Mexican unilateral trade liberalization in the middle of a global economic crisis

Abstract

Facing the global economic crisis, in October 2008 the Mexican government announced the ‘Programme to Promote Growth and Employment’ consisting of five steps. One of them resulted in an ambitious unilateral effort to reduce most-favoured nation tariffs. The unilateral liberalization decision emerged as a measure to encourage growth, at a time of global economic crisis. This policy is based on the wide margin of action that the government of Mexico has in improving its foreign trade regulation. This paper reviews the logic of the implementation of tariff dismantling by a developing economy such as Mexico. It analyses the Mexican trade liberalization phases and explains the negative impact on the Mexican economy’s competitiveness of high import tariffs with non-preferential trade partners. Finally, this paper presents preliminary estimates of the impact that the phase-out of Mexican tariffs had on imports during its first year of implementation.