Borderlands: US-Mexico trade faces hurdles; GE cuts 257 jobs at Texas plant

Written by: Noi Mahoney Sunday, June 7, 2020

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. U.S.-Mexico cross-border trade faces hurdles; General Electric cuts 257 jobs at Texas plant; Laredo CBP seizes $1.6 million of meth hidden in tractor-trailers; Houston and Rotterdam ports launch PortXchange trial.

Consultant: US-Mexico cross-border trade faces hurdles but headed in right direction

The coronavirus pandemic, introduction of new trade rules and confusion in Mexico have all added uncertainty for cross-border operators using North America’s trade lanes.

“Nobody was thinking about the pandemic when they were creating the United States-Mexico-Canada Agreement (USMCA),” said Nelson Balido, an international trade consultant. “Do we have to go back and look at another chapter in the USMCA? I would think, given with all that’s happened with the coronavirus.”

Balido is the managing principal at Balido and Associates, chairman of the independent nonprofit Border Commerce and Security Council, and a former member of the Homeland Security Advisory Council, a group that provides advice to the Secretary of the Department of Homeland Security.

Balido said one of the important issues not addressed in the USMCA is the definition of essential workers or essential industries during pandemics or natural disasters.

“There hasn’t been a synergy on or an agreement on what is an essential business. What we see as an essential business in the United States, [Mexican President Manuel] Obrador will tell you ‘I don’t know what is essential,’ and that’s a problem,” Balido said. “There is no synergy between Mexico and the U.S., there’s no synergy between [Mexico’s] federal government and state governments.”

U.S. industries that rely heavily on Mexico for the manufacturing of mechanical parts — such as parts for aerospace, automotive, refrigeration and HVAC — were affected when Obrador declared a national health emergency and shutdown of all nonessential businesses on March 30.

Many have criticized Obrador and his cabinet over confusion created by conflicting messages over when businesses can reopen. Some automotive companies restarted their factories in Mexico on Monday, with others planning to open later in the month.

Balido said the confusion has led to disruptions in supply chains that could not only affect a company’s bottom line, but could lead to people not receiving vital medical equipment in some cases.

“You have hundreds and hundreds of U.S. companies that have [plants] in China, but they’ve diversified some into Mexico, as an example. The supply chain has been severely disrupted, because they haven’t come into the agreement of synergy,” Balido said. “How do we define essential automotive or aerospace workers? Or how do I know that that particular little widget that you make in Mexico, does it go inside a ventilator that’s used for a hospital system in order to keep people alive, for example.”

Balido said while the USMCA trade pact is not perfect, it is better than NAFTA and benefits all countries. The USMCA is set to go into effect July 1.

“Remember, when the North American Free Trade Agreement was created in 1994, we didn’t have the internet, so USMCA is bringing trade into the 21st century based on what’s happened, minus the COVID-19 pandemic,” Balido said. “Going from being 100% shut off from our supply chain based on the whim of the government overseas in China, we have a lot more influence south of the border than we do in China.”

Read full article: https://www.freightwaves.com/news/borderlands-us-mexico-cross-border-trade-faces-hurdles-general-electric-cuts-257-jobs-at-texas-plant