Center here in washington. This runs about two hours. Mr. Wood good morning. Will you come down and take a seat here . If youre looking for a place, we are willing to sell these place at an inflated price. There are scalpers outside. Do not use them. Just give the money directly to me. Ok. Welcome to the Wilson Center. Thank you for being here. When we talked about doing an event in august, a little voice inside my head said you are crazy, its washington, no one will come. They said maybe the nafta is important enough, maybe our existential questions will attract an audience, and then we came up on bright idea of asking you to gaos chief negotiator to participate. Ken said yes, and this is going to happen. It is extraordinary. And then ken said, no, i can do i cant do it. It was not intentional. But we got a panel for you nonetheless. Let me run through quickly from left to right, as i see it. Fred bergsten, at the Peterson Institute for international economics. Thank you for being here with us. He was great to provide a riposte to some of the mexican perspectives here. That will be very welcome. Francisco de rosenzweig, who previously served at the Mexican Ministry of the economy. Luz maria de la mora, the founder of lmn consulting, and has held multiple posts within the Mexican Government. And my colleague, deputy director, chris wilson, who is known to you for his work on have to wear he was the mexican Economic Affairs and on border affairs. Very nice to see you. Theres been an enormous amount of anticipation. I first page of it says it is here. It is a strange moment, but at this time last year here at the Wilson Center we were holding a series of conversations about, well, under the new administration, how can we improve nafta . We were talking about modernizing nafta on understanding that a different person would be in the white house, because that was what everybody assumed. And we were all saying, the modernization of nafta is desperately needed, and how can we possibly do that . We have this opportunity to do it. There was a nice piece published this morning in canada that says this is a great opportunity to secure north americas competitiveness. This comes with an enormous amount of anxiety, anxiety about whether or not this can be a successful negotiation, anxiety about whether the u. S. Executive branch will stick with it, anxiety about questions of timing and political change. We also see this is an enormously context negotiation, and many in this room has sent over the past few months, how can we possibly get this done in a sixmonth period, which seem to be the preferred time period on the part of the negotiators, especially from the mexican and the american side . The canadians have a different perspective. My colleague im grateful to the Canadian Institute for providing support for us on these issues. The timing question is one of the things that i think we may run up against the question of do we do it fast, or do we do it right . Against do we do it fast or right . There could be a very important choice. Looking forward to discussing that with our panel. We have a very encouraging phenomenon of convergence between the three sides. We go back to january or november of last year. There was an enormous amount of concern of could we ever get to a point where at least we were on the same book, if not on the same page with regards to International Trade negotiations. It seems as though we have got there, which i think is tremendously encouraging. The problems,f challenges and obstacles, many of which are known, but is a number that is unknown. We do not know how things are really going to turn out if these negotiations become public. If we get a great till of by an intimate negotiation. If the certain things are tweeted. If we get a reaction from the u. S. President. Which might throw a reaction from the mexican president. We can say is, now that it is here, now that we are here, we have come a long way in six months come and i think that is a very encouraging part of the story. I am talking of coming a long way. It is worth remembering how far mexico has come since nafta was the agreement. I know this is a story you have heard a million times, but just remind us, before the nafta, was very common in mexico for everyday goods to have price controls on them, for committees to meet on a regular raises to set the prices of basic commodities. It was an economy that was run by staterun enterprises, not open to foreign direct investment. The changes that took place during the 1980s because of the latin american debt crisis are then locked in by the nafta. Those are things which we take for granted these days. It is an extraordinary journey. Another point is to remember their reforms that have taken place in mexico since 2012 are trying to build upon the success of nafta. Now we have the opportunity with nafta renegotiations to lock in some of those reforms again through an international treaty, international negotiation. So without any further ado from me, i would like to ask our panelists to give opening comments, and i will begin with luz, and the floor is yours. I know you have got prepared comments. I want you to start with some of the red lines you see from the mexican and u. S. Point of view. Then we will come to a conversation afterwards about questions of convergence and timing and complexity. Ms. De la mora i would like to thank you for inviting me. Wilson institute, center. And thank you for thinking about me. I know was a mexico scholar a few years ago, and i had a fantastic experience in this place, so it is a pleasure to be back with you. And today, i really feel privileged to be able to be part of this half the discussion. I think the nafta discussion is always welcome, and is very timely given what it represents or a countries in terms of trade, in terms of job creation, integration, also in terms of the place of the regions we represent in the global economy. It is even more timely when we think about the fact that we will see the beginning of a negotiation process that i hope will allow us to move forward towards deeper integration and a better understanding of what north america means for our three countries. Having been part of the mexicanamerican groups that took part of the negotiations thank you for being here with us. We were running around with papers trying to support the negotiators, 25 years ago. I really have to say that i would never ever, ever have expected to see a proposition on the u. S. Side to renegotiate nafta on the proposition to have to address the question of manufacturing jobs lost in the u. S. I would never have expected that it would be the u. S. Side that would have been the source of distrust and questioning of nafta like we have been presented this year. I have to say it still puzzles me to see how to address both questions, the deficits and the job questions through a trade negotiation and through half that. It will be a daunting task for canada and for mexico to sit down with the u. S. When it seems that President Trump views this opportunity as payback time and also has outlined an agenda that is clearly tainted with protectionist and nationalist perspectives. However, as duncan mentioned, i believe that nafta has has yielded amazing results. Nafta has delivered economic results beyond what any one of us expected at that time, beyond the most optimistic expectations. Nafta created a 19 trillion regional market. Every day we tried more than 2. 5 billion. When nafta was negotiated, mexico exports 10 billion a month. Now exports are more than 1. 3 billion every day. In the past 23 years, trade between the three partners went from 290 billion in 1993 to more than 1. 2 trillion last year. 50 of total stock in mexico and more than 200 billion, which to 20 of himclose mexicos gdp. I would like to center my remarks on five quick points. The first one is that in this negotiation process, mexico is not ready to be considered anything else but a u. S. And a canadian trading partner. At the table, mexico and canada are equal partners with equal rights and equal obligations. Because after 22 years of nafta, mexico is the secondlargest u. S. Export market only after candidate. For every dollar the u. S. Sells abroad, 16 cents are bought by mexican consumers. Today the United States trades more in goods and services with mexico and canada than to does with japan, south korea, brazil, russia, india, and china all together. Mexico is also the u. S. second source of imports, only after china. We account for 40 of total imports from north. Production of automobiles and electronics, machinery, and appliances have greatly benefited from production sharing from the three countries, as nafta has enabled firms to reduce costs and become more effective. My second point is that mexico should look for more and not for less now. In the early 1990s, nafta triggered a structural reform in mexico. Since its implementation, nafta has been a force for change and a transformation of mexicos economic structures and institutions. Nafta was a really transformational experience for mexico. It transformed the mexican economy and opened the door to a young democracy, after 70 years of a oneparty rule. Nafta has also been one of mexicos most important engines of Economic Growth, even the relevance that International Trade and Foreign Investment represent for our country. I can tell you that nafta is embedded in mexicos everyday life. Mexico is not ready to reverse the progress we have made in the last 23 years under the nasa. Nafta created a wide consensus in mexico that an open economy is the way to go, that we need more, not less competition and that we want to be global players. What mexico should look for in this negotiation is waste to ways to improve the agreement. There is plenty of room for improvement, and there is plenty of room for full implementation. Just take a quick glance at the history of the european integration, and we will know as long as there is a common leadership and vision, it will lead to regional integration. I can tell you in mexico there is no one single party or leader that think that it could be a good policy option to walk out of the nafta or that mexico should respond to transgressions and trumps aggressions by building a fortress. A recent survey conducted shows that close to 50 of mexicans have a positive opinion of nafta and that trade relationship with the u. S. And only 60 have a negative only 16 have a negative one. In a survey, from march of this year, 73 of mexicans surveyed oppose to getting rid of nafta. This does not mean that nafta has not yielded winners and losers. In mexico, it does mean that the overall the country has gone through a deep transformation that has opened new opportunities in a variety of areas. Mexico today is in a very strong position to push this negotiation for the establishment of 21st century reform. 20th century roles are not the way, and reversing those rules are not an option. Positionedeally now. The Structural Reforms touch upon key sectors. Education, telecommunications, energy, and the financial sector. Those reforms have placed mexico in a better position to conjure strongertribute to a and more competitive north america. This set of reforms in addition to our participation allow accident to negotiate new issue areas such as energy, services, ecommerce, or telecommunications. My third point is nafta 2. 0 could become the latest structural reform in mexico that we need. Why do i say this . In mexico, that has made it more nafta has made it more evident that huge disparities and inequalities that have characterized Mexican Development for centuries. For mexico, this is an ideal opportunity to democratize trade, and a nafta 2. 0 will have to lead to a more inclusive economy for more sectors and regions take part in localization. Today more than half of exports are done by six states on the northern border. 60 of total exports are represented by those sectors. Electronics. D and only 45 out of 5 million economic interest in mexico account for half of our total exports. A nafta 2. 0 will lead mexico to create a Better Business environment. Nafta should be the opportunity to reduce red tape for International Trade and also for business in general. My fourth point is that nafta has to stop being a negative term. Nafta has to be rethought, restated, and revalued. Pastore robert considered the north america idea was conceived as a leader of the world economy. Maybe one of the reasons we are renegotiating nafta today is that we never really took the time or the effort to socialize nafta or to explain the value of north america and how it benefits each one of us. Today probably one of our Biggest Challenges is how to restore the north american idea as a truly regional integration scheme where the three countries are better off with it than without it. However, we really need to rethink the nafta, how to reposition nafta, not as a result of a defensive agenda. Nafta and north america urgently need a common vision from the three countries that shows that together we not only add, but multiply gains in a highly globalized and competitive economy. My fifth and last point relates to what weve learned in more than two decades of that stuff. Of nafta. Nafta has offered the region a clear set of rules and disciplines that have created a transparent and predictable business environment. Nafta locked in a mexican model of economic openness, economic liberalization, and competition. Ill also want to underscore that nafta sees this mechanism, which was visionary, the mechanism for state investors, investor state mechanisms. The chapter 20 states this mechanism. And chapter 19 on trade have been without a question one of naftas most important pillars for effective implementation. The region has a lot to lose if the u. S. Walks out of the nafta. When nafta became effective, north america accounted for more than 20 of world trade. Today, we have lost room to the rest of the world. Today nafta represents close to 18 of world trade. The agreement needs to offer the kind of growth that is her heart by the 21st century economy, where global sharing is the name of the game. Mexico has a lot to lose from the u. S. Leaving agreement, mexicos largest export. Representing of mexicos gdp. U. S. Investment represents 40 of mexicos fdi. Jobs, industrial production, services, tourism, and many other activities in the region have a lot to lose if we temper with nafta. The vast majority of businesses realize how important it is for them and have made specific proposals from where to modernize and improve nafta. For many in the u. S. , the lowest possible denomination or expectation of naftas renegotiation is whatever a result it will do no harm. If the u. S. Decides to walk out of the nafta, which we hope it will not happen, it will certainly affect regional value chains, production, trade, investment, jobs, and Economic Growth. However, the agreement will still remain in place for trade between canada and mexico. If the result of this negotiation shows we can overcome this very delegate delicate situation, the three countries will still have to develop a regional strategy to safeguard nafta and north american integration. In 2014, former u. S. And general David Petraeus issued a report that makes the case for north america. They argued that the u. S. Needs to switch vis a vis of nafta from an afterthought to a central priority in u. S. Policy. The question, how do we revitalize nafta in order to strengthen the Competitive Position of the region and integrate those left behind into the benefits of globalization . Nafta countries need to develop a new regional strategy, and such strategy needs to consider a few key elements. The integration of the north American Market is the way to boost the regions competitiveness, job creation, opportunities, and innovation. We need to reconcile integration and security. Since 9 11, that there has been torn between the driving force and the breaking force to build a fortress to guarantee safe and secure borders. Border infrastructure needs to be modernized and more research is needed to be allocated. And a seamless door to door operation should be facilitated. Mexico has a demographic bonus. We have a young population. Our average age is 26. North america increasingly requires qualified Human Resources. A competitive workforce is key to maintaining a dynamic region. So we need to think about the training and development of Human Resources to meet the needs for qualified personnel in areas that did not exist 20 years ago here. I believe north americas integration will be incomplete until we find a way to sort and integrate labor markets. This is something that could take generations given the huge income gap existing between mexico and its two partners to the north. However, there are some steps that can be taken in this regard and are already part of the nafta. The late Robert Pastor in 2013 it was suggested to improve the provisions on professional services in nafta to facilitate and expurgate obtaining visas for professionals, offer them for longer periods, and create an expanded mexicanamerican worker program. I will refer to my remarks, the new rules that will result from a nafta 2. 0 may become the new golden standard of International Trade. In the early 1990s, the disciplines that we negotiated in the nafta became the stateoftheart trade rules in new areas such as trading agriculture, trade in services, investment, and intellectual property. Nafta was the lab where new rules were developed and later set out on the negotiation agenda on the wto. The negotiations that start tomorrow will be closely followed by the rest of the world. Thatules and disciplines we give ourselves in north america will offer a very clear idea of the direction that global trade may take in the future. We have a responsibility. Mexico needs nafta and mexico needs a strong nafta. Mexico will face president ial elections on june 2. We have been able to pass structural results that will yield results in the medium to long term. However, transparency, the rule of law, crime are serious challenges that are acting against mexicos competitiveness. If mexico will continue to a stronger region, we need to find sustain