July 30, 2019

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Mexican economic plan aims to cut migration to the US

Cars queuing to get into the US at the border between Tijuana and San DiegoImage copyright
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The Mexican authorities needs fewer of its countrymen and girls to transfer to the US, both legally, by way of a crossing reminiscent of this, or illegally

While Donald Trump stays steadfast in his plan to construct a wall alongside the US-Mexican border, Mexico’s new president needs fewer of his countrymen and girls to really feel the want to to migrate in the first place.

To assist obtain this, Andrés Manuel López Obrador has began a brand new initiative to enhance the economies of cities and cities alongside the Mexican facet of the border.

The hope is that companies will develop and make use of extra individuals, rising prosperity. But what are the particulars of the new “zona libre” or free zone scheme, and can it work?

It is midday at the Hotel La Villa de Zaragoza in downtown Tijuana, the Mexican metropolis instantly throughout the border from California’s San Diego. Chef Gerardo Santos Gonzales and waitress Patricia Olvera Martinez are swinging into their well-practised lunch service routine.

He is dry frying some oregano in a pan over a fuel flame, whereas she takes the first orders in the restaurant. The freshly made salsas and corn tortillas are prepared to go.

“The new zona libre should help people here get jobs,” says Gerardo. “It could transform the lives of Mexicans here… and yes, some will not feel the need to look for work in the US.”

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Andrés Manuel López Obrador grew to become Mexico’s new president on 1 December 2018

The free zone scheme was launched final month after President López Obrador introduced it at the finish of final yr.

Running the complete size of the 3,180km (1,954 mile) US-Mexican border, and 25km large, the gross sales tax inside the space has been halved from 16% to 8%.

At the similar time, earnings taxes have been cut from 30% to 20%, and the minimal wage has been doubled to 176.20 pesos ($9.24; £7.12) per day.

In addition, gas costs in the zone have been decreased to the similar degree as in the US.

President López Obrador, who’s left-wing, hopes that as well as to decreasing emigration to the US, the initiative will encourage extra American firms to put money into Mexican corporations, and subsequently enhance cross-border commerce ties.

“It is a very important project for winning investment, creating jobs, and taking advantage of the economic strength of the US,” he stated.

Image copyright
Alejandro Sanchez Zuniga

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Patricia and Gerardo each have kids who now stay in the US

Adrián Valdés, a younger businessman in Tijuana, says he’s hopeful that the scheme will certainly give firms in the border space a lift.

“Right now we import many finished goods, and we’re not producing to our potential,” he says.

Mr Valdés, who runs his personal enterprise advising firms on how to scale back their environmental affect, provides that it’s vital that extra information, expertise and manufacturing is stored on the Mexican facet of the border.

The free zone scheme follows after a brand new commerce deal between Mexico, the US and Canada was signed in November.

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Getty Images

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Companies in the zone have to begin paying workers extra, however will see gross sales taxes lowered

Nikia Clarke, from the San Diego Regional Economic Development Corporation, says that the new initiative by the Mexican authorities brings “additional clarity about cross-border production in the US/Mexico relationship”.

However she cautions that it’s as but unclear “how the increase in the minimum wage will impact the bottom line of a lot of firms that are operating south of the border who might have gone there for cost reasons, or, whether the income tax cut will temper that”.

At any fee, Ms Clarke says that “good strong economic development along the border region is good for Mexico – so in the long run it probably does help with some of the migration challenges, and in that way it’s good for the US too”.

Among the wider Mexican enterprise neighborhood there’s additionally concern about the doubling of the minimal wage inside the border zone.

Carlos Castañeda leads the native chamber of commerce, or “Canaco” in Ciudad Juarez, which is throughout the Rio Grande river from the Texan metropolis of El Paso.

He is fearful that the wage challenge will now turn into “a struggle between a business and its employees”.

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Getty Images

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The concept is that creating extra jobs on the Mexican facet of the border will scale back the variety of individuals making an attempt to get to the US

Other Mexican enterprise leaders have expressed concern that firms in different elements of the nation will relocate to the border space, harming the space that they go away behind.

Back at the Hotel La Villa de Zaragoza waitress Patricia says the discount in the fee of gross sales tax will likely be notably useful.

“Being able to buy most things more cheaply will make life easier,” she says.

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She additionally hopes that the scheme will create work for members of the so-called migrant caravan – migrants from Honduras, Guatemala, and El Salvador who’ve arrived in Tijuana and different border cities and cities with the hope of coming into the US.

Patricia says they’re very welcome to keep in Tijuana if they’re keen to work and contribute to its economic system.

Whether the free zone is profitable stays to be seen, however it’s too late for a few of Patricia and chef Gerardo’s respective kids.

Both say that they’ve children who moved – legally – to the US seeking a greater life.

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