Mexico has free trade agreements with over 50 nations, including the EU, Japan, and many others, accounting for over 90% of trade.
Mexico boasts a trillion-dollar free-market economy. It has a diverse and modern economy, with significant private investment. Trade with the US and Canada has nearly tripled since the 1994 North American Free Trade Agreement (NAFTA) was renegotiated (ratified by the Mexican Senate) and renamed the USMCA (USMCA).
United States–Mexico–Canada Agreement (USMCA)
On July 1, 2020, the United States-Mexico-Canada Agreement (USMCA) took effect, replacing the North American Free Trade Agreement (NAFTA). Under the USMCA, tariffs on qualifying products and services that were zero under NAFTA would remain $0.
The USMCA is a high-standard trade deal for the twenty-first century, enabling mutually beneficial trade that leads to freer markets, fairer trade, and stronger economic growth in North America. By establishing robust labor and environmental protections, novel rules of origin, and improved investment terms, the Agreement modernizes and rebalances US-Mexico and Canada trade ties and decreases outsourcing incentives. Important obligations on customs inspections, automation, and the treatment of low-value commodities are included in the agreement. Furthermore, the USMCA includes the strongest and most advanced intellectual property and digital commerce provisions ever included in a trade agreement, as well as including labor and environmental responsibilities into the pact’s core text and making them fully enforceable.
NAFTA
Since January 1, 1994, the North American Free Trade Agreement has been in effect. The agreement was signed in December 1992, followed by NAFTA side agreements in August 1993. The United States-Canada Free Trade Agreement (US-Canada FTA) was already in place at the time of NAFTA’s implementation, and US tariffs on most Mexican exports were low. The North American Free Trade Agreement (NAFTA) opened the Mexican market to the United States and Canada, resulting in the world’s largest single market. Some tariffs were immediately abolished, while others were phased out over 5 to 15 years. The North American Free Trade Agreement (NAFTA) allowed for the acceleration of tariff reductions. Quotas and import licenses were abolished. It created guidelines for duty drawback programs, which were to be phased out by January 1, 2001.
Market access in goods, agriculture, and most service sectors was also covered, as were provisions for foreign direct investment, intellectual property rights protection, sanitary and phytosanitary measures, government procurement, antidumping, and countervailing duty issues, land transportation, dispute resolution, and special safeguard mechanisms. NAFTA was the first major free trade agreement to include measures addressing environmental and labor concerns in separate side accords that went into effect at the same time as NAFTA.
Mexico-Chile
The Mexico-Chile Free Trade Agreement (FTA), which was concluded in 1998, was signed into law in Chile on July 7, 1999, and in Mexico on August 1, 1999. On April 17, 1998, at the 1998 Summit of the Americas in Santiago, Chile, Mexico and Chile signed the pact. The FTA was expected to strengthen the two countries’ developing commercial relationships and expand bilateral investment prospects in both countries. The 1998 deal superseded a 1991 free trade agreement between the two countries. Tariffs on practically all merchandise commerce between the two countries were lifted.
The FTA between Mexico and Chile contains provisions on national treatment and market access for goods and services, as well as rules of origin, customs procedures, safeguards, standards, agriculture, sanitary and phytosanitary measures, investment, air transportation, telecommunications, temporary entry for business people, intellectual property rights, dispute resolution, and other topics. It lacks a chapter on energy, the environment, or labor. 9 A separate agreement, reached at the same time, contains rules to eliminate double taxation for businesses doing business in both nations. The provisions of the FTA are similar to those of NAFTA, however, they do not include labor or environmental standards. Financial services, patents, and government procurement are examples of provisions not included in the FTA.
Mexico-Uruguay
The Presidents of Mexico and Uruguay signed the Mexico-Uruguay Free Trade Agreement on November 15, 2003. On July 15, 2004, the agreement went into effect. The Mexico-Uruguay Free Trade Agreement includes chapters on services trade, investment, intellectual property rights, dispute resolution procedures, government procurement, rules of origin, customs procedures, technical measures, sanitary and phytosanitary measures, and safeguard provisions, in addition to market-opening measures. With a few exceptions, the agreement abolished practically all tariffs on most manufactured items when it went into effect. Tariffs on footwear will be phased off over the next ten years. Automobile goods are protected by a separate economic complementation agreement, while wool products are subject to tariff-rate quotas. Uruguay lowered 240 tariff lines on products imported from Mexico in the agricultural sector. The agreement excluded sensitive products such as corn, beans, poultry, and other meat products. Over three years, tariffs on bovine meat products were reduced from 10% to 7%.
