8 December 1972 Mexico Mr. B. R. Waples, Jr. Vice President and Manager The Ralph M. Parsons Company 617 West Seventh Street Los Angeles, California 90017 Dear Bee: Enjoyed very much visiting with you in Tucson and appreciate the insight you have on Mexican mining investments. The next time you are in San Francisco would appreciate your calling me. In the meantime, would you be good enough to Xerox a copy of Ambassador McBride's speech and send it to me. We have made several attempts to obtain a copy of the speech but it is necessary to know the title of the speech in order to do so. Once again, congratulations on your Vice Presidency with Parsons. With kind regards. Yours sincerely, WB/nam Investments- Mining Mexico E. C. de Moss AMN am WB WB MAIL ADDRESS: P. O. BOX 54802 LOS ANGELES 90054 PLANNING & DEVELOPMENT 20 DEC 1972 MINING DIVISION UTAH INTERNATIONAL INC. The Ralph M. Parsons Company Engineers Constructors 617 WEST SEVENTH STREET, LOS ANGELES, CALIFORNIA December 14, 1972 Mr. Wes Bourret Utah Construction & Mining Co. 550 California Street San Francisco, Ca. 94104 Dear Wes: It was good to have the opportunity to see you again and discuss problems of American companies operating in Mexico. When I returned to Los Angeles, I was able to find an article that refers to some of the topics that I commented about. I believe this article will give you some additional insight, as well as the names of some of the secretaries within the Mexican government that I could not recall at the time of our discussion. I hope that this is of value to you and I look forward to seeing you again. Please do not hesitate to call me whenever you feel I can be of help to you. Very truly yours, THE RALPH M. PARSONS COMPANY By B. R. Waples, Jr Vice President and Manager of Projects, Parsons-Jurden Division BRW/rp Encl. RULES CHANGE FOR INVESTMENT Mexico Cools to Foreign Capital MEXICO CITYAfter almost two years of equivocation, the Mexican government has made it clear that foreign investment is no longer as welcome as it has been. "Yes, gentlemen," a high govern-ment official told a gathering of U.S. and Mexican businessmen the other day, "we are changing the rules of the game." The official. Undersecretary of Commerce and Industry Jose Cam-pillo Saenz, said the regulations were being adjusted "to the needs and aspirations of our day," reflect-ing the nationalistic views that have guided President Luis Alvarez Echeverria since his inauguration in December, 1970. Antigringo Tirade His remarks touched off in the lo-cal press what one U.S. businessman long resident here described as "the most strident antigringo tirade" since the oil industry was confiscat-ed in 1938. The morning daily "El Dia," which hews to the government line, said it was "probably too early to say that relations between Mexico and the United States have begun to deteri-orate, but it must be recognized at least that these relations have en-tered a state of tension filled with foreboding." For months, Mexican and U.S. investors alike had been complaining privately that the Echeverria government had neglected to spell out a clear and coherent economic policy. Finally, U.S. Ambassador Robert H. McBride brought, the complaint into the open. McBride, a retiring, quietly able diplomat who has maintained in Mexico what the State Department BY FRANCIS B. KENT Times Staff Writer calls a low profile, told a business group in Acapulco: "Let me state quite frankly that I note an attitude not of alarm but of definite concern. Many are unclear as to whether foreign investment is still desired, and whether the rules of the game might be changednot only for new investment but also for established firms." The ambassador opened his ad-dress by recalling that President Echeverria had spoken to President Nixon and the U.S. Congress "with frankness and candor" and had call-ed for establishment of a "frank, and open dialog." He would like, the am-bassador said, to speak "in that same spirit, which I so admire in the pres-ident of Mexico." He was not long in getting an an-swer. Just 48 hours later the under-secretary of commerce and industry, Campillo Saenz, defined precisely to what extent the rules have been changed. Mexico now looks down a new road, he said, "that will make our nation more independent and give greater freedom to all Mexicans." Foreign capital, he added, "can be a useful complement to accelerate our process of development" but it must "conform to the new goals we have set for ourselves." It. must among other requirements "associate with Mexican capital, on a minority basis as a general rule." It must "give preference to Mexican citizens in the employment of tech-nical experts and administrative personnel." It must "provide ad-vanced technology." It must "pro-duce export goods that can also be sent to the foreign investors' mar-kets." "This does not mean," Campillo Saenz added, "that we will not ac-cept foreign capital to be invested in those fields allowed by our laws. We accept it gladly, but only in a bal-anced relation to our own invest-ment. What we want... is for Mex-icans to be partners, not the em-ploves, of foreign capital, co-partici-pants and friends, not subordinates." Please Turn to Page 3, Col. 3 The Pickle Population Predicament Is a Dilly BY RON S. HEINZEL, Times Staff Writer Quick, what's the pickle capital of the world? St. Charles, III., of course. Anyone with an interest in sex or international economics should know that. MEXICO Continued from First Page His address, reportedly drafted by President Echeverria himself, ap-parently signals a tough new approach to foreign investment in a country where previous adminis-trations have actively sought to attract capital from abroad. In the past, even much of the Mexican money in so-called joint ventures has been raised quietly in the United States. On the other hand, some U.S. investors here point-ed out that the policy enunciated by Campillo Saenz does not represent a really radical departure except insofar as it may be applied in practice. For example, one busi-ness contact wondered, "to what degree is this going to affect firms that have been established here for years? Does this mean that existing agreements are now null and void?" Another questioned se-riously the potential im- pact of the rule requiring foreign capital to produce export goods for competi-tion in the home market. "Does this mean," he asked, "that the Ford Mo-tor Co., for example, is going to have to produce Fords here that will com-pete in the Chicago mark-et, say, with Fords manu-factured in Detroit? That's absurd." 'Clear, Positive Statement' A U.S. Embassy spokesman, asked to comment on the Campillo Saenz speech, said he considered it "a clear, positive state-ment, helpful in clarifying the Mexican government's policy." Asked whether the am-bassador's remarks, which obviously triggered the Mexican statement, had been prepared in, or cleared with, Washington, the spokesman would say only that McBride is the chief representative in Mexico of the U.S. govern-ment. In his address to the business group, McBride pointed out that in the re-, cent past "there has been a number of statements critical of the role of foreign investment in Mexico," and added: "We of course recognize that it is the role of the re-ceiving country to decide whether or not foreign in-vestment is desired and under what conditions." He said that Mexico has been for a number of years "a major recipient of foreign investment, de-spite intense worldwide competition for the limit-ed amount of investment capital available." Fills Demand "Although exact statis-tics are not available," he said, "total foreign invest-ment in Mexico has been estimated at $2.5 billion to $3 billion," not including short-term capital or unre-gistered investment, and "this investment has been attracted to Mexico to fill a demand a demand which exceeds the capaci-ty or availability of domes-tic capital." While the Campillo Saenz statement repre-sented his government's first concrete stand on foreign investment, it has been no secret that Pres-ident Echeverria has been pursuing an unmistakable policy of economic nation-alism independent of the United States, which buys about 70% of all Mexican exports. The Echeverria govern-ment has sent trade mis-sions to much of Europe and Asia, including the So-viet bloc and mainland China, and in the past 18 months has nationalized a number of firms here that had been owned in lar part by U.S. investors. Among these were a n jor sulphur mining com ny and the National Te phone Co. In every c the government is repo ed to have paid promp on terms described agreeable to the sha holders. Few in the busin community here d o u that there is more to co particularly in light o speech delivered Thursday by Jefus Re Heroles, president of ruling Institutional Re lutionary Party, at its tional assembly. Because heavy fore investment has accuse "negative and regressi impact on the Mexi economy, Reyes Her said, there must be tended state interventi to eliminate the gap tween the wealthy and the impoveris masses.