Our trade architecture which had been a winning architecture since the end of world war ii was to make wins and increase the econom it is also timely because we are in imminent danger of dismantling the north american t and its predecessor. Those rules of the road have brought us to the kind of economic level that we have had today. Instead of tension and rekrim nation and reproach. T has fossterd a safe boundary and 1. 5 billion crosses. Reyeoh grand. The past two decades created a unique era of trust between the nation that has brought unprecedented security cooperation, intelligence sharing, antinarcotics enforcement, antiterrorism security, happened daily. Proof of the reality of this partnership is found at mexicos askedwith guatemala where our request mexicos efforts to stem the flow of essential american refugees take an enormous burden off our order control. Todays rhetoric is forcing mexicans everywhere to question the unquestionable. Did the country make a mistake 25 years ago by betting its future on a north america . We saw massive marches last weekend against the United States. Hasleftist candidate locked in the top spot in national polls. If we continue to antagonize mexico we risk our neighbor turning its back on us. Turning its back on decades of strategic cooperation. Arrive in secretaries mexico and in the coming months this center will continue to play a constructive role to move this relationship forward. On march 7 we will welcome margaritas of assad to discuss strategies for the future. As we kick off todays discussion about the way forward, but he can continue to do that job better than our very distinguished guests, some buddy who knows a thing or two about trade and u. S. Jobs. Carlos gutierrez. Thank you for opening this event. The secretarys remarks will be followed by a panel discussion, captained by my dear colleague. The center of the latin america growth initiative. We are lucky to have a panel of impressive experts. All of stern, our Atlantic Council board member in fairburn chairwoman of the International Trade commission. Mackay, for minister of canada. In professor at mexico city and the school for citizenship and public affairs. Secretary gutierrez needs no introduction but very quickly, he served as secretary of commerce from 20052009 under president george w. Bush. During his times there, he helped advance economic relationships, enhance trade, promote u. S. Exports, signature a good year as is now chair of the all right stovers Group Previously he spent 30 years with the Kellogg Company area a marker of wellknown food brands becoming the chief executive officer in 1999. The youngest ceo in the companys 100 year history. Welcome carlos gutierrez. [applause] good afternoon. Thank you very much for having me on this very timely meeting. It is a pleasure to be here with peter mackay. I want to thank Peter Schecter and Jason Marsalis for the invitation. The discussion is about nafta. We know that there is a big elephant in the room that is called immigration policy. Cannot going to get into that but i think it is important that we realize that we are talking about our freetrade agreement with mexico and canada and the backdrop is this new immigration executive order that should be finalized very soon. Of the details are out but that is going to add a level of complexity to this. Are fullyink we knowledge and. Acknowledging. Mexicofocus mostly on because it seems like that is the epicenter of what is going on here. It is important to step back. We are going to talk a lot about the details and whether we renegotiate tort updates and whether it is the labor chapter or the environmental chapter only rules of origin. Those are very important things obviously. I want to step back a little bit because theres a lot more at stake than just the rules of origin and who wins or loses on a specific category. We are talking about a big strategic issue. I remember being in mexico city a couple of weeks ago and just thinking about how the relationship has evolved and how there is a certain confidence in it islationship, whereby becoming somewhat bilingual, bicultural. There are myriad of english words that are just creeped into spanishlanguage in mexico. There are spanish words that creeps into the u. S. Language, you name it. D the relationship has never been better. This was what was on my mind. You are talking about a level of anxiety in mexico that sweet cannot see from here. We hear about this, we read in the papers. Isnt anyone in mexico who is not thinking about what is going on. We have worked very hard to get here. Is atelationship today risk. I think what we need to trust that our i government here in the u. S. Will understand this, we cannot humiliate a country to the bargaining table. We cannot get a country to negotiate with us by humiliating them. Maybe in business you can because it is all about the bottom line but you cant quantify cannot quantify National Pride. You cannot quantify national dignity. That is what is at stake here. It will be extremely difficult for mexico to do anything but take a combative response or position. In many ways, it is our position and our tactics that have forced mexico into a corner, and they have no option. We have given them no option. It is not going to be in easy task. I would not push mexico on that. I would not call their bluff. You know as well as i do that if this means going into a recession for a couple of years, but we are going to keep our National Sovereignty and dignity that will happen. I would hate to even test it. So, we are creating the conditions for a president ial election in 2018 in mexico where the winner could well be an antiamerican populist, antiimperialist, what have you in mexico. Something we have not seen in decades. That would be a strategic issue. We need to have the wisdom to not go for a tactical victory that down the road will cause us to realize it was a strategic defeat. The motivation for a quick, tactical victory is always there. I hope we have the wisdom to look down the road a little bit. I started my career in mexico. For me, it is a country that i know very well. I was general manager of kellogg mexico from 1983 to 1988 before nafta. I remember that mexico extremely well. We are talking about very nationalist policies, protectionist in many ways, products that are imported today that we could not import back then, and a sense that things had to be nationalistic. Not open but very nationalistic. Being on the corporate side of things, you could see the impact it had on our ability to create jobs. When hundred percent inflation. A lot of people have 100 inflation. A lot of people forgot about that. Low growth rates. We all remember this oom and boost cycle where once every six years there would be in major devaluation which would have devastating impacts on border towns, state, jobs in the u. S. , jobs in mexico, corporate balance sheets, corporate earnings which led to more downsizing it was just a terrible, vicious cycle. We have not seen that for about 20 years. That coincides with the nafta period. Today, what the hree countries have built is really quite breathtaking. Nafta is worth over 1 trillion. Supply chains have been integrated throughout the three countries. Manufacturing supply chains and Agricultural Supply chains going on both sides of the border. Being able to give produce get produce to the countries on time so it does not rot. We have been able to do that because of this infrastructure we have built over 20 years. But just six Computer Systems on both sides. Nafta is infrastructure and Computer Systems on both sides. Nafta is digital. All the hings you need to do to work the supply chain and forecast sales. To invoice a customer. It is not like switching off a light. All of a sudden nafta goes away. This is billions of dollars that has been invested in this infrastructure we call nafta. 14 million u. S. Jobs are tagged tied to nafta. As we approach this, we need to keep that in mind. Geographic proximity always makes the difference. You would expect that mexico is the main export market for the majority of u. S. Companies. Let me explain that for a second 57,000 u. S. Companies export to mexico. Of those 57,000 companies, 94 are small and mediumsize. You are talking about this is the essence of geographic proximity. If you start exporting, you might want to export your neighbor. So, a lot of jobs are at stake. If you just take one example of the domino effect of Something Like this we received exports of avocados and tomatoes from mexico. A lot of families are working in that industry. The u. S. Is a great market. Those are highvalue agricultural items. They also happen to be in the states where we have seen the drug crime and impact of organized crime in mexico. What are those families going o do if they are out of a job . If you cannot find a job in the avocado business or tomato business, where else do you go . We have to keep thinking about and connecting dots. This is a lot bigger than how much we are paying for mexican goods or how much they are paying for u. S. Goods. How much are they buying and how much are we fighting buying. Canada and mexico are the top customers for u. S. Products. So, we are dealing with the biggest thing we have going. The world is regionalized. We keep talking about globalization and how it has heard hurt everyone. It is still very much a regional world. The eu, in spite of brexit, the brexit problem shows the issue with the u. K. Now and eu with trade. China is now leading the way towards the 10 Southeast Asian countries in ne big trading block. All that without the u. S. Dollar. That is the vision. It may not happen for 10 years or so, but it is being talked about. They are getting ready. So, let us look at the americas. We are fragmented and splintered. Aside from nafta, there are the pacific lines in a lot of different things, but there is not one americas. The crown jewel we have is nafta. I hope we also think about the role that our region plays as we compete with other regions in the world. We would much rather have jobs stay here in the hemisphere than go to asia. And that is a reality. It becomes an economic reality in a National Security reality. Again, i hope we keep that in mind. Energy supply chains we have the opportunity to see a massive shift of wealth from the east to the west if we can get our act together regionally and build Energy Supply chains. We have the oil, and we have the gas. This is a time where we could be doing that. This is a time where we could be negotiating that. Soon, mexico will be the seventh largest economy in the world. Canada will always be one of the most developed per capita income economies anywhere. So, nafta is not only important today, but it will get more and more important. Nafta should be updated. Let us agree to that. The market has changed. The world has changed in 23 years. So, yes, the labor chapter in the environmental chapter we should look at rules of origin. Nafta was signed before the internet took over the world. Think about the digital economy. Online marketplaces, the cloud, the app economy this is an area where the u. S. Could have a significant advantage if we get to the point where we can negotiate a better agreement where it is not a zerosum game. Where one party wins and the other loses. That is not what trade is about. It is about growing the market. I think the question i would hope we are asking as we go into these talks whenever they start to happen how do we make nafta stronger for all three countries . How does north america better compete with the rest of the world . Those are the two strategic questions. Everything else i think is tactics and politics. Sort of appealing to the political circumstances in individual countries. I think we should be working on Bilateral Agreements with mexico on immigration. We should be working on bilateral and trilateral agreements on border security. I had the opportunity to work on a major study to come up with a Bilateral Agreement for low skilled workers from mexico. Right now, low skilled workers ave to go to a black market. So, we are essentially outsourcing the labor that our Companies Need to a black market. Why not negotiate some kind of agreement . Those are the things i think are possible should those are the things i think we should be focusing on if we have the right attitude and not this idea that we are going to win and theyre going to lose. Or that we are going to put our foot down. We know from history that that is not going to work. I want to thank all of you for your interest in his. I want to thank you for your leadership and commitment. Above all, i hope we can be a voice of wisdom as this process starts, because there is an awful lot at stake not just for next year but 10 or 20 years down the road. Thank you all for being here. It is a pleasure. Utstanding. A great summary of the entire situation. Very well done. Thank you, secretary gutierrez. For taking the time o be here today and your leadership on this topic. Thank you very much for your comments and insights. Thank you to all of you for joining us today for this incredibly timely and important discussion. Id. I am jason, and i will be captaining the rest of our discussion today alongside these panelists. The topic of discussion today could not be more appropriate. Tonight, secretary Rex Tillerson and secretary john kelly will arrive in mexico with the objective of trying to calm the waters. Im sure we can all guess what will be part of the topics in tomorrows meetings. Of course, this will be against a backdrop where a once constructive relationship is now under threat. Politics on both sides of the border now will be as important as policy or potentially more important in finding common ground. It comes just within a week after Prime MinisterJustin Trudeau came to washington. A visit that again raised questions about broader north america integration. There could be a huge loss for u. S. Jobs. We have an allstar panel to do so today. Beginning on your right is peter mckay. Peter is someone i have had the pleasure of working alongside of four years now. Everything you have heard about him is correct. He as held an impressive number of posts in the canadian government. That includes minister of defense and foreign affairs. He was also minister of justice until 2015. He is currently a partner in the oronto office in a firm that we have had the good fortune of collaborating with for a number of different conferences. Peter, thank you for joining us. Next to peter is paula stern. She is a wealth of knowledge and a privilege to call paula a dear colleague. As far as trade goes, i think it is hard to find someone with both the experience and expertise of paula. She served as chairwoman of the u. S. International trade commission has commissioner for nine years could she analyzed and voted on over 1000 trade cases involving a broad range of industries and issues. Next to me is rafael who is a professor at mexico city. Rafael, you are really the ultimate expression of a strong u. S. Mexico relationship. Ive had the pleasure to note rafael and work with him for a number of years. He is also a prolific writer who has written over 30 books on u. S. Lactic relationships and mexico or policy. He is someone who knows foreign policy. He is someone who knows what hes talking about. Thank you all for joining us. Here is what we are going to do we will spend the next half hour or so of taking a deep dive on a number of issues. We will talk about the future of nafta, short the longterm repercussions of todays environment, and we will leave plenty of time for questions from everyone joining us today. There is a lot to cover, and so i would ask analyst to keep panelests to keep comments short. Lets start with the visit of the secretaries to mexico tonight. Border policy and security will they will be meeting with the president as well secretaries of interior, finance, and national defense. Perhaps, peter, starting off with the, giving off the new relationship and President Trumps personal interest in driving this agenda, what do you think can be realistically accomplished at this point . Peter firstly, i want to thank peter and yourself for the invitation. Firstly, it is clear to us from a canadian perspective that the president s quite serious criticisms of nafta have been very much and undoubtedly in the direction of mexico. The visit of President Trump with Prime Minister trudeau here last week i think demonstrated that. The word that he used was tweak, not tweet. With respect to your question and this upcoming meeting, i think its an opportunity to maybe step back. And u. S. Officials, tillerson and kelly, who are going have an opportunity to hone in on legitimate concerns around security. I think if they go back to the basics of the security as being perhaps the primary concern that has been expressed by this administration, that may allow them to, i daresay, rethink some of the rhetoric, particularly around the wall. I fully expect we will have a discussion on the wall. And at the same time, i think it will allow mexican counterparts to make a very strong case for the continuation of this unprecedented relationship here in north america. How integral it is to the success of all of our countries from an economic perspective, but from an overall quality of life perspective. Lets go back to basics here. To make America Great again, you have to make nafta great again. I agree with many of the comments, all the comments frankly of the secretary who spoke of the need to modernize this agreement. I think this opening salvo and this visit tomorrow is a tremendous opportunity to recast what has perhaps been a wrongfooted approach and go back to the basics of security, improving some of the concerns that do exist in an agreement that is 23 years old when it comes to nafta, and not reach french or double down reach trench or double down on the rhetoric of how horrible nafta is. I know that the was the approach that Preminger Trudeau took last week in washington. Jason obviously secretary guajardo is not part of these discussions tomorrow. In addition to the wall and border issues and Law Enforcement cooperation front and c