On Monday, August 3, the United States Embassy in Mexico published, on its Twitter account, the “USMCA Hotline”, which is a platform to receive complaints or information on labor matters. This should not come as a surprise because it was foreseen in article 717 of the USMCA Implementation Act.
El Comité Laboral Interinstitucional para Monitoreo y Aplicación Laboral de #EEUU ha establecido un sitio electrónico multilingüe para recibir información confidencial sobre cuestiones laborales de partes interesadas en países integrantes del #TMEC. https://t.co/fEhcRJbD1J
— Embajada EU en Mex (@USEmbassyMEX) August 4, 2020
Through this “Hot-Line”, people will be able to write confidentially, either anonymously or by leaving their contact details, about issues related to “denials” of labor rights.
In essence, this mechanism will allow the gathering of information and testimonies that could eventually be used to present a USMCA “labor case”. Notwithstanding the foregoing, it is important to mention that if a party (e.g. the US) wishes to activate the rapid response mechanism, for example, the complaining party must have “good faith basis”; that is, having credible evidence or causes. In this sense, one or several anonymous complaints – by themselves – can hardly be classified as a good faith basis. However, a complaint through the USMCA Hotline can trigger the investigation by the US labor attaches in Mexico and, therefore, obtain additional evidence or elements to support a USMCA labor review.
On Thursday, August 6, 2020, President Trump announced the “re-imposition” of tariffs on certain Canadian aluminum products because they were “flooding” the American market and, therefore, such measures are necessary to protect the industry from the USA based on section 232 of the Trade Expansion Act.
The proclamation can be found at the following link: Proclamation on Adjusting Imports of Aluminum Into the United States.
Steel and aluminum from Mexico (as well as from Canada) were also subject, at the time, to tariffs in the US for national security reasons. However, these tariffs were eliminated on May 19, 2019, as we reported.
By virtue of the actions of the US government, the Mexican government will increase the “control” of steel and aluminum exports through an automatic license, as reported in a media outlet, for the purpose of avoiding the increase of exports through transshipment.
On Monday, our firm organized a webinar on the alert issued by the Tax Authorities (SAT) on Wednesday, August 5, which defines the guidelines for the retroactive payment of fees for those companies that obtained their registration as under the Certified Company Scheme.
Our partner Eduardo Zepeda, leader of the practice regarding the legal aspects of the manufacturing or maquila industry, commented that this issue is “regrettable and worrisome”, pointing out the numerous deficiencies in the legal grounds and reasoning on behalf of the SAT.
For his part, Eduardo González, leader of the litigation practice, presented the recommended legal strategy to avoid possible reprisals from the SAT, such as the non-renewal of the Certified Company Scheme registration (VAT / IEPS Certification, OEA, among others).
Should you wish more information on the recommended legal strategy, please let us know.
On September 20, 2019, the “Decree that modifies the Tariff of the Law of General Import and Export Taxes, the Decree establishing the general import tax for the border region and the northern border strip, the Decree establishing various Sector Promotion Programs, and the Decree for the Promotion of the Manufacturing, Maquiladora and Export Services Industry ” was published on the Official Gazette on its afternoon edition, entering into force on September 22, 2019
VTZ have prepared a summary of this Decree. To see and download it, please click here: Decreto TIGIE 250919
(Download our newsletter in Trading Room -20190607)
The US and the Mexican government have not reached an agreement regarding the migration crisis. Mexican Foreign Affairs Minister, Mr. Ebrard, claimed that both countries are willing to find a solution. According to a statement made by the US Press Secretary, Mrs. Sanders published in news outlets after the noon of this Thursday, the US is still moving forward with the tariffs. Needless to say, it has been reported by media outlets that the American government is considering to delay the 5% tariff against Mexican products. In the end, the decision to halt the tariff increase against Mexican products will ultimately be in the hands of the US President’s, who returns to the US from Europe this Friday.
High-level talks were have taken place since Wednesday, and it is being reported the possible solutions and/or agreements towards the migration crisis. Mexico confirmed that it has agreed to send 6,000 forces of the “Guardia Nacional” to control the migration flows from the Mexico-Guatemala border. Also, the New York Times reports that Mexico and Guatemala “have agreed to consider significant changes in asylum laws” so that migrants are required to seek asylum in the “first safe country” they enter. This would mean that people from Guatemala should request asylum in Mexico and not in the US, while people from El Salvador or Honduras should seek asylum in Guatemala. In addition, it appears that Mexico has agreed to expand the number of migrants that are seeking asylum in the US to wait in Mexico; but, Mexico has rejected to agree on being a “safe third country” for Central American migrants.
(Download the PDF version: Trade Alert – 20052019)
Last Friday a joint statement by the US and Mexico was issued regarding the elimination of the so-called Section 232 tariffs on Mexican steel and aluminum. On Sunday 19th, the US President issued a Proclamation that eliminated the 232 measures applicable to said Mexican imports.
Today, 20th of May, the President of Mexico issued the following Decree:
DECREE that modifies the former Decree by which it modifies the Tariff of the Law of the Import and Export Tariffs, the Decree that establishes the Applicable Rate for 2003 of the Import Tariff for the goods originating in America of the North, and the Decree establishing various Sectoral Promotion Programs, published on June 5, 2018.
Sole Article.- Articles 1, 2 and 9 are repealed of the Decree[….] published on June 5th, 2018, in the Official Gazette.
In today’s Decree, the Mexican President eliminates the countermeasures that were taken against goods originating from the US (Decree of June 5th, 2018), such as steel and aluminum products, pork meat, cheese, agricultural products, motor boats, fans, “bourbon whiskey”, lamps and metal furniture, among others. The Decree enters into force today, so said US products can again benefit from the preferential tariffs that were established in NAFTA.
As mentioned in the joint statement and the Proclamation, we note that the elimination of the 232 tariffs is accompanied by a series of measures that will aim “to prevent the importation of steel articles that are unfairly subsidized or sold at dumped prices, to prevent the transshipment of steel articles, and to monitor for and avoid import surges.” According to the joint statement, the US and Mexico “agreed” that tariffs may be imposed to an individual steel or aluminum product in the event that imports surge, and that the “exporting” country can only retaliate in the affected sector; this clearly limits Mexico’s possible retaliatory measures which proved to be effective. Finally, Mexico and the US agreed to terminate all WTO litigation regarding this matter.
VTZ notes that in the Presidential Decree of June 5th, 2018, Mexico temporally raised tariffs against steel products from third countries with which it does not have a Free Trade Agreement. Such tariffs expired on January 31st, 2019. Mexico adopted said measure because it considered that it was likely a substantial increase in exports to Mexico, in part, because of the unilateral measures adopted by the US.
Notwithstanding that the aforementioned measures expired, again Mexico temporally raised tariffs on steel products from third countries on March 25th, 2019, claiming that there is an oversupply of steel. These “temporal” tariffs will be in force for 180 days, i.e. September 22, 2019.
Finally, VTZ highlights and considers that these events constitute a significant step towards the ratification process of USMCA in Mexico and the USA (as well as Canada). In this sense, companies established in the region shall start to prepare for its entry into force possibly in 2020.
For more information, please do not hesitate to contact Adrian B. Vázquez (adrian[@]vtz.mx), Eduardo Zepeda (eduardo[@]vtz.mx), Emilio Arteaga (emilio[@]vtz.mx).
(Download our newsletter in PDF: Trading Room -20190510)
This Tuesday the Ministry of Economy issued a public statement regretting the decision of the Department of Commerce (DOC) regarding the termination of the Tomato Suspension Agreement, which was agreed by Mexican Exporters and renewed for the last time in 2013. This agreement a non-injurious export price was fixed.
The termination of the Agreement means that tomato exporters should pay/deposit a duty of 17.5% on the value when exporting tomato to the USA. Said percentage refers to the “dumping margin”, which was calculated provisionally in the antidumping investigation in the 90s. The DOC will continue to investigate and determine that the exports were made at less than fair value, the International Trade Commission will analyze whether the domestic industry was injured.
Notwithstanding, the parties will continue the negotiations for a new agreement. If it is reached, it will enter into force within 30 days and the provisional duties paid would be returned.
Last week, Mexican president, AMLO, and the Underminister of International Trade, Luz María de la Mora, announced respectively that the government is preparing new tariffs as countermeasures against agricultural, industrial and steel products from the USA. The countermeasures that are being prepared are an updated version of those imposed in response to the 232 measures against Mexican steel and aluminum. Mexico still has in force the countermeasures against certain products of US, steel, aluminum, pork meat, cheese, among others… will the new measures include temporal imports?
In several news outlets, it was reported that the Ministry of Economy will not renew the temporary raise of MFN Steel tariffs, 15% ad valorem, for 186 steel tariff items, which had been extended in several occasions since they were first implemented in 2015 due to the global overcapacity and supply problem.
This decision clearly benefits steel producing countries that do not have FTAs with Mexico, such as Korea, China, and Russia.
We are not aware of the reasons behind this decision and the Ministry of Economy did not issue a press release explaining it. The last Decree that established the temporal raise of MFN steel tariffs justified the measure due to the possibility that the steel tariffs established in the US pursuant the 232 section (national security) may divert steel imports into Mexico. Other jurisdictions, such as the European Union and Canada, implemented trade remedies.
Is the trade policy of the new administration to finish with the protectionism of the Mexican steel industry and have closer commercial ties with China and Russia?
This Monday an article published in INCOMEX, authored by Alejandro Gómez Tamez, Director General of GAEAP and executive president of the Chamber of Guanajuato’s Footwear Industry, criticized the new administration’s international trade policy.
The piece notes that the speech “Mexico First” made by the President is contradictory to the actions of the Ministry of Economy, mainly because the validity of the “transitory” MFN tariffs for apparel and footwear products were not extended, validity that concluded on January 30th, 2019.
According to Mr. Gomez, the Minister of Economy, Graciela Márquez, suggested to the industry in a private meeting (held on February 8th) to file antidumping investigations once the conditions are met, but the tariff reduction was imminent. Before January 31th, 2019, MFN tariffs were in a 30% ad valorem, now they are at a 20% ad valorem level.
Mr. Gomez, mentions Mexico will not receive any benefit from this unilateral trade policy, affecting the relevant industry and favoring, in particular, Chinese products. Will we be seeing in the near future antidumping investigations in the textile and footwear sector; if so, will the Ministry of Economy impose antidumping duties which, in addition to tariffs, exceed the previous 30% ad valorem tariff that sought to protect the industry?
Download our News Letter: Trading Room -20190215
This week on the Trading Room:
WTO Report on G20
The WTO issued its 20th monitoring report on the G20 trade measures (from mid-May to mid-October 2018) finding that the introduction of trade restrictive measures have hit a new high, unsurprisingly.
We highlight the following:…See More
232 Measures under WTO Review
On November 21st, the Dispute Settlement Body (DSB) of the WTO, agreed to establish panels to review the tariffs imposed by the US on steel and aluminum imports, following requests of 7 different WTO Members, including Mexico….See More
Esta semana en Trading Room:
Reporte OMC sobre el G20
La OMC emitió su 20° reporte sobre las medidas comerciales del G20, de mediados de mayo a mediados de octubre 2018, encontrando -sin sorpresas- que se registró un nuevo récord de medidas restrictivas.
Destacamos lo siguiente:…See More
Medidas 232 Bajo Revisión OMC
El 21 de noviembre, el Órgano de Solución de Diferencias (OSD) de la OMC acordó el establecimiento de Grupos Especiales (GE) para examinar los aranceles impuestos por EEUU a las importaciones de acero y aluminio en virtud de solicitudes de 7 miembros, incluyendo México….See More
Today, the President of Mexico, Enrique Peña Nieto, issued two Decrees that adopted countermeasures against the United States (US) as a result of the US tariffs applied to aluminum and steel imports from Mexico. Most Mexican countermeasures come into effect today.
Mexico has adopted a strong position against the US, selecting a wide range of products from pork to steel products, which may be adjusted through time.
Further, Mexico raised its Most Favored Nation (MFN) tariffs temporarily for a list of selected steel products.
Mexico’s trade measures can be classified as follows:
VTZ prepared a report about the recent events, available in the following link: VTZ Report: Mexico – Countermeasures
This week on the Trading Room:
Esta semana en “Trading Room”: