Customs Inefficiencies, Need for Mexico-Asia Supply Chains Limit Nearshoring's Appeal, Panelists Say
Representatives from manufacturing interests operating in Mexico said the COVID-19 pandemic has presented an opportunity to argue for locating more production in North America, for both reliability and speed, but there are still obstacles to making the argument for nearshoring as an answer to vulnerable supply chains. The president of the National Council of the Maquiladora and Export Manufacturing Industry and the director of global trade compliance for Illinois-headquartered manufacturer Regal Beloit spoke at the Wilson Center's "Building a Competitive U.S.-Mexico Border" conference, which was held Aug. 10 and 11.
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Kathy Neal, from Regal Beloit, said she was not speaking on behalf of Beloit but rather broadly about manufacturing in Northern Mexico. She said when companies are considering near sourcing, they should look not just at labor costs and freight costs, but also at the cost of holding inventory. But she said that customs processes need to improve to help Mexican goods be time- and cost-competitive.
For one, customs brokers should be allowed to clear at more than five Mexican ports, she said. She said that implementing unified cargo processing at every land port on the border would help boost efficiency. And she said that having combined data streams for Mexican export authorities and CBP, "so I only have to enter data once," would be a big help. She said the ideas being talked about for the 21st century customs framework would have a big effect "if they're able to be implemented."
Luis Hernandez, president of the maquiladora council, said that the sourcing process in Mexico suffers compared to its competitors' because most of the raw materials, such as plastics, metal and cotton, are coming from Asia.
Sen. Mike Crapo, R-Idaho, the ranking member on the Senate Finance Committee, provided pre-recorded remarks to the conference, and argued for the renewal of the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill. He said he is seeing progress important to his home state of Idaho in the Mexican Supreme Court decision that limits on potato exports from the U.S. were not justified, but added, "areas of regression are apparent elsewhere" with regard to technical barriers to agricultural exports, including Mexico's halt in approving biotech crops. "I will follow that issue closely," he said.