Transcript: Q&A Mexico s Foreign Policy: Leveraging the Domestic Transformation Secretary of Foreign Affairs, Mexico Chair: Dr Robin Niblett Director, Chatham House 13 June 2014 The views expressed in this document are the sole responsibility of the speaker(s) and participants do not necessarily reflect the view of Chatham House, its staff, associates or Council. Chatham House is independent and owes no allegiance to any government or to any political body. It does not take institutional positions on policy issues. This document is issued on the understanding that if any extract is used, the author(s)/ speaker(s) and Chatham House should be credited, preferably with the date of the publication or details of the event. Where this document refers to or reports statements made by speakers at an event every effort has been made to provide a fair representation of their views and opinions. The published text of speeches and presentations may differ from delivery. 10 St James s Square, London SW1Y 4LE T +44 (0)20 7957 5700 F +44 (0)20 7957 5710 www.chathamhouse.org Patron: Her Majesty The Queen Chairman: Stuart Popham QC Director: Dr Robin Niblett Charity Registration Number: 208223
2 Mexico s Foreign Policy: Q&A Question 1 I wonder if you might expand a bit on Mexico s strategy for dealing with the United States under the Peña Nieto administration. You touched upon Mexico s very positive trading relationship with the United States, the economic success of NAFTA, and certainly US-Mexico bilateral relations are in better shape now than they have been at many times in the past. But the United States has never been an easy neighbour for Mexico and even in the last year there must have been some things that disappointed Mexico electronic eavesdropping, the failure to pass meaningful immigration reform and so on. So my question really is: what s Mexico s strategy for dealing with the United States at this point? The relationship with the US is a very complex relationship because of the number of issues that we should be talking about not necessarily the number of issues that we talk about, because we tend to talk about a more reduced subset of issues than the ones that we should be dealing with. In some cases, with some countries, you very quickly run out of things to talk about. With the US, it s almost impossible, because we could be talking about almost anything. You said, for example, health. In North America, because we share the same geography, we sometimes share the same challenges. We have dealt with some of them successfully, like the pandemic of H1N1 three or four years back. So looking at those health issues from a North American perspective, which we did in the past and we did successfully, is something that we should be talking more with the US about. Mexico in general is of the belief that there are very few topics that would not benefit from a North American perspective. In general, when you talk about climate change, we would get further along if we looked at it from a North American perspective. If we talk about trade, which is one of the reasons that Mexico suggested that the negotiation between the US and Europe would be better if it were a NAFTA- Europe type of negotiation but looking at trade as a regional issue, it has an advantage. What we have tried to do within this administration is to create a sort of structure for dialogue that would do away with the temptation to just talk with the US about security and migration. Security and migration are important we are always going to talk to the US about security because it s a shared responsibility, because it s a problem that affects us both, because it s a problem where both countries have to collaborate if we want to reach a better equilibrium. We will always talk about migration because it s a reality that s there. Even though net migration to the US has been zero for the last three or four years, Mexico still talks about the fact that Mexicans are being repatriated, that Central Americans are transiting through Mexico to go to the US, that Mexicans are continuing to transit Mexico to go to the US, and the fact that we are receiving migrations as a destination on our own. So that is something that we will always talk about. But what we wanted to do was to try and get security and migration not to dominate the agenda. What we wanted to do with the US was to get them to talk about education, to get them to recognize the border as a source of competitiveness and not just a challenge from the security perspective. To try to get them to talk about logistics, to try to get them to decide together what type of global workforce we will need for the years to come. I think that we have been successful in that endeavour. If you look at the level and the quality of engagement in the last year and a half, we still have a very good dialogue on security. We are disappointed but we have welcomed the fact that immigration reform is being debated very vigorously and you have something that was passed by the Senate that would be a step forward to what we now have.
3 Mexico s Foreign Policy: Q&A But we have been talking more and more about all of these issues that are also an integral part of the Mexico-US relationship. Robin Niblett I suppose we may come back to some of the US issues in a minute. You noted the US-EU trade negotiations and that may be a topic we want to come back to. Question 2 You spoke with great eloquence about Mexico s Caribbean and Latin American identity, but when talking about the Latin American identity, you didn t mention CELAC, the Community of Latin American and Caribbean States. When I met you briefly in Mexico before Christmas, the theme of the dinner was that CELAC will only work if there are closer relations between Mexico and Brazil. You talked about trade relations but we all know you can have trade relations of considerable depth without necessarily having good political relations. You may think the only source of rivalry is in football but I have to disappoint you: Brazil does not regard you as a rival in football, but they do regard you Let s wait until next week. Question 2 They do regard you as a rival in some other areas, particularly the Pacific Alliance, which a high-ranking Brazilian official here in Chatham House last week (I was chairing the meeting) dismissed in somewhat derogatory words. What can you do to reduce, if you like, Brazilian suspicion both of the Pacific Alliance and of TPP, if it comes to that? Because at the moment, Brazil does not feel as warmly towards Mexico, in terms of making CELAC work and things like that, as you do towards them. Just one important point of clarification which I think is relevant. I think the last Olympics I don t remember, were they hosted here in the UK? Could you recall for me who won gold in men s soccer? Because I actually think it was Mexico beating Brazil. So they should consider us as a more serious rival in terms of soccer. What happens every day when a Brazilian wakes up in the morning? He goes to his kitchen, which was probably manufactured in San Luis Potosi, so it s a Mexican kitchen. He opens up his pantry and he gets sweet bread; the brand is [indiscernible] but it is owned by Bimbo. He gets a soft drink which was bottled
4 Mexico s Foreign Policy: Q&A by Femsa in Mexico. He drives his car which was manufactured in Mexico. He calls his girlfriend on a telephone service that is being provided by Claro, which is Mexican. He goes to the movies at Cinepolis, which is also Mexican. He probably bought the appliances in Elektra, which is Mexican, with credit with Azteca, which is Mexican. But if you asked him if he had any contact with Mexico, he will probably say no. Not a single day goes by where Brazilians aren t in close contact with Mexico s investment in Brazil and our trade relationship is very good. The Pacific Alliance, I think, has worked well as a mechanism for integration on many levels. The trade negotiations were important but the level of cooperation and the type of specific issues that we re tackling and trying to solve is also relevant. What we want to try to do with Brazil, where we are trying to go with the observers, is to get them to recognize that the Pacific Alliance is not designed to be a space for political dialogue. Rather, it is designed to be a space that provides specific solutions to integration challenges. What we want for the observers to do, and we would love for Brazil to be an observer, is to pick and choose almost à la carte what within the Pacific Alliance is working that they would want to be a part of. For example, we are working amongst ourselves to facilitate regulation and to modernize our coastal regulations. So the US said: that is something we would want to work with the Pacific Alliance with. If we get facilitation and the same documents coast-wide between these four countries and the US, and we work with Central America and do the same thing, suddenly you have a result that makes sense and that is interesting. Within the Pacific Alliance, we recognize that many people come to study and want to work. So we designed a visa scheme amongst us that would allow students to study and work. We would love it, for example, if the Brazilians did away with trade that is not something that is feasible to think that they will want to do with the Pacific Alliance, but they could conceivably say: we want our students to be part of that. We want our students to be able to work and study in Brazil, in Mexico, in Chile, Colombia and Peru. If we can get them to engage in just a single one of these issues, I think they will come to recognize that the Pacific Alliance is providing good, concrete deliverables every time that it meets, and that it has no other objective beyond facilitating the life of its citizens in a pragmatic and straightforward way. As soon as they hook up with any single one of the deliverables, I think the political suspicions would be done away. I did not speak about CELAC, it was an omission. I think it is a very exciting development because it will get all of us in the same room. When CELAC met in Cuba, out of the 33 members, 30 were represented at the head-of-state or head-of-government level. There is not going to be meaningful integration in Latin America if Brazil is not in the room and if Mexico is not in the room. We think the Pacific Alliance is an interesting exercise that shows the value of that integration process without having to buy into the political economy of either one of the countries. You could have visa exchanges while maintaining the same type of economic policy in Mexico or in Brazil. Our belief is that if we can get them to see the value of making life easier and integration easier between our two countries without getting into a debate about our core policy differences, that will be a good thing for Latin America.
5 Mexico s Foreign Policy: Q&A Question 3 As you deregulate and change the regulations related to the energy sector in Mexico, how might that affect your international relations? I think one of the most important paradigm shifts, not just in terms of Mexico s foreign relations but in general, is what is happening with energy in North America. If you remember the debates in terms of industrial policy in North America and in Mexico ten years ago, they were predicated on the fact that gas was relatively expensive and relatively scarce. Suddenly you are now in a position where North America could conceivably be energy self-sufficient within a decade, where you have Canada, the US and Mexico self-sufficient in oil, and all of us having especially the US and Mexico important reserves in terms of gas. So energy has the capacity to make North America a very competitive and a very dynamic region, which is why energy reform was such an important thing for Mexico to accomplish. It will help make energy an important source of future growth by opening up investment and technology within the energy sector. It will also allow us to have a more competitive source of energy provision within Mexico. Having competitive energy will have advantages beyond just the energy sector. It will have advantages for manufacturing, for petrochemical, for agriculture, for the production of fertilizers. So energy has the potential to scale up the capacity of Mexico, not just because it will attract investment and hopefully technology, but also because it will make us a meaningful contributor to a region that will have good, high-quality and quantity access to energy, with all of the benefits that will result from that. So energy is also an issue that benefits from a North American perspective. Robin Niblett You stressed climate change quite a bit earlier on. The kind of solutions that you will be bringing to the table with oil and gas, how are you going to match these two things up, these two policies? Wanting to play a more active leadership role on the climate change side and yet really take advantage of exploiting your natural resources, very much in the hydrocarbon space? From a climate change perspective, you are moving from residual fuel from diesel generation, and from generating to oil, that was generated with gas. That even in itself, even though it is not the endgame and it is not what would be ideal from the perspective of climate change, is a much better equilibrium than we have today. The Caribbean has to be part of that for many reasons. It has to be part of that because they are today the Caribbean and Central America are generating electricity, in the case of Central America at three times the cost that Mexico is. We are generating electricity at a higher cost than the US is. The Caribbean in some instances are generating at about six times the cost as Mexico is, with very inefficient
6 Mexico s Foreign Policy: Q&A technology, reliant not only in oil but even in diesel, which amongst the alternatives is probably the worst in terms of efficiency, in terms of cost and in terms of climate change. Robin Niblett So this is earlier on in the process, as you said exactly, shifting away even to gas It s an advantage. Question 4 Mexico, unlike Brazil, was one of a hundred nations that was willing to vote at the UN in favour of Ukraine s territorial integrity. Yet that whole fight was depicted as Russia versus the US, perhaps with Britain, France and Germany in support as well. Do you think that you have the opportunity in the future to play a more substantial role in international diplomatic events, not just within your region? I think we do. I think we aspire to. I think this is going to be gradual. If you re the 14th largest economy in the world, if you have one of the largest populations in the world, if you are a state of the G20, if you re part of the OECD, it s likely that you re going to be playing a larger and larger role in the global governance debates. If you look at that specific vote, it was interesting on many levels. Again, when one talked about the BRICs not having a lot in common but being willing to invest a lot in dialogue, that paid off in the case of Russia in that specific vote. All of the BRICs either abstained or voted against the resolution. Interestingly enough, all of the MIKTAs would have voted for that resolution. So I do think that not just Mexico but countries like Indonesia, Korea, Turkey call them whichever way you want, middle powers, constructive powers, pivotal powers, responsible partners but in general these are players that are large and that increasingly have more to say not just regionally but in terms of the global governance debate. They just have to find the spaces and the possibility to become more active, and go from being regional to having not global leadership but at least a global opinion, and to shape the global opinion. Question 5 First of all, it makes me very proud to see how my former students become such distinguished people and with such broad capabilities now covering your third ministry, after energy and finance. My question is regarding Mexican-Chinese relationships. After a long time of lagging probably the activity of China in
7 Mexico s Foreign Policy: Q&A other parts of the world, it seems to me that during the current administration this has increased dramatically. There is now a unit within the ministry of finance focused on Mexican-Chinese relationships. There s a new Mexico-China Fund. We have seen huge interest from the Chinese and very aggressive bidding in some of the infrastructure projects, whether it s fast trains, some of the gas projects, etc. How do you see this developing and how do you think that will affect Mexican relationships with other places, including the States? I think that s a very good question. This effort on the part of Mexico has been well corresponded on the part of China. It was part of a systemic design of our policies straight on. China is the second-largest economy in the world. The quality of the relationship between Mexico and China in terms of political dialogue, in terms of the economic intensity of the relationship, was not what we would have expected between the fourteenth and the second-largest economies. China today is an important trading partner to Mexico. We trade with China roughly $60 billion a year. As with the rest of the world, it s a very unbalanced trading partner: we basically import almost ten times what we export. But if you take into consideration that 75 per cent of what we import ends up being part of our value chain, then that puts into perspective the importance that that trade has for Mexico as a source of competitiveness. What we did not have in Mexico that we typically would expect for a country like China, which is structurally an exporter of capital, is a large investment process in Mexico. So you had with Mexico the same partners as you had with the rest of the world, pretty unbalanced trade, but you did not have the second part of the equation, which would be China playing an important role as a source of capital, as a source of tourism, as a source even of technology. So in a way what we wanted to do with China is respect and take advantage of the trade relationship but at the same time create an environment that would be conducive to a bigger presence of China in infrastructure and in tourism at least. That would not be hard to do and we could actually do it with the UK and propose a doubling up of those numbers. If one considers that today China invests in Mexico about $100 million, which is probably a rounding error in their accounting numbers, and tourism to Mexico is also a very small number so we don t want something that dramatically shifts the relationship but we would want to move beyond the $100 million to having something more substantial, which we think would be of value to Mexico. We would want to become a more attractive destination not just for their investments but also for their tourism. Mexico is among the top ten tourist destinations even without China coming into play. But if we want to remain competitive in that sector, we need to create an ecosystem that will allow for more investment and more tourism. That we are trying to do, with better engagement politically, to which the Chinese have responded in a very positive fashion. We are happy about what we are constructing with China.
8 Mexico s Foreign Policy: Q&A Question 6 What do you think will be the role of civil society and small and middle businesses in this new global perspective of Mexico and this Mexican transformation? Question 7 If I take the title of the talk, which is Leveraging the Democratic Transition, I seem to remember about ten years ago the PAN administration also tried to make democratic transition the basis for its foreign policy. So in what sense is the PRI s foreign policy significantly different? Would it include promoting democratization or trying to do that in other parts of the world? Foreign policy is no longer the exclusive monopoly of governments. Foreign policy is conducted every day from a public diplomacy perspective by governments but they are played also by businesses, civil society, cultural groups, NGOs. All of them play a relevant role, that Mexico recognizes, in generating dialogue abroad. Each one of those dialogue instances, we believe, opens up opportunities. Trade is not the domain now of the large enterprises. The partners of trade are very conducive to supporting the growth opportunities for small and medium enterprises and we have made them part of our discourse and of our policy in all of these regions. Again, going back to the US-Mexico relationship, one of the things we are talking about is how to generate an environment, especially in the border, conducive to empowering women entrepreneurs and fostering the growth of small and medium enterprises. In a way, leveraging democracy is, from our perspective, a challenge of making our democracy work. Mexico, within the PAN, if you look at Latin America and if you look at the US, you have a whole challenge and this whole perception that democracy is not being the best way to generate consensus, and that this lack of consensus is hampering growth. What we are trying to do and say is: even within a very divisive political scenario, where you have in Mexico three parties and no single party has enjoyed a majority since 1997, we have made our democracy work. We have made our democracy generate consensus. This consensus is deep and far-reaching and is providing us with a new structure for an economy that allows us to have a different kind of dialogue with the region and globally. So it s not so much the challenge of spreading the gospel of the values of democracy. Rather, it is saying: we have made our democracy work. We are reaching consensus. We are approving important and meaningful reforms and it is those reforms that we are approving that are going to generate a Mexico that s different and that is more conducive and more capable of engaging more broadly in terms of its global dialogue. Question 8 I m interested in Mexico s economic growth. I think it s accepted that an important element of that will be Mexican citizens understanding of the reforms and getting behind them and feeling the benefits from them. In the matter of foreign affairs, to what extent do you see the Mexican people s view of Mexico s
9 Mexico s Foreign Policy: Q&A place in the world evolving, becoming more important? Do what extent do you think that is important in achieving that goal? Question 9 You mentioned Mexico is Central American and then you mentioned Mexico is Latin American, and then you go on to say that the most important relationship for Mexico is North America. But does this mean that you understand Mexico as a Latin American country? Or is it also a North American country? I think we do have real multiple belongings. You can say we are a Latin American country in North America, or you can say we are a North American country in Latin America. If you look at the numbers of trade, Mexico really has an important regional presence. But the magnitude of that trade really conditions the type of dialogue and the issues that we talk about within each region. So if you look at the US, where there are 10 million Mexicans living in the US, where we trade $500 billion every year, where we have security concerns, where we exhibit our culture every day in every major American city, there are very little things that the US and Mexico don t talk about. But then you go to the Caribbean and within the Caribbean the trade numbers go from $500 billion to $3.3 billion. The type of dialogue that we have is very different in quality, given the fact that there is nobody from Barbados living in Mexico and nobody from Mexico living in Barbados. So we don t really talk about migration. But we do talk about tourism, we do talk about how to protect the heritage of the Caribbean Sea, and we do talk about climate change. So Mexico is Caribbean in the sense that it shares some of these challenges and that we are part of that solution. With Central America, we talk about many issues, in some cases with the same level of intensity as with the US. They re not exactly the same scope and the same size but we talk with them about trade, about our border, about migration, about security, in some cases with more intensity than with the US. So the fact that we have multiple belongings is not rhetoric. It s the Mexican reality within which we have to design our foreign policy and the type of issues that we reflect on. Robin Niblett Just to the first question you say that, but do you think the Mexican people see that?
10 Mexico s Foreign Policy: Q&A I think more and more. If you look at the attitudes, there is a very interesting survey that is done by CIDE, a prestigious Mexican university. It s a survey that has been ongoing for I think eight years they do it yearly. They poll Mexicans as to how they see themselves, whether they see themselves as North American, Latin American, Central American, Caribbean. They ask Mexicans how they view the US, how they view Brazil, their attitudes. They divide the survey with the general public and the officials and policymakers, the leaders. So you do have a way to they ask Mexicans if they were to live anywhere else, where they would want to live. So you do have a sense and you have a way to follow the public s attitude [indiscernible] survey is changing. In general, you are seeing a more global aspiration, in terms of wanting to become more and more part of this global dialogue. You are starting to see a society that is more interested in multilateral issues, that believes that foreign policy is relevant or at least, that is my read on the survey. But in general you do get a more global feel out of the survey more and more, and you can actually follow the changes in attitude over time because the same set of questions has been asked now for an interesting period of time. You can see the numbers moving and they are moving in the direction of a Mexico that is more interested in the world than before. Question 10 You talked about reforms, and there have been many reforms within your country, but the practical application of those reforms is what s key. There s an area where there s a significant gap between the promises and the reality, and that s the issue of torture. Torture shouldn t be an issue in Mexico you have very strong laws against it, you ve signed up to all the international commitments. Yet your own human rights ombudsman between 2010 and 2013 received over 7,000 complaints about federal officials on torture. So it s clearly still an issue in Mexico. So my question is: what concrete steps can the Mexican government take to close that gap, to meet your own domestic laws and your international commitment? Question 11 My question is regarding free trade. There have been talks about the evolution of the North American Free Trade Agreement. My interest is your views about the future of the free trade agreement with Europe and about the free trade agreement between the US and Europe. Question 12 You mentioned $350 billion of investment required from private sectors, roughly speaking, and of that number roughly $30-60 billion should go into the energy reform per annum. That s the estimates that are managed. So that s big financing needs for the country [indiscernible] private investors, public investors, sovereign wealth funds, pension funds and so on. So one of the assumptions that they all look into is the transparency and rule of law. What kind of assurances can you give to these kind of investors that this is
11 Mexico s Foreign Policy: Q&A going to continue? The other assumption that they re questioning very much is what happens if the PRD comes into power eventually in one or two administrations, if there s a change in law. Mexico attracts a lot of foreign investment, directly and through the stock markets. We have been improving the quality of our regulation on both of those levels to give the level of confidence those investors need to have. Mexico went from having a very poor track record and very poor regulations in terms of protecting investors, minority investors through stock markets, to having one of the strongest. So we were ranked about 100 out of 150 countries, to being ranked around the top 20, I think, in terms of investor protection. So in general, the best argument to generate conviction that rule of law and the type of environment that investors would need is the fact that we attract and we have been attracting for many years an important number of firms and resources being invested in Mexico, that have enjoyed a good experience and a good respect of law. Today, the energy reform is current law in Mexico. Anything that you do under that law will be protected by not just the Mexican law but the Mexican constitution. That would be enforceable. As with anything else, if the law changes, the law changes. But whatever you did under the law that we now have is absolutely protected and there s absolute certainty in terms of the outcome and the ownership of the flows, so that should not be a reason for concern. We think that in terms of the ongoing negotiation what you will end up having is three bilaterals: Canada and the European Union; the US and the European Union; and Mexico and the European Union. Hopefully that last one being actualized, because it is a relatively old treaty that needs to be modernized. I think what we all have in the back of our minds is that by the time you have these three bilaterals, you should have a mechanism that allows convergence between them, so that in practice it ends up being a good regional support of trade, given especially the fact that what you have in North America are very well integrated value chains. So I think each one of us, when we negotiate our treaties, have in mind the fact that we have to consider the value chains and our core North American that nothing that we negotiate individually should take away from what we already have achieved in terms of integration. I think that Mexico is an example of a country that has been very open. So the numbers that Amnesty International has just cited are a result of a country that has been willing to open itself up so that it can be diagnosed. We have an office of the high commissioner I think Amnesty International is going to have an office in Mexico. We have an ombudsman that reports on all of these cases. We follow up on all of that. We have challenges we re a big country with serious problems and serious challenges. But we are committed to making human rights abuses a thing of the past. We need to continue to work on the implementation, but we have been very willing to engage in that dialogue and to have our process of full compliance being observed, diagnosed and reported on. We have not been a country that has been shy to allow anybody to look at what we re doing, to critique what we re doing and to try to do it better. So we are fully committed to having torture and human rights violations be a thing of the past.
12 Mexico s Foreign Policy: Q&A Robin Niblett Foreign Minister Meade, thank you very much for doing such a wide-ranging talk and set of questions. I think you set yourself up for it a bit at the beginning, because you started right from Mexico inside looking at Mexico outside, Mexico s place in the world. The fact that everyone has stayed here at this time of the morning, all the way through, is testament both to the interest in what Mexico is doing but also to your mastery of your brief, as we would say in the UK. So I want to thank you very much for taking the time. We look forward to working with you, with our colleagues and think tank counterparts in Mexico as well, and see if we can build up a little bit at our level some of that bilateral integration. Especially, the more international Mexico is in its outlook, I think the more connectivity it s going to have to institutes such as ours. We really look forward to the input. This is a more G20 world and that diversity of opinion is going to be great to make it more resilient. Thank you very much for sharing those perspectives and thank you for coming.