On May 31, 2018, United States Secretary of Commerce Wilbur Ross announced the levying of a twenty-five percent tariff on steel imported from Canada, the European Union and Mexico, as well as a ten percent tax on imports of aluminum from the same nations. This move strains commercial relations with Mexico, as well as with other major trading partners.

Because of newly strained commercial relations with Canada and Mexico, two parties have maintained that they would retaliate by imposing a series of import tariffs on a diversity of goods from the United States. Canada has already announced that it would retaliate by levying taxes on over US $12 billion worth of goods imported from the United States and that it would release a list of the products which would be affected during the month of June. When discussing the issue, Canadian prime minister, Justin Trudeau, expressed that it is “inconceivable” that Canada be considered a threat to the economic well-being of the United States. Mexico, for its part, is in the process of formulating the actions it would take in response to the punitive tariffs.

While some economists and economic policymakers consider this move to be the opening shot of an imminently certain to occur broader trade war, Commerce Secretary Ross has justified the imposition of tariffs by stating that this is a much-needed move towards balancing trade between the US and the affected nations. United States president Donald J. Trump ordered the levying of the tariffs despite opposition to them by his own Republican Party. Additionally, some international trade experts are of the opinion that the unilateral action was taken to punish Canada and Mexico for the disagreements that remain in the renegotiation of the NAFTA.

Due to strained commercial relations with Mexico and Canada, the three participants in the NAFTA renegotiations failed to meet a deadline that was set for May for completion of the agreements. The White House was anxious to come to an agreement on the particulars of the free trade a deal because the NAFTA treaty is subject to modifications by the US Congress after July 1st. Should the trade talks not be wrapped up in a timely manner, they most likely will not be terminated before Mexico’s presidential contest. Mexico chooses its leader for the coming six years on July 1st. Manuel Lopez Obrador, a leftist, is currently leading the frontrunner as is reflected in recent polls. There are some private sector and government officials that, at this juncture, believe that the conclusion of the North American Free Trade Agreement renegotiation will happen during calendar year 2019.

In March of the present year, when Trump made clear his intentions impose tariffs on aluminum and steel, he excluded Mexico and Canada from them for a period of just over a month and a half. At the time he expressed that he was extending the exemption date as an act of “good faith” that was related to the renegotiation of the North American Free Trade Agreement.

The main disagreement that is holding up the successful conclusion of the NAFTA renegotiations has to do with the automotive industry’s rules of origin. The US has made clear that it wants seventy-five percent of the total value of light vehicles to be made of NAFTA region originating products. Additional to this issue, that is a strain in commercial relations with Mexico, tensions are also a product of US sought NAFTA zone wage requirements in the automotive industry, and in the definition of a five-year “sunset clause for the pact.”

In order to be successful, companies that manufacture within the borders of Latin America’s second-largest economy must be knowledgeable regarding the requirements for importing goods into Mexico.

Although much has been done in recent years to simplify the process, those that are importing goods into Mexico must know the applicable rule in order to avoid complications that may include delays and fines.

Those that are importing goods into Mexico must remember that:

1. A Mexican Customs Broker is needed when importing goods into Mexico. Contracting with a party that is fully knowledgeable about Mexican customs rules and procedures will ensure smooth international transactions.

2. It is necessary to present import documents (pedimentos) to Mexican Customs Authorities. The pedimento is one of the most important trade documents when importing into Mexico. It must be filled out by a Mexican customs broker and must contain the following:

– Certificate of weight and volume;
– Commercial invoice;
– Certificate of origin.
– Identification (This may include part numbers, brand information, and serial numbers).

The Mexican pedimento, when filed by those importing goods into Mexico, signifies that the good or goods have entered the country legally.

3. The item or items imported into Mexico must be classified using the Harmonized Tariff Code System (HS Code). This is an international system that assigns a specific code to an item or items. This assignment allows customs brokers to identify requirements that apply or tariffs that must be paid when importing into Mexico.

4. A Certificate of Origin is needed to verify the source country of the item or items that are being imported into Mexico. It is absolutely essential that this document is presented to Mexican Customs for without it the good or goods will be denied entry.

5. Parties to import trade must be registered in Mexico’s Official Register of Importers. This is important because enrolling in the Register is the process by which those importing into Mexico is recognized by the Mexican Tax Authority or SAT. The SAT is part of Mexico’s Secretaria de Hacienda y Credito Publico (SHCP). The SHCP is the Mexican equivalent of the IRS.

It is also fundamentally important to note that when importing goods into Mexico from the US and Canada, a NAFTA Certificate of Origin must be presented.

All companies importing into Mexico are required to follow the five requirements listed above. Stand-alone companies in Mexico must have the expertise on staff to deal with these and other important Mexican Customs issues. Companies that operate in Mexico under the auspices of a shelter company, however, do not have to become directly involved in dealings with Mexican customs when importing goods into Mexico. Shelter companies employ the services of Mexican customs brokers or have them on staff. These parties work on behalf of shelter company clients.

Remember, interested parties can receive Mexico manufacturing information on a weekly basis by SMS Texting the word Tecma to 96000.

Background of the Safeguarding of Intellectual Property in Mexico

The first efforts made at the safeguarding of intellectual property in Mexico (IP) began in1832 with the “Law of Property Rights for Inventors”.  During that period, the mandate was put into effect as a measure to safeguard certain kinds of ideas and innovations.  It was implemented as a derivative of Spanish law.  In 1889, it was superseded was by the “Law of Manufacturing Trademarks.”  This statue was patterned after French codes for the protection of intellectual property and was enacted while Porfirio Diaz served as Mexico’s president.

In the 20^th century, the safeguarding of intellectual property in Mexico was heavily impacted by transnational accords and foreign laws such as the Brussels Review (1900), the Washington Review (1911), the Hague Review (1925), and the Convention of Paris (1934).  In addition to this, the Mexican Law of Industrial Property of 1943 was heavily affected by statutes implemented by France in order to protect intellectual property within its borders. This code was updated on several occasions and was utilized as the basis for the “Law of Inventions and Trademarks”, which the Mexican government implemented in 1976. The purpose of the law was to protect intellectual property in Mexico.  It was enforced until 1991 when the “New Law of Industrial Property” was codified.

Mexico’s “New Law of Industrial Property,” or as it is called in Spanish “Ley de Propiedad Industrial,” was updated in 1994 so that it conformed with North American Free Trade Agreement (NAFTA) standards.  Under the reworked law, “the author or the person who creates an invention, utility model or an industrial design has the right to exclusively exploit it for his benefit himself or by another duly authorized individual.”  In accord with the NAFTA agreements on the subject of the protection of intellectual property in Mexico, the United States, and Canada if one of the signatory countries is unable to give the minimum guarantees to an investor, that person or group can take their case to an arbitration court.  “The arbitration court will defend the interests of the investor, without taking into account the national legislation of the defendant country.”

In Mexico, the governmental organ with the legal mandate to enforce the laws that ensure the protection of intellectual property in Mexico is the “Instituto Mexicano de Propiedad Industrial,” or the Mexican Institute of Industrial Property (IMPI).  The IMPI was formed by government action in 1993 to provide professional and technical support to the country’s Economics Ministry. It is charged with:

• Granting intellectual property protection in Mexico using patents, utility model registrations, and industrial designs;
• Preventing and combating acts that violate intellectual property rights and promote unfair competition;
• Promoting invention, innovation and the transfer of technologies in order to make the Mexican
• economy competitive on a global scale;
• Promoting international cooperation through the exchange of information with institutions responsible for protecting intellectual properties in other countries.

The safeguarding of industrial property in Mexico is executed in order to prevent any illegal usage of patents, utility models, and industrial designs.  Therefore, the Institute (IMPI) is governed by three characteristics of industrial property rights:

• Territoriality, which are the rights granted within the national territory and is independent of those granted in other countries;
• Temporality, which is the stipulated time during which the protected can be exploited commercially;
• Exclusivity, where the owner is the only one authorized to exploit commercially what he has protected.

How Intellectual Property in Mexico is Classified

In Mexico, IP is classified into two categories: Industrial Property (Inventions and registrations), and copyright (literary, musical, artistic and photographic works, among others).  Mexico’s Ministry of Economy, through the country’s Institute of Industrial Property (IMPI) has the jurisdiction to administer systems for the safeguarding of intellectual property in Mexico at the national level.

The items protected by the IMPI are:

• Utility model, which are those changes to existing inventions and innovations, tools and machinery to improve upon their performance;
• Patent, which is the product or process that proves to be new at the transnational level;
• Industrial Designs such as Industrial Model, Industrial Drawing, Brand, Commercial Notice, Commercial Name and Denomination of Origin.

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