AMBASSADORIAL ADDRESS
TO CANADIANS IN MEXICO
NOTES FOR AN ADDRESS
AMBASSADOR STANLEY GOOCH,
CANADIAN SOCIETY, LAKE CHAPALA
AJIJIC, MEXICO
19 OCTOBER, 1999January 1, 1999 marked the fifth anniversary of the coming into Force of the North American Free Trade Agreement. While NAFTA gave further impetus to Canada's already strong relationship with the USA, what is new is that NAFTA has made Mexico a very significant partner for Canada - certainly in trade and economic terms - and across the full range of activities that characterize relations between States in the modern era. But our relationship with Mexico is barely beginning - the potential and opportunities for Canada - and For Mexico - are vast.
In this context I am delighted to be with you today to talk about where we are going in the Canada-Mexico relationship as well as where I think we should be going in our trade and economic relationship with that country.
Despite my long association with Mexico which goes back to 1971 or perhaps because of it - the single thing that has impressed me most about Mexico during the almost two years that I have been Ambassador, is that it is a country going through a profound transition, both politically and economically. I am also absolutely convinced that these changes are very positive for both Mexico and Canada, in that they provide a solid basis for a closer and mutually beneficial long term bilateral economic partnership.
THE ECONOMIC BASIS
International relations in the post cold war era are primarily driven by economic factors and, of course, the cornerstone of the merging Canada-Mexico partnership is our expanding trade and economic relationship.
The negotiation of NAFTA and the opening of Mexico's economy represented a major departure economically - as well as politically - from traditional Mexican economic policies. Since Mexico abandoned Protectionism and embarked on a policy of trade liberalization, exports have become one of the principle motors for growth. I believe that Mexico remains strongly committed to maintaining an open economy based on solid economic principles, and that this will lead to continued strengthening and expansion of the Mexican economy, providing the basis for further growth in bilateral trade and further investment opportunities.
Let me review some economic facts:
- - In 1998, Mexico's GDP grew by just under 5%, with the expectation of 3% for 1999 (bucking the regional trend) and 5% for 2000.
- - Mexico has become a trading power, with exports of over ~us 110 billion, making it the 10th largest exporter in the world.
- - The bulk of Mexico's trade - more than 80% - is within North America, principally with the USA. This is good news for Mexico as long as the USA remains the world's dominant and most dynamic economy.
- - The peso has performed relatively well - in 1999 it is one of the few currencies in the world which has strengthened against the USA dollar.
- - Inflation for 1998 was 18.6%, but current indicators suggest that the government's target of 13% for 1999 will be met, and possibly surpassed. Inflation is still too high but the trend downwards is good news.
- - In the past year, Mexico has finally succeeded in differentiating itself from other emerging markets. Thus Mexico has become less vulnerable to negative economic developments in Asia and even elsewhere in Latin America.
- - Mexico's integration into the North American market place is a very strong plus for Canada and the NAFTA is a card that we must use to our mutual advantage.
CANADA-MEXICO RELATIONS IN THE POST-NAFTA ERA
Now let me turn to Canada-Mexico relations in the post-NAFTA era.
January 1, 1999 marked the fifth anniversary of the NAFTA. It is not an exaggeration to say that NAFTA has completely transformed Canada-Mexico relations, not just on the economic front but also across the full range of international activities. Contact between Canadian and Mexican organizations, groups and individuals are growing rapidly. Mexico is now among Canada's top priority Countries and President Zedillo has appropriately named the bilateral relationship a "strategic partnership".
NAFTA has already made Canada and Mexico very significant economic partners. Total two-way trade between Canada and Mexico increased by 110% during the first five years of NAFTA to a level of more than $ 11 billion.
Canada is now Mexico's second most important market, after the USA. Mexico and China are neck to neck as the third most important source of imports into Canada following the USA and Japan. Canada is fourth in importance to Mexico as a supplier of imports.
Our figures for 1999 demonstrate that bilateral trade is continuing to expand at an impressive rate. Our two-way trade for this first six months of this year was $7 billion, an 18% increase over the same period in 1998. We are now projecting total bilateral trade for this year in the range of $13 billion, compared with $ 11 billion for 1998.
Over the next five years this rate of growth is bound to increase based not only on the NAFTA partnership, but on the increasing strength and health of the Mexican economy. The value of trade as a share of Mexico's GDP has almost doubled since 1994. As Mexico's prosperity expands, so will its trade. With NAFTA and greater familiarity, Canada's share in Mexican trade will increase exponentially.
Canadian investment has grown rapidly, principally in financial services, energy and telecommunications. With 1,029 Companies investing over $1.7 billion in Mexico between 1994 and 1998, Canada is now Mexico's fourth largest supplier of foreign investment. Substantial further investment is on the horizon - and in some cases much closer - in financial services, in energy, in tourism and perhaps in mining.
Canadian companies, logically, are much more active in Mexico in the post-NAFTA era. Mexican records indicate that more than 1,000 Canadian companies have invested in Mexico. Many more of course are involved in Mexico; quite a substantial number have opened offices in this country. The growth of the Canadian Chambers of Commerce in Mexico City and Guadalajara as well as the emergence of a new chapter in Monterrey with more than 70 members is a testimony to the interest of both Canadian and Mexican companies in this relationship.
While NAFTA is a trade agreement, it has also opened doors to much closer and more intense relationships across the board in the political, cultural, environmental and academic sectors, among others. As one indicator, Canada's Ministers of Trade, Culture and Intergovernmental Affairs have all visited Mexico over the past two months, and President Zedillo undertook a most successful visit to Canada as one of two keynote speakers - the other was USA President Clinton - at a conference on federalism just two weeks ago.
On the foreign policy front, we have become allies on a wide range of international issues. One recent example was the Ottawa Treaty on Land Mines where Mexico was a key ally and played a major role in marshalling hemispheric support for this initiative and on-going activities such as support for mine clearance in Central America.
Canada and Mexico are close allies at the United Nations and the OAS and work together on such issues as disarmament and institutional reform. Our active cooperation at the OAS is one clear indication that Canada has become a "Nation of the Americas".
Canada and Mexico seek to manage the increasingly complex relationship through periodic summits between our two leaders and through at least biennial meetings of the Joint Ministerial Committee chaired by our respective Foreign Ministers. These two Ministers are always joined by Trade Ministers and other Ministers depending upon which sector merits attention at the time of the meeting. The most recent meeting of the committee - the thirteenth - took place in Ottawa in February and for the first time featured a dialogue on social issues - indigenous issues, health care, programmes for the poor and education.
The committee is complemented by a number of sector specific sub-committees which deal with such subjects as culture, drugs, environment, customs and, more recently, Y2K.
Provincial and State governments are very much in the act. All Provinces and Territories participated in the 1998 visit of "Team Canada" to Mexico, which, incidently, remains the largest "Team Canada" contingent to visit any foreign country. The state of Jalisco is probably a leader in developing relationships with Canadian Provinces, with its twinning relationships with both Manitoba and Alberta and active exchanges between Premiers and the Governor as well as business communities. But other Mexican States are not far behind. Next month, for example, Governor Miguel Aleman of Veracruz is leading a Trade Mission to Ontario and Quebec.
Cultural relations have boomed over the past few years. For example, we are hosting the largest ever exhibition in Latin America of the Group of Seven and Tom Thomson right now at the Museo de Arte Moderno in Mexico City. This initiative, made possible with more than $300,000 in support from Canadian companies active in Mexico, has stimulated the Mexican Government to reciprocate with a major exhibit of contemporary Mexican artists which will open next month in Montreal and in February in Ottawa at the national gallery.
On a continuing basis, the Banff Centre for the arts and the Mexican Foundation for Culture and the Arts have implemented a yearly programme under which 23 Canadian artists study and work in Mexican institutions for a few months, while an equal number of Mexican artists produce at Banff. As you will know, the Royal Winnipeg Ballet conducted a most successful visit to Guadalajara last month.
Educational contacts of every type flourish. For example, over 300 university-to-university arrangements are in place. Since the establishment of the Canadian Educational Centres in Mexico city, Guadalajara and Monterrey in January 1997, the number of Mexican students studying in Canadian institutions of higher learning has increased rapidly to over 6,000 annually. The Mexican Association for Canadian Studies is now firmly established with centres or programmes in 7 major universities and a recently-launched Journal of Canadian Studies.
Canada has contributed over the years - in a small way - to development in rural Mexico through the Canada Fund for Local Initiatives. The focus has been upon gender, indigenous peoples and environment, and in combination with local financing has made a significant impact.
But the Mexico-Canada relationship goes beyond trade, Ministerial visits and exhibits of paintings and now involves many more Canadians and Mexicans - last year approximately one million Canadians visited Mexico. About 100,000 Mexicans went to Canada, up substantially from previous years. I regularly hear, with great pride, that Mexicans are discovering Whistler, Banff, the Blue Jays, Quebec City and beyond. And I hear that the number of Canadians around Lake Chapala is now perhaps greater than the number of Americans. A book written in the sixties "Los Gringos del Lejano Norte" reflected how Mexicans viewed Canada. In this post-NAFTA period, I find that, throughout this great country, Canadians are now seen as very distinct from the citizens of our mammoth common neighbour. I also sense that Mexicans prefer to deal with us in business, to study in our Country and get to know us better. Canadians, too, are beginning to put aside some Hollywood stereotypes about Mexico and rapidly re appreciating and understanding the rich diversity and potential of this country.
THE FUTURE
Where do we go from here? NAFTA has offered an extremely important boost to our relationship, which has gone beyond trade. Canadians and Mexicans are now much more aware of each other and of our mutual capacities. Our leaders, President Zedillo and Prime Minister Chretien, are close friends and allies as are our respective Foreign Ministers, Trade Ministers and many others. The framework for a long-term government-to-government relationship is firmly established and consolidated.
If I were to look five years into the future, I think I could say safely that our economies will become even more integrated and the commercial relationship will continue to expand exponentially. As the Mexican economy grows and evolves, the number of potential consumers of Canadian goods and services will multiply- I would expect a further 200% increase in two-way trade over the next five years totalling $38 billion by the end of 2004.
I am also convinced that Canadian investment in Mexico will increase by several hundred percent as Mexico's privatization programmes evolve, and Canada will become Mexico's second most important investor after the USA.
I can afford to be optimistic. NAFTA has opened many doors for Canadian and Mexican companies which have discovered complementarities. It has shaped, and will continue to shape, a much wider and mutually beneficial bilateral relationship.