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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 Knox University of Florida. 6 th Annual International Business Research Forum: Global Security Concerns and International Competitiveness

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CONSEQUENCES OF HOMELAND SECURITY FOR U.S.-LATIN AMERICA ECONOMIC RELATIONS: A PRELIMINARY ASSESSMENTTerry 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

overview
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
background u s latin american relations before 9 11
Background:U.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
post 9 11 relations
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
new us security regime department of homeland security
New US Security Regime:Department 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
new us security regime homeland security regulations
New US Security Regime:Homeland 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

container security initiative
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
advance cargo information
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
customs trade partnership against terrorism c tpat
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
bioterrorism act
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
consequences for latin america
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.
mexico
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
mexico18
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
the caribbean
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
conclusions findings
Conclusions:Findings

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
conclusions future research
Conclusions:Future 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
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