If the North American economy were a human body, it would be in intensive care for acute blockage of the arteries.
The industrial heart is strong, pumping out products that compete globally. The human muscles are strong, with a world-class workforce, from manual workers to sophisticated technicians to the most globally aware management in the world. But the circulatory system – especially infrastructure at our physical borders – has failed to keep up with the growth in travel and trade.
As global competition intensifies, especially with the imminent completion of the Trans-Pacific Partnership, this amounts to fighting with one hand tied behind our back.
The first new rail crossing of the U.S.-Mexico border in more than a century went into operation just weeks ago. Most of the increase in trade over that century has taken to our highways, but investment in road infrastructure at our borders hasn’t kept pace.
Some 20 percent of U.S.-Canada trade – over $130 billion, more than all trade between the U.S. and the United Kingdom – crosses a single bridge at Detroit. These bottlenecks raise the cost of our products, hobbling our global competitiveness.
This problem exists for several reasons. One is the failure of all three governments to fund the investments needed to make post-9/11 security enhancements work smoothly and efficiently.
Second, a mismatch in planning cycles leads to embarrassing results like the bridge over the Rio Grande near El Paso that the U.S. built half of before Mexico had appropriated funds for its half. Or the new Mexican port of entry at El Chaparral south of San Diego that faces a blank wall until the U.S. builds the southbound approach.
Moreover, the countries budget for border infrastructure differently: Canada and Mexico control border infrastructure funds at the federal level, enabling them to plan with the U.S. The U.S. channels highway funds through the states and finances ports of entry from the same fund that builds federal buildings. As a result, it is harder for the U.S. to set priorities between border-related buildings and buildings elsewhere, while the states have their own highway priorities that compete with border projects.
For our economic prosperity, we must rescue border infrastructure from the annual appropriations cycle in the U.S. and let the market set priorities. Encouraging private investment from all three countries to partner with public monies in building border infrastructure will do this – and reduce the cost to government budgets of the necessary improvements.
An independent bank, established by the three governments and capitalized by both public and private money, could issue bonds and invest in existing and new border facilities. We have the foundation for such a bank in the North American Development Bank, which has been supporting improvements in water and air quality infrastructure along the U.S.-Mexico border for two decades. However, its ability to invest in cross-border transportation infrastructure is limited. We should invite Canada to join NADBank and add private sector members to its board. Its capital should be increased and expanded to include private shares, and it should have the ability to set priorities for infrastructure investment across the borders. The result will be to make border planning more responsive to the needs of the market, eliminating unnecessary costs and making our products more competitive.
There is no other approach to the border infrastructure challenge that would cost the governments less, be easier to implement or offer a more efficient path forward. At their upcoming summit in Canada, the North American leaders should commit to this plan and instruct their bureaucracies to be ready to inaugurate the new NADBank at their 2016 meeting.
Or we could keep spinning our wheels – literally – while the Chinese and their partners in the Asian Infrastructure Investment Bank mobilize billions to make themselves more efficient competitors.
Editor’s Note: This op-ed first appeared in the San Antonio Express-News. Click here to read the op-ed in the San Antonio Express-News. The main image accompanying this op-ed was taken by Rio Grande Guardian reporter Steve Taylor at the official opening of the West Rail International Bridge project in Brownsville on August 25, 2015.