[Scott Case] (0:00 – 1:08)
My name is Scott Case,

[Cameron Roberts]
I’m Cameron Roberts,

[Scott Case]
and this is Logistically Speaking. Cold enough for you?

[Cameron Roberts]
You know, I felt it when I got off the plane And I was talking to him about Logistics from the airport to where we’re doing this podcast and thank you for arranging a lovely podcast And the guy’s like, yeah, you don’t want to go outside. It was negative 20 when I showed up this morning So yeah in a word, yes for the work for the record, it’s a dry cold From the land of fire and heat in Southern, California, I can tell you that The dry heat thing is nonsense hot means hot and when it’s over a hundred, you know it and just like when it’s under Once it gets below freezing. I think I Was talking with our guests on the way over and it’s like once you get to a certain point It’s just it’s just damn cold is what it is.

[Scott Case] (1:08 – 1:14)
You know what I do. I tell my kids. I tell my kid It’s like to me It’s cold when you when you breathe in through your nose and your nostril hairs freezing.

[Cameron Roberts] (1:15 – 1:32)
That is that sort of my definition of cold And I and I can understand why the inauguration was inside and Although at the same time, I know I pivoted hard there, but I have whiplash from that Yeah, I got it.

[Scott Case] (1:32 – 1:33)
I think I’m talking to two lawyers.

[Cameron Roberts] (1:33 – 1:55)
I never thought that that Presidential executive order signing would be a stadium event Never I mean I saw a lot of things coming, but I didn’t think that that would be part of the stadium event Potter I’m just wondering whether or not they had like full menu because I’ve been to like concerts where they’ll have like chicken fingers and Fries I just I just want to know the Verizon Center, right?

[Scott Case] (1:55 – 2:00)
It’s the Verizon Center Did they have like the full concessions venue could you’ve gotten yourself a suite for the EEO signing?

[Cameron Roberts] (2:01 – 3:31)
If it had been done in LA Absolutely because There would have been like a cocktail server it would have happened it would have happened there would have been a VIP section It had better bathrooms. They would have had a better booze They would have shorter lines moving closer to the stage all of that would have been possible You know, I went to the inauguration really first one. Really?

Yeah. Well my congressman Ted Liu family friend His kids are the same age as my kids both by he has two sons I have two daughters They’re the same age. They went to the same elementary the same middle in the same high school.

That’s cool and Not surprisingly when Trump won the election and Hillary did not No one from the constituency for which Ted predominantly serves because it is quite a blue district wanted to go and I’ll just out myself and say well, I did not vote for the Trump on the on the first round I am curious. I’m a curious person. And so I said, you know, I’d like to go my parents were political people my father stepfather was the mayor of our town and so I thought it would be interesting as a Political science major though 30 years ago to go see the transition of history And I know a few people in DC that could like hook me up to go to different

[Scott Case] (3:32 – 3:40)
I got an invite to watch the parade from a mutual friend of ours from from their office too And I had to politely decline. You should take that ticket by the way

[Cameron Roberts] (3:40 – 5:16)
You should take that ticket by the way.

He has an amazing view of Constitution Boulevard I the only downside is that the the the mall below it they rent to whomever and So I had to hurt here like rage against the machine for like I don’t know how many hours straight So it was a little hard that way, but I will say going to an inauguration is like nothing I have ever seen it is a circus ambiance and if you Choose to wear a button. You should be prepared to talk about why you’re wearing that button especially if you wear a button that That has the president’s name on it and you go to Dupont Circle Because Dupont Circle has a particular political vibe.

I’ll let our audience figure that out for itself and it’s it’s not Republican I can just share that not so much and we went to a very nice restaurant up there and I and we had Multiple conversations, so I just can say that you have a lot of interesting chats about What what’s going on in politic what the impact of the incoming administration is going to be and Frankly, I think that dovetails very nicely into what we’re doing here today in that We’re here to talk to a good friend of mine about what?

the perspective is on the incoming administration what we thought was going to happen in the first 24 hours that apparently has been pushed off a week and Examine the possibility

[Scott Case] (5:17 – 6:46)

Absolutely, and as as we record here in in cold Chicago on Tuesday night, January 21st We’re a little over a day and a half into the second Trump term and Americans in the world Nobody stood for the first time around and spent his four years out of office talking about it and agitating to bring to the fore In the waning days of the Biden administration There was a flurry of trade related activity much of its centering around China and de minimis There were also additional export restrictions put in place for technology and last week saw CBP issue not one but two notices of proposed rulemaking covering changes to low-value entry shipments in what products are and aren’t eligible for those types of entries and Prior to those two NPRM’s and as our guest this week is intimately aware Mexican President Claudia Sheinbaum instituted a significant change to Mexico’s MX type renounce it right MX MX program which undergirded the nearshoring programs of many brands who had taken advantage Legally of the loophole in the de minimis program which exempts payment of those duties for type 86 and manifest entries that MX change for chapters 61 62 and 63 brought about not just a 35% duty rate into Mexico But also eliminated the ability to recover paid import duties at the time of exportation effectively stamping out the program with zero warning And on Monday while the president didn’t issue any executive orders As you said Cameron announcing increases in tariffs from the Oval Office later that evening in response to a reporter’s question

[President Trump] (6:46 – 7:08)
He said this we’re thinking in terms of 25% on Mexico and Canada because they’re allowing Vast numbers of people Canada’s very bad abuser also vast numbers of people to come in and fentanyl to come in I think February 1st I think I think we’ll do it February 1st

[Scott Case] (7:10 – 8:00)
Sir on each and this announcement came in concert with an executive order named America first trade policy the president laid out his plans to review existing trade deals and had some specific inclusions about China de minimis Canada and Mexico Coupled with this apparently novel idea of playing risk in 2025 with Canada Greenland Panama and who knows elsewhere along the way I’d say that we’re gonna be in for quite the ride over the next four years and we normally bring in our guest after Cameron I’ve had a chance to sort of lay out the episode topic But something tells me that a three-headed discussion will be better than one in this particular instance And we couldn’t be happier to have Cameron’s longtime friend Carlos Cesma, Jr., Senior partner in the Mexican law firm of Cesma, Cesma and McNeese joining us for Logistically Speaking.

Thank you so much for being here Carlos Thank you very much for having me.

[Carlos Sesma] (8:01 – 8:12)

Thank you very much for having me. I’m very excited to be able to talk to you tonight and I think we could have chose a different venue in January, but but I’m happy to be here Freezing, but very happy.

[Cameron Roberts] (8:12 – 8:13)
Oh, you’re right.

[Scott Case] (8:13 – 8:41)
We were both here for a good cause totally No, I appreciate it Cameron. Why don’t you open up? What’s I mean?

We were having a little informal chat as we were as we were prepping for this And there’s just a myriad of things that are floating around there I mean if we want to do it chronologically We can start with the pre-christmas announcement from from President Sheinbaum about the 35% duty for stuff in MX Is that something you could just sort of detail for our listeners in in a minute or two from top down?

[Carlos Sesma] (8:42 – 10:51)
Yeah, sure. I think that it’s important. First of all to establish what you mix is It makes is a is a trade program a foreign trade program in Mexico Which was created a long time ago and the acronym for it that everybody kind of knows is the maquiladora Okay, so the the MX which are initials to this program allows for companies to temporary import raw materials and parts to manufacture in Mexico and therefore generate investment generate employment and Then afterwards the final product is exported outside of Mexico and all the time the the import and the export That do not generate Import tax.

So the idea is that we’re doing this free of taxes for companies to come and establish in Mexico invest in Mexico and generate employment and The intent of all of this is that any type of manufacturing company can apply to Different sectors of this program so you can be in the automotive sector you can be in the apparel sector clothing and these type of things and The recent change was that The president enacted an increment in tax specifically for the clothing and apparel sector An increment in tax that goes all the way to 35% was that for footwear as well or just apparel that It’s basically apparel and clothing.

There’s that’s that’s where it’s geared and the There’s a lot of talk around this because it was enacted precisely in the moment where people were distracted and holidays and everything but the idea here is This is geared specifically in the and it’s what we’re looking at It’s geared specifically to companies that were taking advantage of the EMEX program That were not supposed to be taking advantage of that type of program specifically companies such as Temu or Sheen or Ali Express that were that were taking advantage of this and Sending a lot of the manufacturing over to Mexico and taking advantage of the zero tax

[Cameron Roberts] (10:51 – 11:00)
Well, let me ask you were they actually doing any manufacturing and they were just simply storing the goods there To satisfy an e-comm need they were doing both

[Carlos Sesma] (11:01 – 11:05)
and the storage was more than anything so

[Cameron Roberts] (11:05 – 11:08)
So it could be a Chinese manufactured good.

[Carlos Sesma] (11:08 – 11:30)
Correct. No input from Labor other than the warehousing or certain certain type of value-added services not necessarily manufacturing per se but certain types of tags or label labeling and these superficial embossments things And there was no warning given for this.

[Scott Case] (11:30 – 11:33)
It was just like effective now

[Carlos Sesma] (11:33 – 12:34)
no warning whatsoever this this decree comes with a little bit of a a Subterfuge there as there’s a there’s an alternative which is to Declaring a simplified process in this simplified process declared taxes in a simplified process which basically allows for these companies to pay 19% Which is just a global a global tax that is That that can be opted by this by these companies in which we suspect that a lot of these companies We believe that this is a little bit of the Claudia shame, but I’m trying to show the United States that there’s going to be a an understanding that there’s going to be a Certain friendly relationship around the the management of the tariffs and the management of the of the of the of the Chinese participation in Mexico

[Scott Case] (12:34 – 13:36)
it’s um, I I’m wondering whether or not it’s a um, it’s a chess move and I thought about this when the announcement was made Which is the fact that you have jobs that are there in sort of like the e-commerce the warehouse the very very simple lower skilled pick and pack space But in Mexico has a very vibrant automotive manufacturing base that is generating a lot of foreign direct investment that Plants are moving there things are happening and it seemed like sort of sacrificing a piece on a chessboard To give away sort of the lower value lower skill stuff along the border To be able to preserve because he has said in in camera, correct me if I’m wrong and throughout 2024 100 or 200 percent in some situations on Mexican auto. So I mean if we’re all sort of sitting here It’s it is a maximalist negotiating position to sort of ask for the moon and then to sort of settle around a number that that Everybody seems to be able to live with well, if you’re having a rally in Dearborn I think you’re probably talking over a hundred percent.

[Cameron Roberts] (13:36 – 14:32)
Sure, but there’s that and there’s the reality of it and I think the interesting part of it is that So many parts that are brought from Mexico to the United States assembly facilities our inputs into US manufactured Automobiles. So if you start talking like that, you’re going to have an inflationary effect it will be counterproductive and Won’t really get you more u.s. Jobs. I do see that they will try to keep the jobs that are there and the Dearborn jobs, I mean and then you have to balance that against what is going on in Monterey and Demanding more u.s. Regional value content into the finished product to qualify for the US MCA

[Scott Case] (14:32 – 14:43)
And keeping in mind that US MCA was Renegotiated and put in place on his first watch as well So he’s got a second bite at the Apple for a program that was passed with overwhelming

[Cameron Roberts] (14:43 – 15:24)
Bipartisan support during his first term and isn’t a or another year but what we’re seeing at least I think we’re seeing is a intention to bring those negotiations forward So that he can get leverage into it now So in other words while on the books you have to negotiate it 2026 let’s negotiate it today Let’s get it on the table today.

And that’s I think what Trump is clearly telegraphic and it’s interesting to see Mexican president try to anticipate that move Potentially.

[Carlos Sesma] (15:24 – 16:07)
I do think it does seem like she’s anticipating it I would agree the the Mexican president is a very intelligent woman. She’s very well prepared and I think that she knows well that our country really is is depending On the relationship with the United States more than anything So there’s there’s options of foreign trade around the world But for Mexico the United States implies 86 percent of its exports So when you think of that number That’s a big customer’s it’s a big customer and it also has a big customer The customer has buying power, of course, so so negotiated power comes around with it for sure

[Cameron Roberts] (16:07 – 17:01)
Now one of the things we talked about before the show was we got on the line here was What is do you perceive Mexico’s relationship with China because I think one you know, it’s it’s Not just a bilateral situation it’s a trilateral or a multilateral situation and are there other countries that aside from Mexico China and that relationship that we should really be thinking about because so often One of the things I like to about talking to guests like yourself is like you’re looking at it from a different perspective You’re not hearing the The It’s not just these it’s not framed as simply I think in the US news market We often get framed and sold frankly framed and sold shit.

[Scott Case] (17:01 – 17:07)
That is not real It’s a byproduct of having an attention span of a gnat for the populace.

[Cameron Roberts] (17:07 – 17:16)
It’s just it’s it’s it’s X It’s X and Y and there’s no let’s not confuse it It’s more complicated, isn’t it?

[Carlos Sesma] (17:17 – 18:03)
I would tell you first of all to your to your first question regarding the relationship between Mexico and China. I think that Markets the size of China and of course the size of the United States and so on You cannot not have a relationship with in Even if you try so they’re having a relationship with China It’s you you you have it because it exists and you need to manage it and that’s the situation The preferred relationship for Mexico has always been the United States However, there needs to be options, of course and One of the things that also happened over December was that Mexico?

signed a restated Trade agreement with Europe how important well now we’re pivoting to Europe.

[Cameron Roberts] (18:04 – 18:21)
So here we go What Do you see as the importance of Europe and China in the relationship to Mexico Separate apart from the relationship with the United States.

[Carlos Sesma] (18:21 – 19:07)
They continue to be less than 86 percent, right? So So the situation I can do the math. That’s 14 or less So the situation here is it’s easy Europe is an additional partner.

That is something that we can do without Picking a fight with everybody else. So but if we choose China and we choose the brick countries then choosing that means picking a fight, so The the situation here is very very touching The going towards Europe is still friendly territory. You can still do commerce with Europe and still be Business partners and friends with the United States.

[Cameron Roberts] (19:07 – 19:52)
So you just raised a really good point there bricks Do you see Mexico being in alignment with the United States as part of? The counter to bricks because now we’re looking at bricks Which obviously involves Brazil Russia China, and now we have the United States Mexico Canada Europe Is that where how you see this playing itself, I know we’re getting to the end of the podcast as opposed to the front but You know that it just jumps out at me like that. And so I just have to ask what do you think about that?

That’s kind of you know, it’s not nutty. It’s I’m thinking it’s the you’re playing chess

[Carlos Sesma] (19:53 – 21:11)
Well, but it’s a difficult game of chess because the situation is they might be in something Look the 86% I’m gonna continue to say that number because it’s practically what creates the relevance and The 86% really you don’t come to that number in in a year or in five years You know, this has been this has been a relationship entries, you know so this this region as a as a commercial block has has been you know ages in creation and For for a country such as Mexico to decide to change gears and to look for a different Trade group trade partners, which they could look into brick That would mean start from zero and it would be a very abrupt and drastic Situation that no country can survive.

So I think that for Mexico to actually take that change of gears There would need to be really a very strong trade war with the United States Terrorists would need to be imposed by the US and then counter imposed by Mexico off and on to to basically probably USMCA You know catastrophically fail Then Mexico would need to buy it by need to look to a different solution

[Cameron Roberts] (21:11 – 22:15)
you know if you’ve read the Republic and Plato and The Philosopher King is coming out of the cave and looking at the forms on the cave wall The alley, you know, the analogy is like, okay. Well, that’s not reality the philosopher King has to go beyond the cave beyond the manipulation of the shadows and Come into the daylight see the world as it is What is the world as it is?

This is the same. We’re doing the same dance. It’s only 2,000 years later and It’s that Question I think that posed here is We’re three guys that are trying to figure this out and go.

What is the next move? What is because that’s what your clients are asking you isn’t it? Correct?

I mean you’re you’re gonna talk to clients here in Chicago. You’re gonna talk to clients in Mexico Clients wherever you are about what what what what are your clients asking you today?

[Carlos Sesma] (22:16 – 22:41)
I Think the main concern right now is What to do if the 25% tariff is actually a vote That that I think it’s the greatest of the situation if they change the name of the Gulf of Mexico, we really don’t care Yeah Well, you can we can fight Britannica for it Well, I mean, it’s funny because I said this I’m sorry.

[Cameron Roberts] (22:41 – 22:44)
I need to know the answer though. What what do you what is it?

[Carlos Sesma] (22:45 – 23:59)
Well for me, it’s it’s something that’s the move Keep working the there’s there’s there’s for the past several years. I think we’ve seen a creation of a populist Politics in basically every country that is civilized in the world and This approach has generated a big separation between the the government and the politicians and the business Business continues to develop business continues to grow and business continues to work every day The Businesses that are making money in the United States and that depend on Canada depend on Mexico to do that money They’ll continue to do money the same way.

They’ll continue to work the same way Same in Mexico same in Canada so I think that going a lot to to what you were saying right now is We need to try to look past the politic layer and look at the actual business and legal layer Below it because that’s more stable That’s that’s more real and that’s where we need to try to focus in and you’re getting lost in the forms by analogy

[Cameron Roberts] (23:59 – 24:58)
if you do the other and so you have to look at what’s the daylight and the thing I’m curious about is As I’ve talked to my clients as well on this and my advice is similar because first it’s probably going to be temporary and Second The advantage to a cross-the-board Everybody pays the same rate regardless with no exceptions. No exclusions Is a level playing field everybody suffers so, you know You can’t have people do what people have done for years, which is Shave this shave that the only way you get around it is Arguably Valuation distortion the thing that the thing that just popped into my head as we were sitting here having this discussion One of the things that he’s pushing for is reduction in inflation.

[Scott Case] (24:58 – 26:25)
I mean very notably it was it was another one of the EEOs We’re gonna drive inflation down You start talking about some of the duty percentages at like a 25% Figure or whatever else all of a sudden. Yeah, it goes from the dollar store to the dollar 25 Goes from five below to It goes from five below to six below. But the point is people aren’t gonna stop buying Watermelon for talking about the weather.

Sorry It’s colder than that for the record People aren’t gonna stop buying watermelon for a summer picnic People aren’t gonna stop buying avocados before the Super Bowl to make their guac What’s gonna happen? I think is that that the the number that gets baked in the first people that are gonna feel it are gonna be the Importers who already had to come up with a pile of money the first time around and we saw the bond stacking we saw everything else That went with that They’re gonna have to come up with a pile of money to write that check first of all Then the price is gonna get Carried on to the consumer But where I see this sort of coming at the consumer is that if they think that they’re going to try and do inflation reduction targeting on the back end Whatever like major benefits they might have been able to demonstrate Hey, look, we were able to reduce the cost of X by Y percentage They’re handicapping themselves by putting this extra 25% on it making their job to demonstrate the inflation Reduction that that he wrote into town on more difficult And why would they want to shoot themselves in the foot right out of the box like that?

[Carlos Sesma] (26:26 – 27:34)
That’s a good thought It’s it’s it’s I totally agree The situation is that the this type of protectionist measures really are not sustainable in the long term the The tariff solution. I think it’s and I hope it is a negotiating tool And that is what what is happening at this point if it is Welcome, let’s let’s let’s use it. There’s a lot of things that need to be Modified there’s a lot of things that can be Better right now between the other three countries in the region and so on If that is the way to get the attention if that is the way to sit the people to the table, that’s fine But if the actual implementation of the tariff is established it is going to harm commerce It’s going to harm the citizen that it has to pay more money for each things There’s gonna create inflation and and at the end it is not going to be sustainable There’s gonna have to be a step back and that is going to be also something that’s gonna hurt the whole Scenario so the whole negotiation position the whole empowering position if there needs to be a step back on the 25% I’m not gonna look good

[Cameron Roberts] (27:35 – 28:35)
Anything less than 10% is manageable You can divide by three and the producer can share a third The middle person can share a third and the ultimate consumer can share a third and therefore it is less inflationary by definition And there’s something Egalitarian and somewhat inherently fair in that sort of arbitrary math But once you get above that percentage, it starts to get very difficult to manage and we’ve seen people say that if it were 25% or higher Or anything higher frankly than 10 It would be very problematic because who then bears the burden is everybody is still tear a third And are you willing to take that third and can you take that third? I mean, it’s all well and good to say that one person can reduce the cost but if you’re already your your margins are less than that third then by definition, it’s Something not a business.

[Carlos Sesma] (28:35 – 31:45)
No, look at the end. I think that there’s there’s an end realization at certain levels that the the actual intent of these we have to see a little bit longer term and What are we facing here we see a lot of messages for example this past Monday Where you have all of the tech companies at the at the presidential event and With better seats than the cabinet exactly and and or part of the cabinet. Yeah, so To that regard.

I think there’s a there’s there’s a very Important strategy at this point as to who’s gonna be the next technological power in the world and who’s gonna have control of the chips who’s gonna have control of artificial intelligence who’s gonna be the more advanced and There that situation which is clear to my eyes is going to generate competition immediately with China And the United States has to create the space that is secure that is better for the national security that that they can have a Easy sourcing for all of these manufacturing and energy producing that they need to come to come by for that type of Development and that can only be accomplished through these region that has been created over this centuries, you know and at the end These Canada and Mexico right now are the trading partners Mexico number one Canada number two of the United States so if you stamp that if you stamp it the Terrace at this point, it’s not a good be good for everybody The this stay in Mexico what it does is that it sends all of the illegal immigrants down to Mexico to wait there for actual process to come into the United States and it’s creating a humanitarian problem because our country is Does not have the resources to receive this number of immigrants into our country What the president has has come out and said this time around is that she is going to make sure that the Mexicans can be Refrigerated and the Mexicans will get jobs and they will and they will be received back in Mexico But there’s no assurances for people that are foreign We have had to set up and this is something also that has been stealth and not very Known but we have had to set up camps in the in the border on the Mexican side to have all of this immigrants in the waiting process and keep them there and that in turn has forced the Mexican government to actually Implement strategies in our southern border, which is a very very difficult border even though it’s not as large as our border that we share with the u.s. Our southern border is is a jungle and That it is very difficult to actually keep track of the whole crossing area, so there’s a lot of investment in a lot of Actions that are trying to To close the Mexican border as well, and it’s very difficult.

[Cameron Roberts] (31:47 – 32:15)
You see that this I See it as a kind of a poker game You know you have on one hand immigration. I’ll play that card and then I’ll play Sentinel and then this or that Somehow distort The relationship and therefore generate a basis to assess a terror Yeah, well, it’s politics.

[Carlos Sesma] (32:16 – 32:42)
We come back to the layer of politics politics because To each of these situations. There’s there’s a reason so Sadly because it’s a very sad effect and the fact that it even exists is sad fentanyl come to the United States because there’s consumption and If No market, it wouldn’t come it wouldn’t come now, which is a whole different discussion.

[Scott Case] (32:42 – 32:43)
None of which got mentioned

[Carlos Sesma] (32:43 – 34:59)
Yeah, and never does because it’s inconvenient exactly and when you have a region that is so entangled as ours Immigration is also a natural effect Where there’s benefits for the receiving country of illegal immigration that are Bill benefits in lower wages benefits in certain functions that in certain work and certain labor that is not generally Performed by the nationals and so the illegal immigrants take take part of that And in a lot of industries in the US benefit from this type of work And in this case this this is a common situation amongst Countries that are so entangled that I think that the use of these two concepts versus tariffs is is It’s again political rhetoric because in Mexico, we’re not in favor of selling fentanyl to the United States, you know We’re not in favor of sending illegal immigrants to the United States.

We have the same problems in Mexico We also have consumptions of fentanyl in Mexico and that is also very sad So there’s those are regional problems that we tackle with regional solutions in in the fact that that that’s happening, I read I read a paragraph what I was looking for information for this and It struck me as interesting where this this person was commenting a tweet and the comment was Mexico is not Allowing for immigrants to go to the United States The actual people that allow the immigrants to come in are the border officers, you know The country receiving is the one that is allowing the entry So I would tell you at the end, I think We are all for Fixing the immigration problem We don’t we don’t like illegal immigrants either We are all for fixing the fentanyl problem, we’re all for fixing the Violence problem. We’re all for fixing the the the cartel problem So I think that what we should be finding is solutions to all of these Problems jointly to create a safe area for everybody and an area that we can all do commerce in it’s bad for business

[Scott Case] (34:59 – 35:00)
exactly

[Cameron Roberts] (35:01 – 36:08)
Something that we seem to fail to Understand This this Border relationship is obviously critical 84% critical And then the next question is how to mitigate the Restraints of Unnecessary trade restrictions that Prohibit the flow of free and fair trade These I think the countries that we’re talking about both with the United States Mexico Canada all have a mutual self and self interest, but they also have joint interest Perpetuating this this union that we’ve created So, how can we best do that? And this is what again?

This is we’re trying to figure out how does the current administration’s the incoming administration? Policies this America I was reading through this as we’re talking and you know it’s a lot of investigations a lot of quasi accusations a lot of

[Scott Case] (36:09 – 37:56)
There’s a lot of for in looking at that first batch of eos There’s a lot of sort of first-person need grievance stuff in there that I just I it’s that seems okay Once once we get the little bitch session out of the way Here’s what I plan on doing with it, which I which I found to be interesting I mean that was across all of them from the EVs to the immigration to the To the to the sort of wind policy and we were talking obviously we were talking about oil and gas But with the with the cessation of those leases those windmills are really nice project cargo, too I mean the same way you look at sort of like drilling pipes being the length that they are Some of those windmill turbines and the blades are equally as very nice project cargo Which could move by truck which could move by rail. We’ve obviously got a rail Mexico also looking at a rail I mean in Mexico to something we were talking about earlier While you’re looking sort of at our magic 86% number that we’ve got cross-border You’re also looking as a country at your own economic security We’re looking at the Panama Canal which may be setting up for another dry season We’re looking at the ability to sort of move goods across the Mexican portion of land and tell me about some of the things that Mexico is doing from an infrastructure point of view I mean it somewhere along the line the word infrastructure became pork here in America Like it used to be it used to be you’re bringing something back to your district. This is a reward for a congressperson Look, I brought jobs back to my district and then somebody decided to make it an anathema or a dirty word It’s like oh now it’s just pork and all this wasteful sort of spending You know when the bridge that you’re riding across on a river falls away beneath you all of a sudden Infrastructure seems like a really good idea So within Mexico aside from the growth that has happened with a lot of the industrial towns What are some of the major infrastructure projects that that Mexico is working on for its own economic security?

[Carlos Sesma] (37:57 – 40:47)
Well, I think that There’s a very interesting infrastructure projects going on right now in Mexico So again, this is going beneath the bullets the politics layer and going through the business and the actual things that are we’re not here for the politics we’re here for the business exactly so So the What I can tell you is this administration as the previous one in Mexico Claudia shame bomb took office in October. So so this is very recent, but there’s a very strong There’s a very strong investment going on in rail precisely So there’s there’s two mega projects right now that are happening and they’re already in in operation They’re still underway, but there’s pieces of them that are already operating. So one is the Mayan train The Mayan train is a is a train that goes around the whole Yucatan Peninsula and it’s a it’s a it’s a train for passengers and a train for cargo and it also has connectivity with certain airports Specifically then the the most popular one that probably a lot of you have heard is the tool is the Tulum Airport Yes, so Tulum is more known as a tourist and party destination but But the but there’s also a very important the the new airport also has a very important component for cargo And there’s other airports that are going to be Connecting that that train as well That along with a very important project that was Spearheaded by the previous administration, which is what we call the the trans ismic Train, which is if you take the narrowest part of our country if you think of our country, it goes a little bit like an upside triangle and Like a funnel exactly it like a funnel So if you go to the lower part of it where the state of Oaxaca is and the state of Veracruz on the other side there’s a very narrow area of Mexico where there’s already a train functioning and it’s there’s a lot of investment going on right now to bring it up then to better the the capacity of that of that rail and The port that connect that train to both both sides the intent is to actually create an alternative to the Panama Canal precisely and That is something that should be happening under this administration our government in Mexico is It has a period of six years with no re-election So currently we still have six years of Claudia in front of us and the intent is that this train is going to be fully operational during this administration In a way that it’s going to present an alternative for the Panama Canal.

[Cameron Roberts] (40:48 – 40:51)
Does it already run from coast to coast?

[Carlos Sesma] (40:51 – 41:08)
it is it is The one that is running from coast to coast is not sufficient is that it’s an older version of what we want to accomplish But there is some that we say Infrastructure in place that needs Upgrading exactly.

[Cameron Roberts] (41:08 – 41:19)
So the the land is cleared. There’s track laid It’s just a matter of getting better track better equipment better end to end Exactly

[Carlos Sesma] (41:20 – 42:15)
connectivity and there’s roads being built and there’s clusters that are going to be established along the way for Certain industries a lot of the focus of the previous administration and this one is to develop the southern area of Mexico Our country has has developed unevenly where the northern area Given its proximity to the United States is very modern and there’s a lot of industry a lot of work a lot of money And also the center because of Mexico City, but when you go south Which is this area that I was telling you about that has the jungle and it’s difficult to access and so on Our southern area of Mexico is very poor So the focus here is to try to bring development into the southern area of Mexico and all of these projects that I’m telling you About are precisely in that area and the intent is to bring Development and work and investment.

[Cameron Roberts] (42:15 – 43:46)
It’s actually a parallel I see because if you think about how China exploited its seaboard during the 80s And then pushed west and it in it pushed West eventually, but it it it was started in these economic zones in various cities Following the Singapore model and then developed and developed and developed and then once they felt confident that they could Because the you know, my first experience anyway back in the late 80s was all of the goods that were ferried Manufactured in China, whether it be Shanghai and what-have-you all of that went by Peter vessel down to Hong Kong and then did transpat from Hong Kong across And that was the trans-pacific route now, obviously we’ve got Ningbo. We’ve got Shanghai. We’ve got dozens of deep water ports but my emphasis here is that I could see where Mexico could exploit that train track as a seacoast in a way and then develop it and then it would have the equal ability to Export goods and commerce to All of Latin America all of Europe all of the Pacific Rim Makes a lot of sense

[Carlos Sesma] (43:46 – 45:44)
the intent is precisely to try to develop in that sense and in the focus and rail is is is very natural because Using roads in the jungle is very difficult And it’s unsafe and it’s just a very complex and very expensive endeavor. So So rail has been the solution and so you’ll see that there’s a lot of investment around that there’s there’s there’s a There’s a gonna be further investment in in rail as other Companies that have concessions in Mexico will continue to invest so CPK Sorry CPKC Canadian Pacific Kansas City Southern exactly. So the first rail that actually crosses Mexico the US and Canada under the same company is actually Looking to to grow its infrastructure in Mexico.

So they’re in negotiations and discussions with the federal government so It’s it’s rail is going to be probably the biggest infrastructure project. There’s there’s also investment geared to ports In both sides and there’s also investment going to be focused to create a broader Crossing for Laredo, which that’s also underway And that I will tell you probably is that the Things that are underway right now that that are going to be Quite beneficial for for commerce between the three countries The the teams for negotiating the USMCA already in place and they’re ready to go At least the Mexican and the Canadian teams are ready But it’s interesting because the three countries have new administrations at the same time Canada is not there yet, but it’s very close so

[Scott Case] (45:44 – 45:53)
So we’re gonna well the Canadian negotiating team turn over if the if the composition and the leadership turns over or is it the Same team you think?

[Carlos Sesma] (45:55 – 46:38)
I don’t know if it’s gonna be a full a full turnover, but because these groups of experts that have done it before but It’s gonna be interesting at least the focus and in the way that they do it is the Claudia team The same players as the last time say I have to be honest a complete ignorance on Who is at the tip of the spear for Mexico? It’s it’s the same thing It’s the same team with the new players that are going to be Forming part of it, but it’s the same people that that worked with the USMCA the last administration in Mexico Was I think?

[Cameron Roberts] (46:39 – 47:04)
Criticized or it’s The way it was looking toward the judiciary and trying to renegotiate the Constitution so that the judiciary played a less important role or a less independent role in the As a I would say a check on the presidential power of the Mexican President is that fair?

[Carlos Sesma] (47:05 – 48:29)
I think you’re very kind in the way that you’re presenting this I The situation that actually happened is that there were sufficient constitutional reforms in Mexico in the past year to create a Situation where going forward The current president is sitting in probably the most powerful chair for the past 70 years in our country I see of course controls the executive power Through the elections. She got majority in both of our chambers. So she’s is controlling the legislature and Through the constitutional reform there’s gonna be changes coming where there’s the whole body of the federal judges and the state judges are now going to be elected in Mexico and The process is very messy However, the most important part of the whole reform is that through that process The whole Supreme Court is going to be elected again So this is going to be a precedent that is going to have indirectly and informally a say in Who’s going to be a Supreme Court judge and for every

[Cameron Roberts] (48:29 – 48:55)
Supreme Court judge is the Supreme Court going to be a nationally elected job Yes, I Can see why that would be messy.

Yeah Candidates and who’s gonna support the candidates and who’s gonna get behind them and give them money to run in Traditional elections are always just so messy.

[Scott Case] (48:55 – 49:28)
I mean we’ve got him obviously here in America we’ve got him at the state level county level, but it’s like Mm-hmm some things it just I mean there’s there’s a there’s a number of things about this wonderful little Democratic constitutional experiment of ours that make me twitchy like I Think we’re almost about out of time here Cameron and Carlos. Thank you so much for the time for the travel for the extra jacket I realize I keep making fun of the weather but but it when it’s as cold you have to any any parting it’s Something not a business administration

[Carlos Sesma] (49:29 – 50:32)
Yeah, sure, I think that what I would tell the audience is let’s keep our eye on the ball let’s try to see past all of the rhetoric and all of the politics and all of the Craziness that is going on in our two countries and basically in our three countries because there’s craziness in the three countries right now So let’s try to look past that and try to see what’s actually going on. Try to see that there’s Long-term relationships here. There’s there’s a long-term ventures.

There’s a there’s a companies that have been doing business forever In our three countries, so let’s continue to do work every day let’s continue to grow every day together and let’s try to navigate the Political aspect of it and try to just make sure that we’re not driven by that rhetoric Because there’s a lot of things serious things to do that continue to be there and that we can continue to To grow as a region and grow our businesses together

[Scott Case] (50:32 – 50:58)
Wonderful. Carlos. Thank you Cameron always a pleasure to see you in person.

That’s fun. We get to do this I love it when we’re here face to face as do I well, I think that is it for this episode So for Carlos and for Cameron, I am Scott case you have been listening to logistically speaking have a wonderful day