MEXICO CITY — Maquiladora plastics companies will get to keep the low tariffs they currently enjoy on resin imported from outside North America. On March 15, the Mexican government outlined a pre-emptive strike against a North American Free Trade Act provision set to kick in Jan. 1.
Currently, Mexico, Canada and the United States are allowed to defer duties on certain materials used to manufacture products intended for sale in North America. For the plastics industry, that has meant avoiding resin tariffs of as much as 18 percent.
"It was agreed [when NAFTA was passed] that the maquiladoras would be classified under a duty-deferral program, but according to NAFTA this will change as of January 2001," said Carlos Angulo, an El Paso, Texas, lawyer specializing in NAFTA trade issues for the international law firm Baker & Mackenzie.
To avoid a tariff increase that would hurt the maquiladoras, Secofi, the Mexican commerce ministry, announced that on Nov. 1, Mexico would greatly reduce tariffs to 5 percent or less on raw materials for industries ranging from plastics and auto parts to electronics and textiles.
To be eligible for the reduced tariffs, companies will need to register with Secofi for the so-called "sector promotion" program.
The registration also will allow companies 60 days after shipment to pay the import duty on the materials used to make the products.
While Secofi officials have been quick to point out that the Mexican plastics industry also will benefit from the reduced tariffs, some local suppliers are concerned. In some cases, where deferrals are no longer allowed but a tariff still will remain, prices may go up. But, more importantly to local suppliers, the reduced tariffs will mean more competition from abroad.
"The potential effect for us is negative," said Ricardo Mendez, spokesman for BASF Mexicana SA de CV, which manufactures polymers in Mexico and supplies them to processors throughout North America, principally the United States.
"Raw materials, such as the ones we produce, might start coming in from non-NAFTA countries with zero to 5 percent duties when they should be paying 10-18 percent duties under the current circumstances," he said.
But Angulo, who is also chair of the Border Trade Alliance, a nonprofit El Paso-based organization that promotes commerce between Mexico and the United States, brushes off the complaint.
"The Mexican government should have the policy of promoting efficiency not inefficiency," he said. "If the supplier is in Mexico, its costs should be lower anyway considering the costs involved with transport."
The announcement of the new tariff regime was overshadowed by a controversial decision by Mexico earlier this year to delay for three years a ruling on whether the country should begin charging income tax to companies operating maquiladora plants in Mexico.
While the decision has been shelved for now, Angulo said foreign investors are concerned about the possibility of future taxation.
"This raises uncertainty and very important issues for the long-term," he said.
