15 Jan 2013
Mexico: Market Profile
Major Economic Indicators
Recent Developments
-
Thanks to stronger demand from the US, the Mexican economy ended last year with a 4.0% growth. Amid the slow but expanding US economy and the perennial sovereign debt crisis in Europe, the Mexican economy is expected to grow by 3.5% in 2012.
-
Hong Kong’s total exports to Mexico grew by 3% to US$2.0 billion in the first eleven months of 2012, while its imports from Mexico decreased by 6% to US$471 million.
Current Economic Situation
Reviving demand from the US led the Mexican economy out of the economic slump in 2010 and allowed the country to grow by some 4.0% in the past two years. The improvements in the credit market and industrial activities have helped consumers and businesses regain confidence, while a recovering US economy has propped up Mexico’s exports.
On entering 2013, the Mexican economy is forecast to grow by 3.5%, given that the impacts of government efforts to boost job creation wane and the fiscal situation in the US remains uncertain. Meanwhile, a relatively weak Mexican peso is underpinning exports and industrial production, while the continuing trend of industrial relocation to Mexico helps improve labour market prospects. In all, the Mexican economy, on the back of the recovering US economy and the lingering European sovereign debt crisis, is forecast to grow by 3.5% in 2012.
Trade Policy
The Mexican government has taken decisive steps in recent years to further liberalise its import regulations in place on a wide array of products. These efforts have greatly enhanced the prospects for exporters in the Mexican market, who currently face a considerably lower import barrier than few years ago.
Import duties
The Harmonised System is used for goods classification and customs clearance in Mexico. As a WTO member, Mexico affords at least most favoured nation (MFN) tariffed treatment to all its trading partners. Tariffs are levied on most products entering Mexico, applying ad valorem to the CIF values of imports. Since 2008, Mexico has embarked in a years-long, unilateral effort to reduce its MFN duties rates on approximately 97% of manufactured imports. The most recent round of cuts took place on 1 January 2013, covering certain apparel, textile made-ups and footwear, reducing the MFN duty rate for apparel and textile made-ups imported into Mexico to 20%. Tariffs aside, most imports are subject to a 16% value-added tax (VAT) in Mexico, while a 0.8% ad valorem customs processing fee is levied on imports.
Import Documentations
In Mexico, all imports must be accompanied by an import declaration, which must contain a broad range of information including a commercial invoice (must include information about the place and date of issue, name and domicile of the consignee, detailed description of the merchandise and name and domicile of the seller), a bill of lading or airway bill, documents showing compliance with non-tariff regulations and restrictions, certificates of origin, applicability of antidumping duties, documents demonstrating guarantee of payments of additional duties when imports appear to be undervalued, and information allowing identification, analysis and control of the imports (such as serial number, brand, model or technical specifications).
Anti-Dumping and Countervailing
As of December 2012, Mexico applies no anti-dumping (AD) order on Hong Kong’s exports. On the other hand, the transition duties imposed by Mexico on a range of Chinese mainland products were eliminated on 12 December 2011. Yet, the Mexican government has stressed that regular AD and safeguard actions against Chinese mainland products may be initiated to protect the domestic apparel, footwear and other sectors from injurious competition from abroad. As it now stands, Mexico applies 13 AD measures on imports from the Chinese mainland and has one ongoing investigation, while it does not apply any AD measures on imports from Hong Kong or countervailing (CV) measures on imports from the Chinese mainland or Hong Kong.
As part of the on-going efforts to enhance the monitoring of imports in Mexico, the Servicio de Administración Tributaria (SAT) launched on 15 December 2011 a new price alert system to detect any practices of undervaluation that may adversely affect domestic producers. SAT indicates that this price alert system will initially focus on 400 textile tariff lines and will subsequently incorporate tariff lines of Chapters 61, 62 and 64. Other sectors beyond the textile, apparel and footwear sectors will be incorporated into the system at a future date.
Product standards and labelling requirements
Basically, Mexican product standard regulations can be classified under two categories, namely mandatory technical regulations (NOMs) including labelling requirements, issued by government agencies and ministries, and voluntary standards (NMXs) issued by recognised national standardisation bodies. In short, most of the standards and certificates are in line with US standards, so that Hong Kong companies can have their products tested and certified before shipment in Hong Kong or the Chinese mainland.
On labelling, all products intended for retail sale in Mexico are required to bear a label in Spanish prior to importation. Most NOMs require commercial information to be affixed, adhered, sewn, or tagged onto the product, with information such as the name/business name and address of the importer and exporter, trademark or commercial brand name of the product, net contents, use/handling/care instructions for the product and relevant warnings and precautions, if applicable, in Spanish.
Preferential treatments
With 12 free trade agreements in place, Mexico is having preferential access to 44 countries, including the EU, US and Japan. In a recent move of interest to Hong Kong traders, Mexico signed on 18 June 2012 a comprehensive agreement for the avoidance of double taxation (CDTA) with Hong Kong, aiming to encourage the flow of investment and talent between the two economies. Under the CDTA, tax paid for income earned in Hong Kong by Mexican residents will be allowed as credit against tax payable in Mexico, while a lower withholding tax will be applied to Hong Kong residents receiving interest from Mexico.
Hong Kong’s Trade with Mexico^
Mexico is Hong Kong’s largest export market in Latin America. Hong Kong’s total exports to Mexico rose by 3% to US$2.0 billion in the first eleven months of 2012, after increasing by 18% to US$2.1 billion in 2011. Major exports to Mexico in January-November 2012 included telecommunications equipment & parts (shared 35% of the total), electrical apparatus for electrical circuits (9%), electric power machinery & parts (7%), parts & accessories of office machines/computers (7%), semi-conductors, electronic valves & tubes (6%), toys, games and sporting goods (3%), computers (3%) and household type, electrical & non-electrical equipment (3%).
On the other hand, Mexico is Hong Kong’s 3rd largest source of imports in Latin America, with total imports from Mexico decreasing by 6% to US$471 million in the first eleven months of 2012, following a 14% increase to US$563 million in 2011. Leading import items in January-November 2012 included computers (shared 27% of the total), telecommunications equipment & parts (14%), parts & accessories of office machines/computers (10%), plastic waste, parings & scrap (8%), crustaceans, molluscs & aquatic invertebrates, chilled, frozen, dried, salted or in brine (5%), fresh or dried fruit and nuts (5%) and leather (4%).
^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.
