Please permit me to express my appreciation for having been given the honor of becoming President of our Chapter this year. It is certainly a challenge to follow the excellent leadership provided so generously by Mauricio Monroy who has now become our Chairman.
I hope to continue to call upon his kind assistance in planning our future initiatives in partnership with all of the members of the Board and of the Chamber. I would also like to express my gratitude to Marlen Marroquin, our Executive Director, for her tireless efforts on behalf of the Chamber. The members of the Board contribute so much to our success and I would also like to express my admiration for their enthusiastic participation. We also wish to thank the Consul General, the Trade Commissioner and their staff for their continuous cooperation.
As we are preparing to recognize the 20th Anniversary of the North American Free Trade Agreement later this year, it is perhaps an appropriate occasion to reflect on the progress we have made and to look forward to what business prospects the future might hold.
As well as being one of the nation’s major trading partners, Mexico is also California’s largest trading partner. In 2012 the Los Angeles Customs District, which includes the Ports of LA and Long Beach and LAX Airport, handled $ 2.17 Billion in bilateral cargo with Mexico. The San Diego Customs District handled $ 48.7 Billion in two way trade with Mexico. Therefore, the total activity for our Southern California region is approximately $ 51.4 Billion.
At the Ports of Los Angeles and Long Beach, our trade connection with Mexico is more readily measured, not so much through containers, but through cruise passenger services to Ensenada, Cabo San Lucas and other vacation destinations on the West Coast of Mexico. This cruise business has a high multiplier effect in terms of economic benefit for local communities surrounding the ports of call. For example, if a visitor spends $ 150 on their local visit on meals, souvenirs and other items, that would amount to $ 75,000,000 in direct economic activity, based upon 500,000 cruise visitors per year. Bringing together the stakeholders in Mexico and California to contribute to a long term marketing campaign to revive this critically important sector would have many benefits for all participating Southern California and Mexican port areas and destinations. Baja California would be a major beneficiary.
The Chamber has for several years considered our trilateral trading and investment relations with Mexico and Asia to be of great future strategic importance for our region. Due to the gradual increase in labor costs along the industrialized coastal areas of China, an interesting development has occurred. In some cases and in certain sectors, costs for manufacturing in Mexico have become competitive with several coastal areas of China.
Due to the experience and infrastructure acquired through the development of the Maquiladora sector as well as the progressive education policies in Baja California, there are an increasing number of facilities that can meet the needs of Asian exporters and U.S. importers.
These facilities along California’s Southern border hold many benefits. They are capable of responding to U.S. orders quickly and without lengthy shipping and inventory delays, smaller orders can be accommodated, changes can be made more nimbly, there are many value added services and there is a skilled work force. These facilities are also close to our international ports and airport gateway here in Southern California. There are billions of dollars of services and goods that Southern California can and does provide to this growing manufacturing sector in North Baja.
The conclusion is that Southern California and Baja California together constitute a Mega Region, with an unparalleled opportunity to develop into the most potentially powerful and diverse economic platform on the Pacific Rim.
In 2012, the United States concluded Free Trade Agreements with Colombia and Panama, as well as South Korea. These Latin American agreements put into place a vertical connection of trade agreements which reach all along the West Coast of the Americas, from NAFTA in the North to CAFTA in Central America and all the way down the coast to the Antarctic (with the sole exception of Ecuador). This is an unprecedented development and our Mega Region is strategically placed on this line as the key trading and cargo pivot with both Asia and Oceania. Additionally, we now have enhanced manufacturing competitiveness to add to our portfolio of advantages.
If there was one major enhancement that could be wished, it would be improved flow across our border for safe cargoes. We should unite to request increased funding for technology, staffing and facilities so that our regional economic potential can be achieved. There are some estimates that the commercial penalty which we are paying for this inefficiency of safe cargo flow may exceed $ 14 billion. At a time when unemployment in Southern California still remains stubbornly high compared to the rest of the nation, this policy initiative should constitute a high priority, as it would provide immediate economic relief and employment opportunities.
It is our wish that together we may support the Chamber in taking a leading role to promote improved relations between the United States and Mexico, and, in particular for our Mega Region. These relations have many dimensions and in addition to commerce should include the social, cultural and sports aspect which enrich our lives immeasurably.
There are encouraging signs that we are approaching a turning point where bilateral relations might be improved on a number of levels, but our Chamber’s voice may be of critical importance in accelerating the pace. That is why we are looking forward to the future with an increased degree of optimism and it is a golden opportunity for the Chamber to increase our outreach and activities.
My sincere best wishes go out to all members, supporters and their families and friends for a healthy and prosperous future,