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Compendium of Antidumping and Countervailing Duty Laws in the Western Hemisphere


Mexico

 

I. Legal Authority to Impose Antidumping and Countervailing Duties

A. Treaties or Agreements

Article VI of the GATT 1995, the WTO Antidumping Agreement ("AD Agreement") and the Agreement on Subsidies and Countervailing Measures ("SCM Agreement").

These Agreements apply to all WTO signatories.

B. Legislation

   Article 133 of the Political Constitution of the United Mexican States establishes that the Constitution and laws passed by the Congress of the Union, as well as the treaties in accordance therewith entered into by the President of the Republic with the approval of the Senate, shall be the Supreme Law of the entire Union. Thus with the publication on December 30, 1995, of the Decree Promulgating the Final Act of the Uruguay Round of Multilateral Trade Negotiations, this Agreement and the obligations contained therein constitute part of national legislation.

   Nevertheless, in Mexico treaties are for direct implementation and do not call for a legislative act after their promulgation to be implemented.

   Thus national legislation consists of the following:

             
  • Art.131 of the Political Constitution of the United Mexican States
             
  • External Trade Law
             
  • Fiscal Code
             
  • Federal Code on Civil Procedures
             
  • Customs Law
             
  • Law on General Import Duties

C. Regulations

   Mexico's AD/CVD Regulations, issued under the Foreign Trade Act, were published in the Diario Oficial de la Federacion of December 30, 1993 (Annex II). Rules on legislation in Mexico concerning antidumping and subsides are established through the following regulations:

             
  • Regulations of the External Trade Law
             
  • Regulations of the Federal Fiscal Code
             
  • Regulations of the Customs Law
             
  • Internal Regulations of SECOFI
             
  • Agreement establishing the rules for determining the country of origin of imported goods and the provisions for their certification with regard to countervailing duties
             
  • Agreement establishing the Advisory Council on International Trade Practices and establishing its organization and functions
             
  • Agreement assigning administrative units systematically and delegating authority to the Assistant Secretaries, Chief Officers, Heads of Unit, Directors General and other subordinates of SECOFI.

   The provisions of these regulations include matters related to price discrimination as well as subsides.

D. Administrative Practice, Handbook or Guide

   Mexico does not have a manual or guide.

II. Authorities Responsible for Conducting Investigations

A. Injury

   Article 5 of the Foreign Trade Law indicates that the Secretariat, understood to be the Secretariat of Trade and Industrial Development (SECOFI) according to Article 3 of the same Law, has the authority to conduct and deal with investigations of unfair international trade practices and to determine the countervailing duties based on such investigations.

   In accordance with the Internal Regulations of the Secretariat of Trade and Industrial Development, "the Unit on International Trade Practices has the authority to take up, conduct and deal with the administrative procedures of investigation related to unfair international trade practices...".

   In accordance with Article 28 of the Foreign Trade Law, the importation of goods under price discrimination or subject to subsidies in their countries of origin that cause or threaten to cause damage to national production is considered an unfair international trade practice.

   Therefore SECOFI is the agency responsible for conducting investigations of damage. The Mexican system is an integrated one, that is, the same empowering authority makes decisions on dumping, subsidies and damage.

B. Antidumping and Countervailing Duties

   Article 5 of the Foreign Trade Law indicates that the Secretariat, understood to be the Secretariat of Trade and Industrial Development (SECOFI) according to Article 3 of the same Law, has the authority to conduct and deal with investigations of unfair international trade practices and to determine the countervailing duties based on such investigations.

   In accordance with the Internal Regulations of the Secretariat of Trade and Industrial Development, "the Unit on International Trade Practices has the authority to take up, conduct and deal with the administrative procedures of investigation related to unfair international trade practices...".

   In accordance with Article 28 of the Foreign Trade Law, the importation of goods under price discrimination or subject to subsidies in their countries of origin that cause or threaten to cause damage to national production is considered an unfair international trade practice.

   Therefore SECOFI is the agency responsible for conducting investigations of damage. The Mexican system is an integrated one, that is, the same empowering authority makes decisions on dumping, subsidies and damage.

III. Methodologies/Definitions

A. Like Product

   Identical goods mean products which are alike in all respects to the product under investigation. Like goods are products which, although not alike in all respects, are similar in their characteristics and composition, thus allowing them to fulfill the same functions and making them commercially interchangeable with those with which they are being compared. (II/37).

B. Domestic Producers

   The term "domestic industry" is at least 25 per cent of the domestic production of the goods in question.

   When certain producers are related to the exporters or importers or are themselves importers, the term "domestic industry may be interpreted as referring to at least 25 percent of the rest of the producers.

   When all of the producers are related parties or importers, the term "domestic industry" may be interpreted as referring to the entire group of producers of the goods produced during the immediately preceding stage in the same continuous line of production." (I/40)

C. Standing

   Articles 40 and 50 of the Law and Article 60 of its Regulations provide that petitioners must prove that they represent at least 25 percent of national production of the goods in question.

   Nevertheless, Articles 5.4 of the Antidumping Code and 11.4 of the Code on Subsidies call for support of producers that represent more than 50 percent of overall production in order to begin an investigation. Nevertheless, the investigating authority shall not initiate an investigation when the national producers that expressly support the petition represent less than 25 percent of national production.

D. Polling

   The final part of article 63 of the Regulations establishes SECOFI's obligation to gather necessary information on the national producers not petitioning so that the determination of damage will be representative of the situation of overall national production.

E. Normal Value

   Normal value is "the comparable price, in the ordinary course of trade, for identical or like goods when destined for the domestic market of the country of origin." (Annex I, Art. 31).

   "Ordinary course of trade" means "commercial transactions which reflect market conditions in the country or origin and which are concluded customarily, or within a representative period, between independent buyers and sellers." (I/32).

   For a centrally planned economy, prices are used from a surrogate market "which may be regarded as a substitute . . . for the purposes of the investigation" (I/33).

   When there are no sales of identical or like goods in the country of origin, "or when such sales do not permit a proper comparison", normal value is either

         (1) a comparable price of identical or similar goods exported to a third country in the ordinary course of trade, or

         (2) a computed value (e.g., when the transactions which generate profits are "insufficient to be described as representative") -- which is the "sum of the cost of production, general costs and a reasonable profit, all in the ordinary course of trade in the country of origin, in that order". (I/31-32).

   As a general rule, the comparable prices of identical or like goods in the domestic market or, where appropriate, for export to a third country, shall be deemed to be representative when they account for at least 15% of the total volume of sales of the subject merchandise. (II/42).

   Sales in the domestic or third country market "which reflect sustained losses shall be disregarded in calculating the normal value. Such sales . . . include transactions whose prices are insufficient to cover the costs of production and general costs incurred in the ordinary course of trade within a reasonable period of time, which may be more extensive than the period of investigation". (I/32).

F. Calculation of Cost of Production

   Mexican regulations provide that "production costs, overheads and profit margins shall correspond to those obtained in the ordinary course of trade". (II/44).

   As a general rule, the profit margin shall not be greater than that ordinarily obtained in the sale of products of the same generic category in the country of origin. (II/46- XI).

   When the margin of price discrimination is estimated by type of product, the profit margin shall be estimated according to the weighted average profit margin for domestic sales used to establish normal values based on prices. (II/46-XI).

   If this method is not applicable because there is no normal value by class of goods determined on the basis of prices, the generic category shall be deemed to be the first category of goods, according to the accounting information systems of the enterprise, which contains the product under investigation and for which there are profit figures. (Id.).

   "When the accounting information available only reports profits at the corporate level, the profit margin for the subject merchandise shall be calculated by dividing the profits for all products of the enterprise, before direct taxation and distributions of the share of profits due to third parties, into the selling cost, in accordance with corporate data. The resulting average margin shall be multiplied by the selling costs specific to the subject merchandise to determine the profit attributable to such merchandise". (II/46-XI).

   The above methods "shall not be used when they result in a profit margin which does not reflect a long-term position, but a transitory effect or the economic situation . . .". (II/46-XI).

   Overheads shall be determined taking into account administration and sales, financial and other not directly attributable costs, including R&D and depreciation of assets not related to production. (II/46-II).

   Indirect costs and expenses shall be allocated proportionally to the product under investigation. The Ministry shall reconcile the available accounting information in order to verify that, when the proportion allocated to the product under investigation is added to the allocations determined for products not under investigation, each of the indirect costs and expenses is totally or partly absorbed. (II/46-III).

   With regard to overheads which cannot be directly allocated to the product under investigation, when the available accounting information allocates parts of such expenses at departmental level and part at corporate level, both headings are prorated to the product under investigation, preferably on the basis of selling costs. (II/46-IV).

G. Export Price

   "As a general rule, both the normal value and the export price shall be calculated on the basis of the weighted average figures obtained for the period of investigation". (II/40).

   "Export prices shall be weighted according to the proportion of each transaction relative to the total volume exported". (II/40).

   "Where there is no export price or where it appears to the Ministry that the export price is not comparable with the normal value, that price may be calculated on the basis of the price at which the imported products are first resold to an independent buyer in the national territory". (I/36).

H. Export Price - Adjustments

   "The Ministry shall make the necessary adjustments to enable the export price and normal value to be compared.

   In particular, allowance shall be made for differences in terms and conditions of sale, quantities, physical characteristics and tax charges.

   When an interested party requests that a particular adjustment be taken into consideration, it shall be incumbent upon that party to provide the corresponding supporting evidence". (I/36).

   Adjustments for differences in terms and conditions of sale shall be applied both to the normal value and the export price provided they are directly related to the markets under investigation. (II/53-54).

   However, adjustments for differences in quantity, physical differences and differences in tax charges shall apply exclusively to the normal value [not the export price]. (II/53).

   Differences relating to levels of trade shall also be adjusted to the extent they have not otherwise been taken into account. (II/52).

I. Injury

   Article 39 of the Law establishes that damage is the proprietary loss or impairment or the deprivation of any legal and normal gain that national production of the goods in question may or could suffer.

J. Threat of Injury

   Article 39 of the Law establishes that threat of injury means the imminent and clearly anticipated danger of injury to the domestic industry.

   A determination of threat of injury shall be based on facts and not merely on allegation, conjecture or remote possibility.

   Moreover, Article 68 indicates the standards the Secretariat must bear in mind in determining the threat of damage.

   The standards listed in this article are similar to those established in Article 3.7 of the Antidumping Code and 15.7 of the Code on Subsidies.

   In determining threat of injury, the Ministry is to take into account any elements which the Ministry deems appropriate and, in particular, the following factors which make it possible to conclude whether further imports in unfair conditions are imminent and whether, unless duties are applied, injury will occur:

         (1) increased imports pointing to a well-founded probability of a significant increase in such imports in the immediate future;

         (2) freely disposable capacity or an imminent substantial increase therein, pointing to the well-founded probability of a significant increase in exports to the Mexican market in unfair conditions, with due regard for the availability of other export markets to absorb any additional exports;

         (3) whether the imports are entering at prices which will have a significant depressing or suppressing effect on domestic prices, and will likely increase demand for further imports;

         (4) inventories; and

         (5) where appropriate, the expected return on realizable investments.

K. Material Retardation

   Article 39 of the Law establishes that obstruction to the establishment of new industries is also considered damage.

L. Cumulation

   The legislation states that, for both actual and threatened injury, the Ministry may cumulate the volume and impact of imports of identical or like products from two or more countries under investigation, subject to conditions and exceptions provided for in the Regulations. (I/43 (emphasis added)).

   The Regulations state that for purposes of determining injury, "when imports of a product from more than one country are simultaneously subject to investigation . . . , the Ministry shall cumulatively assess the volume and effects of such imports, provided that the imports compete amongst themselves and with products identical or alike to those imported which are manufactured in Mexico". (II/67 (emphasis added)).

   However, the "Ministry need not cumulatively assess the effects of imports . . . if such imports are not significant and do not have any identifiable adverse effect on domestic production . . .". (II/67).

M. De Minimis Provision

1. Antidumping

   The Law and the Regulations do not expressly establish which de minimis margins are to be observed by the Secretariat.

   Nevertheless, in view of the contents of item 2.I.B of this document, the Secretariat must observe the provisions of Article 5.8 of the Antidumping Agreement (2%) and Article 11.9 of the GATT Agreement on Subsidies (1%).

2. Countervailing

   The Law and the Regulations do not expressly establish which de minimis margins are to be observed by the Secretariat.

   Nevertheless, in view of the contents of item 2.I.B of this document, the Secretariat must observe the provisions of Article 5.8 of the Antidumping Agreement (2%) and Article 11.9 of the GATT Agreement on Subsidies (1%).

N. Margin of Dumping

   The Ministry shall fix the amount of the duties which shall be equivalent, in cases of price discrimination, to the difference between the normal value and the export price.

   The duties may be less than such difference, however, "provided they are sufficient to discourage imports of goods in circumstances involving unfair international trade practices".

   If it is impracticable to name all the suppliers affected by the duties, "the Ministry may order its application to the country or countries concerned". (I/62).

   "As a general rule, both the normal value and the export price shall be calculated on the basis of the weighted average figures obtained for the period of investigation". (II/40).

   "If the product under investigation consists of goods which are not physically identical with each other, the margin of price discrimination shall be estimated according to the type of goods, in such a way that the normal value and the export price utilized for each calculation correspond to comparable goods". (II/39).

   "When the margin of price discrimination is calculated by type of goods, the margin for the product under investigation shall be determined as the weighted average of all the individual margins which have been estimated.

   This weighted average shall be calculated according to the proportion of each type of goods relative to the total volume of the product exported during the period of the investigation". (II/39).

   With an exceptionally large number of types of goods or quantity of transactions, the margin may be based on a representative sample" selected in accordance with generally accepted statistical criteria". (II/41).

O. Subsidy Rate

   The Ministry shall fix the amount of the duties which shall be equivalent, in cases of subsidization, to the amount of the benefit.

   The duties may be less than such difference, however, "provided they are sufficient to discourage imports of goods in circumstances involving unfair international trade practices".

   If it is impracticable to name all the suppliers affected by the duties, "the Ministry may order its application to the country or countries concerned". (I/62).    A subsidy is a benefit conferred by a foreign government, its public or semi-public agencies or its entities, either directly or indirectly, on producers, processors, marketing agents or exporters of goods for the purpose of inequitably strengthening their international competitiveness, except where such practices are regarded internationally as acceptable.

   This benefit may take the form of inducements, incentives, premiums, grants or support of any kind. (I/37).

   The Ministry shall issue a list of export subsidies, which shall be non-exhaustive, in an order published in the Diario Oficial de la Federacion. (I/37).

   The total of any export taxes, duties or other charges payable on the export operation in the country of origin and designed to offset the subsidy shall be deducted. (I/38).

IV. Steps of the Investigation

A. Petition Filing

   An investigation of unfair international trade practices (and safeguard measures) shall be initiated ex officio or at the request of an interested party -- a natural and legal person producing goods identical to or like the subject merchandise. (I/49).

   "The requesting parties must be representative of the domestic industry [at least 25% of the domestic production, per I/40], or be legally constituted organizations". (I/50 emphasis added).

   The request (petition) shall be submitted using the questionnaire issued by the Ministry, which shall include, inter alia, the following (II/75):

             
  • Name or business name and domicile of the requesting party and, if applicable, his representative, accompanied by accrediting documents;
             
  • Volume and value of domestic production of the identical or like product;
             
  • "The legal basis of the request";
             
  • Description of the imported product, with specifications and details showing its quality in comparison with the domestic product and other distinguishing details; the volume and value imported or intended to be imported based on the appropriate unit of measure and its tariff classification according to the schedule of the General Import Taxes Act;
             
  • Name of the countries of origin or source of the product, as appropriate, and the name or the business name of the person or persons exporting or intending to export the product under unfair conditions to Mexico;
             
  • Statement of the facts and data, accompanied by reasonably available evidence, on which the request is based;
             
  • Indication of the difference between the normal value and the comparable export price or, if applicable, the effect of the subsidy on the export price;
             
  • In the case of subsidies, information and facts concerning the unfair practice, the foreign governmental authority or body involved, the form of payment or transfers and the amount of the subsidy to the producer or foreign exporter of the product;
             
  • Evidence which shows that the introduction of the goods concerned into the domestic market is causing or threatens to cause injury to the domestic industry.

B. Initiation of Investigation

   An investigation of unfair international trade practices (and safeguard measures) shall be initiated ex officio or at the request of an interested party -- a natural and legal person producing goods identical to or like the subject merchandise. (I/49).

   Within a period of 30 days following the submission of a request for investigation, the Ministry shall reject the request if it does not fulfil the requirements set forth in the Regulations, or ask the requesting party for further information which must be provided within a maximum of 20 days following receipt of the notification that more information is needed, or accept the request and declare the initiation of the investigation. (II/52).

C. Issuance of Questionnaire

   In cases of investigations at the petition of a party that meet the requirements provided for in the applicable legislation, in accordance with the first part of Article 52 of the Law, the Secretariat shall publish the corresponding decision for initiation in the Official Daily Gazette of the Federation within 30 working days after presentation of the petition or, in the event there has been an injunction by the investigating authority, within 20 working days from the date on which the petitioner has exhausted such injunction.

   "The Ministry may request the interested parties to produce evidence, information and data which it considers relevant, for which purpose the Ministry's questionnaires shall be used". (I/54).

   In addition, the Ministry "may request the producers, distributors or traders of the goods in question as well as the customs officers, agents, representatives and persons receiving the imported goods, or any other person it deems appropriate, to provide information and data which they have at their disposal". (I/55).

   "Failure to provide the Ministry with the documents and reports related to cases referred to in [this Article (I/55)] within the deadline stipulated in the relevant request" shall result in a "fine equivalent to 180 times the legal minimum wage". (I/93-IV).

D. Response to Questionnaire

   Once the parties have received the official form for investigation, they are given 30 working days to answer it, heedful of the provisions of Article 53 of the Law.

   In this regard, it is useful to emphasize that, even the footnote on page 15 of the Antidumping Law indicates that the periods for the exporters shall begin from the date of receipt of the questionnaires; and for this purpose they shall be assumed to have been received one week after being sent.

   The period provided for by the Law, as has been indicated, refers to working days, in accordance with the provisions of its Article 30, while the periods in the Agreements refer to calendar days.

   Thus, despite the apparent contradiction between the two sequences, the periods provided for by the Law are actually longer than those of the Agreements, and therefore there is no inconsistency.

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