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Going Global Trade deal debate runs deep #8212 Hispanic business leaders understand the push to rework trade deals with Latin American countries. They’re just not sure it makes sense to do so.

Leo Cervantes, chef and owner, Chilangos Mexican restaurant in Highlands.

Leo Cervantes knows about struggles, personally and professionally.

He overcame the difficulties of life in an impoverished, crime-stricken town on the periphery of Mexico City for 18 years before he came to New Jersey in 1989.

And he survived the nearly yearlong closure of his restaurant in Highlands, Chilangos, after it was hit hard by Superstorm Sandy.

Both were difficult periods in his life, so one might forgive him for hoping the worst is over. He knows it may not be.

“I’m still having to prepare for what could be another potential disaster.”

Without hyperbole, Cervantes has a profound fear of the change in trade policy direction that President-elect Donald Trump has laid out plans for. Part of that comes from Trump’s vow to back the United States out of the Trans-Pacific Partnership on his first day in office.

The Trans-Pacific Partnership is a trade deal that aims to lower tariffs and taxes for 12 nations, including Mexico, Peru and Chile. It builds on a current trade pact between Canada, Mexico and the U.S., the North American Free Trade Agreement, a deal Trump also has spoken of renegotiating or outright terminating.

It’s this move — above even the immigration rhetoric that was put on repeat ahead of the election — that brings the most anxiety to Hispanic business owners such as Cervantes. He said that he saw for himself the benefits of a flourishing trade interaction between Mexico and the U.S. on a three-day Mexico City trade mission he made with Gov. Chris Christie in 2014.

And he wants — needs, for the sake of his business — to have it supported.

“There’s something like 20,000 jobs and billions of dollars in products exchanged between New Jersey and Mexico,” Cervantes said. “In my own restaurants, I carry 275 different brands of tequila that come straight from Mexico. I serve cactus, tomatillos, peppers, avocados — all straight from Mexico.

“It’s not because I’m Mexican that I’ve been speaking out against Trump — I’ve spent more time here than I have in Mexico, and I’ve very much embraced the culture. … I care about what’s here: my family, my community and, also, my business.”

In total, there was $12.2 billion in goods and products that was exported out of New Jersey to countries that are a part of the Trans-Pacific Partnership last year, according to Rutgers business professor Arturo Osorio-Fernandez.

The American dream
After Leo Cervantes immigrated to New Jersey, his first job was a dishwasher spot at the now-closed Cypress Inn in Ocean Township.
He told a story of coming into work one day at the Mexican restaurant and finding that the place was full of commotion. He didn’t speak English at the time, but asked a friend what the excitement was all about.
“He told me that everyone was so excited because the boss was in the restaurant,” he said. “I didn’t know who he was talking about, but he told me that it was the nickname of a famous rock star, Bruce Springsteen.”
About 15 years later, after starting his own restaurant business and bringing it to prominence, Cervantes found himself hosting events for the Springsteen family.
Cervantes spoke with Springsteen about his life story, and even talked about their near-meeting many years before at the Cypress Inn.
“He asked me what I did when I heard he was there — I told him I went back to washing dishes, because I cared more about my other boss,” Cervantes said. “He laughed about it.”

And the North American Free Trade Agreement before the new pact has increased New Jersey’s exports by 425.8 percent since its implementation, he added.

“To give a point of reference, the rest of the world during that time increased exports 220 percent,” Osorio-Fernandez said. “So New Jersey grew 1.93 times more in exports than the rest of the world.”

While a majority of the exports just utilize New Jersey’s transportation infrastructure, the number of companies in the state producing goods for export is significant, too. And, perhaps surprisingly, 90 percent of the many thousands of companies sending products off to Trans-Pacific Partnership members are small and medium-sized companies.

Carlos Medina, chairman of the Statewide Hispanic Chamber of Commerce, said it goes both ways.

“We have a lot of smaller retailers that are bringing in soaps or beauty products or coffee from Colombia and other countries,” he said. “Any little change (to tariffs or other trade policies) could hurt them, as they exist on such small margins as it is.

“But then there’s also a much larger company such as Goya Foods that could be affected, a New Jersey company supporting a lot of jobs here that has products they’re bringing to or from Mexico and other places.”

Luis O. De La Hoz, who also leads the Hispanic Chamber of Commerce along with being a small business owner, said the food sector constitutes a large part of the Mexico-U.S. trade.

It’s largely concentrated in Passaic, a city with a sizable Hispanic population (the largest Peruvian community outside Peru) that 70 percent of produce headed from Mexico to the Northeast passes through.

“Food is a big industry for this trade, and I think part of it is that we want to share these products with those who have never been to our countries of origin,” he said. “And these are foods that are widely used today — not just exotic products. Even sushi has avocado in it.”

Chemicals and computer technologies are key in the trade interchange as well.

And that latter industry leads into another area of both concern and criticism for proposals that involve less interaction with current trade partners, as Osorio-Fernandez explained:

“Using a rather extreme example … you have Cuba — they closed their commerce borders to incentivize job creation; they did get higher rates of employment, but they lagged behind in innovation so far that they became an alternative reality.”

Although local Hispanic business leaders are hoping for best, there’s some worry that this all could spell trouble for New Jersey’s status as a focal point for international trade.

“There are consequences we need to be fully aware of,” Osorio-Fernandez said. “We don’t want to go to Newark or Middlesex County, to look at our ports and trains, and see a lot of people idle.”

E-mail to: brettj@njbiz.com

Brett Johnson

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