Foreign Relations, 1977–1980, Volume XXIII, Mexico, Cuba, and the Caribbean

157. Memorandum of Conversation¹

Mexico City, February 15, 1979, 9:00 a.m.–noon.

SUBJECT

• Discussion of U.S.-Mexican Bilateral Issues

PARTICIPANTS

• • U.S.
  • The President
  • Secretary Vance
  • Dr. Brzezinski
  • Ambassador Lucey
  • Assistant Secretary Vaky
  • R. Pastor, NSC Staff
  • M. Nimetz, Counselor, State
  • J. Powell, Press Secretary
  • S. Eizenstat, Domestic Advisor
  • J. Katz, Assistant Secretary
• • Mexico
  • President Jose Lopez Portillo
  • Foreign Secretary Santiago Roel
  • Hugo B. Margain, Mexican Ambassador to Washington
  • David Ibarra Munoz, Secretary of Finance and Public Credit
  • Miguel de la Madrid Hurtado, Under Secretary of Finance and Public Credit
  • Ricardo Garcia Sainz, Secretary of Programming and Budget
  • Dra. Rosa Luz Alegria Escamilla, Under Secretary for Evaluation
  • Jorge de la Vega Dominguez, Secretary of Commerce
  • Hector Hernandez Cervantes, Under Secretary for Foreign Commerce
  • Jose Andres Oteyza Fernandez, Secretary of National Wealth & Industrial Development
  • Ing. Jorge Diaz Serrano, Director-General, PEMEX
  • Oscar Flores, Attorney General of the Republic
  • Jose Ramon Lopez Portillo, Director General for Documentation and Analysis, Dept. of Programming and Budget
  • Rafael Izquierdo Gonzalez, Adviser to the President
  • Fernando Rafful Miguel, Head of Department of Fisheries

LOPEZ PORTILLO: Yesterday, Mr. President, we began our discussions on international topics.² It is proposed that today we take up bilateral matters. If you agree, you may wish to initiate the discussion.

CARTER: I would like to do so. Let me say first that we are eager to conclude this visit with an agreement between us—and with a perception by the peoples of our two nations—that this has been a successful visit and constructive. Of all the visits I have made, this one has aroused the greatest interest in my country. This is an accurate measure of the importance we attribute to Mexico and our relationship.

There are serious problems and issues, but we want to turn them into opportunities. Some of the major issues are energy, trade, border questions and future collaboration on technology and the achievement of a better quality of life for our two nations.

Let me begin frankly with energy:

We are pleased and excited over your prospects for developing major energy resources. We have no desire to influence such matters as your production, exploration, distribution of your resources. This is entirely your prerogative. We would like to be good customers for what you may want to sell to us. We want to pay a fair price and would like to negotiate long-range arrangements without delay.

As far as oil goes, a fairly standard world price pattern exists in terms of long-term contract and spot-price purchases. At present our purchases of your oil are normal and routine—and are satisfactory. We do think that there is an advantage to you in selling to us because our location means lower transport costs. At present we import 45 percent of our consumption. For a number of years therefore the U.S. will be a ready market for whatever oil you decide to sell to us.

As regards gas, for now and the immediate future we have ample supplies of gas. We have increased local production and are constructing the Alaskan pipeline which will increase supplies. But my expectation is that when your gas development reaches the point where you are ready to sell, we would be prepared to buy it. Obviously the terms of delivery and price would have to be arrived at through negotiation.

I regret last year’s misunderstandings on gas.³ It was embarrassing to both. Our problem is that our government does not play a role in the purchase, commercialization and distribution of gas and oil. That is in the hands of private companies. But our regulatory agencies must control prices and protect consumer interests. Private oil companies are interested in keeping prices as high as possible because they control reserves they would like to sell in the future.

Our desire would be to have our government representatives meet without delay to determine the terms of such future sales as you deem it best to make. Then within those parameters, the companies would be free to purchase gas or oil. I have studied the history of the negotiations last summer, and I believe we can negotiate an agreement satisfactory to the interests of both countries. There is no doubt that our market will be a growing one. We want to be good neighbors and customers, recognizing your patrimony over your own resources. Would you like to comment on these points?

LOPEZ PORTILLO: I am afraid my answer will be long, because I want you to understand our views. Oil for us is a symbol as well as an energy source. The Cardenas expropriations were historic milestones. Our whole history has been a fight for decolonization. In the 19th century it was a political fight. In the 20th it was oil expropriation. Thus oil is a symbol and surrounded with great emotion here. We define our identity in terms of oil.

Oil is also a non-renewable resource. Thus we must plan carefully for the future, and exploit oil on the premise that we do so to improve renewable resources. We must “sow the oil.”

This year we will produce 1.5 million BPD. We are increasing at an approximate daily rate of 25,000 barrels. All this requires considerable investment; it also means we must import large amounts of goods for this exploration and exploitation. Our studies show that we have oil throughout the territory of Mexico. Thus two points come up with regard to our economic structure—the amount of investment and the level of imports. The first relates to indebtedness. We have agreed with the IMF to respect certain limits regarding indebtedness—both public and foreign. A great speed-up of investment could deform the whole structure, and create inflation. Because we need imports we must also watch the level of imports to avoid a balance of payments problem. We have in short to be cautious with regard to our oil investment.

As far as production goes, there will come a time when we will have export surpluses, and relatively soon. We thought by 1982, but now it appears that point may be reached as early as 1980. What volume of exports? We do not want to go too fast. We need to develop projects first to use the petro-wealth we will earn, projects relating to poverty and unemployment. That takes time, and we want them in place first. Even if we have projects they must be implemented with a certain rhythm. We do not want to go so fast we provoke inflation or create a capital surplus and capital exports.

In short, we must link oil to internal development. We want to use oil as the trigger for our development “take off.” We have a globally congruent plan for development, centered around reorienting industrial development and helping create a more equitable population distribution. Simple import substitution does not serve us now. We must produce to satisfy the needs of the masses, not the middle and upper classes. We must organize to export. Oil enables us to do this, and we have a number of plans covering such things as agriculture, forestry, tourism, marketing education, etc.

The general structure of our plan was to divide my Administration’s period into three 2-year periods. The first two years were aimed at recovering from deteriorated conditions and reactivating the economy. We have been successful. The present two years will be aimed at consolidating our economy, and the last two years to acceleration. What does consolidation mean? Maintaining the indices, resolving certain bottleneck problems—petro-chemicals, trained labor, transport infrastructure. We have identified some seven to eight bottlenecks. Transport is a good illustration. We need the infrastructure to move the oil and the products of development. If we just produce oil we cannot take advantage of it without transportation infrastructure. What do we do first?

The fact that we found that gas was associated with oil meant that to activate oil production we had to decide last year how to handle the gas. Our alternatives were either to sell the surplus rapidly or use the gas to foster our industrial development. At that time—a year ago—we decided to sell the gas to our natural market quickly, i.e., the U.S. So I authorized PEMEX to negotiate with private companies who were interested. An agreement was not possible. This created political problems, but we have overcome those. We then decided to route the pipeline to Monterrey and circle our territory. This gas will replace other fuels which are easier to export.

Let me now relate specific conclusions regarding production. By 1980 we should reach our first production plateau of 2.25–2.5 million BPD. This will produce four billion cf of gas. Of this we will probably have 600–700 million cf to export, and with some increasing trend. There is a gas line from Reynosa to Monterrey that can carry this amount now. When we reach that production plateau we will review the economic situation to determine what we do next. Obviously we are flexible. We will then decide on the next plateau.

Within the range of all that I have said, then, we are in the market; we will respect the rules of the game. The U.S. is a natural client. We have of course had relations with you for a long time, selling both gas and oil. It would be absurd if for whim’s sake or xenophobia we withdrew from the market. Negotiations should be opened to reach sales agreement. Price and terms should be worked out.

On price, I repeat that the economic order is not designed to help LDC’s. We want to rationalize flows. We need to revalue our assets because our terms of trade deteriorate. With reference to gas, price was one of the objections to last year’s negotiations. Gas can be considered a fuel; it has caloric value. Is it not reasonable to give it a price equal to other fuels even if it is the lowest price? I put these considerations on the table. This is the rationale that should govern the price of gas. We are ready to talk about gas and oil. We should come to some agreement on a system for long-term relationships, established on a rational basis as regards terms for trading in this crucially valuable and emotionally charged resource.

But I must say clearly and frankly, Mr. President, that the basis we established for gas sales cannot be modified by us without domestic difficulties and without damage to my own credibility and position. This is not abusive; it is realistic.

In short, we are disposed, once the U.S. has determined its policy (and we do not wish to interfere in its domestic politics or policies) to negotiate. This is not a bluff. Neither you nor we are in a hurry. It would not be a failure if we could not agree on price. What we should do, however, is establish permanent bases for the long term. If these are well balanced, flexible, there should be no problem.

CARTER: I presume, then, that you think it would be advisable to resume discussions at the government level, recognizing that we are not in a hurry, and with respect for each other’s interests, looking to the future.

LOPEZ PORTILLO: Let me clarify this. You are talking about government negotiations? Because an alternative is to have the companies negotiate with PEMEX.

CARTER: Government to government.

[Lopez Portillo nodded assent.]

Good. Your explanation has been very helpful. I believe I understand the special symbolic importance of energy to your country. Many of these considerations are not unique to Mexico. The question of depletion of non-renewable energy resources is certainly a concern of ours. Problems of debt, balance of payments, trade—these issues are on my plate as well.

As is true of Mexico, the U.S. also has a rapidly growing number of adults entering the job market. We are also concerned about investments to provide employment for these people coming into the labor market.

It would be a mistake for the U.S. to blame Mexico or for Mexico to blame the U.S. if we sometimes have difficulties. There is no question of the need for fair play. I am determined that my country will always act in good faith.

There are ways in which we could collaborate and cooperate. In nuclear energy, we would be glad to cooperate with you, if you wish, depending on what your plans are. Solar energy is another area in which we would welcome close collaboration. We could study electricity exchanges along the border. Transportation systems in both countries have needs. Railroad as well as other types. We could collaborate in exchanging information in that regard. There would be a great advantage in increasing tourism for both countries and expanding student exchanges, and these areas offer opportunities for cooperation. As your country industrializes, we would be glad to share our experiences with you so that you could profit by our successes as well as by our mistakes. Mutual financing arrangements and inflation control are additional areas in which we could exchange information and ideas. We have made full progress in the area of water resource management, but there is a need for cooperation in sanitation and pollution problems, and these should be tackled jointly.

I could mention other areas, but the point is that the bases for cooperation in all these areas would be complete equality and mutual respect and with no intention to influence each other against each’s interests. We established a Consultative Mechanism in 1977 to pursue some of these subjects. It made some progress but my assessment is that it needs to be improved.⁴ The ones that consult should have more authority to decide and act, specific assignment should be broadened and agenda items expanded.

Our Ministers should explore all this without delay—and you and I can be in touch with each other personally or in writing to handle differences that may arise. We can explore this more at our private meeting at breakfast tomorrow.⁵

I want our frankness to result in tangible accomplishments and future agreements.

And I hope we won’t wait two more years to get back together to resolve our differences.

LOPEZ PORTILLO: I would like to go a little bit deeper into energy. I want to ratify Mexico’s position that oil will be treated as the heritage of mankind. I want to reopen the idea of establishing an international order to manage consumption, production, distribution—not only of oil but all energy sources. I note, by the way, that Mexico buys butane and propane at American market prices.

Let me refer to uranium. My associates tell me that the U.S. has not authorized the return of uranium sent up for enrichment, adducing the need for some security safeguards. This illustrates the problem of dependence, which we don’t want for other areas because it would encourage us to turn to other sources. We are a peaceful country, and we will not use atomic energy for anything but peaceful purposes.

On electricity, let us by all means explore such exchanges. We are totally willing to enter into such arrangements.

We believe the technological development of the United States is extraordinary. We are certainly interested in making use of your technology. We need to explore its links to financing and markets. We are interested greatly in solar energy and alternative sources of energy, and we offer what we have. I believe we can find a just and fair exchange. What you said is very interesting to us.

In general all these things would be part of the general system I talked about yesterday.

CARTER: I am pleased that we can move on electricity exchanges. On nuclear fuels, I think I can assure you that the problem will be resolved when you are ready for it. I will give this my personal attention when I return.

As you know, Congress has passed a non-proliferation law that has caused problems and delays in regard to nuclear fuels, but these are being resolved.

We can also explore the possibility of an oil swap between Alaska, Mexico and Japan to save transportation costs and benefit all concerned.

I suggest that we allow our strengthened consultative group to explore all these things and then you and I get together again sometime, perhaps this summer if that is convenient to you, to assess what has happened and resolve any differences that exist. If we announce we will meet personally to assess their work, this might stimulate our staffs to move more expeditiously. We have done so well in narcotics cooperation, under the leadership of Attorney General Flores. This shows that when we work well together the progress can be great.

LOPEZ PORTILLO: I want to underline the importance of the possibility of supplying oil to Japan from Alaska which we would deliver to you. This is just the kind of rationalization of oil flow I referred to when I talked of international cooperation and organization. For ideological reasons and clients we distort and make prices higher than necessary. We accept the idea of a swap with enthusiasm.

CARTER: Do you agree that we should meet early this summer or at the beginning of summer?

LOPEZ PORTILLO: In view of the similar views of our associates about the meeting [all around the table smiled after the President’s remarks on the matter to expedite decision making by a Presidential meeting], I am in agreement with your ideas.

CARTER: Let me raise trade. I realize you have some concerns about the advisability of Mexico joining GATT. I want to point out that our mechanism for concluding bilateral understandings is based on the GATT and MTN framework. We have no desire to influence you against what you think are Mexico’s best interests, but we do believe that any trade differences could be resolved better within GATT than outside. We recognize that there is a need for bilateral agreements and understandings. I do believe that GATT is the best avenue for progress in that regard. But we are determined to resolve our bilateral problems regardless of your decision on GATT, but you may wish to consider them in this light.

LOPEZ PORTILLO: Let me first go back to drugs. Attorney General Flores has asked for the floor. Let me give it to him.

FLORES: Mr. President, the eradication campaign is effective and cooperation is good; by next year it should be completely successful.

I am always receiving missions from the United States, but everything is fine. This effort is almost totally on the shoulders of the Mexican side, and it is a difficult task to cover a 3,000 kilometer border.

One point I should make is that Mexico will be a channel for drug flow from the south. That will be our responsibility. We have proposed the establishment of radar lines on the Mexican-Guatemalan border to detect planes flying over—this would benefit mainly the U.S.

We have urged the U.S. to help us prepare teams and plans for Central America, because the drug trade is going to move south. We have proposed that teams of young officers from these countries be trained here.

I want to note that the U.S. does not control in any way the hundreds of planes that leave commercial airports in the U.S. and bring contraband to Mexico. 99 percent of these return with drugs. We are not warned, nor do you watch them. It would help if you could.

With the problem of paraquat, we thought it was just a political problem in your country. We said if you give us something else to spray the fields, we will use it. We are willing to try different markers, colors, scents or even vitamins if you like. Since then, the campaign in the U.S. against paraquat has diminished.

We had asked the UN for assistance in rehabilitating zones which had been growing poppies. We believe this was warranted since the Mexican government in effect deprived peasants of a livelihood. Our request was pigeonholed in a study committee in the UN and nothing has happened. So we are going on our own.

Let me finish by reemphasizing the point that we should prepare plans and people now to confront what will surely be a shift of the drug trade south to Central America.

LOPEZ PORTILLO: On GATT, on January 16 we contacted the Director General of GATT to ascertain the conditions for acceding. Bear in mind, however, the results of the Tokyo Round and the need for non-reciprocal preferences. We cannot be competitive with more developed countries.

There are differences in my Cabinet on this issue. Minister Hernandez, for example, believes we should join the GATT. Minister Oteyza of Patrimony, has reservations about joining the GATT because he is responsible for developing new industries. We surely need industrial protection for now. We cannot go suddenly to a new system, especially given our need to shift industry to the coastal belt. We have to be careful.

We contemplate entering GATT; we do not want to be left out. But GATT must look at the problems of developing countries. I believe in principle that there is some reason to be optimistic about the possibility of Mexico entering GATT, but we will have to study it carefully. It will not be an arbitrary decision.

CARTER: It is not the most important thing in the world, but we see some advantages in this relationship. Perhaps these problems can be discussed with our people who are familiar with the GATT/MTN framework. We believe that your problems can be handled with the flexibility you need in that framework.

Let me now turn, Mr. President, to the border problems—smuggling and migrants. Immigration is a sensitive matter in both the United States and Mexico. I am required to enforce the laws of my country, including immigration laws. I realize you do not want to settle my problems. But I wanted to discuss this with you. I’ve set up an excellent Commission on Migration to advise me on this; Governor Reubin Askew will chair it.⁶ It will deal with migration generally, not just Mexico. He will be studying this matter.

I would like the advantage of your consultation and advice on these issues. There are, for example, a growing number of migrants from other countries who simply pass through Mexico. How do we handle that? I am determined that people who are present in the U.S.—regardless of their status—will be protected under the law. Their human rights will be protected.

LOPEZ PORTILLO: Let me give you my points of view. The United States is totally in the right in trying to solve by laws and policy the situation and status of people in its territory or entering into its territory. Mexico and all countries act in similar ways. But one thing happens. In spite of law, migration occurs. We are faced with a fact—this violates the law, and we have no study adequate to resolve it. When violations occur on this scale something is wrong.

Mexico wants to protect its citizens wherever they are—as does the U.S. As a nation we are not responsible for individual violations, but if a violation occurs we believe the violator should be protected by legal procedures and laws. For example, the United States was concerned about the treatment of United States citizens in prison in Mexico on narcotics charges. A migrant therefore should be dealt with in accordance with the law he broke, i.e., immigration laws, and not the labor code.

Let us look at the facts. There is a market for Mexican labor. If there weren’t, the phenomenon wouldn’t occur. We are undertaking a study costing a million dollars to examine the origins and destinations of these people. We need time to study and plan, so we do not have an immediate reply for you. We understand that these matters must be decided by you. We would like to help, however, in defining and studying the problem. I understand that opinion in the U.S. is divided. The problem is that the issue is not defined, the problem is not stated right. We will help with our facts, considerations, and studies to define the nature of the problem. If these problems are not addressed, they will get more complicated.

Let me present some painful concerns: There has been an increase in persons accused of violating the labor laws. In the last month there has also been an increase in one form of human rights violations. This involves the expulsion of mothers who are forced to leave their family in the U.S. This seems to us a violation of the essence of family unity. The figures are impressive. The expulsion of women may be legitimate under the law, but it is certainly cruel.

We need time to study this (general problem of migration). We need to see how best to combat it. We want to find formulas, and would like to analyze the situation. We should both study this matter in depth—we now have no bases for sound judgments.

There is another situation that pains me. The County of Los Angeles has determined it will not extend medical care to undocumented workers. It has the right to do that without question. But Mexican workers contribute more in taxes than the benefits they receive. This shows the complexity of the human problem.

I suggest that this being such a complex, long range, human problem, it may be an error to resolve it by police measures.

CARTER: We have no wish to be pushed into errors. Errors have been made, and clearly we must understand the problem better. I have devoted a lot of time to this problem. I recognize that a prerequisite for dealing with it is to understand it. The average stay of a Mexican migrant worker is only 4–5 months. But obviously more stay than return. We now have an estimated 7–8 million undocumented workers in the U.S.

The Department of Justice has concentrated its effort on protecting the rights of these workers. One quarter of civil rights cases involve protection of such rights. Actually, the loudest and most frequent criticism of the flow of migrants comes from Chicanos—who are citizens and many of whom compete for the same jobs.

I have no doubt that undocumented workers are contributing to the U.S. economy.

It is difficult to amend our law. There are intense feelings on all sides. If it is convenient, Governor Askew might like to see you when he comes to Mexico.⁷ Perhaps we should share and do joint studies. These studies will continue for years in the future because the problem is complex and changing.

We want to take action immediately. But because of our relationship we want your advice.

I had not heard of the problem of women being expelled. Since they know they are in violation of the law, undocumented workers are reluctant to register their complaints. This is the kind of information which is difficult for us to get, so that it is difficult for many to protect their rights. Hence, you may obtain such information easier than we can.

Thus, we need your advice and consultation. Governor Askew should explore mechanisms to permit us to analyze the situation.

I am determined to deal with this problem as fairly as I can.⁸

LOPEZ PORTILLO: I thank you for your words Mr. President.

Our studies show interesting things. Motives are not always just unemployment; it is sometimes better salaries. Hence, for some the pull is survival, for others improvement. People are not only coming for agriculture but for industry and services.

This is a problem which is characteristic of a worldwide phenomenon. We find it wherever development and under-development is in contact.

A serene statement of the problem will make it easier to deal with it. By the end of this century we should be able to provide full employment for our population—but we cannot now. And if we mismanage oil we may never be able to. This is the enormous responsibility of this generation. In the meantime let us seek solutions. We are very willing to do everything possible. We are most interested in the problem. We appreciate your concern about the human rights of Mexicans in the United States.

With your permission Mr. President, one of my colleagues raises the question of tuna. With the American tuna fleet fishing without permission in Mexican waters during your visit, what shall we do? Let me ask the Director of Fisheries to comment on this.

RAFFUL: The problem of reaching agreement resides in the number of ships. We have only 24 ships that fish for tuna; the U.S. has 800. If we could establish some joint venture combinations this would meet many of our mutual interests and help us develop our resources. If the U.S. would work with us, the solution could occur tomorrow. The problem is that under the U. S. formula for allocating tuna, 28,000 tons would be allotted to us; we feel we need 38,000 tons.

Cannot American shippers associate with us—say as regards up to 50 ships?

The tuna negotiations have been suspended. Ambassador Negroponte is inflexible.⁹ But we feel we need a solution.

LOPEZ PORTILLO: I want first to instruct you to make no seizures for now. I am sure we can construct solutions. There are many possibilities.

CARTER: I will try to become more familiar with the problem. I do have some problems. Ambassador Negroponte thinks the Mexicans are inflexible. Congress thinks our offer on percentages is too generous.

As I understand it it will be difficult to expand your capacity to meet the goals you want this year in any case. Perhaps it would be advisable to phase in a change over time. We have a law that prescribes that any seizure of U.S. ships results in an embargo of that country’s fish products. I would like to see this matter resolved as quickly as possible in a spirit of cooperation. We have just concluded a more complicated agreement with Canada. I will instruct my negotiators to match the flexibility of Mexico’s negotiators. We will pursue this with a determination to resolve it. By tomorrow morning I will try to learn more about this problem.

LOPEZ PORTILLO: Thank you Mr. President. On the boats fishing in our zone, we will reserve our rights even though we do not seize, because there is a violation under our laws.

1. Source: Carter Library, National Security Affairs, Staff Material, North/South, Pastor, Country, Box 30, Folder: Mexico, 2/14–16/79. Confidential. The meeting was held at the Presidential Residence, Los Pinos. All brackets are in the original.
2. See Document 156.
3. See Document 137.
4. See Document 131.
5. The two Presidents met for breakfast the morning of February 16. (Carter Library, Presidential Materials, President’s Daily Diary) Carter commented on the meeting in his diary. (Carter, White House Diary, p. 293)
6. On March 22, President Carter designated Reubin Askew Chairman of the Select Commission on Immigration and Refugee Policy. (Public Papers: Carter, 1979, Book I, pp. 450–451)
7. Askew met with President Lopez Portillo in Mexico City on April 18. Telegram 6472 from Mexico City, April 20, reported on the discussion. (National Archives, RG 59, Central Foreign Policy File, D790182–0818)
8. In a September 27 memorandum to Vance, Brzezinski wrote, “With reference to the annex on Mexico in this morning’s PDB, the President has instructed me to inform you ‛that Mexico’s help in administering U.S. immigration laws or insuring civil rights is not needed—any more than we intrude in Mexico’s internal affairs.’” (Carter Library, National Security Affairs, Staff Material, Office, Presidential Advisory File, Box 78, Sensitive X, 9/79)
9. John D. Negroponte was Deputy Assistant Secretary of State for Oceans and Fisheries Affairs. Reference is to U.S.-Mexican negotiations to regulate tuna fishing in the Exclusive Economic Zone of Mexico.