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Diplomacy in Action

Highlighting the U.S.-Mexico Economic Relationship

Jose W. Fernandez
Assistant Secretary, Bureau of Economic and Business Affairs

Washington, DC
January 18, 2013

State Dept Image/Jan 18, 2013/Washington, DC
Date: 01/18/2013 Location: Washington, DC Description: Jose W. Fernandez, Assistant Secretary of State for Economic and Business Affairs, discusses the U.S.-Mexico economic relationship in advance of US delegation visit to Mexico City to discuss strenghtening of U.S.-Mexico bilateral economic relationship - State Dept Image

2:00 P.M. EST


MODERATOR: Welcome to the Washington Foreign Press Center. Today we are pleased to welcome Jose Fernandez, who is the Assistant Secretary of State for Economic and Business Affairs, who will discuss the U.S.-Mexico economic relationship in advance of participating in a delegation from the U.S. Government that will visit Mexico City to discuss strengthening the U.S.-Mexico bilateral economic relationship.

With that, I will turn it over to Assistant Secretary Fernandez.

ASSISTANT SECRETARY FERNANDEZ: Well, thank you. It’s good to see all of you. All of you are from publications that I have read many times in my professional career, so thank you.

As you just heard, I am honored that I’ll be going to Mexico next week as part of a delegation that’s going to be joined by three other of my colleagues: Susan Kurland from the Department of Transportation – all four of us are assistant secretaries; Susan Kurland from the Department of Transportation; Charles Collyns from the Treasury Department; and Michael Camunez from the Commerce Department.

And the reason for this is that we think that we are in Latin America and also and – but especially with Mexico as well, we are at a unique point in our relationship with Latin America. It’s what President Obama and Secretary Clinton have called a moment of opportunity. And this was recognized by President Pena Nieto when he was here, because one of the things that he talked about was focusing on economic reforms and the need to try and increase economic integration among NAFTA partners, not just to – because it’s good to do but also to make NAFTA much more competitive on a global basis.

And this is something that we wholeheartedly endorse. We very much endorse his call – President Pena Nieto’s call to make economic, trade, investment issues real core components of a bilateral relationship. And if there is anything that we can communicate as part of this trip, it’s exactly that point. We have heeded the call. We understand the call. We share the call for turning our economic relations in what is already a wonderful relationship with Mexico a core component.

And I think that this places the economics as at the center, clear evidence that we put economics together with the other issues that we deal with Mexico at the center of our relationship. And we really look forward to working with our colleagues and friends in the Mexican cabinet as well as with Mexican business leaders, because we will be meeting with the private sector as well in Mexico, in order to continue to talk about strengthening or deepening our economic relations.

And one of the – as we try and – that was – we speak about increasing economic relations, we have to keep in mind how good, how vibrant, the economic relations already are, right? We have 400 and – I’m going to get this number wrong – $462 billion a year of trade between our two countries. If you break that down, that’s about one and a quarter billion dollars a day in trade. Mexico is our second largest export market. Mexico is our third largest source of imports. Mexico is our third supplier of energy anywhere in the world. The bilateral trade, the 460 billion, not 462, 460 billion of trade in 2012 between our two countries is four times the trade that existed at the time of NAFTA.

And something that is sometimes lost in the details is the fact that what we sell to Mexico and what Mexico sells to us and what’s counted as exports sometimes, what we sell to Mexico has a lot of Mexican content that we take, we assemble or we put together, we add value, and we sell it back to Mexico, and the other way around. What Mexico sells to us includes a lot of U.S. components.

So this is – you have heard many, many times diplomats talk about partnerships. Everybody likes to talk about partnerships. It’s an overused term. But this is a real true partnership. This is a partnership where we make things together. We are partners in an integrated enterprise whose fortunes depend on the successful collaboration with one another. And you see it in the numbers, not just the $460 billion but the fact that Mexico – that U.S. companies have over $90 billion worth of investments in Mexico, the fact that Mexican investment in the West continues to grow and it’s now at about $13 billion.

And when you get away from the numbers, what this all means is jobs and trade and a closer relationship between our two countries. And it also has, in the case of our NAFTA partners, has an added benefit, and that benefit is that by working together we strengthen our common competitiveness of the North American business.

We recently welcomed Mexico into the Trans-Pacific Partnership, the TPP. And with all three NAFTA partners now participating in the TPP, what we have now is the ability to use each other’s supply chains to export goods into the other eight TPP countries.

So look, we have already a broad and deep economic relationship. We have an incredibly vibrant human relationship, a relationship that goes back hundreds of years. And all we’re trying to do with this trip is to highlight the potential for deepening our relations even more. And so we will explore how we can support the Government of Mexico’s reforms efforts to improve economic competitiveness, how we can enhance business-to-business ties, how we can promote innovation, and how we can enhance cooperation in areas like transportation, infrastructure, and trade.

Following that, my trip, sort of personally in Mexico, I will be going to the other side of the border. I’ll be going to southern Texas to – and I am sure that in Texas I will see the other side of the economic relationship. But again, it’s a fluid relationship. It’s a relationship that can only grow. And what we’re trying to do on this trip is to highlight and to stress how interested we are and how committed we are in continuing and strengthening our economic relations. So with that, I will turn it over to your very easy questions, I’m sure.

QUESTION: Thank you for this briefing.


QUESTION: When you go to Mexico, are you bringing any concrete agreements, something concrete that you can tell us, or it’s more like getting to know the (inaudible)?

ASSISTANT SECRETARY FERNANDEZ: It’s to – the main purpose of our trip is to stress how interested we are, to talk about how we go forward, how we deepen the relationship. So it is not necessarily to bring anything or we – it’s not that we expect a concrete project to come out of it. But what we do expect is to discuss a path forward. How do we take our relationship – how are we going to do that? And that – what are the issues that are of interest to Mexico to put on the table? What are the issues that are of interest to us to put on the table?

And I suspect, which is why I’m so excited about this, that we are going to have very much of a common agenda. And so it’s really about looking for a path forward.

QUESTION: Assistant Secretary, when you just mentioned both the U.S. and Mexico are going to put some issues on the table, can you please tell us – can you expand on that, what are those issues and –

ASSISTANT SECRETARY FERNANDEZ: I mean, it’s something that will have to be discussed. But an issue that’s of interest to all of us is: How do we streamline commerce along the border? How do we make – how do we eliminate burdensome and unnecessary regulatory disparities between the two countries? I’m sure that the issue of – just that issue, there’ll be other issues of infrastructure. We’ll be meeting with the Secretary of Infrastructure and Transportation. So there will be issues on that front. There will be economic issues because we will be meeting as well with the Secretary of the Economy, as well as the Finance Ministry.

So there will be issues, many issues. But again, what we’re trying to do is to say okay, we have this common agenda, we have this common interest. How do we make it a reality? What else can we add to the relationship which is already quite good?

QUESTION: I understand that you – at this point I suppose that you can be more specific, because this is the first trip with the new Government of Mexico. But I wonder if you can tell us, for example, if you would like the Mexican Government could be more open mind, for example, in the energy sector, because you’re talking that you would like that Mexico could be more competitive. So –

ASSISTANT SECRETARY FERNANDEZ: Both of us need to be more competitive, not just Mexico.

QUESTION: I would like to know, what you think, what do you expect, for example, in the energy sector? You know that this is a very sensitive subject, and what do you expect? What would you like –

ASSISTANT SECRETARY FERNANDEZ: Well, look, we signed – we actually have a Transboundary Hydrocarbons Agreement, as you know, with Mexico, that was signed in February of this year. It’s an agreement that’s intended – that will promote joint economic exploration and development of hydrocarbon reservoirs in the Gulf of Mexico. And this is a perfect example of the kind of cooperation, kind of the common agenda that exists already between our countries. It will – from our point of view, it will enhance energy security. It will do so with a high degree of safety and environmental standards. This is something that already in Mexico the Mexican Senate has ratified. And obviously, in our Congress will implement the agreement as well, will be working to implement the agreement.

So this is a perfect example of what we will be working – of the kinds of issues that can – the kind of common agenda that we can pursue when we work together.

QUESTION: I don’t know if you’ve addressed this, because I was a couple of minutes late, but I don’t know if –


QUESTION: I’m good, thank you. I don’t know if you gave, like, a readout of who is going to be in the delegation and what the meetings are going to be.


QUESTION: You did, right?

ASSISTANT SECRETARY FERNANDEZ: But I’ll be happy to – (in Spanish) --

QUESTION: Or maybe I can get it afterwards.

ASSISTANT SECRETARY FERNANDEZ: No, no, that’s okay. It’s fine. It’s very simple. I’m going with three other Assistant Secretaries – Charles Collyns from the Treasury Department; Michael Camunez, an old friend from Commerce Department; and Susan Kurland from the Department of Transportation. And we have meetings with the Foreign Ministry in Mexico, the SCTs, Communications and Transport, Economy, and I’m missing one – Finance, and then also Private Sector and a number of other ministries as well.

QUESTION: There are some reports of some agencies – private agencies like Stratfor (ph) that says that there are going to be a lot of violence in 2013.


QUESTION: It’s Stratfor. It’s this agency of security in Mexico that –


QUESTION: -- thinks that it’s going to be (inaudible), more of the same than the last year. And do you think that the security is really a problem? Is it still a big problem?

ASSISTANT SECRETARY FERNANDEZ: Nope (ph). I have been working in Mexico for a long time. I – so I – and I can tell you one thing, and that is – let’s just start with a – something very important, which is we the United States, I on a personal basis, very much admire the work and the sacrifice of the Mexican security forces. I think the number now is 40,000 people have lost their lives in your --

QUESTION: 70,000.

ASSISTANT SECRETARY FERNANDEZ: 70,000. That’s even sadder. So we very much have supported it. We have the Merida Initiative, where we have $1.1 billion worth of assistance, but also a lot of cooperation between our two agencies. Our President has several times recognized that and said that the drug problem is a shared problem, and that the illicit weapons problem is also a problem on both sides.

But that’s a given. That’s part of what we start with, with Mexico – that admiration for what they – for what is a very courageous fight. It’s not what we do. What we’re trying to do, as in the four of us who are going, are the economic agencies. And we have – we cannot lose sight of the fact that in addition to a security cooperation, we have very strong economic relations, and not just economic, but also add political and human.

And so what we are trying to highlight is the economic dimension of our relationship, because just highlighting the security relationship between our two countries is – does not do the overall relationship justice. It’s a much, much more rich and historic and longstanding relationship beyond simply security.

QUESTION: Assistant Secretary, you have described a very successful relationship, but there have been, in the past, problems in trade. For example, there’s – last year was this tomato affair. I don't know exactly on which faces these – I think the Commerce Department has yet --


QUESTION: -- to find something. I wanted to know, in which status is this? And if you think these problems have to be addressed in order for the relationship to really go a step further?

ASSISTANT SECRETARY FERNANDEZ: Sure. Well, look, the – we have had good examples of cooperation to try to deal with issues – the trucking issue, probably you remember that. The tomato case, in accordance with our law, in accordance with the U.S. law, is something that the – that it falls within the realm of the Commerce Department. It’s something that they are reviewing. It’s something that we, as a Department, at the State Department, don’t get involved. It’s a very – it’s intended to be an objective review.

All parties have been invited to submit comments. The Mexican Government and Mexican growers, in addition to a number of other stakeholders, have been in touch with the Commerce Department. And this is something that’s being analyzed and that my colleague, Michael Camunez, will probably be able to speak about better than I can. But it’s a process. It’s a procedure objective which has a process, and that’s all I can say about it. But of course, our governments have been in contact with that, as have the growers and have the other stakeholders.

QUESTION: (In Spanish.)


QUESTION: (In Spanish.)


QUESTION: (In Spanish.)


MODERATOR: It won’t make it to the transcript in Spanish.

QUESTION: So do you want us to do it in --

MODERATOR: In English.


MODERATOR: You can ask a question in Spanish at the end of – afterwards, and now in English?

QUESTION: Perfect, yeah, let’s do that.


QUESTION: Assistant Secretary --


QUESTION: -- you mentioned in sort of a joking manner that part of this is also not only to help Mexico, but to help the U.S., obviously, right?


QUESTION: So how these meetings and how this relationship can actually help with jobs here in the U.S., I mean, that’s another – that’s one of the biggest priorities right now for the Obama Administration, especially a couple days before the Inauguration. Are you guys looking to create an advantage here in the U.S. with these kind of relationships as well?

ASSISTANT SECRETARY FERNANDEZ: What we – jobs is our number-one priority. We, since the time that we came into office, we are – we have been told that jobs is our number-one priority at all – even at the Department of State, which is why you will have heard about the economic statecraft efforts of the Department of State.

Trade creates jobs, and if we can make it easier for countries to trade, if we can make it easier for countries to invest, if we can make it easier for countries to produce goods that have competitive advantages with other parts, other regions of the world, we will help both countries. This is not intended to be a unilateral advantage, and it’s – that’s not a lasting basis for a relationship. It’s not a basis for a lasting relationship.

You’ve got to create ways for both sides to be able to trade, for both sides to be able to create jobs. The new Mexican administration also wants to create jobs. Mexico has gone through some difficult times as well. And so we intend to look for ways for us to be able to create mutual advantages for our people and to create jobs, which is why I’m so – I’m delighted that I’ll be able to go to the other side of the border afterwards, because that’s also – that’s what we see a lot of the benefit to, right alongside the border where you have this very fluid situation, which is, I think, unique in this hemisphere, of that fluid border that we’re – we create things together, we trade things together. Our families are straddled between both sides. But it’s got to be a mutual advantage. Otherwise, it just does not work.

QUESTION: And if you can talk about what your activities will be at the other side of the border, or if you’ll have --

ASSISTANT SECRETARY FERNANDEZ: Well, I’ve been asked by Congressman Hinojosa in Texas to go, and I’m delighted. I’m delighted to be able to do that, to be – because again, the benefits of what we do are visible on that side.

MODERATOR: Any more additional questions? All right.


MODERATOR: Thank you very much.

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