Ambassador Eduardo Medina-Mora: “A New and Better Day, US and Mexico,

Building on Success, Meeting Challenges”

National Democratic Network (NDN)

Good afternoon, I would like to thank the National Democratic Network for inviting me to make this presentation and for hosting this important and timely event. In special, I thank Simon Rosenberg, Nelson Cunningham, Doris Meissner and Edward Alden for their continuous support and contributions to a well-informed debate about Mexico.

Migration between Mexico and the United States is in constant transformation, but the pace of change has been faster and more dramatic in the last 20 years. In that time span, we witnessed both an exponential growth of Mexican immigration to this country in the 1990s, and a significant slowdown that reached almost a zero net balance in 2010, according to the Pew Hispanic Center.

In this presentation, I would like to share some thoughts about the recent transformation of Mexico and its bilateral relationship with the United States. I will place special emphasis on four topics:

1. Structural changes in Mexico;

2. North America: a region of opportunity;

3. The Mexico-US border: an area of prosperity and competitiveness; and

4. Contributions of Mexicans to this country.

At a time when immigration reform has gained momentum and some regard it as a unique window of opportunity product of a series of fortunate coincidences, we must remember that the United States and its people have long worked for this opportunity and that chance has played a minor role. As we all know, it may be the case that the Senate will see a bill this week.

Similarly, it is not serendipitous that Mexico is now doing much better, both economically and socially. We have made great strides in order to reach this point and worked closely with the US to anchor our most important and joint achievements. I believe that now is the time to cash in the hard work, as individual countries and as a region.

Let me begin with the structural changes taking place in Mexico.

Today, Mexico is once again on the move. What happens in the streets and factories across the country is quite different from what some foreign observers might still assume. Mexico is, indeed, on a sustained path of progress. Challenges remain, but we are working together every day to overcome them.

In the first 120 days of President Peña Nieto’s Administration, the main political parties signed a historic, wide-ranging and forward-looking political agreement called “Pact for Mexico”. Due to this pact, Congress passed two major structural reforms and is already considering a third, sea-changing proposal, to reform the telecommunications sector. It is no coincidence that The Washington Post and the New York Times, among others, have praised this model that has overcome years of gridlock in the Mexican Congress.

Concurrently, the Mexican economy is expanding. Mexico has maintained fourteen consecutive quarters of growth since the 2009 global economic downturn. GDP per capita in Mexico has increased from $7,979 in 2009 to $10,146 in 2011 (current US dollars). Annual GDP growth for 2012 was 3.9%, a higher rate than the average of the twenty years prior, and is expected to grow 3.5% this year. Mexico's country risk, as measured by J.P. Morgan’s Emerging Markets Bond Index (EMBI+), has long been lower than Brazil's and Argentina's.

And Mexico is also taking care of its people. We have become a predominately middle-class country. The Brookings Institution has highlighted that 60% of Mexico’s population is middle class, and by 2030, 86.5% of all Mexicans will have a middle class status. A couple of examples suffice: there has been a tripling, since 1980, in the number of Mexican students that receive higher education, and housing credit has increased more than twentyfold since the early 1970’s.

All of these factors, that have taken place on our side of the border, reduce the immigration pressures of the past. As I mentioned before, academics and non-partisan think tanks now estimate that net migration between Mexico and the US is close to zero, for the first time in decades. A recent Gallup survey shows that only 11% of Mexicans say they would leave Mexico if given the opportunity -- a decline of about half from the 21% that said so in 2007. As a reference, 11% of Americans also told Gallup they would consider moving to another country.

Geography defines us, and we have worked to make the best of the Mexico-US Border.

Over the last few years, our common border has increasingly become an area of prosperity and regional competitiveness. It is more dynamic and more secure than it has ever been. The 10 border states – 4 in the United States and 6 in Mexico – have a population of 13 million people and together they constitute the world’s 4th largest economy.

Much remains to be done, but our countries’ progress can be objectively measured. Bilateral cooperation is stronger than ever in areas such as infrastructure development, security and trade facilitation.

To illustrate this new era of closer collaboration, I will share the following two examples with you:

In May 2010, we signed the Mexico-United States Twenty-First Century Border Management Declaration. This bilateral instrument recognizes the importance of building a prosperous border that thrives and contributes to the welfare of communities in both countries. To that end, the two governments work together through an Executive Steering Committee (ESC) that meets regularly. It monitors and ensures the implementation of specific actions to facilitate the movement of goods and people in a safe, efficient, expeditious and lawful manner. The most recent meeting took place last week with important outcomes and agreements.

The border between Mexico and the United States is one of the busiest in the world, with 53 ports of entry and 32 international bridges. Around $1 billion dollars is traded every day and 300,000 vehicle crossings take place (including 70,000 trailers). However, no new bridges were built in more than a decade. We therefore opened three new border crossings in 2010: two between the states of Texas and Tamaulipas, and one between Arizona and Sonora. In the coming months, the first new railway crossing in over 100 years will start operations. Additionally, the crossing between Boquillas del Carmen/Big Bend national parks has just began operations. It is a huge set of complex dynamics, but we have succeeded in making them work.

These are only two specific actions, among many, that Mexico and the US have achieved bilaterally in the management of our shared border. The nature of the border itself and the goodwill of governments at all levels and on both sides of the border allow for intense and creative interactions that keeps us moving forward.

And beyond each side of the border, it is all happening in North America.

North America is deepening its critical mass and should remain a region of opportunities for all. Under the North American Free Trade Agreement (NAFTA), bilateral trade and investment within the region have grown exponentially, far beyond the expectations of some of us who were at the negotiating tables 20 years ago. In 2012 alone, Mexico-US total trade reached $494 billion dollars, more than $1.3 billion dollars per day – almost 1 million dollars per minute. Mexico is the third largest US trading partner in absolute terms, but we are a special partner unlike others.

For one, the Mexican market is fundamental to the US economy. In 2012, US exports to Mexico were $216.3 billion dollars. This is more than the $210 billion of combined US exports to all the countries with which it has a trade agreement in place (excluding Canada). It is more than US exports to Japan and China combined ($180.6 billion), of the sum of its exports to France, Germany, the Netherlands and the United Kingdom ($175 billion).

Furthermore, exports to Mexico maintain and create jobs in the United States. The US government estimates that each additional billion in new exports supports more than 6,000 new jobs. Exports to Mexico increased $18 billion in 2012, thus potentially helping create over 107,000 new US jobs. Almost six million U.S. Jobs rely on trade with Mexico, according to the US Chamber of Commerce.

And individual states benefit from exports to Mexico. Mexico was the main destination for exports of three US states (Arizona, California, and Texas). It was the second destination for exports from 20 states, and was ranked one of the top-five export destinations for 34 states.

Investment flows are mutually beneficial. According to data compiled by the Office of the United States Trade Representative, sales of services in Mexico by majority US-owned affiliates were $34.4 billion in 2010. Sales of services in the United States by majority Mexico-owned firms were $4.8 billion.

But above all, Mexico and the United States compete together in the global economy. Production and supply chains in North America are deeply integrated. The US content of Mexican exports to the US is estimated at around 40%. As a reference, it stands at about 25% for Canadian exports to the US, 4% for China, and only 2% for the European Union.

And finally, let me talk about the most important element of this equation: our people.

Mexicans in the United States have always made great contributions to the economy and social fabric of the communities they live in. The work ethic they display is broadly recognized by the private sector and civil society. Many are also entrepreneurs, and even during challenging economic times they have continued to create jobs in the US.

Mexicans make significant contributions to the US economy. According to the BBVA-Bancomer Foundation, first generation Mexicans contributed with about 4.1% of the United States’ GDP in 2007. Following the effects of the crisis, the contribution of Mexican immigrants to GDP fell to 3.8% in 2009. However, if 2nd and 3rd generation Mexicans are added, their contribution to GDP is closer to 8%.

Mexicans also make local economies grow faster. Most Mexicans live in California (37%, 4.3 million) and in Texas (21%, 2.5 million), states that grew above the national average. According to the Migration Policy Institute, the cities with more Mexican immigrants are Los Angeles (15%, 1.7 million), Chicago (6%, 684,000) and Dallas (5%, 610,000), and the economies of these cities grew faster than the national average.

The Government of Mexico, through its 50 consulates, recognizes these great contributions. We have expanded our ability to deliver services to our community and will continue to do so. Mexico remains, and will remain, committed to assisting them in their efforts to achieve greater personal development.

Conclusion

I would like to end this presentation with a couple of ideas.

Mexico and the United States need to build on the positive dynamics now in place. Our partnership has proven to have a strong positive impact in our societies. A new era of opportunities stands before us. If we seize them together, then together we will continue to thrive.

The current discussion of comprehensive immigration reform opens new possibilities to strengthen this great country and the region as a whole. We have been closely and respectfully following this debate, and we will make contributions whenever it is needed to make sure that our top priority, increasing the opportunities and the well-being of our nationals, is advanced on both sides of the border, regardless of the specific final outcomes of this process.

As you know, on May 2nd and 3rd, President Barack Obama will visit Mexico. This will be an opportunity to re-launch the bilateral relationship and will set the tone for the coming four years. It will also prove crucial to harness the depth and energy of our partnership moving forward in the decades to come. I am confident that the right conjunction of shared goodwill, commitment and joint vision will lead us there.

Thank you very much and I look forward to your comments and questions.