What does North America need to become a more competitive region?

Judith Morán

The results of the midterm elections in the United States are generating discussion, especially in the border states with Mexico, which, together with the Mexican states on the northern border, make up an economic region more important than the European Union, according to Pedro Casas Alatriste, executive vice president and general director of the American Chamber of Commerce of Mexico (AmCham).

“The border states—the four U.S. states and the six Mexican states: Texas, New Mexico, Arizona, California, Baja California, Sonora, Chihuahua, Coahuila, Nuevo León, and Tamaulipas—together represent a $7 trillion economy. That's a lot; they are the third largest economy in the world after China and the United States. These states combined are larger than the European Union,” said the speaker, who is also a graduate of the Universidad Iberoamericana (Ibero) in Mexico City. He was on campus to deliver the keynote address at the conference “Mexico Facing a New Commercial Geography,” organized by the ITESO Business School (ENI).

Pedro Casas Alatriste posed the question: “Why isn’t North America becoming the most competitive region in the world?” and pointed out that now is the time to think big and rekindle ambition. “We need to see North America as having infinitely greater growth potential than what we’re seeing today.”

He recounted that in a meeting with Jamieson Greer, the United States trade representative, he raised some points to guide the negotiation of the United States-Mexico-Canada Agreement (USMCA), including modifying how the trade deficit is understood.
“We have overestimated the trade deficit,” since Mexico is a co-producer with the United States and it is not the same trade relationship as with China, a country to which finished goods are sold, he pointed out.

Another point he made is that a strong Mexican economy is positive for the United States, "because we are the largest buyer of goods" from that country.

According to Casas, “it was a terrible idea to invite China to the World Trade Organization (WTO) and think they would operate under the same rules. China systematically violates the rules, and that hurts Mexico and the United States in a lot of industries.”
Finally, he emphasized that the reindustrialization of the United States would benefit Mexico.

The Director General of AmCham also addressed three pillars on which the region's economic strategies could focus: talent and demographics; infrastructure and institutions; and a co-production system.

The talent and demographics report showed how Mexicans are the predominant community in the United States, despite a decline in their workforce of between half a million and 450,000 people per year.

“So, what do I think we should be discussing? We should be having discussions about circular mobility, in the sense that you could graduate from ITESO, have your degree validated in the United States, and that would give you a visa to work for one or two years in Silicon Valley or wherever you want to go and then return,” he said.

“There’s a visa that originated from the North American Free Trade Agreement (NAFTA), called the TN Visa, which lists industries with labor shortages in the United States. As a Mexican or Canadian citizen, you can access it for four years, and it’s for specific skills and talents.” He noted that these visas were created in the 1990s and should be updated to include areas like semiconductors and artificial intelligence.

He also spoke about streamlining procedures for cargo trucks crossing the border. “Your truck is inspected in Mexico, you cross the border into the United States, and then you're inspected again just meters away. This obviously causes a loss of time,” he said, noting that joint inspections could be implemented, in addition to investing in secure logistics corridors.

According to figures presented by Casas, 145 economies currently trade more with China than with the United States. Twenty-five years ago, that number barely reached 30.

“If we continue talking about tariffs and a trade agreement as we know it today, without understanding that we have a co-production platform, it’s like trying to solve the water issue by building roads,” he said.

He clarified that he is not talking about a customs union or a trade agreement, but rather that "we should have a regional industrial policy that ensures that both countries do well."

At the end of the conference, the students formulated questions related to their research topics. Among them were: “Are we witnessing the end of globalization as we knew it, or is it simply a transition toward a globalization divided into blocs?”, “How can Mexico balance the benefits of its integration with the United States without being exposed to the structural vulnerability of concentrating more than 80 percent of its exports in a single market?”, and “What could we do to ensure that Mexico stops being just a manufacturing hub and truly develops a stronger economy?”