VZCZCXRO9631
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #0548/01 0371644
ZNR UUUUU ZZH
P 061644Z FEB 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 5214
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
RHMFIUU/CDR USNORTHCOM PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 04 MEXICO 000548 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR A/S SHANNON 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA, EAP/CM, EAP/EP 
STATE FOR EB/ESC MCMANUS AND IZZO 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/ARUDMAN 
USDOC FOR ITS/TD/ENERGY DIVISION 
TREASURY FOR IA (ALICE FAIBISHENKO) 
DOE FOR INTERNATIONAL AFFAIRS KDEUTSCH AND ALOCKWOOD 
STATE PASS TO USTR (EISSENSTAT/MELLE) 
STATE PASS TO FEDERAL RESERVE (CARLOS ARTETA) 
NSC FOR DAN FISK 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EFIN ELAB ENRG MX PGOV PREL
SUBJECT: MEXICO ECONOMIC NOTES, JANUARY 25 - FEBRUARY 1 
 
REF: MEXICO 483 
 
Sensitive but unclassified, entire text. 
 
Summary 
------- 
 
¶1.  (SBU) Commerce Secretary Gutierrez discussed 
criminalization of 
commercial disputes, the current tortilla crisis, conformity 
assessment, 
competitiveness, the Security and Prosperity Partnership 
(SPP), and border 
cooperation with Secretary Sojo of Economy.  Gutierriez 
learned of a GOM 
interest in U.S.-Mexico Open Skies talks in 2008 from 
Secretary Tellez of 
 
SIPDIS 
Communications and Transport.  Tellez raised preclearance in 
Cancun and 
making the Tijuana airport binational.  On telecoms, 
Gutierrez received a 
realistic assessment of the difficulties liberalizing the 
sector.  Secretary 
Kessel told industry insiders Mexico would seek technical 
associations with 
foreign firms to help develop deep water oil production, but 
stopped short of 
calling for constitutional change.   Secretary Sojo signed a 
Customs 
Cooperation Agreement with USTR Schwab in Davos  January 26. 
End Summary. 
 
Gutierrez and Sojo Discuss Tortillas, Disputes, Border 
--------------------------------------------- --------- 
 
¶2.  (SBU) Commerce Secretary Gutierrez met Mexican Economy 
Secretary Eduardo 
 
SIPDIS 
Sojo February 1.  Sojo said that the GOM is investigating 
what may or may not 
have happened to raise corn and tortilla prices in Mexico, 
but did not expect 
a U.S. firm to be singled out.  Gutierrez raised GE/NBC's 
problems with TV 
Azteca in the context of U.S. concerns over the 
criminalization of commercial 
disputes.  The two secretaries also agreed to set up a 
bilateral working 
group to develop a border agenda in the next few months. 
Gutierrez and 
Calderon also met to discuss a number of bilateral commercial 
issues. 
Complete reporting cables will follow. 
 
U.S. - Mexico Aviation Issues 
----------------------------- 
 
¶3.  (SBU) Secretary of Communications and Transportation Luis 
Tellez met with 
Secretary of Commerce Carlos Gutierrez on February 1.  In 
 
SIPDIS 
response to 
Gutierrez asking whether the Mexicans would be interested in 
such talks, 
Tellez addressed the idea of negotiating an Open Skies 
agreement between the 
United States and Mexico, saying that the GOM could be ready 
to discuss the 
agreement in 2008.  Tellez said that the first step toward 
Open Skies would 
be the privatization of Aeromexico, which should take place 
in 2007, and to 
see what effects privatization has on the aviation market in 
Mexico.  Tellez 
and Under Secretary of Transportation Manuel Rodriguez also 
 
MEXICO 00000548  002.2 OF 004 
 
 
raised the idea of establishing CBP preclearance in Cancun, an 
issue that former president Fox and President Bush discussed in 
¶2006.  Tellez mentioned Mexico's hope to make the Tijuana airport 
binational, though he noted that Tijuana would need a new airport 
terminal to make this more realistic. 
 
Mexico Telecom Topics 
--------------------- 
 
¶4.  (SBU) In the same meeting, Tellez expressed the Calderon 
administration's commitment to encouraging competition in the 
telecom market, but said that it is a "very hard goal" to meet. 
Under Secretary Rafael del Villar told Secretary Gutierrez that 
Mexico has a long way to go to match US telecom rates and that 
Mexico must work through foreign investment restrictions in this 
sector, but that the SCT faces difficult political issues.  Tellez 
and del Villar also mentioned the current debate between the SCT 
and Cofetel, saying that Cofetel "is neither as pro-competitive 
nor as independent as it should be." 
 
Energy Secretary:Foreign Tech Associations 
------------------------------------------ 
 
¶5.  (SBU) In a speech to energy industry representatives in 
Mexico January 31, Energy Secretary Georgina Kessel emphasized that 
Mexico was interested in developing "technical associations" with 
foreign companies to develop deep water oil production, but when 
asked whether this meant that the Calderon administration would 
seek a change to Article 27 of the Mexican Constitution, she 
demurred.  On the same program, Carlos Morales Gil, CEO of Pemex 
Exploration and Production rejected reports over the past two 
weeks that the Cantarell field was declining faster than expected 
and presented a production forecast showing the field declining 
by 13 percent annually through 2015. 
 
A Big Step Toward Textiles Cumulation 
------------------------------------- 
 
¶6.  (SBU) U.S. Trade Rep Sue Schwab and Mexico's Secretary of 
Economy Eduardo Sojo took a step toward implementing the textiles 
cumulation provisions in the U.S.-Central America Free Trade 
Agreement (CAFTA) by signing a Customs Cooperation Agreement 
January 26 in Davos.  Cumulation would allow Central American 
apparel makers who use Mexican textile inputs to still qualify for 
duty-free export to the U.S. market under the CAFTA.  The Customs 
Cooperation Agreement would allow customs officials to perform 
inspections to verify the origin of the textile inputs of CAFTA 
apparel exports. Before these cumulation provisions can take effect, 
Mexico must first reach an agreement 
 
MEXICO 00000548  003.2 OF 004 
 
 
with the Central Americans that would also permit them to 
export duty-free to Mexico apparel using U.S. textile inputs. 
Mexican and Central American trade negotiators are meeting 
January 30-31 to work out just such an agreement. The Secretary 
of Economy issued a press release (echoed in a number of news 
publications) declaring that cumulation would be a major boost 
for Mexico's textiles sector as it faces rising competition from 
Asia in general and China in particular.  See upcoming septel for 
a broader look at the impact of China's economic rise on Mexico. 
 
Union Leader Suspicious of U.S. 
------------------------------- 
 
¶7.  (SBU) According to Francisco Hernandez Juarez, the head 
of the Telephone Workers union and a leader of the National 
Workers Union (UNT), many of  the major unions Mexico are 
suspicious of the US Embassy and have preferred to keep their 
distance from Mission Mexico.  Hernandez attributed this attitude 
to these organizations' belief that the USG is not interested 
in worker rights.  He also added that many union members and 
ordinary Mexicans believe that last year's approval by congress 
of the construction of a wall along parts for the U.S./Mexico 
borders is an indication that the U.S. is not really interested 
in good neighborly relations with Mexico. 
 
Remittances Break Record 
------------------------ 
 
¶8.  (SBU) Remittances to Mexico reached USD 23,1 Billion in 
2006 exceeding last years USD 20 Billion figure.  According to an 
Interamerican Development Bank (IDB) survey 73 percent of the 12 
million Mexicans living in the U.S. sent funds to Mexico.  The 
average Mexican migrant earned USD 900 per month, 6 times more 
than he earned before migrating. 
 
2006 Not a Good Year for Mexican Tourism 
---------------------------------------- 
 
¶9.  (SBU) Mexico was the only country in Latin America to 
experience a decrease in international tourist, according to figures 
published last week by the World Tourism Organization.  Secretary of 
Tourism Rodolfo Elizondo confirmed that 550 thousand fewer tourist 
visited Mexico last year than in 2005.  Political upheaval caused 
by the elections and Oaxaca, fallout from Hurricane Wilma, and the 
dollar's weakness created a perfect storm to reduce the number of 
travelers.  The Mexican government is optimistic that the number of 
tourists will rebound in 2007.  They are likely right if WHTI 
continues to have a miniscule effect and the political situation 
remains under control. 
 
 
MEXICO 00000548  004.2 OF 004 
 
 
Calderon Pounds Pavement for European Investment 
--------------------------------------------- --- 
 
¶10.  (SBU) Calderon completed a 6-day trip to Europe this 
week with stops in Berlin, Madrid, London and the World Economic 
Forum in Davos, Switzerland. The overarching theme of Calderon's 
European trip was investment promotion. In each stop he met with 
multinational business leaders and promoted Mexico as a safe place 
for foreign investment.  The Economist study naming Mexico as 
the 5th largest world economy by 2040 was repeatedly cited 
and Calderon assured investors that his administration would 
continue the development advances necessary to make it a reality. 
See (reftel) for political analysis and media reaction to the visit 
and upcoming septel for the investment message. 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
BASSETT