Gonzalez Expresses Concern In Manufacturing Investments: We See ‘Chinese Money Flooding Into Mexico’

3 months ago

On Tuesday, Rep. Vincente Gonzalez (D-TX) discussed investments in foreign manufacturing during a House Financial Services Committee hearing.

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Transcript

00:00Gentleman's time has expired.

00:01With that, we'll go to the gentleman from Texas.

00:03Mr. Gonzales is recognized for five minutes.

00:06Thank you, Mr. Chairman, and thank you, Madam Secretary,

00:10for being with us this morning.

00:12I'm pleased that the Treasury Department noticed the proposed rulemaking concerning the

00:17outbound investment screening program.

00:20There's no doubt that U.S. money should be kept out of the hands of Chinese and Russian firms.

00:25I also want to add another angle concerning foreign investment that's a concern to us

00:30in South Texas and I think along the border.

00:33Many of our constituents are seeing Chinese money flooding into Mexico

00:38where manufacturing facilities are at and are being developed south of the border.

00:44So goods can be shipped to the United States as a Mexican product instead of Chinese.

00:50And I worry that if we consider only the direct U.S. investments into Chinese

00:55or Russian factories that they can produce technology of concern,

01:00those investments may be directed instead to factories overseas

01:07and Chinese-owned companies and third nations.

01:11Will the Treasury Department consider or have you already considered those sort

01:15of nonlinear investments that aim to evade the goals

01:19of the President's outbound investment screening program?

01:23If not this mechanism, in what capacity could we work together in order to prevent U.S. investments

01:32from funding, for example, the semiconductor factory that's in Mexico owned by Chinese entities?

01:39So I think you raise an important issue and it's one that we're aware of at Treasury.

01:45I made a visit to Mexico last year and this is a matter that I've discussed

01:53with senior Mexican officials.

01:58We're discussing with them developing their own essentially investment screening mechanism

02:08similar to our CFIUS.

02:11They're open to discussing and working with us on that and I think that's a first step

02:19at looking at these issues.

02:21We realize the North American market is highly integrated

02:27and that we have a common interest in this.

02:31That's what my next question was going to be.

02:33Have they been forthcoming in wanting to work with us?

02:35They have been and I discussed this when I was at Mexico

02:42with a press conference that I gave there.

02:44I think it's a huge concern, not only our direct investments but a lot of things

02:48that are happening with Chinese moving into that region.

02:50You're right and it's an important issue.

02:54Thank you.

02:55Also, in 2023, Mexico received a record $63 billion in remittances.

03:02It was a 7.6% increase from 2022 of which 95% of this came from the United States.

03:12With a recent surge in remittances, I'm concerned that this has inadvertently made it easier

03:17for some of the Mexican cartels to launder drug money and cartels use civilians as conduits

03:24for remittances who then hand the money back to the cartels, a practice known as smurfing.

03:30What is being done to limit the use of remittances as an avenue to finance illicit activities?

03:36How can we identify and monitor laundering schemes run

03:40through legitimate financial transactions?

03:42And I feel there's an increase.

03:44There was a recent report by a Reuters journalist that was down there

03:49that actually followed one of the ladies in Sinaloa that went to one of these places

03:53to collect the money and then kept a very small slice of it and gave the majority

03:58of it back to the cartels.

04:00It's a huge concern as remittances grow and I think they're,

04:04certainly they're harder to monitor and police.

04:10What are we doing and what cooperation do we have for Mexico?

04:13I think that that should be a clear area of concern.

04:17I just see it very unregulated.

04:20So, I mean, we've certainly been focused on Mexican drug cartels and have been cracking

04:27down on them with Mexico's cooperation.

04:30With respect to remittances, many of them occur through money service businesses

04:39and those businesses are subject to the Bank Secrecy Act, AML, CFT, compliance regime.

04:51There's been a spike in these resources coming into Mexico and it's just a concern being

04:56on the border and, you know, seeing all the activity and the growth of the Mexican cartels

05:01on the other side of the border is really worrisome

05:04and I think we should pay closer attention to this.

05:06There's a Mexican think tank that just came up that said $4.4 billion of the money

05:11that we remitted to Mexico last year was directed, was sent directly to cartels and I hope

05:18that we can continue to work on this issue.

05:20It's a huge concern for all of us.

05:22It's an important issue and, of course, we want to work on it.

05:25Thank you so much.

Gonzalez Expresses Concern In Manufacturing Investments: We See ‘Chinese Money Flooding Into Mexico’

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