PACIFIC BASIN ECONOMIC COUNCIL
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Additional Info: Speeches Photos Policy Statements Speakers & Noted Participants Featured Biographies Registration Media Information Conference Statement Regional Vitality in the 21st Century April 6-10, 2001 — Tokyo, Japan Mr. Gabriel Millan General Director Coraza Internacional, S.A. de C.V. It is more than just an act of courtesy to state my great satisfaction and the privilege to participate in this 34th. International General Meeting (IGM) of the PBEC, and to mention that in 1990 before the IGM held in Guadalajara, Mexico, much was spoken here in Tokyo about the importance of maintaining and increasing commercial relationships between the Asia-Pacific Region and Latin America. I have to acknowledge that notwithstanding all the efforts and statements made by our Governments, reality tells us that instead of increasing the degree of commercial relationships between Asia-Pacific and Latin America, these have proportionally fallen. It is true that globalization is a reality that should grant us the opportunity to complement each of our countries and to increase our interaction. However, although the fact that Latin America has substantially reduced its tariff barriers from 40% in 1980 to 11% by 1999, the truth is that the only thing that this reduction has allowed is a greater flow of goods from Asia to Latin America and less from Latin America to Asia, consequently increasing our trade deficit. Regardless of the crisis suffered by our different economies over the last decade, we see that the areas in which we could have increased our relations, exploiting the opening of our economies, have not given the expected results. However, as businessmen, we shall not be discouraged, but rather we shall be forced to think in different alternatives and to find new paths. In Mexico, for example, we are very enthusiastic. Some numbers have already been mentioned in this panel, but we mainly believe that the political transition we have gone through and the development plans headed by the new administration of Mexico's President Vicente Fox, which emphasizes not only democracy, but also a framework of economic freedom as well as a greater efficiency of the economy, will allow us, Mexican businessmen and women, to identify investment projects in petrochemical, energy, telecommunications, transport, ports, aeronautical, capital goods and manufacturing industries, among others. I think that everyone knows that Mexico has executed many Free Trade Agreements with the United States and Canada, with the European Union, with Guatemala, El Salvador, Honduras, Israel, Colombia, Venezuela, Bolivia and Nicaragua. However, we see that in spite of these Agreements, our diversification and trade relationships with the Asia-Pacific are less and less frequent and the numbers prove it. For example, 30 years ago Mexico maintained a trade relationship with the Pacific Region that represented 9% of all exports. However, today it only adds up to 2%. On the other hand, a constant diversification of products cannot be seen from the statistics. Our exports to Asia-Pacific are mainly raw materials, but regardless of the Free Trade Agreements that we have signed with so many other countries, their result is that we have concentrated our commercial relationships with the US to the point that they today represent nearly 90% of our trade. All this leads us to think that if we want to go back to having at least 10% of our trade with the Asia-Pacific region, either in Mexico or in some other Latin America countries, we will need another 30 years, provided that the structure of our trade relationship changes. This raises the question, how could a structural change in Asia's relationships with Latin America be achieved? Here I would mention that, given the entry of China to the World Trade Organization, and the competitive structure that is going to represent the new opening on the year 2010 suggested by the APEC for developed countries and in 2020 for developing countries, we should consider situations such as the following one in the case of Mexico. Mexico needs much more than just Free Trade agreements. We consider that it is more convenient that Mexico executes Integral Economic Cooperation Agreements for example with Japan. These could include an industrial complementation program through which companies are installed in specific sectors with investments from both countries. These companies, using products from the region, can then export their products all over the world. These Agreements would incorporate: transfer of technologies, sustainable development programs, transportation and communications, financial support, strategic investments and, additionally, aspects such as tourism and culture, as well as social factors. These Agreements go beyond Free Trade Agreements and are more ambitious and creative mechanisms than traditional trade agreements. Latin American business leaders firmly believe that the future is yet to be written; that the 21st Century represents a great opportunity in the light of the speed of change and, that it requires a different attitude and business model from both the Governments and private sector in the Asia-Pacific region. An open economy on its own does not drive a country towards prosperity, a strong domestic market with efficient supply chains is a key component of the success formula. Globalization can certainly increase wealth, but the truth is that it cannot guarantee its fair distribution. We know that there are many problems to be tackled, such as the gap between poor and rich countries in the world, but we must have the imagination to create wealth and to distribute it in the right way. This PBEC forum is a means by which to encourage us to change. I am sure that the Pacific meetings to be held by the APEC such as the Shanghai-China Summit this year and the 2002 Summit to be held in Mexico, will constitute a platform for discussion that will lead the countries linked by the Pacific Ocean to find different mechanisms of collaboration and initiate new ventures. I rest assured that these efforts of the PBEC will constitute and be transformed into commitments that each one of our Governments and private sectors will adopt, and that the studies of the Pacific Basin will be translated into policies that benefit our nations' well being.