February 18th, 2014 – Are global consumers likely to see many manufacturing labels change from made in China to made in Mexico?

Many economists and foreign investors believe it to be the case for some items, and potential immigration reform between Mexico and its nearest northern neighbor is poised to further fuel that outcome.

Reaching Across Borders to Solve Immigration Issues

The topic of immigration has been a hot-button issue in the United States for many years now and is volatile enough to sway political elections. While many of the immigration reform strategies and planning efforts seem to have been hatched in a national vacuum, the Rand Corporation, which is a think tank known for innovative policy solutions, proposed that establishing a bi-national immigration agreement with Mexico may help alleviate some of the grumbling about immigration for concerned parties on both sides of the issue.

While recognizing that the United States’ immigration challenges will not go away altogether with just a bi-national immigration agreement in place with Mexico, the analysts at the Rand Corporation believe that the agreement is a move in the right direction since many immigrants living and working in the United States illegally are from Mexico. The bi-national immigration agreement takes a new approach to the issue, as it does not assume that illegal immigrants want to live in the United States for any other reason than economic pressure.

Assuming that illegal immigrants are driven north for a better quality of life, experts say that the bi-national immigration agreement may uncover ways to improve Mexican citizens’ quality of life without them having to leave their native country at all. This is possible because the inviting pool of skilled, relatively inexpensive labor in Mexico beckons to foreign investors to dive right in to the growing Mexico manufacturing market. Why should companies wait for immigrants to move to the United States illegally when they can simply set up shop in Mexico?

Reduction of Illegal Immigration is Bitter Sweet for the United States

The Rand Corporation proposes a United States-Mexico bi-national immigration agreement that collects data on migrants to determine better visa policies and efficiently moderate the supply and demand for foreign workers (Rausnitz, Z. 2014). This type of demographic data on migrant workers has not been collected before, and it will help produce invaluable labor statistics for the governments of both countries, as well as foreign investors.

While inexpensively made textiles are likely to remain products of China, Mexico–based foreign manufacturing companies are likely to use labor in Mexico for more skilled, high-end work. For instance, Mexico already has the labor and infrastructure to be competitive in the automotive and appliance manufacturing segments (Coy, P. 2013). They are also set to be leaders in the alternative energy market for solar, geothermal, and wind energy technology.

The bi-national immigration policy may result in better border security and a decreased influx of illegal immigrants coming from south of the border. However, many in the United States were hoping that their policymakers would generate business-friendly legislation needed to entice foreign investors to bring manufacturing jobs back to the United States, in addition to solving the security issues brought about by illegal immigration. That hope seems all but dashed as a proposed bi-national immigration policy further highlights the economic advantages of Mexico manufacturing for foreign investors.