Mexico and Canada—Beyond NAFTA
The Empire Club of Canada Addresses (Toronto, Canada), 26 Jan 1994, p. 278-287
Fuentes, Her Excellency Sandra, Speaker
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A "Mexican-Canadian joint venture." What NAFTA does and does not represent. Cooperation and integration and how that may be achieved under a free trade agreement. Economic and political reform in Mexico. The 50th anniversary of diplomatic ties between Mexico and Canada.
Date of Original
26 Jan 1994
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Full Text
Her Excellency Sandra Fuentes Ambassador of Mexico
Chairman: Dr. Frederic L. R. Jackman President, The Empire Club of Canada

Head Table Guests

Carlyle Dunbar, Financial Journalist and an Honorary Director, The Empire Club of Canada; Elia Enkuez-Escamilla, grade 13 student, Oakwood Collegiate Institute; John Crispo, Professor of Political Economy and Industrial Relations, Faculty of Management, University of Toronto; Robert L. Brooks, Executive Vice-President, Investment Banking, Bank of Nova Scotia and a Past President, The Empire Club of Canada; Julie K. Hannaford, Partner, Borden & Elliot and 2nd Vice-President, The Empire Club of Canada; Rev. Ariel Dumoran, St. Lorenzo Ruis Congregation; Brian Segal, Publisher, MacLean's Magazine.

Introduction by Dr. Jackman

When Ambassador Fuentes murmured something about the size of the audience, I had to tell her the truth. When the snow flies and the temperature gets this cold, Canadians all go looking for trading opportunities in Acapulco. Some stay, however, and last year in December, the Liberal government proclaimed into law the North American Free Trade Agreement. This was the same bill that was passed by the Conservative government the previous spring.

Roy MacLaren, the Liberal Trade Minister, said the NAFTA agreement will create the world's largest single trading bloc. With the combined population of Canada, the United States and Mexico at 360 million people with an annual output of $7 trillion, this trading bloc is indeed enormous. Mexico alone accounts for 85 million people, almost triple Canada's population.

As you know, the NAFTA legislation has now been proclaimed in all three nations. It will mean freer movement of goods, services and investment among the three countries.

Because of NAFTA--a new word about to enter Webster's dictionary--each country recognizes the importance of the ambassador they send to reciprocating countries. We have heard that President Salinas believes that the two most important international diplomatic posts for Mexico for the next several years will be Washington and Ottawa. When Mexico requested that Canada accept the credentials of Mrs. Sandra Fuentes as Mexico's ambassador, our Governor General had no difficulty in doing so (in February, 1993).

As ambassador for just under a year, Mrs. Fuentes has made her mark amongst the diplomatic corp and amongst Canadians. A Financial Post article was titled, "Mexico sending us high-powered new ambassador." Variously described as bright, brilliant, super-bright, outgoing, energetic, lots of fun and a real intellect, she is also a real pleasure to meet.

She might also be described as having a severe case of wanderlust as you will appreciate when I tell you all the countries she has worked in. Whether this condition preceded her entry into the diplomatic corp is yet to be determined.

Her Excellency graduated with a law degree from the National University of Mexico and studied international economic law in London, England. In her career in the foreign service she has served in Mexico's embassies in London, Paris, Rome and Washington before being promoted to the rank of ambassador and appointed Consul General in Hong Kong in 1988.

In Mexico's foreign affairs secretariat, Ambassador Fuentes has been Director-General for Western Europe (1979-1983) and, subsequently, as Director-General for the Pacific (1991-1992). Ambassador Fuentes has participated in numerous international meetings and conferences of a bilateral and multilateral nature and has been decorated by the governments of Germany, France, Italy, Great Britain, Spain and Sweden.

She is fluent in Spanish, English, French and Italian. She is married to Dr. Henri Robcis, a veterinarian, and has two children, Camille 15 and Sebastien 11.

Ladies and gentlemen, would you please welcome Ambassador Fuentes who will speak on Mexico and Canada--beyond NAFTA.

Sandra Fuentes

Ladies and gentlemen, it is a great privilege to be here this afternoon and to be part of such a distinguished list of speakers. The Empire Club's invitation to me, as ambassador of Mexico, underscores just how much my country has evolved during the past decade and how brightly the international spotlight is shining upon those changes. Mexico is indeed "moving up in the world," fulfilling for the first time its historical potential. But Mexico is not alone in this journey toward progress.

Through NAFTA, Mexico, Canada and the United States are building a new North American identity that will define our countries' futures for the next century. I invite you to participate this afternoon in a "Mexican-Canadian joint venture," and reflect with me on where we are headed and how we might get there.

As I see it, you are not merely an audience, but also my sounding board. You are my cross-national partners in colouring in the outline that NAFTA has drawn for all of us.

After months of often-harrowing negotiation, endless editorials and television debates, not to mention tri-national diplomatic headaches, NAFTA finally became a reality. Indeed, during this past year it seemed that Mexico and Canada's favourite national pastime was to speculate on whether the deal would be ratified. Thankfully, the game is over now, and we all know the score. But today the direction and content of our speculation has shifted toward NAFTA's impact on our countries.

Before January 1, NAFTA was only a figment of negotiators' imaginations, or a catchy acronym for media headlines. Now it affects Mexicans and Canadians from all walks of life and will continue to do so for decades to come. But in order to prepare the next stage of thinking about NAFTA, it is necessary to clearly assess what NAFTA represents and what it does not.

First and foremost, it is crucial to recognize that NAFTA is not a panacea that will automatically cure Mexico and Canada's economic woes. Thorny issues such as unemployment, sluggish productivity and changing living conditions will continue to test both countries, with or without free trade. In fact, these are global economic dilemmas. Many social and economic problems that haunt our two countries were born before the agreement was conceived, and NAFTA is not a pill prescribed to postpone the pain of necessary adjustments.

If NAFTA is not a panacea, neither is it the apocalypse. Contrary to the predictions of doomsayers, it will not single-handedly bring down governments, marginalize labour unions, collapse local industry, or lead to environmental destruction. What NAFTA does is herald the advent of a new economic era in which traditional activities will be pressured to restructure or fail. NAFTA may accelerate that inevitable adjustment. In so doing, it will test the adaptive capacities of governments and societies. To put it simply, NAFTA is an instrument and an opportunity. Like all instruments, it can be played melodically or out of tune. Like all opportunities, it can be seized or lost.

Both Canada and Mexico are at a critical juncture. As we prepare for the 21st century, history has granted us the chance to reinvent ourselves--to learn from our past mistakes and to build better societies. NAFTA will be a crucial part of that reinvention process. Most of all, it will bring our two countries together so that the acquisition of knowledge is more profound and the building more solid. The key concepts that will increasingly define Mexican-Canadian relations will be "co-operation" and "integration."

We have signed a treaty that binds us formally as trading partners, yet, we have only just begun to discover each other as countries. Before NAFTA, Canadians' perception of Mexico was of taco chips, sandy beaches, sombreros and desperate poverty. Mexicans' storybook vision of Canada was built upon images of mounted police, maple leaves, wide-open prairie, polar bears, and, as this past month has reminded me, cold and snow! We viewed each other through the distorted lenses of damaging stereotypes. But now that the courtship is over, we will slowly--and perhaps at times painfully--learn what married life is like!

Free trade will mean more than the unrestricted flow of goods and services across the border. It will also mean exposure to the subtle mores, habits and traits of our respective national characters. You will soon sample the spicy flavour of our salsas, the freshness of our fruits and vegetables and appreciate the quality of our compact cars. We, Mexicans, will acquire a new taste for maple syrup, Saskatoon pie, Canadian Christmas trees and perhaps even constitutional debates! Corona will become a household word across the Canadian provinces (if it has not already!) just as Northern Telecom may lead to an unprecedented phenomenon in Mexico--efficient telephone service!

These changing tastes and perceptions are no trivial matter. Once we think of each other as partners and equals, we will begin to treat each other as partners and equals. Integration will then proceed at many levels, far beyond the mechanics of reducing tariffs. As that integration intensifies, we will need to develop new forms of interaction and understanding. Canadian business is already engaged in that process of learning and is rapidly discovering the unbounded opportunities that exist south of the American border. I encourage you all to do the same.

But although today we celebrate all of the possibilities which free trade provides, I remind you again that NAFTA will not be a cure-all. Now is the time to build on what it represents, rather than to lament what it does not.

From the perspective of my country, while NAFTA's implementation is clearly a high foreign policy priority, it is only one part of a larger plan for growth, development and reform. More importantly, we believe that NAFTA is not the appropriate tool with which to criticize member states' non-trade policies.

For all its promise, NAFTA is only what its name suggests--a free trade agreement. Other channels of communication are open to address other kinds of concern. They have been used in the past and we will continue to use them in the future.

Nevertheless, given the importance that has been attached to NAFTA (both in and outside Mexico), it is not surprising that the people of Chiapas should use it as a symbol to emphasize their long-standing grievances. This is their complaint and the Mexican government is listening. What is less understandable is the linkage between NAFTA and human rights currently being advocated by organizations within Canada. Yes, poverty and human rights are issues of great importance--to both Mexico and Canada. But one incident--such as the one in Chiapas--should not stand in the way of a greater project for modernization and development, a project that is attempting to bring economic prosperity for a better quality of life to all Mexicans.

Some elements within Canada have consistently disputed these beneficial effects of North American free trade. But if it is the NAFTA process itself which these groups oppose, they should not seize upon the legitimate plight of the people of Chiapas. Let them lay their real concerns upon the table and we will debate them head-on. In the case of Chiapas, my government has quickly responded to international requests--including those of your country--to observe first-hand the delicate and tragic situation in this region.

The Mexican government does not shy away from this publicity, or from its international responsibilities. On the contrary, as an increasingly prominent member of the international community, Mexico knows that 'transparency' is an international norm which has been gaining in popularity in the past two decades. However, in granting entry to foreign observers, we ask that the international community use that access to better understand the situation, rather than only to criticize. In particular, the causes behind the Chiapas problem are rooted not only in Mexico's ancient history but also in the forces of contemporary international economics.

Chiapas is one of the most beautiful states in Mexico, but its mountains and rugged landscape also explain the difficulties encountered by the authorities in bringing the most basic services to these isolated communities. This isolation also reduces the exposure of these communities to the national market. In addition, it allows the establishment of local, influential individuals who then become the interpreters in voicing the needs and demands of the communities, while at the same time slowing the development of democratic institutions.

To these ancient obstacles to development, we must add three other factors.

First, the population growth in the area exceeds the national average and not only overcrowds land and depletes natural resources, but also leads to migration and agrarian disputes. Secondly, the impact of the decline in international prices of coffee and meat have seriously affected the peasant communities of the region. Finally, the pressures to preserve the environment has limited the economic development of those communities that rely on logging.

While the government has implemented actions to address these problems, the recent events in Chiapas remind us that we need to work more expeditiously to create alternative sources of income and address the demands for social and economic justice in these communities. Last week, President Salinas announced the implementation of an economic and social programme for the Chiapas region and the creation of a new commission for social justice and advancement of indigenous peoples.

Finally, we ask the international community to examine the long-term commitment to economic and political reform that has been undertaken by President Salinas' government. This reform is designed not only to improve the situation in Chiapas, but also to allow all of Mexico to travel along the road to becoming a first-world nation.

I think you will agree that two of the most prominent causes of social and political unrest are poverty and economic stagnation. Our government is committed to alleviating these more systemic problems. Today, governments in several countries around the world are facing demands for similar economic and political reforms.

In many cases, however, the two do not mesh. As events in the former Soviet Union so painfully remind us, "shock therapy" is not always conducive to social and political stability. If we look around, we also see many countries grappling with discontented minorities within their borders, or groups with conflicting economic or political visions. Here, one does not have to look only to the traditionally poor states of Latin America, Asia and Africa, or to Central and Eastern Europe. This is a first-world as well as a third-world dilemma.

In confronting these kinds of political and economic challenges, Mexico is not unique. What is notable, however, is the remarkable success which my country has had in the past decade in implementing and sustaining fundamental structural reforms.

Since 1983, but especially since 1988, we have worked to put our finances back in order and to establish the conditions for a healthier economy. While in 1982, we faced a public deficit that represented 17 per cent of our GDP, in 1993, for the second year in a row, we had a surplus. We have lowered inflation from 160 per cent in 1987 to eight per cent in 1993. Our total debt fell from 81 per cent of our GDP in 1986 to only 29 per cent in December, 1992. Since 1989, Mexico has received more than $30 billion in direct foreign investment and $15 billion through the stock and bond market. Our foreign trade amounted to $143 billion in 1992, three times more than in 1986. Ten years ago, 71 per cent of our exports were oil products. Today, 72 per cent of our products are non-oil goods. The income derived from the privatization process has exceeded $25 billion.

As these statistics indicate, we have taken a tough but dedicated path towards modernizing our country.

Now is not the time to reverse this process by slowing the implementation process or weakening the effectiveness of the NAFTA agreement. It is a tool for further progress and development. Instead, firm support for NAFTA from Canada and the United States will inspire and strengthen those forces in Mexico which are working towards modernization. It is this correlation of forces that can further open up Mexico to the international community. It needs the encouragement and assistance of countries like Canada now more than ever.

Ladies and gentlemen, the Mexican government acknowledges that the road to a better economic and political future is not a straight one. I believe that if you compare Mexico's reform efforts with those of other nation-states, our commitment will not be found lacking. Evidence of real innovation is everywhere. Many Mexicans have already felt the benefits.

We recognize that there will be growing pains and that many of the adjustments will be difficult. Some of you, in various constituencies, will face the same kind of pressures. But the historic movement for change on our shared continent cannot be halted. It deserves your support and enthusiasm.

This weekend we celebrate the 50th anniversary of the establishment of diplomatic ties between Mexico and Canada. As I suggested earlier, the relationship that this event commemorates is based firmly on co-operation. It is also rooted in mutual respect and tolerance of diversity. While we have much to learn from Canada, and welcome your assistance and advice, we also believe that you have much to gain from us. NAFI'A has opened the door to that process of exchange and learning. Let us do our best to keep that door open. Thank you.

The appreciation of the meeting was expressed by Robert L. Brooks, Executive Vice-President, Investment Banking, Bank of Nova Scotia and a Past President, The Empire Club of Canada.

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Mexico and Canada—Beyond NAFTA

A "Mexican-Canadian joint venture." What NAFTA does and does not represent. Cooperation and integration and how that may be achieved under a free trade agreement. Economic and political reform in Mexico. The 50th anniversary of diplomatic ties between Mexico and Canada.