The governors of the two border states, Arizona and Sonora, Mexico, came together last week to celebrate their shared accomplishments in furthering the region鈥檚 growth as a global economic force over the past six years.  

Arizona Governor Doug Ducey and Sonora Governor Claudia Pavlovich spoke at a special virtual meeting of the and to highlight their shared successes as well as their friendship since they both were first elected in 2015. The event also honored Pavlovich, Sonora鈥檚 first female head of state, who is finishing out her term this year. 

鈥淭oday we see these common roots and unbreakable ties everywhere,鈥� Juan Ciscomani, senior adviser to the governor and vice chair of the AMC, said during introductory remarks. 鈥淭hey are in our economies and our businesses, they are in our binational tourism, they are in our trade relationships, they are in the arts 鈥� and they are definitely in our food!鈥�

More than 800 people tuned in to the event, 鈥淎rizona-Sonora: Transcendent Leadership Sonora-Arizona: Liderazgo Trascendente,鈥� Arizona Public Service was the prime sponsor of the event. 

Legacy and mission: improving quality of life, economic development 

This year, the two commissions are celebrating 62 years of collaboration in promoting the region. Founded in 1959 by former governors Paul Fannin and 脕lvaro Obreg贸n, the commissions鈥� mission is to improve the quality of life for citizens through public-private collaborations. Economic development is a key focus.   

During their tenure, Ducey and Pavlovich have developed one of the strongest and most fruitful relationships in the history of the border, said Jessica Pacheco, president of the AMC board of directors. 

Friendship and free trade 

In the process, free and open trade between the two states and countries has created one of the largest economies in the world, benefitting both states. Two-way trade between Mexico and Arizona reached $17.51 billion in 2019.  

鈥淚n every metric that we measure, there鈥檚 been improvement,鈥� Ducey said. 

鈥淚 know the citizens of Arizona have heard me say dozens of times that Mexico is our number one trading partner and it鈥檚 not even close 鈥� this is four times any other trading partner the state of Arizona has,鈥� he said. 

Pavlovich expressed similar sentiments about Sonora. 

鈥淚t seems like I see a new skyscraper going up everyday,鈥� Pavlovich said in Spanish. 

Shared accomplishments 

At the event, they listed key accomplishments of the two relationship over the past six years, including;

-The Unified Cargo Processing program between the U.S. Customs and Border Protection agency and Mexico鈥檚 Tax Administration Service allows for officers from both agencies to work side by side at ports of entry to jointly inspect and process cargo shipments. The has eliminated the need for separate inspections and reduced wait times for goods crossing the border. 

-The Border Liaison Unit works with the international commercial transportation industry to ensure safe and efficient movement of people, goods and services. Among its are to hold training workshops and classes for truck operators in both states to improve border crossing efficiency to reduce wait times.

-Safety corridor from Lukeville to Puerto Pe帽asco, also known as Rocky Point. This 63-mile safety corridor along Highway 8 was created to improve safety for travelers. The initiative included improved lighting and increased law enforcement and emergency services. 

-Educational partnerships Sonora and Arizona universities and colleges have entered into a number of agreements and memorandums of understanding to provide more opportunities for research and students, including tuition waivers and reduced tuition for international students. 

-Arizona-Sonora Business Expo draws hundreds of exhibitors and thousands of visitors each year, focusing on the region’s high-growth industries like aerospace, mining, construction, manufacturing, medical devices, renewable energy and tourism.

–Expansion and investment at ports of entry at border crossings. For example, nearly $60 million of private investment has resulted from improvements to border infrastructure in Nogales, Arizona, for warehouses and distribution centers to support international commerce.

–United States-Mexico-Canada Agreement Both governors worked to encourage  passage of the new . The agreement replaced the outdated NAFTA to bring tariff-free trade into the modern age. There are new chapters on digital trade, protection of intellectual property, and the opening up of international trade to more small and medium-sized businesses.

鈥淪taying the course鈥� through five presidents, Covid-19

Since 2015, when the two were first elected to office, the region has attracted hundreds of new companies, thousands of new jobs and billions of dollars in investment, they said. Growing supply and distribution chains near the border are bringing in major corporations like Lucid Motors, which is investing $1 billion in an electric vehicle factory in Casa Grande.

Both said it took staying the course during times of political turmoil, the changeover of three American presidents and two Mexican presidents, and Covid-19. 

鈥淎rizona and Sonora have already shown what can be achieved when you chart a course and lead a vision. Together we鈥檝e shown the world that everyone is better off when you put politics aside and put people first,鈥� Ducey said.

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Members of Arizona鈥檚 congressional delegation updated the business community on legislation important to industry and commerce last week at the annual Update from Capitol Hill presented by the Arizona Chamber of Commerce and Industry and Salt River Project. 

The most discussed topic was the proposed fourth round of federal COVID-19 relief funding that has stalled in Congress.

Senators Kyrsten Sinema (D) and Martha McSally (R) both expressed their frustration with the process and vowed to continue to fight to break the deadlock. 

But it may not happen before the election, leaving those most in need behind. 

鈥淭his isn鈥檛 a game to me, because all across our state and across my neighborhood, people are struggling and still need relief,鈥� McSally said. 

Sinema said she was disappointed that the White House and Congress are unable to compromise 鈥渨hen so many Arizonans are in need.鈥�

鈥淧artisan bills that won鈥檛 pass won鈥檛 move us any closer,鈥� Sinema said. 

COVID-19, tourism, immigration, climate change among top concerns 

The two senators and seven of the state鈥檚 nine representatives 鈥渮oomed鈥� in to give updates and answer questions virtually at the event. 

About 450 participants tuned in to hear what Arizona鈥檚 federal lawmakers are championing in Congress.

Representatives who also spoke at the event were Ra煤l Grijalva (D), David Schweikert (R), Paul Gosar (R), Tom O’Halleran (D), Andy Biggs (R), Debbie Lesko (R), and Greg Stanton (D). 

They detailed current and upcoming legislation and proposals for issues important to Arizona: immigration and trade, military and veterans, forest health and climate change, new interstate highways, modernization of ports of entry, broader access for Mexican tourists to visit Arizona, and the national deficit.

They also discussed the status of the CARES Act and a new round of funding for those who are still struggling from COVID-19 shutdowns. 

Standoff over another round of relief 

As intended, the CARES Act that was passed in March, has helped citizens, businesses, schools and governments in Arizona survive the financial shutdowns.  

The Act has saved over 85,000 businesses and over 1 million jobs here, McSally said. 

Now, another, more targeted round is needed to help those who are starting to be left behind, she said.  

But unlike the first three rounds of relief funding, the divide between the two houses is stalling progress.

Wide divide between 鈥渟kinny鈥� and 鈥渇at鈥� pandemic relief bills

Currently, there鈥檚 a huge gap when it comes to funding a package.  

Two weeks ago, Democrats blocked a Republican-backed 鈥渟kinny鈥� $300-billion package that targets those most in need while taking into account the nation鈥檚 soaring debt, now over $27 trillion. 

Democrats are expected to present a $2.2 trillion package to the White House this week. 

President Donald Trump, meanwhile, has indicated he would be comfortable with a $1.3 trillion package, according to by Reuters on Friday. 

If a compromise can be reached, a new CAREs package most likely would include:

• Renewed Paycheck Protection Program funding for industries hardest hit by COVID-19 including restaurants, tourism and travel.聽
• Expanded unemployment benefits.聽
• A new round of direct checks to Americans.聽
• Personal Protective Equipment for schools, nonprofits, healthcare providers and others.
• COVID-19 testing and research.
• Funding for education, low-income students and rural broadband access.聽
• Liability protection from frivolous COVID-19 lawsuits against businesses.
• Rent, mortgage and utility relief.

Arizona鈥檚 delegation champions for residents and businesses 

In closing, Chamber President and CEO Glenn Hamer thanked Arizona鈥檚 entire delegation for working across the aisle in the best interests of the state. 

While their political differences can be stark, he said, they have come together repeatedly to pass historic legislation like the Colorado River Basin Drought Contingency Plan to protect Arizona water supplies and the United States-Mexico-Canada Agreement that allows a border state like Arizona to tap into the largest free trade bloc in the world.

鈥淲e really appreciate how our very diverse political delegation works well together. I think it gives great hope to not only the state but the country,鈥� he said. 

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Business and civic leaders met virtually to discuss the opportunities that Arizona and its sister state, Sonora, Mexico, should focus on during COVID-19 and beyond to strengthen cross border trade during the Arizona and Mexico Town Hall last week.

Now that the new United States Mexico-Canada Agreement (USMCA) is in effect, the two countries are strategically positioned to expand commerce in the region, participants said. 

Expanding e-commerce, improving ports of entry and travel corridors, and tapping into colleges to produce more qualified workers for the region were among the top recommendations. 

About 70 people from Arizona and Sonora attended the event, Cross-Border Connecting: Implementation of the USMCA — Opportunities for Arizona and Sonora. Phoenix law firm Jennings, Strouss and Salmon sponsored the event. 

Glenn Hamer, the president and CEO of the Arizona Chamber of Commerce, was the featured speaker. He talked about why the USMCA, which updates and expands on NAFTA, is so important for both states, improvements in the new agreement, and the need to protect free trade during the coming elections.

There鈥檚 much at stake, particularly now with economies struggling during the coronavirus, Hamer said. 

鈥淚f you take a look at just the numbers since NAFTA went into effect, they’re staggering. Before the world stopped, Arizona鈥檚 trade relationship with Canada and Mexico was worth $20 billion (annually). For the U.S., the trading block is worth $1.3 trillion.鈥�

Hamer spoke of the improvements in the new modernized agreement including a new chapter to help small and medium businesses benefit more from trade, new protections for digital trade and intellectual property, and de minimis rules that raise thresholds from 7 to 10 percent, which provide cost savings by allowing more cross-border shipments to occur that won鈥檛 be required to be conducted as formal customs transactions. 

Most essential element of new deal: duty-free trade 

But by far, the most essential ingredient in the new deal is that it maintains 鈥渄uty-free, tax-free鈥� trade between the three countries, Hamer said.聽

鈥淭his is the world’s most prosperous trading block. It is that big a deal and it affects every sector of the economy, whether its financial services, energy, manufacturing, health care, agriculture, semiconductors, electronics, mining, tourism — you couldn鈥檛 pick an important sector of our state鈥檚 economy that hasn鈥檛 been affected in a positive way,鈥� Hamer said 

鈥淎nd the same goes for direct foregn investment. Our friends from Canada are far and away the largest source of foreign direct investment (FDI) into Arizona. In terms of Arizona and the United States, we鈥檙e the biggest source of FDI in Canada and Mexico.鈥�

Recommendations 

During breakout sessions, participants targeted opportunities to focus on to improve regional tourism and commerce. Among the most mentioned were:

-Expand ecommerce, particularly during COVID-19, to increase shipping at a time when consumers and businesses need it most

-Encourage investment in border points of entry to streamline processes and move cargo and tourism traffic more quickly and safely

-Invest in the modernization of heavily traveled tourist and cargo corridors 

-Promote relationships between municipalities and states on projects, including messaging to inform Americans about safety protocols in communities like Rocky Point that are taking measures to protect visitors from COVID-19 

-Support more cross border relationships between business and industry with universities, colleges and trade schools to produce workers for the region

About Arizona and Mexico Town Hall 

The Arizona and Mexico Town Hall is part of the nonprofit Arizona Town Hall that 鈥渂rings diverse people together to solve critical and often divisive policy issues.鈥� 

鈥淭he goal of these programs is to strengthen the economic opportunities as well as the quality of life for Arizonans and Sonorans as sister states who work together, and to show by example to the other states of our nations how we can work together to  improve each others lives by building these cultural bridges,鈥� said Tara Jackson, president of the Arizona Town Hall. 

To read more about the town hall, visit: . 

To read more about how the USMCA benefits Arizona and the U.S., go to: .

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Arizona companies export an annual $9.7 billion in goods tariff-free to Canada and Mexico largely due to the North American Free Trade Agreement (NAFTA) that took effect in 1994.  

Flash forward to 2020 and the new modernized version of that accord, the United States-Mexico-Canada Agreement (USMCA), is now in place, giving Arizona more chances to reap the benefits of free trade, trade experts said Tuesday.

Top Arizona Exports to Canada and Mexico, 2017

Computer & Electronic Products ($2.1 Billion)
Electrical Equipment, Appliances & Components ($1.3 Billion)
Minerals & Ores ($1.1 Billion)
Transportation Equipment ($947.2 Million)
Machinery ($727 Million)
Agricultural Products ($536.9 Million)
Plastics & Rubber Products ($528.6 Million)
Fabricated Metal Products ($440.6 Million)
Chemicals ($386.2 Million)
Primary Metal Products ($278.8 Million)

How this new agreement impacts Arizona businesses was the topic of a panel discussion hosted by the Arizona Chamber of Commerce and Industry. The event, entitled A New Era for Trade: USMCA Implementation & Growing Arizona鈥檚 Trade Ties, detailed the changes in the new agreement that went into effect July 1. 

Four panelists, all who are involved in strengthening economic ties and trade between Arizona, Canada and Mexico, were the speakers: Zaib Shaikh, consul general of Canada in Los Angeles; Jorge Yescas, consul general of Mexico in Phoenix; Juan Ciscomani, senior adviser for regional and international affairs for the Arizona Office of the Governor; and Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry. 

New rules to advance world鈥檚 largest free trading block 

Among the new chapters and provisions in the USMCA lauded by the panelists were higher dollar thresholds for duty-free sales, labor reforms and higher wages for auto workers in Mexico, legally binding standards to protect the environment, protections for intellectual property, gender equity provisions, and new measures to help small- and medium-sized companies more fully access the global market. 

The new treaty also positions the three countries to come out of the pandemic in a stronger position, united together as a global competitive force, the Chamber鈥檚 Hamer said.  

鈥淭he more we use the tools of this agreement, the more prosperous all three countries will be, and the faster we鈥檒l get out of this damage that the pandemic has caused us all,鈥� Hamer said. 

Free trade in a region with 470 million customers 

Mexico and Canada are Arizona鈥檚 top trading partners. Canada also is the No. 1 country with direct foreign investment here. 

For North America, the USMCA represents a region with 470 million consumers and an annual marketplace of more than $1.2 trillion in trade.   

鈥淚n this time of the pandemic, as we look forward to what the agreement means to the reset and the recovery, those kinds of numbers are really meaningful,鈥� said Shaikh, consul general of Canada, whose job is to encourage cooperation between Canada and聽Arizona, Southern California and Nevada. 鈥淔rom a Canada perspective, the USMCA is a top-notch updated modern agreement, but it also is a preservation of the North American Free Trade Agreement. There will be no new tariffs.鈥澛�

New and improved USMCA changes

The USMCA鈥檚 stated purpose is to deepen gains from trade and preserve and expand regional trade and production by further 鈥渋ncentivizing the production and sourcing of goods and materials in the region.鈥�

Here are some of the most important changes in the new agreement, the panelists said:

New Rules of Origin

More stringent rules from the automotive industry. Seventy-five percent of vehicles, including electric vehicles, must be produced in North America instead of the former 62.5 percent, and 40-45 percent of vehicles are to be assembled by workers who earn at least $16 an hour.

Yescas, consul general for Mexico in Phoenix, said his country鈥檚 president and congress overwhelmingly support labor reforms including the 鈥済radual鈥� increase of hourly wages and 鈥渢he extension of labor protections for migrant workers and the protection of women from discrimination.鈥� 

These new rules will benefit Arizona, tilting automotive original equipment manufacturers (OEMs) toward the southern part of the U.S. and Mexico.

Arizona is well positioned, given its proximity to OEMs in Northwest Mexico like Ford in Sonora, and Toyota in Baja California, and its connectivity via I-19 to Mexico鈥檚 Highway 15 corridor, leading to the Baj铆o automotive cluster. Trinational electrical vehicle projects, such as the Lucid Motors factory in Casa Grande and the Nikola truck factory in Coolidge, also are well positioned to meet USMCA goals and leverage research and development and auto assembly in the U.S.

Agricultural access

The agreement preserves market access for Arizona鈥檚 agricultural industry and includes additional U.S. access to Canada鈥檚 poultry, dairy and turkey聽 markets. There are additional measures to improve phytosanitary inspections.

In Arizona where agriculture is a key industry, tariff-free trade is essential to the economy, said Ciscomani, who also is vice chair of the board of directors for the that has been working for 61 years to improve economic, cultural and tourism ties between Arizona and Mexico.

Yuma alone produces the vast majority of America鈥檚 green leafy vegetables in the winter months, Ciscomani said. 

鈥淎griculture has always been a staple for the Arizona economy so we鈥檙e excited about the advantages tariff-free trade brings to the sector,鈥� Ciscomani said. 鈥淚t did well under NAFTA and the new improvements will set it up for further expanded success.鈥�

Higher duty-free thresholds

Minimum thresholds were increased, removing tariffs on more goods. This will allow for additional flexibility in sourcing globally while also keeping the duty-free incentive to source in North America. This also would have a positive impact on the SkyBridge project at Phoenix-Mesa Gateway Airport, a new operation that capitalizes on the U.S.-Mexico Unified Cargo Processing that expedites import and export processing times of goods.

Stronger IP protections

New protections for intellectual property extend patent protections to 10 years from eight in Canada, expand copyright protections, and broaden trademark rules to cover sound marks and scent marks. Penalties are increased for violating trade secrets or trading counterfeit goods. Custom rules for detaining illegal counterfeit goods have been modified. Internet service providers are now required to implement a 鈥渘otice and takedown鈥� system in Mexico when digital information infringes on ownership rights.

Digital Trade and cybersecurity

New provisions for digital trade such as e-books, music, software and video games include a prohibition on tariffs on digital products distributed electronically, rules for validating e-signature and e-documents, anti-spam measures, and coordinated cybersecurity measures for the three countries鈥� highly integrated telecommunication systems.

Small businesses will benefit for first time

For the first time in a U.S. trade agreement, the USMCA includes a dedicated chapter on small- and medium-sized enterprises (SMEs) and other provisions targeting this group including:

-Establishes information-sharing tools to help SMEs to better understand the benefits of the agreement

– Creates a committee on SMEs issues comprised of government officials from each country to ensure they benefit from the agreement

To read more about the new USMCA and its impacts in Arizona, go to: .

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As business and industry trumpet the start of North America鈥檚 new trade agreement this month, the road ahead is lined with both possibilities and challenges, experts on multinational trade said. 

All three countries now must put in the hard work required to advance the largest tariff-free trading bloc on the globe, they said.

鈥淣orth America’s new regional trade agreement has the potential to propel each of the three member countries individually, and the region collectively, to the highest levels of international competitiveness,鈥� said Duncan Wood, an internationally known specialist on North American politics and the director of the Wilson Center鈥檚 Mexico Institute in Washington D.C. 

鈥淣ow what we have to consider is how each of the three governments is going to do its job making sure we have the right regulations in place, the right legislation in place, and that we can work with business to take full advantage of this.鈥�

Big unknowns  

COVID-19 will be one of the biggest concerns on the trek forward, said Marco L贸pez, Jr., president and CEO of International Business Solutions, Inc. (IBS), a business advisory firm that provides business development and policy direction to international and domestic organizations.

鈥淲e must start thinking and working towards a risk mitigation plan should the economy struggle to meet the new reality post-COVID19,鈥� Lopez said. 鈥淲e have to now think about the millions of American jobs that the country is losing due to the pandemic.鈥�

Reasons to celebrate 

For now, there are many reasons to celebrate, trade experts and business advocates agree.   

Most importantly, the new deal allows for the continued tariff-free trade to continue between America, Mexico and Canada, they said.

The new agreement, the United States-Mexico-Canada Agreement (USMCA), is a reboot of NAFTA — the 鈥済randmother of free trade鈥� — that went into effect in 1994 and has helped create the largest free trade bloc in the world. 

Globe鈥檚 largest tariff-free trading bloc 

Since NAFTA鈥檚 inception, annual American trade with the two countries has nearly quadrupled to $1.3 trillion, and they purchase more than one-third of U.S. merchandise exports, according to statistics compiled by the U.S. Chamber of Commerce. 

Today, trade with Canada and Mexico support nearly 14 million American jobs, and nearly 5 million of these jobs are supported by the increase in trade generated by free trade. 

A win for Arizona industry 

A 2019 report by the Arizona Chamber of Commerce & Industry, the Arizona Chamber Foundation and the Arizona-Mexico Commission, found that between 2015-2017 Arizona exported $10.5 billion annually to Canada and Mexico. More than 228,000 jobs in Arizona are dependent on the annual trade and investment relationship.

Arizona is now well positioned to continue to attract new manufacturing and supply chains, Wood said. 

The introduction of digital and e-commerce into the trade agreement should strengthen Arizona and North America鈥檚 competitive edge in global markets with a new emphasis on digital trade and ecommerce, fewer barriers to trade, joint production and the strengthening of existing supply chains, experts said.

Among the benefits cited:

-Raises the 鈥渄e minimis鈥� customs thresholds under which U.S. businesses may export to Canada and Mexico with reduced paperwork and without paying taxes or duties

-Reduces red tape at the border, reduces costs, and increases predictability for cross-border transactions

-Gives preferential market access for U.S. agricultural exporters, and commitments to fair and science-based trade rules

-Opens up new market opportunities for U.S. dairy and fruit farmers in Canadian markets

-Introduces agricultural biotechnology into the agreement including support for innovation including new technologies such as gene editing

-Introduces a chapter for the first time to support expanded trade for -size businesses

Biggest challenges ahead  

Covid-19鈥檚 impact is one of the biggest challenges facing the region. With millions of people out of work, there will need to be investment by both public and private sectors to retrain them for 21st century jobs, Wood said. 

鈥淲e need to think about the skills the workforce doesn鈥檛 have or skills the people don鈥檛 want to learn,鈥� he said.

Missed opportunity for Mexico 

Mexico is the least poised to benefit from the USMCA, Wood and other multinational trade experts said. 

President Andr茅s Manuel L贸pez Obrador, popularly known as AMLO, has done little to instill confidence in investors, they said. A number of his economic policies and weak relationship with the business community have been widely criticized. 

UMCA could be a missed opportunity for Mexico to attract manufacturing and supply chains, Wood said. 

鈥淢exico really is in such a privileged position right now and it needs to open up to the world, it needs to provide legal certainty,鈥� he said. 鈥淚t needs to provide a regulatory and legal framework whereby investors feel they are protected.鈥�

Positive signs with leaders meeting    

A meeting between Trump and AMLO at the White House last week offered signs of a friendlier relationship. But it revealed little about Mexico鈥檚 ability to meet the demands of the new USMCA like boosting the hourly wage of auto workers and enforcing environmental standards.  

It was AMLO鈥檚 first trip during his presidency to a foreign country. In a joint public appearance to herald the USMCA. Trump said he was 鈥渉onored鈥� to have AMLO as his guest. AMLO called the meeting, the 鈥渂eginning of a new stage.鈥� 

Need for countries to work together to compete globally

While the USMCA is now in place for 16 years, it contains a new clause that allows for review every six years.

That offers an opportunity for dialogue, collaboration and action to incorporate changes, Wood said.

The is launching a series of monthly dialogues with public and private stakeholders from all three countries to identify problems so they can emerge better prepared when the USMCA comes up for review every six years, he said. 

鈥淣ow, what we have to consider is how each of the three governments are going to do their job making sure we have the right legislation in place, the right regulations in place and that we can work with businesses to take full advantage of this.鈥�

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Mexico鈥檚 president, Andr茅s Manuel L贸pez Obrador (AMLO), is under heavy fire for his delayed and shaky response to the coronavirus and his failure to provide significant stimulus funding to shore up the private sector. 

Add in rising violence and tanking oil prices and the economic outlook for this year is gloomy: Mexico鈥檚 economy is projected to contract by , according to the International Monetary Bank (IMF). 

鈥淢exico under AMLO appears to be entering a dark period of economic decline and spiraling violence,鈥� said Ryan Berg, a research fellow for the American Enterprise Institute (), who studies Latin American foreign policy and development issues. 

As many as 20 million Mexicans could slip into poverty, said Berg, who spoke to 探花精选 about the implications for Arizona and North America. 

Headlines attack 鈥渋ndifferent fiscal response鈥�

A rash of articles and editorials critical of AMLO appeared in Bloomberg, Forbes, the Washington Post, Aljazeera and other major news outlets this week to mark the official opening of the new trade agreement, the United States-Mexico-Canada Agreement (USMCA). 

鈥淟opez Obrador Is making Mexico鈥檚 tragedy worse,鈥� blared a headline from Bloomberg鈥檚 editorial board Wednesday. 鈥淭he government鈥檚 indifferent fiscal response is inexcusable.鈥�

Some of his actions have been labeled irresponsible. He has downplayed the need for mass testing. And until recently, AMLO continued to hold large public rallies, shaking hands and kissing people.

Business groups calling on AMLO to aid private sector

As AMLO prepares to meet with President Trump in Washington D.C. July 8, business leaders and advocates are urging U.S. officials to press AMLO to follow the lead of other countries that have rushed financial aid to help businesses survive the pandemic.   

The meeting is meant to celebrate the USMCA, the successor accord to NAFTA that has fueled the three economies to become the largest free trade group in the world for more than two decades. 

But Mexico鈥檚 response and missteps in reacting to the virus are producing challenges that could hurt the recovery of supply chains and economies on both sides of the border, Berg said. 

Here are a few takeaways from Berg:

Missteps and misguided policies 

Mexico is the least poised of the three partner nations to take advantage of the new trade deal, he said.   

The rapid spread of COVID-19 cases is wearing on the country鈥檚 already fragile health system, and continues to cripple the main pillars of the Mexican economy — tourism, energy production, and manufacturing.  

Meanwhile, AMLO continues to reopen the economy as cases are skyrocketing. And as  Mexican officials have downplayed mass testing, it had 231,770 confirmed cases and 28,510 deaths as of today, according to the John Hopkins .

鈥淔or a successful reopening, tests need to come back positive at a rate of around 5 percent,鈥� Berg said. 鈥淭en percent is dangerous. Twenty percent is crazy. Mexico is returning coronavirus tests with a 50 percent positive rate, which is way too high for a successful reopening. It would seem as though USMCA is coinciding with a massive surge in cases.鈥�

Contentious relationship with private sector 

AMLO also 鈥渉as indulged his contentious relationship with the private sector鈥� instead of bolstering the economic model that has brought Mexico tremendous growth over the past 25 years under NAFTA, Berg said. 

In April, AMLO yielded to pressure to help businesses and informal workers, who make up more than 50 percent of the economy, approving a $25.6 billion stimulus package. 

But it was too little, too late. 

鈥淢exico has spent less than any country in the region as a percentage of its GDP, save for the Bahamas, to support its industrial base,鈥� Berg said.

Meanwhile, AMLO continues to focus on 鈥減et projects鈥� like the new airport in Mexico State that has been plagued by cost overruns and delays, the Mayan train project in the Yucatan Peninsula, and a large new refinery for the heavily indebted state-owned petroleum company, Pemex.

鈥淢any people think these glitzy projects are economically dubious and cost a lot of money. Money that could be better spent shoring up Mexican industry.鈥� 

More dialogue needed to define essential businesses

Resuscitating economies in Mexico and the U.S. after the pandemic will depend largely on the renewed productivity of the massive North American manufacturing supply chain, Berg said. 

One of the roadblocks has been Mexico鈥檚 鈥渉aphazard鈥� method for declaring which  industries are essential, he said.

In April, the National Association of Manufacturers sent a to AMLO, stating its members’ concerns about losing supply chains that have taken years to fortify. The letter contains 14 pages of signatures from leading manufacturers across America. 

In response, AMLO moved to open up more industries. Now, dialogue is needed to create harmonization between the three trading partners, including joint definitions of what is essential. 

鈥淪upply chains are so complicated that when we鈥檙e talking about the disruption of a supply chain, we could be talking about something as small as a screw or a nail or something that is nevertheless a very critical component that might be going over the border multiple times as it’s assembled,鈥� Berg said.

Opportunity for Mexico to reverse course

Unless Mexico adjusts its domestic policies, it is squandering an opportunity to expand its role in North American trade and production, Berg said. 

鈥淎t a time when many U.S. and Canadian businesses will be keen to take advantage of the USMCA to “nearshore” their supply chains, Mexico doesn’t seem to be in a position to take full advantage.鈥� 

If Mexico can prove that the country is safe for trade and manufacturing, it has many benefits to offer, he said. Mexico is graduating more people every year that are poised to enter high tech manufacturing and other skilled trades. Unlike China, it has managed to keep labor costs relatively low. 

鈥淚 think Mexico has a huge opportunity here. I think there is going to be a bipartisan consensus or a near bipartisan consensus to rethink some of these supply chains after the pandemic, particularly extracting some of these supply chains from China.鈥� 

鈥淲ith the right policies, Mexico could be a huge beneficiary of that.鈥�

Mexico鈥檚 recovery vital to Arizona  

For Arizona, Mexico鈥檚 recovery is vital. Here are some of the reasons why:

• Mexico is Arizona鈥檚 largest trading partner times four. Arizona鈥檚 two-way trade with Mexico was $16.6 billion in 2018: nearly $7.6 billion in exports and $9 billion in imports. 
• Arizona鈥檚 infrastructure supports international trade and tourism with six international border ports of entry, including one of the nation鈥檚 largest commercial ports, the Mariposa Port of Entry in Nogales, Arizona.
• Visitors from Mexico contribute between 60-70 percent of sales tax revenue in Arizona鈥檚 border communities.
• Together, Arizona and Mexico are leaders in the automotive industry, importing $968 million and $761 million in auto parts in 2016 鈥� net trade of nearly $1.7 billion annually.
• The automotive industry in Arizona and Sonora produces 1,488 vehicles daily, supporting more than 50,600 employees.
• Nearly 3.6 million people from Mexico choose Arizona as a travel destination annually, representing the largest segment of international tourism to Arizona.
• Tourism from Mexico accounts for the majority of all expenditures in Arizona by international visitors to the state. 
• Tourists from Mexico have an annual economic impact of $2.5 billion and support approximately 30,000 jobs throughout Arizona.  

(Source: )

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Arizona border communities that were overwhelmed with the migrant crisis last year are rebounding as asylum seekers are being routed back into Mexico, commerce is flowing more smoothly at crossing ports, and a new free trade agreement is in place, local mayors said Tuesday.聽聽聽

Nonprofit, faith-based and government agencies that provided food, shelter and other services to migrants last year also are seeing some relief with the announcement of a of emergency funding from the National Board for Emergency Food and Shelter Program.

And as the migrant humanitarian crisis has shifted south of the border, a new $2.5 million shelter opened this month in Nogales, Sonora, Mexico, to take in families that continue arriving in search of a legal path to America.聽

鈥淓verything has calmed down completely,鈥� said Nogales, Arizona Mayor Arturo Garino. 鈥淎lmost everybody is being processed in Mexico. We don鈥檛 have people waiting to come across. I was in Nogales, Sonora, yesterday and it took me 15 minutes to get across when it would have taken two hours last year.鈥�

Almost one million migrants arrived at U.S. borders

Last year, record breaking numbers of Central American families trekked north to the border seeking asylum, resulting in hours-long delays at many ports of entry.聽

Close to a million — 977,509 — migrants were last year, almost double the amount from five years prior, according to the U.S. Customs and Border Protection (CPB).聽

Under threat from the Trump administration, Mexico agreed to stem the flow of migrants. Monthly apprehensions dropped from around 100,000 each month to tens of thousands.

Commerce buzzing again聽

Now, at the height of produce season, 1,300 to 1,500 trucks transporting goods are flowing smoothly across the border daily, Mayor Garino said.聽聽

Businesses that were hurt by the border chaos are seeing profits returning, he said. Sixty-five to 70 percent of the city鈥檚 sales tax comes from outsiders who come to shop in Nogales or stop on their way to Tucson. Last year, border issues caused the city’s revenues to decrease by about $140,000.

When the mayor gives his state of the city speech next month, he expects to announce that聽 revenues are well into the black.聽聽

Yuma state of emergency lifted聽

In Yuma last year, Mayor Doug Nicholls, was faced with a city crushing under the weight of thousands of migrants needing assistance.

In one four-month period, Yuma dealt with 5,700 desperate migrants, mostly Central American families released from custody by the Border Patrol, he said. He called upon the city鈥檚 non-profit partners to help prevent widespread homelessness and starvation among migrant families.

In April, he called a state of emergency when city services, shelters and food lines could no longer handle the influx.聽

The dollar impact for illegal immigration activity during the first half of 2019 is estimated at about $1.2 million, which includes the sheltering process and health care costs that were not reimbursed, said Nicholls, who withdrew the emergency proclamation in December.聽

New policies and stronger border security in place聽

As the crisis reached a tipping point, new U.S. Migrant Protection Protocols were put in place to return migrants to Mexico to await processing or return them to their home countries. The White House also entered into agreements with Mexico and Central American countries to increase border security.

Now, the border region is stabilized, the two mayors said.聽聽

Second round of funding to reimburse agencies that aided migrants聽

To reimburse agencies that shouldered much of the burden of the humanitarian crisis, an act called the Emergency Supplemental Appropriations for Humanitarian Assistance and Security at the Southern Border Act was signed into law on July 1, 2019.聽

It provides $30 million for the Federal Emergency Management Agency鈥檚 Emergency Food and Shelter Program (EFSP) to reimburse local communities. During round one, $8 million was reimbursed to over 80 entities for expenses incurred the first six months of 2019. Round two covers the second half.聽

State and local social service organizations in Arizona are eligible to apply for this supplemental funding on the .

New shelter opens on Mexican side of the border聽聽

To continue to assist migrants, the nonprofit Kino Border Initiative unveiled its this month near the Nogales-Mariposa Port of Entry.聽

Called the Migrant Outreach Center, the 19,000 square-foot facility has dining space, classrooms, offices and separate sleeping areas for men and women and children.聽

United States Mexico Canada Agreement to help border economies聽聽

After a rough year, both mayors said last month鈥檚 passage of the new free trade agreement, the USMCA, offered a ray of hope.聽聽聽

鈥淚t is critical to the continued and increasing growth of the Yuma area,鈥� Nicholls said. 鈥淲e are already seeing interest in companies looking to have a United States presence and keeping close proximity to both Mexico and California. Job creation and opportunity benefits the Yuma region that has a unique positioning to engage on the global stage.鈥�

Moving forward聽

Both mayors said they hope that the region can now focus on strengthening economies and communities.聽

There are still challenges ahead. Immigration reform is one, said Nicholls, adding that Yuma鈥檚 thriving agricultural and other industries rely upon labor from neighboring countries to supplement the lack of domestic workers.

Global competitiveness will rely on updated, concise immigration laws, he said.聽

鈥淲e have come a long way past the humanitarian border crisis of 2019, but are not done yet,鈥� Nicholls said. 鈥淥ur nation is founded upon legal migration. The need for a more modern immigration reform is long overdue. It is a federal level issue that has a huge impact locally.鈥�

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Arizona Corporation Commissioner Lea M谩rquez Peterson wrote identical letters to United States Sens. Kyrsten Sinema, D-Ariz., and Martha McSally, R-Ariz., requesting they work with their colleagues to ratify the U.S.-Mexico-Canada Agreement as soon as possible.

Gov. Doug Ducey appointed M谩rquez Peterson to the Arizona Corporation Commission, which regulates public utilities statewide, in May 2019. She is the first Latina to serve in a statewide office in Arizona.

鈥淎s a member of the Arizona Corporation Commission, I have the unique opportunity to comment on the USMCA from the perspective of a public utility regulator and the utilities and utility customers we represent,鈥� M谩rquez Peterson wrote in the letters.

鈥淔rom this perspective, I see the USMCA as providing net benefits for all signatories in the areas of energy, water, and telecommunications policy, which complement and support our push for a cleaner and more interconnected economy.鈥�

M谩rquez Peterson said she specifically supported the USMCA鈥檚 promotion of:

• Energy, including zero-tariff energy trade and the ability to share electricity across the border;
• Telecommunications, including full access to public and major suppliers鈥� networks;
• Electric vehicles, with incentives to encourage companies to build in Arizona;
• Utility infrastructure;
• Air quality, including enforcement of existing environmental laws to improve air quality in major metropolitan and rural areas across North America; and
• Water, including addressing land- and sea-based pollution, promoting waste management infrastructure and protecting Arizona鈥檚 natural water resources.

鈥淎s we begin to discuss building a more robust and interconnected regional grid in the west, we will necessarily need to consider how we connect and interact with our clean energy customers and suppliers on both sides of the Arizona-Sonora border,鈥� M谩rquez Peterson said.

鈥淢ore access to [electric] transmission infrastructure between these two partners will provide benefits and clean energy opportunities for everyone, while promotion of electric vehicles charging and production by manufacturers and suppliers will help both neighbors as they strive to achieve shared air quality goals across the region,鈥� she said.

Before her appointment, M谩rquez Peterson served as president and CEO of the Tucson Hispanic Chamber of Commerce for almost a decade. The U.S. Chamber of Commerce recognized the Tucson Hispanic Chamber as the 鈥淗ispanic Chamber of the Year鈥� in 2013, under M谩rquez Peterson鈥檚 leadership.

To view the letter to Sinema, .

To view the letter to McSally, .

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All members of Arizona’s U.S. House delegation Thursday voted in favor of legislation to implement the United States-Mexico-Canada Agreement 鈥� called USMCA 鈥� a decision cheered by Arizona’s business community.

“We are deeply聽appreciative of the members of the Arizona congressional delegation 鈥� Republican and Democrat 鈥� who voted to strengthen Arizona鈥檚 ties between our leading trade partners Mexico and Canada,鈥� said Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry.

The state鈥檚 congressional delegation in 1993 also voted as a unified bipartisan bloc when Congress voted to implement the North American Free Trade Agreement, the precursor to USMCA, something Hamer urged the 2019 delegation to repeat.

鈥淲e thought it was very important for the state of Arizona to maintain that type of record,鈥� Hamer said.

The House vote to implement USMCA was overwhelming: 385-41.

The Senate vote, which is anticipated to take place next month, is also expected to be definitive.

Members of the Arizona congressional delegation spoke out after the vote, calling it a “major win” for Arizona.

“Today, I am proud to finally vote ‘yes’ on USMCA,” said Rep. David Schweikert, R-Ariz., a member of the House Ways and Means Committee. “We have worked tirelessly to get this modernized trade agreement across the finish line, and while it took longer than we all expected, I am pleased to see the USMCA finally be passed to help strengthen our trading relationships a cross North America.”

Rep. Greg Stanton, D-Ariz., who has been a vocal proponent of USMCA, spoke on the House floor in favor of USMCA on Thursday.

“Those of us in border states understand the value of trading with our neighbors, and I can tell you that growing trade relationships with Mexico and Canada is essential聽to Arizona聽鈥� and this new agreement will offer a big lift to our local聽companies,鈥� Stanton said. 鈥淭oday we have a real opportunity聽to cement certainty for job creators. From multinational聽companies to mid-sized and small businesses, from tech聽workers to farm workers, there鈥檚 no doubt that the new聽USMCA is a win for all Arizonans.鈥�

Following the vote, Rep. Debbie Lesko, R-Ariz., released a statement:

鈥淭he USMCA is a big win for the state of聽Arizona. Although I am disappointed it took聽Speaker Pelosi over a year to bring the聽USMCA to the floor for a vote, I am glad we聽could finally secure this victory for Arizona聽and the United States. Implementing the聽USMCA puts American workers first with聽176,000 jobs, higher wages, and $68 billion聽in economic growth. I am proud to have聽supported the USMCA since before I was聽elected to Congress and today on the House聽floor.鈥�

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Nearly 70 organizations and businesses from across Arizona sent a letter this week to the state鈥檚 congressional delegation urging its members to vote to pass legislation that would implement the United States-Mexico-Canada Agreement trade deal.

The House of Representatives is expected to vote on the legislation later today.

鈥淭rade with Mexico and Canada is a critical component of Arizona鈥檚 economic competitiveness,鈥� the letter read. 鈥淎lmost 50% of all Arizona exports go to Mexico and Canada, and more than 228,000 Arizona jobs rely on this trade.鈥�

In addition to large business advocacy groups like the Arizona Chamber of Commerce and Industry, the Greater Phoenix Chamber and the Greater Phoenix Economic Council, the letter was signed by local chambers of commerce including those from Lake Havasu, Gilbert and Glendale 鈥� to name a few 鈥� as well as private businesses such as UPS, Tucson Electric Power and the Phoenix Suns.

The United States Chamber of Commerce this week also sent its own coalition letter to Congress, signed by more than 700 chambers of commerce and industry associations from all 50 states and the District of Columbia, urging legislators to swiftly pass USMCA.

鈥淯SMCA is critical to our economic future because it will preserve and strengthen U.S. trade ties to Canada and Mexico,鈥� the read.

鈥淢ore than 12 million American jobs depend on trade with Canada and Mexico. U.S. manufacturers export more made-in-America manufactured goods to our North American neighbors than they do to the next 11 largest export markets combined, and the two countries account for nearly one-third of U.S. agricultural exports.鈥�

The U.S. Chamber sent an earlier version of the letter in July.

Thomas J. Donahue, CEO of the Chamber, issued a statement earlier this month following news that the Trump administration and House Democrats reached a to move forward with USMCA.

鈥淲e thank U.S. Representative Robert Lighthizer, House Speaker Nancy Pelosi, House Ways and Means Chairman Richard Neal, and members of the House Democrats鈥� Working Group for their leadership and hard work,鈥� Donahue said in the statement. 鈥淲e are optimistic this development will open the door to final approval of USMCA on a bipartisan basis by the end of the year, which will especially benefit American聽farmers, manufacturers, and small businesses. We look forward to reviewing the details of the deal with our members and assessing their impact.鈥�

The letter to Congress 鈥� sent Dec. 17 and addressed simply to 鈥渕embers of the United States Congress鈥� 鈥� said approval of USMCA will ensure U.S. manufacturers, farmers and service providers can continue to access markets in Canada and Mexico.

鈥淯SMCA will also modernize North American trade rules,鈥� the letter continued. 鈥淔or example, when NAFTA [the North American Free Trade Agreement] was negotiated a quarter century ago, there was no e-commerce; consequently, the agreement did not address this sector. While no trade agreement is perfect, USMCA鈥檚 updated trade rules in areas such as digital trade, services, and non-tariff barriers promise substantial benefits.鈥�

Arizona organizations that signed the letter include: the Arizona Chamber, the Arizona Manufacturers Council, GPEC, the Latina Coalition of Ports and Borders, the Arizona Mining Association and chambers of commerce from cities across the state, both large and small.

To see the U.S. Chamber’s full coalition letter and a list of its signatories, .

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