Gov. Jerry Brown’s decision to strengthen California’s trade and investment partnerships in establishing the Office of Business and Economic Development (GO-Biz) is a move that should be applauded by Angelenos –indeed, all Californians – with one major caveat.
The governor has selected China as the location where GO-Biz will open California’s first foreign trade office since 2003. He should be turning first to our neighbors to the south, who are best positioned to be vital global partners. For Los Angeles, where nearly 48 percent of residents are of Hispanic origin, the relationship is natural. Since Los Angeles is the largest manufacturing center of any city in the western United States, the economic rationale is even more compelling. A trade office in Mexico should be first priority for the governor’s GO-Biz initiative. Instead, it is seated behind Beijing and Shanghai on the to-do list.
As a state, California often leads the nation on forward-looking policy. It was the late California Rep. Tom Lantos who, during a 2007 congressional hearing before the Foreign Affairs Committee, provided opening remarks as chairman that scolded the United States for putting “South America somewhere slightly ahead of Antarctica on its priority list,” noting that “we are paying for it dearly with a severe loss of influence and prestige” in that region.
Unfortunately, little has changed since that hearing more than five years ago, and our U.S. foreign policy agenda has yet to recognize Latin America as the key economic and diplomatic ally that it is. California has an opportunity here to pave the way, and Los Angeles should be pushing Sacramento in that direction.
A new report, “Sharing Space With Our Hemispheric Partners: A Latino Perspective on U.S. Policy Toward Latin America,” recently released by the Pacific Council on International Policy (an organization I’m affiliated with), describes why investing time and resources in our Western Hemisphere relationships makes economic sense. It points out that the United States has failed to promote trade opportunities in Latin America with the same vigor as in Asia – to our detriment.
Historically, authoritarian and often unstable governments in Latin America posed strategic problems for the United States. Today, the region has been transformed by the rise of stable democracies and market economies open to global trade in much of the region. Latin America is now populated by ascending global actors – like Mexico, which alone imports more goods from the United States than does China, accounting for more than 10 percent of total U.S. exports.
Mexico’s GDP growth is 5.6 percent, compared with an anemic 1.3 percent in the United States. But perhaps more relevantly for U.S. self-interest, the trade relationship with Mexico benefits companies and workers in this country.
Mexico’s economic stability, its proximity to the United States and its increasingly skilled workforce in a flourishing manufacturing sector combine to create a perfect partner for “production sharing,” which requires parts to be shipped back and forth across the border as goods are produced. As a consequence, U.S. imports from Mexico contain an average of 40 percent American-made parts, compared with about 4 percent for imports from China. This means that, in an era of outsourcing, U.S. trade with Mexico translates into 6 million American jobs.
Private-sector partnerships are creating win-win lessons in job creation, as well. The U.S.-Mexico Foundation, a binational collaboration governed by a board of prominent business and civic leaders from Mexico and the United States, provides a model program with its Mexican American Leadership Initiative. The initiative connects successful job-creating Latino business leaders in this country with their Mexican counterparts, who are equally committed to expanding economic opportunities in theirs. This U.S. Latino-inspired strategy promotes deeper integration with Mexico’s strong market economy and generates economic opportunities for both Mexican and U.S. companies and their workers.
This kind of data points to key differences between our relationship with Mexico, and that with China.
China has held down the value of its currency to the disadvantage of American exporters, provided outsized subsidies to Chinese companies to give them a commercial advantage, and introduced regulations and standards designed to keep foreign competition out of its domestic market.
Meanwhile, a relationship with Mexico translates into U.S. imports with high U.S. content, enhanced U.S. global competitiveness and job creation in the United States – including in Los Angeles, a manufacturing mecca.
Why wouldn’t we embrace a country that is ready, willing and able to be one of our strongest trade partners in the world?
In the early 21st century, Latin America matters to the United States at least as much as Asia, if not more. With support from businesses and officials in Los Angeles, California should take up the familiar mantle of adopting forward-thinking policy that leads the nation, and take proactive steps to develop long-term and mutually beneficial relationships throughout the Western Hemisphere. It can begin close to home by reopening its Mexico trade office, and by considering Mexico a first priority.
Antonia Hernández is president and chief executive of the California Community Foundation and she is co-chairwoman of the Latino Leadership Task Force at the Pacific Council on International Policy. Both are in Los Angeles.
For reprint and licensing requests for this article, CLICK HERE.