In the complex web of international trade, understanding a country’s participation in key trade agreements is crucial. One such significant agreement in history is the General Agreement on Tariffs and Trade (GATT). So, was Mexico part of GATT? The answer is yes. Mexico joined GATT in August 1986, a move that significantly shaped its economic and trade landscape.
The Pre - GATT Era in Mexico
Before joining GATT, Mexico’s trade policies were quite protectionist. In 1985, the country’s maximum import tariff stood at 100%, with an average tariff rate of 75%. Moreover, all imported goods required import licenses. The 1982 - implemented Customs Law mandated that all natural and legal persons engaged in foreign trade must pay foreign trade taxes. This highly restrictive trade environment limited Mexico’s economic growth potential and its integration with the global market.
The Decision to Join GATT
Mexico’s decision to join GATT was driven by several factors. The country aimed to access a more open and fair international market with fewer trade barriers. By joining GATT, Mexican entrepreneurs and investors could benefit from clear trade rules, providing them with security in international trade. Additionally, GATT’s trade - dispute settlement mechanism was appealing. In case of unresolved trade issues, an independent commission within GATT could arbitrate, ensuring a more stable trading environment.
Impact of Joining GATT
Tariff and Import License Reforms
After joining GATT in 1986, Mexico made substantial changes to its trade policies. The maximum tariff dropped to 50%, and the average tariff to 42%. The proportion of goods requiring import licenses plummeted to 7% of the total customs tariff numbers. In December 1987, the Mexican government further slashed the maximum tariff to 20%. These tariff cuts were a clear sign of Mexico’s commitment to align with GATT’s principles of free trade.
Long - term Economic Transformation
The accession to GATT also kick - started a series of long - term economic transformations. Mexico began to liberalize its trade regime, which led to increased foreign investment. In the 1990s, Mexico negotiated and signed free - trade agreements with multiple countries. The most notable among these was the North American Free Trade Agreement (NAFTA) in 1994, which it formed with the United States and Canada. This agreement not only deepened Mexico’s economic integration with its North American neighbors but also attracted more foreign direct investment.
Influence on Domestic Policies
GATT membership also influenced Mexico’s domestic economic policies. The country started to reform its customs and trade regulations to comply with GATT requirements. For example, it adjusted its import tax system, and the Mexican government continued to fine - tune its tariff rates. In 1996, after the 1995 financial crisis, the government raised the maximum tariff to 35% (for clothing) and categorized tariff rates into six levels: 0%, 5%, 10%, 15%, 20%, and 35%.
Conclusion
Mexico’s membership in GATT was a pivotal moment in its economic history. It marked a shift from a protectionist trade policy to a more open and liberalized approach. The country reaped the benefits of a more predictable and rule - based international trading system. Even after GATT evolved into the World Trade Organization (WTO) in 1995, Mexico continued to adapt and thrive in the global trade arena. Understanding Mexico’s GATT membership provides valuable insights into how countries can leverage international trade agreements to drive economic development, manage economic crises, and adapt to changing global economic landscapes.