Problems relating to Trade and Investment on Mexico

 
9. Restrictive export/import trade, duty, and customs clearance
Issue
Issue details
Requests
Reference
(1) Change in Import Tariff Rate - On 9 February 2010, GOM promulgated Decree that amends the Tariff Law and the PROSEC Decree. With the exception of certain products (5%), zero duty rates will apply from January 2012, provided, however, that duty on steel products repealed since 1 January 2010 is revived so that 3% or 5% or 7% of duty rate apply correspondingly to product items.
On 1 January 2011, PROSEC Scheme (in which Preferential tariff duty rates apply, 3% for cars, 5% for electric appliances, 0% for electronic appliances, etc.), along with the change in the general tariff rates, items subject to change as of 10 February 2010 have been removed from the subject items under PROSEC. Instead of PROSEC, the Duty Exemption Scheme under Japan-Mexico EPA separately applies to certain steel items.
On 1 January 2012, under Decree enforced on 9 February 2010, general tariff rate was reduced to 0%.
On February 2012, CANACERO (Camara Nacional de la Industria del Hierro y el Acero = National Chamber of Iron and Steel Industries) and SNTIMMSA (Sindicato Nacional de Trabajadores de la Industria Metal-Mecanica, Siderometalurgica y Autopartes = National Workers' Syndicate of metal, mechanical, iron and steel and auto-parts industries) instituted "Amparo" Litigation (that seeks protection on the ground of unconstitutionality), demanding stay of Decree published in the Federal Official Gazette that roughly nullifies the MFN tariffs from 2012.
On 29 June 2012, the Court handed down its Decision, holding stay of execution on the measures to Nullify the MFN tariffs. The court ordered MME to put the duty rates back to those as of 2011.
On 1 August 2012, the MFN tariffs, reduced to zero on 9 February 2010, were raised to 3%. As to Japanese steel products, preferential 0% tariff rate applies under Japan-Mexico Economic Partnership Agreement, subject to attachment of Certificate of Origin, and if imported by registered enterprises under PROSEC in electronics, auto and capital goods industries.
  (Action)
- Since 8 October 2015, Mexican Minister of Economy (MME) raised general tariff rates from 0% to 15% on 97-items of steel products, including slab, thick plate, cold-rolled steel, wire rod, etc. under tariff classification HS72, as a 180-days interim measure. On the other hand, MME attempted to alleviate the impact on the competitive edge of the industry by newly adding 10-items under HS 72 tariff classification to the goods subject to PROSEC (Programme of Sectoral Production Promotion) Decree, Article 1 and 2, "Diario Oficial (DOF) de la Importacion y de Exportacion y el Decreto por el que se establecen diversos programas de promocion sectorial". However, interim measures on tariff raise do not apply to the preferential duty under Japan-Mexico Economic Partnership Agreement so that Japanese steel products under HS72 classification can be exported duty free to Mexico.
- MME, under Article 1 of Decree promulgated in DOF of 4 April 2016, extended by additional 180 days, its provisional measures to raise by 15%, generation tariff rates on the 97-items of steel products.
(2) High Import Tariff Levy by Change in Tariff Classification - In mid-2013, after its review of customs import tariff classification standard on (finished) solar panel, Mexican customs changed the HS code from the previous "85.41 solar panel (duty free)" to "85.01 generator (15%)", the reason for the change given being merely: "including diode," without considering the member firm's assertion: "The bypass diode of the member firm's product is devoid of power generating function, different from the diode being the focus of the customs contention." In addition, it is irrational to levy duty on the solar panel "with the purpose of developing the domestic industry", despite its extremely limited scale of the domestic industry. - It is requested that GOM restores tariff classification on solar panel back to the previous "85.41 solar panel (duty free)".
(3) Continuation of Anti-Dumping Measures for an Extended Period - On 10 November 2000: Antidumping duty of 99.9% was imposed on seamless line pipe from Japan.
- In October 2006: At the 1st Sunset Review, Continued Levy of Antidumping Duty was decided.
- In November 2010: At the 2nd Sunset Review, Continued Levy of Antidumping Duty was decided.		 - It is requested that GOM repeals the antidumping measures.
  (Action)
- On 1 July 2007, the tariff classification of the products subject to antidumping finding is replaced by HS2007. As of July 2007, 16 items of steel pipes are subject to GOM antidumping duty.
- On 1 June 2008, GOM signed agreement with PRC to revoke ADD on 953 items (based on HS classification numbers) so that ADDs on 749 items are revoked within FY 2008 and the ADDs for the rest of 204 items reduced in staged so that it is revoked by December 2011.
- On 6 November 2015, Ministry of Economy, Mexico started Anti-Dumping Sunset Review on pressure seamless steel piping from Japan.
(4) Complex Monitoring of Imports - In September 1998, MME monitors import prices of certain specific steel products with the intent of protecting the domestic industry through import check and price maintenance. MME issues Import License (I/L) based on the importer's report to MME of import prices and the result of the pre-shipment inspection of the documents and products by the designated inspection institution.Many importers are unwilling to absorb the inspection cost and to put up with the vexatiously complex procedures.While strong voices are heard for the repeal of this requirement, it seems that GOM continues its monitoring for the time being.
- On 5 December 2013, Ministry of Economy (MME) notified in the Federal Gazette Decree amending "General Rules And Standards on External Trade Ordained by Ministry of Economy". It compels advance notification to MME for import of 113-items of steel products subject to notification requirement.
The Notification requires attachment of MIL-Sheet (Steel Materials Inspection Certificate), which could delay customs clearance, Moreover, certain indefinite matters such as the procedures to give notification require further clarification.
- GOM has introduced advance notification on certain steel parts. However, the absence of sufficient explanation, clear-cut format, etc. makes its practical implementation difficult.		 - It is requested that MME repeals the monitoring system or streamlines the procedures.
- It is requested that GOM clarifies the procedures.
- It is requested that GOM:
-- appreciates the burden to the tax payors, exporters, importers, etc. when it executes new obligations to them, and
-- exhausts checking all possibilities with the view to facilitate discharge of their responsibility.		 - Agreement on General Rules And Standards on External Trade Ordained by Ministry of Economy
- Agreement on General Rules And Standards on External Trade Ordained by Ministry of Economy notified on 5 December 2013 in Federal Gazette
(5) Implementation of the Safeguard Investigation - On 2 July 2010, MME initiated investigation for Safeguard Measures on Welded Steel Pipes and Tubes for Piping (HS Code 7305.1901, 50.8 mm or less in thickness with 8 inches or more in diameter and 26.83 m or less in length with API 5L Approval.
On 20 March 2012, Mexico's Ministry of Economy, notified in the Official Federal Gazette (Diario Oficial de la Federacion) not to invoke the Safeguard Measures as a result of its Investigation.
  (Action)
- On 13 April 2016, MME added 8-steel products under HS73 Harmonised Tariff Schedule of Mexico, which are subject to prior acquisition of 'compulsory import licence' through the single window of MME.
[Reference:] Please refer to the following URL on requirement of this additional information on prior acquisition of import licence through SE (in Spanish): http://www.dof.gob.mx/nota_detalle.php?codigo=5432966&fecha=13/04/2016
(6) Vexatiously Complex Customs Clearance Procedures on IMMEX IVA In bond Processing Programme - On 1 January 2015 MME amended the tax rules whereby "IVA (VAT) has become taxable in principle on products manufactured under IMMEX," provided, however, that with the approval of taxation bureau during the year 2014, continued IVA import in bond has become possible. However, the customs requires more documents relative to customs clearance procedures than that of before, making the process vexatiously complex. In emergency imports, customs frequent enquiries delay customs clearance so that urgently required cargoes do not reach the recipient. Moreover, the required materials differ from one officer to another the customs clearance, necessitating new materials resulting in further delay. - It is requested that GOM streamlines the customs clearance procedures. - ME's General Rules and Standards on International Trade
(7) Delayed and Nebulous Procedures for Customs Clearance at the US/Mexican Border - Government of Mexico (GOM) negotiation with the landlord has stranded over the plot for the 2nd Otay Mesa Port of Entry (OMPE), while the land area is apparently too small in light of future expansion. The development of infrastructure in the vicinity also lags behind.
- It now takes a vast amount of time for the border passage at the U.S./Mexican border. While the development plan exists for the 2nd Otay border, it wouldn't advance. The construction work has begun from No.905 to SR11 (1st Border Exit). However, the construction plan remains pending from there to the 2nd border. Especially, the construction plan on the Mexican side remains halted. The customs clearance at the 1st border becomes difficult when the cargo movement further increases.		 - In light of competition with Asian countries opening of the 2nd OMPE are eagerly awaited for further speeding up of cargo transport between the U.S.-Mexican borders.
- It is requested that GOU and GOM join their efforts to open as soon as possible the 2nd OMPE, beginning with the GOM's procurement of the land plot.
- It is requested that GOM expedites the road construction at the Otay 2nd border.
  (Action)
- The new Integral Automated Customs System Millenium3 ("IACSM") due for introduction from 2001 has been prepared in stages. Under this system, which resembles the U.S. system, customs and customs brokers are directly connected online and customs clearance can be completed solely by computers. When this system is in full operation, customs clearance can be completed prior to the arrival of the vessel into the port, and the cargo can be unloaded from the vessel direct onto the truck.
- The modernization program is being implemented, such as an automated customs clearance system.
- Two kinds of new taxes have been imposed since the year 2002 with regard to the import customs clearance. One is called Pre-validacion del pedimento (Pre-document inspection charge) of MXN250 peso and the other is MXN135 peso for a sort of "computer tax", which is incurred by the broker for check up of documents against products. Although some are of the view that imposition of charges and fees other than duties is not in violation of the WTO Agreement, the fact remains that the Customs authority relies upon such revenue as a fund for construction of the IACSM.
- GOU after formally authorizing construction of the 2nd Otay Mesa Port of Entry has set up the new plan for State Route 11 connecting to the existing State Route 905/125 Interchange at Otay Mesa Port of Entry. The construction will start in 2012. Its operation will begin in 2014 one after another commensurate with completion of each construction. The toll will be levied for crossing the National Border (in the amount of MXN$9.97 for general vehicles and MXN 86.27 for trucks.)
- Under NAFTA, the long distance Mexican drivers were to enjoy free entry into the U.S. open road and arterial expressways. However, due to the Congress opposition that reflected the strong pressure of International Brotherhood of Teamsters (IBT), Obama Administration had to postpone The US-Mexico Cross-Border Trucking up to 2007, during which period a pilot program that allowed a limited number of Mexican trucking firms to operate within designated areas on U.S. soil had been suspended.
On 11 March 2009, President Barack Obama signed legislation suspending a pilot program that allowed a limited number of Mexican trucking firms to operate within designated areas on U.S. soil. Following the suspension of the pilot program, the Mexican government retaliated against the United States on certain U.S. produced products.
- In 2013, President Enrique Pena Nieto disclosed the Accelerated Modernisation Plan 2013-2018 for the Mexican customs, including overhaul of infrastructure. Agreement was reached to implement 56-modernisation projects, amounting to in US$604 million in total. Mexican state tax administration in charge of administering 33-projects has recently announced accelerated overhaul of infrastructure at each Mexican check station.
  (Improvement)
- By amendment of the Customs Act in 2003, a special treatment is granted to a business entity with qualification for "Proven Industry". As a result, there has been a drastic simplification in the customs clearance procedure, which has been much expedited.
- GOU has newly established the two FAST lanes in Calexico and Mexicali for trucks registered with the FAST (Free and Secure Trade) Program, in addition to Tijuana, Juarez, Nuevo Laredo, Reynosa, and Matamoros, making the total of 7 FAST lanes at the U.S.-Mexican borders.
- The office hours at customs have been extended to 12 hours from 08:00 to 20:00 hours at both customs in the U.S. and Mexico, which is a significant improvement.
- In August 2005, President Vincente Fox announced a deregulation program that includes continuation of rationalizing the procedures for foreign trade/customs clearance and expanded use of electronic means.
- On 9 November 2005, MME announced Circular adding certain tariff lines that requires import/export licenses under Chapter 87 of HS code and deleting 106 tariff lines that require import license.
- General Customs on 1 July 2008 released commencement of the test project for streamlining the Customs Inspection, modeling "the Customs-Trade Partnership Against Terrorism (C-TPAT) of the U.S." under the name of ACS (Automated Commercial System). It aims at introducing the full-scale project in the first quarter of 2009 by allowing a simple, expedited customs inspection on enterprises, whose distribution process is determined as safe by the Customs Authority.
- Secretariat of Communication and Transport announced on 4 August 2008 that it would postpone until 31 August 2010 the deadline for the test project that has been implemented since September 2007 on mutual entry of trucks. The two-year extension aims at prompting more enterprises to participate in the project, while prompting investment into new trucks that satisfy the threshold standards for mutual entry.
- On 31 March 2008, GOM promulgated Decree that lists the measures to streamline the customs procedure that includes promotion of computer usage for customs clearance procedure.
- General Customs on 1 July 2008 released the start of the test project for a smoother operation of Customs Inspection, modeling after the "Customs-Trade Partnership Against Terrorism (C-TPAT)" of the U.S.
- On 15 October 2015, GOU and GOM signed memorandum of understanding in approval of the U.S.-Mexican advance cargo inspection programme with the view to facilitating the trade between the U.S. and Mexico by rationalising the cargo inspection procedures.
(8) Arbitrariness / Delay in Import Customs Clearance Procedures - Importers rely on DHL, FEDEX, etc. to rush import of goods urgently required. However, due to the frequent questions from Customs, customs clearance delays so that the required cargo would not reach the customer, in the timely manner.
- Due to the varying documents demanded each time by import customs personnel in charge, the importer must prepare new documents. It delays the customs clearance.		 - It is requested that the Customs clearly identifies the requisite documents for Import Customs Clearance.
(9) Violation of NAFTA Rules of Origin - Due to manufactures of IKD (Incomplete Knock Down) whose satisfaction of NAFTA Rules of Origin are questionable, competitive edge has declined of the companies observing the NAFTA Rules of Origin. - While Mexican Secretaria de Finanzas del Distrito Federal and MME are looking into the state of affairs to correct the problems, it is requested that both expedite their inspection and rigorously execute their control.
(10) Irrational invoicing of irrational express delivery charge - A member firm's subsidiary (MFS) was charged the sum of 116,000 yen for customs duty and transportation fee on account of the operating instructions for a machinery (weighing 13 kgs. Invoice price @16,000 yen) despatched by DHL. - It is requested that GOM corrects the customs duty at an appropriate level (0%-5%)

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