TRADE POLICY REVIEW OF MEXICO

Statement by Ambassador Peter F. Allgeier
U.S. Permanent Representative to the WTO

Geneva,
February 11, 2008

Thank you, Chair. 

The United States would like to welcome Mrs. Beatrice Leycegui, Vice Minister of International Trade Negotiations at the Ministry of Economy, and the entire Mexican delegation on the occasion of its fourth Trade Policy Review.  I would like to commend the Mexican representative for her opening statement. I would also like to thank the Mexican delegation and the Secretariat for their useful reports.  Finally, we would like to thank Ambassador Claudia Uribe for her insightful remarks.

As a neighbor and an important FTA partner, Mexico’s trade regime is of deep interest to the United States. 
And as a proactive and astute member of the WTO, Mexico’s constructive participation in its activities is of great consequence to the WTO Membership.  When President Bush met with President Calderon last March in Mexico, they affirmed that our two countries have deep and strong ties that that are societal, economic, cultural, and familial.  They highlighted the importance of expanding trade between our two countries as a basis for our shared prosperity.

The foundation of our trading relationship has been the North American Free Trade Agreement (NAFTA).  Since the United States, Mexico, and Canada began to implement the Agreement in 1994, our trade with our NAFTA partners has blossomed.  Since the entry into force of the NAFTA, total two-way trade between the United States and Mexico has more than quadrupled, from $81.5 billion in 1993 to $ 332.5 billion in 2006.  In addition to being our third largest trading partner, Mexico is our second largest market for goods.  Today, approximately 85 percent of all Mexican exports go to the United States, and 51 percent of Mexican imports come from the United States.

The Secretariat report says that Mexico sees the promotion of foreign investment as an essential complement to trade liberalization.  This policy choice has had benefits for U.S.-Mexico investment.  Foreign direct investment has been increasing between our two countries.  U.S. foreign direct investment (FDI) in Mexico (stock) was $84.7 billion in 2006, a 12.8 percent increase from 2005.  Mexican FDI in the United States (stock) was $6.1 billion in 2006, up 59.6% from 2005.

The United States and Mexico recently passed an important milestone:  On January 1, 2008, we eliminated the remaining NAFTA tariffs and quotas between us, thereby joining North America in free trade.

The United States and Mexico have also worked together to advance the multilateral trading system.  We share Mexico’s view that the multilateral trading system and preferential agreements form complementary agendas for moving towards economic liberalization.  It is particularly noteworthy Mexico, with an extensive network of free trade agreements, remains a strong advocate of MFN liberalization.   

The United States remains grateful for the tireless efforts of the Mexican government in launching the Doha negotiations, and for its active participation in the negotiations themselves.  We also appreciate the critical role that Ambassador de Mateo is playing as Chair of the Services Negotiating group.  Mexico, like all of us, has a major stake in achieving ambitious results in the Doha negotiations.  A result that includes new, meaningful market access in services, industrial goods and agriculture could further enhance opportunities for Mexico to broaden and diversify its export markets.  Mexico’s constructive approach to subsidies disciplines and to issues involving fisheries subsidies are also commendable.  The United States looks forward to working with Mexico toward successfully concluding the Round.

Since Mexico’s 2002 Trade Policy Review, Mexico’s economy has grown; but, additional reforms are needed over a wide range of areas in order to move the economy towards a higher and sustainable growth path.  An OECD report notes that the reform process, which has lost momentum in recent years, should regain pace as a result of a number of measures, including greater economic openness, to make the most of international integration.  As a first priority, the study advises, Mexico ought further to liberalize international trade by lowering its MFN tariff so as to give firms better access to competitive inputs and restrict possibilities for corruption and fraud at Mexico's borders.  Also, Mexico needs to further reduce non-tariff barriers, for instance, as they relate to complex customs procedures and complicated technical requirements.  As a second priority,
the OECD report advises Mexico to reduce restrictions on foreign direct investment with improvements in the business climate and additional strengthening of the rule of law.

Beyond the aforementioned points, there are also some other areas where we encourage the Mexican government to make further improvements.  We hope this Trade Policy Review will help draw Mexico’s attention to these areas where it can further liberalize its regime and enhance its competitiveness.  These include:

• Steps necessary toward acceding to the Government Procurement Agreement;
  
  
• Improve certification and conformity assessment requirements relating to animal products.
  
  
• Strengthening intellectual property rights protection and enforcement; and
  
  
• Activities within the purview of the TBT Agreement regarding Mexico’s approach to technical regulations and standards.

Mr. Chairman, in conclusion I would like to compliment Mexico’s strong leadership role in many regional and multilateral fora, including in the WTO and APEC.  This morning I have touched briefly upon some of the key issues with respect to one of our most important trading relationships. We look forward to discussing Mexico's trade policies and practices with Mexico's distinguished delegation during this review.