WORLD TRADE  
ORGANIZATION  WT/REG198/M/1 
19 December 2008 
 
 (08-6244) 
Committee on Regional Trade Agreements 
Fifty-first Session  
 
 
 
CONSIDERATION OF THE ECONOMIC PARTNERSHIP AGREEMENT BETWEEN 
JAPAN AND MEXICO, GOODS AND SERVICES  
Note on the Meeting of 27-28 November 2008  
 
Chairman:  Mr. D. Brauns (Germany) 
 
 
1. The meeting was convened in document WTO/AIR/3261, dated 16 October 2008. 
2. Under Agenda Item B.II of its 51st Session, the Committee on Regional Trade Agreements 
(CRTA or the Committee) took up consideration of  the Economic Partnership Agreement between 
Japan and Mexico (hereinafter referred to as 'the Agreement'), goods and services. 
3. The Chairman  said that the Agreement had entered into force on 1 April 2005 and had been 
notified by the Parties to the WTO on 31 March 2005 under Article XXIV:7(a) of the GATT 1994 and the Understanding on the Interpretation of  Article XXIV of GATT 1994 as an Agreement 
establishing a free-trade area (document WT/REG 198/N/1) and under GATS Article V:7(a) as an 
Agreement providing for the liberalization of trade in services within the meaning of Article V of the 
GATS (document S/C/N/328).  The text of the Agreem ent was available, together with its Annexes, 
on the Parties' official websites.  In addition, on 12 April 2007 the Parties had notified changes to this 
Agreement as contained in document WT/REG198/3. 
4. The Factual Presentation on the goods and services aspects (document WT/REG198/4 dated 
15 September 2008) had been prepared by the Secret ariat on its own responsibility in full consultation 
with the Parties, in accordance with paragraph 7(b) of the Transparency Mechanism for Regional 
Trade Agreements (document WT/L/671).  In a ddition, written questions and replies on this 
Agreement had been recently distributed in doc ument WT/REG198/5 dated 21 November 2008.  He 
proposed to organize the consideration of the Agre ement by first asking the Parties and then other 
Members to give any general comments.  The Co mmittee would then turn to the specifics of the 
Agreement using the Factual Presentation, document WT/REG198/4, to guide the debate.   Given that 
the goods and services aspects of this Agreement were dealt with in a single factual presentation, he 
proposed that the Committee would go through the Factual Presentation section by section, and then 
look at the questions and replies document. 
5. The representative of Japan
 began by saying that the Agreement had been established with a 
view to realizing the full potential of the economic relationship between the Pa rties by liberalizing and 
facilitating trade in goods and services, investment, a nd government procurement,  in conformity with 
the WTO Agreements.  In Japan's trade and invest ment policy the Mexican market played a major 
role, not only as a large market in itself but as the gateway to the American market.  Consequently, it 
had been essential for Japan to strengthen the economic  relationship with Mexi co by concluding the 
Agreement.  Negotiation of the Agreement had begun in November 2002 based on what both sides 
had agreed on at the summit in October 2002.  The negotiations had been difficult because both 
Parties had pursued mutually satisfactory outcomes.   He, himself had endeavoured to conclude the WT/REG198/M/1 
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  negotiation when Japan had invited the then Mexican Pr esident, Mr. Fox, to pay a State visit.  On that 
occasion, following instructions from the leaders of  both countries, three ministers from Japan and 
two from Mexico had negotiated directly with each other until early morning without agreement.  
Following this his colleagues had continued the negotia tions and had been able to reach a substantive 
agreement.  The Agreement had been signed on 17  September 2004 in Mexico City and had entered 
into force on 1 April 2005.  It was the second Comprehensive Association Agreement for Japan 
following the agreement with Singapore.  The Agreem ent eliminated tariffs on 96% of total bilateral 
trade in 2002, and was applicable to the main sect ors.  Consequently, it was in conformity with GATT 
Article XXIV. 
6. It was also in conformity with GATS Artic le V because both Parties had committed to 
national treatment with regard to the main are as of services sectors.  Moreover, the Agreement was 
highly transparent in that it had specified the sect ors where reservations had been formulated by 
means of a negative list.  After its entry into force, trade in goods and investment had rapidly 
increased, particularly exports of automobile pa rts and parts for electronic products such as 
televisions.  Currently, Mexico was Japan's main tr ading partner in Latin America.  Total bilateral 
trade in 2007 had been 190% of total in 2004, when no agreement was in place.  In addition, total 
investment in Mexico had tripled.  The Parties ha d taken up liberalization measures for products that 
had not yet been liberalized completely.  For exampl e, Japan had liberalized or reduced tariffs on 99% 
of all imports from Mexico.  Since the Agreem ent had entered into force, both Parties had 
implemented it through the effective operation of the Joint Committee and the Sub-Committees.  Such 
efforts had led to a reduction of tariffs on poultry meat , beef, and fresh oranges.  There had also been 
concrete progress in the area of sanitary and phytosan itary measures.  The Parties had also set up the 
Committee for the improvement of the business envi ronment to promote trade and investment by 
private enterprises.  The Committee could invite representatives of private entities and provide them 
with an opportunity to present their request to the respective governments.  During the four sessions 
which had taken place so far, the Parties had achie ved a positive outcome, such as the improvement of 
public security and the establishment of a direct help line to the relevant authorities, which had been 
appreciated by the Parties.  He concluded that th e bilateral economic partne rship between the Parties 
would maintain and strengthen the multilateral trading system promoted by the WTO and would 
advance worldwide trade liberaliza tion and economic revitalization. 
7. The representative of Mexico  echoed the comments of his Japanese counterpart and thanked 
the Secretariat for its generous help.  From the Me xican delegation's point of view, the Agreement, by 
having established a framework of law and disciplin es to regulate economic re lations and bilateral 
cooperation with the world's second largest economy, had given a powerful impetus to trade flows, 
investment and cooperation between the two countri es, as well as to Mexico's competitiveness.  The 
Agreement reflected the ever-growing importance of the Asia-Pacific region in Mexico's trade policy 
through its recognition that factors such as the exte nsive interaction of their economies – which meant 
that several of the most important value chains in  the world originated in the region – and the great 
dynamism of its markets presented genuine opport unities for Mexico to establish future synergies 
with the region and participate more widely in tr ans-Pacific flows of trade and investment.  The 
Agreement underlined Mexico's strategy to consider Asia as a fundamental part of its international 
trade policy and to contribute thereby to the comp etitiveness of Mexico along four main activities: (i) 
exports, in order to increase the presence of Mexican goo ds in new markets;  (ii) imports, in order to 
facilitate the supply of components at lower cost, pa rticularly advanced technology products, and to 
strengthen manufacturing in Mexico;  (iii) attrac tion of investment, in order to support the 
development of sectors of high added value in Mexi co;  and (iv) cooperation, in order to take 
advantage as much as possible of the benefits of the liberalization and opening-up of markets in 
goods, services and capital under the Agreement. 
8. The Agreement had strengthened Mexico's positi on as Japan's principal trading partner in 
Latin America and had made Japan Mexico's fourth la rgest trading partner (after the United States, the  WT/REG198/M/1 
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  European Communities and China), by having generated bilateral tr ade of US$19,523 million1 in 
2007.  Total bilateral trade had increased by 25% from 2005-2007, while during the three years prior 
to the entry into force of th e Agreement trade had increased by 15.7%.  In 2007, Mexico's  exports to 
Japan had totalled US$3,163 million and, benefiti ng from the Agreement, its sales to Japan had 
increased at an average annual rate of 11% since 2005.   Products such as beef, pork, octopus, shrimps, 
fish meal, bananas, mangoes, frozen orange juice,  tequila, car seats, vehicle engines, telephones, 
medical equipment, microphones, and modular circuits  for electronic equipment had recorded growth 
rates ranging from 16% to over 400%.  Mexico had ev en begun to export cars to that sophisticated 
market.  Mexico was now the main supplier of a vocadoes, melons and mangoes;  the second of beer 
and guava, and the third of orange  and lemon juice to Japan.  Appr oximately 90% of Mexican imports 
from Japan were intermediate a nd capital goods which were not produced in Mexico, such as 
specialized steel products, semi-conductors, plasma and liquid crystal (LCD) television screens, car 
parts and precision equipment.  The imported go ods were incorporated into the products 
manufactured by companies based in Mexico in such  sectors as the auto parts-automobile sector and 
the electrical-electronic sector and subsequently were re-exported as finished goods of higher added 
value.  Since its signature in September 2004, th e Agreement had played a fundamental role in 
investment decisions taken by Japanese companies, principally in the industries manufacturing auto 
parts and automobiles, electrical-electronic goods , ceramic products and pl astic and rubber products, 
which had attracted investment in Mexico of over US$3,200 million.2  The growth of Japanese 
investment in Mexico, together with the supply of components imported from Japan had been a key 
factor in supporting sectors of high added value.  For example, Mexico had become one of the most 
important manufacturers in the world of flat-screen  televisions and occupi ed first position on the 
American continent. 
9. The Agreement not only included elements of trad e liberalization, but also contained bilateral 
cooperation provisions in such areas as: development of support industries and SMEs;  science and 
technology;  education and the de velopment of human resources;  and improvement of the business 
climate, etc.  Under bilateral cooperation, proj ects included the training of human resources in 
business consultancy for SMEs and the training of personnel in metal stamping technologies for the 
metalworking industry.  Both projects would help to promote the development of the support industry 
in Mexico in order to strengthen a manufacturi ng plant supplying the major Japanese companies and 
Asian value chains in general.  Thus, the benefits of this Agreement, three years after its entry into 
force, were undeniable and the Agreement compleme nted the trade negotiating strategy of Mexico.  
This Agreement was an addition to  Mexico's extensive network of free trade agreements with 44 
countries in three continents.  This network of agre ements had been one of the pillars of Mexico's 
economic growth in recent years and, above all, of the strategy to promote openness and strengthen 
competitiveness.  The benefits resulting from the Ag reement complemented the advantages that were 
derived in more general terms from Mexico's free tr ade agenda and which were finally being reflected 
in more and better paid jobs and in direct benef its for Mexican consumers by providing them with a 
greater choice of goods at more competitive prices. 
10. The representative of the United States  thanked the Parties and the Secretariat for the 
information provided on the Agreement.  It w as necessary for the United States to draw specific 
attention to the serious short-comings in this partic ular Agreement, particular ly with regard to the 
unbalanced treatment of agricultural tariffs as compared to those on industrial goods.  While the 
United States commended the Parties for having elimin ated tariffs on a high percentage of their 
industrial goods, duty elimination on only 42% of agricultural tariff lines by Japan and 53% by 
                                                      
1 Source:  Banxico and Ministry of Finance of Japan. 
2 Source:  Office of the Ministry of the Economy in Tokyo, Japan.  The investments announced came 
into effect as the companies' invest ment plans came to fruition.  Furthermore, it was important to emphasize that 
much of these investments were made via the headquarters of Japanese companies established in the 
United States, and thus were recorded as investment from that country. WT/REG198/M/1 
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  Mexico was highly disappointing.  Given the significance of agricultural products to Mexico's exports 
to Japan, he wondered how the Parties could consider  the limited coverage of  agricultural products as 
appropriate under the requirements of the GATT Ar ticle XXIV.  It was his delegation's opinion that 
preferential liberalization agreements could be co mplementary to, and support, liberalization in the 
multilateral trading system.  However, in its experience, RTAs with limited coverage where 
significant carve-outs had only solidified entren ched agricultural inte rests complicated the 
effectiveness of the multilateral system and arguabl y prevented its progress.  This was regrettable.  
This Agreement was all the more di sappointing due to the fact that Japan had contributed significantly 
less to the Agreement than Mexico with regard to tariff elimination.  From his delegation's point of 
view, this seemed inappropriate for one of the world's largest traders. 
11. With respect to consistency with GATT Article XXIV, the representative of Japan  replied that 
although GATT Article XXIV:8 did not specify any quantitative benchmark, it was his delegation's 
opinion that the Parties had liberalized substantially  all the trade and there was no carve-out of major 
sectors.  Therefore, Japan believed that the Agreem ent was fully consistent with GATT Article XXIV.  
In terms of the imbalance in liberalization of  agricultural and industrial goods, these outcomes 
reflected the result of negotiations as had been stat ed in the written response.  In addition to tariff 
elimination Japan had made furthe r liberalization efforts and aimed to reduce tariffs by establishing 
special arrangements of tariff quotas for several sen sitive products.  This had taken into account the 
special interests of Mexico.  As a result, approximate ly 90% of total imports of agricultural, forestry 
and fishery goods by value from Mexico by Japan in  2002 was subject to either tariff elimination or 
reduction under the Agreement.  In the case of industrial goods, 99% of imports by value from 
Mexico by Japan was subject to tariff elimination or reduction. 
12. Referring to paragraph 24 of the Factual Presentation and written question no. 22, the 
representative of the United States  said paragraph 24 of the Factual Presentation showed lines that 
would remain dutiable at the end of the implementa tion period in 2015.  Unfortunately, the response 
to question no. 22 was confusing.  If the 26 lin es, whose duty was to be reduced or to remain 
equivalent to the MFN duty, were excluded from dut y elimination, why had they been separated from 
the other 1,032 lines that had been shown as excl uded from duty elimination?  Additionally, the 
response had indicated that some of the 26 lines we re under categories A, B4, B8, and Ca.  He asked 
whether these lines were subject to full duty elimin ation or not.  The Agreement noted that duties for 
products under category A were to be eliminat ed immediately upon implementation.  Duties on 
products in categories B4 and B8 were to be eliminat ed within four and eight years, respectively.  He 
asked Japan to indicate which products under categories A, B4, B8, and Ca were not subject to 
'complete' tariff elimination.  The representative of Japan  explained that the 26 tariff lines contained 
both excluded lines and lines subject to liberalization.  As noted in the written replies, those 26 lines 
were further divided beyond the 9-digit tariff classifi cation which meant a part of the line would be 
excluded from tariff liberalization, but the other fell into categories A, B4, B8, etc.  His delegation 
would submit further detailed explanation on the 26 lines to the Committee in writing. 
13. Referring to paragraph 26 of the Factual Presen tation, and the response to its written question 
no. 23, the representative of the United States  asked for confirmation that there was no commitment to 
liberalize trade in those products "subject to consulta tions";  that products "whose tariff rates are to 
remain unchanged until 2015" were not subject to any lib eralization;  and that consultations on further 
liberalization could not be undertaken until 2015.  If this was not correct he wanted an explanation.  
The representative of Japan  replied that no commitment on liberalization had been made at the time of 
the conclusion of the negotiations which was why th ese lines were subject to further consultations.  
Japan would consult Mexico in accordance with Ar ticle 5 of the Agreement.  These consultations 
would take place in the future, and he was not in a position to prejudge their results at this moment.  
He added that Article 5.3.(a)(ii) of the Agreement s tipulated the possibility of consultations for further 
trade liberalization between the Parties after four y ears from the date of the entry into force of the  WT/REG198/M/1 
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  Agreement.  Therefore, consultations could take place in accordance with this Article even before 
2015. 
14. The representative of the European Communities (EC)  thanked the Parties for their detailed 
explanation regarding their negotiations and also for the replies to questions.  Regarding the questions 
and answers document, for the sake of transparency and coherence, the EC said that it was preferable 
if the Parties provided joint replies to each questi on instead of individual replies as had been the case 
for several questions.  In that way, Members would be reassured by the completeness of the mutually 
agreed reply by both Parties. 
15. As regards liberalization commitments, she underlin ed the lack of ambitious liberalization in 
agriculture, noting that only 42% of Japanese agricu ltural tariffs were duty-free under the Agreement 
while 53% of Mexican agricultural lines were duty-fr ee.  This level of liberalization was in stark 
contrast with the more ambitious liberalization in trade in industrial goods.  She noted that the Parties 
had stated that the liberalization commitments we re the result of negotiations which had taken due 
account of specific concerns and interests and that a ccording to Article 5 of the Agreement, the tariff 
lines which remained dutiable could be subject to rene gotiation.  In this regard, her delegation wished 
to know precisely whether the Parties intended to  liberalize further the products which remained 
dutiable, and if so, how this would be conducted. 
16. The representative of the United States  appreciated Japan's response and wished to follow up 
on those comments.  It was his understanding that th ere had already been some consultations between 
the Parties regarding further liberalization after the Ag reement had entered into force.  In this regard, 
he asked whether there had been actual tariff liber alization on any items.  The representative of Japan  
responded that the Parties had agreed on tariff reductions for poultry meat, beef and fresh oranges as a 
result of the consultations under Article 5.3.(a)(i) of  the Agreement.  The reduction had been realized 
through the conclusion of a protocol which had ente red into force on 1 April 2007.  With respect to 
products under category R, the Parties were currently  involved in consultations.  Japan then provided 
the additional information requested by the represen tative of United States on the protocol, in which 
both Parties had agreed on the reduction of in-quota rates as follows:  for poultry meat, Japan 
originally had committed to apply preferential dutie s which were lower than MFN duties by 10%.  In 
the Protocol, Japan had now committed to apply preferential duties which were lower than MFN 
duties by 10 to 40% for 2006 to 2009.  For in-quota rates for beef, Japan originally had committed to 
apply preferential duties which were 10% lower than MFN duties.  In the Protocol, preferential duties 
were lower than MFN duties by 10 to 40% for 2007 to 2009.  For in-quota rates for fresh oranges, 
Japan originally had committed to apply preferentia l duties which were 10% lower than MFN duties.  
In the Protocol, preferential duties were lower than MFN duties by 50% for 2007 to 2009.  The representative of the United States
 asked whether the quota amounts had been changed and said it 
would be useful to have the actual tariff reduction and the actual in-quota rates.  Therefore, his 
delegation asked what the range of in-quota tariff rates was.  The representative of Japan  said it would 
check on these rates and provide the information to th e Secretariat to be forwarded to the Members. 
17. With reference to paragraph 66 of the Factua l Presentation and the response to question no. 
25, the representative of the United States  said the Parties had noted that reservations to the 
Agreement's obligations on local presence (Article  100 of the Agreement) and national treatment of 
investment (Article 58 of the Agreement) could pr ovide guidance to service suppliers regarding the 
imposition of market access limitations described in  GATS Article XVI 2(e) and 2(f).  He asked the 
Parties to confirm that they maintained quantita tive restrictions of the kinds described in GATS 
Article XVI 2(a) – 2(d) and that these restrictions ha d not been listed in the text nor in the Annexes of 
the Agreement.  With respect to non-discriminatory quantitative restrictions that might be maintained 
or imposed by the Parties and as described in GATS Article XVI 2(a) – 2(d), his delegation wondered 
whether it was accurate to say that the Agreemen t provided no further liberalization beyond the 
Parties' GATS commitments.  The representative of Japan  considered that the commitments that had WT/REG198/M/1 
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  been made by the Parties on non-discriminatory quan titative restrictions with respect to local presence 
went far beyond those under the GATS, where mark et access commitments were undertaken only in 
the sectors specified in Members’ Schedules.  As th e Parties had decided to adopt a “negative list” 
approach in the services Chapter including local presence, they were committed not to adopt non-
discriminatory quantitative restrictions except those for which they had made reservations in Annexes 
6 and 7. 
18. Referring to paragraph 84 of the Factual Pr esentation and to written question no. 26, the 
representative of the United States  said the Parties had suggested in their response that 
paragraph 59.B.2 of the Introduction to the Provisi onal Central Product Classification (CPC) "admits 
that certain services may not be classified under th e categories specified in the CPC."  Paragraph 
59.B. of the CPC addressed the situation where par ticular services might appear to be classifiable 
under two or more CPC categories and prescribed rules for determining the most appropriate 
classification for a particular service.  The paragraph did not suggest that there were services, existing 
or new, that might not be classified under the CPC.  On the contrary, it recognized the fact that not all 
services would be explicitly described and provide d guidance on how to determine which category 
provided the best fit.  Paragraph 59 did not detract from, or contradict, the essential principle 
expressed in the preface in paragraph 21 of the CPC that it was a system of categories covering goods and services that was exhaustive and complete.  Pa ragraph 59.B.2 reinforced this principle by 
providing for a method of classification for ever y possible service.  Referring to written question 
no.27 and with reference to Tables II.8 and II.10 of  the Factual Presentation, he said the Parties had 
suggested in their response that their broad reservatio ns for regulations of services which had not been 
technically feasible at the time of the entry into force of the Agreement were necessary to "reserve the 
right to impose appropriate measures ".  He asked wh ether the Parties could explain, in the absence of 
the reservations in the Annexes, how the obligati ons under the Agreement would interfere with their 
ability to "impose appropriate measures" in respect of  new services.  He then referred to the Parties' 
Annex 7 reservations for "new services" applied onl y with respect to the obligations on national and 
MFN treatment, and local presence.  He asked whethe r they could explain why they envisaged having 
to impose regulations on new services in a mann er that discriminated against or among foreign 
suppliers specifically.  The representative of Japan
 responded that there might be a case where new 
services which could not have been foreseen at the tim e of the entry into force of the CPC and later 
the Agreement emerged as a consequence of technologi cal advances.  Japan had wished to reserve the 
right to impose appropriate measures in respect of new and unknown services in order that such 
measures would not be construed as contrave ning its obligations under the Agreement. 
19. The Chairman  noted that the consideration of the goods and services aspects of the Economic 
Partnership Agreement between Japan and Mexico ha d allowed the Committee to clarify a number of 
questions and oral discussion of the Agreement coul d be concluded in accordance with paragraph 11 
of the Transparency Mechanism.  If any delegations  wished to ask follow-up  questions they were 
invited to forward submissions in writing to the Secretariat by 4 December 2008 and Parties were 
asked to submit replies in writing by no later than 18 December  2008.  In accordance with paragraph 
13 of the Transparency Mechanism all written subm issions, as well as minutes of this meeting would 
be circulated promptly, in all WTO official la nguages, and would be made available on the WTO 
website. 
20. The Committee took note  of the comments made. 
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