President Ernesto Zedillo was at the point of exiting the Mexican presidency in 2000 when it became the beginning of the Economic Partnership, Political Cooperation and Cooperation Agreement between Mexico and 15 countries that form the European Union (EU) became urgent, an agreement that had been signed since December 1997 but that did not take effect until the year 2000.  This is the foundation of the relationship between both parts that is also called the Global Agreement.

As was forecast in the Global Agreement, the Free Trade Agreement was signed between the European Union and Mexico (FTAEUM) and came into force one day before the presidential elections, July 1^st, 2000, for the sale of goods, and March 1^st, 2001 for the sale of services.  The FTAEUM called for the step-by-step abolition of customs barriers and other trade obstacles until 2005 for the exports of Mexican goods to Europe, and until 2007 for European exports to Mexico.  For the sale of services there are other transition arrangements that last for up to ten years.  Total trade liberalization would be reached in 2010.

The Agreement was initially signed between México and the European Union then made up of the countries of Germany, Austria, Belgium, Denmark, Finland, Spain, Greece, France, Ireland, Italy, Luxembourg, Holland, Portugal, Sweden, and the United Kingdom.  But beginning March 1^st there will be ten more countries added to the first fifteen: Cyprus, Slovakia, Slovenia, Estonia, Hungary, Lithuania, Malta, Poland, and the Czech Republic.  Today the European Union has more than 450 million inhabitants and Mexico has 100 million inhabitants.  Beginning in 2000, Mexico was the first country in the world with the most free trade agreements and that had signed free trade agreements with the two most important commercial and political blocks in the world: the United States and Europe.

In this agreement there did not exist an equal, gradual and much less just treatment, even though a democratic clause was incorporation that says: “The respect for democratic principles and fundamental human rights, such as those enunciated in the Universal Declaration of Human Rights, inspires the international and international policies of the Partres and constitutes an essential element of this Agreement.”  [1] Although it is good to know and say it, lamentably it is not binding.  That is to say, it is a declaration that does not obligate any government to anything.  In Mexico there are torture, political assassinations, internal displacements, paramilitaries, militarization, feminicides, political arrests, growing extreme poverty, unemployment and migration, lack of basic services and deaths from illnesses of poverty; and nothing happens, the trade agreements continue to move forward despite the recent reports by the United Nations and Amnesty International about the grave situation that dispossesses human rights in Mexico.

President Zedillo was crafty and used many tricks to get it approved by the Mexican Congress.  The document was not translated on time and true to form; the legislators only learned about it a few days before the Chamber session’s period was to finish and a few months before the 2000 presidential elections were to take place.  There was no public consultation and everything was sped up; the interests of the Mexican productive sectors were not taken into account; the topics of negotiation were hidden; and they also did not take into account the differences between the rich EU countries and Mexico that would give some protection to the most vulnerable productive sectors of Mexico.

Beyond the anti-democratic Mexican process, the parts created a Joint Committee, composed of government functionaries of the Mexican government and the European Commission, that complements at the ministerial level the already existing Joint Council.  This Joint Council met for the first time on October 2^nd, 2001 in Brussels, a year after the Global Agreement came into force.  This Committee can meet and modify dates for trade liberalizations, percentages, and times, without having to consult with the Senate of the Mexican Republic or the European Parliament.

Initially, it was established that 52% of the goods that have duties would be liberated little by little until they would not pay a cent to enter in 2007.  Initially, it was intended for 95% of the current universe of commercialized goods.  Of those that would achieve trade liberalization were 100% of industrial products, 62% of agricultural products, and 99.5% of the fishing sector.  Until the year 2003 the FTAEUM affected 96% of all products and services.  The greatest part of this already until 2003 (50% of Mexican imports and 82% of European imports).  There are few exceptions of sensitive products, over all the farming and stockbreeding sectors, while other agrarian products were treated with great preference such as wine, beer, different types of fruits and vegetables, tobacco and other European products, and coffee, avocados, flowers, fruits and honey among Mexican products.  In the services sector, this facilitates greater access for European companies, especially banks and insurance, in the Mexican market.  Now, European banks and insurance companies can invest in Mexico without having to take into account participation by the United State and Canada.

Direct European investments in Mexico were also facilitated.  Easier money transfers, drives and fomentation of programs to protect investments should be expanded and accelerate the transit of transatlantic capital.  In many cases they have recourse to existing bilateral agreements between Mexico and individual EU members.  Aside from trade liberalization, the FTAEUM also foresaw the opening of markets for the entrances of goods, services and investments, also in areas that up to the present have been reserved for the public sector, such as in the case of Mexico the telecommunications (Telmex), electric energy (CFE) and petroleum (Pemex) sectors.

Within the margins of conventions, international organizations like the World Trade Organization (WTO), or already existing bilateral agreements, they have also arrived at agreements on the rights of competitiveness, of author and of licensing and patents.  Both tangible and intangible things (scents, colors, flavors or food processing) can be patented.  On the other hand, various mechanisms for conflict resolution were established.  The intentions of the signers of the Global Agreement and the FTAEUM are evident.  Mexico develops 80% of its exterior trade with the United States.  In second place is the EU that does not even amount to 7% of Mexico’s exterior trade, followed by Japan and Canada with a little more than 2% each.  Mexican trade with all South America is less than 2% of all national exterior trade.

The EU sees in Mexico a strategically important trade partner.  First, because Mexico is just after Brazil as the second-place economy in Latin America, with more than 100 million consumers.  Second, because of the amount of free trade agreements that Mexico has with other countries and economic blocks offers it a good opportunity to enter in the markets of various nations.  In the first place there is obviously the FTAA, but Mexico also has bilateral trade agreements with various Central and South American countries (Bolivia, Chile, Costa Rica, El Salvador, Guatemala, Honduras, Columbia, Nicaragua, Venezuela), with Mercosur, Israel, and soon with Japan and other countries.  In fact, Mexico is the country with the most free trade agreements in the world.  Third, due to low salaries, weak labor laws, low taxes, tolerant laws on environmental protection, et cetera, especially in the factory sector, implies low production costs and makes Mexico an attractive place of production for European companies, especially if the principal market for these products is in North America.  The automotive industry in Europe is a good example.  The Germany company Volkswagen, for example, produces its models destined for the North American market and not the European (like the Beetle) exclusively in Mexico.  In the case of Germany, almost half of the total trade with Mexico is composed of automobiles and automobile parts.

Before the beginning of 2000, only .12% of all productive units in Mexico, which represented 327 of the big national and foreign corporations – many of them European – and the 3,200 export maquiladoras have been the principle beneficiaries of free trade agreements and are responsible for 80% of Mexico’s exterior trade.  These companies were those that drove the trade negotiations.  For example, Volkswagen had great influence on the subject of the automobile industry.

In the year 2000, the volume of transatlantic trade was 20,900 million Euros (basically equivalent to the dollar); some 7 billion of these were European imports from Mexico and 13,900 million European exports into Mexico.  That is to say that Mexico imported almost twice as much as what it exported to the EU.  With this, Mexico’s trade deficit with the EU was approximately 6,900 million Euros.

One year later, in the course of 2001, Mexico exported goods and services of a value of some 7,400 million Euros to the EU.  Meanwhile, European goods and services worth more than 15 million Euros crossed the Atlantic to Mexico.  In total, the trade volume between the two grew from 20,900 million Euros in 2000 to 22,400 million Euros in 2001, or by 7.2%.  Mexico’s trade deficit with the EU grew disproportionately, from 6,900 million Euros to 7,600 million Euros, or by 10.1%.  In 1990, the trade deficit was less than 1,200 million Euros.

The EU achieved the increase in its participation in Mexico’s total exterior trade from 6% in 2000 to 6.6% in 2001.  The large bulk of the trade between Mexico and the EU consists of industrial products.  Farming and stockbreeding products represent only 6.7% of imports and 4.4% of European exports to Mexico.  The most exported European goods to Mexico are factories, automobiles and automobile parts, in addition to chemical products.  The EU imports from Mexico automobiles, office products and hydrocarbons.  Tourism takes up the greatest bulk of the tourist sector.

Over the course of the 1990s, 16% of direct foreign investments came from EU countries.  In total there are today more than 5,000 companies with European capital in Mexico.  The most important trade partner Mexico has from the 15 founders of the EU is the Federal Republic of Germany, followed by Spain, the United Kingdom, France and the Netherlands.  At the end of the decade, Mexico had accumulated a general trade deficit that in the last ten years was 48 billion dollars.

Yes, trade relations through the Atlantic have increased quickly, but at the same time Mexico’s external deficit with the EU increased greatly, which shows that the Europeans have done better from the FTAEUM than the Mexicans.  Until now, the FTAEUM has not been able to diversify Mexican exports to the EU.  More than 80% of the Mexican exports to the EU are currently still composed of only nine important products.  The sector that has surely suffered the most with the FTAEUM is Mexican agriculture, which is currently undergoing a profound crisis.

Before the FTAEUM came into force the ten most exported products to the EU represented between 40 and 45% of the total.  Among them are petroleum, motors, machine accessories, sugar, coffee and penicillin.  In contrast, the ten principal exports of the EU to Mexico represented 10% of the total from Germany, Italy, France, Spain and the United Kingdom.  On its side, the EU charged high tariffs on Mexican products like beer (14%), frozen strawberries (13%), orange juice (18%), plastic products (7%), etc.  Other products including avocados, tequila, and garbanzos also paid import duties.

The Mexican farming and livestock products that were most in demand in Europe after the FTAEUM came into effect are generally in the hands of large European or international companies.  Avocados, for example, are dominated by French companies, and flowers by Holland companies.  The EU for its part demands total opening of the Mexican market for European farming and livestock products, while it still protects its peasants through import duties and subsidies.

In the year 2001, the total budget of the Mexican government for agriculture was almost three billion dollars.  The EU spent in the same time period more than 105 billion dollars in subsidies alone.  The Mexican peasant simply cannot compete with modern agriculture, highly subsidized and politically unified by the EU.

Inasmuch as these statistics it should be mentioned that they are chosen from a great variety of different and contradictory statistics, sometimes from one source.  The European Union’s webpage (europa.eu.int) for example offers many documents and tables on trade relationships between Mexico and the EU that in many cases do not coincide with others from the same site.  The National Institute of Geographic and Computer Science Statistics of Mexico (INEGI) does not have more information either.    Moreover, it was impossible to verify in any site the high levels of growth that are described in official reports and the meetings of representatives from both trade partners, as in the first meeting of the Joint Committee in the month of October in 2001 in Brussels, where a growth in trade between Mexico and the EU of more than 25% during the first year the FTAEUM was in effect was mentioned.

The transnational European companies seek a way to guarantee business in Latin America and the Caribbean.  Banks and the entire banking system has already been bought or is being bought, but also electric energy, natural gas and petroleum, water, etc.  Among these companies are BBV, Santander, Scotian Bank, Union Fenosa, Endesa, Iberdrola, Repsol, Shell, British Petroleum, Gas Natural, Vivendi, Suez, Electricity of France, etc.  Many of these companies have profits equivalent to the budget of any Central American or Caribbean country.

The process, as a result, was completely anti-democratic and sold the sovereignty of Mexico.  With the agreement, it was approved that the Mexican government would be demanded by foreign companies in international courts and their resolutions would be obligatory on the country independent of Mexican laws.  Another result of the agreement was to accelerate the time in which companies did not pay any of the taxes (tariffs) for whatever product they brought into Mexico; and eliminates the earlier possibility of import quotas, that is, the amount of tons that can be brought into the Mexican market of the same product.  The last grave element of the agreement was to provide regulations so that it was everything had “national treatment,” that is, that the foreign company cannot ever receive a less favorable deal than that which national companies receive (aid, subsidies, fiscal easements, advertising, contracts, laws or special regulations, etc.).

The FTAEUM will continue to exacerbate economic, social, cultural and environmental inequalities that NAFTA is already worsening.  It infringes on the Universal Declaration of Human Rights and the International Pact on Economic, Social and Cultural Rights.  Both international instruments refer to the rights of social security, work, to a dignified wage; the right to form labor unions and to strike; to equal treatment without discrimination; to the satisfaction of economic, social and cultural rights; to education and health; to a healthy environment; to the free determination of communities; to participation and popular consultation, etc.

Civil society in Mexico and the EU strongly criticize the Global Agreement and the FTAEUM.  A central point of criticism of the Global Agreement is the absence of a central organism for monitoring of fulfillment of the democratic and the aforementioned human rights clauses.  They demand, most of all the Mexican Action Network Against Free Trade, a Social Observatory that observes and permanently evaluates the current democratic situation, of environmental and human rights within the EU and in Mexico.  Moreover, they demand the creation of a Mixed Advisory Council that advises the authorities on Mexican-European relations that according to the Global Agreement will be the Joint Council as far as issues of the impact of the FTAEUM on the economic, political and social situation.  With this it is hoped to achieve a positive and active dimension of the democratic and human rights clauses of the Global Agreement, which so far has seemed too passive and negative.

Face with all this, civil society demands regular publication of an annual report on the impacts of the Global Agreement and the FTAEUM in the sectors of human rights, work, poverty, agriculture, minorities, environment, et cetera.  Another problem with the Global Agreement is with the Joint Council and the Joint Committee.  As these are composed exclusively of government representatives who are the only ones responsible with the right to make decisions.  This contradicts the Mexican Constitution that requires the inclusion of legislative powers, which is to say parliament and the senate, in making decisions.  It is also criticized that small and medium companies, as much European as those of Mexico, do not obtain any advantages with the FTAEUM.  Large companies that produce in Mexico like Volkswagen are those that are especially favored by the agreement, as well as the entire factory sector in general.  The increase in commerce on both sides also has not grown extraordinarily as was promised.

Because of this, non-governmental organizations (NGO) demand that the Mexican government protect those products most sensitive in Mexican agriculture, like for example corn, wheat, sugar, coffee and cacao among others.  To give them the opportunity to dialogue with different parts of Mexican and European civil society, it was decided in the encounter of the Joint Committee in the month of October, 2002, to convoke a Social Forum Mexico-EU of civil society on both sides of the Atlantic.  This first forum took place in Brussels on November 26^th, 2002.  More than 200 representatives from distinct groups of civil society including NGOs, labor unions, interest groups, scientific groups and the press, as both governments were invited.  The forum sought to give civil society to express its strong criticism, explain the impacts of the Global Agreement and the FTAEUM to society on both sides make proposals to improve the signed agreements and agree amongst themselves.  This was to be achieved through the formation of three work groups for the political, cooperation and trade, and economic sectors.

After some initial confusion in terms of the form and goal of the forum and the role of the government representatives, which had almost caused some NGOs to withdraw, the Mexican participants in particular presented a great quantity of ideas and proposals.  The reactions, as much from government representatives as from civil society, were generally positive.  The EU representatives especially acted interested in the Mexican Action Network Against Free Trade’s proposals on the establishment of a Social Observatory and a Mixed Advisory Council.  But none of the representatives wanted to make concessions or concrete promises.  Anyway, we must continue the pressure so that the free trade agreements do not override human rights.

Sources: European Unión Web Page (http://europa.eu.int/); Red Mexicana de Acción frente al Libre Comerio (http://www.rmalc.org.mx/ ); Periódico “Milenio”, Ciudad de México, 25.11.2002 y 26.11.2002; Periódico “Reforma”, Ciudad de México, 27.11.2002; Periódico “El Economista”, Ciudad de México, 26.11.2002; Periódico “De Morgen”, La Haya, 28.11.2002; “EU Country Strategy Paper: Mexico 2002-2006”, Brussels 2001; RMALC/CIFCA, “Encuentro de Organizaciones Sociales y Civiles de México y la UE en el Marco del Acuerdo Global UE-México”, Ciudad de México 2001; Embajada Alemana en México (http://www.embajada-alemana.org.mx/); Instituto Nacional de Estadísticas Geografía e Informática (http://www.inegi.gob.mx/); EuroStat (http://europa.eu.int/comm/eurostat/Public/datashop/print-catalogue/EN?catalogue=Eurostat); “Voto Particular. Acuerdo de Asociación Económica, Concertación Política y Cooperación entre México y la Unión Europea”, PRD, México, DF, March 2000.

[1] Título I Naturaleza y Ambito de Aplicación del Acuerdo Global, Artículo I Fundamento del Acuerdo.

Note: If you wish to be placed on a list to receive this English version of the Bulletin, or the Spanish, or both, please direct a request to: ciepac@laneta.apc.org and indicate whether you wish to receive the bulletin in plain text or as a Word 7 for Windows 95 attachment.

Note: If you use this information, cite the source and our email address. We are grateful to the persons and institutions who have given us their comments on these Bulletins. CIEPAC, A.C. is a non-government and non-profit organization, and your support is necessary for us to be able to continue offering you this news and analysis service. If you would like to contribute, in any amount, we would infinitely appreciate your remittance to the bank account in the name of:

CIEPAC, A.C.
Bank: Banamex
Account number: 7049672 Sucursal 386
San Cristóbal de las Casas, Chiapas, México.
You will also need to use an ABA number:
BNMXMXMM

Thank you! CIEPAC

Telephone:
in México: 01 967 674 5168
from outside Mexico:: +52 967 674 5168