Senator Eliot Shapleigh - El Paso, Texas

Introduction

One of our great strengths is the Border ~ Frontier of the Future. For over 150 years, El Paso has been the true Gateway to Mexico, serving as a major transit hub for the international movement of goods, services, technology, ideas, and people north and south. In addition to the city's location on a major corridor for NAFTA trade, the El Paso airport's $60 million air cargo facility is the largest and most complex on the U.S. Mexico border. With a 78 percent Hispanic population, El Paso is uniquely equipped to support businesses seeking to operate throughout Latin America. The city's population of immigrants and their descendants have lived a cross-border experience that promotes a reach beyond the confines of domestic business. The region's binational, bicultural, and biliterate atmosphere offers vast untapped opportunities for businesses to reach south.

Increased trade liberalization, combined with the city's natural geographic advantages, give El Paso the potential to become a strategic hub for access to hemisphere-wide markets. How can El Paso promote its binational, bicultural, and biliterate port as a launch pad for international business?

Facts

The two million people living in the combined El Paso-Ciudad Juarez metroplex form the largest binational community in the world. The area is growing at a rate of more than 5 percent a year, most of which is on the Mexican side of the border. This growth has been fueled in part by the rise of the maquiladora industry, relocation of industries to the area, and the associated growth in jobs. As cross-border business has expanded, city leaders have worked to streamline movement of people, product, and services across the border.

Mexico has capitalized on this free movement by attracting businesses seeking to take advantage of the country's skilled labor. Yet, while the maquilas thrive in Juarez, citizens of Chihuahua still must come across the border for many basic needs. El Paso must focus on harnessing its own highly educated and skilled labor force to meet the needs of this diverse and dynamic international community.

Factors of Trade: Great Ports

From Singapore and Hong Kong to Los Angeles and Miami, great ports worldwide are the ones that promote their natural advantages as factors of trade. A busy port can give a city broad access to international markets. As people, goods, and services cross the border, businesses based in port cities are poised to benefit. In particular, ports need strong banking and finance, business services, and education to support growing multicultural populations.

For more than 50 years, Miami has billed itself as the Gateway to Latin America, its airport and seaport servicing passenger and cargo traffic to and from hundreds of destinations in Mexico, South America, and the Caribbean. The city has successfully harnessed its diverse local population to build a multi-cultural destination and waypoint for international trade and tourism. For example, Univision's television operations are based in Miami, allowing the company to draw on the city's large population of second and third-generation Latin American immigrants. Utilizing residents' cultural expertise empowers the company to market its programming throughout the hemisphere.

Similarly, Los Angeles has become the west coast's hub for global trade and is the busiest container port in the country. The port supports 259,000 regional jobs and $8.4 billion in wages in Southern California. In addition to its seaport, the city is a center of air cargo and overland freight pathways. LA has become the primary interface for trade (both import and export) with rapidly growing markets and manufacturing operations in Asia.

El Paso already is a major port, expanding to accommodate increased international trade. City leaders must use the port's operations as a factor of trade to spur business development.

Factors of Trade: Banking

The financial services industry is well suited to the border area, where companies can base an international hub for financial services. Bank consolidation has made it more difficult for minority and low-income individuals to access the seed money needed to start a small business. National banks are ill equipped to understand the needs of local enterprises.

More than 80 percent of Mexico's banking assets are controlled by foreign banks. These institutions have not made lending a priority in Mexico, favoring less risky banking services such as ATMs and credit card accounts. There are more than 440,000 small businesses in Texas, each with small payrolls, generating revenues of less than $500,000, and typically having fewer than 10 employees. Mergers of smaller banks have left smaller lenders with limited access to credit. Yet in Laredo, Brownsville, and McAllen, there is fierce competition between local homegrown banks that are familiar with border economics and international trade.

In 2003, remittances by U.S. workers to Mexico totaled $13.3 billion; these remittances serve as Mexico's third-largest source of income. Federal law allows U.S. banks to accept foreign-issued identification cards, such as the matricula consular issued by the Mexican government, to open accounts.

Citigroup, after merging with Mexico's leading bank, formed a remittance program to facilitate fund transfers to Mexico. By focusing on immigrant populations and offering services at reasonable rates, the program has both helped bring Mexican immigrants into the financial mainstream and opened a new, diverse arm of international commerce for the bank. To further tap this market, banks need to pursue bilingual and cross-border marketing strategies to educate and provide banking services.

Case Study in International Finance: Laredo

A few hundred miles downriver from El Paso, Laredo, a city with a population of only 200,000, is home to two locally-owned billion dollar banks. Positioned on the busy I-35 corridor, Laredo and its Mexican sister city Nuevo Laredo make up a population of over 700,000. Like El Paso and Ciudad Juarez, Los Dos Laredos act as an integrated bilingual and bicultural community that serves as a gateway between the U.S. and Mexico.

In 1970, Laredo's banks had total assets of $102 million. By the end of 1994, the city of Laredo attained the status of a "$4 billion plus" banking center. In addition to offering traditional banking services to local residents, these banks tailor their services to cater to the predominantly Hispanic border populations. Some banks also offer banking services to undocumented immigrants living in the U.S. Laredo has also pursued higher education opportunities to educate local students to become leaders in locally based international business. The Texas A&M International University (TAMIU), based on Laredo, has a global and culturally diverse focus and offers bachelor's, master's, and doctorate degrees in international trade and international banking.

Factors of Trade: Key Services

In addition to movement of people and goods, ports have the potential to export key services such as engineering, architecture, constructing information technology, business management, accounting, media, and international law. El Paso, in particular, is an ideal home for providers of services seeking to reach international markets. By harnessing American higher education, expertise, and investment, businesses situated at the border can reach southward to endless potential markets. At the same time, American businesses can provide services currently in dire need in regions of Mexico and broader Latin America.

Businesses in El Paso have already begun to grasp this opportunity. For example, the El Paso-based architecture firm Perspectiva has built on its technical expertise and cultural fluency to complete projects in the southern U.S., Mexico, Venezuela, Argentina, and Puerto Rico. The firm's border location and bicultural focus have allowed its designs, which include hotels, schools, stores, and other institutional buildings, to take into account local geographic, historic, and cultural cues.

Another company, International Outsourcing Services (IOS), bases its operating headquarters in El Paso. This location allows the company to interface with its skilled workforce of engineers and manufacturing workers in Latin America, providing a culturally appropriate approach to cross-border outsourcing. Other opportunities abound for American companies to bring expertise into Latin America.

Factors of Trade: Growing Market for Healthcare for Mexican Nationals
Increasingly, cities like Miami, Houston and San Antonio see rising use of specialty medical services by Mexican national clients. MD Anderson, the world's leading cancer treatment facility in Houston's Texas Medical Center, has drawn thousands of cancer patients from all over Mexico and Latin America. With over 2,200 beds, and a brand new 100 bed Eastside Hospital, and with a fully bicultural, biliterate population, El Paso is poised to become a center for specialty medical services to a growing Mexican national market in areas like oncology, complex cardiology and neonatology.

Conclusion

Situated at the intersection of several major interstate and international routes at the border, El Paso is the Gateway to Mexico. The city's port--land and air--is expanding to become a major crossing point for American companies to approach Latin American markets. El Paso's busy port makes the city a factor of trade, providing businesses with the bicultural, binational, and biliterate expertise needed to launch operations and market products and services hemisphere-wide. As industrial globalization progresses, businesses will need to adapt to international markets to succeed. Our community is poised to become a bustling hub for international business.