1E9Ct5D

CHAPTER XIVEconomic Competition1. IntroductionOn December 17, 1992, Mexico, the United States of America, and Canada signed theNorth American Free Trade Agreement (NAFTA), which entered into force January 1, 1994.In this agreement the basic rules were established that would become the new FederalEconomic Competition Law (Ley Federal de Competencia Económica‚ LFCE) for Mexico.First of all, the state parties to NAFTA recognized in Chapter XV the importance of establishinga common policy in the area of economic competition for the free trade zone and,therefore, the treaty signatories were obliged to limit State monopolies and regulate thefunctions of the companies owned by the States so that no harm would be done to marketcompetition. The contracting States were also obliged to apply rules that effectivelyregulate economic competition. It is obvious that the commitments made in Chapter XVof NAFTA had a specific purpose: Mexico was the only one of the three member countries ofthe agreement that did not have a modern competition law and, therefore, the greatestcommitment was made by Mexico, which not only had to create such a law, but also hadto create the entity responsible for applying it.One of the most important purposes of the treaty is to promote foreign investment inthe State parties. For Mexico, foreign investment is of great relevance due to the fact thatthe internal savings of the country do not provide sufficient resources for its economicdevelopment. Therefore, Mexico agreed to give its markets clear rules in order to allowinvestment to be made under the best conditions possible. 1Based on its commitment to execute the treaty, the Mexican government initiated aparallel discussion to begin the work of preparing the economic competition law, which241__________1For this reason, in NAFTA the principles of national treatment, most favored nation, and transparency, whichwere already established in the General Agreement on Tariffs and Trade (GATT) of 1947 and ratified in theGATT of 1994, were ratified, but with special emphasis.