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September 11: The View from the U.S.-Mexican Border

What economic repercussions did the terrorist attacks have on U.S.-Mexican Relations?

November 11, 2001

What economic repercussions did the terrorist attacks have on U.S.-Mexican Relations?

In the months prior to September 11, the United States and Mexico were well on their way to becoming fast friends. Mexican president Vicente Fox was the first foreign leader to visit U.S. president George Bush in Washington — and George Bush’s first state visit took him across the Rio Grande.

By the end of August 2001, George Bush seemed ready to legalize thousands of illegal Mexican immigrants. And there was even talk of relaxing border controls. But the events of September 11 changed all that.

To understand why, just look at developer Sam Marasco’s project. Only a few weekes ago, the star-struck business community was anxiously awaiting the opening of this “International Gateway of the Americas” — a $225 million retail, office and hotel mega-complex.

At the construction site, the first phase — a 630,000 square foot, open air, colorful border shopping complex — was rising like Emerald City on a once dusty, abandoned plain. The project was on schedule to open later this fall, in time for the holiday season.

The gateway project would recast the image of the border zone, leveraging all sorts of other new projects. It even featured a much-heralded, stunning and new elliptical architectural design: a sculptured pedestrian bridge that would link the San Diego region directly to downtown Tijuana.

“We’re going to convert a forgotten back door into a beautiful front door, ” Marasco announced to the press early in the summer. “It isn’t Checkpoint Charlie time anymore,” he added, in an obvious reference to the the drab and oppressive border post in Berlin.

It symbolized the divide between East and West Germany prior to 1989. Mr. Marasco hoped his project would reverse old stereotypes of the U.S.-Mexico border zone as a place of violence, chaos and ugliness.

Then came September 11. Checkpoint Charlie was suddenly back in a big way — with tight controls, clampdowns and fear. And Sam Marasco was left waiting — and wondering.

No region in the western hemisphere has taken a harder hit from the September 11 tragedy than the Mexico-U.S. border. Just as summer was ending, President Bush and Mexican President Vicente Fox were poised to sign sweeping immigration agreements.

These would have heralded a new era of open cross-border exchanges of labor between the two nations. Even the dream of a European-style economic community was close at hand.

At least for now, that dream came crashing down to earth along with New York City’s twin towers on the fatal morning of September 11. The tragedy — far away on the East Coast of the United States — quickly swung immigration policy in the opposite direction. With ports of entry into the United States on high alert, the U.S. Justice Department imposed the strictest of limitations on crossing the border.

Lengthy searches of vehicles and pedestrians entering the United States led to instant gridlock along the international boundary. The Bush Administration announced we were at war. From Baja California, it looked as if the Berlin wall had suddenly been resurrected.

The economic impact of these dramatic measures has been swift and disastrous along our southern frontier with Mexico. The San Ysidro-Tijuana port of entry is the largest border crossing in the world. It stands as the great NAFTA circuit breaker — conveying giant flows of people, goods and money between Mexico and California.

Nearly 100,000 workers, shoppers, cars, bicycles, buses and trucks cross through here each day of the year. This is a critical gateway for a cross-border economy that generates some ten billion dollars in trade for the southern California/northern Baja California zone.

Suddenly, and completely unexpectedly, this region faces its biggest crisis in recent history. The economic engine, once humming along nicely, is paralyzed. Average border waiting times have ranged from one to four hours for vehicles.

A new policy for pedestrians requires photo identification and computer checks for every person heading north on foot. Long lines of border crossers now snake out of the U.S. port of entry building — and well south into Mexico every day.

More critically, an atmosphere of uncertainty hovers like a dark cloud over the land. It is impeding the flow of workers, consumers and business people so vital to the NAFTA economy that normally thrives here.

“I have asked Governor Davis of California and President Bush to declare an economic state of emergency along the U.S.-Mexico border,” Congressman Bob Filner (D-San Diego) told the press on October 25. His reasons were obvious — an alarming drop off of 30-50% in retail sales, layoffs, business closings — and projected millions of dollars in losses of sales tax revenue and tourism business.

Things are no better south of the border. An already flat tourism industry is reporting 90% declines in sales over the last month. Retail businesses are laying off employees to cope with the dearth of customers.

Revolution Avenue in Tijuana, normally a bustle of commercial activity and a prime destination for U.S. consumers, looks like a ghost town. During the week, many stores have simply shut down. Even the bars and restaurants that normally thrive here have drastically cut back hours.

Across town the global factories that make up the city’s billion-dollar maquila (=assembly plant) industry are also in trouble. Accustomed to double-digit growth throughout the 1990’s, the maquila sector is no longer spewing out color TV sets, VCR’s and other electronic and manufactured goods at the same rate it once was.

In fact, sales are down 15% — and there are reports of companies leaving town, a disturbing trend for a sector that sold 23 billion dollars worth of products in Baja California in 2000.

Why does all of this matter? The U.S.-Mexican border region has been one of the economic success stories of the new millennium, proof of the virtues of globalization — not only in creating innovation and more wealth, but also, in promoting good will across borders and cultures.

The gradual integration of the Mexican and U.S. economies was a “feel good” story that everyone on this side of the world could celebrate.

September 11 has been a sobering reminder that globalization remains a work in progress. Along the Mexico-U.S. border, the two nations need to rethink the NAFTA project.

First on the agenda: how to provide security without paralyzing the cross-border economy. Speaking of the need for an estimated six million dollars in federal funds to add U.S. immigration staff to keep all the border gates open at San Ysidro, California, the local congressman Bob Filner recently said, “Surely, if we can provide billions to the airline industry, we can find six million dollars to pay for border security.”

There are also innovative technologies (such as laser transponders) that need to be developed quickly to speed up the flow of legitimate daily border crossers.

Not moving quickly carries risks — not only in billions of dollars of revenues, but also in the good will NAFTA has created up to now. C. Samuel Marasco is watching closely.