Lessons and Experiences of Mexico in Dealing with Issues …mddb.apec.org/Documents/2006/CTI/FTA-RTA/06_fta-rta1_015.pdf · Trade with other FTA partners has also increased… Costa

___________________________________________________________________________

2006/SOM1/CTI/FTA-RTA/015

Lessons and Experiences of Mexico in Dealing with

Issues Emerging from RTAs/FTAs Participation

Submitted by: Mexico

APEC Workshop on Best Practices in Trade

Policy for RTAs/FTAs: Practical Lessons and Experiences for Developing Economies

Ha Noi, Viet Nam 27 February-1 March 2006

1

1

APEC Workshop on Best Practices in Trade Policy for RTAs/FTAs: Practical Lessons and Experiences for Developing Economies

Lessons and Experiences of Mexico in dealing with issues emerging from

RTAs/FTAs participation

February-March, 20062

Rationale to Negotiate a FTA

Policy Goals

Increase the level of production, employment and investmentImprove market access for goods and/or services in the international market

Attract foreign direct investment 3

Mexico’s Trade Negotiations

BILATERAL

• FTAs

• BITs

• RTAs

MULTILATERAL

4

El Salvador

Costa Rica

Nicaragua

Honduras

Guatemala

Israel

Canadá

UnitedStates

South

Korea

ChileArgentina

Bolivia

VenezuelaColombia

Uruguay

Portugal

Netherlands

Switzerland

Austria

Spain FranceItaly

Greece

Germany

Belgium

Luxembourg

Finland

Denmark

Ireland

UnitedKingdom

SweedenNorway

Iceland

Liechtenstein

Mexico’s network of FTAs

20 BITs

12 FTAs

7 RTAs

Brazil

Cuba

Czech Rep.

Japan

5

Successful stories

Mexico is the eight most important trading economyworldwide and the first one in Latin AmericaIn 13 years exports have

quadrupled the level they had in 1993 (51.9 millions of US dollars)

6

Successful stories

Exports have become a very important source of economic growth:

During 1994-2000 GDP growth was due to exports in more than 50% percentOn third of new jobs wasrelated to exporting activities

7

Successful stories

Between 1993 and 2004 imports growth was 201.8%

During 1994-2003 Mexico was the fourth most important destination of foreign direct investment (FDI) among developing economies and the first one in Latin America.

8

Successful stories

FDI has lead to technology transfer, new jobs and increased wages in high-added value sectors such as automotive, electronic and electric industries

9

Successful stories

In 2004, In 2004, MexicoMexico--US trade tripled preUS trade tripled pre--NAFTA levelsNAFTA levels

050

100150200250300

19931994

19951996

19971998

19992000

20012002

20032004

US imports f rom M exico M exican imports f rom the US

Growth 04/93 211%

NAFTA NAFTA

Bill

ion

of U

S D

olla

rs

85

265

2

10

Successful stories

05

101520

1993

1995

1997

1999

2001

2003

Canada imports from M exico M exican imports from Canada

With NAFTA, trade between Mexico and With NAFTA, trade between Mexico and Canada Canada increased sharplyincreased sharply

Growth 04/93 288%NAFTA

Bill

ion

of U

S D

olla

rs

4

16

11

Successful stories

Trade with other FTA partners has also increased …

Costa Rica (1995)

Chile (1992)

Venezuela (G-3, 1995)

Bolivia (1995)

Colombia(G-3, 1995)

Nicaragua ( jul. 1998)

129%

707%

106%

659%

156%

121%

12

Successful stories

34.3%

July, 2000

July, 2000

37.6%

13

Key actions to implement FTAs

Make dispositions establishedin FTAs operative

Managing FTAs

14


Make dispositionsestablished in FTAs operative

Certificate of OriginCustoms proceduresRules of originTariff reductionQuota provisions

15


In order to make a FTA operativeMexico publishes in the official gazette:

• A set of rules to inform all interested parties the customs formalities that have to be followed in order to apply the preferential tariff treatment to imported goods;

16


• The template of the certificate of origin (auto-certification) or the certification rules (certification by authority);

• The preferential tariff duties that will be applied during a specific time frame thus they could be known by customs authority and economic operators;

17


• Application forms and procedures that allow access to quotas established in FTAs by interested parties;

• Procedures to apply for refund of duties paid in excess (where applicable); and

18


• Requirements governing applications for advance rulings.

3

19


Publication in the official gazette requires coordination among several authorities

20


Example: (preferential tariff duties)

Ministry of Economy

(technical area,legal counselor,

etc.)

Regulatory Improvement Commission

(Regulatory Impact Assessment)

Presidencia(State Department)

Ministry ofTreasure

(revenue office, etc.)

Official Gazette

21


Managing FTAs

Meetings of Committees/Subcommittees as established in FTAs

Exchange/update contact points

22


Follow up the implementation of FTAs with the feedback of the business sector

Exchange information about quota utilization

23

DIFFICULTIES

FTAs/RTAs shall grantflexibility in the procedures required for itsimplementation

24

DIFFICULTIES

This is particularly true with regard to administrative actions related to the practices and logistic of international trade

25

DIFFICULTIES

Example:Some dispositions of the Movement Certificate EUR.1under the EU-Mexico FTA constitute impractical requirements that obstruct trade

26

DIFFICULTIES

Movement certificate EUR.1 requirements:Each form shall measure 210 x 297 cm; a tolerance of up to 5 minus or plus 8 mm in the length may be allowed. The paper used must be white, sized for writing, not containing mechanical pulp and weighting not less than 25 g/m2.

27

DIFFICULTIES

It shall have a printed green guilloche pattern background making any falsification by mechanical or chemical means apparent to the eye.Any alteration must be initiatedby the person who completed the certificate and endorsed by the customs authorities …

4

28

DIFFICULTIES

Nature of the problem• Each EU Customs Office makes

use of different kinds of paper which do not conform to specifications established in the FTA

• EU Customs authorities are not used to apply the FTA dispositions regarding fulfillment of the certificate of origin 29

DIFFICULTIES

Outcome• Non compliance of the EU

certification authorities lead Mexican Customs to reject the certificates of origin

• Trade flows slowed down and economic operators faced additional costs

30

DIFFICULTIES

Solution• Mexico and the EU had to

negotiate interpretation notes to resolve operative problems related to the information that has to be placed in the certificate and the technical reasons to reject a certificate

31

Final Remarks

Negotiation of FTAs/RTAsdemands legal and institutional infrastructure

Participation of industry representatives, academia, trade unions and other public/private organizations and civil society is key factor in the negotiating process 32

Final Remarks

Involvement of interested parties in the negotiation entails flexible mechanisms of consultation

Implementation of FTAs/RTAs requires a roadmapto coordinate actions of government authorities

33

Final Remarks

FTAs/RTAs are useful trade policy instruments in order to achieve higher levels of production, investmet and employment

Flexible operation of FTAs/RTAs is cornerstone to avoid administrative obstacles to trade