The California-Mexico border is the most important global connection that either state possesses. Mexico is California’s largest export market, and most of California’s trade with Mexico is concentrated in Baja California. Baja California likewise depends critically on trade with the United States, and the California market is the primary consumer of its exports. In recent years, however, two overwhelming factors—security and economic crises—have posed major challenges that undermine cross-border trade and collaboration, in general, between the two states. These challenges, however, present extraordinary opportunities for both California and Baja California to examine the cross-border ties that bind them, and work together to strengthen their global competitiveness.

This report, authored by Dr. Lawrence A. Herzog from San Diego State University, identifi es the tremendous importance of the bilateral ties between California and Baja California, and the need for greater efforts and investments to realize their true potential. While trade and commerce between the two states has exploded over the last 15 years, the trade infrastructure of the two Californias has not advanced signifi cantly since the start of the North American Free Trade Agreement (NAFTA). Over time, cross-border trade fl ows have fallen short due to a failure to invest adequately in expanding the necessary infrastructure to maximize volume and effi ciency. Even worse, beginning well before 9/11, extra security provisions at the border have stymied the vast majority of legitimate cross-border trade and travel in order to control a minute fraction of illicit cross-border activity.