Issue 277, November 3, 2000
As previously reported, the Mexican Maquiladora industry has enjoyed the benefits of duty deferral status for all materials, components, supplies, equipment and machinery, irrespective of their origin, for over 30 years. The loss of that status was originally scheduled for November 1, 2000. On October 30th, Mexico officially announced a new start date of November 20, 2000. On that date, all non-NAFTA originating materials and components (when finished goods are exported to the United States or Canada) will be fully dutiable in Mexico at either the Most Favored Nation (MFN) rate, which can range for 13% to 30%, or the Preferential Duty Rate, which can range from 0% to 5%. On January 1, 2001, machinery and equipment from a non-NAFTA country will be subject to duties under the same rate system.

To limit the potentially devastating impact of these new rules, the Mexican government introduced the Sectorial Promotion Programs. On October 30th, the Mexican Government released an updated report covering all the sectorial promotion programs, including three newly added programs. The current list covers the following industrial sectors: Electric, Electronic, Furniture, Toys and Recreation, Foot Wear, Mining and Metallurgic, Capital Assets, Photographic, Agriculture Machinery and Varied Industries. The three newly added programs cover Textiles and Apparel, Automotive and Plastics.

Last week, at the Maquiladora Industry Convention in Cancun, the Mexican Government strongly recommended that all maquiladoras, including those suppliers who sell to Maquiladoras, carefully review their parts and components by HTS number to determine if their items are included in one of the sectorial programs. Items which are not included are still eligible for listing in one of the programs, but Maquiladoras will need to make a formal request to SECOFI as soon as possible. Please note, that inclusion in one of the sectorial programs does not guarantee duty free status. In many cases, the rates can range from 2.5% to 5% under certain programs.

It is also important to remember that participation in one of the Sectorial Promotion Programs is not automatic. Each maquiladora must file an application with the Mexican Government requesting participation in a Sectorial Promotion program. The application is designed to establish a Maquiladora?s eligibility for one of the sectorial programs.

Our contributing writer, Steven B. Zisser, is an attorney in the San Diego border community of Otay Mesa, where he specializes in the practice of U.S. Customs and International Trade Law. He can be reached via email or at (619) 671-0376.

Please note that due to the complex nature of the subject matter, Danzas AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with Danzas AEI.