San Diego Metropolitan - The Connection

For the San Diego-Baja California region, 2003 promises to be a year of transition — hopefully for the better. But it could be a transition for the worse or no transition at all if the stars don’t align properly. And so far, stargazers are guessing.

In the United States, security and impending war with Iraq still hold the nation’s immediate future captive. The security issue has introduced new levels of xenophobia, bringing new problems to the border. Long waits for the legal entry of Mexicans and returning U.S. citizens/legal residents are now a fact of life. With the second INS increase in two years, visa fees have hit $100 per person, discouraging many middle-income Mexican families who normally cross into San Diego to make retail purchases from applying. The long waits and fewer Mexicans crossing have a negative effect on the border economy. When added to the national recession and Mexico’s economic problems, the combination has severely affected the entire binational region.

If during 2003 long border crossing waits persist, both San Diego and Baja retailers will continue to feel the effects. On the commercial side, U.S. Customs shutting down the usage of California rental trucks to cross into Baja to pick up merchandise has added costs, reflecting on the already precarious profit margins of small businesses in San Diego.

Tourism has picked up on both sides of the border, but this is subject to immediate contraction in the event of war or terrorist activity. Baja, however, is still nowhere close to pre-Sept. 11 tourist traffic. This has caused levels of unemployment that are felt across the board and border.

So off we go into 2003 with a lot of uncertainty, but with hopes — perhaps not of a banner year, but at least one better than 2002. If 2003 can set the stage for great things to come, it will be a good year.

Great Things To Come

The Toyota truck-bed manufacturing plant is under construction and scheduled to begin production in 2004. That’s the good news. The we-don’t-know-yet news is that Toyota’s production will depend on market conditions in both the U.S. and Mexico, and further expansion into other auto products in Tijuana also is dependent on the market.
Construction on Tijuana’s convention center is scheduled to start this year. It won’t be completed until 2004, but the future of Tijuana as a business destination will be greatly enhanced, and with San Diego next door will help attract conventions from within Mexico, Latin America, Asia and Europe and possible combinations between San Diego and Tijuana.
The Otay Mesa binational airport terminal promoted by the South San Diego County EDC is still alive. As the Tijuana airport concession operators are consolidating their position, they are taking a serious look at the proposal. During 2003 the search for investment will start in earnest.
More health insurance companies are contracting with providers in Baja so that their Southern California policyholders can avail themselves of services and more affordable rates. This is creating revenue and employment sources in Baja. By 2004, several of these programs will be in full swing. In Southern California it means greater insurance options to those now being priced out.
The Long Beach Port and the Los Angeles Port are investigating the potential of diverting to the Port of Ensenada smaller container ships and fish cargoes. The studies should be completed during 2003. If the conclusion is that Ensenada can be viable, it will create the need for investment in improving the highway between Ensenada and Tecate, plus the potential of making the railroad between the port city and Tijuana a viable investment.
The Royal Flush of what is taking place in Baja, with significant potential effects for not only San Diego but throughout Southern California, is the frantic desire for billionaire multinational oil companies — Sempra Energy, Phillips, Shell, Marathon, El Paso Gas — to invest in liquefied gas to gas installations along the Pacific Coast from Tijuana to Ensenada. For Baja, if one or more of the projects is approved it means investments in the billions of dollars, plus natural gas supplies for the foreseeable future, and exports for Southern California’s ever-growing gas demands. Once approved, LNG projects need up to three and a half years to construct.

The big question: Can they get permits? Baja Californians have come of age since voters threw out the PRI. In the PRI heyday, local wishes were ignored at the whim of the ruling elite. No more. Citizens from Playas de Tijuana, through Rosarito and to Ensenada are mostly speaking as one voice, and that voice so far is — NO.

During the course of the year, we’ll provide greater detail about some of the above projects. Yet the most important thing both sides can accomplish this year is for each to take a respectful attitude toward the other.

Our binational region can be the big winner if we make 2003 The Year of Friendship/El Año de la Amistad.

Patrick Osio Jr. can be reached through San Diego Metropolitan or by e-mail at posiojr@aol.com.