What we can learn from a cross-border community

Nearly 25 million people cross annually by car or the footbridge that links the two downtowns. They shop, eat and visit families and friends. Some are students commuting to the University of Texas at El Paso. Last fall, about 500 students traveled daily from Juarez to UTEP.

These human ties drive and are driven by the region’s embrace of trade, particularly the North American Free Trade Agreement. Everyone recognizes that their own path to prosperity, as well as their community’s path, depends upon goods and services regularly and easily crossing the border. The Dallas Federal Reserve Bank projects total trade in El Paso to be up 5.2 percent from a year earlier — a faster pace than the national economy.

Trading relationships existed before NAFTA, but the treaty has affected each side of the border. Take the expansion of Juarez’s maquiladora factories. They specialize in manufacturing such products as auto parts, medical devices and electronics. And employment in Juarez’s maquiladoras has grown 56 percent since 2010.

True, El Paso’s low-wage jobs took a hit as the maquilas grew. But El Paso has rebounded and focused on how its residents could provide financial and business services for Juarez’s factories. UTEP’S Hunt Institute for Global Competitiveness reports that El Paso’s service sector increased its share of the city’s total employment from 53.8 percent in 1990 to 68 percent in 2014.

But will we be smart enough to modernize this trading pact and keep it as a force for economic growth? The United States and Mexico have announced “agreement in principle” to increase the amount of North American content that an auto would have to include to qualify for duty-free access to the U.S. market. It is tempting to see this as a win for manufacturing employment, but it does tend to raise the cost of manufacturing in the United States and Mexico — and economics teaches us that when you raise the cost of something, you get less of it.

“If you want to learn about immigration, this is where you learn,” El Paso Mayor Dee Margo says, and he has a point.

Consider those Juarez students attending UTEP. They acquire skills that allow them to work across borders. So do many of UTEP’S 23,000 students. They are being equipped to work across nations and cultures, which is a selling point to companies that make their mark globally.

In the internet age, working across borders doesn’t necessarily mean moving across borders. The two countries’ labor markets are tightly synchronized even without cross-border movement of workers. So whether we agree on a reform of our immigration laws or not — and regardless of the final outcome of the NAFTA renegotiation — we should remember that wages and employment in Mexico are linked to wages and employment in our country, whether we like it or not.

Yes, the region faces challenges. Juarez’s drug-related violence has resumed, with more than 350 homicides in June and July alone. Fortunately, El Paso remains a very safe city, with just 17 homicides in 2016, a rate half the national average. Still, the region’s cross-border community is keenly aware of the human and economic cost of Juarez’s violent crime. Americans and Mexicans alike know the situation is untenable.

A more subtle challenge to growth in the region is the differing federal, state and local laws that may put off companies from creating jobs there, a point that the Hunt Institute is trying to address. “A market cannot function without a common regulatory framework,” says Patrick Schaefer, the Hunt Institute’s executive director.

Yet as you visit El Paso, you see what former U.S. ambassador to Mexico James Jones describes. There is the United States. There is Mexico. And there is the border. They work together. Both nations have plenty to learn from their shared border region how an integrated regional economy can produce prosperity and community. When you have those, you have a future.