Remarks: Susan Segal Opens AS/COA's 2017 Mexico City Conference

Remarks by
President and CEO of Americas Society/Council of the Americas
Susan Segal

At the 2017 Latin American Cities Conference in Mexico City

May 23, 2017

***As Prepared***

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Carlos Sada, subsecretario para América del Norte de la cancillería; Pierre Alarie, embajador de Canadá en México; embajadores; miembros del gobierno; miembros del Americas Society/Council of the Americas; invitados especiales; amigas y amigos: quiero darles a todos una muy cordial bienvenida.

Es un placer estar de vuelta en México. Quiero darle un agradecimiento muy especial a la Secretaría de Relaciones Exteriores, con quien estamos organizando esta conferencia. Gracias al secretario Videgaray y a su equipo por apoyarnos desde el comienzo con esta iniciativa. Y gracias al secretario José Antonio Meade y la subsecretaria Vanessa Rubio por apoyarnos desde el principio.

Gracias a nuestros colaboradores: CanCham México; el Consejo Empresarial Mexicano de Comercio Exterior, Inversión y Tecnología; el Consejo Mexicano de Asuntos Internacionales; la Asociación Mexicana de Capital Privado; y ProMéxico.

Gracias a nuestros sponsors pan-regionales de la serie de conferencias en Latinoamérica: Citibanamex, J.P. Morgan, y Microsoft. Y a nuestros sponsors corporativos: Chevron, Chubb, Estee Lauder, Greenberg Traurig, HSBC, IE Singapore, Kellogg, MetLife, MUFG, PepsiCo, y Scotiabank. Y a CAF por su apoyo, y a nuestro media sponsor el Financial Times.

¡Ustedes son muy importantes para nosotros! Muchas gracias, thank you so much!

También quiero agradecer a todo mi equipo del Council que ha trabajado muchísimo para realizar esta conferencia: Randy Melzi, Ernesto Aguilar, Adan Toledo, Ana Calderon, Adriana La Rotta, y Carin Zissis. Por último, aprovecho para saludar a quienes nos acompañan virtualmente desde diversas partes del mundo a través del webcast, y agradecer a nuestros webcast sponsors, MUFG y Rassini. Posteriormente, podrán encontrar la conferencia integra en nuestro website.

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• Vea videos de la conferencia.
• Watch videos of the conference.
• Lea un resumen de la conferencia en español.
• Read a summary of the conference in English.

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Normally I would give my opening remarks in Spanish—but this morning I want to speak in English because I want to be precise and I want to be on the record not just in Mexico but also, and importantly, in my own country.

Today North America is a global powerhouse. And the North American Free Trade Agreement (NAFTA) has played a huge role in creating that powerhouse. By integrating our continent, we have lowered prices for consumers, particularly American consumers; raised standards of living; and yes, supported millions of good, middle-class jobs. In the United States, trade with Canada and Mexico supports over 14 million American jobs—and between 5 and 6 million of those depend on the commercial relationship with Mexico. Think about what that means: one out of every 29 U.S. workers has a job sustained by U.S.-Mexico trade.

Most importantly, the reality is that we are not merely selling products to one another, but that U.S., Mexican, and Canadian manufacturers are literally building goods together, through an extraordinary network of integrated supply chains that know no frontiers, with products seamlessly crossing the border 4, 5, and sometimes even 6 times before completion. And many of those manufacturers in the supply chain are small- and medium-sized companies which, frankly, are and have been the backbone of the U.S. economy.

Nonetheless, last Thursday, U.S. trade representative Lighthizer gave official notice to the U.S. Congress of the government’s intention to renegotiate NAFTA.

The trade representative’s letter, however, was also very clear that NAFTA has been successful for certain sectors of the U.S. economy, for example agriculture, investment services, and energy—which does indicate some evolution in the thinking of the administration.

The letter mentioned job losses in the manufacturing sector, which is the case but probably, in my opinion, not fundamentally as a result of NAFTA. In fact, an editorial in yesterday’s Financial Times, indicated the job losses would have been worse had there been no NAFTA. That is because of the integrated manufacturing supply chain which has enhanced the ability of North America to compete with China. Finally, loss of manufacturing jobs is also the result of technological change, which will continue to occur.

Our economy has evolved over the last almost 50 years, with manufacturing declining as a share of U.S. GDP—from 24.3 percent of GDP in 1970, to just 11.7 percent last year. By contrast, the tech sector represented a very small percentage of GDP in 1970—but rose to account for 7.1 percent in 2015. And the services sector, which also incorporates technology, accounts for about two-thirds of economic activity today.

But I want to provide perspective on the history of NAFTA—everyone should please remember that at its creation, it was considered revolutionary—something entirely new and unique.

NAFTA was created with a vision which was much bigger than just a trade agreement. At its core was a big idea for what North America could accomplish working together as friends and neighbors. For Mexico and the United States, it was the master plan to put aside generations of mutual distrust and hostility. The agreement was the mechanism to stabilize the rules of the game to encourage more trade and investment in Mexico, and to cement the macroeconomic reform for which Mexico had sacrificed so much.

In an op-ed last week, Mack McLarty and Penny Pritzker noted, and I quote “NAFTA is the wiring that connects and provides power to large parts of the U.S. economy.”

After all, Canada is the largest market for U.S. exports—taking in 15 percent of America's goods and services—and Mexico is the third biggest trading partner for the U.S. And Canada and Mexico are the top export destinations for 39 U.S. states.

There is also huge cross border investment among Mexico, the United States, and Canada, with leading Mexican and Canadian firms investing in U.S. assets, companies, plants, and equipment which create jobs across the United States.

And over the years, the three countries together have built the trust and friendship that was the very dream of those who created NAFTA. They cemented the cultural ties among our countries which existed long before NAFTA, and which will only continue to grow over the years to come.

One of the central pieces of the newest issue of our magazine, Americas Quarterly—aptly titled "Indivisible"—highlights how we see the benefits of integration in places as distant to the border as Flint, Michigan and Queretaro, Mexico. As AQ’s reporting correctly proves, the “border” between our countries is, in reality, everywhere.

Evolution and modernization are natural for every trade agreement as countries evolve and change, macroeconomic environments shift, and technology advances. Pacts between countries must be modernized and adapted.

NAFTA should be modernized to deal with today’s economy. At its founding in 1994, there was no digital economy or e-commerce—or it was just at its nascent beginning. The agreement needs to be updated to incorporate those areas, along with, for example, energy, new standards for the environment, and updated rules of origin.

But we always need to keep in mind a few fundamental ideas:

1) The cost of leaving NAFTA, in terms of growth, jobs, and competitiveness across all 3 of the countries is enormous. We need to create more jobs—not lose the 14 million jobs created in the United States as a result of NAFTA.

2) Years of trust and confidence that have been built between Mexico and the United States are very dear and very important. We cannot allow that to be undermined.

3) We all, private-sector and cultural leaders, as well as all the people of both countries whose lives depend on this, have a responsibility to ensure that our friendship continues to grow and thrive. These are the people to people, the culture to culture, and the business to business ties—we cannot just leave them to our governments, but we need to be engaged.

4) We are somewhere in the first 30 percent of our NAFTA journey. The opportunity to continue to build on NAFTA, to make North America the most competitive region in the world, is real. The results are tangible. So let’s continue to build on our achievements to make that a reality.

We at AS/COA are as committed to NAFTA today as we were at its origination. But we are also committed to the ties and friendships that have been built up between our countries over the years.

This morning, we have convened an important group of public- and private-sector leaders from across the hemisphere to discuss the current North American reality—and more importantly, our common future. NAFTA was built on relationships of mutual esteem and respect. Today we build on its strong foundation to work together towards a truly “indivisible” North America.

Ahora es mi honor pasar la palabra a mi gran amigo Carlos Sada, subsecretario para América del Norte.

Una vez más, estoy muy feliz de estar de nuevo en México.

Muchas gracias. And enjoy the conference.