Companies looking for opportunity in the Southwest will hear a lot from El Paso in the future.

        “We’re going to have to get on the road as a city,” says Mayor Joe Wardy. “On my watch the city is going to get more organized. We’ve got to get going to promote our city.”

        As Wardy sees it, there is a lot to promote. El Paso forms a critical component of a three-pronged base: New Mexico’s research and development capability; El Paso’s transportation and logistics expertise; and Ciudad Juárez’s manufacturing base.

        “The Number 1 thing El Paso has to do is promote regionalism,” Wardy says.

        Founded more than four centuries ago as an outpost for traders and missionaries in the west, El Paso, Texas’s dynamic growth has been credited to the development of an integrated international trade region with Juárez, long before free trade zones and global markets flourished.

        According to Census 2000, El Paso is currently the fifth largest city in Texas and the 23rd largest city in the United States. Juárez is the largest city in Chihuahua and the fifth largest city in Mexico.

        While the Juárez manufacturing base is important to El Paso’s future, the city has more than that to offer. According to city planners, El Paso has five sectors it is targeting for growth:

        •Military. El Paso is home to Fort Bliss, where the U.S. Army’s Air Defense Artillery Center of Excellence is based.

        •Medical. As the largest city in West Texas and Southern New Mexico, El Paso is a natural site for regional health care. The Texas Tech University Health Sciences Center is here, as is the William Beaumont Army Medical Center.

        •Services. This sector would provide paperwork services such as Customs brokerage and banking needed by maquilas and other companies.

        •Retail. El Paso is a target destination for thousands of Mexican nationals who visit relatives or come just for shopping.

        •Tourism/retirement. The city’s proximity to Juárez and other area attractions make it a potential tourist destination. Additionally, El Paso’s favorable climate could be a lure for retirees.

        For the moment, El Paso’s economy is flat, Wardy says. However, there are stirrings caused by the recent improvements in the U.S. economy and there are signs of life again in the Juárez maquila sector.

        Over the next few years, El Paso will experience a continued decline in the apparel and textile industry, but this should be offset by growth in manufacturing operations in two other areas: those that are part of the maquiladora process, and growth in higher value-added companies that are attracted to the assets that El Paso has to offer. Partly resulting from activity in Juárez, job growth in sectors such as rubber and plastics, electronic equipment, and transportation equipment has grown at annual rates of over six percent since 1996.

        The growing cross border trade associated with NAFTA and the maquiladoras has brought additional opportunities for El Paso manufacturers. Suppliers from the interior United States send hundreds of trucks to Juárez with parts and machinery for the maquiladoras. On the back haul, the trucks often return with empty loads. This abundance of trucks departing the  El Paso/Juárez area has driven down the rates on shipments leaving El Paso for locations across the United States.

        Juárez is the prime maquiladora location in Mexico, providing about one fifth of the nation’s overall maquila employment. More than 70 of the maquiladora plants in Juárez are owned by Fortune 500 corporations; among these facilities are telecommunications, electronic assembly plants, clean room manufacturing for medical supplies, consumer appliances, and automotive industry manufacturing. A growing percentage of employment generated by maquiladoras has been in technical and administrative positions rather than direct labor.

        El Paso derives significant economic benefit from the maquiladora industry in Juárez, including a payroll of $247.8 million for maquila employees who live on the U.S. side of the border. In addition, the production-sharing sector of the border economy has attracted companion industries to the area with the maquiladora industry purchasing $1.6 billion worth of services in El Paso. The industry has generated jobs in El Paso in indirect support industries including retail sales, manufacturing support services, professional support services, transportation, banking and home building.

        The steady increase in trade between the United States and Mexico, largely due to increased NAFTA-related activity, has caused El Paso-Juárez to be ranked 16th in trade among the largest Metropolitan Statistical Areas in the United States. Twenty-five percent of all trade between the U.S. and Mexico crosses at the El Paso -Juárez border. Population increases in the area are double the national average for El Paso/Juárez combined.

        The increased trade and the opportunities it brings was the major reason behind a $60 million upgrade to the El Paso International Airport. As a result, El Paso is home to the border’s largest and newest passenger terminal and is emerging as the border’s most centralized intermodal hub. This development included two 144,000 square foot air cargo buildings, more than 34 acres of aircraft parking and 6.4 miles of roadways. The result is the largest and most modern air cargo complex on the U.S. Mexico border.

        The 288,000 square foot cargo complex is the only modern air cargo complex on the border with immediate expansion capabilities, allowing a clear advantage in border trade and associated economic development issues. These new facilities are centered in a future industrial park tailored to the Just In Time nature of US/Mexico trade.

Foreign-Trade Zone No.68

        El Paso is also the site of a foreign-trade zone. A foreign trade zone is a site within the United States, in or near a U.S. Customs port of entry, where foreign and domestic merchandise is generally considered to be in international commerce. Foreign or domestic merchandise may enter this enclave without a formal Customs entry or the payment of Custom duties or government excise taxes.

        El Paso’s Foreign-Trade Zone No. 68 is a general-purpose zone encompassing about 3,003 acres of industrial properties at 21 non-contiguous sites within the El Paso Port of Entry. These sites offer a variety of locations for potential industrial users in the East, Southeast, Central, and Northeast areas of El Paso.

        Growing international trade and the influx of co-production activity related to the North American Free Trade Agreement are expected to increase the number of FTZ users and the volume of their activity. Although FTZ benefits are limited on merchandise originating in Mexico, Canada, and the United States, consolidated entry and export procedures (i.e., Weekly Entry or Weekly T&E) may provide substantial savings and operational efficiencies to importers and exporters. Also, companies whose merchandise originates from other countries around the world can enjoy a multitude of FTZ shipping and manufacturing benefits. These benefits can help business contain overhead costs. Major benefits include:

        •While in the zone, goods are not subject to U.S. Customs duties, quotas, or excise taxes.

        •Duty is not paid until goods are imported from the trade zone into the U.S., so cash flow is flexible. If goods are exported from the trade zone, no duty is paid.

        Certain FTZ opportunities may be taken advantage of depending on the company’s industry or commerce. Wholesalers may:

        •Store goods indefinitely and free of duty or quota restrictions until they enter U.S. territory, if exported, no duty is levied.

        •Inspect merchandise for quality, breakage and loss before duty is paid. Substandard goods may be discarded, destroyed or returned without duty.

        •Remark, repackage, etc. in order to satisfy customer requests or Customs requirements.

        •Borrow on goods stored in the FTZ through the issuance of warehouse receipts.

        •Store goods while awaiting quota openings or favorable exchange rates.

        •Avoid fines for improperly marked items or lost documents- merchandise may be stored until documents are found or identification is corrected.

        •Sample merchandise in order to determine quality before actual payment is required.

        •Exhibit or market goods before payment of duty.

        Manufacturers may:

        •Conduct complete processing or assembly operations and defer the payment of duties until the product enters U.S. territory.

        •Combine foreign and domestic components through processing, manufacturing or reassembly of products in order to qualify for lower duties. U.S. overhead or materials are also duty free.

        •Avoid payment of duties on scrap and waste due to processing or manufacturing.

        •Avoid payment of duties on materials used in manufacturing and on exported materials.

        •Place goods intended for exports in the FTZ in order to qualify for tax rebates.

        Local FTZ advantages include:

        •One-stop shop, U.S. Customs Inspectors located onsite at FTZ administrative offices.

        •Strategically located on the U.S.- Mexico border.

        •Advanced telecommunications systems for clearing merchandise in and out of the zone.

        •Located on a major interstate highway system with international trucking facilities.

        •Access to rail facilities serving every major North American market.

        •Abundant air cargo handlers and facilities at a modern international airport.

        •Streamlined FTZ procedures for prompt distribution of merchandise.

        •Tax exemption of inventory held in active zone.