RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/195 
7 January 2008  
 
(08-0041) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
MEXICO 
 
  
 
This report, prepared for the fourth Tr ade 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 Mexico on its trade policies and 
practices. 
 
Any technical questions arising from this  report may be addressed to Ms Martha 
Lara de Sterlini (Tel.:  022 739 6033), Mr Alberto Bueno (Tel.:  022 739 6392) 
and Mr Raymundo Valdés (Tel.:  022 739 5346). 
 
Document WT/TPR/G/195 contains the policy statement submitted by Mexico. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Mexico. Mexico WT/TPR/S/195 
 Page iii 
 
 
CONTENTS 
 
  Page 
SUMMARY OBSERVATIONS vii 
 (1) E CONOMIC ENVIRONMENT  vii 
 (2) T RADE POLICY AND INVESTMENT FRAMEWORK  vii 
 (3) M ARKET ACCESS FOR GOODS  viii 
 (4) M EASURES AFFECTING EXPORTS  ix 
 (5) O THER MEASURES AFFECTING TRADE  ix 
 (6) S ECTORAL POLICIES  x 
I. ECONOMIC ENVIRONMENT 1  
 (1)  OVERVIEW  1 
 (2)  MACROECONOMIC TRENDS  1  
 (i)  Structure, growth and employment 1  
 (ii)  Fiscal policy 4  
 (iii)  Monetary and exchange-rate policy 7  
 (iv)  Balance of payments 9  
 (3)  DEVELOPMENTS IN TRADE AND INVESTMENT FLOWS  11  
 (i)  Trade in goods 11  
 (ii)  Trade in services 12  
 (iii)  Foreign direct investment 12  
 (4)  OUTLOOK  14 
II. TRADE AND INVESTMENT REGIME 15 
 (1) O VERVIEW  15 
 (2) G ENERAL LEGAL FRAMEWORK  15 
 (3) T RADE POLICY FORMULATION AND OBJECTIVES  17 
 (4) F OREIGN INVESTMENT REGIME  18 
 (i) Formulation and regulatory framework 18 
 (ii) Restrictions on foreign investment 19 
 (iii) International investment agreements 21 
 (5) I NTERNATIONAL TRADE RELATIONS  22 
 (i) WTO 22 
 (ii)  Free-trade agreements (FTAs) 23 
 (iii) Other agreements and arrangements 29 
III. TRADE POLICIES BY MEASURE 30 
 (1) O VERVIEW  30 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  32 
 (i) Registration, documentation and customs procedures 32 
 (ii) Customs valuation 35 
 (iii) Rules of origin 36  (iv) Tariffs 38 
 (v) Other charges affecting imports 43 
 (vi) Prohibitions, restrictions and import licensing 45 WT/TPR/S/195 Trade Policy Review 
Page iv 
 
 
   Page 
 
 (vii) Contingency measures 47 
 (viii) Technical regulations and standards 51 
 (ix) Sanitary and phytosanitary measures 57 
 (3) M EASURES DIRECTLY AFFECTING EXPORTS  63 
 (i) Registration and documentation 63 
 (ii) Export taxes and duties 63  (iii) Export prohibitions and rest rictions and licensing regime 64 
 (iv) Tariff and tax concessions 66 
 (v) Export financing, insurance and guarantees 70  (vi) Export promotion 72 
 (4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  73 
 (i) Establishment and taxation of companies 73  (ii) Competition policy and price controls 76 
 (iii) Incentives 79 
 (iv) State-trading enterprises and privatization 85  (v) Government procurement 86 
 (vi) Protection of intellectual property 89 
IV. TRADE POLICIES BY SECTOR 94 
 (1) O
VERVIEW  94 
 (2) A GRICULTURE  95 
 (i) General features 95 
 (ii) Policy objectives 96 
 (iii) Agricultural support indicators 97  (iv) Policy instruments 98 
 (3) M
ANUFACTURING  106 
 (i) Main features 106 
 (4) E NERGY  109 
 (i) Main features 109 
 (ii) Hydrocarbons 110  (iii) Electricity 114 
 (5) S
ERVICES  116 
 (i) Multilateral commitments 116  (ii) Telecommunications 116 
 (iii) Financial services 121 
 (iv) Air transport and airports 126  (v) Maritime transport 129 
 (vi) Professional services 131 
 
REFERENCES 135 
 APPENDIX TABLES 141 
 
   Mexico WT/TPR/S/195 
 Page v 
 
 
TABLES 
 
Page 
 
I. ECONOMIC ENVIRONMENT 
I.1 Structure of GDP by expenditure, 2001-2007 2 
I.2 Main economic indicators, 2001-2007 3 
I.3 Balance of the Federal non-financial public sector (NFPS), 2001-2007 5 
I.4 Main monetary indicators, 2001-2007 8 
I.5 Balance of payments, 2001-2007 9 
I.6 Trade in services, 2001-2007 12 I.7 Foreign direct investment (FDI) by sector, 2001-2007 13 
I.8 Foreign direct investment (FDI) by country of origin, 2001-07 13 
II. TRADE AND INVESTMENT REGIME 
II.1 Limits on foreign holdings in economic activities and companies subject 
 to specific regulation, 2007 20 
II.2 Free-trade agreements (FTAs) signed by Mexico, 1993-2006 23 
III. TRADE POLICIES BY MEASURE 
III.1 MFN tariff structure, 2007 39 
III.2 Summary of MFN tariffs, 2007 40 III.3 Products subject to the requirement of a prior import licence from the 
Ministry of the Economy, June 2007 46 
III.4 Anti-dumping duties and countervailing measures, 1 January 2002 – 31 December 2006 49 III.5 Notifications of technical re gulations and conformity assessment 
procedures to the TBT Committee, January 2002 – April 2007 53 
III.6 Notification of sanitary and phytos anitary regulations to the SPS Committee, 
January 2002 – August 2007 59 
III.7 Goods subject to export taxes 64 
III.8 Goods subject to a prior export licence or notification to the Ministry of the Economy 65 
III.9 Credits and financial services from th e National Foreign Trade Bank (BANCOMEXT) 70 
III.10 Principal taxes applicable to companies and natural persons engaged in business activities 75 III.11 Federal programmes in support of industrial activity by entity, October 2007 79 
III.12 Tax incentives for the promotion of economic activities 81 
III.13 Fiscal costs budget, 2006 82 III.14 Credits and financial services of th e National Finance Company, S.N.C. (NAFIN) 83 
III.15 Mexican participation in international agreements on intellectual property rights 89 
III.16 Summary of the protection of intellectual property rights in Mexico, 2006 91 
IV. TRADE POLICIES BY SECTOR 
IV.1 Agricultural support estimates, 2001-06 97 
IV.2 Multilateral tariff quotas and import volume, 2006 98 IV.3 Productivity in the manufacturing sect or in real terms (per cent), 2001-06 107 
IV.4 Manufacturing industry's share of GDP, 2001-06 107 
IV.5 Structural indicators, maquiladora industry, 2001-2006 108 IV.6 Private participation in the hydrocarbon sector 112 WT/TPR/S/195 Trade Policy Review 
Page vi 
 
 
APPENDIX TABLES  
 
Page 
 
I. ECONOMIC ENVIRONMENT 
AI.1 Merchandise exports by product, 2001-2006 143 
AI.2 Merchandise imports by product, 2001-2006 145 
AI.3 Merchandise exports by trading partner, 2001-2006 147 
AI.4 Merchandise imports by trading partner, 2001-2006 148 
II. TRADE AND INVESTMENT REGIME 
AII.1 Selected notifications to the WTO, October 2007 149 
AII.2 Issues involving Mexico subject to WTO dispute settlement, 2002-2007 153 
III. TRADE POLICIES BY MEASURE 
AIII.1 Summary of preferential tariffs, 2007 155 
AIII.2 Initiation of anti-dumping investigations, 1 January 2 002 to 31 December 2006 159 
IV. TRADE POLICIES BY SECTOR 
AIV.1 Summary of Mexico's specifi c commitments under the GATS 161 
 Mexico WT/TPR/S/195 
 Page vii 
 
 
SUMMARY OBSERVATIONS 
 
1. Since its previous Review in 2002, 
Mexico has continued with the gradual and 
unilateral liberalization of its trade regime.  It 
has also concluded new free-trade agreements, now conducting 85 per cent of its trade with preferential partners.  While preferential agreements have played an important role in 
Mexico's liberalization efforts, they have also 
altered economic incentives.  At the same time, some barriers to MFN trade and foreign investment limit the access of Mexican consumers and producers to certain goods and services on more competitive terms. 
2. In recent years Mexico's economic 
performance has been  solid, and several 
sectors of its economy have achieved high levels of development.   Nevertheless, per 
capita income has risen only modestly and 
alleviating poverty rema ins a challenge.  Thus, 
steps to speed up productivity growth would seem necessary, such as increasing competition in the domestic market and establishing a more uniform incentive structure;  the latter could include the 
rationalization of the MFN tariff and of special 
fiscal regimes.  Further structural reform would contribute to reducing bottlenecks in areas such as energy, telecommunications and transport.  Resolving these long-standing 
issues would help Mexico to take advantage of 
the significant progress already attained in order to accelerate growth and achieve higher living standards. 
(1) E
CONOMIC ENVIRONMENT  
3. In 2006, Mexico's per capita income 
was around US$8,000, having increased at an average annual real rate of 1.7 per cent between 2001 and 2006.  Over the same period, the average annual real increase in GDP was 2.3 per cent.  After stagnating in 
2001-02, partly because of the economic 
downturn in the United States, Mexico's economic growth resumed, boosted by internal demand and a favourable external environment. 4. Prudent fiscal management has 
allowed for the gradual consolidation of the federal budget and the reduction of the public debt to GDP ratio;  measures are also being 
taken to lessen the dependence of public 
finances on petroleum revenue.  Mexico has successfully implemented an inflation-targeting regime, maintaining inflationary expectations at around the objective of 3 per 
cent. 
5. Despite the persistent and large deficit 
in the services balance, the current account deficit of the balance of payments has virtually disappeared, mainly because of increased family remittances.  In 2006, trade in goods 
accounted for some 60 per cent of GDP.  
Growth in trade has been accompanied by changes in its composition and direction.  For example, in value terms, petroleum exports have increased even though manufactures are 
still the predominant export.  Imports from 
Asia, notably China, have risen significantly, although the United States remains by far Mexico's leading trade partner. 
(2) T
RADE POLICY AND INVESTMENT 
FRAMEWORK  
6. Mexico is an original member of the 
WTO and considers that the multilateral system is the principal instrument for liberalizing global trade.  It believes that the multilateral trading system and preferential 
agreements should be complementary, while 
acknowledging that there are certain issues on the trade agenda that can only be resolved in the multilateral sphere.  In September 2003, 
Mexico hosted the WTO's Fifth Ministerial 
Conference in Cancún. 
7. During the period under review, 
Mexico has made no fundamental changes to its internal legal framework or its trade policy.  The latter is aimed at expanding and diversifying markets abroad, continuing to 
negotiate preferential agreements, and 
reinforcing the legal framework in order to attract foreign investment.  Mexico recognizes that trade liberalization must be accompanied by other measures to boost competitiveness. WT/TPR/S/195 Trade Policy Review 
Page viii 
 
 
8. Mexico has submitted a large number 
of notifications to the WTO, but there have been delays in submitting others.  Since 2002, under the WTO dispute settlement mechanism, 
Mexico has been involved in six cases as a 
complainant, seven as a defendant, and 27 as a third party. 
9. Mexico has 12 preferential agreements 
with 44 countries;  the agreements with Japan 
and Uruguay were signed during the period 
under review.  Preferential agreements have led to the substantial liberalization of Mexico's trade regime.  Nevertheless, their large number has altered economic incentives and the allocation of resources, and has made the 
administration of trade policy instruments 
more complicated. 
10. Mexico sees the promotion of foreign 
investment as an essential complement to trade liberalization.  No limits are set for foreign 
investment in activities not reserved or subject 
to specific regulations.  However, some sectors are still reserved for the State, while others are reserved for Mexican capital, require a majority of Mexican capital, or prior approval before foreign participation may 
exceed 49 per cent of the total equity.  
Exceeding the limits set on foreign investment is permitted through the use of neutral investment (shares with no voting rights). 
(3) M
ARKET ACCESS FOR GOODS  
11. Mexico has lowered its simple average 
MFN tariff, from 16.5 per cent in 2001 to 11.2 per cent in 2007.  Agricultural goods still receive higher tariff protection (23.0 per cent) than other products (9.9 per cent).  The applied 
tariff is complex and tariff dispersion has 
increased.  There is negative tariff escalation between raw materials and semi-processed products, which has led to inconsistencies in the tariff structure.  These could be addressed by further reducing MFN tariffs and 
simplifying their structure. 
12. Mexico has bound all its tariffs, at an 
average rate of 36.0 per cent, thus enhancing predictability;  this could be further increased by reducing bound tariffs so as to narrow the 
gap of almost 25 percentage points between average applied and bound rates. 
13. In the Uruguay Round, Mexico 
committed to allocate tariff quotas for a 
number of agricultural products, but reserved most of these for particular countries. Mexico also administers tariff quotas under preferential agreements and on an autonomous 
basis.  Tariff quota administration is complex 
and lacks transparency;  for most products, no procedures were established to allocate WTO-related tariff quotas in 2007.  Mexico's most recent notification to the WTO on tariff quotas covered the period 1996-99.  Domestic 
consumption requirements are applied in the 
allocation of tariff quotas for powdered milk and maize. 
14. Mexico has adopted several measures 
to streamline foreign trade procedures but 
some procedures remain complex.  This 
suggests the need to continue the process of customs reform and the simplification of foreign trade regulations.  Customs valuation still involves the application of an estimated price mechanism to certain products, which 
involves the deposit of a guarantee when the 
declared value is lower than the estimated price. 
15. Mexico uses both preferential and 
non-preferential rules of origin;  the latter are 
aimed at preventing circumvention of 
contingency measures. 
16. A customs processing fee is payable 
on imports, generally at a rate of 0.8 per cent of the customs value;  preferential imports are 
not subject to this fee.  Products such as used 
vehicles and clothing are subject to prior import permits with the aim, inter alia , of 
protecting the environment and public health.  The prior notice mechanism for imports has been abolished. 
17. Through anti-dumping measures, 
Mexican producers have actively sought protection against imports they deem to be unfair.  Between January 2002 and Mexico WT/TPR/S/195 
 Page ix 
 
 
December 2006, the authorities initiated 
42 anti-dumping investigations that resulted in the adoption of 24 definitive duties.  In June 2007, 70 anti-dumping duties were in 
effect, concerning mostly products from China 
and the United States. 
18. In general, the procedures for adopting 
technical regulations (Mexican official standards, NOMs) are clearly defined.  In 
some cases, importers of products from 
countries with which Mexico has a preferential agreement may utilize the certification obtained by other importers of the same product.  Goods subject to sanitary and phytosanitary measures must comply with 
NOMs, phytosanitary or animal health 
information sheets, and/or inspection requirements. 
(4) M
EASURES AFFECTING EXPORTS  
19. Mexico promotes exports by granting 
tariff and fiscal concessions as well as 
administrative facilities.  The major promotion instruments, the Maquila and the PITEX, were amalgamated into the IMMEX programme at the end of 2006.  This programme grants fiscal benefits subject to compliance with minimum 
export requirements, unless preferential 
agreements provide otherwise.  In addition to this scheme and the duty drawback, other programmes provide administrative facilities and/or financial support to companies meeting 
export requirements.  Mexico has not made 
any notifications on new or updated (non-agricultural) subsidies since 2001. 
20. Mexico also provides several export 
financing and guarantee schemes through 
development banks.  After having incurred 
large losses, the leading export bank was reorganized in 2007. 
(5) O
THER MEASURES AFFECTING 
TRADE  
21. Since 2002, Mexico has implemented 
several sectoral promotion programmes(PROSECs) under which the beneficiary 
companies may import inputs at reduced tariffs in order to produce particular goods.  As indicated in an official study, the PROSECs 
are not the best solution for offsetting the 
impact of MFN tariffs on the costs of companies importing inputs from non-preferential sources, inasmuch as their scope is limited and they involve administrative costs. 
22. In addition to the PROSECs, there are 
many other government support programmes in specific areas.  It would be helpful to analyse the extent to which the benefits derived from the various support programmes, including those oriented towards exports, 
offset their fiscal cost and the distortions they 
may cause among various activities. 
23. Since its last Review, Mexico has 
strengthened its competition legislation and competition authority.  Nevertheless, there are 
still monopolies and/or insufficient levels of 
competition in industries such as electricity, hydrocarbons, and telephony.  Enhancing competition in these and other key sectors of the economy is one of Mexico's most pressing economic policy challenges. 
24. Mexico is neither a signatory to nor an 
observer in the WTO Agreement on Government Procurement.  Most government procurement takes place through tenders only open to Mexican persons and goods, or to 
Mexicans and foreigners from countries with 
which Mexico has signed relevant agreements.  Although this could assist the domestic industry, it could also raise the cost of government procurement to the detriment of 
taxpayers. 
25. In 2000, the TRIPS Council examined 
Mexico's intellectual property legislation and Mexico has notified subs equent amendments.  
In several areas, Mexico grants protection that exceeds the minimum periods laid down in the 
TRIPS Agreement.  For example, copyrights 
were extended to 100 years in 2003.  It would be useful to analyse how such an extensionWT/TPR/S/195 Trade Policy Review 
Page x 
 
 
achieves a balance between the economic 
interests of right holders and those of users. 
(6) SECTORAL POLICIES  
26. Mexico has continued the reform of 
the agriculture sector to improve its market 
orientation.  There has been a reduction in the most distorting interventions and the efficiency of transfers to producers has been improved, but market price support and 
output-based payments still account for over 
half the support given to producers.  It would seem necessary to introduce further reforms in order to facilitate the reallocation of resources among activities and achieve a sustainable increase in the sector's productivity.  
27. The manufacturing sector has played a 
key role in Mexico's development and integration into the global economy.  Nevertheless, in recent  years the sector has 
lost part of its previous dynamism, owing both 
to cyclical factors and to a loss of 
competitiveness in international markets.  The authorities are aware of these challenges and are considering implementing reforms to enhance competitiveness.  Because of the large size and diversification of the sector, 
horizontal reforms that minimize the distortion 
of incentives would be particularly appropriate. 
28. The Constitution provides that the 
State must be responsible for exploiting 
hydrocarbons and for generating and 
distributing electric power to the public.  A heavy tax burden and consumption subsidies have meant that both the state-owned oil company, PEMEX, as well as the state-owned 
companies in the electricity sector, are facing 
significant difficulties in financing the investment required.  It would therefore appear essential to carry out structural reforms that ensure their financial viability, increase their efficiency, and allow a better use of Mexico's 
energy resources. 
29. In the services sector, Mexico made 
specific commitments in ten of the 12 sectors of the GATS.  It adopted the Fifth Protocol on Financial Services and the Fourth Protocol on 
Basic Telecommunications, accepting also the Reference Paper on regulatory principles in telecommunications.  In the context of the 
DDA negotiations, Mexico submitted an initial 
offer in 2003 and a revised offer in 2005. 
30. In many cases, the market access 
provisions in Mexico's legislation and preferential agreements are more liberal than 
the commitments it undertook under the 
GATS.  Mexico could enhance the predictability of its investment regime by closing this gap.  This could help to attract foreign investment, boost economic growth, and lead to more uniform treatment between 
preferential partners and other WTO 
Members. 
31. In the telecommunications sector, the 
traditional operator, TELMEX, still has a dominant position in key markets.  Moreover, 
interconnection problems remain among 
operators, and the price of service is high.  Foreign capital participation is limited to 49 per cent, except in the case of mobile telephony, where it may exceed this limit subject to authorization.  Relaxing these 
restrictions could complement other efforts 
being made to improve the competitive environment. 
32. In recent years, several reforms have 
transformed Mexico's financial sector, 
improving its regulation and supervision.  
Concurrently, commercial banking has seen significant internationalization.  There are no restrictions on foreign capital participation in banks or insurance companies from countries 
with which Mexico has a free-trade agreement 
that includes a chapter on financial services.  Foreign capital from other countries may have effective control of a bank but not of an insurance company.  In general, insurance may 
be taken out with foreign insurance companies 
only if a firm established in Mexico cannot 
cover the risk. 
33. Mexico's aviation market was 
dominated by a state-owned duopoly, but recent privatizations and the entry into the Mexico WT/TPR/S/195 
 Page xi 
 
 
market of low-cost airlines have led to a 
considerable increase in competition.  Foreign investment is limited to no more than 25 per cent of the capital of companies providing 
scheduled domestic air transport services, and 
up to 49 per cent of companies managing airports. 
34. There has been large-scale investment 
in modernizing the port infrastructure, but the 
authorities are aware that further progress is 
needed.  Cabotage is restricted to shipping lines with a majority of capital held by Mexicans.  International maritime transport is provided almost entirely by foreign shipping lines, nevertheless they may only participate if 
the ship's country of origin offers Mexico reciprocal treatment. 
35. A professional licence is required in 
order to engage in a profession in Mexico.  
The licence is valid nationally and requires, inter alia , possession of a recognized 
professional qualification and completion of a social service.  Some professional and 
technical services are reserved for Mexican 
nationals.  The exercise of professions by foreigners is subject to the principle of reciprocity.