MESSAGE OF AMBASSADOR EDUARDO MEDINA MORA ON THE OCCASION OF ANNUAL CONFERENCE OF THE US-MEXICO CHAMBER OF COMMERCE, THE CHAMBER AT 40, NAFTA AT 20.
Señoras y señores, Ladies and Gentlemen, Dear friends.
An old African saying states that there are two ideal moments to plant a tree. Forty years ago, and right now.
Forty years ago, a tree was planted. A young tree of commercial engagement, which has become a mature tree, with deep roots and wide branches, very much like the Arbol del Tule. That magnificent tree has grown through the effort of institutions, which have fostered growth through coordinated action, but mostly, it has grown by the will of individuals, entrepreneurs, hard working men and women.
Our markets have grown, have matured together, our relationship has flourished, not only through the deepened relationship in traditional sectors but also through the diversification of the sectors that unite us. Forty years ago, visionary business people got together to establish the US-Mexico Chamber of Commerce. Not an easy endeavor. At that time, businesses were not talking about medical tourism or workforce mobility. But they were laying the groundwork for our shared vision.
Let me fast forward to 1994. Almost twenty years ago, the North American Free Trade Agreement launched with a bilateral trade of 81 billion dollars. In 2012, bilateral trade grew to 494 billion dollars - a 510% growth. This means that trade between Mexico and the U.S. has sextupled, growing 10% annually. This, by any standard, is a successful commercial agreement.
But let me continue with the numbers, because they tell a fascinating tale. Most of you know that trade between Mexico and the US amounts to USD $ 1.3 billion each day. But how many of you have made the calculation of what this means per minute. I have: it amounts to 1 million dollars!
For the case of groups of countries, in 2012 the US exported to its NAFTA partners 33% of its exports; 17% to the European Union, and 12% to Brazil, Russia, India and China (BRIC countries) combined, and 38% to the rest of the world.
U.S. exports to Mexico in 2012, which represent 14% of total US exports rose $18 billion dollars above their 2011 value. According to the White House, each $1 billion in new exports supports more than 6,000 jobs. This suggests the growth in exports to Mexico created over 107,000 new American jobs in 2012.
As a result of geographic proximity, supply chain integration, cultural bonds, and the certainty of rules laid out two decades ago by the North American Free Trade Agreement (NAFTA), the North American region has become highly integrated economically and one of the most competitive in the world. U.S. value-added in Mexican manufacturing exports is about 37%, which is ten times higher than the 3.7% of U.S. value-added in Chinese manufacturing exports. This synergy has created a win-win relationship so that when Mexico exports, the U.S. exports as well.
So how can we help this already very successful joint production? We need to reduce transaction costs and to establish the infrastructure needed for better, more efficient logistics. As 82%, or $404 billion, of bilateral trade was carried across the border via surface transportation in 2012, expanding and modernizing the current border infrastructure will help promote a world-class logistical capability that improves border wait times, customs procedures, and trusted traveler or shipper programs.
We also recognize that regulations are key elements in our trade relationship. In this respect, both countries are committed to improving bilateral regulatory cooperation aimed at making regulations more compatible, reducing regulatory burdens, and increasing transparency and predictability that work to ensure environment protection, health and safety. A better regulatory framework will ultimately lower trade costs for consumers, businesses, and producers, and support growth, productivity, investment and innovation.
In this context, the High Level Economic Dialogue will have a very ambitious agenda: competitiveness, creativity, economic growth, productivity and a shared leadership in global issues. I will refer to that last objective in a minute.
A more ambitious growth in the value chain is particularly important to Mexico: we need to be more serious with respect to research and development. The role of the private sector is critical here: companies and universities must come together to match the needs of industries to the academic programs that Universities offer. The Bilateral Forum on Education, Innovation and Research has been set up to facilitate that conversation and to put forth proposals for specific actions.
Ladies and gentlemen,
North America’s exports will be more successful if both countries produce jointly for world markets. An important challenge is to work together in key ongoing and future international trade negotiations to further strengthen the supply chains that will make the North American region more competitive. Mexico and the U.S. have a shared agenda, and Mexico's participation in the Trans-Pacific Partnership (TPP) negotiations will be focused on creating a 21st Century agreement which will drive growth and economic development and promote innovation, benefitting our consumers and supporting the generation and retention of jobs, raising living standards and reducing poverty in participating countries and in the Asia-Pacific region.
In the case of North America, due to the strategic economic relation between Mexico and the United States established through the NAFTA, the TPP will enable synergies to be further strengthened and the natural integration of our production and supply chains deepened, which will create greater trade opportunities and better jobs.
Entry to the TPP negotiations gives Mexico a great opportunity to continue to diversify its export to regions with highly dynamic economies. Asia has become the most dynamic region for Mexican exports.
Given the great relevance of an efficient North American production platform for the competitiveness and prosperity of our region, it is critically important that the provisions of the Transatlantic Trade and Investment Partnership (the U.S. – European Union trade negotiations), which has an aggressive timeline for concluding negotiations within two years, fully reinforce and complement the rules governing trade and investment relations between our countries that were set by NAFTA, and hopefully soon also complemented and updated by the Trans-Pacific Partnership.
A Trans-Atlantic Trade Agreement that included Canada, Mexico, and the United States would strengthen the North American region by expanding market access, creating jobs, reducing transaction costs, and eliminating distortions that accompany the different scope and coverage of the agreement of each North American country with the European Union.
Ladies and Gentlemen, I said at the beginning of this message that there are two good times to plant a tree. Forty years ago, and right now. Forty years ago we planted a tree, and we have reaped its fruits. What tree are we going to plant right now? I hope it is a tree that ultimately contributes to a better quality of life on both sides of our border.
* * *