Business Report: What The USMCA Trade Deal Means For San Diego
Friday, December 13, 2019
Photo by Ruxandra Guidi
Q: This week there were reports of progress with the USMCA. How important is this trade deal for San Diego's economy as a border city?
A: Well you know it's very important. We're talking about a trillion dollars of trade between these countries. And in San Diego alone, $52 billion crosses the border. So it's really critical. This whole agreement had been negotiated by the Trump administration over a year ago. There were some really good things about it. Greater access to U.S. companies into the dairy sector in Canada. Huge improvement in the auto industry. But the big issue is enforcement. And that's where the Democrats finally came into agreement. Enforcement on labor disputes and environmental disputes. and they. They got a mechanism where these disputes can be resolved inside 90 to 180 days, which is really fast. But in San Diego, where the environmental component becomes really important, is over $300 million are being earmarked for the Tijuana River Valley cleanup, which has been a major issue with spills all the way up and down the California coastline. And secondly, the EPA with their wasteland infrastructure fund is going to be able to deal with wetland issues. It's a good progress. Congress looks like it's going to ratify it at the end of the month. And the Senate will take it up in the first quarter of 2020. Look for that to be law soon.
Q: Another round of tariffs were supposed to take effect this weekend. But President Trump says he's close to a deal with China. What's the breakthrough?
A: This has been a 17-month trade war with China. Neither side wants to budge for a lot of different reasons. It's a little more smoke and mirrors than we'd like to think. But yes, the tariffs that were scheduled to go into effect this Sunday on all the rest of the trade that we have with China which has all the consumer products, the clothes, the toys, the cell phones aren't going to go into effect. So it's a big relief to those manufacturers. Additionally, the administration agreed on the second tranche of top tariffs which affected over $100 billion of products that we would reduce them from 15 percent to seven and a half percent over a period of time. In exchange, the Chinese agreed to buy an undisclosed amount of agricultural products. The administration has publicly stated they want it to be around 40 or 50 billion. The Chinese don't want to be tied into these quotas simply because they say it violates WTO rules, which is a major concern for them. In the end, they're punting all on all the serious issues on intellectual property and investment in China. That's all going to be handled later.
Q: Let's talk about a shakeup for a major San Diego based brand. What's the big change coming for Jack in the Box?
A: Yeah, Jack in the Box is an iconic San Diego brand. Their CEO is going to be stepping down. Leonard Comma, who's been the CEO for the last six years, has had a very tumultuous tenure He's had a lot of activist investors who've demanded certain things of him. He sold a lot of the company-owned stores to franchisees. So now almost all Jack in the Box stores are franchise owned. They cut back on marketing and same-store sales really suffered. Last October, the franchise association wrote a public letter demanding that he step down or be fired. So he's at a point where this is a good transition point. He's going to stay on until a new successor is found. And they want to make the transition smooth so it doesn't disrupt Jack In The Box operations.
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