First I want to thank World Business Chicago for inviting me to share our interest in Illinois and Mexico as key partners in fostering economic growth and quality job creation.
Economic growth requires competitiveness, and that is why Mexico is fully engaged in implementing far-reaching economic reforms and in deepening economic integration in North America, to make it the most competitive region in the world.
This year we are celebrating NAFTA’s 20th anniversary, and rightly so, for it represented a big leap forward in the strategic outlook and the rules governing economic interaction in North America.
- Intra-NAFTA trade today exceeds $1 trillion dollars. For the U.S. and Mexico this represents more than six times what it was 20 years ago.
- Mexico is now the third largest trading partner for the U.S. and its second largest export destination.
- Six million jobs in the U.S. depend on exports to Mexico and 250,000 jobs here in Illinois are the result of our trade.
- Illinois has in Mexico its 2nd largest export destination, representing 7.3 billion dollars last year.
North America. Integrated production.
While the goal of NAFTA was the establishment of a free trade area, something much more significant has happened—North America has become a region of shared production. We are jointly producing goods through the deeply integrated production and supply chains that have developed as the result of clear, stable and transparent rules. We are increasingly engaging with the global economy as one region.
Some very interesting examples of our integration are right here in Illinois. The Chicago Transport Authority is undertaking a fleet replacement plan with new Bombardier 5000-series railcars. Production of those railcars, takes place in all three NAFTA countries, La Pocatiere (Quebec), Sahagun (Mexico) and Plattsburgh (New York).
No less than 270 aerospace companies are currently operating in Mexico as we aggressively pursue “high-tech” aerospace jobs to broaden our industrial base. As result, Boeing works with over 60 suppliers in 10 different Mexican states.
Two years ago, Caterpillar began construction of a 500 million dollar factory and less than a year ago, Mondelez announced an investment of 600 million dollars for the construction of the world’s largest cookie production plant, both in Nuevo Leon. Illinois-based Archer Daniels Midland operates a soybean processing plant and nine wheat flour mills in Mexico.
The results of NAFTA in terms of trade and integration of supply and production chains are encouraging, but if we are to take North American economic integration and competitiveness to the next level, we need to have much stronger and proactive engagement between the public and private sectors, and to truly think and act regionally.
Significant transaction costs of cross-border trade and investment still remain. A highly skilled workforce, streamlined regulations and vastly improved infrastructure and logistics, will be critically important to take full advantage of our economic complementarity.
Mexico’s Structural Reforms
To address these challenges, Mexico has undertaken a flurry of reforms under the leadership of President Peña Nieto. Those reforms include transformative changes to election laws, labor, education, telecommunications, financial services, competition policy, fiscal policy and energy.
Bilateral engagement will also be of critical importance in preparing for a competitive future. The High-Level Economic Dialogue (HLED) is a mechanism launched a year ago to foster engagement at the highest level between the Mexican and U.S. governments with a view to reducing transaction costs to increase the competitiveness of our shared economic space.
Through the HLED initiatives are underway in areas such as transportation, telecommunications, strategic logistics corridors, and customs and border master plans, which will increase the competitiveness of the region.
A week ago Secretary of State Kerry and Foreign Secretary Meade met in Mexico where they formally announced the launch of the Bilateral Forum on Higher Education, Innovation and Research (FOBESII). The mission of the Bilateral Forum is to foster mutual understanding through programs addressing student mobility, academic exchange, research and innovation. Those programs will help both bring our societies closer together, and better prepare a talented workforce to meet the needs of the market and drive future growth and prosperity in the region.
Last February’s North American Leaders’ Summit in Toluca focused on regional competitiveness. President Peña Nieto, President Obama and Prime Minister Harper acknowledged that, while North America is one of the most competitive and dynamic regions in the world, there is still enormous untapped potential, and undertook a series of commitments that build upon the foundation we laid some twenty years ago with NAFTA.
In conclusion, Mexico today is undergoing far-reaching domestic reforms that will transform its future; we are bilaterally engaged with the U.S. on strategic economic issues; we are participating in some of the most significant trade negotiations in the world –such as the TPP and the Alianza del Pacifico-, and working to build upon our strong regional foundation to create a dynamic and competitive North American era. All these actions have Mexico poised to be at the cutting edge of rules on international trade and investment, and become an even more important player in the global economy for a long time to come.