San Diego Metropolitan - The Connection

Political economic foolishness continues as local and state budgets are cut. Earlier we witnessed the funding reductions for San Diego County’s sales team, the Regional Economic Development Corp. and South County EDC. In July, I worried that such public attacks on agencies and/or their management was the precursor of an assault on California’s Office of California-Mexico Affairs, commonly called the Trade Commission.

Guess what? It’s happening. California will close its “sales” offices in 12 countries; the world’s fifth largest economy will have no representation in the highly competitive world of trade and commerce.

Shuttering the state’s trade offices will open the door for competitors to move in on our clients. At last count, 31 states have offices in Mexico and one can just hear representatives from Texas, Arizona, Illinois and other states talking with Mexican economic officials about “poor California’s economic disarray.” But now, their states, well do they have deals ....

The pending closure concerns Luis de la Calle, the former undersecretary of Mexico’s ministry of economy. “We buy more California products than any other country in the world,” he says. “If you are closing your No. 1 trade office, you have serious problems.”

When retail operators need to make cuts, an analysis on a per-store basis is performed. The stores not carrying their weight are closed while the strong survive. Similarly, state leaders could have analyzed the 12 foreign trade offices. What countries are bringing us the most business, and which ones are not performing? Close offices accordingly, but don’t shut everything.

Had this been done, the Mexico office would avoided the termination list. Mexico is California’s top trading partner. Trade with Mexico supports 228,000 California jobs. In the year 2000, before this latest recession, California trade with Mexico surpassed $17.51 billion. By 2002 it was down to a still impressive $16.07 billion.

And the nonsense about the trade office’s lack of effectiveness is just that — nonsense. Gov. George Deukmejian opened the Mexico office in 1988. By 1991, trade amounted to $5.5 billion and five years later it was $9.11 billion. Pop ahead five years and it is $16.35 billion. United States exports to Mexico in 2002 totaled $97.47 billion, with California accounting for nearly 16.5 percent of the total.

The annual savings for closing the Mexico City office amounts to $786,000.

Unless state lawmakers like Sen. Denise Moreno Ducheny, who seems to understand the mistake made by her fellow legislators, are able to introduce legislation rescinding the Mexico office closure, the deed is done. The office closes in November.

Creativity still may save the day.

In 2002 the California Legislature approved the opening of a new trade office in Yerevan, Armenia. Approval was easy because the funding will be provided by members of the U.S. Armenian community, so that office will remain open.

And therein is an opportunity.

Before the budget deficit and the where-to-cut debate began, Douglas Smurr, director of the California Office of Trade & Investment Mexico City, founded Friends of California — Mexico Chapter Inc. This public nonprofit 501(c)(3) corporation is dedicated to enhancing and promoting the commercial, cultural and educational ties between California and Mexico.

This gem was Smurr’s vision, but probably not for what I am about to suggest.

With the Armenia effort as a template, the legal mechanism is in place, as is office space in Mexico and a well-qualified director.

It will cost California about $1 million to close the Mexico City office.

Why not consider donating the office furniture and equipment to the nonprofit Friends of California, and provide $500,000 from the $1 million closing fund toward first year operations. Another $250,000 could go for the second year and a similar amount for the third.

Friends of California was designed as a membership organization. With the office and state dollars, the office can continue to operate and launch a membership drive to attract more funding from private sector companies and the numerous chambers and organizations whose members benefit from trade with Mexico.

The office could establish fees for its services, much like the U.S. Department of Commerce has programs for businesses seeking help from commercial attaches in foreign countries.

Properly done, the Friends of California could fulfill the same mission as the trade office with the added advantage that once it stands on its own, it can be removed from the political whims and shortsightedness at which some of our legislators excel.

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