December and January Developments on International Trade – The Trading Room
15 Jan , 2021
Developments Mid-December 2020
A series of decisions and regulations trade-related were published in December 2021. The most relevant in our opinion are the following:
Mexico and CPTPP: Ministry of Economy made some changes to the procedure regarding the public tenders to access the import quotas per Mexico’s Tariff Rate Quotas established in Appendix A-1, which deals with dairy products.
UK-Mexico Trade Continuity Agreement: Mexico and the UK reached an agreement whereby the preferential tariffs are maintained. In essence, the European-Mexico Free Trade Agreement will continue to apply between Mexico and the UK as modified per the agreement. Now, we highlight that materials originating from the European Union will be considered as materials originating from the UK. The text of the agreement is available here.
The New General Tariffs on Imports and Exports Act in Mexico: The new tariff system entered into force on december 28th, 2020, whereby Mexico now has a 10 digit tariff item code, called NICO for its acronym in Spanish. With the entry into force, the federal government published the implementing regulations, and updated its non-tariff barrier regulations:
Import and Export Quotas;
Trade regulations on Pesticides, Fertilizers, and Toxic Substances;
Goods subject to trade regulations to the Ministry of Culture;
Goods subject to trade regulations on behalf of the Ministry of Agriculture
Goods subject to trade regulations on behalf of the Ministry of Health;
Goods subject to trade regulations on behalf of the Ministry of Environment;
Goods subject to trade regulations on behalf of the Ministry of Energy;
Sugar export permit and maximum quota;
Dual-Use, Software, and Technologies subject to trade regulations on behalf of the Ministry of Economy;
Trade Sanctions per the United Nations Security Council resolutions;
Goods subject to trade regulations on behalf of the Ministry of Defense.
Tax Benefits in the Northern and Southern Border: As reported in our last edition, the federal government renewed the Northern Borders Tax Program and replicated said Program in the Southern Border of Mexico. For more information, Jorge Montes, VTZ Tax partner, prepared a Tax newsletter about this matter (available in Spanish).
The Free Trade Zone of Chetumal: Mexico created this Free Trade Zone located in the capital of the State of Quintana Roo (about 3-4 driving from Cancun). The Decree lists the goods that will not be subject to import duties and the customs processing fee. “Companies of the Region” can only access these benefits provided that they register before the Ministry of Economy. The Decree aims to “promote” trade of goods at lower costs in this region. It is uncertain (and unlikely) that this free trade zone is designed to be a foreign investment attraction policy.
Should you need more information, do not hesitate to ask us.
Do you remember that when the union AFL-CIO announced, in September, that it was going to submit a Labor Complaint against Mexico within 30 days?
Well, this week Trumpka, AFLI-CIO leader, claims that they will submit said labor complaint to trigger the facility-specific rapid response mechanism as soon as Biden takes office. Apparently, it is being reported that the AFL-CIO perceived resistance on behalf of Trump’s USTR regarding the labor complaint. If submitted, this will probably be the first USMCA task that the new Mexican Minister of Economy will have to oversee.
Mexico to Eliminate Independent Bodies?
The Mexican president has submitted the idea that independent and autonomous bodies must cease to exist per “austerity” policies. These bodies are the Anti-trust Commission, Telecommunications Institute (IFT), Transparency Institute, and the Human Rights Commission.
As a result of this idea, which is being discussed in the cabinet, experts have expressed, that eliminating the IFT, in particular, puts Mexico at risk of not complying with relevant USMCA obligations.
The Under-minister of International Trade, Luz de la Mora, expressed in an interview that the Federal Government will seek to bring any proposed public policy into compliance with Mexico’s international obligations, including anti-trust.
In VTZ, we consider that this sudden public policy proposal and its reach, which requires constitutional amendments, will affect democratic institutions and rule of law.
USMCA Implementation E-Book
The Mexican Ministry of Economy and Senate published an e-book titled “Implementing the USMCA : A test for North America ”, which contains chapters in Spanish and English.
If your interested, you can access the e-book: here.
In December, we organized a webinar in a round table format (in Spanish) that discussed trade and tax-related matters. You can access the video at the following link: Webinar.