EDINBURG, RGV – With such a positive reaction to USMCA coming from border leaders, guest speakers at a Rio Grande Guardian LIVE at Bob’s luncheon were asked if it was time to pop open a bottle of champagne.
Bankers David Deanda of Lone Star National Bank and Gerald Schwebel of IBC Bank responded, not so fast.
However, before Deanda and Schwebel had given their answers, waiters at Bob’s Steak & Chop House had already opened a couple of bottles and so everyone in the audience was asked to raise a glass.
If those present could not toast the successful renegotiation of the North American Free Trade Agreement, moderator Steve Taylor said, at least they could raise a glass to international trade. And they did.
“Such positive thinkers,” joked Bob’s Steak & Chop House proprietor Peter Higgins.
Schwebel, executive vice president of IBC Bank, explained why he was not yet ready to celebrate.
“I have lost so many bets,” Schwebel said. He said he was giving a talk about NAFTA 2.0 to an audience in San Luis Potosi a while back. When asked if the trade agreement would pass, Schwebel answered: “I am 100 percent sure it will be passed but there is a 50-50 chance I will be wrong.”
Schwebel noted that the deal struck by the U.S. President Donald Trump, Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau still had to be ratified by Congress.
“Are you going to look at the merits or treat it like a political football?” Schwebel asked. “I am not ready to pop the champagne yet. I do believe we will resolve it but I am taking once day at a time, one tweet at a time, one email at a time.”
Schwebel recalled the negotiations to create NAFTA 25 years ago. He referenced a picture taken in San Antonio in 1992 when the agreement was reached. It showed U.S. President George Bush, Mexican President Carlos Salinas de Gortari, and Canadian Prime Minister Brian Mulroney. By the time the agreement was ratified, Schwebel noted, Bush and Mulroney were out of office.
“We are moving forward. We are making major advances. Thirty days ago we were concerned Canada was playing hardball. They faced the pressure of Mexico as well as the United States. I will wait until the very last day of the vote,” Schwebel said.
He added: “It is not governments that make trade successful it is people. It is not the government that trades, it is us, the people, the people in this room. I am not ready to celebrate yet. I would rather wait until Congress rectifies it.”
Deanda agreed. “Leave it on ice,” he said of the champagne.
Deanda and Schwebel were joined on the panel by customs broker Adrian Gonzalez of Daniel B. Hastings, Inc. The conversation was titled “NAFTA 2.0 – Within Reach?”
In the Q&A section of the program, Rio Grande Valley Partnership President Sergio Contreras asked how the new NAFTA agreement could help Valley economic development leaders deliver better paying jobs.
Schwebel said they must adapt to the changes. He pointed out that when the original NAFTA was created, that did not happen for communities that saw their manufacturing base disappear.
“The Trade Adjustment Assistance Program was supposed to help those whose jobs were going offshore. But, the government never funded the program. The government failed the worker,” he said.
Schwebel encouraged Valley communities and industries to stay engaged in the process.
“We brag about the border being so successful, about having the number one port, but we are one of the poorest cities in the nation. We have that ongoing challenge,” Schwebel said, referring to his hometown of Laredo.
Deanda responded to Contreras’ question by stressing the importance of education. He said the Valley’s huge drop in unemployment since the advent of NAFTA did not happen overnight. He also said the Valley had to address its ‘brain drain.’
“We cannot forget that the lifeblood of the Rio Grande Valley is small business, that is what creates jobs. Small businesses reinvest in the local economy. It is critical we focus on education, make sure our kids get trained, that they come back to the Valley,” Deanda said.
Another key component, Deanda said, will be the UT-Rio Grande Valley School of Medicine, noting that, more often that not, doctors set up practice within 50 miles of where they are trained.
“That is going to have a big impact,” Deanda said of the medical school. “Education is going to be key. Over the next 25 years, you will see the Rio Grande Valley explode, like San Antonio did.”
Customs broker Gonzalez said the Valley will continue to benefit from maquiladora operations just across the border because the engineers and plant managers invariably live on the U.S. side. He said there has to be more value added to the Valley’s economy. And, he said, if the United States continues to have trade disputes with China, more manufacturing plants could move to Mexico, which would help the Valley.
Veteran news reporter Ron Whitlock asked the panel about USMCA, otherwise known as the United States-Mexico-Canada Agreement. “Where’s the beef?” Whitlock asked.
Schwebel responded that the new agreement is good because there will be more transparency. “I am getting very excited about the energy sector in Mexico. Also telecom, and digital trade. The thrust of the (USMCA) changes were worked out under TPP (Trans-Pacific Partnership). Every trade agreement has been better than the last. This one will be better.”
Business advisor David Girault asked about the impact USMCA will have on the financial services sector.
Deanda said the Bank Secrecy Act has proved a challenge for border banks because there has to be greater validation of where deposits are coming from. “It has become a way of life over the last seven years. Most banks will not take cash any more. We are seeing some larger banks move out because of BSA,” Deanda said. “It is having a major impact. There is nothing wrong with cash.”