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Mexico trade hits new highs

After being knocked for a loop by the Great Recession, San Diego County international trade is surging close to the record highs it hit before the downturn began, said a report released Monday by the National University System Institute for Policy Research.

And much of that growth comes from just one country -- Mexico -- thanks to a new wave of maquiladoras opening or expanding across the border.

As Mexican factories generate more products to be sold in America, they are importing more paper, printed materials, textiles, metals and other supplies from or through San Diego, said Kelly Cunningham, an economist who compiled the institute’s report.

Since hitting a four-year low in 2009, San Diego’s trade with Mexico has shot up nearly 28 percent to hit an all-time high of nearly $49 billion, partly thanks to Tijuana’s relatively recent concentration in manufacturing biotechnical equipment, which has supplemented such former mainstays as television sets and electronics.

“Mexico has been doing some smart things,” Cunningham said. “There seems to be a lot of investment going on in Tijuana now. More people are viewing it as a good option for dealing with China and avoiding some of the problems that companies have encountered there.”

But the vast bulk of that trade total consists of imports rather than exports, since San Diego buys 60 percent more goods from Mexico than it exports.

“We send raw materials down there and they assemble them into finished products that get sold here,” Cunningham said, giving one reason for the gap between the export and import totals. Those finished goods are much more expensive than the raw supplies it costs to make them.

Alan Tonelson, research fellow at the U.S. Business and Industry Council in Washington, D.C., warns that such trade has had a negative impact on domestic manufacturing. In a recent report, he said imports have captured 38 percent of the market of the top 100 advanced manufactured products. As recently as 1997, imports had a market share of less than 25 percent.

On a worldwide basis, San Diego County last year generated $56.5 billion in international trade, with $19.9 billion in exports offset by $36.6 billion in imports, according to data from the Census Bureau, which counts some goods that travel through San Diego as well as goods that are made here.

Local trade has jumped 27 percent since hitting its lowest point in the recession in 2009, when exports and imports totaled $44.4 billion. In nominal terms, it has now topped the previous all-time high of $54.2 billion from 2007, although after adjusting for inflation it still has about 4 percent to go.

Despite the inflationary lag, Cunningham said it was “a significant turnaround” that represents “a significant positive development for the regional economy.”

But imports outnumbered exports by $16.7 billion, including a $10.1 billion trade deficit with Mexico. Only seven of the region’s top 30 trading partners buy more from San Diego than they sell here: Malaysia, Switzerland, the Netherlands, Ukraine, Hong Kong, Australia and Austria.

Out of the 30 top categories of exported goods, there is a 50-50 split between trade surpluses and deficits. But the surpluses tend to be in lower-cost supplies. For instance, San Diego last year had a $561 million trade surplus in paper and printed materials, including exports of packaging materials to the maquiladoras. The trade deficits included $9.5 billion in computers and electronics and $6 billion in transportation equipment.

But the trade deficit isn't setting records, even before adjusting for inflation. Before the recession began, when U.S. consumers had more spendable money in their pockets, San Diego's trade deficit with Mexico topped $12.8 billion, 18 percent wider than last year.

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