US-MEXICO "HYPERBORDER" CONFERENCE

UNCLAS SECTION 01 OF 04 MEXICO 006760

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EIND ECIN ETRD ELTN ETTC ELAB MX
SUBJECT: US-MEXICO "HYPERBORDER" CONFERENCE

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Summary
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1. (U) On November 16 and 17, Embassy EconOff and Ciudad
Juarez ConOff attended the 2nd Annual Hyperborder Conference
in Ciudad Juarez, Mexico and El Paso, Texas. They also spoke
with the Director General of the Associacion de Maquiladora
A.C. Consul General Donna Blair offered remarks at the
opening reception. The conference sought to promote shared
dialogue on challenges and opportunities of the cross-border
region, while promoting a "multi-faceted" "Hyperborder"
approach that promotes joint economic, social, cultural,
government and academic links. Experts and stakeholders from
both sides of the border participated. Common threads in the
discussion included the need for more decisions to be made in
the region as opposed to distant political capitals and
business headquarters. However, there were differing
priorities between Mexican and U.S. interlocutors. The
Mexican stakeholders appeared more concerned with a
comprehensive approach that would improve Juarez not just
economically, but socially. The
U.S. stakeholders placed paramount value on improving the El
Paso/Las Cruces business climate. For the "Hyperborder"
concept to succeed a truly joint and comprehensive approach
will be needed.

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Hyperborder and Its Creators
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2. (U) The purpose of the "Hyperborder" effort is to build
a platform for improved cross-border cooperation and
understanding. Cecilia Levine (El Paso, TX) and Fernando
Romero (Mexico City) joined together to give shape to this
vision by designing a pedestrian bridge that would serve as
an immigration museum, which crosses the border between the
sister-cities of El Paso and Ciudad Juarez. It has been five
years since the concept of the Hyperborder Bridge was
presented to the government officials of both countries and
the bridge has yet to be built, but the "Hyperborder" concept
has spurred a yearly conference of the same name. The first
Hyperborder Conference took place in 2005 and primarily
discussed broad themes. This year the ideas were more
focused, especially in light of the recent Mexican
Presidential election and the new government.


3. (U) Cecilia Levine has owned and operated a maquiladora
since 1990. Born in Chihuahua, Mexico and having lived in
the U.S since the mid-sixties, she in many ways represents
the bi-national identity that is commonly felt among people
living along the border. She is the founder of US/Mexico
Strategic Alliance, which networks with various organizations
to improve the life of the U.S. and Mexican citizens living
in the border region. She is also a Director of the Dallas
and El Paso branches of Federal Reserve Bank.


4. (U) Fernando Romero is a renowned architect who strives to
portray contemporary society through innovative architecture.
His most famous work is the winning entry for a concert hall
in Portugal called Casa da Musica. His architectural firm
Laboratory of Architecture (LAR) is based in Mexico City.

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AMAC: Maquila Evolution
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5. (U) At a meeting with Econoff and Conoff, Jorge Pedroza
Serrano, Executive Director of Associacion de Maquiladoras
A.C. Ciudad Juarez (AMAC),outlined some of the significant
concerns of the maquiladora industry. Despite the turnaround
of the maquila sector and evidence indicating the return of
some business initially thought to have been lost to China,
infrastructure issues and a supply chain throttled by the
cross-border transportation difficulties, remain top concerns.


6. (U) In response to concerns from the maquiladora industry
about expensive delays and costs associated with suppliers
of raw materials (mainly from the U.S.),AMAC is trying to
establish raw material suppliers in Juarez to enable
just-in-time production and subsequently take advantage of
the geography for distribution of the finished products.
AMAC is also undertaking a competitiveness study to determine
how Mexico, particularly the border areas, can become
competitive to mitigate threats from China. One key factor
is availability of energy. Energy costs in Juarez are about
40% higher than that in the U.S. AMAC is looking into
possibilities of purchasing cheaper energy from the U.S.
border states.


7. (U) Serrano explained that the type of industrial growth
is also evolving, with maquilas moving from simple assembly
type plants to more sophisticated production. In

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collaboration with business, industry and academia, there is
a push to establish a MEMS production facility. MEMS (Micro
Electro-mechanical Systems) are silicon micro-machines
smaller than a human hair, which can move to accomplish a
variety of tasks. These include things like rotary electric
motors, toothed gears, linear stepper drives, hinges,
inclined planes, screws, pulleys etc. These devices are
small, cheap, robust, and can be integrated with digital and
analog circuits. This type of growth will perhaps give an
added edge to Juarez, because the market for MEMS exists
right there in already established production facilities.
Investors are lined up and the project is imminent, according
to Serrano.


8. (U) On September 20th, the Center for Research in Science
and Technology (CICTA) (situated inside the Institute of
Engineering and Technology of the Universidad Aut"noma de
Ciudad Ju rez (UACJ)) was formally opened by regional
officials. This Center will develop technology projects, new
products and patents for industry; and will offer incubation
services for enterprises. CICTA will be supported by
different groups of researchers from the UACJ in areas like
electronics, digital systems, manufacturing and biomedical
sciences. It will also collaborate with institutions, which
are part of the MEMS-Mexico Network, as Centro de
Articulacion Productiva MEMS (CAPMEMS).

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CG Delivers Remarks at Conference Opening
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9. (U) The conference opened at the headquarters of the
Asociacion de Maquiladoras AC (AMAC) with broad themes for
the conference outlined by Tomas Mena Sanchez, President of
AMAC and CG Donna Blair of the U.S. Consulate General in
Ciudad Juarez. The event included a presentation by Dr.
Maccario Schettino, professor at the Tecnologico de Monterrey
and Planning Coordinator of the El Universal newspaper. In
her comments, the CG welcomed the commitment of stakeholders
and international experts in helping create programs to
enhance economic opportunities while improving quality of
life, growth and stability.


10. (U) In light of regional priorities to increase
competitiveness in an increasingly globalized world, the CG
emphasized the Consulate's commitment to ensuring a vital
flow of traffic across the border, which facilitates
bi-national commerce, education, and personal travel. She
pointed out that in the next five years, hundreds and
thousands of business/tourist, work and investment visas will
be renewed on top of those that will be issued, which will
help in further economic development in this region. The
Consulate will also continue to issue student visas, which
will help in creating creative brainpower of the inventor,
the entrepreneur, and the skilled worker who will then bring
innovation and technical competency to the modern
marketplace.


11. (U) The CG observed that markets succeed as long as
people have confidence in their public institutions. She
noted that regional movements supporting transparency in
government have helped make Chihuahua state one of the most
stable and attractive international investment alternatives.
To further underscore the US commitment to bi-national
growth, the CG announced the approval of a new position of a
full time Political/Economic Officer to the Consulate staff.

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Infrastructure, Education and Reform: Key to Mexican Success
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12. (U) Professor Schettino's analysis of Mexico from a
social, political and economic perspective used figures
published by the Economist showing that Mexico is poised to
become the 4th largest world economy by the year 2050,
displacing Germany. However, Schettino said Mexico will not
achieve this goal unless its leaders show the political will
to increase productivity by improving human capital and
infrastructure through changes in laws and regulations.
Schettino argued that Mexican leaders are now making
decisions based on a Mexico that does not exist. In the
past, the government's share of the economy allowed it to
greatly influence growth. Now, the situation has changed and
the government can only provide the environment that leads to
growth. To do this, the government needs to build
infrastructure, revitalize the education system and support
reforms that provide the basis for economic growth.


13. (U) Schettino cited the need for fiscal reform. He
provided an economic model showing that if the government
continues as usual, with the projected depletion of Mexico's
largest oil reserve by 2009 and the increase in pensions
needed over the same period, Mexico will experience a 5-6

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percent budget deficit by the end of the decade. But, if the
government enacts fiscal reform by raising tax revenues,
along with reforms to increase exports in other sectors,
Mexico can continue to thrive despite the oil and pension
problems.


14. (U) Lastly, Schettino discussed the political outlook for
the next administration. His analysis showed that Calderon
will be able to successfully run the government if he is able
to form a coalition of the center left and the right.
Additionally, the PRD would cease to be a problem as they
lacked the numbers required to keep a constitutional
amendment from passing. This, according to Schettino, boded
well for the reforms that are needed to make Mexico
competitive.

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Stakeholders: Growth Will Continue, But Some Changes Needed
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15. (U) The second day of the conference was held at the El
Paso Community College and focused on large and small
business issues. While the small business sessions
consisted of seminars on the logistical aspects of running a
cross border business, the large business track focused on
broader economic issues, border integration and investment.
Both tracks seemed to concentrate more on the perspective
from a U.S. based or branched company, and these sessions
included more U.S. representatives than had attended the
first day of the conference in Juarez.


16. (U) A broad representation of speakers from academia
(University of Texas - El Paso),government (Federal Reserve
Bank and the Governor's Economic Council),associations (El
Paso Chamber of Commerce, Plan Juarez, New Mexico Economic
Development, etc.) and private business (Delphi, Baker and
McKenzie, Hunt Oil, etc.) noted the success Juarez has had as
the maquila sector has rebounded during the past 3 years.
They agreed that despite the expected slowdown in the U.S.
economy, the maquila sector in general and Juarez in
particular should be able to maintain its growth - albeit at
slightly lower rates. They also agreed on problems that
slow the development of the sector including high energy
rates, border transportation problems, limited flexibility in
supply chain, lack of labor flexibility and corruption/rule
of law issues.

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Juarez Needs Comprehensive Approach
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17. (U) Veering from the topics of other speakers, who
concentrated on the business aspects of the border, Lucinda
Vargas of the Juarez Strategic Plan, spoke on the overall
development of Juarez. The Juarez Strategic Plan is based
on a similar plan implemented in Bilbao, Spain for the
purpose of encouraging development in that city. Vargas
noted that in Juarez, "population growth and economic
dynamism have not equaled overall development". She said job
creation had not equaled infrastructure development, and in
order for Juarez to actually develop, a comprehensive plan
was needed that included public and private sectors, academia
and social groups. She said a multi-faceted, bi-national
approach such as that intended with the Hyperborder concept
was the way to make growth finally equal development.

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Border Region Lacks Powerful Voice
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18. (U) The conference concluded with a roundtable discussion
with commerce promotion associations from both sides of the
border. One of the main issues raised was the lack of true
cross border cooperation in lobbying so that more decisions
are made locally, as opposed to in Washington, DC, Mexico
D.F., and at corporate headquarters in places like Detroit
and New York. Businesses complained that turnover in key
decision-making positions made it harder to promote local
businesses in the supply chain. They also said more
cross-border investment promotion was needed, and
intra-border data needed to be developed to assist businesses
in making decisions.


19. (U) The association representatives countered that they
did work together, but that the region was not currently in a
position to effect change so that decisions are taken
locally. Importantly, while they seemed willing to cooperate
fully on simple matters such as data reporting, the
associations were almost entirely domestic leaning in their
ideas for promotion development. For example, the expansion
of Fort Bliss and the revitalization of the El Paso
International Airport were repeatedly cited by the U.S.-based
associations as large economic boons for the region though

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they had little information on how these would affect Juarez.

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Comment
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20. (U) The "Hyperborder" concept is a great idea in theory.
The open dialogue highlighted perspectives that limit
cross-border linkages. However, the term "Hyperborder"
implies that both El Paso and Juarez must develop
complimentary economic models. Because the border region is
strongly linked, growth on either side of the border can
spread throughout the larger region. In practice, however,
the respective business communities seem primarily interested
in helping themselves more than promoting comprehensive
cross-border linkages. We observed that there were very few
U.S. representatives at the Juarez event and few Mexican
representatives at the El Paso event. It appears that the
U.S. business community sees relations with Ciudad Juarez as
just another component of the business process and does not
view Juarez as a full and complete partner. By the same
token, the Mexican business community is aware that, for the
majority of them, good business means working closely with
the U.S., even if Ciudad Juarez is not experiencing the
development it desires


21. (U) Economic growth on the U.S. side of the border does
provide some benefits for Juarez. However, the commercial
advantages of thousands of Mexicans traveling to El Paso to
go shopping far exceeds that of the smaller number of
Americans who cross the border for business or pleasure. The
ongoing Fort Bliss expansion and planning by El Paso leaders
to bring defense related industries to the area offers an
optimistic model for growth. The planned revitalization of
downtown El Paso is also a positive factor. These plans
could provide increased benefit to Juarez as well, but the do
not investigate the possibility. In sum, Cecilia Levine has
her work cut out for her in trying to promote the Hyperborder
concept. The goal is for the Juarez-El Paso border region to
achieve a sustainable economic model that draws on strengths
of each side. If this model works, it could be of great
interest in the border region, and may also be a model for
sister-cities. It would also encourage leaders on both sides
of the border to work together on problems that can only be
solved jointly. In the end, before a true Hyperborder can
exist, Ciudad Juarez must resolve its basic problem of
underdevelopment while the El Paso/Las Cruces border region
must come up with a sustainable economic model that also
complements efforts in Juarez.

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