I was privileged
last week to hear Vicente Fox, former President of Mexico, talking about the
importance of open markets and trade agreements like NAFTA in today’s
complex global trading economies. It was the highlight of AMR Research’s 2008 Supply
Chain Summit and most of the people I talked with were very impressed with the
speech.
I admit
that it is easy to question trade agreements like NAFTA when we see so many
U.S. manufacturing jobs moving overseas. But the arguments in favor of open
trade are strong and need to be considered. I will try to share some of Vicente’s
thoughts in this article and I urge that you also keep an open mind. Even if we don’t agree with some of his
message, we can respect that it comes from someone that has done a lot of
research, collaborated with international leaders, and has a lot of international
business experience. Before entering politics, Vicente Fox was a successful
President for Coca-Cola Latin America.
I would
also like to note that Vicente Fox is a very clear and charismatic speaker. He was
able to engage us, make his points with humor, and keep us focused on topics
that are usually full of boring political rhetoric. If you ever have a chance
to listen to him, don’t miss it.
Paraphrasing
some nuggets from the former President...
In the 70-80’s,
nationalism and protectionism was the name of the game. Several dictatorships
and corrupt governments made it hard to do business and make a profit. While
other parts of the world were advancing, Latin America was falling behind. We had to change and let go of the dictators.
We needed new leaders with great vision.
Today we
know that in Latin America, democracy and open markets work. We are finally returning
to growth in the region. Capital per person is increasing. We are making a
small dent on poverty numbers but we know this path works. We need to continue
increasing our middle class.
The theme
of this conference, Globalization Comes Home, is very important, because globalization is still not a fully
accepted concept around the world. Mexico has one of the most open markets in
the world with a large number of trade agreements. A lot of of the world’s
exported products move through Mexico.
I am
surprised that this US nation is moving back toward protectionism. We are also
concerned about China, but building walls is not a long term vision. I don’t believe
that thinking global translates to losing jobs.
Mexico, US
and Canada are all losing jobs to China and we could benefit from working
closer together. There are also many other stable countries in Latin America
like Chile, Brazil, and even Colombia who has been trying to control problems
with drug trafficking.
There are
also currently a few countries like Venezuela that are causing worries in Latin
America. It seems that we have not learned our lessons from the past.
Fortunately globalization does not
really enable Totalitarian governments to thrive in the global economy. Hugo
Chavez withdrew from the G3 Trade Agreement
between Colombia, Mexico and Venezuela. The
current few dissident Latin American leaders opposing free markets have eroded
the process, but it will come back.
I am not
just talking optimistically about democracy and open markets. We have sound
figures that show us the results and point to what we have to do to move
forward in the future. What we need the most is leadership and institutions
that generate those leaders. So we are creating initiatives like Mexico’s Presidential Library to
help educate the next generation of leaders for Latin America. We need to
recover the time lost during the 20th century in Latin America.
We hope
this great US nation comes back to show its leadership in the area of globalization
and open markets; a nation with great ideas and innovation like the Internet.
Not
everything that shines is gold. The race to China might be overrated. A big
advantage of doing business in Mexico for US companies is the benefit to
logistics from the proximity. As an example, in the maquinadoras industry we
can turn around raw materials into final product and have it back in the US in
one day.
Mexico also
represents a huge local market for the United States. Mexico still has 33%
poverty; we need to continue growing the middle class. But the 77% that consume
represent a big buying market. Imports from the US to Mexico are bigger than for
the rest of Latin America together. Mexico as a market is bigger than several European
nations together. Around 70-75% of imports into Mexico are from the US.
Q: Your
book, “Revolution of Hope”, talks about a “Super NAFTA” can you elaborate?
A: We must study
and learn from models like the Europe Union. We
are learning in Latin America and making some progress. For example, it is not
necessary to have a passport to move between Guatemala and El Salvador. We should pay attention and learn from what is
working over there.
Q: How much
can Chavez derail progress in Latin America?
A: We have
not increased education levels enough and middle class enough in Latin America,
so these leaders have been able to hold on to power. I don’t believe that 21st
century socialism is going anywhere. It is just a nostalgic concept and does
not have a plan for future prosperity. There is no long term vision.
Education and
democracy is the only way to prosper in the future. It gives people choices. Authoritarian
governments will try to keep people ignorant so they don’t have choices. We
learned the lesson in Mexico and we have been educating. Now 100% of schools have
IT technology and a big percent of them are connected to the Internet. We
expect the returns not only in numbers but also in the quality of the
education.
I believe
that we need to be able to handle more than one issue at a time. We cannot just
focus on terrorism. We also need to address issues of trade, immigration, and
manufacturing globalization. I have campaigned a lot, and when you campaign you
make a lot of promises. Once you sit on the chair, you feel the weight on your
shoulders and you ask yourself “Now what are you going to do Vicente?” After
the elections, the same will happen here and we will need to more seriously address
issues like immigration and the NAFTA trade agreement.
“Better tomorrow”
is a great Mexican concept :) But some of these issues need
attention now and we should act soon. We need to figure out soon how to turn
issues like immigration into a plus for each country.
***
More
references on Vicente Fox:
http://www.elbalero.gob.mx/kids/government/html/gobierno/bio_foxkids.html
http://en.wikipedia.org/wiki/Vicente_Fox
Information
on NAFTA:
http://www.fas.usda.gov/info/factsheets/NAFTA.asp
More on the
G3 Trade Agreement:
http://en.wikipedia.org/wiki/G3_Free_Trade_Agreement
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