BROWNSVILLE, RGV – Although securing approval for a Bi-National Economic Development Zone will require federal approval, Dr. Mark Kroll believes it important also to secure state support.
Which is why the dean of the college of business and entrepreneurship at UT-Rio Grande Valley testified recently before a hearing staged jointly by the Texas House Committee on Business & Industry and the Texas House Committee on International Trade and Intergovernmental Affairs.
“If the state Representatives and the political infrastructure in Austin is enthusiastic about our concept, that would obviously reverberate up in Washington. Anything we can do to build interest and enthusiasm for the initiative has got to be a good thing,” Kroll told the Rio Grande Guardian, shortly after providing his testimony at the legislative hearing.
Kroll is a board member of United Brownsville, one of the sponsor organizations of Bi-NED. He is also on the Bi-NED working group. In his testimony, Kroll had said the concept is to create a federally-recognized bi-national zone straddling the Rio Grande in which design, engineering and advanced manufacturing would take place.
In his interview with the Rio Grande Guardian, Kroll said the idea is for the border region to win back manufacturing projects that have been moving to the interior of Mexico. If that happens, he said, Texas would benefit.
“If we are not careful, manufacturing on the North American continent will be centered in places like Querétaro, Aguascalientes and Guanajuato. We want some of that in our community. At the end of the day what we need to do is create a destination for manufacturers that they find extremely attractive, viz a viz these alternatives in the center of Mexico.”
Kroll then gave an historical perspective: “People forget that the maquilas, 40, 50 years ago, represented a huge economic leap forward for the border region. But with the advent of NAFTA we lost our competitive advantage because those benefits that came from being clustered up along the border now existed anywhere in Mexico. So, that is why be here. We now have to revisit how we make ourselves attractive.”
Kroll said that while there is some benefit to Texas for having maquilas in central Mexico, it would be far greater if a bi-national manufacturing zone straddled the Rio Grande.
“There are some benefits, some splash over on the U.S. side, to having plants in central Mexico. But, it could be a lot more if we were actually sharing that production process. While it is important that we have bridges and efficient bridges, we are not really going to create a lot of wealth in our community by waving trucks through, headed north or south. There is just not a lot of money in selling a few gallons of diesel, selling a few chicken fried steak dinners, etc., to truckers. You create wealth by producing the goods that go on the trucks.”
Asked to explain why a South Texas-Tamaulipas bi-national manufacturing zone would work when, in this technological age, product developers based in say, Boston, can so easily contact a manufacturing plant in, say, China, Kroll said: “You would be surprised how many times an engineer who is designing a new product would like to go to talk to the people who are actually going to build it. If I did this, what would the consequences be. Now, yes, you can have that 12-hour lag, and you can have that conversation with one person who is going to work at 8 o’clock in the morning and the other person is sitting at home at 8 o’clock at night but it just ain’t the same.”
In written testimony provided to the two Texas House committees, Kroll said the “Rio South Texas Mega Region” is already has large concentrations of facilities and employees engaged in the manufacturing sector. He said Reynosa and Matamoros alone have over 261 manufacturing facilities employing over 209,000 workers. He said the region is also home to large energy reserves and that the recent expansion of power generating and transmission capacity has led to significantly lower utility costs in the region.
Kroll urged leaders on both sides of the Rio Grande to work together to plan and leverage the region’s resources as an integrated mega region. “There are a number of initiatives that will be needed to capture these opportunities, but the most crucial of these will be the development and implementation of intelligent manufacturing technologies that allow production lines to quickly adapt to market trends; the integration of supply chains in the region; development and implantation of integrated bi-national workforce development strategy; and creating an infrastructure/utility infrastructure that is dictated by the mega region’s economic development strategy, not the other way around.”
Kroll said there are five specific sectors where the region has a potential competitive advantage: 1) consumer electronics; 2) energy exploration, production and servicing; 3) aerospace; 4) automotive; and 5) medical.
In his written testimony, Kroll offered seven proposals that he believes should run parallel and that would involve coordinated local and state/federal efforts. The seven proposals are:
1) Create a governing Coordinating Board structure for the Rio South Texas Bi-NED Mega Region.
2) Develop a single economic development plan for the Rio South Texas Bi-NED Mega Region. Instead of having a series of regional, disjointed efforts, where different cities are acting in independent disjointed silos, or even within cities where individual strategies are disjointed (e.g., infrastructure or workforce development pursuing disparate uncoordinated initiatives), a single regional economic development plan will create a unified path forward for the economic development of the region. A bi-national economic model is already in place in the Sweden-Denmark border and can serve as a prototype for the Bi-NED initiative.
3) Develop and create a pilot Bi-NED Zone for the Rio South Texas Mega Region modeled after the Safe Economic Development Zones proposed by Mexican President Enrique Peña Nieto for Mexico’s Southern Border. A Bi-NED-type zone already exists along the Sweden-Denmark border and can serve as a prototype for our Mega Region.
4) Pursue implementation of an integrated International Metropolitan Statistical Area
5) Alternative L-1 Visa Program. Scope: Promote the modification of the L-1 Visa program to allow for foreign company representatives to live in the U.S. and work in Mexico. The benefits are border communities could attract greater foreign investment to the region as well as gain the economic benefit of foreign management expenditures on goods and services.
6) Joint U.S.-Mexico Built Certification. Scope: Establish a corridor along the U.S.-Mexico border in which products and manufactured goods within the corridor meet the certification requirements of both nations, as though they had been made in both the U.S. and Mexico for trade purposes.
7) Border Free-Trade Corridor Designation. Scope: Create a defined, secure area extending across the U.S.-Mexican border in a conterminous zone designated free of border entry procedures and payments of duties within the zone, allowing for free movement of raw materials, components, semi-finished goods and finished goods, as well as personnel, as long as such goods and persons remain within the zone.
Editor’s Note: This is the second in a two-part series on Bi-NED. Click here to read Part One.