Mexico Set to Implement New Import/Export Tariff in 2002

By Julia S. Padierna-Peralta

On January 18, 2002, Mexico’s Economy Secretariat published a Decree implementing the Import and Export General Duties Law (Ley de los Impuestos Generales de Importacion y de Exportacion).^/ The new Law reflects the changes made to the Harmonized Commodity Description and Coding System (the Harmonized System or HS) by the World Customs Organization (WCO). It also consolidates Mexico’s Import Tariff and Export Tariff^/ into a single instrument: the Import and Export General Duties Tariff (or TIGIE by its Spanish acronym). The TIGIE will go into effect on April 1, 2002.

This article highlights some of the key features of Mexico’s TIGIE and its relevance to individuals and companies trading with Mexico.

II. Mexico’s New Tariff: HS Amendments

Mexico currently employs a system of two customs tariffs: an Import Tariff (Tarifa de Importacion), with approximately 11,430 tariff items; and an Export Tariff (Tarifa de Exportacion) with close to 5,290 tariff items. The structure of both Tariffs is based upon the international Harmonized System (HS).^/

The international HS is reviewed and amended periodically to reflect changes in technology and world trade patterns, regroup goods in a more efficient manner and correct orthographic errors. The most recent changes to the HS were agreed by WCO members in June 1999. Mexico, along with other WCO members, is required to incorporate these changes into its customs nomenclature in 2002.

The WCO approved a total of 372 sets of amendments to the HS, affecting 57 of the existing 97 chapters in the HS. The WCO amendments include, among others:

• New subheadings in 2009 (fruit juices).
• Subdivision of heading 2710 (petroleum oils).
• Creation of heading 3825 (municipal and industrial waste, sewage sludge).
• Amendments to reflect new technology or industry practice (e.g., restructuring of provisions on conveyor or transmission belts (4010), tires (4011) and oriented strand board (4410).
• Restructuring of Chapter 40 (rubber), Chapter 41 (leather), Chapter 48 (paper), Chapter 60 (knitted or crocheted fabrics), Chapter 84 (electric hand tools).
• Creation of 150 subheadings to describe substances and products regulated by international agreement (e.g., related to arms control, toxic waste, endangered species, narcotic drugs and psychotropic substances).
• Adjustments to 138 texts of Legal Notes.
• Clarification of texts and use of updated terminology in numerous subheadings.

The extensive changes recommended by the WCO provided Mexico with the opportunity to do a comprehensive review of its Import and Export Tariffs. Mexico revised the language of commodity descriptions, regrouped products and eliminated tariff items. It also harmonized the units of quantity used in the Import and Export Tariffs for the same commodity into single and uniform units of measure. In addition, it harmonized export and import tariff items.

Together with the WCO recommendations, Mexico made approximately 12,308 tariff changes, which are now reflected in the structure and nomenclature of the TIGIE.

The TIGIE is Mexico’s most comprehensive effort to simplify its customs tariff regime. It reduced a total of approximately 16,700 tariff items, encompassing both the Import and Export Tariffs, down to about 11,800 tariff items. It is also an effort to curtail the illegal smuggling of goods, improve statistical reporting and facilitate customs operations by making it easier for importers, exporters and Mexican customs brokers to classify goods.

The TIGIE will revoke both Mexico’s Import and Export Tariffs effective April 1, 2002.^/

The new Tariff is not intended to change existing tariff preferences nor applicable non-tariff regulations. Safety, health, quality, environmental, phytosanitary and other technical standards or NOMs will continue to apply to products, regardless of their new tariff classification. Mexico, however, has yet to express preferential tariff rates and the non-tariff requirements in terms of the TIGIE provisions.

To facilitate the use of the TIGIE, Mexico’s Economy Secretariat is expected to publish prior to April 1, 2002 a tariff item correlation table showing the current tariff items affected and their new TIGIE equivalents. Furthermore, the TIGIE is expected to be incorporated soon into Mexico Customs Integrated Automatic System (Sistema Automatizado Aduanero Integral: SAAI) – the information system that supports the operation of Mexican Customs. This incorporation may provide insight into conversion issues, in the event that the correlation table is not published by that time. As of April 1, 2002, the SAAI will not longer recognize tariff items and commodity descriptions not longer existent in the new Tariff.

Mexico also plans to make available in the near future an updated version of the Notas Explicativas (Explanatory Notes) to guide the interpretation and application of Mexico’s TIGIE.

The numerous changes reflected in Mexico’s new customs tariff (TIGIE) will inevitably create some degree of confusion and extra work for importers and exporters, at least at the beginning of the TIGIE’s implementation. Individuals and companies trading with Mexico are strongly advised to carefully review the changes relevant to their industry and products. Familiarity with the structure and nomenclature of the TIGIE is fundamental not only for tariff classification purposes, but also to meet origin rules, comply with non-tariff regulations, and avoid customs delays, as well as potential customs penalties and fines.

Julia S. Padierna-Peralta (jpadierna@npwdc.com) is a former liaison to the Mexican Senate and currently an associate with the law firm of Neville Peterson LLP. This article is for informational purposes only and does not purport to provide legal advice.