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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
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RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
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UNCLAS SECTION 01 OF 02 MEXICO 000777 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR A/S SHANNON 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA 
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 MX PGOV PREL
SUBJECT: MEXICO ECONOMIC NOTES, FEBRUARY 10 - FEBRUARY 16 
 
Summary 
------- 
 
¶1.  (U) Missouri Governor Matt Blunt promoted the Kansas City 
Smart Port on a visit to Mexico City February 12.  The 
Embassy worked successfully to ensure Mexico included 
petroleum products when it approved a third track of NAFTA 
rule changes this week, thereby facilitating trade worth 
roughly USD 20 billion. Calderon nominated Dr. Carlos 
Hurtado, former Undersecretary of Spending, as one of the 
Bank of Mexico's four deputy governors, and announced 
creation of internal audit committees to oversee procurement 
decisions of Pemex and the electricity monopoly, CFE. The 
Supreme Court of Justice ruled that international treaties 
including trade agreements like NAFTA take precedence over 
federal and state laws. Economy Secretary Sojo said his 
Secretariat would create a new organization for Mexican trade 
 
SIPDIS 
promotion. The Secretary of the Chamber of Deputies Finance 
Committee does not expect that fiscal reform will be debated 
in the Chamber before August. And, despite renewed calm, some 
striking teachers are still causing unrest in Oaxaca.  End 
summary. 
 
Governor of Missouri visits Mexico 
---------------------------------- 
 
¶2.  (U) Governor Matt Blunt of Missouri headed a trade 
delegation to Mexico City on February 12. During the visit he 
met with Secretaries Carstens (Finance), Tellez 
(Communications and Transport), Espinosa (Foreign Relations) 
and President Calderon.  Accompanying him was a delegation of 
businessmen from the Kansas City Smart Port. While the 
meetings were mainly to promote the Smart Port facility with 
the new administration (see septel), the governor also spoke 
with Calderon about promoting Missouri investment projects in 
Mexico and the mutual support for expanding the Port of 
Lazaro Cardenas in the state of Michoacan.  During the visit, 
Gov. Blunt also participated in the signing ceremony between 
Kansas City Southern de Mexico and the State of Michoacan for 
an 80 million USD inter-model terminal at the port. At the 
ceremony Kansas City Southern de Mexico announced additional 
investments of 300 million USD. 
 
NAFTA Rule of Origin Changes Finalized 
-------------------------------------- 
 
¶3.  (U) As part of the ongoing process of simplifying NAFTA 
rules of origin, which determine whether a particular product 
qualifies for preferential NAFTA treatment, the three North 
American governments have agreed on a Track Three package of 
products for which the rules of origin will be changed. 
These changes will make it easier for American, Canadian, and 
Mexican exporters to take advantage of NAFTA's benefits.  The 
total amount of trade covered by these changes will be 
roughly USD 67 billion, USD 20 billion of which will be 
accounted for by the inclusion of a variety of petroleum 
products.  Earlier this week, the Embassy was active in 
ensuring that the Mexican government approved inclusion of 
these petroleum products.  These changes must still be 
approved by the Mexican Senate. Previous sets of changes were 
implemented in 2002 ("the seven"), 2004 (Track One), and 2006 
(Track Two), covering a total trade value of USD 39 billion. 
The three countries are working on a Track Four set of 
changes. 
 
Hurtado Nominated to Central Bank Board 
--------------------------------------- 
 
¶4.  (U) President Calderon on February 9 nominated Dr. Carlos 
Hurtado Lopez, a former Ministry of Finance Undersecretary of 
Spending, as one of the Bank of Mexico's four deputy 
governors.  If ratified by Congress, Hurtado would replace 
 
MEXICO 00000777  002 OF 002 
 
 
Jesus Marcos Yacaman, whose eight-year term ended December 
31, 2006.  Hurtado has an economics degree from the 
Autonomous Technological Institute of Mexico (ITAM) and a 
doctorate in economics from the University of Chicago. 
 
Calderon Announces New Audits for Energy Sector Contracts 
--------------------------------------------- ------------ 
 
 
¶5.  (U) President Calderon announced creation of internal 
audit committees to oversee procurement decisions made by 
Pemex and the Mexican Electricity monopoly, CFE.  In making 
the announcement, Calderon said that fighting corruption is 
essential for a competitive economy.  Pemex and CFE together 
account for 48 percent of Mexican government procurement. 
 
Supreme Court Rules for NAFTA Ahead of Domestic Law 
--------------------------------------------- ------ 
 
¶6.  (U) Regarding 14 injunctions filed by 12 companies 
against Mexico's General Import Law, the Ministers of the 
Supreme Court of Justice ruled six to five that international 
treaties including trade agreements like NAFTA, were above 
federal and state laws, with the exception of the 
Constitution.  The majority determined that international 
treaties such as NAFTA are the equivalent to a "supreme law" 
and should be respected at all levels of the government as if 
they were the Constitution itself. 
 
New Mexican Trade Promotion Organization 
---------------------------------------- 
 
¶7.  (U) Economy Secretary Sojo announced that his Ministry 
would create a new organization for Mexican trade promotion 
during the first quarter of 2007 that will take on some of 
the functions of the current Bancomext,the Mexican export 
credit bank. 
 
Deputies to Debate Fiscal Reform in August 
------------------------------------------ 
 
¶8.  (U) Antonio Soto, Secretary of the Chamber of Deputies 
Finance Committee, told the press he expected Congress would 
work on fiscal reform during August 2007 as he did not 
believe there would be sufficient time during the current 
session, which ends in April. 
 
Oaxaca: Not All Quiet with the Teachers' Union 
--------------------------------------------- - 
 
¶9.  (SBU) Although civil unrest in Oaxaca has improved 
measurably (Mexico 719), the situation for the teachers' 
union remains unstable.  As a result of the Oaxaca protests, 
membership in the national teachers' union (SNTE) split.  In 
December 2006, those teachers disposed to work with besieged 
governor Ulises Ruiz broke away from the existing local 22 
with the support of the union's national leadership forming 
their own local, 59. SNTE members in local 59 work in 2000 of 
Oaxaca's schools.  On February 14, section 22 members staged 
a protest which forced the closure of schools with local 59 
teachers. The local 22 teachers also protested in front of 
the office of Oaxaca's Lieutenant Governor. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
GARZA