The 2nd North American Sustainable Economic Development Summit was held in Las Colinas-Irving, Texas, on August 24, 2015. The approximate 100 attendees discussed the economic and political impacts of current trade systems in the Americas as well as the potential effect of trade agreements now in negotiations, especially those in the NAFTA region.
Officials and business leaders from various sectors, including the economy, transport, energy and infrastructure participated in discussions, reviewing economic and supply chain strengths, and weaknesses in infrastructure and accountability.
NAFTA brings benefits and challenges to both the U.S. and Mexico
The North American Free Trade Agreement (NAFTA) in the 1990s brought together the economies of the United States, Mexico and Canada. NAFTA established a framework that created the world’s largest free trade area, connecting 450 million people and producing $17 trillion worth of goods and services annually. This has been primarily responsible for regional integration in the Western Hemisphere.
The increasing economic integration of Mexico and the United States during the last three decades has benefited both countries significantly. NAFTA has provided North American businesses with better access to materials, technologies, transportation and infrastructure.
Moving forward 21 years, both countries are facing additional challenges to free trade. Overcoming these challenges will be key to the continued and sustainable economic development of North America and, given increasing global connections, also important for the development of the hemisphere.
The U.S.-Mexico Chamber of Commerce (USMCOC) recognizes the importance of trade policies for the continent and how they help create solutions for strong, sustainable economic development and integration. Thus, the Chamber continues to develop and implement new means of collaboration to bring public and private enterprise together to address issues of binational concern such as infrastructure, security, energy independence, and IT innovations, among others.
Senator Javier Lozano presented the keynote address. He greeted the audience by reminding all present that “…NAFTA is a symbol of understanding, friendship and cooperation [and] has provided the opportunity to move forward.” He also emphasized the importance of “…build[ing] bridges between [ourselves].”
Francisco Gonzalez, general director of ProMexico, supported Lozano’s comments, citing the importance of understanding the dynamic of the U.S.-Mexico relationship. “No matter how interconnected we are and live, we must continue to work together,” the general director stated.
In order to emphasize the importance of competitiveness and fair trade practices, Roger Noriega, former assistant secretary of state for Western Hemisphere affairs, noted that “Mexico is aware that trade and trade agreements mean that we should think globally and act locally.” He also pointed out that markets must be sensitive to the needs of the population in order to have economic growth, and that government programs should provide the foundation for stable economic growth; however, a key factor for the success of fair trade is accountability. According to Juan Sosa, former Panamanian ambassador to the U.S., NAFTA increased the world’s positive perception of Mexico, as seen in Panama. A free trade agreement that makes the government accountable brings a competitive edge and a brand new game which translates to opportunities.
Mexico’s international image was also addressed by Congressman Agustín Barrios, representative from the LXII Mexican Legislature, who observed, “Mexico’s image must correspond to the benefits and potential of the country and its people. It is the responsibility of its people to strive every day to represent Mexico well in order to have the ability to influence the direction of the country.”
One example of Mexico’s potential is in the energy sector following the Energy Constitutional Reform of December 2013 which now permits private investment in Mexico’s oil and gas industry.
This change offers significant opportunities for private oil and gas companies to invest in Mexico but the law is not something new. According to Rafael Alexandri, director general of Planning and Information, Ministry of Energy of Mexico-SENER, “NAFTA opened the opportunity to integrate the energy sector. Without the NAFTA initiative, the region would not be looking ahead and expanding [which is] leading to economic development gains and greater development and growth worldwide.”
This integration is not just a function of Mexico’s natural resources, investment policies and free trade. Jaime Buitrago director of exploration for ExxonMobil Exploration and Production Mexico, said that it is collaboration that has helped increase growth and productivity, and international investment and markets. Steve Molina, a member of the Interstate Oil and Gas Compact Commission, indicated that the energy reform is creating an extraordinary opportunity for Mexico, making possible the creation of joint programs to form the basis for a regional community.
NAFTA is a key instrument in the unavoidable process of regional integration where infrastructure, transportation and technology do not recognize borders. Marcos Jimenez, CEO of Softtek North America, said, “Technology is taking integration into a true global scale without boundaries,” adding, “This regional integration creates opportunities for everyone.”
Luc Ringuette from UMEXX–ConnectMexico, noted that ConnectMexico, a joint effort of the USMCOC and ProMexico, was designed to promote investment, trade, commerce, economic deve- lopment and stronger bilateral relations. It also seeks to broaden the potential reve-nues of small and medium -sized companies in Mexico.
“The Mexican government’s role in this integration process has been fundamental to its success,” commented Ismael Berumen, partner in the U.S.–Mexico Corrido of KPMG. He further acknowledged that the government has made improvements in infrastructure, and has opened competition in airports and seaports, generation of electricity, telecommunications, natural gas distribution and railroads. He also agreed that there is still more to do and that integration has been an important factor in achieving progress.
Also addressing the summit’s participants was U.S. Congressman Pete Sessions (TX-32) who lauded the collaborative efforts and contributions that are building a stronger U.S.-Mexico relationship that has been strengthened by the participation of the private sector in the discussions
Infrastructure a key to regional economic growth
Infrastructure is key to regional economic growth and one of the most critical sectors in a country’s economy. Solid infrastructure reduces costs and helps the integration process. In this context, railroads play a major role. As the president of Kansas City Southern of Mexico José Zozaya remarked, “Mexico’s foreign trade accounted for 46 percent of the total cargo handled by the Mexican rail system, the most productive freight railway in all of Latin America.” He affirmed that transportation plays a crucial role in economic growth at local, national, regional and global levels.
David Aguilar, partner of Global Security and Intelligence Strategies, commented that Mexico is one of the most active trade ports of entry for the U.S. Its geographic location contributes to regulating economic, political and security integration, and is the result of cooperation between officials and companies and actions designed to increase trade-based revenues. Ana Hinojosa, deputy assistant commissioner of the Office of International Affairs, Customs and Border Protection, U.S. Department of Homeland Security and director-elect of the World Customs Organization, Compliance and Facilitation Directorate, emphasized that this integration is critical in order to deal with the issues that customs services faces today. Among those issues are supply chain security, data harmonization, coordinated border management, and enforcement.
Ricardo Treviño Chapa, México customs administrator, Servicio de Administración Tributaria, also addressed key concerns impacting trade, but commended how the U.S. and Mexico have come a long way in building bridges between the countries in order to facilitate and strengthen integration.
During the luncheon, William H. Duncan, U.S. Embassy Mexico City chargé d’affaires, highlighted the strong ties between the U.S. and Mexico and outlined his vision for the bilateral relationship which requires “working together [so] we can grow together.” He called on the audience to be part of the dialogue and tell our governments how we can remove bottlenecks and facilitate exchanges.
Yael Smadja, president of Smadja & Smadja USA, Inc., expressed her belief that by working together, “we can cover not only Mexico’s future but the key strategic issues common to or impacting on the whole region.”
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José Antonio Vidales Flores, president of the Confederation of Associations of Custom Agencies in Mexico (CAAAREM), reinforced the importance of infrastructure and transportation as two essential elements to facilitating the commercial exchange between Mexico and the United States. He challenged atten-
dees to reexamine the cornerstones that have created this reality. He also asked them to reevaluate the main actors in the supply chains that enable favorable numbers for the future: “Communication, interaction and openness are the key elements where we will build more trust, more integration and more security.”
The economic, political, and social integration that has taken place in North America since NAFTA went into effect has made the region one of the most competitive on the planet. With rapidly growing economies in Asia and South America challenging North America’s competitiveness, NAFTA remains fundamental to sustained growth and prosperity in the region.
The panel session ended with Woody Buckner, CEO of Buckner & Company, Inc., who invited all speakers and guests to reflect about how innovation helps integration and such integrations builds and strengthens NAFTA.
The process of regional integration has been possible through the commitment of individuals with vision and determination to mutually benefit Mexico and the United States. To honor one of the leaders in that effort, the U.S.-Mexico Chamber of Commerce bestowed its Good Neighbor Award on Richard W. Fisher, former president and CEO of the Federal Reserve Bank of Dallas.
The presentation of the Good Neighbor Award was the closing ceremony of a successful 2nd North American Sustainable Economic Development Summit. We are grateful for our speakers, sponsors and conference attendees for being part of this effort and look forward to continue the conversation.
