 Okay, so welcome everyone here in the room and also those watching us from home as we are live on webcast and welcome to this press conference about enabling trade for Mexico. I am Peter Vannum. I'm the media lead here at the World Economic Forum. And with me are three distinguished guests. There's one unfortunate thing, which is this is an all-mail panel. So we'll work on that next time. But they are experts on my left side is Christian Rodríguez Cifale. He's a trade expert here at the World Economic Forum. And he'll be telling us a little bit more about where we are in terms of trade, international trade and also that involving Mexico. Very hot topic. Next to him is Rodríguez Rubio, the managing director, I think, from Bain and Company in Mexico. And then we have Francisco Gonzalez Diaz, who is the CEO of Pro Mexico and who was so kind to make some last-minute time in his agenda to join us in this press conference. We'll be keeping it brief to about 20 minutes. If you have any questions afterwards, I'm sure we'll make some time outside of the room because here we'll have a next session starting at 6.15. So let me kick off and let me start with Christian. So we're here to talk about trade that involves Mexico, Christian. Of course, trade is a topic that is hot internationally, there's a number of big trade agreements being negotiated and it remains uncertain whether they will be ratified or not. And that has been also the way in which trade has developed in the larger part of the 90s and maybe the years of 2000. Is that something you expect to continue or do you see more advantages from specific trade measures as we will be talking about here for Mexico? Thank you, Peter. I believe both, actually. I think countries had focused for a long time, I think, on just playing the big picture and enhancing the World Trade Organization. I'm sure you referred to NAFTA, the Trans-Pacific Partnership, which is being enacted right now and others. But I think it's also very important to focus on specific measures and specifically helps that you can develop to actually untangle trade barriers. I think this project is a very, very good example. Today, economic growth has become, I think, so complex that really you need to seek for specific solutions to really solve many of those problems. You choose a specific area, you deep dive on that area such as this project has done and then you look for specific fixes. I think this is really where frameworks such as the enabling trade initiative from the World Economic Forum excels. What we do here in this initiative is that we detect businesses which are a little bit on the verge of being able to be competitive internationally and we try to give them the final push. And that's why, I think, in particular in this study, we refer to a very specific sector of the economy, which were medical devices in Mexico, and just to bring some number to this, the report detected that in Mexico could achieve additional market access, market share growth of 10 to 20 percent on a market which is in a world market with $7.7 billion. So you put numbers to that and you realize it's very, very, very important. But going a little bit broader also, continuing on trade facilitation, I think, the OECD reports have mentioned that actually if the trade facilitation agreement of the World Trade Organization is unhacked, I think, well it says that actually the cost of trade will be lowered in around 50 percent. And WTO studies have said that 20 million new jobs could be created. So also very important and another area where the forum is working through the Global Alliance for Trade Facilitation. That I think addresses the first part of your question. You also mentioned about trade agreements, World Trade Organization, bigger picture and bigger framework. And I think an effective rules-based framework on international trade is of the essence and is something the World Economic Forum is absolutely committed to. In such an interconnected world as today, I think it is very important to have clear international rules to fight against, I think, an increasing protectionism that we are seeing. I mean, it's obvious the anti-trade rhetoric that you see, for example, in the campaign in the United States from both parties actually, things happening in Europe and elsewhere. And actually there are very serious studies that have said that the trade protectionism measures applied by governments since the 2009 financial crisis have actually increased threefold. So there's definitely protectionism. And protectionism is not good for business, it's not good for developing countries, it's not good for anyone because it restricts free flow of goods. So that I think is something where the forum is very committed to keep those borders open. Thank you. And of course, what you say is something that resonates with a lot of people who are experts in this matter and they will see the clear benefits that trade brings usually both for the importing, the exporting country or basically across the board. What has been difficult and maybe why the rhetoric has not really been accessible for the public or many people don't really believe in it anymore is because they don't see the tangible results of it. And for this I wanted to ask Rodrigo, because you've been working on this specific case and instead of looking at a whole economy, you've done a deep dive into one very specific industry where you can really measure what possible results can be. And what I would like to ask you is perhaps first and foremost, what have you detected when it comes to this specific industry and the production and the export for Mexico? We mentioned it was in this case the medical device industry. So what specific barriers exist? What can you do about it and what is then the end result of taking such measures? Absolutely, Peter. Thank you. Thank you very quickly. Thank you to the World Commerce Forum for the opportunity to partner in such an important topic. A big thank you and a big recognition to the government of Mexico who actually not just allowed us to actually work very much on this specific study. As Christian started, I mean, the main important framework for this was we need to go beyond rate reduction to the next phase of trade facilitation that is kind of non-rate related, things like access, infrastructure, border crossing facilitation, and the general business environment. We believe strongly and I think we share that belief with the World Economic Forum that in order, I mean, these barriers exist for a reason, in order to address them, rather than take a broad look at generic topics across the economy, it's better to take these tipping point industries. Industries are very close to being competitive and look at the whole ecosystem across them to identify things you can pragmatically do, right? And oftentimes what needs to be done, and I think Francisco will talk about this soon, right, are measures that need to cross boundaries between government entities and oftentimes actually involve industry and government collaboration. So being specific on an industry we think is very important. We chose, together with the government of Mexico, to work on medical devices because there was a feeling that this was truly an industry that was close to the tipping point. It was already a relatively important exporter, but there was a feeling that there could be more done. And so we looked at it, again, beyond access, so yes, we have NAFTA. We have relatively low rates for trade between Mexico and the U.S., right, between Mexico and the U.S. But what else is keeping us from really developing that, not just to the U.S. but the world, but the export market in Mexico. So we looked at market access beyond this and found that a lot of the... We are not really taking advantage of our big, relatively big, local market. So for an exporter to settle business in Mexico, right, there's the opportunity to do export, but a local market is always a good anchor. It's important for them. It actually attracts, you know, the smaller and medium business companies that provide inputs to them, to the market. And despite actually a lot of progress, we still have about two times the length of typical innovation of medical devices from, say, world benchmarks, which is around, you know, six to eight months from, you know, the product is approved to the process available to patients. In our public sector health services in Mexico, we're still closer to two years than to eight months. That hinders a bit the access to the local market. We have actually done a lot of progress in bioequivalence agreements, actually mostly on the importing side. So Mexico has been a very good trade citizen, if you will, and the citizens of Mexico take advantage of having available all these products. But the bioequivalency network of agreements is not as strong on the export side. So there's a little bit of, that's the access finding, you will, or the summary of some, then you look at border crossing. And again, the SAT has done a lot of, there's already done a lot of work in kind of trying to standardize, simplify these crossings. But because there's still, it's still in implementation and there's still a lot of stages that things need to go through at the border and the incoming side and the outgoing side that are not necessarily coordinated. And the importance of looking at this cross, it costs about two to three times more to move a container across the Mexico border than it takes in kind of benchmark markets like, you know, Hong Kong or something. So just crossing the border is, you know, $300 for the box instead of a hundred, which would be typical, right? Infrastructure and particularly road infrastructure in Mexico. So the cost and the time that it takes to move these things around the country is also significantly more expensive. We estimate it probably increases the cost of something sourced from Mexico, five to ten percent. And again, when you bring it all together, so again, we've done a lot of progress, but there's still, you know, better access, better border crossing processes, better infrastructure that would give us around a 10 percent better cost position and a more attractive local market. That's where the, you know, roughly $1 billion estimate of additional exports would be coming from. Yeah. So that's very tangible if you look at possible results that can come out of it. Now what I find so interesting about what you say is that in effect what's hindering export from Mexico to, for example, the United States, its biggest neighbor, is actually perhaps more internal barriers rather than a formal trade barrier at the border. Yes. And that's interesting and we don't have to go too much into politics and rhetorics, but perhaps Mr. Gonzalez, yes, I should ask you, because I find that such an interesting contrast when you have on one side of the border somebody who says, I want to build a wall with Mexico, and on the other side of the wall, as a matter of fact, you have, as the other side of the border, you have actually somebody who says, no, I'm going to destroy a barrier, I'm going to destroy a wall. As a matter of fact, we can take down some trade walls between Mexico and U.S. and it's going to be much easier than for anyone else to build an additional barrier. Is that a fair assessment? Is it fair to say that it's more likely for you to take down a few barriers? Of course, let me tell you that Mexico has been committed to competitiveness of the Mexican market, of the Mexican economy, and in this sense we have enrolled many FTAs, many free trade agreements, but also very one important FTA, the facilitation of trade agreement of Bali. It was just approved by the Senate in Mexico and we're moving on. We really are committed into not only lowering the different taxes and lowering the, let's say so, the quantitative issues, but also the qualitative ones. For example, we are now very committed, as Rodrigo said, with the certification of an authorization in the pharmaceutical level, at the pharmaceutical level. Yes, it sounds more like import, but it was the decision to start with the pharmaceuticals and not with the medical devices. This is the second step, and really you have really x-rayed the system very, very good, and we are working on that, and the implementation will be in the next year, and we're really not only hoping that this will be a success, we know that this will be a success, because also the Pan American Health System organization already approved many of the ways of doing things in Mexico. Then this will be easier rather than the one we had with the pharmaceutical level that took almost two years. Also in customs and border issues, we're developing new systems, and this is something that's happening. We're working now, for example, with the U.S. There was a law that it was forbidden for foreigners to bring weapons into Mexico, and it was a must for the customs department in the U.S. Also for the Mexican aduanas, it was important to have the same security issues at the other side. Now we're jointly combining our efforts, customs, U.S. customs, and Mexico-Mexican customs in the U.S., and this is bringing also really, really agile times for trade. We're still implementing this. Of course, this is not at the 100% level, but it's working. We are also in one of the other findings that we had at the end to end the value chain case that we are considering, for example, implementing new suppliers. The value chain is needed, and we have to develop Mexicans, yes, but also to bring more, sorry, more and more, thank you, more and more suppliers from all over the world, and how do we develop this with roadmaps? We know precisely what kind of materials are needed for the development of medical devices. This is not something that you go to the world and say, please invest in Mexico. No, you go with a target that you say this kind of company is the one we need in Mexico. Finally, this is also something very important. It's one of the findings that you had. It's a part of bidding. In Mexico, it's really transparent, but it's really complicated. We have also to ease in the way of doing this bid system for Mexico. It's really transparent, but it's really baroque, and we have to change this. And we're also working on that. This one, the last one, is something that we must do. The other one says something that we have been developing in the past years. Thank you, and that's very clear. And thank you also to talk about a few different industries and a few different initiatives you've been taking in this regard. I know that we have to wrap up soon, but I wanted to see if there's perhaps one question from the audience. If not, I will ask one additional question myself, because I find it's quite interesting. So let's see if there's any questions for any of the panelists here. It's OK. So the question that I wanted to ask is now we've really zoomed in to, let's say, what can be improved in the case of Mexico, in the case of the medical device industry. And then you say there's potential to take away some trade barriers and to have a better cost position. Having this, does that also immediately imply, and I don't really know who's best place to answer this question, but improving this on the Mexico side, does that immediately imply that other countries, the ones to which is being exported, are also better off because of it? Because that's often one of the questions that you get. Is there anyone who wants to take on that question? I can take a start. And then maybe, Pason, I think you basically refer to the concept of a global value chain. And I think it's definitely fundamental. And the way that value chains work and develop is that, I mean, sure, if you can make them work at the same time everywhere, fantastic. But that is the same thing as believing you're going to achieve the multilateral WTO agreement. Not always so easy. The TPP takes you six years. The Doha run, what, 15 already? So I just make that comparison to also, if you're saying you're going to lower the standards at some particular level, and I think that's what I think you saw. I think I mentioned it with the value agreement, the WTO trade facilitation agreement, that that creates a great threshold. But definitely, at least from the World Economic Forum side, what we're doing is we're definitely going beyond that. Because what you've mentioned is definitely to prepare and to have readiness from the country to be at the highest level. Someone mentioned Hong Kong, Singapore, the benchmark. So that's definitely what you want to do. What you want to place yourself, where you want to go. If you can do it unilaterally, fantastic. That's only going to benefit you. But of course, that is going to raise the playing field for the rest of the world. So definitely, I think you're right. I think you need to go country by country and what you can do to get a great, but you need champions. OK. Well, I see a lot of nodding here. And if you want to finalize, perhaps. Yeah, just one additional thought, I think. Despite the fact that we believe that looking at a specific industry is very powerful, as a way to highlight things, most of the things you need to do will actually benefit other industries that are related in the country. And in the end, this is all about what are the industries at the tipping point. These industries are almost competitive, but not quite. And frankly, almost competitive is not good enough. You need to be competitive. So you need to be world-class competitive to be an export platform. And that's how we think. You look at this, you improve this. And competition is tough. You're never done. You'll get competitive now, and then someone else will try and out-compete you, and then you'll catch up again. Very fast. If you build a barrier, you will grow a company that is not competitive inside of your country. If you throw this barrier down, then you will have really the real competitiveness of the country in your country, of the world in your country. Then the idea is to really take away all kind of barriers and to have the best of the best in your country. OK. And with that, I want to thank you all for coming here today, and thanks for making it to the press conference. Thank you so much. Thank you. Thank you very much.