NAFTA has progressively eliminated tariffs and non-tariff barriers to trade in goods; improved access for services trade; established rules for investment; strengthened protection of intellectual property rights; and created a dispute settlement mechanism. 

      Prior to NAFTA, the average tariff facing U.S. goods entering Mexico was 10 percent; the average tariff on Mexican goods entering the United States was 2 percent.  On Jan. 1, 2003, the tariff for most agricultural goods was reduced to zero with exceptions for sugar, corn, non-fat dry milk, and beans (due in 2008).

      Mexico has the largest network of free trade agreements in the world. Including the most recent trade agreement negotiated with Japan, Mexico has FTAs with 33 countries including the European Union, European Free Trade Area, Israel, and 10 countries in Latin America.  The agreement with the European Union was modeled after NAFTA and provides EU goods with rough NAFTA parity from 2003 onwards.  Mexico is holding free trade discussions with additional Latin American and trading partners. The significance of this for U.S. exporters is that many of its strongest international trade competitors enjoy duty free access to the Mexican market equivalent to that provided by NAFTA – or if they do not today, they might in the near future.

            Mexico also has implemented what are called Sectoral Promotion Programs (PROSEC), which reduce MFN tariffs to 0 or 5 percent on a wide range of important inputs needed by Mexico’s export manufacturing sector.  This program includes some 20 different industry sectors and affects 16,000 tariff line items.  Mexican companies must

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