Mexico is to Contest Argentina´s Unilateral Decision to Suspend Economic Completation Agreement (ECA 55)

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The Government of Argentina published in today's Official Bulletin, Decree No 969/2012 suspending the Economic Complementation Agreement (ECA 55), in force since 2002, for three years, including its Annexes and the Bilateral Appendix I.

The Decree published today effectively alters the content of ECA 55 because it fails to faithfully reproduce the provisions of the agreement. Argentina intends to impose requirements and conditions in addition to those already established by the agreement, affecting legal certainty in bilateral trade. 

It should be noted that Mexico's positive trade balance, which is the basis of Argentina's argument, is not the result of differences in the international environment. Both Argentina and Mexico face the same international environment of low interest rates in industrialized countries and weakened economies in major trade partners. Mexico's good performance is nothing more than the result of its high level of competitiveness and the strength of its automotive sector and manufacturing in general. 

Countries which engage in and promote free trade generate more and better jobs, greater economic growth and better welfare for their people. Mexico is an example of that and, unlike Argentina, fully honors its trade agreements and international commitments.

The macroeconomic and structural policies followed by Argentina, unlike Mexico, have depleted its current account. Argentina has pursued a policy of increasing export taxes and taking steps which significantly weaken property rights over investment, hence the evident decline in its export capacity.

The Mexican government categorically rejects the arguments put forward in the said Decree, which violate the commercial legal framework of the Latin American Integration Association (Asociación Latinoamericana de Integración or ALADI) and the basic principles of international law. 

Mexico will, therefore, apply all the legal means available within ALADI to challenge Argentina's unilateral action, through the dispute resolution mechanism signed with Argentina. Mexico will also contest the application of other recurrent protectionist practices which restrict Mexican exports and breach international regulations, with the World Trade Organization. 

Furthermore, Mexico is exploring the possibility of adopting measures or actions to compensate for the damage incurred as a result of Argentina's suspension of the preferential tariff treatment. 

Argentina justifies its decision by claiming to be affected by the Mexico-Brazil bilateral agreement on the ECA 55, of March 19 this year. Nevertheless, the negotiation, registration and notification procedures are effected under the auspices of ALADI, in accordance with the agreement and with international practice. Therefore, the amendment protocol between Mexico and Brazil fully complies with ALADI regulations. In addition, the protocol with Brazil imposes no additional burdens and grants no additional concessions to other MERCOSUR members due to its bilateral nature.

The Mexican government expresses its deep concern about the adoption of protectionist practices, such as those applied by Argentina, which not only affect trade between the two nations, but cause serious damage to the regional integration process by erasing the progress achieved thus far in trade liberalization.

The Mexican government reiterates its support for the domestic and export industry and will defend the breach of trade agreements and treaties to which it is party to the very end.

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