MEXICO BUSINESS SUMMIT FOCUSES ON THE FUTURE

UNCLAS SECTION 01 OF 03 MONTERREY 000442

(CORRECTED COPY)
SIPDIS

E.O. 12958: N/A
TAGS: EIND EINV PGOV ASEC ECON MX
SUBJECT: MEXICO BUSINESS SUMMIT FOCUSES ON THE FUTURE

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Summary

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1. (U) The 2009 Mexico Business Summit, "Beyond the Crisis,
Creating a Vision for a New Era," held in Monterrey November 8 -
10, brought together prominent leaders from business, government
and academia. Major topics at this year's Summit included North
American economic development (particularly in the health care
and alternative energy sectors),the importance of
infrastructure improvements for Mexico's economy, reform of
NAFTA, and the effects of the security situation on U.S. -
Mexico trade. Ambassador delivered the keynote address at the
closing plenary session of this annual event, which is modeled
on the World Economic Forum. Other participants included
billionaire businessman Carlos Slim, President Felipe Calderon,
Colombian President Alvaro Uribe (via a prerecorded speech),and
former Costa Rican President Oscar Arias.



Joint Economic Competitiveness, Trade Development

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2. (U) Ambassador and Consul General attended Monterrey's 2009
Mexico Business Summit, held November 8 - 10, which focused on
creating an economic vision for Mexico's future. The more than
20 panel discussions, debates, and speeches that occurred during
the three-day event emphasized U.S. - Mexico economic issues.
Numerous participants in the conference, including Carlos Slim,
former U.S. Secretary of Commerce Carlos Gutierrez, and Carlos
Guzman, President and CEO of Hewlett-Packard, Mexico,
highlighted the impact of Chinese economic pressure on both
economies. Summit participants identified the outbreak of the
H1N1 virus, the worst drought in 60 years, the ongoing recession
and its corresponding reduction in remittances from the United
States, border security and violence, and the decline in oil
prices as the biggest short-term obstacles facing the Mexican
economy.




3. (U) Ambassador stressed that NAFTA has led to an
unprecedented integration of the North American economy and
that, since its implementation, the U.S. and Mexican economies
have become increasingly interconnected. He noted that neither
the U.S. nor Mexico can afford to stop the integration process
and that deeper economic cooperation and increased cross border
trade will be essential to maintain competitiveness in the
global economy.



The Healthcare Sector

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4. (U) Billionaire Carlos Slim, whose holdings include TelMex
and Saks Fifth Avenue, called the U.S. health care system
"broken" and, in remarks echoed by other speakers, hoped that
healthcare reform in the U.S. would create economic growth
opportunities for Mexico. Summit participants identified
several healthcare sector opportunities for Mexico in the
bilateral relationship with the U.S., including: 1) the chance
to be the prime destination for the storage and maintenance of
U.S. electronic medical records; 2) medical tourism and
potential changes in U.S. law to allow Medicare reimbursement
for services provided in Mexico; 3) the migration of Mexican
nurses to the U.S. to alleviate the nursing shortfall there; and
4) developing Mexico as a research and development site for the
pharmaceutical industry, especially for clinical trials.



Climate Change and Opportunities in the Alternative Energy Sector

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5. (U) Juan Carlos Marroquin, the President of Nestle in
Mexico, and Daniel Servitje Montull, the CEO of Grupo Bimbo (a

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Mexican food conglomerate and one of the biggest baked goods
companies in the U.S.) urged Summit participants to view global
climate change as an economic opportunity for Mexico's renewable
energy sector. Ambassador emphasized the economic opportunities
that could be created through increased bilateral cooperation on
climate change and alternative and renewable energy development
projects, especially if the U.S. adopts a cap and trade system
in which energy from Mexican alternative energy sources could
provide offsets in the U.S. He added that the U.S. currently
generates about 10 percent of its energy with renewable sources,
while in Mexico the number is still below 4 percent.



NAFTA 2.0?

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6. (U) Many Summit participants discussed the need for
reforming NAFTA and called for a "NAFTA 2.0," but there was no
consensus on what a new trade agreement would actually look
like. Rather, participants seemed to be using the phrase NAFTA
2.0 as a platform for introducing the changes they thought were
necessary to fully realize the benefits of the original
agreement. Rafael Fernandez de Castro, Foreign Policy Advisor
to President Calderon, agreed with the need to "modify NAFTA."
He said the most pressing concern is the resolution of the
cross-border trucking issue, which stifles opportunities for
Mexican exports. Alan Stoga, President of Zemi Communications,
a New York public relations firm, agreed, calling the failure to
resolve the trucking issue "obscene." In a similar vein, Jaime
Serra Puche, an architect of NAFTA and an advocate for increased
economic integration, said that the USG's Buy America program
violates NAFTA and is a hindrance to true free trade.




7. (U) Along with those concerns about specific NAFTA
provisions and calls for changes in trade policy, Professor
Robert Pastor, Co-Director of the Center for North American
Studies at American University argued that difficulties at the
border are an obstacle to increased North American trade and
hinder a full realization of NAFTA's benefits. Pastor estimated
that, despite the implementation of NAFTA, bureaucratic
inefficiencies, customs procedures, and security requirements
add between 10 and 12 percent to the cost of cross-border
transactions. During his closing remarks, Ambassador urged the
audience not to see the border as only a security issue, but as
a "multidimensional phenomenon" that involves infrastructure,
technology, and economic opportunity as well. For example, he
noted that streamlined customs procedures would not only
expedite trade in goods and reduce transaction costs, but would
also improve security.



The Need for a "Mexican Brand"

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8. (U) Panelists in various sessions agreed that, whatever
obstacles exist for Mexico in the U.S. market (such as Buy
America or the unresolved trucking dispute),Mexico should
better position itself to attract foreign direct investment and
increase its exports. While discussing economic development and
ways to attract foreign direct investment, President Calderon
told the audience that Mexico must develop a clearer vision
about its economic future.




9. (U) David Clifton, General Director of Interbrand Mexico and
Luis Ferezin, General Director of Accenture in Mexico, used the
President's statement as a springboard for their presentation on
the need to develop a "Mexican Brand." They argued that the
most important attributes to attract foreign investment are good
infrastructure, highly developed educational systems, access to
global markets, capacity for research and innovation, and
technological preparation. Mexico does not have a world class
brand in those areas. To emphasize their point, they compared
Mexico to Brazil. While Brazil is often cited as an example of
successful development, they said Mexico is a more successful
country in terms of exports, GDP and, literacy rates. In order
to take advantage of the foreign direct investment that could
come from a more recognizable "Mexican Brand," as Brazil has

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done, Ambassador Pascual called on Mexican businesses to better
coordinate their networking and communications strategy.



Security Remains a Top Concern

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10. (U) Although the security situation was not a topic of any
particular Summit session, underlying all of the conference
discussions about economic development and investment
opportunities was the continued violence tied to the drug trade
and its impact on the business climate. Ambassador pointed out
in his closing remarks that narco-violence is not a national or
bilateral problem, but part of a "hemispheric scourge." He said
that community organizations and community police work are key
to improving the situation in Mexico and are Merida Initiative
hallmarks. He described how initial Merida Initiative
successes, such as the recent downturn in violence in Tijuana,
demonstrated that an active community working with local police
and law enforcement can be an effective tool in reducing
narco-violence.




11. (U) This cable was cleared by the Ambassador.
WILLIAMSONB