Free Societies

Understanding the importance of U.S.-Mexico trade relations

Brad on trade
Brad Lips

Brad Lips | CEO, Atlas Network

With political leaders on both sides of the Rio Grande questioning the merits of open trade and migration, Atlas Network’s Center for Latin America is calling attention to facts about free enterprise that are often overlooked.

“Analyzing the Texas-Mexico Relationship,” a special breakfast program hosted by Atlas Network and held in conjunction with the Mont Pelerin Society’s Regional Meeting in Fort Worth, Texas, put a spotlight on the complex economic ties that have helped to encourage competitiveness and stimulate growth in the region.

Roberto Salinas León, director of the Center for Latin America, set up the conversation by highlighting the manner in which trade since the passage of NAFTA has led to cooperation across borders that we should not take for granted. Salinas León pointed out that two-way trade between the two countries is en route to surpass $600 billion in 2019, a staggering tenfold increase since the agreement took effect. “In a single day,” said Salinas León, “more than one million people come and go across the border, along with 300,000 vehicles and over 75,000 trucks.” The U.S.-Mexico border zone is now the largest manufacturing corridor in the world, and one of the most dynamic economic regions in the past 50 years, with virtually full mobility of goods, services, capital, and even labor. All 54 border points across the Rio Grande engage in trade on all kinds of goods—gasoline, natural gas, watermelons, auto parts, computer chips, software, cereals, blueberries, flowers, and much more.

Richard Alm, the current Writer-in-Residence at the O’Neil Center for Global Markets and Freedom at the SMU Cox School of Business, discussed his study “Texico: The Texas-Mexico Economy and its Uncertain Future," which provides substantial data sets to put in context the importance of cross-border economic activity. Alm’s presentation focused also on the convergence conundrum of why has Mexico failed to catch up to the U.S. on many economic indicators in the wake of its economic opening. The persistence of corruption and a decline in public security stand out as possible explanatory factors.

Pia M. Orrenius, who is vice president and senior economist of the Federal Reserve Bank of Dallas, presented statistics on immigration flows across the southwest border, giving relevant context to what has become a divisive debate. Orrenius’ data showed that illegal immigration has actually been declining since 2007 and that Mexican-born individuals are a diminishing percentage of those who do cross the border. What has changed in recent years are larger numbers of migrants in family groups coming from Central American countries.

Atlas Network and the new Center for Latin America look forward to increased collaboration with civil society groups across the region to make the case for the benefits of free trade. For example, a recent video by Atlas Network explores how Libertad y Progreso helped remove a tariff on laptops and tablets, and how this change is improving lives in a poor community in Argentina.

As we engage our partners to highlight the benefits of cooperation and trade, the Center for Latin America will be an important source of factual information that will caution against a turn away from the kind of economic integration that benefits the U.S., Mexico, and all of Latin America.