By  on March 4, 2008

GENEVA — The World Trade Organization and major commercial partners have urged Mexico to lower its tariffs and take steps to simplify its complex and cumbersome custom measures.

Mexico also was prodded to take steps to boost its faltering competitiveness and productivity levels, especially in industrial sectors such as textiles and apparel, in a WTO report and review last month.

The report said that in recent years Mexico's economic performance has been solid and noted that certain sectors have posted big gains, but also concluded that per capita income "has only risen modestly and alleviating poverty remains a challenge."

Between 2004 and 2006, Mexico's real economic growth, boosted by oil revenues, expanded by 3.9 percent annually and is forecast to grow by 3.5 percent in 2008. Final 2007 economic figures are not yet available.

"There is still room for improvement in Mexico's trade policy," said China's WTO ambassador, Sun Zhenyu, during a two-day review of Mexico's trade regime.

The Chinese envoy singled out what he called "the large difference" between Mexico's bound, or threshold tariff rates, and its average applied tariffs, which leaves exporters at risk of being charged the higher rate. Many other delegates also called on Mexico to reduce the big gap of almost 25 percentage points between its average applied tariff rate of 11.2 percent and average bound rate of 36 percent.

With regard to industrial tariffs, Mexico's average applied tariff in 2007 was 9.9 percent and the bound rate 35 percent. But the average rate for textiles and apparel was much higher. For 1,275 tariff lines in this segment, the average applied tariff was 18.1 percent and the bound at 35 percent.

The WTO study also reveals that between 2000 and 2006 the value added that the country's textiles, apparel and leather manufacturing sector contributed to the country's gross national product contracted by 21.3 percent.

Peter Allgeier, deputy U.S. Trade Representative, said, "Mexico ought further to liberalize international trade by lowering its [most favored nation] tariff so as to give firms better access to competitive inputs and restrict possibilities for corruption and fraud at Mexico's borders. Mexico needs to further reduce nontariff barriers, for instance, as they relate to complex customs procedures and complicated technical requirements."Allgeier said two-way trade between the U.S and Mexico "more than quadrupled, from $81.5 billion in 1993 to $332.5 billion in 2006," and added that U.S. foreign direct investment in Mexico was $84.7 billion in 2006. The North American Free Trade Agreement, which includes the U.S., Mexico and Canada, went into affect in 1994.

South Korea also charged that Mexico has continued to keep in place discriminatory measures that require imports of textiles, apparel and footwear from some Asian nations, including itself, "to be subject to special certifications of origin."

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