Page 78 - STRATEGY Magazine

INTERVIEW: CULTIBA
JUAN GALLARDO THURLOW
Chairman Cultiba
“NAFTA was a breakthrough agreement not only for the region but for the world, and it has established a very important precedent in every other way,” says Juan Gallardo Thurlow, Chairman of beverage and sugar
giant Cultiba. For him, Mexico’s focus since the 1990s on trade liberalization has been the catalyst for the country’s rapid transformation, and critical to its success is the continued spirit of consultation between the government and the private sector.
GETTING EXPERT ADVICE ...
During the NAFTA negotiations, the Mexican government approached the private sector and asked for its views and objectives. “That grew into the National Coalition of the Private Sector, with a number of enormous contributions of resources, knowledge, insights, and time from business leaders,” recalls Gallardo. Known as “the room next door” due to its proximity to the trade talks, the coalition sowed the seed of active private sector participation in Mexico’s future. “It is appearing again today,” he adds. “We have launched the Pacific Alliance, which is also a great initiative, and we are renegotiating our agreement with the European Union.” The advisory structure that exists between public and private leadership continues today.
The implementation of NAFTA opened the door to trade with a combined market of, at the time, more than 365 million people. Of course, not everyone was convinced that the deal would be good for business. Gallardo remembers, “Within our own private sector, the response of every one of the participants was: ‘The U.S. is big; we are small. They are rich; we are poor. They have more technology; how can we have a level playing field? This doesn’t make sense.’”
... AND ACTING ON IT
For Gallardo, the big difference is that back then, proponents of NAFTA were selling a promise, while today, businesses in Mexico are witnesses to a new reality. As an example, he cites agribusiness: “Mexico is good at certain kinds of produce and bad at others. The same thing happens on the U.S. and Canadian side. If you see how we have complemented each other in terms of food products, it is truly amazing.”
But the benefits go beyond intraregional trade. What NAFTA brought to its constituent countries was the opportunity to
Can Public and Private Work Together?
In the two decades since it signed NAFTA, the groundbreaking free trade agreement, Mexico has transformed into an open, outward-looking, and diversified economy, thanks in no small part to the dialogue between its public and private sectors.
create goods for export in collaboration with each other. “That was the major transformation. You see it in textiles, you see it in the auto industry, you see it in electronics, you see it in aviation, and on and on,” says Gallardo.
AN APPROACH BEARING FRUIT
In the Mexico of today, stability (almost) reigns, driven in part by the economy’s drastic reduction of its dependence on oil revenue. While there is no doubt that post-NAFTA Mexico has changed dramatically for the better, challenges to investor confidence remain. “Something that we have to deal with— and we have not been able to deal with it yet successfully—is the whole question of the drug trade,” laments Gallardo.
“The drug trade is a serious cancer on both sides of the border and it has enormous implications.” He shares the opinion of many in the private sector that practical solutions to the issue must go beyond military involvement, and he points to progress made in fighting corruption as an example of Mexico’s tough stance on crime. “Very few people know of the depth and the strength of the new anticorruption laws that have been put into place.”
The key, as ever, has been the administration’s willingness to listen to and act on the concerns of the private sector, and this is an approach that is bearing fruit. “I’ve never seen as many opportunities for business in Mexico as I see today,” says Gallardo. “Hardly a week goes by where someone doesn’t pop into the office with some new idea.”
STRENGTH ON THE HOME FRONT
Since NAFTA, Mexico has gone on to establish many other agreements with different parts of the world, which, as Gallardo notes, have had different kind of impacts and successes. For him, having the world’s largest economy as a next-door neighbor is both a blessing and a challenge. “Logically, it is much easier just to look north, and we have to, as Mexicans, look actively for better and other markets.” Today, with huge investments in agroindustry, telecommunications, and the food and steel industries in Central and South America, as well as ventures into Europe, Japan, and China, Mexican companies are building on the strong business environment they have at home to do just that.
In February 2017, Mexico started working with the private sector to set the parameters for a renegotiation of NAFTA following U.S. President Donald Trump’s announcement that he wanted to rework or dismantle the deal.
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