Title:Annex 300-A -- Trade and Investment in the Automotive Sector
Author: White House
Document-Date: 29 Sept 1993
Content-Type: text/plain; CHARSET=US-ASCII
Content-Length:61047








                                      Annex 300-A

                     Trade and Investment in the Automotive Sector


            1.   Each Party shall accord to all existing producers of
            vehicles in its territory treatment no less favorable than it
            accords to any new producer of vehicles in its territory under
            the measures referred to in this Annex, except that this
            obligation shall not be construed to apply to any differences
            in treatment specifically provided for in the Appendices to
            this Annex. 

            2.   The Parties shall review, no later than December 31, 2003,
            the status of the North American automotive sector and the
            effectiveness of the measures referred to in this Annex to
            determine actions that could be taken to strengthen the
            integration and global competitiveness of the sector.

            3.   Appendices 300-A.1, 300-A.2 and 300-A.3 apply to the
            Parties specified therein respecting trade and investment in
            the automotive sector.

            4.   For purposes of this Annex, unless otherwise specified in
            the Appendices:

            existing producer of vehicles means a producer that was
            producing vehicles in the territory of the relevant Party prior
            to model year 1992; 

            new producer of vehicles means a producer that began producing
            vehicles in the territory of the relevant Party after model
            year 1991; 

            used vehicle means a vehicle that: 

                 (a)  has been sold, leased or loaned;

                 (b)  has been driven for more than 

                      (i)  1,000 kilometers if the vehicle has a gross
                           weight of less than five metric tons, or

                      (ii) 5,000 kilometers if the vehicle has a gross
                           weight of five metric tons or more; or

                 (c)  was manufactured prior to the current year and at
                      least 90 days have elapsed since the date of
                      manufacture; and

            vehicle means an automobile, a truck, a bus or a special
            purpose motor vehicle, not including a motorcycle.


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                                   Appendix 300-A.1 

                                         Canada

            Existing Measures

            1.   Canada and the United States may maintain the Agreement
            Concerning Automotive Products between the Government of Canada
            and the Government of the United States of America, signed at
            Johnson City, Texas, January 16, 1965 and entered into force on
            September 16, 1966, in accordance with Article 1001, and
            Article 1002(1) and (4) (as they refer to Annex 1002.1, Part
            One), Article 1005(1) and (3), and Annex 1002.1, Part One
            (Waivers of Customs Duties) of the Canada - United States Free
            Trade Agreement, which provisions are hereby incorporated into
            and made a part of this Agreement for such purpose, except that
            for purposes of Article 1005(1) of that agreement, Chapter Four
            (Rules of Origin) of this Agreement shall be applied in the
            place of Chapter Three of the Canada - United States Free Trade
            Agreement.

            2.   Canada may maintain the measures referred to in Article
            1002(1) and (4) (as they refer to Annex 1002.1, Parts Two and
            Three), Article 1002(2) and (3), Article 1003 and Parts Two
            (Export-Based Waivers of Customs Duties) and Three (Production-
            Based Waivers of Customs Duties) of Annex 1002.1 of the
            Canada - United States Free Trade Agreement.  Canada shall
            eliminate those measures in accordance with the terms set out
            in that agreement.

            3.   For greater certainty, the differences in treatment
            pursuant to paragraphs 1 and 2 shall not be considered to be
            inconsistent with Article 1103 (Investment - Most-Favored-
            Nation Treatment).

            Used Vehicles

            4.   Canada may adopt or maintain prohibitions or restrictions
            on imports of used vehicles from the territory of Mexico,
            except as follows:

                 (a)  beginning January 1, 2009, Canada may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territory of Mexico of originating used vehicles
                      that are at least 10 years old;

                 (b)  beginning January 1, 2011, Canada may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territory of Mexico of originating used vehicles


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                      that are at least eight years old;

                 (c)  beginning January 1, 2013, Canada may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territory of Mexico of originating used vehicles
                      that are at least six years old;

                 (d)  beginning January 1, 2015, Canada may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territory of Mexico of originating used vehicles
                      that are at least four years old;

                 (e)  beginning January 1, 2017, Canada may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territory of Mexico of originating used vehicles
                      that are at least two years old; and

                 (f)  beginning January 1, 2019, Canada may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territory of Mexico of originating used vehicles.

            5.   Paragraph 4 shall not be construed to allow Canada to
            derogate from its obligations in respect of land transportation
            services under Chapter Twelve (Cross-Border Trade in Services),
            including its Schedule to Annex I.


























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                                    Appendix 300-A.2

                                         Mexico

            Auto Decree and Auto Decree Implementing Regulations

            1.   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 Modernizaci n
            de la Industria Automotriz"), December 11, 1989, (the "Auto
            Decree") and the Resolution that Establishes Rules for the
            Implementation of the Auto Decree ("Acuerdo que Determina
            Reglas para la Aplicaci n para el Fomento y Modernizaci n de la
            Industria Automotriz"), November 30, 1990, (the "Auto Decree
            Implementing Regulations") that would otherwise be inconsistent
            with this Agreement, subject to the conditions set out in
            paragraphs 2 through 18.  No later than January 1, 2004, Mexico
            shall bring any inconsistent provision of the Auto Decree and
            the Auto Decree Implementing Regulations into conformity with
            the other provisions of this Agreement.

            Autoparts Industry, National Suppliers and Independent
            Maquiladoras

            2.   Mexico may not require that an enterprise attain a level
            of national value added in excess of 20 percent of its total
            sales as one of the conditions to qualify as a national
            supplier or enterprise of the autoparts industry.

            3.   Mexico may require that a national supplier or an
            enterprise of the autoparts industry, in calculating its
            national value added solely for purposes of paragraph 2,
            include customs duties in the value of imports incorporated
            into the autoparts produced by such supplier or enterprise.

            4.   Mexico shall grant national supplier status to an
            independent maquiladora that requests such status and meets the
            requirements for that status set out in the existing Auto
            Decree, as modified by paragraphs 2 and 3.  Mexico shall
            continue to grant to all independent maquiladoras that request
            national supplier status all existing rights and privileges
            accorded to independent maquiladoras under the existing Decree
            for the Promotion and Operation of the Maquiladora Export
            Industry ("Decreto para el Fomento y Operaci n de la Industria
            Maquiladora de Exportaci n"), December 22, 1989 (the
            "Maquiladora Decree"). 





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            National Value Added

            5.   Mexico shall provide that a manufacturer ("empresa de la
            industria terminal") calculate its required national value
            added from suppliers (VANp) as a percentage of:

                 (a)  the manufacturer's reference value as set out in
                      paragraph 8; or

                 (b)  the manufacturer's total national value added (VANt),

            whichever is greater, except that Mexico shall provide that a
            manufacturer beginning production of motor vehicles in Mexico
            after model year 1991 calculate its required national value
            added from suppliers (VANp) as a percentage of its total
            national value added (VANt).

            6.   Mexico may not require that the percentage referred to in
            paragraph 5 be greater than:

                 (a)  34 percent for each of the first five years beginning
                      January 1, 1994;

                 (b)  33 percent for 1999;

                 (c)  32 percent for 2000;

                 (d)  31 percent for 2001;

                 (e)  30 percent for 2002; and

                 (f)  29 percent for 2003.

            7.   Notwithstanding paragraph 6, Mexico shall allow a
            manufacturer that produced motor vehicles in Mexico before
            model year 1992 to use as its percentage referred to in
            paragraph 5 the ratio of actual national value added from
            suppliers (VANp) to total national value added (VANt) that the
            manufacturer attained in model year 1992, for so long as that
            ratio is lower than the applicable percentage specified under
            paragraph 6.  In determining such ratio for model year 1992,
            purchases that the manufacturer made from independent
            maquiladoras that would have been eligible to receive national
            supplier status had paragraphs 2, 3 and 4 of this Appendix been
            in effect at that time, shall be included in the calculation of
            the manufacturer's national value added from suppliers (VANp),
            in the same manner as autoparts from any other national
            supplier or enterprise of the autoparts industry.



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            8.   The annual reference value for a manufacturer ("reference
            value") shall be:

                 (a)  for each of the years 1994 through 1997, the base
                      value for the manufacturer, plus no more than 65
                      percent of the difference between the manufacturer's
                      total sales in Mexico in that year and its base
                      value;

                 (b)  for each of the years 1998 through 2000, the base
                      value for the manufacturer, plus no more than 60
                      percent of the difference between the manufacturer's
                      total sales in Mexico in that year and its base
                      value; and

                 (c)  for each of the years 2001 through 2003, the base
                      value for the manufacturer, plus no more than 50
                      percent of the difference between the manufacturer's
                      total sales in Mexico in that year and its base
                      value.

            9.   Mexico shall provide that where a manufacturer's total
            sales in Mexico in a year are lower than its base value, the
            reference value for the manufacturer for that year shall be
            equal to the manufacturer's total sales in Mexico for the year.

            10.  In the event an abnormal production disruption affects a
            manufacturer's production capability, Mexico shall allow the
            manufacturer to seek a reduction in its reference value before
            the Intersecretariat Automotive Industry Commission,
            established under Chapter V of the Auto Decree.  If the
            Commission finds that the production capability of the
            manufacturer has been impaired by such an abnormal production
            disruption, the Commission shall reduce the manufacturer's
            reference value in an amount commensurate to the event.

            11.  If, on the request of a manufacturer, the Intersecretariat
            Automotive Industry Commission finds that the production
            capability of the manufacturer has been significantly disrupted
            as a result of a major retooling or plant conversion in the
            facilities of the manufacturer, the Commission shall reduce the
            manufacturer's reference value for that year in an amount
            commensurate with the disruption, provided that any reduction
            in that manufacturer's required national value added from
            suppliers (VANp) that may result from the Commission's
            determination to reduce the manufacturer's reference value
            shall be fully made up by the manufacturer over the 24 months
            after the date on which the retooling or plant conversion is
            completed.


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            Trade Balance

            12.  Mexico may not require a manufacturer to include in the
            calculation of its trade balance (S) a percentage of the value
            of direct and indirect imports of autoparts that the
            manufacturer incorporated into that manufacturer's production
            in Mexico for sale in Mexico (VTVd) in the corresponding year,
            greater than the following:

                 (a)  80 percent for 1994; 

                 (b)  77.2 percent for 1995;

                 (c)  74.4 percent for 1996;

                 (d)  71.6 percent for 1997;

                 (e)  68.9 percent for 1998;

                 (f)  66.1 percent for 1999; 

                 (g)  63.3 percent for 2000;

                 (h)  60.5 percent for 2001;

                 (i)  57.7 percent for 2002; and

                 (j)  55.0 percent for 2003.

            13.  Mexico shall provide that, for purposes of determining a
            manufacturer's total national value added (VANt), paragraph 12
            shall not apply to the calculation of the manufacturer's trade
            balance (S).

            14.  Mexico shall allow a manufacturer with a surplus in its
            extended trade balance to divide its extended trade balance by
            the applicable percentages in paragraph 12 to determine the
            total value of new motor vehicles that it may import.

            15.  Mexico shall provide that a manufacturer's adjustment
            factor (Y), included in the calculation of such manufacturer's
            extended trade balance, shall be equal to:

                 (a)  for a manufacturer that produced motor vehicles prior
                      to model year 1992

                      (i)  the greater of the manufacturer's reference
                           value or the manufacturer's total national value
                           added (VANt), minus


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                      (ii) the manufacturer's actual national value added
                           from suppliers (VANp) divided by the appropriate
                           percentage specified under paragraph 6 or 7 as
                           appropriate;

                 (b)  for all other manufacturers

                      (i)  the manufacturer's total national value added
                           (VANt), minus

                      (ii) the manufacturer's actual national value added
                           from suppliers (VANp) divided by the appropriate
                           percentage specified under paragraph 6,

            except that the adjustment factor (Y) shall be zero if the
            amount resulting from subtracting (ii) from (i), under (a) or
            (b), is negative.

            16.  In determining the annual amount that a manufacturer may
            apply to its extended trade balance from unused surpluses
            earned prior to model year 1991, Mexico shall in any year allow
            the manufacturer to elect:

                 (a)  to use the procedures of the existing Auto Decree
                      Implementing Regulations; or

                 (b)  to apply up to the Mexican peso equivalent of US$150
                      million, adjusted annually for cumulative inflation,
                      from the date of entry into force of this Agreement,
                      based on the implicit price deflator for U.S. Gross
                      Domestic Product (GDP) or any successor index
                      published by the Council of Economic Advisers in its
                      "Economic Indicators" (hereinafter "U.S. GDP price
                      deflator").  To adjust the US$150 million ceiling for
                      cumulative inflation up to a certain month of a year
                      following 1994, the $150 million shall be multiplied
                      by the ratio of

                      (i)  the U.S. GDP price deflator current as of the
                           month of that year, to 

                      (ii) the U.S. GDP price deflator current as of the
                           date of entry into force of this Agreement,

                      provided that the price deflators under subparagraphs
                      (i) and (ii) have the same base year. 

                      The resulting adjusted amount shall be rounded to the
                      nearest million dollars.


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            Other Restrictions in the Auto Decree

            17.  Mexico shall eliminate any restriction that limits the
            number of motor vehicles that a manufacturer may import into
            Mexico in relation to the total number of motor vehicles that
            such manufacturer sells in Mexico.

            18.  For greater certainty, the differences in treatment
            required under paragraphs 5, 7 and 15 shall not be considered
            to be inconsistent with Article 1103 (Investment - Most-
            Favored-Nation Treatment).

            Other Restrictions

            19.  For the first 10 years after the date of entry into force
            of this Agreement, Mexico may maintain prohibitions or
            restrictions on the importation of new automotive products
            provided for in existing items 8407.34.99 (gasoline engines of
            more than 1000cm3, except for motorcycles) and 8703.10.99
            (other special vehicles) in the Tariff Schedule of the General
            Import Duty Act ("Tarifa de la Ley del Impuesto General de
            Importaci n"), except that Mexico may not prohibit or restrict
            the importation of automotive products provided for in item
            8407.34.99 by manufacturers that comply with the Auto Decree
            and the Auto Decree Implementing Regulations, as modified by
            this Appendix.

            Autotransportation Decree and Autotransportation Implementing
            Regulations

            20.  Mexico shall eliminate the Mexican Decree for Development
            and Modernization of the Autotransportation Vehicle
            Manufacturing Industry, ("Decreto para el Fomento y
            Modernizaci n de la Industria Manufacturera de Vehiculos de
            Autotransporte"), December 1989, and the Resolution that
            Establishes Rules for the Implementation of the
            Autotransportation Decree ("Acuerdo que Establece Reglas de
            Aplicaci n del Decreto para el Fomento y Modernizaci n de la
            Industria Manufacturera de Veh culos de Autotransporte"),
            November 1990.  Mexico may adopt or maintain any measure
            respecting autotransportation vehicles, autotransportation
            parts or manufacturers of autotransportation vehicles provided
            that the measure is not inconsistent with this Agreement. 

            Importation of Autotransportation Vehicles

            21.  Mexico may adopt or maintain a prohibition or restriction
            on the importation of autotransportation vehicles of another
            Party until January 1, 1999, except with respect to the


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            importation of autotransportation vehicles pursuant to
            paragraphs 22 and 23.

            22.  For each of the years 1994 through 1998, Mexico shall
            allow any manufacturer of autotransportation vehicles to
            import, for each type of autotransportation vehicle, a quantity
            of originating autotransportation vehicles equal to at least 50
            percent of the number of vehicles of such type that the
            manufacturer produced in Mexico in that year. 

            23.  For each of the years 1994 through 1998, Mexico shall
            allow persons other than manufacturers of autotransportation
            vehicles to import, in a quantity to be allocated among such
            persons, originating autotransportation vehicles of each type
            as follows:

                 (a)  for each of the years 1994 and 1995, no less than 15
                      percent of the total number of vehicles of each type
                      of autotransportation vehicle produced in Mexico;

                 (b)  for 1996, no less than 20 percent of the total number
                      of vehicles of each type of autotransportation
                      vehicle produced in Mexico; and

                 (c)  for each of the years 1997 and 1998, no less than 30
                      percent of the total number of vehicles of each type
                      of autotransportation vehicle produced in Mexico.

            Mexico shall allocate such quantity through a
            non-discriminatory auction.

            Used Vehicles

            24.  Mexico may adopt or maintain prohibitions or restrictions
            on imports of used vehicles from the territory of another
            Party, except as follows:

                 (a)  beginning January 1, 2009, Mexico may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territories of Canada or the United States of
                      originating used vehicles that are at least 10 years
                      old;

                 (b)  beginning January 1, 2011, Mexico may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territories of Canada or the United States of
                      originating used vehicles that are at least eight
                      years old;



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                 (c)  beginning January 1, 2013, Mexico may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territories of Canada or the United States of
                      originating used vehicles that are at least six years
                      old;

                 (d)  beginning January 1, 2015, Mexico may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territories of Canada or the United States of
                      originating used vehicles that are at least four
                      years old;

                 (e)  beginning January 1, 2017, Mexico may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territories of Canada or the United States of
                      originating used vehicles that are at least two years
                      old; and

                 (f)  beginning January 1, 2019, Mexico may not adopt or
                      maintain a prohibition or restriction on imports from
                      the territories of Canada or the United States of
                      originating used vehicles.

            25.  (a)  Paragraph 24 shall not apply to the importation on a
                      temporary basis of a used vehicle provided for in
                      item 8705.20.01 (mobile drilling derricks),
                      8705.20.99 (other mobile drilling derricks) or
                      8705.90.01 (street sweepers) of the Tariff Schedule
                      of the General Import Duty Act.  Such importation
                      shall be subject to the conditions set out in
                      paragraph 4(b) of Annex 301.3-B for such time as
                      Mexico may adopt or maintain a prohibition or
                      restriction on the importation of the vehicle under
                      paragraph 24.

                 (b)  Paragraph 24 shall not be construed to allow Mexico
                      to derogate from its obligations in respect of land
                      transportation services under Chapter Twelve (Cross-
                      Border Trade in Services), including its Schedule to
                      Annex I.

            Import Licensing Measures

            26.  Mexico may adopt or maintain import licensing measures to
            the extent necessary to administer restrictions pursuant to:

                 (a)  the Auto Decree and the Auto Decree Implementing
                      Regulations, as modified by this Appendix, on the
                      importation of motor vehicles;


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                 (b)  paragraph 19 of this Appendix on the importation of
                      new automotive products provided for in item
                      8407.34.99 (gasoline engines of more than 1000cm3,
                      except for motorcycles) or 8703.10.99 (other special
                      vehicles) in the Tariff Schedule of the General
                      Import Duty Act;

                 (c)  paragraphs 22 and 23 of this Appendix on the
                      importation of autotransportation vehicles; and

                 (d)  paragraph 24 (a) through (f) of this Appendix on the
                      importation of used vehicles that are motor vehicles
                      or autotransportation vehicles or of other used
                      vehicles provided for in existing items 8702.90.01
                      (trolley buses), 8705.10.01 (mobile cranes),
                      8705.20.99 (other mobile drilling derricks),
                      8705.90.01 (street sweepers) or 8705.90.99 (other
                      special purpose vehicles, nes) in the Tariff Schedule
                      of the General Import Duty Act;

            provided that such measures shall not have trade restrictive
            effects on the importation of such goods additional to those
            due to restrictions imposed in accordance with this Appendix,
            and that a license shall be granted to any person that fulfills
            Mexico's legal requirements for the importation of the goods.

            Definitions

            27.  For purposes of this Appendix:

            abnormal production disruption means a disruption in a
            manufacturer's production capability resulting from a natural
            disaster, fire, explosion or other unforeseen event beyond the
            manufacturer's control;

            automotive products (referred to as "productos automotrices" in
            rule 1, paragraph III of the Auto Decree Implementing
            Regulations) means motor vehicles and autoparts;

            autoparts (referred to as "partes y componentes automotrices"
            in article 2, paragraph X of the Auto Decree) means parts and
            components intended for use in a motor vehicle;

            autotransportation parts means parts and components intended
            for use in an autotransportation vehicle;

            autotransportation vehicle means a vehicle of one of the
            following types:



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                 (a)  a vehicle without a chassis and with an integrated
                      body, intended for the transport of more than 10
                      persons, with a gross vehicle weight of more than
                      8,864 kilograms, provided for in items 8702.10.02,
                      8702.10.03, 8702.90.03, 8702.90.04, 8705.20.01 or
                      8705.40.01 of the Tariff Schedule of the General
                      Import Duty Act;

                 (b)  a vehicle with a chassis, intended for the transport
                      of goods or more than 10 persons, with a gross
                      vehicle weight of more than 8,864 kilograms, provided
                      for in items 8702.10.01, 8702.10.03, 8702.90.02,
                      8702.90.04, 8704.22.99, 8704.23.99, 8704.32.99,
                      8705.20.01, 8705.40.01 or 8706.00.99 of the Tariff
                      Schedule of the General Import Duty Act; or

                 (c)  a vehicle with two or three axles, either with
                      integrated equipment or intended for the transport of
                      goods by hauling a trailer, or semi-trailer, provided
                      for in items 8701.20.01, 8705.20.01, 8705.40.01 or
                      8706.00.99 of the Tariff Schedule of the General
                      Import Duty Act;

            base value means the average for model years 1991 and 1992 of a
            manufacturer's production in Mexico for sale in Mexico (VTVd),
            adjusted annually for cumulative inflation, based on the
            Mexican National Producer Price Index of Vehicles, Autoparts,
            and other Transportation Goods ("Indice Nacional de Precios al
            Productor de veh culos, refacciones y otros materiales de
            transporte"), or any successor index, published by the Bank of
            Mexico ("Banco de Mexico") in its "Economic Indicators"
            ("Indicadores Economicos") (hereinafter "Mexican NPPI").  To
            adjust the base value for cumulative inflation up to 1994 or a
            subsequent year, the average for model years 1991 and 1992 of
            the manufacturer's VTVd shall be multiplied by the ratio of:

                 (a)  the Mexican NPPI for that year, to

                 (b)  the Mexican NPPI for 1992,

            provided that the price indices set out in subparagraphs (a)
            and (b) have the same base year;

            enterprise of the autoparts industry (referred to as "empresa
            de la industria de autopartes" in article 2, paragraph V, and
            articles 6 and 7 of the Auto Decree) means an enterprise
            constituted or organized under the law of, and operating in,
            Mexico that produces autoparts and:



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                 (a)  whose annual invoice value of sales of autoparts to
                      manufacturers, for use as original equipment by the
                      manufacturer in its production of automotive products
                      for sale in Mexico, constitutes more than 60 percent
                      of the enterprise's annual total invoice value of
                      sales, calculating its annual invoice value of sales
                      of autoparts to manufacturers in accordance with rule
                      20 of the Auto Decree Implementing Regulations as of
                      August 12, 1992, or any other measure adopted by
                      Mexico that is no more restrictive than such rule;

                 (b)  complies with the national value added requirements
                      pursuant to paragraphs 2 and 3 of this Appendix; 

                 (c)  complies with the capital structure required under
                      the Law to Promote Mexican Investment and Regulate
                      Foreign Investment ("Ley para Promover la Inversi n
                      Mexicana y Regular la Inversi n Extranjera"), March
                      9, 1973, and the Regulations of the Law to Promote
                      Mexican Investment and to Regulate Foreign Investment
                      ("Reglamento de la Ley para Promover la Invers on
                      Mexicana y Regular la Invers on Extranjera"), May 16,
                      1989, as applied consistently with Mexico's
                      commitments set out in its Schedule to Annex I of
                      Part Five (Investment, Services and Related Matters);
                      and

                 (d)  that, on the fulfillment of the requirements under
                      (a), (b) and (c), is registered with the Ministry of
                      Trade and Industrial Development ("Secretar a de
                      Comercio y Fomento Industrial") ("SECOFI") as an
                      enterprise of the autoparts industry, except that
                      SECOFI may grant registration to an enterprise that
                      complies with subparagraphs (b) and (c) but does not
                      comply with subparagraph (a);

            extended trade balance for a manufacturer is equal to S + T + W
            + 0.3I + SFt - Y, where:

                 (a)  S denotes the manufacturer's trade balance; 

                 (b)  T denotes the transfer of

                      (i)  trade balance surpluses between the manufacturer
                           and other manufacturers, and

                      (ii) foreign exchange to the manufacturer that an
                           enterprise of the autoparts industry has earned
                           from exports of autoparts, excluding the value


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                           of import content in such exports, and excluding
                           foreign exchange that the enterprise has earned
                           from exports of autoparts that were promoted by
                           the manufacturer, 

                      applied in accordance with rule 8 of the Auto Decree
                      Implementing Regulations as of August 12, 1992, or
                      any other measure adopted by Mexico that is no more
                      restrictive than such rule;

                 (c)  W denotes the transfer to the manufacturer of foreign
                      exchange that a maquiladora has earned from the
                      export of automotive products, excluding the value of
                      the import content in such exports, provided that the
                      maquiladora is not a national supplier, and one or
                      more of the following conditions is met 

                      (i)  the manufacturer is, directly or indirectly, a
                           majority shareholder of the maquiladora,

                      (ii) the manufacturer and the maquiladora have a
                           majority shareholder in common, or

                      (iii)     the manufacturer is a promoter of the
                                automotive goods exported by such
                                maquiladora,

                      calculated in accordance with article 9 of the Auto
                      Decree and rule 8 of the Auto Decree Implementing
                      Regulations as of August 12, 1992, or any other
                      measure adopted by Mexico that is no more restrictive
                      than that article or rule; 

                 (d)  I denotes the value of the manufacturer's investments
                      in fixed assets of Mexican origin destined for
                      permanent use in Mexico, excluding machinery and
                      equipment purchased in Mexico but not produced in
                      Mexico, that the manufacturer may transfer to its
                      extended trade balance, applied in accordance with
                      article 11 of the Auto Decree and rule 8 of the Auto
                      Decree Implementing Regulations as of August 12,
                      1992, or any other measure adopted by Mexico that is
                      no more restrictive than the article or rule; 

                 (e)  SFt denotes the manufacturer's trade balance
                      surpluses unused in prior years and transferred to
                      the current year, calculated in accordance with rules
                      17 and 19 of the Auto Decree Implementing Regulations
                      as of August 12, 1992, as modified by paragraph 16 of


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                                                                Annex 300-A
                                                                ___________

                      this Appendix, or any other measure adopted by Mexico
                      that is no more restrictive than such rules; and

                 (f)  Y denotes the adjustment factor calculated in
                      accordance with paragraph 15;

            independent maquiladora means an enterprise registered as an
            export maquiladora enterprise under the existing Maquiladora
            Decree, that has no majority shareholder in common with any
            manufacturer, and in which no manufacturer is directly or
            indirectly a majority shareholder;

            manufacturer (referred to as "empresa de la industria terminal"
            in article 2, paragraph IV, and articles 3, 4 and 5 of the Auto
            Decree) means an enterprise constituted or organized under the
            law of, and operating in, Mexico, that is:

                 (a)  registered with SECOFI; and

                 (b)  engaged in Mexico in the manufacture or final
                      assembly of motor vehicles;

            manufacturer of autotransportation vehicles means an enterprise
            constituted or organized under the law of, and operating in,
            Mexico:

                 (a)  that is registered with SECOFI;

                 (b)  that manufactures autotransportation vehicles in
                      Mexico; and

                 (c)  where the enterprise's

                      (i)  total invoice value of sales of
                           autotransportation vehicles and
                           autotransportation parts that it produces in
                           Mexico, minus

                      (ii) total invoice value of autotransportation parts
                           that the enterprise imports directly, plus the
                           value of the import content of
                           autotransportation parts that it purchases in
                           Mexico,

                      is equal to at least 40 percent of its total invoice
                      value of sales of autotransportation vehicles and
                      autotransportation parts that the enterprise produces
                      in Mexico;



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                                                                Annex 300-A
                                                                ___________

            manufacturer's production in Mexico for sale in Mexico (VTVd)
            means the total invoice value of a manufacturer's sales in
            Mexico of motor vehicles and autoparts it produced in Mexico,
            excluding the manufacturer's sales of imported motor vehicles;

            manufacturer's total sales in Mexico means the manufacturer's
            total invoice value of sales of motor vehicles it produced in
            Mexico for sale in Mexico plus the total invoice value of its
            sales of imported motor vehicles; 

            model year (referred to as "a o-modelo" in article 2, paragraph
            IX of the Auto Decree) means a 12-month period beginning
            November 1;

            motor vehicle (referred to as "veh culos automotores" in
            article 2, paragraph IV of the Auto Decree) means an
            automobile, a compact automobile of popular use, a commercial
            truck, a light duty truck or a medium duty truck, where: 

                 (a)  automobile means a vehicle intended for the transport
                      of up to 10 persons, provided for in items 8703.21
                      through 8703.33, 8703.90.99, 8706.00.01, 8706.00.02
                      or 8706.00.99 of the Tariff Schedule of the General
                      Import Duty Act;

                 (b)  compact automobile of popular use means a vehicle
                      that complies with the characteristics set out in the
                      existing Decree that Establishes Exemptions for
                      Compact Automobiles of Popular Use ("Decreto que
                      Otorga Exenciones a los Autom viles Compactos de
                      Consumo Popular"), August 2, 1989, provided for in
                      items 8703.21 through 8703.33, 8703.90.99,
                      8706.00.01, 8706.00.02 or 8706.00.99 of the Tariff
                      Schedule of the General Import Duty Act;

                 (c)  commercial truck means a vehicle with or without a
                      chassis, intended for the transport of goods or more
                      than 10 persons, with a gross vehicle weight of up to
                      2,727 kilograms provided for in items 8702.10,
                      8702.90.02, 8702.90.03, 8703.21 through 8703.33,
                      8703.90.99, 8704.21.99, 8704.31.99, 8705.20.01,
                      8705.40.01, 8706.00.01, 8706.00.02 or 8706.00.99 of
                      the Tariff Schedule of the General Import Duty Act; 

                 (d)  light duty truck means a vehicle with or without a
                      chassis, intended for the transport of goods or more
                      than 10 persons, with a gross vehicle weight of more
                      than 2,727 but no more than 7,272 kilograms provided
                      for in items 8702.10, 8702.90.02, 8702.90.03,


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                                                                Annex 300-A
                                                                ___________

                      8704.21.99, 8704.22.99, 8704.31.99, 8704.32.99,
                      8705.20.01, 8705.40.01, 8706.00.01, 8706.00.02 or
                      8706.00.99 of the Tariff Schedule of the General
                      Import Duty Act; and

                 (e)  medium duty truck means a vehicle with or without a
                      chassis, intended for the transport of goods or more
                      than 10 persons, with a gross vehicle weight of more
                      than 7,272 but no more than 8,864 kilograms provided
                      for in items 8702.10, 8702.90.02, 8702.90.03,
                      8704.22.99, 8704.32.99, 8705.20.01, 8705.40.01,
                      8706.00.01, 8706.00.02 or 8706.00.99 of the Tariff
                      Schedule of the General Import Duty Act;

            national supplier (referred to as "proveedor nacional" in
            article 2, paragraph VII of the Auto Decree) means an
            enterprise constituted or organized under the law of, and
            operating in, Mexico:

                 (a)  that supplies to manufacturers autoparts classified
                      in categories 26, 40, 41, 42, 43 and 57 of the
                      input-output matrix of the National Institute of
                      Statistics, Geography and Informatics ("Instituto
                      Nacional de Estad stica, Geograf a e Inform tica"),
                      published in 1980; 

                 (b)  that is registered with SECOFI; 

                 (c)  in which no manufacturer, directly or indirectly, is
                      a majority shareholder;

                 (d)  that has no majority shareholders that are also
                      majority shareholders of any manufacturer; and

                 (e)  that complies with the national value added
                      requirements pursuant to paragraphs 2 and 3;

            national value added from suppliers (VANp) (referred to as
            "VANp" in rule 18 of the Auto Decree Implementing Regulations)
            means, for a manufacturer, the sum of:

                 (a)  the national value added contained in the autoparts
                      that the manufacturer purchases from national
                      suppliers and from enterprises of the autoparts
                      industry, excluding purchases of autoparts from such
                      suppliers and enterprises destined for the
                      aftermarket, and

                 (b)  the foreign exchange attributable to the value of


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                                                                Annex 300-A
                                                                ___________

                      exports of autoparts, excluding the value of import
                      content in the exports, produced by national
                      suppliers and enterprises of the autoparts industry,
                      where the export of the autoparts was promoted by the
                      manufacturer,

            calculated in accordance with formula 7 of rule 18 in the Auto
            Decree Implementing Regulations as of August 12, 1992, or any
            other measure adopted by Mexico that is no more restrictive
            than such formula;

            national value added means, for an enterprise of the autoparts
            industry or a national supplier, the total value of sales of
            such enterprise or supplier minus the value of its total
            imports, direct and indirect, excluding those imports
            incorporated in autoparts destined for the aftermarket, as
            modified by paragraphs 2 and 3;

            total national value added (VANt) (referred to as "valor
            agregado nacional de la empresa de la industria terminal" in
            rule 18 of the Auto Decree Implementing Regulations) means, for
            a manufacturer, either:

                 (a)  the sum of the manufacturer's production in Mexico
                      for sale in Mexico (VTVd) plus the manufacturer's
                      trade balance (S), where the trade balance (S) is
                      greater than zero; or

                 (b)  the manufacturer's production in Mexico for sale in
                      Mexico (VTVd), where the manufacturer's trade balance
                      (S) is negative;

            total sales means, for a national supplier or an enterprise of
            the autoparts industry, the sum of:

                 (a)  the invoice value of sales of autoparts by that
                      supplier or enterprise to a manufacturer that are
                      intended for use as original equipment in the motor
                      vehicles or autoparts that the manufacturer produces,
                      excluding autoparts destined for the aftermarket; and

                 (b)  the value of autoparts that the supplier or
                      enterprise exports, either directly or through a
                      manufacturer, less the value of the imported content
                      of such autoparts; and

            trade balance (S) (referred to as "saldo en balanza comercial"
            in rule 9 of the Auto Decree Implementing Regulations), for a
            manufacturer, is equal to X + TP - ID - IP, where:


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                                                                Annex 300-A
                                                                ___________

                 (a)  X denotes the value of the manufacturer's direct
                      exports of motor vehicles and autoparts that it
                      produces, 

                 (b)  TP denotes the foreign exchange attributable to the
                      value of exports of autoparts, excluding the value of
                      import content in the exports, produced by national
                      suppliers and enterprises of the autoparts industry,
                      where the exportation of such autoparts was promoted
                      by the manufacturer,

                 (c)  ID denotes the value of the manufacturer's direct
                      imports, excluding duties and domestic taxes, and
                      whether the imports are for domestic consumption
                      ("definitivas") or for re-export ("temporales"),
                      incorporated in the motor vehicles and autoparts
                      produced by the manufacturer, excluding autoparts
                      destined for the aftermarket, and

                 (d)  IP denotes the value of import content in the
                      autoparts purchased by the manufacturer from an
                      enterprise of the autoparts industry or a national
                      supplier that are incorporated in the motor vehicles
                      and autoparts produced by the manufacturer, excluding
                      the import content of autoparts destined for the
                      aftermarket, calculated in accordance with rules 10,
                      12, 13, 14, and 15 of the Auto Decree Implementing
                      Regulations as of August 12, 1992, or any other
                      measure adopted by Mexico that is no more restrictive
                      than such rules,

            provided that, for purposes of subparagraphs (c) and (d), the
            value of imports for domestic consumption ("definitivas") shall
            be discounted in accordance with paragraph 12.

















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                                                                Annex 300-A
                                                                ___________

                                    Appendix 300-A.3

                     United States - Corporate Average Fuel Economy

            1.   In accordance with the schedule set out in paragraph 2,
            for purposes of the Energy Policy and Conservation Act of 1975,
            42 U.S.C.   6201 et seq. ("the CAFE Act"), the United States
            shall consider an automobile to be domestically manufactured in
            any model year if at least 75 percent of the cost to the
            manufacturer of such automobile is attributable to value added
            in Canada, Mexico or the United States, unless the assembly of
            the automobile is completed in Canada or Mexico and such
            automobile is not imported into the United States prior to the
            expiration of the 30 days following the end of the model year. 

            2.   Paragraph 1 shall apply to all automobiles produced by a
            manufacturer and sold in the United States, wherever produced
            and irrespective of car line or truck line, in accordance with
            the following schedule:

                 (a)  with respect to a manufacturer that initiated the
                      production of automobiles in Mexico before model year
                      1992, the enterprise subject to the fuel economy
                      requirements for those automobiles under the CAFE Act
                      may make a one-time election at any time between
                      January 1, 1997 and 
                      January 1, 2004, to have paragraph 1 applied
                      beginning with the next model year after its
                      election;

                 (b)  with respect to a manufacturer initiating the
                      production of automobiles in Mexico after model year
                      1991, paragraph 1 shall apply beginning with the next
                      model year after either January 1, 1994 or the date
                      that the manufacturer initiates the production of
                      automobiles in Mexico, whichever is later;

                 (c)  with respect to any other manufacturer producing
                      automobiles in the territory of a Party, the
                      enterprise subject to the fuel economy requirements
                      for those automobiles under the CAFE Act may make a
                      one-time election at any time between January 1, 1997
                      and January 1, 2004, to have paragraph 1 applied
                      beginning with the next model year after its
                      election.  If such a manufacturer initiates the
                      production of automobiles in Mexico, it shall be
                      subject to subparagraph (b) on the date it initiates
                      such production;



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                                                                Annex 300-A
                                                                ___________

                 (d)  with respect to all manufacturers of automobiles not
                      producing automobiles in the territory of a Party,
                      paragraph 1 shall apply beginning with the next model
                      year after January 1, 1994; and

                 (e)  with respect to a manufacturer of automobiles covered
                      by subparagraph (a) or (c), paragraph 1 shall apply
                      beginning with the next model year after January 1,
                      2004, where the enterprise subject to the fuel
                      economy requirements for those automobiles under the
                      CAFE Act, has not made an election under subparagraph
                      (a) or (c).

            3.   The United States shall ensure that any measure it adopts
            pertaining to the definition of domestic production in the CAFE
            Act or its implementing regulations shall apply equally to
            value added in Canada or Mexico.

            4.   Nothing in this Appendix shall be construed to require the
            United States to make any changes in its fuel economy
            requirements for automobiles, or to prevent the United States
            from making any changes in its fuel economy requirements for
            automobiles that are otherwise consistent with this Appendix.

            5.   For greater certainty, the differences in treatment
            pursuant to paragraphs 1 through 3 shall not be considered to
            be inconsistent with Article 1103 (Investment - Most-Favored-
            Nation Treatment).

            6.    For purposes of this Appendix:

            automobile means "automobile" as defined in the CAFE Act and
            its implementing regulations;

            manufacturer means "manufacturer" as defined in the CAFE Act
            and its implementing regulations; and

            model year means "model year" as defined in the CAFE Act and
            its implementing regulations.












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