Mexico Import: Non-Tariff Barriers
For more detailed information on Mexico's non-tariff barriers, including the topics below, see the 2021 National Trade Estimate Report on Foreign Trade Barriers. This report was compiled by The Office of the United States Trade Representative.
Antidumping Duties
A number of exports are subject to antidumping duties that limit access to the Mexican market. Products subject to these duties currently include beef, hydrogen peroxide, epoxidized soy oil, apples, liquid caustic soda, ammonium sulfate, polyvinyl chloride, bond paper, industrial fatty acids, stearic acid, ethylene glycol monobutyl ether, and carbon steel pipes and tubes.
Administrative Procedures and Customs Practices
Concerns about Mexican customs administrative procedures include insufficient prior notification of procedural changes; inconsistent interpretation of regulatory requirements at different border posts; and uneven enforcement of Mexican standards and labeling rules.
Agricultural exporters note that Mexican inspection and clearance procedures for some agricultural goods are long, burdensome, nontransparent, and unreliable. Customs procedures for express packages continue to be cumbersome.
Exporters complain that registering is bureaucratically difficult, and this requirement sometimes causes costly customs clearance delays when new products are added to the list of subject items with immediate effect, thereby denying importers sufficient notice to apply. They also report that certain importers are summarily dropped from the registry without prior notice or subsequent explanation.
Sanitary and Phytosanitary Issues
Mexican sanitary and phytosanitary measures have created barriers to imports of certain agricultural goods, including grains, seed products, apples, stone fruit, pork, beef, poultry, citrus fruits, wood and wood products, dry beans, avocados, potatoes, and eggs. In addition, procedural requirements regarding sanitary and phytosanitary inspections at individual ports of entry result in unnecessary delays at border points of entry, seaports, and airports.
Intellectual Property Rights (IPR)
There is wide availability of pirated and counterfeit goods in Mexico, via both physical and virtual markets. As broadband access increases, digital IP crimes have been at the forefront of IP violations. The online availability of copies of new-release movies sourced from Mexico is a particular concern. Overall criminal enforcement of IP rights, including online, continues to be characterized by weak coordination among federal, state, and municipal officials; limited resources for prosecutions; the lack of long-term sustained investigations targeting suppliers of counterfeit and pirated goods and services; and the lack of sufficient penalties to deter violations. In 2020, Mexico continued to reduce resources for numerous government agencies, further limiting Mexico’s efforts to improve the environment for IP. The United States has identified the Tepito market in Mexico City, the San Juan de Dios market in Guadalajara, and the La Pulga Rio market in Monterrey in the Notorious Markets List for selling pirated and counterfeit goods.
With respect to geographical indications (GIs), in April 2018, Mexico and the European Union (EU) came to an agreement in principle on a free trade agreement in which Mexico agreed to protect 340 names for foodstuffs, wines, and beers. The United States remains concerned about the negotiation of product-specific IP outcomes as a condition of market access from the EU, and reiterates the importance of each individual IP right being evaluated on its individual merit in Mexico.
In July 2020, Mexico enacted a new law for the protection of industrial property and amendments to the Federal Copyright Law and Federal Criminal Code intended to implement a variety of IP commitments under the United States-Mexico-Canada Agreement–USMCA, including provisions on enforcement against counterfeiting and piracy, protection of pharmaceutical-related IP, protection against circumvention of technological protection measures and rights management information, unauthorized camcording of movies, satellite and cable signal theft, and transparency with respect to new GIs. When these laws are fully implemented, these commitments should substantially improve the IP environment in Mexico and help to modernize Mexico’s IP system.
Ownership Reservations
Mexico reserves certain sectors, in whole or in part, for the state, including: petroleum and other hydrocarbons; control of the national electric system, radioactive materials, telegraphic and postal services; nuclear energy generation; coinage and printing of money; and control, supervision, and surveillance of ports of entry. Certain professional and technical services, development banks, and the land transportation of passengers, tourists, and cargo (not including courier and parcel services) are reserved entirely for Mexican nationals.
Reforms in the energy, power generation, telecommunications, and retail fuel sales sectors have liberalized access for foreign investors. While reforms have not led to the privatization of state-owned enterprises such as Pemex or the Federal Electricity Commission (CFE), they have allowed private firms to participate. Still, the Lopez Obrador administration has made significant regulatory and policy changes that favor Pemex and CFE over private participants. The changes have led private companies to file lawsuits in Mexican courts and several are considering international arbitration.
Hydrocarbons: While the Mexican government retains ownership of subsoil resources, Mexico’s 2013 energy reform allows private companies to explore and extract hydrocarbons and participate in downstream operations, including refining, petrochemicals, transport, retail, and supply, subject to local content requirements. Private companies participate in hydrocarbon exploration and extraction activities through contracts with the government under four categories: competitive contracts, joint ventures, profit sharing agreements, and license contracts. All contracts must include a clause stating subsoil hydrocarbons are owned by the state. Mexico’s hydrocarbons law restricts the ability of foreign investors to use international commercial arbitration to resolve certain types of disputes with the Mexican government. For investors seeking to resolve such disputes, the only available forum is the Mexican court system.
Telecommunications: Mexican law states telecommunications and broadcasting activities are public services and the government will at all times maintain ownership of the radio spectrum.
Real Estate: Mexico prohibits foreigners from acquiring title to residential real estate in so-called “restricted zones” within 50 kilometers (about 30 miles) of the nation’s coast and 100 kilometers (about 60 miles) of the borders. “Restricted zones” cover roughly 40 percent of Mexico’s territory. Foreigners may acquire the effective use of residential property in “restricted zones” through the establishment of an extendable trust (fideicomiso) arranged through a Mexican financial institution. Under this trust, the foreign investor obtains all property use rights, including the right to develop, sell, and transfer the property. Real estate investors should be careful in performing due diligence to ensure that there are no other claimants to the property being purchased. In some cases, fideicomiso arrangements have led to legal challenges. US-issued title insurance is available in Mexico and US title insurers operate here.
Additionally, US lending institutions have begun issuing mortgages to US citizens purchasing real estate in Mexico.
Services Barriers
Telecommunications
Notwithstanding the sweeping reforms of the telecommunications sector in 2013 and 2014, new market entrants must still compete with the traditional dominant supplier, which has maintained a market share well above 60 percent.
On March 31, 2018, Mexico’s Federal Institute of Telecommunications (IFT) adopted an order that directed the traditional dominant supplier to restructure itself within two years into (1) a local access company that controls passive infrastructure assets such as local loops and dedicated links, (2) a wholesale services division that provides wholesale services, and (3) a retail services division that provides retail services. In addition, the local access company and the wholesale services division will be obligated to provide their services and infrastructure on a nondiscriminatory basis. Although the initial IFT order required that this restructuring be completed by the end of March 2020, IFT has suspended this deadline due to the COVID-19 pandemic. The full implementation of this IFT order is a key part of the reform of the telecommunications sector in Mexico.
Note: The above information is subject to change. Importers are advised to obtain the most current information from a customs broker, freight forwarder, logistics professionals, or local customs authorities.
Sources: Office of the United States Trade Representative, US Department of State, National Customs Agency of Mexico (Agencia Nacional de Aduanas de México or ANAM)
Article written for World Trade Press by Felicia Topp.
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