International Trade 2018 Comparisons

Last Updated June 27, 2018

Law and Practice

Authors



Vázquez Tercero & Zepeda was founded in 1973. While it originally focused on industrial policy, investment and trade control matters, the firm shifted its practice exclusively to international trade matters in the mid 80’s, and has been a leader in matters related to GATT/WTO, NAFTA, trade remedies, origin verification, customs and regulatory for the past forty years. In 2011, Vázquez Tercero y Asociados joined forces with Eduardo Zepeda, and VTZ was born, establishing its first office outside Mexico City, in Guadalajara, with emphasis in trade-related tax planning and litigation. VTZ expanded and now has five small offices throughout the country.

The Mexican Foreign Trade Law (“FTL”) provides that anti-dumping duties shall be equal to the margin of dumping; however, it also provides for the possibility that they may be less than the dumping margin, provided they are sufficient to discourage the import of goods subject to “unfair trade practices” (seeFTL, article 62.1). This possibility is reinforced by the Regulations to the Foreign Trade Law (hereinafter referred to as “Regulations to FTL”), which provide for the same application of a “lesser duty” rate if such lesser duty is sufficient to offset injury (seeRegulations to the FTL Articles 89-A and 90).

The word “may” is of importance in the relevant provisions. While some authors and the Ministry of Economy hold that a possibility arises based on such provisions, others maintain – based on judicial precedent – that when a legal provision applicable to the actions of Government (ie, law, rule, regulation, etc) indicates that the relevant authority “may” do or refrain from doing something, and such action or restraint entails greater benefit for the petitioner or subject of Government action, the term “may” actually means that such authority should do or refrain from doing (see, for instance, Tesis: 1a./J. 148/2007; Tesis: I.7o.A.264 A; Tesis: XV.4o.26 A). In practice, although the Ministry of Economy deems the application of a “lesser duty” as a discretionary act, a “lesser duty” analysis is always conducted when it has extended the term of the preliminary duties pursuant to Article 7.4 of the Anti-dumping Agreement (see Regulations to the FTL, articles 82 and 83). However, a “lesser duty” is not applied in all cases.

Mexico does not calculate an injury margin as such. Rather, the elements of injury are taken into consideration for determination of the injury suffered by the domestic industry, ie, price undercutting, price suppression, price depression, etc. Therefore, if the Ministry of Economy decides to apply a “lesser duty” rate to injurious imports, these elements – and especially price undercutting – are taken into consideration for the application of the anti-dumping duty, which in most recent cases has been imposed as a specific duty as opposed to an ad valoremrate (see, for instance, Final Determination of the Anti-dumping Investigation on Ammonium Sulfate from the USA and China, Federal Official Gazette, 9 October 2015; Final Determination of the Anti-dumping Investigation on Steel and Zamac Handles from China, Federal Official Gazette, 23 December 2015; Final Determination of the Anti-dumping Investigation on Kitchenware from China, Federal Official Gazette, 13 October 2016).

Article 2 of the FTL specifically indicates that the provisions of the Law are in the public interest, and apply throughout Mexico without prejudice of the provisions of the treaties or conventions to which Mexico is a party. Article 88 of the FTL was amended in March of 2003, in order to eliminate over-consideration of the effects on industrial users and end consumers derived from the application of a measure.

Regardless, although an affirmative finding of injurious dumping may exist, public interest considerations may suggest that the collection of duties should be suspended in certain cases, including short supply, public health or other emergency situations. For instance, in the case of the anti-dumping investigation on the import of chicken legs and thighs from the United States (Final Determination dated 6 August 2012), collection of duties was suspended as a result of the epidemic of Avian Flu H7N3, since the Ministry of Economy found that the price of chicken legs and thighs from the USA had experienced certain distortions that are not explained by ordinary market factors. In another case, following a recommendation from the Foreign Trade Commission, anti-dumping duty collection on ammonium sulfate (a nitrogen nutrient for crops) from the United States was suspended in light of a food crisis.

Such public interest considerations may arise during the discussion of the final determination project at the Foreign Trade Commission (COCEX).

According to the FTL, the Ministry of Economy has 90 working days after the notice of initiation to publish the preliminary determination. However, provisional anti-dumping duties can only be imposed after 45 working days have passed since the initiation of the anti-dumping investigation. 

Nevertheless, the Ministry of Economy usually takes more than six months to publish preliminary determinations, and generally always imposes provisional anti-dumping duties. 

Pursuant to Article 84 of the Regulations to the FTL, disclosure meetings shall be granted to interested parties who request them within five working days of the publication of the preliminary determination. The purpose of disclosure meetings is to explain the methodology used to determine dumping margins, as well as injury and causation.

Moreover, the Ministry of Economy often schedules the requested meetings a few days after the five-day period has expired, thereby providing the parties with disclosure information halfway through the time allotted for response to the preliminary determination.

Anti-dumping duties in Mexico are imposed on a prospective basis and, as such, do not affect imports that took place prior to the imposition of provisional measures, so long as “retroactivity” requisites are met.

Article 65A of FTL considers three circumstances in which definitive anti-dumping duties could be imposed on imports made during the three months prior to the establishment of provisional duties:

  • when there is a record of dumping imports causing injury;
  • when the importer knew or should have known that the exporter was dumping and that it would cause injury to the domestic industry; and
  • when injury is due to massive imports of a dumped product in a relatively short period, and the Ministry considers that imports are likely to seriously undermine the “remedy effect” of the definitive anti-dumping duty to be imposed, due to the timing, volume and other circumstances (such as fast stockpiling).

However, the authority has not yet imposed anti-dumping duties retrospectively. The only case in which the domestic industry recently requested retrospective application was during the anti-dumping investigation into Steel and Zamac Handles from China, in which the Ministry plainly concluded the request was “without merit”. 

Prior to 2006, the FTL provided for the imposition of anti-dumping duties retrospectively as a “penalty” for the importation of products after the initiation of the relevant investigation, provided the importer knew or should have known the exporter was dumping and would cause injury. The “fine” imposed could equal the amount resulting from applying the definitive anti-dumping duty to imports made up to five months after the date of initiation. 

The FTL and its Regulations provide the right for interested parties in an investigation to access and consult the confidential information held in an administrative record when acting through their legal representatives: Article 80 of the FTL establishes that confidential information will be available to legal representatives of interested parties. Legal representatives must comply with certain requirements provided in articles 159 and 160 of the Regulations to the FTL in order to qualify for the right to consult confidential information. Once authorised, such legal representative will be considered an "accredited legal representative".

The more relevant requirements with which the representative must include the following: 

  • to assume and submit a confidentiality agreement; 
  • to state the reasons why the requested confidential information is relevant to the defence of their case; 
  • to state that he or she is aware of the responsibilities and sanctions that may be incurred through a breach of the confidentiality of the information accessed; 
  • to commit to surrender the original versions of notes or summaries made during the review of confidential information, within ten days of issuance of the final determination; 
  • not to be nor to have been a partner, nor hold nor have held a managerial position nor served as a paid representative or agent of the company he or she intends to represent, nor of any of the interested parties in the investigation, during the last year; and 
  • to submit a warranty for an amount set by the Ministry of Economy.

The legal representative requesting access to confidential information must use an application form published by the Ministry of Economy on its website. If the legal representative satisfies the above requirements, the Ministry will issue his or her “Record of Access” within ten days of receiving the submission. The legal representative must submit a bond for MXN4.2 million (USD220,000) along with the application form, which may be effective in the case of breach of confidentiality. Finally, the legal representative may authorise two additional persons, who must also be legal representatives as defined in Article 51 of the FTL (ie, they shall be persons authorised to exercise a profession in Mexico – not only lawyers).

As can be seen, it is not easy for interested parties to gain access to confidential information. The biggest obstacle is obtaining a bond issued by an authorised Mexican institution. This obstacle is more cumbersome when it comes to small companies or foreign companies that are unable to demonstrate the existence of sufficient assets in Mexico to serve as collateral to guarantee the amount of USD220,000. Thus, in practice, foreign companies often use related importers to process the bond in favour of their legal representatives. However, foreign companies without a related importer can hardly meet the requirements required by Mexican bonding institutions, unless they are able to contract it abroad with a bonding company that has a correspondent relationship with a Mexican institution.

Finally, it is worth noting that confidential information can only be viewed at Ministry of Economy locations, and under the direct supervision and presence of a Ministry official. When consulting the confidential information, the legal representative may compile notes or summaries by hand, which will be certified by the official. The authority allows the use of computers in the Ministry to review CDs containing confidential information (databases). In accordance with the Regulations to the FTL and the confidentiality agreement executed, the legal representative must maintain those original notes and summaries in a special place to ensure that confidential information is available only to accredited legal representatives.

Pursuant to Article 31 of FTL, when no sales of identical or similar goods are made in the country of origin, or when such sales do not allow a valid comparison, normal value will be determined by:

  • the highest comparable price of an identical or similar good exported from the country of origin to a third country, or
  • constructed value. 

Prior to March 2003, the FTL mandated a successive order, but subsequent amendments have replaced the term “and” with “or”, in the absence of home-market normal value. The third country should be an “appropriate country” and export prices must be in the ordinary course of trade and represent at least 5% of the sales of the product exported to Mexico. A smaller proportion will be acceptable where there is evidence to show that, even if less than 5%, the sales are of sufficient magnitude to permit an adequate comparison.

As discussed above, in general terms both the normal value and the export price shall be calculated on the basis of figures obtained from the weighted averages found during the period of investigation, as reported in the records of the producer or exporter under investigation. As a general rule, costs are calculated as recorded in the books of the producer or exporter under investigation who has fully collaborated in the response to the investigation.

Accordingly, the following rules shall apply per article 46 of the Regulations to the FTL for the purpose of calculating costs data:

  • The cost of production shall include the cost of direct materials and components, the cost of direct labour, and indirect manufacturing costs, including (a) the cost of indirect materials and components; (b) the cost of indirect labour; (c) the cost of energy, including electricity and fuel; (d) the depreciation of assets intended for production; and (e) other applicable indirect expenses.

The cost of production must be obtained by the weighted average cost incurred in each production facility of each exporter that manufactures the goods under investigation (as a general rule, the cost of packaging will be considered part of the cost of production).

  • For the determination of general expenses, management and sales, financial and other not directly distributable expenses should be taken into consideration, including those related to research and development and the depreciation of non-production assets.
  • Indirect costs and expenses will be allocated proportionately to the investigated product. In particular, the investigated product should be allocated a proportional contribution to each of the indirect costs and expenses. The Ministry shall reconcile available accounting information in order to verify that each of the indirect costs and expenses would be wholly or partially considered if the share allocated to the investigated product was added to that determined for non-investigated products.

Allocation methods shall demonstrate an obvious and reasonably verifiable relationship between the cost or expense to be distributed and the apportionment base applied.

  • In the case of general expenses that are not directly attributable to the investigated product, when the available accounting information allocates a portion of said expenses at the department level and another at the corporate level, both items will be prorated to the investigated product, preferably on the basis of cost of sales.

In the second case, the allocation of general expenses to the product under investigation should be equivalent to average general expenditures for all products of the company. For purposes of this calculation, general expenses should be normalised in terms of cost of sales. Average general expenses will be estimated by dividing general expenses by cost of sales, according to figures reported in the company's financial statements. The general expenses attributable to the investigated product shall be determined by multiplying the resulting factor by the specific cost of sales of that product.

  • Both the cost of production and general expenses must include all fixed and variable components.

The costs related to idleness of the factors of production shall be considered as fixed costs and, as the case may be, shall be allocated directly to the product under investigation or distributed to the latter on a pro rata basis.

  • Depreciation charges should include both the depreciation of assets in use and the depreciation of unused assets.
  • In general terms, recoveries of costs and expenses must be deducted from the items to which they correspond.
  • Financial expenses shall be estimated on a net basis, excluding financial income not related to the normal business activities of the company, such as those deriving from permanent or long-term investments.
  • All general expenses acknowledged during the fiscal year corresponding to the period of investigation must be taken into account. However, such expenditures shall be proportionate to the period of investigation.

As an exception to this rule, expenses acknowledged in a fiscal year may be distributed over a longer period when the nature of the expenditure in question justifies this procedure and the Ministry has accounting information from previous years that allows it to include in the expenses of the period of investigation a share in expenses previously incurred that must be distributed in a similar way.

  • The Secretariat may exclude general expenses that are extraordinary in nature, ie, occurring incidentally or infrequently, which essentially represent a loss of stockholders' equity and are not related to income-generation. This exclusion shall be considered exceptionally.
  • As a general rule, the profit margin will not be higher than that normally obtained in the sale of products of the same generic category in the country of origin.

Where the dumping margin is estimated by type of goods, for the purpose of calculating the profit margin the generic category shall be understood as the types of goods for which normal value is determined according to domestic prices. In particular, the profit margin will be estimated according to the weighted average profit margin found in domestic sales that serve as the basis for establishing normal values based on prices.

If this method is not applicable because no normal value per goods class is determined on the basis of prices, the generic category shall be deemed the first category of goods according to the company's accounting information systems containing the product under investigation with respect of which there are profit figures.

When the available accounting information only refers to profits at the corporate level, the company as a whole will be considered as a generic category. In these cases, the profit margin for the product under investigation should be equivalent to the average margin found for all products of the company. In particular, the average margin should be calculated by dividing profits – before they are affected by direct taxes and by third parties' share in them – by cost of sales according to corporate data. The profit attributable to the product under investigation shall be determined by multiplying the resulting average margin by the specific cost of sales of that product.

The methods described above should be discarded when a profit margin is obtained that does not reflect a long-term condition, but a temporary or cyclical situation. In such cases, the profit margin should be calculated on the basis of additional financial information that corresponds strictly to the period of investigation. If this latter procedure is not satisfactory, the Ministry shall determine the profit margin by any other economic and accounting research method, as well as based on facts available.

  • In order to compare the sum of costs and expenditures with domestic prices, and to compare the constructed value with export prices, the Ministry may take relevant mismatches between production and sales into consideration.

For the purpose of such calculation, the Ministry shall accept as valid the generally accepted accounting principles that prevail in the country of origin, as long as they do not contravene anti-dumping legislation and other applicable legal provisions.

Based on the foregoing, in a recent case (Anti-dumping investigation of imports of longitudinal and spiral weld steel pipe from the USA, Spain and India; final Determination published in the Federal Official Gazette dated 20 April 2016) the Ministry of Economy requested from an exporter all cost data and supporting evidence that was necessary for calculation of the constructed normal value proposed by such exporter. In the final determination, the Ministry found that the relevant exporter was unable to submit supporting evidence for half of the product codes reported and, therefore, although the unsupported cost data was found to be consistent with cost data for which supporting evidence was available, unsupported cost data was discarded and, instead, the investigating authority relied on the market research report submitted by petitioners as the normal value proposal that served as the basis for initiation of the investigation.

Accordingly, it can be concluded that costs will always be based on the costs recorded in the books of the producer or exporter under investigation for the purpose of calculation of constructed normal value in Mexico, provided that such recorded costs are fully supported by evidence from the company’s cost accounting records. Should supporting evidence be insufficient for all or part of the costs reported for the purpose of calculation of constructed normal value, the investigating authority will rely on information submitted by the petitioner in its application for initiation of the corresponding investigation.

In order to make a fair comparison between export price and normal value, the Ministry frequently applies adjustments in order to take prices to the same level of trade, in compliance with article 36 of the FTL. 

When an interested party requests that a particular adjustment be taken into account, said party has the burden of proof and will have to provide the corresponding evidence.

Interim reviews are not common in Mexico. The high level of duties normally acts as a barrier to imports, which serves to hinder exporters from requesting an interim review for fresh margins. Exporters prefer to abandon the Mexican market and look for new or existing free markets.

During interim reviews, Mexican authorities concentrate on the dumping review rather than both a dumping and injury review. Dumping reviews would not consider treating anti-dumping duties paid upon importation as a cost of importation, unless conducted under the construction of the export price as a result of related party transactions, where anti-dumping duties, import duties, processing fees, etc, are taken into consideration as import expenses incurred by the related importer.

Moreover, anti-dumping duties would only be considered as a cost of importation for purposes of the analysis of effects on domestic prices in an injury interim review.

The FTL uses the term “centrally planned economy” as opposed to “non-market economy”; a centrally planned economy is one that does not reflect market principles. Article 33 of the FTL provides that, in a country with a centrally planned economy, normal value shall be determined based upon the domestic price in a market economy that qualifies as a surrogate or analogue country for purposes of the investigation.. The Ministry may determine whether each sector or industry under investigation operates under market principles, pursuant to the Regulations to the FTL.

Article 48 of the Regulations to the FTL develops the definition of the expression “centrally planned economy” to be an economy that lacks market conditions. In other words, a centrally planned economy is an economy or an industry under investigation in which costs and price structures do not reflect market principles.

Article 48, second paragraph, further provides six general non-exhaustive conditions that a “market economy” needs to meet in order to be considered a market economy. In other words, said provision serves to establish criteria in order to reverse or rebut a determination that the country under investigation (or the relevant industry) is a market economy and not a centrally planned economy.

The surrogate “market economy” must be similar to the exporting country with a centrally planned economy. Similarity between both countries must be established in a “reasonable manner”, so that normal value in the exporting country can be approximated on the basis of the home-market price in the surrogate country. The surrogate country must be selected on the basis of economic criteria, such as similarity in the production processes, and the cost structure of the factors that are used intensively in such processes.

Over recent years, the investigating authority has been very open to accepting the choice of surrogate country proposed by the petitioner and very strict in reviewing the counter-proposal from responding parties. The choice of surrogate country has become the focus of increasing debate in the course of investigations from China. In an effort to refuse an analysis of which surrogate country should prevail, the investigating authority has stated that the choice given by the petitioners suffices as long as it is a “reasonable one”, because the investigating authority does not have the legal obligation to choose the “best surrogate country”, rather only one that is “reasonably surrogate”. Moreover, it has indicated that the investigating authority cannot perform an analysis of all the countries that may actually act as a surrogate country, which leaves the responding parties with almost no possibility to prevail.

The choice of surrogate country has been analysed pursuant to the similarities between the proposed surrogate country and the exporting country in terms of production processes, raw material availability, number of producers, open market and data regarding home-market prices. If the proposed surrogate country of the subject good is subject to AD/CVD, the investigating authority has considered it a negative factor of “distortions” in the domestic market of that country. In essence, because Mexico’s approach is to obtain reference, quoted or actual prices in the surrogate country, adjusted to an ex-works or FOB level, the investigating authority does not conduct adjustments for other types of distortions resulting from NME status.

It is still unclear how the investigating authority will conduct anti-dumping investigations against China after the expiration of Section 15(a)(ii) of its Protocol of Accession. Mexico has not announced whether it will make changes or amendments to its current legislation, although it has amended the petitioner’s questionnaire.

A couple of recent anti-dumping proceedings on products from China have been initiated and could shed some light on this issue: an original investigation and a sunset review. In the original investigation, which concerns longitudinally welded pipe from China and was initiated a few days before the expiration of Section 15(a)(ii), the investigating authority explained that, while China had made progress in meeting its WTO obligations, it has also implemented consolidation mechanisms to reaffirm its control over a number of sectors, including the steel industry. Therefore, according to the investigating authority, there seems to be evidence that market conditions in the Chinese steel industry do not prevail. In view of the above, the investigating authority initiated the investigation under the surrogate country methodology for purposes of calculating normal value. 

In the recent initiation of a sunset review on graphite electrodes from China, the exporter’s questionnaire requests prices in the surrogate country if the normal value calculation was pursuant to the surrogate country methodology during the ordinary investigation (or the last interim review), or to provide information of domestic prices if the exporter fully demonstrates that it moved from being a non-market economy to a market economy. This means that, during sunset reviews, Chinese exporters would need to follow the surrogate country methodology from the original investigation (or the last interim review), or would have the burden of proof in connection with their market economy status.

The new petitioner’s questionnaire released in February provides the guidelines to be followed during future investigations. In essence, when responding to the questionnaire, the investigating authority requests the petitioner pursuant to Article 33 of the FTL to use the surrogate country methodology when dealing with imports from countries that do not reflect market principles. Moreover, pursuant to Article 48 of the Regulations to the FTL, the petitioner must provide arguments and information that demonstrate that the price and cost structure of the production and sales of the subject merchandise – produced by the companies of the sector or industry of the exporting country – do not comply with market principles.

The questionnaire further indicates that the petitioner must propose a surrogate country, as explained above, following the guidelines provided in Article 48 of the Regulations to the FTL. In addition, the petitioner must explain in detail and provide relevant information that supports the choice of a surrogate market economy country that satisfies the requisites of a surrogate country. Specifically, the surrogate country must: (i) be a market economy country, specifically in the sector of the subject goods; (ii) produce a like product to the investigated product, taking into account physical characteristics, chemical composition, main producers, production process, functions and uses; and (iii) have similarity in the cost structure of the factors used intensively in the production process of the investigated product, and free access to the main raw materials used in its production.

As can be seen, the new questionnaire shifts the burden of proof on surrogate country methodology to petitioners. However, once the investigation is initiated, there will be little or no room for respondents to prove otherwise. Prior to the submission of the respondent’s normal value, the Regulations do not open a procedural stage of the decision-making process to deliberate which surrogate country methodology or home market price methodology is to be applied. The respondent will finally become aware of which methodology was adopted by the investigating authority during the preliminary finding, giving little opportunity for defence if its home-market data sales information is disregarded. It could be suggested that this results in a serious violation of due process.

Mexican law provides for expiry reviews every five years, pursuant to Article 11.3 of the Anti-dumping Agreement. Expiry reviews are self-initiated, provided that a motion of interest is filed by one or more domestic producers, 25 working days in advance of the expiration date of the relevant duties.

It is important to highlight that Mexican law does not provide a maximum period of validity for anti-dumping measures: they can be extended indefinitely when all applicable legal conditions are met. For instance, measures have been in effect since July 1995 in the case of caustic soda from the United States, as measures have been extended in every expiry review conducted since the date of the final determination.

Acceptance of price undertakings is not frequent in Mexico, although the possibility of their existence has been present since the inception of the Mexican anti-dumping system. 

Currently, the only two price undertakings in force relate to sensitive or problematic investigations, namely cold rolled steel from South Korea and ceramic tiles from China, during which the investigating authority had the political will to suspend or terminate an investigation through a price undertaking in order to avoid problem issues within the industry.

These most recent price undertakings have not been breached; however, the legal consequence of a violation would be immediately to apply preliminary or final duties, as applicable. 

In a previous case concerning apples from the United States, the price undertaking was allegedly breached. After a consultation process, it was determined that there had been a violation to the price undertaking, which resulted in the price undertaking termination and continuation of the investigation. Nevertheless, preliminary duties were not reinstated. 

Mexican law does not provide for the possibility of retrospective collection of duties in the case of a violation of a price undertaking.

A total of 22 anti-subsidy investigations have been initiated in Mexico since 1990, accounting for 7% of all trade defence investigations, although three anti-subsidy investigations were initiated in the last decade and one of these was a concurrent anti-subsidy and anti-dumping investigation (for official purposes, the Mexican Ministry of Economy considers that it has initiated four anti-subsidy investigations because one investigation involved a product from two origins). 

Hence, anti-subsidy investigations are uncommon in Mexico, and a concurrent anti-subsidy and anti-dumping investigation is rare in Mexican trade defence practice.

The Mexican pharmaceutical industry has been the sole user of anti-subsidy investigations in the last decade. All three anti-subsidy investigations have targeted pharmaceutical products: two solely from India (dicloxacillin sodium and metoprolol tartrate), and a concurrent anti-subsidy and anti-dumping investigation(amoxicillin trihydrate)from India and China. Countervailing duties have been imposed on all Indian products and two expire this year (2017) (provided a sunset review is not initiated), since the petitioner dropped the anti-subsidy (and anti-dumping) investigation against amoxicillin trihydrate from China.

In the sole concurrent anti-subsidy and anti-dumping investigation that terminated, the Ministry of Economy did not undertake a separate assessment in its injury analysis of the effects of the dumped and subsidised imports. As a result of the participation of the Indian Government in the public hearing, the Ministry agreed that the countervailing duty (in Mexico, the term “countervailing duty” is a generic term used to address both an anti-dumping and a countervailing duty as such) should be lower than the concurrent dumping and subsidy margin (ie, 109.35%), and further considered that a countervailing duty equal to the subsidy margin (ie, 64.9%) was sufficient to remove the injurious import prices.

In principle, it may be possible for a petitioner to submit new evidence regarding subsidy schemes in an ongoing anti-subsidy investigation, and the Ministry of Economy could possibly accept such information. The Regulations to the FTL establish an evidentiary period that begins on the day after the notice of initiation is published and ends with the Public Hearing. It is therefore legally possible to submit ‘supplementary’ evidence and arguments in a party’s response to the preliminary determination. Notwithstanding the foregoing, there may be legal grounds for interested parties to contest the legality of the decision to include subsidy schemes that were not initially identified in the notice of initiation.

As noted above, the only anti-subsidy investigation concerning a non-market economy did not reach a final determination, so the investigating authority has not dealt with benefits calculations regarding NMEs. 

The safeguards instrument is the least used trade defence instrument, with only four investigations since 1994: two were bilateral (ie, fish powder from Chile – Final Determination of the Safeguard Investigation on Fish Powder Imports from Chile, Federal Official Gazette, 28 December 1996; and chicken legs and thighs from the USA – Decree that establishes a Safeguard Measure on Chicken Legs and Thighs from USA, Federal Official Gazette, 25 July 2003) and two were multilateral (ie, plywood panels – Notice of Initiation of the Safeguard Investigation on Plywood panels (three-ply), Federal Official Gazette, 15 August 200; and spiral weld steel pipes – Final Determination of the Safeguard Investigation on spiral weld steel pipes, Federal Official Gazette, 28March 2012). Only one safeguard investigation has been initiated during the last decade (spiral weld steel pipes), but no measure was established. Only one safeguard measure (bilateral) has been imposed, on chicken legs and thighs from USA, although it has not been in force since 1 January 2008. 

As a result of the exporters’ legal defence in the above-mentioned spiral weld steel pipes safeguard investigation, the Ministry of Economy concluded that the existence of “unforeseen circumstances” was not proven. In doing so, the Ministry first referred to the Appellate Body’s precedents (ie, Argentina – Textiles and Apparel and Korea – Diary), and rejected the petitioner’s claim that the 2008 financial crisis constituted an unforeseen circumstance. It concluded that a governmental programme announced with sufficient anticipation, such as Mexico’s Federal Government’s infrastructure projects plan, was the cause of the increase of imports of the investigated product. 

In the spiral weld steel pipes safeguard investigation, the Ministry of Economy interpreted the notion of the “effect of the obligations incurred by a contracting party under this Agreement” as to whether Mexico’s schedules resulted in increased imports. It concluded that the increase of imports did not result from Mexico’s obligations under Article XIX:1(a) of GATT 1994.

Vázquez Tercero & Zepeda

Martín Mendalde 1755-P.B.
Col. del Valle
Deleg. Benito Juárez
Mexico City
Ciudad de México
Mexico
03100

+52 55 5534 3636

+52 55 5534 9195

info@vtz.mx adrian@vtz.mx www.vtz.mx
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Law and Practice

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Vázquez Tercero & Zepeda was founded in 1973. While it originally focused on industrial policy, investment and trade control matters, the firm shifted its practice exclusively to international trade matters in the mid 80’s, and has been a leader in matters related to GATT/WTO, NAFTA, trade remedies, origin verification, customs and regulatory for the past forty years. In 2011, Vázquez Tercero y Asociados joined forces with Eduardo Zepeda, and VTZ was born, establishing its first office outside Mexico City, in Guadalajara, with emphasis in trade-related tax planning and litigation. VTZ expanded and now has five small offices throughout the country.

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