In the absence of a standard for a certain imported product or service, such product or service must include a legend indicating that it complies with the corresponding specifications of the country of origin, international specifications or the manufacturer's specifications.
The fulfillment of the standards contained in the NOMS must be verified and certified by the corresponding authorities or by an authorized certifying entity. A product subject to compliance with standards must carry a statement of such compliance.
Sanitary control consists in the verification and application of safety measures or sanctions to manufacturers and sellers of certain products. The Health Law regulates sanitary control of either national or imported products such as food, alcoholic or non-alcoholic beverages, perfumes, cosmetics, tobacco, pesticides, fertilizers and hazardous or toxic substances used in their manufacture as well as certain health products such as medical, odontological and surgical equipment, prosthesis, and hygiene and healing products. What constitutes each of the products covered by the Law is defined therein.
The manufacturing process and specifications that must be complied with by some of the products are described in technical standards. Medications and their preparation are regulated by the Mexican Pharmacopoeia Book.
Facilities dedicated among others, to the manufacture and distribution of health products, pesticides, fertilizers, sources of radiation and toxic or hazardous substances require a health authorization. Labeling requirements must also be complied with.
First time imports of food, alcoholic and non-alcoholic beverages, perfumes, beauty products and tobacco as well as materials used in their manufacture, are subject to sampling and analysis by certified laboratories in order to determine compliance with official standards. Certain products contained in a listing published in the Official Daily Gazette may require import permits depending on the risks they may represent to human health.
In the event that no such permit is needed, these products may be imported under the health certificate of the country of origin or from authorized Mexican or foreign laboratories.
Import and export of drugs and psychotropics is subject to authorization from health authorities which may be granted to pharmacies or authorized manufacturers of medicines. Import permit for health products and medicines is needed for those established by the health authorities and published in the Official Daily Gazette. Import of fertilizers, pesticides and toxic substances is also subject to authorization.
Imported products must include a counter-label in Spanish containing specific commercial information, data of the manufacturer and of the importer.
Products imported into Mexico from a NAFTA Party shall comply with the rules regarding marking of the country of origin, to determine when these products must be considered as NAFTA products.
Moreover, Mexico has adopted GATT-approved valuation rules which enable the foreign supplier to determine the "normal price levels" for goods shipped to its Mexican importer.
Before Mexico's accession to GATT, most imports were subject to prior import permit requirements. GATT accession has dramatically reduced the number of products requiring an import permit. Since GATT and even prior to NAFTA, tariffs were reduced from highs of 100% to a maximum of 20% with many products free of tariff. The average weighted tariff is approximately 11%. In those few cases where permits are required, the Ministry of Commerce reviews the applications, and relies on Mexican industry associations for advice regarding the local availability of the product and may reject applications if the product is already available.
Under NAFTA and other trade agreements, certain products enjoy favorable tariff treatment. (See Section III.B.3. hereinabove).
Quantitative prohibitions and restrictions on imports, such as quotas and licensing requirements, are prohibited with few exceptions and reservations, i.e., firearms, certain pharmaceuticals, endangered species, used computers, printers, and peripherals. Certain Mexican import restrictions will be phased out over a ten-year period, such as those on automobiles. Importers must be registered with the Importers Registry operated by the Ministry of Finance.
If goods are shipped by land, a bill of lading shall be executed. This bill of lading is the contract between the shipper and the carrier. If the carrier is to be liable for the value of the goods, the shipper must pay an additional charge equivalent to the insurance premium. The full value of the goods must be expressly declared in the bill of lading. If no declaration is made, the carrier's responsibility will be generally limited to an amount equivalent to fifteen times the daily minimum wage per ton.
If goods are shipped by sea, a bill of lading must be executed and issued by the ocean carrier to the shipper. This bill of lading is a title representing the goods and is a receipt for the goods on board the vessel. The ocean carrier or operator issuing the bill of lading will be responsible for the merchandise from the moment received until delivered to the consignee. The ocean carrier or operator may limit their responsibility in an event of loss or damage to the goods up to an amount determined by the applicable legal provisions.
If the goods are shipped by air, an airbill must be issued by the carrier to the shipper upon receipt of the goods. The carrier will be responsible for the goods from the moment received until delivery to the consignee. In the event of loss or damage to the cargo, when the value of the shipment is not declared, the carrier will be responsible for up to an amount equivalent to ten times the minimum general daily wage in Mexico City per gross kilogram. The carrier will be liable for the total value of the goods even in the event of force majeure, when the shipper declares the total value and pays an additional charge to the carrier equivalent to the cost of the insurance premium.
Mexico offers no special tax concessions to encourage foreign entities to establish operations in Mexico, nor are there any special exchange rates in effect for trade.
There are no exchange controls on funds moving in or out of the country, however foreign currency accounts are not allowed except in special cases.
Foreign residents who have merchandise in Mexico on a consignment basis for sale are considered to have a "permanent establishment" for tax purposes.
Goods can be delivered to one of many bonded warehouses found in most Mexican cities under the fiscal deposit regime. Under this regime import duties, taxes and compensatory duties are calculated but not paid until the purchaser actually withdraws the goods delivered from the warehouse, and which in such bonded warehouse is not considered a "permanent establishment."
Delivery from a warehouse within Mexico will mean that the seller may be deemed to have a permanent establishment, and in such case would be subject to Mexican income tax on profit earned on the sale. However, tax treaties may allow delivery to be made locally without triggering the concept of a permanent establishment (example U.S.-Mexico Tax Treaty).
With regard to temporary imports not subject to these special programs, the importer is allowed to deposit the amount of the import duty in a special bank account, referred to as "cuenta aduanera." When the goods are exported within the term provided by law for such particular goods, the importer will be allowed to recover the deposit, plus the interest earned. The foregoing is not applicable to the VAT, which must be paid in full when machinery and equipment are imported in this manner, but such payment may be refundable or accreditable in accordance with VAT provisions. (See Section XIV.E.2. hereinafter).
In addition, NAFTA mandates that each Party allow duty-free entry of certain goods imported on a temporary basis, including professional equipment, press equipment, equipment for sound or television broadcasting, cinematic equipment, sporting equipment, goods intended for display or demonstration, commercial samples and advertising films.
The Ministry of Finance is authorized to determine, presumptively, the price at which taxpayers acquire or sell goods, as well as the amount of the consideration in case of other types of operations, in several cases mentioned in the Income Tax Law. For example, when the price of the corresponding operation is lower than market value, or the acquisition cost is higher than said price, or when the sale of goods in import and export operations is at cost or less than cost, or whenever a payment abroad is made.
By determining the price the Ministry of Finance may modify tax profit or loss in operations entered into by and between individuals, companies, residents in Mexico or abroad, permanent establishments, if they are interrelated, as long as the requirements specified in the Law are complied with. (Article 64-A of the Income Tax Law).
The Ministry of Finance issued on March 31, 1995, Temporary Rule Number 248 stating that maquiladoras must elect to use a transfer pricing "safe harbor" rule or apply for an advance pricing agreement if they want to retain their U.S. parent company's exemption from Mexico's Asset Tax. Traditionally, maquiladoras were not operating as a profit center and therefore paid little or no income tax and little or no asset tax since most assets were temporarily leased. As of the date mentioned maquiladoras and their parent companies must review their previous mode of operation from this new tax point of view.
Since Mexico is a signatory, this Convention applies to any international commercial agreements for goods unless the parties expressly waive application of such Convention or any part thereof. If the Convention is applicable, Mexican commercial legislation applies only in a supplementary manner.
The Convention itself establishes the application of Mexican legislation in the following cases:
Since the early 1990's, Mexico has become much more aggressive in enforcing its international trade laws initiating numerous antidumping and subsidies procedures against countries, such as, the United States, China, Brazil, Argentina and Korea.
To offset the effect of the imports of goods under unfair practices of international trade, the Law establishes the imposition of compensatory duties which may only be imposed if there is a price discrimination practice or a subsidy, injury, or threat of injury, and a cause-effect relationship between them.
Discriminatory pricing is defined as introducing goods into the country at a price below their "normal" value. Subsidies are defined as a benefit granted by a government, or, its entities, directly or indirectly to manufacturers or exporters for specific goods to strengthen their international competitive position unless it involves internationally accepted practices.
If goods are imported from a country with a centrally planned economy their "normal value" will be taken from an identical or similar product manufactured or sold in a substitute market-economy country.
In both cases the complaint may be filed by any national manufacturer, individually or as part of an association of manufacturers, representing at least 25% of the national production of a similar or like product to those imported accompanied by documents supporting the allegations. An investigation may also be started by the Bureau when it has gathered sufficient elements to presume the existence of unfair practices of international trade or safeguards.
A provisional resolution containing its preliminary findings must be published 130 days after the publication of the initiation of the investigation wherein the Bureau may impose a preliminary compensatory duty, continue the investigation without provisional compensatory duty or terminate the investigation.
The Bureau will publish the final resolution containing its findings 260 days after the publication of initiation of the investigation. A final compensatory duty may be imposed, the provisional compensatory duty revoked or the investigation concluded without the imposition of compensatory duties.
Thereafter, any interested party may: i) request the revision of the final resolution at the anniversary month of the final resolution; ii) initiate an administrative repeal action, or iii) request the initiation of an alternative dispute settlement procedure under NAFTA Chapter XIX, or GATT.
Safeguards must be installed 260 days after the publication of the initiation of the corresponding investigation. The measures adopted may continue up to four years provided the national manufacturer fulfills the adjustment programs adopted.
Provisional safeguard measures may be taken 20 days after the date of initiation if, from the circumstances, a delay in the imposition of the safeguard measures would cause an injury difficult to repair and there is sufficient evidence of the threat of a serious harm resulting from the imports. These measures may not last more than six months.
The remedies established under Mexican law (nullity suit before the Superior Chamber of the Fiscal Court of the Federation) for the revision of the conformity of the final determination with the Law, may be replaced under NAFTA Chapter XIX by a binational panel. The panel may confirm the Bureau's final resolution or make recommendations for modification.
Panelists must apply the standard of review and the general legal principles that the Fiscal Court of the Federation would otherwise apply.