 Ladies and gentlemen, welcome to CSIS. Good morning. My name is Peter Deschezzo. I'm the director of the Americas program at CSIS. It's a great pleasure to have you here for this important event, the launching of the book, Unequal Partners, the United States and Mexico, by Sidney Weintrop. As I was a teenager in the 1960s, one of the things that we paid a lot of attention to was the launching of a new Beatles album, which used to come out about every year. It was something that everybody looked forward to, that it was always going to be creative and different. And you could almost depend on it that within about a year, there would be a new album out, and everybody'd be interested in acquiring it. Since I've been at CSIS, I sort of get the same feeling that about every year there's going to be a new book by Sidney Weintrop. And it's going to be provocative. It's going to be really interesting. It's going to take sort of a different path every time. You never really know what it's going to say until it's out. And I think one of the impressions that I've gotten since I've been here, and I admit I didn't know Sidney until I'd come to CSIS, was the unbelievable work ethic, creativity, productivity of Sidney Weintrop. And it's really quite remarkable. So I guess I sort of get that same feeling as I had when I was a young man. We are very honored to have with us today to make introductory remarks. Ambassador Carla Hills, the chairman and chief executive of Hills & Company, a former U.S. trade representative, and also a trustee and counselor of CSIS. And Ambassador James Jones, co-chairman, Manat Jones Global Strategies, former ambassador to Mexico. Following the introductory remarks, we'll move to a panel discussion, and then all of you will have a chance to ask questions of Sidney and we'll go deeper into the book as we go along. So let's begin with Ambassador Hills. Carla, it's a pleasure to welcome you. Thank you, Peter. It's a pleasure to join you this morning, and it's a pleasure to say a few words about Dr. Sidney Weintrop's book, Unequal Partners, United States and Mexico. Most of you know that Sid holds the William E. Simon chair on political science here at CSIS, and is also professor emeritus at the London School of Public Affairs. But you may not know that for a quarter century, he served as a foreign service officer and as deputy assistant secretary of state for international finance and development, and as assistant administrator of aid. And that his current book is only the latest of a long list of bestsellers on economic activities and literally hundreds of individual articles. In Unequal Partners, he assesses how the United States over many, many years had dealt with important issues of trade, investment, narcotics, energy, migration, and the border. And in each area, he's highly critical. Critical of the United States for its indifference and critical of Mexico for its inability to deal with structural deficiencies that hamper its growth and prosperity. And he closes his analysis, noting that in his words, Mexico and the United States are still attached at the hip. This is deeply understood by Mexican officials, but the reality is only vaguely grasped by US authorities. And I would add that it is not grasped at all by many American citizens. And that is why Sid's book and the expert panel, that is to follow, are so important. When leaders of Canada, Mexico, and the United States signed the North American Free Trade Agreement, it was the most comprehensive trade agreement that had been negotiated anywhere. It created a more competitive regional market of roughly 450 million people by erasing industrial tariffs, removing restrictions on agricultural trade between the United States and Mexico, opening a broad range of services, including financial services and telecommunications, providing world-class protection for intellectual property and protecting investors against expropriation. The three governments did not intend this agreement to deal with domestic structural issues. The objective was to promote economic growth through enhanced trade and investment, and this was accomplished. But most Americans, including their elected representatives, are ignorant of what the NAFTA actually did do. They do not know that as a result of the agreement, total merchandise trade since 1993 has more than tripled for all three nations, and foreign direct investment has quadrupled from both within and without the region. And they aren't aware that Canada and Mexico are two of our largest trading partners and that they supply nearly 30% of our nation's energy needs. They do not know that since the NAFTA became effective in 1994, the GDP of all three participants has steadily grown. Between 1994 and 2008, the United States, Canadian, and Mexican economies grew respectively at an average annual rate of 3%, 3.1%, and 2.9%. Mexico's growth was below its potential, without question. But most economists agree that that growth rate was deeply affected by the Peso crisis of 1995 and that the NAFTA insured access to the US market expedited its recovery. Americans have been told that the NAFTA has cost our nations millions of jobs and are surprised to learn that a study of the bipartisan congressional research surface finds that to be false. Instead, the data shows that until the recent financial crisis, which cannot be blamed on the NAFTA, overall employment between 1993 and 2008 rose substantially in all three countries. US employment rose from 120 million to 143 million. Canadian employment rose from 12.8 million to 17.2 million. And Mexican jobs in the former formal sector grew from 31.3 million to 43.8 million. And in fact, US unemployment dropped from 6.9% to 4.7% prior to the Great Recession. They have also been told that the NAFTA made Americans worse off because Mexicans lower wages depressed manufacturing wages here at home. They're unaware of studies like the one conducted at the Peterson Institute for International Economics by doctors Huffbauer and Schott, economists who examined the manufacturing wages in our four largest states that trade most with Mexico and found that they recorded higher wages than the overall wage growth of our national average. In short, the NAFTA delivered precisely what was promised, but unless we can generate stronger support for the value of an integrated and cohesive North American market, we will not be able to realize the NAFTA's full potential. For the rest of the world has not stood still. Tariff barriers have come down all around the globe and global competition has increased. Other regions, including the European Union and Asia are far more integrated today than they were in 1993. Today there are actions that our three governments could take together that would make the North American community more competitive, more prosperous and more secure. For example, we could start by trimming unnecessary regulatory costs. To qualify for tariff-free treatment in North America requires proof that the product was mostly produced in North America, the so-called rule of origin. The task of documenting that most of the product's components originated here in North America has become extremely onerous. For example, a car imported into North America, say from Germany, faces one customs transaction. In contrast, our industry is highly integrated and a car produced and sold in North America may go back and forth across our borders as many as eight times. Each crossing constitutes a customs transaction. The gains in productivity that come from our integrated supply chain are lost because of the costs required with each crossing to establish North American origin. Studies show that a common external tariff would reduce transaction costs by $100 billion annually and eliminate regulatory distortions that favor goods coming from outside into North America that only have a single border crossing. Now trying to establish a common external tariff regime in today's political environment would be a step too far. But we could incrementally focus on specific tariff lines where the difference amongst us is quite small but still create a costly drag on our competitiveness. The NAFTA commission, which is comprised of our respective trade ministers has identified this as a priority. And in 2008, Congress approved changes to harmonize our respective tariffs affecting about $100 million worth of trade. And we should urge our government to move forward on this initiative. In addition, we have an incredible number of regulatory differences that unnecessarily hamper our trade and these range from rules governing the size of boxes to product safety. By harmonizing these differences, we could achieve our regulatory goals and avoid unnecessary costs. And the refusal of our government to permit Mexican trucks to cross our border in accordance with the agreement is more than a national embarrassment. It generates inefficiency, waste energy, and contributes unnecessarily to pollution. And finally, there are a number of areas where our three governments could partner to find joint solutions to global issues. Take for example, the complex mix of climate change and energy security. The House has passed the American Climate and Energy Security Act that would seek to reduce emissions from the 2005 levels by 20% by 2020. 20% by 2020 and 83% by 2050. And it includes both cap and trade and renewable energy requirements. Many Americans worry that U.S. firms will be disadvantaged if our policies governing greenhouse gases are more rigorous than those of our trading partners. Our northern and southern neighbors are major suppliers of energy and specifically oil to the United States. In 2007, the energy trade was about $100 million with Canada and $10 million with Mexico. In addition, several states obtained their electricity from Canada. To avoid trade distortions of vital energy supplies, all three NAFTA governments have a mutual interest in harmonizing how they deal with climate. Now with all that is at stake, one of the most important things we can do is to educate Americans about the economic and security benefits that our nation derives from a strong and close North American community. And books like Unequal Partners and the expert panel that follows is just one wonderful way to do just that. So Sid, I congratulate you. I think that you've made a real contribution and it's a pleasure to join you here today. Thank you very much, Carla Ambassador Jones. Peter, thank you very much. I will start by saying I subscribe to everything that Carla Hill said and hopefully we can all move forward in that same common spirit. My interest in Mexico really began with my first job out of law school at the White House because my boss, Linda Johnson, was very close to Mexico and Mexicans and we had two or three trips there during those four years I was at the White House and I became affected and had great affection for Mexico and Mexicans. Then in subsequent to that when I was in Congress for 14 years in Congress, I paid very little attention to Mexico because Mexico wasn't important to the United States. It didn't affect the East West Cold War issues other than the fact that Mexico City and Vienna were the two major crossroads of spies in the old Cold War days. But Mexico was not important to us. It was not a part of the world trading regime. Didn't really affect our economy that much. We had a relationship on temporary workers that seemed to suit us, seemed to suit Mexico so I didn't pay much attention to it. When I left Congress and went to New York at the American Stock Exchange, it became important again because we were looking at developing markets and the year I left Congress, Mexico joined the World Trading Order, the GATT, the General Agreement on tariffs and trade and all of a sudden I started paying attention to Mexico again and at that time everyone said, well, if you want to know about Mexico, read Allen Riding's Distant Neighbors. You have to know it to know where you're going. You have to know where you've been. Well today I'm going to tell my clients if you want to know about Mexico, read Sidney Weintraub's book, Unequal Partners. Because what he has done is to blend the history of modern Mexico, the latter half of the 20th century and the first part of this century, blend the history to where Mexico is and where our relationship is and it gives you an idea. If you want to know where you're going in Mexico, you have to know where you've been and the issues that's going to affect where you want to go. And that's what I think Sidney's book does. It is an unequal partnership still, although that partnership is becoming closer and closer to a real partnership. Many of us have tried, myself, when I was ambassador and the subsequent ambassadors have tried to point out that we're here as partners and not as preachers or paternal parents of Mexico. But I think when Secretary of State Hillary Clinton went down in the first part of the Obama administration and just laid it on the table that a major cause, if not the major cause of the drug trade, is the demand for drugs in the United States, that really helped to equalize the partnership because that's something that had been rankling the Mexican officials for many years that we were able to preach very strongly about what Mexico needs to do. And yet the real draw of criminal organizations and the money where the drugs are sold, we neglected. And so that partnership is becoming more equal. And I think that Sidney Weintraub's book points out the still inequalities and the potential equalities that have developed. So I think it's a very important book, but he also points out that what we need to do on both sides of our border. Mexico clearly needs to invest more in education and to reform its educational system. And as an ex-politician, I don't minimize that challenge when you're taking on the largest trade union in the country and trying to really seriously change it and reform it, but they do need to do that if they're going to be a competitor. In this global world of particularly where Asia has done that and is doing more of it, Mexico needs to do a number of other things and it's judicial and systems and rule of law. And Sidney points that out because you have to have a trust and a confidence both within Mexico as well as among foreign investors in the rule of law and in the fact that disputes are going to be fairly met with and decided. So Mexico's got a lot to do yet. It needs to invest more in infrastructure in that half of the country that has experienced none of the tangible benefits of NAFTA that Carla pointed out. Only the other half seems to have recognized and benefited from NAFTA in a tangible way. Mexico has to do more and the United States has to do more. We still have to work on the fact that we really are partners in this whole economic security and global situation and we have to start acting like partners. We have to do our part in less preaching and more doing on things such as the Merida Initiative and to help Mexico in this valiant fight against criminal organizations that have grown in some cases stronger than the government itself in certain parts of Mexico. So we have a lot to do to do that to create an equal partnership. Sidney Weintraub's book in a readable and concise manner points out why that partnership has been unequal and what it takes to make it more equal on both sides of the border. So for my, what I'm doing most of my line of work these days is to take companies, foreign and direct investors into various other markets. Mostly for me it's Mexico. Our clients alone have had foreign direct investment of about six or $7 billion in Mexico over the time we've done that. But in order to help them be successful they need to know where Mexico has come from. They need to know where it's going and what needs to be done. And Sidney Weintraub's book really points away in a concise manner. So I'm going to be recommending not Alan Writing's book but Sidney Weintraub's unequal partners if you want to be successful in doing business in Mexico. Thank you. Thank you. Thank you.