Edited By Gerhard Niedrist
The EU-Mexico Agreement: What Has Happened to Trade and Capital Flows since 2000?
René Cabral* & Daniel Villarreal Cabello†
It is well documented that Mexico embarked in an ambitious openness campaign in 1986 when it became a member of the World Trade Organization (WTO; previously, the General Agreement on Tariffs and Trade (GATT)). This campaign took a new dimension in 1994 when Mexico became a partner of the United States and Canada in the North American Free Trade Agreement (NAFTA). The aggregate positive effects of NAFTA were many, with not just trade rising considerably but also, with total foreign direct investment (FDI) inflows rising from figures below 4.3 billion in 1993 to nearly 30 billion by 2001. A number of studies have analyzed the direct and indirect economic effects of NAFTA from different perspective (for assessment of NAFTA’s effects on trade and investment see, for instance, Ramirez (2006), Lederman (2005), Montenegro and Soloaga (2006) and Nica et al. (2006), among others).1 Most of them find significant positive effects from the agreement for Mexico.
A few years later after the enactment of NAFTA, Mexico took another important and definitive step in its openness campaign by negotiating a broader cooperation agreement with the European Union (EU). The so called ‘EU-Mexico Economic Partnership, Political Coordination and Cooperation Agreement’ was signed in 1997 and entered into force in 2000.2 The three pillars of this agreement are political dialogue, trade and cooperation. In our view, for Mexico and the EU, economic diversification and strengthening of its presence in Latin America are, respectively, the...
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