Archive for the ‘Economy’ Category

Treat Mexico as a Strategic Partner

February 21, 2017

John D. Negroponte (Mexico, 1989-1993)
James R. Jones (Mexico, 1993-1997)
Jeffrey Davidow (Mexico, 1998-2002)
Antonio Garza (Mexico, 2002-2009)
Carlos Pascual (Mexico, 2009-2011)
Earl Anthony Wayne (Mexico, 2011-2015)

An edited version of this piece appeared in The Washington Post.

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Mexico is of enormous importance to the United States. We have strong strategic interests in a relationship of respect and collaboration with Mexico while we work through differences on trade, security, and migration.

US-Mexico relations touch the daily lives of more Americans than ties with any other country, whether through culture, commerce or travel. US prosperity and the security of our homeland are deeply affected by the type of relationship we have with our southern neighbor.

Much can be improved between Mexico and the US for the good of both countries, but tackling these challenges need not be a win-lose proposition. Both countries can gain security and prosperity. Reviving the animosity and “distance” that characterized our relationship in the seventies or eighties is dangerous and runs counter to our interests.

The six of us have served as U.S. Ambassadors to Mexico, managing the ever-improving relationship across Democratic and Republican administrations since the late eighties. We have seen firsthand the strategic value of working cooperatively with Mexico to tackle common problems, including crime, terrorism and global economic competition. Along the way, Mexico has become a more democratic and prosperous country, making it a better and more reliable partner.

We are now deeply concerned to see this foundation shaken. Public attitudes in both countries are being soured by exaggerated public accusations. Mexicans believe that their national “dignity” has been insulted. Champions of closer cooperation with the US are on the defensive. Nationalist voices are gaining traction. This is not in America’s long-term interest.

The United States and Mexico started our modern journey to closer partnership with the 1993 North American Free Trade Agreement. Collectively, the six of us have worked through every stage of NAFTA. This is not a perfect agreement, but neither is it the job killer some have construed. Since NAFTA was signed in 1993, U.S. jobs linked to trade with Mexico grew from 700,000 to 4.9 million. The value of our two-way trade has grown six fold, reaching $584 billion in 2015. Mexico is now the second largest market for US exports, larger than our exports to China, Japan, and Germany combined. Mexico is the third largest buyer of US agricultural products. We build many things together, with parts crossing borders in both directions – so much so that finished Mexican manufactured exports were found to have 40% U.S. content.

US jobs moved to Mexico, but others were created by NAFTA. A 2013 study estimated that the US is $127 billion richer each year because of extra NAFTA trade. New studies have made clear that the big causes of US manufacturing job losses are automation and trade with China, not NAFTA. NAFTA can be improved to help boost the US economy in such areas as “rule of origin,” services, e-commerce, border inefficiencies, and labor standards. Those are the issues that should be negotiated based on facts to strengthen a long-term relationship that makes both countries more competitive.

Energy deserves special mention. Under NAFTA, Mexico’s nationalized energy sector was still off limits to US companies. In 2013, Mexico opened investment and trade in oil, natural gas, electricity, renewables, and refined fuels to US and other companies. Today, the US exports more natural gas and gasoline to Mexico than to any country. In December, major US companies won licenses to develop Mexico’s oil reserves, while others are partners in new pipelines. These openings make North America more energy secure.

The US deficit with Mexico gets more public attention than it deserves. Mexico represents 8% of our deficit. Our deficits with China, the EU and Japan are larger. The deficit with Mexico declined by over 40% between 2010 and 2015, even as our trade grew 35%.

A sharp point of contention has been over the border wall and migration. The great irony is that today there are 1.1 million fewer undocumented Mexicans in the US than in 2007. Apprehensions of Mexicans at the border have reached the lowest levels of this century. Mexico has joined us to manage the surge in migrants from Central America, deporting over 165,000 from its southern border in 2015, more than the United States did. Publically demanding that Mexico pay for a wall that Mexicans don’t think is needed has fueled anti-American nationalism. That limits the capacity of Mexico’s government to work with us to find solutions.

Common borders also made Mexico and the United States partners in national security. Ever since 9/11, Mexico and the US have worked closely to stop potential terrorists from entering the US. We also work to improve the fight against illicit trafficking. The trafficking of heroin and other drugs into the US and the smuggling of weapons and drug profits into Mexico fuel violence, corruption, and deaths in both countries. Still, during the years of our collective service, law enforcement officials have built trust, competency and legal channels to act against criminal networks. That cooperation needs to be strengthened, not undermined.

Together, the authors have witnessed profound and positive changes in the US-Mexico relationship over the last quarter century. We urge that the US engage in serious, fact-based negotiations over differences on trade and other issues. Intimidating or denigrating remarks make it harder to reach outcomes that support American economic and security interests and fuel anti-Americanism in Mexico. Workers, companies, and communities of both countries will prosper with a long-term strategic partnership between the US and Mexico. Let’s keep building it.

Summer Doldrums. Not Quite.

August 3, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s August 2016 newsletter.

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It should be the summer doldrums, but the news out of Mexico hasn’t quite slowed down.

One of Mexico’s biggest stories was the debate, passage, veto, and then re-passage of the country’s anti-corruption package. These seven bills were designed to put legislative meat on the bones of the 2015 anti-corruption reform, and will greatly assist in coordinating corruption fighting across government institutions. The final package stopped short of embracing every part of the civil society written and backed Ley 3de3 (which would have forced government officials to publicly declare their assets, conflicts of interest, and tax records), but it did create what has been called “the most encompassing system to identify and sanction corruption that the country has ever had.”

In more welcome anti-corruption news, the Peña Nieto administration filed legal challenges this month against the governments of Veracruz, Quintana Roo, and Chihuahua for reforms that would have shielded outgoing governors from corruption investigations. These states are facing federal inquiries over financial irregularities under the governors’ tenures. And in the case of Veracruz, for at least twenty-six phantom companies that received some US$1 billion in unaccounted funds. (more…)

More Uncertainty but Message Clear: “Fix It”

July 5, 2016

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s July 2016 newsletter.

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This past January, I wrote that the coming year would be one characterized by our “Living with Uncertainty”. Looking back, while it was clear that this year would be tumultuous, I certainly misunderestimated what was to come.

It’s hard not to start with Brexit, when 52 percent of the United Kingdom’s voters chose to break with the European Union.  The vote marks the first departure from the grand European project, tacking an uncharted course for the United Kingdom and for the continent. But the contentious vote was really the easy part. The next two years will be filled with the tougher steps—sitting through painful negotiations, designing a brand new state framework, and calming jittery markets that are concerned with the future of both the United Kingdom and a strong and peaceful Europe.

The anger is not just a United Kingdom and United States phenomenon; voters around the world are frustrated. And Mexico is no exception.

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Mexico’s energy reform to attract international interest

August 11, 2014

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s August 7, 2014 special to the Houston Chronicle.

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With final Congressional approvals now in place, Mexico and President Enrique Peña Nieto can begin celebrating the passage of the secondary legislation necessary to codify last year’s constitutional amendments that opened the energy sector to private investment. The confetti will have barely hit the floor when the focus must necessarily turn to the crucial implementation period when the institutional and market architecture must go from blueprints to the hard work of build out.

The December 2013 constitutional reform ended the monopoly of the state-owned energy company Pemex and introduced private investment into every segment of Mexico’s hydrocarbon sector. It also gave regulatory authority to a new set of autonomous, independently funded entities that will oversee licensing, safety and environmental protection. Additionally, the reform required that Pemex be transformed into a “state productive enterprise” and established the Mexican Petroleum Fund, under the purview of the Central Bank, to manage contract payments and oil revenue.

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The future motor of the world economy: India

November 20, 2013

Richard W. Carlson (Ambassador to the Seychelles, 1991-1992)

Cross-posted from Ambassador Carlson’s November 16, 2013 op-ed in The Tribune-Review.

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Growth in India has averaged about 8 percent a year for the past decade. Millions of Indians have moved to big cities from towns and villages and, by dint of intelligence, hard work and education, have joined the middle class.

After independence from Britain in 1947, India embraced socialism with its stultifying bureaucratic regulations, wasteful inefficiencies and interventionist policies.

In 1991, the year the USSR, its longtime ally and supporter, collapsed and died, it threw off its planned economy and adopted the principles of the free market, including expanded international trade. India tried to slow down its waste of capital and labor and get out of the way of small manufacturers. The economy took off like the recent Indian space shot to Mars.

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Mexico: A Push for Reform

November 7, 2013

Antonio O. Garza (Ambassador to Mexico, 2002-2009)

Cross-posted from Ambassador Garza’s November newsletter.

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Later this morning, I’ll be headed north from my Mexico City office to Texas in order to appear with Mexico’s Secretary of Economy Ildefonso Guajardo and North American Development Bank president Geronimo Gutierrez at a U.S.-Mexico High Level Economic Dialogue forum in San Antonio. I’m sure among the things we’ll talk about is the reform push currently underway in Mexico.

Nearing his one-year anniversary mark, President Enrique Peña Nieto has amassed an impressive list of accomplishments, including labor, telecommunications, financial and education reforms. Fiscal, energy and political reform measures also have been wending their way through the legislative process, generating heated debate as political leaders and competing interests wrangle over specifics of the proposed bills. Duncan Wood, via the Wilson Quarterly, offers an overview of this year of ambitious reforms, with an emphasis on the all-important energy overhaul. For an interesting (if perhaps too tempered) take on Mexico’s prospects for true reform under a PRI president, published in the World Affairs Journal, read here. The many unknowns surrounding the major pieces of reform legislation in Mexico means there will be much to watch in the weeks leading up to the close of the Congressional session on December 15.

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20 percent women, 100 percent effective

October 23, 2013

Swanee Hunt (Ambassador to Austria, 1993-1997)

Cross-posted from Ambassador Hunt’s October 18, 2013 special to the Global Post.

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Senator Patty Murray, D-Wash., once said her experience as a preschool teacher was excellent training for Congress.

As many on Capitol Hill are mugging for the press pool, proud of their political brinkmanship, a small group of female senators (Republicans Susan Collins, Kelly Ayotte and Lisa Murkowski, and Democrats Amy Klobuchar, Heidi Heitkamp, and Jeanne Shaheen) stands to the side, immune to the “me, me, me” fest. Led by Sen. Collins, R-Maine, their strategic collaboration with a handful of male senators led to a deal to reopen the federal government and save the US from a first-ever default.

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Ambassador Stephenson on his Trip to Israel

October 22, 2013

Thomas Stephenson (Ambassador to Portugal, 2007-2009)

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As I write, I am flying back from four days in Israel during which time I participated in a series of meetings with current, and several former, senior military, intelligence, and government leaders. None of the meetings were for attribution, but I thought it would be interesting to address the questions posed (How does the government shutdown impact US foreign policy and US credibility abroad? How significant is the recent shift in US-Iran relations? What do you expect will result from the recent agreement between Secretary Kerry, Russian Foreign Minister Lavrov, and the Assad regime regarding the disarmament of Syria’s chemical weapons?) in the context of Israel’s precarious position with regard to most of the issues raised, and the gist of what we heard and observed regarding these issues while there.

There was concern expressed about the impact on Israel and our other trading partners of our government shutdown and potential debt default (fortunately, an agreement to kick the can down the road a few months was reached the day after our meetings concluded). Several of the people with whom we met expressed concern about the potential impact of shutdown and sequestration on our military capabilities, the dollar as the world’s reserve currency, and the extent to which world financial markets and international trade have been roiled by our failure to find a solution. There is no doubt relief in many corners of the world that we have at least an interim solution.

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We have a deal, but the damage is already done

October 18, 2013

Jim Rosapepe (Ambassador to Romania, 1998-2001)

Cross-posted from Ambassador Rosapepe’s October 17, 2013 op-ed in The Baltimore Sun.

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I’ve spent the last two weeks in Latin America — where they know something about defaulting on public debts. As part of a bipartisan group of former U.S. ambassadors, I met with business leaders, central bankers, government officials and ordinary citizens. They all asked: what is going on in the U.S. Congress? Is the U.S. really going to default on its debt because of the political game playing?

Along with my traveling companions, Republicans as well as Democrats, I repeatedly reassured them that we were confident that cooler heads would prevail and default would be avoided. But privately, we shook our heads and said to each other: Boy, I hope we’re right.

Well, we were right — for now. But Congress has just agreed to put our country, the financial markets, and the world through another episode of “Will the tea party destroy the credibility of the greatest country in the world?” Under the plan approved Wednesday night, the show will be back on the air in January, 2014.

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Relax the U.S. Visa Waiver Program

August 30, 2013

Jim Rosapepe (Ambassador to Romania, 1998-2001)

Mark Gitenstein (Ambassador to Romania, 2009-2012)

Cross-posted from Ambassadors Rosapepe and Gitenstein’s August 29, 2013 op-ed in The Washington Post.  Ambassadors J.D. Crouch and Michael Guest also contributed to the op-ed.

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An overlooked but critical component of immigration reform would modernize how the United States welcomes visitors — businesspeople, tourists and relatives of Americans — from friendly nations. The Senate immigration legislation includes a measure to revamp the Visa Waiver Program (VWP), which allows citizens from selected countries to travel without visas to and in the United States for up to 90 days. The House needs to join in updating this key program. Stagnancy is straining U.S. relationships with allies and hamstringing our economy.

The VWP, open only to citizens of countries where no more than 3 percent of applicants are refused for visas by U.S. consular officers — known as the “refusal rate” — carries to a national level a central flaw of the 1952 Immigration and Nationality Act: It makes an entire country’s citizens guilty until proved innocent of wanting to violate the terms of their visas. In so doing, it deters bona fide tourists, businesspeople and students.

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