CONSEQUENCES OF HOMELAND SECURITY FOR U.S.-LATIN AMERICA ECONOMIC RELATIONS: A PRELIMINARY ASSESSMENT Terry L. McCoy and Brandon Knox University of Florida

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CONSEQUENCES OF HOMELAND SECURITY FOR U.S.-LATIN
AMERICA ECONOMIC RELATIONS A PRELIMINARY
ASSESSMENT Terry L. McCoy and Brandon
KnoxUniversity of Florida

• 6th Annual International Business Research Forum
• Global Security Concerns and International
  Competitiveness
• Fox School of Business, Temple University
• April 2, 2005

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Overview

• Central Question Have measures adopted by the
  U.S. following 9/11 to enhance homeland security
  affected trade, finance and migration flows in a
  way to undermine the competitiveness of U.S.
  firms?
• Outline
• Background U.S.-Latin American Relations Pre and
  Post 9/11
• Homeland Security Regulations
• Regional Impact
• Mexico
• Caribbean
• Conclusions and Suggestions for Future Research

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BackgroundU.S.-Latin American Relations Before
9/11

• Growth of market democracies in Latin America
• Democratic transition and economic liberalization
• Intensification of economic integration in the
  Americas
• NAFTA, MERCOSU, etc.
• FTAA process promised regional economy of 800
  million people and 14 trillion GDP
• Re-engagement of US with the region
• Trade and democracy agenda
• Results
• Ascendancy of economics in hemisphere relations
• Growth of trade and investment
• Growth of cross border, intra-firm integration
• Promise of an American Union

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FTAA Countries
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Post 9/11 Relations

• Reorientation of US Foreign and Defense Policies
• Re-ascendancy of security agenda and realist
  paradigm
• Focus on Middle East
• Homeland Security
• Consequences
• US lost focus on Latin America and economic
  relations
• Disagreement over Iraq but Latin America support
  for WOT
• US-Latin America relations cooled and lost
  momentum
• FTAA negotiations stalled
• Homeland Security regulations affecting Latin
  America

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New US Security RegimeDepartment of Homeland
Security

• Comprises 180,000 employees across 22 federal
  agencies
• Consists of four Directorates
• Border and Transportation Security
• Emergency Preparedness and Response
• Science and Technology
• Information Analysis

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New US Security RegimeHomeland Security
Regulations

• Pushing the borders outward
• Container Security Initiative
• Advanced Cargo Information
• Customs-Trade Partnership Against Terrorism
  (C-TPAT)
• Bioterrorism Act
• Private sector and trading partners share the
  burden

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Container Security Initiative

• Initiated in early 2002
• Geared towards protecting maritime cargo
• Applies risk assessment techniques to identify
  high-risk cargo and to interdict it before it
  reaches U.S. ports
• Layers of maritime security
• U.S. Customs officials based at foreign ports as
  part of program

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Advance Cargo Information

• Requires expedited cargo manifest information for
  goods inbound for U.S.
• Amount of lead time differs depending on mode of
  transport
• Stricter requirements may lead to greater systems
  harmonization across federal agencies

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Customs-Trade Partnership Against Terrorism
(C-TPAT)

• Public-private partnership geared at expediting
  goods from low-risk firms
• Companies agree to meet safety standards in areas
  such as
• Loading and unloading
• Cargo container seals
• Physical security of buildings
• Manifest procedures
• More than 5,000 companies participating worldwide

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Bioterrorism Act

• Oversight shared by the FDA and Customs
• FDA provides technical expertise
• Customs responsible for screening foodstuffs
• FDA must receive prior notice of imported food
  shipments and must confirm them electronically
  (timeframe varies by shipping method)
• Requires all domestic and foreign food facilities
  to register with the FDA to allow for more
  accurate tracking of food-borne contamination

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Consequences for Latin America

• Indirect Impact of WOT
• Deterioration in US-Latin American relations and
  downgrading of economic agenda
• Direct Impact of Homeland Security Measures
• Not uniform across Latin America
• Felt more acutely by those countries whose
  economies are more closely linked to the U.S.

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Mexico

• Trade
• Heavily dependent on trade with the U.S.
• 46 of exports in 2004 were from the maquila
  sector
• U.S. accounted for 87 of exports in 2004
• Compliance
• 2002 US-Mexico Border Partnership Agreement
• FAST (Free and Secure Trade)
• US-VISIT (Visitor and Immigration Status
  Indicator Technology)
• 2005 Initiative for North America

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Mexico

• Immigration
• Increased border security following 9/11
• Political pressure against immigration growing
• Confluence of security- and anti-immigration
  concerns in the Mexican immigration debate
• Bush Guest Worker Proposal

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The Caribbean

• U.S.s Third Border
• Heavily dependent on trade and tourism with the
  United States
• Preferential trade agreement with US (CBI)
• Increased scrutiny of offshore financial centers
• High level of cooperation with U.S. and
  trade-related security initiatives
• Caribbean Basin Marine Security Alliance

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ConclusionsFindings

• U.S.-Latin American Relations Have Deteriorated
• At risk deepening of economic exchange and
  integration
• FTAA talks at standstill
• Impact of U.S. security regime on LA
• Selective, greater for Mex and Caribbean
• Targeted on trade and immigration
• Specific measures have had limited impact

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ConclusionsFuture Research

• Trade links to competitiveness of U.S. Firms
• Increased transaction costs for cross-border
  firms (like auto industry)
• Adjustment process
• Costs
• Immigration links
• Labor force issues