US embassy cable - 04OTTAWA2989

UNCLAS SECTION 01 OF 03 OTTAWA 002989 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, ECON, EINV, CA, MX 
SUBJECT: GETTING TO KNOW YOU:  MEXICAN PRESIDENT FOX VISITS 
CANADA 
 
REF: OTTAWA 1687 
 
1.  (U) Introduction and Summary:  Mexican President Vincente 
Fox marked the 60th anniversary of diplomatic relations and 
the 10th anniversary of NAFTA with a working visit to Canada 
October 24-26.  Accompanied by eight cabinet-level officials, 
three senators,  and about 40 business leaders, the 
President's schedule ranged from addressing a joint session 
of Parliament to hosting a ballet gala and speaking to 
university students. The most significant deliverable was 
agreement on a Canada-Mexico Partnership, explicitly modeled 
on the U.S.-Mexico Partnership for Prosperity. Both Mexican 
and Canadian officials confirm that discussions focussed on 
the bilateral relationship, with NAFTA issues to be raised in 
the upcoming NAFTA deputy's meeting. Canada still has not 
adopted Mexico's vision of a "strategic alliance" and active 
engagement in NAFTA plus, but the visit does mark 
re-invigoration of a neglected bilateral relationship.  End 
introduction and summary. 
 
A complete success 
------------------ 
 
2. (SBU)  Officials at Foreign Affairs Canada report that 
this was the most complex working visit they have ever hosted 
(due to the size and diversity of the delegation and the 
variety of events) and that "it couldn't have gone better." 
The Prime Minister's personal commitment made possible 
signing of the Partnership agreement and facilitated the 
unusually broad involvement by cabinet members.  PM Martin's 
focus on the visit is especially noteworthy as the Provincial 
Premiers were in Ottawa at the same time for negotiations on 
federal-provincial finances.  The PM went so far as to summon 
the Director of the Mexico desk to add some Spanish to his 
toast for the official dinner, so as not to be outdone by 
Parliamentary leaders who had addressed President Fox in 
Spanish during his visit to the Hill. 
 
3.  (SBU) The Mexican embassy characterized the visit, 
positioned as an opportunity for political dialogue, 
promoting business, and liaising with the (approximately 
36,000 members of) the Mexican community in Canada, as a 
complete success.  Official functions included the Martin-Fox 
bilateral followed by an expanded meeting with cabinet 
ministers, a warmly-welcomed address to Parliament and 
ministerial bilaterals.  But the official side was leavened 
with glamor and outreach.  The Foxes started the visit Sunday 
night by hosting the Prime Minister and his wife, as well as 
other officials, at a glittering gala around the performance 
of the Ballet Folklorico de Mexico.  The Prime Minister 
reciprocated the following night with a dinner for 900 
guests.  The visit also included outreach to the Mexican 
Community (in which a surprising 500 members of Ottawa's 
limited Mexican population participated), a speech at 
Carleton University and a solid schedule for the business 
community.  A private sector retreat in Montreal for business 
leaders on both sides was capped Monday with a lunch with 
President Fox in Ottawa hosted by the Mexcian Ambassador. 
 
4.  (U) Fox also met with Opposition leaders of Parliament 
and with Quebec Premier Jean Charest, who will shortly be 
accompanying the French President to Mexico.  This is Fox's 
third visit to Canada, and had been postponed from July due 
to the difficulty in scheduling so soon after the election. 
Although the July visit would have included stops in several 
cities (but not Ottawa), this visit covered the national 
capital area only. 
 
Canada-Mexico Partnership leads a long list of little 
deliverables 
-------------------------------------- 
 
5.  (SBU) The headline deliverable was agreement on a 
Canada-Mexico Partnership modeled on the US-Mexico 
Partnership for Progress. A working group is being 
established to identify areas for further cooperation through 
a private-public partnership.  Although the agreement does 
not include specific commitments, we are told that the PM 
does not sign such bilateral agreements lightly and this 
signifies a renewed commitment to the neglected bilateral 
relationship. Canadian business groups strongly supported the 
intiative.  GoC and business sources commented to us, 
however, that Canada will resist duplicating the high-profile 
(and expensive) P4P format favored by the Mexican side and 
hopes to develop a format, e.g. with working groups, that 
will provide some continuity and produce pragmatic results. 
One contact commented that the Canadian side had also pushed 
for a broadly economic theme but that the Mexicans had 
insisted on an emphasis on development. 
 
6.  (U) In addition to this headline agreement, the visit 
resulted in new money from Export Development Canada and 
signature of letters of intent on climate change initiatives 
and renewal of an LOU on health sector collaboration.  There 
were deliverables in 13 other areas, including medical 
research, housing and sustainable cities, migration, 
professional and academic exchanges, and tourism promotion. 
 
Open Exchange With University Students 
-------------------------------------- 
7.  (U) President Fox addressed university students on 
"Mexico's Vision of North America:  Working Together for a 
Common Future" but spoke instead on democracy and good 
governance in Mexico.  The speech drew a strong press 
contingent, as well as representatives from the diplomatic 
and academic community.  Canadian and Mexican contacts were 
impressed by the warmth of the President's connection with 
the Mexican community, including the students.  (Organizers 
anticipated that if there were demonstrations or problems 
they would occur at the university.)  The Mexican students 
clearly appreciated his responses to their pointed but 
on-topic questions. The speech (given in English) did not 
break new ground, but in response to questions President Fox 
noted that: 
 
--The GOM is working to provide health coverage for those 
outside the formal economy.  They are starting with the 
poorest and hope to have 7 million people covered by the end 
of this year, and about 25 million covered within three 
years.  That will require expanding medical infrastructure. 
 
--  In response to a question on NAFTA institutions, such as 
a North American court of justice, he said the three 
governments are discussing the new vision for NAFTA.  A court 
is not yet on the radar, but things will move in that 
direction. 
 
--  On whether NAFTA is heading towards an EU-type 
arrangement or something more laissez-faire, he said "Europe 
is not yet the trilateral inspiration."  Perhaps that will be 
the case in 40-50 years, but for now we are working on 
NAFTA-plus.  All three NAFTA economies are losing jobs to 
China, and need to react by increasing competitiveness and 
productivity by uniting their resources. 
 
--  Given US domination and the fact that there are, in fact, 
two bilateral relationships, what are the realistic 
possibilities for a North American Union?  Fox responded that 
often the most powerful have the biggest weaknesses and 
painted an extremely gloomy picture of the fate of aging 
populations in the US and Canada that will need to rely on 
Mexico's abundant, talented, hardworking human resources. 
 
--  Asked about what his government will do to halt 
brain-drain, he admitted that right now Mexico has a 
population boom and there is a lack of space:  inadequate 
educational opportunities, jobs or housing. 
 
Trade Minister's Bilaterals:  Introductory Calls, Not NAFTA 
---------------------------------------- 
 
8.  (SBU) Trade contacts on both the Mexican and Canadian 
sides said the 45-minute bilateral between the two trade 
ministers on Monday morning would include discussion of 
ongoing NAFTA work-in-progress, such as rules of origin on 
textiles, and a review of progress thus far.  Canada's trade 
minister Peterson was not briefed to raise "beyond NAFTA" 
issues, and both sides noted that such discussions would be 
inappropriate in the bilateral context, but would be 
discussed at the upcoming NAFTA deputies meeting.  Secretary 
of Economy Canales' bilateral with Industry Minister Emerson 
on Tuesday was even briefer, scheduled as a 30-minute 
introductory call. 
 
A "Strategic Alliance"?  But without a Strategy 
---------------------------------------- 
 
9.  At a pre-visit conference on "Mexico & Canada at the turn 
of the 21st Century:  Sixty Years of Diplomatic Relations," 
Mexico's Ambassador to Canada opened the discussion with 
remarks stressing the desire of both "strategic allies" for 
deeper cooperation.  She noted that since the early 1990s, 
both Canada and Mexico have been seeking to diversify their 
foreign relations and gain greater autonomy from the U.S. 
She claimed that the greatest benefit in sharing such a long 
border with the U.S. is the fact that it facilitates 
rapprochement with Canada.  There is, she said, a perception 
that the US designs policy for itself, but world events have 
reinforced the Mexico-Canada strategic alliance.  The two 
countries are looking for ways to reduce or eliminate the 
power asymmetry, so should coordinate priorities, not just 
react to policies imposed by the U.S. 
 
10. (U) During the subsequent panel discussion, which the 
Mexican Ambassador was not able to attend, academic panalists 
characterized the bilateral relationship as "evolving but 
embryonic," providing statistics to demonstrate the room for 
growth.  (Canada has 4% of the total stock of FDI in Mexico, 
but that is 40 times more than all Mexican FDI in Canada. 
Mexican FDI in Canada accounts for 0.8% of the total stock.) 
The final panelist of the morning quipped that while Canada 
and Mexico may have a "strategic alliance," it lacks a 
strategy.  He characterized the situation as two North 
Americas, rather than one integrated market.  He called for 
strengthening relations at the elite level (which this visit 
will do) and noted that while "managing the US is no cup of 
tea," the two countries have much to celebrate as 
demonstrated by the higher density of bilateral linkages over 
the years. 
 
11.  (U) Canada's Assistant Deputy Minister of Foreign 
Affairs Marc Lortie summed up the conference with a realistic 
but hopeful assessment of Canada-Mexico relations.  He said 
that during the upcoming visit the two countries would launch 
a new mechanism to deepen economic relations.  He used the 
term "strategic partnership", with the two countries trying 
to establish strong links on trade, border issues, and 
security.  Lortie said it is still an open question how much 
of this strategic partnership can be put in an institutional 
framework and how much will continue to be carried out on an 
ad hoc basis.  Is there a place for EU style engagement, for 
example?  (He asked a number of open questions during his 
remarks). 
 
12.  (U) Lortie said that after three years of trying to 
manage the Americas, Fox realizes that he must be more 
pragmatic and more precise.  He now knows the limits of 
trilateral mechanisms.  Lortie said that Canada and Mexico 
have each been overwhelmed since 9/11 in managing the 
"relationship of all relationships," and have not dedicated 
time in a strategic sense to their bilateral relations.  They 
both know that the economy will take a backseat to security. 
On September 20th, 2001 FM Castaneda suggested to then-deputy 
Prime Minister John Manley that they focus on trilateral 
cooperation on the border, but Canada was also cool to the 
idea of forming a strategic partnership with Mexico to 
"manage" the United States. 
 
 
List of (most) Mexican Ministerial Participants 
--------------------------------------------- -- 
Economy     Fernando Canales 
Energy      Fernando Elizondo 
Environment and Natual Resources    Alberto Cardena 
Finance and Public Credit     Francisco Gil 
Health      Julio Frenk 
Labor and Social Welfare      Carlos Abascal 
Public Service    Eduardo Romero 
 
 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
CELLUCCI