Border Region The exceptional growth of the border between the United States and Mexico has placed extraordinary strains on the border environment and on the border's physical and social infrastructure. While the challenge to transform this region is great, the good news is that it is getting renewed attention from Mexico City and Washington. (April 1997)

SOME BASIC FACTS
The Border Area between the United States and Mexico is formally defined as the area lying 100 kilometers (62 miles) to the north and south of the 3,141 kilometer (1,952 mile) U.S.-Mexico boundary, according to the 1983 Agreement for the Protection and Improvement of the Environment in the Border Area (La Paz Agreement). [Click here for a map of the border region.]

For about half its distance, the border is defined by the Rio Grande; for the other half, the border is unrelated to topography, marked only by signs at the formal border crossings.

The border separates politically four U.S. states from six Mexican states. These states, going from the Pacific Ocean to the Gulf of Mexico are:

About 10 million people live in the Border area. 92 percent of these people live in or near the fourteen sister or twin cities along the border. These cities which face each other across the border share common air sheds and drainage basins.

While legally separate cities, in reality they often constitute binational and bicultural "single" communities; communities joined together by shared social, environmental, and economic interests.

With the exception of the lower Rio Grande Valley near the Gulf of Mexico, most of the border passes through high-altitude deserts populated by drought-resistant species of plants and animals.

From an environmental perspective, the border area is undivided. In addition to the Rio Grande — which separates Texas from Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas — several rivers flow across the border: Santa Cruz, San Pedro, Colorado, Tijuana, and New rivers. Three major desert regions — the Sonoran, Mojave, and Chihuahuan deserts — with their unique ecosystems lie on both sides of the border. Ground water aquifers that provide essential water resources lie under both sides of the border.

More people cross the U.S.-Mexico border than any other border in the world. There are over 250 million legal border crossings from Mexico into the United States each year. In addition, there were over one million undocumented Mexican migrants apprehended attempting to enter the United States illegally last year.

INTERRELATIONSHIPS BETWEEN BORDER ISSUES
The four topics covered in the sections below must be seen as an interrelated whole. While a discussion of border economics will focus on the maquiladora program and its impact on border growth, it is this growth which has put strains on the transportation infrastructure and the environment. The transportation infrastructure — significantly exacerbated by government policies — frequently leads to long waits at the border for trucks. The exhaust fumes from these trucks contributes about 20 percent of all emissions and adds to poor air quality at the border. When one looks at the socio-cultural aspects of the border, one is confronted with the failure of governments to keep up with the growth of basic infrastructure for water, sewers, or housing. In Texas and New Mexico, this has led to about 1,700 colonias, informal and very poor communities, being established without adequate water or sanitation facilities.

BORDER ECONOMICS
The phenomenal growth of the border over the past 25 years can be directly attributed to Mexico's decision in 1965 to set up its maquiladora program, a special customs regime to encourage industrialization. This Mexican program permits certain corporations duty-free imports into Mexico for raw materials, equipment, machinery, replacement parts, and other items needed for the assembly or manufacture of finished goods for subsequent export. This maquiladora program was complemented by a U.S. tariff schedule provision known as "9802" (formerly known as 806/807) which permits U.S. goods to be exported to Mexico and face a duty only on the value added when the finished product is imported back into the United States.

There are now over 2,500 maquiladora plants employing over 800,000 people in Mexico. About 70 percent of maquiladoras are located in the border area. Over 1,600 maquiladora plants in the border area employ over 510,000 workers, about half of which are located in the two biggest Mexican border cities of Tijuana and Ciudad Juárez. Maquiladora employment growth in the border region last year was about 13 percent although maquiladora employment growth in the interior was 28 percent. Nearly 40 percent of these border maquiladoras manufacture electronic equipment, materials, and supplies. The rest produce a variety of petroleum, metal, transportation, medical, and other products. While most of these maquiladora firms in the early years utilized low-skilled assembly operations, in recent years these businesses have become more and more sophisticated manufacturing centers. There are now a large number of Mexican engineers employed in these manufacturing operations.

To provide some idea of the exceptional growth of the border region, Tijuana, Mexico, was a village of 16,500 in 1940. By 1980 this village had grown into a large city of 430,000. A decade later it had grown to almost 700,000 and is now believed to have a population exceeding 1 million. Its twin city of San Diego also had exceptional growth, from 200,000 in 1940 to over 1.1 million in 1990. Ciudad Juárez, the twin city to El Paso, Texas, grew from 20,000 in 1940 to about 500,000 in 1980 and to about 800,000 by the census in 1990 but many residents believe it was even then well over 1 million. El Paso itself experienced a five-fold growth over this period.

Much of the growth in the U.S. twin cities is directly related to the growth on the Mexican side of the border. Not only have retail sales boomed with many Mexicans doing much of their shopping on the U.S. side of the border, but many firms have been established to supply the growing maquiladoras across the border. For example, the city of McAllen, Texas, began in 1988 to use its own economic development agency to attract maquiladora plants for its twin city across the Rio Grande, Reynosa. It encouraged maquiladoras to open up in Reynosa by explaining the services which McAllen could offer to new maquiladora operations. McAllen also has built three modern hospitals in the past decade, developed to a large extent to supply medical service to Mexican nationals. A number of jobs on the U.S. side also result from transportation services as goods are prepared to be shipped across the border.

A large percentage of the over 250 million legal border crossings from Mexico are Mexicans coming to the U.S. to shop. It is estimated that over $20 billion of merchandise is carried back into Mexico from these shopping trips. These sales represent an export from the U.S. and an import into Mexico. However, since there is no record of these transactions at the border, these sales are not counted in official U.S. statistics on exports or Mexican statistics on imports. If they were counted, the trade deficit which the U.S. had with Mexico in 1996 of $16 billion would be turned into a surplus of at least $4 billion. While trade deficits and surpluses have absolutely nothing to do with the number of jobs, this revised statistic would turn around the argument of those who erroneously claim that trade deficits cause job losses.

SOCIO-CULTURAL ASPECTS OF THE BORDER
The rapid growth of the border region over the past several decades has significantly outpaced the development of infrastructure to meet environmental, health, housing, transportation, and other needs. Each twin city along the border shares a common population base which breaths the same air, drinks the same water, and is exposed to the same pollution and diseases. The public health of one twin city affects the other almost instantly.

The rates of gastrointestinal diseases in the border region are significantly higher than elsewhere in the United States. Morbidity rates for Hepatitis A and tuberculosis are much higher than the respective national rates. High rates of death due to congenital anomalies are found in certain border counties in Texas. El Paso's twin city Ciudad Juárez has no sewage treatment facility; open sewage ditches carry raw sewage from the urban edges of the city to the farm lands.

About 20 percent of the population on the U.S. side of the border lives at or below the poverty line compared with a national average of 12.4 percent. This figure is 35 percent for Texas based on 1990 Census data. Along the Texas border, where more than 73 percent of the population is Hispanic, less than half the population in some counties has medical insurance and two-thirds of the poor are not eligible for Medicaid.

Development pressures on the U.S. side of the border from industrialization, immigration, and population growth has led to the development of communities outside of city limits and not subject to zoning regulations called colonias . These semi-rural unincorporated housing subdivisions are characterized by substandard housing, inadequate access to clean water, plumbing and sewage disposal systems, and unpaved roads. The population in these low income towns are often exposed to such toxic substances as lead and water-borne bacteria, resulting in much higher than normal rates of illness, including third-world diseases such as cholera, typhus, and hepatitis. 97 percent of the colonias residents are Hispanic, two-thirds native born in the U.S., the rest born in Mexico. 37 percent are not proficient in English.

A recent Wall Street Journal article focused on the failure of the education system in Nogales, Arizona to equip its residents for the new jobs being created to support the growing maquiladora sector in its twin city, Nogales, Sonora. Many of the new jobs being created were being filled by recruiting from elsewhere in the U.S. since current residents were not equipped to carry out these skilled jobs. The job market in Nogales, Arizona is booming but the high unemployment rate is not falling.

TRANSPORTATION INFRASTRUCTURE
Physical trade in goods between the United States and Mexico has approximately doubled since 1990. This has strained the existing infrastructure required to move goods across the border. Goods can cross the border by truck, by train, by ship, or by air. Trucking remains the most important method of transferring goods. Last year 3.5 million trucks and 75 million cars entered the United States from Mexico.

Border truck transportation infrastructure includes roads leading to the border, bridges where necessary, and facilities for customs / immigration clearance. Currently, trucks are often forced to wait in long lines for several hours. At certain crossing points, existing regulations and practice requires most truck loads of goods to be handled at the border by special transfer companies leading to almost as many trucks crossing the border empty as full.

There is general consensus that the basic border transportation infrastructure is adequate but that there is a need for some additional construction so that existing facilities can be fully utilized.

Operations management at ports of entry also remains a major challenge. Five independent agencies and employee unions on the U.S. side are responsible for operational inefficiencies.

The General Services Administration has invested considerable sums in improvements to border stations as well as construction of new ports of entry. New technology is being tested to speed up the processing of documentation. At the U.S. Border Infrastructure Conference held in August 1996 in San Antonio, Texas, U.S. officials emphasized that there are real and serious issues of law enforcement at the border. Illegal immigration continues to be a problem. Goods passing through the border must be checked for contraband and narcotics. Vehicles must be inspected for safety.

Already there are three x-ray machines available at the border which permit an entire truckload to be checked for contraband in about 20 minutes. More of these are on order.

As the U.S. Customs Service is not expected to obtain the authority to hire more personnel, they are looking to solve their problems with the use of technology, including electronic data interchange.

There is a real tension between the need to process goods coming into the United States quickly and efficiently and the need to reduce the flow of narcotics.

There has been a movement both in the U.S. and in Mexico to encourage certain border infrastructure requirements to be carried out by the private sector. For example, California has entered into a franchise agreement with a private consortium to build and operate a major highway providing access to the Otay Mesa port of entry. Mexico is continuing its efforts to privatize parts of its transportation infrastructure despite some problems to date.

THE BORDER ENVIRONMENT
The twin cities along the border use common basins and aquifers, air sheds, and ecosystems. Events on one side of the border affect the other side almost equally.

More than 32 million tons of toxic waste are produced annually by 150 industrial facilities in the border region.

Contamination from the region has damaged fishing and shellfish industries in the Gulf of Mexico.

El Paso has some of the worst air quality in the United States.

There are 460 endangered species in the border region.

Contamination of transborder ground and surface water resources is a challenge facing many border communities. The lack of adequate sewage treatment facilities in many border communities threatens drinking and bathing water supplies. Environmental degradation has destroyed the use of rivers for bathing and drinking water.

The New River which flows across the border near Calexico, California has been labeled the most polluted river in the United States, carrying more than 280 million gallons a day of industrial waste and sewage. The New River is a major contributor to poor regional health: 15 viruses including hepatitis, polio, cholera, and typhoid have been identified in its waters.

Air quality in many border communities often falls far below U.S. federal standards. Many border area residents are exposed to health-threatening levels of air pollutants including ozone, particulate matter, carbon monoxide, and sulfur dioxide. In heavily populated urban areas the air quality problems are compounded by emissions from increasing numbers of vehicles, many of which are older and poorly maintained; extensive industrial activity; and numerous other sources such as unpaved roads and waste disposal fires.

The U.S. Environmental Protection Agency (EPA) formally began working with its counterparts in the Mexican government under the La Paz agreement in 1983 to protect, improve, and conserve the environment of the border region. This formal foundation for cooperative environmental efforts set up a series of working groups through which EPA worked with both the Secretariat of Social Development (SEDESOL) and the Secretariat of the Environment, Natural Resources and Fisheries (SEMARNAP).

In 1992 the environmental authorities of the U.S. and Mexico released the Integrated Environmental Plan for the Mexican-U.S. Border Area (IBEP). The next phase of binational planning was launched with the Border XXI Program which builds on the efforts of the IBEP and increases the scope to include environmental health and natural resources issues. The final version of this five year plan to clean up the border was published in October 1996. This Border XXI program is an innovative binational effort which brings together the diverse U.S. and Mexican federal entities responsible for the border environment to work cooperatively toward sustainable development through protection of human health and the environment and proper management of natural resources in both countries.

Established by the side agreement of the North American Free Trade Agreement (NAFTA) were two institutions to help deal with the extensive environmental problems on the U.S.-Mexico border. The Border Environment Cooperation Commission (BECC) is an autonomous, binational organization which supports local communities and other project sponsors in developing and implementing environmental infrastructure projects related to wastewater treatment, the prevention of water pollution, and the management of municipal solid waste. As such, the BECC identifies, assists, and certifies projects for financing consideration from the North American Development Bank (NADBank) and other sources.

The NADBank is a twin institution to the BECC and was established to provide loans and loan guarantees to projects certified by the BECC. The NADBank is capitalized by funds from both the U.S. and Mexican governments and by charter must make its loans at market rates. The process of designing projects which can be financed has been hampered by weak planning capacity in the target communities and micro management by the BECC's board of directors. Developing institutional capacity in the target communities is one of the greatest challenges to the success of these border environmental efforts.

The U.S. Congress recently named the U.S.-Mexico Chamber of Commerce as the recipient of a grant — through the Department of Commerce — to improve the U.S.-Mexico business community's access to Mexico's environmental rules. The goal of the grant is to remove non-tariff barriers present in regulatory uncertainty, enhance business opportunities and promote sustainable environmental practices.

CONCLUSION
The exceptional growth of the border between the United States and Mexico has placed extraordinary strains on the border environment and on the border's physical and social infrastructure. While the challenge to transform this region is great, the good news is that it is getting renewed attention from Mexico City and Washington. The Border XXI Program commits both federal governments to work together with state and local governments to find solutions for the border's sustainable economic development. New institutions like the BECC and NADBank are gearing up to assist in the border transformation. Finally, the business community in both countries is beginning to recognize the importance of the border as a vehicle to improve commerce between the United States and Mexico. This attention to the border region needs to be followed up with real planning and real resources if the current situation is to be repaired.

— April 1997

Acknowledgment: Much of the basic data for this report was obtained from "The Border/La Frontera", El Paso Community Foundation, May, 1996.

The preceding paper is part of the United State-Mexico Chamber of Commerce's NAFTA Forum series, which considers general trade issues and sector-specific concerns between the two nations. The information contained herein is for informational and educational purposes only.

CONTACT INFORMATION:

Albert C. Zapanta, President
John Harrington, Senior Economist and author of NAFTA Forum series
Jeff Sparshott, Director of Communications
United States-Mexico Chamber of Commerce
1300 Pennsylvania Avenue NW, Suite G-3
Washington, DC 20004-3021