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Effect of the North American Free Trade Agreement on Trade Between the United States and Mexico in the Energy and Petrochemical Industries

Michael E. Arruda, Proceedings of 39th Annual Rocky Mountain Mineral Law Institute (1993)

The governments of the United States, Mexico, and Canada reached consensus on the long-awaited and often controversial North American Free Trade Agreement (NAFTA or the Agreement) on August 12, 1992. The text of the Agreement and its associated schedules, comprising more than 2,000 pages, was made public in early September. Before becoming effective, the Agreement must be ratified or approved by each of the signatory countries. NAFTA becomes effective on January 1, 1994, assuming it has been appropriately approved by that date.

The Agreement establishes a free trade area between the three signatory countries, affecting everything from textiles to oil field equipment and addressing the entire range of trade issues from tariffs to procurement procedures. Its primary objectives are to break down barriers to trade through the elimination of tariffs on goods originating within the boundaries of the free trade area, to promote fair competition, and to increase investment opportunities across the signatories' borders. These goals are to be achieved through the principles of national treatment, most-favored nation treatment and procedural 'transparency'.2

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This paper reviews the potential impact of NAFTA on U.S.-based companies pursuing new opportunities in the Mexican energy sector, focusing primarily on the petroleum industry.3

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