Mon | Oct 23, 2017

Border cities worry that ending NAFTA would hurt economies

Published:Sunday | December 18, 2016 | 12:00 AMDonald Trump's only visit to the United States-Mexico border while running for president was a stop in Laredo that lasted less than three hours.
In this Monday, November 21, photo, a truck pulls into a warehouse at LMS International, in Laredo, Texas. (AP Photo/Eric Gay)

On some days, that's not long enough for 18-wheelers hauling foreign-made dishwashers and car batteries to lurch through the gridlocked crossing.

Trump's campaign promise to tear apart the North American Free Trade Agreement NAFTA helped win over Rust Belt voters who felt left behind by globalisation. But the idea is unnerving to many people in border cities such as Laredo and El Paso or Nogales in Arizona, which have boomed under the 1994 treaty.

About 14,000 tractor-trailers cross the border daily in Laredo, the nation's busiest inland port. Local officials say roughly one in every three jobs benefits from international trade.

"We are NAFTA on wheels," Mayor Pete Saenz said.

Free trade across the border, he explained, is the "backbone" of this city of 255,000 people. The Democrat endured a backlash from his party for welcoming Trump in July 2015 after the then-candidate called immigrants from Mexico criminals and rapists.

Trump described NAFTA as "the worst single trade deal ever approved in this country". That kind of talk resonated in hard-hit industrial towns such as Greenville, Michigan, where Electrolux shut down a factory a decade ago and moved jobs to the Mexican border city of Ciudad Juarez.

During his transition to the White House, the president-elect has not discussed NAFTA at all. The agreement went unmentioned in a video Trump released last month laying out the priorities for his first 100 days in office.

Saenz, the telegenic son of a dairy farmer, talks about the possible repeal of NAFTA like a small-town Midwest mayor trying to keep a factory from moving away. He foresees unemployment spiking to double digits, abandoned warehouses, and crippled city finances. Laredo keeps the toll revenue from international bridge traffic, which, last year, amounted to about US$60 million, enough, according to Saenz, to cover police and fire department payrolls.

GRIM PREDICTIONS

His grim predictions are not widely shared. Even customs brokers in Laredo who have cashed in on NAFTA believe that they will survive and trade will continue if the agreement is abandoned.

But for now, there's still no better place in the US to get a glimpse of the trade treaty than the Rio Grande city.

Interstate 35, clogged with wheezing 18-wheelers, starts here on its 1,600-mile straight shot to the Canadian border. Busy industrial parks are a revolving door of imported and exported goods. Four years after NAFTA was signed by President Bill Clinton and approved by a Republican-controlled Congress, the Census Bureau named Laredo the country's second-fastest growing area.

At one time, denim makers thrived in Texas, and El Paso was considered the blue jean capital of the US, but those clothing manufacturers closed and the jobs went south.

Bill Hrncir, owner of LMS International, turned a small factory that once made Levi's into a 200,000-square-foot distribution centre. His warehouses are now stocked with coils of steel awaiting transport to Mexico.

Emilio Richer III, whose company has customs brokers and logistics services offices up and down the US-Mexico border, said that ending NAFTA would be felt in his hometown of Laredo, but he does not think Trump is serious.

"I have it in the back of my head that he was being fed wrongful information," and Trump was talking to people in other parts of the country, telling them "what they wanted to hear," said Richer, whose vote for Trump was in the minority in heavily Democratic Webb County, which went 3-to-1 for Hillary Clinton.

Repealing or renegotiating the agreement could wallop Mexico, the United States' largest trading partner. Most American economists do not believe that NAFTA has a major effect on the nation's overall job market.

Nor was NAFTA some high tide that lifted all boats, even in Texas. After NAFTA was adopted, US$400,000 homes sprang up in Laredo. But beyond that wealth is widespread poverty in one of the nation's poorest cities. The poverty rate in Laredo is 32 per cent, among the highest in the nation, according to census figures. And 92 per cent of students in the city's public schools qualify as economically disadvantaged.

Warehouse jobs generally are not lucrative, with wages less than double the minimum wage of US$7.25 an hour. At the South Texas Food Bank, just a few blocks behind Hrncir's distribution centre, Claudia Lira waited in the lobby for a box of food to take home.

She and her husband moved back to Laredo after he retired from a John Deere factory in Iowa. She didn't know anything about NAFTA, but speaking in Spanish, theorised why the city has remained so persistently poor.

"A lack of jobs could be a factor," she said. "There aren't enough of them."

- AP