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Border business relies on citizens on both sides

We use the term BC (Before Christ) and AD (Anno Domini or in the year of our Lord) to denote the separation of time over the years. I think many people are going to modify this system so that BC means “before COVID” and AC means “after COVID.” These terms particularly have a profound meaning to retail businesses, especially those on either side of the U.S. border in cities such as Ju├írez and El Paso. In addition to nonessential businesses being shut down at the beginning of the pandemic, some for months, a different system of dealing with people crossing the border has been in place.

The U.S. has been prohibiting nonessential Mexican travelers from crossing the border to shop, seek entertainment, or to visit family. Essential Mexican workers, people who are seeking medical care in the U.S., and students have been allowed to continue to cross. In many cases, proper documentation and a letter from a doctor or employer is required. On the other hand, Mexico has not been restricting American citizens from entering that country, and many who have family in Mexico or who shop there are routinely crossing as usual. Officials at U.S. ports of entry have not been restricting Americans from returning to the U.S.

This means that Americans continue to be free to shop in Mexico and to frequent bars and restaurants if they are being allowed by the Mexican government to be open. I know Americans who are crossing weekly into Mexico for such purposes, and continue to complain about long lines at the ports of entry. However, many Americans are choosing to stay close to home during the pandemic, and Mexican restaurants, shops, and bars that receive a lot of revenue from American tourists are suffering.

It is a similar story for U.S. border retailers and entertainment venues, the vast majority of which have been allowed to reopen as COVID-19 infections continue to decline, but for different reasons. These U.S. businesses depend heavily on Mexican patrons for a good portion of their revenues. For example, there is research that has been conducted showing that an average of 15% to 20% of the El Paso retail trade is accounted for by Mexican shoppers. In the pre-pandemic days, this was evidenced by seeing so many Mexican license plates at shops such as Target, Walmart and locally owned businesses. It was common to hear Spanish being spoken in stores and restaurants by whole families who had crossed the border for the day.

I have talked to several American border retailers who have seen their revenues decline because their Mexican clientele, who have been deemed nonessential travelers, have not been spending money in their shops. This has started movements at the border to petition the U.S. government to rescind or relax the travel ban so that border businesses can get back on track. The U.S. government periodically reviews this policy, but has consistently extended it.

The current retail situation at the border has created an interesting black-market business for many entrepreneurs. Friends and relatives who can travel from Mexico to the U.S., or U.S. citizens going to Mexico, are being asked to bring back groceries and other items. One of my friends tells me that she will not mention to anybody that she is going to her ranch in Mexico because she is tired of being pestered to bring back a list of items, which can be time-consuming.

Some people in the U.S. have formed mini-delivery companies that take orders from customers in Mexico and charge to cross them south. Thus, a cat-and-mouse game is played with Mexican Customs as to the nature of the goods and who will ultimately consume them. If a person claims to live in Mexico, as many Americans do, Mexican Customs personnel will generally not bother them about groceries and items for personal use. Many entrepreneurs from Mexico come into the U.S. with suitcases, as if they are traveling. They will then go to retail stores and fill them with clothes, shoes, and other items. If they get inspected while crossing back into Mexico, they will claim that it is for their personal use in order to avoid tariffs. These items will then find themselves on a rack in a Mexican retail operation or for sale in a flea market.

Economics teaches us that the restricting of any part of a market almost always results in a black market being established. The restriction of Mexican shoppers to the U.S. is creating a black market of goods from the U.S. being shipped to Mexicans who can’t cross the border. It is heartbreaking to see businesses on both sides of the border suffer because of COVID-related travel restrictions. However, governments must balance the safety of their citizens with the health of the economy. This is an exercise that has continued at the border since the beginning of the pandemic. In the future, many border retailers will mark time by BC and AC.

Jerry Pacheco is the executive director of the International Business Accelerator, a nonprofit trade counseling program of the New Mexico Small Business Development Centers Network. Contact him at 575-589-2200 or jerry@nmiba.com.

Pandemic has created an interesting black-market business for many entrepreneurs



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