Border flub cost US GDP hundreds of millions - Albuquerque Journal

Border flub cost US GDP hundreds of millions

Texas Gov. Greg Abbott in 2020. Abbott’s ordering of a second layer of inspections by Texas border officials on cargo shipments heading from Mexico into Texas had wide-ranging affects on the border region. (AP Photo/Evan Vucci)

Second in a series.

On May 23, the federal government is slated to revoke Title 42, which allows it to immediately deport to Mexico immigrants seeking asylum in the U.S. due to the pandemic.

In response, Texas Gov. Greg Abbott ordered secondary inspections by Texas Department of Public Safety on northbound cargo shipments into Texas, which is in addition to the routine inspections that Customs and Border Protection conduct on northbound commercial vehicles entering the U.S.

The effect was immediate, creating a crisis involving delays in shipments crossing the border, with trucks waiting up to 15 hours to cross and Mexican truckers blocking major ports of entry.

After approximately a week of delays, disruptions and finding no major stores of contraband or human cargo, Abbott met or communicated separately with the Mexican governors representing Mexico’s northern states that border Texas. Press releases were issued with a general message that the Mexican governors had agreed to cooperate on security in shipments and illegal immigration, and Abbott’s order was rescinded.

However, has this crisis really been put to bed, and what are the longer-term effects of Abbott’s actions? Even though the Mexican governors agreed to cooperate with Texas on these trigger issues, much of the security efforts and cooperation that Abbott announced in his press conferences and releases to be implemented were already in place. Customs and Border Protection already conducts inspections using high-technology equipment and agent inspections on northbound shipments. They are efficient in doing their job and this is why Abbott’s secondary inspections produced no major findings. Furthermore, public-private partnerships such as the Customs Trade Partnership against Terrorism and Fast and Secure Trade allow CBP and companies in Mexico and the U.S. to keep away contraband and human cargo from their shipments.

Mexican border states have benefitted by attracting foreign companies that invest billions in the construction of production plants (generally referred to as maquiladoras), and the creation of jobs and supply chains in cities such as Juárez, Nuevo Laredo and Reynosa. This has helped transform economies, and allowed their citizens to help climb out of poverty. Therefore, Mexican border governors have had a long history of caring about security when maquiladoras ship their product into the U.S. Chihuahua Gov. María Eugenia Campos Galván stated that her state previously has invested more than $200 million in “high-profile” technology such as drones, cameras and facial/license plate recognition to be able to track shipments from plants to the international border. In order to keep attracting foreign investment, Mexican border states have to be focused on security.

Even though Abbott rescinded his order a few weeks ago, companies are still playing catch-up with their logistics. Global supply chains were already strained before Abbott’s actions, and a week of delays will be reflected in companies’ bottom lines. The Perryman Group, a Texas-based economic analysis group that studies the U.S.-Mexico border, estimates that the week of delays resulted in a daily loss to the U.S. GDP of $996.3 million, with Texas losing $470.3 million. Perryman estimated that the total loss for the week was $8.967 billion and the equivalent of 77,019 job-years for the U.S. A job-year is one person working for a year, but in this case, it is mostly multiple individuals working for shorter periods. It estimated that Texas lost $4.233 billion in gross product and 36,330 job years.

Weeks after Abbott’s order was rescinded, the Santa Teresa Port of Entry in New Mexico, which was used during the crisis as reliever route for blocked El Paso ports, is still seeing higher than average commercial crossing numbers. This would indicate that some of the traffic that had intended to temporarily use Santa Teresa as a reliever route during the crisis is now inclined to permanently shift traffic to that port, or at a very minimum, to diversify their shipment routes to try to minimize delays and disruptions. Other shippers might still be angry at Abbott and are choosing not to cross in Texas. For the El Paso-Juárez-Santa Teresa region, the shift of some commercial traffic to Santa Teresa might actually be good for the region. Shifting more traffic to Santa Teresa decreases congestion and waiting times at El Paso ports of entry. Shorter crossing times at those ports are attractive to firms operating cross-border operations, and is an advantage in recruiting companies to the region in the future.

Finally, during the crisis, Abbott acknowledged that his actions caused delays and blockages. However, he stated that he didn’t regret his actions and would be inclined to reinstate the inspections if his Mexican counterparts don’t comply with their agreements. While it is possible that Abbott can do this again, it is improbable, as he received strong backlash from the trade community and even high-ranking members of his own political party. In the meantime, border interests are desperately trying to reestablish a sense of normalcy in cross-border logistics.

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.

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