Request for Bilateral Negotiations
On a Japan-Mexico Economic Partnership Agreement

1. Bilateral negotiations on a Japan-Mexico economic partnership agreement began in November 2002. Such negotiations are now under way in earnest, as indicated by the third round of senior-level negotiations that took place in Mexico in May 2003.

2. Mexico has concluded free trade agreements with more than 30 countries. Since Japan has not concluded such an agreement with Mexico, Japanese companies must pay tariffs averaging 16 percent, and they are placed in an uncompetitive position relative to European and U.S. companies regarding government procurements and investment. This situation is causing real losses for Japanese companies. Annual losses resulting from the lack of an FTA is estimated at 400 billion Japanese yen (Japan-Mexico Joint Study Group on the Strengthening of Bilateral Economic Relations Final Report), a huge amount approaching the 490 billion Japanese yen in annual exports from Japan to Mexico (both figures for 1999).

3. In the evaluation of bids for government procurements, Mexican companies enjoy a 10 percent discount over companies from the non-FTA nations, putting Japanese companies at a disadvantage. Furthermore, on May 1, President Vicente Fox announced an economic revitalization program, which included a policy that international bids for government procurements be limited to Mexican companies and companies from FTA nations. As a result, Japanese companies are unable to participate in international bids. Japanese companies have already been excluded from the initial bid package for the large modernization project for PEMEX's Minatitlan refinery, a project anticipated to total 1.6 billion US dollars in value. It is also thought that Japanese companies will be excluded from subsequent bid packages. Concern is growing that this situation will spread to include other projects. Japanese companies are facing the difficult condition of forfeiting major business opportunities in Mexico.

4. To resolve this situation as soon as possible, the early conclusion of a Japan-Mexico economic partnership agreement is indispensable. This will become the first full-fledged one for Japan as it will involve sensitive sectors requiring difficult negotiations, unlike the agreement concluded with Singapore. In view of trade negotiations with Asian nations in the near future, an economic partnership agreement with Mexico will become a standard model for these negotiations. President Vicente Fox is scheduled to visit Japan in October. We earnestly hope that bilateral negotiations will proceed so an economic partnership agreement can be reached between Japan and Mexico at that time.

The Cases That Japanese Companies Can Not Participate
In the Mexican Government Procurement

1. PEMEX

Project Title:

The Modernization of Minatitlan Refinery

Estimated Amount:

1.6 Billion US Dollars in total for six package tenders

Descriptions:

The first tender on May 29 was announced only for the Mexican Companies and the Companies of the FTA countries. Eventually, the Japanese Companies were excluded. The Japanese Companies will not be able to participate in the remaining package tenders in the future.

2. IMSS

Project Title:

The Procurement of the Monitors and Equipment for Resuscitation

Estimated Amount:

Around 100 Million Japanese Yen

Descriptions:

The tender in May was announced only for the Mexican Companies and the Companies of the FTA countries, and the Japanese Companies were excluded.

3. IMSS

Project Title:

The Procurement of Medical Equipment, such as the Medical Imaging Systems

Estimated Amount:

Around 1 Million US Dollars

Descriptions:

The tender in May was announced only for the Mexican Companies and the Companies of the FTA countries, and the Japanese Companies were excluded. The Japanese Companies will not be able to participate in the tender in June (The estimated amount will be 3 million US dollars).

4. IMSS

Project Title:

The Procurement of the Blood Collecting Bags and Blood Products Bags for the Blood Center

Estimated Amount:

Around 150 Thousand US Dollars

Descriptions:

The tender in May, originally an international open tender, was announced only for the Companies of the FTA countries, and the Japanese Companies were excluded.

5. IMSS

Project Title:

The Procurement of the Blood Bags and other Consumables for the Blood Center

Estimated Amount:

Around 50 Thousand US Dollars

Descriptions:

The tender in May was announced only for the Companies of the FTA countries, and the Japanese Companies were excluded.

6. PEMEX

Project Title:

The Procurement of the Marine Hoses

Estimated Amount:

Around 2 Million US Dollars

Descriptions:

The tender in June will be announced only for the Companies of the FTA countries, and the Japanese Companies were excluded. The Japanese Companies will not be able to participate in the tenders in the future (The estimated amount will be 15.5 million US dollars).

7. PEMEX

Project Title:

The Petrochemical Project (The Phoenix Plan)

Estimated Amount:

Around 2.8 Billion US Dollars

Descriptions:

The tender will be announced by the end of 2003, and only the Mexican Companies and the Companies of the FTA countries will participate in it.

8. PEMEX

Project Title:

The Non-Associated Natural Gas Project (MSC)

Estimated Amount:

Around 1.3 Billion US Dollars

Descriptions:

The tender will be announced by the end of 2003, and only the Mexican Companies and the Companies of the FTA countries will participate in it.