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San Pedro Garza Garcia, Nuevo Leon
Friday, May 13, 2005
Good Morning. I’d like to start by thanking Carlos Bremer and the Hemispheria organizers – you’ve really brought together an impressive group this year, and it’s an honor to be a part of it.
The City of San Pedro, as usual, has done a terrific job hosting this event, and likewise the state of Nuevo Leon and Governor Natividad González Parás.
Of course it’s a pleasure to share the stage this morning with my North American partners – Canadian Ambassador Lavertu and Gerónimo Gutiérrez of the Mexican Secretariat of Foreign Relations.
I’m particularly pleased and honored that the new U.S. Secretary of Commerce, Carlos Gutierrez, is here this morning. Secretary Gutierrez, I’m delighted that you’ve made your first official visit to Mexico as Commerce Secretary to Monterrey. Actually, welcome back. I know this is a country close to your heart and that you know well.
For North America, trade really has been the key, and this view guides President Bush’s strong commitment to securing ratification of CAFTA, probably the most significant free trade agreement since the North American Free Trade Agreement. The President met yesterday with six leaders from the Central American nations, and is working hard to ensure CAFTA’s success.
It’s great to be here… “almost” home in Texas, but certainly at home in this vibrant and distinctly NAFTA community of Monterrey. Just look around: Big Brother is on TV; HEBs, McDonalds and Wal-Marts are now part of the Mexican landscape… and that’s only part of the picture. AS significant is the remarkable level of Mexican integration with the U.S. and the influence and impact of the more than 25 million people of Mexican descent living in the U.S. I can tell you: you need only spend Semana Santa weekend on South Padre Island, or just about any afternoon in a McAllen shopping mall, to see that south Texas and Monterrey are practically each others’ suburbs.
There is little doubt that the U.S. and Mexico are strong and democratic allies in our globalized world, and we’ll continue to work together to modernize and develop our economies and societies. Along with Canada, our three countries are integral to President Bush’s vision of a North American continent free of terrorism and competitive with the world’s strongest economies.
Over the past ten years, the close economic relationship between our countries has grown closer, and the region has prospered. Canada has maintained its place as the United States’ most important trade partner, while Mexico has been our second largest trading partner in nine of the last ten years.
This means higher revenues for North American companies and, more importantly, more jobs for North American workers. In the first two months of this year, bilateral trade reached over 43 billion dollars—750 million dollars worth of goods cross the U.S.-Mexico border daily—and U.S. trade with Canada over the same period reached a staggering 75 billion dollars.
I’m sure we all hear complaints that free trade only benefits the other party, whoever that other party may be. But in North America, it is easy to see that all three countries have benefited impressively from NAFTA. This is particularly true here. The six Mexican border states account for over 24% of the Mexican GDP, or 157 billion dollars annually, and have some of the highest average economic growth rates in Mexico. On the U.S. side, border states account for 23% of the U.S. GDP, or over 2.5 trillion dollars. Remarkably, this thin stretch of land is now one of the most productive areas in the world.
But none of this can be taken for granted, and it should be clear to all of us that North America faces significant economic challenges. A recent report by the Mexican Institute on Competitiveness confirmed North America’s declining competitive position versus Europe and China.
The IMF recently announced that Mexico has slipped from being the ninth largest economy in the world to the fourteenth, and yesterday’s Reforma reported that Mexico now ranks 56 out of 60 countries reviewed in terms of competitiveness. The sort of reforms that Mexico will need to stay competitive are not easy… and let’s be honest with each other, reliance on remittances from the U.S. and wind-fall revenues from high oil prices is simply not an economic policy...
The underlying message of these reports is clear—reform or fall further behind.
There is a lesson that those of us in the U.S. have learned the hard way: major reform of any kind takes cooperation across party lines and across all branches of government. It’s hard work, but imagine what the Mexican economy might look like if there were better cooperation across the political spectrum to secure Mexico’s future.
Fundamental to the sort of reforms that will improve Mexico's climate for business and investment is the rule of law. A strong public faith in the justice system means that fewer business deals are poisoned, and investment can move into the country with confidence. Nuevo Leon is a terrific example. Here, leadership has clearly understood that investment, whether foreign or domestic, is more likely to go where there is a reliable and transparent legal system. President Fox submitted to Congress an extensive justice reform package in March 2004. Although there seems to have been little movement since then at the Federal level, President Fox’s proposal incited enormous interest at the State Level. Nuevo Leon’s governor Gonzalez Paras was instrumental in ensuring that justice reforms in his state became a reality and his state was the first to launch these reforms at the state level. In July 2004, the state legislature passed Nuevo Leon's justice reforms permitting oral procedures for all misdemeanors, and the new oral system officially entered into force in January.
Nuevo Leon recently had its first oral trial in which a defendant was found guilty of vehicular manslaughter. The entire process lasted five days – a process that could have lasted nine months in the "old" system. It’s clear to me that with justice reform, every state in Mexico and every Mexican citizen would feel the benefits every day.
The other big-ticket reform that is so critical to Mexico’s prosperity is energy. I know this issue a terribly sensitive one in Mexico, particularly when it’s the U.S. Ambassador who is talking about it. But you don’t have to hear it from me. You can hear it from any state governor on either side of our border. You can hear it from Mexican business people and foreign investors. And you can hear it from average Mexicans concerned about their country’s economic future.
Mexico must find ways to more fully exploit its own energy resources because it’s competitiveness and the prosperity of its own people depend on it.
Let me say a few words here about immigration. President Bush made clear in his State of the Union Address that America’s immigration system is outdated—unsuited to the needs of our economy and to the values of our country. The President wants a rational immigration system that permits temporary guest workers to fill jobs that the Americans are unwilling to do, but he rejects an amnesty program. The system must also allow us to monitor who is entering and leaving the US, ensuring that our resources are focused on stopping those who would seek to do either country harm.
I recognize the importance of this issue for Mexico. There should be no doubt, however, that immigration reform will become far more likely when the US public and its leaders feel confident that the border is secure and Mexico is doing everything it can to create economic opportunities here in Mexico.
Trade and immigration have always influenced the North American relationship, but now security has become a cornerstone of our coexistence as we move forward. One need look no further than Laredo for an example.
Laredo, Texas is the busiest commercial port of entry on the U.S.-Mexico border. In 2003, over 1.3 million trucks, 35,000 passenger buses, over 300,000 train cars, and over 15 million passenger vehicles crossed from there into the U.S. A terrorist attack there would catastrophically affect the North American economy, with lost trade costing billions of dollars a day. To avoid this scenario we need to realize that cooperation is the only way to protect our countries.
We have had some recent success, including the implementation of anti-terrorist and anti-smuggling programs that expedite border crossings while ensuring that commercial traffic is clean of contraband or weapons. Both Mexico and Canada have collaborated in securing our borders and in addressing drug trafficking, terrorism, and illegal immigration but we all know that terrorists will continue to seek to do us harm so we can never rest or relent in our efforts to stop them.
Sadly, in spite of our successes, our economic and cultural exchange with Mexico remains threatened by ongoing and deadly drug violence along the border. Drug cartels and the violence they have wrought in the region are destroying the economic and social fabric of our communities. If that violence – whether prison riots in Matamoros or gangland-style shootings right here in Monterrey – is not controlled, it will badly undermine both investment and tourism, particularly in the border area.
Two weeks ago, I asked the State Department to re-issue a public announcement about violence in the border region. I did this not because I have any interest in criticizing Mexico, but because the safety and security of U.S. citizens is my primary responsibility, and I will not hesitate to speak out when their safety is at stake. I also recognize that the security of this region is a shared responsibility… we are committed to doing our part, and are grateful for the strong cooperation and commitment from the Fox administration in this effort. The bottom line is that we simply can’t allow drug traffickers to jeopardize all that we have accomplished.
Another issue that is felt and lived every day on the U.S.-Mexico border – less violent to be sure, but no less real – is water and the on-going challenge of managing our shared environment. The long-standing issue of Mexico's water debt to the U.S. is finally off the table, thanks in no small part to the efforts of committed public servants like Gerónimo Gutierrez… but there remains much to do.
As anyone who lives or works in northern Mexico or the southern U.S. states knows, we must be more aggressive about ensuring that the management and conservation of our air, soil, and water resources remain high on our agenda. How we share and conserve water, and how we manage our regional environment, are very real issues that people must deal with every day.
There is, however, no issue more central to the U.S. – Mexico relationship than education. The collective North American future lies in developing the creative brain-power of the inventor, the entrepreneur, and the skilled worker who will then bring innovation and technical competency to the modern marketplace. Education is the key for all of North America – the key for our competitiveness, our success in the marketplace, and for broadening the mutual understanding and respect that lies at the heart of the North American partnership.
Security, prosperity, competitiveness – these are certainly important ideas. But without action, they are ultimately only words.
When Secretary Gutierrez and I report to our President next month on the progress made in the Security and Prosperity Partnership our three countries announced in March, I can assure you he will not be interested in what we all have planned, or what we have committed to. He will want to know what we have accomplished.
We need to be honest about what can happen if we fail to deliver. If people lose economic hope, they can also lose faith in their public institutions, turning away from both markets and democracy and towards the sort of demagoguery that has too often plagued other countries and limited their horizons and freedoms. This has been the recent misfortune of Venezuela, where democracy now faces a severe test. And it has been the tragedy of Cuba for the past 45 years.
As we consolidate our modern partnership with Canada and Mexico, we are seeking new initiatives to promote the security and prosperity of all of North America.
We all share in a common cause in moving North America forward, our responsibility is to action—a commitment I know each of you take seriously.
Thank you for the opportunity to be with you here this morning. And I’ll close as I always do, with a simple prayer that God bless our three great countries, Mexico, Canada and the United States.
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