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story.lead_photo.caption Mexico's President Andres Manuel Lopez Obrador

Mexico's president flew to Tijuana on Sunday to champion his plan to grow the economy of the country's northern border region by lowering taxes, increasing the minimum wage and pegging gasoline prices to those of neighboring U.S. communities.

In his first presidential visit to Baja California, Andres Manuel Lopez Obrador said the measures are part of a national development plan intended to keep Mexicans at home, so that "migration is an option, but not obligatory."

The president was joined by Economy Secretary Graciela Marquez Colin and Baja California Gov. Francisco Vega de Lamadrid as he promoted his plan to the state's political and economic leaders who gathered at a hotel in the city's Rio Zone. His visit to Tijuana, just south of San Diego, came on the heels of similar visits in two other border cities, Reynosa and Ciudad Juarez -- both neighboring Texas.

The plan includes cutting the value-added tax along the northern border by half, to 8 percent from the national rate of 16 percent. It reduces the income tax from 30 percent to 20 percent, a measure aimed at drawing both national and foreign investment to the region. It doubles the minimum wage to 176 pesos a day, or just over $9. It also brings gasoline prices in border cities in line with those of neighboring U.S. communities.

As Lopez Obrador landed at A.L. Rodriguez International Airport in Tijuana, groups of demonstrators clamored for his attention. Some were residents of El Rubi, a hillside neighborhood where homeowners are seeking government compensation after losing their houses in a landslide.

Others arrived from Mexicali, the state capital, to oppose the construction of a large U.S.-owned brewery, Constellation Brands. In the Rio Zone, a few dozen demonstrators demanded stricter immigration controls in line with national security, and they protested the presence of Central American migrants waiting to seek asylum in the United States.

The president also received private petitions, including one from the Baja California governor asking that the federal government send funds to support the state's strapped educational system and to compensate for the large numbers of deportees and migrants in the region, according to a high-ranking state official.

But publicly, the focus of the visit was solely on the new zone that encompasses 43 municipalities in six Mexican border states, including all five municipalities that make up the state of Baja California. The initial designation is for two years, and Lopez Obrador promised to return in three months to evaluate progress of the zone, part of a national development plan.

The president said the idea for the "free zone" was born in Tijuana during a campaign trip to the city. The initial proposal came from a group of business leaders who petitioned for the special designation.

The new zone covers some of Mexico's most dynamic areas. The region's overall growth rate of 3.1 percent from 2013 to 2017 exceeded the national average of 2.6 percent during that same period. The aim is to spur growth even further, said Colin, the economy minister.

"We want this growth to be the locomotive ... of the rest of the national economy," she said, stressing Tijuana's close link to the Southern California economy. "To live in Tijuana is to live in the CaliBaja region, of enormous productive potential."

The largest city on Mexico's northern border, Tijuana epitomizes both the opportunities and challenges faced by communities on the U.S. border. The city has been doing well economically, creating jobs and drawing foreign investment, but at the same time it has struggled with insufficient infrastructure, social inequality and a high homicide rate fueled by the neighborhood drug trade.

A left-of-center populist who has vowed to eradicate corruption, Lopez Obrador came into office after a landslide victory in July. His depiction of the border as a place of economic opportunity stood in contrast to President Donald Trump's focus on the border as a security issue.

On Sunday, even members of the Tijuana business community who opposed Lopez Obrador's candidacy applauded the economic plan. Rafael Carrillo Barron, owner of the Tijuana Zonkeys professional basketball team, called it "a very positive message."

"It will be very beneficial for us to pay less taxes; it's going to make us more competitive," he said. "So far we're very happy with this; after two years from now, we'll talk."

Mexico's northern border for much of its history has benefited from a special economic status conferred by the federal government because of its proximity to the United States. The measures had been designed to make the region competitive with U.S. communities. But in recent years, residents have seen the erosion of these privileges, much to the dismay of the business community.

Lowering the value-added tax will mean lower prices for residents of Tijuana -- about half the population -- who don't have visas that allow them to shop in the United States, said Aram Hodoyan, president of the Tijuana Economic Development Council.

"It's a first step. We are very grateful that he's sitting down with us and that we are talking and working things out," Hodoyan said.

Business on 01/08/2019

Print Headline: Mexican leader touts economic zone

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