[Senate Hearing 115-769]
[From the U.S. Government Publishing Office]
S. Hrg. 115-769
THE U.S.-MEXICO RELATIONSHIP: ADVANCING
SECURITY AND PROSPERITY ON BOTH SIDES OF THE BORDER
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON WESTERN
HEMISPHERE, TRANSNATIONAL
CRIME, CIVILIAN SECURITY,
DEMOCRACY, HUMAN RIGHTS,
AND GLOBAL WOMEN'S ISSUES
OF THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
MARCH 29, 2017
__________
Printed for the use of the Committee on Foreign Relations
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web:
http://www.govinfo.gov
_____
U.S. GOVERNMENT PUBLISHING OFFICE
39-933 PDF WASHINGTON : 2020
COMMITTEE ON FOREIGN RELATIONS
BOB CORKER, Tennessee, Chairman
JAMES E. RISCH, Idaho BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida ROBERT MENENDEZ, New Jersey
RON JOHNSON, Wisconsin JEANNE SHAHEEN, New Hampshire
JEFF FLAKE, Arizona CHRISTOPHER A. COONS, Delaware
CORY GARDNER, Colorado TOM UDALL, New Mexico
TODD YOUNG, Indiana CHRISTOPHER MURPHY, Connecticut
JOHN BARRASSO, Wyoming TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia EDWARD J. MARKEY, Massachusetts
ROB PORTMAN, Ohio JEFF MERKLEY, Oregon
RAND PAUL, Kentucky CORY A. BOOKER, New JerseyQ02
Todd Womack, Staff Director
Jessica Lewis, Democratic Staff Director
John Dutton, Chief Clerk
SUBCOMMITTEE ON WESTERN HEMISPHERE,
TRANSNATIONAL CRIME, CIVILIAN SECURITY, DEMOCRACY,
HUMAN RIGHTS, AND GLOBAL WOMEN'S ISSUES
MARCO RUBIO, Florida, Chairman
RON JOHNSON, Wisconsin ROBERT MENENDEZ, New Jersey
JEFF FLAKE, Arizona TOM UDALL, New Mexico
CORY GARDNER, Colorado JEANNE SHAHEEN, New Hampshire
JOHNNY ISAKSON, Georgia TIM KAINE, Virginia
(ii)
C O N T E N T S
----------
Page
Rubio, Hon. Marco, U.S. Senator From Florida..................... 1
Menendez, Hon. Robert, U.S. Senator From New Jersey.............. 4
Richardson, Hon. Bill, Former Governor of New Mexico, Santa Fe,
New Mexico..................................................... 6
Noriega, Hon. Roger F., Visiting Fellow, American Enterprise
Institute, Washington, DC...................................... 8
Prepared statement........................................... 10
(iii)
THE U.S.-MEXICO RELATIONSHIP: ADVANCING SECURITY AND PROSPERITY ON BOTH
SIDES OF THE BORDER
----------
WEDNESDAY, MARCH 29, 2017
U.S. Senate,
Subcommittee on Western Hemisphere, Transnational
Crime, Civilian Security,
and Global Women's Issues,
Committee on Foreign Relations,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:23 a.m. in
room SD-419, Dirksen Senate Office Building, Hon. Marco Rubio,
chairman of the subcommittee, presiding.
Present: Senators Rubio [presiding], Flake, Gardner,
Menendez, Udall, Kaine, and Shaheen.
OPENING STATEMENT OF HON. MARCO RUBIO,
U.S. SENATOR FROM FLORIDA
Senator Rubio. This hearing of the Subcommittee on the
Western Hemisphere, Transnational Crime, Civilian Security,
Democracy, Human Rights--you guys know the committee--comes to
order. It is a long title. We have got the longest name of
anybody. The subcommittee comes to order. We just spent too
much time talking about the title of the committee.
The title of this hearing is the U.S.-Mexico Relationship:
Advancing Security and Prosperity on Both Sides of the Border.
We are going to have one panel testify today. It will
feature the Honorable Roger Noriega, Ambassador and Visiting
Fellow at the American Enterprise Institute, and the Honorable
Bill Richardson, former Governor of New Mexico, among other
important positions that he has held. Of course, both have
impressive careers in this field, and we are fortunate and
grateful to them for being with us today. We look forward to
your testimony.
Today we will discuss a topic that I believe is both timely
and important, and that is how we can continue to advance the
deep economic, security, and people-to-people ties between the
United States and Mexico that have proven to be vital for the
wellbeing of both of our respective nations.
I recently joined my colleagues in introducing a bipartisan
resolution to reaffirm the importance of bilateral cooperation
that advances our Nation's national security and economic
interests and underlines the strategic partnership between the
United States and Mexico. And I urge all of my colleagues to
join us in supporting this bipartisan resolution.
Earlier this week, I welcomed Mexican Ambassador Gutierrez
to his new post in Washington, DC. He has been on the job now
for about 3 weeks, and I extended my sincere and strong desire
to work together on the challenges and on the opportunities we
both share for our respective countries.
To this end, it is my hope that to address common
challenges, including counterterrorism and counternarcotics, we
can advance security cooperation between the United States and
the Mexican militaries, law enforcement, and intelligence
communities. Improving security also requires a judicial system
that investigates and prosecutes crimes.
As indicated in the State Department's 2016 International
Narcotics Control Strategy Report, Mexico remains a major
transit point for illegal drugs destined for the United States,
as well as an originator for both heroin, marijuana, and
methamphetamine. And I note that, by the way, not as a negative
slight against Mexico because on the other side of that
equation the transit point is to the United States and it is
our consumption problem that is an equal part of that problem.
We should also note that the Mexican Government has
increased its public and national security budget to more than
$15.4 billion with an aim to combat and prevent organized
crime.
Under the Merida Initiative partnership, Congress provided
nearly $1.5 billion from fiscal year 2008 to 2016. This
assistance also addresses human rights, the rule of law, and
public security.
However, drug trafficking and related violence in Mexico
continues to pose a significant problem to Mexico's security
and to its economic development. The DEA notes that Mexican
criminal networks transport the bulk of their goods over the
southwest border through ports of entry using passenger
vehicles or tractor-trailers. In passenger vehicles, the drugs
may be held in secret compartments, while in tractor-trailers,
the drugs are often commingled with other legitimate goods.
Less commonly used methods to move drugs include smuggling them
through cross-border underground tunnels and on commercial
cargo trains, small boats, and ultra-light aircraft.
Mexico is also experiencing an alarming surge in poppy
cultivation and heroin production. According to the U.S. Office
of National Drug Control Policy, 28,000 hectares of opium poppy
were cultivated in Mexico in 2015. That was up from 17,000 in
2014, a 64.7 percent increase. Virtually all of Mexico-sourced
heroin is consumed in the United States, and Mexico is
reportedly the source of more than 90 percent of the heroin
seized in the United States. That is up 50 percent from 2012.
Additionally, new synthetic opioids like fentanyl that are
substantially more powerful and deadlier than heroin are
increasingly being produced and trafficked into the United
States through Mexico using precursor chemicals from China.
We are all, I think, committed to supporting the work of
law enforcement agencies on both sides of the border to counter
the increase in cross-border trafficking of heroin and fentanyl
and to fight transnational criminal organizations. But this
must be done with the support and the attention of both
nations.
Senator Markey and I have introduced the INTERDICT Act,
which would provide U.S. Customs and Border Protection with
better tools to detect and stop fentanyl coming into the
country.
As neighbors, we need to tackle security challenges
together. Our nations share a border of nearly 2,000 miles, but
we also share a long history of cooperation and a mutual desire
to see peace and prosperity through Central and South America.
Both countries have worked jointly to further advance and
protect democracy as well as to support democratic institutions
in other parts of the western hemisphere, as best evidenced by
yesterday's vote at the OAS in which Mexico stood strongly on
behalf of freedom and democracy in the region.
We cannot talk, of course, about our relationship with
Mexico without mentioning the North American Free Trade
Agreement, NAFTA, and our deep economic ties across the border.
According to the U.S. Trade Representative, the U.S. exports to
Mexico and Canada are responsible for more than 3 million
American jobs, and both countries purchase more American goods
and services than any country in the world. However, according
to information published by the Census Bureau, the trade
deficit with Mexico went from a surplus to a deficit, and it
has continued to grow since NAFTA went into effect.
The current administration has signaled its intention to
modernize this agreement. We need to ensure that our trade with
Mexico is free but also fair.
For example, Florida's agriculture community--some segments
of it have been harmed in the past by Mexico's ability to
supply the U.S. market with produce in large quantities and at
prices that are often below production costs. This is
particularly true for our tomato growers and our strawberry
growers. This past weekend, I was in the Tampa Bay area. I
visited the Florida strawberry fields, and I heard about the
challenges our farmers have faced from unfair competition.
These are issues that Secretary Ross and our Trade
Representative will have to address as changes are considered.
If done correctly, I think the efforts to modernize NAFTA can
produce significant economic and strategic benefits for all
three countries.
In addition to these challenges, we also have the issue of
immigration and of border security. While the rhetoric on the
subject is sometimes heated, both of our nations have a
responsibility and an interest in stemming the flow of illicit
activity crossing the U.S.-Mexico border. We often think of
this issue in terms of America's southern border. We also need
to be cognizant of the pressure Mexico faces along its own
southern border due to migration from Central America and
through Central America.
For our two nations, this is not simply a question of how
we can improve our border security. We need to think and act
strategically to advance policies that advance democracy,
security, and economic prosperity throughout the entire
hemisphere because when people feel confident in the future in
their home countries, they do not have to migrate to the United
States illegally, at least not at the levels we have seen
throughout the decades. We need to work with our Mexican
partners to enhance their ability to police and defend their
own southern border, which is an entry point for many migrants
who seek to transit through Mexico, more often than not, on
their way to the United States.
As I stated earlier, the U.S. and Mexico have a long
history of cooperation. As Senators Cornyn, Flake, Udall, and
others representing border states will tell you, our two
countries are intertwined by history and by shared interest in
the future. Our people have worked together and interacted for
generations. Many Americans of Mexican descent have achieved
great success in business, sports, arts, medicine, politics,
just to name a few. And it is in our mutual interest to
continue to work together to ensure economic opportunities and
strengthen our security on both sides of the border.
I look forward to hearing from both of our witnesses about
this critical relationship.
And with that, I turn it to the ranking member, Senator
Menendez.
STATEMENT OF HON. ROBERT MENENDEZ,
U.S. SENATOR FROM NEW JERSEY
Senator Menendez. Thank you, Mr. Chairman. There was much
of what you said that I agree with you on, and I appreciate you
holding this second hearing of the Western Hemisphere
Subcommittee on a critically important bilateral relationship.
I want to thank both of our ambassadors for being here, and
my good friend, Bill Richardson, for traveling here today. I
greatly appreciate that and his knowledge particularly of this
relationship.
It would be a gross understatement to say that Mexico is a
critical ally, partner, and most importantly, neighbor of the
United States.
Now, over the past few months, Mexico and the United
States' relationship with Mexico has been in the spotlight. And
I would like to start by outlining some facts. And while I am
sorry I have to make this clarification, let me be clear that
these are factual facts that reflect the truth.
The United States cannot effectively manage our southern
border in a way that protects, serves, and benefits Americans
without collaboration and cooperation from the Mexican
Government and the Mexican people. Since 2007, more Mexicans
have been leaving the United States to return to Mexico than
have been arriving from Mexico. In fact, between 2009 and 2014,
there was a net exodus of 140,000 Mexican migrants back to
Mexico.
As a geographic transit point since 2014, Mexico has
experienced the same surge in unaccompanied minors and
undocumented migrants from Central America that we have here.
Mexico intercepts around 150,000 Central American migrants
seeking to come to the United States. In fact, the United
States and Mexico are working together to find the best
solution for addressing these children and families fleeing
violence and poverty.
The United States and Mexico have a nearly $600 billion per
year trading relationship in goods and services that is overall
fairly balanced. And in fact, the United States actually has a
trade surplus in services of about $10 billion. After Canada,
Mexico is the most important trading partner. They are the
second largest trading partner export market with Mexicans
consuming more than $240 billion of U.S. goods. Mexico plays a
distinctive role in U.S. trade overall due to the unique nature
of integrated supply chains. Around 5 million jobs in the
United States depend directly on bilateral trade with Mexico,
largely tied to our export market.
Now, during his campaign, our current President rallied
crowds around the ridiculous idea of building a wall along the
entire U.S.-Mexico border and the more ludicrous proposition
that Mexico would somehow pay for this wall. I will start by
noting that the last time a nation tried to wall itself off in
East Berlin in the 1940s, that did not turn out so well. Beyond
ludicrous, this rhetoric, along with its outrageous and
misguided admonishments, including that all Mexicans are
rapists and drug dealers, have in fact undermined American
national security and undermined good will that Mexicans have
towards the United States, not just our political leaders, but
our citizens as a whole. To anyone with a faint understanding
of foreign policy or the history of Mexico, some of whose
territory now comprises a large chunk of the southern part of
the United States, the idea of having Mexico pay for this idea
is nonsense.
As Mexico gears up for its own elections in 2018, paying
for the wall has driven a growing movement of nationalism that
could see political leaders emerge who harbor negative views of
the United States.
Now, the President seems to be trying to find ways for
Americans to pay the $8 billion to $25 billion this project
could cost. And recognizing the infeasibility of his own
campaign promises, the President is now seeking ways for
American taxpayers to pay for the wall. That does not come as a
shock to me, but I was genuinely surprised to learn that of all
the funding sources President Trump plans to pay for the wall
by using elements from other homeland security programs,
including cuts to the Coast Guard, airport, port security, and
most astonishing of all, by charging a special increase on
homeowners flood insurance premiums, something that I can
assure you I will fight tooth and nail, having lived through
Super Storm Sandy.
Many of the challenges facing the United States, including
eradicating the scourge of drugs like opioids and fentanyl,
combating the drug traffickers who bring them into this
country, securing our borders in a responsible way that serves
the interests of our entire population cannot be effectively
confronted, let alone solved, without cooperating and
strategically planning with Mexico.
In fact, since the 1980s, the United States and Mexico have
built effective strategies that improved the lives and national
security of Americans and Mexicans. This cooperation was
formalized largely through the Merida Initiative, built on
trust and the principle of shared responsibility that has
served as the basis of this productive relationship for
decades. We rely on Mexican cooperation for critical
intelligence sharing, counterterrorism, and counternarcotics
trafficking operations.
Foreign aid to Mexico that this administration is seeking
to reduce by drastic and draconian measures contributes
directly to programs that help Mexican law enforcement and
immigration authorities address their southern borders and
migrants from other countries. Our economic development support
directly aids Mexicans' purchasing power which often goes to
U.S.-made goods. Higher levels of economic development and
education in Mexico lead to less pressure for emigration and
generally more stable and resilient communities that are able
to stave off poverty and criminal networks who seek to exploit
it.
That Mexico, with all of its national pride, would allow
for the extradition of El Chapo Guzman speaks volumes about not
only the skill that their forces have developed but also the
trusting relationship we have fostered.
While no country is perfect, Mexico's police and military
with investment, training, and cooperation of the United States
have made incredible strides in protecting their population and
combating drug traffickers. We need to continue and expand
these efforts, particularly to support judicial and governance
reforms that will help Mexico tackle the root causes fueling
criminal networks and drug trafficking.
The bottom line is that Mexico and Mexicans have the most
direct impact on Americans in their daily lives than just about
any other country in the world. It is vital to our national
security and to our continued peaceful prosperity in the
northern part of the western hemisphere that the United States
and Mexico continue strengthening our relationship and forging
new areas of cooperation and growth.
I look forward to hearing both of your testimonies and
engaging in a dialogue with you.
Thank you, Mr. Chairman.
Senator Rubio. Thank you, Senator Menendez.
Just as a side note, my understanding is next week there
will potentially be working coffee with the foreign minister of
Mexico. He was saying Mexico. So I got to work that in there
too.
And the second is that my understanding is that late in
April, a delegation of Mexican Senators will be traveling here
as well. And I hope my colleagues take an opportunity to attend
both of those gatherings. It is really important to establish
those bonds, both with our counterparts in the Mexican Senate
and also with the foreign minister.
Thank you both for being here. Governor Richardson, thank
you. I look forward to your testimony.
STATEMENT OF HON. BILL RICHARDSON, FORMER GOVERNOR OF NEW
MEXICO, SANTA FE, NEW MEXICO
Ambassador Richardson. Thank you, Mr. Chairman and members
of the subcommittee. I am not going to enunciate the friendship
I have had with those outstanding three members of the
minority. And, Mr. Chairman, I have always respected you and
your knowledge of Latin America and your excellent Spanish,
which I hope you try to match Senator Menendez.
Senator Rubio. It is not as good as Senator Kaine's, but we
are both working on it.
[Laughter.]
Ambassador Richardson. Mr. Chairman, this is a very
important hearing, and I am glad you are focusing on the U.S.-
Mexico relationship. I have been involved with this issue as a
governor, as somebody who grew up part of my life in Mexico, as
a Congressman, as Energy Secretary. I have never seen the
relationship in such bad shape as it is today. It is in
tatters, and steps need to be taken to better--one of the most
important relationships we have I think among the top there
countries that the United States has--I will not name the
others, but it is obvious--I think Mexico is one of those. And
I am extremely concerned that we are heading into a period
where the issue of paying for the wall, the building of the
wall, the NAFTA negotiation, the threat of an import tax, the
deportation--and I commend Senator Menendez. I know you did an
event a couple of days ago on that issue. Eleven million
potential deportations.
The government-to-government relationship is shaky, but I
worry about the relationship between the American people and
the Mexican people. There is resentment. They feel insulted--
the Mexican people. I spend quite a bit of time there. My
sister lives there. And I am concerned. And I think it is
important that in the course of the hearing, Ambassador Noriega
and I might have some suggestions on what to do about it.
My worry is that what we have is a Mexican election coming
up. And I think it is 16 months. But the election really starts
in 5 months with state elections. And what we want to do is
find ways to deal with the problem issues that affect the
relationship. On the wall, my hope is that other alternatives
are looked at. I know in the Senate and the House, there is
great concern about funding the wall. I hope that is abandoned.
I hope the import tax discussion ends. The NAFTA negotiations.
Yes, I think the U.S. NAFTA relationship needs to be
modernized, but I think an acceleration of those negotiations
needs to take place. Otherwise, they are going to head into
these negotiations into the Mexican election period.
I would also add that--echoing the views of all of you, and
that is that we have transnational issues affecting the
relationship. The best way to deal with transnational threats,
whether it is health, whether it is terrorism, whether it is
immigration, whether it is crime is together. And Mexico and
the United States need each other, and I see us heading into a
situation where the government-to-government relations needs to
be revitalized but very, very soon.
I think the statistics are very strong. You asked me to
focus on some of the issues relating to security and strategic
issues. There is an extraordinary level of collaboration
between the U.S. and Mexico to address terror threats and
capture dangerous criminals. You mentioned El Chapo. Every
airline passenger who arrives in Mexico is vetted against the
U.S. criminal and national security database. Heroin addiction
is epidemic in the United States, and we rely on Mexico's
cooperation in allowing DEA agents to operate on the ground.
I think as Senator Menendez mentioned, on immigration, net
migration to the U.S. is negative. Not a single terrorist act
has been committed in the United States by anyone that entered
via the Mexican border. Mexico has cooperated with the U.S. by
deporting hundreds of thousands of Central American migrants
bound for the U.S. I have some views on that. I think we have
got to be careful, especially with families and children.
But across the board, on the economic front, we trade
approximately five times as much with Mexico as we do with
Great Britain. Five times as much. Mexico is our third largest
trading partner. Mexico is our second largest export market.
And Mexicans buy more American goods than Japan, Germany, South
Korea, and Great Britain combined--combined. Mexico buys more
from the U.S. than China, Japan, and the UK combined. And
additionally, the two NAFTA countries, Canada and Mexico,
represent 30 percent of all U.S. trade, 35 percent of our total
exports. So on the domestic side, 23 states in the United
States count Mexico as their number one or number two export
market. In 2015, foreign direct investment from Mexico in the
U.S. was $52.5 billion.
I think those most concerned with the NAFTA negotiations
and with the breakdown in trade are agricultural people. I know
there are issues in Florida, but if you look at Midwest corn,
$2.5 billion in exports could be jeopardized. Auto plants,
food, across the board.
I will cite one statistic. Six million American jobs depend
on U.S. trade with Mexico according to the U.S. Chamber of
Commerce. But most importantly and to put our trade deficit
with Mexico into perspective, 40 cents of every dollar's worth
of goods imported from Mexico is made in the United States.
So in conclusion--and I am sticking to my 5 minutes here. I
see this thing glaring at me, and I will observe it because I
think the best questions can come in a dialogue.
When I was Governor of New Mexico, the State of Chihuahua
was our partner. And Senator Udall knows these issues well.
NAFTA created a lot of jobs along our border, good jobs, good
high paying jobs. But the cooperation that I had with the
Governor of Chihuahua on issues relating to crime, on issues
relating to heroin addiction, issues relating to immigration
was exceptional. And the worry that I have is the border
states, the 12 border states, because we are talking about four
on the U.S. side and eight on the Mexican side, have tremendous
cooperative relationships on security, on trade, on drug
interdiction, on extradition that would be jeopardized.
So my hope is that in the next few months, the sooner the
better, I think this subcommittee can play an important role
because I see right now the executive branch is not necessarily
coordinating the best they should on the relationship. I think
this subcommittee can play an important role in bringing an
institutional framework of the U.S.-Mexico relationship where
the State Department and the Commerce Department take the lead
in the relationship, perhaps with your intervention, and not
the White House. I think this is a relationship that is too
valuable to let drift away into domestic politics.
So I thank you, Mr. Chairman. I thank members of the
subcommittee. And I appreciate your time.
Senator Rubio. Thank you, Governor.
Ambassador Noriega?
STATEMENT OF HON. ROGER F. NORIEGA, VISITING FELLOW, AMERICAN
ENTERPRISE INSTITUTE, WASHINGTON, DC
Ambassador Noriega. Thank you. Good morning, everyone.
Mr. Chairman, Ranking Member, members of the committee, it
is an honor to be with you this morning to discuss the
importance of Mexico to our prosperity and security and its
potential importance in terms of foreign policy interests of
the United States as, Mr. Chairman, you referred to Mexico's
leadership really on the Venezuela question at the OAS. And I
commend you for calling out those countries that could not find
their way to work with the United States and other democratic
countries vis-a-vis the narco dictatorship that is taking shape
in Venezuela.
It is really vitally important--and I agree with the
Governor here--that Members of the U.S. Senate, U.S. Congress
generally, and other stakeholders in this relationship speak
out to explain the vast mutual benefits that derive from our
economic partnership with Mexico, as well as from our
cooperation to confront drug trafficking and to secure our
border. Both sides can do more to realize the full potential of
NAFTA and of our law enforcement cooperation. But it is
precisely why a respectful dialogue is essential as we expand
and deepen those ties.
It is well known, as others have referred to already this
morning, that Mexico is the United States' second largest
trading partner after Canada and the third largest two-way
trading partner behind Canada and China. But not many realize
that our $530 billion two-way trade with Mexico is more than
that of Japan, Germany, and South Korea combined. And when you
back out the crude oil exports from these trade figures,
Mexico's two-way trade with the United States actually edges
out Canada to make it our largest trading partner.
Much is made of the $60 billion trade deficit with Mexico.
However, the U.S. trade encompasses integrated cross-border
supply chains or production sharing. As a result, 40 percent of
every dollar of Mexican exports is actually U.S. content. Five
million American jobs depend on trade with Mexico, 14 million
on NAFTA more generally. And Mexican companies have invested
$16 billion in the U.S. economy, $3.7 billion in manufacturing.
There is no doubt that NAFTA has been a success for all of
the three countries participating. It has fueled momentum
behind the modernization that has encouraged Mexico to
strengthen its democratic institutions and diversify its
economy, all of which make Mexico a more cooperative and stable
neighbor.
As good as that cooperation on cross-border issues is
today, it could be better. The United States needs Mexico to do
more to promote border security to protect our citizens from
drugs and terrorism. Mexico's role on border security really is
critical, as has been stressed today. Our country cannot
formulate an effective anti-drug strategy, including a plan to
confront the opioid crisis, without intense support of Mexican
authorities who are the last line of defense against illegal
drugs and immigrants bound for our southwest border.
In recent years, not many folks would realize, the Mexican
migration authorities have interdicted 560,000 persons, mostly
illegal immigrants from Central America who are headed for our
border. That is a half a million people who did not have a
chance to test our resources on that border.
In any case, Mexicans should not allow themselves to be
distracted from the important reform agenda that is essential
to building its own modern prosperous nation. Mexico would be
better if it were to exercise the political leadership
internally to take on corruption, which fuels criminality, to
modernize a criminal justice system that unfortunately today
sows insecurity, to adopt fiscal responsibility and tax reform
measures, to undertake meaningful energy sector modernization,
and to adopt a host of measures that will make itself more
competitive in the world. Until these things happen, Mexico
cannot take full advantage of the trade or attract the capital
that it needs to build a more modern economy.
It is interesting that in recent months, Mexicans have not
overreacted. At least the Mexican officials have not
overreacted to the anti-Mexican rhetoric. Instead, they have
looked to open new channels, more serious dialogue, more
reflective based on information about the important
relationship that we have because I think they realize that
those who stand to gain from bad relationships between the
United States and Mexico are those same people in Mexico who
disparage the economic relationship and nationalists who
criticize cooperation with U.S. law enforcement and migration
authorities.
Mr. Chairman, Americans must admit that many of Mexico's
security woes and instability is a direct result of being on
the threshold of a nation with an insatiable desire for
dangerous illegal drugs. We should be trying to make its anti-
drug mission easier, not complicating the ability of that
government to cooperate with the United States.
Finally, American stakeholders in the United States'
bilateral relationship, particularly businesses that rely on
the integrated supply chain and those whose jobs depend on
Mexican partners and investors, must do more to explain the
tangible and substantial benefits of ties with Mexico and to
advocate a more constructive engagement and mutually respectful
dialogue between our two great nations.
Thank you very much, Mr. Chairman.
[The prepared statement of Ambassador Noriega follows:]
Prepared Statement of Ambassador Roger F. Noriega
The American Enterprise Institute (AEI) is a nonpartisan,
nonprofit, 501(c)(3) educational organization and does not take
institutional positions on any issues. The views expressed in this
testimony are those of the author.
key points
President Trump's rhetoric about Mexico obscures the
disproportionate importance of Mexico to U.S. prosperity and security.
The economic partnership and security cooperation with Mexico is not a
problem, it's a solution.
Mexico is the United States' second-largest export market (after
Canada) and third-largest trading partner (after Canada and
China), with a two-way trade that amounts to $530 billion (more
than Japan, Germany, and South Korea combined).
If oil is taken out of the equation, Mexico would surpass Canada as
the United States' second largest good trading partner.
Mexico's two-way trade with the United States would stand at
$511 billion and Canada's at $505 billion.
Mexico is the fourth largest source of foreign crude oil imported
by the United States.
Mexico is the top buyer of U.S. corn (27% of the country's exports
representing $2 billion). Mexico is the world's No. 1 importer
of U.S. dairy products. A disruption or loss of that market
would be devastating to U.S. agriculture.
NAFTA is an indisputable success story for both the United States
and Mexico.
It has helped companies build a mighty North American market,
contributing to U.S. global competitiveness.
U.S.-Mexico trade encompasses integrated cross-border supply
chains and ``production sharing,'' in which 40 cents of every
dollar of Mexican exports are U.S. content.
Five million U.S. jobs depend on trade with Mexico; 14 million
depend on NAFTA.
NAFTA has fueled momentum toward modernization that has encouraged
Mexico to strengthen its democratic institutions and modernize
and diversify its economy--all of which makes Mexico a more
cooperative and stable neighbor.
As good as cooperation on cross-border issues is today, it could be
better. The United States needs Mexico to do more to promote border
security to protect our citizens from drugs and terrorism. That is less
likely to happen if U.S. officials peddle half-truths and hurl threats
that undermine mutual confidence.
The United States cannot formulate an effective anti-drug
(including opioids) strategy without receiving more support
from Mexican authorities who are the last line of defense
against illegal drugs bound for our southwest border.
In recent years, Mexican migration authorities interdicted 560,000
persons, mostly illegal immigrants from Central American
countries, headed for our border.
Misinformation and distortions undermine the effort to build an
even more robust economic and security partnership. Thus far, White
House advisors and their Mexican counterparts appear to have
established a more serious and mutually respectful dialogue.
Mexicans should not allow themselves to be distracted from an
important reform agenda that is essential to building a modern,
prosperous nation. Anti-Mexico rhetoric is a destructive and costly
distraction.
Those who stand to gain from a return to overheated rhetoric are
populists in Mexico who disparage the economic relationship and
nationalists who criticize cooperation with U.S. law enforcement and
migration authorities.
Americans must admit that many of Mexico's insecurity woes are the
direct result of being on the threshold of a nation with an insatiable
desire for dangerous illegal drugs.
American stakeholders in the U.S.-Mexico bilateral relationship--
particularly businesses that rely on the integrated supply chain and
whose jobs depend on Mexican partners and investors--must do more to
explain the tangible and substantial benefits of ties to Mexico and to
advocate for a more constructive engagement by U.S. authorities.
introduction
During his candidacy for the U.S. presidency, Donald J. Trump
tapped into American anxiety about lost jobs and illegal immigration to
garner popular support. That anxiety is very real, but candidate Trump
offered a questionable diagnosis and impractical remedy. Unfortunately
for Mexico, his rhetoric singled out that country as a scapegoat,
accusing the government of taking advantage of the United States in the
North America Free Trade Agreement and saying that it ``forces many bad
people into our country, . . . including drug dealers and criminals of
all kinds.''
In the ensuing months, experts and journalists have systematically
disproven these accusations. However, significant damage has been done
to Mexico's economy and American credibility as a security partner.
Twenty years ago, such animus from a key U.S. political figure, let
alone a one who waged a successful bid for the presidency, would have
been met with a nationalistic backlash. Instead, the Mexican government
and much of the political class has sought to minimize the damage--
recognizing that their country's fate is tied inexorably to North
America.
In recent weeks, the White House advisors managing the relationship
have established a more serious and constructive dialogue. However,
President Trump has not disavowed his most negative comments about
trade with Mexico and illegal Mexican immigrants, of which there are
11-12 million living in the United States today; nor has he dropped his
insistence that our neighbor to the south will pay for a 2,000-mile
border wall that experts say could cost as much as $20 billion.
It is important to acknowledge that, if the President continues to
bash Mexico to placate his political base, one of the United States'
most important bilateral relationships is at risk. Although the damage
so far can be measured in the value of the Mexican peso and the anxiety
of Latin American immigrants, also at stake are billions of dollars in
two-way trade, millions of U.S. jobs that depend on an integrated
cross-border supply-chain, and essential cooperation against illicit
drugs and a potential wave of illegal immigrants.
mexico's contribution to u.s. prosperity
Mexico is the United States' second-largest export market (after
Canada) and third-largest trading partner (after Canada and China),
with a two-way trade that amounts to $530 billion (more than Japan,
Germany, and South Korea combined), according to the office of the U.S.
Trade Representative. USTR reports:
U.S. goods imports from Mexico totaled $295 billion in 2015, up
0.2% ($667 million) from 2014, and up 73% from 2005. U.S. imports from
Mexico are up 638% from 1993 (pre-NAFTA). U.S. imports from Mexico are
up 638% from 1993 (pre-NAFTA). U.S. goods exports to Mexico in 2015
were $236 billion, down 1.6% ($3.9 billion) from 2014 but up 97% from
2005. U.S. exports to Mexico are up 468% from 1993 (pre-NAFTA). U.S.
exports to Mexico account for 15.7% of overall U.S. exports in 2015. .
. . The top import categories in 2015 were: mineral fuels ($70
billion), vehicles ($55 billion), machinery ($20 billion), special
other (returns) ($14 billion), and plastics ($11 billion).
However, these data not take into account the ``production-
sharing'' that is integral to the robust cross-border manufacturing
between the two countries; as a result, about 40 percent of Mexico's
exports actually is U.S. domestic content being re-exported into the
U.S. market. That simple fact means that the $60 billion trade deficit
figure cited repeatedly by President Trump is misleading.
Mexico also is our fourth largest source of foreign crude oil,
according to the U.S. Energy Information Administration.
An article published in Foreign Policy just this week offers a
strong refutation of the suggestion that the lost of millions of U.S.
jobs can be attributed to NAFTA:\1\
From 1994 to 2000, after NAFTA was enacted but before the 2001
recession and the reduction of investment restrictions in China, U.S.
manufacturing employment rose from 16.8 million jobs to 17.3 million.
While estimates vary, research suggests NAFTA had a modest but positive
effect on the U.S. economy. A 2014 study by U.S. International Trade
Commission economists found that NAFTA slightly increases national real
wages and employment in the U.S. machinery and metal industries, while
slightly decreasing employment in the sugar and apparel sectors.
mexico's contribution to u.s. security
(illegal drugs and illegal immigration)
Mexico benefits materially from its proximity to one of the world's
most dynamic markets and its partnership in NAFTA. However, the country
also pays a high price for being located in the heart of the transit
zone through which tons of illicit narcotics and illegal immigrants
flow to the U.S. border. Mexico sits between the largest consumer of
illicit drugs (the United States) and the largest producers of cocaine
(Colombia, Peru and Bolivia). It also borders Central American nations
that are the source of an influx of illegal immigrants.
Transnational organized criminal networks--which no country can
confront on its own--attack the already weak institutions in Mexico in
order to carry out production on the doorstep of the U.S. market and to
move product (and currency from illegal sales) through Mexican
territory. Successive Mexican presidents have implemented policies
aimed at disrupting these drug-trafficking organizations, but the
result has been a decade-long bloodbath that has cost more than 100,000
deaths to the ensuing violence.
Criminal organizations operating in Mexican territory have become
the top producers of methamphetamines and heroin. In fact, 90 percent
of heroin consumed in the United States is produced in Mexico.\2\ Far
from ``forcing'' these criminals over the U.S. border, Mexican
authorities and innocent civilians have paid a very dear price for
trying to interdict these criminals and their contraband and to
dismantle their operations.
The opioid epidemic in the U.S. is fueling this production.
``According to the Department of Health and Human Services, More people
died from drug overdoses in 2014 than in any year on record, and the
majority of drug overdose deaths (more than six out of ten) involved an
opioid. Since 1999, the rate of overdose deaths involving opioids--
including prescription opioid pain relievers and heroin--nearly
quadrupled, and over 165,000 people have died from prescription opioid
overdoses.'' \3\
The State Department's 2017 International Narcotics Control
Strategy Report, using figures from the office of Mexico's Attorney
General, quantifies Mexico's anti-drug seizures in recent years. From
April 2014 to September 2015 (most recent figures) ``Mexico reportedly
seized 1,346.4 metric tons (MT) of marijuana (a 45 percent increase
from the same period in 2013 to 2014), two MT of opium gum (a 43
percent increase), 26.5 MT of methamphetamine (a 74 percent increase),
10.2 MT of cocaine (a 183 percent increase), and 272 clandestine
laboratories (a 90 percent increase).'' ``Mexico also reported seizing
653 kilograms (kg) of heroin from April 2014 to September 2015, an
increase from 455 kg during the previous reporting period, between
December 2012 and April 2014.''
Regarding illegal immigration, candidate Trump excoriated U.S.
authorities for failing to protect the U.S. border with Mexico. A wave
of unaccompanied minors crossing the border in the summer of 2015
exacerbated the impression among the American people that illegal
immigrants are crossing into the United States with impunity.
Unfortunately, Mr. Trump failed to make a distinction about the
national origin of recent arrivals, fueling the incorrect impression
that Mexicans are pouring across the Rio Grande.
The March 28 Foreign Policy piece by Messrs. Blackwill and Rappleye
reports that ``net migration from Mexico to the United States has been
negative since the 2008 recession. . . . Most exiting immigrants were
undocumented. The number of apprehensions of Mexican migrants at the
U.S. border fell from 1,637,000 in 2000 to 188,000 in 2015, reaching a
low level not seen since 1969.''
On the other hand, Mexican authorities continue to play a
significant role in quelling the 2015 crisis. Between October and April
2015, Mexico apprehended 92,889 Central Americans. In the same time
period, ``the United States detained 70,226 `other than Mexican'
migrants, the vast majority from Guatemala, Honduras and El Salvador,''
according to a report in U.S. News and World Report in June 2015.
As the United States confronts this quadrupling of opioid abuse in
recent years, it must be able to count on the Mexican government
deploying law enforcement resources to its southern and northern
borders and adopting other measures to interdict illegal activity.
Rhetoric that treats Mexico as a scapegoat comes dangerously close to
sabotaging crucial political support and law enforcement cooperation on
the Mexican side, without which the U.S. border would be overwhelmed.
populism and nationalism
To the extent Mexicans are disoriented by unhelpful rhetoric, they
may become more vulnerable to a populist of their own. Andres Manuel
Lopez Obrador (known commonly by his initials, ``AMLO'') has made a
career of fanning populist and nationalist flames. For example, he has
blamed NAFTA for causing more poverty and inequality in the country and
attacked presidents for welcoming U.S. law enforcement cooperation.
As Mayor of Mexico City, Lopez Obrador was responsible for
increasing the debt of the city by 400%. When he left office, the
city's debt increased to $4.3 billion (exchange rate of 2006). In that
same period, poverty increased from 9.9% to 10.3%.
In 2006, AMLO ran for the presidency, losing in one of the closest
elections in Mexico's modern history. After losing, he refused to
accept the results of the election and launched nationwide protests,
which paralyzed Mexico City's most important thoroughfares for almost a
year, causing billions of dollars in losses. In 2012, sought the
presidency for a second time, losing by a wider margin to current
President Enrique Pena Nieto. Again, AMLO rejected the results and
initiated nationwide protests.
In 2013, he opposed Pena Nieto's education reform, sponsoring
riots, especially in the States of Michoacan, Guerrero, Oaxaca and
Chiapas. These riots caused billions in losses and were responsible for
serious acts of violence and looting. In 2014, AMLO launched his own
party, Movimiento Regeneracion Nacional (MORENA), signaling his
intention to wage another campaign for the presidency in 2018. Last
year, he proclaimed himself the ``antisystem'' candidate.
The United States is among the greatest beneficiaries of a Mexico
that is democratic, stable, and cooperative. Any sensible U.S.
diplomatic strategy toward Mexico should avoid rhetoric and
confrontations that divide the two countries and strengthen the hand of
politicians who would undermine democratic capitalism and positive
bilateral relations with the United States.
mexico's daunting agenda
The United States should hope that Mexico's political leaders will
take steps to invigorate their nation's economy so that it contributes
even more to a healthy and dynamic North American market with greater
advantages over competitors in Asia and Europe. Anti-Mexican rhetoric
in the United States is a distraction from a daunting agenda of reforms
that Mexico must undertake to build a safer and more prosperous
country--and an even better neighbor.
When President Enrique Pena Nieto came into power on December 1,
2012, he proposed to increase public spending to jumpstart the economy.
Four years into the Pena Nieto administration, public spending has
increased by 16.2%. In 2012, public debt was 34.3% of gross domestic
product (GDP) and last December reached 50.5% of GDP, according to data
from the Ministry of Finance and Public Credit (SHCP). This spending
has not jumpstarted the economy, reduced poverty, or improved public
security.
According to the Economic Commission on Latin America and the
Caribbean (ECLAC), from 2010-2014 poverty in Mexico increased 2.9%. In
the decade from 2006-2016, Mexico's economy grew a meager 2.4%. In
recent years, the 60% decline in oil prices and 20% reduction in oil
production have generated losses that amount to 5% of the country's
GDP.
When the energy reform was enacted in 2013, it failed to attract
sufficient private capital because of the decline in the world prices
of oil. More recently, however, companies have started to invest
through the bidding rounds. So far, Mexico has received investments for
$70 billion, and there are already 80 companies from 18 countries with
contracts for the development of electricity and oil projects. Mexico
needs to continue to attract more companies and capital if it wishes to
recover lost ground. In fact, according to Pablo Zarate, member of the
Mexican Association of Hydrocarbons Companies (AMEXHI), Mexico needs to
attract investments of $26.6 billion a year to reach the goals of the
International Energy Agency, which estimates that Mexico can reach 2.8
million barrels by 2040 if it adopts a serious energy sector reform.
Mexico's currency, the peso, has lost significant value as a result
of bad economic policies and international factors, primarily the anti-
Mexico rhetoric of the Trump campaign. In 2016 alone the peso lost
nearly 20% of its value. This trend is not expected to improve this
year.
In terms of foreign direct investment Citibanamex has reduced its
2017 forecast by a third from $35.8 billion to $25 billion. According
to a report in the Financial Times, a bank research note predicted,
``The main feature [of 2017] will be uncertainty and therefore weak
investment.'' The bank predicted ``a shift from manufacturing to
extractive industries (oil and gas) and electricity, gas and water,
among others.''
Corruption costs Mexico approximately $17.3 billion a year, which
represents 9% of the country's GDP. According to Transparency
International's Index of Corruption for 2015, the country ranks 95 out
of 168 countries.\4\
In Mexico today, more than 50 organized crime organizations
continue to operate with impunity, often engaging in ultraviolent
action that terrorizes the population. The frontal assault against
powerful crime syndicates, which started in earnest under President
Felipe Calderon in 2006, left smaller but functioning cartels.
Unfortunately, federal and local authorities have been unable or
unwilling to adapt in order to thwart the smaller and less organized
splinter groups that emerged after the Calderon offensive.
Pena Nieto began his 6-year term deemphasizing the ``war on
drugs,'' failing to produce a comprehensive security strategy for his
first year in office, and resorting to ad hoc measures as violence
flared up repeatedly in subsequent years. Kidnappings have increased
79% since Pena Nieto took office, according to a January report in La
Opinion summarizing 2016 statistics. Homicides were up by 255% in 2016
in comparison to 2015. Extortion increased by 30%.
According to the Global Impunity Index, Mexico ranks second in the
world on its ranking of countries impacted by impunity. The Index noted
that only seven of ten crimes are reported in Mexico, of which only
4.46% reach a sentence phase. For every 100,000 inhabitants there are
3.5 judges, less than one-fifth the average in most developed
countries. Prisons remain understaffed at 20 guards per 100 inmates;
the average in most developed countries is 47 per 100.
Until Mexico's political class takes on corruption that fuels
criminality, modernizes a criminal justice system that sows insecurity,
adopts fiscal responsibility and tax reform, undertakes meaningful
energy sector modernization, and adopts a host of measures to make
itself more competitive, it cannot take full advantage of trade or
attract the capital it needs to build a modern economy.
There is no agenda more important to Mexico than addressing the
serious security challenges, impunity, and economic malaise that it is
facing today. The rhetoric of President Trump may add to the burden,
but it is a distraction from the country's real problems.
------------------
Notes
\1\ ``Fact Checking Trump's `Alternative Facts' About Mexico,'' by
Robert D. Blackwill and Theodore Rappleye, March 28, 2017.
\2\ ``State Department: At least 90 percent of heroin destined for
the U.S. comes from Mexico,'' The Washington Examiner,'' by Joel
Gehrke, March 2, 2017.
\3\ Fact Sheet, Opioids, U.S. Department of Health and Human
Services.
\4\ ``Corruption Costs Mexico 9% of GDP,'' Forbes.
Senator Rubio. Thank you both.
I will just begin with an observation, and then I am going
to start turning to the members here so they can get their
questions in. Various of them have other engagements, and this
is an important hearing for them.
So let me say I have heard all the facts and figures about
NAFTA, and so there are winners and losers in any arrangement.
So if you are a corn farmer in Iowa, NAFTA has been very good
for you. If you are a dairy farmer in Upstate New York, NAFTA
has been very good. If you are a tomato grower or a strawberry
grower in Florida, it has been more complicated and more
difficult. And so that is the dynamic that we have internally
and it is important to reexamine that.
But here is the broader question that I have. Irrespective
of whether that is a legitimate or not complaint, I think there
are legitimate complaints about the way NAFTA has impacted
certain sectors of our economy. That would be true on the
Mexican side as well.
But the Mexican people are a proud people. We talk about
nationalism. There is nationalism in every country in the world
and that includes Mexico. And here is the broader observation
that I have.
We forget that Mexico is not just a democracy but a vibrant
one. Its leaders are elected. And if they find themselves in
the crosshairs of heated rhetoric that inspires a nationalist
response, leaders have to respond to that reality internally in
their country.
The bigger concern is the impact it is has on the broader
politics of Mexico and creating a space--I am not going to
mention anyone by name. I am not here to give anyone free
publicity. But imagine for a moment a candidate in Mexico who
has made a career of fanning populism and nationalistic
sentiments, who is also anti-NAFTA, who has attacked Mexican
presidents in the past for cooperating with the United States
on law enforcement and all these issues we have talked about.
And imagine that person, someone like that, being able to take
advantage of all this rhetoric to be elected in that democracy.
And suddenly we find ourselves with an Hugo Chavez type leader,
not in Venezuela, which is, of course, tragic, but right on our
border, something we have never faced in the modern history of
this country.
Obviously, it is up to the Mexican people to decide what
future they want and who they are going to vote for in the
upcoming presidential race, and we should not try to influence
that in one way or another other than ensure that we try to
strengthen our relationship.
But describe for a moment that situation internally in
Mexico, what it could lead to, and what would it be like for
U.S. policy. What will this hearing look like in 2 to 4 years
if a leader like that assumes the presidency in Mexico
partially by capitalizing on some of the rhetoric we see here
in the United States.
Ambassador Richardson. Well, Senator, you make an excellent
point. This is why the timing on NAFTA, which is so critical I
think to both countries, the NAFTA negotiations happen sooner
or later because the Mexican State elections are in 5 months,
and you want--the presidential election, as I said, I think is
several months later. But it rolls into the presidential
election. You want to eliminate the U.S. being a vibrant issue.
You want to eliminate the statements made in the presidential
race and the policies that have been initiated and dealing with
the issue of NAFTA sooner than later.
This is what I would suggest. I think that, one, the United
States needs to move on the 90-day consultation period. Now
that the health care debate is over in the Senate and the
Congress, move forward to renegotiate NAFTA sooner than later.
And it does need to be modernized.
First, the rules of origin. I think this is a new era.
Secondly, there was no digital trade in 1993. I happened to
be the Democratic whip in the House when NAFTA was being
debated, and things have changed enormously.
Number three, Mexico has had an opening on energy reform.
Some of those energy issues I think need to be discussed.
Issues related to manufacturing.
You know, you mentioned Venezuela, and my colleague, Roger
Noriega, is an expert on Venezuela. The danger, if there is an
abrogation of NAFTA, is China has invested $30 billion in
Venezuela. $30 billion. And they are going to take over the
vacuum if NAFTA and the United States and Canada do not reach
an agreement. There is potentially a geopolitical threat too.
So I think, Mr. Chairman, what you want to do is--you know
how important these elections are. You want to get the issues
resolved in a way that they do not give impetus to any one
candidate. And the U.S.-Mexico relationship is right now very
fragile.
Ambassador Noriega. Yes, Mr. Chairman, I certainly agree
that some of the rhetoric, the ill-informed characterizations
of our relationship with Mexico and that Mexico has taken
advantage of us somehow under NAFTA or that Mexico is forcing
literally--that was the word used--forcing criminal elements to
come over the border and to prey on our people has a very
serious and negative impact on the relationship between our two
peoples. And most folks on both sides of the border understand
that that is not true, and that kind of rhetoric does not
really reflect the nature of our mutually respectful
relationship among family members in certain ways.
Certainly when the Mexicans reflect on NAFTA, they probably
have a long list of issues that they would like to take up with
us. And my guess is that those negotiations would carry on in a
quiet way for 4 or 8 years, however long it takes. And in the
meantime, decisions that the United States makes arbitrarily or
unilaterally to go beyond the framework of the agreement of
NAFTA would be a great relief to every Washington law firm that
trades in trade law, and there would be tons of disputes. I do
not think it is a short-run exercise. I think they can maybe
lay the groundwork for these kinds of discussions, set up
working groups between our two countries once we actually have
people who can be on our side of the table in those
discussions. But it would be a very complicated, drawn-out
process.
But I think it is important to note also--and I am sure
really everyone here would probably agree with this--the
anxiety among the American people about lost jobs, about
illegal immigration is a genuine anxiety that has been tapped
into. The problem we have to face as a country in a bipartisan,
really non-partisan way is how do we address that anxiety for
our mutual benefit. And I think there has to be an essential
understanding that in global trade you can find win-wins
generally in trade agreements, and that is tough work. But it
makes sense in terms of improving stability in the world, in
this case economic activity and health and prosperity on our
borders. We can knit together mutually beneficial arrangements.
That makes a lot of sense. So trade agreements generally are
important, but we have to find ways to address that anxiety of
the American people that they have not worked in our interest.
And part of that in the short run is better information that
tells the truth about the mutual benefits.
Senator Rubio. Thank you.
Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman.
Thank you both for your testimony.
Would you both agree that the principle of shared
responsibility laid out in the Merida Initiative is a principle
that we should continue to try to engage with Mexico?
Ambassador Richardson. The answer is an overwhelming yes,
Senator. I think the cooperation on extradition, on drugs, on
cartels should be enhanced. I know that Congress budgets
several billion dollars for this, but I think it is important
that it not just be reestablished, but you know, what has
happened since the time period of December and January, some of
these visits and some of this cooperation, military
cooperation, has stalled. You know, the Mexicans are kind of
waiting to see what is going to happen with the import tax,
with the wall, with deportations, with the bilateral
relationship with NAFTA. There are some instances where these
joint visits, just joint cooperative agreements have been so--
--
Senator Menendez. So shared responsibility should be a
mutual goal I would think.
Ambassador Richardson. Absolutely.
Senator Menendez. Ambassador Noriega?
Ambassador Noriega. Absolutely.
Senator Menendez. Now, if you want to renegotiate NAFTA, a
negotiation in and of itself implies that there are multiple
parties, in this case Canada as well. So you cannot ultimately
unilaterally--you could move out of NAFTA totally if that is
what you think is--I do not advocate, but if that is what you
think is the right way. But that is shared responsibility to go
ahead and renegotiate in a way that would benefit the three
countries involved. If you want to do a better job on stopping
the flow of narcotics, which ultimately comes through vehicles
into the United States, not by humans trafficking across the
border, you have shared responsibility. If you want to deal
with the question of the Central American migration, Mexico
could just say, you know what? We are not going to do anything.
Let them go all to the border and let the United States handle
it. But they actually engage in trying to mitigate that. And I
think we need to mitigate the root causes that cause people to
flee Central America and come northward, violence, economic
oppression, gangs, and others. But Mexico could stand back. You
need shared responsibility.
So it seems to me, following on the chairman's question,
that I get real concerned that--of course, it is the people of
Mexico who will decide what their future is and who leads them.
But inadvertently when comments are made in the United States
by its leaders that ultimately are incendiary about Mexicans,
it drives the poll numbers of its right wing candidate--I
mean--excuse me--of its left wing candidate in a way that is
ultra nationalism. So if shared responsibility is our goal, the
last thing you want to do is to drive the Mexican people to
someone out of resentment, not out of hope, that ultimately
will not engage in shared responsibility at the end of the day.
And so how do we get the Trump administration to engage in
the principle of shared responsibility? What would you advocate
that we try to do here from the Senate to try to make that the
continuing cornerstone of our relationship?
You know, we as a country often seek to engage other
countries to have more liberalized economies, to end state-
controlled entities. Mexico has taken a number of proactive
steps over the past several years to privatize state-owned
companies, making them more open to productive trade
relationships. But I could see the reversal of that if you end
up with a leader who says, you know, that was the United States
urging us to do that, and they are not our friends anymore.
So how do we get to the principles of being able to cement
that essence of shared responsibility that was laid out in the
Merida Initiative?
Ambassador Richardson. Well, Senator, what the Senate and
the Congress do is followed in the U.S. and Mexico. You guys
are with the appropriations. You may have to look at NAFTA
again if there substantial changes. So you have a major role.
You also have the pulpit role, the bully pulpit role.
What I would do in this shared responsibility is, number
one, I think--and this is related to your question. One, I
mentioned the NAFTA issues. I would also throw in worker
protection. I think NAFTA needs a little stronger worker
protection mechanisms.
But number one, I would have President Trump invite
President Pena Nieto to a visit in the U.S. The relationship is
in bad shape. That is very important, President to President.
Give him a state visit. That symbolism is very important.
Sending a message, treating Mexico as an equal partner, not as
a subordinate.
I mentioned two others. Let the State Department--they have
a lot of good Mexico experts--let the Commerce Department be
the central focus of negotiations with Mexico on NAFTA, on
issues relating to trade, issues relating to commerce, across
the board. Let the Commerce and State Departments lead the
interagency process. Keep it out of the White House.
I am very concerned about this channel that the foreign
minister and the President's son-in-law have established. You
forget the State Department. I mean, the foreign minister of
Mexico came here, did not even go to the State Department. I
think that is a mistake. Institutionalize the relationship. I
think you are able to do this as the Subcommittee on Western
Hemisphere affairs.
Number three, I mentioned on NAFTA trigger the 90-day
consultation period to get the negotiations going. Press the
executive branch to do it. Find ways to limit this populist,
nationalism, and anti-Americanism that could become part of
bilateral negotiations.
And then there is the area, stop talking about the import
tax. Stop talking about border taxes. We are not going to win
that war. Mexico can retaliate against us on unfair trade
practices.
Again, I mentioned Midwest corn. Do we want Mexico to
punish Midwest corn, which is a $2.5 billion export? Talk to
American farmers. They are in Mexico all the time. They have
benefited from this free trade.
You know, these are the not doable right away. I would
forget about this wall. It is unworkable, sends a terrible
message. It is not going to work. Most of the illegal
immigration that comes in in containers is from Central
America, smuggled. Deportations. Focus on the criminals in
deportation, not have blanket--there are people in New Mexico
and our border states and Colorado that are being deported I
believe unfairly.
So, Mr. Chairman, the long-range issue--and you all have
worked on this--is comprehensive immigration reform. A path to
citizenship but also stronger border security. No question
about that. Data collection, technology, cooperation with
Central American countries.
Mexico needs to do more to take care of their own people
economically on the border. No question. More to deal with the
cartel violence, more to deal with the corruption issues.
I think President Pena Nieto is a very skilled politician,
but I think he needs to engage directly in these negotiations.
When he came into office, he did energy reform, education
reform, political reform. He needs to personally take charge of
a bilateral relationship that only I think a president can
handle at this stage.
Senator Rubio. Thank you.
I am going to turn to Senator Gardner in a second.
Two points that I think are important to raise.
One is that lost in this NAFTA discussion is the emergence
of the Mexican middle class. That has actually grown
exponentially over the last 20 years and has been a benefit to
the United States.
And the second point, before I turn to Senator Gardner, is
just an editorial point is in the business world, when you want
to get into a negotiation with another business, you take a
maximalist position, really tough, because the higher you
start, the better your ultimate outcome could potentially be.
In the political world, there are consequences to taking a
tough line at the start of a negotiation. And that is what both
Senator Menendez and my questions were geared towards is the
impact of a tough line. You think you are staking out a really
good starting point. It strengthens you in a negotiation. But
it has an impact on a democracy that is not applicable in the
business world where it is only about dollars and cents.
Ambassador Richardson. I think, Senator, to that excellent
point, I would just add on NAFTA, if we delay and not try to
fix these problems sooner than later and it gets into a Mexican
election, we, the United States, lose leverage by delaying. So
it reinforces your point.
Senator Rubio. Senator Gardner?
Senator Gardner. Thank you, Mr. Chairman.
Thank you, Governor Richardson, as well as Ambassador
Noriega. Thank you very much for the opportunity to be here
today to learn from you and to talk about this incredibly
important issue.
As a Coloradan, I think some of the statistics are very
compelling. Forty-eight percent of all Colorado goods that are
exported--we are a strong export state, about $8.5 billion
exported from Colorado just a few years back. Forty-eight
percent of all of our goods exported from Colorado were
exported to countries that were involved in the Trans-Pacific
Partnership negotiations. Two-hundred and sixty-five thousand
Colorado jobs are related. Of the some 750,000 trade-related
jobs in Colorado are related to TPP countries.
And if you get further into the relationship we have with
our NAFTA trade partners, the numbers are even more compelling.
Since the passage of NAFTA, the approval of NAFTA in 1994,
Colorado`s exports to Mexico and Canada have increased over 300
percent since it was concluded.
If you look at free trade agreements alone, between 2003
and 2013, Colorado trade with FTA nations increased nearly 40
percent through that decade.
The challenge we have in this country, of course, is the
macro/micro argument. If you look at the macro numbers in
Colorado and you can say that we added thousands of jobs or
increased trade 300 percent, that is a great macro argument to
make. The micro argument that some factory town can make in the
Midwest or perhaps Northeast United States is that the factory
closed and they lost 20 jobs. So while Colorado may have added
thousands of jobs, their small town lost 20 jobs. So it is a
difficult argument that we have to make, that this is a macro
benefit and how do you make sure that even at the micro level,
it is understood.
So I appreciate the chance to have this discussion. The
United States is unique around the world, and a strong
relationship with Canada and Mexico are the envy of the world
in many cases with strong nations on our borders that are
partners, not foes. And too many times you can look around the
globe at conflicts that begin by nations that conflict with
each other on the border, and not only does it lead to
decimation of one nation, but both nations. And I think our
interest, of course, is a strong North America, a strong
partnership between Mexico and Canada and making sure that we
have a rising tide in every nation around the globe, but
particularly in North America. The better Mexico does, the
better Canada does, the better we do. And so this opportunity
gives us a chance to have that discussion. I appreciate that.
So I wanted to talk a little bit about a couple of things.
What does the process--just a technical question on the
process. If NAFTA is, quote/unquote, reopened, renegotiated,
what role does Congress play in any discussions or decisions
that are made as a result of that opening?
Secondly, just a couple on the Merida Initiative. Which do
you believe have shown the most promising results so far?
So either one of you could take those two questions.
Ambassador Richardson. On the NAFTA issues--and, Senator,
by the way, one statistic that I wanted to just mention to you
because it involves Colorado and New Mexico. Nearly 20 million
Americans travel to Mexico every year, while an average of 14
million Mexican tourists visit the U.S. every year, spending
more than $10 billion. And I would like you to share a little
of those tourists that go to Colorado with us in New Mexico.
You are getting a little too much of a lion's share.
Senator Gardner. I was going to say. They are skiing. I do
not know what they are doing in New Mexico. They are skiing in
Colorado.
[Laughter.]
Ambassador Richardson. I think the process has to be,
Senator, look, you are intimately involved. NAFTA--I was
around. I think I am the only human being around when this
passed in the 1990s. I was the Democratic whip. And it was a
bipartisan effort, by the way, in the House and the Senate.
Newt Gingrich was the Republican whip and I was the Democratic
whip to get the votes. And it was 1993, and Congress had to
approve.
I think it depends on the scope of the changes to NAFTA
whether it comes back. If they are considered technical, it
might not. But you are going to have a role regardless.
What first has to happen is 90-day consultation period.
That has to be triggered by all sides. And I think Mexico is
concerned that the U.S. has not triggered that. It has not
happened. The Secretary of Commerce said it is going to take a
year. Before you arrived, I mentioned the danger of waiting a
year. I think the negotiations need to keep going.
But if you get into issues like I mentioned, rules of
origin, which I think you need to do, especially manufacturing
to protect a potential Asian intrusion into North American
manufacturing, rules of origin, digital trade. You might have
to look at it again. And I think that would be constructive if
that happened.
Ambassador Noriega. So, Senator, also adding to this, the
U.S. public law would have very specific expectations of the
administration pre-consulting with the Senate Finance Committee
and the House Ways and Means Committee if they were to look at
significant changes in that agreement and keep you informed
along the process, and then finally very intense discussions,
consultations before they were to bring any agreement back. But
I think those would be sort of long-term objectives.
Perhaps the two countries, two leaders could make sort of
broad statements indicating what is on the table to initiate
this process. But I think that the negotiations would be very
technical at the working level and would be sort of a very low
profile exercise, I think which would be helpful.
And I wanted to just comment, Senator, that your very
positive way of looking at this relationship and the benefits
from trade generally is really extraordinarily helpful and
constructive that Mexicans hear this and then frankly the
American people hear this. But I also understand how difficult
it must be to go to a town hall and to explain these issues.
Senator Rubio used an expression that was running through
my head this morning thinking about this. It is not all dollars
and cents. I was in Colombia yesterday, and we have to
understand that these agreements are not just about trade. Yes,
we want them to be positive, produce tangible benefits for our
economies, but they are also used to fortify our partners and
our allies and our friends, in this case a neighbor. And
certainly we can point to trade tripling since NAFTA was passed
or, in point of fact, fivefold trade among our countries since
NAFTA was passed. And that is a positive macroeconomic good.
But it has also fortified Mexico's move toward representative
democracy. It has cemented its commitment to the rule of law to
where they are a partner with us in addressing this
transnational organized crime.
Mexico, yes, derives a lot of benefits from its proximity
to the United States, right on the threshold of the most
dynamic and robust economy in the world. But it also is the
transit zone for drugs and other things making its way to this
market. And the friction that results, as Mexican authorities
try to stop those things, generates a lot of heat. And there
are hundreds of thousands of Mexicans dead today that were not
5 or 6 years ago precisely because Mexican authorities decided
to stop that flow.
There are some people in Mexico--and some intelligent
people--who say that the United States should step aside--I am
sorry--Mexican authorities should step aside, and if the
Americans want their cocaine or their heroin, they should have
it, but why should Mexican people pay a price in very serious
terms for standing with us and fighting these drugs.
And part of that is the relationship which is cemented by
an agreement like NAFTA where we knit that North American
market together so that, by the way, we are more competitive
economically with our real competitors in Asia and Europe.
Being able to have that intimate, integrated relationship
benefits us in broad ways as well, and having a good ally in
fighting drugs is really indispensable.
Senator Gardner. Mr. Chairman, I see I am out of time.
Last year, I had the opportunity to visit Mexico, visit the
foreign minister. And I would love to continue our conversation
on the Merida Initiative because it was something I would like
to follow up.
Senator Rubio. Thank you.
Senator Udall?
Senator Udall. Thank you very much, Chairman Rubio.
Let me just say, though, Senator Gardner, we do everything
we can as those skiers move from Mexico through New Mexico to
keep them as long as we can. We have extended our ski areas--
extended the opening. So we are going to do everything we can
to keep them from going to Colorado.
Governor Richardson and Ambassador Noriega, wonderful to be
with you here. And this has been an excellent discussion.
I think one of the points that you have made that I think
is very important is treating Mexico like an equal. And I think
what we have seen in this relationship with the President and
the President of Mexico is that has not been the case. It has
been a very kind of condescending approach. And I know we were
all shocked at where President Trump has taken U.S.-Mexico
relations, calling Mexican immigrants rapists and murderers,
insulting their leadership, and threatening to send U.S. troops
south of the border to fight cartels, demanding to build an
expensive and unproductive border wall, and to extort Mexico to
pay for it, threatening to rip up NAFTA, throwing our border
economies in chaos.
For those of us in New Mexico and other border states, this
is really beyond belief. And this approach is completely and
totally inappropriate for a neighbor, for an ally, and a nation
which we share many common bonds.
Now, before the wall became a campaign issue, the United
States and Mexico had already taken strong measures to address
security. The U.S.-Mexico 21st century border management has
allowed the two countries to work together on the issues of
security and tracking risky shipments, while also allowing
trade to increase. And I am wondering what both of you think.
With groups such as this, the Chamber of Commerce, the Council
on Foreign Relations have endorsed these bilateral security
programs. Do you believe that expanding these programs would be
more beneficial than building an unproductive and expensive
wall?
Ambassador Richardson. Well, the answer again is an
overwhelming yes. I think both of these studies that you cited,
one the Merida agreement--I think the Mexicans were concerned
with some of the--they considered some of those measures a bit
intrusive. But, nonetheless, I think they have been resolved--a
lot of those problems. So, yes, the Merida Initiative I believe
should be continued. It involves helicopters, military
cooperation, cartels. Look what Mexico did right after our
election. They sent El Chapo. They extradited him. They
continue with these extraditions. You mentioned a number of
statistics that are so important.
On expanding the relationship, I think because of the
rupture that has taken place and the relationship in such bad
shape, I think additional measures are needed, strengthening
bilateral ties in areas like education, scholarships, medical
technology. You know, our border--Senator Udall, you have done
a lot on our border to enhance ties at ports of entry, the
cooperation on endemic diseases at the border, which are a big
problem, environmental issues, clean air. I worry about the
climate change issue now being deemphasized with, as you know,
a border that needs strengthening.
But I think you hit the nail on the head. The United States
and Mexico--we are bound together by geography, by trade, by
family, by culture, by affinity. You have got several million
Mexicans that are in the United States that are voters, that
are the growing Hispanic community. And then you have got the
11 million that are worried about deportation. It is a very
tense situation. They are scared. This is not America.
And we mentioned the economic ties. U.S. and Mexico
economies--they do not compete with each other. We complement
each other. We make each other more competitive in the global
market.
And across the board, let me just say something about some
of the immigrants that are in all of our states. They are not
violent criminals. They are patriotic. They want to work. They
are hardworking. They make enormous contributions to the
American economy. I mean, what is going to happen to the
security, restaurant business, agriculture, construction. Some
of these industries might collapse. I think, Senator Udall, an
article in New Mexico in the Albuquerque Journal yesterday
basically said that the New Mexico economy is dependent on
immigrants. It is dependent. It would seriously be harmed if
all of a sudden that disappeared.
So in conclusion, we need each other. We need to work with
each other, not fight. And the first step is to not just end
some of this rhetoric but take specific steps that in the area
of geopolitical, soft power, geopolitical issues relating to
our shared interests, we need to work together. And that is not
happening.
Ambassador Noriega. May I just jump in real quickly,
Senator? I am one of those--and I suspect Governor Richardson
is as well--who sees the border as where our two nations are
joined, not where they are divided. And if you take the U.S.-
Mexico economy along that border, 100 miles on either side, it
would be in and of itself one of the top 10 economies in the
world. And so how do we make it safe for people on both sides
for commerce on both sides? And there is all sorts of sort of
private sector cooperation, as well as government cooperation,
which will fortify the relationship in terms of security and
opportunity to prosper.
Senator Udall. Thank you.
And let me just finish by saying, Governor Richardson, you
really set an example as Governor as to how to work with
Mexico, both with the states and with the Mexican federal
entity. You traveled a lot there. You were a real presence. And
I think that is the kind of cooperation that is needed.
And one of the things that I did as State Attorney General,
I remember when there were issues about the judiciary and their
police, we would loan them prosecutors. I mean, they were open
to ideas. And they have done a lot of reforms, and they have
made great strides there.
So I think there is a much better approach than this
accusatory approach that they are using--that the President is
using.
So I thank you both. It has been a very good discussion,
and I am hoping that Senator Kaine is going to ask you some
questions in Spanish.
[Laughter.]
Senator Rubio. All right. Senator Kaine?
Senator Kaine. Welcome. And thanks, Mr. Chair, for doing
this great hearing. [Spanish spoken.]
Senator Rubio. Very good Portuguese.
[Laughter.]
Senator Kaine. Sadly I am now up against a hard stop. And
so all I am going to get to do is ask two questions, and then
my staff are going to be here for the answers because I have to
depart.
I do want to say particularly to Governor Richardson, when
he was a youngster and he got his first job at the State
Department, he worked for my wife's dad. My wife's dad was the
congressional liaison for Secretary Kissinger after he had been
Governor of Virginia. And Bill, as a young staffer, worked for
my father-in-law. And my kids, because they had a father-in-law
who was Governor and a father who was Governor, they think
people in politics are completely uncool. But Bill Richardson
is the only politician they have ever met that my children
thought was cool.
[Laughter.]
Senator Kaine. So I am going to start right there. Here are
my two questions: one for Governor Richardson and one for
Ambassador Noriega.
So, Governor Richardson, I would like you to talk about
this border adjustment tax proposal. You had a bit of it in
your testimony, but I would like you to kind of walk through,
if you would, because I think it is important that it be on the
record in this hearing how you think it might affect the U.S.-
Mexico commercial relationship.
And then second, Ambassador Noriega, you had a wonderful
point in your written testimony. Quote, on page 3, Americans
must admit that many of Mexico's in security woes are the
direct result of being on the threshold of a nation with an
insatiable desire for dangerous illegal drugs.
I am on the Budget Committee too. We are contemplating a
budget proposal that slashes public health funding, that
slashes funding for opioid treatment. What would the effect be
on the security situation in Mexico if America backtracks on a
commitment to public health treatment of the insatiable desire
for illegal drugs that we have.
And I apologize for not being able to stay, but you have
got the best part of me by having my staffers listening to
those two answers, if you would not mind.
Ambassador Richardson. And, Senator, I know you are on your
way out, but what you did not mention is when I worked for
Governor Linwood Holton. He is a Republican, moderate
Republican. So I started my career working for Republicans. I
have since come to my senses.
[Laughter.]
Ambassador Richardson. No. I am just kidding. But he was a
wonderful human being. And I appreciate your kind words. So I
will give a good answer now that you are leaving.
[Laughter.]
Ambassador Richardson. I just think this border tax, this
import tax would be a disaster for U.S. economic relations with
Mexico. The main reason is Mexico would retaliate. I mean, the
Secretary of the Economy, Ildefonso Guajardo, has said we will
retaliate on the $2.5 billion corn from the Midwest. You do not
want a trade war. It does not make sense. It would hurt both
countries, a possible violation of NAFTA. I think that should
be taken off the table.
Initially I think it was put in there as a way to pay for
the wall. But that should be totally taken off the table
because, I mean, we have all outlined the commercial
relationships that exist today between the United States and
Mexico across the board, the statistics that show that Mexico
is our third largest trading partner. In other words, Mexicans
buy U.S. products, goods more than any other country. So to
have a retaliation in the area of food, of auto parts would be,
I think, something very shortsighted that would make American
consumers pay more.
So that would be the effect of a border or an import tax
besides ruining I believe a very productive bilateral
relationship in these areas where we have, Senator Menendez, a
shared interest, cartel cooperation, security cooperation,
immigration cooperation, endemic disease, environmental issues,
issues relating to extradition, to the DEA, across the board.
Ambassador Noriega. Well, if I could just follow up on the
issue of the drug cooperation. Obviously, both countries are
both impacted, as I mentioned before, by transnational
organized crime attacks, already weak institutions in Mexico
and the inability of the state, at least at the federal level,
to deal effectively with that, and at the state level, a lack
of political will. The previous President of Mexico, Felipe
Calderon, initiated a frontal assault against these organized
crime organizations and managed to splinter them. But you did
not have the kind of coherent comprehensive strategy sustained
by him or, for that matter, certainly by his successor to deal
with the splinters that were left over.
Also, Mexican institutions are too weak. They do not have a
sufficient criminal justice system, either prosecutors, prison
staff to deal effectively. So a very few crimes that are
actually reported. Only 5 percent of the time will you actually
see where it reaches the stage of a sentence being handed down.
So with all due respect to Mexico, because this is internal
affairs, for it to get its arms around this criminality, they
have to make a serious commitment to that kind of criminal
justice reform and fighting corruption, which is endemic.
And I think it would be important for this committee also
to review the strategy under Merida because if you take the
pillars that they have laid out there, we have really fallen
far short of any of our objectives. And it is fair to say we
need to renovate that and also consult with the Mexicans about
what more we can do to attack transnational organized crime
using asymmetrical tools like the OFAC sanctions to go after
the drug kingpins. When Senator Coverdell, the former chairman
of this subcommittee, drafted the drug kingpin designation act,
he had Mexico in mind, not Afghanistan where most of this is
taking place. And so I think it is an asymmetrical tool because
these guys are not in the drug business for pharmacology. They
are in it for the dollars. And it is one thing for this
activity to be taking place overseas or maybe we cannot do much
about it. But when they traffic in our American dollar and use
our financial system to launder the resources, we should be
more effective in going after them.
Senator Rubio. Ambassador Noriega, you mentioned the
institutions--criminal justice reform capability increase is
one of the things that the Mexican Government does want to work
more closely with the United States on.
But the other good news in sort of institutions is the
Mexican Navy. The Mexican Navy has been an extraordinary
partner and liaison to the United States. They have proven not
just capable but willing of confronting many of the challenges
that are going on. In fact, they have taken on increasing law
enforcement responsibility. And there are opportunities there.
Now, Mexico is not destitute. They can afford to buy a lot
of this equipment, but there are sales and other technologies
we can make available to them on air-to-ground communications,
on additional training for helicopter maintenance. That really
goes a long way towards increasing the Mexican Navy capability.
That liaison relationship with the Navy of Mexico is a
phenomenal relationship, and it is one of the institutions that
I hope we will continue to work closely with.
Senator Shaheen?
Senator Shaheen. Thank you, Mr. Chairman.
And thank you both for being here. Governor Richardson, it
is nice to see you again.
I just wanted to respond to both of your focus on the
economic relationship between Mexico and the United States,
because as Governor, I took a trade mission to Mexico because
that is what the businesses in New Hampshire wanted. And you
think about a trade relationship with the southern states that
border Mexico, but that relationship is throughout the country.
And in a northern state like New Hampshire, there is a great
deal of interest in Mexico and in our trade arrangements with
Mexico. And that has been enhanced by NAFTA. So I think it is
important to point out that, as you all have suggested, it is
not just with part of the United States, but the whole country
benefits.
I want to go back to the question about what happens with
the drug wars because in New Hampshire we have the second
highest overdose rate in the country. It is from opioids, from
heroin, from fentanyl which is now causing a huge impact on the
heroin and opioid issue in the state and the death rate.
So as we think about cooperation with Mexico, about the
Merida Initiative that you all have referenced--I think you
referenced it, Ambassador Noriega--what would potential cuts
that we are hearing about for the State Department--and we have
not seen detail on the proposed budget cuts from this
administration. But what would cuts like that do to that
initiative and to the efforts to combat trafficking of deadly
drugs and chemicals?
Ambassador Noriega. I must say that Mexicans are already
asking themselves why they are still in this fight when they
see drugs being legalized in the United States, not to take a
position on that subject. But the fact is they are asking that
question even just the marijuana, but why are we in this if the
Americans do not have the resources behind the fight or are
actually changing their public laws to minimize criminality--or
decriminalize I should say. So that is where we are in the
discussion.
In terms of the cooperative agreements that we have and the
material resources that we provide, the training, technical
advice, money to fuel these activities, it is really essential.
It shows a level of commitment whether we are going to be
engaged in a serious way because they are running serious risks
by engaging with us. And they do have alternatives, which is
let the drugs through.
The other thing is we have to show a commitment, a
rhetorical commitment at the presidential level against the
consumption of drugs here. It has made an impact in the past.
And unfortunately, we sort of let our guard down in terms of
speaking out against those things. And the people think that
they are engaging in sort of, quote/unquote, recreational drug
use, are sowing mayhem and chaos up and down our continent.
When unaccompanied minors are throwing themselves over the U.S.
border, part of that is that their agricultural economies and
their societies in general have been decimated by criminality
sown by this trade in these illegal drugs.
The Mexicans are going to--you know, they are concerned
about their own consumption problems too. So I think they are
going to carry that fight forward.
But I think it is very important that the United States do
two things: sit down with them and other consumer and producer
countries, and have a serious discussion about an overall
strategy. And one of the things they are going to want to know
is why do we insist on this kind of coercive strategy. I have
been a hawk on this for a long, long time from when I worked
for Congressman Ben Gilman on the House side and even
criticized the Mexican Government in the past for not doing
enough. But I think we owe them serious answers about a
strategy that says that we should apply all the resources to
interdict drugs instead of looking at other ways of dealing
with the market.
Senator Shaheen. Thank you.
Ambassador Richardson. Senator, I remember when you made
that delegation trip to Mexico. I think I was Secretary of
Energy.
Senator Shaheen. I think that is right.
Ambassador Richardson. And you wanted to do some energy
cooperation. And I went to see you. And I commend you for that
effort.
You know, on the heroin addiction, the opioid, I know how
big an issue it is in New Hampshire. I spent some time in the
Northeast recently. And I think that what is needed there is
the joint programs with Mexico to continue. We know that heroin
addiction, opioid addiction is growing in the United States.
But we allow Mexico's cooperation to permit DEA agents to
operate on the ground in Mexico and extradite these drug
dealers and dangerous fugitives to the U.S.
Now, I think your specific question was on the budget. I
think the Homeland Security budget--some of this would be under
Homeland Security. It would not be under the State Department,
which I hear is maybe a 40 percent cut. I hope that does not
happen, and you can stop that.
But my last point is I think the economic relationship,
NAFTA, has created a Mexican class that did not exist before.
You know, Mexico today graduates more engineers than Germany
does. So this is an evolving economic country that is getting
stronger on the educational side, which is so important.
But I wanted to make you recall that visit. I think we were
in southern New Hampshire. And you were just going to Mexico
and you went.
Senator Shaheen. That is right. Thank you. And we had a
great trip, and we brought back lots of business.
Senator Rubio. While Senator Flake is just arriving--I know
he has got some questions--I want to make two points.
You talked about the Mexican middle class, and I mentioned
that earlier as well. And that is an important development. In
addition to expanding their markets, the ability--I think it
really does strengthen both sides of the country.
But the broader point I would make and I have discussed
with people in the Mexican Government the issue of migration--
it is of growing concern to them because they are largely a
transit point. But when people are unable to enter the United
States, as is the case now, for example, for a number of Cubans
who transited through Central America, through Mexico to try to
get to the border, they now have become a responsibility on the
Mexico side to house migrants and others who are coming through
the country. So they have a shared interest with us in dealing
with the migratory issue, particularly because they are a
transit point for tens of thousands of people who are coming
through the country, and if they cannot ultimately get into the
United States, obviously wind up staying in Mexico and becoming
a burden to them as well. So I do think there is the
opportunity to work in partnership with them on the issue of
their southern border and the broader point of migration.
Senator Flake?
Senator Flake. Well, thank you, Mr. Chairman. I wish I
could have been here for more of the discussion. I appreciate
you scheduling this hearing.
As the Senator from Arizona, I obviously see firsthand the
benefits of our relationship with Mexico. On the economic side
alone, Arizona exported more than $8 billion worth of goods and
services in 2016. $8 billion. Trade with Mexico supports tens
of thousands of jobs in Arizona. Arizona obviously benefits
when shoppers from Mexico come to Arizona as well. And NAFTA
has enabled a number of U.S. industries to become more
competitive on a global scale with our supply chains being
integrated with Mexico.
A ``Wall Street Journal'' article from a few weeks ago
noted that nearly 60 percent of the 17.5 million light vehicles
sold in the U.S. last year were assembled within the so-called
auto alley that runs from the Great Lakes to the Gulf of
Mexico.
Obviously, the talk of renegotiating NAFTA--or first they
talked about tearing it up and then renegotiating. That
obviously has an impact, just the talk of it. And I am
concerned about that.
With regard to Mexico, I would just like to ask the
question, Mr. Noriega, do you believe that just--has there been
any impact with the rhetoric about renegotiating NAFTA in terms
of decisions made by companies to locate or trade patterns? Is
there a problem just by talking down our trade relationship?
Ambassador Noriega. Well, I certainly think there is a
problem with that and even the idea of being able to muscle
certain companies into not relocating their plants. You know,
there are Mexican investors who invest in the United States as
well. What if the Mexican Government were to turn around and
say you cannot create jobs in Michigan, for example? A company
names Rassini is a Mexican company that makes the brakes for
the Tesla and has a new contract with Ford. That is a Mexican
company with Mexican engineers and Mexican technology that is
contributing in the long run to our economy.
The big winner, if were to, quote, tear up NAFTA, would be
China right here in our back yard. Not only does NAFTA make us
more competitive vis-a-vis China, but the Chinese are fully
prepared to move into Mexico and to use Mexico as a platform
and all of its workers and the industrial base that our
relationship helped create to then export Chinese products to
the United States or to the rest of the world and to our
natural market in Latin America. There is literally a case in
recent days of a Chinese investment to make automobiles in
Mexico for export into Latin America.
So that agreement, obviously, as you know really better
than almost anyone around because of your home state, is good
for our interests, and the idea of sort of opening it up to
renegotiation--it has had an impact in terms of the value of
the Mexican peso. In the last 16 months, the Mexican peso I
think has dropped 20 percent in value. It has a real impact on
the lives of folks. And it is really sort of a shame that we
sow these kinds of doubts among our very best partners.
Senator Flake. Well, thank you.
Ambassador Richardson. Senator, you made a very good point.
Mexico has free trade agreements with 40 countries--40 right
now. They would all love to take advantage of the exports that
might be lost if we abandon NAFTA. I think that is a very
serious problem that we have got to address.
In addition to that, China would be the main beneficiary.
I did not mention this in my comments, but what we also
did, which I think was shortsighted, although I seem to be a
minority in my own party and everywhere, is one of the first
steps that was taken in the new administration was canceling
the Trans-Pacific Partnership. That is 11 countries. That
involved Mexico. That involved Peru. That involved Canada. I
think it was a terrible mistake. China is going to fill that
vacuum. We do not want a NAFTA diminishing or a NAFTA
derailment or a delay in NAFTA for other countries to move in.
You know, I am just going to give one example. China, that
does not have a trade agreement with Mexico, would step in.
Days after the President talked about a Ford plant canceling
the opening of a factory in Mexico, a company called JAC, a
Chinese automobile manufacturer, announced that it would be
opening its first plant in that country. So there is movement
that unless we move fast, we are going to hurt ourselves. And
we are going to hurt Arizona and New Mexico and Colorado and
Florida and New Hampshire. You know, 23 states. You mentioned
your statistic with Mexico. Twenty-three states out of our 50--
the number one export market is Mexico, almost half. So this is
an economic security issue too.
Senator Flake. If you will indulge for just a minute.
Let me talk for a second about the trade deficit. People I
think get too hot and bothered about a trade deficit with
Mexico. Our total trade deficit with Mexico is about $50
billion, mostly having to do with the energy sector where we
have a lot of trade deficits around the world. But people will
point to that and say that is the reason we need to renegotiate
or retool this relationship when prior to NAFTA, 1993, I think
total trade with Mexico was about $60 billion. Now it tops $500
billion. But we have a persistent trade deficit largely because
of energy of only about $50 billion.
Is there too much fixation on a trade deficit?
Ambassador Noriega. I think there is for two reasons. One
is if you back the energy number out, Mexico actually is our
largest trading partner, and the deficit is smaller as well.
But the other thing is that because of these integrated
supply chains that you know very, very well, really among the
three countries, not just between Mexico and the United States,
as it happens 40 percent of Mexico's exports is actually U.S.
content that is folded into the final product and then exported
out to the world or, frankly, re-exported to the United States.
So that exaggerates the story.
Senator Flake. Thank you.
Thank you, Mr. Chairman.
Ambassador Richardson. You know, Senator, just another
point. Brazil and Argentina have already approached Mexico on
the corn crop if NAFTA or an import tax is initiated. So we
would lose there.
But on the energy, I know this is a big issue for you.
Mexico has energy reform. So it is permitting American
investment for the first time. And I think that is good for
both countries. There is a potential solar and wind opportunity
for American companies in Baja, California right near you for a
new grid, a solar and wind grid that I think would happen. But
the potential for cooperation on refineries, on
interconnectivity with Mexico's grid is very important. A
growing market for U.S. energy exports to Mexico was $20.2
billion in 2016, and the value of U.S. energy imports from
Mexico to us is $8.7 billion. So we are doing pretty well.
Senator Flake. Thank you.
Senator Rubio. And just as an aside or just to note
sometimes how these things are more complicated than they
appear at first blush, Mexico has 13 free trade agreements
encompassing 45 countries. By comparison, the United States has
14 free trade agreements with 20 countries. So what that means
is Mexico basically has free trade access to 60 percent of
global GDP in a tariff-free environment. So if you are thinking
about making something and it says even if 40 percent of the
content is U.S.-made and it says ``made in Mexico,'' you have
access to 45 countries through free trade, compared to only 20
for the current United States standing. And that is something a
lot of people do not realize.
Yes, their labor costs are lower and they actually have
very high skilled labor for the labor cost differential. But
one of the advantages that they have is that they have free
trade with 45 markets comprising 60 percent of global GDP. That
is an incredible advantage that they have built for themselves,
quite frankly, and expanding, according to what you pointed
out. I do not think we have pointed to that enough. But it is
one of the drivers that moves people to say I want the final
product to say ``made in Mexico'' because again I have access
to 45 markets, 60 percent of global GDP. If it says ``made in
the USA,'' I only have 20 countries that I can send that to, a
significantly less percentage of global GDP.
So when we are talking about some of this free trade stuff
and undoing some of it, we are almost in many ways cutting off
our nose to spite our face in regards with Mexico and the
comparative advantage that they have built.
Yes, Senator Shaheen?
Senator Shaheen. Thank you, Mr. Chairman.
I just have one more follow-up question because I heard
you, Governor Richardson, on NPR this morning talking about
coming today and talking about our border security. You were
talking about the proposal to build a wall along the border
with Mexico. And I would just ask you. I have been down to our
southern border. I have seen that there are better ways for us
to address illegal immigration. I wonder if you could just
speak to that again about what you think is a better way for us
to be dealing with the illegal immigration that we are seeing
in this country.
Ambassador Richardson. Well, first, Senator, my
observation, you get up pretty early because that was very
early. I had just come in from New Mexico. So I commend you for
getting up that early and listening to me. I did not think
anyone listened, but several very educated members of your
staff mentioned the same thing.
The wall is a huge mistake. It is a geopolitical mistake.
It is unworkable. It is going to cost $50 billion. Mexico is
not going to pay for it.
You know, most of the illegal immigration coming into the
United States right now is from Central America. People are
smuggled in in containers. It is not through a wall.
A wall is also a symbol of rejection, that we are saying to
Mexico, you are not welcome. Our immigrants--and I have said
this before you came--are hardworking. They are patriotic. They
want to be part of the American dream.
And so I think the first step has to be--and I think you in
the Senate can do this. You could not fund that wall. Mexico is
not going to pay for it. Just find other ways to deal with
border security. Data collection, technology, maybe some of the
drones. If you went to the border, some of those work. Increase
Border Patrol agents, increase Customs people, cooperation
between states. I know you cooperate very well with Canada.
You know, Mexico, when I was Governor, a lot of the border
governors--and we do need to reinvigorate the border governors.
This is not necessarily U.S.-Mexico. It is kind of dormant. I
do not think they have met in a couple years. I think that
makes a lot of sense for border governors, U.S. and Mexico, to
start meeting again. It is because of this hostility that has
happened.
Ambassador Noriega. Let me just jump in, if I could.
One thing we have not said explicitly here but which we
would all understand is how do you stop illegal immigration.
The most effective way is economic development. It is NAFTA,
quite frankly. And that is why you have a net negative
migration of Mexicans out of this country. And the increase, on
the other hand, is what? Because Mexico's average wage is now
about 60 percent of our wages. And the theory always was for
decades that if we got to 60 percent, they would stop coming.
And guess what? It happened.
Now, we have to turn our attention downrange to Central
America where these countries, particularly the Northern
Triangle countries, are decimated by criminality. And some of
your staff I know have visited the border, and they will tell
you there are more things that Mexico can do to help on that
border. But one thing we need to do with Mexico, with other
countries is help the Central Americans deal with the
insecurity issue but, first and foremost, really unlock the
economic potential to create jobs so people can stay in their
own homes.
Senator Shaheen. You are absolutely right, and we also need
comprehensive immigration reform in the United States.
Ambassador Richardson. Right. You know, on that, Senator,
you are absolutely right. Border security, yes. A path to
legalization. That is needed. Realistically, you should do it,
but I do not know if it will happen. But just one statistic.
Between 2009 and 2014, according to the Pew Center, which is
very respected, on the immigration issue, there was a net loss
of 140,000 Mexican nationals that left the United States to
return to Mexico, bringing Mexican immigration to the U.S. to a
current net of 0 percent.
So let us not be in search of a problem. Let us focus on
the security issues. People say do not say legalization for
citizenship. I am going to say it. I think if you look at what
the Congress has pushed forward in the past, President George
W. Bush, a path to legalization. It takes about 11 years. You
got to pay back taxes, pay a fine if you are here illegally,
embrace American values, many conditions before it happens. And
I think that is the most sensible route.
Ambassador Noriega. I think I would be remiss if I did not
raise one point, and this is an important one in terms of a
discussion of immigration. The 2015 crisis on the border was
driven in large part by a misunderstanding in Central America
over the President's DACA decision. And so we have to be super
careful because think of the tragedy of hundreds of thousands,
tens of thousands at least, of young folks making their way up
through Mexico to reach our border because we have created this
expectation. And that is just too high a human cost to pay.
I am totally supportive of the idea of immigration reform,
to modernize all of that. But let us face it. If you are a
Central American, Central America is pretty nice place to live,
to grow up, to raise your family. And they will do that, of
course, if they have economic opportunity. And that is
something where we can play an indispensable role.
Senator Shaheen. Thank you, Mr. Chairman.
Senator Menendez. [presiding]: The chairman had to leave,
but let me close by saying a couple of things and then we will
close the hearing.
First of all, I appreciate and I hope that our friends in
Mexico got a very clear sense that there is a bipartisan
different view about the U.S.-Mexico relationship than that
which is expressed by the administration. I am very heartened
to hear Republicans and Democrats alike show a deep knowledge
of the incredible importance of the relationship. And for
whatever challenges we might have in terms of issues that we
want to mutually pursue, that there is a better way. And so I
am really heartened by the remarks made by my colleagues here
today.
I just want to make one observation. We got something that
is impossible these days to get in the United States Senate on
controversial issues, 68 votes for a comprehensive immigration
reform. Senator Flake was part of the Gang of 8, as I was. And
68 votes is tough to get. But it had more border security than
even being proposed by the administration without a wall. It
had a very tough, long, arduous pathway to legalization, but it
had one. And it was scored by the CBO with some of the most
outstanding numbers I have ever seen in my 25 years in
Congress. Growth in GDP as a result of the reform, growth in
wages for all Americans, reduction of the national debt as a
result of revenues that would be derived, employment levels
that would rise. I have never seen a score on a single piece of
legislation that was so positive across all the denominators.
So I hope we can at some point get back to that.
I would just say that I am not sure that I agree with you,
Ambassador, that DACA was the driver. I think that violence in
Central America, the gangs, the narcotraffickers. If at the end
of the day your choice is to stay and die or flee and possibly
live, even if you are caught, you are going to make that
choice. And so I think the flow started well before the
President's DACA pronouncements. But I still think today those
are the critical issues that we need to deal with in our
Central American policy so that we can deal with this.
So on behalf of the chairman with our thanks to both of you
for some incredible testimony, I need to close.
Ambassador Richardson. If I could just amplify on your
excellent remarks. I read the paper this morning.
Senator Menendez. Actually we can go on forever. I am just
kidding.
[Laughter.]
Ambassador Richardson. And we have two experts here because
both of you work on a bipartisan way.
I saw the President saying that he wanted to talk to
Democrats now after the health care issue. I am glad.
I think Democrats and Republicans on comprehensive
immigration and U.S. relations with Mexico can forge some
sensible policy. So I urge you on the Mexico issue to get
involved, to put your voices and your appropriations strength
on behalf of a relationship--I am going to say it again. We
kind of danced around it. I know the peso is getting better.
There are some NAFTA talks. And I think both business
communities need to get involved, especially the Mexican
business community that knows these issues well. We need to
cool this relationship down and get it straight again because
it is one of our most important.
And I hope the President reaches out to all of you here and
to people like Matt McLarty and Jim Jones Democrats that have
handled--Noriega--he told me something about his political
affiliation that surprised me. But he has been a leader in the
Republican Party on Latin America. You know, to reach out to
people that may not share his view.
Senator Menendez. Well, thank you.
On behalf of the chairman, let me thank both of you for
some incredibly important, enlightening testimony. It has
really helped the process here, the debate, and the insights.
The record remains open for 48 hours.
And with that, the hearing is adjourned.
[Whereupon, at 12:08 p.m., the hearing was adjourned.]