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Trade sanctions
General restrictions
What restrictions apply in relation to the trade of goods, technology and services?
Tariff barriers
In the form of higher foreign trade taxes or duties to control or reduce the amount of goods entering and exiting the country. Such tariff barriers must be paid at the entry or exit point and must be analysed case by case.
Such import duties or taxes are based on the tariff classification established in the Harmonized Tariff System of the World Customs Organization, applicable to each product. In Mexico, the General Import and Export Tax Law indicates the tariff code and the import or export tax rate.
Non-tariff measures
According to the Foreign Trade Law, Mexico can also impose non-tariff measures or barriers limiting the importation or exportation of products, in the way of quantitative or qualitative restrictions, such as quotas, labelling requirements, import or export permits, authorisations or certificates.
These measures are also imposed based on the tariff classification established in the Harmonized Tariff System of the World Customs Organization, applicable to each product.
However, in the majority of cases, such non-tariff barriers are imposed by other branches of the Executive, such as the Ministry of Economy, Ministry of Health and Ministry of Energy, based on the characteristics of the regulated goods.
Currently, Mexico holds quotas to protect the national production of certain sensitive products, including textiles, coffee, sugar, rice, toys, meat and chicken.
Technical barriers to trade
Mexico can also establish technical barriers to trade as a sanction, to hinder and make the importation or exportation of specific products more difficult. These barriers are usually in the form of formalities and requirements based on the technical characteristics of the products, rather than a general classification.
These measures are also imposed based on the tariff classification established in the Harmonized Tariff System of the World Customs Organization, applicable to each product.
General prohibition
Another sanction could be to completely ban the importation, exportation and circulation of certain products within the country. These sanctions are usually based on risks to health, the environment or security of the country or its citizens.
For example, Mexico currently holds a ban, among others, on electronic cigarettes, spare parts of electronic devices, drugs (such as cocaine), morphine, LCD, opium, turtle eggs, totoaba liver, hazardous chemicals, radioactive products, certain weapons and materials for specific countries.
Restrictions to services
Mexico is a signatory member of the General Agreement on Trade in Services, therefore, all the services provided therein are covered by the principles of most favoured nation, national treatment, among others. However, there are certain services reserved to the state, and Mexico can grant certain concessions and authorisations for the exploitation and rendering of such services (for example, broadcasting, television, gambling and betting games, financial services, transportation of people, and extraction and exploitation of hydrocarbons). In this regard, the importation and provision of such services will be forbidden unless the company or individual holds a relevant licence or authorisation administered by another branch of the Executive, for example the Ministry of Economy, Ministry of Health or Ministry of Energy, based on the characteristics of the regulated services.
In addition, it is worth mentioning that any importation of services considered as illicit in the Federal Criminal Code is totally forbidden.
Military and technological dual-use restrictions
Mexico published a Decree for which several measures are established to restrict the export or import of specific military and technological dual-use goods to the countries, entities and persons indicated therein, among others Iran, North Korea, Afghanistan, Congo Republic, Sudan, Lebanon and Yemen.
Such decree was published as domestic legislation according to the Security Council of the United Nations Organization.
In addition, to avoid any possible terrorist activity, all the military, armament and explosive goods are controlled by the Ministry of Defence, and no civil person is allowed to buy or carry weapons above calibre .38, which is allowed only for military use.
In relation to the above, Mexico is a member of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies.
The Wassenaar Arrangement was established to improve international security and stability, encouraging transparency and obligations in transfers of arms and dual-use goods and technologies, avoiding accumulations in certain regions.
Every six months the signatory members exchange information on sales of arms and dual-use technologies to non-Wassenaar members. The agreement aims to control eight types of weapons categories: battle tanks, armoured fighting vehicles, large-calibre artillery, military aircraft, military helicopters, warships, missiles or missile systems, and small arms and light weapons. The list of goods is revised and updated by its members annually.
Currently, 42 countries have voluntarily adopted the Wassenaar Arrangement: Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, India, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, Ukraine, the United Kingdom and the United States.
Nevertheless, a foreign person or entity may still export, from a different country, goods listed in the Wassenaar Arrangement if they obtain the corresponding import permit regulated by the Ministry of Defence and Ministry of Economy to introduce them into Mexico.
General exemptions
Do any exemptions apply to the general trade restrictions?
There are no general exemptions to trade restrictions.
Targeted restrictions
Have the authorities in your jurisdiction imposed any trade sanctions against dealing with any particular individuals or entities?
No. The only targeted restrictions imposed by the Mexican government directed to specific countries, are the ones related to the exportation or importation of specific military and technological dual-use goods to Al-Qaida, Iran, North Korea, Afghanistan, Congo Republic, Sudan, Lebanon and Yemen.
In 2018, Mexico imposed retaliatory measures on certain US products in response to President Donald Trump’s duties on Mexican steel and aluminium exports to the United States; however, such tariff barriers are no longer in place.
Exemption licensing – scope
In what circumstances may the competent sanctions authorities in your jurisdiction issue a licence to trade in goods, technology and products that are subject to restrictions?
No licences to trade goods, technology and products subject to restrictions can be issued on a general basis.
Depending on the type of restriction to which the product is subject, importers and exporters may request an import or export permit or authorisation; however, some restrictions are not subject to exemption licences.
Regarding tariff restrictions, no licence or permit would be necessary to apply for preferential treatment if the good, technology or product originates from a country with a free trade agreement with Mexico.
In common with other barriers or sanctions, such as import permits, quotas, authorisations or duties, a licence would only be available if the exemption is provided directly by law, and then, the applicant must comply with all the requirements applicable for that licence.
Exemption licensing – application process
What is the application process for a licence? What is the typical timeline for a licence to be granted?
No licences to trade goods, technology and products subject to restrictions can be issued on a general basis. However, depending on the type of restriction to which the product is subject, importers and exporters may request an import or export permit or authorisation, but some restrictions are not subject to exemption licences, such restrictions are imposed based on the tariff classification established in the Harmonized Tariff System of the World Customs Organization, applicable to each product.
For example, the Ministry of Defence has a time frame of 40 working days to issue an import permit of weapons for specific purpose.
Approaching the authorities
To what extent is it possible to engage with the competent sanctions authorities to discuss licence applications or queries on trade sanctions compliance?
Communications with the competent authorities represent a complex problem since most of the application process is carried out through a digital platform. Hence, no verbal communication with the authority is necessary to request such a licence. After the application is submitted, petitioners are able to reach the authority in charge of the approval of the permits, to discuss the approval process in person (covid restrictions did not help this process).