This white paper proposes the strategic Gulf Intracoastal Waterway expansion system into Mexico as part of future trade negotiations. Such an expansion would create a seamless maritime corridor connecting U.S. Gulf Coast states with Mexican coastal ports, offering numerous benefits including increased bilateral trade efficiency, revitalization of the U.S. maritime industry, enhanced border security, reduced highway congestion, and strengthened regional economic cooperation.
By prioritizing this infrastructure initiative in upcoming trade discussions, the United States can advance its economic and security interests while creating a more resilient North American trade network. The U.S. Army Corps of Engineers (USACE) and current administration are uniquely positioned to champion this transformative project that aligns with America’s strategic priorities for trade, security, and infrastructure development.
Background: The Gulf Intracoastal Waterway and Current Trade Challenges
The Gulf Intracoastal Waterway (GIWW) is a 1,100-mile inland waterway system running along the Gulf of Mexico coastline from St. Marks, Florida to Brownsville, Texas. It serves as a critical transportation artery for the movement of bulk commodities, petroleum products, and manufactured goods between Gulf Coast states. Despite its importance, the GIWW currently terminates at the U.S.-Mexico border, creating a transportation discontinuity that limits efficient maritime trade with our southern neighbor.
Current U.S.-Mexico trade faces significant challenges:
- Border Congestion: Land ports of entry experience severe congestion, with the Laredo port of entry alone handling 43% of all truck trade between the U.S. and Mexico. This creates bottlenecks, delays, and increased transportation costs.
- Security Vulnerabilities: The concentration of trade at land border crossings creates security challenges for customs enforcement, leading to opportunities for illicit trafficking.
- Unbalanced Modal Distribution: Nearly 70% of U.S.-Mexico trade travels by truck, placing strain on highway infrastructure and creating environmental impacts.
- Underutilized Maritime Potential: Despite geographic proximity across the Gulf of Mexico, maritime shipping represents a surprisingly small percentage of bilateral trade flows.
The Army Corps of Engineers: America’s Waterway Development Expert
The U.S. Army Corps of Engineers possesses unique capabilities that make it the ideal agency to lead this transformative initiative:
- Established Expertise: USACE has over 200 years of experience in developing and maintaining America’s inland waterways, including the existing GIWW system.
- International Project Management: The Corps has successfully executed complex engineering projects in cooperation with foreign governments around the world.
- Comprehensive Approach: USACE combines engineering excellence with environmental stewardship and economic analysis in its infrastructure development.
- Existing Authority: The Corps already possesses statutory authority to engage in waterway development projects that enhance national security and commerce.
- Interagency Coordination: USACE has established relationships with other relevant agencies including Customs and Border Protection, Department of Transportation, and State Department.
Strategic Benefits of GIWW Expansion to Mexico
1. Trade Efficiency and Economic Growth
Extending the GIWW to connect with Mexican ports would create a “marine highway” that complements existing land transportation networks. This would:
- Diversify transportation options for U.S.-Mexico trade, providing alternatives when land borders experience congestion or disruption
- Reduce transportation costs for bulk commodities and certain containerized goods through more efficient water transportation
- Create new market opportunities for U.S. businesses in Mexico’s growing Gulf Coast economy
- Support the administration’s goals of strengthening American manufacturing and exports
2. Revitalization of U.S. Maritime Industry
The expansion would catalyze growth across the U.S. maritime sector:
- Jones Act Compliance: All vessels operating within the expanded GIWW would need to comply with Jones Act requirements, creating demand for U.S.-built vessels
- Shipbuilding Stimulus: Increased demand for barges, tugs, and other specialized vessels would support U.S. shipyards and manufacturing
- Maritime Employment: Growth in vessel operations, port services, and related industries would create high-quality maritime jobs for American workers
- Merchant Marine Development: Expanded operations would provide additional opportunities for U.S. merchant mariners, strengthening this critical national asset
3. Enhanced Border Security and Control
An integrated waterway system would strengthen border security operations:
- Concentrated Inspection Points: Maritime cargo can be more efficiently inspected at designated port facilities with specialized equipment and personnel
- Reduced Smuggling Opportunities: Shifting legitimate cargo to waterborne transportation allows Customs and Border Protection to focus resources on high-risk land crossings
- Maritime Domain Awareness: Expanded waterway operations would enhance intelligence gathering and surveillance capabilities in the Gulf region
- Coordinated Bilateral Enforcement: The project would necessitate closer U.S.-Mexico cooperation on maritime security initiatives
4. Infrastructure Development and Transportation Benefits
The physical expansion of the waterway would yield significant infrastructure improvements:
- Reduced Highway Congestion: Shifting appropriate cargo to water transportation would reduce truck traffic on already congested border highways
- Lower Infrastructure Maintenance Costs: Water transportation causes less wear and tear on roadways, reducing maintenance requirements
- Environmental Benefits: Marine transportation is generally more fuel-efficient and produces fewer emissions per ton-mile than trucking
- System Resilience: Creating redundant transportation options increases the resilience of supply chains against disruptions
5. Diplomatic and Regional Leadership Opportunities
Proposing this initiative would position the U.S. as a forward-thinking leader in regional infrastructure development:
- Strengthen Bilateral Relations: Collaborative infrastructure development would deepen U.S.-Mexico economic ties
- Counter Chinese Influence: Proactive regional infrastructure investment would serve as an alternative to Chinese Belt and Road initiatives in Latin America
- Set Standards and Practices: U.S. leadership would ensure the implementation of high environmental and operational standards
- Regional Integration Model: Successful implementation could serve as a model for similar initiatives with other trading partners
Implementation Framework
Phase 1: Army Corps of Engineers Assessment (1-2 years)
- USACE conducts engineering feasibility studies and environmental impact assessments
- Corps engages with Mexican counterparts on technical specifications
- Identify key port connections and infrastructure requirements
- Develop preliminary designs and cost estimates for waterway expansion
Phase 2: Initial Development (2-4 years)
- Corps begins dredging and infrastructure improvements at connection points
- Develop pilot shipping lanes between strategic U.S. and Mexican ports
- Implement coordinated customs and security protocols
- Launch incentive programs for maritime operators and shippers
Phase 3: Full Implementation (4-8 years)
- Complete physical connections between waterway systems
- Scale operations to commercial viability
- Transition from pilot programs to full operational status
- Evaluate performance and make necessary adjustments
Sustainable Funding: A Mexico-Specific Waterway Maintenance Fee
A critical component of this proposal is the establishment of a dedicated funding mechanism modeled after the existing Harbor Maintenance Fee (HMF). This new “Gulf Intracoastal Waterway Maintenance Fee” (GIWMF) would provide sustainable, long-term funding for both construction and ongoing maintenance of the expanded waterway system.
Key attributes of this funding mechanism include:
- Fee Structure: A fee assessed on all imports from Mexico, calculated as a percentage of cargo value (similar to the existing HMF rate of 0.125%)
- Dedicated Trust Fund: All collected fees would be deposited into a dedicated Gulf Intracoastal Waterway Trust Fund, administered by the U.S. Treasury
- Protected Funding Source: Unlike general appropriations, this dedicated funding would be insulated from annual budget fluctuations, ensuring consistent support for waterway maintenance
- User-Pays Model: This approach follows the established principle that those who benefit from infrastructure should contribute to its maintenance
- Trade Agreement Integration: The fee structure would be formally incorporated into trade agreements with Mexico, ensuring long-term stability and compliance
- Phased Implementation: Fee collection could begin immediately upon agreement, with revenues initially supporting planning and design activities
Benefits of this funding approach include:
- Sustainability: Creates a permanent, dedicated funding source independent of general appropriations
- Fairness: Distributes costs proportionally across all importers benefiting from U.S.-Mexico trade
- Scalability: Revenue grows naturally as trade volumes increase
- Predictability: Provides consistent funding for long-term maintenance obligations
- Precedent: Builds upon the successful model of the Harbor Maintenance Trust Fund
The proposed GIWMF would generate an estimated $500-750 million annually based on current import volumes, sufficient to support both capital development and ongoing maintenance of the expanded waterway system without placing additional burdens on general taxpayers.
Additional Funding Mechanisms
While the GIWMF would serve as the primary funding source, the project could also utilize complementary funding streams:
- Congressional appropriations for Army Corps of Engineers waterway development
- Public-private partnerships for infrastructure development
- Infrastructure development bonds
- Mexican matching investments in their territorial waters
Policy Recommendations
- Establish the Gulf Intracoastal Waterway Maintenance Fee as part of upcoming trade negotiations with Mexico, ensuring a sustainable funding mechanism for expansion and maintenance.
- Direct the U.S. Army Corps of Engineers to conduct a comprehensive feasibility study examining engineering requirements, environmental impacts, and security implications of extending the GIWW into Mexico.
- Include GIWW expansion as a priority item in future trade negotiations with Mexico, identifying it as essential infrastructure for balanced trade relations.
- Establish a joint U.S.-Mexico waterway planning commission with technical leadership from the Army Corps of Engineers to ensure American interests and standards are protected while facilitating cooperative development.
- Create financial incentives for U.S. shippers to utilize the expanded waterway system once operational.
- Establish a dedicated interagency task force led by USACE to coordinate planning and implementation across relevant departments including Homeland Security, Transportation, State, and Commerce.
Conclusion
Expanding the Gulf Intracoastal Waterway system into Mexico represents a strategic opportunity to reshape North American trade flows while advancing key American interests in maritime industry development, border security, and economic growth. The proposed Gulf Intracoastal Waterway Maintenance Fee provides a sustainable funding mechanism that ensures this critical infrastructure can be developed and maintained without placing burdens on general taxpayers.
By proactively including this initiative in upcoming trade negotiations, the administration can secure a lasting legacy of infrastructure improvement that strengthens America’s competitive position and security posture. The U.S. Army Corps of Engineers is uniquely qualified to lead this effort, bringing its unparalleled experience in waterway development and international infrastructure projects to bear on this transformative initiative.
As international competition intensifies and infrastructure needs grow more pressing, bold initiatives like the GIWW expansion will be essential to maintaining American leadership in global trade and transportation. With dedicated funding and strategic vision, this project can become a cornerstone of modernized North American trade infrastructure.
