21 YEARS OF THE MEXICO-ISRAEL FREE TRADE AGREEMENT

El Consejo Mexicano de Asuntos Internacionales (COMEXI) presenta el webinar “21 años del Tratado de Libre Comercio México-Israel”. Este webinar tuvo lugar el 22 de marzo de 2021 y pertenece a la serie "Quarantine Webinars". En este webinar participaron participaron el Embajador Zvi Tal (Embajador de Israel en México), el Dr. Jaime Zabludovsky (Ex Subsecretario de Comercio Exterior y Expresidente de COMEXI) y el Mtro. Yaniv Tessel (Director de Acuerdos Comerciales Bilaterales en la Administración de Comercio Exterior del Ministerio de Economía e Industria de Israel). La conversación fue moderada por la Emb. Lourdes Aranda (Asociada COMEXI).

 

The Mexican Council on Foreign Relations (COMEXI) presents the webinar “21 years of the Mexico-Israel Free Trade Agreement”. This webinar took place on March 22nd, 2021 and belongs to the series "Quarantine webinars". This webinar features Amb. Zvi Tal (Ambassador of Israel to Mexico), Dr. Jaime Zabludovsky (Former Deputy Minister of Foreign Affairs and COMEXI Associate) and Yaniv Tessel (Director for Bilateral Trade Agreements, Foreign Trade Administration at the Ministry of Economy and Industry of Israel). The webinar was moderated by Lourdes Aranda (COMEXI Associate).

 

The moderator, Ambassador Lourdes Aranda welcomes the speakers on behalf of COMEXI to the webinar “21 years of the Mexico - Israel Free Trade Agreement”. She highlights the 70 years existence of the relation between the two countries and the achievement of important political, economic and cultural goals, such as the Free Trade Agreement. Also mentioned are the regular political consultations since 1997, the Catedra Rosario Castellanos given in the Hebrew University of Jerusalem, and other exchanges on technical and technological issues. 

 

On the Free Trade Agreement (FTA), she underlines the growing exchange the two countries have experienced from it. She prompts the speakers to evaluate the agreement and ponder on how more can be achieved. 

 

The first speaker to take the floor and be introduced is Dr. Jaime Zabludovsky. In his opening remarks he shares the origins and history of the agreement. He recalls how in 1997 he was a Deputy in charge of international trade negotiations under the Secretary of Industry and Commerce and Moshe Melamed was the Israeli ambassador to Mexico. Meeting with the ambassador he confessed his main goal was to achieve an FTA between the countries. The idea had been floating around from before, as coverage of Shimon Peres’s visit to Mexico in 1994 highlighted that goal. At first, he did not know how to respond. Mexico was coming out of the Tequila Crisis and on the first stage of implementation of the multilateral commitments of WTO. There was also a comprehensive trade agenda with neighbors to the south and conditions were being set for negotiating an FTA with the European Union. 

 

Presenting the idea to the Secretary of Industry and Commerce, Herminio Blanco, he was surprised by his reaction. He viewed the possibility to enter an FTA as a way of following the steps of Israel in having important trade partners, but he wanted it to make sense for the business community. After a visit to Israel with a trade mission the issue was brought up to President Zedillo, who quickly agreed to negotiations. Negotiations were launched with a visit of Minister Nathan Sharansky to Mexico, with fellow speaker Amb. Zvi Tal being part of the delegation. Two years later, the agreement was signed in Jerusalem with the visit of President Zedillo to the country. 

 

Dr. Jaime Zabludovsky concludes his first participation by emphasizing Mexico’s very comprehensive and sophisticated political and cooperation agenda with Israel. The agreement proves how right Shimon Peres was when he launched the idea of a FTA as well as President Zedillo when he reacted enthusiastically to the proposal. 

 

Amb. Lourdes Aranda thanks Dr. Zabludovsky for his insights and follows up by presenting Amb. Zvi Tal, asking him about his views on the bilateral relationship and the FTA. 

 

On the political consultations, Amb. Tal mentions how after a break of four years the meeting just happened during last year's November. The political dialogue was mainly dedicated to economic issues. As a legal adviser who came to Mexico with the Israeli team of negotiators for the FTA, he gained a sense of the existing potential for the bilateral relationship. 

 

Agreeing with Dr. Zabludovsky, a FTA is much more than just an agreement on trade. It's a centerpiece in building strong bilateral commercial ties and beyond that. It can be argued that bilateral economic interests can be guaranteed through other means and mechanisms, but a FTA is based on mutual political commitment. It is driven by dynamic economic interests as reflected by the private sector, strengthened by additional building blocks like protection of investments and networking between economic actors, better understanding of each other's ecosystems and cooperation in innovation and entrepreneurship leading to thriving economic relations. 

 

The joint commision of the FTA just held its fourth meeting and it was one of the mission statements the ambassador got from the Ministry in Israel, as it was important to renew discussions on where the parties stand right now. 

 

Amb. Tal mentions how you can have advantages and disadvantages from a FTA. Some advantages are increased economic growth, a more dynamic business climate, lower government, foreign direct investment, and expertise and transfer of technology. All of which are relevant to the bilateral relations between Mexico and Israel. Disadvantages are less relevant to the bilateral relations, regarding job outsourcing, unfair competition or intellectual property issues. Amb. Tal believes an important component to increasing our commercial ties, with a goal of 1 billion dollars, is to bring down tariff barriers. Regardless, that on itself won't be sufficient. Mental barriers are yet to be neutralized and there's a need to bridge cultural gaps. That way the economy becomes part of a wider picture, civil societies are brought together. Mexico and Israel become associated towards opportunities. 

 

He continues by highlighting the importance of trust. To sum up his participation he says it's not only about mercantilistic considerations but rather it's looking at complementarity and joint opportunities in a global setting. 

 

After being presented, Director Yaniv Tessel begins his presentation on where the FTA is at this moment. He begins with an overview of places where the Israeli Foreign Trade Administration operates, mentioning there is a trend to move missions from developed countries to developing countries. The mission of the Foreign Trade Administration is supporting every aspect of promotion of trade and globalization, towards the export promotion of the Israeli exports. His division is  responsible for negotiating, maintaining, periodically updating our trade agreements and also addressing some other trade policy issues. Another map overview is offered on the countries Israel already has a FTA with and countries with whom FTA’s are being negotiated. 

 

On the Mexico - Israel FTA, he mentions it's one of Israel's long standing agreements, covering mostly trade in goods. Being an older agreement it does not include trade in services or emphasis on intellectual property protection. After achieving a series of milestones, the last one was achieved in 2010, the amending protocol for transshipment. FTA’s are the highest level of economic agreements, and when signing one an expected exponential increase in trade value is expected. Accordingly, the FTA between Israel and Mexico has significantly increased the trade volume. Going into the future of the agreement adding chapters on trade in services and investments could be important. Director Tessel briefly shows graphs on the composition of the trade in goods between Mexico and Israel. In the end he shares thoughts on the significant event that was the recent Join Trade Commision, which he hopes will lead to some constructive follow-up work and discussions. 

 

Amb. Aranda thanks the speakers for their perspectives and starts the discussion and Q&A section of the webinar. The first questions are regarding if Israel can benefit from the USMCA, the increase in bilateral commerce in 2021 and if there are efforts to increase exports from Mexico to Israel. She also asks the speakers to reflect on the challenges the FTA has encountered. 

 

Dr. Zabludovsky begins his comments by saying that he thinks that bilateral trade still has a way to go. He also thinks that trade figures underestimate what's happening in the bilateral relation, pointing out the relevance of investments. He asks Amb. Tal about his experience in Mexico so far, in the context of COVID-19, and if the lack of investment and services chapters in the FTA has created any problem to the advancement of the bilateral relation. Also whether it could be modified to address those problems. On the matter of the USMCA, he gives an example on how israeli technology has had an impact in the growth of avocados, which are one of the most important crops exported to the United States.

 

Amb. Tal makes remarks on the success of the Israeli company and technology recently bought by Mexicans. To encourage Mexican companies to do business in Israel they have been doing a lot, such as organizing a virtual technological tour of the country. To review obstacles for the FTA is needed to create an environment to make business much easier. He thinks trust should be given to partners in the private sector. The comment is finalized by saying Mexico and Israel should become economic destinations.

 

The question on expanding the agreement is addressed by Director Tessel. A modernization of the agreement has been discussed. Support and commitment is needed from both sides. He expects for it to happen in the coming years. Some chapters have become obsolete and they need to be reviewed.

 

Amb. Aranda directs the conversation into the modernization of the agreement. Dr. Zabludovsky thinks there are some chapters missing in the agreement. Because of the nature of the imports from Israel, chapters on topics such as intellectual property, government procurement and services are needed. He suspects the lack of those chapters hasn't prevented business from taking place, but under the right protection this business could be fostered even further. Identifying those companies that are already doing businesses among ourselves and have them push our governments on both sides is needed to have them move faster towards modernization of the agreement. 

 

Amb. Tal shares his experience with the comprehensive FTA with the European Union and its importance in expanding the relationship to other areas. Adding the chapters that Dr. Zabludovsky mentioned could reinvigorate the flow of business, but a really good basis has already been achieved. 

 

Some final questions are read by Amb. Aranda. The first being, how would you describe the nature and importance of bilateral relations between Mexico and Israel? The second part being, how does it compare to relations with major European countries for example? She gives her own perspective on how the relationship was really important during her time as Deputy Foreign Minister, even when it experienced difficult moments in terms of security for Israel. The jewish community played an important role. On how they compare to relations to European countries. There were different levels of dialogue but there were very regular and respectful dialogues between the two countries, notwithstanding if there was an agreement or not on different topics. 

 

Complementing, Amb. Tal, mentions a dialogue regarding the participation of Mexico in the United Nations Security Council. He highlights that regardless of disagreements in certain areas there's lots of common ground, such as the empowerment of women and people with disabilities, and gender equality. There are joint initiatives in the UN.  

 

Dr. Zabludovsky points to the Catedra Rosario Castellanos as a unique program of Mexico’s foreign policy. In the program, Mexican professors go once or twice a year to the Hebrew University of Jerusalem to teach about Mexico and Latin America. The program has allowed the two countries to get closer together. Amb. Aranda expresses interests in creating a counterpart of the program in Mexico. She ends the webinar by thanking the speakers and the audience. Amb. Tal and Director Tessel express their gratitude for the invitation and for the opportunity to participate in this webinar.