The governments of Mexico and the United States cannot approach the tariff discussion solely from the perspective of their national interests. They must consider local impacts, since weakening or dismantling productive schemes that have taken decades to consolidate could lead to the disappearance of the border buffer zone
By José Mario Sánchez Soledad
Comercial Supply
Since 1848, when the border with the United States was officially established, supplying the population and generating jobs have been constant concerns for the inhabitants of the mexican border region.
Historically, during the 19th and 20th centuries, tariff conditions and logistics have been more competitive on the United States of American side, which has allowed consumer products to be more accesible in the border. Even today, national governments and mexican suppliers still do not understand the difficulties faced in supplying the border. Among the main obstacles are the distance and high transportation costs, the lack of adequate infrastructure for storing goods—such as refrigerators and warehouses—, the absence of distribution centers, insecurity on the roads and the insufficiency of mexican national production to cover demand throughout the country.
Currently, trade and supermarkets on the mexican side depend largely on imports to meet local demand. Therefore, historically there has been an attempt to guarantee supply at both the national and binational levels. An example of this effort was the fight for “Gancho” products and the National Border Program (PRONAF), which subsidized 50% of freight to national mexican producers who supplied the border. However, not even with this incentive was sufficient coverage achieved.
In the current context of a possible tariff war, it is crucial not to weaken or reverse the progress made since the Free Trade Agreement (NAFTA). If the imposition of tariffs is inevitable, at least the Border Zone should be fully reestablished with a tariff regime differentiated from the rest of the country, which would allow mexican border commerce to continue operating with some supply efficiency.
The authorities of both countries must adopt differentiated strategies according to the regions, since the Northern Border faces challenges and needs different from those of the rest of the territory.
Industry
The supply and preservation of local trade have always been priorities for the border population, which is why, at the time, the Free Trade Zone and, later, the Border Zone were established. However, this commercial reality made it difficult for the mexican national industry to develop in the cities of the Northern Mexican Border. In 1900, Espiridión Provencio, an industrialist from Juárez, criticized the free consumption perimeters, arguing that they impeded industrial growth by making it difficult to insert manufactured goods in the border zone into the national market. As a consequence, for decades the mexican side depended solely on agriculture, local trade, tourism and services.
The panorama changed after World War II, when, in the 1960s, the cancellation of the Bracero Program left tens of thousands of Mexican workers stranded at the border. Faced with the region’s inability to generate mass employment and the lack of national industry, an innovative model emerged: manufacturing in transit, initially known as maquiladora. This scheme evolved into a complex export manufacturing system, further boosted by the 1994 NAFTA.
Today, the concern about a tariff war is the possible disappearance of this binational Maquiladora export industry, which would mean massive job losses in a region where it is difficult to develop viable alternatives for large-scale employment.
Therefore, the governments of Mexico and the United States cannot approach the tariff discussion solely from the perspective of their national interests. They must consider local impacts, since weakening or dismantling productive schemes that have taken decades to consolidate could lead to the disappearance of the border buffer zone that has served as a point of balance between two countries with enormous inequalities.
Through employment and supply, the Border Region has contributed to maintaining a certain stability.
Although the challenges related to drug trafficking and migration are recognized, dismantling border competitiveness would only aggravate the problems. It is essential that economic and commercial decisions do not destroy the mechanisms that have allowed this region to sustain itself and develop over time.
It is necessary to remind our local, state and federal authorities of the importance of considering the border reality in their decisions.
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José Mario Sánchez Soledad, businessman and historian from Ciudad Juárez and national advisor to Coparmex.
