Perry hopes Texas benefits from neighbor's recovery

By RICARDO SANDOVAL / The Dallas Morning News

MEXICO CITY – Trips to Mexico are nothing new to Texas Gov. Rick Perry – he even visited in 2001 for a few weeks of intense Spanish-language training.

Yet before this week, Mr. Perry had not traveled south with the exclusive goal of encouraging trade between Texas and Mexico.

Economists here said Wednesday that he picked the right time to visit. In the nation's bustling capital, Mr. Perry has found great optimism that the hard times of recent years are over for Texas' most important trading partner.

Mr. Perry met Wednesday with Mexican President Vicente Fox, and today addresses a gathering of Texas energy industry executives looking for business opportunities in Mexico. The Mexico City leg of the governor's three-day swing follows a stop in Monterrey, where he signed a pledge with three Mexican border-state governors to stimulate business.

The Mexican economy – tied by a lifeline to the fortunes of Texas and the United States – is reviving after three years of no growth, massive manufacturing layoffs and China's emergence as a favored location for offshore American factories.

In an address Wednesday to the American Chamber of Commerce in Mexico, Finance Minister Francisco Gil Díaz rolled out a red carpet for Mr. Perry with an upbeat prognosis for Mexico's financial health.

The country raised its economic growth forecast to 4 percent this year, up from 3 percent to 3.5 percent, on rising U.S. demand for its exports.

"We've always said the correlation was there. It was just a matter of waiting for the economy of the United States to recover," Mr. Díaz said.

Internally, Mexico is collecting more tax revenue. And the nation's cash cow – Petróleos de México, or Pemex – is receiving greater revenue from rising world oil prices and investing unprecedented amounts in new-well exploration.

Mexican officials said Wednesday that the recovery and current growth projections are the result of more than a global upturn and the country's U.S. ties.

"All world economies were stagnant for three years. Today, that's changed," said President Fox in an address to executives of Mexico's mining industry, which has grown 5 percent in 2004. "But mainly, things have changed inside our country."

The Mexican government has also improved its financial stability, converting the bulk of its weighty external debt to longer-term, dollar-based notes with lower interest rates.

Against this backdrop, Mr. Perry arrived looking to boost Texas' trade position.

The state benefits from proximity, and the fact that a majority of U.S.-Mexico trade flows on trucks and trains. Most of that traffic –$41.5 billion – rolls through Texas. Total U.S.-Mexico trade was $235.5 billion in 2003.

"Every dollar of increased trade means greater opportunities for new jobs in Texas," Mr. Perry said before embarking on his tour.

Even so, he will have to deal with some unresolved Texas- Mexico disputes:

• Texas Agricultural Commissioner Susan Combs' request that Mexico suspend plans, announced this week, to inspect imported livestock from the United States.

• Fears that Mexico is doing too little to ensure future compliance with a cross-border water treaty.

• Texas' refusal to accept consular identification cards as official I.D. for Mexican migrants in the states.

Moreover, Mr. Perry's address to Texas energy executives today may ring hollow, because Mexico has no plans to change constitutional barriers to significant foreign involvement in the country's nationalized oil and energy sectors.

Mr. Fox's attempts to reform Mexico's energy laws have largely failed. And Mexico has posted mixed results in its recent sale of service contracts for exploration and development in Mexico's natural-gas rich Burgos Basin, near the Texas border.

Despite the barriers, Mr. Perry said he will look for ways Texas firms can make money in Mexico off of investments in everything from road construction to cross-border gas pipelines.