Note: Advance written questions by WTO Members and replies provided by the Government of 
Mexico are reproduced in document WT/TPR/M/ 97/Add.1 and will be av ailable online at:  
http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm.WORLD TRADE
ORGANIZATIONWT/TPR/M/97
11 June 2002
(02-3226)
Trade Policy Review Body
15 and 16 April 2001
TRADE POLICY REVIEW
MEXICO
Minutes of Meeting
Chairperson:  H.E. Ms. Amina Chawahir Mohamed (Kenya)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF MEXICO 4III. STATEMENT BY THE DISCUSSANT 8
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 11
V. REPLIES FROM THE REPRESENTATIVE OF MEXICO AND
ADDITIONAL COMMENTS 20
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 24WT/TPR/M/97
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. Following the consensus in the General Council meeting of 15 February 2002 on the
appointment of Chairpersons to WTO bodies for 2002, the outgoing Chairperson (H.E. Mr. Pekka
Huhtaniemi) proposed that the Trade Policy Revi ew Body formally confirmed the appointment of
H.E. Ms. Amina Chawahir Mohamed, Permanent Representative of Kenya to the WTO, as
Chairperson.
2. The TPRB so agreed.
3. The third Trade Policy Review of Mexico was held on 15 and 16 April 2002.  The
Chairperson (H.E. Ms. Amina Chawahir Mohamed) welcomed the delegation of Mexico, headed by
Vice-Minister for International Trade Negotiations Angel Villalobos, and the discussant
H.E. Mr. Federico Alberto Cuello Camilo (Dominican Republic).  As usual, the discussant would
speak in his personal capacity and, in accordance with established procedures, he had made availablein advance a broad outline of the themes he intended to raise (document WT/TPR/D/76).
4. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The Report by the Government of Mexico was contained in document
WT/TPR/G/97 and that of the Secretariat in docu ment WT/TPR/S/97.  Copies of advance written
questions, submitted by:  Argentina;  Australia;  Canada;  Colombia;  the European Union;Guatemala;  Hong Kong, China;  Chile;  Japan;  India;  Republic of Korea;  Malaysia;  Norway;
Switzerland;  Thailand;  Turkey;  and the United States,  had been transmitted to the delegation of
Mexico.  These questions and the replies provided by the delegation of Mexico are reproduced in
WT/TPR/M/97/Add.1.
5. The Government and the Secretariat Reports, she said, concluded that trade and investment
liberalization had been a core element of Mexico's development strategy, and had contributed
significantly to its economic growth.  Liberalization had largely taken place under preferentialagreements, which covered Mexico's trade with 32 countries.  She noted that, as stated in the
Secretariat Report, this liberalization strategy had opened a significant gap between Mexico's
treatment to MFN and to preferential trade partners.  Referring to the Government Report, she noted
that preferential agreements had been an efficient way to promote and attract foreign investment, a
view endorsed by the Secretariat.  The Secretariat Report observed that some key activities, including
certain energy activities, remained off-limits to al l private capital, and that Mexico's authorities
considered the energy sector to be at a crossroads because of the limited state capacity to finance new
investment.  Addressing this and other structural problems was essential for Mexico to resume and
sustain fast economic growth.WT/TPR/M/97
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF MEXICO
6. The representative of Mexico recalled that the objectives of Mexican trade policy over the last
four years had been to open up the economy further, guarantee access to new markets, and create a
favourable environment for investment.  Bilateral free-trade agreements and Mexico's participation in
a range of regional and multilateral trade fora, in particular in WTO, had played a major role in
achieving these objectives.
(i) Context of Mexico's trade policy
7. Mexico's economic activity recovered very rapidly from the crisis of 1995, with an average
annual GDP growth of 5.5% from 1996 to 2000.  In 2001, the Mexican economy had performed
significantly worse, a trend shared by virtually all countries the world over, as a result, among other
factors, of the downturn in the world economy.  A 0.3% decline was recorded over the past year.  A
slight growth was expected for the first half of 2002, with a major rebound towards the end of theyear, bringing annual GDP growth to 1.7%.  Foreig n trade played an increasingly important role in
Mexico's economic development.  During the period 1997-00, exports had accounted for a little more
than 30% of GDP, with an average annual growth rate of 14.6%.  Exports totalled US$158 billion in
2001.  Given the adverse conditions that affected the international economy in 2001, total Mexican
exports for the year shrank by 4.8%, while non-oil exports declined 2.9%.  Macroeconomic policy hadmanaged to bring about a sharp fall in inflation over the last few years, from 15.7% in 1997 to 8.9% in
2000 and 4.4% in 2001.  Projected inflation for 2002 was 4.5%.
8. The export sector and foreign direct investment (FDI) had been the main sources of new jobs
over the past few years.  Mexico's sound financial and monetary position and the headway made with
structural reform meant that it was well placed to achieve economic recovery.  The trade and
investment liberalization strategy had had a significant impact on the country's economic growth,
which had been strengthened by permanent and reliable access to foreign markets and improvementsto the regulatory framework of the national economy.  International trade negotiations were a key
element of this strategy, since they provide greater security of access to the most important world
markets for Mexican products, generate long-term investment, promote national productivity and the
use of new technologies, and boost export volume by further diversifying the target markets for
Mexican products.
9. Mexico considered the WTO to be the main mechanism for both trade liberalization and the
establishment of world trade rules.  Mexico's trade liberalization and participation in the multilateral
trading system have played a very important role in boosting its exports, spurring the economy and
stimulating employment.  Mexico's accession to the GATT in 1986 was motivated by the desire to
create an environment conducive to economic activity by taking advantage of, firstly, the opening-upof world markets with the lowering of trade barriers;  secondly, the certainty that stemmed from
foreign trade operations governed by the clear and transparent rules and disciplines of the multilateral
trading system.  Finally, the possibility of having recourse to a trade dispute settlement mechanism.
The conclusion of the Uruguay Round and the establishment of the WTO made the benefits of
participating in the multilateral trading system even  more obvious.  In this context, with a view to
furthering its economic opening, creating greater opportunities for developing countries and
strengthening the multilateral trading system, Mexico had supported further trade liberalization in the
form of the launch of a new round of multilateral negotiations at the Fourth WTO Ministerial
Conference in Doha, Qatar, in November 2001.  Th e agenda of this Round was sufficiently wide-
ranging to cover the interests of all Members, and in particular of the developing countries.  It wasagainst this backdrop that Mexico would host the Fifth WTO Ministerial Conference in 2003.WT/TPR/M/97
Page 5
(ii) Trade policy
Tariffs
10. As part of its current policy, Mexico had unilaterally introduced tariff reductions beginning in
2001, through its Sectoral Promotion Programmes (PROSECs).  The purpose of these programmes
was to provide support for enterprises established in Mexico in purchasing production inputs of
globally competitive quality and at globally competitive prices, thereby stimulating productivity and
technological change.  These programmes enabled Mexican firms to import inputs for manufacturingproducts for both the export and the domestic market at minimum tariff rates.  The approximately
3,600 tariff headings were grouped into 22 sectors, including electricity, electronics, textiles and
clothing, automobiles and auto parts, and furniture.  These programmes had also helped Mexican
firms to retain a competitive edge in th e light of the changes experienced by the maquiladora  (in-
bond) industry regime as from 2001.  The economic opening-up of recent years had resulted in theweighted average tariff
1, which included the tariff cutting commitments made under bilateral
agreements, falling to 3% in 2000.
Customs procedures and standardization
11. In connection with the opening-up process associated with the various trade agreements,
customs procedures had undergone a series of reforms with a view to facilitating the increasingforeign trade.  A customs modernization programme, involving both investment in infrastructure and
the automation of customs procedures, had been implemented and, in spite of an increase in the
number and volume of transactions, had resulted in a considerable reduction in clearance times.  In
standardization, a number of major changes took place during the period under review, particularly as
regards the harmonization and updating of standards and conformity assessment, including the
promotion of mutual recognition agreements and increased transparency.
Foreign direct investment12. The relevant law had been amended on several occasions between 1997 and 2001 to reduce
the number of activities for which foreign participation was restricted and thereby achieve further
liberalization.  This was done with respect to enterprises involved in the manufacture and assembly of
parts for the automobile industry and in the construction and installation of public works as well as
withholding companies that control financial groups , multiple banking institutions, stock brokerage
firms and specialized stock market firms.  Simila rly, the minority foreign share limit for investment
firms and companies operating investment firms was eliminated.  Up to 51% foreign ownership was
now allowed in the share capital of enterprises involved in international land transport of passengers,
tourists, and cargo between points within Mexico, and administrative services for passenger bus
stations and auxiliary services, thereby eliminating the exclusion-of-foreigners clause.
Intellectual property
13. The Industrial Property Law had been reformed in 1997 to cover protection of layout-designs
of integrated circuits.  The Federal Code of Criminal Procedure had been amended in May 1999 to
include new and harsher penalties for offences.  The Federal Law on Copyright was reformed in 1997
to grant the Mexican Industrial Property Institute the authority to punish trade-related copyrightinfringements.  In the framework of the WTO,  1st January 2000 saw the full entry into force in
Mexico of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
                                                     
1 Calculated on the basis of the rate applicable at the time of importation.WT/TPR/M/97
Page 6
Moreover, all of the free-trade agreements concluded by Mexico over the past four years had included
a chapter on intellectual property.
Competition
14. In the period January 1997 to December 2000, the Federal Competition Commission (CFC)
reviewed 1,994 cases on mergers, acquisitions, privatizations, monopolistic practices, and other
restrictions on competition and consultations.  At international level, the CFC had been involved in
the work of the WTO, OECD, UNCTAD, and APEC.  It recently joined the International EconomicCompetition Network (IECN) with a view to promoting competition policies world wide.  It had also
signed bilateral cooperation agreements with the United States and Canada, and was set to begin
negotiations with Korea and Brazil.
Anti-dumping
15. On the basis, inter alia , of the annual and five-yearly reviews procedures conducted by the
investigating authority, Mexico had eliminated a significant number of anti-dumping and
countervailing measures.  Thus, during the first half of 1997, there were a total of 97 anti-dumping
measures in force, while by the second half of 2001 there were only 60, in other words 38% fewer.  In
the case of countervailing measures, their number fell from 8 in 1997 to 1 in 2001.
Regulatory improvement16. Regulatory improvement had been an integral part of the modernization and structural reform
of the Mexican economy since 1989, and had reinforced its process of economic opening.  In 2000,
Congress had approved a set of reforms to the Federal Administrative Procedures Law (LFPA);
among the most important was the creation of the Federal Regulatory Improvement Commission, a
body with technical and operational autonomy and responsibility for regulatory improvement policy.
An obligation was also established for preliminary draft regulations and their regulatory impact
statements to be submitted to the Commission for review prior to issue.  During the period 2000-01,
the Commission reviewed and improved more than 600 preliminary draft regulations.
Government procurement
17. Eight of the free-trade agreements signed by Mexico had chapters on government
procurement.  Significant progress had also been made in developing and improving the electronic
government procurement system, COMPRANET, with a view to making it easier for firms toparticipate in government procurement processe s, and to provide a transparent mechanism for
informing the public about government procurement processes.
(iii) Bilateral and regional agreements
18. Bilateral and regional agreements had been a mainstay of Mexican trade policy in recent
years:  they complemented and promoted greater multilateral liberalization, and were consistent withWTO rules.  Mexico had 11 free-trade agreements, which afforded it preferential access to more than
850 million consumers in 32 countries.  Thanks to these agreements, Mexico ranked as the eighth
largest exporter in the world and the largest in Latin America and the Caribbean, and was one of the
main developing country recipients of foreign direct investment, with all attendant benefits that this
brought for economic growth, job creation, and wage s.  Up until 1996, Mexico had five free-trade
agreements, with:  Chile (1992);  the United States and Canada (1994);  the Group of Three (G-3),
with Colombia and Venezuela (1995);  Bolivia (1995);  and Costa Rica (1995).  In the period
1997-01, it concluded seven more free-trade agreements, with:  Nicaragua (1998);  Chile (1998);WT/TPR/M/97
Page 7
Israel (2000);  the European Union (2000);  the "N orthern Triangle", with Guatemala, Honduras and
El Salvador (2001);  the European Free Trade Association (EFTA) (2001) and the EconomicComplementarity Agreement with Uruguay (2001).
19. Between 1997 and 2001, Mexico had negotiated a number of Reciprocal Investment
Promotion and Protection Agreements (APPRIs):  with Germany (1998);  Austria (1998);  the
Netherlands (1998);  the Belgian-Luxembourg Economic Union (1998);  France (1998);  Finland
(1999);  Uruguay (1999);  Portugal (1999);  Italy (1999);  Denmark (2000);  Sweden (2000);  Greece
(2000);  Korea (2000);  and Cuba (2001).  Both  free-trade and investment agreements were an
efficient way to promote and attract foreign direct investment to Mexico as well as to protect Mexican
investors operating abroad by means of legal guaran tees and, in general, an increasingly transparent
and pro-investment environment.  Mexico also formed part of other regional initiatives, such as the
Asia-Pacific Economic Cooperation (APEC) mechanism.  It chaired and would host the APECsummit in 2002, and the Free Trade Area of the Americas (FTAA) negotiations, which were to be
completed by 2005.  Finally, Mexico had been a member of the Organization for Economic
Cooperation and Development (OECD) since 1994.
20. In conclusion, Mexico's trade and international trade negotiations policies had consolidated
the opening-up of its national economy, which, in turn, had had a very positive impact on trade andeconomic growth, job creation, and wages.  Mexico was committed to the multilateral trading system,
the most important instrument for global trade liberalization.  Mexico's commitment to the
multilateral trading system  was reflected in its support for the launch of a new round of negotiations
at the Doha Ministerial Conference, and in the fact that it would be hosting the 5th WTO Ministerial
Conference.WT/TPR/M/97
Page 8
III. STATEMENT BY THE DISCUSSANT
21. The discussant (Mr. Federico Alberto Cuello Camilo) noted that Mexico was a success story.
The outward orientation of its trade policy had remained unchanged, even in the difficult
circumstances of late 1994, and trade liberalization had been managed so as to boost the impact of
trade on sustainable development throughout the country's territory, while diversifying the sources of
export-based growth.  However, such success should not stop Mexico from addressing problems that
could reflect departures from its international commitments, in particular when the transition to freetrade called for the phasing out of a number of policies inherited from the past.  This point was clearly
reflected by the written questions submitted by Members.
(i) Macroeconomic environment
22. The overvalued exchange rate at the end of 1994 had forced an adjustment shortly after the
change of government, when devaluation could no l onger be delayed.  This, in turn, had led to a
massive outflow of short-term capital and a considerable increase in interest rates.  The level of
reserves fell dramatically.  As a result, it was practically impossible to continue honouring the
short-term financial obligations towards the intern ational community.  Faced with this situation, the
authorities had introduced a strict adjustment programme which re-established the confidence of the
financial markets by deepening structural reforms, containing inflation, and reducing the currentaccount and balance-of-payments deficits.  Thanks to the rapid financial assistance of the IMF, the
North American Free Trade Agreement (NAFTA), and the United States Department of the Treasury
(both individually and through the IMF and the Financial Agreement), Mexico had been provided
with the needed liquidity to allow time for the adju stment process to work.  This process focused on
strengthening public finances, conducting a restrictive monetary policy, and freezing wages.  Many of
those who were sceptical of the policy of opening up trade saw in this situation a sign that the good
intentions that paved the way to free trade were not sufficient to turn promises into reality.
23. However, the strict application of this programme enabled Mexico not only to stabilize its
economy, recover its growth, and continue diversifying its exports, but also to pay in advance for the
resources used during the adjustment period.  The drastic reduction in the public deficit had been
largely due to the privatization of various services that had been totally or partially in the hands of the
Government, such as telecommunications and the railways.  The rapid decrease in the current accountdeficit had been helped along in part by the recovery  of oil prices, but also by the long-term effect of
the diversification of Mexican exports resulting from the new market-access opportunities offered by
the agreements negotiated by Mexico with its main trading partners.  The latest IMF report on the
consultations conducted under Article IV clearly described how the Mexican economy had been
recovering since 1994, growing over the past five years at an average rate of more than 5%, in spite ofthe slowdown of the world economy in 2001.  However,  the current account deficit continued to grow
(excluding oil exports) with imports increasing at a faster rate than exports.  The past year, during
which Mexico had been barely affected by the instability experienced in other emerging markets,
showed that cautious monetary and fiscal policy management was the best way of ensuring that the
macroeconomic situation continued to be conducive to growth with stability.  At the same time, thereport of the WTO Secretariat placed fairly heavy emphasis on the enormous investment needs in the
electricity and oil sectors in order to keep up with  the Mexican economy's growth rate.  In the future,
Mexico's austere fiscal policies could encounter the traditional resistance to private investment in
those sectors, which were historically sensitive.
(ii) Trade policy regime
24. Mexico was the first country to negotiate and implement a third-generation free-trade
agreement with developed countries, the NAFTA.  Since then, it had implemented another 11WT/TPR/M/97
Page 9
free-trade agreements with countries representing 61% of world trade.  While any assessment of the
results of these new agreements would be premature, eight years after the entry into force of NAFTAthere was reason to hope that the first law of economic geography, that "everything is related to
everything else, but things that are closest are more related to each other than things that are further
away", would infallibly continue to prevail.  In th e case of trade flows, Mexico had gone from being
an important trading partner of the United States and Canada to being one of the two most important
partners, both in overall terms and with respect to specific tariff lines.
25. The Secretariat Report analysed Mexico's dependence on this type of agreement to boost its
trade flows as a "complex" form of trade policy, and, although it was subject to mutually binding rules
that included dispute settlement provisions, these rules did not offer the certainty of multilateral rules.
However, Members knew of no other examples of similar countries that had achieved comparable
results by other means.  And, in the end, the priority given by Mexico to the success of multilateralnegotiations and to the institutional strengthening of the WTO seemed to reflect a long-term political
will to ensure coherence between the two types of trade agreement.  Thus, without wishing to reject
the analysis of MFN-based trade policies, the degree of openness achieved by Mexico was
considerable, and the market access obtained through preferential free-trade agreements was even
more considerable.  This was perhaps why the Dominican Republic whose commitment to themultilateral cause was unquestionable, was seeking, together with its Latin American and Caribbean
neighbours, to conclude a Free Trade Area of the Americas (FTAA), which could enable it to
consolidate the market-access opportunities already acquired and possibly to enjoy conditions similar
to those obtained by Mexico in NAFTA.
(iii) Sectoral and investment policy
26. In a recent booklet
2, UNCTAD had examined investment-related trade measures, dividing
them into four categories:  market access restrictions, market access development preferences, exportpromotion devices and export restrictions.  Among the market access restrictions, UNCTAD specified
regional free-trade agreements, rules of origin, and national standards which, without being
discriminatory, had an impact on trade flows and stim ulated investment flows.  The effect of rules of
origin in attracting investments to Mexico had been significant.  As stated by UNCTAD, until 1995
there had been no production in North America of the main component in value-added terms of colourtelevisions, the picture tube.  As a result of NAFTA's strict rules of origin, production of picture tubes
had not only begun but, within a short time, the four main Japanese colour television producers had
begun manufacturing operations in Mexico and eventually to export from Mexico to the other
NAFTA members, as well as Japan itself.
27. The WTO Secretariat Report pointed to a similar ef fect of rules of origin in consolidating the
North American automobile industry, with Mexico  benefiting from new investments from European
and Asian firms.  FDI represented 64% of the total investment attracted by Mexico during the period
under examination.  It would be difficult to deny the impact of these measures on development:  they
were responsible for attracting such investments and enabling the Mexican worker to achieve world
class productivity and quality levels at costs that would be difficult to equal in countries with a higherlevel of development.  All of this had been accompanied by the vertical development of the entire
automobile production chain.  Incidentally, the Secretariat  indicated that one third of manufacturing
FDI had gone into the maquiladora industry.  The distinction in the report between the free export
zones, the export processing zones and the maquiladoras  was unclear.  The fact that the WTO had no
definition would appear to affect the clarity of this kind of report, which used the three terms asthough they were different.
                                                     
2 UNCTAD (2001):  Investment-Related Aid Measures.   New York and Geneva United Nations
publication, sale No. E.99.II.D.12WT/TPR/M/97
Page 10
28. It was clear, however, that the Mexican maquiladora industry covered export-oriented
manufacturing activities, and might consequently import inputs and machinery duty free.  The Reportstated that in 2000, the maquiladora  industry comprised 3,600 establishments employing 1.3 million
workers and exporting products worth US$79.5 billion.  Already, at the time, 40% of these firms were
located far from the Mexican-U.S. border.  This data testified to the effect on investment flows of the
third type of measure identified by UNCTAD in the mentioned publication:  export promotion
devices.
29. Although NAFTA rules had prompted the Mexican Government to reform this programme,
fiscal incentives remained contingent upon export results.  The Report stated that, following the
reforms, at least 30% of production must be for export in order to receive exemptions for the purchase
of machinery and other equipment.  At least 10% must be for export in order to be eligible for
exemptions with respect to inputs.  Other incentive programmes described at length therein wereALTEX, PITEX and ECEX.  They had not been notified in any of their versions under Article 25 of
the Agreement on Subsidies and Countervailing measures (SCM Agreement).  Although these
incentive programmes continued to operate in spite of the changes made, there seemed to be a
tendency to re-orient firms towards the sectoral  promotion programme (PROSEC).  This programme
provided for the importation of inputs, machinery and equipment at rates varying between zero and
5%, and eligibility was not contingent on export results.  Nevertheless, the Secretariat identified, a
considerable number of promotion mechanisms, operated by the State authorities at the sub-federal
level, whose relationship with export results remained to be elucidated.  It could be argued that these
measures were inconsistent with existing disciplines.  Others might argue that some of these measures
could be subject to new disciplines that remained to be negotiated.  What could not be denied was the
effect on Mexico's development of these policies which, as in the case of the maquiladora  industry,
were already beginning to benefit other areas further away from the northern border.
30. Mexico, as a pioneer in stepping up the rate of trade liberalization through mutually binding
preferential agreements, was the mirror in which many developing countries would like to be
reflected.  And, having brought to the fore in this context, many of the challenges for which a solution
was sought at the multilateral level in the post-Doha agenda, the Report of the Secretariat had raised
important elements for Members' future discussions in the WTO.WT/TPR/M/97
Page 11
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
31. Members congratulated H.E. Ms. Amina Chawahir Mohamed for her appointment as
Chairperson of the Trade Policy Review Body (TPRB), and thanked the outgoing Chairperson for his
leadership of  the TPRB in the last year.
32. Members commended Mexico for its economic performance between 1997 and 2000, and its
sound macroeconomic policies, marked by a stable exchange rate, falling inflation and decreasing
unemployment level.  Members noted favourably Mexico's commitment to the multilateral trading
system, and mentioned that Mexico's continued efforts to liberalize trade and promote foreign
investment had played an important role in achieving such results, which testified to the benefits of an
outward-looking and liberal trade policy.  Members also thanked Mexico for offering to host the fifth
WTO Ministerial Conference in 2003, and commended its constructive role in the WTO, including in
the launch of the new round of trade negotiations.
33. The representative of Canada noted that since NAFTA entered into force, Canada's trade and
economic relationship with Mexico had increased significantly.  Canada was Mexico's second largest
export market, while Mexico had become its fourth largest export market.  Canadian investment in
Mexico had expanded four-fold over the same period.  Canada encouraged Mexico to continue reform
in its services sector and open the few areas in which private or foreign capital restrictions persisted.Canada also welcomed Mexico's work to increase the transparency of its commercial regulations, and
to decrease red tape, in particular, the goal of limiting formalities and procedures, by 2003, to those
listed in the publicly available, on-line database of administrative formalities.  Canada acknowledged
the establishment of the Federal Regulatory Improvement Commission (COFEMER), which assessed
the regulatory impact of all new regulations in Mexico.  Mexico's mandatory technical regulations
were available on-line in a timely fashion.  With regard to government procurement, Mexico had
made important advances with respect to the timely publication of tender notices, and theestablishment of a challenge procedure for companies that believed they had not been treated fairly.
Canada would welcome Mexico's accession to the Agreement on Government Procurement.
34. The representative of Guatemala recalled Mexico's territory and its public spending were
twenty times greater, and its exports fifty times higher than his country's.  This difference in size
between the two countries was reflected in their bilateral trade:  the trade balance was in favour ofMexico.  However, Guatemala accounted for only 0.5% of Mexico exports, whereas Mexico was a
significant recipient of Guatemala's exports.  Nevertheless, the countries were confronted with similar
problems, i.e., to comply with their commitments  on export subsidies.  Guatemala interpreted
Mexico's recognition of the temporary nature of ad vantages derived from FTAs as an expression of its
will to advance on the path towards the elimination of all types of protectionism and  trade distortions.As Mexico was one of the largest economies of the region, the benefits of its liberalization as well as
the negative effects of its restrictions would imp act on the entire region.  Guatemala was concerned
about possible protectionist measures by Mexico.
35. The representative of Hong Kong, China recall ed the good bilateral trade relations between
the two countries.  Hong Kong, China believed that there was potential for further expansion.
Mexico's external trade had been concentrated with its NAFTA trading partners:  no country outside
NAFTA absorbed more than 1% of Mexican exports.  Hong Kong, China noted with concern that
trade diversion effects might result from the growing dominance of bilateral and regional agreements
in Mexico's trade regime, and the widening gap between MFN and preferential rates.  The increase in
MFN tariff rates in 1999 further aggravated the situ ation, resulting in a higher simple average MFN
rate in 2001 than that in 1997.  Hong Kong, China invited Mexico to consider reducing the MFN rates
to minimize trade distortion.  Mexico had put in place an import licensing mechanism for specific
goods imported from certain economies, including from Hong Kong, China, and had explained thatWT/TPR/M/97
Page 12
this had been introduced to allow the relevant aut horities to deter fraudulent practices, in particular
with respect to the origin of the merchandise.  This mechanism might pose unnecessary documentaryburden to trade, increase the cost of import, and result in discriminatory regulations and restrictions
against imports from some WTO Members.  H ong Kong, China invited Mexico to consider
simplifying the mechanism to facilitate the flow of goods.  The participation of international traders in
open tendering of Mexico's government procurement was limited, and Mexican legislation established
a preferential price margin for domestic goods in in ternational tendering.  Hong Kong, China believed
that a level playing field should be provided for all suppliers so as to achieve the best value for money
in the acquisition of goods and services.  Hong Kong, China urged Mexico to provide more
procurement opportunities for international tendering and to consider lowering, and eventually
eliminating, the preference margin. Hong Kong, China commended Mexico's efforts to step up
enforcement of intellectual property rights (IPRs), including the enactment of new legislation, sharpincrease in fines against infringement, redefinition of IPRs infringement as a serious crime, and
substantial increase in budgetary expenditure for its enforcement agencies.
36. The representative of Chile pointed out that Mexico had managed to overcome its difficulties
thanks to transparent management, political transformation, and modernization of its institutions.  He
recalled that the FTA between Chile and Mexico, which was signed in 1991 and entered into force in1999, and initially covered only trade in goods, now also included trade in services, intellectual
property, investment and dispute settlement.  At the bilateral and multilateral level, it was unfortunate
that Mexico had not yet liberalized its air transport, and that no open sky agreement could be reached.
Chile hoped that an agreement would be found on the elimination of anti-dumping duties imposed by
Mexico, and noted that Mexico still maintained trade-distortive measures in government procurement.
Chile welcomed the move forward in trade and investment liberalization in the framework of APEC
and the FTAA.
37. The representative of Korea recalled the good bilateral relationship between the two
countries, and the establishment of a Korea-Mexico 21st Century Committee, which would be a
catalyst for further development of the relationshi p.  Korea shared Mexico's commitment to an open
multilateral trade regime.  Korea hoped that Mexico's expanding network of preferential arrangements
proved to be conducive to trade creation instead of trade distortion.  As noted in the SecretariatReport, since July 1998 Mexico had required the price of certain imports from Asia and Eastern
Europe to be reported to its authorities in advance of customs procedures, to detect fraudulent
activities, illegal transshipments and the under-valuat ion of shipments.  This requirement needed to be
looked at in the context of Mexico's obligation under Article I of the GATT 1994.  As stated in the
Secretariat Report, Mexico maintained more burdensome origin certification requirements for textiles,clothing, and footwear imported from 15 Asian countries, including Korea, than it did for the same
products from other Members.  The justification offered was that this was to prevent circumvention of
anti-dumping measures.  These requirements, however, needed to be seen in the light of the MFN
principle.  They had been maintained for an unnecessarily extended period of time since 1994.  Korea
sought Mexico's position on how to correct these discriminatory requirements.
38. The representative of Norway noted that Mexico's national policy measures, together with its
accession to the GATT, the OECD, and its participation to a number of free-trade agreements, had
contributed positively to its success on the world market.  Norway and Mexico enjoyed good bilateral
relations;  fish and fisheries products, telecom equipment, gas, chemical products, metals, paper, and
fertilizers were some of its main exports to Mexico.  In the framework of the free-trade agreementbetween the EFTA states and Mexico, which entered into force on 1 July 2001, roughly half of all
exports, including fish and fisheries products, were exempted from customs tariffs.  The Secretariat
Report noted that Mexico was an active user of tr ade contingency measures.  Although, this had not
directly affected Norway, concerns had been expressed by certain Norwegian exporters with respect
to potential negative effects of any proliferation in the use of such remedies.WT/TPR/M/97
Page 13
39. Norway encouraged Mexico to join the Agreement on Government Procurement as soon as
possible.  Norway also hoped that Mexico would take on board new and comprehensive commitmentsin the services sector in the context of the new round of trade negotiations.  Mexico had a number of
multilateral and bilateral agreements for the maritime sector, and Norway encouraged it to seriously
consider binding its regime in the present round.  The efforts already made in fostering efficient port
services had produced positive results for Mexican exporters.  Additional benefits could be obtained
by allowing Mexican ships to be insured abroad.  Norway considered the energy sector to be one ofthe most important new areas to be negotiated during GATS 2000, and noted that Mexico had
constitutional provisions that restricted private participation in the energy sector.  This situation
seemed to foster a less than optimal allocation of national resources by forcing private companies to
invest abroad, while there was a need to upgrade and modernize Mexico's energy sector.  Norway
welcomed recent indications that the Mexican authorities aimed to increase private participation andmodernize the energy sector.  Norway, based on its positive experience, encouraged Mexico's efforts
to open up  the exploration of oil and gas.  Like Mexico, Norway participated in regional and bilateral
trade agreements, and believed that these agreements could contribute positively to the development
of the multilateral trade system, which was, and should be, the main instrument for liberalizing world
trade.
40. The representative of Argentina recalled Mexico's positive economic performance, in spite of
a not always favourable external environment.  His delegation was interested in hearing Mexico's
views regarding developments taking place at both regional and international levels.  The renewal of
the Economic Complementarity Agreement, fore seeing a future agreement with MERCOSUR,
reaffirmed the importance that Argentina attached to trade relations with Mexico.  In this perspective,
cooperation projects in the areas of energy and telecommunications were being considered.  Referring
to the Secretariat Report (paragraphs 14-16), he noted that agricultural products benefited from higherMFN tariff protection than non-agriculture products.  Tariff protection for non-MFN originating
goods was, however, relatively low (4.9% for imports from the United States), and had been reduced
progressively.  In its WTO Schedule of Concessions Mexico had included tariff quotas for several
agricultural products, and in certain cases Mexico had allowed imports in excess of the quota at the
in-quota rate.  Argentina asked for the tariff level applied for out-of-quota imports, and whetherMexico had granted tariff concessions on:  (i) pig fat, free of lean meat, and poultry fat, not rendered
or otherwise extracted, fresh, chilled, frozen, salted, in brine, dried or smoked;  (ii) animal fats and
oils and their fractions;  (iii) poultry, not cut in pieces, fresh or chilled;  (iv) extracts, essences and
concentrates of tea or maté;  and (v) beans, other than for sowing.
41. The representative of  Colombia noted the dynamism of Mexico's market, and acknowledged
Mexican investment in Colombia's manufacturing sector.  Colombia welcomed progress made by
Mexico to institutionalize the Ministerial Commission, aimed at simplifying procedures for
enterprises set-up.  Mexico had used multilateral rules in the development of regional agreements and
disciplines.  Colombia believed that Mexico's strategic relations with WTO Members would enable it
to play an  important role in the fifth WTO Ministerial Conference.
42. The representative of Japan referred to the mutually beneficial relations between the two
countries.  The Secretariat Report, he said, noted that Mexico’s liberalization strategy had generated a
significant gap between MFN and preferential rates, and that Mexico acknowledged the temporary
nature of the advantages deriving from FTAs.  Japan invited Mexico to provide more information on
its intention to reduce the gap in its trading conditions applied to its FTA partners and to otherMembers.  Mexico’s bound rates for industrial products were set uniformly at 35%, with the
exception of a few products:  this rate was fairly high compared with those in other countries at the
same level of development.  Since its previous Review, Mexico had implemented MFN tariff
increases, raising the simple average applied rate by some three percentage points to 16.5% in 2001.
Noting that the tariff rates on some steel products had been raised first to 25% and then to 35%, JapanWT/TPR/M/97
Page 14
invited Mexico to be prudent in raising its tariff rates.  Japan hoped that Mexico would consider
reducing bound rates in the current negotiations, and would consider acceding to the InformationTechnology Agreement.  According to the Secretar iat Report, Mexico used public procurement to
support domestic activities, particularly through price preference margins and local-content
requirements.  Japan wished to know whether Mexico intended to accede to the GPA.  Japan
appreciated Mexico’s various efforts to modernize agriculture and to increase productivity and
competitiveness, and hoped that it would continue those efforts.  Japan shared Mexico’s view that
security in basic foodstuffs was essential, and hoped that this position would be shared and supported
widely by an increasing number of Members.
43. The representative of the European Union appreciated Mexico's firm commitment to trade
liberalization and market opening.  Referring to the recent fluctuations of Mexico's economy, he noted
that the medium-term outlook was improving gradually, and that Mexico's economy was increasinglyintertwined with the U.S. economy.  Mexico's impressive macroeconomic performance had been
possible thanks to the important political changes that had taken place in 2000, and had led to a
substantial qualitative leap towards democratic consolidation and opening up to the world.  The EU
remained confident that Mexico would pursue a liberalization strategy that prioritized multilateral
commitments.  Bilateral relations were governed by  the Economic Partnership, Political Co-ordination
and Co-operation Agreement (Global Agreement), which was signed in 1997, and entered into force
in 2000.  This established an FTA, covering inter alia , procurement, competition, progressive
liberalization of investment and related payments, consultation on intellectual property rights, and
dispute settlement, which had helped to increase EU's share of Mexico's market.  Technical bodies
established by the FTA had opened a dialogue on customs issues, standards and technical regulations,
and sanitary and phytosanitary measures.
44. The EU saw problems arising from Mexico's extensive involvement in FTAs, in particular
regarding the gap between MFN and FTA preferential treatment.  The EU asked whether Mexico had
any strategy to tackle the complexity resulting from  differing regimes and to minimize their effect on
its trade patterns.  The EU noted that Mexico's legal framework was sufficiently developed to comply
with the GPA requirements and the openness of its procurement to most GPA parties;  Mexico's
accession to the GPA should not pose any problem.  The EU also wished to have more information onthe rationale behind the concept of neutral investment, which allowed foreign investors to hold higher
shares of Mexican companies' capital in restricted areas, and on the services sectors that were
included.  The EU recognized that Mexico's custom s practices had improved.  However, the EU had
received complaints over inconsistent interpretation of import formalities and requirements among
customs offices as well as on differences in the way controls of compliance with Mexican standardsand technical regulations, labelling rules, and sanitary and phytosanitary standards were carried out.
The EU invited Mexico to elaborate on this issue.  Since January 2000, the TRIPS Agreement applied
in Mexico.  Although, Mexico had adopted the necessary measures to grant adequate legal protection
of IPRs, the enforcement of this legislation remained unsatisfactory.  The EU welcomed Mexico's
efforts to reduce the application of contingency measures, invited it to submit its notification onsubsidies due in 2001, and remained confident that Mexico would take all necessary measures to
ensure the consistency between the WTO Agreement on Subsidies and Countervailing Measures and
its Foreign Trade Act.
45. The representative of Singapore, on behalf of ASEAN Members, noted that despite its
positive economic performance, Mexico had faced challenges of sustaining growth in the light of the
U.S downturn.  However, recent signs of recove ry in the U.S. economy should augur well for
Mexico’s recovery efforts.  Mexico’s trade had attained the fastest growth rate among the WTO's
twenty largest Members, however, the majority was with its FTA partners.  ASEAN encouraged
Mexico to look beyond the North American market .  Trade with WTO partners could be further
improved if Mexico’s MFN rates could be reduced so as to encourage a more diversified pattern ofWT/TPR/M/97
Page 15
trade, and reduce its dependence on a few trade partners.  ASEAN encouraged Mexico to reduce
MFN rates in areas of interest to ASEAN, and to implement measures to help increase Mexico’s shareof trade with Asia.
46. The representative of the United States noted that NAFTA had enhanced the trade
relationship between the two countries.  The United States referred to Mexico's efforts in the
preparatory process  of the Doha Ministerial Conf erence, and in particular in helping to forge
consensus on TRIPS and access to medicines.
47. The Secretariat Report stated that Mexico's import licencing measures were authorized under
the Foreign Trade Act of 1993, and listed categories covering more than 1% of Mexico's tariff subject
to non-automatic licensing.  Licences were issued only when the foreign product had no domestically
produced substitute.  There were serious questions as to whether such import substitution restrictions
were consistent with WTO provisions.  Mexico had not met notification and transparencyrequirements in the WTO Committee on Import Licensing Procedures.  Referring to the Secretariat
Report reference to the Automatic Notice of Importation system, introduced in 1998, she noted that
when the invoice value of imports was below an established reference prices, preshipment inspection
was required.  The system covered items from 30 countries and had been notified under Article 5 of
the Agreement on Import Licensing in 1998.  This did not appear to be an automatic licensing systemas defined in Article 2 of the Agreement, it added to the cost of importation, and did not appear to be
consistent with either the Agreement on Customs Valuation or the Agreement on Rules of Origin.
Moreover, the system was not applied on an MFN basis, and,  therefore, appeared to violate Article I
of the GATT 1994.  Mexico had notified this syst em in G/LIC/N/2/MEX/l, but had not provided
information required by Article 7 of the Agreement on Import Licencing Procedures.  The
United States urged Mexico to:  (i) submit the required  information;  (ii) review its system in light of
the requirements of Articles I and XI of the GATT 1994 and the WTO Agreements on ImportLicensing Procedures, Customs Valuat ion, and Rules of Origin;  and (iii) revise measures that barred
competitive imports.
48. The United States requested further information on the Program of Temporary Imports to
Produce Export Goods (PITEX), in particular on:  (i) which industries were eligible to benefit from
the programme;  and (ii) the qualification criteria.  The United States also requested an update on thesectoral promotion programme (PROSEC), on whet her any new sectors had been added since the
programme's creation;  and whether any duty reductions had been made on an unconditional MFN
basis.  On services, the United States wished to know whether additional steps were planned to
enhance the transparency of procedures and regulation.  The United States asked about the extent to
which foreign firms might participate in oil and gas exploration and development;  electric powertransmission, distribution, and marketing;  and natural gas pipeline transportation, distribution, and
marketing services.  Mexico maintained measures that prevented competition in its international
telecommunications services market.  This remained dominated by TELMEX, with a government
mandate to set high wholesale prices for calls to Mexico.  The United States urged Mexico to address
remaining problems in the enforcement of domestic rules designed to prevent TELMEX fromengaging in anti-competitive practices, and stated that the United States would pursue its rights under
the WTO dispute settlement.  With regard to intellectual property rights, the United States asked how
the various government agencies coordinated their enforcement activities in the areas of health
registrations of generic products;  whether there was a single national office with overall
responsibility in this area;  and how officials involved in enforcement were trained.
49. The representative of Australia referred to the multifaceted and growing relationship with
Mexico, including their cooperation in the WTO and the APEC, and noted that there was considerable
potential for expansion of bilateral trade.  In addition to consolidation and expansion of its traditional
agricultural and energy exports, Australia saw potential in new sectors, such as cereals, oilseeds, plantWT/TPR/M/97
Page 16
products, and in mining technology and services, and other high-technology areas.  Australia would
welcome further reforms that would reduce Mexico's reliance on temporary tariff increases to bolsterits budget.  In this regard, Australia was interested in the timeframe for removal of the temporary
tariffs that had affected Australian exports, including wool, coal, meat, and live cattle/sheep.
Mexico's commitment to liberalizing the energy and electricity generation sector was encouraging.
Potential international partners and investors, including in Australia, would welcome more concrete
moves in that direction.  Australia looked forward to deepening and broadening its bilateralrelationship with Mexico and to developing its regional and multilateral cooperation.  Australia
welcomed growing exchanges of views with Mexico on agriculture negotiations in the context of the
DDA.
50. The representative of India was pleased to note that thanks to a policy of trade liberalization
and deregulation, Mexico had been able to register strong economic growth since 1997.  As noted
both in the Secretariat and the Government Reports, Mexico, while being active in the multilateral
trading system, had increasingly laid emphasis on bilateral and regional agreements.  Mexico's heavy
involvement in bilateral and regional agreements could raise concerns about complexities resulting
from different regimes and about effects on other trading partners.  The current level of trade between
Mexico and India was still negligible considering the potential.  India was confident that bilateraltrade would grow substantially in the coming years to the benefit of both countries.  On market
access, in India's understanding Mexico's visa procedures were difficult and time consuming.  After
the September 2001 events, it had become difficult for Indian nationals, including businessmen and
service providers to obtain a visa so as to facilitate commercial links between the two countries.
51. India requested Mexico to ease the visa procedures, keeping them to the required minimum.
Administration of customs law in Mexico was very strict and even small errors in paperwork could
result in fines and even confiscation of merchandise as contraband.  India's exporters had complainedabout regular delays in clearance of consignments on account of minor discrepancies relating to
documentation, and packing and labelling requirements.  India hoped that GATT Article VIII would
be fully complied with.  India was not clear why a certificate of origin was required for its imports to
Mexico, along with the shipping documents, as India did not have any quota arrangement with
Mexico nor did Indian exports enjoyed preferential tariffs.
52. As noted in the Secretariat Report, the basis for customs valuation varied according to the
origin of imports;  free on board for imports from the NAFTA partners, and cost, insurance, and
freight for other imports.  This effectively in flated the duty rates on imports from non-NAFTA
partners.  Further, in India's understanding all importers had to deposit VAT, which was refundable,
and which again worked to the disadvantage of the non-NAFTA partners.  Since 1999, an additionalsurcharge of 2% had reportedly been charged on imports from non-FTA partners of Mexico.
Although this move was to compensate temporarily for lower oil revenue, it had continued despite a
reversal of trend in oil prices.  India requested Mexico to consider the removal of these measures.
Cumbersome labelling requirements seriously reduced market access for textiles, leather products,
and toys;  a large number of chemicals, pharmaceuticals and power equipment were also affected bythe requirement of technical standards and registration;  and very strict health and phytosanitary
requirements had seriously affected exports of agricultural products to Mexico.  India had been
informed by its exporters of a ban on import of many agricultural products, including basmati rice into
Mexico, for quarantine reasons.
53. Even though basmati rice was being exported from India without any difficulty to some other
more restricted markets by meeting strict quarantine requirements, the concerned Mexican authorities
were not willing to consider import of basmati rice from India without going through lengthy
procedures.  India understood that Mexico's ban was on the account of khapra beetle for which existed
reliable and widely recognized international st andards.  However, the Mexican authorities wereWT/TPR/M/97
Page 17
reportedly not inclined to accept such scientific evidence.  A similar situation occurred in the case of
other grains and oilseeds.  Indian engineering exports to Mexico suffered on account of strictquarantine requirement relating to wooden packing.  Even though the Indian consignments were
accompanied by an internationally recognized ce rtificate of fumigation and pesticide treatment,
importers were required to incinerate the wooden packing material, sometimes within the Customs
zone.  This made imports more complicated and more expensive.  India encouraged Mexico to ensure
that these measures were not more trade-restrictive than necessary, and were based on scientificevidence.  Finally, India hoped that effective implementation of public policies combined with strong
business momentum would enable Mexico to achieve its goal of competitiveness, whilst providing
major benefits to its population.
54. The representative of Turkey recalled that his delegation had submitted a written question on
textiles, clothing, and footwear and looked forward to Mexico's reply.
55. The representative of Thailand invited Mexico to expedite the process to remove the import
ban on rice, notified to the Committee on Sanitary and Phytosanitary Measures, so as to allow
Thailand to be quickly removed from the list of countries affected.  Thailand urged Mexico to publish
the removal of the ban in the Official Gazette .
56. The representative of Switzerland noted that Mexico's liberal economic policy was in line
with the WTO spirit.  Mexico had used trade and investment as catalysts for its modernization and
economic growth.  Switzerland acknowledged that macroeconomic measures taken by Mexico since
1995 had put the country on the path of economic growth, thus helping to reduce inflation rates and to
achieve economic stability.  Mexico had not only attracted FDI, but had also become an important
investor.  At the micro-economic level, Switzerland noted that state participation in the production of
goods and services had continued to decrease, and that the process of privatization covered important
sectors, such as transport and telecommunications.  Switzerland was following with interestdevelopments in regional integration in the fr amework of NAFTA and of the FTAA.  He noted
Mexico's attempt to strengthen its relations with  Asia, Japan and Singapore in particular, in the
framework of APEC.  Switzerland wished to hear  Mexico's views on progress in this regard.
Referring to the Secretariat Report, Switzerland was pleased to note that Mexican producers had been
able to take advantage of the geographical indication Tequila, and welcomed Mexico's efforts to
reduce customs duties and technical barriers to trade.  Mexico's open economy, while offering a
number of opportunities to its trading partners and strengthening its competitive position, had made it
more dependent not only upon the United States, but also upon the multilateral trading system.
57. The representative of Ecuador noted Mexico's positive economic achievements, but expressed
concern with regard to Mexico's market-access conditions.  In spite of agreements between the two
countries, Ecuador faced import restrictions for tuna;  he drew Members' attention to Mexico's
environmental measure NOM-EM-04-PESC-2001 notified to the Committee on Technical Barriers to
Trade (G/TBT/N/MEX/11), which discriminated tuna imports on the basis of fishing methods and
tuna species.  Mexico was committed under the Interamerican Commission for Tropical Tuna to
protect tuna resources, through exchange of inform ation to ensure sustainability of tuna fishing.
Mexico had established quantitative restrictions on a discriminatory basis.  Ecuador took note of
Mexico's notification contained in document G/TBT/N/MEX/15, introducing the measure NOM-EM-
01-RECENAT-2001.  Ecuador was studying the possible effects of this measure on exports of its
forestry products to Mexico.  Ecuador also expressed its concern with regard to the lack of
information on the functioning and procedures of Mexico's Importers Registry.  Ecuador hoped thatthe DDA would help to limit the abuse of anti-dumping measures caused by the lack of clear
provisions in the Anti-Dumping Agreement (ADA).WT/TPR/M/97
Page 18
58. The representative of Uruguay after recalling Mexico's macroeconomic performance, noted
that tariff protection for agricultural products was higher than for non-agricultural products.  While
the two countries enjoyed a good bilateral relatio nship, resulting in growing trade flows and the
signature of the ECA in 1999, Uruguay believed that there could be further trade opening between
them.  In Uruguay's view, bilateral and regional agreements were complementary to, and contributed
to the strengthening of, the multilateral trading system.
59. The representative of China recalled that Mexico was now China's second largest trading
partner in Latin America.  China's accession to the WTO brought broader opportunities for further
trade expansion between the two countries.  China had suffered from Mexico's anti-dumping
measures on around 1,300 tariff lines, with some duties rates as high as 1,100%.  In many cases,
Mexico had not complied, inter alia , with Article II of the ADA on determination of anti-dumping
duties.  Although, a large number of these measures had been removed, many of these duties werestill maintained.  China also believed that Mexico's customs valuation and import licencing
procedures were sometimes incompatible with the transparency principle.  Many exports from China
were subject to minimum customs values set by th e Mexican authorities, which was inconsistent with
Article 7.2(f) of the Agreement on Customs Valuati on.  In some cases, minimum customs values were
higher than the retail prices of like products in the Mexican market.  China hoped that Mexico wouldmake further efforts to correct these trade-distortive measures.
60. The representative of Brazil encouraged Mexico to pursue its efforts towards trade and
economic liberalization.  Brazil hoped that the growing number of preferential agreements undertaken
by Mexico would not undermine its disposition to reduce the gap between MFN and preferential rates,
and that Mexico would take further WTO commitments in goods and services.  With regard to
customs valuation, he asked for clarification on invoicing.  Brazil asked what measures Mexico had
taken, or intended to take, to give effect to the phase-out in 2003 of the extension of time-limitgranted, under the Article 5.3 of the TRIMs Agreement, for its automobile industry.  Brazil requested
more information on Mexico's new telecommunications law, and on its effects on Mexico's
commitments under the GATS.
61. The representative of Belize recognized Mexico's importance as a trading partner within the
multilateral trading system, and within the Western Hemisphere, including within GRULAC, NAFTA
and the wider ambit of the proposed FTAA.  Developments in Mexico's political and economic
spheres had allowed it to move away from the paradox of instability to become a strategic economic
and political partner and an emerging leader.  Where Mexico had shown improvements Belize had
benefited, where Mexico had suffered setbacks Belize's economy had suffered.  Belize was, therefore,
exploring ways to strengthen its economic and trade relations with Mexico.  Mexico's tradeliberalization could serve as a catalyst not only for its development, but also for regional and
hemispheric development.  Belize welcomed Mexico's active and leading roles in both economic and
trade issues.
62. The representative of Jamaica noted Mexico's initiatives resulting in its export sector growth
and attraction of foreign direct investment.  Mexico had also actively pursued access to foreign
markets and boosted the growth of its exports within the regional and multilateral contexts.  Mexico
was an active participant in the negotiations on the Free Trade Area of the Americas (FTAA), in
which Jamaica also participated.  Jamaica also referr ed to its cordial bilateral relations with Mexico,
and the San Jose Accord.
63. The representative of Mauritius noted that, as pointed out in the Secretariat Report, Mexico's
membership in NAFTA together with trade preferential rules had been of paramount economic
significance.  The Government Report noted that Mexico expected that preferential access would have
a positive effect on export performance, investment, and economic growth.  Mauritius appreciatedWT/TPR/M/97
Page 19
Mexico's efforts in taking advantage of such market openings, particularly in the context of NAFTA,
and looked forward to maintaining or increasin g access currently enjoyed in the markets of NAFTA
Members.  Mexico had made important efforts in restructuring and further enhancing the
competitiveness of its economy to access new markets, and in creating strategic alliances to promote
access to new technologies for its productive industry.  Mauritius hoped Mexico would use these
advantages to further develop and provide market access for smaller WTO Members, which faced a
number of constraints and relied significantly on preferential market access for their exports.
64. The representative of the Czech Republic highlighted Mexico's role in promoting a
broad-based trade negotiating agenda.  In 1998, Mexico had increased its tariffs for certain goods.
These measures which were still in place, had affected Czech exporters.  The Czech Republic asked
whether the measures had met their set objectives, and whether Mexico intended to remove them.  On
customs valuation, the Czech Republic asked for clarification on the relationship between thereferences prices mentioned in the Secretariat Report (paragraph 19) and the reference prices used in
the framework of the import licencing regime for selected products (paragraphs 63 and 64).  The
Czech Republic was concerned with regard to different customs valuations procedures applied on
imports depending on their country of origin, in particular differences in treatment between NAFTA
and non-NAFTA members.
65. The representative of Slovakia congratulated Mexico for its economic performance since its
last TPR.  Slovakia appreciated Mexico's steps taken in advance to implement most of the WTO
Agreements, including to improve transparency and IPR's protection.  Slovakia encouraged Mexico to
continue in this direction.  Slovakia recalled that in January 1999 the Mexican authorities had
indicated increases in MFN tariff rates, justified by fiscal reasons to compensate for the negative
impact of external shock on public finance;  at the same time Mexico had granted tariff preferences to
imports from three countries.  Progressive tariff reduction under preferential schemes, combined withthe increases of MFN tariff rates, could, in Slovakia's view, cause trade diversion and have a negative
impact on the multilateral trading system.  In this regard, Slovakia asked whether Mexico was
planning to narrow the gap between MFN and preferential rates.  Slovakia shared Mexico's view with
regard to the importance of strengthening the stable, transparent, and predictable legal and
institutional multilateral environment created by the WTO, as this was an important precondition forachieving sustainable global development and economic growth.  Slovakia recalled the good bilateral
relations with Mexico, and the Agreement on Trade and Economic Cooperation, signed in March
2002.
66. The representative of Hungary commended Mexico for its economic and trade policies.  He
recalled that 80% of bilateral trade between th e countries was in high-tech products.  Hungary
appreciated Mexico's commitment to the multilateral trading system, and invited it to reduce the gap
between MFN and preferential rates.  Hungary expressed its concern with Mexico's frequent changes
in customs clearance procedures;  and requested further information on Mexico's requirement for prior
export inspections of dairy products exporting plants, and on its legal basis.WT/TPR/M/97
Page 20
V. REPLIES FROM THE REPRESENTATIVE OF MEXICO AND ADDITIONAL
COMMENTS
67. The Chairperson invited the representative of Mexico to focus his responses on three main
themes:  (i) economic environment;  (ii) trade policies and measures;  and (iii) sectorial policies and
measures.
(i) Economic environment
68. The representative of Mexico recalled the role that trade liberalization had played in
promoting his country's development, and the co mplementarity between bilateral and multilateral
liberalization.  Mexico's trade liberalization, he said, had benefited several areas:  (i) export growth
had contributed to more than half of Mexico's GDP growth;  (ii) of the 3.1 million jobs created as
from August 1995, half were related to the export sector;  (iii) companies that exported more than
60% of their production paid salaries 37% higher than the rest of the industry;  (iv) in 1982,hydrocarbons represented more than 67% of Mexico's exports, in 2001, 89% of Mexico's exports were
from the manufacturing sector.  It did not, therefore, come as a surprise that Mexico had continued on
the path of trade liberalization.  Mexico's trad e liberalization strategy had been focussing on two
complementary paths:  the set-up of a network, th rough free-trade treaties with 32 countries and
860 million consumers;  and its active participation in the multilateral trading system.
69. Bilateral treaties had played a catalyst role  in further multilateral trade liberalization.
Mexico's preferential trade agreements had stimulated trade with its non-preferential trading partners
as well, as shown by the average growth rate of 14%  compared with the 13.6% of growth registered
with its preferential trading partners.  Mexico had an  interest in moving towards liberalization in areas
covered by the DDA;  the scope and pace of  negotiations therein would depend on Members.
70. The representative of India stated that his delegation looked forward to the English translation
of Mexico's replies, and hoped that all questions had been or would be answered in due course.
71. The discussant recalled the question on the compatibility between preferential agreements
undertaken by Mexico with countries at different levels of development, which would entail high
administrative costs.  The discussant asked what the Mexican authorities planned to do in this regard.
(ii) Trade policies and measures
72. The representative of Mexico stated that every day more than US$930 million of goods
passed Mexico's borders:  five times more than a decade earlier.  Every year eight million import and
export declarations were processed, an increase of 600% in the last ten years.  To face this increase,
Mexico had set up a programme to modernize its Customs, including:  (i) the automatization of 90%
of customs operations;  (ii) the introduction of a single document for 85% of customs operations;  (iii)
the use of modern technology (x-rays and gamma-rays), which rendered physical inspectionunnecessary;  (iv) training, technical examinations, staff rotation, and evaluation of integrity;  (v) the
set-up of two units:  one to verify that operations kept up with standards, the other to handle
complaints on possible irregularities.  These efforts had resulted in greater compliance with and better
interpretation of norms, and in the reduction of time of review.  Furthermore, in order to tackle the
problems of piracy, smuggling, and under-valuation, Mexico had implemented measures such asestimated prices, entry through specific customs points, and an importers' register, in conformity with
its international commitments.
73. On export promotion programmes, the representative recalled that the Maquila  programme
and the Programme of Temporary Imports to Produce Exports Goods (PITEX) administered theWT/TPR/M/97
Page 21
provisions on temporary imports contained in Mexico's Customs Law.  These were managed  by
Mexico's Executive without exceeding the benefits referred to in the Customs Law, and contained asubsidy component, consisting of import duty exemptions on equipment and machinery, linked to
exports results.  PITEX had been notified under Article 25 of the Agreement on Subsidies and
Countervailing Measures, with the intention of notifying the provision on temporary imports, which
was contained in its Customs Law.  On 1 January 2001, Mexico had eliminated this exemption.  At
present no restrictions existed in Mexico's domestic markets.  As a result, Mexico's concessions wereonly of an administrative type.  In Mexico's view, these programmes were in compliance with the
WTO provisions;  there was, therefore, no need to notify them again, and no date for their dismantling
was set out.
74. Mexico promoted negotiations in the area of intellectual property rights as demonstrated by
its participation in the negotiations on TRIPS and public health, and by its chairmanship of the TRIPSCouncil.  Once ratified by the Senate, international agreements were Supreme Law, and were thus
inserted into the national legal system.  IP protection granted by international treaties was applied on a
non-discriminatory manner to nationals and foreigners, including with regard to geographical
indications.  The Mexican Institute of Industrial Property (IMPI) played a pivotal role in Mexico's
implementation of IPRs, and coordinated with the General Customs Administration, the FederalPreventive Police, and the judicial authorities.  Mexico had taken action to strengthen the fight against
violation of IPRs.  In this regard, he highlighted:  (i) the growing number of inspections carried out by
the IMPI, which had increased from 1,504 in 1997 to 4,221 in 2001;  (ii) the training programmes for
examiners and officials in charge of IPR-protection, carried out by the IMPI;  and (iii) the
amendments of the Penal Code and the Penal Procedures Code to classify IPR violation as a serious
crime.  A zero-tolerance campaign had also been launched recently to fight against piracy of
copyrights and of IPRs for CDs, DVDs, cl othing, footwear, and computer programs.
75. Mexico's domestic legislation in the area of standards could be considered as one of the most
advanced at international level, and was based on the principles of representativeness, consensus,
public consultation, modification, and up-dating;  it was in compliance with the TBT Agreement.  The
elaboration process of standards and technical regulations also complied with the TBT Agreement.  In
this regard, he referred to Mexico's written replies.  In conformity with the Federal AdministrativeProcedure Law, units had to submit to the Federal Commission for Regulatory Improvement for
consideration draft laws, decrees, and administrative acts aimed at establishing specific obligations.
Such drafts were made public by the Commission.  With regard to international norms and emergency
standards, none of the TBT Agreement provisions stated that national technical regulations had to be
in full compliance with international norms.  However, by virtue of Mexico's Federal Law onMetrology and Standardization, when preparing technical regulations, including emergency
regulations, competent authorities had to take in to consideration existing international standards,
except where considered inappropriate.  In the area of emergency technical regulations, Mexico had
complied with Article 2.10 of the TBT Agreement.  Mexico notified its technical regulations as
provided for under the relevant Agreement.  Mexico's labelling requirements contained minimalinformation so as to provide consumers with enough facts when buying a product.  Mexico had not
considered simplifying its labelling requirements;  in the course of 2002, a review of standards would
take place, thus allowing Members to make their comments in this regard.
76. The representative of the United States noted that automobiles designated "popular
consumption" automobiles were exempt from the automobile tax (ISAN).  In addition to a maximum
value criterion, the engines of such automobiles had to be produced domestically.  This domestic
production basis for a tax exemption qualified as a local-content requirement, and was a violation of
Article III:5 of the GATT 94.  The United States as ked about Mexico's plans to eliminate this national
treatment violation, and invited it to describe measures taken to implement its obligations under the
TRIPS Agreement with respect to geographical indications;  and steps that nationals of other WTOWT/TPR/M/97
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Members had to take to obtain protection for geographical indications in Mexico, and to oppose
potentially infringing use or registration of a geographical indication.
77. The representative of Korea noted the widening gap between MFN and preferential rates, and
different procedures applied according to the or igin of the import as well as preferential and
non-preferential rules of origin applied by Mexico.  These measures created administrative
inefficiency and trade-distortion for third parties, but also harmed Mexican consumers.  Korea urged
Mexico to extend its preferential treatment to all WTO Members so as to create a favourable businessenvironment.
78. The representative of Mexico stated that due to time constraints some topics had not been
covered in his oral presentation.  However, this information was contained in his delegation's written
replies.  Mexico also undertook to reply to some of the technical questions in writing at a later stage.
(iii) Sectoral policies
79. The representative of Mexico noted that since 1997 Mexico's services sector had undergone
many changes.  Mexico now had a modern and appropriately capitalized financial system.  Its Central
Bank was autonomous and ensured Mexico's monetary stability. Autonomous technical supervisory
institutions existed for banking, brokerage firms, insurance, pension funds, and protection of financial
services users.  Mexico had adopted a number of provisions in conformity with the most stringentinternational parameters, and with its international commitments.
80. Since the privatization of the state-owned monopoly more than a decade ago, there had been a
deep structural change in the telecommunications sector.  This included the adoption of a Federal
Telecommunications Law (1995), the creation of a regulatory body, the introduction of specific
regulations, and the adoption of an offer for sp ecific commitments as provided under the GATS.
Thus, it provided legal certainty for investors in this sector.  The Mexican telecommunications sector
had expanded substantially;  the sector had grown some five times more than the Mexican economyas a whole.  The introduction of competition regulations had resulted in a sharp increase of
telecommunications in Mexico's GDP, from 1% to 3% over the last decade.
81. The Federal Regulatory Improvement Commission (COFEMER) had been strengthened to
ensure transparency in the drafting of domestic regulations.  The internet-based Federal Register of
Formalities and Services (RFTS), containing 1,100 business procedures, had also been set up.  ByMay 2003, only formalities listed in the RFTS would be legally applicable.  To facilitate access to
proposed draft regulation, the Regulatory Impact Statement was now available on line, thus enhancing
transparency.  All regulatory proposals must be sent to COFEMER and made public at least 30 days
prior their publication in the Official Journal .  Mexico had also set up the Expedited System for
Business Creation to simplify procedures and the time frame required to open up a business.  At the
Federal level, only two steps were required;  an d the response time was one working day.  COFEMER
was promoting the adoption of this system at the three levels of Mexico's government:  to date
arrangements had been signed with eight states.
82. The representative of the United States looked forward to reviewing Mexico's replies on
telecommunications, once available in English.
83. The representative of Canada recalled that paragraph 9 of the Secretariat Report noted the
establishment in January 2002 of an excise tax of 20% on soft drinks that were not sweetened with
sugar cane, in a move to try to discourage substitution of sugar cane by other sweeteners.  Canada
welcomed President Fox’s 2002 announcement of a seve n month suspension of the tax.  Canada asked
Mexico to provide assurances that this or a similar tax would not be reactivated.WT/TPR/M/97
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84. The representative of Ecuador looked forward to Mexico's reply to his delegation's question
on import restrictions on tuna originating from Ecuador.
85. The discussant recalled questions that needed further clarification by Mexico, with regard to:
(i) the number of FTAs signed by Mexico with countries at different levels of development, and
administrative costs deriving therefrom;  (ii) export assistance programmes, which might entail an
export subsidy component;  (iii) the widening gap between FTA and MFN treatment;  (iv) the use of
minimum prices, and of different tariff regimes;  (iv) Mexico's complex import licencing system.WT/TPR/M/97
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON
86. This third Trade Policy Review of Mexico has been very good, a superb introduction to my
year in the Chair.  The Review has been thorough and comprehensive, and offered plenty of food for
thought about trade issues.  Our dialogue has prov ided a better understanding of Mexico's trade-
related policies and practices due very much to the full involvement of Vice-Minister Villalobos and
his delegation, and to the engagement of many Members.  This is indeed a felicitous indication of
what this Body can accomplish and will do over the coming months.
87. Members commended Mexico for its economic performance in recent years.  Mexico's trade
and investment liberalization efforts have been key elements in its economic advancement and
prospects, having resulted in substantial incr eases both in trade and investment flows.  In
consequence, Mexico's integration in the world economy has deepened, making it an increasingly
important economic partner.
88. Members also praised Mexico for its active participation in the multilateral trading system,
commended its strong support for the launching of the Doha Development Agenda, and welcomed its
offer to host WTO's fifth Ministerial Conference.
89. At the same time, Members noted that much of Mexico's recent liberalization has taken place
under preferential arrangements.  Several Members maintaining preferential agreements with Mexicocommented on the positive effects of such agreements on trade and investment with Mexico.  But it
was also noted that, in general, falling trade barriers under preferential agreements have not been
matched by similar improvements for MFN partners.  This was a source of concern to a number of
Members, who encouraged Mexico to narrow the gap.
90. Falling applied preferential tariffs contrast sharply with the three-percentage-points increase
in Mexico's average MFN tariff since its previous Review.  Noting that the measure had been
announced as temporary, and that preferential pa rtners have not been affected, Members requested
particulars on the phasing out of the increase.  Other recent tariff increases were also questioned,
notably those affecting steel products.
91. Members commended Mexico's various initiatives to streamline and increase transparency in
many administrative areas, but they were also concerned about Mexico's customs procedures and
practices.  In particular, clarifications were requested on the price reference mechanism introduced tocombat under-invoicing, on import licensing procedures as well as on non-preferential rules of origin.
Although transparency in the use of technical and SPS regulations has improved, some concerns were
raised with respect to measures on certain products.
92. Some Members noted Mexico's use of anti-dumping measures, which although falling in
number were still many, and encouraged Mexico to seek greater transparency in this area by aligningits contingency legislation with multilateral rule s.  Several Members also encouraged Mexico to
accede to WTO's Government Procurement Agreement, and noted that domestic procurement rules
discriminated in favour of national suppliers, and of several suppliers from preferential partners.
93. On sectoral policies, several questions were asked about assistance to the sugar industry, and
plans for its further privatization.  Members expressed interest in developments in the energy sector,air and maritime transport services and telecommuni cation services, notably with respect to foreign
participation, competition and liberalization.  Several Members thought it desirable to further open
these activities to private investment, observing Mexico's positive experience with liberalization in
other areas.WT/TPR/M/97
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94. Members also sought further clarification on a number of specific areas, including:
- bound rates and the gap between these and applied tariffs;
- tariff quotas maintained for agricultural products;
- WTO-consistency of special import regimes (including maquila and PITEX);
- local-content requirements in the automotive industry;  and
- protection of intellectual property rights.
95. The Mexican delegation gave written and oral replies to questions posed during the Review
and undertook to respond in writing to some outstanding technical issues as soon as possible.  The
replies provided have made a major contribution to this meeting, and were clearly appreciated by
Members.
96. In conclusion, I believe that through this Review we have gained a first-hand appreciation of
Mexico's achievements since its previous Review in 1996, and of the challenges that lie ahead.Mexico is now seen by many Members as a prime example of the benefits of trade and investment
liberalization, notwithstanding a number of cycli cal and structural problems.  However, Mexico's
liberalization paradigm raises important questions for all WTO Members concerning the relationship
between preferential and MFN efforts, questions that no doubt we will have to come to grips with as
part of the Doha Development Agenda.
97. For Mexico itself, an additional challenge is to juggle the growing number of preferential
agreements in force and under negotiation, together with the many components of the evolving
multilateral agenda.  Moreover, it is possible that dealing with issues such as ownership and
competition in some critical areas, such as transportation, electricity, hydrocarbons, and sugar, would
contribute to an improved growth profile.  Mexico's  first-rate participation in this Review bodes well
for its capacity to meet those challenges, to the benefit of its people and its trading partners.
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