The Mexican Council for Foreign Trade (COMCE) and Nippon Keidanren convened the 25^th Japan-Mexico Businessmen's Joint Committee Meeting on October 30, 2002, in Mexico City. There were some 90 participants from Mexican economic circles, including both the private sector and the government level. Mr. Tomas Gonzalez-Sada, Chairman of the Mexico-Japan Business Committee, led the Mexican delegation. Mexican President Vicente Fox and Ministry of Economy Luis-Ernesto Derbez were also in attendance. The Japanese side comprised some 60 participants, including businessmen and government observers, and was led by Yoshikazu Hanawa, Chairman of Nippon Keidanren's Japan-Mexico Economic Committee. In the course of the meeting, the two delegations discussed the importance of a Japan-Mexico Free Trade Agreement (FTA), its potential benefits, and the necessity for its expeditious conclusion.

The two sides emphasized the following points regarding the significance and benefits of a Japan-Mexico Free Trade Agreement:

1. Mexico has already concluded a number of free trade agreements in an effort to invigorate trade and investment relations with North America, Central and South America, and Europe. Building upon its experience as a leading FTA country, Mexico sees the signing of a new free trade agreement with Japan as a means to further strengthen economic relations between the two countries.

2. Since signing an FTA with Singapore, Japan has been considering free trade agreements with other countries in Asia and Central and South America. With regard to Mexico, the fact that Japanese companies have suffered the competitive disadvantages relative to U.S. and European companies, not only in terms of customs duties and tariffs, but also in areas of government contracts, investment, and others by the inexistence of Japan-Mexico FTA. A Japan-Mexico FTA is the key to resolving these issues. The Japanese business community has been pointing to the importance of such an agreement, and it expresses its strong desire to see a Japan-Mexico FTA become the second such agreement that Japan enters into, following its agreement with Singapore.

3. Given the progress of globalization, any country that hopes to encourage sustainable foreign investment must provide an attractive business and investment environment relative to other nations. As the Japan-Mexico Joint Study Group on the Strengthening of Bilateral Economic Relations (comprised of academics, businessmen, and government officials from both countries) pointed out in its final report of July 2002, broad improvements to the business environment - encompassing not only liberalization of goods and services, but also modification of rules and institutions, issues of labor, security, deregulation, and the environment - are essential in strengthening bilateral economic relations and encouraging trade and investment between the two countries, as well as promoting the expansion of existing business activities and the development of new ones. In addition, the systematic financial support from both Mexico and Japan and the fostering of supporting industries play important rules to the development of Mexico's industrial infrastructure.

4. Mexico has initiated efforts to strengthen the competitiveness of its businesses, and the nation has implemented ITA Plus, a tariff reduction in the electronics sector. While improvements such as these are valuable, they are still not enough. For example, in 2001 Mexico modified the maquiladora program for the NAFTA signatories, implementing the PROSEC preferential tariff system in its place and also enabling application of the Regla Octava system as the measure to complement the PROSEC. However, a number of problems remain, including the possibility of sudden changes in eligible products and the duties applied to them, as well as overly complex procedures for obtaining authorization. Many Japanese enterprises have suffered serious damages as a result of the instability and unpredictability of such systems, and those firms have had to scale back their operations or pull out of Mexico altogether, shifting their production bases to Asia. Speedy reevaluations of the systems are necessary, including an increase in the range of eligible products and the simplification of procedures. Japanese companies in Mexico, together with Maquiladora Associations, are working already with the Mexican government in this respect.

From the perspectives outlined above, both the Mexican and Japanese delegations welcome and support the agreement reached at the top meeting after the recent APEC meeting in Los Cabos between President Fox and Prime Minister Koizumi to open negotiations between the two governments concerning a Japan-Mexico FTA, and the two delegations jointly call for the expeditious conclusion of such an agreement within a year's time. We hope that the agreement will be one that serves to strengthen our bilateral economic partnership in the broadest possible sense, encompassing proposals for improving the business environment as discussed above. If that is realized, we can expect the revitalization of bilateral business and the building of an economic relationship that matches the potential of our two nations.