BILATERAL ANIMALS
Ex-Ambassador Talks Mexico, Quills and All
Mexico,not Iraq or China,is the most important country for the U.S., says Jeffrey Davidow, former U.S. ambassador to Mexico.
“On a daily basis, what happens in Mexico probably affects us more than what happens in any other part of the world,” said Davidow, ambassador to Mexico from 1998 until 2002.
That’s certainly the case for Orange County, which counts Mexico as its largest export market. The country also serves as a production hub for businesses here and is the homeland for the majority of the county’s Hispanic population.
Davidow spent much of his diplomatic career focused on boosting ties with Mexico and the rest of Latin America. He was ambassador to Mexico when President Vicente Fox came to power with high hopes of reforming Mexico’s economy and politics.
Originally appointed by President Clinton, Davidow was asked by President Bush to remain in his post for an extra 18 months. Current ambassador to Mexico Antonio Garza succeeded him in 2002.
Davidow, now president of the Institute of the Americas at the University of California, San Diego, also served in senior positions in U.S. embassies in Guatemala and Chile and was ambassador to Venezuela from 1993 to 1996. From 1996 to 1998, he was the State Department’s chief policy maker for the hemisphere, serving as assistant secretary of state.
His book, “The U.S. and Mexico: The Bear and the Porcupine,” came out earlier this year. In it, Davidow writes about his experiences and observations as ambassador to Mexico. He recently sat down for an interview with the Business Journal’s Chris Cziborr.
What major economic changes have you seen in Mexico?
We’ve seen a major transformation in trade. When the North American Free Trade Agreement was signed, the level of trade was $80 billion a year. Now it’s more than $250 billion. The level of investment in the country by the U.S. has tripled. NAFTA has worked well for both countries. Mexico had become our biggest trading partner, though recently it’s been eclipsed by China. What’s happened in the past couple of years is that Mexico’s dependency on the U.S. has meant a downturn in Mexico that followed the U.S. recession.
What is your take on NAFTA?
NAFTA is a general success,no question about it. It’s provided more jobs and at a higher wage in the U.S. and Mexico.
The difficulties of NAFTA are those that come with any major dislocation. Some industries will go under and some people will lose their jobs. That’s happened in the U.S. and in Mexico. The hope is,and indeed the reality is,that new jobs will be created.
What about President Bush’s proposed guest worker program? Does it go far enough?
His program does allow the prospect of citizenship for guest workers. The program’s been criticized for not going far enough. But the immigration issue is so complex it’s probably not really solvable in all its dimensions.
If a guest worker program were implemented fairly and efficiently,providing security to both employers and employees,and providing just lives to people who have had to live in the shadows, it would be a good step.
Were expectations of President Fox too high? Why isn’t he having much luck achieving his goals?
I have a rather charitable view of Fox. He came in promising a lot and was dealt a difficult hand. He never had a congressional majority. There were political forces at work trying to make his government fail. There were a lot of interests on the part of the opposition that took precedence over national interests. Fox had a tough time and did not accomplish a great deal of what he would’ve liked to accomplish.
What does Mexico need to do to reform its economy?
The big challenge for Mexico is: How does it claim its status in the global economy? Mexico has tremendous competitive advantages. It’s next to the largest market in the world. So to really take advantage of that it needs to lower the costs of production. It can no longer depend on cheap manual labor to be the principal attraction, because there is cheaper labor elsewhere, particularly in China. Mexico has to look at other elements of the manufacturing cycle to determine where the costs are.
Energy also is an important element,energy costs in Mexico are high. And security of goods is a major cost factor for companies operating there.
Plus the labor laws are really archaic and don’t serve the real interests of either the workers or the employers.
Do you consider Mexico a potential U.S. entry point for terrorists?
It’s obvious we need strong vigilance on the borders, which are by definition porous. On the other hand, the response of the Mexican government that I witnessed after Sept. 11 in response to our concerns about terrorism has been superb. There has been good information-sharing between police forces and intelligence efforts there. We shouldn’t be complacent, but the fact is the government clearly is on our side.
What was the biggest challenge as ambassador?
There is a hypersensitivity that makes the Mexican government and Mexican public opinion always on the lookout for perceived slights and aggression from the U.S. This can make for really complicated relations when things shouldn’t be so complicated.
In my book, I talk about the U.S. as a bear,a creature that lumbers around and really isn’t malicious. But Mexico is like a porcupine with its quills always up. What’s really necessary is for the two to understand more about each other and get around their differences. It’s important because Mexico is the most important country in the world for us, more so than China or Canada.
What will be the key trade issues in the future?
The hottest trade points inevitably are in agriculture. A lot of our trade with Mexico is in agriculture. Another big area to look at is energy. Mexico imports energy from the U.S. As our costs go up, that could become a sensitive issue. At the same time, Mexico could produce a lot more oil than it’s producing now. It needs $120 billion or more to produce the energy it needs for its economy to grow. Right now, most of that money, under law, has to come from government, so every peso they spend on oil exploration is something they have to take away from things like schools. And immigration will continue to be a hot-button issue.
