International trade growing in Arizona

International trade opportunities continue to multiply in Arizona as the state seeks to position itself at the forefront of the 21st century economy.

According to various experts, an increase in global trade, more efficient regionalized supply chains, and diplomatic relationships with other countries have led to a more robust and diverse state economy. 

“Trade opportunities continue to grow for Arizona because of its strong cultural and geographical ties to Mexico and the positive implications of the United States-Mexico-Canada Agreement (USMCA),” said United States international trade professional Caitlyn Hendricks-Costello. “A proactive, collaborative approach by the state’s private and public sectors have also contributed to Arizona’s success in the global economy.” 

In September, a panel featuring various international trade experts, including representatives from the U.S. Hispanic Chamber of Commerce, noted that in a 7-month span, from January to July, Arizona’s trade with Mexico has increased 7.5% ($800,000) from the same period in 2021. Moreover, in the first seven months of 2022, trade between all three USMCA partners has resulted in $14.5 billion, a 7.3% increase from 2021. 

Hendricks-Costello says a strong focus on promoting business growth on a global scale gives Arizona an outstanding economic advantage over other states. She argues Arizona has effectively leveraged USMCA, the successor agreement to the North American Free Trade Agreement, or NAFTA, resulting in direct and indirect economic benefits – including expanding Arizona’s tax base – with long-term positive effects rippling throughout the economy for decades. 

“Trade agreements, like USMCA, incorporate different rules and provisions that facilitate foreign direct investment. This allows states to track international businesses that may want to expand into that state and invest directly into the state’s economy, which Arizona has taken direct advantage of,” Hendricks-Costello said. “These are net new investments into the U.S., where products are manufactured in Arizona, and then shipped nationally and internationally, uplifting the economy, and boosting other industries like transportation.” 

The Arizona-Mexico Commission, a unique, cross-border organization consisting of 16 binational committees dedicated to fostering strong relationships with Arizona’s southernmost neighbor, has also profoundly impacted Arizona’s economic outlook, being a driving force of Arizona-Mexico trade agreements that support 96,000 jobs for the state. 

“The Arizona-Mexico Commission (AMC) seeks mutual prosperity with our southernmost neighbor by finding and implementing solutions to important issues facing our communities,” said Jessica Pacheco, president of the Arizona-Mexico Commission and founder of Arizona-based Public Affairs Firm, Horizon Strategies. “We are focused on having a complementary relationship with Sonora and the federal government of Mexico to exchange ideas, identify practical solutions that improve trade and negotiate memorandums of understanding to implement them. We can work hand-and-glove with our counterparts on top-of-mind issues like border security.” 

Trade advocates say that a forward-thinking mindset has been the Arizona-Mexico Commission’s greatest strength, offering solutions that not only solve problems but prevent them. 

“When looking at opportunities for Arizona over the next 10 years, think about the issues surrounding the supply chain. Most of our supply chain is in the Pacific Rim. With the geopolitical strife occurring, we are looking to regionalize our supply chain structure,” Pacheco said. “If you look at the USMCA footprint, a bipartisan national accomplishment, that is the ideal footprint for a regionalized supply chain.” 

“USMCA makes it as easy as possible to move goods and services in North America. Working with Mexico and Canada to make sure we have the proper infrastructure to move legitimate goods and services, we have a tremendous opportunity not only for our own state but the rest of Latin America,” she said. 

Additionally, Pacheco says international trade stemming from the Arizona-Mexico Commission has resulted in a more effective workforce, a diverse marketplace, and more opportunities for both consumers and employers. 

“Our trading relationship with Mexico enhances variety in the marketplace which helps the business community be more innovative and creative,” she said. “As a result of our global economy initiatives, Arizona companies are exposed to products or ideas that may have never been thought of if our state didn’t have the opportunity to trade internationally. In essence, these companies can build on these ideas to create additional product sets or service solutions, thus making the marketplace more diverse, providing customers with more options.” 

Hendricks-Costello echoes Pacheco, saying that international trade specifically boosts the foundation of the state’s economy – small and medium sized businesses. 

“Eighty-five percent of businesses in Arizona that engage in export practices are small and medium size businesses, which makes Arizona’s economy more resilient,” Hendricks-Costello said.

Both Pacheco and Hendricks-Costello agree these practices give small and medium sized businesses the opportunity to grow their consumer base. With growing middle classes around the world, especially in Southeast Asia, countries are more willing to export products that are produced by companies in Arizona, rather than focusing on just the U.S. This allows the company to grow and reinvest the money back into their business and Arizona. 

The state’s diplomatic relationship with Mexico also enables the state to devise specific solutions to address regional problems. For instance, the AMC Water and Environment Committee has facilitated the implementation of binational solutions revolving around the Nogales International Wastewater Treatment Plant. Moreover, the Commission has begun talks with Mexico to build a desalination plant, offering Arizona more water resources and diversifying Arizona’s water imports. 

“Without a relationship with Mexico, our only reasonable option for desalination would be the western coast of the US, but now we have a whole host of other potential options working with neighbors to the south; we can collaborate on the art of the possible,” Pacheco said. 

Pacheco also makes another point: Arizona has attracted foreign companies because of community-driven leaders – a state that has become welcoming to new residents and all businesses, both foreign and Arizona-based. A welcoming environment has offered more economic development opportunities for the state, especially in the global economy. 

Experts, including Pacheco, say it will be critical that Arizona continues to maintain a business-friendly attitude. The Arizona-Mexico Commission allows and encourages businesses to get involved and be a part of bilateral solutions as they bring more diverse perspectives and invaluable subject matter expertise. 

To learn more about the Arizona-Mexico Commission, visit their website here: Arizona-Mexico Commission

Michael Kittilson

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