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Remarks at Mexico Chamber for Industrial Transformation of Nuevo Leon and Cintermex Luncheon

Friday, February 7, 2014

Today, U.S. Secretary of Commerce Penny Pritzker delivered remarks at a luncheon at Cintermex, and international business center in Monterrey, and hosted by the Mexico Chamber for Industrial Transformation of Nuevo Leon (CAINTRA). In her remarks, Secretary Pritzker discussed the strong U.S.-Mexico economic relationship and the progress made by the U.S.-Mexico High Level Economic Dialogue (HLED). She noted several additional priorities for advancing the bilateral commercial relationship, including border infrastructure, travel and tourism, regulatory cooperation, business investment and support for entrepreneurship and innovation. In addition, Secretary Pritzker said that the Trans Pacific Partnership represents an opportunity to upgrade NAFTA, which has defined the trade relationship between the United States, Mexico and Canada for the past two decades. The Department of Commerce released data yesterday showing that U.S. exports set new records in 2013, reaching $226 billion in U.S. exports to Mexico and $507 billion dollars in two-way trade.

Today marks the final day of Secretary Pritzker’s five-day business development mission to Mexico, focusing on promoting U.S. exports to Mexico and further strengthening the U.S.-Mexico commercial relationship. She is joined by representatives from 17 U.S. companies looking to expand partnerships and develop effective strategies for accessing and doing business in the Mexican market.


Remarks As Prepared For Delivery

Thank you, Mr. Fernandez and Secretary Guajardo.  I also want to thank our hosts:

CAINTRA celebrates its 70th anniversary this month.  Congratulations on all that you have done over the years to support a thriving business community here in Monterrey. 

And thanks to Cintermex for building such a vibrant hub for businesses and people from around the world.

I also want to recognize Ambassador Wayne, Consul General Pomper, the elected officials from Monterrey as well as all of the business leaders here today. 

We have had a terrific week here in Mexico on my first international trade mission as Secretary of Commerce.

This morning, I had the opportunity to visit a local Lowe’s home improvement store. 

As you might know, Lowe’s Companies, is based in the United States but recently expanded into Mexico with 8 stores. Here in Monterrey, Lowe’s and its employees raised and donated funds to a local school for students with special needs.  In addition, they volunteered their time to help renovate the school. Lowe’s commitment to community reflects the values of many American companies that invest here in Mexico. 

Let me be clear: U.S. businesses are here today, they will be here tomorrow, and they want to be part of Nuevo Leon’s future.

The U.S.-Mexico friendship and trust is built on strong person-to-person connections, common values, and a dynamic commercial and economic relationship defined by openness, cooperation, and collaboration.

The depth of our friendship has been evident to me and my delegation this week as Mexican companies and government officials have extended us such a warm welcome.

Today, I want to highlight the importance of our bilateral relationship, and then discuss how we can continue to grow and lead together as partners.

Over the past 20 years, NAFTA has created benefits for our companies and for our people in both countries. 

American exports to Mexico have increased fourfold.  More than 50,000 U.S. firms now sell their products and services here.

I am pleased to say that the Commerce Department released new data yesterday showing that 2013 was a fourth consecutive record year of U.S. exports – $2.3 trillion dollars. 

We reached new records of $226 billion in exports to Mexico and $507 billion dollars in two-way trade last year.

To put that in perspective, about $2 million dollars has been traded between our countries since I started talking.

Of course, Nuevo Leon plays a crucial role in that.  60 percent of our bilateral trade passes through this state.

When I am in the U.S., I remind people that it’s not just states along our border that benefit from this relationship.  For example, my home of Illinois is the fifth-largest exporting state to Mexico.  In fact, nearly half of U.S. states count Mexico as their first or second-largest export market. 

At the same time, business investment in both directions has grown dramatically over the past 20 years.  1,600 U.S. companies have operations in Nuevo Leon, and nearly half of foreign investment here comes from the United States.  Meanwhile, Mexico has risen to become the 15th largest source of foreign direct investment into the United States, supporting thousands of American jobs.

Altogether, millions of citizens in our countries have good jobs because of our strong trade and investment ties.

In fact, we no longer simply trade with each other. We build things together. 

Consider this: Imports to the United States from Mexico contain as much as 40 percent U.S. content – by far the highest of our major trading partners. 

In short, we trade with each other more than ever before.  We invest in each other more than ever before.  And we produce together more than ever before.

Therefore, the decision to come here for my first trade mission was an easy one.  Where better to go than to our close friend and neighbor – Mexico?

Seventeen companies from key industries have joined me.  Could you all please stand for a moment?

This week, each of them has built new relationships that are beneficial to them and to their Mexican partners.

For example, Mexico’s hospitals are looking for health information technology software to help organize records and manage supplies.  American companies on my delegation stand ready to meet the needs of customers ranging from blood banks to orthopedic surgeons.

U.S. firms in my delegation are also eager to support efforts to build out infrastructure and transportation links within Mexico – such as railroads.

In addition, Mexico's historic reforms in areas like telecommunications and energy could create new opportunities and bring substantial benefits to Mexico’s people and its economy.   Businesses from around the globe hope to help with that transformation.

Given all of this progress, I could not agree more with what President Obama said last year when he went to Mexico City: “A new Mexico is emerging.”  Mexico’s rise is good for Mexico and it is good for the United States. 

Secretary Guajardo discussed how we are jointly working with Canada to further integrate our economy.  And I know that we all look forward to the North American Leaders Summit later this month that President Obama will attend.  Many of our tri-lateral initiatives are also reflected in our bilateral priorities as part of the High-Level Economic Dialogue.

Naturally, the new High-Level Economic Dialogue between our countries has been on my mind this week.

I would like to highlight a few key areas that we have identified as priorities since launching the Dialogue.

First, we need to invest more in border infrastructure to handle growing volumes of trade. 

Together, our two governments are working on border facilitation through the 21st Century Border Management Initiative.

But the fact is, our border was built for just a quarter of our current level of bilateral trade.  It takes too long to move goods and people between the United States and Mexico. 

Delays of cargo at the border impact many firms that rely on just-in-time processes to stay competitive. 

With tight government budgets, we must ask these questions: How do we fund these much-needed border infrastructure projects? Are public-private partnerships part of the solution? And which projects should we fund?

These questions do not have easy answers, but to address this infrastructure challenge, we need to develop a model that is financeable and sustainable.

Second, we can do more to facilitate travel across our border.

Programs like Global Entry and SENTRI help people and goods move expeditiously in both directions.

Expanding the enrollment in these programs will help improve the border experience for all travelers.  We can do a better job of marketing and promoting these programs to our citizens and our businesses.

Joint tourism promotion – a related area – is also important.  By sharing travel statistics and market intelligence, we can uncover new ways to attract more customers to our two countries. 

There is enormous economic potential if we work together to support travel and tourism.  We should dream bigger.

Third, we need to work harder to make our independent regulations more compatible.

To address this, our two governments launched the High-level Regulatory Cooperation Council.  The Council is getting input from businesses in industries ranging from food safety to nanotechnology.  It is crucial that our two governments continue to hear from leaders like you to understand regulatory impediments.

Fourth, we can do more to jointly promote investment in both of our countries. 

The fact is, many companies from around the world are considering the United States and Mexico for their next big investments. There are many factors driving their decisions to invest in our region.  For example, sophisticated producers recognize that our supply chains are intertwined and that we build great products together, as I mentioned earlier.

Of course, we will still compete when necessary. But I believe our competitiveness as a region increasingly depends on our ability to cooperate to attract investment when it is in our shared best interests.

Fifth and finally, we have reached a level of sophistication in our bilateral relationship that allows us to focus on entrepreneurship and innovation.

On Wednesday, I met members of the Mexico-U.S. Entrepreneurship and Innovation Council in Mexico City. This Council includes leaders from both countries who are organizing business-plan competitions, supporting women entrepreneurs, developing joint projects on technology commercialization, and much more. 

The Commerce Department supports their efforts in a number of ways. For example, we are mapping out the commercial and educational assets along the US-Mexico border, starting with two key regions: Monterrey-Texas and Tijuana-San Diego.  We will share this data with entrepreneurs, researchers, and other innovators on both sides of the border… so that they can connect with each other.  

We are also working together to further strengthen the legal and tax environment in Mexico.  Specifically, our Commercial Law Development Program is providing funds to study tax incentives to promote the formation of new companies in Mexico.

In addition, in April, the Commerce Department will host government, business, and university leaders from Mexico (and other countries) to tour research, innovation, and entrepreneurship hubs in the Southern United States.  We will spotlight public-private partnerships that accelerate new technologies, attract foreign investment, and more.  We want to cross-pollinate best practices.

These five issues – border infrastructure, travel and tourism, regulatory cooperation, inbound investment, and entrepreneurship and innovation – are ripe for collaboration.

My team stands ready to work with Secretary Guajardo´s team to finalize the plans for our High-Level Economic Dialogue.  I understand that the public comment period in Mexico ends next week.  And, our commercial and economic relationship will be on the agenda for President Obama at the North American Leaders Summit.

Make no mistake: As we implement our bilateral and trilateral plans for the future, we will need continuous input, feedback, and partnership from both U.S. and Mexican businesses.

As someone who spent 27 years in business, and now has entered the public sector, I know that your voice in this process is critically important. 

Please continue to push those of us toward the actions you think will help achieve maximum competitiveness for our region.

Finally, as our bilateral relationship becomes stronger and stronger, we must also jointly lead on a global scale.

Under NAFTA, the United States, Mexico, and Canada built one of the most competitive and successful economic platforms in the world. The combined GDP of our three nations now stands at around $19 trillion dollars – one-fourth of the world’s GDP.  By 2050, Mexico is expected to become one of the world’s five largest economies, and our trilateral GDP will grow to more than $50 trillion. And, by 2060, the North American market of 460 million consumers is projected to grow to 630 million. Clearly, we are at an exciting and important moment for North America’s economic future.

That said, NAFTA itself was not perfect. For example, labor rights and environmental protections were not subject to the agreement’s dispute settlement mechanism.  And NAFTA did not address new realities such as e-commerce, the digital economy, the rise of state-owned enterprises, and more.

Today, we have an opportunity to upgrade NAFTA through the Trans Pacific Partnership.  The Trans Pacific Partnership will be a high-standard agreement with 12 countries representing 40 percent of the global economy.

This agreement can and should reflect shared values among Mexico, the United States, and Canada.

We cannot sit on the sidelines while our competitors move forward with their own agreements that lower standards and make us less competitive in markets around the world. 

Clearly, the opportunities that will flow from this new agreement are simply too big to ignore. 

Outside economists have estimated that – for the United States alone – this agreement could add more than $120 billion dollars in exports each year.  Of course, that would include products that we build through cross-border supply chains, as I mentioned earlier.

Securing this agreement is crucial to North America’s overall competitiveness and our ability to increase exports, promote economic growth, and create good jobs for all of our citizens in the decades ahead. 

We are on track – and we must continue to lead together – to bring TPP across the finish line.

Above all, our bilateral and trilateral plans for the future will require collaboration from a wide variety of stakeholders – government, industry, entrepreneurs, universities, and many others. 

All of you in this room appreciate that our potential as partners is limitless IF we all work together.

As I saw this morning at Lowe’s, our companies are an essential part of this next chapter in our relationship.

Let’s continue to weave the fabric that brings our businesses and our citizens closer together, and let’s continue to trade, invest, build, and innovate with each other to increase our competitiveness.

Thank you for a wonderful week here in Mexico on my first trade mission.