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Gov. Jerry Brown, Mexico's president talk trade in L.A.

Calif. Gov. Jerry Brown hosts Mexico's President Enrique Peña Nieto in L.A. as they discuss trade

Gov. Jerry Brown and Mexican President Enrique Peña Nieto shared the stage in Los Angeles to speak about opportunities for the Golden State and its southern neighbor to work together on business opportunities, climate change and higher education.

“We share language, territory, trade,” Brown said Monday at the Millennium Biltmore Hotel, where Peña Nieto kicked off a two-day trip to California. “We share the sun, the wind, businesses like oil production.”

Peña Nieto’s visit follows Brown’s trade mission to Mexico a month ago -- a trip paid for by business representatives and lobbyists who shelled out thousands of dollars apiece to tag along.

Brown is running for an unprecedented fourth term, and Latino voters are among his strongest supporters. 

Latinos are projected to this year become the largest population group in California, edging out non-Latino whites. Latinos made up less than 8% of voters in 1982, but held a 23.5% share by 2012, according to the California Civic Engagement Project at the UC Davis Center for Regional Change.

A USC Dornsife/Los Angeles Times poll released shortly before the June primary showed Latino voters favored Brown 65% to 14% over his Republican opponent, former U.S. Treasury official Neel Kashkari.

But for Brown, Mexico is also alluring because of its economic promise.

“Mexico and California have a relationship that I think folks on both sides of the border feel has never fully realized its potential,” said Gordon Hanson, a professor of economics at UC San Diego who focuses on international trade.

For example, about 1.7 million Mexicans visited Los Angeles last year, a 3% increase from the prior year, according to the Los Angeles Tourism & Convention Board. That’s more travelers than from Canada, China and Australia -- the next three largest origin points -- combined.

Another industry said to be ripe for expansion: electronics.

A number of California companies specialize in building the component parts for cellphones, computers and other electronics, but they tend to look to Mexico for assembly of the final products.

“Largely because of the very high cost of doing business in California, we don’t make an awful lot of consumer goods,” said Jock O’Connell, international trade advisor with Beacon Economics, a California research firm. “It tends to be stuff that goes into stuff, the components that go into more complex products.”

As Mexico’s skilled workforce develops, the country’s middle class is expanding, said Robert Kleinhenz, chief economist at the Los Angeles County Economic Development Corporation.

“There’s a lot of opportunity coming in the next several decades if we strengthen the relationship," he said. "We anticipate a lot of income growth and new consumer demand."

California currently exports more goods and services to Mexico than to any other country, including Canada and China, according to U.S. Commerce Department figures. But it doesn’t top the list of U.S. states doing so.

That rank goes to Texas.

However, the government figures don’t factor in where the goods were manufactured, or how many times they bounce back and forth in the production process. Instead, the numbers reflect only where goods crossed into or out of the country, O'Connell said.

Experts point out that the actual export numbers from California to Mexico are likely much higher, because goods from California are often shipped to Texas for transportation into Mexico.

California has historically focused most on its trade with China, but UCSD’s Hanson said recent Chinese government crackdowns on U.S. companies could provide an opportunity for more trade with Mexico.

“Mexico presents a much more level playing field,” he said.

And, in some cases, a brand new one.

The country is increasingly privatizing its energy industry, causing renewable-power providers in the U.S. to salivate at the prospect of more business.

“There’s an incredible opportunity just to the south, which has long been known as a country with some of the greatest solar potential in the world but where solar power is effectively nonexistent,” said Rhone Resch, chief executive of American trade group Solar Energy Industries Assn. “We can sell our products there, build large-scale solar farms just over the border and import electricity in the U.S.”

Peña Nieto is scheduled to finish his California trip on Tuesday in Sacramento, where he is to address the Legislature.

Twitter: @tiffhsulatimes, @c_kirkham

Copyright © 2015, Los Angeles Times
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