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$500 billion a year: Realizing the full value of cross-border trade with Mexico

Michael Camuñez, U.S. Assistant Secretary of Commerce
September 26, 2012

More than $1 billion in goods trade crosses the U.S.-Mexico border each day. In 2011 U.S.-Mexico good and service trade reached a major milestone of $500 billion with virtually no recognition.

While media coverage and political conversation about the border, of late, has focused almost exclusively on illegal immigration and drug trade, the great success story of commerce between the United States and Mexico is being overshadowed.

It is time to change the narrative.

That was the message delivered by many at the conference, “Realizing the Economic Strength of Our 21st Century Border: Trade, Education and Jobs,” in Tempe, Ariz., this week. The conference brought together some 250 business leaders, policymakers and educators from both sides of the U.S.-Mexico border to discuss how to strengthen the economic relationship between both countries.

It was sponsored by ASU’s North American Center for Transborder Studies (NACTS) and the U.S. Department of Commerce.

Speakers included several members of Congress and other leaders from both the public and private sector, who all agreed that the economic potential of the U.S.-Mexico partnership has not been fully realized and is poised for even greater growth and success.

“Mexico has an economy the size of Russia and more economic potential than China,” said ASU President Michael Crow. “Yet we have decided to pretend we don’t have a G20 neighbor. Mexico is a powerful economic ally, yet we are purposefully ignorant and we must defeat that.”

The economic value of the U.S.-Mexico partnership for many in the U.S. remains “hidden in plain sight.”

For example:

• U.S. sales to Mexico are larger that all U.S. exports to China, India, Russia and Brazil, combined, as well as all combined sales to Great Britain, France, Belgium and the Netherlands.

• Mexico is the second-largest export market for the U.S. (Canada is first), and the U.S. is the largest global export market for Mexican exports.

• Approximately 6 million U.S. jobs depend on trade with Mexico.

• Mexico’s $349 billion in 2011 exports to the world, on average, contained 37 percent U.S. inputs.

• For every dollar Mexico makes from exporting to the U.S., it will in turn spend 50 cents on U.S. products and services.

• Twenty-two U.S. states count Mexico as their No. 1 or No. 2 export market – states as close to the border as Arizona, California and Texas and as far away as from the border as New Hampshire, Michigan and Ohio.

• Closer to home, the economic impact on Arizona is huge. $11.9 billion in revenue and 111,216 jobs in Arizona rely on trade with Mexico. In addition, Mexican tourists comprise 70 percent of international overnight visitors.

Michael Camuñez, U.S. Assistant Secretary of Commerce, said that as a competitive region the United States, Mexico and Canada are competing against the rest of the world. The countries need to leverage their power, advantage and close proximity.

Camuñez said that for trade to reach its full potential, infrastructure improvements are dire at the U.S. Mexico border, a sentiment echoed by several CEOs of U.S. corporations.

Many ports of entry were built decades ago, before NAFTA and explosive population growth on both sides of the U.S-Mexico border. 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 an overwhelmingly dominant role since 9/11, hampering the ability of agencies to efficiently manage border traffic.

Delays at the border, said Ronald Scruggs, president of Triumph Group Mexico, are one of the biggest challenges for corporations and a major drag on competitiveness.

Rick Van Schoik, Director of NACTS, repeatedly emphasized the importance of public-private partnerships, which feature "the mutual benefits of harnessing the private sector’s financial and logistical capacity and applying it to the challenge of facilitating trade.”

Erik Lee, Associate Director of NACTS, said they hosted the event to bring people together from across the political and economic spectrum from both sides of the border to discuss successes and form solutions so that cross border trade can be fully realized.

“Mexico is an economic powerhouse, currently growing more than twice as fast as we are,” said Lee. “Mexicans are in an even better position to buy U.S. products. What is good for Mexico’s economy is, in the big picture, good for job creation in the United States.”

Lee said the United States and Mexico are at a critical political and economic crossroads. With economic powerhouse China moving full steam ahead, it is more important than ever for the U.S., Mexico and Canada to join economic forces.

Those attending the conference included Congressman Henry Cuellar, U.S. House of Representatives; Congressman Raul Grijalva, U.S. House of Representatives; Congressman Sylvester Reyes, U.S. House of Representatives; Susana Martinez, Governor of the State of New Mexico, Chair, U.S.-Mexico Border Governors Conference; Arnulfo Valdivia Machuca,  President-Elect Enrique Peña Nieto Transition Team; Greg Stanton, Mayor of the City of Phoenix; Jerry Sanders, Mayor of the City of San Diego and Chair, U.S.-Mexico Border Mayors Alliance;  John Cook, Mayor of the City of El Paso; Carlos Bustamante, Mayor, City of Tijuana; Arturo Garino, Mayor of the City of Nogales ; Scott Smith, Mayor of the City of Mesa;  and Gerónimo Gutierrez, Managing Director, North American Development Bank.

The North American Center for Transborder Studies (NACTS) at Arizona State University is a university-based public policy analysis and advisory group in ASU's College of Liberal Arts and Sciences that collaborates with key partners to improve North American cooperation and prosperity. NACTS researches and reports on North American issues and provides specific information, analysis and recommendations to public, private and non-profit groups for better-informed decisions.