California Governor Jerry Brown visited Mexico President Pena Nieto last month – where the two agreed to work to continue to forge an economically integrated future. As the Imperial Valley News reported: While there Governor Brown signed a “broad agreement with Mexico’s Ministry of Economy to expand trade between businesses in Mexico and California.”
As the same report outlines, Governor Brown told those gather for the agreements’ signing that Mexico represents an “incredible opportunity” for California business. And that the agreement he signed will “lay the foundation” for cross-border investment flow between California and Mexico which will benefit those in both economies.
The agreement is focused on boosting economic, cultural and academic cooperation between California and Mexico. In particular, the agreement emphasizes advanced manufacturing, alternative energy, health and biotechnology, education, agricultural technology and tourism.
The agreement will also enable Mexican companies to access California’s Innovation Hubs (iHUB), an innovation network that includes 16 clusters of research parks, technology incubators, universities and federal laboratories along with economic development organizations, business groups and venture capital funds.
A shared history of growth and cooperation
California and Mexico share a strong history of seeking to build bilateral trade ties. In a statement before the California-México Relations Committee in the California State Assembly in May of 2011, Luz María de la Mora of LMM Consulting – outlined the history and future prospects for Mexico-California bilateral trade.
In that address, Maria De la Mora explained that: Mexico is “the 14th largest economy in the world and the second largest economy in Latin America, while its middle class is [expanding]. [Mexico] is the tenth largest trading country in the world; the tenth largest exporter, the eighth importer and the first trading nation in Latin America both as an exporter and importer. Among the world’s leading trading nations”, De la Mora outlined: “Mexico is an open economy and a major destination of foreign direct investment…the second recipient of FDI in Latin America, only after Brazil.”
NAFTA laid the foundation for today’s high-growth trade relationship
“Mexico’s most important free trade agreement is NAFTA, the North American Free Trade Agreement — in place since January 1994, de la Mora explained, making Mexico and California “key business partners.”
Other key statistics De la Mora outlined include:
- “Mexico is the US third largest export market, after the European Union and Canada.”
- Mexico represents the fourth largest source of US imports from the world, after China, the EU and Canada.
- In 2010 Mexican products accounted for 11% of total US imports from the world.
- “Since NAFTA was implemented in 1994, bilateral trade increased more than 4.4 times, going from US$88 bn to US$386 bn in 17 years.”
- “Mexico has become the first destination” for California’s exports in the world.
- In 2011 “Mexico bought almost 15% (14.7%) of California’s total sales to the world.
- “Since 1993,California’s exports to Mexico experienced…222% growth to reach US $21 bn in sales of CA products to Mexico up from US$6.5 bn in 1993. This number translates into CA exporting to Mexico US$57 million every day.”
- “This dynamic relationship”, as de la Mora outlined, “compares favourably to CA’s export growth rate to the rest of the world, which was a bit more than 100% (103.8%) during these same years.”
- “Not only is Mexico the number one market for California exports in the world, but Mexico sources from a wide array of industries located all over the state.”
Looking forward to a regional economy
Governor Brown’s recent visit to Mexico City provides new, concrete steps forward in the already rapidly expanding trading relationship between Mexico and California. Mexico and California respectively have high-growth, dynamic economies. They share a common border and shared values of economic growth, democracy, innovation and environmental protection.
Many events have set the foundation for the successful visit of Governor Brown. Regional integration of three Californias has a proven economic record.
Most recent, San Diego and Tijuana have been working on the international bridge at the Tijuana airport to increase mobility for San Diego area, which is expected to be working on summer 2015. Other examples are the visit from Los Angeles Major Eric Garcetti on a trade mission to Mexico City, the efforts from US/Mexico customs on protocols to expedite foreign trade between countries, the investment of healthcare services in Tijuana to attend US baby boomers and HMOs clients, the cross-border telecom services, and the US investments in green energy (specially solar), resort and retirement housing projects across the two Mexican Californias. In addition, with the opening of the energy and telecom markets in Mexico, a greater regional dynamic is expected.
As these recent events reflect – three Californias are continuing to build upon a rich and bountiful common effort to their mutual benefit, and trade agreements are just boosting the regional business opportunities. With continued dedication and work – this economic relationship is on a trajectory to be among the world’s most dynamic bilateral trading relationships in history.
Photo credit: by Steve Jurvetson