RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/97
15 March 2002
(02-1221)
Trade Policy Review Body
TRADE POLICY REVIEW
MEXICO
Report by the Secretariat
This report, prepared for the third Trade Policy Review of Mexico, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from the Government of Mexico on its trade
policies and practices.
Any technical questions arising from this report may be addressed to Mr. Javier
Suárez 739 5453 and Mr. Raymundo Valdés 739 5346.
Document WT/TPR/G/97 contains the policy statement submitted by the
Government of Mexico.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Mexico.Mexico WT/TPR/S/97
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS ix
(1) I NTRODUCTION ix
(2) E CONOMIC DEVELOPMENTS ix
(3) T RADE POLICY DEVELOPMENTS x
(4) M ARKET ACCESS FOR GOODS x
(5) O THER MEASURES AFFECTING TRADE xi
(6) S ECTORAL POLICIES xii
I. THE ECONOMIC ENVIRONMENT AND TRADE 1
(1) O VERVIEW 1
(2) R ECENT ECONOMIC DEVELOPMENTS 1
(3) P UBLIC FINANCES 2
(4) M ONETARY AND EXCHANGE POLICY 5
(5) B ALANCE -OF-PAYMENTS AND TRADE AND INVESTMENT FLOWS 6
(i) Overview 6(ii) Developments in merchandise trade 8(iii) Trade in non-factor services 9(iv) Foreign direct investment 9
(6) O
UTLOOK 9
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 10
(1) O VERVIEW 10
(2) F ORMULATION AND APPLICATION OF TRADE POLICY 10
(i) General legal and institutional framework 10
(ii) Trade policy formulation and objectives 12
(iii) Principal trade laws and regulations 13
(3) F OREIGN INVESTMENT REGIME 13
(i) Policy objectives and legal framework 13(ii) Restrictions to foreign investment 14
(iii) International engagements and relations 15
(4) I
NTERNATIONAL RELATIONS 16
(i) World Trade Organization 16(ii) Preferential agreements 21
III. TRADE POLICIES AND PRACTICES BY MEASURE 28
(1) O
VERVIEW 28
(2) M EASURES DIRECTLY AFFECTING IMPORTS 28
(i) Registration and documentation 28(ii) Customs valuation 30(iii) Preshipment inspection 31
(iv) Rules of origin 31
(v) Tariffs 32(vi) Other charges affecting imports 39(vii) Minimum import prices 41(viii) Import prohibitions, restrictions, and licensing 41WT/TPR/S/97 Trade Policy Review
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Page
(ix) Regulations, standards and sanitary requirements 42
(x) Contingency measures 49(xi) Other measures affecting imports 56
(3) M
EASURES DIRECTLY AFFECTING EXPORTS 56
(i) Registration, documentation, and certification 56
(ii) Export taxes 56(iii) Minimum prices 56(iv) Export prohibitions 56(v) Export restrictions and licensing 57
(vi) Export subsidies 57
(vii) Duty and tax concessions 57(viii) Export-performance requirements 59(ix) Export-processing zones 59(x) Export finance, insurance, and guarantees 60(xi) Export promotion and marketing assistance 61
(xii) Measures applied in third markets 61
(4) M
EASURES AFFECTING PRODUCTION AND TRADE 61
(i) Competition policy 61(ii) Marketing and pricing arrangements 64(iii) Incentives 65(iv) Production controls 68
(v) Role of state-owned enterprises 68
(vi) Government procurement 69(vii) Local-content schemes 71(viii) Trade-related investment measures (TRIMs) 71(ix) Adjustment assistance 72(x) Free-trade zones 72
(xi) Intellectual property rights and innovation 73
IV. TRADE POLICIES BY SECTOR 82
(1) O
VERVIEW 82
(2) A GRICULTURE 82
(i) Main features 82(ii) Policy objectives and instruments 84(iii) Indicators of assistance to agriculture 89
(3) E
NERGY 90
(i) Petroleum 92
(ii) Natural gas 94
(iii) Petrochemicals 95(iv) Electricity 96
(4) M
ANUFACTURING 99
(i) Main features 99(ii) The in-bond or maquiladora  industry 101
(iii) Policy objectives and instruments 103
(5) S
ERVICES 105
(i) Financial services 105(ii) Telecommunications 112(iii) Transport 117(iv) Professional services 121
REFERENCES 123
APPENDIX TABLES 125Mexico WT/TPR/S/97
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CHARTS
Page
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Tariff escalation for manufactured products, May 2001 35
III.2 Share of tariff lines subject to technical regulations, by HS Section, May 2001 46III.3 Number of anti-dumping investigations initiated and duties imposed, 1987-01 52III.4 Anti-dumping investigations initiated between January 1996 and November 2001,
(Number of cases) 53
III.5 Distribution of ad valorem  anti-dumping duties, March 2001 54
III.6 Trade in selected IPR-intensive products, 1990-00 79
IV. TRADE POLICIES BY SECTORIV.1 Structure of the Mexican financial system, December 2001 107
TABLES
I. THE ECONOMIC ENVIRONMENT AND TRADE
I.1 Basic macroeconomic indicators, 1997-01 2
I.2 Consolidated public sector finance, 1997-00 4I.3 Debt indicators, 1997-00 5
I.4 Balance-of-payments, summary 1997-01 7
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVESII.1 Status of notifications made by Mexico to the WTO, October 2001 17
II.2 Dispute-related WTO matters involving Mexico, 1995-October 2001 19II.3 NAFTA dispute settlement procedures involving Mexico, 1994-September 2001 23
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Summary analysis of Mexico's tariff, May 2001 33
III.2 Tariff items for which applied rates approximate or exceed bound rates 36III.3 Average tariffs under Mexico's main preferential agreements, May 2001 40III.4 Products subject to the import licensing system (November 2001) 43III.5 Main legislation on anti-dumping and countervailing measures 50
III.6 Review of Mexican AD and CV determinations under Chapter 19 of NAFTA, July 2001 55
III.7 BANCOMEXT's export financing by sector, 2000 60III.8 CFC enforcement activity, 1997-00 65III.9 Fiscal incentives to promote economic activities 67III.10 Overview of IPR protection in Mexico, 2001 75III.11 Patents:  applications and patents granted, by nationality and technology field, 1991-00 76
III.12 Other industrial property:  applications and registrations granted, 1991-00 77
IV. TRADE POLICIES BY SECTORIV.1 Ratio of NAFTA tariff quota imports to domestic productions, 1988-99 85
IV.2 Direct payments under the PROCAMPO programme, 1996-01 86IV.3 Budgetary outlays allocated to the Alliance for Agriculture programme, 1996-01 87IV.4 Marketing support programme, 1996-00 88
IV.5 Producer subsidy equivalents and total support estimate, 1996-00 90WT/TPR/S/97 Trade Policy Review
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Page
IV.6 Selected indicators for the petroleum and gas industry 92
IV.7 Selected indicators for the electricity industry, 1996-00 97IV.8 Manufacturing GDP, 1990-01 99IV.9 Productivity indexes in the manufacturing sector 100IV.10 Maquila  industries, structural indicators, 1990-01 102
IV.11 Main financial sector laws 108
IV.12 Total credit granted by commercial banks, by sector, 1997-01 109
IV.13 Commercial banking soundness indicators 110IV.14 Mexico's insurance market, January-September 2001 111IV.15 Structural and performance indicators of Mexico's telecommunications sector, 1995-01 113IV.16 Main indicators for the air transport sector, 1996-01 117
IV.17 Main indicators of the maritime transport sector, 1997-01 119
APPENDIX TABLES
I. THE ECONOMIC ENVIRONMENT AND TRADE
AI.1 Merchandise import by product, 1997-00 127
AI.2 Merchandise exports by product, 1997-00 128
AI.3 Merchandise imports by trading partner, 1997-00 129AI.4 Merchandise exports by trading partner, 1997-00 130AI.5 Foreign direct investment in Mexico by sector, 1994-00 131AI.6 Foreign direct investment in Mexico by origin, 1994-00 131
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Main characteristics of Mexico's preferential rules of origin 132
AIII.2 Products subject to special export provisions 136AIII.3 Federal programmes supporting industrial activity, by entity and type of measure, March 2001 137AIII.4 Selected industrial policy programmes maintained at the State level 138AIII.5 Miscellaneous financial support mechanisms 140
AIII.6 Training, technical assistance, and consulting services programmes 141
AIII.7 Advice services 143
AIII.8 Other industrial promotion programmes 143AIII.9 Mexico's participation in international IPR agreements 144AIII.10 Mexico's IPR enforcement regime 145AIII.11 Mexico's IPR legislation, 2001 146
IV. TRADE POLICIES BY SECTOR
AIV.1 Production, trade, and consumption of livestock products, 1996-01 147
AIV.2 Production, trade, and consumption of basic grains and oilseeds, 1996-01 148AIV.3 Manufacturing sector:  tariff protection and trade 150AIV.4 Summary of Mexico commitments under GATS 152Mexico WT/TPR/S/97
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GLOSSARY
(The translation into English should not be considered official)
Accord establishing the rules for determining the
country of origin of imported goods and the provisionsfor their certification with regard to countervailingdutiesAcuerdo por el que se establecen las reglas para la
determinación del país de origen de las mercancíasimportadas y las disposiciones para su certificación enmateria de cuotas compensatorias
Alliance for Agriculture Alianza para el Campo
Animal and Plant Health National Commission Comisión Nacional de Sanidad Agropecuaria, CONASAG
Capacity and Energy Purchase Contracts Contratos de Compra de Capacidad y Energía, CCCE
Central Light and Power Luz y Fuerza del Centro, LFC
Department of Agriculture, Rural Development,
Fisheries and FoodSecretaría de Agricultura, Ganadería, Desarrollo Rural,
Pesca y Alimentos
Department of Communications and Transportation Secretaría de Comunicaciones y Transportes
Department of Energy Secretaría de Energía
Department of Foreign Affairs Secretaría de Relaciones Exteriores
Department of Health Secretaría de Salud
Department of National Defense Secretaría de la Defensa Nacional
Department of Public Education Secretaría de Educación Pública
Department of Social Development Secretaría de Desarrollo Social
Department of the Comptroller General andAdministrative DevelopmentSecretaría de la Contraloría y Desarrollo Administrativo
Department of the Economy Secretaría de Economía
Department of the Environment and Natural Resources Secretaría de Medio Ambiente y Recursos Naturales
Department of the Treasury and Public Credit Secretaría de Hacienda y Crédito Público
Department of Tourism Secretaría de Turismo
Federal Consumer Protection Agency Procuraduría Federal del Consumidor, PROFECO
Federal Electricity Commission Comisión Federal de Electricidad, CFE
Federal Telecommunications Commission Comisión Federal de Telecomunicaciones, COFETEL
Foreign Trade Bank Banco de Comercio Exterior, BANCOMEXT
General Bureau of Standards and Regulations Dirección General de Normas, DGN
General Customs Administration Administración General de Aduanas
Independent Power Producers Productores Independientes de Energía, IPPs
International Trade Practices Unit Unidad de Prácticas Comerc iales Internacionales, UPCI
Law for Public Works Ley de Obras Públicas y Servicios Relacionados con las
Mismas (LOPSRM)
Mexican Popular Saving System Sistema de Ahorro Popular Mexicano
Mexican Social Security Institute Instituto Mexicano del Seguro Social
National Bank of Financial Services Banco Nacional de Servicios Financieros
National Development Bank Nacional Financiera, NAFIN
National Foreign Investments Commission Comisión Nacional de Inversiones Extranjeras, CNIE
National Normalization Programme Programa Nacional de Normalización, PNN
National Savings and Retirement System Commission Comisión Nacional del Sistema de Ahorro para el Retiro,
CONSAR
National Savings Patronage Patronato de Ahorro Nacional
National Service of Health, Food Safety and Agro-foodQualityServicio Nacional de Sanidad, Inocuidad y Calidad
Agroalimentaria, SENASICA
National standardization advisory committees Comités consultivos nacionales de normalización
National Tourism Promotion Fund Fondo Nacional de Fomento al Turismo
National Water Commission Comisión Nacional del Agua
Official Journal Diario Oficial
PROCAMPO Programa de apoyos directos al campo, PROCAMPO
Programme of Marketing Support and RegionalMarkets DevelopmentProgramas de Apoyos a la Comercialización
Agropecuaria y Desarrollo de Mercados Regionales
Support Services for Agricultural Marketing Apoyos y Servicios a la Comercialización Agropecuaria,
ASERCAMexico WT/TPR/S/97
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SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Since its previous Trade Policy
Review in 1997, Mexico has become a prime
example of trade and foreign investment as
catalysts for economic modernization andgrowth.  Using international engagements as
anchors to move away from past inward-
looking policies, policymakers have induced a
virtuous circle of deregulation, structural
change, growing productivity, and higher percapita income that has been making Mexico
increasingly attractive as a trading partner
and foreign investment destination.  This
process has been driven mainly by an
aggressive policy of reciprocal liberalization,buttressed by unilateral initiatives and
multilateral commitments.  As a result, the
lion's share of Mexican trade is now governed
by the preferential rules of free-trade
agreements (FTAs).
2. Mexico's liberalization strategy has
opened a significant gap between thetreatment offered to MFN and FTA partners,
which in areas like tariffs has widened since
1997.  This raises the possibility of net trade
distortion.  Moreover, despite the broad
coverage of Mexico's FTAs, trade barriers stillhinder the access of Mexican consumers to
some of the world's most competitive products.
Certain activities remain relatively inefficient,
both sheltered from competition and
handicapped by trade or investment barriers.Moving forward the reform agenda is thus
essential to maintain the impetus in Mexico's
restructuring efforts.  This in turn is a
precondition for Mexico to resume and sustain
the fast rate of economic growth required tobring its living standards nearer to those of its
closest trading partners.
(2) E
CONOMIC DEVELOPMENTS
3. Mexico's economy performed very
well between 1997 and 2000, when GDP
expanded at an annual average rate of 5.2%;
Mexican trade in goods grew at an annualaverage rate of 17.1%, the fastest amongWTO's twenty largest single Members, with
imports slightly outpacing exports.  This has
gone hand in hand with considerably
increased investment:  between 1997 and
2000, private investment grew at a annual
average rate of 10.6%.  During that period,Mexico attracted some US$44 billion inforeign direct investment.
4. Underpinning this good performance
were sound macroeconomic policies, marked
by a stable exchange rate, and falling inflation
and unemployment.  Fiscal deficits were
moderate but a better outcome might have
been desirable in view of the economy's strongperformance.  A compromise fiscal package
adopted by the Congress for 2002 is expected
to increase tax revenue, but by less than
originally sought by the Government.
Mexico's fiscal position thus remains exposedto fluctuations in petroleum revenues, and tosignificant contingent liabilities.
5. The majority of Mexico's trade now
takes place under preferential rules, with the
NAFTA remaining of paramount economic
significance.  In particular, Mexico's principal
trade partner is by far the United States, which
in 2000 supplied some 73% of Mexico'simports and attracted about 89% of its
exports.  That year, Canada was the second
largest destination for Mexican products,
accounting for some 2% of exports.  Outside
NAFTA, no individual country absorbed morethan 1% of total Mexican exports.
6. Since late 2000, in the wake of falling
U.S. demand, trade and GDP growth have
slowed, accompanied by a contraction in
employment.  The policy options open to the
authorities to address these trends appearlimited with respect to both monetary and
fiscal policies.  Resuming and sustaining
growth thus depends importantly on a
turnaround in the world economy, particularly
in the United States, and carrying out a
number of important reforms that have been
pending for years, notably in the hydrocarbonsand electricity sectors.WT/TPR/S/97 Trade Policy Review
Page x
(3) TRADE POLICY DEVELOPMENTS
7. Since its previous Review, Mexico has
made no fundamental changes to its trade
policy framework.  The Department of the
Economy (formerly SECOFI) still has main
responsibility for formulating andimplementing trade policy.  A new
administration is largely pursuing earlier
trade policy objectives, which spell out formal
links between industrial policy, economic
deregulation and export promotion.  Asuccessor trade and investment programme for
2000-06 was to be released in early 2002.
Significant improvements have been made
since 1997 in terms of transparency, notably
through various governmental bodies thatdisseminate key information, including
through the internet.
8. Mexico considers the multilateral
trading system as the main instrument for the
liberalization of world trade.  Its support for
this system has been recently very visible, for
example through Mexico's strong backing forthe launch of the Doha Development Agenda
and its offer to host the WTO's Fifth
Ministerial Conference.  Mexico accepted new
multilateral commitments within the context of
the Fourth and Fifth Protocols to the GATS,on basic telecommunications and financial
services, which entered into force in February
1998 and March 1999, respectively.
9. Awaiting the outcome of broader
liberalization initiatives, Mexico's main
avenue to open its trade and investment
regimes has been the negotiation of FTAs.
Mexico acknowledges that the advantagesimplicit in FTAs are of a temporary nature,
and hence no substitute for improving the
competitiveness of its economy.  As is the case
for other Members following similar
strategies, the large and growing number ofMexico's preferential agreements can raise
concerns about complexities resulting from the
application of differing regimes, and their
effect on trade patterns.
10. Since 1997, Mexico has entered into
new FTAs with Chile, the European Free
Trade Association, the European Union,Israel, Nicaragua, and the Northern Triangle
(El Salvador, Guatemala, and  Honduras),
raising to more than 30 the number of
countries with which it has FTAs.  In late
2001, Mexico was considering the negotiation
of FTAs, or was already doing so, with Japanand Singapore, among others.
11. Mexico's trade policy remains closely
associated with the promotion of foreign
investment, rules for which have been part of
both its multilateral and preferentialinitiatives.  With the exception of the
agreement with Israel, all of Mexico's FTAs
contain investment provisions that grant
investors additional protection.  Since 1997,
Mexico has also undertaken importantunilateral steps to open up to foreign
investment various service activities, notably
financial services and telecommunications.
However, a limited number of areas remain
off-limits to all private capital, are either
entirely reserved for Mexican capital, or
require majority Mexican capital, or aresubject to prior approval for foreign
investment to exceed 49% of total capital.
12. Mexico has been involved in only a
few disputes before the WTO.  Most
complaints against Mexico have related toMexican anti-dumping practices;  a complaint
was also lodged against Mexican practices in
telecommunication services.  With Mexico as
complainant, all but one case has also been
related to anti-dumping.
(4) M
ARKET ACCESS FOR GOODS
13. Since its previous Review, Mexico has
implemented MFN tariff increases that raised
the simple average applied rate by some three
percentage points, to 16.5% in 2001.  As aresult, and in contrast with the situation
prevailing in 1997, Mexico's tariff structure
for 2001 showed clear tariff escalation.  The
increase in MFN rates, and reductions in
preferential tariffs, has also widened the gap
between the treatment granted to imports from
MFN and preferential sources.  Tariffprotection for agricultural products is
substantially higher than for other products,Mexico WT/TPR/S/97
Page xi
with applied MFN rates on a small number of
products slightly exceeding bound rates.
Mexico grants at least MFN treatment to all
its trading partners.
14. The number of different tariff-quota
schemes adds complexity to Mexico's importregime.  Mexico applies tariff quotas on
several agricultural products, with most
quotas reserved for specific countries.  In
addition, other products may carry a reduced
MFN tariff provided they have a quotacertificate;  this is aimed at guaranteeing
supply when domestic production is
insufficient.  Mexico also maintains tariff
quotas for certain imports from preferential
partners, and for some agricultural productsimported under a special border tariff regime.
15. The basis for customs valuation varies
according to the origin of imports:  f.o.b. for
imports from NAFTA partners, and c.i.f. for
other imports.  All of Mexico's FTAs contain
specific rules of origin.  Non-preferential rules
of origin apply to products subject to anti-dumping and countervailing duties to prevent
circumvention of such duties;  the procedures
to apply these rules vary by product and
originating country.
16. Mexico maintains import permits for
sensitive products for reasons of national
security, public health, and protection of
domestic industries.  In 2001, imports from
MFN sources subject to permit included
petrochemicals;  vehicles;  and used tyres,machines, clothing, and office machines.  For
used vehicles and machines, permits are
issued only when the foreign product has no
domestically produced substitute.  Since 1998,
Mexico has used an import licensingmechanism to collect statistics on the price of
specific goods from certain countries before
the importation takes place.
17. Mexico is an active user of
contingency measures, mainly anti-dumping.
As at March 2001, there were 90 anti-dumping
duties applied on a wide range of products,mainly of Chinese origin.  Particularly since
2001, the number of anti-dumping casesinitiated has dropped significantly, thus
lessening earlier concerns that these measures
could become major trade barriers in Mexico.
(5) O
THER MEASURES AFFECTING
TRADE
18. In part to offset the anti-export bias
resulting from trade barriers on imports,
Mexico promotes exports through various duty
and tax concessions, one of which has been
notified to the WTO as an export subsidy.
Under these schemes, unless otherwisespecified by an FTA, imported inputs
incorporated into export goods are not subject
to tariffs;  in addition, Mexico promotes
exports through various administrative tax
facilitation schemes.  More than 90% ofMexican exports are undertaken by firms
benefiting from such schemes.  Since Mexico's
previous Review, substantial changes have
been made to restrict their use for exports
covered by the NAFTA.  Under the FTAs
negotiated with the EFTA countries and the
European Union, Mexico should amend in2003 its promotion programmes covering
exports to those regions.
19. Mexico also operates numerous
programmes in support of selected activities.
In general, support is provided throughfinancing facilities, mostly channelled through
development banks or public trust funds, or in
the form of tax concessions.  Certain tax
concessions are contingent on meeting
national-content requirements, or are grantedonly if no domestic substitute is available.
In 2001, Mexico requested and obtained an
extension for the elimination of its WTO-
inconsistent TRIMs in the automotive sector.
20. Mexico has not signed the Plurilateral
Agreement on Government Procurement and it
uses public procurement to support domestic
activities, particularly through price
preference margins and local-content
requirements.
21. From 1 January 2000, the TRIPS
Agreement applies fully to Mexico, which hadtaken steps in advance to implement most ofWT/TPR/S/97 Trade Policy Review
Page xii
the Agreement's provisions.  Mexico's efforts
to improve IPR protection appear to have paid
off in the form of considerable technology
transfers.  Mexico also has an active and
growing trade in IPR-intensive goods such as
information technology products,pharmaceuticals, beverages, and "cultural
goods".
(6) S
ECTORAL POLICIES
22. In agriculture, while many activities in
Mexico have modernized and benefited fromincreased access to foreign markets, notably in
the United States, others remain small-scale
and mainly oriented to self-consumption.
Overall, labour productivity in the sector is
well behind the national average.  Largely toincrease the participation of the private sector
in the commercialization of agricultural
products, Mexico has introduced important
institutional changes since 1997, including the
elimination of the state firm previously
responsible for milk imports.  Mexico
maintains various programmes designed toprovide direct income support to farmers and
to promote their productivity and
competitiveness.  Indicators of assistance to
agriculture have increased substantially since
1997, mainly as a result of low internationalprices.
23. The energy sector remains largely
under state control, as constitutional
provisions restrict private participation in
strategic areas such as the exploitation ofhydrocarbons and the supply of electricity to
the public.  The capital-intensive nature of
petroleum and electricity projects means that
these two industries alone draw close to 57%
of public sector investment.  In view ofMexico's fiscal constraints and to bring in the
investment required to meet rapidly rising
domestic demand, the Government is seeking
to increase private participation in the energysector while retaining its control of the state-
owned companies that dominate the sector.
Addressing the long-standing structural
problems of the electricity and hydrocarbons
industries is of vital economic importance but
has faced strong resistance from entrenchedinterest groups.
24. The manufacturing sector has
confirmed its crucial role as a key catalyst for
economic growth, its expansion having been
closely tied to its ability to compete in foreignmarkets.  It has also benefited from strong
government support through special trade and
investment regimes.  The close interlocking of
the Mexican manufacturing sector with
production chains in the United States hasbrought about considerable benefits;  it has,
though, exposed the sector to U.S. cyclical
downturns, as evidenced by the significant
contraction of manufacturing activity since
late 2000.
25. In the services sector, important
changes have been made to the legal andinstitutional framework, often secured or
otherwise linked to Mexico's multilateral and
preferential liberalization initiatives.  The
degree of state involvement has continued to
decline in recent years.  Increased competitionand growing foreign participation have gone
hand-in-hand with major adjustments to the
market structure of key activities, notably
financial and telecommunications services.
However, competition policy concerns havearisen in recent years in the
telecommunications market, and in domestic
transport, which remains largely closed to
foreign participation.