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A Major U.s. Motive For Negotiating A Free-Trade Agreement With Mexico Was To

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Each of the bilateral agreements negotiated before the Second World War and the first five multilateral cycles negotiated under the GATT achieved only modest results. Since tariff reductions would be made on the basis of the MFN, some countries could try to take advantage of concessions from other countries without reducing their high tariffs. To minimize the potential of these “walkers,” RTAA said the U.S. could only reduce tariffs on products if the “primary” supplier of the product in the United States was also willing to reduce its own tariffs. Fran O`Sullivan, “Mexico Pushes for Trade Deal with New Zealand,” February 4, 2017. With respect to NAFTA, none of the parties has formally announced the provisions they would seek in the event of a renegotiation of the agreement. Any changes to NAFTA could lead to disruptions in extended supply chains across North America, which could affect economic conditions and employment in all three countries, particularly Mexico. Several studies show that Mexico`s trade liberalization policy, particularly NAFTA, may have brought economic and social benefits to the Mexican economy as a whole, but that the benefits have not been evenly distributed across the country and that poverty persists in some parts of the country. Mexico has other reasons for further liberalizing trade with other countries, such as expanding market access for its exports and reducing its dependence on the United States as an export market. By entering into trade agreements with other countries, Mexico seeks to achieve economies of scale in certain economic sectors and to develop its export market.

Free trade agreements provide partners with wider access to their goods and services. Countries can benefit from trade agreements because producers are able to reduce their unit costs by producing larger quantities for regional markets, in addition to their own domestic markets. If more units of a good or service can be produced on a larger scale, companies can reduce production costs. The current global agreement between Mexico and the EU contains provisions on domestic treatment and market access for goods and services; Public procurement DPI; Investments Financial services Standards telecommunications and information services; Agriculture; Dispute resolution and other provisions. The agreement also contains chapters on cooperation in a number of areas, including mining, energy, transport, tourism, statistics, science and technology and the environment14. The EU agreed to remove tariffs on 82% of imports from Mexico when the agreement came into force and to remove the remaining tariffs until 1 January 2003. Mexico said it was ready to remove tariffs on 47% of imports from the EU after the implementation of the agreement and to remove the remaining tariffs until 1 January 2007. In the areas of agricultural products and fisheries, the signatories agreed to eliminate tariffs at 62% of trade within ten years.15 Tariff negotiations for certain sensitive products, including meat, dairy products, cereals and bananas, have been postponed.

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