City: Office in Mexico will improve ties, trade

Phoenix is slated to open a trade and tourism office south of the border next year, a move city officials said reflects its need to lead the region in building ties with a trade partner on shaky terms with the state.

The effort to create a Mexico City office is motivated, in part, by a sentiment among leaders that Phoenix, the nation’s sixth-largest city, has for too long not received its fair share of trade and investment from Mexico. Economists say the country is a ripe partner given its quickly emerging middle class and manufacturing sector.

By most accounts, Phoenix and Arizona have historically lagged other locales in exports to their southern neighbor. The state exported about $6.3 billion in goods to Mexico last year, compared with $26.4 billion from California and $94.5 billion from Texas, according to the U.S. Department of Commerce.

While Texas and California have much larger economies, city and business officials said it’s clear that regions with a physical presence in Mexico reap the benefit — the San Antonio area, which has three long-standing trade offices, dubbed Casa San Antonio, alone exported $3.2 billion in 2012. Metro Phoenix exported just $1.8 billion, commerce figures show.

“You’ve probably heard the slogan, it relates to the lottery, ‘You have to be in it to win it,’ ” said Hank Marshall, Phoenix’s executive economicdevelopment officer. “We have, in my opinion, for far too long tried to advance and expand our economic opportunity with Mexico by simply relying on proximity: that we’re close. But it’s not working.”

Instead, Marshall said Phoenix can enhance its economic relationship with Mexico by improving connectivity, and opening a trade office would provide inroads and make the statement that Phoenix is open for business. The office also would promote tourism to Arizona, particularly travel to utilize its advanced medical facilities,

and help lure Mexican companies to the area.

City leaders are backing a plan to spend $150,000 to $200,000 per year to hire a private consultant to represent its interests in Mexico City, where many of the country’s largest corporations are located. The representative would advocate for Phoenix at business meetings, solicit new businesses and provide a home base for Arizona companies looking to expand their international reach.

About two dozen states and San Antonio have opened trade and tourism offices in Mexico City. Marshall said states thousands of miles away from the U.S.-Mexican border, including some on the East Coast, rival the Arizona border region in trade.

City Council members unanimously approved the tradeoffice proposal in October. Officials said Mexican companies will bid on the contract in the coming months, with the council expected to vote on a potential deal in the spring. The office will likely be housed in an existing consulting firm, with some sort of plaque declaring Phoenix allegiance, officials said.

But while city leaders are optimistic about the move, they noted Arizona faces an uphill battle when it comes to building ties with Mexican companies. They said the state and city have a “brand issue” in Mexico because of the state’s passage of several laws aimed at cracking down on illegal immigrants, notably Senate Bill 1070 in 2010.

“Phoenix has an obligation to lead,” said Mayor Greg Stanton, suggesting the city has reached out to Mexico and taken stances embracing diverse populations, including Latinos, because it’s the “right thing” to do, both morally and to attract jobs and economic growth. City leaders have often opposed SB 1070.

Arizona closed its Mexico City trade office in 2011, but the state has an office in Hermosi- llo, Sonora. The University of Arizona also has an office in Mexico City. Phoenix officials hope partners will join its trade office, including the state, Tucson, chambers of commerce, large companies and universities.

Mexico’s secretary of foreign affairs, José Antonio Meade, applauded Phoenix’s plans during a trip to the state in October. He called the move one of several signs that strained political relations between his country and Arizona are improving.

Although the City Council has largely supported the plan, Councilman Sal DiCiccio questions its depth, suggesting the city is hiring a lobbyist instead of establishing a true trade office. DiCiccio, who voted for the proposal, said the city must spend more if it wants a singularly focused advocate, not a consultant who “could easily represent multiple interests.”

“I absolutely don’t think it’s doable in that amount,” DiCiccio said, adding that references to SB 1070 and the state’s image are “partisan” and counterproductive. “Throwing pocket change at it may not work.”

However, city officials said the contract will require that its trade representative be fully dedicated to Phoenix and the region and cannot have other clients. They said the contract will have benchmarks to ensure results, but the city won’t iron out details until the bid process.

Business leaders in the Phoenix area said the move, while a small first step, sends a message that the region now understands the importance of the business relationship with its neighbor. In the past, the Valley focused on its real-estate market and didn’t see a need to be a major player in Mexico, but that need has become “glaringly apparent,” Marshall said.

“I do think it’s a long time coming,” said Barry Broome, president and CEO of the Greater Phoenix Economic Council.