Agreements

INTRODUCTION

International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history, its economic, social, and political importance has been on the rise in recent centuries.

Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders

Under the new multilateral system (the World Trade Organization (WTO), which emerged from the Uruguay Round), the countries of the region launched trade agreements of various levels (bilateral, sub-regional and plurilateral) in the 1990s.

These initiatives came as a complement to unilateral liberalization since the mid 1980s. At an initial stage, countries took part in intraregional agreements, Economic Complementation Agreement ECA/Latin American Integration Association (LAIA), and from the mid-1990s they began signing FTAs, which were much more ambitious than the former and in which non-regional partners also took part. Presently, there are close to 40 trade agreements in the region, and over half of those are FTAs.

The emergence of bilateral agreements coincides with steps taken by sub-regional agreements —Andean Community (CAN), MERCOSUR, Central American Common Market (CACM), and CARICOM— to widen gradually their integration schemes. Likewise, with an important demand in negotiating efforts, the Free Trade Area of the Americas (FTAA) process has been a learning process for some countries in the region and, to some extent, has helped to channel recent bilateral agreements.

Trade liberalization and the strengthening of integration among countries through trade agreements define conditions for competition that are much more demanding on their economies and on markets in which they interact. Nevertheless, the benefits of trade liberalization can be undermined by anticompetitive practices that affect the local economy.

MEXICO FREE-TRADE AGREEMENTS (FTAs)

Mexico has had a growing commitment to trade integration and liberalization through the formation of free trade agreements (FTAs) since the 1990s and its trade policy is among the most open in the world. In an effort to increase trade with other countries, Mexico has a total of 12 free trade agreements involving 44 countries.

Economic motivations are generally the major driving force for the formation of free trade agreements among countries, but there are other reasons countries enter into FTAs, including political and security factors. One of Mexico’s primary motivations for its unilateral trade liberalization efforts of the late 1980s and early 1990s was to improve economic conditions in the country, which policymakers hoped would lead to greater investor confidence, attract more foreign investment, and create jobs.

Mexico’s top five exports in 2011 were crude petroleum oil, passenger motor vehicles, flat panel screen TV’s, mobile telephones, and vehicles for the transportation of goods. Mexico’s top five imports were gasoline, parts for flat panel screen TV’s, mobile telephones, and passenger motor vehicles.

MEXICO-CHILE

The Mexico-Chile FTA, completed in 1998, was enacted in Chile on July 7, 1999, and in Mexico on August 1, 1999. Mexico and Chile signed the expanded FTA at the 1998 Summit of the Americas in Santiago, Chile on April 17, 1998. The FTA was expected to deepen the growing trade relationship between the two countries and improve bilateral investment opportunities in both countries. The 1998 agreement replaced an earlier FTA that was reached between the two countries in 1991. It removed tariffs on almost all merchandise trade between the two countries.

The Mexico-Chile FTA includes provisions on national treatment and market access for goods and services; rules of origin; customs procedures; safeguards; standards; agriculture; sanitary measures; investment; air transportation; telecommunications; temporary entry for business persons; IPR; dispute resolution; and other provisions. It does not include a chapter on energy, environment, or labor.

A separate agreement, which was signed simultaneously, includes provisions to avoid double taxation for companies doing business in both countries. The FTA provisions are similar to those under NAFTA, but with no labor and environmental provisions in separate side agreements.

CARICOM

The Caribbean Community and Common Market (CARICOM) was established by the Treaty of Chaguaramas, which was signed by Barbados, Jamaica, Guyana and Trinidad & Tobago and came into effect on August 1, 1973. Subsequently the other eighth Caribbean territories joint CARICOM. The Bahamas became the 13th Member State of the Community on July 4, 1983. Suriname became the 14th Member State of the Caribbean Community on July 4, 1995.

In July 1991, the British Virgin Islands and the Turks and Caicos became Associated Members of CARICOM. Twelve other States from Latin America and the Caribbean enjoy Observer Status in various Institutions of the Community and CARICOM Ministerial bodies.

 Caricom Members

Antigua and Barbuda, Belize, Grenada, Montserrat, St. Vincent and the Grenadines, Turks and Caicos Islands, The Bahamas, British Virgin Islands,Guyana, St. Kitts and Nevis, Suriname, Barbados, Dominica, Jamaica, Saint Lucia, Trinidad and Tobago.

 Caricom Observers

Anguilla, The Cayman Islands, Haiti, Puerto Rico, Aruba, Colombia, Mexico, Venezuela, Bermuda, Dominican Republic, Netherlands Antilles.

Caricom aims at the eventual integration of its members and economies, and the creation of a common market. From its inception, the Community has concentrated on the promotion of the integration of the economies of Member States, coordinating the foreign policies of the independent Member States and in Functional Cooperation, especially in relation to various areas of social and human endeavor.

MERCOSUR

The Southern Common Market economic bloc became the world’s fifth-largest economy on July 31 when Venezuela joined Argentina, Brazil, Paraguay, and Uruguay to become the group’s fifth member. Known as Mercosur in Spanish or Mercosul in Portuguese, the group encompasses 240 million people and has a combined

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