In January 2015, Mexico announced a set of new measures aimed at combating “unfair” trade practices in T&A imports and enhancing the competitiveness of domestic T&A sector in the face of increasing foreign competition.
The proposed measures will particularly target those imports considered to be “undervalued” by the Mexican government. According to Inside US Trade and Sourcing Journal Online, one of these measures is to establish a minimum reference price for imported T&A products. If shipments enter at below that price, they would be subject to an investigation by the Mexican government that could lead to the imposition of additional duties and taxes. To be noted, the proposed new measures will be taken separately from traditional trade remedy measures such as anti-dumping, countervailing duty and safeguard.
Other proposed measures intend to strengthen custom enforcement, including:
- Mexico will required a mandatory registry for T&A imports. A similar registry system has been required for footwear;
- Mexico will postpone the import duty reduction that was expected to be implemented at the beginning of 2016 on 73 apparel items and seven textile made-ups. Originally slated to enter into force on January. 1, 2013, the duty reduction from 25 percent to 20 percent has been twice postponed for one-year periods and will now be delayed until 2018;
- Importers will be required to provide advance notice of shipments to the Mexican Economy Secretariat in the future;
- Mexico will break down the current eight-digit tariff lines for textile and apparel products into 10 digits, which an industry source said would allow tariff rates to be more specific in light of the fact that apparel products have evolved to be more specialized;
Moreover, Mexico will implement a new financing mechanism with total available credit of 450 million pesos (around $30 million USD) over the next 12 months to help the domestic T&A industry (especially small- and medium-sized enterprises) upgrade their machinery and equipment, pursue innovative strategies and develop new products. The Mexican Service Agency for the Commercialization and Development of Agricultural Markets (Aserca) will further support the purchase of cotton from domestic growers by textile manufacturers.
According to WWD, the US T&A industry has three major concerns about Mexican’s proposed measures: one is the potential delay in custom clearance and more complicated documentation requirements; second is the additional tariff rate and increased cost of exporting from the United States or anywhere else in the world to Mexico; third is the lack of policy transparency adding to the potent business risks.
Industry Background
T&A industry accounted for 3.7 percent of Mexico’s GDP in 2013 (1.3 percent for textiles and 2.5 percent for apparel). About 415,000 workers directly employed in the sector in 2013, among which 74 percent worked for the apparel sector.
One important feature of Mexico’s T&A industry is the so called “Maquiladora” operation: simple sewing of garments made from imported fabrics and using cheap labor. The “Maquiladora” operation is largely coordinated by US-based apparel brands and retailers. Most of “Maquiladora” factories are located in the free trade zones, in which equipment and imported materials (such as fabrics) can be duty-free. Output of “Maquiladora” are exported, mostly to the United States.
Mexico imported $8.6 billion T&A in 2013, among which $2.4 billion were fabrics, followed by made-up textiles ($0.55 billion) and yarns ($0.39 billion). This pattern reveals Mexico’s heavy reliance on imported textiles due to limited domestic textile manufacturing capacity.
At the same time, Mexico’s apparel imports increased from $2.4 billion in 2008 to $2.9 billion in 2013. Particularly, Mexico’s apparel imports from China surged by 558.8 percent between 2008 and 2013. In 2013 alone, apparel imports from China went up by 42.1% to $0.97 billion. It is said that China is the main target of Mexico’s proposed new import measures.
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FASH455 Global Apparel & Textile Trade and Sourcing 
This article brings up a lot of questioning regarding the future of Mexico. In the streetwear culture, it has become more and more common to do all the production and manufacturing in Mexico. Brands such as The Hundreds, Diamond Supply Co, and YnR are just a few that have began to transition production over there, for a couple of reasons. First reason, prices for textiles in China have slowly increased from my experiences. Second, production in Mexico compared to China means less lag time, as in turnaround times, including shipping. It seems that Mexico will be continuing to make positive steps in the right direction, as they increase machinery and the process.
T&A production in Mexico could be very practical for U.S companies. It being closer means less time waiting for products and cheaper shipping costs. Regional Trade laws also make production in Mexico a good idea.
I think this is a good thing for Mexico. The fact that they will be able to purchase new machinery and equipment for the T&A industry and will be exploring new strategies will create a positive impact for the country. Although it is causing concerns for other countries I feel like it will be a good thing.
I think that Mexico is taking a step in the right direction with the new machinery made available by credit. Most small businesses take out loans to start up their business so I believe more countries should help the large scale businesses too. They will also be able to have competitive pricing and quality with other countries who do not have this benefit. Since the United States does import goods from Mexico too, it will benefit our economy with a quicker turn around time. Maybe Mexico will become the next China?
I have to agree with the above statements and think this new proposed measures can overall be a good thing. The measures to helping out smaller factories will really benefit mexicos competive advantage. But this does bring up a lotta questions about their imports( both finished goods and raw materials such as fabric and yarns) how this will effect their manufacturing process, along with other countries exports? With the t&a industry in Mexico employing over 400,000 these new measures will effect a lot of people.
I completely agree with Kim, that having more textiles in Mexico could potentially be a very good new source of trade and production for the US as it is so close. I am also pleased to hear that the competitive advantage of Mexico could be growing as the small factories begin to develop new strategies and create stronger, more efficient factories. My biggest question would be if the size of Mexico, or close proximity to a much larger US, would effect their production, and if so if it would be positive or negative.
I have been going back through these articles these past couple of days in regards to our continued discussion about trade, especially after Case Study 2. This article proved very interesting to me. I think that it is a step in the right direction for Mexico. I am glad that as a country, Mexico is standing up for itself and asserting itself in the textile and apparel industry. This reminds me a lot of the previous trade agreements in the United States that we have discussed. Mexico is seeing a need to regulate imports, and I think it will be good for them in the long run to do so.
I am very surprised that I agree with everyone’s statements above. This action Mexico is doing is a step in the right direction. Mexico needs to control their imports and having more imports could expand their trade and production with the U.S. This will allow Mexico to be much more competitive in the market and be able to trade with a lot more people. Overall, I think this is a great thing for Mexico.
Mexico’s plan to tackle imports is remarkable. Whereas U.S. protectionist efforts sought solely to protect an increasingly noncompetitive industry through completely anti-import propaganda, Mexico’s plan accepts the existence of imports while working on making the T&A industry in Mexico more competitive. These efforts could become very lucrative if implemented efficiently not only for Mexico but for the United States as well. Like several prior comments earlier, Mexico’s proximity to the U.S. could be an attractive and viable option for future sourcing and trade opportunities. It will be interesting to see how this strategy will pan out in the long run.
I agree with the comments above with having a more competitive T&A market in Mexico and how it could benefit both Mexico and other surrounding countries like the US. This is a good opportunity for the US because if Mexico becomes more competitive it will give the US a close and great country to outsource with because it’s convenient and close by.
I agree in that Mexico should monitor their imports as there is great potential for the T&A industry both there and in the United States. I feel that Mexico’s close proximity to the US will also help shorten lead times and other production tasks that often take much longer when working with overseas countries. This is definitely a step in the right direction…
I think mexico has an opportunity to further develop their T&A industry especially now at a crucial time where prices in the Asian market are rapidly increasing. This too can highly benefit the U.S since Mexico is just across the boarder which can save time and money in shipping.
I agree that Mexico should be monitoring and regulating all of their imports as they are. It is important to keep up with what is being imported and from where. They should definitely have a competitive market as they could not only help but benefit from working with other countries close by such as ourselves. Working with Mexico can lower many costs in regards to textiles and apparel as they are not for which can reduce shipping and actual good prices. It is good to see that not only the US, but other neighboring countries are taking steps to improve in the textile and apparel industry.
Even though this new rules and regulations may cause some problems for other countries, I think it will be very beneficial for Mexico. It will help keep track of its imports and exports, as well as observe any unlawful activities and items that may come in to the country. It is also a great idea to invest in new machinery and technology to better its production capabilities improving its competitive strategy. Overall Mexico is taking the right steps to insure its countries security in the textile and apparel industry.
While production in Mexico may be closer than abroad, the new restrictions and documents needed to trade or import items will create a new line of problems when interacting with Mexican trade.
I think some of their goals are admirable but at the end of the production day it is going to create more issues which will deter countries from trading with Mexico and all of their potential good intentions will be null and void.
I think this article can perfectly relate to case study 2 because it involves the regulation of imports. Mexico was not referenced in the study, but the same concept can be applied here. Mexico has never been seen as a key component to the textile and apparel industry, and for that reason, Mexico is working to combat the unfair trade practices that their imports are involved in. They are taking steps to strengthen their custom enforcement, and I feel as if this is a perfect place to begin because customs is where goods must cross in order to be imported into the country. I feel that their implementation of a new financing mechanism is another step in the right direction because it is allowing them to upgrade their machinery and equipment; another factor that will help them to become more competitive within the textile and apparel industry. Because so many goods are imported from China, I feel as if it only makes sense that China is the main target for Mexico’s import proposals.