To avoid the application of additional tariffs on steel exports from Mexico to the United States, the Mexican government will request, starting tomorrow, certificates of origin for steel imported into the country, which must specify the name of the steel plant (mill), country of origin, export volume, among other data, reported today by the Ministry of Economy.
The certificate will be required starting tomorrow, April 16, although the commercial authority said that certificates issued before the obligation will be valid if they contain the location of the mill or manufacturer, even if they do not specify the country of origin of the steel or the merchandise to be imported, casting number, the shipping number, the folio number or the order number, according to the display of the Ministry of Economy in the official Mexican gazette (DOF).
The new certificates will be for 244 tariff fractions of Chapter 72 of the Law of General Import and Export Taxes (LIGIE) which refers to the foundry of iron and steel. There are 244 tariff fractions, the number increases to more than 730 types of steel considering the various types of steel in each tariff fraction.
The measure is part of the negotiations between the trade authorities of Mexico and the United States to avoid the application of additional tariffs to Mexican steel exports.
In March 2018, the United States, under Section 232 of its Trade Expansion Act of 1962, decreed tariffs of 25 percent on steel and 10 percent on aluminum exports from Mexico. A month later, Mexico applied retaliatory tariffs. A year later, in May 2019, the United States eliminated these tariffs, although the possibility of reimposing the tariffs remained open.
Given the concern of United States congressmen that the export of Mexican steel to the United States continues to be excessive, Mexico has been implementing additional measures, among them, in August of last year, which decreed that the import of steel from countries with which Mexico does not have a free trade agreement, they must pay an additional 25 percent tariff until July 2025.
According to Economía, the requirement for certificates will not apply to the import of raw materials used in the steel production process, such as steel scrap, iron ore, pig iron, processed or pelletized iron ore, or raw alloys.
According to the Ministry of Economy, so far there are 27 steel importing companies. The new measure will have an additional cost of more than $600,000 (MXN 10.4 million).
Companies in Mexico must be up to date in compliance with their tax, customs and foreign trade obligations. In addition, they must send the government quarterly reports of their imports; failure to do so will result in the cancellation of permits.
Additionally, each certificate must not exceed 3.0 percent of the requested or registered volume. The volumes that may be imported will be a maximum of what was imported in the last 12 months.