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P 182154Z MAY 07
FM AMEMBASSY MEXICO
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UNCLAS SECTION 01 OF 02 MEXICO 002545 
 
SIPDIS 
 
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/GWORD 
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, MAY 11 - MAY 18 
 
 
Summary 
------- 
 
¶1.  (U) Mexico's economy grew at an annualized rate of 2.6 
percent in the first quarter of 2007, the lowest in a year. 
In a speech accompanied by controversial teachers' union 
president Gordillo, President Calderon outlined coming 
educational reforms.  The Mexican Supreme Court began 
considering a constitutional challenger to the April 2006 
"Televisa Law."   A ruling could overturn the government's 
decision to allow broadcasters to hold on to their existing 
spectrum for new services without charge.  Economy Secretary 
Sojo criticized the U.S. House of Representatives passage of 
a bill halting the pilot project allowing Mexican trucks to 
operate in the U.S.  The Guatemalan Ambassador to Mexico 
criticized President Calderon's decision to significantly 
reduce the volume crude Mexico would supply to the proposed 
Central American refinery.  End summary. 
 
Mexican Economy Slows 
--------------------- 
 
¶2.  (U) In the first quarter of 2007, the Mexican economy 
grew at its slowest rate in more than a year, largely because 
of a drop off in automobile output and construction.  Real 
GDP grew 2.6% from a year earlier, slightly below the average 
market expectation of 2.7% but down sharply from the 4.3% 
growth registered in the fourth quarter of 2006.  Slower 
growth in the U.S. is weakening demand for Mexican goods in 
the U.S., the destination of 85% of Mexico's exports.  The 
automobile sector in particular has suffered, with vehicle 
production down 12.4% in the first quarter compared with the 
first quarter of 2006.  Auto output in April rebounded 11% 
over the same month in 2006, but it is too early to project a 
recovery.  Industrial production rose only 0.2% in March, 
after growing only 0.1 in February and 1.5% in January. 
Construction, which surged during last year's election season 
and from Hurricane Wilma cleanup, fell 0.7% in February and 
rose only 1% in March. 
 
Calderon Outlines Education Reform 
---------------------------------- 
 
¶3.  (U) President Calderon publicly proposed education 
reforms in five areas (1) improving teaching quality, by 
promoting freedom, civic responsibility, and competitiveness 
in the classroom (2) evaluating teachers in cooperation with 
the union (3) improving buildings and infrastructure (4) 
increased use of technology, and (5) linking education more 
closely t the demands of the labor market.  The President 
announced the initiative accompanied by Education Secretary 
Josefina Vazquez Mota and controversial teachers' union 
leader Elba Ester Gordillo. 
 
Supreme Court Considers "Televisa Law" 
-------------------------------------- 
 
¶4.  (U) This week the Mexican Supreme Court began considering 
a draft ruling on the constitutional challenge filed last 
year to the April 2006 "Televisa Law."  If approved, the 
ruling would overturn many key elements of the Law including 
the right to allow broadcasters to hold on to their existing 
spectrum for free and to simply inform the government of 
their intent to offer new services.  While overall the draft 
ruling appears to encourage competition in the sector, it 
could also overturn the Article that established that public 
auctions be conducted to grant frequencies.  The judge who 
wrote the draft ruling stated that this Article violates the 
Constitution because it privileges economic interests before 
the social use of the spectrum.  Opponents of the 2006 law 
have picked up support across the political spectrum over the 
past two weeks. (See Mexico 2507) 
 
 
MEXICO 00002545  002 OF 002 
 
 
Economy Secretary Criticizes U.S. Congress on Trucking 
--------------------------------------------- --------- 
 
¶5.  (U) Economy Secretary Eduardo Sojo, speaking in Paris, 
said the Mexican Government would 'sensitize' the U.S. Senate 
so they would not pass the trucking bill approved by the 
House last week.  Sojo said the bill "would restrict the 
entrance of Mexican trucks to the U.S. in violation of 
NAFTA."  He added that Mexico "did not want to lose is 
greatest competitive advantage, access to the largest market 
in the world."  He called opening the border to Mexican 
trucks a U.S. NAFTA obligation, and the result of an 
agreement between the U.S and Mexican governments. 
 
Guatemalan Ambassador on Mesoamerican Refinery 
--------------------------------------------- - 
 
¶6.  (U) The Guatemalan Ambassador to Mexico, Manuel Soto, 
criticized President Calderon's decision to reduce the crude 
Mexico would supply to the proposed Central American refinery 
from 230 to 80 thousand barrels per day.  The refinery, a 
cornerstone of the Mesoamerican Energy Integration Plan 
(PIEM), would have benefited from a steady supply of Mexican 
heavy crude.  Without that steady supply, the project's 
economics become unsustainable according to Embassy sources. 
Soto's criticisms are the first since Calderon announced the 
reduction in a Calderon Plan Puebla Panama speech April 10. 
Soto said the decision would allow other suppliers, such as 
Venezuela, to satisfy Central American energy demand. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA