The US-Mexican border es una herida abierta [an open wound] where the Third World grates against the First and bleeds. And before a scab forms it hemorrhages again, the lifeblood of the two worlds merging to form a third country-a border culture.

- Gloria Anzaldùa- Borderlands La Frontera

Relations between Mexico and the US throughout history have not always been friendly, but links between both nations were and remain historically important. As Bustamante, an authority on US-Mexico immigration issues has noted: "the US and Mexico . . . share the most extensive and complex network of linkages of any two countries on either side of the North/South divide." This special relation between these two countries was already institutionalized in 1977, with the funding of the interparliamentary Bi-national Committee (BNC). Presidents Carter and president Portillo established the BNC to provide better coordination for US-Mexico relations. Further, cross-border developments such as the bracero and the maquiladora programs, that date back respectively to 1944 and 1965, bear testimony to the ongoing economic interdependence between the countries. They have also served to illustrate how this bi-national relationship has been shaped by the economic effects of globalization and the inherent asymmetries therein.

In view of these precedents, NAFTA can be seen more as the extension and institutionalization of existing globalization trends than as a radically new departure. In fact, for the US one of NAFTA's major goals "was to ensure that Mexico would lock in the economic reforms instituted since 1985. These reforms have created a more predictable business environment for US exporters and investors." However, as the preceding chapters have illustrated they have also created many problems.

Following the structure set in the preceding chapters, this policy section will briefly look at the problems that NAFTA has either created or exacerbated in the border regions. Specifically, attention will be given to the environmental problems of water, air and soil pollution, and socio-economic problems of transport, emigration and labor. In addition, lessons from the European experience will be addressed, and finally, policy recommendations for each problem will be provided as well a general approach to the US-Mexico border region.

The general policy proposal of this chapter is the following: to work towards sustainable development for the region by strengthening networks of collaboration in the border regions, increasing the power of bi-national institutions, and delegating more decision making to the local level. Specific problems such as water, air and soil pollution, infrastructure, labor and immigration should be looked at individually because they present very unique challenges which need specific attention and policies.

DEEPENING INTEGRATION AND STRENGTHENING INSTITUTIONS

NAFTA, as the first such agreement among developed and less developed nations, faced the challenge of both accommodating and trying to harmonize standards in an upward fashion for countries with very different realities and necessities. Strictly economic asymmetries are the most obvious and easy to illustrate; as Ganster has pointed out, "the greater Los Angeles area GDP exceeds the GDP of Mexico, but with one tenth the population." Still many other asymmetries are present ranging, from the wage gap examined in chapter 7 by Heidi Hall to the lack of environmental regulations and enforcement discussed in chapter 8 by Bryan Roe, from the disparities in labor standards broached in Chapter 9 by Erika Kussmann, to the differences in fuel standards illustrated in chapter 10 by Gerardo Botello, As the chapters note, asymmetries between developed and less developed countries inevitably have led to difficulties in implementing free trade policies and in advancing the further integration of the continent. The interdependence between Mexico and the US is part of a larger process of globalization and will continue to increase. The borders will have to become far more harmoniously integrated than they are today if the NAFTA in particular and the continued process of globalization, in general, is to be successful and beneficial to the US.

As discussed in Chapter 6 by Colin Johnson, deepening is necessary for successful integration and sustainable economic growth of the border regions. Johnson argues for further deepening in the northern border which he predicts "will enhance the overall growth of the entire transnational region." The same argument is made here for the Southern border. However, deepening is a much thornier process in the Southern border region, where large asymmetries prevail, and where the countries are less economically, historically and socio-culturally integrated. Given the difficulties, these current level of social, cultural, economic and institutional integration in the border region is quite impressive. Martinez, discussing the level of cultural integration in the borderlands has noted that:

Living in an environment of uncertainty and unpredictability, they [people who live in the borderlands] have developed a high tolerance for ambiguity and mechanism for coping with it. In short, core borerlander have discard fears, inhibition and prejudices that afflict people with a national ethnic specific orientation....The institutional underpinnings of the system are so deep and so strong that attempts to diminish transitional or transcultural interaction are exercises in futility.

Further, as all the chapters in this document have shown, regionalization is the other side of the globalization coin; the whole coin is rapresented by a process described in the Gabriel Grant's introduction as "glocalization." NAFTA as an expression of this process, has increasing the speed of pre-existing trends towards integration of the economies, but has also increased awareness regarding the negative side effects that come with intensified interdependence, especially in the border regions. Border regions are the places where the tensions between countries are most manifest. Asymmetries and differences are confronted daily on the border and attempts at harmonization can strain can border-relations. The Southern border regions are where the US and Mexico meet daily. As Hall illustrated in chapter 7, in the border regions approximately 4 millions Mexican a year cross the border to go work in the US. Most of the maquiladora industries are located there. Most trade goes through the border, often by trucks, as the discussion on the trucking controversy discussed by Kussmann in Chapter 9 has shown. The poorest regions of the US with the lowest per capita income in the US are located along the border (with the exception of the San Diego metro region). The Mexican side has experienced uncontrolled and exploitative development and, lacks sufficient infrastructure to mantain such "progress." The severe consequences of which, both Botello and Roe have shown in their respective chapters. The region is today surviving only tenuously. As the preceding chapters in this document have shown, it is no longer sustainable to continue the existing pattern of environmentally and socially blind economic development .

At the same time, border regions have an incredible potential to bring increased economic growth to both countries. They are key to NAFTA's success or failure. As Michael Kantor, US Secretary of Trade has said:

The border is not simply where our countries meet. Our one shared border is where our goals and opportunities and futures meet. In other words, we could say that the process of integration starts at the border region. Here is where it is more tangible. If it were to fail here, it is unlikely that NAFTA would survive.

The problems within the Southern border regions are not necessarily new, but they have been intensified as a result of increased globalization in general, and the NAFTA agreement more specifically. They are the problems, or externalities that follow unfettered, unsutainable, free-market development and they include:

• a degraded environment where water, air and soil pollution constitute the greatest worries.
• a lack of sufficient infrastructure: transportation, roads, water treatment plants, proper sewage systems, sufficient housing.
• labor related problems such as wages differentials, job loss, retraining programs and immigration.

These externalities both increase the environmental problems and put a strain on future economic development. According to the Economic Report of the President 1996, when externalities occur the government has a special role to play:

[it] has an obligation to perform that role as efficiently as possible, minimizing the burden on the economy and the intrusion in the lives of its citizens. Not every market "problem" calls for government action. In order to raise living standards, government actions, therefore, must meet two criteria: they must address some serious imperfection in the private marketplace, and they must be designed so that their benefits outweigh their costs.

With this in mind we can examine existing efforts and recommend new policies to redress negative externalities in the border regions. In the chapter on Europe, by Dominik Karelus we have seen that shifting the decision-making to the local level, and decentralizing, are the most logical and efficient way to deal with border issues. This approach is also appropriate in the US-Mexico region. In the US, the concept of decentralization has been translated by the government into devolution:

today many support the notion that, in several policy areas, authority ought to be devolved from Federal agencies to States, localities, and individuals, to foster more creative and responsive solutions to the problems of diverse communities

Shifting the decision-making process to the border regions allows for more input from the bi-national communities who know and understand their problems better than distant governments in Washington D.C. and Mexico City. Also, placing control in the hands of those closest to the border promotes a lessening of the tensions, which are the inevitable flip side of sharing a border.

Together with decentralization and more cooperation in the border regions, another major policy goal is that of sustainable development. Sustainable development is a type of economic development "which meets the needs of the present without compromising the ability of future generations to meet their own needs." The US-Mexico border region has suffered enough from unfettered, unsustainable development; the basic idea behind the maquiladoras rests on the exploitation of Mexican comparative advantage, namely low wages and a de facto lack of environmental regulations. Today, due to unsustainable development, the delicate equilibrium, illustrated by the chapters in this section, on which the borderlands have survived so far could easily be lost. Undoubtedly, sustainable development requires the participation of all those involved in the development process. Thus it is important it is to allow local communities to give input on decision making concerning their futures. It is the people who live in a community who know best what is be feasible and best for their region.

Promoting Sustainable Development through Improving Existing Institutions

Institutions have a large role to play in ensuring smooth economic development. As Johnson has argued, and Writer and Karelus have shown in the case of Europe, institutions are key to structural border regions development. The ideal institutions for border regions' development should be able to respond to the particular problems of the bi-national region. Thus, the following characteristics are vital for successful institutions:

• they should be bi-national,
• they should be both regional and local,
• they should create cooperation and public participation,
• they should create coordination among the various agencies and organizations involved,
• they should have a high level of autonomy from the federal government.

Such institutional developments require funding and the conservative nature of US government reduces the likelihood of interventionist policies or substantial funding as in the case of the structural funds provided by the EU. Thus, border regions' institutions will need to relay heavily on private funding as well as promote private involvement in their projects. Kantor, the Secretary of Trade said: "meeting that need, [to raise enough money to take care of the infrastructure], will call on us to devise innovative strategies, to think creatively about the roles of government and business, and to challenge outdated assumptions."

Unlike the northern border, the Southern border has many bi-national institutions already in place, as Table 1 shows. An exceptional example of regional policy making institution is the Western Governors' Association (WGA), established in 1984. WGA's 6 goals elucidate the organizations focus on regional policy: 1. Develop and communicate regional policy. 2. Serve as a leadership forum. 3. Build regional capacity. 4. Conduct research and disseminate findings. 5. Form coalitions and partnerships to advance regional interests. 6. Build understanding and support for regional issues and policy positions. Given these goals, WGA has established a regional approach to the US-Mexico border region, with representatives from both US and Mexico border states. "The most effective and efficient means to improve the quality of the environment and to protect the health of the citizens in the border regions is through coordination and collaboration." Thus the WGA stressed the importance of State-to-State cooperation and more concretely has established specific "Joint Activities" to address specific issues.

The NAFTA side agreements have also created new bi-national institutions: NADBank, the BECC, NACEC and NAAL, each of which are examplify deepening. Another little known and potentially beneficial program to foster cooperation is Border XXI. This program was created along side with NAFTA's negotiations. The program embodies both the deepening principle, as well most of the basic concepts which have been stressed as fundamental for the success of the border regions in the previous chapters, such as "public involvement, decentralization of environmental decision-making through state and local building, and improved communication and cooperation among federal, state and local governmental agencies." Border XXI was signed in Mexico on May 7th, during a bi-national conference on cooperation. As Table 2 illustrates, Border XXI provides a structure for all the institutions involved in the border regions to come together.

As we have seen in the preceding chapters, problems in the border regions are numerous and extremely diverse in nature. Each one requires specifically tailored policies, which must address the needs of the communities on both side of the border. Due to interdependency, both sides of the border share an inextricably connected fate and NAFTA will only deepen that interdependency.

Karelus has shown how similar problems such as immigration, lack of infrastructure, and environmental degradation in the EU have been addressed through local and regional cooperation, which was fostered and partly funded by the EU through the structural funds. NAFTA does not dispose of structural funds. However, the way in which those funds were used can provide insight on how to approach similar problems in the US-Mexico borderlands. From the EU, NAFTA can learn the importance of emphasizing local community decision-making in order to achieve successful sustainable development.

THE ENVIRONMENT

As we have seen in preceding chapters, the fragile environment of the border regions is threatened by unsustainable economic and unchecked population growth, both of which have been stimulated by NAFTA. The situation is already at an advanced stage in which contamination of water and air has direct effects on people's health. As Roe illustrated in Chapter 8; climbing gastrointestinal disease, linked to water pollution has caused a rise in infant mortality in the region; the Council on Scientific Affairs of the American Medical Association described the water situation of the border regions as "cesspool and breeding ground for infectious diseases.. Regarding Texas, Botello reports that "Texans living near the Rio Grande are three to five times more likely than other Texas residents to suffer from illness contracted by contaminated waters." But as Mar Spalding, a researcher at University of California San Diego's Center for US-Mexican Studies has pointed out "[t]hings are worse since NAFTA does not mean because of NAFTA." This section will first look at the environmental problems and give general policy recommendations, and will then provide specific recommendations aimed at the problems addressed in the previous Chapters.

Whereas, in the past, border regions' concerns had been ignored by bureaucrats, and the media, today, as the focal points of free trade, their issues have reached the level of national interest. Further, as Botello has shown, NAFTA spurred cooperation between the many existing organizations that deal with the environment. A general consensus has been reached between the two nations that the environment must be protected from excessive exploitation and that the region must be cleaned up and provided with suitable infrastructure to sustain the growth that is aspected as a result of NAFTA. These goals can only be achieved through bilateral cooperation. As we have seen in the preceding Chapters, pollution knows no borders. The establishment of common goals makes collaboration much easier, limiting areas of conflict to funding implementation, and the degree of government involvement. The side agreement on the environment, and the bilateral institutions created therein, the BECC and NADBank, address environmental issues and reflecting this general environmental consensus. The main problems with the side agreement are that the institutions therein createdare not adequately funded. Further the agreement does not provide for any new regulations or for harmonizing standards; instead it is geared towards ensuring the parties' enforcement of their own national environmental laws, and creating increased cooperation with the long-term goal of harmonization of standards to the highest common denominator. As Johnson explains in Chapter 6, integration tends to influence upward conversion of standards. This approach will take a longer time to take place, but it does have the advantage of avoiding the debate over national sovereignty.

Border XXI, reflects and addresses most of the border region necessities outlined above; the goal of the program is to achieve "sustainable development through the protection of human health and the environment and proper management of natural resources in both countries." As Diagram 1 illustrates, Border XXI provides for the necessary coordination among the existing institutions and acts as a hub for organizing, planning, and studing border regions' environmental issues. Border XXI has been welcomed by many environmentalists who agree with government officials that the lack of coordination in the border region can be rectified by this program. Peter Emerson, a senior economist at the Environmental Defense Fund (an NGO which had supported NAFTA's side agreement during the negotiations) said that Border XXI will increase expertise on both sides of the border making effective use of existing funds.

In theory, the institutional approach set up for the region's environmental problems is ideal and very innovative. On paper it enhances, coordination, cooperation, local decision making, and public involvement; all factors which are generally felt to be important for the sustainable development of the border regions. However, the reality seems to be more fragmented and far less efficient. The policy recommendation for border institutions is to use the existing structures, enhance their efficiency by increasing their funding as well as jurisdiction. Border XXI should function as the central hub for all the institutions at a federal, state and local level. Having one main center allows for greater synergy and sharing of resources. Within this structure, NADBank should become the channel through which all the financing issues are handled. On paper the program seems flawless. It is too soon to see if the principles of Border XXI and its lofty goals can be effectively implemented.

Financing Environmental Change in the Borderlands

Even though NADBank has been widely criticized for not funding any development projects, towards the end of last year, it finally started to provide funding. Those projects highlighted the bank's capacity to mobilize capital from the federal government and other international organizations to assist community projects. An example of this is the $28 million secured for a treatment plant which should guarantee a steady supply of clear and healthful water for Brawley, a city 120 miles east of San Diego. This plan will also deliver for the first time potable water to the residents of the Poe colonia west of the town. Without NADBank, the BECC and its technical help, the city would have borne 40 percent higher costs. While it is clear that NADBank does work, it still needs restructuring and better financing. The criticism NADBank incurred will help in defining restructuring policies.

NADBank has experienced major performance problems since its inception. The main problems with NADBank are: insufficient funding and inability to allocate loans effectively. The General Accounting Office has criticized the bank, accusing it of charging far too much for loans. Philips Olmedo, one of the Presidents of NADBank, notes that the bank has been constrained by having to borrow from capital markets to finance projects, even though the US and Mexico agreed to capitalize the bank with US $ 1.5 billion. Also, the bank does not have a government guarantee when financing projects and, thus, has had to ensure the cash flows are sustainable; therefore can loan only to wealthier communities. Guarantee loans work in the following way: The federal government provides a certain amount in loan guarantee. Then, banks hold the guarantee and can loan up to 20 times the guarantee to private entities the projects funded. As long as the money is returned the federal government gets is money back. Guarantee loans seem interesting and efficient and could be used also for environmental projects.Due to all these complications commercial banks can loan at lower rates than NADBank. Further, Mexicans have had problems borrowing money from NADBank because of Mexican restriction against foreign banks. Restructuring and easing the regulations involving NADBank would improve things immensely. Mexico and the US should grant loan guarantees to the bank, this would allow it to become more competitive compared commercial banks. The bank should also make sure that Mexico can freely access credit without being impeded by national restrictions.

Recently both NADBank and the BECC have faced additional woes. Amidst allegations of mismanagement, the two top General Managers for the BECC, Roger Frauenfelder and Luis Raul Dominguez, were ousted, while Alfredo Philips Olmedo resigned to take No.2 job in Mexico's ruling PRI party. Economist Peter Emerson interprets the ousters as based on a "cultural clash," because the institution was imposing US concepts on Mexico. However, morale in the institutions is still good. Harry Browne, an environmentalist praised the BECC for its role of encouraging participation and sharing, which has strengthened NGOs in Mexico; in Browne words: "organization has also gone far to establish a bi-national mentality among environmental official that didn't exist before."

The lack of funds from NADBank could partly be rectified by the channeling the money that World Bank and other international institutions which loan money to projects in the border regions. For example, in 1995 the World Bank provided a loan for $918 million for water treatment and disposal of municipal and solid waste and air quality improvements. The problem with this loan was that not enough information was provided to the public on how the project affected the people of the area, and no adequate environmental assessment was made; also it took a very long time for the Mexican government to finalize the loan. Further the World Bank has a special northern Border Environmental Program (NBEP) for a credit of $368 million to support environmental programs. If the World Bank channeled those funds into NADBank, this would solve both problems of environmental standards and public involvement as well as increase funds for NADBank. NADBank would serve intermediate for all development aid money channeled to the border areas thus providing both for increased funding and better allocation criteria.

Another way through which NADBank should increase its budget is by collecting a polluter-pays tax from those companies that are not complying with environmental standards and/or sell pollution permits to companies contaminating the air and water. Pollution permits would, in theory, result in the commodification of pollution and function as an incentive for firms to switch to less pollution producing methods, which would not be taxed. Those firms producing negligible amounts of contamination would not have to purchase pollution permits and would thus gain an advantage vis-a-vis their competitors. Pollution permits should be extended to water as well, as water pollution is the major problem of the border region. Companies that pollute in excess of the permits they hold should have to pay stiff fines while those that reduce emissions would be at an advantage and could sell their permits to less efficient companies. Permits such as these can and have been sold on the stock market as well. In 1992, 150,000 permits were auctioned for 21 million dollars at the Chicago Board of Trade. We can thus see the potential those two approaches offer for both increasing NADBank's budget and reducing pollution.

Both those strategies are already part of the EPA legislation. However, there have been conflicts of jurisdiction between the EPA and state governments. In Texas, the Texas Natural Resource Conservation Commission has filed suit against the EPA accusing it of "unnecessarily obstructing the program which regulates new air emission in the state." According to the decentralization policy advocated by this task force, the administration and determination of both taxes and permits should be done by individual states. More importantly, US owned firms in the border regions must also comply with federal US regulations. The taxes collected and the revenues from the permits should be used for projects in the same areas where the money comes from. Combined with this, a more positive approach to addressing companies behavior would be to include a priority low-interest loans to companies with strong records of compliance with regulations as wells as ecologically friendly modes of production.

Once those improvements are made NADBank can be incorporated into the structure of the Border XXI, and the goals of addressing specific issues regarding border communities will be easier to achieve. By having all the regions' projects channeled through the same institutions, a synergy of forces could be created, with no danger of overlapping or of insufficient project assessment. Also, most of the decision making would be moved to the border region in general, and to communities for specific projects. This will allow for easier bi-national collaboration; with Washington D.C. and Mexico City far away, issues of sovereignty and of national interest would not impede the realization of important local projects, and, therefore, deepening of interdependence could be achieved without jeopardizing the nations' identities.

For summary, the following steps should be taken to move NADBank into the key financial role for the region it was designed to serve:

• Restructuring aimed to make the Bank truly bi-national
• Increase funding through:
  • a) collecting polluters tax and/or managing the polluters permit market,

    b) acting as funnel for funds going towards the border regions such as the World Bank funds,

    c) obtaining a loan guaranteed from the US and Mexico,

    d) becoming the recipient for international institutions aid programs in general,

• Expand NADBank to include funding for socio-economic.

Cleaning up the cesspool

Water problems are endemic to the entire US-Mexico border; water issues are twofold in nature. First, there is the a lack of water and second, the little existing water is highly polluted, as Botello and Roe's Chapters have shown. A solution to the first problem would for the IBWI to sell water as a commodity to the maquiladoras and then use the revenues to build water treatment plants. A less drastic approach would be to tax, both residential (in the US) and industrial users of water who exceed the established quantity.

As Roe and Botello's Chapters have shown, water is highly polluted in the border regions mainly because of lack of sufficient water treatment plants. Other major reason, and consequence of lack of infrastructure, are that the maquiladora who dispose of their waste, with the municipal waste, which already does not get treated; were maquiladora to pre-treat their waste, a large part of the problem would be solved. Thus maquiladoras should be given incentives by the US to build for themselves a pretreatment plant or be heavily fined. In the case of Tijuana, as Roe argued, it is of vital importance that a treatment plant be built up stream from the city. Another source of water pollution is caused by the fact that in Mexico, most homes don't have waste disposal and the waste goes directly into the rivers. According to Border XXI Working Group on Water, water treatment plant capacity along the whole US-Mexican border is 34% of total need; 69% of the population has access to sewage disposal and 88% to drinking water.

Polluted waters affect four main sectors of the life of the region. Health is severely threatened by polluted water. As Roe shows, "waste pollution in the Tijuana River increases the incidence of diseases such as s hepatitis, tuberculosis and dysentery." Tourism is also adversely effected by polluted waters, as the Roe's chapter pointed out, Imperial Beach lost $100m annually due to closed beaches. Agriculture is also affected; the water used to irrigate the fields is taken from the rivers which are highly polluted and thus agricultural goods absorb most pollutants. Finally, biodiversity is being killed by pollution.

Conventional ways to raise funds to build the necessary infrastructure to process all water waste are not sufficient. In 1996 the EPA received $150 million for border environmental infrastructure and the Commission Nacional del Agua (CNA) gave $5.5 million for Mexico's northern border needs. However, Border XXI Water Working Group estimated it will need $442.3 for the next 5 years which does not come close to the funds provided by the governmental agencies. Other sources must be found. The tourism industry, for example, could provide funds to clean up the beaches. The maquiladoras could be asked to either collectively provide their own water treatment plants, reduce their discharges of pollutants on municipal wastewater collection systems, or be heavily taxed on waste produced. The taxes and fines collected should go to NADBank who would channel it in water projects. With the maquiladoras, however, we have seen that a major problem is that of enforcement of regulations. The Water Working Group is devising ways to make sure industries comply with the regulations.

To summarize, the following steps should be taken in order to improve the water situation in the border region:

• Develop consciousness about water and promote its efficient use through education. Promote water reuse and conservation,
• Foster environmental responsibility through "green" taxes and pollution permits,
• Tax excessive use of water,
• Tax maquiladoras that don't reduce their discharge and coerce maquiladoras to build a pretreatment recycling plant for industry use,
• Channel all the taxes collected into NADBank to be used for water projects exclusively,
• Enforce existing regulations,
• Increase institutional coordination to make decision-making more efficient and optimize available resources (so that situations like the South Bay Plant, discussed by Roe won't happen again).
• Build an additional waste treatment plant in Tijuana.

Lifting the clouds

Air quality in the border regions is very poor. In the Texas region, as Botello has illustrated, the quality is depleted due to vehicle emission, unpaved roads in Mexico which send dust in the air, and the brick making industry. Further, in Mexico, the problem is increased by the low quality of fuel used, the poor conditions of most vehicles and the long lines trucks have to waiting at the border. To address air pollution, most of the policies necessarily address directly with problems occurring in the Mexican side of the border; thus they are harder to implement. Those policies should focus on the need harmonize gasoline quality in Mexico as well as the quality of vehicles standards.

By addressing the problems of the long lines at the ports of entrance, significant exhaustion fumes emissions would be eliminated. Increasing efficiency of the border crossing is fundamental both to decrease pollution and facilitate trade. As Hall pointed out, at times the lines of trucks waiting to get clearance at costume is as long as five miles. Pace lanes, speed lanes for pre-approved vehicles and trucks, should be made more efficient. Also a system of traffic lights that would make the traffic move in waves ensuring that during pausing periods the engines would be turned off, this would curb large amounts of air pollution. Education about how to reduce pollution would also create positive results.

More projects, like the one mentioned by Botello should be devised to minimize the harm of brick making. Microcredit type loans could be effectively used here to provide brick makers with money to invest in higher quality kilns. Microcredit is a system initially devised by Mr. Yunus an Indian economist who funded the Grameen bank in Bangladesh over 20 years ago. The idea was to provide small credit for poor women who would not generally qualify for loans; through those small loans the poor are able to improve their income. Just recently in Washington D.C. a Microlending Summit took place were. Over 2000 politicians, business people and financiers took part, among them Hillary Clinton. The World Bank and other international institutions have shown great interest and are planning to launch their own microlending projects. Clinton announced he would request $1 billion over 5 years to support development of a "microenterpries development program" to increase access to credit for women, low-income people and minorities, Mrs. Clinton believes loans can change the lives of poor. The idea of microcredit would work well in the border region on both side of the border. The colonias are perfect targets for those types of projects. The Foundation for International Community Assistance, (FINCA) presently has 3 microbanks in Tijuana, and it is planning to enlarge. NADBank could help FINCA to expand along the border and expand to the Texas border with specific plans for brick makers.

To summarize, the following steps should be taken to decrease air pollution in the border region:

• Harmonize fuel and vehicles quality standards in Mexico,
• Foster environmental responsibility through "green" taxes and pollution permits,
• Concentrate in improving transport policies so that they help decrease pollution,

  a) Increase efficiency of ports of entry,

  b) Create or ameliorate pace lane,

  c) Place traffic lights at border-crossing to tell drivers to turn their engines off,

  d) Through NADBank, finance projects to pave roads in Mexico,

• Through microcredit influence habits of brick makers to less polluting practices via market forces.

Hazardous waste

The last major environmental problem, discussed both by Botello and Roe, is hazardous and solid waste disposal. The problems here are illegal trans-border shipments of hazardous waste from the US, where it is expensive to dispose, to Mexico where it is not; improper disposal of hazardous and solid waste, which causes health and environmental risks by toxic leaks in the aquifers; and the need to develop new sites. The problem of uncontrolled dumps is a major one in both trans-border regions examined in the previous Chapters; in the San Diego-Tijuana region there are as many as 9000 hazardous waste sites, of which 1400 are uncontrolled. Because it would still be cheaper for the US to dispose of waste in Mexico, even legally, more dump sites in should be build in Mexico by using NADBank funding. Also major efforts must be placed on monitoring and enforcing existing laws. Because large parts of the hazardous waste improperly disposed of in Mexico originates in the US, the US should place stricter regulations and fines on firms that engage in illegal trans-border disposal of hazardous waste, and more effective checks should be conducted at the border.

Also maquiladoras, according to law should, repatriate their waste to dispose of it in the US, instead of illegally dumping it in Mexico. To prevent this a system whereby the production and of disposal waste of those companies could be monitored should be devised so as to ensure the waste is properly dumped. The Hazardous and Solid Waste Working Group from Border XXI has in the past years worked on several important projects which should continued to receive funding. From 1992 together with the EPA and SEMARNAP, the Hazardous and Solid Waste Working Group developed and expanded a bi-national computerized tracking system for trans-border movement of hazardous waste and substances (HAZTRKS), with this it achieve improved bi-national enforcement of import/export regulations. Also the group has work on a bi-national development of information and detection of illegally imported/exported hazardous waste. In 1996 it established a bi-national recycling market development zones (RMDZ) in San Diego and Tijuana. The group is involved in training both maquiladoras, government official and community leaders on waste reduction and pollution prevention, and border patrol on how to detect hazardous waste. The primary goals of the group are to implement and improve waste management programs, to monitor trans-border movement of hazardous waste and promote pollution prevention.

To summarize, the following steps should be taken in order to reduce the problem of hazardous waste:

• Increased control of US companies dumping practices both in US and Mexico

  a) make more rigorous checks of Southbound trucks

  b) establish a system whereby the waste of US companies both in Mexico and the US is monitored so that the US knows what companies are not repatriating their waste and which are illegally dumping it in Mexico

• Create more waste dumps in Mexico with the help of NADBank
• Continue funding of the Working Group on Solid and Hazardous waste

SOCIO-ECONOMIC ISSUES: REDUCING THE ASYMMETRIES

Most of the tensions caused by increased interdependence play themselves out in the socio-economic sphere. Whereas with the environment the US and Mexico have achieved a level of mutual understanding on what the problems and solutions are, socio-economic issues tend to generate greater divergence of interests between the US and Mexico, and thus more antagonistic attitudes. Socio-economic problems are more directly related to the asymmetries in economics and culture between the US and Mexico, thus presents a greater challenge. This section will start by discussing infrastructure problems which are closely related to the environment and are so crucial to the success of the borderlands regions as focal point for trade. The last subsection will look at immigration issues examining all the factors involved and dedicating time to address labor issues as they relate to immigration.

Infrastructure: The Key to Sustainable Development

The lack of adequate infrastructure in the border regions is a source of continuous concern for the environment, for living conditions and for trade. In the EU, as Karelus explained, traffic links have become one of the most important instruments of regional development policy. Through structural programs and different EU funds Portugal and Spain are updating their road system. Even though the US-Mexican border region is in urgent need of upgrading its roads as is Portugal, little supra-national financing is available to these regions. As we have seen both in Kussmann and in Hall's Chapters insufficient infrastructure hampers trade and increases discomfort in the regions. Both the San Diego-Tijuana and the Texas-Mexico region lack an adequate highway system. San Diego and Tijuana don't even have an expressway that connects them. Michael Kantor, US Secretary of Commerce, said, "[w]ithout adequate wastewater facilities, power generation plants, modern transportation systems. . . we will not fully realize the potential of NAFTA." According to government estimates, taking care of infrastructure problems on both sides of the border will cost $15 billion in the next decade. NADBank together with a joint working Committee on Transportation Planning is working on harmonizing infrastructure development programs in the border region. As Michael Kantor said the "goal is to foster private sector participation in the vast array of critical and exciting infrastructure projects and border initiatives now under discussion." NADBank,as we have seen, could play an important role in attracting funds from the private sector for transportation projects. In January 1996 the US and Mexico decided to spend $2.5 million on a US-Mexico transportation planning program. The program will create a data bank for border region transportation system and will formulate policies for technical needs.

Much more remains to be accomplished to solve transportation problems in the border regions. In a recent speech to Congress, Representative from California Bob Filner (D-Calif.) emphasized how the

federal government must take responsibility for its trade policy, which overburdens the infrastructure of the border region and amounts to giant, unfounded mandate on states and localities that are being forced to pay for infrastructure improvements.

Representative Filner, a member of the House Transportation and Infrastructure Committee, proposed a lofty plan for the federal government to invest a total of about $650 millions to improve border states' infrastructure. Representative Filner's plan would take funds from increased custom duties, merchandise fees, and commerce-related revenues as a result of NAFTA. This approach to raising funds defeats the purpose of lowering tariffs; it is doubtful that this plan will pass through Congress. Representative Filner, though, has other ideas for procuring funding which seem more viable. About $100 million of his plan would be generated through loan guarantees, which allow the federal government to encourage private investment. The WGA points out that Congress tends not to honor the purpose for which gas and diesel taxes are collected, namely to be placed into the Highway Trust Fund. If this were done there would be more funds available for transportation needs.

Part of Representative Filner's plan, besides general improvement of highways and building new roads, is to reopen the San Diego and Arizona Eastern Railroad, as described by Hall. Further, as the Kansas City Southern Industries recent winning bid of the $1.4 billion to operate Mexico's busiest rail line, has shown, railways can provided a good alternative to the problematic caused by transporting goods by truck. The advantages of railroad are numerous. Environmentally they do not create as much air pollution; they are easier to inspect, keep the roads emptier, and are 50 percent cheaper than trucks. KCSI will be able to connected Canada and Mexico. The company estimates that there are great investments is necessaryin order to fully reap the benefit of rail roads; updating equipment and opening up new branches, for this they plan to find outside financing. The US government should subsidize the railroad industry and help it to achieve its potential capacity. This will prove to lessen environmental as well as border inspection problems.

The federal government should support initiatives and companies involved in revamping the railroads. WGA has encouraged Congress to maintain federal programs that assist the railways, such as Local Rail Freight Assistance and Tail-Highway Crossing. The Governors suggest that funding for those programs should come from federal diesel taxes collected from the railroads.

Transportation and infrastructure plans for the border regions should be designed with the whole region in mind and especially with the awareness of the interdependencies of twin cities along the border. The region is highly interdependent, and must be viewed as one unit. NADBank and the Committee of Transportation Planning, together with the BECC, and states, should design transport plans that would reflect the need of the community. Finally, if the funds materialize, they should be given to NADBank to channel into infrastructure for the border regions.

Concerning transport issues, the trucking situation discussed by Kussmann in Chapter 9 epitomizes all the tensions, asymmetries, and prejudices that make integration between the US and Mexico so challenging. On the one hand, there is the written agreement for Mexican truckers to have full access to the Southwest border states by December 18, 1996. On the other hand, implementing this agreement would bring complications for the US such as labor discontent and environmentalist's criticisms. This issue can be seen as the eternal battle between the liberalization of trucking across border, and the protectionism pull towards a more regulated system, both to protect US workers and the environment.

The two main objections to Mexican trucks are that they do not measure up to US standards and are therefore dangerous. Also, if Mexicans gain access to the border states, they would take jobs away from Americans. Solutions to these problems are complex. Ultimately Mexican truckers' standards should converge with those of the US, in order for Mexican truckers to be allowed to work in the US. In the meantime, Mexican trucks should still be allowed the 20 miles commercial zone behind the border. Also Mexican truckers should be instructed on how to meet those standards. US companies employing Mexican truckers should be made responsible for the condition of the trucks. Ultimately US truckers will loose some jobs; this is an inevitable effect of integration. For those displaced, NAFTA has provided for retraining programs.

To summarize, the following steps should be taken to improve infrastructure in the region and deal with the trucking problem:

• Devise efficient ways to fund projects: toll streets, taxing the industry, using guarantee loans and other means,
• Channel funds to NADBank to guarantee bi-national, and regional decision- making and environmental sustainability of projects.
• Implement policies that create incentives for new maquiladoras open in the center of Mexico rather than at the border, thus lessening the pressure on the border.
• Subsidize the rail industry
• Increase harmonization of trucks standards and then allow Mexican truckers in the country
• Make US responsible for Mexican trucks

Labor

According to Jerome Levinson, a professor at the American University Law School, the "fatal flaw" in the labor side agreement is that there is "no legal bridge from the side agreement to the main agreement," thus trade sanctions cannot be used as means to ensure that core labor rights be enforced. However, linking the two would go against free market principles, as well as WTO regulations which state that trade sanctions cannot be used as political tools. Like the environmental side agreement the labor one does not create any enforceable regulations instead it stresses the importance of the enforcement of the existing national laws by both parties. The NAAL can take action only against lack of enforcement of domestic laws; thus only the actions of government can be considered, not those of companies. Moreover, the process is long and enforcement mechanism weak. Most of the cases that have gone to the NAAL have not been satisfactorily resolved.

One important improvement that could be made by NAAL is to make multinational corporations (MNCs) parties to NAAL, so that they become responsible to enforce labor standards. If a company is found guilty of not enforcing the standard of the country it operates in, then it could be fined; subsequently it would be audited to make sure it would comply with the law. This mechanism would facilitate enforcement mechanism and better protect worker's rights. As demonstrated in Kussmann's Chapter, Mexico's has a history of abusing workers' rights in order to achieve economic growth. If the border regions labor affairs were taken care of by a bi-national organization, such as that created by NAALC, much of those labor traouble could be corrected.

The other issue Kussmann examined is the poor quality of the retraining programs put in place after NAFTA to prepared displaced US workers for higher skills jobs. Education and training are two fields which the Administration finds of vital interest for the prosperity of the nation. "Education and training policy is one of the few policy levers available to address both the slow down in growth and productivity and the increase in earning inequality." Thus, even if at present the programs in place might not completely satisfy the need created by NAFTA, programs can be adjusted to the specific needs of border regions.

To summarize, the following steps should be taken to improve the efficiency of labor standards enforcement and retraining programs:

• include MNCs in NAALC. Form clear guidelines that US maquiladoras should follow,
• improve and enforce NAALC mechanisms,
• adjust retraining programs to better respond to the necessities of border regions.

Facing the immigration paradox

Because of the complexities and attitudes that the immigrations issue raises, as we have seen Hall's Chapter, there is a need for a deeper understanding of the reality of the issue from both sides of the border and a joint effort to find a compromise. Thus, a bi-national commission that would undertake a comprehensive study of immigration to considered legitimate by both countries should be established. This commission would allow to study the data and come up with realistic policies to manage immigration.

Cross-labor migration is the result of increased economic interdependency. To address immigration, we must study and design policies that directly deal with labor and unemployment issues. In the case of northern Ireland, as Karelus shows in Chapter 11, the problem of migration and the subsequent "brain drain" was tackled by creating partnerships aimed at retaining and placing the long-term unemployed back to work, as well as building potentially self-sustaining firms that provide both training and jobs for those out of work. Moreover, the harmonization of labor norms as well as workplace safety and health standards in the EU has almost eliminated problems of "social dumping." Thus the lesson we can draw from the EU is to focus on curbing unemployment in the country of origin and minimize wage and labor standard disparities.

Similarly, in the US, the two main areas where policies should focus in order to decrease immigration pressures are the demand and the supply side, which respectively translate in mitigating the pull and push factors discussed by Hall. The pull factors can be controlled nationally. Andreas, the author of a study on immigration and drugs problems between the US and Mexico, suggests that the US government should focus more on employers than illegal workers. The 1986 Immigration Reform and Control Act (IRCA), which corrected a law that allowed employers to hire illegal immigrants, was a first step in that direction. However, this law was easily circumvented by immigrants through the forging of documents. Today it only costs 10$ to obtain such documents. A new amendment to this law should be made which cannot be so easily circumscribed and better enforcement for this law should be impose. Andreas justly argues that were the US to raise and enforce labor standards, it would no longer be convenient for employers to run the risk of employing illegal immigrants that they can no longer exploit.

Addressing the push factors is more complicated, but could yield great results. According to a study made before the implementation of NAFTA, NAFTA would have decrease, albeit slowly, undocumented migration, by improving the Mexican economy and thus lowering the pressure of push factors. Thus, it was estimated by the study that in 11 to 15 years there would be a 50% decrease on the volume of undocumented migration.

So far however, as seen in Hall's Chapter, this does not seem to have been the case. Moreover, theoretical projections do not support the rosy future that NAFTA advocates tried to depict. Indeed it seems that if no immediate direct action is taken, the already problematic the situation will only intensify. The displacement created in rural sector by increasing "glocalization" generates huge potential immigrants of the future. The two major causes of displacement in Mexico are, NAFTA and Mexican liberalization programs, both prompted by the US.

The US produces the same agricultural products as Mexico at a lower costs. Thus, in the first year of NAFTA's the US exported about 38% agricultural products. This will cause the displace of many Mexican farmers, who will loose their jobs to the US more competitive prices. It is estimated that as a result 600,000 Mexicans will immigrate illegally to the US in the next five to ten year period. The number of displaced farmers will also be effected by the liberalization of the ejido; ejido which is state owned land distributed to the peasants is estimated will create about 2 to 2.5 million farmers that will sell their land and leave the countryside, many of those will eventually head for the US.

Addressing push factors, Andreas devised several interesting policies to improve the situation and decrease tension between the US and Mexico. The US should postpone lowering agricultural tariffs thus allowing for more adjustment time for Mexican farmers. What this really means it that the US must set its priority, accept an increase in immigrants or limit free market. Andreas' policies force policy makers to seriously consider what their national interests really are. Yet another much less painful step that the US could take in conjunction with Mexico, is to support and advocate microcredit type banks, such as those proposed in the air pollution policy recommendations, both in the border regions and in the interior of Mexico. By giving the poor a chance to establish their own enterprises, microcredit would soften the adjustment process and slow down migratory process. Microcredit would also help poor people on the border. NADBank could also be promote projects that would help small farmers with infrastructure, technology and rescues so that they do not leave the land for jobs in the States.

To successfully address push factors there are also important policies that Mexico should implement. Increasing the minimum wages would lower the wage gap between the US and Mexico and thus decrease incentives to immigrate to the US; Mexico should also take more active role and intervene to mange the economic transition in the rural areas, and help the displaced populations find new opportunities in their own country. Trying to attract foreign investment to the center of Mexico rather than the border regions would increase employment in the center and decrease the pressure along the border.

As Hall argues in Chapter 7, immigration is the result of globalization of labor. Immigration needs to be address by both countries in a cooperative and not hostile and prejudiced way. Priorities must be set and declared openly. NAFTA is not a common market nor do the contracting parties desire to make it such. However, the de facto mobility of labor is something that must be regulated unless it will lead to increasing tensions. In conclusion, as some scholar argue, since immigration pressure are not likely to diminish in the near future, and since the US demand for cheap labor is not likely to diminish either, the US is faced with either allowing for free mobility of labor or to view immigration as an economic and not criminal problem and to collaborate with Mexico to decrease the pressure by addressing the forces pushing migration north.

To summarize, the following steps should be taken to address the immigration issue:

• establish a bi-national institution to study the issue and help formulate policies,
• policies geared toward decreasing demand:

  a) enforce labor standards and minimum wage in the States,

  b) improve monitoring and enforce fines for employer that use illegal immigrants,

  c) amend the 1986 IRCA,

• policies geared toward decreasing supply:

  a) increase Mexican minimum wage,

  b) microcredit projects to induce people not to leave their land,

  c) decrease speed of agricultural liberalization and tariff reductions.

CONCLUSION:

UPWARD HARMONIZATION FOR A SUSTAINABLE FUTURE

NAFTA represents the entrenchment of globalization, a phenomenon which has resulted in increased cross-border trade flows and regional economic interdependency. It is within the border regions that economic interaction between the US and Mexico is most intense, and as a result the border regions have assumed greater importance to the national economy. Due to the process of globalization, they have become important global players and the focus has shifted to regional competitiveness within a global framework. Unfortunately, free trade has generated numerous negative externalities. Such negative externalities threaten the long-term sustainability of the border regions and therefore the economic success of the US and the North American continent as well.

Due to the structural tendencies of neo-liberalism, global competition has resulted in a short-term focus as companies are forced to cut production costs to remain competitive. The asymmetries, in terms of labor and environmental regulations, between the US and Mexico have been an incentive for US investment in Mexico. The success of the maquiladora was predicated upon the exploitation of Mexico's comparative advantage, namely cheap surplus labor and lax environmental regulations.

NAFTA has resulted in increased interdependency, especially in the border regions. The fate of both countries has become inextricably linked through the border regions, and thus the long-term success of the US is tied to its Southern neighbor. Because of increased interdependency, exploitation of the asymmetries between Mexico and the US will no longer be a viable option for the future. Therefore there is an urgent need to facilitate upward harmonization between the US and Mexico. In this way the negative externalities of rampant free trade can be mitigated.

The US-Mexican border is at the cutting edge of regional interdependence, which integrates "developed" and "less developed" worlds and has hitherto demonstrated effects of unsustainable growth. The dramatic and pressing environmental situation, and, at the same time the vital importance of the region for the economies of both countries have forced the US and Mexico to take impressive, but still insufficient steps to solve the numerous long-ignored problems that threaten the region's well being. The number of bi-national institutions, some of which existed long before NAFTA, together with the many instances of collaboration, as well as the large amount of decision making that has been delegated to local communities, attest to the fact that this region is attempting to deal with some of the most challenging problems that globalization has brought about.

Much remains to be done, however. While a basis for coordination and cross-border dialogue exists, as well as basic ideas for socially responsible free trade, today's policies tend to treat the symptoms and not the root causes of problems within the border regions. If politicians and policies, together with the private sector, incorporate the principle of sustainable development and trans-border cooperation, the market failures of free trade can be mitigated. Such a vision provides the hope that the border regions will be able to overcome their problems and achieve a stable and healthy environmental and socio-economic equilibrium. Because NAFTA reaches beyond "trade" and concerns itself with environmental issues, labor concerns, and aspects of general social well-being, the success of NAFTA can be measured by the extent to which the border regions overcome their problems and prosper. The policy proposals in this section seek to provide a path for sustainable growth for the North American continent.

Appendix