Mexico’s measures to encourage the development of its textile and apparel industry

(1) Industrial policy measures
The Mexican Ministry of Economy, together with 26 strategic production sectors, has developed a set of policies that will help enhance industry productivity and competitiveness, and plans to invest more than 540 million pesos in this policy. Relevant industrial policies mainly include four aspects:
1. Develop enterprise capabilities
Cooperate with the industry to introduce enterprise capability certification, management and production process systems, and integrate these process systems with key customers and creative markets based on standard rules or strategic means;
2. Promote the implementation of innovation process
International experience shows that innovation and added value are the source of power for products to withstand the impact of external competition and open up foreign markets. Therefore, the country plans to establish a “National Textile and Apparel Innovation Center” to realize President Peña’s commitment to the industry, which will be launched this year. For the first phase of the plan, the location was chosen in Hidalgo state;
3. Stimulate domestic market demand
The government and major national business associations, including CONCAMIN, have signed an agreement on best trade practices within the framework of the new Economic Competition Law to strengthen value chains in favor of consumers by promoting competitive business practices Construction, promote the development of supply chain and distribution channels, and increase the domestic market share of textile and clothing products;
4. Further deepen the department’s internationalization process
Utilize Mexico’s existing multilateral and bilateral free trade network to actively promote the textile and clothing sector to increase its share of the international market through complementary resources and win-win cooperation with foreign counterparts.
(2) Measures in the customs field
1. Suspension of the process of import tax reduction for finished products
During the six-year term of President Peña Nieto, that is, from 2013 to 2018, the reduction of textile tariffs for 80 tax codes will be suspended. The import tariffs for products under these tax codes will remain at 25%, instead of the previous level. The stipulated rate will be reduced to 20% starting from January 1, 2015. It is worth emphasizing that this measure only targets countries that do not have a free trade agreement with Mexico.
2. Establish a list of importers
Starting from January 2015, the Mexican Tax Bureau will establish a “Textile and Clothing Sector Importers List”, which will serve as a control mechanism to identify importers and measure their foreign trade business risks. Importers who are not registered in the directory will not be allowed to import fibers or manufactured products. The Tax Administration Service (SAT) under the Ministry of Finance has the power to formulate specific requirements for registration, and each registered importer must comply with the principles of legal and fair competition.
3. Fulfill the obligation to notify in advance
Under the new regulations, importers are required to notify at least five days in advance any activities involving the import of textiles and clothing from abroad to Mexico. Must include: invoice, source of supply, commodity freight and insurance documents. Based on this, SAT can pre-assess whether there will be price under-reporting in the import activities and formulate a review process in advance.
4. Establish a “continuous supervision” system
Continuous supervision will be carried out on customs declarers, importers and their customers of low-price customs declaration products. Not only will the imported goods be verified during customs declaration, but import companies with bad records such as unfair competition or illegal imports will also be continuously inspected.
5. Launch the “Split Customs Tax Number” pilot project
The purpose of splitting the previous 8-digit customs tax number into 10 digits is to describe the goods more accurately and specifically so that they can be better identified and distinguished. The Ministry of Economic Affairs will work with SAT to start the pilot with a group of tax numbers. If the pilot is successful, it will be mandatory to all relevant tax numbers.
6. Establish a commodity import valuation guarantee mechanism
Starting from January 1, 2015, a valuation guarantee mechanism for the import of textile and clothing finished products and their raw materials will be established. All importers who attempt to import relevant products at a price lower than their actual cost must guarantee to pay the customs declaration price and Tax on the difference between the valuation price. Once it is confirmed that the goods are imported at a low price, the deposit will be used to compensate for the difference between it and the valuation price.
(3) Financial incentives
Thanks to the financial reform plan announced at the beginning of this year, various development banks in Mexico have been given more credit rights. It is easier for small and medium-sized enterprises to obtain loans than before, and they can obtain more favorable conditions in terms of amount, term and interest rate. Specifically, the financial incentives to promote the development of the textile and clothing industry are as follows:
1. National Financial Bank (NAFIN) Small and Medium Enterprises Support Plan
NAFIN will provide at least P450 million in credit financing to the textile and apparel sector over the next 12 months, earmarked for the modernization of machinery and equipment and the development and innovation of new products for small and medium-sized enterprises in the sector.
2. International financing plan of Bancomext
Bancomext will provide financing support for textile and apparel sector companies to participate in national competition, including the following three specific products:
(1) Provide direct loans to enterprises engaged in exporting goods in this department for working capital, equipment, investment projects, etc.;
(2) Provide international factoring for foreign buyers’ accounts receivable and handle export commercial invoice discounting for international customers;
(3) Provide letters of credit for small and medium-sized enterprises – letters of credit often become a hindrance��An important factor for Mexican companies to export.
3. ACERCA Plan of the Ministry of Agriculture
Given that most of the cotton currently used in the Mexican textile industry comes from imports, the plan aims to encourage the Mexican textile industry to purchase cotton from domestic farmers by providing partial support for cotton farmers to purchase insurance. The Ministry of Agriculture will publish relevant details of the plan in the near future.