MEXICAN TRANSPORT U/S ON CROSS-BORDER

C O N F I D E N T I A L SECTION 01 OF 02 MEXICO 004288

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PLEASE PASS TO USTR JOHN MELLE

E.O. 12958: DECL: 08/02/2016
TAGS: EAIR EINV MX ECIN ELTN ETRD PBTS
SUBJECT: MEXICAN TRANSPORT U/S ON CROSS-BORDER
TRANSPORTATION AND INFRASTRUCTURE PROJECTS


Classified By: MINISTER COUNSELOR FOR ECONOMIC AFFAIRS VLAD
SAMBAIEW FOR REASONS 1.4 (B) AND (D)

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Summary
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1. (C) Econ Mincouns and Econoff met with Mexican
Undersecretary of Communications and Transport (SCT) Aaron
Dychter on July 31, 2006. Dychter is concerned that leaks
about a proposed cross-border trucking pilot program could
have negative effects on the ability to implement the program
in the future. However, he hopes both sides will continue
working out the technical aspects of the program so they are
prepared to implement it soon after an announcement is made.
Dychter also discussed potential projects and funding
opportunities for cross-border transportation and
infrastructure projects, including the use of the North
American Development Bank (NAD Bank). End Summary.

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Trucking
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2. (C) Econ Mincouns and Econoff met July 31 with U/S of SCT
Aaron Dychter. U/S Dychter apologized for the Secretariat of
Economy's leaking word of the cancellation of the
cross-border trucking pilot program. However, he also
expressed concern that a Department of Transportation
official mentioned the program in an interview in the July 24
Edition of Traffic World magazine. He said it is important
not to get industry spun up on the prospects for the program
at this time. He noted that both sides need to stress the
importance of the program to bilateral safety, security, and
competitiveness. Dychter also wants the technical group to
continue meeting to hash out the details of the program prior
to a future announcement.

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Cross-Border Transport Projects
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3. (SBU) Dychter said that both the GOM and the U.S. must
concentrate on developing cross-border transportation and
infrastructure projects, but noted that security cannot be
sacrificed for faster trade. SCT is currently studying how
the GOM can make the Nuevo Laredo-Laredo rail crossing more
efficient. The ministry is also doing the same for the
Ciudad Juarez-El Paso rail crossing. He believes both rail
lines have to move to the outskirts of the cities, but
believes it will be a challenge finding money to fund the
projects. Dychter mentioned that Mexican Foreign Ministry
U/S of North America Geronimo Gutierrez plans to set a
meeting with Governor Perry of Texas to discuss border
projects.


4. (SBU) Dychter thinks the North American Development (NAD
Bank) could be a possible funding source for such projects.
It would allow companies to place competitive bids on
projects and could help to reenergize the NAD Bank. Dychter
hopes to see these types of topics enter into the bilateral
transportation agenda over the next months. He said both
sides have to focus on new investments and the success of a
few tangible projects, and worry less about regulatory
issues. He also feels the GOM needs to concentrate on
intermodal corridors.


5. (SBU) On other transportation issues, Dychter stressed
his belief that the aviation relationship is working
extremely well. He said a key goal for the GOM is to
conclude a Bilateral Aviation Safety Agreement (BASA) with
the U.S. (Note: We did not raise open skies possibilities at
this meeting, given Dychter's apparent plans to leave his
post later this year. We believe it would be better to raise
open skies options with a new top SCT team in 2007. End
note.)


6. (U) Dychter encouraged the Embassy to meet with the
Mexican Treasury (Hacienda) to discuss the broader use of NAD
Bank. As is often the case with GOM officials and local
economists, he added that North America should seek to
develop an Infrastructure Investment Fund (IIF) to increase
investment, employment, and growth. He insisted Mexico can

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commit its full fair share of the funds by using finances
from its oil shares. Having just attended a conference in
Guatemala with other Latin countries and Spain, Dychter said
it was clear that Spain had doubled its investment capacity
and benefited well in terms of infrastructure through the use
of EU matching funds.

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Comment
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6. (SBU) Needless to say, we did not encourage Dychter's
comments regarding an IIF. At the same time, it seems that
the NAD Bank could be a credible funding source for mutually
agreed priority transportation infrastructure projects,
especially given new commitments by both governments to make
the NAD Bank more effective. End comment.



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