Recommendations for a true U.S.-Mexico Smart Border

On September 7, 2021, the US-Mexico Foundation published a document with recommendations to strengthen binational collaboration along the US-Mexico border. This document was a result of the work of the C26+ Smart Borders Working Group, which met in anticipation of the US-Mexico High-Level Economic Dialogue (HLED).



Introduction

On September 7, 2021, the US-Mexico Foundation published a document with recommendations to strengthen binational collaboration along the US-Mexico border. This document was a result of the work of the C26+ Smart Borders Working Group, which met in anticipation of the US-Mexico High-Level Economic Dialogue (HLED).

The HLED recalls the bilateral relationship of the joint statement released on September 6, 2001, in which both countries committed to a 22-point agreement to strengthen the integration of the North American region. The decision to sign this agreement was based on the success of NAFTA at the time, and with an ambition to further strengthen the commercial and trade logistics between both nations as a means of catalyzing economic growth in the region. As a result, the term smart border was first introduced in this document.


At the time, smart borders were still in discussion and planning stages with the goal of building border infrastructure that ensures an efficient exchange of goods, services, and people through the use of technology. Yet, two decades later, customs processes and infrastructure have not evolved to the intended levels. The exponential growth of border-crossing exchanges and technological innovation has posed new challenges for customs and border agencies in both countries.


As a result the group of 17 specialists from different binational organizations, coordinated by the US-Mexico Foundation, delivered their recommendations to the US and Mexican federal government officials that participated in the ministerial meeting.

Smart ports seek to satisfy a multitude of new demands in terms of:

  1. Globalization and market liberalization

  2. Dynamics of International Trade and increasing supply chain complexity

  3. Competition in the market

  4. Security issues

  5. Environmental sustainability

Furthermore, the COVID-19 pandemic forced Mexican and US authorities to close the border for all non-essential travel, as a means to prevent the virus from spreading. For the last 20 months, the pandemic taught us to view the exchanges made at the border differently. For starters, we learnt what “essential travelers” were, and resultantly that international trade - and all people who participate in it - are essential. Consumer and production habits will most likely not return to normal, which is something that was unforeseen by customs and border agencies in Mexico and the U.S.



Identifying the Main Flaws

The US-Mexico Foundation recognized issues currently affecting trade flow, supply chains, and border operations. These are:

  • Different Interests and Lack of Coordination.- Policies in both nations do not share the same intrinsic characteristics for a unitary, coordinated, and regulated decision.

  • The U.S. Customs and Border Patrol focuses more on security, while Mexican border agencies focus more on the collection of tariffs. Both border agencies disagree on operational systems structures, and invest their resources on personal interests rather than the common good of the region.

  • Outdated Infrastructure and Under-staffed personnel.- The current personnel and infrastructure needed for border operations, security, logistics, and development lacks behind the needs for improving international trade.

  • More resources need to be invested in digital infrastructure and personnel in order to fulfill the operational demands customs and border agencies claim.

  • The delay of new technological implementation plans due to the lack of coordination and funding represents a stagnation in innovative border processes.

  • The transition to 21st century technologies, such as digital records, electronic information systems, transfers and transactions control, tax credits determination, automated operational systems among other new technologies, are yet to be developed and implemented in Mexico’s Tax Administration Service (SAT).

  • Different perspectives for Immigration solutions.- The U.S. and Mexican governments have had different solutions to immigration. Mexico focuses more on a humanitarian approach, while the United States focuses on security.


Recommendations

The US-Mexico Foundation recommendations are divided by the following themes:

  1. Trade Facilitation

  2. Physical Infrastructure

  3. Technology Implementation

  4. Gradual Reopening of the Border*


Some of the recommendations include:


Pre-clearance of People and Goods - Governments and stakeholders should upgrade the institutional architecture to ensure a harmonized, high-tech pre-clearance system capable of pre-arrival data processing according to clear rules on who is allowed into either country.


Implementation of New Technologies - As referenced in USMCA Chapter 19 on Digital Trade, CBP and SAT/ANAM should invest in open source, interoperable data sharing standards for data transmission between Mexican customs systems, US Customs systems and industry.

  • Commitment to open source data sharing standards will preserve competitiveness and optionality for commercial markets, while a mandate for interoperability will ensure that any technology solution built on said standards will work seamlessly and compliantly for regulators and industry alike.

  • Successful implementation of such data sharing technologies also requires policy makers to examine and update their current joint inspection and clearance procedures to maximize efficiencies.


Dialogue and Communication Efficiency - A systematic engagement of governments with the private sector and civil society leaders is required.

  • At the consular level: Use interoperable data to expedite the processes to renew expiring documentation and engage in greater dialogues with the border trade community to work on the most pressing issues.

  • With the legislative branch: Better liaisoning and external messaging are needed to know plans and priorities for lawmakers in order to propose feasible solutions that will actually be implemented.


Create a Civil Customs Corps - Create a public-private partnership to expand trade facilitation capacity by recruiting and training young people from both sides of the border to become the next generation of trade facilitators. On the Mexican side this could include the participation of Youth Building the Future (Jóvenes Construyendo el Futuro) program.


Increase Funds Access at the Border - Establish a Smart Border Fund to finance and connect startups and citizens from both countries to work on initiatives and solutions for border management and logistics issues.


Invest in Additional Infrastructure - Both governments must invest in implementing new technologies to their operational systems, physical infrastructure, and manpower necessities. It is essential to build more POEs and roads in Mexico to reduce congestion.


Establish Green Practices - Traffic congestions, cargo border crossings and pollution are a reality in border cities. It is key to offer environmental and social justice, as well as equity in public health through environmental management programs. It is unconscionable that people wait it lines for many

hours at any time of the day.


Managing the Border as a System - Adopting modern data infrastructure would allow for key performance indicators to be tracked and be readily available to regulators, industry and even to the public. Accurate and actionable data help travelers, businesses and agencies alike, providing accountability as well as opportunities to rapidly identify challenges or threats that should be addressed or improved.


Cloud network collaboration - to ease procedures and optimize the flows of trade and people across the border, we must invest in 4.0 industries with emphasis on interoperable, open data creation, verification and sharing standards.



Conclusion

A U.S.-Mexico Smart Border requires sustained collaboration and coordination from the public, private and social sectors. It is of utmost importance to harmonize the thinking and approach towards the border. Instead of border city pairs thinking and acting independently of one another, there ought to be a binational mindset.


Today more than ever is the right time for North American trade integration to grow. We have been in a global pandemic for almost 20 months, which causes a sense of uncertainty on a daily basis. There are shortages in our global value chains. International freight costs have skyrocketed. The ports of the United States, mainly those of Long Beach and Los Angeles, are at their maximum capacity. The United States and China are experiencing a constant trade war, which affects the supply of essential products such as solar panels and semiconductors. And like all crises, it is time for opportunity.

The C26+ Smart Border Working Group includes Victor André Gamas Mayer (Nexus Global Ventures), former Mexican Ambassador to the US Geronimo Gutierrez, Emilio Cadena (US-Mexico Foundation), Enrique Perret (US-Mexico Foundation), Gustavo de la Fuente (Smart Border Coalition), Odracir Barquera (CCE), Gerald Schwebel (IBC Bank), and Luisa del Rosal (Southern Methodist University). They meet on a quarterly basis to discuss the latest affecting the binational border and ports infrastructure to generate their next set of recommendations.


*At the time that the report was drafted, there were no plans announced for the reopening of the US border for non-essential traffic. On November 8, 2021, the United States will allow foreign travelers to enter the country if they present their proof of vaccination.



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