SPEECH FOR AMBASSADOR MEDINA MORA ON THE OCCASION OF THE FORUM “MEXICO ON THE REGIONAL AND GLOBAL STAGE”, ON JULY 30, 2013, AT THE INTER-AMERICAN DIALOGUE
Good morning. I would first like to thank the Inter-American Dialogue for hosting us today and for inviting Uri and myself to share our thoughts and perspectives about the world and Mexico. I would especially like to thank Michael Shifter for his efforts in putting this event together.
Uri, you have done a wonderful job in presenting a 30,000 feet vision of what is happening in the world today.
So the task at hand is to explain where Mexico fits in. Mexico has undergone a tremendous transformation over the past few decades, and today, we are on our way to becoming a major player and an active leader in the global arena.
Some have called our current situation the “Mexican Moment”....
According to the World Bank, Mexico currently has the fourteenth largest economy in the world. Looking forward, Goldman Sachs has estimated that Mexico will be the fifth-largest by 2050. Of course, no one has a crystal ball, but those predictions reflect a larger consensus regarding Mexico and its economic performance.
I must say, I don´t really find the concept of “Mexican Moment” very attractive, for a very simple reason. I think that this type of phrase speaks of a fleeting chance, of a temporary potential. That is not what Mexico´s growth and success are based upon. Mexico has been taking on very thorough policies and difficult choices, has reached consensus and has achieved to establish a long term view. In a nutshell, Mexico´s success is based upon twenty years of free trade and sound macroeconomic policies.
The only way in which this concept of Mexican Moment makes sense is if we understand it as a milestone. In that sense, it is true that Mexico is currently passing through a crucial moment in its history. Macroeconomic stability –a modest fiscal deficit and low inflation – has been maintained since 1995. Our economy has been growing at a moderate yet steady rate even after the global economic crisis. In 2012, Mexico saw its economy grow by 4 per cent, a rate that is expected to reach even higher levels in the years ahead.
Even in the context of the anticipation of the end of QE, Mexican government bonds have fallen to record lows while the stock market has hit record highs. With a healthy economic performance and employment growth, Mexico is reaping the fruits of its efforts.
This balanced and sustained growth has improved the quality of life for many millions of Mexicans. There have been important achievements in public health, such as longer life expectancy and lower fertility rates.
Additionally, the average number of years that Mexicans spend in school has doubled while university enrollment has tripled. Close to 100 percent of 5 to 14 year olds are enrolled in school, a higher enrollment rate than the OECD average. This means that today, young Mexicans receive more years of schooling than their parents.
Within this context, Mexico is now becoming a predominantly middle class society. The Brookings Institution has highlighted that 60 per cent of Mexico’s population is middle class, and by 2030, estimates that 86 per cent of all Mexicans will have middle class status.
With a healthy democracy, a more competitive economy, high capital investment, and a major demographic bonus, Mexico has a grand opportunity for even more growth. The administration of President Peña Nieto is as aware of this advantage, as it is conscious of the remaining challenges. This government’s primary goal is to enable Mexico to reach its full potential in light of all the factors trending in its favor.
To this end, the administration has enacted a series of policies to move Mexico forward. These policies are underpinned by the broad agreements that have been reached between Mexico's three major political parties.
These structural reforms and policies strengthen the three main pillars of productivity, namely, better institutions, availability of human capital and investment.
With regard to the first pillar, Mexico has focused on three main areas: competition and antitrust, labor and judicial process. Competition, which is essential for a market to thrive and countries to grow. In the past, competition has sometimes been slow to develop, or has been delayed and frustrated by structural problems in the legal framework.
But this is now changing. The Anti-Trust Reforms seek to raise competitiveness in every sector, but it is particularly relevant to the telecoms sector, —opening it up to greater foreign investment and smaller players in the industry—and give Mexicans access to better and cheaper telecom services. This reform will promote social and economic dynamism.
The labor reform that passed into law in late 2012 represents a major breakthrough to improve the functioning of the labor market. The reforms provide flexibility and simplify rules on employment contracts that reduce labor force participation rates.
A deep reform of the judiciary is taking place, and although the main focus has been criminal procedures, the civil courts are also undergoing significant changes that will allow for more certainty for businesses and improves SME access to credit while fostering financial penetration.
The second pillar, human capital, is another key motor for growth. Mexico has achieved virtual universal enrollment for primary and middle school. But just as important as quantity is the quality of education.
The Education Reform signed earlier this year addresses the challenge of increasing the quality of education in Mexico. Through a series of structural adjustments, Mexico looks to provide students with the necessary tools to successfully compete in an increasingly dynamic market.
The third and last pillar is investment. Mexico has a privileged geography, but it requires a modern infrastructure and state of the art facilities in order to transform this into a competitive advantage.
Two weeks ago, President Peña Nieto announced a plan to direct over 100 billion dollars to infrastructure. This investment will be used to improve roads, railways, airports and seaports as well as telecommunications.
Other large scale reforms –namely the fiscal and energy reforms- are still being discussed. Let me assure you that I am equally curious as you are about the energy reform. But the main point, I think, is clear - Mexico is taking the necessary steps to ensure its sustained growth in the short and long term.
It is important to recognize that, while our ascendancy is certainly the result of long-term fiscal discipline and other domestic efforts, it is also the result of our trust in liberalized international markets. Our agreements with trading partners have played a large role in our success, and none have been more important than our NAFTA partners.
Mexico has one of the largest network of free-trade agreements in the world. Our country's trade as a percentage of GDP is around 65 per cent. That compares with China’s 59 per cent, The United States’ 32 per cent, and Brazil’s 25 per cent.
In terms of trade, Mexico has one of the most globalized economies in the world, and our involvement in the TPP as well as our recent negotiations with our partners in the Pacific Alliance will only reinforce Mexico’s committed free trade approach and further globalize and diversify our economy.
This commitment to free trade has paid off. In 1992, before NAFTA was signed, Mexico’s GDP was around 360 billion dollars. Now it is well over one trillion.
Ladies and gentlemen, no doubt many of you in the audience have heard about Mexico's economic successes in the past decade. But there is another side of that story that gets told much less. Our increased economic strength has raised our global profile, and that means sharing global responsibility more than ever before.
From the beginning of his administration, President Peña Nieto has voiced his commitment to have Mexico assume more global responsibility and become an active participant on issues that stretch far beyond our own borders.
This involves much more than just trade agreements. It means that, as our President put it recently before the leaders of the G8 countries, we must actively get involved in “the great causes of humanity”.
With that in mind, one of Mexico’s chief foreign policy goals is to strengthen international cooperation on some of the world’s biggest challenges. I can easily point to two topics in which we are playing an important role--control of global arms trading and transparency. These are challenges which require large-scale collective action in order to be overcome, and Mexico has taken on leadership roles in both cases.
During the recent G8 talks, President Peña Nieto emphasized not only Mexico's commitment to free trade, but to transparency and openness. This year Mexico is set to co-chair the Open Government Partnership, a global effort to improve transparency and accountability in governance, and it will act as chair of the partnership from 2014 and through 2015.
Mexico was also very actively involved in the recent negotiations of the United Nations' Arms Trade Treaty (ATT), serving as Vice Chair of the Preparatory Committee in the lead up to the treaty which, to date, has been signed by nearly 80 countries.
The ATT is broad in scope, but is primarily focused on stopping the unregulated flow of arms to conflict regions. It is also a great example of how Mexico is assuming its responsibility to defend the rule of law and safeguard the conditions that allow for a more peaceful world.
Finally, I want to end on a special area of focus of our new foreign policy - Latin America.
We want to promote regional integration and Mexican trade. To this end, we have consolidated the Pacific Alliance as a space of profound interconnectedness that promotes the free circulation of goods, people, and services between Mexico, Chile, Colombia, and Peru. As a unit, the countries of the Pacific Alliance will form the eighth largest economy in the world.
With regard to our neighbors in Central America, we believe a safer and more prosperous Central America means a safer and more prosperous Mexico.
Ladies and gentlemen, going forward, I think we can expect to see Mexico take on more global leadership roles. As the current domestic reforms taking place inside Mexico begin to take root, we will find ourselves standing on solid ground from which to extend and deepen our international involvement.
Our relationship with the US and Canada is a priority, of course. But Mexico is, and has always been, a nation that finds common ground with many others.
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