WT/TPR/S/29 Trade Policy Review
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10. Economic liberalization andadministrative deregulation arebeing complemented bychanges
"toensure thattheruleoflawprevails inMexico"; thishasincluded strengthening theJudicial Branch,
providing forgreater judicial independence, aswellasimproving thepublic security system andthe
lawenforcement institutions.3
(ii) Structure oftrade policy formulation
11. There havebeennomajor modifications tothestructure oftrade policy formulation since the
previous Trade Policy Review in1993, although several trade-related agencies haveundergone internal
reorganization. TheFederal Executive hastheauthority tocontrol theflowofimports, exports and
goods intransit, andtoconduct international tradenegotiations. TheMinistry ofTrade andIndustrial
Promotion (SECOFI) isstillincharge oftradepolicy: under theForeign Trade Actof1993, SECOFI,
inconsultation withCOCEX (seebelow), isresponsible forproposing tariffchanges, establishing trade
controls andrulesoforigin, granting export andimport licences andquotas, conducting tradedefence
investigations, advising Mexican exporters affected bysimilar investigations abroad, coordinating
international trade negotiations, andestablishing export promotion mechanisms. SECOFI ’scurrent
organization isshown inChart II.1.
12. The1993Foreign Trade Actcreated theForeign Trade Commission (COCEX) asanauxiliary
bodyintheforeigntradepolicyformulationprocess,replacingtheTariffsandForeignTradeCommission
(CACCE). COCEX comprises representatives ofSECOFI, theCentral Bank, theFederal Competition
3MinistryofForeignAffairs,PressBulletin,August1996,URL:http://www.quicklink.com/mexico/g0b96ags/
ezreform.htm.Mexico WT/TPR/S/29
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Commission, andtheMinistries ofAgriculture, Environment, Finance, Foreign Affairs, Health, and
SocialDevelopment;SECOFIpresidesovermeetingsoftheCommission.Otherfederalorstateagencies
maybeinvited toparticipate inmeetings when COCEX isdiscussing specific sectoral issues within
theirareas ofresponsibility. COCEX works asaconsultative inter-agency body toallentities ofthe
Federal Public Administration inmatters concerning trade policy formulation, including thereview
ofproposed andexisting regulations ontariffandnon-tariff import measures, rulesoforigin, customs
measures,exportrestrictions,andcontingencymeasures.COCEXisresponsibleforissuingnon-binding
opinions andrecommendations onthose matters, forwhich itmayalsoholdpublic consultations with
interested parties. Tochange tariff ratesCOCEX mustsubmit recommendations tothePresident of
theRepublic, towhom theFederal Congress hasdelegated theauthority toregulate ontrade. Ifsuch
recommendations areaccepted, thechanges areissued through decrees published intheOfficial Journal.
13. Thecoordination ofexport promotion activities isundertaken bytheFederal Executive with
theassistance oftheJointCommission forExport Promotion, which iscomposed ofpublic agencies
andprivate sector organizations.4TheCommission ischarged withtheanalysis, evaluation, design
andimplementation ofexport promotion policy guidelines andinstruments, aswellasthecoordination
ofprivate andpublic sector export promotion activities. TheCommission alsoparticipates inthereform
ofexport regulations.
14. Asnoted intheSecretariat report fortheprevious Review, Mexico hasnoindependent bodies
toprovideformalpublicadvicetotheGovernmentongeneraleconomicpolicies,includingtradepolicies.
However, theGovernment consults closely withtheprivate sector ontrade policy formulation under
schemes initially established forthenegotiation andmonitoring offreetradeagreements. Particularly
important inthisrespect aretheAdvisory Council forInternational Trade Negotiations, which has
22rural, labour, enterprise andacademic representatives; andtheprivate sector ’sCoordinating Body
ofForeignTrade(COECE)whichhasrepresentationfromtheagricultural,industrialandservicessectors.
15. Within thecontext oftheIndustrial Policy andForeign Trade Programme (PPICE -section (iv)
below) anumber ofprogramme evaluation mechanisms operate onthebasis ofclose collaboration
between theauthorities andtheprivate sector. Thetwomain mechanisms aretheProductive Sectors
Programmes andtheNational Council forMicro, Small- andMedium-Size Enterprises. ThisCouncil
wasestablished inMay1995toformulate export promotion strategies; study, design, coordinate and
implement support measures formicro, small- andmedium-size enterprises; andencourage alliances
between these andlarger enterprises tofoster vertical integration. SECOFI presides overmeetings
oftheCouncil, inwhich other public agencies, aswellasprivate sector organizations participate when
appropriate. Several elements ofthePPICE were theresult ofwork undertaken bytheCouncil.
(iii) Trade policy objectives
16. Unilateral trade liberalization wasanimportant element ofthestructural transformation
programmeundertakenbyMexicointhemid-1980s,andtheauthoritiesacknowledgethatfurtherbenefits
fromtariff elimination could beachieved through unilateral actions. Policymakers alsorecognize the
importance ofmultilateral tradeliberalization, which theyseeastheprincipal catalyst ofglobal economic
growth andaneffective method tocombat persistent protectionist trends.5
4Public agencies, members oftheCommission, comprise theMinistries ofForeign Affairs, Finance, Social
Development, Energy, Agriculture, Communications andTransport, Health, Labour, andFishing, aswellas
NAFIN andBANCOMEXT.
5GATT document MTN.TNC/40/ST/17, 20January 1994; andBlanco (1994), pp.83-84, 270.WT/TPR/S/29 Trade Policy Review
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17. Ontheother hand, Mexican policy makers believe thatmultilateral liberalization hasbeenslow
andremains threatened byprotectionist pressures, while multilateral negotiations haveproved complex
andlackpredictability. They arealsooftheopinion thatneither unilateral actions normultilateral
negotiationsarelikelytoresultintheplanned,congruentanddeepliberalizationpossiblethroughregional
negotiations.6Asaresult, while engaging inmultilateral negotiations, Mexico isalsoseeking
arrangements based onbilateral orregional negotiations.
18. Intheconduct ofitstrade negotiations, Mexico usesreciprocity asafundamental guiding
principle. Theauthorities haveemphasized thatfairer international distribution ofincome iscontingent
onliberalization withreciprocity, andthattrade partners wishing toobtain legally guaranteed access
totheMexican market willhavetogrant reciprocal access.7
19. Trade policy ismade inassociation withindustrial andsectoral programmes, andthere are
special objectives forcertain industries, notably agriculture, motor vehicles andtextiles (Chapter IV).8
TheMexican authorities havesought tofacilitate theadjustment ofthedomestic industry toamore
liberal environment through aprogramme oftariff reduction which isdesigned, according tothe
authorities, toincrease thelevelofeffective protection andprofitability during theadjustment period
byreducing protection forfinalgoods more slowly thanforinputs.9
20. Inaddition, trade policy formulation hassought tocreate therightconditions tosustain the
highlevels offoreign investment called forbyMexico ’smacroeconomic policies (Chapter I).Greater
certainty hasbeenoffered toinvestors through theestablishment ofapermanent framework oftrade
andinvestment rules embodied inawebofagreements thatguarantee thepermanence ofthe
outward-orientation taken byMexico inrecent years.10Theneedtopromote investment has,thus,
beenacatalyst fortrade liberalization.
21. Inparticular, theNAFTA isasmuch about investment asabout trade: through itMexico has
sought toattract foreign investors bybinding theopeneconomy reforms thatwerealready inplace.11
Thetwoaims arereflected inNAFTA ’sstated objectives to"...eliminate barriers totrade" and
"...increase substantially investment opportunities intheterritories oftheParties".12Bylocking in
domesticreformsandachievingdeeperintegrationwiththeUnitedStatesandCanada,Mexico’seconomy
wasexpected tobecome better integrated intotheglobal economy. Mexican policy makers alsosaw
NAFTA asavehicle toincrease theoverall competitiveness ofNorth America vis-à-vis therestof
6Blanco (1994), pp.83-84, 270.
7GATT documents MTN.TNC/40/ST/17, 20January 1994; andMTN.TNC/MIN(94)/ST/16, 12April 1994.
8Aspartofitsaccession toGATT in1986, Mexico negotiated theright tomaintain specific measures for
agriculture andtheautomotive, computer andpharmaceutical industries; measures onthelatter twohave since
been abolished.
9SECOFI (1996), p.19.
10SeeBlanco (1994), p.83,Ibarra (1995) andZebadúa (1994).
11SeePastor (1994) andWhalley (1995).
12Articles 102(1)(a) and(c)oftheNAFTA.Mexico WT/TPR/S/29
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theworld,aslabour-intensiveactivitiesinMexicowereexpectedtocomplementcapital-intensiveactivities
inCanada andtheUnited States.13
(iv) TheIndustrial Policy andForeign Trade Programme
22. Mexico’sgeneraltradepolicyobjectivesarestatedintheNationalDevelopmentPlan1995-2000.
ThePlanrequired theelaboration ofseparate programmes for(i)industrial policy andeconomic
deregulation and(ii)foreign trade andexport promotion. Instead, asingle programme, theIndustrial
PolicyandForeignTradeProgramme(PPICE),wasformulatedastheauthoritiesconcludedthatindustrial
andtradepromotionpolicieswereinseparableinthecontextofgrowingtradeliberalizationandeconomic
globalization.
23. ThePPICEseekstoaddresstheexternalchallengeposedbyinternationalcompetitionforforeign
investment andinlow-skill, labour-intensive products. TheProgramme alsoseeks toaddress the
domestic challenges arising fromtradeliberalization, which hasresulted inreduced vertical integration
inkeyindustries, andpressure onsmall firms, arising inparticular fromrapidly growing imports from
South-East Asia.
24. ThePPICE considers thatgreater competitiveness cannot result from theindividual efforts
offirms orindustries, orfrom market forces alone; thus, individual efforts must becomplemented
bythecoordinating action oftheState. Asaresult, thePPICE strategy comprises: creating conditions
forhigh, permanent profitability inexports; expanding access toforeign markets; accelerating the
development ofregionally andvertically integrated industrial groups; andencouraging "efficient
import substitution".
25. Theabove strategic objectives havebeentranslated intoeight specific policies, namely, to:
ensure macroeconomic stability andimprove thefinancial system; enhance physical infrastructure,
human capital andlegalinstitutions; promote greater vertical integration; strengthen thetechnological
infrastructure topromote industrial development; continue economic deregulation; enhance export
promotion; engage inforeign trade negotiations; andencourage market competition.
26. ThePPICE alsocallsforatariff policy thatbalances thefourobjectives ofimproving access
toforeign markets bydemanding reciprocity foranyliberalization oftheMexican market; strengthening
long-term competitiveness ofthedomestic industry byensuring itsaccess tocompetitive inputs;
promoting foreign investment; andmaintaining the"congruency" ofthetariffratesapplied todifferent
production stages.
27. ThePPICE notes thehighconcentration ofdirect exports among certain enterprises, with
10percentofexporting firms responsible for90percentofthetotalvalue ofexports. Moreover,
ahighproportion oftheinputs usedbyexporting firms areimported, which results inweak backward
linkages (seeChapter IV).Noting alsothatdeveloped countries offerawiderange ofexport promotion
schemes, thePPICE proposes better coordination ofexport efforts, andtheprovision offinancial
information andadvisory services toexport firms.
28. ThePPICE considers thattofaceforeign firms, Mexican producers musthaveaccess tocredit
under competitive conditions. Itthusproposes toincrease thelending activity ofdevelopment banks,
aswellastomodernize andintensify competition inthefinancial sector. Theproposals foreconomic
13Blanco (1994), p.274.WT/TPR/S/29 Trade Policy Review
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deregulation include revising theregulatory framework tominimize theburden ofestablishing and
operating enterprises, ensuring thatnewdispositions haveaminimal effect oncompetitiveness, and
reducing thecurrent uncertainty thatresults from obsolete commercial legislation (seealso
section (i)above).
29. Trade liberalization isseenashaving reduced thedegree ofintegration ofMexico ’sproduction
chains, assuppliers orbuyers lostground vis-à-vis foreign competitors. ThePPICE thusproposes
tostrengthen theintegration ofsectoral chains, regional programmes, andtheexchange ofinformation
among firms. Thepromotion ofproduction chains istotaketheforminthefirstinstance ofgeneral
measures, complemented withspecific measures suchasfinancial assistance to"satellite" firms. In
thisrespect, themotor vehicle industry isconsidered ofcrucial importance andspecific measures are
envisaged forthissector (Chapter IV(4)). Measures arealsotobestudied forthepromotion ofsmall-
andmedium-size enterprises; thedevelopment ofthepetrochemical, mining andagricultural industries;
andthedevelopment ofsuppliers forthepublic sector.
(v) Trade lawsandregulations
30. Themain lawsandregulations governing foreign trade inMexico include Article 131ofthe
Constitution, theForeign Trade Act,theRegulations totheForeign Trade Act,theCustoms Lawand
theGeneral Import TaxLaw. Over thelastfouryears, Article 131oftheConstitution remained
unchanged, butthefollowing newlawswereadopted (publication datebetween parenthesis): Foreign
Trade Act(27July1993), Customs Law(15December 1995, lateramended) andGeneral Import Tax
Law(18December 1995, lateramended). Other trade-related lawsissued ormodified during thesame
period include theIndustrial Property Law(2August 1994), theFederal LawonPlant Varieties (25
October 1996), theFederal Copyrights Law(24December 1996), theFederal Penal Code (amended
on24December 1996), andtheLawonMetrology andStandardization (amended on26December
1996 and19May 1997). Additional amendments andmodifications were alsomade toseveral
activity-specific statutes, asdescribed inChapter IV.
31. TheForeign Trade Actof1993 seeks toestablish abody ofrules atthefederal level that
consolidates anddefines theroleofforeign trade inMexico, enhances competitiveness, andprovides
security toeconomic agents engaged intrade. TheRegulations under theForeign Trade Actof1993
werepublished intheOfficial Journal on30December 1993. Theauthorities noted thatalthough the
current Foreign Trade Actwasadopted before theconclusion oftheUruguay Round, foreign treaties,
including theWTO Agreements, donotrequire theadoption ofdomestic legislation fortheirinternal
application (section (i)above).
(3) Trade Relations
(i) WTO andother multilateral agreements
32. Mexico wasafounder member ofICITO andacceded toGATT inAugust 1986. TheMarrakesh
Agreement Establishing theWTO wasratified bytheMexican Congress on22November 1994 and
published intheOfficial Journal on30December 1994. Under theWTO Agreement, Mexico assumed,
aspartoftheSingle Undertaking, allcommitments under theMultilateral Trade Agreements.14The
14Excluded from theSingle Undertaking arethefourplurilateral agreements ongovernment procurement,
civilaircraft, dairy andbovine meat. Prior totheestablishment oftheWTO, Mexico hadadhered tofourMTN
(Tokyo Round) Agreements: theAgreement onTechnical Barriers toTrade, theAgreement onImport Licensing
Procedures, theAgreement onImplementation ofArticle VIoftheGeneral Agreement (theAnti-Dumping Code),Mexico WT/TPR/S/29
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authorities haveindicated thatMexico plans tomake useofthetransition periods available todeveloping
countries.
33. IntheUruguay Round, Mexico accepted toreduce ceiling bindings from ageneral baseof
50percent, agreed onMexico 'saccession toGATT, to35percentfornon-agricultural products,
withcertain exceptions (Chapter III(2)).
34. Based onitsobligations under various WTO Agreements, Mexico hasmade several notifications
totheWTO; Table AII.1 contains asurvey ofnotifications made uptomid-1997. Atthattime, certain
aspects ofMexico ’snotification obligations wereyettobecompleted, including some related toimport
licensing procedures, preshipment inspection andquantitative restrictions.
35. Inastatementpreparedforthisreview,theMexicanauthoritiesindicatedthatthebenefitsderived
byMexico fromtheUruguay Round included astronger andmore predictable multilateral framework,
amore favourable business andinvestment environment andbetter market access forMexican exports
toforeign markets. Mexico alsoobtained recognition foritsautonomous trade liberalization efforts
through concessions from Asian andEuropean countries onvarious Mexican export products,
e.g.,honey, fresh flowers, fruits, coffee, orange juice, alcoholic beverages, glassandsteelproducts,
engines, computers andmotor vehicle chassis.
36. Although theauthorities believe thatMexico willbenefit from thereductions inexport and
production subsidies agreed inagriculture, theyconsider suchreductions onlyapreliminary, incomplete
solution. Theliberalization oftradeintextiles should opennon-traditional areastoMexican producers,
notably inEurope, andallow them todiversify markets. Thenewprovisions onanti-dumping are
seenasproviding adelicate balance between theneedtoprotect theinterests ofexporters anddomestic
producers. Oncountervailing measures, theauthorities consider itimportant thatrecognition wasgiven
tothedevelopment roleofcertain subsidies, andthatenvironmental subsidies weremade non-actionable.
Intheservices area, theauthorities seebenefits arising from Mexico ’scomparative advantage in
labour-intensive activities andthegreater certainty provided toinvestors.
37. MexicobelievesthatthefourfundamentalaimsoftheWTOmustbetodeepentradeliberalization
onareciprocalbasisbyeliminatingremainingbarriersanddistortions;ensurethatmultilateraldisciplines
eliminate unilateral measures andprotectionist tendencies; ensure appropriate interaction between
competition policy andtrade measures tocombat unfair trade practices; andprevent protectionist
measures related tolabour andenvironmental standards affecting theintegrity ofthemultilateral trading
system.
38. Theauthorities alsopointed outthatprotection oftheenvironment andworkers ’rights have
received priority inMexico. Intheirview, liberalization ofworld trade willenhance theprotection
oftheenvironment andworkers rights, asgrowing liberalization generates resources andopportunities
toimprove theenvironment andthewell-being ofworkers.
39. Mexico accords most-favoured-nation treatment toallcountries, whether ornotWTO members.
Departures fromm.f.n. treatment arisefromMexico ’sparticipation inpreferential trade agreements,
including theNAFTA, thosesigned within theframework oftheLatin American Integration Association
andtheAgreement onImplementation ofArticle VIIoftheGeneral Agreement (theCustoms Valuation Code).
IthadobserverstatusundertheAgreemen tonSubsidiesandCountervailingMeasures,theArrangementRegarding
Bovine Meat, andtheInternational Dairy Arrangement.WT/TPR/S/29 Trade Policy Review
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(LAIA), andtheGlobal System ofTrade Preferences among Developing Countries (GSTP). Mexico
alsoparticipates intheProtocol Relating toTrade Negotiations Among Developing Countries ofthe
GATT (theCommittee ofParticipating Countries orCPC). TheGSTP andCPCareofrelatively minor
importance.
(ii) Preferential agreements
40. Regional andbilateral agreements havebecome coreelements ofMexico ’straderelations. The
Mexican Government views preferential trade agreements ascomplementary toitspolicy objectives
within themultilateral trading system. Mexico ’sstated strategy fornegotiating free-trade agreements
hasbeentoseekwidecoverage ofproducts andclearly defined rules(e.g., onrulesoforigin, safeguards
anddispute settlement), based onmultilateral principles where applicable.
41. Although Mexico hasparticipated inaregional integration process since 1960 (under the
Latin American FreeTrade Association, LAFTA), theimportance ofapreferential approach toexternal
tradepolicy hasgrown considerably inrecent years. Theentry intoforceofnewfree-trade agreements
(FTAs) overthelastfouryears hasresulted inalmost 90percentofMexico ’sexports and80percent
ofimports nowtaking place under FTAs. During thisperiod, thetotalvalue oftradehasalsoincreased
sharply (Chapter I).Although theshare ofMexico ’sexports destined toFTApartners hasremained
stable, theshare ofimports hasincreased significantly duetothegreater weight ofU.S.products in
Mexico ’stotalimports (Chart II.2). Thiscould reflect inpartthegrowing gapbetween thetariffapplied
tom.f.n. andpreferential trade. Forexample, inJanuary 1997 theaverage applied m.f.n. ratewas
13.7percent(almost unchanged sincetheprevious review in1993), while thatapplied toimports from
theUnited States hadfallen to3.4percentandtoimports from Chile towellunder 1percent
(Chapter III(2)).
42. TheOECD haspointed outthatthegrowing number ofoverlapping agreements makes it
increasingly difficult toensure thattradedistortions donotoccur astheirsheer complexity maycreate
inadvertent inconsistencies andeconomic costs. Another issuearising withmultiple agreements relates
toadministrative coststotheextent thatdifferences among agreements require thecustoms authorities,
inparticular, tomanage different setsofrulesandprocedures. However, inthecaseofMexico, the
newer preferential tradeagreements haveahighdegree ofuniformity interms oftheapproach tocore
commitments, andinmost ofthemore detailed commitments.15
(a) North American FreeTrade Agreement (NAFTA)
43. TheNorth American FreeTrade Agreement between Canada, Mexico andtheUnited States
came intoforce on1January 1994. TheAgreement engages Mexico inaprocess ofgradual market
liberalization vis-à-vis theUnited States andCanada thatenvisages, interalia:thegradual elimination
oftariffs, non-tariff barriers andimport quotas; theelimination ofinvestment barriers andgreater
protectionforinvestment;thephasedopeningofMexico’sservicessectortoinvestmentandcross-border
transactions; theprogressive opening ofMexican government purchasing andconstruction contracts;
cleardispute resolution andinternational arbitration procedures; andacommitment toprovide effective
protection tointellectual property rights. Associated withtheNAFTA aretwoNorth American
Cooperation Agreements, orNAFTA sideagreements onenvironment andlabour.
15OECD (1996), p.111-112.Mexico WT/TPR/S/29
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WT/TPR/S/29 Trade Policy Review
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44. Ingeneral, Mexico accepted toliberalize imports immediately, oraccording toaschedule of
tariff reductions tobecompleted on1January 1998 or1January 2003, depending ontheproduct;
forasmall number ofproducts, including cornandbeans, fullliberalization willoccur in2008. In
themotor vehicles industry, liberalization willoccur by2004, although restrictions onusedcarimports
willremain until2018. While NAFTA members explicitly affirm theirexisting rights andobligations
withrespect toeachother under theGATT, theprovisions ofNAFTA prevail, within theNAFTA
context, intheevent ofanyinconsistency between itsprovisions andthose oftheGATT, unless NAFTA
specifically provides otherwise.
45. Overall, theNAFTA hasbeenimplemented onschedule, including tariffreductions. NAFTA
institution-building hasalsocontinued, atministerial level through meetings oftheFree Trade
Commission, through thework ofthevarious committees, andinworking groups required bythe
Agreement. Each country hasdesignated asub-ministerial coordinator forNAFTA; theyconsult
regularly onimplementation matters. Theauthorities noted thatalthough Mexico 'sinternational
agreementsdonotrequirefurtherlegislativeimplementation,theentryintoforceoftheNAFTAprovided
theincentive tomodify several Mexican laws(including those relating toimport taxes, phytosanitary
measures, public procurement, foreign investment, tourism, maritime navigation, roadtransports,
industrial property andtheCentral Bank) inorder toharmonize NAFTA anddomestic rulesandfacilitate
theirapplication.
46. TheNAFTA iscurrently under examination bytheWTO Committee onRegional Trade
Agreements inthelightoftherelevant provisions ofGATT 1994, including Article XXIV (oncustoms
unions andfree-trade areas). Most commentaries made onNAFTA appear toconclude thatitisa
relatively openagreement; however, concern hasbeenexpressed bysome WTO Members about rules
oforigin diverting trade infavour ofNAFTA members, andononeaspect ofcustoms valuation
(Chapter III(2)).
47. NAFTA ’sapparent success inpromoting tradeandinvestment flows hasmade itthecornerstone
ofMexico ’strade policy. Particularly marked hasbeenthestrengthening ofMexico ’srelationship
withtheUnited States; theU.S.share ofMexico ’stotalimports increased from68percentinmid-1994
to75percentinlate1996, while itsshare ofMexico ’sexports remained atclose to85percent
(Chart II.2). Theauthorities emphasized thatthestrengthening ofMexico ’srelationship withtheUnited
States andCanada hasnotimpeded Mexico ’sengagements inmultilateral negotiations andotherbilateral
orregional arrangements.
48. TheNAFTA appears tohavebeenacentral element ofthemajor restructuring affecting most
ofMexico ’seconomic activities, including agriculture, manufacturing andservices. Since theentry
intoforceoftheNAFTA, many Mexican firms havebeenexposed toandperformed wellincompetition
withtheirU.S.counterparts;others,however,havebeenunabletooutlivethedismantlingofprotectionist
arrangements under which theydeveloped (Chapter IV).
(b) Other preferential arrangements
49. Inaddition totheNAFTA andtheearlier free-trade agreement withChile, anactive programme
ofnegotiations hasresulted intheentry intoforce on1January 1995ofnewtreaties withCosta Rica,
Bolivia, and,intheGroup ofThree (G-3), withColombia andVenezuela. Thenewagreements follow
theNAFTA model, providing forcomprehensive, progressive elimination oftariffs andnon-tariff
barriers,andcontainingprovisionsonsectoralmatters,tradeinservices,investment,intellectualproperty
rights,sanitaryandphytosanitarymeasures,governmentprocurementanddisputesettlementprocedures.
There are,however, afewdifferences between thevarious agreements. Thearrangement withChileMexico WT/TPR/S/29
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isstillanagreement of“theolder generation ”under theLAIA; ithasalimited coverage, notincluding,
interalia,rules oninvestment, trade inservices, government procurement, orintellectual property.
Differences between theNAFTA andMexico 'ssubsequent free-trade agreements relate toareas such
astariff reduction schedules andtrade defence provisions.
50. TheAgreement withColombia andVenezuela -theFreeTrade Agreement oftheG-3-extends
LAIA ’sregional preferential treatment totheentire customs tariffandcovers items contained inprevious
bilateral Partial-Scope orothertradeagreements between Mexico andthetwoAndean Group members.16
TheG-3’sMotor Vehicle Committee wasscheduled toestablish rulesoforigin fortheindustry toallow
theinitiation on1January 1997oftheprocess oftariffreductions formotor vehicle products. Mexico
wasalsoseeking anagreement withVenezuela onrulesoforigin fortextiles, aimed atintegrating textiles
intheexisting programme oftariff reductions by1January 1997.
51. Theagreements between (i)Mexico andBolivia and(ii)Mexico, Colombia andVenezuela
werecommunicated totheWTO in1996bytheSecretariat oftheLatin American Integration Association
(LAIA), under whose legal scope theagreements fall.17Theagreement between Mexico andCosta
Rica(notamember ofLAIA) isyettobenotified totheWTO. Questions havearisen ontheappropriate
WTO forum fornotification ofsuchagreements, astheyallcover newareas, notably tradeinservices,
notenvisaged inearlier arrangements, including LAIA.18
52. In1996, Mexico wasnegotiating bilateral tradeagreements withEcuador, Nicaragua, Panama
andPeru, andaregional agreement withGuatemala, Honduras andElSalvador. WithMERCOSUR,
MexicoisnegotiatinganeconomiccomplementarityagreementwithinLAIA;negotiationswereexpected
tocontinue throughout 1997. Implementation oftheEconomic Complementarity Agreement between
Mexico andChile hascontinued19;in1997, Chile andMexico commenced negotiations todeepen
theAgreement.
53. Mexico participates inallregional-scope agreements within theLAIA, andhassigned
partial-scope agreements withallLAIA members. Partial-scope agreements havealsobeensigned by
Mexico withcertain Central American countries thatarenotmembers oftheLAIA. Mexican policy
makers viewLAIA ’spartial-scope agreements asflexible tools; however, thelarge number ofsuch
agreements hasfragmented thepattern ofexternal trade relations andcomplicated theadministration
ofnegotiated preferences.20Mexico hasparticipated actively intheWestern Hemisphere FreeTrade
AreaoftheAmericas(FTAA)launchedinDecember1994.Theinitiativeenvisagesfulltariffelimination
by2005, "with some limited exceptions tobeagreed", andtheprogressive abolition oftrade and
16SeeWTO (1996a) andWTO (1996b).
17Communication received on16August 1996 bytheWTO Committee onTrade andDevelopment for
circulationtoWTOMembers.Thecommunication,submittedbythePermanentDelegationofUruguayonbehalf
ofthemember States oftheLAIA, reported ontheimplementation oftheEnabling Clause byLAIA States during
theperiod 1993-1994 (WTO Document WT/COMTD/7, 30September 1996).
18Seeforexample WTO (1995), Chapter II.
19Thebasic framework isdescribed intheprevious Trade Policy Review ofMexico; more recent information
isprovided inWTO (1997).
20Blanco (1994), p.119.WT/TPR/S/29 Trade Policy Review
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investment barriers. TheMexican authorities seeanopportunity inthisprocess toupdate theLAIA
framework inlinewiththecurrent defacto process ofhemispheric integration.
54. Mexico maintains bilateral economic arrangements thatdonotprovide fortariff preferences.
These include cooperation arrangements signed before 1993 withFrance, Italy, Republic ofKorea,
Russia, Spain, Switzerland andThailand. In1994, Mexico signed cooperation arrangements ontrade
andinvestment withAustralia andNewZealand; in1997, anewcooperation arrangement wassigned
withtheRepublic ofKorea. Bilateral relations between Mexico andtheEuropean Union takeplace
within the1991 Framework Agreement, which doesnotinclude trade orinvestment liberalization
programmes; inMay1995, thetwoparties signed ajointdeclaration tonegotiate anewagreement
covering those areas. Inmid-1997, Mexico andtheEuropean Union concluded thenegotiation ofan
Economic Partnership, Political Co-ordination andCooperation Agreement; anInterim Agreement;
andaJoint Declaration. Thelasttwoinstruments provide fortheestablishment ofaframework to
encourage trade ingoods andservices, including liberalization onapreferential, progressive and
reciprocal basis.
55. InNovember1993,MexicobecameamemberoftheAsia-PacificEconomicCooperation(APEC)
forum, launched in1989 topromote freeandopentrade andinvestment intheAsia-Pacific region.21
TheMexican authorities viewAPEC ’scurrent strategy ofliberalization, based onunilateral actions,
asunlikely tosucceed; instead theybelieve thatAPEC members mustcommit themselves toamore
rigorous procedure andamore precise accord.22
56. Under theSanJoséPactof1980, Mexico andVenezuela continue tosupply petroleum tocertain
countries ofCentral America andtheCaribbean oncommercial terms.23
(iii) Dispute settlement
57. Uptotheendof1992, Mexico hadusedtheGATT dispute settlement mechanism onthree
occasions, eachagainst theUnited States, withthethree Panel Reports ruling inMexico ’sfavour.
Since January 1993, Mexico hasbeenacomplainant inacaseagainst theEuropean Union under the
WTO Dispute Settlement mechanism; italsopursued anearlier panel caseonU.S.anti-dumping duties
oncement (Table A.II.2). ByMarch 1997, Mexico hadrequested theestablishment ofapanel on
cementexportstoGuatemala,andwasparticipatingasathirdpartyinpanelcasesinvolvingphotographic
filminJapan, theU.S.Cuban Liberty andDemocratic Solidarity ActandU.S.measures onshrimp.
Ithadalsoparticipated invarious other consultations anddiscussions involving theuseofcontingency
measures bytrading partners against Mexico ’sexports andU.S.restrictions ontunaimports.
58. Since itsaccession toGATT in1986, Mexico hasnotbeenthetarget ofanypanel case,although
anumber ofissues havebeenraised against itinvolving bilateral consultations orother discussions;
suchcases haverelated toMexico ’suseoftradedefence measures, except fortwoinstances involving
customs valuation andcertification oforigin (Table A.II.2).
21Forfurther details onAPEC seeWTO (1996c), Chapter II.
22Statement bythePresident ofMexico, Reuters, 19November 1996.
23SeeWTO (1996b).Mexico WT/TPR/S/29
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59. Chapter 20oftheNAFTA provides fordispute settlement; ifconsultations andmeetings of
atri-national "Free Trade Commission" failtoresolve theissue, amember mayrequest adispute
settlement panel toprovide itsviews andrecommendations ontheissue. Inaddition, anti-dumping
andcountervailing measures canbeappealed tospecial NAFTA panels. When aconflict concerns
amatter thatmaybedealtwithbothinNAFTA andintheWTO, theNAFTA gives thecomplaining
party theoption tochoose either forum tosettle thedispute, withcertain exceptions inwhich only
theNAFTA system maybeinvoked (actions under theEnvironmental andConservation Agreements,
andcertain sanitary andphytosanitary measures).
60. TheMexican authorities indicated thatnoformal complaint against Mexico hadbeenraised
indispute settlement foraoutside theWTO, including theNAFTA.
61. Mexico andtheUnited States heldbilateral consultations under Chapter 20oftheNAFTA
regarding cross-border freight transportation andsmall-package delivery services inMexico. Similarly,
thetwocountries heldChapter 20consultations onaU.S.proposal toadminister NAFTA tariffquotas
onseasonal tomato imports onaweekly basis.
62. Mexico requested inJanuary 1996 theestablishment ofapanel under NAFTA Chapter 20to
review aU.S.finding against Mexican exports ofbroom-corn brooms. Following theimplementation
ofsafeguard actions against suchexports, andaccording toChapter 8oftheNAFTA, Mexico responded
byintroducing measures withsubstantially equivalent trade effects, namely, increasing tariff onU.S.
products suchasfructose, certain alcoholic beverages, notebooks, flatglassandcertain wood furniture.
63. Mexico hasalsorequested consultations under NAFTA Chapter 20ontheCuban Liberty and
Democratic Solidarity Actof1996; Mexico isalsoparticipating asathirdparty inarelated casewithin
theWTO (Table AII.2). Inthecontext ofthisreview, theauthorities stressed thatMexico opposes
theextra-territorial application oflegislation affecting trade orinvestment flows. Asanadditional
countermeasure against extra-territorial legislation, on23October 1996Mexico adopted theLawfor
theProtection ofTrade andInvestment against Foreign Rules thatContravene International Principles.
Thelawprohibits, under penalty offines, thesupply ofinformation toforeign authorities using
extra-territorial legislation, forbids acknowledging sentences orjudicial decisions based onsuch
legislation, andprovides forconsultations andnotifications totheMinistry ofForeign Affairs
andSECOFI.
64. InOctober 1996, Mexican tomato growers reached anagreement withtheU.S.Department
ofCommerce under which adumping investigation against exports offresh tomatoes from Mexico
wassuspended (Chapter III(3)(ix)). TheMexican authorities haveexpressed concern about theconduct
oftheanti-dumping investigation, which theyclaim didnotadhere toWTO orNAFTA rules; Mexico
hasrequested consultations onthisissue within theWTO framework (Table AII.2).
65. Anumber ofcomplaints havealsobeenbrought byandagainst Mexico under theAgreement
onLabour Cooperation associated totheNAFTA. Anti-dumping complaints havealsobeenbrought
under theNAFTA concerning cases suchascountervailing duties imposed byMexico onimports of
U.S. steel, anddisputes brought byMexican exporters questioning thelegality ofU.S.-imposed
countervailing duties onimports ofleather wear, porcelain-on-steel cookware, cement andoiltubes
from Mexico.WT/TPR/S/29 Trade Policy Review
Page 32
(4) Investment Policy Framework
(i) Policy objectives andinstitutional framework
66. Thebasicprinciples fortheformulation offoreign investment policy inMexico derive directly
fromthe1917Constitution. Article 27oftheConstitution confers ontheMexican nation ownership
oflandandwater within thenational territory, andgrants thenation thepower totransfer ownership
rights toprivate individuals, thereby constituting private property. Section IofArticle 27provides
thatonlyMexican individuals andcompanies have therighttoacquire thedominion oflandandwater.
TheState hasthediscretionary power togrant thesame righttoforeigners, subject tothecondition
thattheyagree inwriting before theMinistry ofForeign Affairs toconsider themselves Mexican
nationalswithrespecttothepropertyacquiredandnottoinvoketheprotectionoftheirhomegovernments
withrespect tothesame (theCalvo Clause). Ifthiscovenant isbreached, allrights tosuchproperty
revert tothenation.
67. Inthepast, theconstitutional principles onforeign investment were applied inarestrictive
manner, atendency which wasonlypartially redressed bytheLawtoPromote Mexican Investment
andRegulateForeignInvestment(LIMIE)of1973.AsisnowacknowledgedbytheMexicanauthorities,
theLIMIE, reflecting ageneral trendatthetimeamong developing countries, placed excessive emphasis
ondirect control offoreign investment andwascomplex, inward-looking anddefensive innature.
Moreover, thelawgave theauthorities wide discretionary powers, which created confusion and
uncertainty forinvestors.
68. Mexico hasgradually relaxed theinterpretation oftheLIMIE; theRegulations totheLIMIE
of1989 allowed foreign investors toconstitute corporations withmajority foreign capital inseveral
sectors andmaintain upto100percentownership in"unrestricted activities". Inmostsuchactivities,
project approval became automatic upon inscription attheNational Registry ofForeign Investment.
Likewise, a"negative list"ofsectors where private investment wasrestricted wasestablished.
69. Theshifttowards amore liberal, balanced, foreign investment strategy hasgonehandinhand
withsimilar efforts affecting trade andindustrial policies (section (1)-above). Inthisrespect, ithas
beenargued thatthemoststriking feature ofNAFTA isitspermanent liberalization ofrulesgoverning
U.S.andCanadian investment inMexico.24
70. Theauthorities consider thatinvestment subsidies create economic distortions andwould have
budgetary implications incompatible withMexico ’scurrent economic programme. They estimate that
strong incentives toboth foreign anddomestic investment already spring from thecountry ’s
macroeconomic adjustment, sustained liberalization andeconomic deregulation, reforms tothesocial
security andpension systems, andnewbilateral investment agreements.
(ii) The1993 Foreign Investment Law
71. Most ofthe1989regulations under theLIMIE werere-codified intheForeign Investment Law
(LIE) of27December 1993, which abrogated theLIMIE. TheLIEhasbeendescribed asreflecting
aspects of"both thecountry ’straditional restrictions onforeign investment andevolving philosophy
24Hufbauer andSchott observed that"NAFTA marks thefirsttimethatadeveloping country hasaccorded
toforeign investors from thedeveloped countries themore favourable ofeither national orMFN treatment, has
adopted rigorous dispute settlement procedures, andhasaccepted comprehensive constraints onitsuseof
performance requirements" (quoted inPastor, 1994).Mexico WT/TPR/S/29
Page 33
toward greater openness".25Thesubsequent implementation oftheNAFTA ledtothefurther
liberalization ofinvestment rules. Thisprocess hasalsobeenspurred bytheobjective ofincreasing
foreign participation inactivities previously considered strategic, suchasmining, fisheries, financial
services, petrochemicals, natural gas,electric power, telecommunications, highways, railroads, ports
andairports, aviation andmaritime services. Asaresult, several specific lawsgoverning suchactivities
were amended after 1993, andincorporated intheLIEthrough amendments published on
24December 1996. Theauthorities continue towork ontheelaboration ofnewregulations tothe
LIE; meanwhile the1989 regulations remain inforce.
72. Changes havealsobeenintroduced tostreamline theprocedures toestablish foreign investment,
notably through modification tosections oftheLIErelating torealestate acquisition, theincorporation
offirms andtheirestablishment inMexico. Thelawnowprovides fora"single window" procedure
forforeign legalpersons; following a15-day processing period thepermit isgranted automatically
bySECOFI (instead oftheMinistry ofForeign Affairs, aswaspreviously thecase). Such reforms
alsorendered necessary certain modifications totheCivil Code andtheGeneral LawofCommercial
Organizations.
73. Under theLIE,theForeign Investment Commission (CNIE) actsasaconsultative body on
foreign investment andsetsguidelines toenforce thelegalprovisions onforeign investment. TheCNIE
ischaired bySECOFI; nineother ministries participate intheCommission, plusanyother official
agency theCNIE deems appropriate. TheCNIE evaluates andmakes decisions ontheterms offoreign
participation, using criteria thatinclude theproject ’sexpected impact onjobcreation, workers training,
technology transfer andcompetitiveness. Inaccordance witharticles 24and25oftheLIE, the
Commission ispresided bytheSecretary forTrade andExport Promotion; italsohasanExecutive
Secretary, andaCommittee ofRepresentatives which meets atleastevery fourmonths andcomprises
public officials designated byeachoftheministers thatmake uptheCNIE. TheCommission isalso
responsible forpromoting foreign investment inMexico, butthestatutes stipulate thatunder no
circumstances maytheCommission setrequirements thatdistort international trade.
74. TheLIEstatesthatallactivitiesnotspecificallymentionedinthelawarecompletelyderegulated,
thusallowing upto100percentforeign investment inmosteconomic sectors without authorization,
aswaspreviously thecaseunder theLIMIE. Inter alia,theLIEexpands thescope oftheneutral
investment provisions introduced inthe1989 regulations, reduces many ofthenotifications and
authorizations previously required under theLIMIE, andlargely eliminates performance requirements
(themotorvehicleindustrybeinganexemption(ChapterIV(4)).UndertheLIE,606ofthe704activities
listed intheOfficial Catalogue ofEconomic andProductive Activities havenorestrictions onforeign
investment, 37allow upto100percentforeign ownership withprior authorization from theCNIE,
35allow aminority foreign investment share, 16arereserved forMexicans andtenarereserved for
theState.
(iii) Investment restrictions
75. Despite thesignificant liberalization overthelastfouryears, important areas remain restricted
forforeign investors. Moreover, inallsectors Mexico maintains theright toreview andimpose
conditions onlarge acquisitions byforeign investors. Although onlyasmall percentage offoreign
investments requires theapproval oftheCNIE, withtheexception ofneutral investments (seebelow),
allforeign investors andMexican firms withforeign participation arerequired toregister intheForeign
25Hazera (1995), p.188.WT/TPR/S/29 Trade Policy Review
Page 34
Investment Registry established within SECOFI. NAFTA members aresubject totheliberalization
schedule provided inAnnex IoftheAgreement.
76. TheLIEreserves certain activities exclusively fortheMexican State, including petroleum and
other hydrocarbons, basic petrochemicals, distribution ofelectricity asapublic service, generation
ofnuclear energy, radioactive minerals, telegraph andradio-telegraph services, postal services, the
minting orprinting ofcurrency, control andsupervision ofports, airports andheliports, andanyother
areas thatmaybeexpressly reserved byspecific legislation. Similar reservations onsatellite
communications andrailways were derogated in1995.
77. Theactivities reserved forMexican nationals aredomestic landtransportation ofpassengers ,
tourism andcargo (excluding messenger andparcel services), theretail saleofgasoline anddistribution
ofliquid petroleum gas,broadcasting andother radio andtelevision services (with theexception of
cabletelevision),creditunions,developmentbankinginstitutions,andprofessionalandtechnicalservices
expressly reserved bysector-specific legislation (theauthorities noted thatinpractice onlyservices
provided byPublic Notaries arereserved forMexican nationals).
78. TheLIEalsoreserves forMexican nationals, landtransportation ofinternational passengers,
tourists andcargo between points inMexican territory, andadministrative services ofcentral stations
forpassenger andauxiliary automotive service vehicles. However, maximum foreign participation
inthecapital stock ofMexican companies inthose activities istobeliberalized asfollows: beginning
December 1995, upto49percent; beginning January 2001, upto51percent; andbeginning
January 2004, upto100percent.
79. Foractivities inwhich foreign ownership islimited thresholds are10,25or49percent. The
10percentmaximum foreign participation applies toproduction cooperatives, andthe25percent
limitaffects domestic airtransportation, airtaxiservices, andspecialized airtransportation.
80. The49percentlimitonforeign ownership applies toholding companies forfinancial groups;
commercial (multiple) banking institutions; securities brokerage firms; securities market specialists;
insurance institutions; bonding institutions; currency exchange houses; general deposit warehouses;
financial leasing companies; financial factoring houses; financial companies whose activities arelimited
byArticle 103,paragraph IVoftheLawofCredit Institutions; companies towhich article 12Bisof
theSecurities Market Lawrefers; shares representing thefixed capital ofinvestment companies;
operatingcompaniesofinvestmentcorporations;retirementfundmanagementcompanies;themanufacture
orcommercialization ofexplosives, firearms, cartridges, munitions andfireworks, excluding the
acquisition, preparation oruseofexplosives forindustrial andonmining activities; printing and
publication ofnewspapers forcirculation onlyinMexico; series-T shares incompanies thatown
agricultural orforestry lands; fresh water, coastal, andexclusive economic zonefishing, excluding
aquaculture; integral portadministrations; piloting portservices forvessels carrying outinland
navigation; companies involved inthecommercial exploitation ofships engaged ininland andcoastal
navigation, excluding tourism cruisers andtheexploitation ofmarine dredging andimplements for
portconstruction, conservation andoperation; supply offuelandlubricants forships, airplanes, and
railway equipment; andconcessionaire companies interms ofArticles 11and12oftheFederal
Telecommunications Law.
81. Certain additional activities require theprior approval oftheCNIE forforeign investment to
exceed 49percent: portservices forships engaged ininland navigation operations, suchastowing,
mooring andlighterage; shipping companies engaged intheoperation ofships solely forhighseas
traffic; concessionaires orpermissionaires ofaerodromes forpublic service; private education services,Mexico WT/TPR/S/29
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from pre-school tohighschool levels; legal services; credit information companies; securities
classification institutions; insurance agents; cellular telephone services; theconstruction ofpipelines
forpetroleum andrefined oilproducts; theperforation ofpetroleum andgaswells; theconstruction,
operation andexploitation ofrailroads considered asmeans ofgeneral communication; andthesupply
ofpublic railway services.
82. Inaddition, theCNIE reserves therighttoreview andapprove proposed acquisitions byforeign
investors ofmore than49percentofthecapital stock ofMexican companies engaged ineconomic
activities, other thanthose mentioned above, when thetotalvalue oftheassets ofthetargeted company
exceeds athreshold amount established annually bytheCNIE. For1997, theCNIE fixedsuchthreshold
at85million pesos (about US$11 million).
83. TheMexican Constitution establishes a"restricted zone" (100kilometres widefromtheborders
and50kilometres wide from thecoast) inwhich direct foreign ownership isprohibited. TheLIE
authorizes, forthefirsttime, foreign participation inaMexican company owning realestate within
therestricted zonefornon-residential purposes; forresidential purposes, titleoftherealestate must
beheldthrough atrustwithaMexican bankastrustee. Approval oftheMinistry ofForeign Affairs
isrequired. Alternatively, foreigners mayalsoinvest directly inMexican companies holding real
property within therestricted zones, ifsuchcompanies havea"Calvo Clause" inserted intheirby-laws,
iftheproperty isusedfornon-residential purposes, andiftheacquisition ofsuchproperty isrecorded
withtheMinistry ofForeign Affairs.
84. Thelegislation allows foreigners toholdhigher percentages ofthecapital ofMexican companies
inrestricted areas through theconcept of"neutral investment". Suchinvestment maybemade either
inMexican companies orinauthorized trusts through various mechanisms including theissueofspecial
class "N"(neutral) shares granting holders economic butnovoting rights. Alternatively, SECOFI
mayauthorize credit institutions toacquire Class Ashares (i.e., those reserved forMexicans) of
companies listed ontheMexican Stock Exchange ifsuchcompanies intend tomake newinvestments.
TheCNIE mayalsoauthorize neutral investment inthecapital stock ofMexican companies by
international financial development companies.
(iv) International engagements andrelations
85. TheLIEapplies toallforeign investors. However, investors fromcountries withwhich Mexico
hasanagreement covering investment, enjoy additional protection; forexample, Canadian andU.S.
investors benefit fromtheprotection provided byChapter 11oftheNAFTA, which contains disciplines
onsectoralliberalization,performancerequirements,nationaltreatment,capitalmovement,expropriation
anddispute settlement. TheMexican authorities indicated thatonlytwoofthose disciplines -on
performance requirements and,partially, onsectoral liberalization -arereflected intheLIE.
86. NAFTA 'sChapter 11provides amechanism tosettle disputes between aNAFTA member
andaprivate investor ofanother member bysubmitting toarbitration procedures setupunder the
International Centre forSettlement ofInvestment Disputes orarelated Additional Facility, orunder
theUnitedNationsCommissiononInternationalTradeLaw.Thefirstcomplaintundertheinvestor-state
arbitration clause ofChapter 11ofNAFTA waslaunched against Mexico inearly 1997. Thecase
involves complaints byaU.S.firmregarding toxicwaste disposal facilities. Arbitration proceedings
were underway inmid-1997.WT/TPR/S/29 Trade Policy Review
Page 36
87. Mexico setsnolimits onrepatriation ofprofits orcapital. Recent reforms totheCustoms Law
havemade compulsory thedeclaration ofamounts inexcess ofUS$10,000 brought toMexico bypersons
entering thecountry. Thisispartoftheefforts tofightmoney laundering anddrugtraffic.
88. Mexico hasentered intotaxtreaties withnumerous countries toprevent double taxation. Since
January 1993, Mexico hasentered intosuchagreements with, interalia,thefollowing countries:
Germany (1December 1993), Switzerland (8September 1994), theNetherlands (1January 1995),
United Kingdom (15December 1994), Republic ofKorea (11February 1995), Singapore
(14September 1995), Norway (23January 1996), andJapan (6November 1996).
89. Mexicohascontinueditseffortstonegotiatebilateralagreementsforthepromotionandreciprocal
protection ofinvestment (Bilateral Investment Treaties -BITs). Since January 1993, Mexico hassigned
suchagreements withthreecountries: Spain (22June1995), Switzerland (10July1995) andArgentina
(13November 1996). Mexico isconsidering accession totheMultilateral Investment Guarantee Agency
(MIGA) oftheWorld Bank.26
90. Mexico became amember oftheOrganization forEconomic Cooperation andDevelopment
(OECD)on18May1994.PursuanttoMexico’saccessiontheGovernmentagreedtoreviewitstreatment
ofnon-NAFTA investors intheareaoffinancial services nolaterthanthebeginning of1998, and
toconsider thepossibility ofextending NAFTA benefits toinvestment inareas suchasinvestment
companies, bonding firms, general deposit warehouses andforeign exchange firms (seeChapter IV(5)
financial services, forfurther details). Mexico isattempting toprovide greater investment incentives
andprotection through itsparticipation intheongoing negotiations within theOECD foraMultilateral
Investment Agreement (MIA).27
91. Mexico hasalsonotified totheWTO anumber ofTrade-Related Investment Measures (TRIMs)
which aredescribed inChapter III(4).
26TheMIGA offers foreign investors protection against non-commercial risks associated with currency
convertibility andagainst losses from wars andcivildisturbances.
27Areasundernegotiationincludetreatmentandprotectionofforeigninvestment;movementof"keypersonnel";
investment incentives; performance requirements; privatization; andmonopolies/state-owned enterprises.