Garza: Business community can help drown out ugly political rhetoric

MCALLEN, Texas – Former U.S. Ambassador to Mexico Antonio Garza says chambers of commerce and the business community in general can help turn down ugly political rhetoric.

Antonio Garza was asked if political rhetoric hampers trade negotiations and good trade policy. He was asked this question by Cynthia Sakulenzki, president and CEO of the Hispanic Chamber of Commerce, during a recent webinar that RGVHCC organized.

The webinar took place just before the U.S. presidential election.

“I’m kind of glad you asked that (question), because I do think it gives me an opportunity to say something to the role that the Rio Grande Valley Hispanic Chamber can play, and other private sector (entities can play) as we prepare for the (USMCA) sunset review process – whether it initiates on day one of the new administration, or whether you have a more institutional process that allows for some time to think about it,” Garza said.

“I think, typically, the rhetoric coming out of really all three countries (the United States, Mexico, and Canada), at times acts as a headwind. That outsized rhetoric makes it hard for people to sit at the table and work towards solutions and the ability for the private sector to help shape the debate, drive the debate, inform the debate is very good.”

Garza said he is of the view that the notion of political leadership is almost an oxymoron.

“You get more leadership out of the private sector. And office holders, if they know that the private sector is active and engaged, are more likely to listen and more likely to be responsive. So, it can create kind of a virtuous thing, but I think it has to be driven by the private sector,” Garza said.

“Without the private sector involvement, the political rhetoric tends to be kind of loud, not as well informed, and acts as a headwind to actually getting good and constructive things done.”

Garza noted that while the question from Sakulenzki was asked in relation to trade matters between the United States and Mexico, it could just as easily apply to immigration policy.

“Immediately, the political class injects kind of a level of rhetorical excess that makes it hard, because people are locked down and take positions before you get into the nuances of, what does reform mean? What do we need in terms of our economy? what do we need in terms of our security? What do we need? And you don’t have those conversations if the rhetoric gets too loud and the private sector isn’t at the table saying, turn down the volume. Let’s try to get something done.

“So, I do think chambers and individual businesspeople play an enormous role in offsetting or at least muting some of the potential harm that outside rhetoric can cause.”

Currency exchange

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Another question raised during the webinar was about the valuation of the Mexican peso as measured against the U.S. dollar.

Garza responded: “One of the interesting things, and I think it’s kind of one of the beauties of being where we are, along the Rio Grande, in the Valley, on the border, is, we have sort of natural hedges.

“When the peso is strong, retail does well, because the consumption power of the Mexican visitor is high. So you see more activity around the malls and this sort of thing. When the peso weakens, you see more activity around commercial and trade related things, using our platforms as a basis for export. So that’s kind of a built-in hedge when there’s insecurity around the peso and overall concerns about the Mexican economy.”

Garza said that while he is no expert on currency exchanges, having the peso hover around the $16 to $20 mark is good.

“That is kind of a balance between strong consumption that impacts our retail and a nice platform for our exports, so we don’t lose too much. And I think (it provides) some continuity around real estate. (And so) we are best served by some stability between that band that you’re seeing, between 16 and 20. When it (the peso) collapses, that’s a big problem.”

Garza said that for all the talk about López Obrador being on the left and an authoritarian. he was very respectful of the independence of the Banco de Mexico.

“You saw Banco de Mexico raising interest rates, rates to combat inflation, before our own Federal Reserve (acted). And you saw them bringing them back down more slowly than ours, so they maintained that gap between our interest rates and their interest rates,” Garza said.

“And what that prevented was a lot of capital flight out of Mexico, which maintained the stability around the peso. And then $55 Billion to 60 billion dollars’ worth of remittances into the country helped maintain their current account, so those never got too far out of whack.”

On top of that, Garza said, the future always looked good when it came to nearshoring.

“That’s not something people thought would have been the case on the first day of López Obrador’s administration. So, Mexico, in spite of the headwinds, some of the fundamentals remain very strong.”

Security in Mexico

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Another question came from the Rio Grande Guardian. Garza was asked what to expect from the Sheinbaum administration when it comes to cartel activity in Mexico.

“What has been encouraging about the administration is the team that she’s put together around security,” Garza responded.

He said Sheinbaum likely wants to distinguish her approach from that adopted by former Mexican President Felipe Calderon.

“(Andrés Manuel) López Obrador ran and lost to Calderon in 2006. He used President Calderon as an example of everything that he wouldn’t do. And President Calderon had most famously taken the military, as he said, out of the barracks and off to the streets to confront directly the cartels’ role in the country,” Garza said.

“I think that she’s likely to have a more comprehensive strategy on security than her predecessor did. You saw that during her tenure as mayor of Mexico City. You saw that in her early announcements about security and rule of law and the need for certain certainty around that. So, while I think rhetorically, she still wants to distinguish herself and her approaches from those of President Calderon, two administrations ago, I think practically speaking, there’ll be more direct engagement on security from the federal government, and more cooperation with the United States.”

Garza continued: “I think we all know this, you cannot confront a transnational menace, which is what these cartels and criminal organizations are, by tying one hand behind your back. And by that, I mean the two countries have to be coordinating their strategies, communicating freely, exchanging information and intelligence in a way that makes it actionable. And you can only do that by working more closely with the United States. So, I think you’ll see more complete law enforcement and security strategies from this administration than you did with her predecessor. And I think you’ll see more cooperation with the U.S.”

Garza also spoke about President Sheinbaum’s likely stance on the renegotiation of USMCA and the growing impact China is having on the Mexican economy.

Here is an audio recording of the Q&A section of the webinar.

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Editor’s Note: The Rio Grande Guardian International News Service also wrote a story on the first part of the RGV Hispanic Chamber of Commerce’s webinar with Ambassador Garza. It focused on his opening remarks. Click here to read the story.

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