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TITLE:  MEXICO ECONOMIC POLICY AND TRADE PRACTICES
DATE:  FEBRUARY 1994
AUTHOR:  U.S. DEPARTMENT OF STATE


                              MEXICO

                     Key Economic Indicators
      (Billions of U.S. dollars, unless otherwise indicated)


                                  1991      1992      1993 est.
Income, Production,
 and Employment

GDP (current)                     287.2     329.1     367.8
Per Capita GDP (current US$)      3,465     3,897     4,274
Real GDP Growth Rate (pct.)         3.6       2.6       1.1
GDP by Sector (pct. share)
  Agriculture, Forestry
   and Fishing                      7.7       7.3       7.2
  Mining                            3.5       3.4       3.4
  Manufacturing                    22.9      22.7      22.1
  Construction                      5.0       5.3       5.2
  Electricity                       1.5       1.5       1.5
  Commerce, Restaurants
   and Hotels                      25.8      26.0      25.8
  Transport, Storage,
   and Communications               6.7       7.0       7.2
  Financial Services,
  Insurance, Real Estate           10.8      10.8      11.0
  Communal Services,
  Social and Personal              17.6      17.4      18.3
Labor Force (millions)             26.8      27.4      28.2
Unemployment Rate
(year-end, pct.)                    2.6       2.9       3.1 


Money and Prices

Money Supply  (M1, pct. growth)   119.8 /1   17.0      20.0
Commercial Interest Rate (pct.)    22.56     18.77     18.45
Savings Rate (pct. of GNP)         16.2      16.7       n/a
Investment (pct. of GDP)
Constant 1980 pesos                19.5      21.7      15.0
Consumer Price Index
(Dec.-Dec. growth rate)            18.8      11.9       8.5
Wholesale Price Index
(Dec.-Dec. growth rate)            11.0      10.6       5.6
Exchange Rate (NP per $) /2       3.016     3.115     3.120


Balance of Payments and Trade /3
(Billions of U.S. dollars)

Merchandise Exports (FOB)          42.7      46.2      51.2
  Pct. of Exports to U.S.          80.0      81.2      82.2
Merchandise Imports (CIF)          50.0      62.1      66.8
  Pct. of Imports from U.S.        70.5      70.5      69.6
Aid from U.S.                       n/a       n/a       n/a
Aid from other Countries            n/a       n/a       n/a
External Public Debt               80.0      75.6      78.9
External Debt Service Payments      8.4       7.7       7.7
Gold and FOREX Reserves            17.5      18.6      24.0
Balance of Payments                 7.8       1.2       1.0

/1  The large increase in money supply in 1991 resulted from a
    change in regulatory requirements.
/2  Year-end interbank rate; 1NP=1,000 old pesos).
/3  As of 1993 Mexican data includes imports/ exports for the
    in-bond sector.  Figures for prior years have been
    adjusted to reflect the change.



1.  General Policy Framework

    Since 1987, Mexican economic policy has featured a series
of government-labor-private sector price and wage restraint
pacts, now known as the Pact for Stability, Competitiveness and
Employment.  The pact has combined traditional austerity
measures (tight fiscal and monetary policies) and various
unorthodox economic measures (price, wage and exchange-rate
controls) with rapid trade liberalization.  The Pact has been
successful in lowering inflation and restoring economic
confidence while preserving moderate economic growth.  Between
1987 and September 1993, 12-month inflation fell from 159
percent to 9.5 percent and the annual real rate of economic
growth (as measured by the gross domestic product) increased
from 1.7 percent in 1987 to 2.6 percent in 1992.  Growth slowed
to 1.3 percent in the first half of 1993.  The current Pact,
announced on October 3, 1993, and in effect through December
1994, makes greater economic growth its primary objective but
retains strict targets for price inflation.  The rate of
increase of government-controlled gasoline and electricity
prices is reduced to five percent.  The minimum wage will
increase by approximately 17 percent in real terms between
October 1993 and January 1994 through the application of income
tax relief and increases in line with inflation, plus an amount
equivalent to average productivity increases in the economy. 
The exchange rate policy under the Pact was unchanged to allow
the peso to fluctuate within a range, with its minimum value
devaluing at 0.0004 new pesos per day.

    For 1992 and 1993, the Mexican government's top two
economic priorities have been lowering inflation (through tight
fiscal and monetary policies) and maintaining a viable external
balance.  Tight fiscal policies have driven the overall Mexican
public sector deficit down from 4.0 percent of gross domestic
product (GDP) in 1990 to a surplus of 0.5 percent.  At mid-year
1993, that surplus reached 1.2 percent of GDP, excluding
revenues from the sales of state-owned companies.  Under the
Salinas administration, Mexican government revenues have
increased due to the sale of state-owned companies and improved
tax compliance.  At the same time, expenditures have declined
due to lower debt service (the result of lower interest rates
and significant reduction in the level of internal debt) and a
streamlining of the Mexican bureaucracy.

    On the external side, the rapid trade liberalization has
resulted in burgeoning current account deficits reflecting
growing trade deficits.  Mexico joined the General Agreement on
Tariffs and Trade (GATT) in August 1986.  Between 1986 and
1992, Mexico's merchandise imports increased at an average
annual rate of 25 percent, while its exports increased at an
average annual rate of only 13.5 percent.  Consequently, Mexico
began to run a trade deficit in 1990.  The trade deficit 
reached $22.8 billion in 1992 and will be roughly the same in
1993.  U.S. companies have been the primary beneficiaries of
Mexico's trade liberalization since 70 percent of all Mexican
imports come from the United States.  In 1992, the United
States ran a $5.4 billion trade surplus with Mexico, based on
$40.5 billion of exports to Mexico and $35.1 billion of imports
from Mexico.  This began to change in 1993 as Mexican exports
grew at a faster rate than imports.  Small- and medium-sized
U.S. exporters have been particularly helped by the reform and
market liberalization trend, especially given the streamlining
of the pre-1986 trade regulating bureaucracy.

    Mexico has been able to support large trade deficits by
attracting large and growing capital inflows.  Mexico ran a
$24.1 billion capital account surplus in 1991 and a surplus of
$26.0 billion in 1992.  These inflows more than offset current
account deficits (made up primarily of the trade deficit) of
$13.8 billion and $22.8 billion in 1991 and 1992,
respectively.  In the first six months of 1993, capital inflows
of $16.2 billion exceeded the current account deficit of $10.1
billion.

    Mexico's Central Bank controls the money supply and manages
domestic interest rates through the size of its weekly auction
of government securities and by buying or selling treasury
bills in the secondary market.  The Bank of Mexico raised
interest rates in the second quarter of 1992 to maintain the
inflow of foreign capital into the Mexican money market. 
Average interest rates (as measured by 28-day Treasury bills)
rose to 19.4 percent by October 1992 and declined gradually to
13.7 percent in September 1993.  Commercial rates averaged 18.7
percent in 1992.  High interest rates have been successful in
attracting the foreign capital needed to finance Mexico's
current account deficit, but they have also caused a slowdown
in economic growth.  During 1992, the Mexican economy grew by
2.6 percent in real terms versus 3.6 percent 1991, and is
expected to grow at a real rate of about 1.1 percent in 1993. 
In 1993, the Salinas administration amended the Mexican
Constitution to gradually make the Central Bank autonomous as
of January 1, 1994, ensuring continuity in Mexico's fight
against inflation.


2.  Exchange Rate Policies

    Mexico has managed a floating exchange regime since
November 1991.  The rate at which large foreign exchange
transactions are conducted fluctuates within a band that is
defined by the rates at which banks will buy and sell U.S.
dollars cash (e.g., small retail transactions).  Within the
band, the actual exchange rate is determined by market forces. 
The bottom of the band (i.e., the price a bank will pay for one
dollar cash) is fixed at 3.0512 new pesos per dollar.  The top
of the band (i.e., the price at which a bank will sell one
dollar cash) increases by 0.0004 new pesos per day.  As of the
end of October 1993, there was an 8.27 percent spread between
the top and bottom of the exchange rate band.

    Inflation in Mexico has been consistently higher than in
the United States and the daily devaluation of the peso has not
compensated for the difference.  Therefore, in real terms the 
peso has appreciated steadily against the U.S. dollar, by 9.9
percent in 1990, by 9.3 percent in 1991, by 6.6 percent in 1992
and three percent through July 1993.  The appreciation of the
peso has increased prices of U.S. exports to Mexico at a slower
rate than prices of domestically produced goods, providing U.S.
made goods a competitive advantage.  Moreover, U.S.
intermediate and capital goods' exports to Mexico have grown
significantly as Mexican companies seek to modernize after a
decade of negligible investment, while Mexican consumers
maintain a preference for U.S. products due to their quality
and variety.  In the first nine months of 1993, intermediate
goods and inputs to production constituted nearly four fifths
of Mexico's imports.


3.  Structural Policies

    In 1992 and 1993 the Mexican government sought to modernize
and increase efficiency of the economy by promoting greater
external and internal competition.  The privatization of
state-owned companies is nearly complete, and a series of laws
have been implemented to promote investment and prevent
anti-competitive behavior.  The North American Free Trade
Agreement (NAFTA) signed in December 1992 and its side accords
for protection of workers and the environment represent the
cornerstone of future Mexican trade policy.  The NAFTA was
approved by the U.S. Congress and the Mexican Senate in
November 1993, and awaits proclamation in Canada.  It will be
in force beginning January 1, 1994.  By year-end 1993, Mexico
had also signed or was negotiating free trade agreements with
Chile, Colombia and Venezuela, and a group of Central American
countries.

    NAFTA's key features are:

--  Elimination of tariffs, non-tariff barriers and
quantitative restrictions on traded merchandise.

--  Opening of Mexico's service industries, including financial
services, to U.S. firms wishing to invest or provide
cross-border services.

--  Opening of Mexico's central government and state-owned
enterprise purchasing and construction contracts to bidding by
U.S. firms.

--  Establishment of clear dispute resolution and international
arbitration procedures to provide proper protection to U.S.
investors in Mexico.

--   Commitment from Mexico to afford effective protection for
U.S. companies' intellectual property rights.

    The process of privatization of state-owned companies has
generated $22 billion and shrunk the number of state-owned
firms from 1,555 in 1982 to 206 as of October, 1993.  Under
President Salinas' administration 238 firms -- including all 18
commercial banks -- have been sold to the private sector or
liquidated.  Sixty of the remaining firms are for sale.  Among
companies that have been privatized are the telephone company,
a television network, airlines, film theaters and several sugar
and food processing plants.  The privatization drive has also
opened the door for private investment in Mexico's surface
transportation infrastructure.  The government has announced
plans to extend this program for expansion and modernization of
air and maritime ports.

    Regulation of the Mexican economy has decreased
significantly since 1990.  In 1993, the government introduced
legislation to promote greater competition, limit monopolistic
behavior and prohibit practices to restrain trade.  A new
foreign trade law adopted in 1993 eliminated most non-tariff
trade restrictions and established procedures for remedying
unfair trade actions such as export subsidies and dumping.  The
number of unfair trade actions has grown steadily over the past
five years, yet they are generally considered to proceed in a
fair and transparent manner.  Legislation to reduce barriers to
foreign investment was introduced into Congress in late
November 1993 and was expected to be approved before the end of
the year.  Most new regulations affecting U.S. trade have been
formulated in anticipation of increased trade under NAFTA.  At
times these regulations have disrupted trade as a result of
poor drafting and/or lack of coordination between various
government agencies responsible for their implementation.  The
Mexican customs service has been modernized and partially
automated, and a program to professionalize personnel and weed
out corruption is ongoing.


4.  Debt Management Policies

    During 1992, Mexico continued to reap the benefits of the
successful renegotiation of its external debt concluded in
February 1990.  One of the major benefits of the debt
agreement, besides its direct impact on the balance of
payments, has been greater confidence in Mexico among investors
and creditors, which has resulted in large capital inflows and
the reopening of international credit markets to Mexican
borrowers at progressively more favorable terms.  In the first
six months of 1993, non-bank private sector Mexican companies
issued $558 million of short-term debt in international
markets.  The improved availability of credit has helped U.S.
exports, since some of the money raised abroad is used by
Mexican companies to purchase machinery and equipment from the
United States.

    In December 1992, Mexico's total external debt was $98.5
billion, $75.8 billion of which was held by the public sector
(excluding the Bank of Mexico).  Mexico's total external debt
as a ratio to GDP was 30.1 percent in 1992, down from 47
percent in 1989.  It is projected to decrease to 28.5 percent
of GDP in 1993.


5.  Significant Barriers to U.S. Exports

    Import Licenses:  Mexico eliminated its universal regime of
import license requirements in 1985 and has committed, under
GATT and the NAFTA, to eventually eliminate all import
licensing requirements.  The Mexican government still requires
import licenses for 198 product categories including poultry,
dairy products, beans, wheat, corn, firearms, some 
petrochemicals, cars and trucks, and a few other manufactured
goods.  Import licensing requirements affect less than eight
percent of total U.S. exports to Mexico.

    Automobiles:  Investment and trade in the automobile sector
are subject to the restrictions of the Mexican Auto Decree,
including such performance requirements as local content,
foreign exchange balancing, and quantitative import
restrictions.  Foreign ownership in most auto parts
manufacturing companies is limited to 40 percent.  NAFTA will
open the Mexican automotive sector by phasing out of the Auto
Decree over ten years, eliminating import tariffs over 10
years, and allowing the immediate establishment of 100 percent
foreign-owned auto parts firms.

    Insurance:  Foreign ownership of Mexican insurance
companies is limited by law to 49 percent.  Under NAFTA, U.S.
insurers will be allowed to increase their equity participation
in new joint ventures to 51 percent by 1998 and 100 percent by
the year 2000, with no limitations on market share.  U.S.
insurers will also be permitted to establish subsidiaries in
Mexico, subject to aggregate market share limits which will be
eliminated in 2000.  U.S. insurers that have ownership in
existing joint ventures may increase their equity participation
to 100 percent by 1996.  Mexico must also permit its residents
to purchase insurance certain services (including life and
health insurance, tourist insurance, and cargo insurance) from
U.S. firms doing business from their home office.

    Telecommunications:  The main restriction in the
telecommunications sector is a limitation on foreign investment
in telephone and value-added services to a 49 percent equity
position.  In addition, under the Mexican constitution,
satellite services and the operations of earth stations with
international links are reserved for the Mexican government. 
The NAFTA will eliminate all investment and cross-border
service restrictions in enhanced or value-added
telecommunications services and private communications
networks; most, on entry into force, and the remainder
(enhanced packet-switching services and videotext) in 1995.  In
addition, NAFTA provides for a liberalized regulatory
environment for enhanced or value-added services and
intracorporate communications systems widely used in business.

    Financial Services:  Currently, foreigners are permitted to
own only minority shares of Mexican financial services
companies (banks, brokerages, insurance companies, bonding
firms, etc.) and are prohibited from investing in foreign
exchange houses or credit unions.  About 35 U.S. banks have
representative offices in Mexico, but their activities are
restricted.  One U.S. bank has been authorized for years to
provide a full range of services in the Mexican market.  Under
NAFTA, U.S. financial service firms will be permitted to
establish operations in Mexico and enjoy full national
treatment -- subject to gradually phased-out size and market
share limits -- and to sell their services to Mexican residents
across the border without restrictions.

    Motor Carriers:  As a result of bilateral consultations and
the Mexican government's deregulation of truck and bus
operations, bilateral transportation service is more efficient
and U.S. charter tour bus operators now have substantial access
to Mexico.  U.S. freight carriers have access for trailer entry
into Mexico through copperative relationships with Mexican
carriers who haul U.S. trailers beyond the border into Mexico. 
Mexican tractors and drivers are required by law to haul all
trailers bound for interior points.  Mexican authorities are
implementing new safety, weight and dimension regulations to
meet U.S. standards.  Through a 1991 Memorandum of
understanding, the two countries have implemented reciprocal
recognition of commercial driver's licenses.  A schedule for
liberalization of market access and investment in land
transport operations has been negotiated under NAFTA.

    Standards, Testing, Labelling and Certification:  The
Government of Mexico has traditionally been the primary actor
in determining product standards, labelling and certification
policy, with little input from the private sector and less from
consumers.  As a result, independent standards and
certification organizations like those in the U.S. are
virtually non-existent in Mexico.  The Ministry of Trade has
begun efforts to reverse this situation, shifting
responsibility for the formulation of voluntary standards onto
the private sector or to mixed commissions.

    In 1992-93, Mexico undertook an ambitious project to revamp
its entire system for formulating product standards, testing,
labelling and certification regulations.  The cornerstone of
this review is the 1992 Standardization and Metrology law,
which provides for greater transparency and access by the
public and interested parties to the regulation formulation
process.  This exercise has resulted in a reduction of
obligatory product standards to just above three hundred.  The
process is not without its problems, as poorly drafted
regulations and inadequate communication between enforcement
agencies, such as customs, have occasionally led to trade
disruptions.  In such instances the Government of Mexico has
been receptive to U.S. concerns and willing to resolve problems.

    Under the NAFTA, Mexico has affirmed its GATT obligations
to base its obligatory standards on international standards and
to improve transparency in the standards process.  In addition,
Mexico has taken tentative steps toward reciprocal recognition
of foreign standards and accreditation of foreign test
laboratories.

    Investment Barriers:  A National Foreign Investment
Commission, chaired by the Ministry of Commerce and Industrial
Development, regulates foreign investment in Mexico.  The
country's 1973 investment law reserves certain sectors to the
state (such as oil and gas extraction and the transmission of
electrical power) and a considerably wider range of activities
to Mexican nationals (for example, forestry exploitation,
domestic air and maritime transportation, and gas distribution).

    Provisions contained in NAFTA will open Mexico to greater
U.S. investment by assuring U.S. companies' national treatment,
the right to international arbitration and the right to
transfer funds without restrictions.  NAFTA will also eliminate
many barriers to investment in Mexico such as trade balancing
and domestic content requirements.  Mexico has already
implemented its commitment under NAFTA to allow, as of June 
1993, the private ownership and operation of electric 
generating plants for self-generation, co-generation, and
independent power production.  The NAFTA will also lift Mexican
investment restrictions on all but basic petrochemicals
reserved to the state.

    Government Procurement:  There is no single central
government procurement office in Mexico.  Government agencies
and public enterprises use their own purchasing offices to buy
from qualified domestic or foreign suppliers.  Suppliers from
all countries, whether GATT members or not, may bid on
government tenders that Mexico opens to international
competition and requirements for participation are the same for
foreign and domestic suppliers.  Mexico in 1991 abandoned the
rule that state-owned enterprises give preference in
procurement to national suppliers.  However, Mexican nationals
still enjoy preferential treatment, both official and
unofficial, in bidding for government orders.  A specific
preferential treatment in public procurement is granted to
domestic drug suppliers (which includes foreign companies
established in Mexico).  NAFTA will give U.S. suppliers
immediate and growing access to the Mexican government
procurement market, including the state-owned oil company,
PEMEX, and the Federal Electricity Commission, CFE, which are
the two largest purchasing entities in the Mexican government. 
Under NAFTA, Mexico will immediately open 50 percent of PEMEX
and CFE procurement to U.S. suppliers and this percentage will
increase in steps until virtually all PEMEX and CFE procurement
is open by the tenth year.

    Customs Procedures:  The Mexican government introduced in
1993 a system to combat under-invoicing of certain imports for
customs purposes.  The system, ostensibly aimed at Mexico's
large informal sector, established a "reference price" on which
duty would be charged, absent evidence that the lower declared
price was a valid arms-length commercial transaction and
requires some importers to post a bond if the price is below
the "reference price".  Recognizing some problems in
administering the system, the Government of Mexico has told the
U.S. government , however, that it plans further modifications
in the system soon to bring it more in line with practices in
developing countries.  However, the system may be inconsistent
with NAFTA and will have to be reviewed in that context.


6.  Export Subsidies Policies

    The Mexican government has no export subsidy program and
has informed the U.S. Government that it is in full compliance
with a 1986 bilateral understanding on export subsidies.  The
U.S. International Trade Commission found in April 1990 that
past Mexican export subsidy programs have either ended or the
subsidy element has diminished.  Mexico has not yet joined the
GATT Subsidies Code.  Provisions for promoting exports in
Mexico's new foreign trade law are limited to training and
assistance in finding foreign sales leads.  There is no
provision for export subsidies.


7.  Protection of U.S. Intellectual Property

    Mexico is a member of the major international organizations
regulating the protection of intellectual property rights
(IPR): the World Intellectual Property Organization, the Bern
Convention for the Protection of Literary and Artistic Works,
the Paris Convention for the Protection of Industrial Property,
the Universal Copyright Convention, the Geneva Phonograms
Convention and the Brussels Satellite Convention.

    The Mexican government strengthened its domestic legal
framework for protecting intellectual property in 1991 with the
promulgation of a new industrial property law (patents and
trademarks), effective June 28, 1991, and an extensive revision
of its copyright law, effective July 1991.  Product patent
protection was extended to all processes and products,
including chemicals, alloys, pharmaceuticals, certain
biotechnology, and plant varieties.  The term of patent
protection was extended from 14 to 20 years from the date of
filing.  Trademarks now are granted for ten-year renewable
periods.  The enhanced copyright law provides protection for
computer programs against unauthorized reproduction for a
period of 50 years.  Sanctions and penalties against
infringements were increased and damages now can be claimed
regardless of the application of sanctions.

    Although raids by federal authorities led to the
confiscation and destruction of hundreds of thousands of
pirated audio and video cassettes in 1992 and 1993, U.S.
industry sources estimate that two out of every three audio
tapes sold in Mexico still are pirated products (an annual loss
of about $240 million).  While these raids have affected street
vendors, they have not produced indictments or prosecutions of
large-scale pirates.  In an effort to improve enforcement and
put teeth into its IPR laws, the Mexican government formed an
inter-secretarial commission in October 1993 to cut through the
bureaucratic obstacles hindering effective action to date.  In
addition, the government began a radio and television
advertising campaign designed to raise public awareness of the
destructive effects of IPR piracy on Mexico's own economic
growth and development.

    NAFTA provisions will further strengthen IPR protection by
providing for non-discriminatory national treatment of IPR
matters, establishing certain minimum standards for protection
of sound recordings, computer programs and proprietary data,
and by providing express protection for trade secrets and
proprietary information.


8.  Worker Rights

    For an introduction to the Mexican Labor Law System, see "A
Primer on Mexican Labor Law," (U.S. Department of Labor) and "A
Comparison of Labor Law in the United States and Mexico an
Overview," (U.S. Department of Labor 1992).  In general, worker
benefits mandated by law include paid vacations, maternity
leave, end-of-year bonuses, generous severance packages,
mandatory profit sharing and a series of social security
provisions, including mandatory individual savings and 
retirement accounts to which employees and employers must
contribute.

    a.   Right of Association

    The Mexican Federal Labor Law (FLL) gives workers the right
to form and join trade unions of their own choosing.  Mexican
trade unionism is well developed with thousands of unions and a
number of labor centrals.  Unions must register with the labor
secretariat or equivalent state government authorities.  In
theory, registration requirements are not onerous, involving
the submission of basic information about the union in order to
give it legal status so as to sue and be sued, open bank
accounts, etc.  There have been, however, repeated allegations
by labor activists that the federal and state labor authorities
improperly use this administrative procedure to withhold
registration from groups considered disruptive to government
policies.  Privately, mainstream trade unionists and even
employers say that administrative blockage does occur at times.

    Unions and labor centrals are free to join or affiliate
with the international labor organizations and do so actively.

    b.   Right to Organize and Bargain Collectively

    The FLL strongly upholds the right to organize and bargain
collectively.  On the basis of only a small showing of interest
by employees, an employer must recognize the union concerned
and make arrangements either for a union recognition election
or proceed immediately to negotiate a collective bargaining
agreement; such arrangements are commonplace.  The degree of
private sector organization varies widely by states; while most
traditional industrial areas are heavily organized, states with
a small industrial base usually have few unions.  Workers are
protected by law from anti-union discrimination.  Collective
bargaining has been institutionalized in the "Contrato Ley",
industry or sector-wide agreements that carry the weight of law
and apply to all firms in the sector whether unionized or not.

    c.   Prohibition of Forced or Compulsory Labor

    The constitution prohibits forced labor.  There have been
no credible reports for many years of forced labor in Mexico.

    d.   Minimum Age for Employment of Children

    The FLL sets 14 as the minimum age for employment by
children.  Children age 14 to 15 may work a maximum of six
hours, may not work overtime or at night, and may not be
employed in jobs deemed hazardous.  In the formal sector,
enforcement is reasonably adequate for large and medium sized
companies; it is less certain for small companies.  As with
employee safety and health, the worst enforcement problem lies
with the many small companies.  Eighty five percent of all
registered Mexican companies have fifteen or less employees,
indicating the vast scope of the enforcement challenge just
within the formal economy.  In 1992, the Mexican government
increased from six to nine the minimum number of years that
children must attend school and made parents legally liable for
their children's non-attendance.

    In 1991, the Secretariat of Labor and Social Welfare (STPS)
and the U.S. Department of Labor undertook joint studies of
both the child labor problems and the nature of the informal
economies in Mexico and the United States.  The studies were
published in late 1992 and are serving as a basis for
cooperative efforts to discourage child labor in both our
countries.  In 1993, the International Labor Organization (ILO)
was developing a national action plan against child labor with
the Mexican government's Social Development Secretariat
(SEDESOL).  There were also Mexican government and
non-governmental organization media campaigns to convince
parents to keep their children in school.

    e.   Acceptable Conditions of Work

    The constitution and the FLL provide for a minimum wage for
workers, set by the Tripartite National Minimum Wage Commission
(government/labor/employers).  In December 1987, this
commission agreed on an accord to limit wage and price
increases, which has since been renewed annually.  Generally in
the private sector in the past few years, wages set by
collective bargaining agreements have kept pace with inflation
even though the minimum wage did not.  In August 1993,
President Salinas pledged to incorporate labor productivity
increases into annual minimum wage increased.

    The FLL sets 48 hours as the legal workweek and provides
that workers who are asked to exceed three hours of overtime
per day or work any overtime in three consecutive days be paid
triple the normal wage.  For most industrial workers,
especially unionized ones, the real workweek has declined to
about 42 hours.  Mexico's legislation and rules regarding
employee health and safety are relatively advanced.  All
employers are bound by law to observe the "General Regulations
on Safety and Health in the Workplace" issued jointly by STPS
and Mexico's Institute of Social Security.  The focal point of
standard setting and enforcement in the workplace is in
FLL-mandated bipartite (management and labor) safety and health
committees in the plants and offices of every company.  These
meet at least monthly to consider workplace safety and health
needs and file copies of their minutes with federal or state
labor inspectors.

    Government labor inspectors schedule their own activities
largely in response to the findings of these workplace
committees.

    f.   Conditions in Sectors with U.S. Investment

    In all sectors with U.S. investment, the rights of
association and to organize and bargain collectively, a
prohibition on the use of forced or compulsory labor, a minimum
work age, acceptable working conditions exist and are respected.



         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (Millions of U.S. dollars)

Category                                    Amount

Petroleum                                                  D
Total Manufacturing                                    9,281
    Food & Kindred Products                  1,340
    Chemicals and Allied Products            1,949
    Metals, Primary & Fabricated                 D
    Machinery, except Electrical                 D
    Electric & Electronic Equipment            610
    Transportation Equipment                 2,533
    Other Manufacturing                      2,043
Wholesale Trade                                          777
Banking                                                    D
Finance and Insurance                                    798
Services                                                 325
Other Industries                                       1,935


TOTAL ALL INDUSTRIES                                  13,330



(D)-Suppressed to avoid disclosing data of individual companies

Source:  U.S. Department of Commerce, Bureau of Economic
Analysis.

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