There may not be another bilateral relationship in the world as complex the relationship between Mexico and the United States, and there may not be two countries that are more important to one another. We share a border that is two thousand miles long; we trade almost 1.4 billion dollars’ worth of goods and services per day –that’s one million dollars a minute!- we share a complex history that still continues to shape our current reality; and above all, we share a people.
The US-Mexico relationship has evolved considerably over the past few decades. Twenty years ago, the North America Free Trade Agreement came into effect and those years have transformed the way our countries interact with each other. It removed trade barriers facilitating cross-border movement of goods and services, and provided new investment opportunities; a deeper economic integration in the region has taken place. While the goal of the agreement was the establishment of a free trade area, something more has happened—North America has become a region of shared production. We are building things together and competing as one unit in the global economy.
Let’s look closely at the numbers. Bilateral trade between Mexico and the United States has grown to more than 500 billion dollars. In 2013, total US exports to Mexico reached 226 billion dollars, which is more than US exports to Japan and China combined, or to all the BRICS combined, and almost as much as to the European Union (86% of total US exports to the European Union) (US exports to Mexico more than to Germany, France, the United Kingdom, the Netherlands, Spain, and Italy combined). Soccer fans here in the audience today know that the World Cup is on its way. You might also know that, in the history of the event, 8 different countries have won the World Cup (9 after Mexico wins it this year). You might be surprised to hear that Mexico buys more goods from the United States than all the eight countries that have won the FIFA World Cup combined. In fact, the US Chamber of Commerce estimates that 6 million jobs in the US depend on exports to Mexico. And by the way, goods that the US imports from Mexico have, on average, 40 percent US content. Imports from China have 4 percent US content. So by comparison... 4 to 40.
This last detail is important because I would venture to guess that few people are aware of the extent to which the United States and Mexico compete together as one unit in the global economy. The United States and Mexico build things together to sell here and abroad. While the tag may say Made in Mexico or Made in the United States, more and more, those products are actually just Made in North America and the label should reflect that. To put it simply, in the paradigm of the new global economy, the interests of Mexico and the United States are aligned because we build and export things together.
Now, many of the examples I, myself, and others often use to portray the depth and width of our relationship often refer to the experiences of large companies. We speak of Canadian planes made in Mexico and assembled in the United States, and we speak of large auto manufacturers who find value on both sides of the border. But we seldom refer to small and medium-size companies, although they are really the engines of job creation and prosperity for our region.
In Mexico, SMEs constitute a highly important part of the economy because of their contribution to creating jobs and to economic growth. There are more than four million companies today in Mexico, 99.8 per cent of which are small and medium sized. They constitute 52 per cent of our Gross National Product and 72 per cent of the country’s jobs.
The growth of SMEs in number, but also their increased competitiveness and success as innovators and exporters depend on the will and abilities of entrepreneurs but also, increasingly, on the environment of support and mentorship we can provide for them. With this mission in mind, President Peña Nieto has created the National Institute for the Entrepreneur and, along with President Obama, the Mexico-United States Entrepreneurship and Innovation Council.
Our two presidents share many topics of interest. One of them, a priority for both heads of State, is the support of small business. For President Obama, small businesses are the key to helping families and individuals achieve the American dream. In the words of President Peña Nieto, it is about making business, economic opportunity and development more democratic. In essence, both Presidents agree small businesses are the backbone of our economies and therefore any effort to support their growth and success is commendable.
I want to thank the State Department for hosting this event which highlights the importance given to these initiatives in the context of the Small Business Network for the Americas Initiative. And I want to congratulate George Mason University and the Autonomous University of Nuevo Leon for signing this agreement; I am certain we will soon give testimony of success stories of the soft landing programs in Nuevo Leon and Virginia.
Thank you and good afternoon.
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