Trade Groups Detail Mexican Export Barriers Contrary to USMCA Commitments

Sixteen trade groups, including the U.S. Chamber of Commerce, the National Association of Manufacturers, PhRMA and BIO, asked U.S. Trade Representative Katherine Tai to press Mexico to comply with its USMCA commitments during her trip to Mexico for the Free Trade Commission meeting.

In a 10-page letter made public last week, the groups detailed barriers in the Mexican market to exports of goods and services, as well as regulatory barriers that make it harder to use Mexico as a manufacturing platform to serve the U.S.

They said that the Mexican government is not honoring its customs and trade facilitation obligations "and instead is moving to erect new customs barriers that harm the ability of American small businesses to benefit from the agreement."

They said Mexico doesn't allow periodic assessment and payment of duties, a requirement outlined in Chapter 7; it has not removed the local broker rule to import into Mexico (also an explicit requirement in the trade facilitation chapter); it also isn't consistently publishing proposed customs regulations.

They said exporters are confused about who has which role at the ports of entry among the Tax Administration Service, the National Customs Agency, Foreign Trade Auditing and the military.

They complained that Mexico is not honoring its commitment to raise its de minimis threshold to $117, because there is a 17% tax on express shipments entering under de minimis that are valued between $50 and $117.

"We urge USTR to request that Mexico reverse this increase," they wrote. The global tax was hiked in 2020.

The trade groups, who are in a coalition called the Alliance for Trade Enforcement, also detailed problems with regulatory barriers for genetically modified crops and for new prescription drugs and medical devices.

"Three years after the USMCA’s entry into force, Mexico continues to adopt and maintain policies that unfairly delay market access for U.S. biopharmaceutical products, including delays in the regulatory approval process, barriers to accessing public formularies and new public procurement processes," they wrote.

The letter also asserts that Mexico's equivalent of the FDA, COFEPRIS, does not authorize new medical devices within a reasonable period of time. "The current time for COFEPRIS to review, or in some cases even respond to, medical device applications is two years -- even for medical devices already reviewed by the U.S. Food and Drug Administration or Health Canada."

In the case of genetically modified corn, although there is no explicit ban on its import, a presidential decree asks that the government assess when Mexico could become self-sufficient in yellow corn so it would not rely on GMO corn from the U.S.

The USTR asked for formal consultations, the first step in a state-to-state dispute, because of this policy.

"Any conclusion to this dispute must result in the elimination of this policy and return Mexico to a science-based, transparent, and predictable regulatory pathway for innovative agricultural products. American biotech innovation supports U.S. farmers and workers, and when reviewed on a scientific basis can support affordable access to food and efforts to address climate change. We urge USTR to resolve this dispute satisfactorily in an expeditious manner," they wrote.

With regard to processed food, Mexico requires a black stop-sign shape on the front of packages or bottles of food or drinks that its regulator determines are too high in calories, saturated fat, sodium or added sugar (with a designation of whether it's salt or sugar or fat that requires the label). It also stopped allowing advertisements on children's programming for junk food. All these actions are aimed at curbing obesity.

"These regulations which require warning labels on foods that do not meet government criteria make it difficult for American manufacturers to export U.S.-made food and beverages to Mexico and insufficient time for food reformulation was granted," they wrote. "Mexico has also recently implemented marketing restrictions for foods that carry the required warning labels, including restrictions on adult platforms and during adult content, which further negatively impact U.S.-made food and companies’ ability to sell products in Mexico."

The groups also complained of regulatory barriers for information technology hardware. "For most countries, industry tests external power supplies once and only re-tests a product if it has been modified. Mexico’s proposed NOM-029 deviates from this regionally and internationally accepted practice and imposes significant burdens on industry," the letter said.

A complaint that affects U.S. importers of Mexican goods has to do with regulating chemicals. "So far, Mexico has not developed or implemented a risk-based chemical management system as encouraged by the USMCA Annex of Chemical Substances. This has made it more difficult to coordinate on regulatory issues that impact North American supply chains, including the use of chemicals as essential inputs to many industrial and agricultural products, including semiconductors, high-capacity batteries (HCBs), pesticides, fertilizers, and automotive goods," they wrote.

“It’s been three years since USMCA entered into force and Mexico has unambiguously failed to fully implement the agreement and often takes action in direct contravention of its USMCA commitments,” said Brian Pomper, executive director of the Alliance for Trade Enforcement in the press release announcing the letter.