Trade Mission May Have to Conduct Damage Control : Pacific Rim: Delegation from San Diego and Tijuana is likely to encounter Asian investors worried about assassinations in Mexican border city.

Mayor Susan Golding is scheduled to lead a delegation of San Diego and Mexican business leaders on a two-week trip to Asia to tout the San Diego-Tijuana region as ideal for foreign businesses seeking to take advantage of the North American Free Trade Agreement.

The delegation, which will depart May 18, is expected to plug Tijuana’s cheap labor and San Diego’s infrastructure and amenities for foreign executives who want to be close to that labor source.

But Golding and her colleagues may have to fend off questions from concerned Asian investors worried about a Mexican border city that seems out of control.

The trip--to Japan, Taiwan and Hong Kong--is set to begin just weeks after the April 28 killing of Tijuana police chief Federico Benitez. And widely broadcast television images of assassinated presidential candidate Luis Donaldo Colosio bleeding on a Tijuana street on March 23 may be fresh in the minds of the business people the delegation is trying to impress.

The trip reflects a new spirit of cooperation between two cities, which have often been at loggerheads. Since Golding and Tijuana Mayor Hector Osuna Jaime were elected in late 1992, however, the cities have worked closely on planning and business matters, including ways of profiting from NAFTA in competition with other U.S.-Mexico border regions.

The idea behind the effort is that San Diego and Tijuana may get further in the competition by joining forces.

But the recent assassinations and shootouts between rival police agencies, as well as growing drug-related lawlessness, may have tarnished Tijuana’s image and may be a serious setback to the joint industrial recruitment effort.

Japanese companies mulling a move to Tijuana have adopted a “wait-and-see attitude” at least until after Mexico’s presidential election in August, said Yudo Yamamoto, a San Diego-based consultant who advises Japanese industrial clients.

“Foreigners are quite concerned with making new investments in Tijuana and in Mexico in general. Money seems to be drying up,” said Colleen Morton, vice president of Institute of the Americas, a La Jolla think tank specializing in Latin American issues.

“Part of that is the pre-election caution. But Tijuana has other problems, the drug trafficking, corruption in the police force and the crime rate in general,” Morton said.

Others say recent events haven’t shaken foreigners’ belief in Tijuana’s long-term prospects as a trade hub. Japanese businessmen, for example, seem more worried by the recent killings of two Japanese students in Los Angeles, said William L. Everitt, vice president of Kyocera International, a Japanese ceramics company with plants in San Diego and Tijuana.

But the violence comes at a time when San Diego and Tijuana are locked in competition with other U.S and Mexican cities to attract foreign companies, factories and jobs.

Seattle; Phoenix; El Paso, and McAllen, Tex., are just a few of the other cities that have sent or soon will be sending officials to call on Asian companies. The cities and regions all are touting their own strengths--and other cities’ weaknesses. And the tragic events of recent weeks have given the San Diego-Tijuana region’s competition plenty of ammunition.

“I think that this violence has to be devastating. It just has to give the (San Diego-Tijuana) region a black mark,” said a high level government source in Texas who asked not to be identified.

Golding could not be reached for comment.

NAFTA is expected to generate jobs because the trade pact among the United States, Mexico and Canada is forcing foreign companies to make a higher percentage of their products’ content in North America if they are to qualify for preferential tariff treatment. Up to now, many manufacturers, including Japanese consumer electronics and appliance giants, have imported parts from other countries for assembly in the United States.

In fact, a primary goal of the San Diego-Tijuana delegation’s trip is to attract suppliers of Casio, Sony and Sanyo and other big Japanese firms that already operate big assembly plants in the San Diego-Tijuana region but that typically import the major components from the Far East.

Japanese and Taiwanese companies are “scared that NAFTA is going to affect their ability to access this huge market,” said Mario Hernandez, president of San Antonio Economic Development Foundation.

The rapidly strengthening yen is also forcing Japanese companies to move here because the stronger currency makes foreign labor and materials cheaper than in Japan, said Hideto Miura, chief director of the Japan External Trade Organization, a government agency that promotes foreign trade.

U.S. cities are also hoping to capitalize on fears that China may lose its “most favored nation” (MFN) status. That’s because the loss of MFN status would add so much to the costs of Chinese manufacturing that companies now in China will transfer operations here.

“The violence is hitting Tijuana at a very bad time when all these trade opportunities have opened up,” said Rudy Fernandez, director of the state Trade and Commerce Agency.