Lexology | 3 September 201
Mexico opposition party and industry groups oppose new FTAs, including FTA with Brazil
White & Case LLP
Justin S. Miller
On June 17, 2010, Mexican Senator Manlio Fabio Beltrones of Mexico’s major opposition party (Partido Revolucionario Institucional-PRI) stated that PRI senators would vote against any Free Trade Agreement (FTA) with Brazil until Mexico renegotiates certain provisions on agriculture under the North American Free Trade Agreement (NAFTA). Beltrones made these remarks at a forum on trade agreements organized by the Senate’s Commission for Rural Development (CNA). He opined that “it is no longer necessary to have FTAs with any of the countries with which negotiations are ongoing” because these negotiations could further damage domestic industries, including Mexico’s agricultural sector. Beltrones expressed concerns regarding the Calderon Administration’s decision to gradually eliminate tariffs on certain goods in an attempt to reduce the cost of inputs and raw materials for domestic producers and improve the country’s competitiveness.
Senator Beltrones highlighted that the trade liberalization under the NAFTA and the ongoing tariff reduction being implemented by Mexico’s Ministry of Economy (Secretaria de Economia-SE) has negatively affected Mexico’s agricultural sector. Agricultural producers of corn, rice, cattle and honey have expressed serious concerns regarding ongoing Free Trade Agreement (FTA) negotiations with Brazil and Benjamin Grayeb Ruiz, Vice President of Mexico’s National Agriculture Commission, stated that the agreement “would represent the greatest risk for Mexico due to [Brazil’s] notable competitiveness and government support to its agricultural producers.”
Prior to participating in the CNA forum, Secretary of Economy Gerardo Ruiz, confirmed that FTA negotiations with Brazil are ongoing and Mexico intends to conclude them. He reassured industry’s concerns by stating that Mexico’s agricultural sector would be taken into account before the parties sign the agreement.
After concluding the Economic Partnership Agreement (EPA) with Japan, Mexico halted new FTA negotiations in light of pressure from private sector representatives and sensitive domestic industries who oppose ongoing trade negotiations with Brazil and South Korea. They argue that SE has not taken into account their concerns over these FTAs and Mexico must first fully exploit the FTAs it already has prior to concluding new ones. SE officials have stated that they will continue to hold consultations with stakeholders and leading industry representatives to address their concerns and sign “balanced and advantageous” agreements.