Keidanren and COMCE held the 24th Japan-Mexico Businessmen's Joint Committee Meeting at Keidanren Building, Tokyo on October 22-23, 2001. A Japanese delegation of about 70 members led by Mr. Nobuhiko Kawamoto, Chairman of Keidanren's Japan-Mexico Economic Committee, and a Mexican delegation of more than 40 public officials and businessmen led by Mr. Tomas Gonzales Sada, Chairman of the Mexico-Japan Business Committee, and the Honorable Luis-Ernesto Derbez, Minister of Economy, attended the meeting. The two sides renewed their call for the early conclusion of a Free Trade Agreement (FTA) between Japan and Mexico.
The two delegations underscored the following points with respect to the significance and importance of a Free Trade Agreement between Japan and Mexico:
By combining the rich natural resources and a skilled labor force in Mexico with the industrial resources and technology of Japan, an FTA will help further develop the industries and economies of both countries.
A Japan-Mexico FTA will generate a stronger sense of partnership between the two countries, enhance the cooperation between Japanese and Mexican business sectors in the development of new business opportunities, and put the overall Japan-Mexico relationship on a closer and more constructive basis.
Mexico, which has FTA relations with 31 countries, is an advanced FTA nation in the American Continent and is centrally located in an enormous triangle market encompassing North and South America and Europe. A Japan-Mexico FTA plays an important role linking this enormous market to the market in Asia.
The following candid views were stated by the Japanese side:
Following the establishment of the North America Free Trade Agreement (NAFTA) and the entry into force of the Free Trade Agreement between Mexico and the European Union in July last year, companies from Japan, as a non-member state, have faced different treatment in Mexico as compared with United States, Canadian and European Union companies. Japanese companies are handicapped not only in terms of customs tariff but also in the evaluation of bids, putting Japanese business operations in Mexico at a disadvantage. There is strong concern of a contraction in Japan's economic relations with Mexico.
To Japanese companies, Mexico is an important production base for the Central and South America market. If Japanese companies fall behind United States and European competitors in Mexico, it will pose a big obstacle to the medium and long-term Japanese business strategy in Central and South America. Since putting negotiations for a Japan-Mexico FTA on hold in order to protect certain Japanese domestic industries would handicap Japanese business operations, this means sacrificing a large segment of Japanese industries for the sake of certain domestic businesses. There are problems of national interest as well.
The governments of Japan and Mexico have already set up a Japan-Mexico Joint Study Group on the Strengthening of Bilateral Economic Relations, so that the two sides can hold comprehensive consultations on bilateral economic matters, including the possibility of a Free Trade Agreement. Before the end of the year, Japan and Singapore are expected to conclude a "Japan-Singapore Economic Agreement for a New Age Partnership," Japan's first-ever free trade agreement. Under these circumstances, the Japanese and Mexican delegations expressed the hope that the Japan-Mexico Joint Study Group would determine the gains of consumers and producers of the two countries from an overall perspective and make constructive recommendations toward the conclusion of a Japan-Mexico FTA. The business communities in Japan and Mexico must also strive to foster national understanding for an FTA between the two countries and to this end must make every effort to get public opinion on their side.
The Japanese side also made the following request with respect to the PROSEC preferential taxation system, which came into force on January 1 this year and replaced the NAFTA-targeted Maquiladora system:
There are many problems regarding the PROSEC system, such as sudden changes in the list of applicable products and tariff rates. While it is possible to get government authorization to make use of Regla Octava, a provisional measure set up to complement PROSEC, Regla Octava is, after all, only provisional and has a time limit.
It is requested that the government of Mexico ensure stability and predictability of laws related to the PROSEC system, increase the range of PROSEC-applicable products and make PROSEC permanent. The validity of Regla Octava should be extended to one year from six months now.