The conference was moderated by the President of the Mexican Banking Association (ABM), Luis Robles Miaja.
What follows is the transcript of the remarks given by Foreign Secretary Luis Videgaray at the 80th Banking Convention in Acapulco.
Foreign Secretary Luis Videgaray Caso: Thank you, Luis, and my thanks to all of you, it’s a privilege for me to be here again in Acapulco at the Banking Convention and to thank Luis Robles, mainly, for the invitation, thank you very much. This is a fantastic opportunity to talk not only with the Mexican banks but with many other opinion leaders and decision-makers involved in important aspects of the life of the nation who come to the Banking Convention.
I also want to thank the Finance Secretary, because he was the one who convinced me to come, because I had already said no. I am very grateful that he has given me this opportunity, which naturally goes to the Finance Secretary. It’s a privilege for me and I thank him and the entire Mexican Banking Association because in the past I’ve enjoyed working with you and it gives me great pleasure to see you again and to have this opportunity to talk with you.
Without a doubt, the topic that concerns millions of Mexicans, companies and decision-makers, is our relationship with the United States and the future of our relationship with the United States.
Undoubtedly for Mexico, and this is not a secret to anyone, the relationship with the United States is the strategic relationship that has the greatest effect on the national economy and on the day-to-day life of the Mexican people, this is a fact that is not open for discussion and therefore what happens in the relationship with the United States is always important for Mexico.
However, we are now facing an unprecedented situation and, therefore, the relationship with the United States that has always been a priority has today become determinant for Mexico’s future, and probably not just for the near future.
Regardless of the decision about how to resolve the dialogue, the negotiations with the United States will largely determine how we coexist within North America and, therefore, Mexico’s economic and social life over the coming decades.
What can we say about Mexico’s current situation? How is President Enrique Peña Nieto’s administration facing this unprecedented challenge?
First, we must understand that we are facing an unprecedented circumstance where the center of power in the United States, the White House, is questioning many of the things that we took for granted and that have been created in large measure by the United States itself. For example, the multilateral architecture, the United Nations, the World Trade Organization, trade liberalization, free trade, in large measure have always been promoted by the United States, that is, the United States has always been a pillar of the global institutions since their creation in 1945, since the post-war period.
And now we are faced with this unprecedented situation where it is the United States itself that is questioning the institutions and policies that have enjoyed a consensus for a long time—this is unprecedented.
For Mexico, President Trump has meant several things:
First, and it must be stated clearly: Mexico feels wronged. We Mexicans have been deeply offended by the treatment, by the unfair, incorrect and uninformed expressions that have been directed at Mexico. And today this feeling that we all share is part of our reality, without a doubt.
Second, there is a lot of uncertainty. There are companies that are not making the decision to hire personnel, to buy machinery, to acquire a new facility, because they are waiting to see what happens, particularly with regard to our commercial relationship.
There is uncertainty in the financial markets, we can see it, you know more about it than I do, you live it every day.
There is also uncertainty about what will happen to the Mexicans in the United States, what will happen to the 5.5 million undocumented Mexicans, most of whom have been in the United States for many years, and who contribute their honest and dedicated work to the U.S. economy every day. There is a lot of uncertainty.
But the fact is, and I think we all understand its priority, we all understand that it is to Mexico’s advantage to arrive at an agreement; Mexico has to find a way to resolve the problems.
I haven’t heard anyone tell me, "it’s not important." There is a huge debate on how to tackle the issue, what the strategy should be, but no one disputes the fact that this is an important issue.
How is President Enrique Peña Nieto’s administration, the Mexican government, dealing with the challenge?
In the first place, by understanding that this is the time to diversify our relationships around the world.
If for Mexico it has always been important to open markets, to establish new trade agreements, today it has become even more important and therefore, the first response in our relationship with the United States is precisely, to have a presence in the rest of the world. To strengthen even our strongest commercial relationships around the world, as well as our political relationships.
I will start with Latin America first. Here we have a region in which we have more than commercial ties; Mexico is and always will be a Latin American country and we must have a greater presence in the region, an economic presence and a political presence.
We have a very solid partnership with Chile, Peru and Colombia, the Pacific Alliance, where already 94% of the trade is free of tariffs. We have eliminated visas, there is integration of persons, and now we are negotiating trade agreements with Brazil and Argentina at the same time. These are the two major markets that have represented an obstacle to consolidating our presence in Latin America.
And of course we don’t only have an economic presence, but also an even more important political dialogue. Mexico is playing a more active role, for example, in the issues that have to do with Venezuela.
Secondly, we have the Asia-Pacific region, where Mexico, like many other countries, invested a lot of time, many hours and a lot of talent, in good faith, in the creation of the TPP agreement, an agreement that, for all intents and purposes, will not happen, because it makes no sense without the presence of the United States, at least not in its current form. However, this does not mean that these markets are not important for Mexico.
We just agreed last week in Villa del Mar to expand our relationship with Asia-Pacific, hand in hand with the countries of the Pacific Alliance, and we will negotiate with the countries with which we can reach high-quality agreements with the best commercial standards and with which we can also reach agreements within a reasonably short period of time.
Clearly, the natural candidates are the countries that were part of the TPP. With Europe, we are in the midst of modernizing our trade agreement and we hope to conclude that this year. This would open up the European market even more for Mexican exports. And we continue to work closely with countries such as Japan, Korea and China, which are important trading partners for us.
We are going to continue along this path and it is very important to take this into account because, although the United States is perhaps a decisive relationship for many aspects of our national life, we have to make a real, effective, strategic effort to become more integrated into the world, to diversify our commercial and political relations.
Now, with respect to the United States, the first thing we have to be clear about is that Mexico will address this process with great conviction. We have to try to have a discussion and, eventually, negotiations with the U.S. government, with Donald Trump’s administration, with a lot of confidence in ourselves, with great conviction. We are not going to enter into a negotiation fearfully; we are going to enter into a negotiation and, in fact, we have already begun to discuss some aspects and I’ll tell you in a minute how that is going, but we have to enter into negotiations being very clear about our principles and what is going to guide our actions.
Second, we must have specific goals, because if you want to enter a negotiation, you have to know what it is you want. The agenda can’t be set only by the other party.
In its relation to the United States, Mexico has to be clear about our own goals. It isn’t just the United States that wants to change aspects of this relationship, we also have things that we want to change and they have to be specific goals that we can evaluate.
And third, we need to be very clear about our limits. If we are clear about the goals, the principles and the limits, we can enter into a negotiation, which may be complex, but ultimately will be in the national interest.
With respect to the principles that guide us, what are the goals, what are the principles and what are the limits? The first, the most important, is not to forget that Mexico is a sovereign nation and we have to see ourselves as such, and we have to let the whole world see that, including the United States.
What does it mean to be sovereign in constitutional, non-legal terms?
That Mexico and only Mexico makes decisions for Mexico. We will not let anyone else impose them on us. Of course we have to respect the sovereignty of the other nations, those are the rules of the game.
Secondly, a key principle regarding the rule of law: Mexico is not advocating that laws be broken either in Mexico or in the United States, nor much less in international treaties. This pertains, for example, to when we think of how to protect migrants.
Mexico is engaging in a great deal of consular protection, legal guidance and defense, but always with respect for the rule of law in the United States itself. The moment Mexico were to encourage a different attitude, or were to tolerate or foment illegality, we wouldn’t have the legitimacy to ask that migrants’ rights be respected or that Mexico’s rights be respected in the international arena. So, the second principle, the rule of law.
The third principle: A constructive negotiation. We are convinced that this can be a win-win negotiation, and Mexico will always bring that attitude to the table, with fresh ideas, seeking a win-win negotiation. At the end of the day, economic integration and trade add value, add a lot of value. Structurally, there is always the opportunity to create a win-win situation.
A fourth, very important, principle: This is a trilateral trade negotiation, not a bilateral negotiation. I’m glad the earlier panel was very clear on this. This is a trilateral negotiation. It is Mexico, the United States and Canada.
The fifth principle, and perhaps operationally the most important one: comprehensiveness. We are not leaving out any issue; we are willing to talk about all of the issues, but in a comprehensive way. Nothing is agreed on until everything is agreed on.
Imagine if we arrived at an agreement on migration and that, later, our agreement on another issue, such as trade, was frustrating. The relationship with the United States is the broadest and most complex relationship that Mexico has in the world and we have to look at it in a strategic and comprehensive way. These are the principles.
Now, what are our specific goals? The goals were set by the President in late January and they are what have guided our actions since then, both in the Foreign Ministry and in all areas of the government involved in this relationship.
The first principle, and this is perhaps the most important one right now, is respect for and protection of Mexicans’ human rights. Of course, this is something that concerns us a great deal. The new immigration orders violate an essential principle, which is the dignity of the individual, their fundamental rights, human rights, due process and civil rights and, therefore, the Mexican government is doing a lot of protection work. The consulates’ budgets have been increased, thanks to the legislators. The consulates’ budgets have been increased; we are pursuing a strategy of legal protection for Mexicans that includes informing them; giving them a better diagnosis of each individual's situation; litigating in (inaudible) courts in the United States and, if necessary, and we have said this more than once and I’ll repeat it again here, we will not hesitate to go to international bodies if there are violations that warrant it.
A first key goal is the defense, I repeat, of the dignity and of the human rights of the Mexicans in the United States.
Secondly, immigration policy has to be coordinated and what we want is for coordination to prevail in immigration issues.
Contrary to the image that some have, President Obama’s administration was the administration that deported the most people to Mexico. In 8 years, there were 2.8 million deportations. However, this was never done in an uncoordinated way. There are protocols, there are repatriation agreements that enable Mexico to receive the emigrants in a functional, operational way and it is very important that coordination on migration issues prevails and even improves.
In the third place, a key goal must be to invest in the development of Central America, particularly the countries that we call the Northern Triangle (Guatemala, Honduras, El Salvador) that today are the principal source of emigrants arriving in Mexico with the intention not of staying here but rather of crossing the country to reach the United States. This is a problem that has already caused a great change in the migratory flows. It is estimated that more than 400,000 Central Americans have entered Mexico this year with this goal. Many more Central Americans than Mexicans want to enter the United States now by crossing our country.
In fact, migration has changed a lot. Today Mexico receives more Mexicans than those who leave to go to the United States and this has been the case for over 10 years. In addition, what has changed is that we are now a transit country, but what is our perspective on all of this? If we only focus on controlling migration by stopping it at the border and by repatriating individuals, we are ignoring the core causes. We have to invest in the development and stability of Central America’s Northern Triangle. And here, the United States—as a country with a natural and clear interest in the region—has to commit to investing and we are ready and willing to do this jointly with the United States and with other partners such as Colombia and Canada. This is an important process.
One of the things we agreed to during Secretaries Tillerson and Kelly’s visit to Mexico a few weeks ago was precisely to set up a new working group that focuses on development within Central America.
Our fourth goal: Remittances. Remittances must not be affected; there must not be additional costs; it must not become more complicated. They are key for the Mexican economy. We all know that about 26 billion dollars enter Mexico because of these remittances. This is a very real and very important macroeconomic factor. Even more important than the macroeconomic dimension of the remittances is the social role they play. The remittances are mainly received by low-income families, many of them in the countryside, in rural areas, and today they are a gesture of solidarity from those who emigrated to the United States, they are helping to support their family. Therefore, ensuring that remittances are not affected does have to be a priority.
The fifth goal: In terms of combating organized crime, particularly drug trafficking, this issue must be put on the table and Mexico’s agenda must be proactive; we need to point out that the United States has to do its part with regard to this problem, especially on three fronts:
First: by addressing the problem of consumption, because it is a fact that this is a market where demand creates a market.
Second: By stopping the illegal flows, not those that go from south to north, which are the ones we normally talk about, but the ones that go from north to south. Weapons and cash. Money that, by the way, does not go through any of your banks’ branches, but the illegal financial flow that enables criminal organizations to function and, of course, if 94% of the weapons coming into Mexico come across our border with the United States, that means that if we don’t control that, if the United States does not take responsibility, we aren’t going to be able to win this battle. Therefore, there has to be a commitment from the United States regarding this matter; that is one goal.
Now, about the economic relationship. A key objective, the Free Trade Agreement, must continue to be about free trade. Of course NAFTA can be modified.
I am one of those who is convinced that Mexico should not be reactive. We should clearly and unequivocally propose the changes that we want to be made to the treaty. This is a treaty that is over 20 years old that has led to enormous benefits for all, not only for Mexico, but also for all three partners. Clearly, it can be modified, as long as it continues to be a free trade agreement, and in that sense I think we are doing well.
If you listen to the recent statements by the Secretary of Commerce or the White House Liaison for Trade, there are indications that we can arrive at a revised NAFTA that is a win-win for both parties.
The seventh goal: The revised treaty must include new sectors. There are sectors that did not exist simply because of technological change, for example, e-commerce, everything that has to do with the Internet, which in 1994 was just getting underway and today is a dominant part of our economic and social activity. But there have also been profound changes in Mexico, structural reforms that can be reflected and it is in Mexico’s interest that they are now reflected in the trade rules in North America.
A very important point and the eighth objective: wages. Mexico cannot continue betting on the fact that we are going to be competitive because our labor is cheap. The free trade agreement has to allow free trade, it has to enable everyone to win, starting with the workers and I'm not talking about the workers in Pennsylvania or Ohio, I'm talking about Mexican workers. We can’t have a model of international competitiveness that is based on low wages. Free trade must be something that promotes competitiveness through productivity and that implies increasing benefits for the workers.
Ninth, a very important goal: Protect investments, the investments made by Mexicans, Americans, Canadians and the rest of the world. A lot of capital has entered Mexico because of a set of rules, and to suddenly change the rules midway could mean not only economic losses, but also a loss of confidence. Mexico has to continue to be a reliable partner if we are going to attract investments.
And the tenth goal is very important: Mexico aspires to build bridges, not walls. We want a border that unites us, an efficient twenty-first century border that facilitates trade, that facilitates the mobility of individuals.
What limits do we have vis-à-vis the United States?
One obvious one is that Mexico will not participate in financing a physical barrier; I think we have said that clearly.
Another very important thing, for example, is that we will not accept the extraterritorial application of domestic laws. Neither the United States nor any other country may decide that individuals from third countries are going to enter Mexico. Only Mexico decides who enters Mexico. And if the position of the US Government is that it is going to send migrants to Mexico that it prefer not to have there, migrants from other countries of Central America, South America or wherever, this is a decision that the United States can’t take; that decision is taken by us Mexicans.
And, of course, a line we are not willing to tolerate is that the fundamental rights of Mexicans are not respected. And we will go to all the international bodies.
President Trump’s administration began approximately 60 days ago and today we can reflect on what we have achieved in these first 60 days.
Something very important that sometimes goes unnoticed is that Mexico is perhaps one of the countries that have the most communication, established and functioning, with the new U.S. government. We have a fluid relationship, very frequent exchanges, that enable us to address all of the issues on the agenda, and this can be seen, for example, by the fact that we are working with our counterparts. For example, the Finance Secretary has already met a couple of times with the U.S. Secretary of the Treasury. The Mexican Economy Secretary was the first Trade Secretary to meet with the U.S. Secretary of Commerce; the Attorney Generals have just met.
And this is something that is very important for a normal and functioning relationship.
What other very important things have we been able to do?
We have been able to communicate clearly (this is becoming a conversation) what our goals are and what our limits are. And we have a better understanding of what their goals are. In order to have a successful negotiation, you have to understand what they want. The two sides have to understand each other. We have also communicated what the national sentiment is, in a very clear way. We told Secretaries Tillerson and Kelly that Mexico feels wronged, and this ill treatment can only be overcome with deeds, not words.
We have to work so that the relationship today and tomorrow between Mexico and the United States is a relationship in which we all win and in which we surmount the grievances with good agreements and good deeds.
And something very important that I want to emphasize is that the negotiation is already being based on the principle of comprehensiveness, we are not discussing items via separate channels, we are not separating the timing, we are doing it in a comprehensive way and this has already been accepted by our counterparts.
What should we expect?
First, there is going to be a lot of continuity in the dialogue with our counterparts. In trade issues, there is a clear timetable that depends on when the United States government informs its Congress that it will start fast-track negotiations. This will surely happen (according to what we have been told repeatedly) in the coming days. And this means that the formal trade negotiation, the substantive trade negotiation, will begin around the end of June, probably early July.
This negotiation will be headed by the Economy Secretary, which, by the way, I must say, should give us all peace of mind. We have a great negotiating team for trade issues. We have an extraordinary Economy Secretary. Hopefully you will invite him next time so he can talk to us here at the Banking Convention about what I am sure will be a very positive outcome.
This negotiation will begin in the middle of the year and it will take the time a trade negotiation normally takes. But I think it has started well, the messages have been better aligned. What are we doing in the meantime? The Economy Ministry is conducting consultations and the financial sector should be an important part of the process.
Lastly, I would like to tell you that we should not expect this to necessarily be a conventional nor linear process. We have to be prepared for surprises. The experience of the last two months, the experience of other nations in dealing with the new US government, tells us that this will be the case.
We must be calm, we must act with intelligence. But don’t confuse serenity and intelligence with a lack of firmness. Don’t confuse diplomacy with lack of clarity; do not confuse the absence of stridency with a lack of a strategy.
We are going into a process that will undoubtedly be unprecedented, because the situation is unprecedented, our counterpart is unprecedented. But we are going into it with clarity about what we want to achieve, with a roadmap and, above all, and this we should not forget, and I want to close with this thought, because sometimes Mexicans do not take this sufficiently into account, with the confidence that Mexico is very important for the United States.
The United States is very important for Mexico, there is no doubt about that, but sometimes we do not understand the full measure of what Mexico represents in economic matters, in migratory matters, security, and investments. What Mexico represents for the United States, which is a friend, a partner, an ally.
And this is the conviction and the confidence with which we are working every day and I am sure we will succeed.
Thank you, Luis.
