>> from our studios in new york city, this is "charlie rose." >> enrique pena nieto took office as mexico's president in 2012. he succeeded felipe calderon after gaining 38% of the vote. his victory marked a return to

power for the revolutionary party. mario vargas once called it the perfect dictatorship. pena nieto argues that pri has changed and that he will change mexico. his inauguration speech outlined a bold promise to reform key aspects of mexican society. in 2013, he brought opposition parties on board with his agenda. they formed the so-called pact for mexico. reforms have been hard to implement. on friday, i had a conversation with president pena nieto in his home in mexico city. >> after you were elected with that bold promise of economic growth and reform, people began to talk about mexico in a very flattering way. they called it the mexican moment and the country of the future.

time magazine said after one year in office, the president passed the most ambitious package of reforms in memory. global economic forces have shifted. smart money has begun to bet on peso power. in the wall street community, mexico is the favorite nation just now. it has gone from a country of people that had given up on to become the favorite. all based on what you said in your inaugural speech in december of 2012. huge promise. huge hope. tom friedman said, this country will become the most dominant economic power in the 21st century. the answer to that question, which country, he says, is mexico. there was a huge amount of reaction to these bold reforms.

then the economy slowed down. your popularity slowed down. the question many people are asking, what happened from your vantage point? >> i think that we would have to review everything that happened in one year. that is long we have been in this administration. a lot of expectation was generated in mexico as of the starting point. after i took office as president of mexico, we signed among the main political forces, and agreement we called the pact for mexico. it was a vision that was aimed at making changes, structural adjustments that allow mexico to grow economically and have greater social impact.

this is accomplished the next day after i took office. it is to the supposed that we were building this pact with the main political forces of mexico. i think this is also gathering the processing, such a short period of time, 18 months, to launch structural reforms. on issues that had been postponed for many decades. mexico decided to change. mexico decided to take the path of transformation. this showed the political maturity of the main political forces that have -- changes in the face of what has been

processed in the adjustment of structural reforms. undoubtedly, this shows a very encouraging, promising scenario for the future of our country. implementation of the reforms takes time. nonetheless, what is a reality now in mexico is that there are deep reaching reforms in energy, telecommunications, economic competition, financial, education, political. a full agenda of at least seven profound reforms. right now, congress is still debating the secondary

legislation of the constitutional reforms in terms of energy and have a communication. we show the world that mexico will have great development. my administration will of course have to carry out efficient implementation to ensure such a promising future that many people are seeing. perhaps this will take time. perhaps they will start seeing the benefits with time of these reforms for the population. >> what gave you the political courage to believe you could accomplish this? >> mexico, charlie, is a democratic country. mexico is a country that has had democratic political stability in the last 80 years.

we have had political transition. we have had different political forces ruling our country. in congress, a political party lost majority and the capacity to reform the constitution. for many years, this was postponed, truly being able to materialize. however, i think mexico has reached more political maturity, especially the different political expressions of the country.

all of them i think have shown in this effort, maturity and political stability. this has allowed us to reach an agreement. the second thing, with the work and the responsibility of legislators, we can make sure that those goals we have set out to accomplish are now materializing. reforms have already taken place and they are now a legislation in effect in our country. >> despite the pact for mexico, you understood that this might become politically unpopular. the results of reform might not be felt for years to come. >> i think the reforms and their benefits will not necessarily be seen in the far future. we are talking about a midterm and short-term. gradually we will start feeling

the benefits of these reforms. this is something that i want to say very clearly here, that my task as president of mexico, my responsibility, the most important thing is to make sure the country has greater development and economic growth. in the last 30 years, the average economic growth of our country is 2.4%. undoubtedly positive. a contrast with the growth of other countries. it was fundamental for us to do reforms, reforms that would allow better education, quality education, that would also allow us to open competition in different sectors. one of them is fundamental, telecommunications. it would also allow us to make

sure this would go to other sectors of the population. although we have a robust banking system, the credit level was low compared with other countries. that is why we launched the financial reforms that allowed the state to have better collection and strengthened public finances to invest in strategic sectors for infrastructure, science, technology, education and different things where we have been left behind. >> let me focus on the economy for a second. why isn't the economy growing as you expected it to grow? is it because of the global economy, the u.s. economy, or because internal conditions in mexico? >> i would say for all of those reasons you mentioned, charlie.

i think everything you mentioned, they are all factors that have left mexico not to have in this period of time the level of growth we expected. although it is positive growth, if you contrast it with other countries of the european region, the u.s., it is slowing down. undoubtedly the type of growth the u.s. will have will affect the performance of our economy. the public investment label, another fundamental factor, it is obvious that when the new administration took over, there was a new pace. the second year of my administration, the pace of public expenditure is greater,

practically 40% higher in real terms from last year. i would say that not having more growth right now is due to multiple reasons. performance of the u.s. economy is a very important factor. the public expenditure level is higher now. mexico now has an open economy, clearly dependent on what happens in the world. >> some people in mexico tell me you haven't spent the money you got from increased revenue. they are waiting for you to make the commitment from that revenue. when will you do that? >> this is something we are doing right now. the investment level we have had this year, these first four months of the year, 40% higher in real terms than what we have exercised last year.

there are some areas of the administration that are furthering infrastructure. the level of expenditure in these first four months, 112% higher than last year. this is not a lack of expenditure. on the contrary, we are investing more than last year. on the other hand, we are starting to see encouraging figures. month after month, since january until right now, clearly they are showing better performance in our economy for all the reasons i have mentioned. >> for 2014, the economic growth rate would be less than 3%. >> our estimate is 2.7%. this is the estimate of the finance ministry. >> a couple things about the economy.

manufacturing went to china, has come back to mexico. you have a vigorous manufacturing economy. but some say because it is based on low wages in part, you are not creating the demand that will spur and stimulate the economy. >> i see a different scenario. having done these educational reforms will allow us to have better capital and of course to have human capital that is more specialized in different manufacturing branches. that has given our country a point of difference vis a vis china. it could seem that perhaps we

are still having competition in some sectors. nevertheless, i think we have clearly marked the competitive advantage of this country. mexico is entering into a field of greater specialization. mexico has mainly a young population, higher education, 100,000 engineers every year graduate here. the academic profile of our people graduating will be in special industries. undoubtedly we do have a competitive advantage. the automobile industry, we are the fourth exporter of automobiles to the world.

we are one of the main exporters of automobiles to the united states. flatscreen televisions, we are the sixth supplier of the u.s. industry. we now have become more specialized. >> you also want domestic demand in your country. >> this will depend on the economic growth. it will depend on fostering internal consumption. redistribution will be more just. that is why we have fiscal reforms more progressive than we had before.

it is charging more taxes from those who make more. we also have the budget investing more in social growth and to the less favored sectors. >> when will the people of mexico feel that? when will they know the impact? >> the most anxious, and the person that most desires for this to happen as soon as possible is myself, the president of mexico, yours truly. this is not a personal accomplishment. this is the accomplishment of a team. this is the accomplishment of a democracy that has allowed for this to happen. >> everybody says to me when i come to mexico city, it is about the execution, it is about the implementation. are the people involved that you

convinced to join you in a pact for mexico, are they equally as committed to the implementation of the significant reforms? >> it is evident that the secondary legislation which is being debated, it will soon be passed. there should be consistency in terms of what the political forces have supported. i hope there is consistency. the support we have had will be maintained for the due processing. this will also -- there is a lot of responsibility on the government of mexico, the state governments as well, for the implementation of the reforms. the greatest responsibility is in the government at all levels

and very especially in the federal government. >> it is fair to say that the world is looking at your energy reforms. this is a dramatic thing that hasn't happened in 70 years in mexico. to tackle that was a significant move. tell me how it will work. >> we started doing a very clear diagnosis. mexico is a country which is facing the great opportunity of generating energy through other sources. because of geographical location and natural wealth, we have a capacity of generating. however, we haven't done it. we launched another new reform which allows two things fundamentally. one, it preserves and maintains for the mexican state the ownership. at the same time, the second

element of this reform, it fosters the possibility for the expectation of hydrocarbon and the generation of other sources of energy to have the participation of the private sector, which opens the fan of opportunities. it opens the space for us to have more investment in the sector and to generate more jobs. >> so you will allow foreign companies to come to the mexican oilfields even though ownership remains with the state of mexico? >> that is right. the reform will make it possible for foreign or national investment in the sector. the state maintains the ownership. those that are extracting resources will have to pay for

that extra action. the state -- additionally, i think this makes it possible. the great company that it is and will continue being, will have to face competition. >> so they have to become more efficient. they have to restructure. >> yes, they definitely do have to be more efficient. with more cost-benefit for the population. the population sees more competition being generated. there is access to differentiated products that will be competing. this is a great advantage for the mexican population. this will also allow us to increase our energy security,

especially in natural gas production. we know we have natural gas. we are self-sufficient in natural gas. we can supply household, national industry. if we want to generate more jobs, we have to count on this energy. >> do you believe the scandal has affected this at all? >> that was a private issue of the supplying company. the problem was fraud. fraud of private companies. information. it doesn't directly involve the oil company. >> with respect to telecommunications, in restructuring telecommunications

and creating more competition and relieving what some people believe is a monopolistic circumstance, you are taking on your wealthiest citizens in mexico. carlos slim, he clearly will fight back. how will this battle unfold? >> the telecommunications reform is devoted to opening the sector for more competition. we have to make sure -- there are three fundamental objectives. first, more competition in television services, telephony services, and more internet coverage throughout mexico. on the other hand, the spirit of the telecommunications reforms is for these three services to be delivered through the competition of those participating in the sector.

it is fundamental to have -- to allow us to have even competition for the benefit of users who watch television, use the telephone. for the benefit of small and medium-sized enterprises. they could not count on efficient services that are fundamental to increase their product. this is the impact of the telecommunications reform. it is making sure that this competition will have an impact on the growth of the economy of our country. >> on education, tell me what you want to do. you have taken on the powerful head of the teachers union, who

is now in jail i understand. what is it you want to do in education? >> education, i think we would have to accomplish two fundamental objectives. first, very clearly state that the state is responsible for the country's education. the mexican state is responsible for giving the guidance of education in our country. second, in the past, something that was the fundamental objective of the post revolutionary period of our country, we were a country with a high degree of illiteracy. there was no education coverage. this objective in the 21st century should be expanding of this coverage which is now

covering the basic levels, about 97%, but quality education. this is exactly what the reform is. it vindicates the guidance of public education. second, to make sure there is more quality education. >> back to the question of implementation. it has been delayed. what is the timetable for implementation of these reforms across the board? to get the secondary legislation, to get the execution going, the timetable. >> education reform has been materialized in terms of its secondary legislation. the legislation for sees the

timing. this telecommunications reform right now is being debated in congress. and according to the congress and the speakers of the congress, we foresee that in the following weeks we are going to be holding a debate on telecommunications and we also foresee in terms of what congress has expressed that it will be in the next two or three weeks that they are holding the debate and discussion. two reforms -- i am talking about the secondary legislation. it is not just one law. they are derived from different ones. this is why this process is

complex. >> why do you think your popularity has declined? >> to a great extent, this is due to the transformation the country has decided to implement facing different groups that are being affected. i recognize that i have the firm and full conviction that these reforms will give mexico prosperity for its population and an opportunity for mexico to have sustained economic growth. >> you can overcome those forces that are pushing back? you are convinced? >> i would daresay, charlie, that i am not striving to be a popular president. i am striving to transform mexico. the margin in terms of

popularity, the important thing is to ensure the reforms we have accomplished. i think the judgment of history will be what really takes place. >> beyond your time. >> i am not occupied really in working for the popularity of the president. i am occupied working so that mexico will have a future with more equality, more jobs and sustained economic growth. ♪

>> the united states, as you mentioned, 80% of your exports go to the united states. 50% of your imports come from the united states, correct? characterize the relationship today between the united states and mexico. >> the relationship of mexico with the united states has been

so intense, i would daresay this relationship of the two countries at the institutional level is at one of its finest moments. there is good cooperation in topics that are common to our security, for instance. border security. it is working to increase productivity of our economies. the free trade agreement will give us economic growth, which is the objective of both countries, and more development for our society. our relationship is very intense. let me give you data here. i don't think many know this. about 80% of our exports go to the united states. mexico is the second most important destination of u.s. exports. what does this mean?

practically, the u.s. sales to our country are the same as to other countries. more than what it sells together to russia, china and india. its sales to mexico are higher than all those countries put together. let me also tell you, value chains and the economic relationship between mexico and the united states can be clearly appreciated. each dollar mexico exports to the u.s. as a content of american production of $.40. our economies are well integrated. there is a benefit for both countries. >> do you feel the united states has been a full partner for mexico?

>> undoubtedly. the u.s. has been a strategic partner for mexico. a very important partner. we are the second most important destination for exports that generate jobs. about 6.5 million jobs have been generated in the united states, derived from the free trade agreement we have signed with the three countries including canada but particularly in the relationship between the u.s. and mexico. >> before i turn to immigration, your friends in brazil were upset about disclosures of the national security agency. i didn't hear mexico complain. are there questions about spying on mexico? >> clearly, we pointed out in

the face of this situation, the spying or the u.s. government listening to what we were saying, we sent a diplomatic note. i had the opportunity to talk to president obama about it and ask for an explanation. this is exactly what happened. what i clearly said is that the relationship for our countries will not be -- because we are saying things we shouldn't be saying or having a reaction. truly, to have a relationship of respect and seriousness. this is why i said that the relationship is going through a favorable moment. we have found the response to the relationship in cooperation for different issues.

it is a relationship of great respect between both nations. >> clearly, mexico is upset about the number of guns coming from america across the border. >> i think this is an issue that undoubtedly mexico has said, it has manifested its position. as long as we continue to have this indiscriminate trade of weapons -- i understand this is domestic policy of the united states, however this is affecting mexico. this has meant that criminal groups are arming themselves with weapons that are coming in illegally to mexico. we have established a cooperation agreement.

i think the united states will have to take internal measures. the sale of weapons is generating problems. in this respect for relationship, there is an issue that the u.s. will have to define its domestic policy and avoid having illegal trafficking of weapons along our border lines so we can fight against this together. each of the parts will have to do its own responsibility on each side of the border. this practice is affecting mexico and other parts of the world. >> when i interviewed your predecessor, he constantly talked about the war against the drug cartels and the cooperation with the united states.

you have had some success but you seem to want to focus on other aspects of mexico and not the battle with the drug cartels. give me a sense of where you think you are in eliminating or reducing the violence. >> the security of mexico is a priority for my government. i have said this from the beginning of my administration as well as when i took office in my inaugural address. this is one of the main objectives of my government. this is an issue that has occupied the attention of the government. there is no government that can resign to this. there are efforts to have better

institutions. we have also reinforced the strategy in terms of security and justice. let me simply refer to figures that speak for themselves. they are quite encouraging in terms of the progress made in this year-and-a-half. the number of homicides recorded this year, almost 25% less than in the same period in the year 2012. homicide associated to organized crime, i can tell you we have detained, apprehended various people of drug cartels.

they are now in jail and they are going through the legal process. they are being prosecuted. there are more heads of drug cartels detained and less homicides in mexico. >> which raises an important question. the former president said, what are the challenges of mexico, rule of law. rule of law goes to the heart of the judicial process and corruption. where is that? creating a rule of law that eliminates corruption? >> undoubtedly, it is allowing to ensure conditions of more tranquility for mexico. also, an improvement in legal reforms and justice implemented in mexico. mexico is now going through criminal justice, it is going

through a written process and mainly oral trials that will allow us to have more transparent and open justice as well as more prompt, faster justice to fight impunity. mexico in the year 2016 will have a criminal justice system which is more efficient, that will allow us to fight impunity and ensure justice is served. something which is reinforcing this, it has to do with the reforms, there is going to be a single criminal code in mexico. this will allow us to look at the different processes and reinforce the objective of ensuring law enforcement, for it

to be prompt, expeditious and efficient. >> immigration. there is much concern in america on immigration policy and much debate. there is a question of immigration to the united states of young children coming from central america. the question that raises is, are you doing something about your southern border to make sure the government is not looking the other way, is not corrupt? >> it would seem this is a new issue, a new topic. it has become even more relevant as of the growing numbers of unaccompanied children who are crossing the northern border of our country into the united states. this has caused people's attention.

what is different from the past is the increasingly growing number of children. it is almost a twofold increase in the number of children trying to reach the united states. mexico has perhaps a good practice in which it has officials to detail those children who are crossing our territory, who are coming from central america. when they are repatriated, they are not only sent to their place of origin, but they are accompanied by immigration officials. mexico has shelters where it cares for children who are trying to cross the border. mexico is still reinforcing this

policy. this high number we have seen in recent months -- this is something that just started happening recently. this has led us to have a dialogue and agreement with the u.s. government and the central american countries. this is where the highest number of children come from, central america. just recently we had a high-level meeting in guatemala. the vice president of the u.s. was there. the mexican minister of interior was there. presidents of the central american region were also participating. we are all about to take upon ourselves the responsibility so that gangs of organized crime are not using these minors and

misinforming the population and encouraging a higher number of migrants through mexico to the united states. we have to warn society to avoid this from happening. we have set forth protocol mechanisms to care for these children that are trying to cross the border. we are discouraging this migration of children. most of the time, they are victims of the abuse of criminal gangs that are taking migrants to the united states. >> do you think the immigration policy can be achieved so there is not a flight from your country across the border to america?

>> we have seen the process that the united states is following on immigration reform. i think it is something desirable. this is something that should happen for all those who arrived illegally in the united states. the united states is a country that has grown from great migrations that took place in the past. mexico has been watching this process. we want to prosper, but this is the internal policy of the united states. from mexico to the u.s., the number of mexicans trying to cross the border to reach the united states is lower.

the flow from central america, that is what we mainly see. these reforms we have mentioned so much will give mexico greater opportunities for its population. jobs and development will inhibit the decision of people that want to migrate. they can do it because of their own decision, not because of necessity. on this issue of migration, i insist it would be injustice for the u.s. to recognize millions of migrants who are not contributing to the development and wealth of that country. >> people say it has been a party that had power for a long time until essentially the mexican people said, enough. is the party that you are the

leader of a different party, or do the people who used to be powers in that party still have power in the party that is in power today? >> i can tell you without any doubt that the party of the 21st-century is different from that of the 20th century or the first half of the 20th century were the first three quarters of the 20th century. mexico is also different. today we are a country which is more democratic, with more political competition. this means that the parties have to reconfigure themselves inside. this has happened in my party. first of all, there is a new generation that has taken upon itself the responsibility. i can also say the same has

happened with other actors of the political parties. today we cannot say of the parties that they are the same as they were in the 20th century. rather we would have to concede that the political parties of our country -- first of all, they revitalize and give character and strength to our democracy. it is through the political parties that we give the space of participation within the political activity. with the political reforms, we have independent candidacy. we are opening the opportunity to participate in politics and the condition which is part of democracy is competition.

through a political competition, they want to have different responsibilities, public responsibilities, the president of the country, governor or legislator. this gives us a lot of strength. our country has enjoyed great political stability. it has seen changes in the presidency of the country, political stability and social order as well. being able to tell you this history of mexico, there are not many countries in the world that can really be proud of having the strength mexico now has. we are a more democratic country. we have a more demanding society. we have political plurality.

at the same time, sometimes it does polarize opinions. >> you believe all the resistance to mexico becoming what some had hoped it would be based on the reforms you suggested, you firmly believe are achievable and doable? >> i think the moment for mexico will be in the development and growth that the world can see. this is going to be possible thanks not only to the reforms, but the reforms that have already been made, and the legal framework that were passed by the majority of the political forces of the country. we are now working on the implementation. all this will go right into a

process. at the end of the day, we are going to see greater development, more economic growth, the generation of more jobs and attraction of more productive investment for the country. that is the mexico i think we are going to be seeing year after year with the passing of time. among the most important things that we have done, mexico decided to change. mexico decided the path of transformation. with the participation of all the political expression and the passing of a very important reform, mexican society will find perhaps answers that are not sufficiently explained now

on these reforms. it will find those answers in the benefits in time. energy costs will go down. more investment will be coming to our country. there will be more competition in telecommunications. the benefits we are going to be getting out of all this, mexican society will be feeling those benefits, will perceive those benefits gradually as of the implementation of these reforms. >> mr. president, thank you. >> it has been a pleasure talking to you, charlie. thank you so much for coming to mexico for us to have this meeting. it is a pleasure. >> we will come back. thank you. my conversation with the president of mexico. thank you for joining us. see you next time. ♪

>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover technology, innovation, and future of business. i'm emily chang. the federal trade commission has sued t-mobile, accusing them of adding bogus charges. t-mobile placed unauthorized third-party charges on bills dating back to 2009 in a practice known as cramming. the t-mobile ceo calls the complaint unfounded and without merit. google is boosting its music services. the service select songs for users based on a person's activities.