MEXICO WILL CHALLENGE ARGENTINA'S UNILATERAL DECISION TO SUSPEND THE ECONOMIC COMPLEMENTATION AGREEMENT (ACE 55)

• Mexico protests Argentina’s recurring protectionist practices.

The Argentine government published Decree No. 969/2012 in the Official Gazette today, which suspends the Economic Complementation Agreement (ACE 55), in force since 2002, for three years, including its Annexes and the Bilateral Appendix I.

The decree published today by Argentina alters ACE 55 by failing to faithfully reproduce its provisions. Argentina is seeking to impose requirements and conditions over and above those included in the Agreement, which affects legal certainty in bilateral trade. 

It should be noted that Mexico’s positive trade balance under the agreement mentioned by Argentina is not due to the fact that the international environment is different for the two countries. Argentina and Mexico face the same international environment of low interest rates in the industrialized countries and economic weakness in our major trading partners. Mexico’s good performance is simply the result of its high degree of competitiveness and the strength of the Mexican automotive sector, and Mexico’s manufacturing sector, in general.

Countries that practice and promote free trade create more and better jobs, more economic growth and improved welfare for its people. Mexico is an example of this and, unlike Argentina, it fully honors its trade agreements and international commitments.

Argentina’s macroeconomic and structural policies, unlike Mexico’s, have worsened its current account. Argentina has followed a policy of increasing taxes on its exports and has taken other steps that have seriously weakened property rights regarding investment. This has led to the clear decline of its exports.

The government of Mexico categorically rejects the arguments used in the decree, which violate the trade laws of the Latin American Integration Association (ALADI), as well as the basic principles of international law. 

Therefore, Mexico will use all the legal means at its disposal to challenge this unilateral action by Argentina within ALADI through the dispute settlement mechanism agreed to with Argentina. Mexico will also challenge the implementation of other recurring protectionist practices within the World Trade Organization that restrict Mexico’s exports and violate international law.

In addition, Mexico will study the possibility of adopting measures to compensate for the damage caused it by Argentina’s suspension of preferential treatment regarding tariffs.

Argentina has justified its decision by saying it was affected by the Mexico-Brazil agreement entered into on March 19th on ACE 55. However, the agreement was negotiated, registered and reported under the aegis of ALADI and according to the agreement and to international practice. Therefore, the protocol modifying the agreement between Mexico and Brazil fully complies with ALADI’s rules. Moreover, the protocol with Brazil does not impose additional burdens nor does it grant additional concessions to the other MERCOSUR members, given that it is a bilateral negotiation.

The Mexican government is deeply concerned about the adoption of protectionist practices such as those applied by Argentina which, in addition to affecting trade between our nations, causes serious damage to the regional integration process by nullifying the progress that has been achieved so far in trade liberalization. 

The Mexican government reiterates its support for its domestic and export industry and will defend it by pursuing any breach of the trade agreements and treaties signed by Mexico to the utmost.