VZCZCXRO7983
RR RUEHCD RUEHHO RUEHNG RUEHRS
DE RUEHME #0426/01 0362144
ZNR UUUUU ZZH
R 052142Z FEB 10
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 0366
INFO ALL US CONSULATES IN MEXICO COLLECTIVE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFIUU/CDR USNORTHCOM PETERSON AFB CO
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/USAID WASHDC 0007
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC

UNCLAS SECTION 01 OF 04 MEXICO 000426 
 
SENSITIVE 
SIPDIS 
STATE FOR WHA/MEX/GOMEZ 
STATE PASS TO USTR FOR MELLE/MCCOY/SHIGETOMI 
STATE PASS TO JUSTICE FOR CCIPS/KOUAME AND OPDAT/TRUEBELL 
STATE PASS TO COMMERCE FOR ITA/MAC/ONAFTA/WORD 
STATE PASS TO ITA/MAC/IPR/WILSON 
COMMERCE PASS TO USPTO FOR RODRIGUEZ/BERDUT/MORALES 
 
E.O. 12958: N/A 
TAGS: ECON KIPR MX ETRD PREL EINT ENRG BTIO
SUBJECT: Scenesetter for Ambassador Kirk 
 
¶1.  (SBU) Summary.  Your visit comes at a crucial moment in our 
efforts to deepen our bilateral relationship with Mexico, our third 
largest trading partner after Canada and China.  As we 
institutionalize our security agenda we will also need to give more 
attention to the economic and social agendas in a country whose 
economic and social well-being affects ours directly.  The United 
States' global competitiveness depends increasingly on a more 
competitive Mexico.  Efforts to strengthen our mutually beneficial 
competitiveness in 2010 will focus on spurring innovation, building 
a modern 21st century border, encouraging the requisite regulations 
and infrastructure, and supporting a sustainable energy and 
environment agenda.  All these are top priorities for the Calderon 
administration and offer huge potential for future U.S. investment 
and economic development.  Mexico's and our economic recovery go 
hand in hand, and U.S. export-led successes depend increasingly on 
partnering with Mexico's lower-cost manufacturing capability.  The 
top issues on the Mexican agenda will be the long-standing trucking 
dispute and other trade irritants, including Mexican tuna and 
shrimp exports to the United States.  President Calderon is 
personally devoted to the issue of climate change and renewable 
energy, opening the possibility for trade and investment 
opportunities that benefit both countries.  End Summary. 
 
 
 
Political Context 
 
-------------------- 
 
 
 
¶2.  (SBU) Present Calderon enters the last three years of his 
six-year term facing a complicated political and economic 
environment.  His PAN party emerged seriously weakened from a 
dramatic 2009 mid-term election in which the opposition (PRI) 
gained control of the Mexican Congress.  His popularity numbers 
have dropped 10-points since the beginning of last year, yet they 
still hover solidly over 50 percent.  He is by no means a lame 
duck.  Still, the opposition PRI party is in the ascendancy, 
cautiously managing its illusory unity in an effort to dominate the 
ten gubernatorial contests that are up in the coming year, and to 
avoid any missteps that could jeopardize its front-runner status in 
the run-up to the 2012 presidential elections.  In addition, the 
public's deepening economic worries have begun to counterbalance 
their concern about security. 
 
 
 
Economic Context 
 
---------------------- 
 
 
 
¶3.  (SBU) Following the 2009 electoral setback, Calderon made 
promoting jobs and eradicating poverty his top two priorities for 
2010, sharing the agenda with security issues that have become 
acutely sensitive in the past weeks due to the persisting violence 
in Ciudad Juarez.  It is important that Calderon succeed in making 
real progress on the economy and security in the last three years 
of his term.  The economic and security agendas are time-sensitive 
and volatile, and the more momentum that can be achieved now, the 
greater the prospect for continuity into a new administration. 
However, the complexities of pushing viable economic reforms 
through an opposition Congress complicate advancing such an agenda. 
If Calderon is unable to strengthen Mexico's competitiveness in 
order to promote jobs and eradicate poverty, the United States will 
also feel the impact through immigration pressures and greater 
volatility in high-violence cities that have been the battleground 
for narco-traffickers.  A stable and growing Mexico is in both our 
security and economic interests. 
 
MEXICO 00000426  002 OF 004 
 
 
¶4.  (SBU) As with any mature trade relationship, the United States 
and Mexico have a number of trade-based issues, including 
cross-border trucking, tuna/dolphin labeling, country-of-origin 
labeling (COOL), the Buy American program, and the shrimp/turtle 
excluder devices (TEDs) issue (although not strictly a trade 
concern), that complicate further a complex bilateral agenda where 
Mexico has, in an unprecedented way, engaged the U.S. in its most 
sensitive security issues.  The GOM does not see these trade 
disputes as discrete, but as a message on the relative lack of 
importance we place on achieving a dynamic economic relationship 
with Mexico that would be mutually beneficial in improving our 
ability to compete in today's global market. 
 
 
 
¶5.  (SBU) The trucking issue is the most important and symbolic of 
these issues.  Internally, the GOM is under pressure from its 
trucking industry to expand retaliatory measures under NAFTA.  It 
has become a daily struggle to get the GOM to defer a new round of 
retaliatory measures and to risk further damage to our partnership. 
We have succeeded this far, but it is only a matter of time before 
the GOM takes new actions.  Ironically, this blockage of a major 
transit flow from Mexico to the United States is hurting our own 
exports to Mexico.  For example, the retaliatory tariffs imposed 
almost a year ago have accounted for a 17 percent drop in the 
shipments of one of the United States' largest retailers to its 
Mexican operations. 
 
 
 
¶6.  (SBU) On tuna/dolphins, the challenge will be to break out of 
our litigious impasse with Mexico.  The GOM is primed to hear the 
various non-litigious options you will present.  They will be 
reluctant to drop our even pause their WTO case against us unless 
they are assured that these options lead to their desired outcome 
of access to the U.S. market for Mexican tuna. While the 
shrimp/TEDs issue has not been on USTR's agenda, you should expect 
the Mexicans to raise it.  Decertification of Mexican shrimp 
exports could result in a $300 - $400 million loss in exports, and 
the key actors you will see are deeply engaged on this issue. 
 
 
 
The Challenge:  A Positive Economic Agenda 
 
--------------------------------------------- -------- 
 
 
 
¶7.  (SBU) The challenge, apart from resolving these trade irritants 
in a mutually satisfactory manner, is to find areas where we can 
move forward together.  We need to create a positive economic 
partnership with Mexico beyond trade that goes to the heart of 
improving Mexico's competitiveness, which is key to the rationale 
for integrating the U.S. and Mexican economies and thereby 
increasing the competitiveness of both countries in global markets. 
We have identified a few opportunities in which USTR plays a vital 
role. 
 
 
 
Regulatory Reform 
 
----------------------- 
 
 
 
¶8.  (SBU) Mexico has been desirous of moving quickly to make our 
regulations more compatible, often repeating that regulatory 
cooperation is an essential component of making North America more 
 
MEXICO 00000426  003 OF 004 
 
 
competitive.  Our three governments have asked our regulatory 
agencies to provide updates of cooperative efforts in previously 
identified sectors ranging from organics to information technology, 
as well as highlight priorities in each of these sectors in which 
regulatory cooperation is feasible and achievable. 
 
 
 
¶9.  (SBU) We believe that in addition to these sectors, there is 
potential for regulatory cooperation that are as essential for the 
business community as for consumers.  These include pharmaceutical 
testing, standards for medical devices, common certification for 
telecommunications equipment, and automobile emissions.  You need 
not get into the detail of regulatory reform, but it would be 
helpful if you could affirm our commitment to engage intensively in 
this area and produce a concrete agenda for the North American 
Leaders Summit. 
 
 
 
Renewable Energy 
 
---------------------- 
 
 
 
¶10.  (SBU) Advancing bilateral cooperation on renewable energy, 
energy efficiency and the environmental agenda has been a top 
priority for both President Obama and President Calderon since 
their first meeting January 2009.  This agenda was formalized when 
the Bilateral Clean Energy and Climate Change Framework was 
announced during President Obama's April 2009 visit to Mexico.  On 
January 25-26 a senior level working group met in Washington to 
discuss pragmatic steps to advance this collaboration.  The working 
group agreed to establish a bilateral task force which will work to 
create a renewable energy market between Baja California and 
California.  The task force will consider standards, transmission 
capacity, regulatory issues and financing.  This pilot project 
could be able more broadly across the border, creating significant 
opportunities for US companies to export green technology to 
Mexico.  The January 25-26 meeting also helped advance cooperation 
on the Framework Convention on Climate Change 16th Conference of 
the parties (COP-16) which Mexico is hosting in late 2010. 
 
 
 
¶11.  (SBU) You could also stress President Obama's persona 
commitment to advancing a joint agenda on climate change and 
renewable energy.  You could stress the administration's commitment 
to use all available policy and financial tools, drawing on DOE, 
EPA, State, TDA, USAID, OPIC and EXIM to create a viable renewable 
energy market between both countries.  This wider context will also 
help reinforce USTR's Trade Climate Initiative. 
 
 
 
CITEL MRA 
 
------------- 
 
 
 
¶12.  (SBU) We have recently revived talks with the GOM over the 
implementation of the Organization of American States' Mutual 
Recognition Agreement for Conformity Assessment of 
Telecommunications Equipment (CITEL MRA).  The CITEL MRA framework 
agreement, signed by 34 countries in 1999, goes into effect between 
two signatory countries upon an exchange of letters.  To date, the 
only signatory country with which the U.S. has exchanged letters is 
Canada.  Mexico is concerned that this MRA disadvantages an 
emerging market like Mexico, which produces little telecom 
equipment, and fears that in the face of U.S. competition CITEL 
 
MEXICO 00000426  004 OF 004 
 
 
would leave the sector stillborn as well as harm Mexico's standards 
testing laboratories.  However, Mexico will host a trilateral 
meeting in Mexico City on February 25-26, and we will use the CITEL 
MRA as a starting point to allay Mexico's concerns. 
 
 
 
IPR 
 
---- 
 
 
 
¶13.  (SBU) There is potential for enhanced unilateral enforcement 
efforts in Mexico, further bilateral cooperation and even 
multilateral coordination in the region in combating IPR 
violations.  Mexico continues to suffer from widespread commercial 
IPR infringement that causes huge losses to Mexican, U.S., and 
third country IP right-holders.  However, the GOM has significantly 
improved its IPR protection and enforcement efforts and 
intra-governmental coordination, and has enhanced the cooperation 
between government agencies and the industry.  A September 2009 
DOJ-sponsored training program for Mexican customs officials in 
Manzanillo led to the detention of nearly 500 tons of Chinese 
counterfeit goods at the Pacific port of Lazaro Cardenas within a 
matter of weeks thereafter.  Participation by the General 
Commissioner of COFEPRIS (Mexico's FDA-equivalent) in a March 2009 
APEC-sponsored anti-counterfeit pharmaceuticals symposium in Mexico 
City, and later in a July 2009 tour of the IPR Coordination Center 
in Washington, appears to have heightened GOM sensitivities and 
contributed to an enforcement action in which seven pharmacies in 
Cancun were closed for distributing counterfeit Cialis and other 
medicines. 
 
 
 
Border and Customs Facilitation 
 
-------------------------------------- 
 
 
 
¶14.  (SBU) We need to leverage the competitive advantage inherent 
in our shared border and extend the border to transit hubs 
throughout Mexico and the United States, as well as move our 
security and customs operations to these decentralized points.  As 
long as border operations are limited to a geographic line between 
the United States and Mexico, we will be bound by physical space 
and infrastructure.  If we create multiple customs points in cities 
like Monterrey and Guadalajara using pre-clearance and automation 
resources, we can expand processing capacity and accelerate 
transit.  GPS technology will let us track trucks and trains to 
confirm that they do not get diverted and opened.  Only by moving 
in this direction can we shatter the physical stranglehold on our 
borders that limits the legitimate movement of people and goods. 
 
 
 
¶15.  (SBU) We have begun a discussion of these border issues with 
Mexico under the bilateral Policy Coordination Group on security 
issues with Mexico chaired by John Brennan.  You could affirm 
support for the work we are doing in this channel and note that 
Secretary Napolitano will be in Mexico on February 17 - 18.  In the 
bilateral part of her agenda she will want to focus on the dual 
challenges of competitiveness and security as we seek to create a 
21st century border adapted to global competitive challenges. 
PASCUAL