…The people of the United States and Mexico need us to work toward a future that benefits from increased trade, secure borders, and stronger, more inclusive economic growth in our two great countries, and one in which our globally competitive and integrated supply chains tap new markets in other parts of the world….
MEXICO CITY – Let me begin by thanking Provost Delgado for hosting us today, and to Secretary Meade for that warm introduction. It is a pleasure to be in Mexico for my fourth visit during the Obama administration, and my second as Treasury Secretary. We place enormous value on our relationship with our neighbors and friends in Mexico. Our colleagues at Hacienda have been tremendous partners, working together to make the United States and Mexico more prosperous and secure. We have also made significant strides to foster stronger global growth and ensure that the international financial architecture remains dynamic and able to address the challenges of the 21st century.
More broadly, from a U.S. perspective, our neighbors in the western hemisphere are critical economic and security partners. Having just visited Brazil, Argentina, and Colombia, I would like to reflect on the importance of our joint efforts to deepen and extend our work bilaterally and, through ground-breaking initiatives like the Pacific Alliance, on a multilateral basis.
A half century ago, President Kennedy rightly noted that our two nations are linked by geography and tradition, and bound together in partnership by our shared vision for economic prosperity. The deep ties of family, friendship, language, and culture create strong bonds between our two countries.
Mexico is our third largest trading partner, with nearly $1.6 billion in bilateral goods and services trade crossing the U.S. border every day—averaging more than $1 million every minute. U.S. exports of goods and services to Mexico directly support a million U.S. jobs, and 29 U.S. states count Mexico among their two largest export markets. More Americans travel to Mexico than to any other country in the world—25 million every year.
The cooperation between our two countries is critical under any conditions, but particularly as the global economy faces continued uncertainty and fragile growth. Together, the U.S. and Mexico play an important role in the global economy, and we should embrace opportunities to strengthen that relationship.
What happens in the United States has a profound impact on the Mexican economy, and developments in the Mexican economy can be similarly important to the United States. Working together, we can foster sustainable, inclusive growth in both the U.S. and Mexico. But this relationship extends far beyond the economic realm and has important implications for our shared security. We must also address shared challenges on immigration, border security, and illicit finance in ways that build on common values, nurturing the deep ties between our nations.
It is important to take stock of where we are and how we can build a shared future that is more secure and prosperous.
Important Relationship for U.S. Economic Prosperity
The United States and Mexico must remain solid and stable centers of growth. In the United States, we expect to grow at a healthy pace this year due to strong consumer spending and continued improvement in the labor market. The federal budget deficit has been cut by roughly three-quarters over the past six years to 2.5 percent of GDP in 2015, its lowest share since 2007. This success is further supported by continued record job growth and strong increases in private-sector wages. Median household income in the United States rose faster last year than any year on record.
Mexico is also expected to continue growing at a steady pace. Consumer spending, underpinned by real improvements in wages and job growth, has helped sustain the Mexican economy through a period of low oil prices and reflects the ongoing expansion of Mexico’s middle class. Mexico has been a leader in expanding access to the formal financial system, as was reflected by its participation last December in the Financial Inclusion Forum that I hosted in Washington, where there was great interest in Mexico’s progress through innovative approaches to expanding financial inclusion. And I applaud Mexico’s recent publication of its National Financial Inclusion Strategy, which calls for leveraging the power of technology and strengthening the network of agents who work in communities not traditionally served by the banking sector to expand access to financial services.
Continued growth of the middle class will be a positive force for Mexico, and offers a real opportunity for U.S. firms and workers as a wealthier Mexico demands more of the goods and services that we produce, ranging from agricultural products and music, to tourism and smart grid technology.
A strong economy also allows us to more effectively confront shared threats to our security and the integrity of our financial systems, such as illicit financial flows from drug trafficking.
Important Relationship for U.S. Security
As we celebrate strong economic ties and vibrant, interconnected communities, we must also remain vigilant in protecting these relationships from abuse. That means working together to even greater effect to confront the drug cartels and other criminals that take advantage of cross-border economic activity to raise, move, and hide illicit assets. We need to work jointly to counter criminal activity that is a threat to our common security. By promoting the integrity and integration of our financial systems and economies, we can increase our shared prosperity.
Today, I am proud to say that cooperation with Mexico on security matters is at an all-time high. The United States and Mexico are working together to facilitate the safe and efficient cross-border movement of travelers and goods essential to our economies. Vigorous law enforcement cooperation has led to the arrest and extradition of hundreds of criminals. Working together in the High-Level Economic Dialogue and other bilateral fora we are making the border more efficient even as we make it more secure. We have greatly reduced wait times for passengers and cargo at ports of entry, we have opened the first new rail crossing in a century, and we have begun pre-inspection of cargo on each other’s soil. And particularly important to Treasury, we are safeguarding important financial relationships that make economic growth possible by sharing information and actively dismantling financial networks that support criminal organizations on both sides of the border. This success demonstrates the progress that is possible when countries commit to a partnership that focuses on economic growth and common security goals.
We also work with Mexico on multiple levels to combat illicit financial networks. Financial transparency is critical and it requires sustained efforts to strengthen legal and regulatory frameworks, according to international standards, which Mexico has pursued in recent years thanks to the hard work of dedicated teams at Hacienda and the Bank of Mexico. From bank executives to law enforcement officers to regulatory authorities, we now can more effectively detect and impede criminal abuse in the financial system. Greater transparency and the flow of information deepen the broad ties among financial institutions, businesses, and individuals in our economies, which in turn fosters both economic growth and improved security.
The private sector stands at the front line of our campaign against illicit financial activity. That is why Treasury and our Mexican partners engage regularly with financial institutions to share information on illicit finance trends and to develop initiatives aimed at addressing challenges to our financial systems, including through ongoing public-private banking dialogues.
Our work together with the private sector has resulted in a number of practical initiatives, such as the creation of a formal mechanism to ease information sharing between Mexican and U.S. banks, overcoming a key hurdle for banks on both sides of the border that sought greater integration, but had lacked the ability to cooperate. These efforts underscore the important role Mexican financial institutions play in combatting financial crime.
At the operational level, the U.S. and Mexico collaborate to target illicit actors and deny these criminals access to the financial resources they need. A key partner in all of this is Mexico’s Financial Intelligence Unit, with whom we share information and actively address joint threats, including through our own Financial Intelligence Unit, FinCEN. Treasury also uses targeted financial sanctions to undermine the networks of drug traffickers. Treasury’s Office of Foreign Assets Control has designated more than 800 individuals and entities associated with major Mexican narcotics trafficking organizations to our Specially Designated Nationals list. These efforts help protect our financial systems from abuse and weaken the financial capabilities of criminal organizations.
Of course, more work remains. Our goal is to disrupt and ultimately dismantle the networks that support drug trafficking organizations, in the formal and informal sectors on both sides of the border. Our close partnership provides a strong foundation from which to go after criminals and the drug cartels and networks they work with.
A stronger economy on both sides of our border will help promote greater security for the people of Mexico and the United States. But at the same time, protecting our economic relationship also means continuing to strengthen efforts to secure our shared border. Since President Obama took office, by increasing border patrol agents and technology along our southern border, we have reduced illegal border crossings to their lowest levels since the 1970s. But to address the issue over the long-term, and in a manner consistent with our democratic traditions and values, we continue to press for comprehensive immigration reform—reform that both strengthens our border and provides a pathway to citizenship.
And while we continue to wait for Congress to act on commonsense legislation, the President has taken steps within his authority to make our immigration system smarter, and more fair and just.
He believes we should focus enforcement resources on our highest priorities: convicted criminals, recent border crossers, and threats to national security. Today, undocumented immigrants who have been in the U.S. for more than five years, with children who are citizens or legal residents, can come forward and seek legal standing without fear of deportation. As a result, tens of thousands of high-skilled workers who on their path to a green card are able to work, supporting their families, local communities, and our nation at large.
As a first generation American and a second generation lawyer, I know well that the United States is both a nation of laws and a nation of immigrants.
A Shared Commitment to High-Standard Trade
Even as we reflect on our progress, we must continue to build an even stronger future. A high standard trade agreement is critical to promoting future economic prosperity.
Over the last several years, the United States and Mexico have worked with 10 other nations to forge a new trade agreement that encompasses 40 percent of the world’s GDP, and links some of the most dynamic markets in the world. The Trans-Pacific Partnership will provide new opportunities for our businesses and workers by ensuring their ability to compete on a level playing field with international competitors and by uniting the nations of the Pacific Rim under a shared vision of fair, free, and open trade. This agreement builds on the lessons learned from previous trade agreements like the North American Free Trade Agreement, incorporating strong and enforceable labor and environmental standards and protecting our workers by making sure that our trading partners play by the same rules and values that we do.
Globalization and technological change are powerful forces that increase economic growth, but without question, some industries, towns, and workers—both here and in the United States—are feeling the stress of this change. Rejecting change is not a solution. Isolating economies and people cannot stop technology, and slower growth cannot improve lives. Our response must not be to close ourselves to the world, but rather to redouble our commitment to inclusive growth that spreads opportunity broadly and offers support to those who are most disrupted by transition.
We must win the argument – one that is supported by the facts – that fair trade will grow both of our economies.
We must also demonstrate throughout our commitment to domestic investments like education, job training and child care – and rebuilding our infrastructure – that we know what is needed for working families to experience greater opportunity from shared growth. Building barriers that will reduce economic growth is not an answer.
The Trans-Pacific Partnership is critical to advancing our regional competitiveness. It will allow our companies greater market access to 300 million consumers. It will strengthen our regional supply chains by allowing us duty-free access to raw materials and component parts from our TPP partners. And it will lead our North American stakeholders to engage in greater and deeper integration. Together, we have developed highly complex, on-demand supply chains, and TPP will enhance the attractiveness of North American value chains, creating greater incentives for investment in both the United States and Mexico.
Beyond the benefits to trade, TPP will help us accelerate innovation that is indispensable to solving challenges related to global health, poverty, and environmental sustainability, and to continuing the democratization of growth and entrepreneurship. TPP will secure high standards of intellectual property protection. It will allow our workers to compete on a level playing field by strengthening worker protections, as hundreds of millions of workers are brought under the enforceable protection of International Labor Organization standards, representing the broadest expansion of labor rights in history.
Around the world governments are already taking steps to bring labor laws up to international standards – providing not only an important step for workers but sending a clear message that TPP is already helping to level the international playing field.
TPP will also help safeguard our environment, and commit partner nations to combat wildlife trafficking, illegal fishing and logging, while helping to protect our ozone layer. Mexico will play an important role in this effort, given its leadership on climate change, which includes our recent tri-lateral commitment with Canada to a North American Climate, Clean Energy, and Environment Partnership.
Ultimately, the Trans-Pacific Partnership is as much an expression of shared values as it is a trade agreement. We must seize this opportunity to reaffirm our commitment to openness, transparency, and the rule of law. And we must demonstrate shared leadership in support of the global rules-based order that has helped ensure peace since World War II, lifting hundreds of millions of people out of poverty.
If we do not act, others will step forward to write the rules for the 21st century.
Mexico’s commitment to integration and high standard trade extends beyond the TPP. The ambitious agenda of regional integration and lower barriers to trade that Mexico has championed, along with its fellow members of the Pacific Alliance, have been closely watched by many countries around the world. And indeed, the eagerness of more than 49 observers to become involved in the Pacific Alliance is a testament to the success of its policies.
Mexico has learned lessons from the past, basing its policy choices over the last two decades on lessons learned from what has and has not worked – rooted in careful fiscal management, credible monetary policy, a flexible currency, and a well-regulated and capitalized financial system. The IMF’s recent approval of a larger Flexible Credit Line for Mexico, available only for countries with very strong economic fundamentals and policy performance, underscores the credibility that Mexico enjoys as a result of these efforts. And Mexico has set an example of how to use this tool so that other countries can see that it may be right for them as well.
Of course, Mexico also has its challenges. Markets are closely scrutinizing the reforms underway at Pemex. The government has sharpened its focus on the need to consolidate public finances in response to the collapse of global oil prices. It must consider how best to lower spending without sacrificing the social gains achieved over the past decade. The public is increasingly expressing discontent regarding corruption and holding public officials to an ever higher standard. And Mexico continues to grapple with violence perpetrated by drug trafficking groups.
Though progress often comes more slowly than we would wish, Mexico is working hard to confront these challenges. Reforms at Pemex will help support the energy revolution underway that will lead all of us toward an era of unprecedented North American energy independence. The new anti-corruption system is an example of the government and civil society working together to begin combatting a scourge that threatens to undermine the rule of law. And I also want to recognize Mexico’s renewed commitment to a primary fiscal surplus next year, as it works to keep its finances on a sustainable path.
Yes there is more to do, but we see important signs of progress, like the courage with which Mexico is moving ahead with these energy reforms even at a time of low prices and also stringent austerity. It demonstrates a strong and credible commitment to reform. And that commitment to reform must continue for Mexico to address the challenges that remain.
As Mexico confronts these challenges, it is important that it does so with the United States as a partner by its side.
Working together, we can continue to demonstrate leadership to the world, as we recently did when we secured approval of important reforms at the International Monetary Fund. These reforms increased the IMF’s financial “firepower” and gave emerging-market economies a greater voice in the IMF’s affairs. Mexico’s support was particularly valuable, acting as a bridge between the industrial countries that have typically had the strongest voice in the Bretton Woods institutions and the dynamic emerging market countries that are playing an increasingly important role in the global economy.
Our nations have worked together closely in the Inter-American Development Bank to promote growth and development throughout Latin America and the Caribbean. We also partner in multilateral institutions to protect the environment and combat the threat of climate change. Mexico’s recent ratification of the Paris Climate Agreement demonstrates its leadership on this issue. We are both donors to—and champions of—the Green Climate Fund and the Global Environment Facility, and will continue our work to expand access to disaster risk insurance in our hemisphere so that countries will be more resilient to natural disasters.
The people of the United States and Mexico need us to work toward a future that benefits from increased trade, secure borders, and stronger, more inclusive economic growth in our two great countries, and one in which our globally competitive and integrated supply chains tap new markets in other parts of the world.
It is critical that we continue to stand together in confronting the scourge of criminal networks that prey on our people and weaken our economic potential. Mexico has faced extraordinary challenges in fighting the trans-national criminal organizations responsible for so much violence and fear. And in the United States, we are seeing a dramatic spike in overdoses from deadly mixtures of heroin and synthetic opioids. More than ever, this is a shared challenge and responsibility. We are also working together through the Merida Initiative to strengthen law enforcement institutions. We know how criminal organizations can dampen the faith of our citizens in the rule of law, how they erode the institutions charged with confronting them through corruption and intimidation, and impede legitimate economic growth and the further integration of our economies. But we also know that they will not have the last word. By deepening our partnership and affirming our shared commitment, we can build on our successes in countering illicit activity and strengthening the foundation for our common prosperity.
We must work together to help other countries in the region, such as in Central America, address their own security challenges and improve conditions at home for their citizens, further spreading the benefits of prosperity and security throughout Latin America.
Further investment in the sharing of ideas and learnings is vital to the future generations of our increasingly interconnected communities. That is why, we must continue to expand opportunities for educational exchanges, and increase student mobility through important efforts like the Bilateral Forum on Higher Education, Innovation and Research, in support of President Obama’s 100,000 Strong in the Americas initiative. These cross-border ties—and the critical contributions of countless Mexican-Americans—enrich all of our lives and deepen our partnership.
Achieving this vision will require a sustained effort from all of us, so I ask for your help in telling the story of our shared success to the world, and in charting the path towards the more prosperous and secure future that we want for citizens of both our countries.