I want to thank you, and to thank the committee.
It's a pleasure and an honour to be a part of these hearings, and it's certainly extremely timely. I know you didn't plan it like that, but of course today is the official notification on behalf of the USTR vis-à-vis Congress and the negotiations that are happening.
If you'll allow me, I'm going to go back a bit. I don't think it's highlighted enough that the only reason we're living through this period of bewildered uncertainty is that our collective generation in North America was tested in the run-up to the American elections and we were found lacking.
In the case of Mexico it is perhaps more patently obvious. The current President of the United States based his campaign on ignorance and xenophobia vis-à-vis Mexico and Mexicans. As you know, he led the Republican field only after calling Mexicans rapists and he consolidated his base around the rallying cry, “build the wall”. Then he became a serious candidate in the eyes of many when the Canadian, American, and Mexican private sectors, as well as the Democratic candidate herself, responded with a deafening silence to his attacks on NAFTA. Suddenly he was perceived as being right on a very important policy issue and the die was cast. Now we are suffering the consequences of our negligence, to be perfectly frank.
Whenever I speak to a Canadian audience—and I think this is very important—there are a few things that need to be highlighted because our relationship with the United States is not as well known in Canada as it might be.
The first is that Mexico and the United States are the two most integrated, large countries in the world. We have the most legally crossed border in the world, with 350 million border crossings through 330 entry points. Mexico has the equivalent of the population of Canada in the United States, with 36.9 million Mexicans and Mexican Americans. Of those, 80% are either U.S. citizens or legal residents; that is, the Mexican experience is not an undocumented experience.
At the same time, Mexico is by far the most important destination for the U.S. diaspora. At any given time there are between one million and three million Americans in Mexico, which is between four and 12 times more than in Canada.
Official Washington is very well aware of the staggering depth of our relationship, which is the reason that Mexico City is the only place, outside of Washington, D.C., where every U.S. government agency is represented. It's the reason the new U.S. embassy here in Mexico City is a billion-dollar project, or at least it was because as is so often the case with this administration, nobody really knows what's going on anymore.
At the same time, Mexico maintains the largest consular presence of any country anywhere in the United States.
I'll try to give a focus to this. Basically, when I had the opportunity to introduce the Governor of Texas here in Mexico City, he talked about our being neighbours, which led to my very politely correcting him. We're not really neighbours; we're roommates. The bottom line is that just as with respect to Canada, American prosperity and national security directly depend on a co-operative and stable Mexico.
What is the Mexican perspective on what's going on in North America in general? There is certainly an element of anger at the insults, as well as significant bemusement at the lies, but mainly we don't have a clue as to what's going to happen with American policy, with one day NAFTA being on the verge of cancellation, another day NAFTA being saved because the U.S. President apparently likes his Canadian and Mexican counterparts. I don't know how viable that is in the medium and long term as a reason to stay in NAFTA, the fact that he gets along with Prime Minister Trudeau and President Peña Nieto.
Then we hear that the U.S. will seek separate arrangements with Mexico and Canada, which, if you actually know anything about our position, is a non-starter, at least with Mexico, and I think it is the same with Canada at this point. I know it didn't start like that, but that's at least our feeling. and we'd be very interested to find out your views on that.
But if the White House chief strategist Steve Bannon's whiteboard is to be believed, the U.S. will do its best to quarantine the rest of the world from his city on a hill, sunsetting American visa laws and all of that.
Canadians are being told by the president of Goldman Sachs to relax because the President of the United States apparently likes them, and I guess the corollary being that Mexicans should be sweating because he doesn't like us. I mean, we don't know how to interpret those things.
In his interview with The Economist, the President said that the problem with NAFTA is our VAT, our value-added tax or EVA—which at least is something the Mexican consumer can get behind—although I don't think he really knew very much what he was talking about. The truth is that nobody knows.
We're having to deal with the United States, which sounds more like a volatile developing country than the world's largest and most sophisticated market, sort of Venezuelaization of the United States, but at the same time nothing happens, right? Until today, of course. The peso drops. The peso has dropped significantly. We are about 20% below where we should be because of these tweets and these lies, and because of everything that's been said. Then, of course, American exporters are hurt, and everybody is worse off in a climate of insecurity and fear.
This brings me to Canada. Our perception of Canada is that after the unfortunate episode of Ambassador MacNaughton's comments in Washington that fed the whole throwing Mexico under a bus narrative, Canada has come to realize what was obvious to us from the beginning. That is something I've had a chance to share on CBC's Power & Politics, and I know it caused a bit of an uproar. It was the fact that it was just a matter of time until Canada was going to be put in the crosshairs. It's the reality.
It would be foolish to think that it is in anyone's interest to negotiate individually with this administration. I'm well aware of the fact that the Canadian business community is very interested in flying under the radar, and I'm sure you're being pressured to be accommodating, but with respect to this, I don't think it's a good idea. I think it's about acting on principle.
That's what I would share with you in this first round.