8 October 1997
POLICY REVIEW BODY: REVIEW OF MEXICO
TPRB'S EVALUATION Back to top
The Trade Policy Review Body
of the World Trade Organization (WTO) concluded its second review of Mexico's trade
policies on 7 and 8 October 1997. The text of the Chairperson's concluding remarks is
attached as a summary of the salient points which emerged during the discussion.
The review enables the TPRB
to conduct a collective examination of the full range of trade policies and practices of
each WTO member country at regular periodic intervals to monitor significant trends and
developments which may have an impact on the global trading system.
The review is based on two
reports which are prepared respectively by the WTO Secretariat and the government under
review and which cover all aspects of the country's trade policies, including: its
domestic laws and regulations; the institutional framework; bilateral, regional and other
preferential agreements; the wider economic needs and the external environment.
A record of the discussions
and the Chairperson's summing-up, together with these two reports, will be published in
due course as the complete trade policy review of Mexico and will be available from the
WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the
following reports have been completed: Argentina
(1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Benin (1997),
Bolivia (1993), Brazil (1992 & 1996), Cameroon (1995), Canada (1990, 1992, 1994 &
1996), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), C˘te
d'Ivoire (1995), the Czech Republic (1996), Cyprus (1997), the Dominican Republic (1996),
Egypt (1992), El Salvador (1996), the European Communities (1991, 1993 & 1995), Fiji
(1997), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland
(1994), India (1993), Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992 &
1995), Kenya (1993), Korea, Rep. of (1992 & 1996), Macau (1994), Malaysia (1993),
Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990
& 1996), Nigeria (1991), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997),
Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994),
Singapore (1992 & 1996), Slovak Republic (1995), South Africa (1993), Sri Lanka
(1995), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 &
1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992, 1994 & 1996),
Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY: REVIEW OF
CONCLUDING REMARKS BY THE CHAIRPERSON Back
The second Trade Policy
Review of Mexico was conducted on 7-8 October 1997. These remarks, prepared on my own
responsibility, are intended to summarize the discussion and not to be a full report: this
will be contained in the minutes of the meeting.
The discussion developed
under four main themes:
Economic and developmental policies
Members commended Mexico on
the positive macroeconomic developments since the deep recession of 1995; economic growth
had resumed, inflation fallen, capital inflows risen and public finances improved. They
praised the Mexican authorities for their courageous response to the 1994 financial
crisis, particularly for having avoided protectionist measures. Members also noted the
fall in per capita income following of the 1995 crisis, and the persistence of poverty,
especially in rural areas. It was noted that recently some economic indicators, including
the current account balance, had again deteriorated. Some Members stressed the need to
maintain the exchange rate at a competitive level.
In reply, the representative
of Mexico said that the response of his Government to the financial crisis of 1994 had
been to deepen the reforms, and accelerate structural change and economic liberalization,
committing itself to the disciplines of the market. He gave details of fiscal policy aimed
at improving the revenue-expenditure balance and reducing public debt. Pension reforms
were expected to increase savings and help finance future investments. Monetary policy,
acting through interest rates, had recently been used to prevent real exchange rate
appreciation resulting from short-term financial inflows. As a result, exports had grown
strongly. The Mexican Government was conscious of the effects of the crisis on the
standard of living and was focusing on sustained medium-term growth to create employment
as the best means of addressing the problem; increasing public resources were being
devoted to social concerns. The prospects for growth in the next few years were positive;
not less than 6 per cent this year and 5.5 per cent in 1999 and 2000, with exports
continuing to play an important role.
He added that the Industrial
and Trade Policy Programme (PPICE) recognized the need for sustained development,
employment creation and improved standards of living. Policy sought to alleviate market
imperfections and improve industrial competitiveness. The representative elaborated on
various aspects of the programme aiming at providing better information for business,
promoting economies of scale, assisting the grouping of small enterprises and encouraging
transfer of technology and development of labour.
Members praised Mexico's
active and positive role in the WTO. They also took note of Mexico's growing participation
in regional trade agreements, highlighting in particular NAFTA's major role in Mexico's
trade policy reforms. Areas of concern included the continued and considerable dependency
of Mexico on the U.S. market, the widening gap between preferential and MFN tariff rates,
and the impact on third parties of NAFTA rules on customs valuation and rules of origin.
Members thus sought Mexico's views on the link between regional and multilateral
liberalization and the possibility of trade distortion, as well as the use of reciprocity
as a guiding principle of trade policy. They asked under what conditions Mexico would
extend the benefits of NAFTA liberalization to all WTO members. Members were also
interested in Mexico's agenda for future regional integration.
Mexico was encouraged to
notify to the WTO the G-3 Agreement, and its agreements with Bolivia and Costa Rica.
Details were also sought on the WTO justification for the existence in the NAFTA of some
phasing out periods exceeding ten years.
In reply, the representative
of Mexico said that participation in the WTO, including the dispute settlement mechanism
was fundamental to Mexico's trade policies. It was also a key element in how Mexico had
addressed the financial crisis, having a positive effect on the expectation of the
business and financial community and increasing confidence in Mexico's future. Mexico's
relationship with the United States was intense and complex; NAFTA created a
permanent legal basis for North American cooperation, that went beyond Uruguay Round
commitments. Given the slow speed of improvements in the multilateral system, Mexico was
continuing to explore the regional path as a means to greater liberalization. He mentioned
the EU, Israel and APEC as new areas for such cooperation. However, Mexico supported the
opening of a new round of multilateral negotiations that would lead to further bindings
The representative pointed
out that many of the benefits of NAFTA were available on an MFN basis to other WTO
members, especially in services other than financial services. Mexico had recently also
eliminated MFN tariffs on some 1200 tariff lines of inputs and machinery. Since 1995,
imports from non FTA partners had shown great dynamism, growing very rapidly in the first
half of 1997. In practice, Mexico also considered important the principles of MFN and
national treatment in federal government procurement; reservations for national suppliers
were clearly specified in Mexico's international treaties. The representative concluded
that Mexico's regional agreements complemented the multilateral system. Most, including
NAFTA, LAIA and the G-3 agreement, had been notified and others would be notified shortly.
Implementation of commercial policies, including
Members appreciated Mexico's
autonomous tariff reductions and the decline in other restrictions since the 1980s.
However, concerns were expressed about the gap between "ceiling" bound tariffs
and applied levels; this issue was highlighted by increases in tariffs for textiles,
clothing, and footwear in 1995. Some Members asked about the rationale for such increases
in view of the earlier strong devaluation of the Mexican currency.
Several Members expressed
concern regarding Mexico's application of a FOB customs valuation base for NAFTA and CIF
for other partners. Some Members sought information on the operation of registration
requirements, including on a sector-specific basis. Information was also requested on
restrictions on the entry of various products through specific Mexican ports.
Some Members noted Mexico's
intensive use of anti-dumping measures, which they felt was increasing uncertainty for
economic operators, while undermining Mexico's reforms. Information was requested on
proposed changes to current anti-dumping legislation, and on the independence of its
anti-dumping authority; it was also noted that Mexico imposed special origin certification
requirements for certain products subject to anti-dumping measures; in the opinion of some
Members, these requirements imposed excessive demands on traders from third countries.
Potential problem also
included the increased use of technical and labelling requirements that did not seem to
conform to international standards, including brand regulations introduced in 1996. Mexico
was asked about the scientific justification for measures affecting rice imports.
Members noted that Mexico
was not a member of the WTO Government Procurement Agreement, and restricted national
public tenders to domestic suppliers. Mexico was asked whether it would consider acceding
to a new agreement on government procurement or participate in the ongoing discussions on
Several Members asked when
Mexico would notify CONASUPO as a State trading enterprise.
information on the current status of policy reforms affecting agriculture, including the
use of tariff quotas and direct payments under PROCAMPO. Some Members thought that there
was a need for further trade liberalization on an MFN basis.
Members recognized the
considerable economic importance of the maquiladora industry, but some stressed the need
to encourage its closer integration in the domestic economy. Several Members sought
details on the phasing out of the regime by 2001, as provided under the NAFTA, and the
regime that would then prevail with respect to third countries.
Mexico's policies to promote
the automotive sector were seen as contradicting the country's general thrust towards a
more liberal trade regime. Some members asked how current restrictions would be
liberalized for suppliers not currently producing in Mexico. Mexico was requested to open
the automotive market after the year 2000, as provided by the WTO TRIMs Agreement.
Members asked about plans
for further liberalization of trade and investment conditions in services and welcomed
Mexico's active participation in current negotiations. Details were requested on Mexico's
policy towards financial services. Information was also requested on how Mexico's
development banks obtained funding and set interest rates.
In reply, the representative
of Mexico pointed out that Mexico's trade liberalization, including recent tariff
eliminations, was largely the result of autonomous actions, benefiting all partners. The
gap between applied and bound rates was due to this liberalization as well as to
tariffication in agriculture. Mexico stood ready to negotiate on bound levels in a new
multilateral round. He noted that recent tariff increases on textiles, clothing and
leather goods were within bound levels. The difference between customs valuation on a FOB
basis of NAFTA trade and CIF basis for other trade would be insignificant and temporary,
given the geographical proximity, and the large share of duty-free trade, which would
eventually encompass all NAFTA trade. The representative noted that initiation of
anti-dumping procedures depended on requests. The new draft law, still to be approved by
Congress, was intended to harmonize domestic texts with the WTO rules, which had the
status of Supreme Law in Mexico. Origin certificates were intended to counter
circumvention in cases where final anti-dumping duties had been imposed.
The representative said that
there was no requirement for domestic standards to be in strict agreement with
international standards, although in Mexico the latter often served on the basis for
domestic norms and this was considered important for promoting Mexico's economic
development and international competitiveness. He gave details of the operation of the
National Standardization Commission, procedures for the establishment of Mexican standards
and certification, which were open, transparent and equitable, and on the use of ISO 9000
and 14000 procedures. NAFTA provisions in this regard were compatible with WTO rules and
its Code of Good Practice. He also gave details of Mexico-EU cooperation. The operation of
the Mexican labelling system was explained. The National Commission for Animal and Plant
Health, an autonomous body, established, regulated and coordinated sanitary and
He said that, as noted
earlier, Mexico had a transparent and non-discriminatory regime for government
procurement, and most federal procurement was on an international basis. Reciprocity rules
reflected international realities. Mexico had fought for this subject to be included in
FTA agreements and supported the work of the WTO working party on transparency in
government procurement. At present, however, the GPA was limited in membership and did not
guarantee reciprocal treatment.
emphasized that, following the Uruguay Round, CONASUPO was no longer the sole channel for
the import of milk powder. Others could import at the in-quota tariff with appropriate
certification, or otherwise at the out-of-quota rate. The issue of licences to
"traditional" importers (in this event, CONASUPO) for in-quota imports should
not be confused with state-trading operations.
The representative also gave
details of the operation of various sectoral policies. He said that the in-bond
(maquiladora) industry regime would be changed from 1 January 2001 as a result
of NAFTA commitments, to equalize tariff treatment on inputs as between goods sold on
domestic markets and exports to other NAFTA partners. MFN duties would continue to be paid
on imports from non-NAFTA partners.
In agriculture, the role and
coverage of PROCAMPO was explained; imports could exceed WTO access commitments if
required to ensure supplies; price controls were limited to tortillas and to corn flour.
He explained the status of automotive policy, which aimed to expose the sector
progressively to external competition; TRIMS provisions had been notified and NAFTA
aspects discussed in the WTO Committee on Regional Trade Agreements; he noted that the
transitional period allowed under the TRIMS agreement could be extended by the Council on
Trade in Goods.
The representative noted
that market opening and deregulation had improved the supply in, and competitiveness of,
the services sector in recent years. Mexico's commitments in the WTO were extensive and
ambitious. The sole exceptions to MFN treatment related to cross-border land transport
with the U.S.; Mexico was reviewing its commitments with a view to removing as many
barriers as possible on an MFN basis. He provided details on certain limits to foreign
investment and the circumstances in which the limits could be exceeded. He also reviewed
developments, bindings and conditions for foreign direct investment in telecommunications,
maritime and land transport, and financial services.
Members sought information
on recent foreign investment flows, and on policies and regulations to diversify the
sources of new investment. They asked about the elimination of remaining restrictions on
private and foreign participation in a number of sectors.
Mexico was asked about its
recent experience with the Federal Competition Commission, on plans to strengthen the
Commission, and on cooperation programmes with other countries in competition policy.
Several members expressed
appreciation for the introduction of improved legislation on intellectual property, but
raised various questions on plant protection, copyright and enforcement. One Member
requested information on a new Health Law affecting generic drugs.
In reply, the representative
of Mexico said that the Foreign Investment Law of 1996 had extended on an MFN basis the
treatment negotiated under NAFTA. He cited examples of the liberalization and
simplification of the investment regime. Other regional trade agreements also included
disciplines on investment. Bilateral agreements for the protection of investment had been
signed with a number of countries and Mexico was participating actively in the OECD
negotiations for a Multilateral Agreement on Investment.
He said that deregulation
and privatization complemented economic liberalization, especially in services, fisheries
and mining. The Council on Economic Deregulation was working mainly on simplifying
administrative procedures and eliminating inefficiencies, and he gave examples of
legislative reform in the area. He also provided information on the operations of the
Federal Competition Commission, an autonomous body charged with investigating and
combatting monopolies, monopolistic practices and anti-competitive mergers, fostering
deregulation and promoting a competitive environment. He gave details of international
cooperation in this area.
He drew attention to the
fact that, while Mexico was using the extended period afforded to developing countries to
implement the TRIPS agreement, Mexico now had modern legislation in this area, covering
industrial property, authors' rights and plant protection. Work was also being undertaken
to draft a law for the protection of integrated semi-conductor circuits. He gave details
of penalties for infringement and confirmed that customs could seize infringing goods.
* * * * * * * Back to top
Overall, Members commended
Mexico for its continued programme of trade liberalization and economic reform, despite
the difficult circumstances faced in recent years. Mexico's open policy had assisted
recovery from the 1995 recession. However, concerns about certain areas were
expressed in the discussion, including: the balance between regionalism and
multilateralism; the use of anti-dumping measures; government procurement policies;
application of standards; and sectoral policy aspects in agriculture, manufacturing and
services. Members encouraged Mexico to continue its positive participation in the WTO.