Today World Trade Organization (WTO) Director Pascal Lamy confirmed that the latest round of WTO talks collapsed after nine days because of a dispute between developed and developing countries over “safeguard clauses” to protect lesser-developed economies from a flood of imports. For Mexico, this means increased reliance on its existing plethora of free trade agreements.
Some analysts say the collapse of talks symbolizes the end of the latest round of negotiations begun in 2001 that would arguably increase the world's economy by $100 billion. Instead, countries will continue to negotiate free trade agreements on a regional or bilateral level, rather than a global basis. Mexico is one of the best examples. The country's ruling political establishment has wholly embraced free trade and liberalization, having signed the most number of free trade agreements in the world. These include full agreements with the US and Canada (NAFTA), the EU, Japan, nearly all of Central America, Chile, Uruguay, and Bolivia, in addition to framework agreements with South America's MERCOSUR.
As a result, few countries are left trading with Mexico without a free trade agreement. However, the existing agreements, particularly with the US, the EU, and Japan, pit Mexico's economy against rich-world subsidies, most notably in agricultural and manufacturing sectors. Notably, the stumbling block of safeguard clauses that brought down the latest round of WTO talks was resolved in NAFTA by a gradual lessening of tariffs and non-tariff barriers over a period of seven years. Additionally, much work remains to be done to liberalize telecommunications and financial sectors. On average, services account for 70% of a developed country's economy, 50% of a developing country's, yet only make up 19% of world trade. Notwithstanding, the existing agreements leave Mexico with significantly more prospects for trade.
Pictured: Mexico's Permanent Representative to the WTO, Fernando de Mateo y Venturini (center)
