Arizona border businesses lose key Mexican clients

* Mexico visitors boycott Arizona shops in protest

* $1 billion-a-day U.S.-Mexico trade steady despite furor

* More concern about economic recovery than migrant law

By Tim Gaynor

NOGALES, Ariz., May 23 (BestGrowthStock) – Adalberto Lopez’
family-run musical instrument shop in the bustling Arizona
border city of Nogales sells guitars and accordions to
foot-stomping banda musicians and mariachis who cross up from
Mexico to shop.

But in mid-May, the music stopped in the store. Mexican
customers who account for almost all its sales stayed away as
part of a two-day boycott to repudiate Arizona’s tough new
immigration law.

“The street and my shop were empty,” said Lopez, of the
“Day Without a Mexican” protest on May 14 and 15.

The law may make life more difficult for border retailers
already hobbled by the recession and long border crossing
waits, and Arizona’s economy could take a hit from lost
business.

But on a larger scale, experts believe the overall trade
between the United States and Mexico, valued at around $1
billion a day, is unlikely to suffer from this latest wrinkle
in the often strained U.S.-Mexico relations.

Passed last month, the law requires state and local police
to check the immigration status of those they reasonably
suspect are in the country illegally. Opponents on both sides
of the border say it is a mandate for racial profiling.

Mexico President Felipe Calderon sharply criticized it
during a visit to Washington last week. Standing beside U.S.
President Barack Obama, Calderon said Mexican immigrants make a
“significant contribution to the economy and society of the
United States” but many face discrimination “as in Arizona.”

The measure has triggered legal challenges, convention
cancellations, and, most recently, snubs by some of the 65,000
Mexicans who cross into the desert state each day to work,
visit family and shop, spending $7.4 million, according to a
recent University of Arizona study.

“The people in Mexico have been fairly insulted by this
legislation, as have most Latinos in the state of Arizona,”
said Bruce Bracker, president of the Downtown Merchants
Association in Nogales, who said local shops’ sales fell 40
percent to 60 percent as Mexicans stayed home during the
boycott.

NO TRADE SLOWDOWN

Obama has spoken out against the law, which is backed by a
majority of Americans.

The United States, Mexico and Canada created the world’s
largest free trade block with the North American Free Trade
Agreement in 1994, although the U.S.-Mexico trade relationship
has been jarred by job losses and charges of protectionism.

Trade between the two neighbors is already ruffled by a
trucking row. Mexico is waiting for the United States to let
its trucks circulate again on U.S. roads, ending a spat that
led it to slap duties on $2.4 billion in U.S. goods.

But analysts and customs brokers say the furor over the
state law is unlikely to disrupt the $21 billion annual flow in
goods over the Arizona-Mexico border, between clients scattered
across northwest Mexico and the United States.

“Once you work so hard to get a business enterprise up and
operating, how much are you willing to reverse that based upon
something that someone relatively remote from you does?” said
Rick Van Schoik, director of the North American Center for
Transborder Studies at Arizona State University in Phoenix.

“Life goes on regardless of the newsy political
conversation that’s going on,” he added.

Customs brokers in Nogales, meanwhile, who clear goods
ranging from semi-conductor chips to fresh produce headed over
the border by truck and freight train, said their clients were
more concerned about the sputtering economic recovery than the
migrant law, which is due to come into effect on July 29.

“The economy is one thing, but that’s an ongoing situation
for everyone,” said Nogales customs broker Terry Shannon Jr.

“But I have not had any dialogue with my clients at this
point where they have called me up and point-blank (asked)
‘What do you think of the law? Where are we going with this?'”

‘ONE MORE OBSTACLE’

But in cross-border retail, where sentiment plays a role in
shaping Mexican shoppers’ spending, the outlook is more vexed,
business groups say.

Informal Mexican boycotts in protest at the measure have
taken hold in other cities bordering Arizona, among them San
Luis Rio Colorado, south of Yuma, where some traders are opting
to head to California and Nevada to buy appliances and cars.

“They’re looking for other options,” said Juan Manuel
Villarreal, president of the city’s chamber of commerce, adding
that it is still too early to quantify the impact.

Authorities in Nogales — the state’s principal trade
gateway to Mexico — were unable to place a dollar value on the
recent boycott by Mexican shoppers, whose spending accounts for
nearly a quarter of all jobs in surrounding Santa Cruz County,
and almost half of taxable sales.

But Olivia Ainza-Kramer, president of the Nogales-Santa
Cruz County Chamber of Commerce said a backlash from the law
piled pressure on local shops, restaurants and hotels already
hurt by the recession and delays of up to two hours for
customers crossing up from Mexico.

“This is one more obstacle that’s getting in the way,” she
said.

Stock Market Today
(Additional reporting by Leslie Josephs in Mexico City;
Editing by Mary Milliken and Xavier Briand)

Arizona border businesses lose key Mexican clients