less
than 400,000 a year. BGOV estimates that it might cost $28 billion a year to completely seal the
border by 2019.
In this age of budget austerity, it’s inconceivable that another $16 billion a year could be found
to completely insulate the border.
Third, more trade between the two countries would prove a cost-effective way to bring down
an already reduced level of illegal immigration. BGOV research shows another important
correlation: more Mexican exports means more stable employment for young Mexican males,
who most often cross the border illegally to search for work in the U.S.
This finding suggests that if more money is spent at the border, it’s better to improve and
expand checkpoints, which would reduce delays in moving imported and exported goods,
than to build and monitor a longer fence. More exports of goods to the U.S. from Mexico
would expand the current $500 billion bilateral trade relationship and provide more jobs for
Mexican workers at home.
Congress can literally bridge the divides on an issue that begs for compromise by
understanding the forces driving illegal immigration from Mexico and focusing on spending
border security money in the most cost-effective manner
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No Impact- Instability
A downturn would shift capital from the export sector back to the consumerchecks instability.
Pettis, Senior Associate at the Carnegie Endowment for International Peace and
a finance professor at Peking University’s Guanghua School of Management, 10
( Michael, November 18, 2010, Michael Pettis’ China Financial Markets.
http://www.mpettis.com/2010/11/18/what-happens-if-chinese-growth-slows/, [Accessed
7/8/13], JB).
But what about social instability – why were the Japanese so accepting of such a shocking
contraction in growth? The answer here has probably to do with the fact that during this
difficult adjustment Japan rebalanced its economy away from one that penalized household
income and consumption growth to one that supported it.
If the Japanese measured well-being in terms of GDP per capita, the last twenty years would
have come as a brutal shock. But if they measured it in terms of consumption per capita, the
last twenty years were not so bad. Before 1990, Japanese consumption grew much more
slowly than Japanese GDP as households were forced to subsidize growth via large transfers
of wealth from households to businesses – mainly in the form of very low deposit rates and a
seriously undervalued currency. This, of course, is the same process that is occurring in China.
After 1990, Japanese consumption grew substantially faster than GDP as the country painfully
rebalanced its growth model. One of the forms of rebalancing, interestingly enough, may have
been Japanese deflation, which automatically pushed real deposit and lending rates into
positive territory and so reversed one of the main mechanisms by which wealth was
transferred from Japanese households to Japanese businesses – artificially low interest rates
on deposits and loans.
Japanese per capital household consumption, in other words, did not decline nearly as
dramatically as Japanese per capital GDP. In fact it may have grown in real terms (once you
adjust for inflation in the period before 1990 and deflation after, and after you adjust for the
decline in population) only a little more slowly after 1990 than it did before 1990. As Japan
rebalanced, wealth was transferred from the state and corporate sector back to the household
sector. Most of the slowdown was consequently borne by businesses and governments.
I think the Japanese story has important implications for our analysis of China. If China indeed
experiences a rapid slowdown in GDP growth, the impact on the rest of the world may be far
less than we expect. The real key is the evolution of the Chinese trade surplus. If it contracts,
it will provide an expansionary boost to the rest of the world, not a contractionary one.
Of course that doesn’t mean that the world will grow quickly. My expectation is that global
demand growth over the next several years is likely to be anemic with or without China. But it
does man that a slowdown in Chinese growth might not be the disaster for the world that many
believe.
Also a rapid slowdown in Chinese growth does not mean a social or political disaster
domestically It depends on how serious China is about rebalancing its economy. If
policymakers are willing to force up interest rates and wages, most of the adjustment pain will
be borne by SOEs and the state sector, not by the household sector. In that case we might see
a slowdown in Chinese consumption growth, but one not nearly as severe as the slowdown in
Chinese GDP growth. Since the Chinese, like everyone else, probably measures their well-
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being in terms of purchasing power per capita, rather than GDP per capita, a sharp slowdown
might not be nearly as painful as we assume.
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Trade-Off Good
China tradeoff good- stabilizes Mexican economy
Agren ‘13 (David Agren- Contributor for USA Today “China president visits Mexico amid tension over cheap goods” USA Today
7/4/13 http://www.usatoday.com/story/news/world/2013/06/04/mexico-china-jinping/2388197/ Accessed 7/9-DG
Made in China" has been an increasing common sight on labels in this
country as Chinese merchandise has flooded the Mexican market over the past
dozen years. Chinese-made goods have displaced many items once made or grown here, from artisan guitars to chilies to
statues of Our Lady of Guadalupe, the national patroness. When Chinese President Xi Jinping arrives in Mexico
on Tuesday he will find a Mexico that is focusing on trying to wean itself off
some Chinese goods and build its own export economy to rival China's. Xi is due to
MEXICO CITY -- "
arrive here from Costa Rica during a swing through the Western Hemisphere that will take him to California later this week. "China is
a complicated case" for Mexico, says Aldo Muñoz Armenta, political science professor at the Autonomous University of Mexico
It's not the healthiest (relationship) in diplomatic terms because the
balance of trade has been so unequal." The rise of China has brought benefits for many Latin American
State. "
countries. Brazil, Chile and Peru have taken advantage of a commodities boom by shipping boatloads of minerals and agricultural
exports to feed a rapidly growing Chinese economy. But its rise negatively impacted Mexico, where the economy has tilted toward
Mexican factories closed amid China's rise as
production moved to Asia where labor costs and other expenses were cheaper.
The imports that subsequently poured from China have affected many small
producers in Mexico such as artisans who did well making specialized guitars, ceramics and trinkets tied to Mexico's
manufacturing instead of commodities.
Day of the Dead festivities. The economic shift can be seen especially in the thousands of itinerant markets all over the country,
where the "Made in China" label appears on merchandise once made in Mexico.
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Mexican Politics
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AT- Energy Reform- N/U
Won’t pass—reforms empirically politically unpopular
Althaus, news writer for the El Paso Times, 7-7-13
[Dudley, July 7, 2013, “Mexican elections take wild turn with assassins and animal candidates”,
http://www.elpasotimes.com/newupdated/ci_23614316/mexican-elections-take-wild-turnassassins-and-animal?source=most_viewed, accessed 7-10-13 BLE]
Should they judge fraud has deeply stained the vote, National Action's leaders might pull out
of the Pact for Mexico, an agreement between the country's three main political parties that's
been pushing long postponed reforms through Congress this year. Lawmakers are expected to
take up key tax and energy policy overhauls in September. Proponents say Mexico must
overhaul its state-owned petroleum monopoly, Pemex, in order to attract private investment to
develop reserves in ultra-deepwater and the shale gas fields near the Texas border. Pemex's
shrinking revenues provide more than a third of Mexico's public budget, so lawmakers will first
have to find tax revenue elsewhere. Peña Nieto's own PRI and the left-leaning Democratic
Revolution Party blocked similar reform efforts pushed by National Action presidents in the
past dozen years.
Energy reform won’t pass, and even if it does, Congressional divides
independently tank investment
Cattan, Bloomberg, 13
[Nacha, May 21, 2013, “Pena Nieto’s Mexico Energy Reform Faces Delay in PAN Shakeup,”
http://www.bloomberg.com/news/2013-05-21/pena-nieto-s-mexico-energy-reform-facesdelay-in-pan-shakeup.html, accessed 7-10-13, BLE]
Mexico President Enrique Pena Nieto’s reform agenda that includes legislation to end the
monopoly of state-owned Petroleos Mexicanos faces delays due to a shake-up in the former
ruling party’s leadership. Former President Felipe Calderon’s National Action Party, or PAN,
yesterday ousted former Finance Minister Ernesto Cordero from the Senate party leadership.
The decision erodes the political consensus parties have built in congress, complicating the
economic reform agenda, according to IdeaGlobal and Javier Oliva, a political scientist at
Mexico’s National Autonomous University. “What may happen is that factions of the party
would vote against part of an energy reform,” Oliva said in a telephone interview from
Cuernavaca, outside Mexico City. “It may slow down the reform’s approval process.” Pena Nieto
has pledged to double the pace of economic growth by passing reforms to open up the stateowned oil company to private investment, boost tax revenue and spur competition in sectors
like telecommunications. A multiparty accord, led by Pena Nieto’s Institutional Revolutionary
Party, or PRI, and PAN that has sped up passage of reforms in Congress and that recently
resolved differences over vote buying allegations now faces a divided PAN in the Senate, where
it’s the second-largest party. Cordero, who will remain president of the Senate, confirmed
yesterday that 24 of 37 PAN senators wrote a letter backing his leadership in the Senate. The
party’s internal divisions stem from differences over its role as an opposition presence after
losing the presidency it held for 12 years in 2012, including how it should operate within the
Pact for Mexico political accord to pass economic reforms. Earlier this month the PAN resumed
its activity within the pact after suspending it in April on accusations the PRI used government
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funds to buy votes ahead of July 7 local elections. “The PAN can’t be a satellite of the PRI,”
Cordero told reporters yesterday. “I’m worried that the PAN is losing its independence to the
government.” PAN President Gustavo Madero countered that Cordero has been acting without
consulting party leadership, such as presenting a campaign finance bill a day after Madero had
announced one. Under Cordero’s leadership, PAN senators have pushed through changes to a
telecommunications reform approved in April, allowing companies to gain temporary
injunctions during trials. The senators also strengthened oversight of unions in a labor law
passed in November. “The outlook on reform has become somewhat more challenging and
that in turn overflows into the investment decision process,” said Enrique Alvarez, the head of
Latin America for fixed income at research company IdeaGlobal. “If there’s infighting, if there
are more visible divisions and a sort of questionable desire to work in unison going forward, I
think that’s going to complicate the investment” outlook.
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AT- Fiscal Reform- N/U
Tax reform won’t pass—added taxes risk opposition
Chicago Tribune, 12
[Dave Graham and Ana Isabel Martinez, “UPDATE 2-INTERVIEW-Mexican president confident of
key reforms in 2013,” Chicago Tribune sourced from Reuters,
http://articles.chicagotribune.com/2012-12-11/news/sns-rt-mexico-penanieto-update-2-pixtvl1e8nb0dm-20121210_1_pena-nieto-mexican-president-enrique-reforms, accessed 7-10-13
BLE]
Mexico relies on oil revenues to fund nearly a third of the federal budget, which has not only
concentrated much power in Pemex but also left it open to over-exploitation by the state. The
dependence on oil revenues is regularly cited as an obstacle to Mexico's efforts to improve its
credit rating. The fact that no party has had a majority in Congress for 15 years has stood in
the way of a far-reaching tax reform. Pena Nieto's planned tax reform is tricky because it
could involve applying value added tax (VAT) to food and medicine for the first time. That
could risk opposition inside the PRI since it would hit the poor, who make up roughly half of
Mexico's population. The president declined to say how his government would approach the
subject of changes to VAT, though many experts see few ways of quickly raising more revenues
without it. Mexico has one of the smallest tax takes in Latin America, collecting revenues worth
only about 11 percent of gross domestic product, excluding oil income. Mexico's constitution
stipulates that the right to exploit crude oil belongs to the state, and the new government
must find a way of allowing private investors to help find the crude without surrendering
control of its natural resources.
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AT- Fiscal Reform- No Link
Minimal/No link
Lawson Associate Professor of Political Science at MIT, 07,
(Chappell, April 2007, Pacific Council on International Policy, “Mexico under calderón : The First
hundred days and The challenges ahead.” p. 24,
http://www.pacificcouncil.org/document.doc?id=46, [Accessed 7/10/13], JB).
Calderón’s campaign platform announced his desire for a North American infrastructure fund
that would help to develop Mexico. 7 Presumably, this was a campaign-oriented proposal;
Calderón himself is not naïve enough to think that a straightforward give- away program
modeled on the European Union’s structural development funds could pass the U.S. Congress.
That said, a cleverly designed and targeted version aimed at reducing migration to the U.S.,
coupled with a Mexican commitment to employment generation, could attract support. How
hard a Calderón administration might pursue this goal is uncertain; whether he would find
sufficient support for it in the U.S. is even less so.
Nevertheless, modest steps in this direction are possible, and Calderón appears to be making
the most of the opportunities available. In early March, he floated the idea of broadening the
mandate of the North American Development Bank (NADBank) and expanding its membership
to include Canada. NADBank, whose mission is to spon - sor environmental projects along the
Mexican-American border, was created in 1993 to help secure passage of NAFTA in the U.S.
Congress; it was to be funded equally with U.S. and Mexican contributions. NADBank’s charter
was expanded in 2004, but it is still limited primarily to environmental projects in the border
region. The opti - mal outcome – a well-capitalized trilateral development agency – may be too
much to hope for, but even gradual movement in that direction would be most welcome.8
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Turn- Plan Popular
Gets spun as strengthening ports of entry- It’s the most popular form of border
security
Center for Biological Diversity 11
( July 14, 2011“New Poll: Americans Support Greater Investment in Ports of Entry, Not Border
Walls; Majority Also Opposes Waiving Laws for New Wall Construction.”
http://www.biologicaldiversity.org/news/center/articles/2011/border-wall-07-14-2011.html,
[Accessed 7/10/13], JB).
WASHINGTON— An overwhelming number of Americans believe strengthening U.S. ports of
entry is a better approach to border security than building additional border walls, a new poll
by YouGov for Tucson-based Sky Island Alliance has found. The poll also found that a large
majority of Americans also oppose waiving laws to build additional infrastructure and do not
believe the U.S. Department of Homeland Security has the expertise necessary to do the job
safely and properly.
“In examining this data, it is clear that the vast majority of Americans (92 percent) strongly
prefer beefing up the ports of entry to spending billions on hundreds of miles of fencing in
between the ports,” said Thom Riehle, senior vice president for public affairs with YouGov, the
international, internet-based market research firm that conducted the online poll of 1,000
adults May 10-12, 2011. The poll’s margin of error is plus or minus 3.1 percent.
There’s institutional support for ports of entry
NPI 13
May 2013. New Policy Institute. “Realizing the Strategic National Value of our Trade, Tourism
and Ports of Entry with Mexico.”http://d1jlczrezgss9n.cloudfront.net/wp/wpcontent/uploads/2013/05/NPI-U-S-Mexico-Trade-Tourism-POE-Report_0.pdf
Some Reasons for Optimism
The shared 2,000-mile border needs to be recognized a s both a challenge and an opportunity.
In May 2010, the U.S. and Mexico signed the 21 st Century Border Management Joint
Declaration with a sp ecific focus on trade facilitation at their shared border. Rec ognizing the
importance of fostering commercial relationships, both countries have agreed to coordinate
efforts to enhance economic competitiveness by expediting lawful trade. The idea is that
develo pment of modern and secure border infrastructure will give an added boost to the
region’s competitive ness in the world and attract more trade and tourism, which translates into
more jobs being sustai ned and created.
Mexico wants to improve trade relations with the US—recent trade agreements
prove
Moody, writer for TechDirt, 13
[Glyn, March 13, 2013, “Mexico Will Ask To Join US-EU Transatlantic Trade Agreement”,
http://www.techdirt.com/articles/20130313/10181122311/mexico-will-ask-to-join-us-eutransatlantic-trade-agreement.shtml, accessed 7-10-13 BLE]
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Things are moving fast with the proposed US-EU transatlantic free trade agreement (TAFTA). It
was only a few weeks ago that the formal announcement was made, and already another
country wants to join, as pointed out by @PostActa (original in Spanish): The Mexican
government wants to be part of the negotiations of the Transatlantic Association of Trade and
Investment (TTIP, in its English acronym), which the United States and European Union will be
negotiating, with the idea that there will be two blocks that make up the future pact. That is,
alongside the EU block of 27 countries, Mexico is suggesting there should be a similar regional
grouping in North America. Interestingly, the story says that the Mexican government will ask
the US President for permission to join, with no mention of asking the EU: "It is a sovereign
decision of Washington as to the approach and the negotiation strategy to be adopted", and
although the U.S. government has already referred to the idea, it is something that is not yet
included in a formal dialogue, and needs to be defined.
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AT- Counterplans
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China
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Can’t Solve
China has a bad perception of Mexico- they do not want to invest
Monroy, Managing Director at Emerging Markets Capital, 2/17/13
[Jorge Ramiro, 2/17/13, MEXCHAM, “What’s Stopping China”,
http://www.mexcham.hk/#!about1/c1pyq, Accessed: 7/10/13, PR]
The first issue is a general lack of knowledge about Mexico as a country and as a mining
jurisdiction. Chinese investors often group Mexico in the same political risk quartile as Bolivia,
Mongolia, Ecuador or Argentina. They have the impression of Mexico being a war-zone,
through what they hear on the news, and know little else about the country beyond that.
Nothing could be further from the truth. Mexico has a long history of protection of FDI.
American, Canadian, Spanish, Korean and Japanese companies have been investing in the sector
for decades. No foreign asset has been seized in modern times, Mexico has some of the lower
mining royalties in the world, no capital controls, no restrictions on foreign ownership, an
excellent mining work force and infrastructure that is generally not found in developing
countries. Nevertheless, risk perception in China seems to be radically different. Secondly,
Chinese investors can be sensitive to diplomatic relations. We have noticed that Chinese firms
prefer to invest in Latin American countries which have special relations with the Chinese
government and which are also somewhat ideologically aligned to them, such as Bolivia,
Ecuador, Argentina, Venezuela, and even Cuba. We have been told by several mining
companies that they feel their investment would enjoy special protection in these countries
given their government-to-government relations, protections that no other western country
would provide. In some of these countries, Chinese companies can acquire a project through
direct negotiation with the government, in contrast with projects in Mexico, which have to be
acquired through an open market transaction. Chinese companies should look at these
countries’ track records in seizing foreign assets, imposing steep royalties, limiting foreign
ownership and imposing capital controls. Countries like Peru and Ecuador may offer
favourable FDI terms now, but both president Humala of Peru and president Correa of Ecuador
ran on populist agendas, so it remains to be seen if these policies will change once they consider
they´ve attracted enough foreign capital. If China takes a page from its experience in investing in
other socialist leaning countries, it would see that in the long-run, it would be better off
spending time in identifying and acquiring a high-quality project in Mexico.
China is not interested in investing in Mexico
Peters, Doctor of Economics, 6/9/13
[Enrique Dussel, 6/9/13, NPR, “China Is Building Ties With Mexico”,
http://www.npr.org/templates/story/story.php?storyId=190017843, Accessed: 7/10/13, PR]
In the last 10, 15 years, China has become a major investor in Latin America. Today, China is
the second source of foreign direct investments for the full region but not in Mexico. No? So
what we find today is there has been a lot of disengagement, a lot of misunderstandings, in
particularly regarding trades. The business sector in Mexico and business organizations have
been very critical of massive illegal imports coming from China. And, according to the business
sectors and many analysts, in 2012 we reached the worst relationship among both countries
in the last 40 years. MARTIN: I'd like to ask you to put on your global economics hat and talk a
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little bit about what this means, this closer relationship between America's greatest economic
rival, China, and our southern neighbor? PETERS: (Chuckling) To put it very concretely, we've
been working, for example, on the automobile sector. No? So China today is producing almost
20 million cars; the U.S., around nine million; and Mexico, around three million. No? So we
have a mass producer of cars, which is China, who will start exporting cars in the very short
term massively. No? Foreign producers, but increasingly Chinese brands, are preparing
themselves very well for challenging Ford, Chrysler and many others.
Relations with China are at an all-time low- they will not want to invest
Poweell, Staff Writer, 2/3/13
[Helena, 2/3/13, Pulsa merica, “CHINA/LATIN AMERICA: MEXICAN RELATIONS WITH CHINA AT
LOWEST EBB IN RECENT YEARS ACCORDING TO EXPERTS”,
http://www.pulsamerica.co.uk/2013/02/03/chinalatin-america-mexican-relations-with-china-atlowest-ebb-in-recent-years-according-to-experts/, Accessed: 7/10/13, PR]
Mexican relations with China at lowest ebb in recent years according to experts; Costa Rica
hopes to become a platform for Chinese exports and investment in Latin America; China and the
Bahamas looking to consolidate their bilateral relationship; Uruguayan report shows China to
have the greatest interest in investing in the country Mexico is ‘completely clueless when it
comes to China… There’s no strategy that adequately reflects China’s global importance and
does justice to our second leading trade partner. I don’t think economic and trade relations can
get any worse.’ This damning assessment of Sino-Mexican relations came from Enrique Dussel,
director of the Center for China-Mexico Studies of the National Autonomous University of
Mexico. Mr Dussel is not alone in his view; indeed he is one of a group of 100 academics,
businessmen and politicians who have devised a Strategic Agenda for Mexico-China Relations,
which was presented to President Peña Nieto shortly after he took office. The proposed
agenda covers the economy, culture, environment and education, and highlights the absence of
a coherent short and long term plan for China. It also stresses the need to prioritise forming a
strategy, in conjunction with Beijing, otherwise trade and economic ties will suffer. This issue
has been brought into sharp focus in recent weeks over the Dragon Mart controversy, (see last
week’s article). Plans to build Chinese-financed retail complex near Cancun have received
widespread criticism in Mexico from environmental groups and public figures who questioned
the transparency of China’s trade practices. It is the latest incident in a somewhat chequered
history; last year Mexico filed a complaint against China in the WTO over malpractice in the
textile industry, and in 2011 Mexico failed in its bid for the International Monetary Fund’s head
position when China refused to back candidate Agustin Carstens. Such tensions will not help
Mexico in resolving issues within the bilateral economic relationship. Mexico has a starkly
negative trade deficit with China, importing $52bn worth of Chinese goods in 2011 while
exporting just $2bn worth in return. Furthermore China’s FDI in Mexico is surprisingly low; the
two countries disagree widely about the exact figure (Mexico estimates the 2011 figure to be
$157m while China puts it at $614m), however put into perspective both figures are noticeably
paltry compared to the US 2011 contribution of $8bn.
There are multiple barriers between China and Mexico co-op
The Economist, 6/8/13
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[The Economist, 6/8/13, “From pivot to twirl”,
http://www.economist.com/news/china/21579062-chinese-leader-tries-smooth-moveamericas-backyard-pivot-twirl, Accessed: 7/11/13, PR]
There are big hurdles to overcome, though. The first is that the two countries do not see eye
to eye on the size of the trade imbalance. Many Chinese exports to Mexico come indirectly, via
America, so China does not count them, says Sergio Ley, a former Mexican ambassador in
Beijing. A second problem is a Mexican private sector that believes trade is unfairly stacked in
China’s favour, and so keeps its eyes fixed on the American market. Third, Mexico is hitched to
an American-led free-trade juggernaut, the Trans-Pacific Partnership, that has until now been
anathema to China. For all the tequila that Mexico persuades China to buy, it will take more
than fancy footwork by Mr Xi and Mr Peña to turn relations from rivalry to revelry.
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China Bad
Chinese influence is bad – explodes trade deficits, risks terrorism, and failure of
US leadership – impact is the 1AC
Johnson, Senior Policy Analyst for Latin America, 2005
[Stephen, Senior Policy Analyst for Latin America in the Douglas and Sarah Allison Center for
Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for
International Stud­ies, The Heritage Foundation, “Balancing China's Growing Influence in Latin
America”, http://www.heritage.org/research/reports/2005/10/balancing-chinas-growinginfluence-in-latin-america, Accessed: 7/11/13, PR]
However, closer ties to China also have significant disadvantages for both Latin America and
the United States:¶ Growing trade deficits. Latin American lead-ers who sign trade and
investment deals with the PRC have noticed that China's exports are more affordable than
their own goods, which contributes to trade deficits. Chinese goods are made by laborers who
work for one-third of the wages of Latin American counterparts and who tolerate worse working
conditions. Officials in Argentina, Brazil, and Mexico have signaled their unease about trade with
such a hot com-petitor. In September 2005, Mexican President Vicente Fox made it clear to
visiting President Hu Jintao that dumping electronics and cloth-ing was unacceptable. For every
dollar that Mexico makes from exports to China, the PRC makes $31 from exports to
Mexico.[9]¶ Disinterest in economic reform. Some ana-lysts believe that the commoditiesbased trade model used by China will undermine the progress that Latin America has made
toward industrialization. While countries like Chile and Brazil have moved beyond raw materials
exports, others with powerful presidents or rul-ing oligarchies may be tempted to fall back on
plantation economics. Income gaps between the rich and poor may widen as a result.
More-over, such narrowly focused economies are vul-nerable to downturns in commodity
prices. Some 44 percent of Latin Americans already live below the poverty line. If these
countries fail to adopt reforms, social inequality and political instability could depress U.S.
exports to the region and increase migration problems.¶ Scramble for resources. To obtain
commodi-ties, China offers tempting investments in infra-structure. In contrast, the United
States cannot offer direct tie-ins to state industries and can only offer development aid, now in
decreasing amounts. Chinese competition may make Mil-lennium Challenge Account (MCA)
money a less effective incentive to democratize govern-ments and liberalize markets. The oneto-two year lead time from proposal to disbursement of MCA aid gives volatile governments a
chance to back away from market-oriented perfor-mance requirements.¶ Evasion of Americanstyle bottleneck diplo-macy. China's flexibility counters more rigid U.S. approaches. Obtaining
any kind of assistance from the United States requires compliance on a battery of restrictions,
including observing human rights, protecting the environment, prom-ising not to send U.S.
military personnel to the International Criminal Court (ICC),[10] not assist-ing current or former
terrorists, and not using U.S.-provided equipment for any other than its stated purpose.
American commitments also depend on legislative approval and can be reversed if the mood in
the U.S. Congress shifts.¶ Prying eyes on America. From electronic espi-onage facilities in Cuba
to port facilities run by Hong Kong billionaire Li Ka-Shing's Hutchi-son-Whampoa conglomerate
in Panama, China has an eye trained on the United States. U.S. intelligence agencies are aware
of this, but Washington's penchant for focusing on one threat at a time, such as the war on
terrorism, could leave America vulnerable to Chinese industrial and military espionage.¶ What
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the U.S. Should Do¶ The United States and China have competing inter-ests in Latin America.
Washington would like to see its hemispheric neighbors develop into stable, demo-cratic,
prosperous trade partners that embrace the rule of law. Beijing sees the region as a source of
raw materials, a market for manufactured goods, and a platform for power projection. U.S.
interests probably coincide more with Latin American needs. In con-trast, China represents an
opportunity to temper American dominance with broader alliances.¶ Regrettably, Chinese aid
and commodity imports may buy time for state industries, powerful presi-dents, and influential
oligarchs. Most of all, such commerce could delay needed reforms and indus-trialization that
might lift Latin America's near majority underclass out of poverty.¶ America's strength is
competition, and it should influence the rules of the game in that direction. As a good neighbor
and in its own and Latin America's interests, the United States should:¶ Accelerate free trade
agreements. Free trade agreements have been the hallmark of U.S. pol-icies toward the region
since the 1990s. As an inducement, America should drop its agricul-tural and steel subsidies that
dissuade potential partners and cost taxpayers money. Improved U.S. trade relations with
Andean neighbors (and eventually Southern Cone countries) will open market access for both
U.S. and Latin American enterprises and provide an outlet for industrial growth.¶ Adopt more
comprehensive relationships. Single-issue diplomacy that emphasizes U.S. interests, such as
counternarcotics, leaves vacu-ums in other areas such as security assistance and trade capacity
development that other powers can fill. Plan Colombia is working because the United States is
helping Colombia to combat terrorism, expand public safety zones, strengthen institutions,
reactivate the economy, and promote rural peace.[11]¶ Cut red tape on assistance. This policy
should be followed to the greatest extent possible. Per-formance requirements are blunt
instruments that do not cover every situation. Constraints such as annual certifications on
counternarcot-ics cooperation and Article 98 letters that with-hold security assistance
occasionally backfire by withdrawing support for allies in areas of mutual interest. If Congress
considers such restrictions absolutely necessary, it should tai-lor them to suspend only
economic aid that is not crucial to immediate U.S. interests.¶ Press harder for reforms and use
public diplomacy. Once Latin America had elected leaders and fledgling markets in the 1990s,
U.S. support for democracy and economic reforms declined. Although each country is
responsible for solving its own problems, exter-nal pressure can encourage progress. U.S. pub-lic
diplomacy, which is mostly reactive toward Latin America, should be strengthened and more
supportive of U.S. development goals.¶ Conclusion¶ The United States has become the greatest
power in the world based on its tradition of free choice. Choice goes hand-in-hand with
competition, because these keep markets vibrant and govern-ments accountable. In a globalized
world, democ-racies have relations with whom they wish and nation-competitors such as China
cannot be blocked from visiting the Western Hemisphere. However, the United States can best
look after its regional interests by cultivating closer political and security ties with neighbors,
advancing free trade, and encouraging respect for the rule of law and lib-eral economic
principles among all players- including China.
US influence is key in Mexico to maintain hegemony
Dowd, Senior Fellow with the American Security Council Foundation, 2012
(Alan, American Security Council , “Crisis in the America's,”
http://www.ascfusa.org/content_pages/view/crisisinamericas, Accessed: 7/11/13)
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Focused on military operations in the Middle East, nuclear threats in Iran and North Korea, and
the global threat of terrorism, U.S. policymakers have neglected a growing challenge right here
in the Western Hemisphere: the expanding influence and reach of China.¶ Eyeing energy
resources to keep its economy humming, China is engaged in a flurry of investing and spending
in Latin America.¶ In Costa Rica, China is funding a $1.24-billion upgrade of the country’s oil
refinery; bankrolling an $83-million soccer stadium; backing infrastructure and
telecommunications improvements; and pouring millions into a new police academy.¶ In
Colombia, China is planning a massive “dry canal” to link the country’s Pacific and Atlantic coasts
by rail. At either terminus, there will be Chinese ports; in between, there will be Chinese
assembly facilities, logistics operations and distribution plants; and on the Pacific side, there will
be dedicated berths to ship Colombian coal outbound to China.¶ In mid-January, a Chinese-built
oil rig arrived in Cuba to begin drilling in Cuba’s swath of the Gulf of Mexico. Reuters reports
that Spanish, Russian, Malaysian and Norwegian firms will use the rig to extract Cuban oil. For
now, China is focusing on onshore oil extraction in Cuba.¶ New offshore discoveries will soon
catapult Brazil into a top-five global oil producer. With some 38 billion barrels of recoverable oil
off its coast, Brazil expects to pump 4.9 million barrels per day by 2020, as the Washington
Times reports, and China has used generous loans to position itself as the prime beneficiary of
Brazilian oil. China’s state-run oil and banking giants have inked technology-transfer, chemical,
energy and real-estate deals with Brazil. Plus, as the Times details, China came to the rescue of
Brazil’s main oil company when it sought financing for its massive drilling plans, pouring $10
billion into the project. A study in Joint Force Quarterly (JFQ) adds that Beijing plunked down
$3.1 billion for a slice of Brazil’s vast offshore oil fields.¶ The JFQ study reveals just how deep
and wide Beijing is spreading its financial influence in Latin America: $28 billion in loans to
Venezuela; a $16.3-billion commitment to develop Venezuelan oil reserves; $1 billion for
Ecuadoran oil; $4.4 billion to develop Peruvian mines; $10 billion to help Argentina modernize
its rail system; $3.1 billion to purchase Argentina’s petroleum company outright. The New York
Times adds that Beijing has lent Ecuador $1 billion to build a hydroelectric plant.¶ There is good
and bad to Beijing’s increased interest and investment in the Western Hemisphere. Investment
fuels development, and much of Latin America is happily accelerating development in the
economic, trade, technology and infrastructure spheres. But China’s riches come with strings.¶
For instance, in exchange for Chinese development funds and loans, Venezuela agreed to
increase oil shipments to China from 380,000 barrels per day to one million barrels per day. It’s
worth noting that the Congressional Research Service has reported concerns in Washington that
Hugo Chavez might try to supplant his U.S. market with China. Given that Venezuela pumps an
average of 1.5 million barrels of oil per day for the U.S.—or about 11 percent of net oil
imports—the results would be devastating for the U.S.¶ That brings us to the security
dimension of China’s checkbook diplomacy in the Western Hemisphere.¶ Officials with the U.S.
Southern Command conceded as early as 2006 that Beijing had “approached every country in
our area of responsibility” and provided military exchanges, aid or training to Ecuador,
Jamaica, Bolivia, Cuba, Chile and Venezuela.¶ The JFQ study adds that China has “an important
and growing presence in the region’s military institutions.” Most Latin American nations,
including Mexico, “send officers to professional military education courses in the PRC.” In
Ecuador, Venezuela and Bolivia, Beijing has begun to sell “sophisticated hardware…such as
radars and K-8 and MA-60 aircraft.” The JFQ report concludes, ominously, that Chinese defense
firms “are likely to leverage their experience and a growing track record for their goods to
expand their market share in the region, with the secondary consequence being that those
purchasers will become more reliant on the associated Chinese logistics, maintenance, and
training infrastructures that support those products.Ӧ Put it all together, and the southern
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flank of the United States is exposed to a range of new security challenges.¶ To be sure, much
of this is a function of China’s desire to secure oil markets. But there’s more at work here than
China’s thirst for oil. Like a global chess match, China is probing Latin America and sending a
message that just as Washington has trade and military ties in China’s neighborhood, China is
developing trade and military ties in America’s neighborhood.¶ This is a direct challenge to
U.S. primacy in the region—a challenge that must be answered.¶ First, Washington needs to
relearn an obvious truth—that China’s rulers do not share America’s values—and needs to
shape and conduct its China policy in that context.¶ Beijing has no respect for human rights.
Recall that in China, an estimated 3-5 million people are rotting away in laogai slave-labor
camps, many of them “guilty” of political dissent or religious activity; democracy activists are
rounded up and imprisoned; freedom of speech and religion and assembly do not exist; and
internal security forces are given shoot-to-kill orders in dealing with unarmed citizens. Indeed,
Beijing viewed the Arab Spring uprisings not as an impetus for political reform, but as reason “to
launch its harshest crackdown on dissent in at least a decade,” according to Director of National
Intelligence James Clapper.¶ In short, the ends always justify the means in Beijing. And that
makes all the difference when it comes to foreign and defense policy. As Reagan counseled
during the Cold War, “There is no true international security without respect for human
rights.Ӧ Second, the U.S. must stop taking the Western Hemisphere for granted, and instead
must reengage in its own neighborhood economically, politically and militarily.¶ That means
no more allowing trade deals—and the partners counting on them—to languish. Plans for a
hemispheric free trade zone have faltered and foundered. The trade-expansion agreements
with Panama and Colombia were left in limbo for years, before President Obama finally signed
them into law in 2011.¶ Reengagement means reviving U.S. diplomacy. The Wall Street Journal
reports that due to political wrangling in Washington, the State Department position focused on
the Western Hemisphere has been staffed by an interim for nearly a year, while six Western
Hemisphere ambassadorial posts (Uruguay, Venezuela, Ecuador, El Salvador, Nicaragua and
Barbados) remain empty.¶ Reengagement means reversing plans to slash defense spending. The
Joint Forces Command noted in 2008 that China has “a deep respect for U.S. military power.”
We cannot overstate how important this has been to keeping the peace. But with the United
States in the midst of massive military retrenchment, one wonders how long that reservoir of
respect will last.¶ Reengagement also means revitalizing security ties. A good model to follow
might be what’s happening in China’s backyard. To deter China and prevent an accidental war,
the U.S. is reviving its security partnerships all across the Asia-Pacific region. Perhaps it’s time to
do the same in Latin America. We should remember that many Latin American countries—
from Mexico and Panama to Colombia and Chile—border the Pacific. Given Beijing’s actions, it
makes sense to bring these Latin American partners on the Pacific Rim into the alliance of
alliances that is already stabilizing the Asia-Pacific region.¶ Finally, all of this needs to be part of
a revived Monroe Doctrine.¶ Focusing on Chinese encroachment in the Americas, this
“Monroe Doctrine 2.0” would make it clear to Beijing that the United States welcomes China’s
efforts to conduct trade in the Americas but discourages any claims of control—implied or
explicit—by China over territories, properties or facilities in the Americas. In addition,
Washington should make it clear to Beijing that the American people would look unfavorably
upon the sale of Chinese arms or the basing of Chinese advisors or military assets in the Western
Hemisphere.¶ In short, what it was true in the 19th and 20th centuries must remain true in the
21st: There is room for only one great power in the
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States
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Perm Do Both
Perm do both – only way to resolve funding issues
Shapleigh, Texas Senator, 8
[10/08, Eliot, “Texas Borderlands 2009 The State of Border Transportation and Security,”
http://shapleigh.org/system/reporting_document/file/238/81st_Transportation_Chapter.pdf,
date accessed: 07/12/13, LV]
Texas’ location on the border with Northern Mexico and its proximity to the Mexican ¶ maquiladoras makes our state the logical
crossing point for the transport of northbound¶ commerce from Mexico and Central and South America. With
the expansion
of international ¶ trade agreements, commercial vehicle traffic into Texas will continue to
grow. Yet, much of this ¶ commerce will pass through Texas without providing any significant
economic benefit. Given ¶ their inadequate tax bases, Border communities cannot and should
not have to shoulder the ¶ responsibility for or cost of international trade infrastructure alone,
simply by virtue of their ¶ location. El Paso, for example, is the nation’s 19th largest city, but
only has the 156th largest tax ¶ base. The city does not have an inner or outer loop or
“bypass.” In the lower Rio Grande ¶ Valley, the region still does not posses an interstate highway. Because NAFTArelated trade ¶ benefits both the state and national economies, the state and federal
governments must assume a ¶ greater fiscal responsibility and invest in adequate trade
infrastructure along the Texas-Mexico ¶ Border. These improvements are urgent and vital to the continued
growth and health of Texas’ ¶ economy and Border residents.
Perm do both – Federal and state cooperation needed to address issues
Texas Department of Transportation, 7
[02/07, “Texas NAFTA Study Update Final Report,” ftp://ftp.dot.state.tx.us/pub/txdotinfo/library/reports/gov/tpp/nafta_study.pdf, date accessed: 07/09/13, LV]
One of the most severely limiting factors to the growth of NAFTA rail tonnage are the urban ¶ bottlenecks at gateway communities.
Each gateway community faces a slightly different set of ¶ issues related to NAFTA rail operations, but in most cases, operating
speed and safety are ¶ compromised because of at-grade crossings, poor geometry, and high
land use density of ¶ residential and commercial activity. These constraints typically exist on both sides of the
border ¶ and unless addressed in both Mexico and the Texas the potential for reducing truck vehiclemiles-traveled (VMT) will not be
fully realized as a rail improvement on one side of the border ¶ will generate additional truck trips to the other. These
are
complicated issues, but of critical ¶ importance to the future of U.S.-Mexico trade. To address
these issues, several ongoing and ¶ planned studies and projects are engaging Federal, State,
and local planners and railroad ¶ operators from both sides of the border. The most severe gateway
community bottlenecks ¶ include Matamoros-Brownsville, Nuevo Laredo-Laredo, and Ciudad Juarez-El Paso.
Perm solves—NADBank is a catalyst for state investment
Mosqueda, editorial intern for the Observer, 10
[Priscilla, graduated with a bachelor's in journalism from the University of Texas at Austin, July
20, 2012, “Border Cities Focus on Economic Growth, Infrastructure Despite the Drug War”,
http://www.texasobserver.org/border-cities-focus-on-economic-growth-infrastructure-despitethe-drug-war/, accessed 7-10-13 BLE]
The transfer station marks the 200th project certified by the Border Environment Cooperation
Commission, most of which have been financed by the North American Development Bank for
a total of $3.5 billion. The bank receives equal funding from the U.S. and Mexican
governments, but has also received millions from the EPA over the years. Projects are partially
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funded by the bank, with local, state and federal governments making up most of the
remainder of expenses. “The bank serves as a catalyst to bring that other investment to the
table; we don’t seek to be the sole financier of any infrastructure project,” spokesperson Juan
Antonio Flores says. “The local community needs to be invested in it.”
State cooperation needed due to new commercial zones and to provide air
programs
Texas Department of Transportation, 7
[02/07, “Texas NAFTA Study Update Final Report,” ftp://ftp.dot.state.tx.us/pub/txdotinfo/library/reports/gov/tpp/nafta_study.pdf, date accessed: 07/09/13, LV]
Border trade facilitation and security will also require continuing coordination between ¶
TxDOT, the Texas DPS, and the U.S. Departments of Transportation and Homeland ¶ Security.
The recent announcement that the U.S. government will now permit Mexican ¶ trucks beyond
the commercial zone on a pilot basis will immediately require increased ¶ coordination
between Texas authorities and Federal agencies. Given that Texas bears the brunt of U.S. NAFTA trade now and
into the future, TxDOT ¶ should proactively advocate its interests toward the next surface transportation ¶ reauthorization. Texas’
interests include the core Federal-aid programs as well as the ¶ targeted programs for borders,
corridors, and projects of national significance in the ¶ current Safe, Accountable, Flexible, and
Efficient Transportation Equity Act: A Legacy ¶ for Users (SAFETEA-LU). These targeted programs are
designed to address NAFTA ¶ and other trade and competitiveness issues.
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States Fail
State action in foreign policy and trade a) destroys foreign policy
effectiveness and credibility b) would be rolled back by the Supreme
Court c) would require Congressional approval, means it links to politics
and d) perm solves
Fenton, Associate Dean and Professor of Law, Ohio Northern University,
93
[Howard N, III, , B.S. 1971, J.D. 1975, University of Texas, Spring 1993 Northwestern
University School of Law Northwestern Journal of International Law & Business, “The
Fallacy of Federalism in Foreign Affairs: State and Local Foreign Policy Trade Restrictions”,
GSK]
The state and local trade restrictions are subject to challenge on three distinct grounds:
federal statutory preemption; unconstitutional restrictions on foreign commerce; and
unconstitutional interference in foreign policy under the supremacy clause. These
arguments represent three distinct lines of authority establishing the preeminence of
the federal role in the area of foreign trade controls, but they all involve the same two
fundamental inquiries.¶ First, the tests examine the purpose of the state and local laws to
determine whether they are designed to serve some legitimate local purpose or whether
they are efforts to affect the foreign affairs of the United States or the internal affairs of
a foreign state. Second, each test examines whether the controls at issue interfere with the
current or prospective ability of the federal government to address the same issue. The
best-known formulation of this inquiry is whether the laws limit the ability of the
United States to speak with one voice on a matter of significant international concern.
While focusing on the same two questions, the three tests frame the inquiries and weigh the
answers somewhat differently. However, if the laws have no legitimate local purpose and
impede the conduct of U.S. foreign policy, they would appear to be invalid under all three
tests, as discussed below.¶ The statutory preemption test for state and local trade controls
in [*572] volves determining whether the Congress or the President intended to preempt
state action through legislative or executive trade control regimes, since this intent is the
"touchstone" of traditional preemption analysis. n43 Because the states and localities have
little (if any) residual authority in the area of foreign relations, preemption would be
easily found unless the state and local laws can be characterized exclusively or
predominantly as exercises of spending or police powers.¶ The prospect of
interference with foreign policy is more important to this preemption discussion
because the preemption test focuses on the federal government's intent. If the
Congress or the President has acted in a fashion inconsistent with the state action, or
in a manner that indicates an intent to "occupy the field," the state laws will be
preempted. With regard to foreign relations, the Supreme Court presumes such
intent to occupy the field and has suggested that the government must affirmatively
approve state actions in order to overcome the presumption. n44¶ The issue of the
legitimate local purpose of these state and local laws is central to resolving the second
major hurdle faced by these laws - namely, the challenge posed by the laws' apparent
interference with the foreign commerce of the United States, contrary to the
Commerce Clause of the Constitution. n45 The primary defense offered by proponents
for these state and local trade controls is that they are shielded from scrutiny under
traditional analyses of burdens placed on interstate or foreign commerce, because these
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laws merely reflect terms of the states' participation in the market for investments, goods or
services. This characterization goes to both the purpose of the laws and the means of
implementation, but the issues raised by this "market participation" defense are essentially
issues of local purpose versus foreign goals.¶ If the laws fail to qualify for this market
participation defense, and possess no other legitimate local purposes, then the
burdens they place on foreign commerce are likely to be deemed to be intentional
intrusions into the regulation of foreign trade. Moreover, even if the burdens imposed
by such laws on foreign commerce were incidental to a legitimate local purpose, the
impairment of the ability of the federal government to "speak with one voice" in the
area of foreign policy could also invalidate the laws. This "one voice" test was first
articulated by the Supreme Court in the foreign commerce cases, n46 and its
resolution will probably [*573] dictate the outcome of this inquiry into the Commerce
Clause implications of state and local trade controls.¶ Finally, the question of the
purpose of the state and local trade control laws holds a central place in the Supremacy
Clause analysis under the Constitution as well. n47 Because the foreign policy of the
United States has been reserved to the federal government, the Supreme Court has
looked askance at state actions impinging on the exercise of foreign relations powers.
The leading case struck down state action in an area of traditional state authority
because it was taken in a manner calculated to communicate a hostile message to
foreign governments.
Even tiny State action collapses perception and credibility
Fenton, Associate Dean and Professor of Law, Ohio Northern University,
93
[Howard N, III, , B.S. 1971, J.D. 1975, University of Texas, Spring 1993 Northwestern
University School of Law Northwestern Journal of International Law & Business, “The
Fallacy of Federalism in Foreign Affairs: State and Local Foreign Policy Trade Restrictions”,
GSK]
B. The Impact of State and Local Laws on the Ability of the United States to Speak with One
Voice in Matters of Foreign Policy¶ The discussion of the effect of state and local trade
controls on the ability of the U.S. to speak with one voice is based on three
fundamental assumptions: (1) that foreign policy formulation is the constitutional
preserve of the federal government; (2) that the federal government on occasion
implements foreign policy through the use of trade controls; and (3) that the
divestment and debarment laws of the state and local governments have an impact
on the behavior of targeted companies. The first two assumptions need no discussion.
n59 However, the third assumption is frequently disputed by many defenders of the state
and local laws. Paradoxically, they maintain that these laws have no influence on the
companies affected and that the objective of the laws is merely to communicate a moral or
philosophical community position. n60 The Maryland Court of Appeals decision upholding
Baltimore's divestment law adopted this argument in stating that the ordinances did "not
attempt to impose sanctions on South Africa," n61 and finding them without significant
impact under preemption, foreign policy or foreign commerce scrutiny.¶ As indicated
above, the total value of assets now subject to some form of state and local South Africa
divestment or debarment law exceeds $ 20 billion. Those jurisdictions and organizations
promoting the sanctions generally do so on the basis of their presumed or potential impact
on the target firms. The specific requirements of many of these laws point clearly toward
individual reforms that the jurisdictions desire to see [*578] implemented. n62 Businesses
themselves have indicated that their decisions about business with South Africa have been
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directly influenced by these laws. n63 It is illogical to argue that state or local governments
would craft such precise laws without intending any effects, when enacting simple
resolutions of condemnation would communicate the same messages. Given the three
assumptions set forth above, any deviation by subordinate jurisdictions from federal
foreign trade restrictions will limit the clarity and force of the federal directives. Because
there is no mechanism in the constitutional system to ensure that the state and federal
governments respond uniformly to foreign nations, deviation from the federal position
will almost certainly be the normal outcome of state and local initiatives. Large or
small, the deviations will detract from the impact of U.S. foreign policy. In the worst
case, the differences will communicate a national foreign policy substantially at odds
with the articulated policy of the federal government.
Can’t solve—BECC key to effective trade
Mosqueda, editorial intern for the Observer, 10
[Priscilla, graduated with a bachelor's in journalism from the University of Texas at Austin, July
20, 2012, “Border Cities Focus on Economic Growth, Infrastructure Despite the Drug War”,
http://www.texasobserver.org/border-cities-focus-on-economic-growth-infrastructure-despitethe-drug-war/, accessed 7-10-13 BLE]
The core mission of the bank, he says, is to provide environmental infrastructure that will
improve communities’ quality of life as well as promote economic growth. “When you have a
cleaner environment, conditions all around improve for a community in terms of the quality of
life,” he says. “A clean environment makes a community a desirable place to live, so if
companies want to relocate and grow in an area you want that to be a place with a clean
environment; access to a sustainable potable water source is key for economic development.”
The commission is headquartered in Juarez and the bank in San Antonio. Eligible projects in the
United States are limited to approximately 60 miles distance from the border. In Mexico, the
limit extends to roughly 186 miles from the border due to the greater difficulty of securing
financing in those smaller towns. “The whole idea behind the bank is you can’t have increased
trade and commerce between two countries without having some mechanism in response to
deal with what was for a long time a neglected environmental challenge along the border,”
Flores says.
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Links to Politics
Texas transportation systems are primarily funded through the federal
government—links to politics
Combs, Texas Comptroller of Public Accounts, 8
[Susan, 2008, “Infrastructure—Transportation”,
http://www.window.state.tx.us/specialrpt/tif/transportation.html, accessed 7-10-13 BLE]
Texas funds its transportation system primarily through federal transportation aid, state and
federal motor fuels taxes (20 cents per gallon and 18.4 cents per gallon, respectively), motor
vehicle registration fees, bond proceeds and toll road revenue. These taxes and fees amounted
to nearly $7.7 billion in fiscal 2007. For the 2006-07 biennium, the Legislature appropriated
$15.2 billion to TxDOT to build and ensure safe and efficient roadways. This amount
represented a 24 percent or $2.9 billion funding increase over the total for the 2004-05
biennium (Exhibit 23).79 describes TxDOT various funding sources. In addition to these funds,
TxDOT also can use construction funds from the Texas Mobility Fund (TMF). The TMF is
composed of money collected primarily from drivers with traffic violations; bonds are issued
on the balance of the TMF by the state. These revenues are then allocated to local
transportation planning boards for improvements to the state highway system only. Once
local transportation planning boards have decided on a project or improvement on the state
highway system in their area, TxDOT either completes the work or contracts it out to a private
construction firm. In fiscal 2007, the TMF contained $2.3 billion that can be used to support
bonds issued to fund transportation projects. Exhibit 24 provides a breakdown of the funding in
the Texas Mobility Fund.
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XO
Even if they win congressional vote isn’t key, still needs congressional
discussion, so links to politics.
Reed, Project Director, and Kelly, Executive Director, 2K
(Cyrus and Mary, July 2000, Texas Center for Policy Studies, “Expanding the Mandate: Should
the Border Environment Cooperation Commission and North American Development Bank go
beyond Water, Wastewater and Solid Waste Management Projects and How Do They Get
There?: Comments on Utilizing the Lending Capacity of the NADB,“ p.
9,http://www.texascenter.org/publications/expansion.pdf, [Accessed 6/30/13], JB).
Even if it were to be argued that the Agreement gives the Parties authority to mod ify the
Agreement beyond the four specific areas laid out, without Congressional approval, it would
seem politically unwise to pursue such a course of action. Congressional discussions
surrounding the BECC and NADBank focused on two things: environmental infrastructure needs
at the border and the need for adjustment aid in communities adversely affected by NAFTA.
Extending the functions to such areas as housing mortgages would seem to go far beyond
what was contemplated in Congressional discussion and au thorization of the Agreement and
its allocation of funds to NADBank and BECC.
It is our position that certification and financing of “other infrastructure” projects cannot be
done until the Parties formally agree to modify the Agreement. From a political perspective in
the U.S., that would seem to require at least Congressional discussion, if not Congressional
approval. And, for that to occur, it seems to us that the BECC and NADBank will have to be
specific about exactly which “other” infrastructure projects they want to consider certifying and
financing.
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PPP
Permitting requirements means P3s take over 5 years to solve
Reilly, staff writer for the Federal Times, 13
[Sean, 3-6-13, Federal Times, “Private investors sought for border infrastructure”,
http://www.federaltimes.com/article/20130306/DEPARTMENTS03/303060009/Privateinvestors-sought-border-infrastructure, accessed 7-9-13, GSK]
There are no rules forbidding public-private partnerships, said Chris Wilson, a trade expert at
the Mexico Institute at the Woodrow Wilson International Center for Scholars. “It’s more a
matter of creating a stable legal framework that everyone can refer to.Ӧ One example of how
this could work is underway along the California-Mexico border, where a group of investors
have government approval to build an enclosed pedestrian bridge from San Diego to the Tijuana
airport. In return for paying a toll, users will be able avoid traffic tie-ups elsewhere along the
border. The walkway is scheduled to open next year.¶ Congress has yet to act on any specific
legislation to spur similar endeavors. And even if it does, permitting requirements and other
hurdles means that new projects probably won’t take off for five more years, Wilson said.
Only federal action solves—interoperability concerns and bilateral action
ensure P3s or state action takes years
U.S./Mexico Joint Working Committee on Transportation Planning, DOT agency,
09
[9-30-2009, “Public-Private Partnerships Potential for Arizona-Mexico Border Infrastructure
Projects”, http://www.borderplanning.fhwa.dot.gov/adot_PPPrpt/toc.asp, accessed 7-9-13,
GSK]
As a result of the information obtained during the survey, the Study Team was able to identify
several key implementation issues for the use of public-private partnerships at border
crossings. In later sections of this document, these issues will be discussed in more detail with
regard to specific implementation of public-private partnerships at Arizona border crossings.
The following is a summary of key issues identified.¶ Back to top¶ 5.1 Cooperation Among
Agencies and Stakeholders¶ The Study Team heard about the importance of agency and
stakeholder cooperation from various officials during the public-private partnership and
border project discussions. Phrases like "bringing stakeholders along", "having everyone on
board", and "people moving in the same direction" were common. Because border projects
commonly involve many different agencies from two countries at the federal, state, and local
levels, projects can easily become delayed for years if coordination is not thorough and
inclusive. On the proposed Otay Mesa East project, there are 14 agencies regularly being
coordinated with including the use of bi-monthly, or more frequent, meetings. Introducing one
or more private sector concessionaires into the process will not reduce the need to have
constant dialogue with the stakeholder agencies involved.¶ Back to top¶ 5.2 Oversight¶ Several
states, including California, give legislative and/or transportation commission oversight into
public-private partnership agreements, including potential agreements for border crossings.
While oversight of the public-private partnership arrangements is needed, if the political will for
public-private partnership implementation does not exist for a specific project, attempts to
move towards a public-private partnership may be futile. In addition to stakeholder approvals,
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legislative and public willingness to support a public-private partnership at a border crossing
need to be considered early on in the examination of the feasibility of using a public-private
partnership for a project.