May 18, 2022
As we approach summer in Southern California and Northern Baja California, we are finally leaving COVID behind and entering a new phase in the binational relationship that will call for a renewed enthusiasm and hard work in a border dynamic that is only accelerating and will bring new and sometimes unexpected circumstances.
In the last 6 months it has become clear that the Tijuana-San Diego border is the epicenter of the new phase of the U.S.-Mexico relationship, what with frequent visits by the U.S. Ambassador to Mexico Ken Salazar focusing on environmental and mobility projects, and key officials from the Mexican Foreign Ministry, the Infrastructure, Communications and Transportation Ministry and the Mexican federal water authority (CONAGUA) diligently following up on major water, port and road projects. Visits from EPA Administrator Michael Regan and President Andrés Manuel López Obrador have added positive pressure.
Security, migration and public health will be top agenda items. Mobility, aligning economic development policy, green policy at our ports, nearshoring, allyshoring, and value creation in manufacturing will be our greatest opportunities. Will we be up to the task?
California Senator Ben Hueso’s enviable connection to and understanding of the CA-Baja California relationship makes him perhaps the most important legislator on border matters. With a used tire bill (SB 1181, ) and a “Border Bottle Resolution” in the works, the Senator presses on with the thorny issue of the tens of thousands of used tires that end up in Tijuana, Tecate and Mexicali, are used for a short period and are discarded in landfills and canyons. Many of these tires end up in California estuaries and beaches. Better unsafe used tire tracking and making it a crime to sell unsafe tires will bring attention to this environmental hazard. The bottle resolution would increase the amount of alcohol allowed duty-free -- potentially 4 liters instead of 1-- into California by paying duties online or over the phone rather than in secondary inspection at the land ports of entry.
The Burnham Center for Community Advancement (BCCA) and the Discovery Institute are “think and do tanks” that are guiding lights for our region. The Smart Border Coalition’s co-chair Steve Williams introduced the BCCA’s Tad Parzen and me to Steve Buri, Executive Director of the Institute. The latter is a 30-year old organization that focuses on technology policy, trade, transportation and tourism in the Seattle-Vancouver region, and it advances a culture of purpose, innovation and creativity in a context of limited government. The BCCA has gotten behind some high profile projects such as the World Design Capital, the Balboa Park Initiative (governance and fiscal incongruity issues), housing affordability, workforce development and rebuilding the community fabric.
The Tijuana EDC is leading the way for the recasting of binational industry. Carlos Jaramillo of Via Capital has been an uncommon leader who clearly sees the need for Tijuana and San Diego to view themselves as one region to attract capital but more importantly, to be more competitive globally. He realizes that though Baja California will be in the assembly manufacturing arena for years to come, the move toward a knowledge based economy is a must. Upskilling and reskilling of labor and adding much more value to existing legacy industries such as medical devices and audiovisual equipment must be top of mind.
Jaramillo states that “we can no longer think of industrial clusters; we must think of all-encompassing concepts such as “life sciences” instead of “medical devices” and “mobility” in lieu of “automotive industry.” Though these seem mere word choices, they signal a quantum leap in the way we perceive opportunities, going from a narrow view to a much larger, strategic concept of what’s next.
The MTS and Baja Rail relationships needs an overhaul. One of the effects of the pandemic was to worsen their relationship. Baja Rail did not pay rent in 2020 and 2021, ostensibly because supply chains were affected and the import economy suffered as a result. MTS canceled the lease contract with the company back in late July of 2020 and Baja Rail launched a dispute resolution procedure. Mediation started in early December of 2020 but MTS announced the end of mediation meetings in June of 2021.
It is imperative that the MTS board focus on a plan to make the Desert Line feasible. MTS’s responsibility with tax payers is to have mobility systems work, not to only to collect rent. A step in the right direction is to perform a feasibility study. Caltrans has been able to obtain resources to fund that study. Once we have it, it will be much easier to find a willing and able investment bank and company to take on the “Impossible” railroad challenge, and in my mind, one of the great logistics opportunities in this early part of our century. I believe that Baja Rail will have a role to play in the short term, but the jury is still out on its role for the long term.
The Ensenada to San Diego ferry could become a reality. The Baja California Government has made mobility across our ports one of its cornerstones. The State has been quietly creating momentum for a 2 hour 15 minute journey on a ship designed for both passengers and vehicles. The Port of Ensenada just finished an operations study and the State has embarked on a detailed feasibility study with a private infrastructure firm. The Port of San Diego has also expressed interest in taking a serious look at the project. Key authorities have met several times.
Instead of taking 3-4 hours to go from Ensenada to San Diego (1.5 hours on the highway and another 2.5 to enter Tijuana and get in line at the San Ysidro Port of Entry), travelers would get on a ferry, not stress about driving, and enjoy the scenery for a little over 2 hours, arriving at San Diego’s downtown.
The San Ysidro Port of Entry has shifted its work from Ukrainian refugees to the most vulnerable migrants. Ukrainians are processing their move to the United States through a program that allows them to come directly to the United States from Warsaw and other European capitals. The Pedestrian West crossing close to Plaza Las Américas is now being used to welcome the most vulnerable asylum seekers including members of the LBTQ+ community. Customs and Border Protection was able to get a “loan” of close to 100 agents from the Los Angeles area to staff the port. What we still don’t know is how the agency will process many more migrants once Title 42 is lifted potentially next week.
The World Design Capital designation is in the midst of a CEO search. The team that put together the bid in 2021 and led the burgeoning organization until lately is transitioning to a team that needs a captain, someone quite versatile who really “gets” the binational world and who understands how to manage people both in San Diego and Tijuana.
We will see familiar faces on the new management team such as Michèle Morris, Design Forward Alliance President and also Associate Director of UCSD’s Design Lab.
Ecollanti is an idea and business case that can fill a large tire disposal vacuum for Baja California tires. There are at least 786,000 tires that are legally imported to Baja California mainly from California every year, not to mention the tens of thousands of unsafe used tires that clandestinely make their way to cities like Tijuana. There currently is no effective policy or infrastructure in place in the state to manage a festering problem that grows every year.
The startup proposes to handle tires accumulated in multiple lots in the state, create tire reception centers for a more orderly collection process and build plants to transform tire rubber into useful and exportable day-to-day products such as playground floors.
The State of Baja California Economy and Innovation Secretariat has been setting the stage for an angel investment network that will in time support the local entrepreneurial ecosystem. Creating an angel network is no easy task when our investment culture is one that focuses on owning tangible things like land, cattle and industrial parks where returns are much more predictable. Successful family businesses in their second or third generation in cities like Tijuana and Mexicali have the capital to start investing in startups, and can handle higher levels of risk.
Rudy Andrade, Undersecretary for Economy and Innovation, understands that it will take some hand holding from Silicon Valley accelerators and venture capitalists to convince Baja California investors to pioneer angel funds which will be behind great companies and hopefully, the first Baja unicorn in a few years! Manos Accelerator visited Tijuana and Mexicali last week () and spoke about their evolution. They are the first Hispanic Accelerator in Silicon Valley and have ties to many Mexican entrepreneurs and investors. Their CEO, Sylvia Flores, is a Mexican-American entrepreneur and leader who is opening many doors in Mexico.
The 3rd CaliBaja Symposium and Workshop led by Professor Olivia Graeve of UCSD’s CaliBaja Center for Resilient Materials and Systems () will count on the Smart Border Coalition’s support and sponsorship for an event that will bring together international leaders in science and technology to provide a vision of what future developments lie ahead and to continue building bridges of collaboration.
Please register at . Plenary and invited speakers include Chancellor Pradeep K. Khosla of UCSD, Imperial Beach Councilmember Paloma Aguirre, Professor Dora Luz Flores from UABC (Universidad Autónoma de Baja California), and Chancellor Fernando León García, from CETYS Universidad.
The event will also highlight the start of this summer’s Enlace Summer Research Program designed to create project teams of U.S. and Mexico high school students in an assigned research laboratory.
The Commission of the Californias is getting a shot in the arm from a couple of relevant actors in the CaliBaja region. The Center for U.S.-Mexican Studies led by Rafael Fernández de Castro () and the Institute of the Americas led by Richard Kiy ( ) have become important allies to the State Governments of California, Baja California Sur and Baja California. For the Commission to be effective, a
practical mechanism must be put in place, and this is where the aforementioned institutes have a large role to play. They will also be producing white papers and research in topics such as energy, water and nearshoring that will be useful for the working groups.
The San Diego / Baja California trip to Washington, D.C. coordinated by the San Diego Regional Chamber of Commerce in late March was long overdue. It was a pleasure being with a group of border enthusiasts who speak their mind. There were over a dozen meetings, but I will highlight the ones I felt were most helpful to the binational community.
First was the meeting with new Customs and Border Protection Commissioner Chris Magnus. He is in charge of a 60,000 strong force in all U.S. borders. Our very own former San Diego Field Office Director, Pete Flores, is an Executive Assistant Commissioner and was at Magnus’s side. He admits to a staffing challenge and stated that though in theory the ports are staffed at 95%, the reality is that only 75% of the officers are actually on the ground in the San Diego sector. He is interested in technology, human resource development, resilience and the agency’s image. He believes in port innovation, extending the border line beyond the ports. He mentioned the creation of “sterile corridors” through collaboration with border communities and the use of the CBPOne app. Non-intrusive inspection technology is coming soon to our border, meaning that CBP could inspect up to 100% of all travelers in an effective way.
The State Department meetings touched on the Bipartisan Infrastructure Bill as a once-in-a-generation opportunity. Part of it will be used for bridge construction, traffic and development densification in multimodal transportation. There will be $17B for maritime ports and $20B for airports. However, there is some uncertainty as to the volume of resources coming to the land ports.
There is great interest in deepening the High Level Economic Dialogue and the High Level Security Dialogue between the U.S. and Mexico. New challenges are human rights (human trafficking and use of illicit financial networks), public health and security. Supply chain resiliency and building a sustainable and equitable future for North America are also getting attention.
Mexican Ambassador to the United States, Esteban Moctezuma stated that he has already spoken with Mayor Todd Gloria on 3 occasions and thinks highly of him. The Mexico-California relationship is critical. The Mexican and Mexican-American community is the backbone of the California economy. The border is more than CBP; it is supply chains, it is strategic industries, world class manufacturing hubs and nearshoring. He added that there are opportunities such as the Otay Mesa East Port of Entry and the High Level Economic Dialogue that must be seized for the benefit of our binational community.
The “La Frontera” Docuseries which is to be produced in San Diego, Mexicali and Tijuana this fall is still looking for funders. The effort to produce at least one hour of the wildly popular show that will showcase our region’s culinary prowess, will also change the border narrative by describing our region’s ability to bring the people of Tijuana and San Diego closer together in shared success and prosperity.
Regional up-and-coming professionals such as Bosco Luján and Karlo Terán are marshalling young and successful CEOs of industrial and service companies on both sides of the border as well as governments to donate resources to help absorb 2/3 of the production cost. PBS will add the remaining 1/3. Several Smart Border Coalition board members will also be important contributors to the effort. Please let me know if you are able to donate.
Sempra Infrastructure () connected with several binational organizations in an unprecedented effort to improve the results of its philanthropy. The company is a juggernaut in terms of the energy infrastructure it has in both Mexico and the United States. It is the quintessential North American company. It owns 11 of the 23 liquefied natural gas pipelines connecting our two countries. Their largest investments and philanthropy in Mexico are in Baja California.
The company’s Senior Vice President for Public and Corporate Affairs, Abraham Zamora, invited us to Sempra headquarters in downtown San Diego to discuss company investments so far and what the future holds. Importantly, he wanted to listen to what our non-profits had to say about the current binational environment and how we see the Sempra supporting our efforts in the coming years.
The environmental wheels are turning in Calexico and the imperial Valley with the Rio Nuevo Project. I was pleased to see and hear California Assemblymember Eduardo García kick off our April meeting to describe the $28 million investment that will put a trash screen where the Rio Nuevo enters the United States, divert the river’s flows underground, establish a pumping station to send dirty water to a water treatment facility nearby and return the cleaner water to the normal river flow. Mayor Moreno of Calexico, County Supervisor Jesús Escobar and Baja California legislator Daylín García were also on hand.
The One Border Alliance (OBA) is getting ready to do important work for the border. We are a group of economic development groups and chambers of commerce from both sides of the border who believe it is in speaking with one voice that we will be able to do more to advance border needs and transform the traveler crossing experience.
OBA features 4 key themes: making border crossings faster and more efficient, infrastructure needs and new investments, public health, and security in the crossing experience. Advocacy and performance evaluation are transversal concepts we will use to catalyze and measure results. Our working groups will be based on the 4 themes. If you are interested in joining any one of these please let me know.
Our Stakeholders Working Committee Meeting on May 12th featured Melissa Floca of the University of San Diego speaking about her work as one of the key researchers for “The CaliBaja Regional Economy: Production, Employment, Trade and Investment.” The study also features the work of economist Alan Gin and Professor David Shirk. We also had Evan Reade, Lt. Governor Kounalakis’ Advisor for International Relations and Trade, on the Commission of the Californias relaunch. Rita Fernández, Global Affairs Director for the City of San Diego spoke to the group about the recently signed San Diego – Tijuana MOU that casts a light on migration, border wait times, and environmental issues as new areas of collaboration and information exchange. The Tijuana EDC was also a presenter, with President Carlos Jaramillo delivering some great insights into the new way that the Baja California business community and State Government are viewing their joint planning and work towards a new wave of economic development focused on a knowledge based binational economy.
Key business associations on both sides of the border, including the Smart Border Coalition, will be signing an MOU in June for a new “Binational Business Coalition.” The binational agenda will now officially be included in the business agenda. In addition, the Baja Private Enterprise Development Policy will be in alignment with the State of Baja’s Economic Development Policy (both are 5 year plans), and will officially declare border crossings as “inhibitors” to economic development. This is a big deal, as it thrusts our land ports in the center of private enterprise and government focus and evaluation.
The new CBX and international traveler processing facility at the Tijuana Airport is a sight to behold. I had a chance to get a tour of the space and witness the the ribbon cutting ceremony on May 9th. One friend told me that “it would give the San Diego Airport a run for its money”, but I do not see it this way. The only way to understand the facility is that it will put our region on the world map like few things have done in the last 50 years.
With an area 83% of the entire Tijuana Airport, the new wing adds a much more pleasant and welcoming area for all CBX passengers, with over 40 airline counters, at least 12 lanes for Mexican immigration, large and clear flight information screens, and state-of-the-art
portable bag checking lines. It also offers a sterile processing facility for international travelers who will fly into Tijuana and continue to the United States without going through Mexican customs and immigration. In the near future I see examples of what this means: a Tijuana to Salt Lake City flight or a Singapore flight to San Diego by way of Tijuana.
Congratulations to Grupo Aeroportuario del Pacífico for this $100 million dollar investment!
Our next online Stakeholders Working Committee meeting will convene on July 7th from 9:00a.m. to 11:00a.m. in Tijuana. This will be in-person only. Please register at .
Gustavo De La Fuente
/ (619) 814-1386