The ambassador governor, USMCA, and a better border

My recent participation in delegations to Hermosillo, Sonora for a meeting of the Arizona Mexico Commission and to Mexico City for the inauguration of new President Andrés Manuel López Obrador impacted me on many levels. Arizona Gov. Doug Ducey was received with tremendous enthusiasm by that country’s political and business leaders. I was reminded once again of the dynamism of the U.S.-Mexico relationship and of the huge importance of preserving a trilateral trade pact with Canada. And I was left grateful for the friendship between our countries, and how policies we’ve enacted in Arizona have only strengthened our ties.

Doug Ducey: Arizona’s ambassador

The three most important United States public officials to witness the inauguration of President López Obrador in Mexico City last week were Vice President Mike Pence, Adviser to the President Ivanka Trump, and Gov. Ducey.

As one of only two governors to attend the inauguration (Gov. Steve Bullock of Montana attended as did Gov.-elect Gavin Newsome of California), Gov. Ducey was included in the key events surrounding this historic occasion.

In addition to attending the inauguration ceremony, Gov. Ducey had a series of high-level meetings, including with administration members like Foreign Affairs Secretary Marcelo Ebrard, Under Secretary for North America Jesús Seade, who serves as the administration’s lead trade negotiator, and new Mexico Ambassador to the U.S. Martha Bárcena.

It’s no accident that Gov. Ducey would play such a prominent role in this pivotal moment of transition in Mexico’s history.
The governor, through the Arizona Mexico Commission, has made Arizona’s relationship with Mexico one of the pillars of his administration’s policy agenda. The nearly 60-year-old AMC, over which he presides, is operating at peak performance.

The governor appointed Chief of Staff Kirk Adams as the Vice Chair of the Commission, asign of the seriousness the governor places on our cross-border ties, and AMC Executive Director Juan Ciscomani, who serves as a senior adviser to the governor on international affairs, maintains great respect in Sonora and throughout Mexico. AMC Board President Jessica Pacheco of APS drives a results-based agenda that’s like a turbo-charged NFL offense, and AMC adviser Luis Ramírez is the team’s secret weapon, helping the administration navigate bureaucracies in two countries on issues ranging from border inspection protocols, to tourism, to agribusiness, and more.

And every diplomat in Mexico knows that Gov. Ducey is a leader. His relationship with his Sonoran counterpart, Gov. Claudia Pavlovich, is viewed as best in class between governors of the two nations. He is seen as a serious player in this relationship. During his visit, Ambassador Bárcena correctly tweeted that the governor is “a great partner of our country and in particular of Sonora.”

Arizona’s economy is better off because of Mexico

I can’t stress enough how important these cross-border efforts are for Arizona’s economy. Mexico is our state’s largest trading partner times four. In tourism alone, our friends from Mexico spend over $7 million a day in our shops, restaurants and hotels. For some Arizona border communities, upwards of 60 percent of their total sales tax revenues is because of visitors from Mexico.

In emerging sectors like electric vehicle manufacturing, the Arizona-Sonora relationship is a key driver for major investments in Arizona. For both Lucid Motors and Nikola Motors, the auto part supply chain between the two states was a major factor in winning the hyper-competitive manufacturing investments in Pinal County.

In agribusiness and transportation logistics, our competitiveness continues to improve, which is especially important in a produce trade hub like Nogales. We’ve made major upgrades to State Route 189 there—with more to come—which links the Mariposa port of entry with Interstate 19, while on the federal side, a major remodel of Mariposa has resulted in a more modern facility better equipped to process increased trade flows.

Even the conduct of inspections has improved. Nogales was the first test case for something called Unified Cargo Processing, or UCP, where U.S. and Mexican customs officers work side-by-side to conduct inbound and outbound inspections, a concept that has spread to more ports of entry all along the border this year. UCP has been successfully expanded to rail inspection and even to the air environment, where SkyBridge at Mesa Gateway Airport can send shipments to their final destination in Mexico without having to stop for further inspection. Wait times that used to be measured in hours are now measured in minutes, and consumers now have even greater access to electronic commerce, a boon for both buyers there and sellers here.

Ratifying USMCA must happen, or we put our entire economy at risk

And this takes us to the United States Mexico Canada Agreement, or USMCA. A consistent theme of all of the meetings that I attended as part of the inauguration was the importance of the U.S., Canada and Mexico ratifying the post-NAFTA trilateral agreement signed by the three countries’ leaders at the G20 Summit in Buenos Aires.

As many as five million U.S. jobs are tied to trade with Mexico, and another nine million with Canada. The U.S. Chamber estimates that about 230,000 jobs in Arizona are connected to trade with these two countries.

But in Mexico the stakes are even higher. About 80 percent of total exports from Mexico are bound for the U.S., at a value of nearly $315 billion in 2017.

The new government of President López Obrador has made solidifying this trade relationship a top priority.

In meetings with think tank leaders, we were told that NAFTA is the most researched and firmly supported major policy change made in Mexico in the last quarter century.

With Mexico and Canada seen as very likely to ratify the new agreement, all eyes are on the U.S. Congress. Barring lame duck session consideration this month, which is highly unlikely, it will be up to a new Congress to pass the implementing legislation.

Of course, the new Congress saw a change in party in the House, while Senate rules require 60 votes to pass the agreement. It won’t be easy.

This means that bipartisanship is required.

A hope expressed by a number of officials in Mexico is that governors and those impacted in the business community in the U.S. take a leadership role to convince lawmakers in Washington of the pact’s merits and of its necessity. Washington’s gridlock is well-known in Ottawa and Mexico City, so our trade partners recognize the difficulty of the task that awaits.

But here’s what we know for sure: Mexico is absolutely essential to Arizona’s overall economic health. Thanks to the hard work of Gov. Ducey and his team, the state is well positioned to work with the new government in Mexico to advance the betterment of our citizens on both sides of the border.

Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry.

Glenn Hamer

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