Transcripts For CSPAN3 Discussion Focuses On North American Trade Relations 20170314

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Steinberg was convicted, but then his conviction was later overturned after an Appeals Court made a ruling that made it much harder to convict someone for Insider Trading. Sunday night, at 8 00 p. M. Eastern on cspans q a. The Atlanta Council hosted a Panel Discussion recently with Foreign Affairs and trade experts on the future of north american trade. Speakers discussed the Trump Administrations trade policy, the north American Free trade agreement or nafta, and secretary of state Rex Tillerson and Homeland Security secretary john kellys trip to mexico. This is about 90 minutes. Good afternoon, everyone. My name is Peter Schechter, Senior Vice President for Strategic Initiatives at the Atlantic Council. Im also the director of the asian latin american center. Thank you for joining us in this very timely event. And it is timely because 2 of the 3 members of the president S National Security cabinet are traveling to mexico this week, but it is also timely because we are in imminent danger of dismantling the north american experiment we built with mexico and with canada in the past 25 years. It is a mystery to me and i suspect it is a mystery to many of you how we got to this point of profound recrimination when in fact mexico and the north american integration experiment of the past 25 years have been a huge Foreign Policy success. Today the u. S. Mexican border is the Worlds Largest border of a developing country with an industrialized nation, and instead of tension and recrimination, and reproach, the north american experiment has fostered a stable, safe boundary, connected by trade, culture and history, and 1. 5 billion crosses the rio grande every day. Mexico and canada are now 2 of our top 3 trading partners. Nafta supports 14 million jobs in the United States. Combined canada and mexico invested nearly 400 billion in the United States in 2015. Progress is not only commercial. The past two decades created a unique era of trust between our nations that has brought unprecedented security cooperation. Intelligence sharing, antinarcotics enforcement antiterrorism security happen daily. And proof of the reality of this partnership is found at mexicos border with guatemala where at our request, mexicos efforts to stem the flow of Central American refugees take an enormous burden off our border patrol. Todays rhetoric is forcing mexicans everywhere to question the unquestionable. Did the country make a mistake 25 years ago by betting its future on north america. We saw massive marches last weekend against the United States. The leftist candidate has locked in the top spot in national polls. If we continue to antagonize mexico, we risk our neighbor turning its back on us and turning its back on decades of strategic cooperation. Today as the two secretaries arrive in mexico and in the coming months, this center will continue to play a constructive role in suggesting ways to move this relationship forward. On march 7th, we will welcome a leading candidate for president and former secretary Michael Chertoff to discuss strategies for the future. As we kick off todays discussion about the way forward, nobody can begin to do that job better than a very distinguished guest, a dear friend and somebody who knows a thing or two about trade and u. S. Jobs. Secretary carlos gutierrez. Thank you, carlos, for hosting this event. Then there will be a Panel Discussion by my colleague, jason marzak. We are lucky to have a panel of impressive experts. Paula stern, our Atlantic Council board member and former chairwoman of the International Trade commission. Peter mckay, a good friend and former defense, justice and foreign minister of canada. Finally, Rafael Fernandez de castro, professor at the Maxwell School for citizenship and public affairs. Secretary gutierrez needs no introduction but quickly he served as secretary of commerce from 2005 to 2009 under president george w. Bush. During his time there he helped advance economic relationships, enhance trade, promote u. S. Exports. Secretary gutierrez is now chair of the Albright Stonebridge group. Previously he spent nearly 30 years with the kellogg company, a global manufacturers and well known maker of food brands. Becoming president and chief executive officer in 1999, the youngest ceo in the companys 100year history. Without further ado, please help me welcome carlos gutierrez. Good afternoon and thank you very much for having me on this very timely meeting. It is a pleasure to be here with peter mckay, paula stern. I want to thank you Peter Schechter and Jason Marczak for the invitation. The discussion today is about nafta, but we know that there is a big elephant in the room thats called immigration policy. And im not going to get into that, but i think it is important that we just realize that were talking about our Free Trade Agreement with mexico and canada and the backdrop is this new immigration executive order that should be finalized very soon. I think all the details are out, but thats going to add a level of complexity to this that i dont think we are fully acknowledging. Peters going to discuss a lot of canada and the canadian context. Im going to focus mostly on mexico because it seems like that is the epicenter of whats going on here. It is important to step back. I know that were going to talk a lot about the details and whether we renegotiate or whether we update and whether it is the labor chapter or the environmental chapter and rules of origin and those are very important things, obviously. But i just want to step back a little bit because there is a lot more at stake than just the rules of origin and who wins or loses on a specific product category. Were talking about a big strategic issue. I remember being in mexico city a couple of years ago and just thinking about how the relationship has evolved and how there is a certain confidence in the relationship whereby its becoming somewhat bilingual, bicultural. There are english words that have just creeped into the mexican to the Spanish Language in mexico. There are spanish words that have creeped in to the u. S. Language, cultures, food, you name it. The relationship has never been better. This is what was on my mind. Today youre talking about a level of anxiety in mexico that we cant see from here. We hear about it, we read the papers, but there isnt anyone in mexico who isnt thinking about whats going on. So weve worked very hard to get here and that relationship today is at risk. I think what we need to understand and i trust that our government here in the u. S. Will understand this. We cannot humiliate a country to the bargaining table. We cant get a country to negotiate with us by humiliating them. Maybe in business you can because it is all about the bottom line. But you cant quantify National Pride. You cant quantify national dignity. And thats whats at stake here. And it is going to be extremely difficult. Difficult for mexico to do anything but take a combative response, take a combative position. And in many ways, it is our position and our tactics that have forced mexico into a corner and they have no option. We have given them no option. Its not going to be an easy task. And i wouldnt push mexico on that. I wouldnt call their bluff. Because you know, as well as i do, that if this means going into a recession for a couple of years but were going to keep our National Sovereignty and dignity, that will happen. And i would hate to even test it. So we are creating the conditions for a president ial election in 2018 in mexico where the winner could well be an antiamerican populist, antiimperialist. What have you. In mexico. Something we havent seen in decades, decades, and decades. That would be a strategic issue. I just we need to have the wisdom to not go for a tactical victory that down the road well realize that it was a strategic defeat. And the motivation for a quick tactical victory is always there. I just hope we have the wisdom to look down the road a little bit. I started my career in mexico, so for me, its a country i know very well. I was actually general manager of kellogg, mexico from 1983 to 1988, before nafta. I remember that mexico extremely well. Were talking about very nationalist policies. Protectionist in many, many ways. Products that are imported today we couldnt import back then. A sense that things had to be nationalistic, that not open but very nationalistic. Being on the corporate side of things, you could see the impact that that had on our ability to create jobs. 100 inflation. Lot of people have forgotten that. But during that period when i managed the business, we had about 100 inflation, on average. Low growth rates so high inflation, low growth rate. And we all remember this boom bust cycle where approximately once every six years there would be a major devaluation. That major devaluation would have devastating impacts on border towns, on border states, on jobs in the u. S. , on jobs in mexico, on corporate Balance Sheets and corporate earnings, which in turn led to more downsizing. Just a terrible vicious cycle. We havent seen that. We havent seen that for about 20 years. And that coincides with the nafta period. Today what the three countries have built is really quite breathtaking. Nafta is worth over 1 trillion. Well over 1 trillion. Supply chains have been integrated throughout it the three countries. Manufacturing supply chains and Agricultural Supply chains, going on both sides of the border, being able to get produce to the countries on time so that it doesnt rot. We know how to do that. We can do that because weve been building this infrastructure for over 20 years. Logistics operations on both sides. Computer systems. Nafta is digital. And the Computer Systems that have been also integrated across the three countries to consolidate information, all the things that you need to do, to work the supply chain, to forecast sales, to invoice a customer. Its not like switching off a light that all of a sudden nafta goes away. These are billions and billions of dollars that have been invested in this infrastructure that we call nafta. 14 million u. S. Jobs are tied to nafta. 14 million u. S. Jobs. As we approach this, we need to keep that in mind. Geographic proximity always makes a difference. And you would expect that mexico is the main export market for the majority of u. S. Companies. Let me just explain that a second. 57,000 u. S. Companies export to mexico. Of those 57,000 companies, 94 are small and medium size. So youre talking about this is the essence of geographic proximity. If you start exporting, you might as well export to your neighbor. So a lot of jobs, a lot is at stake. I was hearing this morning, just to take one example of the trickle effect and kind of the domino effect of Something Like this. We receive exports of avocados and tomatoes. Those are highvalue items. But they also happen to be in states where we have seen the drug crime and weve seen the impact of organized crime in mexico. What are those families going to do if theyre out of a job . If you cant find a job in the avocado business, if you cant find a job in the tomato business, where else do you go . So we just have to keep thinking about and connecting dots and understanding that this is a lot bigger than how much are we paying for mexican goods or how much are they paying for u. S. Goods and how much are they buying and how much are we buying. Canada and mexico are the top customers for u. S. Products. So we are were dealing with the biggest thing weve got going. The world is regionalized. We keep talking about globalization and how globalization has hurt everyone. It is still very much a regional world. The eu, in spite of brexit one of the problems with brexit is the eu is the biggest market for british goods. Why . Because of geographic proximity. Because theyre there. Today in asia, china is leading the way toward what they call rsep. Some call is asean plus three or asean plus four. The three south Asian Countries plus korea, japan and china. Without the u. S. , without the u. S. Dollar. Thats the vision. It may not happen for seven years, for ten years, but today as we speak, theyre building roads going down through vietnam, laos, from china. Theyre getting ready. So lets look at the americas. We are fragmented. Were splintered. Theres aside from nafta, theres cafta, you name it, the pacific alliance. There are a lot of Different Things but there isnt one americas. The crown jewel that we do have is nafta. And i hope that we also think about the role that our region plays as we are competing with other regions in the world. We would much rather have jobs stay here in the hemisphere than go to asia. And that is a reality. It becomes an economic reality and it becomes a National Security reality. Again, i hope we keep that in mind. Energy supply chains. We have the opportunity to see a massive shift of wealth from the east to the west if we could get our act together regionally and build Energy Supply chains. We have the oil, we have the gas. And this is the time when we can be doing that. This is a time when we can be negotiating that. By 2050, mexico will be the seventh largest economy in the world. The seventh largest economy in the world. Our southern neighbor. And canada will always be one of the most developed per capita income economies anywhere. So nafta is not only important today, but it will get more and more important. Nafta should be updated. Okay . Lets agree to that. The market has changed. The world has changed in 23 years. So, yes, the labor chapter, the environmental chapter. We probably should look at rules of origin. Think about nafta was signed before the internet took over the world. Right . So think about the digital economy. Online marketplaces. The cloud. The app economy. The internet of things. This is an area we can have, the u. S. Can have a significant advantage if we can get to a point where we can negotiate a better agreement where it is not a zero sum game, where one party wins, the other party loses. Thats not what trade has been all about. It has been about growing the market. So i think the question that i would hope that were asking as we go into these talks, whenever they start to happen, how do we make nafta stronger for all three countries. And how does north america better compete with the rest of the world. Those are really the two strategic questions. Everything else i think is tactics and politics and, you know, sort of appealing to the political circumstances in individual countries. I think we should be working on Bilateral Agreements with mexico on immigration. We should be working on Bilateral Agreements and trilateral agreements on border security. I had the opportunity to work on a major study that we did to come up with a Bilateral Agreement for lowskilled workers from mexico. Because right now lowskilled workers have to go to a black market. So were essentially just outsourcing the labor that our Companies Need to a black market. Why not negotiate some kind of an agreement . Those are the things that i think are possible. Those are the things that i think we should be focused on if we have the right attitude. And not this idea that were going to win and theyre going to lose or were going to show them or, you know, were going to put our foot down. We know from history and history looms large in our relationship with mexico that thats not going to work. So i want to thank all of you for your interest in this. I want to thank you for your leadership. I want to thank you for your commitment. But above all, i hope that we can be a voice of wisdom as this process starts. Because theres an awful lot at stake. Not just for next year but 10, 20 years down the road. Thank you very much for being here. It is a pleasure. Thank you. Thank you, secretary gutierrez, for taking the time and to be with us today. Secretary, for your important leadership on this topic. It is such a pivotal moment. Thank you so much for your comments and your insights. Thanks to all of you for joining us today for this incredibly timely and important discussion. Im Jason Marczak, director of the asianamerican economic im going to be capping our discussion today with the three esteemed panelists on the stage. The timing of the discussion today couldnt be more on the mark. Tonight secretary of state Rex Tillerson and secretary of Homeland Security john kelly will arrive in mexico with an objective of trying to calm the waters. Im sure we can all guess what will be a part of the topics in tomorrows meetings. Security, migration, the economy, border issues. But of course this will be against a backdrop where a once constructive relationship is now under threat. Politics, politics especially on both sides of the border now, will be as important as policy or potentially more important. Finding common ground. It comes just over a week after Prime Minister trudeau came to washington, a visit that again raised questions if one potential casualty of this new u. S. Approach could be broader north american integration. That would of course be a huge loss from u. S. Jobs lost to our strategic footing weakened. Intertwined with the three north american economies simply keeps us safer as we will discuss today. We have an allstar panel to do that. On your right, peter mckay. Peters someone who ive had the pleasure of working with for the past few years. I can say that every good thing youve heard about peter is correct. He is one of canadas premier thought leaders who has held an impressive number of posts in the canadian government. This includes serving as minister of defense for six years and minister of Foreign Affairs for a yearandahalf. Most recently he was minister of justice until november of 2015. Peters currently a partner in the Baker Mckenzie toronto office, a firm with which we have had the good fortune to collaborate with on a number of different conferences and events. Thanks for coming out for this. Paula stern is the founder and chairwoman of the stern group which she founded in 1988. Shes also truly a wealth of knowledge and im privileged to call paula a Dear Colleague as paula serves on the Atlantic Councils board of directors. As far as trade goes, it is hard to find someone with both the experience and expertise of paula. Thats why shes always one of my first calls on any trade related matter. Paula served as chairwoman of the u. S. International trade commission and as commissioner for nine years analyzing and voting on over 1,000 trade cases. Involving a broad range of industries and issues. Next to me Rafael Fernandez de castro, professor at both mexico city and etan and Syracuse Universitys Maxwell School of citizenship and public affairs. Rafael, you are really the ultimate expression of a strong u. S. Mexico relationship. Ive had the pleasure to know rafael, worked with him for a number of years. He is a prolific writer as well, having written coedited more than 30 books. Rafael was also a Foreign Policy advisor to former president felipe calderon. Thank you all very much for joining us. Heres what were going to do. Were going to spend the next halfhour or so taking a deep dive on a number of different issues beginning with tomorrows meetings in mexico, then moving on to north american linkages as a whole. The future of nafta. Short to longterm repercussions of todays environment. And the path forward. And we are going to leave plenty of time for questions from everybody whos joining us here today. It is a lot to cover. Ive asked the panelists to keep comments short and warned that if the comments go long ill jump in to keep the conversation flowing because there is a lot of ground to cover. Start off with tomorrows visit that both secretaries arrive in mexico city tonight. Border security, Law Enforcement, cooperation and trade are going to be at the top of the agenda with our counterpart meetings in mexico. Theyll meet with president pena nieto as well as secretaries of interior, foreign relations, finance and national defense. Perhaps, peter, starting off with you. Given the new low in the relationship, and i think President Trumps personal interest in driving this agenda, what do you think can be realistically accomplished at this point . Well, firstly, i think i want to thank peter and yourself and the Atlantic Council for the invitation. Firstly, i think its been clear to us from a canadian perspective that the president s quite serious criticisms of nafta have been very much aimed undoubtedly in the direction of mexico. The visit of President Trump with Prime Minister trudeau here last week i think demonstrated that, that the word that he used was tweak. Not tweet. Tweak. When it comes to the relationship. People jump when he tweets. With respect to the question and this upcoming meeting, i think it is an opportunity to maybe step back and the u. S. Officials, tillerson and kelly who are going, have an opportunity to hone in on legitimate concerns around security. And i think if they go back to the basics of the security as being perhaps the primary concern thats been expressed by this administration, that may allow them to, i dare say, rethink some of the rhetoric, particularly around the wall. I fully expect well have a discussion on the wall. And at the same time i think it will allow mexican counterparts to make a very strong case for the continuation of this unprecedented relationship here in north america. How integral it is to the success of all of our countries, from an economic perspective, but from an overall quality of life perspective. Lets go back to basics here. To make America Great again, you have to make nafta great again. So i agree with many of the comments all of the comments, frankly, of secretary gutierrez who spoke of the need to modernize this agreement. So i think this opening salvo in this visit tomorrow is a tremendous opportunity to recast what has perhaps been a wrongfooted approach and go back to the basics of security, improving some of the concerns that do exist in an agreement that is 23 years old when it comes to nafta, and not retrench or double down on some of the rhetoric, but really hone in on just how important nafta is. And i know that that was part of the approach that Prime Minister trudeau took last week when he was here. On the trade front, the secretary is not part of these discussions tomorrow, so what do you trade is in addition to the wall and border issues and Law Enforcement cooperation is obviously front and center. What do you see being realistically accomplished tomorrow on that level, whether its behind the scenes . What do you see as far as potentially public statements that could come out . Obviously taking into account that the folks that are traveling from the u. S. Side are Homeland Security secretary and our secretary of state. Im glad you asked about trade, because we heard about one elephant in the room, which was immigration in the opening statement. But i really think the elephant in the room is trade. So maybe there are two elephants here. It is a big room. The fact is the president of the United States of america ran successful on a trade agenda. He said two things that he wanted to get done. One, he wanted to reduce the trade deficits. And the second, he wanted to throw out those dumb agreements that were made by stupid officials. And nafta was numero uno on the list and said on day one he would move against both the nafta and the tpp, the Transpacific Partnership agreement, which had not yet been ratified by congress, but had been negotiated. Now, he did that with the tpp and with nafta it is very clear hes had discussions already with the mexican president. Those phone calls and personal conversations went badly. And i think the mission of the two secretaries from the United States who are going there, tillerson and kelly, is to try to smooth and deal with the backlash, the nationalistic backlash, which is making president nietos position even more difficult to negotiate a new nafta. So it is one is to just kind of smooth down the feathers. Other thing i would like our secretaries to do in this visit is to put the trade issue in a context, and i think we should do that here as a matter of fact as well as thinking folks. Trade agreements are a subset of trade policy. Trade policy is microeconomics. What drives the trade deficits, what drives the disruption that comes from competition, globalization, technological change, which has affected our voters, and disaffected our voters, and made them anxious is all these other matters that are both Macro Economic as well as technological. And so we need to put this nafta agreement, which is old and needs fixing, into a proper context. Economically. Otherwise, we are as a as a nation, and with our neighbors, canada and mexico, will find ourselves in an impoverished reduced state, lower growth, lower productivity, and we will not be gaining on the competition with the rest of the world that we had enjoyed. I think you make an excellent point of what can be accomplished by tillerson and kelly specifically with regard to trade and one of those is smoothing over, you said, nationalist backlash. You cant humiliate a country to the bargaining table and cant underestimate National Pride in mexico. I think also important to emphasize these are two men who know mexico very well. Who have deep relationships with the mexican government, from secretary tillersons time at exxonmobil and secretary kellys time as head of the u. S. Southern command. And these agreements are also strategic agreements. First agreement with israel, not because of the importance of the israeli economy to the United States, but the strategic imperative of that. Rafael, paula mentioned the political environment that exists in mexico now, the political environment that secretary tillerson and kelly will see when they arrive in mexico city tonight. If you could compare the political tenor between the two countries now to a past moment in this relationship, what would that be . And is there is there historical precedent for their point in which the relationship is right now . Let me start by saying something about my recollection of newly appointed secretaries in the u. S. I remember vividly i was working for president callderon, napolitano came to mexico. Few weeks later, Hillary Clinton newly appointed secretary of state came to mexico. The meetings went very well and they were key for the good communication between Hillary Clinton and our foreign minister and also with president calderon. The visit of Hillary Clinton was amazing. She came very well prepared, and the meeting would solve a very important issue. We were getting some helicopters, blackhawk helicopter for the mexican military, they were coming in 2014, president calderon was leaving office in 2012. Thanks to hillary, the helicopters came that year, 2009. This helps a lot, especially to understand the complexities of this. Were the friend, were the ally, the ally, not the enemy. Im pretty sure both secretaries will come to mexico and they will understand they already are getting prepared the complexities of the relationship with mexico. I will say i never thought in my lifetime i would see what im seeing. Trump has been amazing. He has created the perfect consensus in mexico, from the far right, to the far left, we all hate mr. Trump. He made mexico a political pinata in the election. He made our heroes, the migrants, he called them things. So i will say, if you want to do a comparison, i would compare him to ambassador wilson in 2011. This is in the wilson in 1911, he was ambassador who plot against the mexican revolution and he plot against the assassination of francisco i will say we compare him with mr. With president polk, who sent the u. S. Troops to invade mexico in 1846. I have never seen this consensus in mexico. Mexicans are rallying around the flag and, yes, i mean, there is two politicians that have been of trump. And there is he has increased several points, i will say president nieto has also received a push. Why . Because trump is the public enemy, not only that, i will say nieto has to find a sense of purpose. He has given the u. S. mexico relationship a sense of urgency. He made a very important change in his cabinet and i will say hes focused. He has purpose. Hes doing fairly well. This is the end. Were in the five year of his administration. The political times are coming to mexico. I would say nieto, they have benefited a lot from the way mex cans hate mr. Trump. Perhaps unleashed a variety of forces. For folks who dont know, the president ial election will occur in mid2018. I want to underscore throughout the history of north america, mexico, canada, the United States there have been other polarizing figures. Lets be honest. This may be a new standard. But personal relationships in politics, personal relationships in politics matter in the extreme. Following on your example, i recall early days in my tenure as foreign minister, meetings with Patrice Espinoza and secretary rice. And there have always been outstanding issues, water issues between canada and the United States, trade issues, soft wood lumber and similarly with mexico. But the ability to sit down and have an open, honest discourse, develop trust among ministers, not only from the very top, but lying departments, u. S. Governors, mexican governors, premiers in nova scotia, chambers of commerce, those relationships matter as well. And so i dont think at this early stage we should sound too much alarmed. Yes, there has to be pushback. Yes, the early signals and the list of priorities that President Trump has put out there, particularly around trade, are cause for alarm. But i think youre going to see in the coming days and tomorrow maybe a good example of how these ministers make a connection with their opposite number, and allow people a little breathing room to step back from some of these positions because in my estimation, we have to move away from the personal and back to the practical about what is going to pull the economy forward, collectively in north america, because of the tremendous competition that we will face from asia pacific and other parts of the world. We have seen, you know, events like brexit that have also caused tremendous discord in and future elections obviously in the European Union pose that threat as well. But theresa mays visit, with President Trump, is an example of a relationship that could be rekindled in terms of the u. S. Great Britain relationship. I think it is worth mentioning that the united kingdom, now as they extricate themselves from the European Union through brexit, there is a lot of unknowns, but there is a possibility to renew and perhaps establish trade relations with Great Britain from mexico, canada and the United States. So from every situation comes opportunity. There was a very good piece today by the mexican team, i will say the foreign minister and the trade minister went to canada and there is great news. Apparently the Canadian Foreign minister said, yes, we will go trilaterally. Very well received in mexico. So, again, this early visit matters. And that is important. Paul pa a quick followup there was a lot of concern after the visit about where relations might the lack of reinforcement of the importance of north america as a whole and the freelance statements about nafta negotiations must take canada, mexico, wont want to negotiate separately with nafta. Were seeing different signals from the canadian side. Thats right. There was tremendous anxiety in the early days of this presidency. This visit was watched very closely, you know, our Prime Minister removed with his arms and legs in tact, and many people, you know, a lot of rhetoric about this being bam b bi meets godzilla. There was a collective sigh of relief. However, there were signals still about nafta that was there, concessions of concern around the border. Well deal with them over time. I think thats thats the reality. We have to get down to the hard facts, the tremendous advantages that can be laid out in very specific terms of the agreement. And you know modernizations around things like dispute resolution, mechanisms, rules of origin, those things can be and should be dealt with because of the many changes that happened since this agreement was put in place. Paula, there the value change integration that occurred in north america as a result of nafta has is not discussed as much, but allowed our Global Exports to be more economically competitive. So what are the risks to the United States if we break this up . What does this mean for china and for chinas position in the world with a less competitive unified north america . Well, the integration, which has occurred, occurred and acce facilitated by the nafta really started with u. S. Canada on the arnolds agreement which became a u. S. Canada agreement generally. It is all dominated also, the nafta considerations, u. S. , canada and mexico got into the final nafta. What we have seen is a dramatic shift in which the Automobile Industry in this country was battered by japanese competition were able to steady itself. Engaged and not only using the naftas rules but during the same periods saw the increase in technology which allowed the supply chain to span the borders very quickly. There is no question that technology has had a enormous disruptive effect on manufacturing jobs and even in the United States and canada of similar situation. We in the United States, our manufacturing production is higher than ever been. The number of manufacturing jobs is the lowest since the end of world war ii. Right. What you are seeing is a shift and the shift also was occurring in mexico. You saw mexicans who had been eating out a living, agriculturally on small plots being attracted to new factories what were being invested in mexico so that the combination of the technology and the combination of lower wages in mexico for these feedbaactory j saw the capability of au Auto Industry and other manufactures to compete twith te tigers of age, japan and south korea and taiwan and etcetera, so that has been i think a tremendous north american success. Meanwhile, agriculturally, and agriculture in the United States ensures a great surplus. We export around the world but in particular these are mexico. Thats being if you will jeopardize by the future of whether well have a nafta agreement that all three nations can agree to. So we have seen, you know, a shift thats technological or as well as lubricated if you will by these nafta agreements. And it is gifted millions of people economy. There are canadian au autofactories operating in mexico very successfully. Also, it has improved labor standards across the board and a big impact of bringing people into a more modern, more lucrative quality of life in terms of how they can employ themselves and feed their families and contribute to communities. We did not deal here at home in the United States adequately with the disruption and the acceleration of the disruption that comes about the technological go ahead. I would say that, nafta, had a lot of spill overs into mexico and the relationship and i would say one of those was environmental norms because of nafta, metroplnafta started to implement environmental. It is not only about trading or jobs but dip employlomas. We decided to move our embassies from the 16th street. We now have a nice cultural institute. To signify that we are close to the white house that we are here to affect this issue and all that is at stake now with mr. Trump. With one of the big challenges on nafta of the fact that 14 million americans whose jobs depend on nafta. The integrated nature of supply chains that any time of this eruption it is not just the making of this stuff. It is also delivering and servicing and and so railroads. And so it is a the services as well as manufacturing which also go into this whole component of a healthy north american economy. Yeah, i want to get beyond economics. In the interest of time, just drilling down a little bit more on nafta and the current environment secretary gutierrez mentions not being able to humiliate the country and the National Pride thats unleashed in mexico as a result of discussions. What can be some of the points forward for modernizing nafta especially this current political time text. Yes, i think that the political context is about jobs and as long as we can see that even though there is increased productivity that comes about and as long as we have a system in place for helping those who were inevitably disrupted by change. It think it can be a win. But, problem is i have said that we have neglected that. We have not talked about human capitol. So what trump really managed to tap into was this neglect and i have not seen by the way however the president talk about this. And i think that no matter what you negotiated and whatever the terms of the new nafta might be, he has got to wrap it in to adjustment plans for retraining and Community Colleges and Digital Literacy and all the kinds of preparations which these, his voters and as a nation as a whole. As any case in any country but we are if you will we are setting the pace now and this is what trump has put as his number one issue to negotiate these trade agreements. I happen to believe that you can take this old 23yearold agreement and really pull out the things which were way too controversial from the ttp negotiations. Twelve nations negotiated and dominated by canada and u. S. And mexico making up if you will at least a third of the ttp countries. They were able to agree on new rules on environment, new rules on labor. They were able to agree on new rules that had not existed with regards to services and electric property and digital trade and all kinds of matters that had not even been in our minds or adequately politically geled in our system a quarter century ago. I think that the president frankly can make lemonade out of lemons and quickly borrow where you see the agreements already and really come out and say i have thought of the future and i am not just thinking about voters who were disrupted because they had some jobs and manufacturing and they did not come back in productivity. Of course, you could not mention the word and any of these coming from the ttp negotiation themselves. Pete e let me ask yr, let me question. The ttp anyway thagnegotiati prolonged and protracted, similarly, of canada a long process of nine years in its final format. What that tells you though is an important and unspoken the truth that in all of our country, mexico included that we have very capable professional Public Service who have their agame when it comes to trade discussions ready to engage. That helps in the detail mature real, not fake news, discussions about trade. And i think thats going to be very important. You cannot negotiate these things in 147 characters. It has to be done or 140. Right. Or 140. What i am saying is that we have some really capable people other than just, you know, the political figures wholl be involved in these discussions. I have a lot of confidence having spent time in the government in those individuals who are engaged and serious and doing a lot of the heavy lifting frankly out of the glare of the public eye, i think when we get back to all of these important elements in considerations, we are going to be able to make those improvements. You are right, peter. The mexican team have a lot of experience and some of them been there there are 25 years. He has a lot of experience. Then he went to politics so now hes a senior politician as well and hes a great administrator and they were negotiating ttp. Sometimes off and onto balance u. S. Power so it seems to me that that way to remaining trilateral is so important. Canada plays an Important Role here. Canada pivotal because this will set the stage for the next 25 years or 50 years. Whats our trade aing architect. Canada is so important and plays such an Important Role. I think of sylvia ostry who left the charge for so many years in elections, to ensure that canada was part of the quad. What was the quad . That was u. S. , japan, europe, and canada, that push if you will many of the rules of the road at the world trade organizations and its predecessor. Those rules of the road have brought us to the kind of economic levels that we have had today. Again, i want to emphasize that is not enough. Each of our nations have to worry about those who were disrupted by the turbo charges of Economic System that we are in, new Business Models and new digital world. But, on the trade side and thats why i say is just micro economics. It is essential but it is not enough. Trade art techitecture is th. He attended the meeting yesterday and attended by the mexican force secretary and freeland spoke positively saying there will be difficult negotiations as they were in the beginning. Yeah. I do come back to an often referred security of trump in trade. Thats taken on a whole new meaning. Canada has this rg 7 relationship in america and nato relationship. We have tremendous ties with mexico that goes back to decades as well. You mentioned the autopac. This is a relationship that has been cultivated and i put a lot of faith in the leadership as well as those professional Public Service and not only nafta but the reign treaties would not have happened if it was not for the personal relationship of reagan and ry ryan there is a lot of folks in the room who are familiar of the what the Trump Administration wants out of nafta and modifications. From the canadian side as well when nafta is opened to modernizers, there are a number of things thats not serving canadas interest as well and canada is going to fight for changes. What are some of those . Well, one of them i suspect will be asset to Infrastructure Projects thats presented. This is yet to be really unpacked in terms of how theyll impact the american economy. There seems to be a lot of indications that there will be prescriptions placed on mexica mexicans americans. Theyll need labor. Other products will be part of building the infrastructure that President Trump has spoken to. Lets not forget that hes a businessman and a contractor. I think he owns a golf course. [ laughter ] hes going to one or two at least. Hes going to come quickly to the realization that he cannot do it alone. We have seen it broken down. I guess putting on my justice hat for a moment, it strikes me that holding back to the independent mechanism thats entrece entrenched in nafta and going into courts may not be the best idea. You have to be careful of what you ask for. The independent arms of resolution and mechanism thatha worked well overall. Changing the rules of the game significantly at this point is where well get bogged down. If it is tweaking and updating and modernize ing and including things like ip, those things can be worked out. Rafael, what are some of the the u. S. Mexico relations far beyond nafta and intelligence sharing and cooperation at the u. S. Mexico border as well as mexico guatemala border and el chapo was extradited to the United States just a week before President Trump took office, huge cooperation at the agency level and we are talking about governor and mays and mayors an whatnot. What are some that mexico can potentially play to hold these positions with regards to nafta distucussion discussions . It really has become a series of america. The levels of violence in el salvador is like syria. The lack of Economic Opportunities is like syria. I believe that mexico is the essential part of the u. S. To try to control that problem and improve it. Lets put it this way, the last two years of what we call more are trying to come to the u. S. Than mexicans. So far out of ten Central America trying to come to the u. S. And mexico deporting five and u. S. Deporting three and two are making it into the u. S. Mexico is the key ally, strategically, i dont see a way for the u. S. Coming and try to then i would say economically speaking, i will say especially the four boardrd states, california, nucleew mex and texas, those four states have made 25 of the u. S. Economy. California is huge. So i dont see those four states without nafta. Seems to me, the border states will come and believe time will help mexico. Thats how we see it. And so far the narrative is that well take time. In canada, we hacanada in the 1 was a champion in globalization. Because of canada we have annexation closed. Canada was the champion and nowadays, i am sorry, we have al also, he posted visas at a terrible time in mexico, 2009 in the age of crisis. By the way, that was not north american crisis. The number of peop if you looe map and you look at the cities with more than five people infected, you will see that north america was all in red. Why was that . Because of the connectiviity of canada and u. S. And mexico. Because of activities there. There is some conservative people in canada and there is people that they prefer bilateral way. To me thats short sisighted. Nafta, there were about only 40 agreements. Now, the world is basically trading in the United States speaking. So north america could be very strong if the three remaining there which we dont know yet. I know there are a lot of states to canada. I believe that we have a lot to gain of canada and mexico and trying to balance mr. Trump. If we dont remain together, i dont think well have the power. Rafael, you mentioned border states support millions of u. S. Jobs, the latin america her here and other things and one of our tiles that we saw not only those four border states but over 30 states have mexico as number one or number two trade. I think you should put agriculture. I dont think we have talked about it. Thats my question. I want to open up to questions from the audience. Please start thinking of questions, i want to make sure we have time to address the number of questions out there. Paul, my question to you is industries in the United States, what would be the united statin the United States that suffer greatest of any type of breaking apart of nafta or from living bilateral of mexico, how would this, you mentioned agriculture, what the effects of the American Workers . Thats two Different Things. Because i really wanted to emphasize that when it comes to manufacturing, the numbers of jobs in a successfully global sector will be reduced. Well see robots where it might have been people before. You will increase and see increasing production and shipments and exports. But, you may not see the increase in jobs in those particular situations. L electronics. We see it everyday. Factories that are assemblying and value added as well in mexico but often with the semiconductors and high values added input maybe reflected of american u. S. Values, i should say coming across the border and not just once but two or three different times before you finally see the assembled product. So if you disrupt that, i think we basically as a continental economy will lose to competition in asia. I think thats across the board. And as far asing agricultural goods, we heard from texas cattle men, you said if you wait long enough, you will start to see others pushing back. You already hear texas cattle men who got their cattle on the other side of the border, and moving back and forth and coming back to the states. Like wise, of course, corn and we are already seeing the threat to our agricultural sectors here in the United States and representatives speaking out and speaking up now, concerns that mexico is indeed shopping are argentina, brazil shopping for the corn that has been really responsible for much of our exports and our export numbers. So they are not many jobs again particularly in the agriculture area. But, i dont think we can afford to shoot ourselves in the foot if you will by unwhining all of the progress we have made. Yes, there needs to be done to deal with anxiety and yes, we can upgrade the trade agreement. We should i feel be seeing this as an opportunity to expand and not come back with questions. I want to give a quick word and open up to questions. Thats not to say that the u. S. Congress and senator are going to have a lot to say about these negotiations. Constitutionally, they are entitled. Absolutely, pillars of checks and balances in your country are very strong. One of the areas we have not touched on is energy. This affects all three countries in north america and being energy and dependent in america is one thing. In my view it should be the goal. The way to achieve that is closer cooperations and that includes closer cooperations around Climate Change and the environment and mission standards because you know we have yet to see what the president is going to do and with the Climate Change. It is a clear signal thats coming already that there is a backing away from that and as we saw of kyoto, thats problematic. If we are not holding to account china and pakistan, india, and ourselves, we better be working together on that. Going in alone in that area is a disaster. And energy, u. S. Energy export to mexico could in of itself erase the trade deficit. I am going to stop the panel for a moment because we have questions from the audience here. I am sure we have many. There will buy microphones circulating. If you can introduce your name and question. I will take three questions together. First here in the second row. If the the key political problem is jobs, is there within nafta the capacity to raise additional revenue to invest in the skills retraining which we need to meet the newer economy . Thank you. The next hand in the middle of the third row then i am going to go to you maybe on the tenth row on that side. Hi, inside u. S. Trade. How will the idea of negotiations of nafta bilaterally, how is that negotiation going to happen. Is that a realistic deal . How can you deal with issues such as rules in that fashion. There is also been a lot of talk about other issues. Is it possible to that those others are poisoning the wells in terms of negotiations that they over shadow and any possible updates for that . All the way back on the right side. Kirk with clear view strategy group. I want to ask a question, from the mexican point of view, there are a lot of concerns and wage growth over the past 20 years have not been adequate. The flip side of the job, equations there is lack of wage growth. How would renegotiations address that . Thanks kirk. Let me start off with paula. There is a question of capacity of nafta for funding for greater work capacity building. The question on the impact of bilaterals rather than mull lateral and kirks question of the lack wage growth in mexico. Lets start with you, paula. You are right to put this togeth together. The need to deal with the adjustments that come from trade, there is never been if you will a tax that has been put aside and the talk about the wall and how the wall that President Trump wants to build, he has suggested that 35 tariff on mexicos goods that he could pay for the wall if you will. That means you are taking money out of the American Consumers pockets when you take it that way from taf rriff. What your challenge is to congress and president when it comes to allocating funds for th this. There are many excellent proposals that academics have made dealing with wage insurance or various ways of assisting those who were impacted not only changes of trade but changes from technology. Congress has never shown a willingness to allocate those funds. We as a nation thinks that the individuals should deal with disruptions. I happen to believe thats brought of the toxic situation that we saw in this last election, and i think that bigger competitiveness agenda, the bigger bargain is something which i think you have to turn back to President Trump and ask now what are you going to do in addition to just going back to the trade negotiations. You got to remember the role of the consumers when it comes to allocating a new tax or tariff. You want to answer the question on bilateral . I dont believe in the readingrea reading of canada u. S. Brought it up to nafta in 93. It envision ed the impact of technology. That sector and number of jobs and as the secretary says, this is an area of modernization and it should happen and will happen, thank you by the way, Woodrow Wilson did remarkable work on these issues. On negotiations, the signal that came clearly from foreign minist minister freeland yesterday that we are not going to throw mexico under the bus. This is not a alone bilateral and however, making that declaration, it is easy to make that declaratory statement and the concern is for the president to prefer the state of preference in trade negotiations. Going back to square one, he wants to win. He wants to come out at least 51 of what is negotiated. If that means starting over here and making extreme statement to get back to middle ground, thats a negotiating tactic. Thats not new. It is certainly part of the personality and hes going to negotiate canada and mexico is going of to come to the table with facts and let the negotiation begins. Let me say two things. There is american consensus in mexico that if trump were to denounce nafta, it would not be the end of the world for mexico. Why is that . Because well have the appeal. For mexican exports of ties between the u. S. And mexico will raise mostly 3 . It is not the end of the world. I mean it works both ways because then the u. S. Before general motors, out of business. So thats why. Second thing, you are right, the gap between mexicans and the u. S. Have not been bridged. It has not done much. If you take another index you will see that mexico is reaching the gap between the u. S. Why is that . Education has increased a lot in mexico. And also, health. About 95 millions of americans are covered. Important Health Insurance so this is a new mexico and also because of that, you will see it and there is been a lot of mexicans coming back, some of them are willingly because of deportation and if you dont have health here, if you dont have services here, they better go back to mexico. That helps to explain why in the last seven years there is zero net migration of mexicans into the u. S. The good mithing about r negotiations of nafta, we have to have good relations with t m them. The mayor of mexico, hes been talking about raising the minimum wage. Hes getting some where. For now, you listen about this from every single political side. You are finally listening of the treasury minister of mexico talking about this and we know that we have to bridge that gap. We know thathave to change tha. Then we believe that we have to obtain nafta and we can see this as an opportunity for updating that. But, i would always say, nafta helping to lift the boat of all americans. And given the nature of two companies thats different from the get cko. Lifting the boats of mexicans, help the United States and helps north america. You want a prosperous country so i think thats important to take into account. Mexican education, you have more engineers who are graduating in mexico than you do in germany. There is significant educational advantages in technology. We did a report at the Latin America Center last year of innovations in guatemala. There is a lot of interesting things that are happening. We have four minutes. We are going end on time. I am going to take two questions, mid way and third row, sir. Well take those quickly. Thank you, simon from control risks. What is achievable . What is achievable in terms of negotiations and not just taking nafta into account but the broader immigration and board of Security Issues and the liepgt. You cannot you cannot focus on nafta and the two is intertwine and the context of political objectives of u. S. And mexico of any negotiations and also the time frames available. We talked a little bit but the Election Campaign in mexico starts and earnest very soon. Thats having a huge impact. What is it generally achievable as a result of that. Thank you. In the third row. I am from the hill, i will make this quick. Is this jumping the gun or is this getting a head start . Okay, rafael, i want to start with you. Keep your response to 30 seconds. Well, what i would like to say is that the mexican labor here, they are under a lot of pressure. This is a sharp difference from the 1990s. We have a unique party system. Nowadays he used to put a bill about about the corn that we import in the u. S. He said that we have to be careful with mexico. Again, there are ways for mexico to proceed and there is consensus that we can leave. This is a position of mr. Trump seem to me that mexico have response we know we cann leae and survive without america. Whats achievable . The fact that President Trump taught us that again, you know, he or she shapes the debate wins the debate. He made this election about trade now hes making it this discussion here today about a trade agreement. I believe that with enough people in place, Civil Servants and skilled people that we can see as i said earlier, eliminate out of lemons. The president is going to increasingly have to hear from members of congress who in turn are hearing from their constituents how they are being impacted and for the first time and a long time, the ceos had become incredibly spoken about immigration about this h 1 bv system stuff and the Tech Companies and financial companies. We got to see the same ceos Start Talking as long with the agricultural multi nationals about what this can mean if we do not get a success out of it. They have been very silent. Peter, i will give you the last word. The world of nafta. I agree with the fact that you know all three countries are going to go into these negotiations with their own very specific issues and on some things, we may have to part company. But, that does not under mind the fact that the overall agreement can be improved. Security is not inseparable and immigration and labor mobility. This is why canada has a diversify relationship under Steven Harper he negotiated 30 something trades and allowing the country of 37 Million People and having access of 5 Million People european economy. Thats not to suggest, we can go alone but it is to suggest we need to diversify your trading relations. Thats what mexico is doing as well and ttp is dead for the United States is not dead for canada. Other trade relationships that can factor into this as well and including bringing in the uk into the relationship now. I want to thank our colleague and pof this event together and as well as the Latin America Team and i thank secretary gutierrez and for your leadership on this issue and my colleague opening this event and this incredibly allstar panels here. Thank you. All of you thank you all of you for joining us today. This is an issue thats incredibly important for the Atlantic Council at the Latin America Center and well have events and bumper to bumpof pub importance of mexico relationships of north america. Thank you all for being with us. [ applause ] judge gorsuch has his confirmation hearing is coming up, it is scheduled for three days. Well have it live for you starting on the 20th on the c span network. George gorsuch is born in december 1967. In case you missed it. Here are some clips of cspan programming this past week. Nominee of Rod Rosenstein before the general committee. If we dont charge them on the crime, wie have to responsibility not to. From the senate floor. Dick durbin on President Trumps revised travel ban. This includes cosmetic changes but these changes dont alter the fact that President Trumps travel ban is still unconstitutional and