Last week, President Bush sat down with Mexican President Vicente Fox and Canadian Prime Minister Paul Martin in Central Texas. In formal meetings at Baylor University and later at Bush’s ranch in Crawford, the leaders discussed issues confronting North America. Although there are disagreements on some topics, the relationships among the countries remain strong. It is virtually impossible to overstate the crucial nature of these ties to our northern and southern neighbors, and it is heartening to see these three men meeting face to face and pledging a new “security and prosperity partnership.”
First, about security. The 9/11/01 terrorist attacks served as a catalyst for a renewed focus on homeland security. Clearly, few vulnerabilities are more pronounced than the thousands of miles of borders we share with Canada and Mexico. The US-VISIT initiative incorporates many new security measures, but is by no means perfect. Ongoing cooperation is essential to try to solve problems related to border crossings. In addition, shared intelligence and an attitude of securing North America from external threats may well make more sense than focusing on the US alone. At the same time, we must be careful not to let programs aimed at safety ripple economic cooperation and interaction. A study that I completed a few months ago revealed substantial reasons for concern about limiting economic progress by unduly constraining border crossings.
Speaking of prosperity, the economic ties between the US and Canada and Mexico run deep. For Texas, the Mexican relationship is particularly crucial, given proximity and the cultural and familial ties that span the border. Maquiladoras continue to serve as important sources of economic growth, but that’s a topic for another day.
Texas is now the leading exporting state, with some $117.2 billion in exports in 2004, up 18.6% over 2003. In 2004, the Lone Star State accounted for 14.3% of the US total. Mexico is far and away the state’s most important trading partner and Canada is a strong second. Together, these two nations absorb half of Texas exports. Since the implementation of NAFTA, trade volumes with Canada and Mexico have essentially doubled since 1994 when NAFTA’s provisions began to take effect.
Texas exports to Mexico in 2004 totaled more than $45.7 billion (of a US total of $110.8 billion in exports to our southern neighbor). Key export goods include computer and electronic products, chemicals, and nonelectrical machinery. Six of the top 10 land ports between the US and Mexico are in Texas, including the largest by a wide margin—Laredo, with $78.8 billion in trade in 2003.
Texas’ exports to Canada are also substantial. In 2004, the total value of goods shipped to that nation was $12.4 billion. Key product categories were computers, unshaped plastics, and organic chemicals. Other important Texas export markets include South Korea, China, Taiwan, Singapore, and Japan.
Differences in the regulatory climate and business practices in the three countries constrain growth in all to some degree. Financial regulatory standards, for example, complicate matters for international operations. While the North American Free Trade Agreement (NAFTA—which, by the way, recently passed its 10-year anniversary) solved many problems and has contributed to substantial growth, there is still work to be done. Standardizing visa requirements and inspection rules would help. Eliminating certain remaining tariffs would also be a plus.
Problems remain, and these need resolution before they become major stumbling blocks. Canada takes issue with the US stance on importing that country’s beef and certain lumber products. Mexico is frustrated by US immigration laws, attempts by US citizens to patrol borders, and a wall that is going up south of San Diego. Even so, all three countries recognize the interdependent natures of their prosperity and security. It is in the interest of every American to support these relationships. Let’s hope the time spent here in Texas helped strengthen the bonds.