Doing Business in Mexico, English

International Trade in Mexico

24 Aug , 2020  

Our third chapter of Doing Business in Mexico, International Trade, will provide a general overview of ton Mexican International Trade Policy considering international context, as well as customs aspects.

This chapter includes the following sections:

  1. Mexican International Trade Policy and Customs
  2. Tariff Policy
    1. MFN Tariffs or Duties
    2. Preferential Tariffs in Free Trade Agreements
      1. CPTPP
      2. USMCA
      3. New EU-Mexico Agreement
    3. Duty Deferral, Drawback and Preferential Tariffs in Trade Instruments
      1. IMMEX
      2. Trade Promotion Instruments
      3. PROSEC
        1. Eight Rule
        2. Free Trade Zones in Mexico
    4. Other Taxes affecting imports
      1. Customs Processing Fee
      2. Value-added Tax
      3. The Special Tax on Production and Services
      4. The Tax on New Motor Vehicles
  3. Non-Tariff Barriers
    1. Import Prohibitions
    2. Licensing System
    3. Other Non-Tariff Barriers on Imports
    4. Import Quotas
    5. Exports Tariff & Non-Tariff Export Barriers
  4. Recent Changes to Mexican Trade Policy
  5. Customs
    1. Customs Brokers and Customs Agencies
    2. Single Customs Window
    3. Requirements to Import and Export in Mexico
    4. Special International Trade Registries
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1. Mexican International Trade Policy and Customs Law

As a member of international organizations and Free Trade Agreements, Mexico has, to a certain extent, a predictable trade and customs policy. Mexican laws on customs and trade are normally compatible with international rules. The President and his ministers are not only in charge to apply these laws, but they also have powers to regulate international trade and customs, including emergency actions.

Since the inception of the World Trade Organization and the North American Free Trade Agreement, Mexico’s trade and customs legal framework has not been subject to a substantial overhaul; seldom reforms particularly to the customs law have occurred from time to time.

However, Mexico is currently embracing modern free trade agreements, such as the Comprehensive and Progressive Transpacific Partnership (CPTPP) or USMCA, that have and will bring certain legal changes in intellectual property, de minimis, e-commerce, etc.  

Needless to say, trade and customs programs or regulations are subject to frequent changes that seek to adapt to new trends, risks, or policy objectives. Mexico has in place, for instance, duty deferral and tariff reduction programs that allow manufacturing or export-oriented industries to be more competitive. However, such programs are subject to strict government controls.

2. Tariff Policy

Mexico is a party to the World Customs Organization and to the International Convention on the Harmonized Commodity Description and Coding System (HS Convention).

As a result of the sixth amendment to the HS, Mexican congress discussed a new law that replaced its General Import and Export Tariff Act (LIGIE, acronym in Spanish), i.e. Mexico’s Harmonized Tariff Schedule. The Ministry of Economy conducted an exhaustive review and proposed to compact or unfold tariff items for statistical purposes into 10 digits that will be called Commercial Identification Number, instead of an 8 digit tariff item (known as fracción arancelaria). The new General Import and Export Tariff Act was published on July 1, 2020.

2.1 MFN Tariffs or Import Duties

Mexico’s average WTO bound tariff is 35%, and duties rates vary from 0% to 100%. According to Mexico’s most recent Trade Policy Review (2017), the average MFN tariff on agricultural and non-agricultural products was 14.3% and 4.6%, respectively. The General Import and Export Tariff Act establishes the import tariff or “General Import Tax” (Impuesto General de Importación, or IGI) as well as the export tariff “General Export Tax” (Impuesto General de Exportación, or IGE).

….

2.2 Preferential Tariffs in Free Trade Agreements

Mexico has an extensive network of Free Trade Agreements (FTAs) with 50 countries and is also a party to regional agreements within the framework of the Latin American Integration Association (ALADI).

Mexico Free Trade Agreement, USMCA, NAFTA, TLCAN, TMEC, Alianza del Pacífico, Pacific Alliance, European Union, CPTPP, International Trade, FTAs, Mexico, Mexican Law Firm, Mexican Lawyers, WTO, Top Mexican Lawyers

The main FTAs and trade agreements to which Mexico is currently a party are as follows:

  • United States–Mexico–Canada Agreement (USMCA).
  • European Union-Mexico Free Trade Agreement, which is in the process of being modernized.
  • Comprehensive and Progressive Transpacific Partnership (CPTPP) in force between Australia, Canada, Japan, Mexico, New Zealand, Singapore, and Vietnam; Brunei, Chile, Malaysia, and Peru have not yet ratified the FTA.
  • Pacific Alliance with Colombia, Chile, and Peru.
  • FTA with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.
  • FTA with the European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland).
  • FTA with Israel.
  • FTA with Uruguay.
  • FTA with Japan.

….. Read more

3. Duty Deferral, Drawback and Preferential Tariffs in International Trade Instruments

Long before NAFTA came into existence, Mexico had into effect duty deferral policies that allowed manufacturing companies, known as maquiladoras, to import goods, such as raw materials, parts, containers, etc., without paying import duties. The maquiladoras had to use said imported goods in the production of exported manufactured goods and, in turn, they could temporally import said goods and defer customs duties.

Eventually, NAFTA introduced drawback provisions to promote the use of regional goods and “to reduce the incentive for third countries to use a NAFTA country as an ‘export platform.” Article 303 NAFTA, replicated in article 2.5 USMCA, introduced a general prohibition on refunding or exempting customs duties owed on non-originating goods imported into the territory of a party.

In essence, these provisions have as a purpose to avoid double ‘taxation’ on non-originating materials that are used as an input in the production of a finished good subsequently exported to another NAFTA or USMCA party.

Thank you for your interest, if you wish to continue reading please fill out the form below or contact us.

For more information about VTZ Law Firm services, visit our website or contact us info[@]vtz.mx

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English, News

Mexico-US Balance of Trade & Legal Amendments -The Trading Room

7 Feb , 2020  

Mexico – US Balance of Trade

Download our newsletter in PDF: Trading Room

As reported in a news portal, in 2019 Mexico surpassed China in the commercial exchange with the US, taking into account imports and exports according to US figures. As a result, Mexico became the main trading partner of the US in 2019; accordingly, since 2005 Mexico has not been in said position. Obviously, this displacement is due to the Chinese and US trade conflict, as well as the growth of the US economy.

This is not a novelty, UNCTAD conducted a study on the effects of the US-China trade war on trade flows last year. In short, several countries have occupied part of the “void” that China has left, including Mexico, Taiwan, Vietnam, among others. See our summary of the UNCTAD report for more details here.

According to the figures from the Department of Commerce, Mexico increased its exports to the US 3.47% in 2019 compared to 2018, while China’s exports decreased by 17%, the above is reflected in the following table:

In this regard, the president of the National Association of Importers and Exporters of the Mexican Republic (ANIEM), Gerardo Tejonar Castro, acknowledged that there was no way for the national industry to completely fill the void left by China and said that these results may be temporary because, on the one hand, China has already reached the Phase 1 Agreement.

Sources:

https://www.jornada.com.mx/ultimas/economia/2020/02/06/mexico-supera-a-china-en-el-comercio-con-eu-7959.html 

https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

Legal Amendments & International Trade

After a series of steps to reform Mexico’s Harmonized Tariff Schedule (MHTS) that included public consultations, yesterday the Commission on Economy, Commerce, and Competitiveness of the Chamber of Deputies discussed the new Law on General Import and Export Taxes (LIGIE), as well as reforms and additions to the Customs Law

The new LIGIE will implement the sixth amendment of the Harmonized System of the World Customs Organization to improve the identification and classification of the goods. In particular, the sixth amendment addresses the classification of the following goods: fishery products, forest products, anti-malaria, chemicals, and technology advances.

Needless to say, the MHTS has not been revised comprehensively since its creation, therefore, the Ministry of Economy took the task of conducting an exhaustive review. In that sense, it is planned to eliminate tariff items by low trade and, therefore, to compact tariff items, and unfolding tariff items for statistical purposes into 10 digits, which will be called Commercial Identification Number, instead of the current 8 digits.

To download the Law initiative, click here. More information: LIGIE_PRESENTATION

Sources:

https://vtz.mx/news/2017/01/26/consulta-publica-tigie/

http://www.wcoomd.org/en/topics/nomenclature/instrument-and-tools/hs-nomenclature-2017-edition/amendments-effective-from-1-january-2017.aspx

https://twitter.com/LeonoraTrade/status/1225688556405837824

https://twitter.com/jdiazmazadiego/status/1225508761827205122

https://www.snice.gob.mx/cs/avi/snice/tfproyecto.html

 

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News

VTZ en la Conferencia Anual de la Barra de Abogados México-EE.UU.

31 Oct , 2019  

25° Conferencia Anual de la Barra de Abogados México-EE.UU.

 

Nuestro Socio Jr., Emilio Arteaga y nuestra Asociada Senior, Mariana Malváez, participaron en la Conferencia Anual de la Barra de Abogados México-EE.UU.New Realities, New Challenges; Law and Practice in the Era of Trump and AMLO”  que se llevó a cabo los días 23,24 y 25 de octubre en la ciudad de Dallas, Texas. Además, este año se celebró el 25° aniversario de la Barra de Abogados México-EE.UU.

Retos y desafíos a los que se enfrenta TMEC

Emilio Arteaga participó como moderador en el panel “Threats and Challenges Towards the US-Mexico Trade Relations and USMCA” en el que participaron abogados especialistas en Comercio Internacional como Lawrence Hanson de The Law Office of Lawrence W. Hanson, P.C., Juan Carlos Partida de EC Legal Rubio Villegas, Michelle Schulz de Polsinelli y Carlos Vejar de Holland & Knight.

Los panelistas compartieron sus ideas sobre la aprobación del TMEC ante el panorama político en ambos países, los puntos sobre los que se podría negociar su aprobación y su impacto una vez que se apruebe el tratado.

 

Emilio Arteaga, Carlos Véjar, Juan Carlos Partida, Michelle Schulz y Lawrence Hanson

 

Como cada año, esta conferencia reunió a profesionales de los sistemas judiciales de toda la región de Norte América. Los asistentes tuvieron la oportunidad de expandir sus redes profesionales y aprender sobre la evolución de la actual relación entre EE.UU. y México.

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English, News

Legal 500 ranks VTZ and Adrián Vázquez in Band 1

13 Sep , 2019  

, Vazquez Tercero, Mexican Trade Lawyers, Best Lawyers, Leading Lawyers, International Trade and Customs

VTZ a Band 1 Law Firm

Legal 500, a legal guide, recently published its new ranking regarding law practice in Mexico. Our firm is ranked as one of the best law firms in International Trade & Customs Law, listing VTZ in Band 1. Legal 500 notes that the core of our practice is international trade & customs, covering the full range of IT&C matters from trade remedies, regulatory compliance, tax planning, etc.

Adrian Vázquez a Leading Lawyer

At the same time, Adrian Vázquez, our managing partner, is classified as a leading lawyer in the international trade and customs practice.

 

Adrian Vázquez, Band 1 Chambers, Trade Lawyer, Customs Law, Top ranked lawyer in Mexico, Comercio Exterior, Abogado Líder

Other VTZ Members

Besides Adrián Vázquez, Legal 500 notes Eduardo Zepeda and Eduardo Gonzalez in Guadalajara, who co-lead the practice, as well as Verónica Vázquez, Emilio Arteaga, Mariana Rivera Gutiérrez and Alejandro Martinez.

 

International Trade & Customs

We invite you to read Legal 500’s review about the international trade & customs practice in Mexico.

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