MEXICO'S EXPANDING TIES TO ASIA

C O N F I D E N T I A L SECTION 01 OF 02 MEXICO 003378 SIPDIS SENSITIVE SIPDIS E.O. 12958: DECL: 06/19/2016 TAGS: PREL EINV MX SUBJECT: MEXICO'S EXPANDING TIES TO ASIA REF: A. SEOUL 1298 ¶B. TOKYO 1960 ¶C. BEIJING 7118 ET AL Classified By: Acting DCM Leslie Bassett for reasons 1.4 (b,d) ¶1. (C) Summary: In the wake of A/S Shannon's visit to Asia post met separately with Japanese and Chinese embassy and Foreign Ministry (SRE) officials, all of whom welcomed increased consultation with the U.S. on Mexico's relations with Asia. Japanese diplomat Noriteru Fukushima echoed Tokyo officials' (ref B) satisfaction with the Free Trade Agreement but noted a similar agreement with Korea was pending. Embassy of China Political Counselor Shen Zhilang commented on the rapidly expanding exchange of visits between Mexico and China, but acknowledged the China-Mexico BiNational Commission meeting held in May had been long on agreements and short on real programs. SRE Director General for Asia Julian Ventura explained that Mexico's relationship with Japan is built on long-standing ties and complementary markets. With China, he acknowledged, there was greater suspicion and greater opportunity. In the next ten years Mexico would seek to maximize cultural and economic exchanges with both (and Korea),but was already looking to SE Asia as the area of future growth. He lamented that the Mexican Congress was reluctant to support an invigorated opening to Asia, but said institutionalized consultations in the G-8 Plus Five and APEC were valuable and likely to continue. End summary At Ease with Japan ¶2. (SBU) Japanese Political Counselor Noriteru Fukushima was aware of A/S Shannon's successful visit to Tokyo and welcomed greater embassy-to-embassy communication in Mexico City. He described a productive, collaborative relationship with Mexico fueled by the success of the free trade agreement, which he claimed had increased trade between the two countries by 40 percent (SRE documents cite 30 percent). The boom was likely only to last a few years, he said, as Mexico was negotiating a free trade agreement with Korea (unlikely to be signed this year however) which would eat into Japanese market share. China's interest in trade with Mexico would also edge out the Japanese, he predicted. Fukushima noted that Japanese concerns about security issues, especially in Mexico City, had eased considerably over the last year as the result of a dialogue with Mexican officials which resulted in better security at the airport, a venue where Japanese businessmen had been particularly targeted. Japanese officials met regularly with GOM counterparts to discuss the investment climate and generally found a responsive audience. SRE DG Ventura noted that the trade and political relationship with Japan was built on complementary markets and confidence. Mexico was exporting agricultural products to Japan with good success. The two countries were also cooperating on jointly-administered assistance projects to the Caribbean and Central America, with Japan providing much of the finance and Mexico the technical expertise. Fukushima noted the successful visit of Prince Naruhito last March as emblematic of the good relations between the countries. Cautious with China ¶3. (C) Chinese Political counselor Shen Zhiliang opened by citing the large number of government visitors from China to Mexico over the five months he has been here -- over 80, not counting the May 2006 Binational Commission meeting which brought a delegation of close to 100 Chinese government and business leaders to Mexico City. While this second biannual BNC included agreements on energy, education, transportation, infrastructure and technology, Zhiliang noted that there was more good intent than concrete action behind the agreements. Tourism was likely to be the sector of greatest opportunity he said, with China looking into direct flights from Mexico, and Mexico opening a tourist information office in Beijing. The two countries agreed on a five year plan, and to meet again in Beijing in 2008. While China was interested in investing in the energy sector, Zhiliang noted, for the time being there was little opportunity to do so. He described Chinese investment in Mexico as very small. China was interested in the North American market primarily, and in Mexico as an entryway. SRE official Ventura confirmed that Mexico traditionally views China with some suspicion although an active Mexican visitors program with China over the past decades has paid off, and every major political player in China has visited Mexico in the last three years. China was more interested in exploitative industries, and Mexico was wary of dealing with the Chinese on those terms. China and MEXICO 00003378 002 OF 002 Mexico do have profitable political consultations in the context of the G-8 Plus Five, in APEC and in annual multilateral consultations in Geneva and New York. Ventura felt that one of the successes of the bilateral relationship was China's agreement this year to feature Mexican performers and works in the many state-sponsored cultural festivals taking place in 2006 throughout China. ¶4. (SBU) Ventura noted that relations with Korea were also well-established, but Korea faced an uphill marketing battle in Mexico, which tended to view Korean products with suspicion. Korean President Roh Moo-Hyun visited Mexico in September 2005 celebrating the centenary of the first Korean migration to Mexico. Mexico and Korea were at the early stages of discussing a free trade agreement, and a round of talks is scheduled for later this month. From SRE's perspective, Ventura added, the benefits of the Japanese and eventual Korean FTAs were finite and would decrease geometrically as China played a more important role in the North American market. He was already looking to South-East Asia as a target for Mexican commerce. Suspicious of Lopez Obrador ¶5. (C) Both Japanese official Fukushima and Chinese official Zhiliang separately and spontaneously expressed concern over presidential candidate Andres Manuel Lopez Obrador, noting he prided himself on his lack of global experience and interest. Zhiliang noted the Chinese ambassador had tried several times to get a meeting with the leftist candidate, but had never even received a reply. Both expressed the hope that Mexico would continue to look outwards if Lopez Obrador did win the July 2 election -- but their voices betrayed a certain amount of doubt. Ventura, for his part, lamented that the Mexican congress was suspicious of SRE efforts to engage more in Asia, and reluctant to support those efforts with appropriate budgets. ¶6. (SBU) Comment: All three officials were aware of A/S Shannon's trip to Asia and welcomed the chance to compare notes on a local basis more regularly. The Japanese were even open to meetings including the other Asian embassies, the Chinese were more reserved. Visit Mexico City's Classified Web Site at http://www.state.sgov.gov/p/wha/mexicocity BASSETT