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Mexico-Japan Economic
Partnership Agreement.
A Success Story
Dr. Sergio Inclán

Minister. Embassy of Mexico in Japan
Representative in Japan. Ministry of Economy of Mexico

Antecedents
Mexico and Japan share a long history of Friendship, Commerce and Cooperation. The first contacts
between the two Countries date back to the XVICentury. Two years ago, we commemorated the400th Anniversary of the Commercial Mission led
by Hasekura Tsunenaga, whom arrived in Acapulco, Mexico, in January 1614 with the objective toestablish direct trade between Japan and Mexico.
In 1888, Mexico and Japan concluded a very important Agreement, the Friendship, Commerce andNavigation Treaty which represented for Japan its
first Treaty on an equal basis with a Western Country. This important Treaty served as the legal
precedent that allowed the Meiji Government tofinally review the unequal Treaties that Japan had
concluded previously with Western powers. For
Mexico, the Treaty of 1888 with Japan was its first
Commercial Agreement with an Asian Nation.
At the beginning of the XXI Century, Mexico andJapan made a very important decision, to further
strengthen their Friendship, Commerce and Cooperation by negotiating a Free Trade Agreement.

Mexico-Japan EPA. Key Features
The historical friendship, cooperation, and highlevel of economic complementarity between Mexico and Japan were among the main elements that
motivated both Nations to seek a modern Agreement for the XXI Century. Negotiations for theconclusion of a Free Trade Agreement between
Mexico and Japan started in November 2002. Afteralmost two years of an intense process of negotia4

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tions, both countries signed the EconomicPartnership Agreement (EPA) on September 17th2004. The Agreement entered into force on April
1st 2005 after the corresponding ratifications bythe Congress of Mexico and the Diet of Japan.
As a result, Mexico and Japan concluded a newgeneration, and at that time a state of the art TradeAgreement, establishing all the disciplines comprising a Free Trade Agreement: Trade andInvestment Liberalization; Market Access Improvement; Investment Protection; Dispute of Settlements;
Government Procurement; Customs Procedures;
Rules of Origin; etc. Additionally, the EPA includes
a strong mechanism of bilateral cooperation to further strengthen the economic relationship, andmaximize the trade and investment liberalization
between both countries through several Sub-Committees. The EPA includes a Joint Committee and a very
important mechanism for the improvement of thebusiness environment as well, through the Improvement of Business Environment Committee, whererepresentatives of both Governments and the private
sector give recommendations in order to further
strengthen the Mexico-Japan economic partnershipand move it forward.
For Japan, the EPA with Mexico was its first fullfledged Free Trade Agreement including all sectors,
even agriculture, and according to WTO disciplines. For Mexico, the EPA with Japan was its
first Free Trade Agreement with a country fromAsia, and it further consolidated Mexico’s FTAs
Network with preferential access to more than 45countries around the World.

メキシコ 特集

Mexico-Japan EPA: 10th Anniversary.
Positive Results

Mexican exports of manufactured and added value
products to Japan accounted for more than 45% in
2014, serving as evidence of the crucial role of theautomotive, electric, energy, chemical among others, in the bilateral trade. Moreover, these industries
are helping to increase and diversify our trade andto link global supply chains in which both countries are involved, benefiting both countries.

April 1st of 2015 marked the 10th Anniversary of
the EPA entering into force. As we will now describe, as a result of the great efforts by the private
sector and Governments of Mexico and Japan, theEPA has been a Success story for both Countries in
the first 10 years of its implementation. The EPA
has further strengthened bilateral trade, the flow of
direct investment, is supporting industries andsmall and medium size companies, and is fostering
cooperation in key sectors of their respective economies, which is strengthening the economic
partnership between both countries further.

Thanks to the EPA, Japan is for Mexico it’s Third
most important trade partner just after its NAFTApartners, the United States and Canada. Moreover,Japan has become the second most important market for Mexico’s exports of agriculture, fisheries,
and beverage products just after the United States,
accounting for USD 977 million in 2014.

Bilateral Trade
From January to November of 2015, bilateral trade
has reached USD 20,275 million with an incrementcompared with the same period of 2014. During
the same period, Mexico’s exports to Japan accounted for USD 4,326 million, while Japaneseexports to Mexico reached USD 15,949 million.

Since the EPA was signed, bilateral trade has increased 71.4% from USD 12,752 million in 2004
to USD 21,857 million in 2014. During this period,Japanese exports to Mexico increased 65.7% fromUSD 10,583 million to USD 17,544 million. Main
Japanese products exported to Mexico included automobiles, auto parts, precision tools andinstruments, electronic boards, etc.

Japanese Direct Investment into Mexico
The EPA contains state of the art provisions thatgive certainty and legal security to the flow of direct investment. Chapter 7 of the EPA recognizes
important principles like National Treatment andthe Most Favored Nation Treatment for investors ofboth Countries. As we will now describe, the economic and political stability of the Country,
Mexico’s vast Free Trade Agreements Network,
including the EPA with Japan has further consolidated Mexico as an important destiny of foreign

In the same period Mexico’s exports to Japan increased 98%, from USD 2,169 million to USD
4,313 million. Mexico’s main products exported tothe Japanese market were auto parts, machinery,electronic components, optical instruments, chemicals, agriculture products and other commodities.
As a positive result of the EPA, the composition of
Mexico’s exports to Japan has been changing.

Mexico-Japan Trade 1993-2014（USD Billion）
25
Mexico’s Exports to Japan
20
Japan’s Exports to Mexico
15
10
5
0

$5.1

1.4

2.6

2.4

1.6

1.9

98

99 2000 01

1.2
3.9 4.8

1.4 2.1 1.94

6.5
4.1 4.3 4.5 5.1

1993 94

95

96

97

$21.8

EPA
Signed
2.3

2.3
2.1

8.1 9.3 7.6
02

03

10.6
04

2.6

2.8

3.8

3.54

2.8

13.1 15.3

05

3.206

16.4 16.3

0708

11.4

09

15

16.5

10114.4

4.2

4.3

17.6 17.1 17.5

1213

14Since EPA was signed in 2004, Bilateral Trade has grown 71.4%.
Source: Office of the Ministry of Economy of Mexico in Japan with data from the Bank of Mexico and the Ministry of Finance of Japan

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direct investment. Investors take advantage ofMexico’s preferential access to the most important
markets in the World, competitive human resources, and its strong business environment.

Toyota Motor Sales of Mexico initiated operations inApril of 2002. Later on, Toyota Motor Manufacturinginitiated operations in Baja California, Mexico in2004, for the production of Tacoma for the US market.

Since the EPA entered into force in 2005 until September of 2015, there has been an unprecedented
flow of Japanese Direct Investment into Mexico.
Japanese companies have announced major investment projects in Mexico for more than USD 19.6
billion in several sectors key of the Mexican economy including but not limited to: Automotive;
Energy; Infrastructure; Electric and electronics;
Metallurgic; Agroindustry, among others.

Since the EPA was concluded in 2005, Japanese Direct Investment into Mexico has been more heavily
concentrated in the Automotive Industry. All major
Japanese OEMs and their suppliers have announced
major investment projects for the production of automobiles and products in related sectors such as
electronic components, specialized steel, plastic,chemicals, etc., serving North America (Mexico,US and Canada), Europe, and Latin America.

Once again, the legal protection and certainty that
the EPA offers, political and economic stability,
strong business environment in the country, andMexico’s strong FTA’s Network with preferential
access to more than 45 of the most important markets of the World, have catalyzed the flow ofJapanese companies investments in the Country toserve not only the Mexican market but North
America, Latin America and Europe as well. Thus,Mexico has become an important platform for Japanese companies for their production and exports
to the most important markets in the World.

In 2011, Mazda Motor announced an investment ofUSD 770 million for the construction of its First
plant in Mexico. Mazda de Mexico started production of Mazda 3 in its new plant in Salamanca
Guanajuato, Mexico, in January of 2014. The plant
has a production capacity of 200,000 units.

As a result, Japan has become the most importantsource of foreign direct investment from Asia intoMexico. Moreover, Japan is now the third most important source of foreign direct investment intoMexico worldwide.

Japanese Investment in Mexico’s Automotive
Industry

Additionally in 2014, Nissan announced anotherinvestment project in Mexico, together with Daimler AG, worth USD 1.2 billion for the constructionof a plant for the production of high end automobiles, Infinity and Mercedes Benz. The newNissan-Daimler AG plant in Mexico will have aproduction capacity of 300,000 units per year when
it reaches full capacity.

Japanese OEMs have been operating and contributing to Mexico’s Automotive Industry for many years
now. Nissan Motor started operations in May of
1966 with its First plant in Cuernavaca-Morelos,
Mexico. A Second plant was built in Aguascalientes,
Mexico, starting operations in November of 1982.

In February of 2014, Honda announced an investment of USD 1.2 billion for the construction of its
Second Plant in Guanajuato, Mexico, with a production capacity of 200,000 units. In February of2014 Honda began production of the Fit model
mainly for the North American market as well.

Honda Motor started production of motorcycles inJalisco, Mexico, in 1971. Later on Honda started
the production of vehicles and auto parts in 1996.

In 2012, Toyota Motor Corp. announced a new investment project in Guanajuato, Mexico, for
production of automobiles in the Mazda Plant
within the framework of the Investment and Sup-6

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In January of 2012, Nissan announced an investment for USD 2 billion for the construction of its
Third plant in Aguascalientes, Mexico. In November of 2013 the new plant of Nissan was inaugurated
with a production capacity of 175,000 units.

メキシコ 特集Japanese OEM’s Production in Mexico has increased 223.6% with the EPA.
UNIT（1,000）
1,200

1,123

1,000hGrowt
223.6%

800

EPA600 Signed
400
20003424342750
514348347
2224
24

325

363

408

498

449

2004

05

06

07

08

Nissan

355
09

Honda

5455506
10

Toyota56636364607

684

680

11121350
45102
71
14480614MazdaProduction of Japanese OEM’s in Mexico reached more than 1.12 million units in 2014.
Source: Office of the Ministry of Economy of Mexico in Japan with data of AMIA

ply Agreement between the two Japanese OEMs.
Additionally in April of 2015, Toyota announced
an investment for approximately USD 1 billion tobuild a new plant in Guanajuato, Mexico. The newplant will have an annual capacity of 200,000 units,
starting production in 2019.
Since the signing of the EPA and due to the major
projects announced by the Japanese OEMs and their
suppliers, Nissan, Honda, Toyota and Mazda haveincreased production in Mexico by 223.6%, from346,626 units in 2004 to 1,123, 447 units in 2014.

form modified three articles of the Constitution ofMexico, allowing domestic and foreign private investment together with PEMEX and the Mexicanutility company CFE.
Mexico’s energy reform is generating high expectations in the international markets and among Leading
Energy’s companies Worldwide. The Energy reform
represents a great opportunity for Japanese companies in order to participate more actively in Mexico’s
Energy market, and to increase their presence inNorth America at the same time, with the possibility
to diversify their sources of energy.

Japanese Investment in Energy Sector
Since the Mexico-Japan EPA came into force in
2005, Japanese companies have been winning more
public biddings for energy projects with PEMEXand CFE, with an amount of approximately USD
5,044 million until 2014. The EPA has been a key
element for the increasing participation of Japanesecompanies in Mexico’s energy and infrastructure
sectors like Mitsui & Co, Mitsubishi Corporation,
Mitsubishi Heavy Industries, Sumitomo Corporation, Toshiba Ltd, Chubu Electric Power, etc., andwith the financial support of JBIC in some projects.
On December 23rd 2013, Mexico’s Energy Reform
formally became law following the approval inCongress and the ratification by the majority ofMexico’s States Legislatures. The objective of theEnergy Reform is to increase the competitivenessand efficiency of the energy sector to contribute toMexico’s sustainable economic growth. The re-Mexico and Japan have shared a Global vision
based on the principles of Friendship, Commerce
and Cooperation for more than 400 years. The first
10 years of the Mexico-Japan EPA have been aSuccess story based on the results described above.
Moreover, Asia-Pacific is the most dynamic region
in the World, with more economic growth expectedin the future. Based on the principle of co-existenceof current FTAs in the region, the Trans PacificPartnership Agreement will further strengthen theMexico-Japan EPA, as well as the Global StrategicPartnership between both Nations that our Leaders
have recognized in a Joint Declaration.
Finally, we strongly believe that our EPA, theTrans-Pacific Partnership Agreement (TPP), increasing investment and joint venture projects by
Mexican and Japanese companies in the Energy
sector will fuel a new era of Mexico-Japan Economic Partnership for the XXI Century.
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