Foreign Relations of the United States, 1969–1976, Volume E–10, Documents on American Republics, 1969–1972

472. Memorandum of Conversation¹ ²

Washington, January 19, 1972

SUBJECT:

• U.S.-Mexican Relations

PARTICIPANTS:

• Assistant Secretary Charles A. Meyer
• Mexican Foreign Secretary Emilio O. Rabasa
• Mexican Ambassador Jose Juan de Olloqui
• Country Director for Mexico, Robert A. Stevenson

Following the talk with Secretary Rogers, Secretary Rabasa accompanied Assistant Secretary Meyer to his office and continued the discussion. He stressed to Mr. Meyer that President Echeverria is obsessed with the need to strengthen Mexico’s trade position; that the balance of payments after tourism receipts have been deducted still shows a gap of some $343 million. He remarked that people get tired of being buyers all the time. He referred to the shock of the 10% surcharge and requested that we give the trade problem serious thought. He said “We feel you cannot be equal with all, but Mexico is not only friendly but can be politically helpful and the United States can be economically helpful to Mexico.” He expressed unhappiness that now that the surcharge has been lifted we are troubled by difficulties over strawberry and tomato exports to the United States. He wishes that we could work out a better understanding between our countries so that our relations are not constantly troubled by these economic problems. He said he fully realizes the State Department does not have full control or responsibility for these matters—that they do not depend only on us, but believes if we take the position that helping Mexico would be politically useful it could help with regard to the trade problem.

Ambassador de Olloqui remarked that tourism is not the panacea for Mexico’s trade problem which many people consider it to be; that much of the gain is offset by Mexican expenditures in the United States. He suggested that we should encourage direct foreign investment which complies with Mexican rules of the game.

At this point Secretary Rabasa interrupted to say that he had forgotten to mention to Secretary Rogers the new measures taken by President Echeverria with regard to empresas mixtas. The problem here was with regard to foreign investment in housing, hotels and other real estate close to the Mexican borders. This was prohibited under Mexican law but the prohibition was constantly violated through the use of presta nombres. The new trust agreement created by President Echeverria provides that any bank can be a trustee for a foreigner on 10 to 30 year contracts for investments in these areas. He thinks there should be great interest in this new measure for those interested in investing in tourism and border industry. He asked us to try to help in stimulating investment activity in this field.

Ambassador de Olloqui observed that Brazil and Mexico can work with the United States because they have no inferiority complex. “It is true,” he said, “that investors get a lower return in Mexico, but Mexico had its revolution 50 years ago.” Assistant Secretary Meyer asked jokingly if this meant that Brazil is next in line for hers. Secretary Rabasa observed that in his view the secret of Mexico’s political stability is the fact that Presidents cannot succeed themselves.

Mr. Meyer made a strong point that in working with Mexico, Brazil and Argentina and recognizing their importance, we are not able, nevertheless, to forget the other countries. In many ways they need our help more as they are farther behind than the big three. He asked if the study proposed by Secretary Rabasa would be on a product or financial basis, i.e., with regard to goods or with regard to money. Secretary Rabasa said that the study would cover both aspects of the problem and thanked Mr. Meyer for pointing out that the matter could be handled either way or by a combination of both.

Secretary Rabasa brought up the problem of the braceros, and said “We don’t like laborers to leave Mexico and you don’t like them to enter the United States illegally.” He said Mexico had been trying to think of ways of giving them better protection from exploitation. He referred to his discussion late last year with Assistant Secretary of Labor Hodgson of the problem. Mr. Meyer pointed out to him our difficulties with this problem because of AFL–CIO’s adamant opposition to any thought of reintroducing a bracero program when we have our own unemployment problem, and pointed out that this is an election year. Secretary Rabasa said “We will put the problem of the braceros in parenthesis until after November, but in my opinion we will have to deal with it next year.

Secretary Rabasa said that he was most pleased with his talk with Secretary Rogers and with Assistant Secretary Meyer, and expressed the hope that we can continue with these frank exchanges of views.

1. Source: National Archives, RG 59, Central Files 1970–73, POL MEX–US. Confidential. Drafted by Robert A. Stevenson (ARA/MEX). The meeting between Meyer and Rabasa took place following an earlier meeting on January 19, between Rogers and Rabasa, which covered general U.S.-Mexico relations, a Mexican offer to provide “good offices” in negotiations over the Panama Canal, and the agenda and activities of the Organization of American States. (Ibid.)
2. Assistant Secretary Meyer and Mexican Foreign Secretary Rabasa discussed trade relations, border economics, the bracero program, Mexico’s $343 million trade deficit with the United States, and the 10 percent surcharge on imports.