Mexico just got publicly slapped by none other than our own California “Terminator.” Gov. Schwarzenegger said that, using his own money, he will reopen a California trade office in Japan. The sound was heard in the international trade community all the way to Mexico City, and it was President Vicente Fox holding his hand up to his cheek. “Oohing” with delight were states competing with California for business in Mexico.

Japan is a richer country than Mexico. It is the second largest economy in the world. It is California’s No. 1 foreign investment source. Japan’s cars are leading sellers, as are the country’s televisions, video game systems and most consumer electronic products. But surely Schwarzenegger knows that Mexico buys more products from California than does Japan — or he should know. He also must surely know that Mexico is next door to California — he has said he loves Mexico — he has spent family vacations there.

Gov. Schwarzenegger was on a high-profile trade mission to Japan promoting California products. But get this — mainly agricultural and wine products. We all know that California’s $27 billion agriculture industry is the state’s largest revenue sector. Although we cringe at the thought and hesitate to speak of it publicly, we also all know it is Mexican nationals, both the legal residents and undocumented workers, who are the backbone of California’s agricultural success. The Japanese buy more than $1 billion worth of Mexican-worked-California-produced agricultural products, and the governor wants them to buy more.

Mexico overtook both Japan and Canada as California’s leading trading partner in 1999 and has held that position since. In 1999, Mexican purchases were about $1 billion above those of Japan and Canada. That gap has grown to $5 billion higher than Japan’s $11 billion in purchases and more than $6 billion above Canada’s $10 billion in purchases. In 2003, Mexico purchased more than $16 billion in goods and services from California, more than 30 percent of that computers and electronic products. Mexico accounted for 17.4 percent of California’s total trade in 2003 while Japan accounted for 12 percent.

Mexico also is the United States’ No. 1 trading partner, buying more than $81.4 billion of goods through September, double the $40.4 billion that Japan purchased. In fact Mexico is among the top five trading partners with all but four states in the union. Texas, which does have trade offices in Mexico, is eating California alive. In 2003, Texas’ exports to Mexico were $41.5 billion, a whopping $25 billion more than California’s.

Schwarzenegger also has announced he will be visiting European countries promoting California and its products next year, plus his administration is making a big push to increase trade with China, a nation that annually buys about $5 billion of Mexican-worked-California-produced agricultural products. The Mexico versus China trade with California (and the U.S.) is even more lopsided in favor of Mexico than it is with Japan.

So why is California’s No. 1 trading partner treated with such disdain and outright disrespect?

When it comes to Mexico, the good and the bad issues are rolled into one, and the bad ones trump the good. Issues like illegal immigration, driver’s licenses for undocumented state residents and the Mexican Matricula Consular (Mexican official ID) obstruct discussions and overshadow positive aspects such as trade.

In July 2003, we decried in these pages the foolishness of Gov. Davis for shutting down the state’s 12 trade offices in foreign countries. Closings included offices in Mexico and Japan. We correctly predicted competing states would step in and slowly pick away at California’s business.

In fairness to Schwarzenegger, it was Vicente Fox who canceled his scheduled trip to California. As he stated, the national budget was in the middle of heated debate in Congress, and he had to stay close to the game. It is widely believed the real reason for the cancellation was he wanted to discuss the driver’s license issue with Schwarzenegger and already had been told there would be no change. So Fox didn’t want to return to Mexico with one more failure.

Whatever the case, when it comes to Mexican trade other states are moving in. They love the idea that California so shoddily treats its best customer, because it represents opportunity for them.

Patrick Osio Jr. can be reached at posiojr@sandiegometro.com. The veteran consultant also has issued The Mexican Perspective, an intensive primer on business culture and protocol. Copies are available at http://www.hispanicvista.com/sales/book_sale.htm.