Doing business in Baja and or the rest of Mexico one may find
themselves interested in NAFTA.
What is NAFTA?
The North American Free Trade Agreement was signed in
to effect in January of 1994. It is an agreement between Canada,
United States of America and the United States of Mexico in hopes of
increasing trade by reducing trade restrictions. The agreement
established the world’s largest free trade area at the time. Following
is an excerpt of the NAFTA document with the preamble discussing the
intentions of the three countries.
The Government of Canada, the Government of the United Mexican States
and the Government of the United States of America resolved to:
STRENGTHEN the special bonds of friendship and cooperation among their
nations;
CONTRIBUTE to the harmonious development and expansion of world trade
and provide a catalyst to broader international cooperation;
More Below...
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 2. The
Parties shall interpret and apply the provisions of this Agreement in
the light of its objectives set out in paragraph 1 and in accordance
with applicable rules of international law.
For the rest of the document you may find it here:
http://www-tech.mit.edu/Bulletins/nafta.html on one of the
Massachusetts Institute of Technology servers. The plan as described
in the whole of the document was to reduce all trade barriers between
the there countries by the year 2005. How has it affected trade and
investment in Mexico?
I myself having done business before this agreement came to be and
after, have noticed both problems and
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CREATE an expanded and secure market for the goods and services
produced in their territories;
REDUCE distortions to trade;
ESTABLISH clear and mutually advantageous rules governing their trade;
ENSURE a predictable commercial framework for business planning and
investment;
BUILD on their respective rights and obligations under the General
Agreement on Tariffs and Trade and other multilateral and bilateral
instruments of cooperation;
ENHANCE the competitiveness of their firms in global markets;
FOSTER creativity and innovation, and promote trade in goods and
services that are the subject of intellectual property rights;
CREATE new employment opportunities and improve working conditions and
living standards in their respective territories;
UNDERTAKE each of the preceding in a manner consistent with
environmental protection and conservation;
PRESERVE their flexibility to safeguard the public welfare;
PROMOTE sustainable development;
STRENGTHEN the development and enforcement of environmental laws and
regulations; and
PROTECT, enhance and enforce basic workers' rights;
The objectives of NAFTA are as explained in this excerpt from the
NAFTA document that follows:
Article 102: Objectives
1. The objectives of this Agreement, as elaborated more specifically
through its principles and rules, including national treatment,
most-favored-nation treatment and transparency are to:
(a) eliminate barriers to trade in, and facilitate the cross border
movement of, goods and services between the territories of the
Parties;
(b) promote conditions of fair competition in the free trade area;
(c) increase substantially investment opportunities in their
territories;
(d) provide adequate and effective protection and enforcement of
intellectual property rights in each
Party's territory;
(e) create effective procedures for the implementation and application
of this Agreement, and for its joint administration and the resolution
of disputes; and
(f) establish a framework for further trilateral, regional and
multilateral cooperation to expand and enhance the benefits of this
Agreement.
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solutions created by it. Years ago when it first went into effect it
seemed importing to Mexico became much more difficult. This, many
felt, was caused by the Mexican Aduana (customs) scrutinize more
closely the shipments than they had before. It was like they were
interested in getting every last import duty they could before the
agreement took the duties away. Today this is not always the case, but
I still have heard of some recent cases as we come to the end of this
implementation period that seem to be similar motivated from the same
fears.
I recently had a very difficult time importing goods for clients that
were routed through to the mainland on their way to Baja. This has
always added problems through the years because Baja and Mainland
Mexico still seem to be two separate worlds. We used both major US
carriers Fed-Ex and DHL which in Mexico use a routing system that
sends your goods to clear customs (Aduana) in Guadalajara which today
seems to still not have received a copy of NAFTA. However once the
goods were returned to the states and shipped directly into Baja by
other carriers the fees were reasonable and there were no additional
requirements to process our shipments. This was just for a small
amount of inventory and equipment of a value of about $15,000.00usd.
While I have seen little trouble importing over the California-Mexico
through customs brokers at the border directly to Baja, it does not
seem to have changed much on the mainland. I’m also aware that for
larger companies I have worked with, that they seem to have less
duties and fees and the process has been sped up as long as the goods
come over the California-Mexico border.
While I have not had that many clients or contacts with people trying
to export from small to medium businesses from Baja I do know of one
client that gave up in trying to export his goods due to not being
able to get the proper permissions from the Mexican government. After
many discussions and payment to several lawyers the solution was never
found even though he was repeatedly told he should be able to export
his goods. I have tried to help a few others with this problem of
exporting goods but generally due to the paperwork, costs, difficulty
in transportation, lack of insurance and banking, most do not find it
worth it to set up to do regular exports.
There is no doubt that there has been greater investment into Mexico
from Canada and the United States of America since the agreement
began. We have many more American companies such as Home Depot, Office
Depot, Costco and real estate investors and developers from all over
the world. Whether this is actually from the benefits afforded by the
agreement or its greater protection for those trading it definitely
has had some effect. However there still are many different feelings
about the success of this agreement. Whether the objectives are really
being met and is it working in general to increase trade. There is no
doubt to the latter as there has been a tripling of trade between
these countries since NAFTA’s inception. The question still arises as
to whether this increased trade has equally benefited those countries
involved? I would love to hear from anyone who has more experiences,
or comments, concerning the resultant changes caused by NAFTA.
James Glover
Click here to contact James Glover
Click here to Visit their website
Or Call:
Baja
California Real Estate & Consulting
Cabo San Lucas • Las
Vegas, NV
(702)-953-8756 or
Cabo San Lucas
624-143-4327
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