"The North American Neighbourhood"

The Reverend Canon Philip Wadham, Mission Co-ordinator for Latin America and the Caribbean for the Anglican Church of Canada; Robert Armstrong, Vice-President and CEO, Canacermex Inc.; David J.S. Winfield, Executive Director, The Toronto International Centre for Financial Supervision and Former Canadian Ambassador to Mexico; The Hon. Michael H. Wilson, Chairman and CEO, UBS Canada and Former Minister of Finance for the Government of Canada; Harry Swain, President, Trimbelle Limited and Director, The Empire Club of Canada; David McCown, President, The Couchiching institute on Public Affairs and Vice-President, Corporate Development CIBC; and Robert Pitfield, Executive Vice-President, International Banking, Scotiabank.

Introduction by Ann Curran

There are many wonderful aspects to the Empire Club but the most enjoyable for me is the historical snap shots it provides though its speakers and the recording of their addresses.

June 5, 2003

A prime example can be illustrated by going back 10 years and reading some of the addresses and topics of the clay. Several were about the newly formed North American Free Trade Agreement which we all know as NAFTA.

At the time. NAFTA created 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 seemed enormous. Mexico alone accounted for 85 million people, almost triple Canada's population.

In fact, on January 24, 1994--23 days after NAFTA came into being--Her Excellency Sandra Fuentes, Ambassador of Mexico, spoke to the club about Mexico and Canada--beyond NAFTA.

A quote from her address brought me back those 10 years in a flash: "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."

Today, Ambassador Garcia Segovia de Madero will outline the concept of the "strategic alliance" between Canada and Mexico.

She will also explain Mexico's vision regarding the future of North America and address the current process of redefining the region that is currently being embarked upon by the three North American countries.

But first let me tell you a little bit about our guest speaker.

Mrs. Maria Teresa Garcia Segovia de Madero has been active in political life for almost three decades. In 1984 she became a member of the National Action Party (PAN), as well as of the Executive Committee of the PAN in Nuevo Leon. In 1985, she was a founding member of the Democratic Electoral Assembly for Effective Suffrage, both in the State of Nuevo Leon and nationally.

From 1985 to 1988, she acted as a Deputy of the State Congress of Nuevo Leon. In 1987, together with three other state representatives, she promoted a case before the Inter-American Human Rights Commission of the Organization of American States, on account of the violation of the human rights of citizens by the Electoral Law of Nuevo Leon then in force. In 1991, the commission decided in favour of the claimants. This international verdict led to important changes in the electoral laws of Mexico.

Among other positions she has occupied within the Mexican government are Mayor of San Pedro Garza Garcia, Nuevo Leon, from 1997 to 2000, Secretary of the Municipal Council of San Pedro Garza Garcia from 1994 to 1997, and Municipal Councilwoman of Monterrey from 1991 to 1994.

Her political commitments include membership in the PAN State Council of Nuevo LeOn and in the National Council of that party. In October, Ambassador Garcia Segovia de Madero took a leave from her position as member of the National Executive Committee (CEN) of the PAN, in response to her appointment to Canada.

Her non-political endeavours include her role as President of the Committee of Wives of Industrial Relations Executives (ERIAC), member since 1975 of the Asociacion National Civica Femenina (Women's National Civic Association). member of the Board of the University of Monterrey (UDEM) and lecturer and speaker at over 350 local and international events.

Ambassador Maria Teresa Garcia Segovia de Madero has a BA in Spanish Language from the Universidad Labastida in Monterrey, Nuevo Leon, as well as diplomas in English Language Instruction from Oxford University and Cambridge University and in Public Administration from the Institute of Public Administration of Nuevo Leon.

Ladies and gentlemen please welcome Her Excellency, Maria Teresa Garcia Segovia de Madero.

Maria Teresa Garcia Segovia de Madero

Mr. David McGowan, President of the Couchiching Institute, Mrs. Ann Curran, President of the Empire Club, Mr. Harry Swain, Empire Club Director, ladies and gentlemen:

I thank the Empire Club and the Couchiching Institute on Public Affairs for the opportunity to share these remarks with you. It is a great honour and privilege to be joining both institutions in the festivities to commemorate the first centenary for the Empire Club, and Couchiching's 71st anniversary. It is a true honour since all the projects and different events put together by both organizations have gained a well-deserved reputation due to the various opportunities they provide for debate on the important Canadian as well as international issues of our tunes. Congratulations to you both!

The purpose of my presentation is twofold. First, I will try to explain the reasons why Mexico and Canada share a strategic alliance and in the course of such an endeavour, I shall aim to convey two messages: One that the alliance is not rhetoric, as some experts have claimed, and two that, from my perspective, the sine qua non condition to advance substantially in the North America integration agenda is the consolidation of the Mexico-Canada relationship. I will briefly describe Mexico's vision regarding the future of North America. It would be interesting if, after the end of my presentation, you and I could engage in a reflection exercise regarding the future of our regions and touch upon the continental integration process.

What do we mean by having a "strategic alliance" with Canada? How is the word "strategic" being viewed when used to describe what Mexico and Canada share? Since when did we begin to refer to each other as "strategic partners"?

Only a handful of countries meet the mandatory conditions and the characteristics to appear as a strategic ally to Mexico. And Canada is without a doubt one. Why? Because Canada is a country with whom we could establish an open and transparent dialogue; one that has the potential to fully cooperate in order to bring benefits to both partners; and one, above all else, with whom Mexico could easily share the political willingness to seize the comparative advantages that each country brings to the table and to our peoples.

Let me begin by saying that the governments of Mexico and Canada did not view nor call one another "strategic partners" when they first decided to establish a bilateral relationship back in January 1944, almost 60 years ago--an event that we will be celebrating next year. I definitely believe that Mexico and Canada inaugurated this strategic partnership in the early nineties, after two concrete events took place. The first was in August 1990, when Canada's foreign policy decided to knock on the hemispheric door and join the Organization of American States and the second, and by far the most important event, was when the North American Free Trade Agreement (NAFTA) became a reality on January 1, 1994.

By just reviewing some of our mutual history we arrive at two of the reasons to explain why we share a strategic alliance: diversification and trade. In the early nineties, both Mexico and Canada were seeking to diversify their international relations. In the case of Mexico, this same strategy was not new at all. On the contrary, it could be traced back to Porfirio Diaz days, in the early 20th century, when he, surrounded by his closest advisors, the so-called "cientificos," made significant efforts to diversify the country's foreign policy. His intentions were genuine but not realistic. The strategy was reawakened in the early nineties. If we take a glance at your country's recent past, we could say that a similar interest was found in the Canadian government, particularly in 1993 when efforts were focused on having Canadian foreign policy look towards two specific regions: Asia-Pacific and Latin America. I believe that Canada's interests were best achieved in 1990, with its accession to the OAS, as previously highlighted.

Mutual knowledge, however, increased exponentially with NAFTA. Every time I review the history of our bilateral relationship, I cannot but confirm that NAFTA was "the missing link" or in other words, "the driver" that allowed Mexico and Canada to leave behind their "distance-partnership-type" of relationship for a closer, tighter and more integrated one. Prior to NAFTA, the bilateral trade exchange between Mexico and Canada was trivial. During the eighties, bilateral trade totalled $680 million, a figure that in those days represented only 1.5 per cent of Mexico's foreign trade, placing Canada below Mexico's main trading partners in that decade, such as the United States, Japan, France and Spain. One of the

explanations behind those figures in the eighties had to do with Mexico's previous economic policy of "looking inwards."

Mexico is today one of the world's most open economies. We are currently ranked as the ninth economy worldwide. Now more than ever, Mexico is better prepared to face external events and this is due to the strengthening of the country's economic fundamentals. Among them are the government's commitment towards sound public finances and a significant decline in inflation and interest rates. These efforts will not only continue, but will be strengthened during the administration of President Vicente Fox, in order to free up resources for the private sector while promoting a further stable economic environment. Furthermore, in spite of ongoing regional instability and a slowdown in the global economy, Mexico has been able to avert an economic crisis.

But to offer a rough idea of Mexico's openness, let me tell you that while two decades ago Mexico received an average of US$4 billion annually in direct investment flows, in the nineties this amount tripled to nearly $12 billion. Through NAFTA, Mexico has become Canada's main trading partner in Latin America and its fourth-largest partner overall, after the United States, Japan and China. Mexico has also become the third destination of Canadian products, and currently 1;259 companies with Canadian capital are doing business in Mexico. The main sectors attracting Canadian investment are manufacturing, representing 59 per cent, followed by financial services with 25 per cent and mining with 11 per cent.

Bilateral trade with Canada has tripled, reaching more than US$11.3 billion in 2002. Between 1993 and 2001, Mexican exports to Canada grew by 170 per cent, reaching US$7.3 billion in 2002.

In tandem with the economic and trade dynamics, the political understanding between our two nations has grown strongly and expanded with time. Again, it was precisely in the nineties--right after the end of the "lost-decade"--when Mexico, compared to other nations in the hemisphere, was sprouting as "a new country" due to a series of domestic economic reforms and a decisive willingness to open to the world scene. Its political views and values were coinciding more and more with the ones held by countries such as Canada. It was then that both our countries began to realize, on the one hand, that there was "more substance" to link them and on the other, that there was an increasing commonality of interest developing between them. In a nutshell "political coincidence" was emerging--a political coincidence that has definitively strengthened with President Fox's democratic intentions to portray a new face of Mexico. In the mid-nineties, our countries grasped that they both favoured the pre-eminence of international law, multilateralism over unilateralism and respect for the basic principles that regulate countries' coexistence, such as the right to self-determination of peoples, peaceful solution of controversies and legal equality of all Nation-States just to mention a few. July 2, 2000 marked a new watershed for our bilateral relations. Vicente Fox's foreign policy, interested in placing the universal respect of human rights, the promotion of democracy and good governance among its top priorities and reactivating the relevance of multilateral organizations as natural fora whereby international actors could analyze, exchange views and positions and make decisions on the world's most prominent issues, has strengthened Mexico's and Canada's political coincidence. Our stances towards the creation of the International Criminal Court and the Inter-American Democratic Charter are only two examples of how this political coincidence continues to build.

There is coincidence, but there is also political complementarity. While Canada is trying to build a closer relationship with the Southern Hemisphere, where Mexico is a key actor and plays a pivotal role due to its

cultural and historic ties within that area, Mexico is seeking to become a real partner in the North American region, where Canada plays a major role. We are trying to be "bridges" to one another and assisting one another, to achieve our respective national interests. Yet political complementarity could also mean that due to their specific peculiarities, Mexico and Canada have a vast potential for cooperation. If we analyze the conditions of each country's economy, industrial structure, agriculture, cultural and education realities and even demographic profiles, we could definitely solve a puzzle and be certain that the pieces match at the end of the game.

According to the Mexican National Statistics Institute, Mexico's population in the year 2001 reached approximately 101 million people. This is about a third of the United States population but about three times greater than Canada's. What should be underscored is not so much the figure itself, but rather the numbers outside it. Allow me to elaborate on this.

According to the U.S. Census Bureau and Mexico's National Population Council, in 2001, about 23 million people living in the United States were of Mexican descent. Roughly nine million of them are Mexican citizens and 14 million are Mexican-Americans. In other words, 23 per cent of Mexico's population--or close to one-fifth of its total population--live in the territory of our immediate neighbour to the North. Further, approximately 3.8 of these nine million Mexican nationals are undocumented workers.

As for Canada, the figures are just as interesting. For many years, when we spoke of Mexicans abroad, we were referring only to those located in the United States. However, recent trends show that more and more Mexicans are travelling to more distant lands, such as Canada. In 1986, according to the Canadian Census, about 13,000 Mexicans legally resided in Canada. By 1991, this figure had grown to 19,000 and by 1996 it stood at 28,000.

If we compare the initial figure (13,000) to the latter (28,000), we notice that in a matter of a decade, the Mexican population in Canada doubled. Currently, the figure stands at about 35.000 and the Mexican population in this country is growing at an average annual rate of about 8 per cent. This is not merely a number. Mexicans living in Canada represent one of the many pluses that contribute to Canada's multiculturalism and to the country's economy.

But the migrations and displacements are not unilateral. On the contrary, the flow of people is a two-way phenomenon, whereby Mexicans are not the only group moving out of its country of origin. On an annual basis, one out of 30 Canadian tourists visit Mexico and more than 150,000 Mexicans visit this wonderful country every year, while the number of Mexican students deciding to either begin or finish their higher education here is increasing. On the other hand, there are over one million U.S. citizens residing in Mexico, which makes it the largest foreign community in our country. And, not unexpectedly, the third-largest foreign community in Mexico today is Canadian.

The importance and impact of these figures are definitively reflected in the number of diplomatic representations we have in each other's countries: Mexico has three Consulates--General Vancouver, Toronto, and Montreal--plus the Embassy in Ottawa, and five Honorary Consulates in Quebec City, Manitoba, Dartmouth, St. John's and one in Regina. Allow me to take this opportunity to announce that responding to the intense co-operation established with the provincial authorities of Alberta and with the business sectors located in this province, as well as the dynamic academic exchange that is currently taking place, the Government of Mexico has wisely decided to open a Consular Agency in Calgary. The inauguration of the agency is scheduled to happen next month.

This just goes to demonstrate two important facts:

1. How well integrated in terms of people's mobility and government representation our societies are, which at the same time show the political importance given to the bilateral relationship; and,

2. It is not only Mexico's face that is currently experiencing a change, but also Canada's.

The mobility of our peoples definitely has something to do with the sharing of common values. A first survey conducted by EKOS Research on the future of North America, demonstrated, among other things, that Mexico and Canada share values that are not shared with other countries within the hemisphere. For example, this survey revealed that Canadians and Mexicans, for instance, are, in general terms, more tolerant societies. In particular, the results of the study impressively illustrated that Canadians and Mexicans are particularly tolerant toward immigration, for instance. These value commonalities between Mexicans and Canadians are undeniably a solid basis of the "strategic alliance."

Last, but not least, is the obvious feature of geography. It would be futile to deny that anyone interested in the Mexico-Canada equation, would have to consider the "U.S. variable." Prior to and following the formal establishment of diplomatic relationships, our common neighbour has significantly influenced the two countries' domestic and international development. As with any neighbour in our personal lives there have been moments when Mexico and Canada have decided to be closer than other times. There are passages in the history of both countries' foreign policies that shed light on how, at certain times, they have looked for more autonomy and diversification, but we have also witnessed other types of cycles--those where both countries have deployed clear strategies to seek a closer and stronger relationship with the United States.

The reality is that we both share significantly long borders with the U.S. and those borders will not disappear. But having the world's hyper-power as our common neighbour has brought Mexico and Canada closer. For those particularly aware of power and identity issues, the sharing of the border with the U.S. is quite a concern, due to the fact that there is general understanding that it would be the United States, specifically--in its role as superpower--setting forth the guidelines in all realms of cooperation. This perception may be strengthened after September 11. But it is also true that the "strategic alliance" that Mexico and Canada are beefing up can diminish the power asymmetries and thus work in a joint fashion and provide their own input.

As a confirmed "North Americanist," I believe that there are at least two ways where the "strategic partnership" could work efficiently to diminish and, if possible, eliminate the asymmetries within North America:

First, recognizing the fact that the integration process is well underway, whether we like it or not, and that NAFTA--especially in the case of Mexico--has made it even more inevitable and taking the latter as a given, it is of the utmost importance to go beyond the agenda, rather than reacting to often contradictory realities of the integration process. Any projection of North America will have to take a broader approach and, ultimately, be used as the framework for the creation of a long-term and more comprehensive working agenda.

Second, Mexico and Canada need to really begin thinking "out of the box." Having the United States as the common neighbour brings us a plus; a plus that translates into "more substantial matter to exchange among us--an exchange that could only end up strengthening us internally, as well as bilaterally and internationally. Take the issue of border management after the dreadful terrorist attacks on New York and Washington. Although the nature and dynamics of the Canada-United States borders

are completely different from those characterizing the one we share with the United States, there are more than a handful of border issues and a good amount of border management expertise that both countries can share, particularly in light of the fact that Canada and Mexico have each signed "Smart Border" Declarations and Plans of Actions with the United States. We have then two separate documents that are almost a facsimile. Whether common ground exists or not, border management is only one of a plethora of issues where Mexico and Canada vis-a-vis the United States could work in a very positive fashion making the "Mexico-Canada connection" stronger.

The list of features, conditions and causes defining la raison d'etre of the strategic alliance does not stop here. Our relationship is privileged and forward-looking and we should definitely take advantage of this to move ahead in the North American integration continuum.

Mexico wants to continue widening and deepening the integration process and it is interested in doing it along with its two North American partners. It was here in Canada, in Ottawa, when President Vicente Fox first voiced his concept of building on a NAFTA-Plus. Considering that in general terms, NAFTA has been a success story. As of today, NAFTA-Plus means for Mexico:

a) More trade and investment according to the Agreement's paradigms;

b) Inauguration of a new era, where the three countries could establish a more comprehensive trilateral co-operation agenda; that is, an agenda that goes beyond trade and investment.

There is a pressing need to devise and eventually agree on regional scenarios encompassing variables that go beyond issues such as trade and investment, without of course, disregarding the latter two.

There is a governmental willingness to embark upon a more serious exercise of strategic planning that could eventually result in a more comprehensive and long-term vision for our region. Proof of the latter is the Guanajuato Proposal, the Ottawa Declaration and the sum of bilateral encounters that our three leaders have sustained in the last couple of years as well as the historic Quebec meeting, where Presidents Fox, Bush and Prime Minister Chretien met for the first time to recognize common grounds to strengthen trilateral cooperation, but also to identify some of the areas on which three-way cooperation, under a revised idea of a broader North American community, could be based.

Next year marks the 60th anniversary of the Mexico-Canada bilateral relationship as well as NAFTA's 10th birthday. The year 2004 gives us an historic opportunity to celebrate of course, but also to think, rethink and exchange views on the North American future that we want our grandchildren and great grandchildren to inherit. It is up to the governments, but also to civil societies of the three democratic countries to begin a serious discussion on how we want North America to be shaped in the next 20 to 25 years. Thus, I extend you an invitation for two magnificent and fabulous "fiestas"--two enormous opportunities to consolidate Mexico and Canada's strategic liaison and to jointly design the next phase of this mega project called the "North American Neighbourhood" with a "Capital N."

Thank you.

The appreciation of the meeting was expressed by Robert Pitfield. Executive Vice-President, International Bauking, Scotiabank.