The Peterson Institute for International Economics (PIIE) and the Center for Strategic and International Studies (CSIS) in the United States released a collection of research briefings in October 2021 to discuss the opportunities and challenges of transferring the US supply chain to Mexico. Some scholars expressed their views on the impact of the restart of the dialogue between the United States and Mexico on the cooperation between the two countries.

Earl Anthony (Tony) Wayne is an outstanding diplomat and scholar who has held positions at American University, Wilson Center, CSIS and other institutions. He believes that the resumption of dialogue between the United States and Mexico will strengthen the economic cooperation between the two countries. The following are his views.

In order to restore the economic relations between the United States and Mexico and enhance the competitiveness of the two countries against China, the leaders of the United States and Mexico have launched a new cooperation plan and decided to restart the cabinet-level high-level economic dialogue that has been suspended since 2017 ( HLED). To emphasize this initiative, US Vice President Harris hosted a meeting at the White House on September 9 attended by the US Secretary of State, Secretary of Commerce, Secretary of Land and Resources, and the Secretary of Foreign Affairs and Commerce of Mexico.

If the dialogue goes well, and with Mexico's further improvement of the investment environment, HLED will be able to encourage more offshore outsourcing manufacturing and other companies to move to Mexico and contribute to a more flexible supply chain. The working groups of the two countries are working hard to determine goals and actions, and plan to report on progress in early November.

The US-Mexico-Canada Agreement (USMCA) came into effect in 2020, and HLED aims to seek economic opportunities beyond the agreement. The USMCA called for the establishment of a new negotiation mechanism on trade rules for automobile production, respect for labor rights, and agricultural trade barriers. As a complement to the new dialogue, HLED will also help strengthen the value chain and effective nearshore outsourcing in key sectors, creating good job opportunities on both sides of the border.

From 2013 to 2016, HLED has always been a fruitful bilateral cabinet-level working mechanism, but it was later abandoned by the Trump administration. As a result, some important issues including border modernization were shelved, which has a significant impact on economic efficiency and growth. Will have a major adverse impact.

With the implementation of the USMCA and the increased expectations for cross-border cooperation after the end of the epidemic blockade, both U.S. President Biden and Mexican President Lopez have seen the potential benefits of better management of cross-border supply chains and trade through cooperation, and have tried to resolve the impacts. Cyber ​​threats to trade and increase investment in workers. They also agreed that the promotion of targeted economic growth in southern Mexico and Central America could be part of a larger effort to reduce immigration.

The restarted HLED dialogue believes that the economic recession brought about by the pandemic has exposed weaknesses in the US-Mexico cross-border supply chain and the management of border trade flows in key industries such as automobiles, medical supplies, electronics, and aerospace.

The new crown epidemic has also highlighted the costs and risks of relying on long supply chains in Asia, and a shorter value chain with Mexico can provide greater security in future crises, while establishing in areas such as semiconductors, medical equipment, and pharmaceuticals. The supply chain with Mexico may improve the efficiency of the supply chain.

If the border states of the United States and Mexico are grouped together, they will be equivalent to the third largest economy in the world. Better trade simplification measures, investment and development on both sides of the border will attract more near-shore trade investment, increase employment opportunities, and bring more benefits to the cross-border production areas that have benefited from the United States and Mexico.

The United States and Mexico are working hard to manage immigrants entering the United States through Mexico and establish a more reasonable, humane and efficient system to deal with these immigrants. The two governments also agreed to promote investment and economic development in or near the areas where these immigrants are located. These regions can provide good job opportunities, thereby reducing the factors that "pull" these immigrants to the United States.

The White House meeting on September 9 proposed four pillars for HLED's preliminary work agenda.

The first pillar is "Rebuilding Together." It can include steps to create a more resilient and efficient supply chain, and plan to deal with the disruptions that have occurred in the past 18 months in the future. This work will make the US-Mexico border a modern border in the 21st century by improving the efficiency of the flow of goods and people at the border and ensuring the safety of processes and facilities. The ministers of the United States and Mexico agreed to first make the semiconductor supply chain more resilient and help Mexico fill valuable vacancies. The supply chain of electric vehicles, medical equipment and medicines may also play a role in reducing vulnerabilities, attracting investment in nearshore trade and increasing competitiveness. Experts also suggested that green technology and adaptation to climate change are also good areas of cooperation.

The review of such industries should involve private sector stakeholders and allow them to express their views on the strengths and weaknesses of the market and the promotion of investment and cross-border flows. Concerns about border management efficiency and infrastructure were basically put aside during Trump's administration and should now be updated. Many studies have emphasized that increased investment in customs agencies, new technology applications, and new border infrastructure can improve competitiveness. Regular and better organized cooperation between the governments, private sector, states and cities of the two countries will make progress more possible.

The second pillar of HLED is to "promote sustainable economic and social development in southern Mexico and Central America." Finding the right combination of economic, financial, and development tools and plans to increase investment is never easy. Despite years of development efforts in the United States, there is no perfect plan. For example, there are many thorny issues surrounding the US proposal to allow individuals from these regions to have different types of temporary work visas; Mexico’s two projects that support afforestation and provide youth apprenticeships have been criticized as invalid. The Mexican Minister of Economy also mentioned potential supply chain investment in southern Mexico, while private sector participants believe that investment in roads, ports, railways and energy infrastructure is critical.

The third pillar will focus on "tools to ensure future prosperity," including further strengthened cyber security cooperation and management of the evolution of information technology networks that are increasingly important for the development of North American trade. Similarly, improved intergovernmental dialogue needs to involve the private sector in the discussion.

The fourth pillar is "Invest in Our People", with a focus on labor development. In the industries connecting the United States and Mexico, the skills of workers will be improved, and workers in both countries will benefit. In terms of increasingly important cross-border service provision, a skilled workforce needs to keep up with the pace of development of new technologies. These efforts will also encourage nearshore trade and investment. Mexico and the United States should also agree on the certification of workers’ certificates and educational programs. This step can increase wages and worker mobility. Such cooperation can include professional and vocational training, as well as targeted assistance to specific groups, such as women or vulnerable communities. Focusing these efforts on small and medium-sized enterprises, allowing them to join the USMCA economy, and promoting basic skills training in southern Mexico and Central America will help attract investment. The United States and Mexico have many successful cases of connecting participants at all levels in labor development cooperation. These cases can provide valuable inspiration for pilot projects.

The most encouraging aspect of HLED is its collaboration through organizing stakeholder dialogues. For example, HLED can consider managing the US-Mexico border "as a whole", rather than by geographic area or only involving federal agencies. More normalized bilateral border community communication mechanisms, such as arranging annual border summits to assess progress, may find new ways to promote the common prosperity of Mexico and the United States.