VZCZCXRO6101
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1215/01 1141750
ZNR UUUUU ZZH
R 231750Z APR 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 1557
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 MEXICO 001215 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR WHA/MEX AND EB/TRA and EB/TPP/BTA 
STATE PLEASE PASS TO USTR (EINSSENSTATE/MELLE) 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD 
TREASURY FOR IA (Rachel Jarpe) 
 
E.O. 12958: N/A 
TAGS: ETRD ECON MX
 
SUBJECT: SAN DIEGO/BAJA MISSION ADVOCATES FOR BORDER DEVELOPMENT 
 
REF: TIJUANA 115 
 
Introduction and Summary 
------------------------ 
 
¶1. (U) The San Diego/Baja California Mission to Mexico, sponsored by 
the Mexico Business Center and the San Diego Regional Chamber of 
Commerce, met Mexican government officials and analysts during their 
third annual visit, including Mexican President Calderon; Economy 
Secretary Eduardo Sojo Guillermo Ortiz, Mexican Central Bank 
 
SIPDIS 
Governor; Luz Maria de la Mora, Undersecretary for International 
Economic Relations at the Secretariat of Foreign Relations; Humberto 
Trevino, Undersecretary of Transportation at the Secretariat of 
Communications and Transportation(SCT). 
 
¶2. (SBU) Mission members pressed Mexican officials to support a 
proposed cross border terminal at Tijuana International airport and 
to improve port and rail infrastructure to increase cargo transit 
capabilities in the region.  They discussed health tourism promotion 
and the possibility of Medicare acceptance in Mexico.  The 
delegation suggested the GOM work to increase efficiencies and 
decrease wait times at the San Diego/Tijuana area border crossings. 
Bank of Mexico Governor Ortiz told the group Mexico would weather a 
U.S. economic slowdown better than it had during the 2001 downturn. 
The mission was receptive to the advice and comments by Mexican 
officials. End Introduction and Summary. 
 
Tijuana Cross Border Terminal 
----------------------------- 
 
¶3.  (U) In every meeting with Mexican officials the delegation 
lobbied for constructing a cross border terminal to serve Tijuana 
International Airport. They argued that San Diego International 
Airport cannot keep pace with demand while Tijuana airport is 
becoming a significant transit hub featuring a flight to Tokyo and 
later this year to Shanghai.  They noted that the concept of cross 
border terminals exists at the Geneva International Airport on the 
border between France and Switzerland. 
 
¶3.  (U) Delegation member Christian Checa Levien, Chairman of the 
Mexican Airport Control Board and Baja California mission delegate, 
announced that his group, along with other investors, had acquired 
land on the Mexican side of the border to prepare for the building 
of the cross border terminal.  In meetings with SCT, he suggested to 
members of the San Diego group that U.S. shareholders do the same on 
their side of the border as land is at a premium and could be 
unavailable when construction time arrives, increasing the cost for 
the project. 
 
¶4. (U) In the meeting with Mexican and U.S. customs officials, the 
group presented the project and asked whether or not it was 
feasible.  Fernandez Wilburn, International Affairs Administrator 
for Mexican Customs (Aduanas), said that Aduanas would be willing to 
review any proposal for a cross border terminal and would decide, 
jointly with CBP, the feasibility and requirements for such a 
facility.  Embassy Mexico's Deputy CBP Attache agreed that CBP would 
be willing to consider any proposal presented. 
 
¶5. (U) Newly appointed SCT Undersecretary for Transportation, 
Humberto Trevino, said he supported a cross border terminal and 
pressed the group for a development timeline. When asked by the 
customs officials about details of the terminal, such as whether it 
would be a full service terminal or only a passenger bridge and 
whether it would be funded with public or private sources, San Diego 
members of the delegation explained that they did not have details 
yet but were willing to work with the two governments to find the 
easiest, most efficient plan.  They said that they could present a 
draft proposal by April 18 for review by both federal governments. 
As of COB April 18, the proposal had not yet been received. 
 
¶6. (SBU) Comment: The Tijuana Cross Border Terminal appears to be in 
the early planning stage.  In order to move forward with this 
project, the backers from both sides of the border will have to 
better organize and present detailed proposals to both federal 
governments.  That being said, as Tijuana International continues to 
increase routes (specifically trans-Pacific) while San Diego reaches 
saturation, expect the Cross Border Terminal to be a recurring 
talking point with stakeholders from the region. End Comment. 
 
Punta Colonet/Improving Ensenada Rail Corridor 
--------------------------------------------- - 
 
¶7. (U) The delegation also raised increasing rail traffic 
capabilities and interconnectivity in the region.  U/S Trevino noted 
that the Punta Colonet intermodal project was going forward. The 
 
MEXICO 00001215  002 OF 003 
 
 
Punta Colonet project is a joint plan between the Mexican federal 
government and the government of the state of Baja California to 
build an intermodal port to accommodate the ever-increasing trade in 
transit from Asia to the United States.  Plans consist of a shipping 
port to be built in Punta Colonet, 50 miles south of Ensenada, 
Mexico with a rail connection leading from the port to the U.S. and 
linking to existing U.S. rail routes.  The project has been 
estimated to cost anywhere from USD 4 and 9 billion and is included 
in President Calderon's National Infrastructure Plan. U/S Trevino 
said that he expected the project to be tendered and licensed in 
September.  He also said that the winning concessionaire would 
decide the crossing's location and complete the presidential permit 
process with support from SCT. 
 
¶8. (U) Representatives of the region's cross border railway company 
explained to Trevino that Punta Colonet was a long-term project that 
will not likely be completed until 2018.  They suggested that there 
were ways to make short- to mid-term improvements at the Ensenada 
port to take advantage of Baja California's natural logistic 
advantages.  While they conceded that Punta Colonet will no doubt 
improve upon Baja California's logistic benefits, they suggested the 
GOM look to improving current infrastructure in the near term. 
 
¶9. (SBU) Comment: Trevino and other officials from SCT are overly 
optimistic about Punta Colonet.  Their announcement that the tender 
would go forward without a location selected for the border 
crossing, let alone the necessary permits, suggests that they are 
putting off some of the major problems inherent in the project until 
after the government chooses a private sector partner.  Comments by 
the delegation reflect that the region's private sector feels, and 
rightly so, that the GOM is neglecting quick and easy fixes in favor 
of their pet project. End Comment. 
 
Health Tourism and Medicare 
--------------------------- 
 
¶10. (SBU) Delegation member Flavio Olivieri, representative of the 
Tijuana Chamber of Commerce and the Tijuana Health Tourism Cluster, 
brought up the booming health tourism industry, and asked for the 
GOM's assistance in getting Mexican medical centers approved to 
receive Medicare payments.  As previously reported, (reftel) the 
Ensenada corridor is home to an increasing number of retired baby 
boomers.  Olivieri explained, though did not provide data to 
confirm, that more U.S. citizens are retiring to Mexico and cannot 
afford to return to the U.S. for health care.  He noted that, 
because Mexican health care is cheaper and Mexico does not suffer 
the nursing shortage the U.S. does, it would be beneficial to allow 
U.S. citizens in Mexico to use Medicare.  Though Olivieri brought up 
the issue at numerous meetings, the common reaction from the GOM 
officials was that they would look into the issue but could not 
provide any guarantees.  GOM interlocutors suggested that he would 
be better served encouraging the U.S. citizen consumers of Medicare 
to lobby the USG.  Comment: Extending Medicare benefits to Mexico 
remains a common request from Mexican officials, including local 
developers and Finance Minister Carstens, who has asked the 
Ambassador and U.S. Treasury officials to help get to authorize 
payments for services in Mexico. End Comment. 
 
Meeting with Secretariat of the Economy 
--------------------------------------- 
 
¶11. (U) The Secretariat of Economy (Economia) sponsored a working 
meeting headed by Chief of Staff, Alberto Ortega.  In line with 
previous discussions by the Joint Border Facilitation Working Group 
(BFWG), of which Ortega is a key GOM member, he told the group that 
they need to focus on short to medium term ideas. He announced that 
the GOM had undertaken a study of bottlenecks in the border region 
and would share a copy of the study at the Leader's Meeting in New 
Orleans.  He suggested that the San Diego/Baja California group 
discuss and publish any of their own findings to be presented to the 
two federal governments.  He also said that the group needed clear 
leadership and sub-groups and should try not to get bogged down in 
"bureaucracy."  Mexican Consul General in San Diego, Remedios Gomez 
Arnau suggested that the border liaison mechanism could be used to 
channel proposals so as better take advantage of current binational 
communication methods and decrease the likelihood of any new 
bureaucratic hurdles.  Ortega also encouraged the group to feed 
proposals to the BFWG.  He explained that the group is the best way 
to reach all pertinent agencies in the U.S. and Mexico.  He further 
explained the organization of the group and listed the participating 
agencies. 
 
¶12. (U) Speaking on behalf of the joint mission, Cesar Alejandro 
Monraz Sustaita, Federal Delegates of the Economy Secretariat for 
the State of Baja California, said that the delegation had a list of 
 
MEXICO 00001215  003 OF 003 
 
 
17 issues to be resolved by either or both federal governments. 
Some of the issues mentioned included the possibility of an enhanced 
ID for use between California and Baja California, a push for land 
acquisition on the U.S. side of the border to increase the capacity 
of border crossings, and increased double stacking (two simultaneous 
inspection booths per lane) at ports of entry under construction to 
better handle traffic. 
 
¶13. (SBU) Despite the BFWG visiting San Diego last year and meeting 
with the San Diego Chamber of Commerce, the members of the mission 
seemed unaware that a key purpose of the group was to engage the 
private sector in finding solutions to decrease border waits and 
increase crossing efficiencies.  Now that they have been made aware, 
members of the group were optimistic that they have interlocutors in 
both federal governments who will be receptive to their ideas. 
 
Mexican Economy and U.S. Recession 
---------------------------------- 
 
¶14. (U) While the visit focused on advocating for border 
improvements, the mission also had an opportunity to meet with both 
Guillermo Ortiz, Governor of the Bank of Mexico and Juan Pedro 
Trevino, Chief Economist at HSBC Mexico.  Trevino predicts the U.S. 
will experience a recession through 2009.  As a result, he said that 
Mexico's growth will decrease in 2008 further slow in 2009, though 
he did not predict a Mexican recession. He expects inflation in 
Mexico to be above 3% until 2009 as well.  He cited various Mexican 
strategies for improving economic performance as a reason for the 
optimistic outlook, namely a 10% increase in real budget spending 
over 2007, the National Infrastructure Fund, and USD 7.2 billion 
worth of programs to support the economy.  He said that, ultimately, 
six issues will affect the Mexican economy in the near term: 
 
- The size and length of the U.S. slowdown 
- Less restrictive monetary policy by the U.S. Federal Reserve 
- The level and volatility of oil prices and production 
- Supply side inflationary shocks 
- More restrictive Mexican Central Bank monetary policy 
- Delays in structural reforms 
 
¶15. (U) Ortiz, for his part, would not give a prediction for the 
Mexican economy, however he did express optimism.  He said that this 
recession would not be as bad for Mexico as the recession of 2001 
because Mexico was less stable and the recession hit U.S. 
manufacturing at the same time that competitor nation China joined 
the WTO.  This time, he said that Mexico has stronger indicators, 
U.S. manufacturing is stable, and the weak dollar makes Mexican and 
U.S. goods cheaper abroad.  He expects inflation overall to remain 
high through 2008 and 2009. 
 
¶16. (U) Ortiz suggested that Bank of Mexico policy and U.S. Federal 
Reserve policy during this time would likely differ because Mexico 
is not currently experiencing the same crisis as the U.S.  He said 
that the U.S. is decreasing interest rates because of the housing 
crisis, but the Bank of Mexico plans to keep rates steady or even 
raise them.  He reiterated that Mexico needs to be aware of 
inflation and be prepared to do what is needed to stem it. 
 
Conclusion and Comment 
---------------------- 
 
¶17. (SBU) The group met with a wide array of important decision 
makers in the GOM and a key group of attendees managed to meet with 
President Calderon.  The tone of the GOM representatives across the 
board was that they were receptive to issues raised by the private 
sector, but required organized, detailed, written proposals in order 
to advocate for them.  The points presented to the Economy 
Secretariat were a first step towards better organizing the San 
 
SIPDIS 
Diego-Baja California area stakeholders and, if they incorporate the 
advice given, they will likely become better advocates for their 
region. 
 
GARZA