MEXICAN CONSUL GENERAL IN LA MARCELA CELORIO ON THE U.S.-MEXICO RELATIONSHIP IN 2021
BY CASSIE HERMISTON-BOYD
One of the most pressing topics for the incoming Biden administration is the U.S.-Mexico trade relationship. The bilateral relationship is deeply rooted in a shared border, tourism, culture, and strong trade ties, with Mexico serving as the United States’ second largest trade partner behind Canada.
Mexican Consul General in Los Angeles Marcela Celorio recently discussed the future of the U.S.-Mexico trade relationship with Pacific Council member Cassie Hermiston-Boyd.
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Cassie Hermiston-Boyd: As the world battles COVID- 19, how has the coronavirus pandemic affected Mexico?
Consul General Marcela Celorio: Mexico began monitoring the epidemic’s development in the world as well as detecting cases at the national level in early January 2020. The first confirmed COVID-19 case was registered on February 27. This process has been directed by specialists and scientists from the health sector since its beginning.
Pertinent information regarding health and social distancing measures was promptly and continuously spread among the population, with special emphasis on vulnerable people. Every day, a special COVID-19 task force comprised of national health authorities holds a one-hour press conference in Mexico City on national network.
Mexico’s main challenges with the pandemic stem from having integrated communication routes and urban centers with high population density, such as Mexico City—one of the largest human conglomerates in the world—as factors that facilitate the spread of the virus.
Conversely, parts of the country are also characterized by urban centers with little population and mobility that limit its spread. For instance, southern Mexico has not recorded as many cases as central or northern Mexico, which are more populated. In fact, there are states in the south of the country that are approaching a reopening and return to normal activity, while the most densely populated cities require a more rigorous recovery strategy over a longer period of time.
The government of Mexico has focused on two aspects in its response to COVID-19. The first one is based on preventive measures and the dissemination of public guidelines, such as social distance, frequent washing of hands, the use of antibacterial gel, proper use of face masks, stay-at-home measures when necessary, etc.
“Stimulating trade and investment during this crisis is certainly to the benefit of both countries.”
—MARCELA CELORIO, MEXICAN CONSUL GENERAL IN LOS ANGELES
A very useful and practical measure has been the implementation of a four-color traffic light (red, orange, yellow, and green) which informs care and limitations in social and economic activity, a policy that emerged from consensus among the federal, state, and municipal levels of government.
The other aspect has been the medical attention given to people with COVID-19 or suspected of having it, either via medication, hospitalization, or intensive care. Work has been done at all times to respond to a possible exceeded demand of care and intensive care in hospitals throughout the country. As a result, at the end of 2020, Mexico ranked 17th in the incidence of deaths from COVID-19 and 101st in infections worldwide, both cases measured per million inhabitants.
Predictably, preventive measures have reduced economic activity and employment, particularly given that almost a fourth of the country’s GDP is attributed to the informal sector. This has required the implementation of actions to support the economy—especially on the product-demand side—including a strict austerity program in the public sector, direct support from the public treasury to 22 million people covering 60 percent of families in Mexico, and several projects designed to benefit from the spillover of resources and the creation of jobs.
Among the pillars of the government’s reactivation strategy were the sense of collective responsibility, the digital economy, and the participation of women in the labor market. An important contribution to the country’s recovery resulted from the reopening of the construction, mining, and automotive industries, which were closed last April and May.
Additionally, Mexico’s central bank, Banco de México (an autonomous institution), injected into the economy a total of 750,000 million pesos (approximately $37.8 billion USD), equivalent to 3.3 percent of GDP, through measures aimed at providing greater exchange liquidity, strengthening the financial system, and promoting economic activity by generating greater access to credit, increased production by companies, and thereby increasing consumption, reducing layoffs, and lowering default levels.
The Minister of Finance predicted a contraction of 8 percent of GDP in 2020 with a rebound of 4.6 percent in 2021. The approval of more and more vaccines points to a light at the end of the tunnel and stimulates confidence in the next steps for recovery.
Countries around the world have begun vaccination campaigns. What does Mexico’s vaccination distribution look like and how will it reach underserved populations that are unable to afford vaccines, but also contribute heavily to the Mexican economy?
Mexico has sufficient financial resources to cover all its vaccination needs. It has participated in the last phase of clinical trials of various vaccines and has agreements with multiple manufacturers, some of which have already been given an advanced payment. The Ministry of Foreign Affairs, led by Secretary Marcelo Ebrard, has done an exemplary work in ensuring the provision of vaccines from international sources.
Vaccination in Mexico began on December 24 and will be universal and free of charge. The vaccination plan considers in its first phase members of the medical sector who are in direct contact with the pandemic. Next are vulnerable populations starting with people over 60 years of age. This initial distribution is estimated to conclude in March. The vaccine will then be distributed to people with chronic diseases, such as high blood pressure, heart or lung problems, diabetes, cancer, obesity, etc., as well as teachers and people 50 years and older and so on according to their age group.
It is estimated that more than a million people will be vaccinated by the end of January, including the entire medical sector, and that vaccination of older adults—which will cover more than 15 million people—will have begun and concluded in March.
Within the public health sector, 10,000 small vaccination groups will be deployed throughout the territory in order to reach more secluded areas.
The United States surpassed 300,000 deaths in mid-December and more lockdowns have been extended across the country. How has this impacted foreign investment, trade, and tourism in Mexico?
The bilateral relation between Mexico and the United States is one of the most dynamic and interdependent in the world, maintaining close ties in all areas: political, social, cultural, economic, touristic, etc.; and an understanding that what happens to one directly affects the other and vice versa.
As such, the closure of economies has had repercussions in both directions. For example, Mexico is the first source of foreign visitors to Los Angeles, and Los Angeles is the first source of visitors from the United States to Mexico. Evidently, a disruption by COVID-19 has affected both recipients in multiple related industries.
Nonetheless, some industries are more affected than others. For instance, the air transport industry—which depends on other integrated sectors such as manufacturing and fuels—was tremendously impacted when trade between the two countries decreased by 50 percent in May, compared to the same month in 2019, and later rebounded and even surpassed trade levels of other years in September. Trade between January and September, however, decreased between 14 percent and 19 percent.
Stimulating trade and investment during this crisis is certainly to the benefit of both countries.
In January 2020, I organized a fireside chat between you and Canadian Consul General in LA Zaib Shaikh at LA CleanTech Incubator to discuss the revised USMCA trade agreement and how it pertains to each country’s political and economic agenda. Our world has changed drastically since then. How do you see Mexico’s trade relationship with its two largest trading partners in a post-COVID vaccine world?
I am confident the entry into effect of the USMCA agreement on July 1 will positively affect bilateral trade in the months to come, engendering prosperity in the North American region.
Among the processes that accelerated during the pandemic were the coordination efforts in matters of essential sectors between Mexico and the United States. These resulted from a broad review of concepts, considerations, and actions that were carried out in detail along different supply chains to facilitate the activity and synchronization of industries, as was the case with the automotive, medical, and food sectors, among many others. The result of these actions was very positive as it allowed for a shared understanding of what constitutes an “essential” good or service.
The pandemic has also made it possible to appreciate the advantages of Relocation, Nearshoring, and Decoupling for many industries as well as the manufacturing, exporting, and distributing capacities to be exploited in the North American region, particularly regarding essential goods and services whose demand skyrocketed during 2020. Of course, this represents an opportunity to extend supply chains in the region, stimulating investment and employment in the three countries.
The incoming Biden administration will seek to re-center its longstanding relationship with Mexico grounded in institutional cooperation after Trump’s America First Policy. What action is needed to re-engage and deescalate tension particularly tariffs, border security, pollution, and trade?
Mexico and the United States are neighbors, friends, and partners. We share a deep interest in the prosperity of the region. As such, our economic relationship is largely determined by the performance of the USMCA.
Every day, 427,000 vehicles, 30,000 trucks, and 1 million people cross the border between Mexico and the United States. Along with security policies that are being implemented throughout the Mexican territory, with very positive results, security at the border has been strengthened.
Since the beginning of the last decade, Mexico has ceased to be a source of immigrants. Currently, and since 2010, the flow of immigrants from Mexico is negative; that is, the number of immigrants that return to Mexico is greater than those coming into U.S. territory; and those who do migrate are mostly documented. Currently, the majority of immigrants coming to the United States are families and unaccompanied minors from Central America and—to a lesser extent—people from the Caribbean, Asia, and Africa.
Increasingly, Mexico has become a country of destination and transit. Faced with this situation, my government has implemented a policy in support of the economic development of Central America and created employment hubs throughout our territory in order to retain and provide working opportunities to immigrants.
“It is important to consider the tangible effects of the political rhetoric around immigration and the importance of deconstructing an intolerant and divisive discourse to truthfully showcase the beauty and benefits of diversity within U.S. society.”
—MARCELA CELORIO, MEXICAN CONSUL GENERAL IN LOS ANGELES
Regardless of the above, there is a significant number of Mexican immigrants who arrived in the United States within the last 30 years and have successfully assimilated and contributed with their work to the country's economy. This represents a central opportunity for the incoming Biden administration to provide this population with a path towards greater security and stability for their stay and thus contribute even more to the economy of the country.
This is a priority for Mexico and an interest expressed on different occasions by President-elect Joe Biden; for example, by reconstituting initiatives and legal frameworks such as the Deferred Action for Childhood Arrivals (DACA) program, which has to date benefitted over 600,000 young immigrants from Mexico.
It is important to consider the tangible effects of the political rhetoric around immigration and the importance of deconstructing an intolerant and divisive discourse to truthfully showcase the beauty and benefits of diversity within U.S. society.
Green energy and climate change will be important initiatives for the Biden administration while President López Obrador continues to invest heavily in Pemex and Mexico’s fossil fuels future. What are mutually beneficial areas of cooperation that both countries can adopt to economically recover while protecting the environment?
Mexico has maintained its commitments to the Paris Agreement by gradually working on reducing the use of fossil fuels and replacing them with clean energy sources. The use of alternative energies has grown widely, and it is estimated that 35 percent of electricity will come from clean energies by 2024, in accordance with the country’s international commitments. Additionally, fracking is prohibited throughout Mexico.
Further, the use of petroleum products for energy production has decreased in recent decades, but so has the production of petroleum and the elaboration of its derivatives, to the extent that the country had to start importing petroleum and most of the derivatives it consumes. Since 2019, work has been done to halt the sharp decline in oil extraction and production of its derivatives in order to satisfy national demand.
Joint research and development on new energy technologies and transportation systems based on clean energy could be a fruitful field of collaboration between both countries.
Regarding our shared interest in combating climate change, I am convinced of the key role that agreed upon rules and institutions play in increasing costs to parties involved in cases of noncompliance.
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Cassie Hermiston-Boyd is a Pacific Council member and a fellow at the Southern California Leadership Network.
The views and opinions expressed here are those of the interviewer and interviewee and do not necessarily reflect the official policy or position of the Pacific Council.
