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WORLD TRADE
ORGANIZATIONWT/REG198/415 September 2008(08-4272)
Committee on Regional Trade Agreements
FACTUAL PRESENTATION
Economic Partnership Agreement between Japan and Mexico
(Goods and Services)
Report by the Secretariat
This report, prepared for the consideration of the Economic Partnership Agreement between Japan and Mexico has been drawn up by the WTO Secretariat on its own responsibility and in full consultation with the Parties. The report has been drawn up in accordance with the rules and procedures contained in the Decision for a Transparency Mechanism for Regional Trade Agreements (WT/L/671).
Any technical questions arising from this report may be addressed to Ms Juneyoung Lee (tel: +41 22 739 6791).
WT/REG198/4Page iii
TABLE OF CONTENTS
Page
I. TRADE ENVIRONMENT 1
A. MERCHANDISE TRADE 1
B. TRADE IN SERVICES AND INVESTMENT 5
II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT 8
A. BACKGROUND INFORMATION 8
B. TRADE IN GOODS 101. National treatment and market access provisions on trade in goods 10
(a) Import duties and charges, and quantitative restrictions 10(b) Rules of origin 17(c) Export duties and charges, and quantitative restrictions 18
2. Regulatory provisions on trade in goods 18(a) Standards 18(b) Safeguard mechanisms 19(c) Anti-dumping and countervailing measures 21(d) Subsidies 22(e) Customs-related procedures 22
C. TRADE IN SERVICES AND INVESTMENT 221. Scope and definitions 222. Denial of benefits 223. General provisions on trade in services and investment 23
(a) Market access 23(b) National treatment and MFN 23(c) Local presence and performance requirements 23(d) Movement of natural persons 24
4. Non-conforming measures 27(a) Japan 27(b) Mexico 30
5. Regulatory provisions on trade in services 33(a) Domestic regulation 33(b) Recognition 33
6. Liberalization commitments in selected services sectors 33(a) Financial services 33(b) Maritime transport services 34
D. GENERAL PROVISIONS OF THE AGREEMENT 341. Exceptions 342. Accession and termination 343. Institutional framework 354. Dispute settlement 355. Relationship with other agreements concluded by the Parties 376. Government procurement 387. Intellectual property rights 388. Competition policy 39
Annex I 40Annex II 44
WT/REG198/4Page 1
JAPAN-MEXICO ECONOMIC PARTNERSHIP AGREEMENT (GOODS & SERVICES)
Factual Presentation by the Secretariat
I. TRADE ENVIRONMENT
1. The Economic Partnership Agreement (EPA) between Japan and Mexico (hereinafter referred to as "the Agreement") is Japan's first cross-regional EPA and Mexico's first EPA with an Asian country.
2. Japan was Mexico's 8th largest merchandise export market (0.64% of Mexico's exports) in 2006.1 Mexico's top five export destinations are: the United States (84.9%), European Communities (EC25) (4.4%), Canada (2.1%), Colombia (0.9%) and the Bolivarian Republic of Venezuela (0.7%). Japan is Mexico's fourth largest import source with 6% of the total value of imports after the US (51.1%), EC25 (11.4%) and China (9.5%).2 Mexico is Japan's 30th import source (0.49% of Japan's imports) and 14th export (1.43% of Japan's exports) destination.3
3. Japan's GDP was estimated at US$4,340 billion in 2006, while that of Mexico was US$839 billion in the same year. With total merchandise exports of US$647 billion and imports of US$579 billion, Japan ranked in 2006 as the world's fourth exporter and fifth importer; with merchandise exports of US$250 billion and imports of US$268 billion, Mexico ranked as the world's 15th exporter and the 14th importer in that year.4
A. MERCHANDISE TRADE
4. Recent developments in global and intra-Party trade are presented in Charts I.1 and I.2. Over the period surveyed (1999-2006), Mexico has run a consistent and growing trade deficit with Japan. Japan's exports to Mexico have grown particularly rapidly since 2003, while Mexico's exports to Japan have been subject to considerable fluctuation since 1999.5
1 UNSD, Comtrade database (2006). Data on the countries of the EC are reported individually in the Comtrade database.
2 WTO Statistics Database, Trade Profiles (April 2008).3 UNSD, Comtrade database (2006).4 WTO Statistics Database, Trade Profiles (April 2008).5 There is a discrepancy in the trade data reported by Japan and Mexico to Comtrade due to the use of
different accounting methods for calculating trade data.
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US$billion US$billion
Chart I.1 - Japan: merchandise imports from and exports to world and Mexico, 1999-2006
Source:UNSD, Comtrade database.
Imports from MexicoExports to Mexico
Total importsTotal exports
Left hand scale: Right hand scale:
020406080
100120140160180200220240260280300
1999 2000 2001 2002 2003 2004 2005 2006024681012141618202224262830
US$billion US$billion
Chart I.2 - Mexico: merchandise imports from and exports to world and Japan, 1999-2006
Source:UNSD, Comtrade database.
Imports from JapanExports to Japan
Total importsTotal exports
Left hand scale: Right hand scale:
WT/REG198/4Page 3
5. The commodity structure of trade among the Parties, as well as of their imports and exports to the world in the period 2002-2004, is shown in Chart I.3 on the basis of Harmonized System (HS) section.
6. Japan's four largest export product categories – machinery, vehicles, chemicals and base metals – made up 79.8% of its total exports in 2002-2004 and accounted for 83.8% of Mexico's imports from Japan. Mexico's four largest export product categories – machinery, vehicles, mineral products and textiles – made up 74.2% of its total exports in 2002-2004 and accounted for 55% of Japan's imports from Mexico. Other major imports from Mexico are animal products (13.4% of imports from Mexico) and vegetables (8.1%).
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Chart I.3Japan and Mexico: product composition of merchandise trade, annual average (2002-2004)
Japan's imports from Mexico Mexico's imports from Japan
Source: UNSD, Comtrade database.
Per cent
Total: US$2.0 billion Total: US$9.2 billion
Total: US$392.1 billion Total: US$178.7 billion
Total: US$484.8 billion Total: US$171.2 billion
Japan's global exports Mexico's global exports
Japan's global imports Mexico's global imports
Machinery27.2
Other3.1
Prepared Foods2.1
Mineral Products14.5
Animal Products13.4
Vehicles12.0
Vegetables8.1
Optical5.3
Chemicals4.9
Miscellaneous4.7
Pearls3.2
Machinery61.5
Other6.2Chemicals
3.2Plastics,Rubber
4.5
Optical5.6
Base Metals7.8
Vehicles11.3
Machinery23.4
Other7.5
Plastics,Rubber4.2Miscellaneous
2.3Articles of Wood
2.7Vegetables
3.6
Mineral Products23.3
Prepared Foods3.9
Vehicles4.2
Base Metals4.4
Optical4.5Live Animals
5.1 Textiles6.2 Chemicals
6.8
Machinery39.5
Other9.2
Pulp of Wood2.7Vegetables
2.8
Optical3.2
Mineral Products3.8
Textiles5.1
Chemicals7.3
Plastics,Rubber7.9
Base Metals8.2
Vehicles10.4
Machinery42
Other9.8Plastics
4.0
Optical6.3
Base Metals6.6
Chemicals6.9
Vehicles24.3
Machinery40.5
Other4.2
Prepared Foods2.2Plastics,Rubber
2.4Vegetables2.4
Chemicals3.0
Optical3.4
Miscellaneous3.6
Base Metals4.5
Textile5.7
Mineral Products11.3
Vehicles16.7
Textile1.3
WT/REG198/4Page 5
B. TRADE IN SERVICES AND INVESTMENT6
7. In 2006, Japan ranked fourth in the world both for exports and imports of commercial services. Its commercial services exports amounted to US$122 billion, representing 4.43% of world exports, while imports amounted to US$144 billion and represented 5.48% of world imports. In the same year, Mexico ranked 34th in the world in terms of world exports of commercial services and 31st
in terms of world imports. Its commercial services exports amounted to US$16 billion, representing 0.6% of world exports, while imports amounted to US$22 billion, representing 0.85% of world imports.7
8. Chart I.4 shows the breakdown of commercial services trade for Japan in 1999-2006. Total exports of commercial services have risen steadily during the period and especially since 2002. Imports have grown more slowly. The main contributors to both imports and exports of services during this period have been transportation, and other business services. These sectors accounted for almost 60% of services exports and 53.5% of imports in 2006.
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Chart I.4Japan, total commercial services trade, 1999-2006
Exports Imports
Transportation services
Travel services
Source : IMF, BOP CD-Rom.
Communications services
US$ billion
Construction services
Financial services
Computer and information services
Royalties and license
Other business services
Personal and cultural services
Government services
US$ billion
Insurance services
Note: Exports of insurance services were negative in the following years: 1999 (US$ -80 million), 2001 (US$ -100 million), and 2002 (US$ -380 million).
6 The exchange rate used for converting data in Japanese Yen to US dollars in this section was: 125.39 Yen per US dollar (2002), 115.93 (2003), 108.19 (2004), 110.22 (2005) and 116.30 (2006).
7 WTO Statistics Database, Trade Profiles (April 2008).
WT/REG198/4Page 6
9. Chart I.5 shows the breakdown of commercial services trade for Mexico in 1999-2006.8
Exports have risen more slowly than imports during this period. Travel services account for the bulk of its exports with significant shares for transportation and insurance services. Imports of commercial services have been mainly driven by insurance, travel and transportation services.
0
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2005
2006
Chart I.5Mexico, total commercial services trade, 1999-2006
Exports Imports
Transportation servicesTravel services
Source: IMF, BOP CD-Rom.
Communications services
US$ billion
Financial servicesRoyalties and license
Other business servicesPersonal and cultural servicesGovernment services
US$ billion
Insurance services
10. Japan's global investment position is depicted in Chart I.6. Japan's inward stock of foreign direct investment (FDI) increased 47% over the period 2002-2006, while its stock of outward FDI increased by 58% over the same period.
8 Mexico notes that figures on its services trade flows are difficult to obtain since neither governmental agencies nor private institutions have developed strict methodologies to record or develop accurate data.
WT/REG198/4Page 7
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2002 2003 2004 2005 2006
Chart I.6 Japan inward and outward foreign direct investment stock from world, 2002-2006
Inward Outward
Source: WTO Secretariat estimates based on data at http://www.boj.or.jp/en.
US$ billion
11. Chart I.7 which shows Japan's inward and outward stock of FDI with Mexico over the period 2002-2006 shows that Japan's FDI in Mexico accounted for 0.94% of its total outward FDI in 2005. After rising steadily between 2002 and 2005, Japan's FDI in Mexico fell sharply by 53% in 2006. Inward FDI from Mexico also fell marginally in 2006.
WT/REG198/4Page 8
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2002 2003 2004 2005 20060
500
1,000
1,500
2,000
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4,000
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Chart I.7 Japan inward and outward foreign direct investment stock with Mexico, 2002-2006
Inward Outward
Source: WTO Secretariat estimates based on data at http://www.boj.or.jp/en.
US$ million
II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT
A. BACKGROUND INFORMATION
12. The Agreement was signed by Japan and Mexico on 17 September 2004 and entered into force on 1 April 2005.
13. The goods and services aspects of the Agreement were notified to the WTO by the Parties on 31 March 2005 under Article XXIV of the GATT 1994 and the Understanding on the Interpretation of Article XXIV of GATT 1994, and Article V of the GATS, respectively (WT/REG198/N/1 and S/C/N/328). The text of the Agreement was circulated to Members as document WT/REG198/1, and is also available, together with its related annexes, on the following official website:
Japan: http://www.mofa.go.jp/policy/economy/fta/mexico.html
Mexico: http://www.economia.gob.mx/?P=2120
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14. The Agreement is composed of 18 Chapters and has related Annexes, as follows:
Box II.1: Composition of the Agreement
Preamble
Chapter 1: Objectives Chapter 2: General Definitions Chapter 3: Trade in Goods Chapter 4: Rules of Origin Chapter 5: Certificate of Origin and Customs Procedures Chapter 6: Bilateral Safeguard Measures Chapter 7: InvestmentChapter 8: Cross-Border Trade in Services Chapter 9: Financial ServicesChapter 10: Entry and Temporary Stay of Nationals for Business Purposes Chapter 11: Government Procurement Chapter 12: Competition Chapter 13: Improvement of the Business Environment Chapter 14: Bilateral Cooperation Chapter 15: Dispute Settlement Chapter 16: Implementation and Operation of the Agreement Chapter 17: Exceptions Chapter 18: Final Provisions Annexes Annex 1 referred to in Chapter 3 – Schedules in relation to Article 5 Annex 2 referred to in Chapter 3 – Measures of Mexico in relation to Article 7 Annex 3 referred to in Chapter 3 – Geographical Indications for Spirits Annex 4 referred to in Chapter 4 – Specific Rules of Origin Annex 5 referred to in Chapter 5 – Origin Verifications Annex 6 referred to in Chapters 7 and 8 – Reservations for Existing Measures Annex 7 referred to in Chapters 7 and 8 – Reservations for Future Measures Annex 8 referred to in Chapter 7 – Activities Reserved to the State Annex 9 referred to in Chapter 7 – Exemptions from Most-Favoured-Nation Treatment Annex 10 referred to in Chapter 10– Categories of Entry and Temporary Stay of Nationals for Business Purposes Annex 11 referred to in Chapter 11– Entities Annex 12 referred to in Chapter 11 – Goods Annex 13 referred to in Chapter 11 – Services Annex 14 referred to in Chapter 11 – Construction Services Annex 15 referred to in Chapter 11 – Thresholds Annex 16 referred to in Chapter 11 – General Notes of Mexico Annex 17 referred to in Chapter 11 – Publications Annex 18 referred to in Chapter 11 – Procurement Procedures
Source: Economic Partnership Agreement between Japan and Mexico.
15. No overall implementation period is explicitly stated in the Agreement. However, the Parties' schedules of concessions on trade in goods foresee an implementation period of ten years for the Parties from the date of entry into force of the Agreement.
WT/REG198/4Page 10
B. TRADE IN GOODS
1. National treatment and market access provisions on trade in goods
(a) Import duties and charges, and quantitative restrictions
(i) General provisions
16. Each party accords national treatment to the goods of the other Party in accordance with Article III of the GATT 1994 (Article 3).
17. The Parties agree to eliminate or reduce customs duties on originating goods as scheduled in Annex 1 of the Agreement and not to raise customs duties on originating goods from the level provided for in the schedules (Article 5). Annex 1 contains 15 categories relating to tariff liberalization between the Parties: i) the immediate elimination of customs duties from the entry into force of the Agreement (A); ii) the progressive elimination of customs duties using various methods of calculation (B1-B2, B4-B8, C, Ca, and D); iii) elimination of duties from the eleventh year (2015) (E); iv) reductions in customs duties (P specified in the note in column 5 in the schedules); v) tariff-rate quotas (Q); and vi) exclusion from liberalization (X).9 In addition, there are some lines subject to consultation (R).10 With the exception of the year of entry into force, tariff reductions take place on 1 April of each year.
18. For products that are subject to consultation (R), under Article 5.3.(a).(i), and Sections 2-3 of Annex I the Parties agreed to consult on improved market access after the third year from the entry into force of the Agreement. The Parties may also request consultations for further liberalization of goods four years after the date of entry into force of the Agreement (Article 5.3.(a).(ii)). Article 5.3.(a).(ii) shall not apply to the originating goods referred to in Article 5.3.(a).(i) while the consultation on the originating goods is held under the terms and conditions referred to in Article 5.3.(a).(i) (Article 5.3.(b)). The Parties will also consult to consider further trade liberalization for goods listed in Annex 1 in light of the results of multilateral trade negotiations (Article 5.4).
19. The Parties agree not to institute or maintain any prohibitions or restrictions on imports from each other, other than customs duties, which are inconsistent with their obligations under Article XI of the GATT 1994 and relevant provisions under the WTO Agreement (Article 7.1). Mexico has listed current restrictions and prohibitions on imports and exports in Annex; under the Agreement these can be maintained, provided that they are consistent with Mexico's rights and obligations under the WTO Agreement (Article 7.2) and do not accord more favourable treatment to non-Parties, including with which Mexico has concluded an agreement under Article XXIV of the GATT 1994 and the Understanding on the Interpretation of Article XXIV of the GATT 1994. The measures mainly concern HS Chapters 27 and 87.11
(ii) Liberalization of trade and tariff lines
20. Trade in goods under the Agreement is classified under the 2002 nomenclature of the Harmonized System (HS) (Article 4). The elimination of tariffs applicable between the Parties is scheduled in Annex 1.
21. The overall tariff elimination under the Agreement is depicted in Tables II.1.A and II.1.B below. Japan's MFN tariff schedule in the year of entry into force of the Agreement (2005) comprised
9 For some of category X lines, there is partial liberalization.10 General notes in Section 1, Annex 1 of the Agreement; and the preambles of Sections 2 and 3,
Annex 1 of the Agreement.11 These Chapters relate to mineral fuels and oils, and motor vehicles.
WT/REG198/4Page 11
9,111 tariff lines at the HS 9-digit level, out of which 603 held non ad valorem duties.12 For the lines with non ad valorem rates, ad valorem equivalents were not provided; the Secretariat has used only the ad valorem component of the tariff lines subject to alternate and compound rates of duty in the tariff calculations in this presentation. Table II.1.A shows duty elimination in terms of tariff lines and trade, as applied by Japan to imports from Mexico. Before the entry into force of the Agreement 3,797 tariff lines (41.7% of Japan's tariff) were already duty-free on an MFN basis. Upon entry into force of the Agreement, an additional 3,367 tariff lines (37% of the tariff) became duty-free for imports from Mexico; as a result, 78.7% of Japan's tariff lines became duty-free corresponding to 74.9% of imports by value from Mexico. The remaining tariffs are to be progressively eliminated in six additional stages, in 2008; 2009; 2010-2011; 2012-2013; 2014; and 2015. By 2014, after nine years of implementation, a further 675 lines are to become duty-free (7.4% of Japan's tariff lines) amounting to 11.2% of the value of imports from Mexico. By the end of implementation in 2015, 87% of tariff lines and 86.1% imports by value from Mexico will be duty-free.
Table II.1Tariff elimination commitments under the Agreement and corresponding average trade A: Japan
Duty phase-out period Number of lines % of total lines in
Japan's tariff schedule
Value of Japan's imports from Mexico (2002-2004)
in million US$
% of total Japan's imports from Mexico
2002-2004
MFN duty-free (2005) 3,797 41.7 1,212.9 64.0
2005 3,367 37.0 206.1 10.9
2006-2007* 25 0.3 74.5 3.9
2008 59 0.6 2.9 0.2
2009 94 1.0 0.0 0.0
2010-2011* 87 1.0 48.7 2.6
2012-2013* 163 1.8 84.5 4.5
2014 247 2.7 0.0 0.0
2015 92 1.0 3.1 0.2
Remain dutiable 1,180 13.0 262.6 13.9
Total 9,111 100.0 1,895.4 100.0
* The number of duty free lines remains the same as in the previous year.Note: Based on the HS 2002 nomenclature. Calculations exclude tariff lines having an in-quota rate and import data under Chapter 99.
Source: WTO Secretariat estimates based on data provided by Japan and WTO-IDB.
22. Mexico's MFN tariff schedule in the year of entry into force of the Agreement (2005) comprised 11,907 tariff lines at the HS 8-digit level, out of which 59 held non ad valorem duties13; imports under 22 tariff lines are prohibited. For the lines with non ad valorem rates, ad valorem equivalents were not provided; the Secretariat has used the ad valorem component of the compound rates in the tariff calculations in this presentation. Table II.1.B shows Mexico's duty elimination in terms of tariff lines and trade, applied to Japan. Before the entry into force of the Agreement 2,113 tariff lines (17.7% of Mexico's tariff) were already duty-free on an MFN basis. Between 2005 and 2007, an additional 2,615 tariff lines (22 % of tariff lines) became duty-free for imports from Japan; as a result, 39.7% of Mexico's tariff lines became duty-free, corresponding to 62.2% of imports by value from Japan. The remaining tariffs are to be progressively eliminated in seven stages, in 2008; 2009; 2010; 2011; 2012-2013; 2014; and 2015. The majority are to be liberalized by 2014, after nine years of implementation, with a further 6,101 tariff lines (51.2% of Mexico's tariff) becoming duty-free, amounting to 33.2% of the value of imports from Japan. By the end of the
12 Of these 246 are subject to specific rates, 56 compound rates, and 301 alternate rates.13 Of these 13 are subject to specific rates and 46 to compound rates.
WT/REG198/4Page 12
implementation period in 2015, 94.1% of tariff lines and 98.9% of the value of imports from Japan will be duty-free.
Table II.1Tariff elimination commitments under the Agreement and corresponding average tradeB. Mexico
Duty phase-out period Number of lines
% of total lines in Mexico's tariff
schedule
Value of Mexico's imports from Japan (2002-2004)
in million US$
% of total Mexico's imports from Japan
2002-2004
MFN duty free (2005) 2,113 17.7 3,833.4 45.8
2005-2007* 2,615 22.0 1,375.0 16.4
2008 23 0.2 0.0 0.0
2009 970 8.1 322.5 3.9
2010 52 0.4 0.5 0.0
2011 20 0.2 536.9 6.4
2012-2013* 109 0.9 8.0 0.1
2014 4,927 41.4 1,906.3 22.8
2015 370 3.1 287.4 3.4
Remain dutiable 708 5.9 96.2 1.1
Total 11,907 100.0 8,366.1 100.0
* The number of duty free lines remain the same as in the previous year.Note: Based on the HS 2002 nomenclature. Calculations exclude tariff lines having an in-quota rate and import data under Chapter 98.
Source: WTO Secretariat estimates based on data provided by Mexico.
(iii) Japan's liberalization schedule
23. Table II.2 shows Japan's tariff elimination commitments vis-à-vis Mexico by HS section product categories. Of the remaining 1,947 tariff lines subject to duty after entry into force of the Agreement, 265 lines are to be fully liberalized by 2011; they include mostly textiles and textiles articles; prepared food; vegetable products; and wood and wooden articles. The additional 502 tariff lines to be fully liberalized by 2015 are also mostly textiles and textiles articles, and hides and skins.
Table II.2Japan: Tariff elimination under the Agreement, by HS section
HS section and description
MFN avg.%
Total no of lines
Number of duty-free linesRemain dutiableMFN
2005 2005 2006-2007* 2008 2009 2010-
2011*2012-2013* 2014 2015
I Live animals and animal products 8.6 503 104 144 2 4 249
II Vegetable products 6.1 527 164 56 19 27 6 1 254
III Animal or vegetable fats and oils
3.8 85 20 3 3 6 53
IV Prepared food etc. 16.3 762 78 67 9 48 28 31 501
V Minerals 0.6 218 156 36 25 1VI Chemicals and chemical products 2.2 1,054 425 595 2 32
WT/REG198/4Page 13
HS section and description
MFN avg.%
Total no of lines
Number of duty-free linesRemain dutiableMFN
2005 2005 2006-2007* 2008 2009 2010-
2011*2012-2013* 2014 2015
VII Plastics and rubber 2.4 305 106 199
VIII Hides and skins 10.3 208 69 1 76 32 30
IX Wood and articles 3.3 237 88 64 29 5 4 10 37
X Pulp, paper etc. 0.0 172 172XI Textiles and textiles articles 6.5 2,149 92 1,733 83 235 6
XII Footwear, headgear 16.3 117 6 25 40 28 18
XIII Articles of stone 1.1 164 103 59 2
XIV Precious stones, etc. 1.3 80 58 22
XV Base metals and base metals products
0.9 844 604 234 6
XVI Machinery 0.1 984 970 14XVII Transport equipment 0.1 153 152 1
XVIII Precision equipment 0.2 309 300 6 3
XIX Arms and ammunition 6.9 24 24
XX Misc. manufactured articles
1.6 209 123 84 2
XXI Works of art, etc. 0.0 7 7
Total 4.8 9,111 3,797 3,367 25 59 94 87 163 247 92 1,180
* The number of duty free lines remains the same as in the previous year.Note Based on the HS 2002 nomenclature; for tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related
calculations.
Source: WTO Secretariat estimates based on data provided by Japan.
24. The 1,180 tariff lines that will remain dutiable at the end of implementation period (2015) are mainly agricultural products, such as prepared food; vegetable products; and live animals and animal products. These lines include products excluded from liberalization (1,032 tariff lines, mainly HS Chapters 3-4, 11, and 19-21), products subject to consultation (35 tariff lines, mainly HS Chapters 8, 11, 17 and 20), categories Q containing TRQs (79 tariff lines, mainly HS Chapters 2, 16, 20 and 29) and P containing products whose duty is to remain unchanged until 2015 (8 tariff lines, HS Chapters 2, 3 and 16), and other products whose duty is to be reduced or remained equivalent to MFN (26 tariff lines, mainly HS Chapters 4, 8, 11, 20 and 22). Chart II.1 below shows the composition of these categories.
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Chart II.1
Japan'sRemaining Dutiable Lines
Excluded Rice Category Q Consultation Category P Others
Others (2.2%)
Rice (Excluded)(0.3%)
Excluded (87.1%)Category P
(0.7%)
Category Q(6.7%)
Consultation(3.0%)
Source: WTO Secretariat estimates based on data provided by Japan.
(iv) Mexico's liberalization schedule
25. Table II.3 shows Mexico's tariff elimination commitments vis-à-vis Japan by HS section product categories. Of the remaining 7,179 tariff lines subject to duty after entry into force of the Agreement, 1,065 are to be fully liberalized by 2011, after six years of implementation; they include mostly chemicals and chemical products, precision equipment, and base metals and products. However, the largest share of the tariff, 4,927 lines, is to be liberalized after nine years of implementation, including chemicals and machinery. The additional 370 lines to be fully liberalized by 2015 are mostly base metals and base metals products.
Table II.3Mexico: Tariff elimination under the Agreement, by HS section
HS section and description
MFN
av
erag
e%
Tot
al N
o of
lin
es
MFN
200
5
Number of duty-free lines Remain dutiable
2005
-20
07*
2008
*
2009
2010
2011
2012
-20
13*
2014
2015
I Live animals and animal products
33.5 323 34 132 2 5 150
II Vegetable products 16.3 468 88 160 13 22 8 177III Animal or vegetable fats and oils
20.4 69 1 15 3 50
IV Prepared food etc. 22.8 337 6 94 2 15 20 4 196V Minerals 8.5 210 35 108 18 2 47VI Chemicals and chemical products
8.1 2,828 856 162 172 1,590 48
VII Plastics and rubber 13.5 566 37 30 37 462VIII Hides and skins 15.2 122 8 32 2 37 24 19IX Wood and articles 15.6 137 3 80 6 8 22 18X Pulp, paper etc. 9.5 299 35 20 6 236 2
WT/REG198/4Page 15
HS section and description
MFN
av
erag
e%
Tot
al N
o of
lin
es
MFN
200
5
Number of duty-free lines Remain dutiable
2005
-20
07*
2008
*
2009
2010
2011
2012
-20
13*
2014
2015
XI Textiles and textiles articles
20.7 1,245 35 678 96 434 2
XII Footwear, headgear
29.3 100 3 14 40 13 13 17
XIII Articles of stone 15.2 293 3 50 80 160XIV Precious stones, etc.
9.2 65 23 13 16 13
XV Base metals and base metals products
12.3 1,231 78 148 128 548 329
XVI Machinery 10.0 2,474 741 521 93 1,119XVII Transport equipment
15.4 381 24 109 105 20 94 29
XVIII Precision equipment
10.8 464 87 168 135 74
XIX Arms and ammunition
15.6 33 2 31
XX Misc. manufactured articles
17.4 248 3 61 68 1 115
XXI Works of art, etc. 0.0 14 14Total 13.1 11,907 2,113 2,615 23 970 52 20 109 4,927 370 708
* The number of duty free lines remain the same as in the previous year.Note: Based on the HS 2002 nomenclature; for tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related
calculations.
Source: WTO Secretariat estimates based on data provided by Mexico.
26. The 708 tariff lines that will remain dutiable at the end of implementation period (2015) are mainly agricultural products, such as prepared food; vegetable products; and live animals and animal products. These include lines that are excluded from liberalization (517 tariff lines – mainly HS Chapters 2-4, 7-9, 11, 15, and 19-21), or subject to consultation (22 tariff lines – mainly HS Chapters 17 and 20), category Q containing TRQs (44 tariff lines – mainly HS Chapters 2, 16 and 20), duty reductions based on different combination of categories or whose tariff rates are to remain unchanged until 2015 (125 tariff lines – mainly HS Chapters 3, 20, 44, 64 and 87). Chart II.2 below shows the composition of these categories.
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Chart II.2
Mexico'sRemaining Dutiable Lines
Excluded Category Q Consultation Rice Others
Excluded (72.3%)
Rice (Excluded)(0.7%)
Others(17.7%)
Category Q(6.2%)
Consultation(3.1%)
Source: WTO Secretariat estimates based on data provided by Mexico.
(v) Tariff-rate quotas
27. Both Parties maintain complex tariff-rate quota (TRQ) schemes – 27 and 18 schemes for Japan and Mexico, respectively.
28. Japan maintains TRQs on 217 tariff lines; these are mainly for raw hides and skins (HS Chapter 41 -66 tariff lines); meat and edible meat offal (HS Chapter 2 – 43 tariff lines); footwear (HS Chapter 64 – 31 tariff lines); and articles of leather (HS Chapter 42 – 33 tariff lines). Details of the quantities and rates applying to these lines are given in Table AII.1. The in-quota rates for most of these products are zero, while imports above the quota enter at the prevailing MFN rates; in some cases, notably, bananas, leather products, some footwear, glass, clocks and furniture, the out-of-quota rates are less than the applied MFN rates. The quotas are to be eliminated in 2012 for tariff lines relating to raw hides and skins and leather, articles of leather, footwear, glass, clocks and furniture; in 2015 for bananas, raw hides and skins and leather and footwear. By the end of the implementation period 62.7% of all TRQs are to be eliminated.
29. Mexico maintains TRQs on 182 tariff lines; these are mainly for raw hides and skins (HS Chapter 41 – 33 tariff lines); footwear (HS Chapter 64 – 24 tariff lines); articles of leather (HS Chapter 42 – 22 tariff lines); articles of iron or steel (HS Chapter 73 – 20 tariff lines); and vehicles other than railway or tramway rolling-stock (HS Chapter 87 – 20 tariff lines). Details of the quantities and rates applying to these lines are given in Table AII.2. The in-quota rates for most of these products are zero, while imports above the quota enter at the prevailing MFN rates, the exception being motor vehicles (HS Chapter 87), for which the out-of-quota rates are less than the base MFN rates.14 The TRQs are to be eliminated in 2011 for motor vehicles; in 2012 for some
14 The preferential rates which are based on MFN rates in 2004 in the first year of the Agreement are higher than the applied MFN rates in 2005 for six lines (87041099AA, 87042201AA, 87043201AA, 87039001,
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articles of leather, raw hides, skins and leather, and footwear and furniture; in 2015 for bananas and some lines relating to raw hides, skins and leather; and iron and steel products. By the end of the implementation period 68.6% of all TRQs are to be eliminated.
30. Consultations under Article 5.3.(a).(i) were held between the Parties and resulted in the conclusion of a protocol which entered into force on 1 April 2007.15 The consultations involved products such as poultry meat (0207), beef (0202) and fresh oranges (0805), which are scheduled under 1.(b), 4.(b), and 10.(b) respectively, of Sections 2 and 3 of Annex 1. For these goods, Japan originally set quota quantities for the first five years but in-quota rates were set either for the first year or the first two years following entry into force of the Agreement. Following these consultations, the in-quota rates for these products were set at rates ranging from between 10-50% below the prevailing MFN rates for the second to the fifth years, with consultations to take place again for the sixth year onwards to agree the quota quantities and in-quota rates for subsequent years.
31. Mexico originally fixed quota quantities from the first to the second year or from the first to the fifth year, but in-quota duties of zero were fixed for only the first or the first two years. Following consultations between the Parties, the in-quota rates up to the fifth year were fixed at rates ranging from 10-50% below the prevailing MFN rates. As in the case of Japan, the future quota quantities and in-quota duties for the sixth year onwards are subject to further consultations.
(b) Rules of origin
32. Disciplines regarding rules and certificates of origin, and customs procedures covered by the Agreement are set out in Chapters 4 and 5. Articles 22-38 deal with the rules of origin, while Articles 39-50 cover other customs-related issues.
33. The general requirement for a good to be considered originating (Article 22.1) is that it is: wholly obtained or produced entirely in one or both Parties, as defined in Article 38; produced entirely in one or both Parties exclusively from originating materials; satisfies the requirements of Annex 4, and other applicable requirements of Chapter 4, if produced entirely in one of the Parties using non-originating materials; or, except for a good of HS Chapters 61- 63, produced entirely in one or both Parties, but if one or more of the non-originating materials used in its production do not undergo a change in tariff classification (CTC). The regional value content of the good must not be less than 50%, unless otherwise provided for in Annex 4, and the good must satisfy all other applicable requirements of this Chapter.
34. Under Article 22.2 a good using non-originating materials that undergo a CTC and satisfies other requirements set out in Annex 4 must be produced entirely in one or both Parties and its total regional value content entirely met in one or both Parties.
35. Section 2 of Annex 4 sets out specific criteria for non-originating materials to meet in order for the final good to acquire originating status. In the majority of cases, origin is granted if the non-originating materials have undergone a CTC on the basis of HS headings or subheadings - i.e. at the four or six-digit level. The CTC is supplemented with, or replaced by, a regional value requirement which establishes the minimum value of originating materials allowed in the final good for it to be considered originating. It is expressed as a percentage of the regional value content. The
87042101, and 87043101).15 WT/REG198/N/1/Add.1 (17 October 2007).
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minimum value is mainly 50%, but there are also cases where it is 55%16, 65%17 or 90%18 (Section 2 of Annex 4).
36. Article 25 establishes a de minimis principle whereby a product is considered to be originating if the value of all non-originating materials used in its production that do not undergo a CTC is no more than 10% of the transaction value of the goods, and the good satisfies all other applicable requirements of this Chapter (Article 25.1). This does not apply to certain HS Chapters (Article 25.4). Cumulation between producers in one or both Parties is permitted (Article 27).
37. Articles 29-33 define how certain materials (sets, kits or composite goods; indirect materials; accessories, spare parts and tools; packaging materials and containers for retail sale; packing materials and containers for shipment) are to be treated/valued when determining their origin.
38. Under Article 35, originating goods shall be considered as non-originating, even if they satisfy the requirements of Article 22 if, they undergo: further production; operations other than unloading, reloading or any other operation necessary to preserve them in good condition or for transport to the other Party; or do not remain under the surveillance of the customs authorities in one or more non-Parties where they undergo transshipment or temporary storage.
(c) Export duties and charges, and quantitative restrictions
39. The Parties agree not to adopt or maintain any duties on their mutual exports (Article 6). Neither Party shall institute or maintain prohibitions or restrictions other than customs duties on imports from other Party or on the export, or sale for export, of any good destined for the other Party, which is inconsistent with its obligations under Article XI of the GATT 1994 and relevant provisions under the WTO Agreement (Article 7).
2. Regulatory provisions on trade in goods
(a) Standards
(i) Sanitary and phytosanitary measures
40. The Parties reaffirm their existing rights and obligations under the WTO Agreement on Sanitary and Phytosanitary Measures (SPS) (Article 12).
41. Article 13 provides for each Party to designate an enquiry point to answer all reasonable enquiries from the other Party on SPS measures and to provide relevant information, if appropriate.
42. On the date of entry into force of the Agreement, a Sub-Committee on SPS measures was established for: exchanging information on SPS incidents in the Parties and non-Parties, as well as modification or introduction of SPS-related regulations and standards by the Parties; sharing information on potential SPS risks; conducting science-based consultations to identify and address specific issues; and carrying out other functions which may be delegated by the Joint Committee and, if necessary, establishing ad hoc technical advisory groups for technical information and advice (Article 14).
16 HS 64.01-64.05, HS 6406.10.17 HS 8407.31-8407.34, HS 8408.20, HS 8409.91-8409.99, HS 8483.10, HS 8511.10–8511.80,
HS 8544.11-8544.60, HS 8544.70, most of the lines under Chapter 87 (vehicles other than railway or tramway rolling-stock, and parts and accessories thereof) listed in Section 2 of Annex 4.
18 HS 9608.50 (ball point pens – sets of articles from two or more of the foregoing subheadings).
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43. The dispute settlement provisions in Chapter 15 do not apply to SPS measures (Article 15). When a dispute arises, both Parties will try to solve their differences within the Sub-Committee on SPS measures with the guidance of the Joint Committee. If this is not possible, both Parties could seek settlement under the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes.
(ii) Technical barriers to trade
44. The Parties reaffirm their existing rights and obligations under the WTO Agreement on Technical Barriers to Trade (TBT) (Article 16). Subject to the availability of appropriated funds and the applicable laws and regulations of each party, the Agreement provides a framework to address cooperation in technical regulations, standards and conformity assessment procedures, such as: joint studies, seminars and symposia for enhancing mutual understanding of domestic technical regulations, standards and conformity assessment procedures; exchanging government officials for training; contributing jointly to international and regional fora; and encouraging entities, other than the government of the Parties to engage in such cooperation (Article 17).
45. Under Article 18 each Party designates an enquiry point to answer all reasonable enquiries from the other Party and to provide relevant information, if appropriate.
46. Similar to SPS, on the date of entry into force of the Agreement, a Sub-Committee on technical regulations, standards and conformity assessment procedures was established for: exchanging information on technical regulations, standards and conformity assessment procedures; reviewing implementation and operation of Section 3; reporting any findings to the Joint Committee; and carrying out other functions which may be delegated by the Joint Committee. (Article 19).
47. The dispute settlement provisions of Chapter 15 do not apply to TBT measures (Article 21). When a dispute arises, both parties will try to solve their differences within the Sub-Committee on TBT measures with the guidance of the Joint Committee. If this is not possible, both Parties could seek settlement under the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes.
(b) Safeguard mechanisms
(i) Global safeguards
48. The Parties may take measures in accordance with the provisions of Article XIX of GATT 1994 and the WTO Agreement on Safeguards (Article 51.2).
(ii) Bilateral safeguards
49. The Parties are free to invoke bilateral safeguards subject to consistent, impartial and reasonable administration of laws, regulations, decisions and rulings governing such measures (Articles 51.1 and 52).
50. As a result of the elimination or reduction of customs duties, if a good originating in one Party is imported by the other Party in such increased quantities, in absolute terms, and under such conditions that the imports constitute a "substantial" cause of serious injury, or threat thereof, to a domestic industry of the importing Party, it may apply a bilateral safeguard measure to the minimum extent necessary to prevent or remedy serious injury and to facilitate adjustment (Article 53.1).19
19 Under Article 56, the Agreement follows the definitions of "domestic industry" and "serious injury" as in Article 4 of the WTO Agreement on Safeguards. However, there is no definition of "threat of serious injury" in the Agreement. Further, the Agreement does not define the word "substantial".
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51. Bilateral safeguards may take the form of (a) suspension of the further reduction of customs duty on the originating good; or (b) increased customs duty to the lesser of the applied MFN duty when the safeguard is taken and on the day immediately preceding the date of entry into force of the Agreement (Article 53.2). Safeguard measures cannot be applied to imports within the tariff-rate quota quantities granted under Annex 1 of the Agreement (Articles 53.3 and 53.4).
52. Bilateral safeguards cannot be imposed for more than three years (compared to four years in the WTO Agreement on Safeguards), but can be extended up to a maximum period of four years in very exceptional circumstances subject to prior consultations.20 (Article 53.5). The measure must not be applied to goods which have already been subject to a bilateral safeguard measure, for a period of time equal to the duration of the previous measure or one year (compared to two years in the WTO Agreement on Safeguards), whichever is longer (Article 53.6).
53. Although provisional measures may be taken in critical circumstances where delay would cause damage if the subsequent investigation did not determine that increased imports caused or threatened to cause serious injury to a domestic industry, the customs duty imposed as a result of such measure shall be refunded within 60 days (Articles 54.1 and 54.4).21 The duration of provisional measures cannot exceed 200 days within the overall period of the safeguard (Article 54.3).
54. An investigation shall, except in special circumstances, be completed within one year, and no more than 18 months from the date of initiation (Article 55.4).22 Only if the investigation demonstrates the existence of a causal link between increased imports of the originating good and serious injury or threat thereof can a bilateral safeguard measure be applied (Article 55.10). The relevant factors for the investigation include the rate and amount of the increase in imports in absolute terms, the share of the domestic market taken by increased imports, and changes in the levels of sales, production, productivity, capacity utilization, profits and losses, employment, and prices (Article 55.9).23
55. If necessary, the Parties shall review the bilateral safeguard provisions ten years after the entry into force of the Agreement (April 2015) (Article 53.13).
56. The Parties can take any measure for balance-of-payments purposes in accordance with the conditions established under Article XII of the GATT 1994, and the Understanding on the Balance-of -Payments Provisions of GATT 1994 (Article 171.1).
Table II.4: Synopsis of bilateral safeguards
Requirements Specific Conditions under the Agreement
Trigger Rise in imports
Criteria Cause of serious injury or threat thereof "Substantial" cause of serious injury, or threat thereof
20 Under the WTO Agreement on Safeguards, the maximum period of application of (global) safeguard measures is eight years (Article 7.3).
21 Article 6 of the WTO Agreement on Safeguards states that the duties shall be refunded "promptly".22 There is no time period for the investigation in the WTO Agreement on Safeguards.23 Article 4.2.(a) of the WTO Agreement on Safeguards also includes the rate and amount of the
increase in imports of the product concerned in absolute and "relative" terms as factors in the investigation, whereas, in the Agreement, only the word "absolute" is mentioned. Further, "price" is not a factor in Article 4.2.(a) of the WTO Agreement on Safeguards.
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Requirements Specific Conditions under the Agreement
Measures allowed Suspension of further duty reduction
(Article 53.2. (a))
Increase in duty rate
Up to a maximum limit corresponding to the MFN rate applicable to the same product at the time when the bilateral safeguard measure is taken; and on the day
immediately preceding the date of entry into force of the Agreement (Article 53.2.(b))
Timing Maximum duration including provisional measures
3 years; in “very exceptional circumstances” up to a maximum of 4 years
(Articles 53.5 and 54.3)
Conditions or limitationsInformation of initiation of an
investigation through a written public notice
(Articles 53.7 and 55.5)Detailed criteria are to be identified in the written public
notice.
Information of the intention to take measures through a written notice
(Article 53.8)
Prior consultation
(Article 53.9)
Prior investigation
(Article 55.2)
Provisional bilateral safeguard measures
(Article 54)If the subsequent investigation does not determine that increased imports have caused or threatened to cause
serious injury to a domestic industry, the customs duty imposed as a result of such measure shall be refunded
within 60 days
Re-imposition of safeguard measures on the same good
Shall not be applied for a period of time equal to the duration of the previous measure or 1 year, whichever is
longer
Progressive liberalization
(Article 53.5)For measures exceeding 3 years
Compensation
(Articles 53.10 and 53.11)
Possibility of retaliation
(Article 53.11)
(iii) Special safeguards
57. The Agreement contains no provisions on special safeguards.
(c) Anti-dumping and countervailing measures
58. There are no anti-dumping and countervailing provisions per se in the Agreement. However, Article 11.(b) implies that anti-dumping can be applied pursuant to the Parties' domestic laws and to the provisions of Article VI of the GATT 1994, the WTO Agreement on Implementation of Article VI of the GATT 1994 and the WTO Agreement on Subsidies and Countervailing Measures.
(d) Subsidies
59. The Agreement contains no specific provision on subsidies.
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(e) Customs-related procedures
60. The Parties affirm the important role of customs authorities and procedures for trade facilitation. Article 50 aims for customs cooperation between the Parties to achieve conformity with relevant international standards and recommended practices such as those under the auspices of the Customs Cooperation Council.
C. TRADE IN SERVICES AND INVESTMENT
1. Scope and definitions
61. Trade in services is mainly governed by the Chapter on cross-border trade in services (Chapter 8). The definition of "cross-border trade in services" is the supply of a service (Article 106.(a)): from the Area of one Party into that of the other; in the Area of one Party by a person of that Party to a person of the other Party; or by a national of a Party in the Area of the other Party.
62. The supply of a service by an investor of one of the Parties (commercial presence) is not regarded as "cross-border trade in services", but covered by Chapter 7 on investment. Further, Chapter 8 does not apply to: financial services, which are separately covered in Chapter 9; cabotage in maritime transport services including navigation in inland waters; measures affecting air traffic rights or measures affecting services directly related to the exercise of air traffic rights other than measures affecting computer reservation systems, aircraft repair and maintenance, and sales and marketing of air transport services; procurement by a Party or a state enterprise; subsidies provided by a Party or a state enterprise thereof, including grants, government-supported loans, guarantees and insurance; measures pursuant to immigration laws and regulations; services supplied in the exercise of government authority; and measures of a Party with respect to a national of the other Party seeking access to its employment market, or employed on a permanent basis in that Party.
63. Chapter 7 on investment does not take precedence in the case of inconsistency with any other Chapter; the other Chapter prevails to the extent of the inconsistency (Article 69). Chapter 7 does not apply to measures adopted or maintained by a Party to the extent that they are covered by Chapter 9 on financial services (Article 57.3). It also establishes a mechanism for the settlement of investment disputes without prejudice to the rights and obligations of the Parties under Chapter 15 on dispute settlement (Article 75). The tribunal may award monetary damages and any applicable interest or restitution of property if it finds in favour of the complaining party (Article 92).
64. Both Chapters 7 and 8 follow a "negative list" approach with all sectors and sub-sectors assumed to be open to competition from nationals of the other Party, both for national and most-favoured-nation (MFN) treatment, unless otherwise specified. Additionally, Chapters 7 and 8 do not impose senior management and boards of directors and performance requirements; and local presence requirements, respectively, unless otherwise specified. For the implementation and operation of Chapter 8, a Sub-Committee on Cross-Border Trade in Services is established (Article 103).
2. Denial of benefits
65. Under Articles 70 and 105, a Party may deny the benefits of Chapters 7 or 8 to an investor or a service supplier from the other Party, respectively if that person is an enterprise "owned" or "controlled" by investors/persons of a non-Party, and the denying Party does not maintain diplomatic relations with the non-Party or adopts or maintains measures with respect to the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of the either of the relevant Chapters were accorded to the enterprise. Further, subject to prior notification and consultation, a Party may deny the benefits of Chapter 7 or 8 to an investor or a
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service supplier of the other Party if that investor/person is an enterprise owned or controlled by persons of a non-Party, and has no substantial business activities in the other Party. "Owned" and "controlled" are defined in Chapter 8, but not in Chapter 7.
3. General provisions on trade in services and investment
(a) Market access
66. The Chapter on cross-border trade in services does not contain market access provisions along the lines of Article XVI of the GATS.
(b) National treatment and MFN
67. Articles 98 and 99 (Chapter 8) on national and MFN treatment require respectively that each Party accord to services and service suppliers of the other Party treatment no less favourable than that it accords, in like circumstances, to its own services and service suppliers or to services and service suppliers of non-Parties. Further, each Party shall accord to services and services suppliers of the other Party the better of the treatment required by Articles 98 and 99.
68. Chapter 7 on investment requires each Party to accord national and MFN treatment (Articles 58 and 59 respectively), in like circumstances, to investors of the other Party and to their investments, with respect to establishment, acquisition, expansion, management, conduct, operation, maintenance, use, enjoyment and sale or other disposition of investments. Each Party shall accord to investors of the other Party and to their investments the better of the treatment required by Articles 58 and 59. National and MFN treatment shall be also applied, in like circumstances, for access to the courts of justice and administrative tribunals and agencies in all levels of jurisdiction (Note 3 under Article 59).
69. The Parties also reserve the right to be exempted from the MFN principle for treatment accorded under international agreements in force prior to 1 January 1994; and international agreements involving aviation, fisheries, or maritime matters including salvage, in force or signed after 1 January 1994. This exemption does not exist with regard to cross-border trade in services. Any current or future foreign aid programmes promoting economic development are also not subject to MFN treatment (Annex 9).
(c) Local presence and performance requirements
70. The Parties shall not require each others' service suppliers to establish or maintain a representative office or any form of enterprise, or to be resident, in their Area as a condition for the cross-border supply of a service (Article 100).
71. Article 65 prohibits performance requirements. Accordingly, the Parties undertake not to impose or enforce any of the following requirements, or any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of an investment by an investor of a Party or of a non-Party in its Area:
(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to goods produced or services provided in its Area, or from persons in its Area;
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(d) to relate in any way the volume or value of imports to exports or to the amount of foreign exchange inflows associated with the investment;
(e) to restrict sales of goods or services produced or provided in its Area by relating them to the volume or value of its exports or foreign exchange earnings;
(f) to transfer technology, a production process or other proprietary knowledge to a person in its Area; or
(g) to supply exclusively its goods and services to a specific region or world market.
72. The Parties reserve the right to condition receipt of advantages on compliance with requirements to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development in their Area (Article 65.3).
73. Article 64 prohibits restrictions concerning the nationality of senior management. However, a Party may require that a majority of the board of directors, or any committee of directors, of an enterprise of that Party owned by an investor of the other Party, be of a particular nationality, or resident of the Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.
(d) Movement of natural persons
74. Chapter 10 contains provisions on the movement of natural persons, particularly, the entry and temporary stay of nationals for business purposes on a reciprocal basis (Articles 113.1 and 114.1). It does not apply to measures affecting nationals seeking access to the employment market of the Parties or regarding nationality or citizenship, or residence or employment on a permanent basis (Article 114.2) but permits the Parties to take measures to protect the integrity of their borders (Article 114.3).
75. The Parties grant entry and temporary stay to each others' nationals in accordance with Chapter 10 and its related Annex 10. The Parties cannot impose or maintain quantitative restrictions on: short-term business visitors; intra-corporate transferees; investors; and nationals of a Party who engage in professional business activities on the basis of a personal contract with public or private organizations in the other Party. The Party, however, maintains the right to ask for a visa from a national of the other Party requesting entry and temporary stay (Sections 1.6, 2.4, 3.3 and 4.4). Further, a national of a Party belonging to one of the four categories must comply with immigration laws and regulations of the other Party (Sections 1.2, 2.1, 3.1 and 4.1).
76. The period that persons in these four categories may stay in the other Party is summarized in Table II.5 below.
Table II.5Japan Mexico
Initial period of entry and stay
Extension Initial period of entry and stay
Extension
Short-term business visitors 90 days – in principle, granted as of arrival
Yes – but no indication of extension criteria.
30 days Yes – but no indication of extension criteria
Intra-corporate transferees One or three years Yes – but no indication of criteria.
One year Yes – four times each and for equal periods of time
Investors One or three years Yes – but no indication of criteria.
One year Yes – four times each and for
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Japan Mexico
Initial period of entry and stay
Extension Initial period of entry and stay
Extension
equal periods of time
Nationals of a Party engaging in professional business activities on the basis of a personal contract with public or private organizations in the other Party
One or three years Yes – but no indication of criteria.
One year Yes – four times each and for equal periods of time
Source: Appendix 1 of Annex 10, the Agreement.
(i) Short-term business visitors
77. A short-term business visitor is understood to mean a person with business contacts including negotiations for the sale of goods or services, or other similar activities including preparing for establishment. In addition, a short-term business visitor cannot receive remuneration from the other Party or engage in direct sales to the general public or supply services himself (Section 1.1 of Annex 10). The documents to be presented include: proof of nationality; evidence that the national will be engaged in the business activities; and evidence indicating no aim to seek domestic employment (Section 1.2 of Annex 10).24 The Parties cannot require prior approval procedures or other procedures of similar effect. Currently, neither Party is requesting such measures, nor is planning the introduction of such measures.
(ii) Intra-corporate transferees
78. An intra-corporate transferee is understood to mean a national of a Party: who has been employed by an enterprise that supplies services or that invests in the other Party (for a period not less than one year immediately preceding the date of application for the entry and temporary stay in the other Party), and who is being transferred to its branch or representative office in the other Party, or to an enterprise constituted or organized in the other Party but owned or controlled by, or affiliated with, it.25 The activities of an intra-corporate transferee are: directing a branch or a representative office as its head, an enterprise as its board member or auditor, and one or more departments of an enterprise; requiring technology or knowledge at an advanced level pertinent to physical sciences, engineering or other natural sciences or to jurisprudence, economics, business management, accounting or other human sciences.
(iii) Investors
79. An investor is a national of a Party who is engaged in one of the following activities:
(a) investing in and managing a business in the other Party;
(b) managing a business in the other Party on behalf of a person other than that of the other Party who has invested in the business; or
24 Evidence can indicate that the source of remuneration for the proposed business activity is outside the Party granting entry and temporary stay; and the national's principal place of business, and the actual place of accrual of profits, predominantly, remain outside the Party granting entry and temporary stay (Section 1.3 of Annex 10).
25 An enterprise is "affiliated" with another enterprise when the latter can significantly affect the decision making of the former on finance and business policy (Note of Section 2 in Annex 10).
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(c) conducting a business in the other Party in which a person other than that of the other Party has invested.
(iv) Nationals of a Party engaging in professional business activities on the basis of a personal contract with public or private organizations in the other Party
80. A national of a Party engaging in professional business activities based on a personal contract with public or private organizations in the other Party is limited to professional business activities: requiring technology or knowledge at an advanced level pertinent to physical sciences, engineering or other natural sciences26; or to human science including jurisprudence, economics, business management and accounting, or requiring cultural ideas and sensitivities of a non-Party. 27 Mexico listed 42 such professions in Appendix 2 of Annex 10. Degrees from universities or other similar educational institutions are required for the listed professions.
81. The fee for processing applications by nationals of the other Party shall take into account the administrative costs involved (Article 115.2). Transparency provisions require the Parties to publish an explanation of requirements for entry and temporary stay, no later than one year after the date of entry into force of the Agreement.28 From the entry into force of the Agreement, the Parties endeavour to collect, maintain and make available to each other, data on the granting of entry and temporary stay to each others' nationals (Article 116.2). Table II.6 below shows the number of such grants by Japan in 2002-2006.
Table II.6A: Movement of Mexican Natural Persons to Japan
YearCategories
TotalIntra-corporate transferees
Service sellers/ persons responsible for setting up commercial presence
Other categories of relevance in the context of the Agreement
2002 4 3,053 0 5,0592003 12 2,736 1 4,752
2004 4 3,561 1 5,570
2005 18 3,557 1 5,581
2006 8 3,660 0 2,014
Source: WTO Secretariat, based on data provided by Japan.B: Movement of Japanese Natural Persons to Mexico
YearCategories
TotalIntra-corporate transferees
Service sellers/ persons responsible for setting up commercial presence
Other categories of relevance in the context of the Agreement
2002 .. .. .. 8,7332003 .. .. .. 8,148
2004 .. .. .. 10,698
2005 .. .. .. 12,563
2006 .. .. .. 14,975
26 For Japan, activities under the status of "engineer" as indicated in Section 4.1.(a).(i) of Annex 10 (which may include other activities provided that the activities fulfil these requirements); for Mexico, professions listed in Appendix 2 of Annex 10.
27 For Japan, activities under the status of "specialist in humanities/international services" as indicated in Section 4.1.(b).(i) of Annex 10 (which may include other activities provided that the activities fulfil these requirements), for Mexico, professions listed in Appendix 2 of Annex 10.
28 Available for Mexico at http://www.inami.gob.mx. As at April 2008, Japan's explanation of such requirement is under consideration by Mexico. The relevant information is available at http://www.mofa.go.jp/j_info/visit/visa/index.html.
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.. not available.
Source: Data provided by the Mexican National Migration Institute.
82. A Sub-Committee on Entry and Temporary Stay was established to, inter alia, enhance mutual understanding between the Parties on credentials and other qualifications for entry and temporary stay (Article 117).
83. Refusal to grant entry and temporary stay is not normally open to consultations under Article 152 unless there is a pattern of practice and the nationals concerned have exhausted the available domestic administrative remedies (Article 118.1). According to the Parties, subject to meeting both conditions, any dispute arising from Chapter 10 can be dealt with under the dispute settlement mechanism established in Chapter 15.
4. Non-conforming measures
84. Reservations on cross-border trade in services are specified for national treatment, MFN treatment, and local presence (Article 101); and in the case of investment, for national treatment, MFN treatment, senior management and boards of directors, and performance requirements (Article 66). Annexes 6 and 7 contain existing and future non-conforming measures respectively. The lists are based on domestic industry classification codes. Both Parties maintain reservations on any future measures in new services, broadcasting, energy, and social services. Further, Annex 8 lists activities for which investment can be refused by Mexico (Article 57.2). These are: petroleum, other hydrocarbons and basic petrochemicals; electricity; nuclear power and treatment of radioactive minerals; telegraph and radiotelegraph services; postal services; issuance of bills (currency) and minting of coinage; and control, inspection and surveillance of maritime and inland ports and of airports and heliports.
85. In addition, the Parties agreed to indicate any existing non-conforming measure maintained by a state or a prefecture within six months of the date of entry into force of the Agreement (Articles 66.2 and 101.2). Mexico notified Japan of reservations maintained by its states on cross-border trade in services and investment for 82 existing measures concerning, inter alia, education; leisure, cultural recreation and sporting services; professional, technical and specialized services; public services; trade; transportation; and water collection, purification and distribution (Annex 6). There are no reservations by Japanese prefectures.
(a) Japan
86. Japan has listed existing limitations on national treatment in Annex 6, in the form of nationality or prior notification requirements. Under the prior notification requirement, a Mexican investor or a Japanese enterprise owned or controlled by the Mexican investor must notify the intended investment to the Ministers of Finance and the Industry concerned. If the Ministers consider that the investment could adversely affect national security, public order or public safety, or sound management of the national economy, they may recommend or order changes to the investment plan or cancel it (Annex 6.6). Such measures can be taken only by Japan, but not by Mexico. Japan has taken five MFN reservations which apply to some transport services. Japan requires local presence for the professional services listed in Annex 6. Table II.7 contains the existing limitations.
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Table II.7Non conforming measures listed by Japan in Annex 6
Sector Obligations Mode DescriptionAutomobile maintenance business LP CBTS Establishment requirement and approval by authority where the
workplace is located.Business services: private employment and worker dispatching
LP CBTS Establishment/permission/notification requirements.
Construction LP CBTS Establishment/permission requirement. Registration requirement for demolition work business.
Heat supply NT I Prior notification requirement.Telecommunications NT/SMBD I If the aggregate voting rights of: (a) a non-Japanese natural person;
(b) a foreign government or its representative; or (c) a foreign juridical person or association reach or exceed one-third of the total, the Nippon Telegraph and Telephone Corporation (NTT) may not register shareholders. Nationality restriction for director and auditor of NTT, NTT East Corporation, and NTT West Corporation.
Telecommunication and internet based services including mobile telecommunication
NT I Prior notification requirement.
Drugs and medicines manufacturing – biological preparations
NT I Prior notification requirement.
Leather and leather products manufacturing
NT I Prior notification requirement.
Matters related to the nationality of a ship
NT/SMBD I Japanese nationality to be granted to a ship whose owner is a Japanese natural person or a legal person established under Japanese law with all senior management and not less than two-thirds of executives being Japanese nationals.
Measuring services – commodity inspection and surveyor certification
LP CBTS Establishment/designation/registration requirements.
Medical, health care and welfare – miscellaneous social insurance, social welfare and care services
LP CBTS Establishment/approval requirements.
Mining NT/LP I/CBTS Nationality requirement.Oil industry NT I Prior notification requirement – exception for organic chemicals, such
as ethylene, ethylene glycol and polycarbonates.Primary industry related to agriculture, forestry and fisheries (except those covered by Annex 7)
NT I Prior notification requirement.
Professional services – lawyer's offices
LP CBTS Qualification requirement under "Bengoshi". Establishment requirement for an office within the district of the local bar to which the person belongs. Establishment requirement for an enterprise under "Bengoshi – Hojin".
Professional services – lawyer's offices – foreign legal consultant services
LP CBTS Qualification requirement under "Gaikokuho-Jimu-Bengoshi". Establishment requirement for an office within the district of the local bar to which the person belongs. Minimum required stay in Japan for 180 days per year.
Professional services – patent attorneys' offices
LP CBTS Establishment requirement for an enterprise under "Tokkyo-Gyoumu-Hojin".
Professional services – notary NT/LP CBTS Nationality requirement. Establishment requirement in the place designated by the Minister of Justice.
Professional services – judicial scrivener
LP CBTS Qualification requirement under "Shiho-Shoshi". Establishment requirement for an office within the district of judicial scrivener association to which the person belongs. Requirement for an establishment of an enterprise under "Shiho-Shoshi-Hojin".
Professional services – certified public accountants' offices
LP CBTS Establishment requirement for an audit corporation under "Kansa-Hojin".
Professional services – auditors' offices
LP CBTS Qualification requirement under "Zeirishi". Establishment requirement for an office within the district of certified public tax accountant association to which the person belongs to. Establishment requirement for an enterprise under "Zeirishi-Hojin".
Professional services – architectural design and certified real estate appraisers services, etc.
LP CBTS Qualification requirement for architects/building engineers under "Kenchikushi". Establishment requirement.
Professional services – certified social insurance and labour consultants' offices
LP CBTS Qualification requirement under "Shakai-Hoken-Romushi". Establishment requirement for an enterprise under "Shakai-Hoken-Romushi-Hojin".
Professional services – administrative scriveners' offices
LP CBTS Qualification requirement under "Gyousei-Shoshi". Establishment requirement.
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Sector Obligations Mode DescriptionProfessional services – land and house surveyor services
LP CBTS Qualification requirement under "Tochi-Kaoku-Chosashi". Establishment requirement. Establishment requirement for an enterprise under "Tochi-Kaoku-Chosashi-Hojin".
Real estate services LP CBTS Establishment requirement. License from/ permission from/registration by the authorities.
Real estate appraisal services LP CBTS Establishment/registration requirements.Seafarers NT CBTS Nationality requirement except for the seafarers referred to in the
relevant official notification.Security guard services NT/LP I/CBTS Prior notification/establishment/approval requirements.Services related to occupational safety and health
LP CBTS Residency, establishment and registration with the authorities required.
Survey services LP CBTS Establishment requirement. Register requirement in the authorities.Air transport NT/MFN/
SMBDI Prior notification/nationality requirements.
Aircraft services, except air transport
NT/SMBD I/CBTS Prior notification/nationality requirements.
Air transport – registration of aircraft in the national register
NT/SMBD I Nationality requirement.
Customs brokerage LP CBTS Establishment/permission requirements.Freight forwarding business (excluding freight forwarding business using air transportation)
NT/MFN/SMBD/LP
I/CBTS Registration/permission/approval/establishment requirements.
Freight forwarding business (only freight forwarding business using air transportation)
NT/MFN/SMBD
I Nationality/registration/permission/approval requirements.
Railway transport NT I Prior notification requirement. The manufacture of vehicles, parts and components for railway transport is not included.
Road passenger transport NT I Prior notification requirement. The manufacture of vehicles, parts and components is not included in omnibus industry.
Road transport – passenger and freight transport
LP CBTS Establishment requirement and permission for passenger motor transport or trucking businesses.
Services incidental to transport - pilots
NT/LP CBTS Nationality/association requirements.
Water transport: oceangoing transport
NT/MFN CBTS Restriction/prohibition of Mexican oceangoing ship operaters from, inter alia, entering Japanese ports, if Japanese oceangoing ship operators are prejudiced by Mexico.
Water transport: coastal transport, inland water transport, coastal ship leasing
NT I Prior notification requirement.
Water transport NT/MFN I/CBTS Ships without Japanese flag are prohibited from entering Japanese ports that are not open to foreign commerce and from performing cabotage.
Vocational skills test LP CBTS Establishment/designation requirements.Water supply and waterworks NT I Prior notification requirement.Wholesale and retail trade - livestock
LP CBTS Residency/licence requirements.
Note: CBTS: Cross-border trade in services; I: Investment; LP: Local presence requirements; MFN: Restriction to MFN treatment; NT: National treatment restriction; SMBD: Senior management and boards of directors restriction.
Source: Annex 6, the Economic Partnership Agreement between Japan and Mexico.
87. Japan has reserved the right to maintain existing, or adopt new or more restrictive, measures as listed in Annex 7 and described in Table II.8. The energy and fisheries sectors enjoy the full reservations of the five obligations.
Table II.8Non conforming measures listed by Japan in Annex 7
Sector Obligations Mode DescriptionAll NT/SMBD I Possible prohibition or limitation on ownership and controlling
interest by investors. Any measure relating to the nationality of senior management or members of the board of directors.
All NT/SMBD/LP
I/CBTS Any measure relating to future liberalization in telegraph services; postal services and betting and gambling services; manufacture of tobacco products; issuing of and Bank of Japan notes; and minting and sale of coinage in Japan.
All NT I NT may not be accorded with respect to subsidies for research and development.
All (new services) NT/MFN/LP CBTS Any measure relating to new services other than those recognized at
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Sector Obligations Mode Descriptionthe entry into force of the Agreement. Any measure relating to the supply of services through any mode in which those services were not technically feasible at the entry into force of the Agreement.
Aerospace NT/SMBD/PR/LP
I/CBTS Any measure relating to investment/supply of services in the aircraft and space industry.
Arms and explosives NT/SMBD/PR/LP
I/CBTS Any measure relating to investment/supply of services in the arms industry and explosives manufacturing.
Energy NT/MFN/SMBD/PR/LP
I/CBTS Any measure relating to investment/supply of services in listed sub-sectors of the energy industry.
Fisheries NT/MFN/SMBD/PR/LP
I/CBTS Any measure relating to investment/supply of services in fisheries in territorial seas, internal waters, the exclusive economic zone and continental shelf of Japan.
Information and communications NT/SMBD/PR/LP
I/CBTS Any measure relating to investment/supply of services in the broadcasting industry.
Security guard services NT/LP CBTS Any measure relating to the supply of security guard services by non-nationals.
Social services NT/SMBD/PR/LP
I/CBTS Any measure relating to public law enforcement and correctional services and social services such as income security or insurance, social security or insurance, social welfare, public education, public training, health and child care.
Note: CBTS: Cross-border trade in services; I: Investment; LP: Local presence requirements; MFN: Restriction to MFN treatment; NT: National treatment restriction; SMBD: Senior management and boards of directors restriction; PR: Performance requirements.
Source: Annex 7, the Economic Partnership Agreement between Japan and Mexico.
(b) Mexico
88. Mexico has listed its existing limitations to national treatment in Annex 6, in the form of nationality requirements and/or ownership interests. It has taken six MFN reservations which apply to telecommunication, fishing and transportation services. Table II.9 contains these limitations.
Table II.9Non conforming measures listed by Mexico in Annex 6
Sector Obligations Mode Description
All NT I Limitation on property rights over land and water for foreign nationals or foreign enterprises.
All NT I Criteria for permitting investment: a) effects on employment and training of workers; b) technological contribution; c) compliance with environmental provisions; and d) contribution to the competitiveness of Mexican production.
All NT I Permission by the National Commission on Foreign Investment (NCFI) required for investment above 49% by Japanese investors in unrestricted sectors.
All NT/SMBD I Maximum 10% of foreigners in a Mexican production cooperative. Maximum 10% Japanese ownership in a Mexican production cooperative by investors. No foreign nationals in general administrative functions or managerial activities.
All NT I Nationality requirement for a micro-industry enterprise (run by up to 15 workers and whose annual sales do not exceed an amount determined by the Ministry of Economy) and no foreign partners.
Agriculture, livestock, forestry, and lumber activities
NT I Nationality requirement to own land for the purpose of these activities. Maximum 49% participation by foreign investors through shares.
Telecommunications services and public networks (commercial agencies)
NT/MFN/LP I/CBTS Nationality/permit/establishment/approval requirement.
Telecommunication services and public networks
NT/MFN/LP I/CBTS Maximum 49% participation by investors. Nationality requirement.
Telephone services including mobile, and public telephone
NT/MFN/LP I Maximum 49% participation by investors in telephone and telephone booth services and telecommunications facilities.
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Sector Obligations Mode Descriptionservices, and telecommunication installation
Permission by the NCFI required for investment above 49% capital by Japanese investors in mobile phone services operators. Nationality requirement.
Communications including telecommunications and postal services; and transport
NT I Restriction on investment by foreign governments and foreign state enterprises or their investments in Mexican enterprises in communications, transportation and other general means of communication.
Construction for petroleum and petroleum-derivative pipelines; drilling of oil and gas wells
NT I Prohibition on risk-sharing contracts. If non-risk-sharing, Permission by the NCFI required for investment above 49% by Japanese investors.
Education services – private schools
NT I Permission by the NCFI required for investment above 49% by Japanese investors.
Energy – retail trade in liquefied-gas fuels
NT I Nationality requirement.
Energy – retail trade in other articles and goods not elsewhere classified
LP CBTS Only Mexican national by permission.
Energy – retail trade in gasoline and diesel
NT I Nationality requirement.
Energy – supply of fuel and lubricants for aircraft, ships and railway equipment
NT I Maximum 49% ownership by Japanese investors.
Fishing NT/MFN/LP CBTS Nationality/permit requirement.Fishing – in ocean; coastal waters; and inland waters
NT/MFN I Maximum 49% ownership by foreign investors for coastal fishing, fresh water fishing and fishing in the Exclusive Economic Zone. Permission by the NCFI required for investment above 49% by Japanese investors for high seas fishing.
Manufacture of goods – explosives and fireworks; firearms and cartridges
NT I Maximum 49% ownership by Japanese investors.
Manufacture of goods PR I Differentiation between “direct and indirect exporters” based on annual total sale.
Manufacture of goods PR I Criteria for authorized exporters.Printing, editing and associated industries
NT I Maximum 49% ownership by Japanese investors.
Professional, technical and specialized services: medical doctors – medical, dental and veterinary services provided by the private sector
NT CBTS Nationality/licence requirements for in-house medical services in Mexican enterprises.
Professional, technical and specialized services
NT/LP CBTS Local presence/address required.
Professional, technical and specialized services – commercial notary public
NT/LP I/CBTS Nationality requirement (by birth) with license. Establishment requirement in the area where the practice authorized.
Professional, technical and specialized services – services of customs and representative agencies
NT I/CBTS Nationality requirement (by birth) for a customs broker.
Religious services – services of religious organizations
SMBD/LP I/CBTS Nationality requirement for representatives of religious associations. Establishment requirement for register.
Retail trade – sale of non-food products in specialized establishments
NT I Maximum 49% ownership by Japanese investors.
Services to agriculture NT/LP CBS Concession by authorities required for spraying pesticides based on nationality requirement.
Air transportation: manufacture, assembly and repair of aircraft
LP CBS Permit requirement.
Air transportation: scheduled air transport services on domestically registered aircraft, non-schedules air transport (air taxis)
NT/SMBD I Maximum 25% of voting interests in an enterprise by investors. Nationality requirement for the chairman, the board of directors and managing officers.
Air transportation: aeronautical navigation services, airport and heliport management services
NT I Permission by the NCFI required for investment above 49% by Japanese investors.
Specialty air services NT/LP/SMBD
I/CBTS Maximum 25% of voting interests in an enterprise by investors. Nationality requirement for the chairman, the board of directors and managing officers. Permit requirement based on address in Mexico.
Land transportation: construction materials transport, moving, other
NT/LP I/CBTS Prohibition of ownership except inter-city bus services, or domestic cargo services between points in Mexico other than
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Sector Obligations Mode Descriptionspecialized freight transport, general freight transport, long-distance passenger bus and coach transport, tourist transport services
packaging and messenger services. Permit requirement based on nationality requirement.
Land transportation: local bus; school bus; and taxi and other collective transportation
NT I/CBTS Nationality requirement.
Establishment or operation of bus or truck station or terminal
NT/LP CBTS Permit based on nationality requirement.
Road and bridge management services and auxiliary services
NT/LP CBTS Concession by authorities required based on nationality requirement.
Construct and operate marine or river works or roads for land transportation
NT/LP CBTS Concession by authorities required based on nationality requirement.
Construct and operate pipelines carrying goods other than energy or basic petrochemicals
NT/LP CBTS Concession by authorities required based on nationality requirement.
Construct, operate and exploit railroads
NT/LP I Permission by the NCFI required for investment above 49% by Japanese investors. Authority concession/permit based on nationality requirement.
Railway crew NT CBTS Nationality requirement.Establish and operate a shipyard NT/LP CBTS Concession by authorities required based on nationality
requirement.Sea and coastal transport; coastal transport; transoceanic and coastal towing; inland water transport services
NT/MFN I/CBTS Maximum 49% ownership by Japanese investors for commercial exploitation of vessels for inland and coastal navigation. Permission by the NCFI required for investment above 49% by Japanese investors for high-seas navigation services. Nationality requirement for the operation and exploitation of dredges and maritime devices for the construction, preservation and operation of ports.
Water transportation NT/LP I/CBTS Permission by the NCFI required for investment above 49% by Japanese investors. Concession/permit by authorities required based on nationality requirement.
Management of ports NT I Maximum 49% ownership by Japanese investors. Piloting port services NT I Maximum 49% participation by Japanese investors.
Note: CBTS: Cross-border trade in services; I: Investment; LP: Local presence requirements; MFN: Restriction to MFN treatment; NT: National treatment restriction; SMBD: Senior management and boards of directors restriction; PR: Performance requirements.
Source: Annex 6, the Economic Partnership Agreement between Japan and Mexico.
89. Mexico reserves the right to maintain existing, or adopt new or more restrictive, measures as listed in the Annex 7 and described in Table II.10. Among others, communication and air transportation services remain protected.
Table II.10Non conforming measures listed by Mexico in Annex 7
Sector Obligations Mode Description
All NT I/CBTS Any measure restricting the acquisition, sale or other disposition of bonds, treasury bills or any other kind of debt security issued by the federal, state or local government.
All NT I Any measure relating to subsidies or grants provided by the federal or state governments or by a state enterprise, including government-supported loans, guarantees and insurance.
All (new services) NT/MFN/LP CBTS Any measure relating to new services other than those recognized at the entry into force of the Agreement. Any measure relating to the supply of services in any mode of supply in which those services were not technically feasible at the entry into force of the Agreement.
Communications – entertainment services (broadcasting)
NT/SMBD/PR/LP
I/CBTS Any measure relating to investment/supply of services in radio or television programming for broadcasting or cable distribution in Mexico, and the advertising through open radio and television or
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Sector Obligations Mode Descriptionrestricted television.
Communications – postal services and telecommunications
NT CBTS Nationality requirement for postal, telegraph and radiotelegraphy services.
Communications - telecommunications
NT/LP I/CBTS Any measure relating to investment/supply of services in air traffic control; aeronautical meteorology; aeronautical telecommunications; and other telecommunications services relating to air navigation services.
Communications – telecommunications services and networks
NT/MFN/LP I/CBTS Any measure relating to investment/supply of services in maritime telecommunications services.
Energy NT/MFN/LP CBTS Any measure relating to services associated with energy and basic petrochemical goods.
Entertainment services NT/MFN/SMBD/LP
I/CBTS Any measure relating to investment/supply of services in recreational services including gambling and betting.
Minority affairs NT/LP CBTS Any measure according rights or preferences to socially or economically disadvantaged groups.
Professional, technical and specialized services – services of lawyer's offices including foreign legal consultancy
NT/MFN/SMBD/LP
I/CBTS Any measure relating to investment/supply of services in legal services and foreign legal consultancy services by Japanese nationals.
Social services NT/SMBD/LP
I/CBTS Any measure relating to the supply of public law enforcement; correctional services; income security or insurance; social security or insurance; social welfare; public education; public training; health; and child care to the extent they are established or maintained for a public purpose.
Transportation – air transportation NT/LP CBTS Any measure relating to management, operation, exploitation and construction of airports and civil airfields other than airports.
Transportation – specialized personnel
NT/MFN/LP CBTS Only Mexican nationals by birth for: captains; pilots; ship masters; machinists; mechanics and crew members manning vessels or aircraft under Mexican flag, and harbour pilots, harbour masters and airport administrators.
Note: CBTS: Cross-border trade in services; I: Investment; LP: Local presence requirements; MFN: Restriction to MFN treatment; NT: National treatment restriction; SMBD: Senior management and boards of directors restriction; PR: Performance requirements.
Source: Annex 7, the Economic Partnership Agreement between Japan and Mexico.
5. Regulatory provisions on trade in services
(a) Domestic regulation
90. Article 104 on licensing and certification is based on Article VI.4 of the GATS. With a view to ensuring that measures relating to the licensing, certification, or technical standards of each others' services suppliers do not constitute an unnecessary barrier to cross-border trade in services, each Party shall endeavour to ensure that such measures are: based on objective and transparent criteria, such as competence and the ability to supply the services; not more burdensome than necessary to ensure the quality of the services; and do not constitute a disguised restriction on the cross-border supply of the services (Article 104.1).
(b) Recognition
91. Where a Party recognizes, unilaterally or by agreement, education, experience, licences or certificates obtained in a non-Party, it is not bound to accord this treatment to the other Party (Article 104.2).
6. Liberalization commitments in selected services sectors
(a) Financial services
92. Chapter 9 applies to measures adopted or maintained by a Party affecting: cross-border trade in financial services; financial institutions and investors of the other Party; and investment by such
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investors, in financial institutions in the Party (Article 107). The provisions of Chapters 7 and 8 do not apply to this sector (Article 111) and the Chapter does not have provisions on market access, national treatment and MFN. Further, the dispute settlement provisions in Chapter 15 do not apply to this Chapter (Article 109).
93. Activities or services forming part of a public retirement plan or statutory system of social security may be provided exclusively by the Parties including their public entities (Article 107.3). The Parties also may adopt or maintain measures for prudential reasons, including for the protection of investors, depositors, policy holders, and claimants or persons to whom a fiduciary duty is owed by a financial institution or a cross-border financial service supplier, or to ensure the soundness, integrity and stability of their financial system (Article 110).
94. The Parties reaffirm their commitments under the GATS including the Understanding on Commitments in Financial Services as well as the OECD Code of Liberalization of Capital Movements and other international agreements to which both are parties (Article 108).
(b) Maritime transport services
95. The Parties have taken additional liberalization commitments in the Agreement on maritime transport services. For example, under the Agreement Japan does not have any national treatment reservations on maintenance and repair of vessels services which is a sector not included in its GATS schedules. In the case of oceangoing transport, as under its GATS schedules, it restricts or prohibits cargo from entering Japanese ports or loading and unloading in Japan in cases where Japanese oceangoing ship operators are prejudiced by Mexico. Under maritime transport services in its GATS schedules, Japan has liberalized pushing and towing services (modes 2 and 3), maritime agency services (modes 1, 2, and 3) and salvaging and refloating, watering, fuelling and garbage collection services (modes 1, 2, and 3). Under the Agreement, these services are also liberalized.
96. Mexico has taken additional liberalizing commitments in the Agreement in maritime transport services. In contrast to its GATS commitments where maritime transport is uncommitted, the sector is liberalized under the Agreement subject to certain national treatment or national treatment/MFN principle reservations with regard to several maritime transport services. For example, only Mexican nationals and Mexican enterprises can establish and operate shipyards. This is also the case for the operation and exploitation of dredges and maritime devices for the construction, preservation and operation of ports. In addition, Mexico has scheduled reservations under the Agreement that in the case of constructing and operating, or operating maritime and inland port terminals, including docks, cranes and related facilities, only Mexican nationals and Mexican enterprises are allowed.
D. GENERAL PROVISIONS OF THE AGREEMENT
1. Exceptions
97. General exceptions for goods and services are maintained by incorporating into the Agreement mutatis mutandis Article XX of the GATT 1994 for goods and Article XIV of the GATS for services-related issues.29 Article 169 sets general exceptions relating to security concerns that are similar to those in Article XXI of the GATT 1994. The Chapter also includes exceptions for taxation. However, Article 3 (national treatment), Article 6 (export duties) and Article 61 (expropriation and compensation) of the Agreement are applicable to taxation measures (Article 170).
29 For the purposes of trade in goods, rules of origin, certificate of origin and customs procedures, and bilateral safeguards for goods and cross-border trade in services and entry and temporary stay of nationals for business purposes for services.
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2. Accession and termination
98. There are no accession provisions in the Agreement. Either Party may terminate the Agreement but must first notify the other Party in writing one year in advance (Article 176).
3. Institutional framework
99. Chapter 16 addresses implementation and operation of the Agreement. The Parties must promptly publish laws, regulations, administrative procedures and rulings and judicial decisions of general application as well as details of international agreements to which they are a party for any matter covered by the Agreement (Article 160). Provisions are also made for public comment procedures (Article 161); administrative proceedings (Article 162); review and appeal (Article 163); and the disclosure of confidential information (Article 164).
100. A joint committee composed of Government representatives from the Parties was established to, inter alia, review the implementation and operation of the Agreement; serve as a forum for consultations; and supervise the work of Sub-Committees established under Article 165. The Parties have established a contact point to facilitate communications (Article 166).
4. Dispute settlement
101. Chapter 15 sets out procedures on the settlement of disputes relating to the interpretation or application of the Agreement. Articles 151.1 and 151.2 provide a forum election clause for matters falling under both the Agreement and any other international agreement to which both Parties are party. Once the complaining Party has chosen the forum to settle the dispute, that forum shall be used to the exclusion of the others (exclusive forum clause). The clause is not applicable in the case of substantially separate and distinct rights or obligations under different international agreements.
102. A Party may request consultations in writing with the other Party on measures that it considers inconsistent with the Agreement. The Parties shall enter into consultations within 30 days (15 days for perishable goods) following the date of receipt of the request (Article 152).
103. If the Party who received the request does not enter consultations within 30 days, or the Parties fail to resolve the dispute through consultations within 60 days, the complaining Party may request in writing the establishment of an arbitral tribunal (Article 153.1). The tribunal shall take its decisions, including any award, by majority vote (Article 154.7); the award shall be final and binding on the Parties (Article 154.8).
104. If the tribunal confirms that the Party complained against has failed to comply with the award within an implementation period, the complaining Party may notify the other Party of its intention to suspend concessions or other obligations under the Agreement (Article 156.5). The conditions for suspensions listed in Article 156.6 are similar to Article 22 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes. However, the Agreement is more stringent than the WTO Understanding in that such suspensions must cover the same sector or sectors to which the nullification or impairment relates. The Parties share equally the costs of the arbitral tribunal (Article 158).
105. The detailed steps to be taken in the process for dispute settlement are described below. The time frame indicated is subject to modification by the Parties' mutual agreement (Article 157). The Parties may also terminate the proceedings at any time by joint notification to the chair of the arbitral tribunal during its proceedings (Article 155).
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Table II.11 Synopsis of Dispute Settlement Provisions under the Agreement
30 days (15 days for perishable goods)
30 days
Maximum 52 days for composition
(Arts. 153.4, 153.5 and 153.6)
90 days (Maximum 150 days)
30 days
20 days
30 days
Written request for
consultations (Art. 152.1)
Consultation (Art. 152.2)
Written request for the establishment of arbitral
tribunal (Art. 153.1)
Establishment of arbitral tribunal (Art. 153)
Rule of procedure (Art. 159)
Arbitral tribunal – 'draft' issued (Art. 154.4)
Arbitral tribunal – 'final' issued (Art. 154.5)
Final and binding (Art. 154.8) (Arts. 154.5 and 154.8)
notification of implementation period (Art. 156.2)
Non-implementation
Non-compliance within the implementation period
(time concern) – consultation for a mutually acceptable compensation
(Art. 156.3)
Non-compliance with the award (quality concern) – refer to an arbitral tribunal
(Art. 156.4)
Notification of intention to suspend concessions or
other obligations (Art. 156.3)
Confirmation of failure to comply with the award by the
arbitral tribunal (Art. 156.5)
Notification of intention to suspend concessions or
other obligations (Arts. 156.5 and 156.6)
Arbitral tribunal reconvened upon request from losing Party
(Art 156.7)
Arbitral tribunal determination
Binding (Art 156.8)
if unacceptable – refer to an arbitral tribunal
(Art. 156.2)
if failed
30 days
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5. Relationship with other agreements concluded by the Parties
106. The Agreement's relationship with other agreements concluded by the Parties is defined in Article 167, where the Parties reaffirm their rights and obligations under the WTO Agreement. In particular, the Parties can take any necessary actions in accordance with Article 22 (compensation and suspension of concession) of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes in line with Chapters 3 (trade in goods), 7 (investment), and 8 (cross-border trade in services). The Convention on Commerce between the Parties signed on 30 January 1969 expired upon the date of the entry into force of the Agreement, (Article 167.3).
107. Table II.12 lists all other regional trade agreements (RTAs) notified and not notified to the GATT/WTO and in force to which Japan and Mexico are party.Table II.12Japan and Mexico: Participation in other RTAs (notified and non-notified in force), as of August 2008
Partner/
Agreement
Date of
entry
into force
Type of
agreement
GATT/WTO Notification
Year WTO Provision
JAPAN
Brunei Darussalam 31.07.08 Goods & Services 2008 GATT Art. XXIV & GATS Art. V
Indonesia 01.07.08 Goods & Services 2008 GATT Art. XXIV & GATS Art. V
Thailand 01.11.07 Goods & Services 2007 GATT Art. XXIV & GATS Art. V
Chile 03.09.07 Goods & Services 2007 GATT Art. XXIV & GATS Art. V
Malaysia 13.07.06 Goods & Services 2006 GATT Art. XXIV & GATS Art. V
Singapore 30.11.02 Goods & Services 2002 GATT Art. XXIV & GATS Art. V
MEXICO
Honduras* 01.06.01 Goods & Services 2006 GATT Art. XXIV & GATS Art. V
El Salvador* 15.03.01 Goods & Services 2006 GATT Art. XXIV & GATS Art. V
Guatemala* 15.03.01 Goods & Services 2006 GATT Art. XXIV & GATS Art. V
EC 01.10.00 Services 2002 GATS Art. V
EFTA 01.07.00 Goods & Services 2001 GATT Art. XXIV & GATS Art. V
EC 01.07.00 Goods 2000 GATT Art. XXIV
Israel 01.07.00 Goods 2001 GATT Art. XXIV
Chile 01.08.99 Goods & Services 2001 GATT Art. XXIV & GATS Art. V
Nicaragua 01.07.98 Goods & Services 2005 GATT Art. XXIV & GATS Art. V
Costa Rica 01.01.95 Goods & Services 2006 GATT Art. XXIV & GATS Art. V
NAFTA 01.04.94 Goods & Services 1995 GATT Art. XXIV & GATS Art. V
GSTP 19.04.89 Goods 1989 Enabling Clause
LAIA 18.03.81 Goods 1982 Enabling Clause
PTN 11.02.73 Goods 1971 Enabling Clause
Group of Three (Colombia, Venezuela) 01.01.95** Goods & Services Not notified
Bolivia 01.01.95 Goods & Services Not notified
Uruguay 15.07.04 Goods & Services Not notified
* Mexico-Northern Triangle.** Since 19 November 2006, only Mexico and Colombia are members.
Source: WTO Secretariat.
EFTA: European Free Trade Area NAFTA: North American Free Trade Agreement GSTP: Global System of Trade Preferences LAIA: Latin American Integration AssociationPTN: Protocol relating to Trade Negotiations among developing countries
WT/REG198/4Page 38
6. Government procurement
108. Chapter 11 on government procurement consists of 12 Articles and eight related Annexes. The Chapter's fundamental principle is national treatment in the conduct of government procurement. The Parties must immediately and unconditionally provide treatment no less favourable than that accorded to domestic goods, services and suppliers of goods and services to the other Party's goods, services and suppliers of these (Article 120.1). Other general principles are the non-application of rules of origin that are different from the rules that the Parties apply in the normal course of trade (Article 121), the prohibition of offsets (Article 123), transparency and confidentiality of information (Article 124). Challenge procedures are laid out in Article 125. A Sub-Committee on Government Procurement is established for the purposes of the effective implementation and operation of the Chapter (Article 127).
109. Japan applies procurement procedures under the Agreement in accordance with the provisions of the WTO Agreement on Government Procurement (GPA) (Articles II, VI-XV and XVIII). Mexico, which is not a member of the GPA, follows the procedures under the NAFTA (Articles 1002, 1007-1016).
110. Annex 11 lists the entities covered: 22 central government entities, and 126 other entities for Japan, and 23 federal government entities and 36 government enterprises for Mexico. Local government entities and sub-federal entities are, however, not covered (Japan includes 59 sub-central government entities under the GPA). The Parties must notify each other when government control, at the federal or central government level, over an entity is effectively eliminated (Article 129). Chapter 11 applies to all goods. However, for procurement by the Japanese Ministry of Defence and the Mexican Ministries of National Defence and Navy only the goods specified in Annex 12 are covered by the Chapter. For Mexico, applied scope and coverage are subject to the General Notes in Annex 16 which includes that, until 1 January of the ninth year following the entry into force of the Agreement, Chapter 11 does not apply to the procurement, by the Ministries of Health, National Defence and Navy, the Mexican Social Security Institute, and the Social Security and Services Institute for Government Workers, of drugs that are not currently patented in Mexico or whose Mexican patents have expired (Annex 16, Section 1.7).
111. For services, Annex 13 contains a positive list for each Party of the services covered. In particular, construction services covered are specified in positive lists for the Parties in Annex 14. Annex 15 indicates the applicable thresholds to Japan which vary for different groups of entities and according to the nature of purchases, such as: goods; services; construction services; and architectural, engineering and other technical services. The thresholds are the same as those under the GPA.30 Mexico applies the NAFTA thresholds.
7. Intellectual property rights
112. The Agreement does not contain detailed intellectual property provisions, but intends to pursue cooperation in this field. Such cooperation may include the exchange of information on: increasing public awareness of intellectual property protection; improving intellectual property protection; enforcement; and automation of intellectual property administration (Article 144).
113. In Article 8 and Annex 3, the Parties confirm their obligation under the TRIPS Agreement to protect geographical indications (GI). Japan's GIs on spirits are for Iki, Kuma, Ryukyu and Satsuma
30 GPA/W/299/Add.5 (8 February 2008). The thresholds are effective between 1 April 2008 and 31 March 2010.
WT/REG198/4Page 39
while Mexico has GIs for Tequila, Mezcal, Sotol, Bacanora and Charanda.31 The Parties can propose modifications to this list which the Joint Committee may subsequently adopt (Article 165.2.(e).(i)).
8. Competition policy
114. Chapter 12 aims to promote competition to facilitate trade and investment between the Parties. The Parties cooperate to control anti-competitive activities through the fair implementation of administrative and judicial procedures. The Implementing Agreement aims to contribute to the effective enforcement of the competition law of the Parties through cooperation between their competition authorities (Articles 132). It mainly stipulates notification and consultation obligations and cooperation in and coordination of enforcement activities (Articles 2, 3, 4, and 9 of the Implementing Agreement). The application of the Parties' competition laws and regulations shall not discriminate against persons on the basis of nationality (Article 133).
115. This Chapter is not applicable to Article 164 of the Agreement concerning confidential information. However, Article 10 of the Implementing Agreement further defines how confidential information shall be dealt with. In particular, Japan is not required to provide trade secrets of entrepreneurs covered by Article 39 of the Antimonopoly Law to Mexico, except for those provided in accordance with Article 4.4 of the Implementing Agreement and with the consent of the entrepreneurs concerned. In addition, the dispute settlement procedures of Chapter 15 do not apply to the Chapter (Article 135). Article 6 of the Implementing Agreement states avoidance of conflicts over the Parties' enforcement activities. However, if there is any matter which may arise in connection with the Implementing Agreement, the competition authorities of the Parties shall consult with each other (Article 9 of the Implementing Agreement).
31 Satsuma for Japan and Sotol, Bacanora and Charanda for Mexico have been added to the list of GIs under Decision 8 between the Parties, adopted on 11 April 2007, by the Joint Committee and which came into force on 1 March 2008.
WT/REG198/4Page 40
ANNEX I
Indicators of Trade Liberalization under the Agreement
1. A comparison between the scheduled elimination of tariffs applied to the Parties' mutual imports and the MFN rates applied by Japan and Mexico is shown in Tables A.1 (Japan) and A.2 (Mexico) below, by total products, agricultural products and non-agricultural products.
Table A.1 Japan: Indicators of MFN and preferential tariff rates on imports from Mexico
Origin of goods Year
ALL PRODUCTS Agricultural products a Non-agricultural productsAverage applied
tariff Share of duty-free
tariff lines (%)
Average applied tariff Share of
duty-free tariff lines
(%)
Average applied tariff Share of
duty-free tariff lines
(%)Overall
(%)
On dutiable
(%)
Overall (%)
On dutiable
(%)
Overall (%)
On dutiable
(%)
MFN 2005 4.8 8.3 41.7 11.2 15.8 25.8 3.4 6.3 45.6Mexico 2005 2.5 12.8 78.6 10.5 16.1 31.2 0.8 8.3 89.9
2006 2.4 12.4 78.9 10.3 15.8 31.2 0.8 7.8 89.92007 2.3 12.0 78.9 10.1 15.5 31.2 0.7 7.3 89.92008 2.3 12.1 79.6 9.9 15.6 32.9 0.7 7.2 90.32009 2.2 12.4 80.6 9.7 15.4 32.9 0.6 7.7 91.62010 2.1 12.7 81.5 9.5 16.4 37.6 0.6 7.3 91.72011 2.1 12.4 81.5 9.4 16.3 37.6 0.6 6.8 91.72012 2.0 13.6 83.3 9.3 16.8 40.0 0.5 8.0 93.32013 2.0 13.4 83.3 9.3 16.7 40.0 0.5 7.7 93.32014 2.0 16.3 86.0 9.2 16.6 40.0 0.5 15.1 96.72015 1.8 16.0 87.1 9.2 17.2 42.1 0.3 10.5 97.5
a WTO Definition.Note: For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related calculations; lines with specific duties
and the non ad valorem component of lines with compound and alternate rates are excluded from the calculations.
Source: WTO Secretariat estimates based on data provided by Japan.
2. Japan's average applied MFN rate in 2005 was 4.8%; the average applied tariff on agricultural products was roughly three times higher than that applied to non-agricultural products. Duty-free tariff lines account for 41.7% of all tariff lines. Mexican exporters enjoyed an absolute margin of preference of 0.7% for agricultural goods vis-à-vis the prevailing average MFN tariff in 2005, and 2.6% for non-agricultural goods. Overall, Mexican exporters enjoyed an average margin of preference of 2.3% vis-à-vis the prevailing average applied MFN tariff, as well as an increase (to 78.6%) in the share of Japan's duty-free lines.
Table A.2Mexico: Indicators of MFN and preferential tariff rates on imports from Japan
Origin of goods Year
ALL PRODUCTS Agricultural products a Non-agricultural productsAverage applied
tariff Share of duty-free
tariff lines (%)
Average applied tariff Share of
duty-free tariff lines
(%)
Average applied tariff Share of
duty-free tariff lines
(%)Overall
(%)
On dutiable
(%)
Overall (%)
On dutiable
(%)
Overall (%)
On dutiable
(%)
MFN 2005 13.1 15.9 17.7 22.2 25.1 11.3 12.1 14.8 18.4Japan 2005 9.7 16.2 39.7 15.0 27.7 45.0 9.2 15.1 39.1
2006 8.7 14.4 39.7 14.6 27.0 45.0 8.0 13.2 39.12007 7.6 12.7 39.7 14.2 26.3 45.0 6.9 11.4 39.12008 6.6 11.0 39.9 13.9 26.3 46.4 5.8 9.5 39.22009 5.6 10.7 48.0 13.6 25.8 46.4 4.7 9.1 48.22010 4.7 9.2 48.5 13.4 27.2 50.0 3.8 7.4 48.32011 3.9 7.7 48.7 13.3 27.0 50.0 2.9 5.7 48.52012 3.1 6.3 49.6 13.2 28.3 52.6 2.1 4.1 49.3
WT/REG198/4Page 41
Origin of goods Year
ALL PRODUCTS Agricultural products a Non-agricultural productsAverage applied
tariff Share of duty-free
tariff lines (%)
Average applied tariff Share of
duty-free tariff lines
(%)
Average applied tariff Share of
duty-free tariff lines
(%)Overall
(%)
On dutiable
(%)
Overall (%)
On dutiable
(%)
Overall (%)
On dutiable
(%)2013 2.4 4.8 49.6 13.2 28.3 52.6 1.2 2.4 49.32014 1.6 18.6 90.9 13.1 28.3 52.7 0.4 8.0 95.22015 1.5 26.5 94.1 13.1 28.5 53.1 0.2 18.3 98.6
a WTO Definition.Note: For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related calculations; lines with specific duties
and the non ad valorem component of lines with compound and alternate rates are excluded from the calculations.
Source: WTO Secretariat estimates based on data provided by Mexico.
3. Mexico's average applied MFN rate in 2005 was 13.1%; the average applied tariff on agricultural products was roughly two times higher than that applied to non-agricultural products. Duty-free tariff lines account for 17.7% of all tariff lines. Japanese exporters enjoyed an absolute margin of preference of 7.2% for agricultural goods vis-à-vis the prevailing average MFN tariff in 2005, and 2.9%for non-agricultural goods. Overall, Japanese exporters enjoyed an average margin of preference of 3.4% vis-à-vis the prevailing average applied MFN tariff, as well as an increase (to 39.7%) in the share of Mexico's duty-free lines.
Table A.3 – Japan: Market access opportunities under the Agreement for Mexico's top 25 exports
Mexico's top export products in 2002-2004
Access Conditions to Japan's import marketsMFN (2005)
Duty-free inAverage MFN applied
rate (%)
Number of tariff lines
HS number and description of the product Share in global exports (%)
Duty-free Dutiable 2005 2006 2012
270900 Petroleum oils and oils obtained from bituminous minerals, crude.
10.0 -- 2 2
870323 Of a cylinder capacity exceeding 1,500 cc but not exceeding 3,000 cc
4.4 0.0 1
852812 Colour 4.0 0.0 2854430 Ignition wiring sets and other
wiring sets of a kind used in vehicles, aircraft or ships
2.6 2.4 1 1 1
870324 Of a cylinder capacity exceeding 3,000 cc
2.6 0.0 1
847160 Input or output units, whether or not containing storage units in the same housing
2.2 0.0 4
870431 g.v.w. not exceeding 5 tonnes 1.8 0.0 1847330 Parts and accessories of the
machines of heading 84.711.7 0.0 2
852520 Transmission apparatus incorporating reception apparatus
1.6 0.0 6
940190 Parts of leather 1.5 1.3 2 1 1870829 Other 1.4 0.0 1847150 Digital processing units, other than
those of subheading 8471.41 or 8471.49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units
1.1 0.0 1
870421 g.v.w. not exceeding 5 tonnes 1.1 0.0 2870899 Other 1.1 0.0 2840734 Of a cylinder capacity exceeding
1,000 cc1.0 0.0 1
853710 For a voltage not exceeding 1,000 V 1.0 0.0 1847141 Comprising in the same housing at
least a central processing unit and an input and output unit, whether or not combined
0.9 0.0 1
620342 Of cotton 0.8 9.6 2 2847180 Other units of automatic data 0.8 0.0 1
WT/REG198/4Page 42
Mexico's top export products in 2002-2004
Access Conditions to Japan's import marketsMFN (2005)
Duty-free inAverage MFN applied
rate (%)
Number of tariff lines
HS number and description of the product Share in global exports (%)
Duty-free Dutiable 2005 2006 2012
processing machines852721 Combined with sound recording or
reproducing apparatus0.8 0.0 1
220300 Beer made from malt. 0.7 0.0 1620462 Of cotton 0.7 9.6 2 2852990 Other 0.7 0.0 1851790 Parts 0.6 0.0 2870422 g.v.w. exceeding 5 tonnes but not
exceeding 20 tonnes0.6 0.0 2
Total of above 45.7 37 8 5 2 1
--: Specific duty.
Source: WTO Secretariat estimates based on data provided by Japan and UNSD, Comtrade data.
4. Table A.3 shows the market access conditions in Japan for Mexico's top 25 exports, which in 2002-2004 accounted for 45.7% of its global exports. Thirty-seven tariff lines were already duty-free on an MFN basis. Out of eight tariff lines which were dutiable, five lines became duty-free upon the entry into force of the Agreement; a further two lines became duty-free in 2006. The last remaining dutiable line which will become duty-free in 2012 relates to leather.
Table A.4 – Mexico: Market access opportunities under the agreement for Japan's top 25 exports
Japan's top export products in 2002-2004
Access Conditions to Mexico's import markets
MFN (2005)Duty-free in
Remain Dutiable
Ave
rage
MFN
ap
plie
d ra
te(%
)
Number of tariff lines
HS number and description of the product
Share in global
exports (%)
Duty-free Dutiable 2005 2009 2011 2014
870323 Of a cylinder capacity exceeding 1,500 cc but not exceeding 3,000 cc
6.8 20.0 1 1
870324 Of a cylinder capacity exceeding 3,000 cc
4.2 20.0 1 1
854221 Digital 3.6 0.0 2 0847330 Parts and accessories of
the machines of heading 84.71
2.8 0.0 6 0
852540 Still image video cameras and other video camera recorders; digital cameras
1.9 0.0 1 0
847989 Other 1.6 14.8 5 23 5 1 17852990 Other 1.4 3.3 17 6 6870840 Gear boxes
(transmissions)1.3 13.3 6 2 2 2
870899 Other 1.3 12.3 2 43 7 21 15870322 Of a cylinder capacity
exceeding 1,000 cc but not exceeding 1,500 cc
1.1 30.0 1 1
854229 Other 1.0 0.0 1 0890120 Tankers 1.0 15.0 2 2890190 Other vessels for the
transport of goods and for the transport of persons and goods
1.0 16.3 4 4
847160 Input or output units, whether or not containing storage units
0.9 0.0 14 0
WT/REG198/4Page 43
Japan's top export products in 2002-2004
Access Conditions to Mexico's import markets
MFN (2005)Duty-free in
Remain Dutiable
Ave
rage
MFN
ap
plie
d ra
te(%
)
Number of tariff lines
HS number and description of the product
Share in global
exports (%)
Duty-free Dutiable 2005 2009 2011 2014
in the same housing870332 Of a cylinder capacity
exceeding 1,500 cc but not exceeding 2,500 cc
0.9 30.0 1 1
840991 For use solely or principally with spark-ignition internal combustion piston engines
0.8 12.0 1 19 9 6 4
842952 Machinery with a 360° revolving superstructure
0.8 5.0 2 1 1
854140 Photosensitive semiconductor devices, including photovoltaic cells; light emitting diodes
0.7 0.0 1 0
870333 Of a cylinder capacity exceeding 2,500 cc
0.7 30.0 1 1
870829 Other 0.7 13.1 24 19 1 4852520 Transmission apparatus
incorporating reception apparatus
0.5 1.2 12 1 1
853400 Printed circuits. 0.5 0.0 4 0853690 Other apparatus 0.5 12.5 2 28 8 8 12870421 g.v.w. not exceeding 5
tonnes0.5 19.8 4 4
870422 g.v.w. exceeding 5 tonnes but not exceeding 20 tonnes
0.5 32.7 7 2 5
Total of above 37.2 70 173 64 39 11 54 5
Source: WTO Secretariat estimates based on data provided by Mexico and UNSD, Comtrade data.
5. Table A.4 shows the market access conditions in Mexico for Japan's top 25 exports, which in 2002-2004 accounted for 37.2% of its global exports. Seventy tariff lines were already duty-free on an MFN basis. Out of 173 tariff lines which were dutiable, 64 lines became duty-free upon the entry into force of the Agreement; rates on the remaining 109 lines are to be progressively eliminated. The remaining dutiable five lines are related to motor vehicles.
WT/REG198/4Page 44
ANNEX II
Tariff-Rate Quotas under the Agreement
1. Tariff rate quotas maintained by the parties under the Agreement are discussed in the following Tables.
Table AII.1Japan: Tariff-rate quotas for products originating in Mexico
HS Code (description) In quota rate Out of quota rate QuantityMeat and edible meat offal020120090, 020130010, 020130020, 020130030, 020130090, 020220000, 020230010, 020230020, 020230030, 020230090, 020610010, 020621000, 020622000, 020629010, 020629020, 020629090
0 in 2005 and 2006.For 2007-2009 – the rate ranges from 10-40 percent lower than the 2003 applied MFN rate.a
Subject to consultation in 2009.
MFN 10 metric tonnes (MT) in 2005 and 2006 increasing annually to 6,000 MT in 2009. Subject to consultation in 2009.
Preparation of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates160250510, 160250520, 160250590, 160250600, 160250700Meat and edible meat offal020312021, 020312022, 020312023, 020319021, 020319022, 020319023, 020322021, 020322022, 020322023, 020329021, 020329022, 020329023, 020649092, 020649093, 020649099, 021011010, 021011020, 021012010, 021012020, 021019010, 021019020
For HS 0203 and 0206: ¥482 per kg and above depending on the customs value of the import.For HS 0210 and 1602: rates vary depending on the customs value of the import.32 Subject to consultation in 2009.
MFN 38,000 MT in 2005 increasing annually to 80,000 MT in 2009. Subject to consultation in 2009.
Preparation of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates160241011, 160241019, 160242011, 160242019, 160249210, 160249220Meat and edible meat offal020711000, 020712000, 020713100, 020713200, 020714210, 020714220
0 in 2005.In 2006 10% lower than the 2004 applied MFN rate.a
In 2007-2009 10-40% lower than the 2004 applied MFN rate.a
Subject to consultation in 2009.
MFN 10 MT in 2005 increasing annually to 8,500 MT in 2009. Subject to consultation in 2009.
Preparation of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates160231210, 160232210, 160232290, 160239210
Natural honey040900000
0 MFN 600 MT in 2005 increasing annually to 1,000 MT for each year as from 2009.
Edible fruit and nuts - Bananas080300100
0The TRQ to be eliminated on 1 April 2015.
9% (MFN 20%) and 18.1% (MFN: 25%) in 2005 decreasing annually; duty-free in 2015
20,000 MT in 2005-2014.
Edible fruit and nuts – Oranges080510000
0 in 2005 and 2006.In 2007-2009 50% lower than the 2004 applied MFN rate.a Subject to consultation in 2009.
MFN 10 MT in 2005 and 2006 increasing annually to 4,000 MT in 2009. Subject to consultation in 2009.
Preparation of vegetables, fruit, nuts or other parts of plants200290219, 200290229
0 MFN 1,000 MT.
32 For further details, see page 141 in Section 2, Annex 1 of the Agreement.
WT/REG198/4Page 45
HS Code (description) In quota rate Out of quota rate QuantityPreparation of vegetables, fruit, nuts or other parts of plants200911110, 200911190, 200911210, 200911290, 200912110, 200912190, 200912210, 200912290, 200919110, 200919190, 200919210, 200919290
50 % of the applied MFN until 2009. Subject to consultation in 2009.
MFN 3,850 MT in 2005 for HS 2009.11 and 2009.19, increasing annually to 6,200 MT in 2009. Subject to consultation in 2009. 750 MT in 2005 for HS 2009.12, increasing annually to 1,500 MT in 2009. Subject to consultation in 2009.
Preparation of vegetables, fruit, nuts or other parts of plants200950200
0 MFN 140 MT.
Miscellaneous edible preparations210320010
0 MFN 800 MT.
Miscellaneous edible preparations210320090
0 MFN 60 MT.
Organic chemicals290544000
0 MFN 600 MT.
Organic chemicals291814000, 291815010
0 MFN 200 MT.
Albuminoidal substances350510200
0 MFN 70 MT.
Raw hides and skins and leather410120212, 410150212,410190212, 410411212, 410419212, 410441122, 410441222, 410449122, 410449222, 410711222, 410712222, 410719222, 410791222, 410792222, 410799222
0
The TRQs to be eliminated on 1 April 2015.
MFN 70,000 square metres in 2005 increasing annually to 145,000 square metres in 2009. Subject to consultation in 2009 or after, as needed.
Raw hides and skins and leather410330200, 410631000, 410632100, 410632200, 410640211, 410640212, 410640213, 410640219, 410692110, 410692190, 410711100, 410712100, 410719100, 410791100, 410792100, 410799100, 411200100, 411310100, 411320100, 411320210, 411320220, 411330100, 411330211, 411330212, 411330221, 411330222, 411390100, 411390211, 411390212, 411410000, 411510000, 411520000
0
The TRQs to be eliminated on 1 April 2012.
2.6%- 21.8% (MFN: 3%-25%) in 2005 decreasing annually and duty-free in 2012
¥86,715,000 in 2005 increasing annually to ¥258,930,000 in 2011.
Raw hides and skins and leather410441212, 410441219, 410449212, 410711212, 410711219, 410712212, 410712219, 410719212, 410791212, 410791219, 410792212, 410792219, 410799212
0
The TRQs to be eliminated on 1 April 2015.
MFN and duty-free in 2015.
15,000 square metres in 2005 increasing annually to 31,000 square metres in 2009. Subject to consultation in 2009 or after, as needed.
Raw hides and skins and leather410530112, 410622112, 411200212, 411310212
0
The TRQs to be eliminated on 1 April 2015.
MFN and duty-free in 2015.
15,000 square metres in 2005 increasing annually to 31,000 square metres in 2009. Subject to consultation in 2009 or after, as needed.
Raw hides and skins and leather411420010, 411420090
0
The TRQs to be eliminated on 1 April 2012.
17.5% (MFN: 20%) and 24.5% (MFN: 28%) in 2005 decreasing annually and duty-free in 2012.
¥697,000 in 2005 increasing annually to ¥2,082,000 in 2011.
Articles of leather420100000, 420219000, 420239000, 420299010, 420299020, 420299090, 420400100, 420400200, 420610000, 420690000
0
The TRQs to be eliminated on 1 April 2012.
2.3%-15.7% (MFN: 2.7%-18%) in 2005 decreasing annually and duty-free in 2012.
¥23,522,000 in 2005 increasing annually to ¥70,237,000 in 2011.
Articles of leather420211100, 420211200, 420212100, 420212211, 420212219, 420212220, 420221110, 420221120, 420221210, 420221220, 420222100, 420222210, 420222290, 420229000, 420231100, 420231200, 420232100, 420232210, 420232290, 420291000, 420292010, 420292090
0
The TRQs to be eliminated on 1 April 2012
4%-14% (MFN: 4.6%-16%) in 2005 decreasing annually and duty-free in 2012.
¥345,555,000 in 2005 increasing annually to ¥1,031,823,000 in 2011.
WT/REG198/4Page 46
HS Code (description) In quota rate Out of quota rate QuantityMiscellaneous manufactured articles960500000Articles of leather420500000
0
The TRQs to be eliminated on 1 April 2012.
8.7% (MFN: 10%) in 2005 decreasing annually and duty-free in 2012.
¥32,252,000 in 2005 increasing annually to ¥96,305,000 in 2011.
Footwear640320012, 640320022, 640330012, 640330029, 640340012, 640340022, 640351012, 640351029, 640359019, 640359091, 640359092, 640359093, 640359094, 640359095, 640359099, 640391019, 640391029, 640399015, 640399016, 640399019, 640399029, 640419119, 640420119, 640420212, 640420222, 640510119, 640590112, 640590122
0
The TRQs to be eliminated on 1 April 2015.
MFN and duty-free in 2015
250,000 pairs in 2005 increasing annually to 518,000 pairs in 2009. Subject to consultation in 2009 or after, as needed.
Footwear640510300, 640520000, 640590200
0
The TRQs to be eliminated on 1 April 2012.
2.9% (MFN: 3.4%) in 2005 decreasing annually and duty-free in 2012.
¥26,704,000 in 2005 increasing annually to ¥79,737,000 in 2011.
Glass and glassware701810000, 701890010
0
The TRQs to be eliminated on 1 April 2012.
5.7% (MFN: 6.6%) and 7% (MFN: 8%) in 2005 decreasing annually and duty-free in 2012.
¥15,726,000 in 2005 increasing annually to ¥46,956,000 in 2011.
Clocks and watches and parts thereof911390210
0
The TRQs to be eliminated on 1 April 2012.
8.7% (MFN: 10%) in 2005 decreasing annually and duty-free in 2012.
¥65,018,000 in 2005 increasing annually to ¥194,142,000 in 2011.
Furniture940190020
0
The TRQs to be eliminated on 1 April 2012.
3.3% (MFN: 3.8%) in 2005 decreasing annually and duty-free in 2012.
¥9,507,000 in 2005 increasing annually to ¥28,387,000 in 2011.
a: Products for which consultations were held under Article 5.3.(a).(i) of the Agreement and resulted in the conclusion of a Protocol which entered into force on 1 April 2007. The new in-quota rates are presented in column 2 of Appendix 1.
Source: Section 2, Annex 1 of the Economic Partnership Agreement between Japan and Mexico and the related Protocol.
Table AII.2Mexico: Tariff-rate quotas for products originating in Japan
HS Code (description) In quota rate Out of quota rate QuantityMeat and edible meat offal02012099, 02013001, 02022099, 02023001, 02061001, 02062101, 02062201, 02062999Preparation of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates16025099BB, 16025099CC
0 in 2005 and 2006.In 2007-2009 from 10-40% lower than the 2003 applied MFN rate.a
Subject to consultation in 2009.
MFN 10 metric tonnes (MT) in 2005 and 2006 increasing annually to 6,000 MT in 2009. Subject to consultation in 2009.
Meat and edible meat offal02071101, 02071201, 02071301, 02071302, 02071303, 02071399, 02071401, 02071403, 02071404, 02071499Preparation of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates16023101, 16023201, 16023999
0 in 2005.In 2006 10% lower than the 2004 applied MFN rate.a
In 2007-2009 from 10-40% lower than the 2004 applied MFN rate.a
Subject to consultation in 2009.
MFN 10 MT in 2005 increasing annually to 8,500 MT in 2009. Subject to consultation in 2009.
Natural honey04090001
0 MFN 600 MT in 2005 increasing annually to 1,000 MT for each year as from 2009.
Edible fruit and nuts – Bananas, including plantains, fresh08030001AA
0The TRQs to be eliminated on 1 April 2015.
Base rate 23% decreasing annually; duty-free in 2015.
20,000 MT in 2005-2014.
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HS Code (description) In quota rate Out of quota rate QuantityEdible fruit and nuts - Oranges08051001
0 in 2005 and 2006.In 2007-2009 50% lower than the 2004 applied MFN rate.a Subject to consultation in 2009.
MFN 10 MT in 2005 and 2006 increasing annually to 4,000 MT in 2009. Subject to consultation in 2009.
Tomato puree and tomato paste for the manufacture of tomato ketchup and other tomato sauces20029099AA
0 MFN 1,000 MT.
Preparations of vegetables, fruit, nuts or other parts of plants20091101, 20091201, 20091299, 20091901, 20091999
50% of the applied MFN. Subject to consultation in 2009.
MFN 3,850 MT in 2005 for HS 2009.11 and 2009.19, increasing annually to 6,200 MT in 2009. Subject to consultation in 2009. 750 MT in 2005 for HS 2009.12, increasing annually to 1,500 MT in 2009. Subject to consultation in 2009.
Tomato juice, not containing added sugar20095001AA
0 MFN 140 MT.
Miscellaneous edible preparations21032001
0 MFN 800 MT.
Miscellaneous edible preparations21032099
0 MFN 60 MT.
Organic chemicals29054401
0 MFN 600 MT.
Organic chemicals29181401, 29181505
0 MFN 200 MT.
Albuminoidal substances35051001
0 MFN 70 MT.
Raw hides and skins and leather41041101, 41041102, 41041199, 41041901, 41041902, 41041999, 41044101, 41044199, 41044901, 41044999, 41053001, 41062201, 41071101, 41071199, 41071201, 41071299, 41071901, 41071999, 41079101, 41079201, 41079901, 41079999, 41120001, 41131001
0 in 2005-2009.Subject to consultation for 2010-2014.The TRQs to be eliminated on 1 April 2015.
MFN and duty-free in 2015.
100,000 square metres in 2005 increasing annually to 207,360 square metres in 2009. Subject to consultation for 2010-2014.
Footwear64032001, 64033001, 64034001, 64035101, 64035102, 64035199, 64035901, 64035902, 64035999, 64039101, 64039103, 64039199, 64039901, 64039903, 64039904, 64039905, 64039999, 64042001, 64051001
0 in 2005-2009.Subject to consultation for 2010-2014.The TRQs to be eliminated on 1 April 2015.
MFN and duty-free in 2015.
250,000 pairs in 2005 increasing annually by 518,000 pairs in 2009. Subject to consultation for 2010-2014.
Raw hides and skins and leather41063101, 41063201, 41064099AA, 41069201, 41132001, 41141001, 41142001, 41151001, 41152001Articles of leather42010001, 42021101, 42021201, 42021202, 42021999, 42022101, 42022201, 42022202, 42022999, 42023101, 42023201, 42023202, 42023999, 42029101, 42029201, 42029202, 42029999, 42040001, 42050099, 42061001, 42061099, 42069099Footwear64052001, 64052002, 64052099, 64059001, 64059099Furniture94019001
0 in 2005-2011.The TRQs to be eliminated on 1 April 2012.
Base rates vary; decreasing annually and duty-free in 2012.
US$5 million in 2005 increasing annually to US$14.9 million in 2011.
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HS Code (description) In quota rate Out of quota rate QuantityIron and steel72085201, 72085301, 72085401, 72155099, 72222001 72230001, 72254099, 72281001, 72283099, 72285099Articles of iron or steel73012001, 73043105, 73043199, 73043999, 73045199, 73045904, 73045905, 73045910, 73045999, 73049099, 73053902, 73053999, 73063099, 73064001, 73064099, 73066099, 73079101, 73079299, 73079999, 73269099
0 MFN until 2009 decreasing annually and duty-free in 2015.
Not less than 10,000 MT provided that the goods meet the conditions under Mexico's Sectoral Promotion Programme (PROSEC).
Motor cars and other motor vehicles for the transport of persons; Motor vehicles for the transport of goods87021001AA, 87021002AA, 87021003AA, 87021004AA, 87029002AA, 87029003AA, 87029004AA, 87029005AA, 87041099AA, 87042201AA, 87043201AA, 87049001AA, 87049099AA, 87032199, 87032201, 87032301, 87032401, 87033101, 87033201, 87033301, 87039001, 87039099, 87042101, 87042102, 87042103, 87042199, 87042202, 87042203, 87043101, 87043103, 87043199, 87043202, 87043203
0The TRQs to be eliminated on 1 April 2011.
11.1%-25.7% (MFN: 10%-50%) in 2005 decreasing annually and duty-free in 2011.
5% of domestic sales in the previous year.
a: Products for which consultations were held under Article 5.3.(a).(i) of the Agreement and resulted in the conclusion of a Protocol which entered into force on 1 April 2007. The new in-quota rates are presented in column 2 of Appendix 2.
Source: Section 3, Annex 1 of the Economic Partnership Agreement between Japan and Mexico and the related Protocol.
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