Supply Chain Now Episode 398
“Environment, history, culture, and language are always connected to the relationship between our countries. There are millions of families in the United States and in Mexico that have mixed citizenship from our countries. There are Americans who live in Mexican households in Mexico and the other way around also too. So, we share people, we share history and we share of course, millions and billions of dollars in trade and economic relationships.”
– Javier Díaz de León, the Consul General of Mexico in Atlanta
Although it did not receive much attention, the United States–Mexico–Canada Agreement (USMCA) officially went into force on July 1, 2020. USMCA replaces NAFTA, which went into effect in 1994. A lot has changed since then, and the USMCA reflects new developments such as the role of intellectual property and digital trade.
Javier Díaz de León has been the Consul General of Mexico in Atlanta since May of 2016. He has a degree in International Relations and a master’s degree in International Conflict Analysis. In 2019, Mexico bought $11B worth of products from Georgia, making the USMCA a critical concern to the state of Georgia and its manufacturers and producers.
In this conversation, Javier returns to Supply Chain Now to tell Co-Hosts Scott Luton and Greg White about:
– Why the border between the U.S. and Mexico represents an opportunity for both countries, and for the communities and businesses located on both sides of it
– The certainty that is delivered by the USMCA trade agreement in an era of extreme uncertainty – certainty about market access and investment
– The industries that are most likely to be impacted by USMCA policy, including automotive, agriculture, and energy.
Intro – Amanda Luton (00:05):
It’s time for supply chain. Now broadcasting live from the supply chain capital of the country. Atlanta, Georgia heard around the world supply chain. Now spotlights the best in all things, supply chain, the people, the technologies, the best practices and the critical issues of the day. And now here are your hosts.
Scott Luton (00:28):
Hey, good afternoon, Scott Luton and Greg white with you here on supply chain. Now welcome back to today’s show Greg. We’re really excited to have a repeat guest, but a very distinguished repeat guests on today’s show a leader in global trade and diplomacy. Are you as excited as I am? I am. I feel like it’s old friends week. Um, and I feel like this is going to be a better baseball day than the last time we talked. So I agreed and no baseball today is better than, than the baseball take place on that day. But so we’re going to be talking about a lot of topics here today, but namely the U S MCA that’s right. The new United States, Mexico Canada agreement is referred to as a C U S M a. If you’re listening to us in Canada, or if you’re listening to us and Mexico TMX, um, so stay tuned for what will be a very informative show that it’s going to help raise your supply chain at Q quick, programming it before we get started.
Scott Luton (01:26):
If you enjoyed today’s podcast at checkout, our podcast, wherever you get your program from, we publish Monday through Friday, as we aim to cover and provide insights and perspective on global supply chain, very busy world. All right. So no further ado, Greg, we must introduce our featured yesterday. Ambassador Javier Diaz, daily own consul general of Mexico in Atlanta council Diaz. How are you, sir? I’m very good. Thank you, Scott. Great to see you, Greg, no baseball today, but it’s definitely better than the last time. So it should shed a little light for some of our listeners. So the last time Greg actually interviewed console Diaz was that the 2019 Georgia manufacturing summit put on our, by our friends over at GMA. And it was the day of game five in the series and the playoff series between the st Louis Cardinals and our beloved Atlanta Braves.
Scott Luton (02:22):
And unfortunately on that day, it was over after the first sentence. And I cannot recall there was double digits scored, but the Cardinals scored in that first setting. I’ve kind of tried to forget the rest of the game Braves went on to lose a series, but nevertheless, Hey, the good news is baseball is back. Evidently in a 60 game series has been announced. So we’ll have to talk baseball hopefully in the weeks to come. All right. So constantly is, uh, you know, last time we kind of had a, uh, a quick hitter interview and we want to dive deeper and your background as we start this one, tell us about yourself, tell us where you’re from and if you could, yeah. Share a story or two about upbringing.
Ambassador Diaz (03:00):
I was, uh, I was born in Mexico city, a small town in my country of you. Might’ve heard about it. And, uh, I was born and raised there. And, um, since I was young, of course, I went to school over there, but since I was very young, my parents had a lot of, uh, interests. My mom, I always had a lot of interested in getting me to get very fluent in English. She was very big thing back then. Now it’s a lot more common, but back then, not everybody in Mexico is fluent in English, especially middle class families. So she was very adamant about getting somewhere to get me not only at school, but get me, you know, practical experience to learn English and get involved in that sort of thing. And she managed to through some friends to get a connection with a family here in United States, in Charlotte, North Carolina.
Ambassador Diaz (03:46):
And we were connected with them through friends, through friends. And I started coming to the United States to spend, to spend summer at the home of this great family. I love them to death, and I know them for all my life. First time I came to their house in Charlotte, I was about, I was probably about 10 or 11 years old, but I did it almost every summer throughout most of my teenage years. So you can probably imagine a lot of, a lot of times, you know, my, my American young friends, there was a couple of guys there, my age in that household, they would come over to Mexico sometimes quite a few times, too, you know, as a reciprocity kind of thing, my bond was created there. And, uh, uh, and I, and so I always, I was very familiar with the South. So all of my time and experience here in Charlotte, but of course, every time I would fly from Mexico city to Charlotte as a young, you know, young boy back then there was no direct flight from Mexico city to Charlotte.
Ambassador Diaz (04:48):
So I would always fly through Atlanta. So I had a, you know, personal experience going through the airport in the city from a very young experience. I noticed this, I would never, you know, back then, you know, stop over in Atlanta because I was flying to Charlotte. But, uh, I learned a lot about a lot of what I, that point of time in my life. I didn’t distinguish a lot about the Southern culture with, you know, BCV the rest of the United States. You don’t really see things that way you just go. I was in the U S but of course, as time went by, I want to do interesting things. I mean, very interesting things for me. Of course, then I, then I became a used letter. I became a Mexican diplomat and I worked in several offices and diplomatic offices in, in the United States. I started out way back when I started as a diplomat. I work in at the Mexican embassy in Australia, but after that is, this has been all us. So, uh, after Australia, I started in, you know, San Diego, New York, Washington, D C at the embassy. And then I got appointed in the United States in my first role as a council general. And when that happened, that happened in North Carolina. So it kind of came full
Scott Luton (05:58):
Circle for you.
Ambassador Diaz (05:59):
We’ll put a circle. Exactly. It wasn’t a Charlotte because our counselor is in Raleigh, not in Charlotte, but again, anyway, I mean, it was kind of a very, you know, big, full circle for me, going back to North Carolina as a diplomat,
Scott Luton (06:12):
We’re going to dive a little deeper into your professional journey in a minute, but let me ask you as your mother was, uh, had the good side of, of developing you from a bilingual standpoint, I’m very jealous. I wish I had spent more time learning other languages earlier. How helpful was the immersion of the, you know, that time you spent in Charlotte each year with the American family? How helpful was that to fine tune your ability to speak English?
Ambassador Diaz (06:37):
No, I think it was definitely, I mean, it’s a game changer, totally. Because if there’s one thing about learning and language in the classroom, but of course I was thrust upon this American family in a place like Charlotte. And let me tell you this, this is about 40 years ago and I mean, Charlotte 40 years ago was a very different place. Yes. I would probably say the same thing about Atlanta, uh, in many ways, but amongst them back then, there were no Mexicans in. Right? Right. No, hardly anybody I met there had no knew any people from Mexico. And of course there was no Spanish anywhere. Nobody spoke Spanish anywhere in a city, in an American city like Charlotte. So I had no choice. I had to survive and I had to speak English.
Scott Luton (07:30):
I’ve got to ask you, and we’re going to talk more about this in a second. But you know, your diplomatic journey, all these years of service, you’ve had the ability to meet new people and navigate policy. You negotiate, you know, get stuff done. How much of that? I mean, it sounds like to me, you had a great leg up of that as you were, as you spent time in Charlotte, where you were having to meet new people and building those bridges, how, how instrumental was that experience to what you spent your career doing?
Ambassador Diaz (07:58):
It’s definitely a great experience when you leave abroad. And when you have experience in larger space of living outside of your country, because you learn to understand that there are different people’s viewpoints, and you need to understand that, you know, people from other countries are human. People from other countries might see things differently from people in your country, but it’s usually a cultural thing and cultural gaps can always be, you know, closed. And of course I never knew I had no idea back then that I would be working in the United States as a Mexican government representative. But of course, you know, such a very wide experience, long experience of knowing, having so many American friends before and knowing about American culture in ways that a lot of people outside the United States sometimes don’t know, they don’t go through the more people than, you know, the stereotypes. Right. That is, I mean, that is a tremendous, tremendous tool implement.
Scott Luton (08:54):
Agreed. One last question, your American friends that would come, would go to Mexico and stay with your family. What was one thing that you think they had to really get over? Just like you had to get over when you were in Charlotte? Well, give us, give us a good deal on that.
Ambassador Diaz (09:08):
First of all, they would have to get over their fear of spicy food. I would say that no, either first thing, I mean, he goes with Gus, of course, yes. That is not a stereotype. We like spicy. That’s the way it should be done in our, in our, and that’s something that would really need to get through it. The language barrier, because one of the things that we usually find is that, and that was back then. It’s still, still there. Again, it’s a lot easier to find someone in Mexico city who speaks English and there’s less that is changing for, but it’s less the case of American people who would of Mexico who speak Spanish. And a lot of times they expect Mexicans to speak English to them. And that will, that happens a lot more often. Now that was the case, you know, 35, 40 years.
Scott Luton (09:59):
Yeah, that was it. That was really interesting question, Scott, because what I was thinking was, and I wondered, and we got the answer, did your American friends learn to speak Spanish and come to Mexico to do so. And I suspected that they didn’t,
Ambassador Diaz (10:14):
They learned a few words, but they never went, you know, fully, fully, fully, you know,
Scott Luton (10:20):
So they must not have stayed for very long. I mean, when they came to visit, I’m guessing because I would get difficult after a while, even in Mexico city, I would think. But typical Europeans love to joke about Americans, someone who doesn’t have a passport and only speaks one language that’s us. Anyway, thank you for that. And I really, I think, man, it’s amazing because we didn’t talk about that before. And I, I totally get that whole full circle thing. And I thought I detected a bit of a Southern accent. I don’t know, just real quick. I studied North Carolina and I was a political science major and in the eighties, which might have been when you were there, I studied North Carolina and at the time North Carolina was the most populous state in the nation that didn’t have a single city over 300,000 people. And that includes Charlotte to give you some idea of what, what North Carolina and what Charlotte was like in those times.
Scott Luton (11:16):
It has a lot, I mean, Charlotte is much, much bigger now, even Raleigh and technology triangle, there is much, much, much bigger now. So we see how you kind of shaped yourself to become a diplomat or how you and your mother, it sounds like kind of work together to do that. So tell us a little bit more about DISA. I’d love to know how you decided to be a diplomat and then maybe a little bit about, more about your role now that you’re, you’re here in the Southeast, because you are the consul general to Atlanta, but you cover a number of Southeastern States. Correct. Okay. I’ve been a diplomat
Ambassador Diaz (11:54):
For around 26 years. I don’t really, I’m not really counting, but something like that. And, and it’s kind of those things that happen. I mean, yeah, I mean, there was an influence. I was always interested maybe because of this personal experiences, you know, traveling and mean outgoing to foreign countries to the United States a lot. And my mom’s brother was a diplomat when I was very young. I didn’t have a lot of contact with my uncle because he was, you know, he always lived in this far away, exotic places. And I saw him very little during my childhood and he passed away now. So, but there was a little bit of an influence there because he would come home every now and then and visit my grandparents and I would see him and he would talk about his life in these places of the world. And I would probably make a little bit of an impression I’m sure.
Ambassador Diaz (12:44):
And so depression was there. I basically know, I, I did study international political science and international politics, and I was doing a masters in England after that, when I got contacted by one of my teachers from college, who was a great mentor. And, uh, and he, he was working at the ministry Mexican ministry of foreign affairs. And he, you know, he contacted me saying, you know, there is an opening because there’s, there is a contest public contest to join the diplomatic Corps. That’s how it happens in the U S also too, it’s competitive. So he called me and tell me, you know, there’s this going on? You should join, you should put your name up and do the exams and try to get in. I was in England at the time. And so I send the paperwork, he helped me get the paperwork done and all that.
Ambassador Diaz (13:31):
He was really, it was, it worked perfect. I, I didn’t plan it that way, but by the time I finished my masters in England, I had a job. I had a job coming back to Mexico into the ministry of partner first. And it’s basically, you know, certain things that happen at a certain time. Then the rest just goes from there. And I, I guess naturally, even though I started out in Australia that embassy in Australia, which was a great experience, he was kind of inevitable that most of my work would end up being in the United States, because that was a natural thing for me, I guess, because of my life and many others. So, and that’s what I’ve been doing for the past almost more than 20 years. And it’s been very interesting because I’ve had the chance have experienced very different perspectives of the relationship between our two countries.
Ambassador Diaz (14:22):
I started out at UC San Diego. So the border migration and the border issues, not only related to immigration, but also trade and all those things are very important there. And that was a big, big, big way of proceeding the relationship, how it applies, how it happens at the border. And then of course, New York, very different perspectives, totally district different perspectives. And then I had the chance to work at the embassy of Mexico in the United States, in Washington. And then again, you know, that is, you know, that’s where it’s happening. So that that’s sort of prepared me very well to then, you know, go to the local job of being the head of the council at like a place first in Raleigh and now here in Atlanta. So it’s kind of a long journey around 20 years of journey, getting different perspectives, not only in terms of perspectives of the relationship between two countries, how it affects how it works in different places, but also of course, experiencing different cultures in the United States. I always say that I was transferred from San Diego to New York. And it was like moving to a different country in many ways. Not only because of the distance, but culturally wise, people are completely, completely different.
Scott Luton (15:32):
Yeah. I think, you know, that’s a really unique part of the States that I think is difficult to recognize because it is a vast physical space like Mexico and Canada, all the countries in North America are, are huge. There are vast cultural differences in the different regions. And I always chuckle a little bit when I’m in Europe, at least they have clear boundaries, right. And they say you Americans, and then they, whatever they say, and I’m like, okay, now, which Americans are you talking about? I mean, it’s almost like there are multiple Americas and it’s likewise in Canada and, and in Mexico,
Ambassador Diaz (16:08):
I think it’s, uh, it’s, it’s, it’s part of human nature. I mean, people like to classify things classic because it makes it easier to think about things, but of course, in my experience, and I’m sure it’s your story. Almost always, things are a lot more complicated, a lot more complex. And of course the United States is a very complex country with enormous specific cities in different regions and different people and different cultures within the country. It’s obvious, it’s obvious, but sometimes for people, couple in Mexico is not so obvious because they tend to pigeon box things and people, and, and, and again, same thing applies to Mexico. I mean, we are a country of tremendous, tremendous cultural differences between the North and the South and the golf and the Pacific and Mexico city. And [inaudible], we’re all Mexican, but we’re very different. We speak the same language technically,
Scott Luton (17:02):
Right? Yeah. Anyway, you see a lot of those, a lot of those sort of groupings, right. Whatever they are. And I think it’s good that you got to see that probably natural, that you were able to discern that having started in the South then going West and then to the Northeast, it’s really a benefit to be able to do that, frankly. And I hope that more people get to do that to experience outside their own country. And I mean, really experience it like you have. Well, okay. So I imagine other than your uncle, which it sounds like we may have just discovered on this show had maybe more influence on you than maybe even you realized until now, but other than that, who else, or, or what events kind of helped shape your worldview or your perspective on things, or, you know, what passionate about
Ambassador Diaz (17:50):
The way my career developed? It’s not something that is kind of planned, but you’re under sustained to pigeon pigeon how people and what I mean by that is at some point in my career, I’ve been pigeonholed in terms of this guy works in the United States. This guy does consulates the United States. That’s what, that’s his thing. You have other people who do, you know, a multilateral organizations that Geneva our new, I think United nations in New York or people who are specialized in Asia or things like that. And that’s how, you know, there’s groups that are me. I’m, I’m this guy who is good at the U S and now through my perspective, I think I started out in the border, but I started on also that created a very specific discovery for me, because even, you know, we, people in Mexico city sometimes don’t perceive the border correctly.
Ambassador Diaz (18:43):
And I think that applies in the United States to people who are never been in the border, who are sometimes seem to deteriorate places like Atlanta or Chicago or New York or DC. And they’ve never been in the border. And again, Mexico too, we think we know what’s going on there, but you don’t, you’re not there. I’ve never been there. The probably don’t really understand the nature of the dynamics of our board. That to me, was an eye opener because how, how thick and how complex are our relationships in the border? How, how much people on both sides of the border need each other and work with each other every day. And sometimes they get together people from Tijuana and San Diego or people from, uh, I don’t know, [inaudible], I don’t know you name it Mexicali and Calexico, why they sounded Paso, whatever, you know, they have a lot more in common with each other in their daily lives than they have with Mexico city or Washington DC.
Ambassador Diaz (19:42):
And in many ways, Mexico city and Washington, D C is a problem for them because they don’t let them live and do the things that they would like to do. I think everything that involves the very complex relationship of our countries, because we usually pigeonhole our relationship. Again, I like the word I run a couple of issues, migration and trade. Our relationship is very, very complex. It goes through almost any issue that you can think of environment, history, culture, language, it always connected to the relationship between our countries. There are millions of families in the United States and in Mexico that had mixed citizenship of our countries. There are Americans who live in Mexican households in Mexico, people who were born in America or American citizens were living people in Mexico with Mexican families and the other way around also too. So we share people, we shared history and we share of course, millions and billions of dollars in trade and economic relationship.
Ambassador Diaz (20:40):
You are again, you know, very well, but it’s a lot more than that. And all of that happens in the border. All of that happens. You can see it a little bit in the morning. So to me, my experience in the border, which was my first experience in United States was so intense. I was there five years. I need open really my eyes about how complex things are with, you know, two countries that complex, I don’t mean bad. I just mean complex. So I worked for an auto parts chain based in Phoenix, and we had stores on both sides of the border in San Diego and Calexico. And what is sin and all kind of all over there. And I have to tell you, it was amazing, the similarities of culture to those cities that are on both sides of the border, regardless of whether it was Americans on the American side or Americans on the Mexican side or vice versa, it is very similar.
Ambassador Diaz (21:30):
And you know, that is sort of a connector if you will, whether we mean for it to be or not. It is a connector between our two countries. And I do that to them. The most of those communities in the border, the border is an opportunity. The border represents an opportunity. It gives them in many ways, in terms of their economic activity, it gives them a niche. It gives them something. They have that probably some other parts of the Mexico United States don’t have. When you move from there to other parts of the United States, I was suddenly, you know, surprised about sometimes the perspective that is sometimes portrayed in the interior of the United States about the border. There’s not a lot of knowledge about what really the border is like, and this perception that it is like this wild area where there’s no authorities, there are no infrastructure.
Ambassador Diaz (22:17):
Anybody can come and go anywhere whenever they want, because there’s nothing there, which is not true. And there’s this productive, secondly, basically on the border as a source of threat, the danger area, everything that the border means is a threat. I’m not, and I’m not saying that the border does not equal, particularly the issues. Of course they do. And that’s those things that we, of course we need to, and we do work together on, on a daily basis, but there’s really record a lot of recognition about how important that border working, the way shoot is so important for lives of people who are in both of our countries. So let’s talk about that opportunity thing. You were just talking about U S MCA goes into effect July 1st and it, with everything going on in the world. It’s almost as if people have forgotten about that to pigeonhole people and give a gross generalization.
Ambassador Diaz (23:07):
But let’s talk about that. Somebody talked about pre show, all the conversations we have with business leaders, supply chain leaders, leaders that undoubtedly, whether this the U S MCA in impacts all of the enterprise or the portion that’s here in North America, and it’s not been forefront. In fact, we’re so fortunate to have constant Diaz on the show and have an expert kind of within access to come back on because to your point, [inaudible] July 1st, it’s going into effect and this pandemic, no pandemic, it doesn’t matter. It is here and it’s going to be impacting operations. So consul Dez with that, I not a,
Scott Luton (23:46):
I’m not speak for Greg. I am not a trade policy, wonk or analyst or historian. However, as we’ve done our homework for this show, I understand that U S MCA replaces the 26 year old NAFTA, which I find interesting NAFTA was being implemented about the time that you were entering your years of, of serving as a trade ambassador. We loved about your last appearance. Greg. One heck of an interview with constantly has last time, Greg people should, we should put that in the show notes. One of the great things that constantly has shared last November, as you seem to say, was being negotiated and whatnot, was that when that was implemented, there was no such thing as digital trade. So naturally NAFTA, wasn’t going to take into account things like that, which of course
Ambassador Diaz (24:29):
Scott Luton (24:30):
And then some these days, so shed a little background, light forward, dive into your CMCA and what business leaders need to know shedload background on why the need for the new replacement for NAFTA.
Ambassador Diaz (24:42):
And I think you just mentioned, it’s got, I mean, it’s not, at that point was a very, a groundbreaking trade agreement. We grew accustomed to it and we knew it was there, but maybe, you know, 26 years, later years later, it’s not as easy to remember, but the world was very different. Back then in 26, I can tell Mexico was very different. Sure. Mexico was definitely very different country. Mexico was an emerging steel of course economy. That was a very close to economy for a long time. One of the most protection is the economist in the world. And it was based on an import substitution model that involved basically no stopping goods coming into the country and we’re going to build our own and all that sort of thing. And during the mid eighties, Mexico started changing. We got into the gap and we started embracing free-trade.
Ambassador Diaz (25:33):
And then out of a total dollars people surprising my country. The government said, we’re going to do this with the United States. Mexico had never done a free trade agreement before with anybody before doing it. So this was our first free trade agreement, you know? So that is something, if we remember right, I mean, the United States had already done its free trade deal with Canada. So that was already done. So we started, you know, we hopped into the agreement that Canada and the us had done, and it became a trilateral that is important. But the other thing very important thing about NAFTA is that it was at that point, the first ever free trade agreement between between developed economies and developing economies. Mexico was the first developing economy in the world to enter into free trade with a dependent economy in the world. That was the first time a developing economy had a free trade agreement with a developed economy
Scott Luton (26:26):
Console. We were all so young. Then we probably didn’t realize the significance of that. But that is, that is huge because that is so natural today for that to happen,
Ambassador Diaz (26:36):
It’s become, you know, because the liberalization of trade and the globalization of world economy has become, of course, given to many of us, I was not the case in the early nineties. And up the end, I ended up et cetera. The world was moving in and in, in Mexico’s perspective was not only, you know, for the first time ever opening its economy, he was opening its economy to the biggest economy in the world. So from the perspective of a lot of people in Mexico, there was a deal, there was a trade deal that was going to transform us. And it did. I mean, some people were, you know, afraid, very afraid of it because they would say, Oh, we’re going to lose our identities. We’re going to lose tacos. Or we gone out, all of us are going to start eating hamburgers and hotdogs, and there’ll be no tacos left in Mexico because we’ve got to become American.
Scott Luton (27:22):
That’d be a travesty. I’m sort of realizing. Yeah. I mean, I could see that Pete and I think we had a prominent politician, right? Ross Perot is famous term. The giant sucking sound. Right? Cause the fear there was fear everywhere, right? The fear was that all the jobs would go to Mexico
Ambassador Diaz (27:40):
And that’s on the other side, the other side of United States, of course, uncertainty, nobody has done a free trade with a country like Mexico, which has of course wages, which are very different than our economies, very different United States. How does that work? How does that translate? So we went through that and Mexico was transformed. Economically. Mexico has become one of the most open economies in the world. We have free trade with over 40 countries. Now in the world, of course, Mexico has become a manufacturing hub, which was not the case of us. We used to be an oil based economy, uh, pre pretty much like what Venezuela is now that that is not Mexico anymore. Mexico is, I mean, it has oil. Of course we do have oil, but Mexico is a manufacturing economy.
Scott Luton (28:22):
It’d be really interesting in the months to come to see what new industry opportunities come to me, come to all of North America based on some, some of these resources, decisions, procurement decisions that are bound to, to a fault. I have to have some fallout. All right. Clearly you set, I love how you frame up kind of a NAFTA history impact, clearly the huge impact. And now the need update, replace it with USM. So now let’s talk about what that means for business leaders in Mexico and the us and Canada or, or, or international organizations that have parts of the enterprise here in North America. What are some of the big impacts here as it goes into effect? Well, by the time this publishes, it’ll already have it implement it, implement it.
Ambassador Diaz (29:04):
First of all, I mean, one very important thing is that, of course, any sort is not a minor thing. Now in the global economy, the U S S MCA brings to the table now is first of all, it’s certainty certainty in a global trade environment that as you know, is far from certain in many ways. So there’s a lot, there’s a lot of concern everywhere about what’s going to happen in terms of potential trade Wars with only Regency the world, cetera and North America. It’s a very, it’s an a bit it’s positioned thirdly, starting next week, when dress MCA comes into force in a very distinct competitive advantage because we have certainty and we have certainty related aspects, particularly around what you do, supply chains. That is not the case for most of the other, the rest of the world. They are living in a, in a, in a context of uncertainty because they don’t know where the next trade war is going to happen.
Ambassador Diaz (29:58):
They don’t know where the next tariff is going to be put up. And they don’t know about the access of markets and investment and manufacturing among other regions. And we certainly know what’s going to happen in our region because we weren’t careful to do to do that. Then you USM MCA has very specific permissions in terms of how, for example, the car manufacturing industry in North America is going to look like in North America for the next few years. First of all, there was a threshold included in the U S MCA to increase the level of regional content of what we do in new, in North America and other what we do when we make cars, that’s a thing of country, country of origin rules
Scott Luton (30:41):
Back on that automotive point, that if I understand you correctly, that’s going to make the clustering that’s across all three countries, really that regional automotive industry, more competitive against the rest of the world is that
Ambassador Diaz (30:55):
I think that’s what the leaders of our three countries decided and saw. They wanted to move towards. I think before, I mean the NAFTA requirement for, for a car to be considering NAFTA car, whatever you want to call that enough, the car, it would mean that 62.5% of the content that card was regional was Canadian American, Mexican 62.5. These negotiation opt the level for that now is going to be 75%. So at least 75% of the car needs to be parts and manufacturing and content that was done here in this region. So that is closing a significant part from other regions in the world who have been, you know, sending arts and manage machinery and pieces from other parts of the world. And we are creating a March, March, regionally stronger supply chain, because of course, here in North America, that is a big difference. And that’s going to create a lot of opportunities for companies in the U S Canada and Mexico.
Scott Luton (31:56):
Yeah. And I think it’s important to note that it doesn’t just impact American or Mexican or Canadian brands because Volkswagen and BMW and other brands manufacture cars in the Americas and for it to be considered manufactured in America, it means that more of the products have to be sourced here
Ambassador Diaz (32:16):
Correctly. And that means that a lot of those car car companies, manufacturers like the ones you mentioned, which are Japanese or European cars, which have of course very big potent manufacturing basis here in the South, of course, we’ll have to do a lot of the production here, sometimes part of the production that they were doing in other regions in the world. So for example, there are plants here in Georgia from up here in Georgia. [inaudible] economic actor has a strong role here in Georgia and they are, they have a connection with a Kia plant in Monterrey, Mexico. And so a lot of the supply chain that goes between these plants in North America will be stronger, will have to be stronger with less content from plants or from products or other, other, other parts of the world. Conflict is one of the things I understand, and to be fair, it’s been probably 10 or 11 years, 12, 13 years since I’ve managed shipments for manufacturers coming across borders.
Ambassador Diaz (33:16):
But I understand that documentation, the compliance documentation, it’s going to streamline that including electronic, electronic documentation, and rather than relying on just one form that was accepted, it’s going to allow for a variety of different formats for this documentation, which can be a headache for supply chain practitioners, they’ll get stuff in and out of different countries. And none of the elements also that we also discussed with do streamline procedures, yes. To have a common guidelines and common documentation among the three countries to make a streamlined. Because again, I mean our competitive edge as a region is not all in terms of, you know, how competitive we are in terms of pricing for manufacturing, but also, you know, transportation act and just send access to clothes, suppliers of parts, and that needs to work easily. And that’s connected to what I was talking about before. For example, in the border, we need a border that is, that is efficient.
Ambassador Diaz (34:09):
You know, goods come and go easy, fast and efficiently in our border because we have, you know, a trade relationship between us and Mexico, this over $500 billion. And most of that trade goes through the border. So things like that, you know, which are regulations, relations, streamlining is, is critical. It’s tough to make $500 billion worth of anything. So why not make it easier, make it a lot easier and make it poised for growth and more reasonably competitive. And of course, you know, we need to think about it always with a perspective of doing, making sure that the border works efficiently without taking our mind off the security elements. Of course. So we need to make sure that those things we want to cross you see lead through the border do so. And those things that we do not want things to cross the border easily, do not.
Ambassador Diaz (34:59):
Have we defined that in USM fairly well? Would you say, I mean, of course they do SMTA is mostly about traits, but if it is, it does consider, I need, I talks about how we can, we need to set up a specific procedures and protocols in our order to streamline those things that are, are created on three trade fluxes that are based on Bree agreed protocols from our countries that will streamline the process of crossing the border for goods. And we have done a lot of that throughout the years. We have the bolt on that a lot. There’s a lot of custom rechecking, U S customs pre checking happened in Mexico before. So things cross past the border. So we have developed that. I know that happens in Canada too. So we have a lot of big, good experience now that we did not have.
Ambassador Diaz (35:44):
When we first started with the NAFTA. When we reached out to your office council Diaz, we also reached out to the Canadian consulate general in Atlanta, and we hope to have her own soon. I understand y’all collaborate quite a bit and you’re on panels a lot and you speak together. I love that. She’s amazing. She, she, she she’s, she’s actually an expert, not me. She is an expert. She knows what she’s talking about. So hope I’m sure she will reach out to you soon. She loves to talk about this. I know because that’s her really both ballpark. And she’s really great about this sort of matters. And that’s consult theater where I was, I had a little lap for real quick. You mentioned automotive industry clearly is USM poised to have a great impact there any other industries that really come to mind that sure.
Ambassador Diaz (36:29):
If they are, and I’m sure they’re already tracking this already, but for our audience, uh, may not be in positions, navigate through the U S MCA policy. First of all, of course, the agricultural part of free access between our countries remained exactly the same. So, I mean, there’s basically no tarrifs for a country train into not countries. There are, of course, in some products, some tiny sanitary issues that all of our countries have in place in terms of tariffs, free trade. Is there, there were some discussions about changing that, but that was avoided. So that’s very good news. Intellectual property is also one of the key elements that are hiring the new in the new agreement that were not present before. So very strong agreements and very strong locks into the system are there to protect intellectual property. Uh, of course we already talking about digital trade.
Ambassador Diaz (37:18):
There is a full chapter on digital trade in the agreement that of course was there, but then I should add also the, of course, the end and some sectors, some very interesting, important sectors, like energy are very important now in this U S MCA because when NAFTA was agreed upon the Mexican energy sector was very different for what it is now. So that is something that to keep in mind also, Holy cow, we’re gonna have to get a copy of the entire policy, Greg, and we’re gonna have to go through it page by page. Sounds like it chock full of good stuff. That’s good for good for industry, but also good for the special relationship. The way we see it. Then I say we, because I, uh, I think it’s all countries, all three countries is that, uh, this is a 21st century trade agreement.
Ambassador Diaz (37:59):
In many ways. BC is something that we many countries in the world we had done before, especially when we negotiated the TPP transpacific partnership, which was done a couple of years ago, three or four years ago. And it included all of these, you know, global, new, global economy elements into that. But of course the United States decided not to partake in that. So it was the United States. It’s not in there. We needed to have a 21st degree, 21st century. We think United States, because of course it’s not our number one trade partner in the world, right. And you gave us some numbers, Mexico,
Scott Luton (38:36):
And the Southeast of the U S the area that you cover in terms of the trade there, can you share with our listeners
Ambassador Diaz (38:43):
In the case of, uh, Georgia and, uh, Mexico, for example, our total trade, the last number we have, of course, it’s 2019. And in 2019, our total trade was over $11 billion, which is, you know, I mean, tremendous, uh, Mexico is the second buyer in the world of Georgia. And guess who is the number one?
Scott Luton (39:05):
Probably Canada. Of course. Yeah. That was a trick question. They love peaches.
Ambassador Diaz (39:10):
So, I mean, it’s actually a trick question because most of them, when I do this thing and asked that the most common answer, I get a lot of times people say China, there’s this perception, no, it’s this Canada. And then it’s, then it’s Mexico in terms of countries in the world who buy Georgia goods. So, I mean, that is there. And so the, the, the size of the relationship has evolved. And the other very important thing is that the numbers keep growing every year. Last year, experts from Georgia to Mexico were over $41 billion.
Scott Luton (39:41):
How do you reconcile those two numbers, the 11 and the 41 billion. So tell me the difference between those numbers,
Ambassador Diaz (39:48):
The difference with those, those numbers.
Scott Luton (39:49):
So 11 billion is, is Mexican goods consumed in Georgia
Ambassador Diaz (39:54):
11 point $3 billion was a total trade, both ways between the Mexico and Georgia, the Mexican Georgia. And I think I just made a mistake because I told them the total exports of Georgia to the world in 2018 were 41 billion.
Scott Luton (40:10):
Oh, got it. Okay. Okay.
Ambassador Diaz (40:11):
I’m sorry. That was my mistake. But that basically means that around 25% of the total trade of Georgia and the world was with Mexico, one fourth of the total exports of Georgia to the world we’re sent to Mexico. So that puts things in a certain perspective, make that easier. Let’s streamline that
Scott Luton (40:29):
Let’s grow it. And that’s a good question, or a good jumping off point here on USF. Reducing friction is essentially the goal of S MCA, right? It’s to make trade more accountable, but also a little bit easier than for some of the aspects. One that NAFTA didn’t cover, like digital trade, like we talked about and other areas where it did not effectively reduce friction.
Ambassador Diaz (40:53):
And a lot of it goes to the supply chains and manufacturing and all that. It’s a recognition that the relationship and our chronic relationship has evolved to more of a manufacturing hub. Because, you know, when you think basically of a trade free agreement have people, a lot of times think about basically trading finished goods, we sell you the Keela and avocados, and you say, we buy your beaches, you know, and that’s fine, then it’s true that that happens. It’s not, that’s not really what we’re about if, and if you see that the, the nature of, uh, of the products that Georgia buys from, and that’s the United States in general, of course, Georgia buys from Mexico or, or the other way around. Yes. He’s not, it’s not really about tequila and peaches. It’s about, you know, machinery, it’s about tables. It’s about vehicle parts and that’s, that’s real. So, so that’s what USA NCAA is about. It’s about how are we going to be competitive at an asset manufacturing power in the global economy.
Scott Luton (41:53):
So on that note, you finished with the global economy, Greg, we like the kind of see what’s on his mind. Right. I recall when we talked before you mentioned those numbers, 25% of all trade from Georgia with Georgia is with Mexico. I recall you saying that now, but it’s still, it’s really a shocking number, but I guess we should expect that it’s a huge economy. It’s relatively proximate. I mean, Mexico is, is close. It seems natural when you think of it that way,
Ambassador Diaz (42:22):
Mexico is the 13th largest economy in the world.
Scott Luton (42:27):
Speaking of that global business economy, and speaking of things beyond us MCA, and we’re going to have to have you come back on with this counsel Diaz and, uh, once everything gets implemented, maybe we can, uh, you know, talk through the first couple months of, of how things yeah. Play out as you, as CMCA gets implemented, maybe we’ll get consultated order to join. You. Let’s talk about Everything else in global business. As you survey this, this challenging year, that is 2020 pandemic environment, What else is on, you know, front and center for you? What other trends or topics or issue, what are you talking about with your fellow trade ministers and other business
Ambassador Diaz (43:06):
People around the world? Right now, it’s a big trend around how the global economy is moving towards a more local locally inward instead of globally. There’s of course, a lot of concern about possible trade Wars and in all regions of the world, of course, everybody thinks about the United States and China, but it’s happening many other regions in the world. So that brings uncertainty, you know, about tariffs and, uh, and a lot of, you know, uh, putting our con our jobs on our manufacturing first, before buying the goods from other countries in the world. So it’s, it’s a certain in terms of the future for the global economy, the way we saw it a few years ago. And a lot of things that we’ve seen is that a lot of companies are looking into a strategies to work around avoiding getting caught by tarrifs. And some of the emerging targets that are, that are happening here in the United States, seeing in Asia, in Europe or in other regions of the world.
Ambassador Diaz (44:01):
And, uh, we have seen increased imports in Mexico of North American companies that are tweaking their supply chains to reroute around China, because they don’t want to get caught in these target floors that are not good for anybody. So of course, you know, smart business goes where they see a safe Haven from uncertainty, and we are seeing a large number of that happening. I personally have been involved recently with a lot of inputs and context from companies in the it sector that are interested in learning, you know, the opportunities for their companies in Mexico, as a, as a production hub, as a place where they can replace a, such a team that they are finding in other parts of the world in order to take advantage of something like U S MCA. Uh, the second also thing is that it’s also connected to this previous idea.
Ambassador Diaz (44:48):
That’s the second trend will talk about, and we sort of mentioned it a little bit, is that a localization is supply chains and communications with this uncertainty in the global economy. Uh, we are seeing a lot of, okay, supply chains and they, big manufacturing hubs are looking for more local supply chains. People who will be their suppliers that are locally and closer to their production place, instead of bringing in some parts or machinery from the other side of the world, not only because of costs, but also because of uncertainty, this would be, you know, star Wars and all that. And that is exactly what you know, North America is about. And that’s why we are placed in a very, very advantageous position that no other region in the world has. In this context, there is a very different perspective of the way you see political economy and the political viewpoint between the leaders of North America, how we see each other as partners. And we don’t see each other as threats in terms of our manufacturing activity. And that is not exactly necessarily how we are acting towards the rest of the day. So there is this trend of, you know, regional agreements, regional powerhouses, and we are already in place in North America.
Scott Luton (46:04):
And we have 26 plus years of experience in working together, right for manufactured goods. You know, Scott and I talk about this a lot, ever since COVID has come up, there’s a lot of talk about reassuring or near shoring or shoe or shoring or whatever shoring we’re talking about. And of course, Mexico and Canada come up in those discussions, Mexico more so because the workforce is so much larger and economically it fits as well.
Ambassador Diaz (46:32):
That’s always a thing of access to the, you know, the, the necessary elements in the production chain that you need, and you need workers, you need highly trained workers, you need communication channels, you need to get streamlined processes. We have all of that and we have all that. And we are, I think we’ve become pretty good at it in our region and our competitors in other regions in the world. I don’t think they can say the same. I mean, Europe has big problems in terms of who they are. Do they actually want to be together for the rest of the years? You know, you know what happened with Brexit? And of course, uh, the Asian area is a lot more in Florence also. So we, North America, I think we need to think of ourselves more as North Americans and less as just Canadians, Mexicans and Americans.
Scott Luton (47:16):
We have a lot fewer real borders or perceived borders, and frankly, a lot fewer cultural differences than even what we tend to call Europe. You know, we think of Europe as a place, some even think of Africa
Scott Luton (47:30):
As a country, right? But those are vastly different cultures and they are, they are dozens of them within relatively small proximity. We cover an enormous portion of the world’s population and physical space with just three countries.
Ambassador Diaz (47:46):
We will, you’ll be the victims of our success in the sense that, in the sense that we’re not, that we’re not America gets kind of taken for granted. It’s very common when we attend, you know, panels or conferences when you’re talking about global trade, et cetera. And then definitely, always a lot of talk about, you know, finding this new market in Asia or this great opportunity in a certain marketing in Africa or in South America, which is fine. We already got it. So a lot of people talk about what we are already doing in North America. Maybe we can always be a lot stronger and 45 while we already do that, put in so much of attention to, you know, new, exciting markets.
Scott Luton (48:27):
All right. So I hate this, start to wrap up the conversation, but you know, when we started and he started talking about spicy food, you started making me really hungry, counseled Diaz. So I’ve gotta go. I catch a late lunch or maybe a second last, I don’t know. So let’s make sure folks, I can connect with you. I mean, I, I really, you know, through a couple of conversations now, Greg, your worldview, consul Diaz, own economies, own industrial on the, on the background, the history, as well as those points that connect us all, especially here in North America, that’s some really good stuff. And it’s clear that you study your craft and that, and that might sound naive or obvious, but to know your history and they’d be able to kind of deconstruct things as you do, it really makes for a layman like us, Greg, certainly not us MCA experts. Yeah. It really makes it easier to understand. And really frankly, exciting about this next chapter that hopefully will spur a lot of growth amongst three countries. So how can folks connect with you constantly as you and the Mexican consulate right here in Atlanta?
Ambassador Diaz (49:24):
We have a, of course our, all our social media, which are our pitching Facebook, of course, our Twitter is, uh, ad council, max ATL, ad console, max ATL. So you can contact us through Twitter. My Twitter account is at CG, J D L C G J D L. And that’s the easy way when anybody can contact us. Anytime,
Scott Luton (49:46):
Of course we’ll include those links so that folks can reach out what a great conversation. I really appreciate you spending some time with this, walk through this next chapter and, and, you know, share some of the things that folks, especially business leaders really need to understand. How about the U S MCA, which all the time, again, this is released, it will have been implemented and companies, Greg we’ll be navigating through the change, right? I already like USM CA better because I feel like we’re approaching it with hope and not fear. And I can say this cause I’m not a diplomat or even diplomatic, but I feel a lot better having tight trade ties with our neighbors, then someone to whom we are just that vast nation across the ocean. We have a lot of combined interests. We can work together to benefit one, another physical proximity, cultural proximity, and all of that works to help us become better partners and to help each other thrive.
Scott Luton (50:42):
I know two countries in the world who have more invested interest in America’s prosperity than Canada and Mexico. It’s likewise. And that’s the beautiful thing of it. We only have a few borders, right? We don’t have dozens or hundreds of borders like, like you do in other parts of the world. And it just makes it that much easier. We’re only talking about three entities here to cover the entirety of North America. So that’s, that’s the way we see. I think we’re also excited. We’re looking forward to what the U S MCA takes. But, uh, again, I mean, we know what happened the past 26 years, we are in a better position now. So let’s look forward to this. Thanks so much. We’ve been chatting with ambassador Javier Diaz, daily own council, general of Mexico in Atlanta. Thanks so much, sir, for your time here today, we look forward to having you back on, okay.
Scott Luton (51:29):
Maybe in a couple of months, as, as everything plays out, don’t go anywhere just yet. Greg and I are going to wrap up this episode of supply chain. Now, Greg, I love this stuff. No, it’s in demand. We’ve been asked about it numerous times. We’re so fortunate to have experts right here in our backyard that know how to deconstruct things and make it easy for non policy walks. Huh? That’s the really natural thing. I’m going to speak about you. Like you’re not here constantly S but anyone can understand this discussion, whether you know, a whole lot about USM or even international trade, or even the state of Georgia or America or Canada or Mexico, you can understand this. And it, it takes an exceptional gift to be able to speak about such world shaping things, activities so that the rest of us can understand it.
Scott Luton (52:16):
And I really appreciate that. And do we do appreciate your time and do thank Marcel for helping us schedule this. She’s been really helpful being bilingual and being able to decide for what’s taking place and share it. That’s a language in and of itself. So really appreciate that to our audience. If you enjoyed this discussion, there are certain elements of it that will play out in our July 15th event, where we will talk more about the state of race in industry. And we’re going to have a very Frank conversation along different lines, the conversations that need to be had so that we can [inaudible] for a better environment, a better industry and more opportunities for all. Let’s check out that event, July 15th and I’ll rest of the resources, podcasts live streams that we have at supply chain, net radio.com. Greg, I’m going to wrap it up here as much as we’ve enjoyed this conversation, we invite our audience to check out the very next episode. Hey, along those lines, we encourage it to do good. Give forward. It’d be the change that is needed today. And on that note, we will see you next time here on supply chain.
Would you rather watch the show in action? Watch as Scott and Greg welcome Ambassador Diaz to Supply Chain Now through our YouTube channel.
Javier Díaz de León serves as the Consul General of Mexico in Atlanta. He has a degree in International Relations, having graduated from the Universidad Iberoamericana. He has a Master in International Conflict Analysis from the University of Kent in England. Since 1991, Javier has served as a member of the Mexican Foreign Service and received promotion to the rank of Ambassador on April 28, 2017. He has held various positions throughout his professional career, including: Alternate Consul in San Diego; Alternate Consul in New York, Chief of the Section of Migration and Hispanic Affairs at the Mexican Embassy in the United States of America and Executive Director of the Institute of Mexicans Abroad of the Mexican Foreign Ministry. From June 2013 to May 2016 he served as Consul General of Mexico in Raleigh, North Carolina. In May 2016, he was named the Consul General of Mexico in Atlanta. Learn more: https://consulmex.sre.gob.mx/atlanta/
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