Preamble

The Government of the State of Israel and the Government of the United Mexico Mexican States,

RESOLVED to:

STRENGHTEN their economic relations and to promote economic development;

CREATE an expanded and secure market for the goods produced in their territories;

ESTABLISH clear and mutually advantageous rules governing their trade;

CREATE a framework for promoting investment and cooperation;

FOSTER the development of their trade with due regard to fair conditions of competition;

RECALL the mutual interest of the Government of the State of Israel and the Government of the United Mexican States Mexico in reinforcement of the multilateral trading system as reflected in the WTO;

ESTABLISH a free trade area between the two countries through the removal of trade barriers;

CREATE new employment opportunities and improve working conditions and living standards in their respective territories;

DECLARING their readiness to explore other possibilities for extending their economic relations to other fields not covered by this Agreement;

HAVE AGREED as follows:

Chapter I

Initial Provisions

Article 1-01: General Definitions

For purposes of this Agreement, unless otherwise specified:

customs duty: includes any duty and charge of any kind imposed in connection with the importation of a good, including any form of surtax or surcharge in connection with such importation, but does not include any:

(a) charge equivalent to an internal tax imposed consistently with Article III:2 of GATT 1994;

(b) antidumping or countervailing duty or levy;

(c) safeguard duty or levy; and

(d) fee or other charge provided that it is commensurate with the cost of services rendered;

GATT 1994 means the General Agreement of Tariffs and Trade of 1994, which is part of the WTO Agreement;

good means a domestic good as this is understood in GATT 1994 or such a good as the Parties may agree, and includes an originating good of that Party;

Harmonized System means the Harmonized Commodity Description and Coding System, and its General Rules of Interpretation, Section notes and Chapter notes, as adopted and implemented by the Parties in their respective tariff laws;

measure includes any law, regulation, procedure, requirement or practice;

originating goods means good or material that qualifies as originating under the provisions of Chapter III (Rules of Origin); and

WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, including GATT 1994.

Article 1-02: Establishment of the Free Trade Area

The Parties to this Agreement, consistent with Article XXIV of GATT 1994, hereby establish a free trade area.

Article 1-03: 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 movement of goods between the territories of the Parties;

(b) promote conditions of fair competition in the free trade area;

(c) increase substantially investment opportunities in the territories of the Parties;

(d) create effective procedures for the implementation, application and compliance with this Agreement, and its joint administration; and

(e) establish a framework for further bilateral and multilateral cooperation to expand and enhance the benefits of this Agreement.

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.

3. Each Party shall administer in a consistent, impartial and reasonable manner all laws, regulations, decisions and rulings affecting matters covered by this Agreement.

Article 1-04: Relation to Other Agreements

1. The Parties affirm their rights and obligations with respect to each other in accordance with the WTO Agreement, including GATT 1994, and its successor agreements and other agreements to which both Parties are party.

2. In the event of any inconsistency between this Agreement and such other agreements, this Agreement shall prevail to the extent of the inconsistency, except as otherwise provided in this Agreement.

Article 1-05: Extent of Obligations

Each Party shall ensure that all necessary measures are taken in order to give effect to the provisions of this Agreement, including their observance by states and municipal governments and authorities within its territory.

Chapter II

Trade in Goods

Article 2-01: Scope and Coverage

This Chapter applies to trade in goods of a Party, except as otherwise provided in this Agreement.

Article 2-02: National Treatment

1. Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994, including its interpretative notes, and to this end Article III of GATT 1994 and its interpretative notes, or any equivalent provision of a successor agreement to which both Parties are party, are incorporated into and made part of this Agreement.

2. Paragraph 1 does not apply to the measures set out in Annex 2-02 (Exceptions to Article 2-02 and Article 2-04).

Article 2-03: Customs Duties and Tariff Elimination

1. The basic customs duty for the successive reductions set out in this Agreement shall be the lowest most-favored-nation rate effectively applied by each Party in the period starting on July 1 1998 until February 1, 2000. If, after this date, any tariff reduction is applied on a most-favored-nation basis, such reduced customs duties shall replace the basic customs duties as from the date when such reduction is effectively applied. To this end, each Party shall cooperate to inform the other Party of basic customs duties and preferential rates in force.

2. Except as otherwise provided in this Agreement, no Party may increase any existing customs duty, or adopt any customs duty, on an originating good of the other Party referred to in paragraphs 3 or 4.

3. Unless specified in this paragraph or elsewhere, each Party shall eliminate its customs duties on originating goods classified in Chapters 25 to 98 of the Harmonized System in four equal stages, the first one taking place on the entry into force of this Agreement, and the other three on January 1 of each successive year, so that these customs duties are completely eliminated by January 1, 2003:

(i) each Party shall eliminate its customs duties on goods classified in the Harmonized System headings or subheadings listed in Annex 2-03.3(a) (Products for Immediate Tariff Elimination) on the date of entry into force of this Agreement;

(ii) each Party shall eliminate its customs duties on goods classified in the Harmonized System headings or subheadings listed in Annex 2-03.3(b) (Products with Tariff Elimination Schedule for 2005) in six equal stages, the first one taking place on the date of entry into force of this Agreement, and the other five on January 1 of each Article 4-02: Certificate and Declaration of Origin successive year, so that these customs duties are completely eliminated by January 1, 2005;

(iii) for the purpose of elimination of duties in accordance with this Article, rates shall be rounded down, at least to the nearest tenth of a percentage point or, if the rate of duty is expressed in monetary units, at least to the nearest .01 of the official monetary unit of the Party; and

(iv) goods classified in the Harmonized System headings 3502 and 3505 shall be treated in accordance with paragraph 4.

4. Except as otherwise provided in this Agreement, each Party shall eliminate or reduce duties on originating goods covered by Chapters 1 to 24 of the Harmonized System and by paragraph 3 (d) and listed in Annexes 2-03.4(a) (Concessions made by Israel to Mexico ) and 2-03.4(b) (Concessions made by Mexico to Israel) in accordance with the timetables and the conditions set out in those Annexes.

5. Upon request of either Party, the Parties shall consult to consider accelerating the elimination or reduction of customs duties set out in the Annexes referred to in paragraphs 3 and 4. The Parties shall examine periodically the possibilities of granting each other further concessions in trade in agricultural goods.

6. In accordance with paragraph 5, an agreement between the Parties to accelerate the elimination or the reduction of a customs duty on a good or the inclusion of a good in the Tariff Elimination Schedule or in Annexes 2-03.4(a) (Concessions made by Israel to Mexico) and (b) (Concessions made by Mexico to Israel), shall supersede any duty rate or staging category determined pursuant to their schedules for such good when approved by the Commission.

7. Upon entry into force of this Agreement, the Parties shall eliminate any customs users fee which is applied on originating goods on an ad valorem basis.

8. The preferential rates of duty set out in paragraph 3 shall apply to certain goods classified in Chapters 50 through 63 of the Harmonized System, within the Tariff Preferential Quotas set out in Annex 2-03 (8) (Tariff Preferential Quotas for certain Goods classified in Chapter 50 through 63 of the Harmonized System), provided that these goods comply with the provisions of Article 3-03(3).

Article 2-04: Import and Export Restrictions

1. Except as otherwise provided in this Agreement, no Party may adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of GATT 1994, including its interpretative notes. To this end, Article XI of GATT 1994 and its interpretative notes, or any equivalent provision of a successor agreement to which the Parties are party, are incorporated into and made a part of this Agreement.

2. The Parties understand that the rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.

3. In the event that a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non-Party of a good, nothing in this Agreement shall be construed to prevent the Party from:

(i) limiting or prohibiting the importation from the territory of the other Party of such good of that non-Party; or

(ii) requiring as a condition of export of such good of the Party to the territory of the other Party, that the good not be re-exported to the non-Party, directly or indirectly, without being consumed in the territory of the other Party.

4. In the event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, on request of either Party, shall consult with a view to avoiding undue interference or distortion of pricing, marketing and distribution arrangements in a Party.

5. Paragraphs 1 through 4 shall not apply to the measures set out in Annex 2-02 (Exceptions to Article 2-02 and 2-04).

Article 2-05: Appellations of Origin or Geographical Indications

Annex 2-05 applies to appellations of origin or geographical indications.

Article 2-06: Committee on Trade

1. The Parties hereby establish a Committee on Trade, comprising representatives of each Party. The Committee shall meet on a date and with an agenda agreed in advance by the Parties. The office of chairman of the Committee shall be held alternatively by each Party. The Committee shall report to the Commission.

2. Upon request of either Party, the Committee shall convene in order to consider and find appropriate solution to any matter concerning trade in goods, including:

(i) sanitary and phytosanitary measures;

(ii) standards-related measures;

(iii) antidumping and countervailing duties measures;

(iv) government procurement;

(v) intellectual property rights; and

(f) any other matter referred to it by the Commission.

3. Additionally, the Committee may, as if it considers appropriate, establish and determine the scope and mandate of any ad hoc group or subcommittee to deal with any specific matter.

Annex 2-02

Exceptions to Article 2-02 and Article 2-04

Measures of Israel

1. Restrictions on imports of waste and scrap of plastic, rubber, paper, metal, and glass that are maintained for ecological purposes.

2. Restrictions on imports of meat not approved by the Chief Rabbinate.

3. Restrictions on the import of used clothing and made-up textile of second quality.

Measures of Mexico

Exceptions to Article 2-02

Notwithstanding article 2-02, until January 1, 2004, Mexico may maintain the provisions of the Decree for Development and Modernization of the Automotive Industry (“Decreto para el Fomento y Modernización de la Industria Automotriz”), December 11, 1989, and its amendments of May 31, 1995.

Exceptions to Article 2-04

1. For only those goods listed below, Mexico may restrict the granting of import and export licenses for the sole purpose of reserving foreign trade in these goods to itself.

(For purposes of reference only, descriptions provided next to the corresponding item)

Item	Description
2707.50	Other aromatic hydrocarbon mixtures of which 65 percent or more by volume (including losses) distills at 250° C by the ASTM D 86 method.
2707.99	Rubber extended oils, solvent naphtha and carbon black feedstocks only.
27.09	Petroleum oils and oils obtained from bituminous minerals, crude.
27.10	Aviation gasoline and motor fuel blending stocks (except aviation gasoline) and reformates when used as motor fuel blending stocks; kerosene; gas oil and diesel oil; petroleum ether; fuel oil; paraffinic oils other than for lubricating purposes; pentanes; carbon black feedstocks; hexanes; heptanes and naphthas.
27.11	Petroleum gases and other gaseous hydrocarbons other than: ethylene, propylene, butylene, and butadiene, in purities over 50 percent.
2712.90	Only paraffin wax containing by weight more than 0.75 percent of oil, in bulk (Mexico classifies these goods under HS 2712.90.02) and only when imported to be used for further refining.
2713.11	Petroleum coke not calcined.
2713.20	Petroleum bitumen (except when used for road surfacing purposes under HS 2713.20.01).
2713.90	Other residues of petroleum oils or of oils obtained from bituminous minerals.
27.14	Bitumen and asphalt natural; bituminous or oil shale and tar sands, asphaltites and asphaltic rocks (except when used for road surfacing purposes under HS 2714.90.01).
2901.10	Ethane, butanes, pentanes, hexanes, and heptanes only.

2. Mexico may maintain restrictions in effect on the date of entry into force of this Agreement on the importation of used products classified under heading 63.09 of the Harmonized System.

3. Mexico may adopt or maintain prohibitions or restrictions to the importation of used goods provided for in the items set out below:

(For purposes of references only, descriptions are provided next to the corresponding item)

Item	Description
8407.34	Reciprocating piston engines of a kind used for the propulsion of vehicles of chapter 87, of a cylinder capacity exceeding 1,000 cc.
8701.20	Road tractors for semi-trailers.
87.02	Motor vehicles for the transport of ten or more persons.
87.03	Motor cars and other motor vehicles principally designed for the transport of persons, (other than those of heading 8702), including station wagons and racing cars.
87.04	Motor vehicles for the transport of goods.
8705.20	Mobile drilling derricks.
8705.40	Concrete mixers.
87.06	Chassis fitted with engines, for the motor vehicles of headings 87.01 to 87.05.

4. Until January 1, 2004, Mexico may adopt or maintain prohibitions or restrictions to the importation of used goods provided for in the items set out below.

8426.91.02	8471.60.06	8471.90.99	87	8716.20.99
			08.
			70.
			02
8426.91.03	8471.60.07	8474.20.02	87	8716.31.01
			08.
			70.
			03
8427.20.01	8471.60.08	8474.20.0	8708.70.0	8716.31.
		5	7	02
8429.20.01	8471.60.09	8474.20.0	8708.70.99	8716.31.99
		6
8452.29.04	8471.60.10	8504.40.12	8711.10.01	8716.39.01
8471.10.01	8471.60.11	8701.9	8711.20.0	8716.39.
		0.02	1	02
8471.3	8471.60.12	87	8711.3	8716.39.04
0.01		02.	0.01
		90.
		01
847	8471.60.13	87	87	8716.39.05
1.41		03.	11.
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8	8471.70.0	87	8712.00.04	8716.39.07
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8	8471.80.01	8705.20.99	8712.00.99	8716.39.99
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8471.60.04	8471.80.03	8705.90.99	8716.20.0	8716.80.99
			1
8471.60.05	8471.80.9	87	8716.2
	9	08.	0.03
		70.
		01

5. Until December 31, 2003, Mexico may maintain prohibitions or restrictions to the importation of goods provided for in the items set out below:

(For purposes of references only, descriptions are provided next to the corresponding item)

Item	Description
8407.34	Reciprocating piston engines of a kind used for the propulsion of vehicles of chapter 87, of a cylinder capacity exceeding 1,000 cc.
8701.20	Road tractors for semi-trailers.
87.02	Motor vehicles for the transport of ten or more persons.
87.03	Motor cars and other motor vehicles principally designed for the transport of persons, (other than those of heading 8702), including station wagons and racing cars.
87.04	Motor vehicles for the transport of goods.
8705.20	Mobile drilling derricks.
8705.40	Concrete mixers.
87.06	Chassis fitted with engines, for the motor vehicles of headings 87.01 to 87.05.

Annex 2-03.3(a)

Products for Immediate Tariff Elimination (1) (2) (3)