By Karl Reiner
Although it is of little concern in the state capital, Arizona's exporters had a good first quarter of 2013. U.S. merchandise exports to Mexico totaled $53.5 billion, an increase of $487 million over the same period last year. Texas was the leading state with $24.16 billion, followed by California, Michigan and Louisiana. Arizona ranked fifth with $1.65 billion, up $132 million over the previous year's first quarter.
Mexico's stock market hit an eight-month low in May. Sluggish sales to the U.S. (Mexico's largest export market) during the first quarter of 2013 slowed the economy. Mexico's economic growth forecast was reduced to 3.1% from 3.5%.
In the 30 years prior to 2013, the Mexican economy grew an average of 2.4% per year while productivity fell by 0.7% per year. Mexico's three main political parties agree that the productivity decline has to be reversed through structural reform. They have signed a pact promoting about 100 changes in the telecommunications, media and banking sectors.
Mexican President Enrique Pena Nieto promoted the ambitious reform package. The country also needs to enforce competition laws, improve the criminal justice system and make life safer for individuals and firms. One of the president's goals is to allow Mexican citizens to go through the day without paying a bribe. His agenda includes improving tax collection, protecting anti-poverty programs from political meddling and prosecuting officials abusing power.
China has been investing in resource rich Latin America in order to ensure a secure supply of raw materials. China's president, Xi Jinping, is in Mexico for trade discussions. Mexico is an oil producer and China seeks oil to fuel its expanding economy. Mexico is open to diversifying its trade and investment base which has long been dominated by America.
The illegal drug traffickers supplying America's drug demand are a murderous lot. The trafficking routes linking Latin American production sites to the lucrative United States market run through seven of the world's eight most violent countries. Drug-related crime takes its toll on investment and tourism. Mexico is no longer one of the world's top 10 tourist destinations.
The corruption, number of deaths and the cost of fighting the drug war have caused a shift in thinking. Many Latin American officials are questioning the futility of the drug war. The violence has moved the Organization of American States to begin seriously exploring legalization options. A report on the topic will be discussed at the organization's annual meeting which will be held in Guatemala in July.
SB 1070, the housing market collapse and the recession combined to reduce the number of undocumented residents in Arizona by around 200,000. There are an estimated 360,000 undocumented immigrants in the state at the present time. They are a portion of the 11 million currently residing throughout the U.S.
The immigration reform bill may pass the Senate sometime in July. The U.S. currently spends $18 billion a year on immigration enforcement. The cost covers 21,000 Border Patrol agents, fences, and a growing fleet of drones. The Senate bill contains $6.5 billion for border technology (fencing costs $4 million per mile) and additional agents. There were 364,768 apprehensions along U.S. borders in 2012, a drop of 50% in four years. In the Tucson sector, apprehensions are down to an average of about 124,000 per year.
The Senate bill faces stiff opposition in the House where some 70 Republicans are opposed to immigration reform of any kind. In a recent poll, large majorities of Democrats and Independent voters supported a path to legal status for undocumented immigrants. Only 42% of Republican voters polled supported the concept.
The economic conditions in Mexico and Central America continue to drive migrants to the U.S. to seek work. The share of the population living below Mexico's poverty line lingers at nearly 50%. The inefficient informal economy, which provides 60% of Mexico's jobs, needs stimulation. Along with immigration reform and border security, Congress should support economy boosting measures in Mexico and Central America. It would help mitigate the factors driving people to migrate.
The city council in Nogales opposes the idea of a land border crossing fee because it fears the fee would discourage Mexican shoppers. Arizona's border region, including the city of Nogales, generates more than $26 billion in annual economic activity which supports 235,000 jobs in the state. Nogales gets 60% of its sales tax revenue from Mexican shoppers.
Rev. Sean Carroll, S.J. , the director of the Kino Border Initiative in Nogales, Sonora, deals with some of the harsh border backwash. He will be the speaker at the Drinking Liberally session on June 12. His discussion will cover the Kino program, immigration reform and his recent experience testifying before a congressional committee in Washington.