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Mexico Announces Comprehensive Program to Fight Unfair Textile and Apparel Imports

Tuesday, December 30, 2014
Sandler, Travis & Rosenberg Trade Report

[Editor’s note: This article originally appeared in the Dec. 18, 2014, issue of the Advisor, a weekly publication of the ST&R-TAP service, and is reprinted here with permission.]

The Mexican government announced earlier this month a set of measures aimed at combatting unfair trade practices affecting the textile and apparel sector and enhancing the productivity and competitiveness of domestic manufacturers in the face of mounting foreign competition. A press release from the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) indicates that this action includes six separate measures involving import duties, importer registration, automatic alerts, enhanced surveillance and minimum estimated prices. In addition, Mexico will establish new financing mechanisms to allow domestic textile and apparel producers to modernize their infrastructure and increase their exports to foreign markets.

A summary of the measures announced by the Ministry of Finance and Public Credit is provided below.

- Textile and apparel importers will be required to be listed on a sector-specific registry. This requirement is already in place for certain other sectors, including footwear.

- As it has done with footwear and steel, the Mexican government will establish an automatic alert system for textile and apparel imports that will ostensibly allow customs officials to verify imported goods in advance.

- Mexico’s Tax Administration Service (Servicio de Administración Tributaria, or SAT) will put in place a permanent system of controls for importers of undervalued goods and their clients.

- Mexico will again postpone the import duty reduction that was expected to be implemented at the beginning of next year on 73 apparel items and seven textile made-ups. Originally slated to enter into force on Jan. 1, 2013, the duty reduction from 25 percent to 20 percent has been twice postponed for one-year periods and will now be delayed until 2018.

- Minimum estimated prices will be set for raw materials and finished goods.

- Tariff breakouts for textile and apparel products will be expanded from the 8-digit to the 10-digit level (it is not clear at this point whether this action will be limited to sensitive textile and apparel items or cover all products).

- Mexico will implement a new financing mechanism with total available credit of 450 million pesos over the next 12 months to enable the textile and apparel sector (especially small- and medium-sized enterprises) to upgrade their machinery and equipment, pursue innovative strategies and develop new products.

- Mexico’s National Foreign Trade Bank (Bancomext) will enhance financing opportunities for the textile and apparel sector through a comprehensive program that will include (i) direct credit for companies that are currently exporting or are seeking to export their products; (ii) international factoring; and (iii) the provision of letters of credit for import and export transactions carried out by SMEs.

- The Service Agency for the Commercialization and Development of Agricultural Markets (Aserca) will support the purchase of cotton from domestic growers by textile manufacturers.

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