168. Memorandum From the United States Trade Representative (Askew) to President Carter1
SUBJECT
- Trade Negotiations with Mexico
My Office has completed negotiations with Mexico on a major trade agreement which includes concessions on several hundred products totaling nearly $850 million. More important than the specific provisions of this agreement is the fact that it is a prerequisite for Mexican membership in the General Agreement on Tariffs and Trade (GATT).
The present trade situation between the United States and Mexico is not as fair as it should be to U.S. exporters. As a GATT member, the United States generally accords liberal trade treatment to Mexican products. However, because Mexico is not a GATT member, and because we have not had a bilateral trade agreement with Mexico since 1947, our exports to Mexico are subject to protective and capricious import policies by that country. Recently, Mexico has begun to liberalize these policies. Without the disciplines of GATT, though, there is nothing to prevent future Mexican administrations from reversing this liberal trend.
Consequently, an important objective of your policy toward Mexico has been their accession to GATT. Mexican entry into GATT would reduce the bilateral irritants in the trade relations between our two countries, require Mexico to exercise greater restraint in its trade policies, and generally hasten Mexican entry into the international trading community.
Currently, the Mexicans are engaged in a national debate over whether to enter GATT. This decision must be made by May. The agreement we have reached with Mexico contains concessions of the kind required of any country when it joins GATT. In fact, the agreement will not go into effect unless and until Mexico becomes a GATT member. Mexico has completed similar negotiations with all its principal trading partners except the United States. Our approval of the agreement would fulfill this one remaining external prerequisite to GATT membership.
As is usually the case with our agreements with developing countries, the trade coverage of this agreement is weighted in Mexico’s [Page 408] favor. However, without this agreement, Mexico would remain free to prohibit entry of the U.S. products the agreement covers. As a member of GATT with obligations to other GATT members, we do not have such freedom. For this reason, among others, there is more qualitative value in the Mexican concessions to the United States than in our concessions to them. This is true despite the weighted ratio in trade coverage, which, in this agreement, unlike some others, is less than two to one.
This agreement binds the Mexicans to more certainty in our mutual dealings, protects existing U.S. interests in Mexico, and provides an expanded potential for U.S. exports to one of our most important trading partners. In my view, approval of this agreement is clearly in the best interests of the United States. Therefore, I request your approval to allow me to proceed with the agreement.2