How NAFTA built a bustling border city

In southern New Mexico, a dream of a bi-national community, not a concrete wall.

 

From the top of a dry mesa in southern New Mexico, the Chihuahua Desert looks like an ocean, a vast stretch of sand and mesquite that fades away into hazy light. Southward, the land appears unbroken, as if the border between the U.S. and Mexico does not exist.

When Jerry Pacheco, a 52-year-old business developer from northern New Mexico, first came here almost three decades ago, the town of Santa Teresa was little more than a few buildings surrounded by empty desert. But Pacheco saw opportunity: With a new border crossing, Santa Teresa could link New Mexico with the booming manufacturing industry in nearby Ciudad Juárez, Mexico — and grow into a city spanning the border.

These days, in the wake of President Donald Trump’s threats to seal the border and pull out of the North American Free Trade Agreement, or NAFTA, Pacheco’s vision might seem unrealistic. But since the early ’90s, trade between U.S. and Mexico has grown steadily, and cities and towns throughout the border region have grown closer as well, their economies more dependent on each other than on the geographic line dividing them. This is the future that Pacheco sees for Santa Teresa: a bi-national community, instead of a concrete wall.

A crane unloads a shipping container from a Union Pacific train at the Santa Teresa Intermodal Ramp.
Courtesy of Jerry Pacheco

Pacheco was in business school at the University of New Mexico in the late 1980s when a friend told him about the ongoing NAFTA negotiations. The agreement between the U.S., Mexico and Canada would eliminate tariffs on goods shipped among the three North American nations. For the soon-to-be graduates, the horizon filled with the prospect of new business opportunities. “NAFTA is the future,“ Pacheco remembers a friend telling him.

When Pacheco graduated in 1991, he took a job under then-New Mexico Gov. Bruce King, deciding where to build a new border crossing. Santa Teresa, he believed, was the ideal location from which to launch New Mexico’s pivot to Mexico: It was the easternmost land connection between the two countries, eliminating the need for expensive bridges over the Rio Grande. And it was mostly undeveloped — a blank slate for new ideas and economic solutions for a state that had long been hampered by its dependence on government spending and the oil and gas industries.

Pacheco was not the first to see potential in Santa Teresa. Three decades earlier, when northern Mexico’s maquiladora industry was just taking off, Charles Crowder, a savvy land trader, envisioned a thriving industrial community straddling the U.S. Mexico border with schools, shops, a country club and modern housing for Mexican workers. But when a planned border crossing stalled, Crowder’s plans faltered. By the early 1990s, he was courting bankruptcy and the New York Times declared the Santa Teresa experiment “a flop.”

At least one person still believed in it: Pacheco. After a stint establishing New Mexico’s first foreign trade office in Mexico City, he returned to Santa Teresa in 1995. The new port of entry had finally opened, and NAFTA was a year old.

Pacheco started a company called Santa Teresa Real Estate Development Corporation and began to buy the land once owned by Crowder, building warehouses, recruiting new businesses to the border region and lobbying the state Legislature on their behalf. In the beginning, Santa Teresa was a hard sell. Where Pacheco pictured a thriving hub of global trade, others saw sand and a few cattle trails. For many years, Pacheco said, he felt “like this crazy guy in the desert with a camel hair coat.”

But slowly his efforts began to pay off: In 2008, Taiwanese computer manufacturer Foxconn built a new plant adjacent to the Santa Teresa border crossing. Every day, the plant churns out 55,000 Dell computers and HP tablets, assembled from parts delivered by suppliers in Santa Teresa. Pacheco succeeded in negotiating a special overweight truck zone around Santa Teresa so that weight limits would be consistent on both sides of the border. Aligning those standards, Pacheco estimates, brought 12 companies to Santa Teresa — creating 606 jobs. Three years ago, the Union Pacific Railroad opened a sprawling train yard, further expanding the flow of goods from Asia, across the U.S., and south into Mexico, transporting everything from giant wind turbine blades to tiny copper wires and tankers full of glucose and sucrose.

In November, I met Pacheco at his office in one of Santa Teresa’s industrial parks. Colorful maps showing various development plans were taped to the walls. “I love this!” Pacheco said, pointing to a PowerPoint graph showing the growth of trade from New Mexico to Mexico. Since 1999, it has jumped 3,271 percent — the highest increase in the nation.

Jerry Pacheco in his office in Santa Teresa, New Mexico. He has brought 82 companies to Santa Teresa in the span of more than 25 years.
Jorge Salgado/El Paso Inc.

A good portion of Santa Teresa’s success can be credited to the growth in trade between the U.S. and Mexico fostered by NAFTA and the accompanying cross-border cooperation. The agreement allowed the U.S. and Mexico to build things together through supply chains that crisscross the border, from a factory in the U.S. to an assembly plant in Mexico, combining their comparative advantages into a single regional system.

Over the last decade, all four U.S. border states have increased their trade with Mexico, especially New Mexico, which now exports almost $1.5 billion worth of goods to its neighbor, a 350 percent rise. Most of that growth can be traced to the expansion of Santa Teresa, says Christopher Wilson, an expert on the economic relationship between the U.S. and Mexico at the Woodrow Wilson Institute, a D.C.-based think tank. “Lots of places have benefited, but border communities have benefitted more than most,” Wilson says. “They are NAFTA communities. For all four border states, Mexico is their number-one market.”

Still, outside the border region, many Americans are skeptical of NAFTA and blame it for stealing U.S. manufacturing jobs. It’s true that the trade agreement had a negative impact on some communities, says Wilson. But much of the blame is misplaced or overblown. Most economists agree that the majority of job losses were not due to NAFTA, but to technological changes — especially automation — in the manufacturing industry.

Even when companies chose Mexico for their new factories, American businesses still won, according to Wilson. Honda CRV cars, for instance, are assembled in Mexico, but 70 percent of the material going into each car is made in the U.S. Or take ACME mills, a Detroit-based textile maker, which opened a plant in Santa Teresa in 1989 to distribute textiles used in upholstery for cars made in Mexico. Every day, the plant welcomes five or six trucks bringing in materials from U.S. suppliers and managed by U.S. logistics firms. “Most people don’t realize how many U.S. jobs are tied to NAFTA,” Alex Sierra, the plant manager, told me.

Keenly aware of the cross-border benefits of NAFTA, Pacheco was understandably frustrated in August, when Trump tweeted that it was “the worst deal ever made” and threatened to terminate the agreement. Just before Thanksgiving, negotiators from the U.S., Canada and Mexico finished their fifth round of talks on how to re-tool NAFTA, with another informal round of meetings beginning in December. So far, says Wilson, discussions have not gone well due to U.S. insistence on certain trade measures that are “nonstarters” for the other two partners.

For Pacheco, Santa Teresa’s success is a testament to how the president’s “America First” ideology fails to consider the benefits of international collaboration and partnership: “I tend to promote the Mexican side even more because I know that in developing the other side of the border, we get a piece of it here (in the U.S.) as well.”

A border city prototype designed by architect Fernando Romero. It imagines a binational population that is able to mingle in the international plaza along the border.

Elsewhere along the border, the spirit of cooperation has only strengthened in recent years, a phenomenon that Lawrence Herzog, a professor of city planning at San Diego State University, calls the “transfrontier metropolis.”

In March, the mayors of San Diego and Tijuana pledged to collaborate on economic promotion, cultural programming and law enforcement training. And last year, officials in the sister border cities of Nogales, Arizona, and Nogales, Sonora, outlined new joint initiatives to boost local tourism, including a combined Chamber of Commerce. “These cities know now that they will be better off if they think of themselves as part of a single cross-border region, Herzog says.

Meanwhile, despite all the negative rhetoric, Pacheco has been forging ahead with his dream: a city named Los Santos. In 2013, New Mexico Gov. Susana Martinez signed an agreement with the former governor of Chihuahua, Mexico, Cesar Duarte, to cooperate on water management, energy, and even education and health care for the future city. Every month, Pacheco and a group of Mexican and American partners meet to coordinate planning efforts for Los Santos.

Before I left, Pacheco showed me a video prototype for his border city of the future, designed by Mexican architect Fernando Romero. We zoomed down walkable streets lined with trees and shops converging at a central plaza located right on the border. At one point, Pacheco interrupted the video to explain how the customs clearance would be located outside the plaza, so that in the middle, people could mingle freely.

In some ways, it seemed impossibly futuristic, a utopia dreamt up by a bunch of idealists in a design studio. Yet the concept behind Los Santos is actually quite old, rooted in the long history of cities where cultures meet and the boundaries between them blend together — places beyond borders. It might take 10 years or more, but one day, says Pacheco, a bi-national city will happen. “It makes too much sense not to."

Correspondent Sarah Tory writes from Paonia, Colorado. She covers Utah, environmental justice and water issues.

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