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rst time in over a decade.
Strengthening economic tieSand creating JobS
In most trading relationships, the U.S. simply buysor sells nished goods to another country. However,with its neighbors, Mexico and Canada, the U.S.actually co-manuactures products. Indeed, roughly40 percent o all content in Mexican exports to theUnited States originates in the United States. Thecomparable gures with China, Brazil, and Indiaare our, three, and two percent respectively. OnlyCanada, at 25 percent, is similar.With the economies o North America deeplylinked, growth in one country benets the others,and lowering the transaction costs o goods crossingthe common borders among these three countrieshelps put money in the pockets o both workersand consumers. Improving border ports o entry iscritical to achieving this and will require moderateinvestments in inrastructure and stang, as well asthe use o new risk management techniques andthe expansion o pre-inspection and trusted shipper programs to speed up border crossing times. Trans-portation costs could be urther lowered — andcompetitiveness urther strengthened — by pursuingan Open Skies agreement and making permanentthe cross-border trucking pilot program. Whilethese are generally seen as border issues, the ben-ets accrue to all U.S. states that depend on exportsand joint manuacturing with Mexico, includingMichigan, Ohio, Nebraska, Iowa, South Dakota, NewHampshire, and Georgia, to name just a ew.Mexico also has both abundant oil reserves andone o the largest stocks o shale gas in the world.The country will probably pursue a major energyreorm over the next couple years that could spur oil and gas production, which has been decliningover the past decade. I that happens, it is certainto detonate a cycle o investment in the Mexicaneconomy, could signicantly contribute to NorthAmerican energy security, and may open a space or North American discussions about deepened energycooperation
Organized crime groups based in Mexico supplymost o the cocaine, heroin, and methamphetamines,and some o the marijuana, to U.S. consumers, who,in return, send six to nine billion dollars to Mexicoeach year that uels the violence associated with thistrade. The U.S. and Mexican governments havesignicantly improved intelligence sharing, whichhas helped weaken many o these criminal networksand disrupt some o their nancial fows. At thesame time, the congressionally unded Merida Ini-tiative, which has provided $1.6 billion to Mexicoor national and public security since 2008, has beensuccessully strengthening the Mexican government’scapacity and rule o law institutions. These eortsappear to be yielding some success as violence hasdropped noticeably since mid-2011.Going orward, the two countries will need to domore to disrupt the southbound fows o ille-gal money and weapons that supply the criminalgroups, strengthen communities under the stress o violence, and improve the perormance o police,prosecutors, and courts in Mexico. In many ways,Mexico has been successul at turning a nationalsecurity threat into a public security threat, butthe country now requires signicant investment tocreate an eective and accountable criminal justicesystem and to slow the fow o illegal unds rom theU.S. that undermine these eorts.As Mexico’s security crisis begins to recede, the two