U.S. government identifies 8 obstacles to developing trade and investment with Mexico

07/04/2021

The Office of the United States Trade Representative (USTR) identified eight major issues that represent an obstacle to developing trade and investment with its second-largest trading partner worldwide, Mexico. Through its annual report 'Barriers to Foreign Trade 2021', the office headed by Ambassador Katherine Tai dedicated 12 pages to point out the issues that concern them in their bilateral relationship with the Government of Mexico.

The first issue the USTR raised was the import policies prevailing in the Mexican market. As an example, it noted that Mexico requires a license for certain steel products to be shipped into the country in order to combat customs fraud and improve the statistical tracking of steel imports.

"However, administrative delays and complicated procedures for processing license applications by the Ministry of Economy have resulted in U.S. steel exporters and their Mexican customers experiencing disruptions in supply chains and additional shipping costs or delays," the report said.

In response, the Ministry of Economy established an alternative scheme with simplified licensing requirements for certain U.S. exporters and their customers; however, the U.S. remains concerned and is monitoring and lobbying to ensure that these measures do not disrupt bilateral trade.

This first topic alone includes several subtopics, including difficulties in trading medical devices, supplies, pharmaceuticals, and the controversy generated by import restrictions on glyphosate.

Secondly, the USTR pointed out that there are several obstacles to trade, such as the implementation of NOM-051, which includes nutritional labels on the front of prepackaged packages and soft drinks. The U.S. government considered that these measures could affect its producers. 

US exports of processed products to Mexico amounted to 5.7 billion dollars in 2020, which represents that the Mexican market is the second largest for the United States after Canada.

As a third point, the US agency pointed out several sanitary and phytosanitary barriers used by Mexico against US agricultural producers, as is the case of potatoes, since they cannot enter Mexican territory due to an alleged detection of pests in the shipments. In addition to this issue is the request to open the Mexican market to imports of U.S. peaches and plums and the controversy over cottonseed imports.

Meanwhile, Joe Biden's administration also denounced that Mexico has centralized almost all government procurement, which is causing concern among U.S. investors, as they consider the processes for participating in procurement processes to be less transparent than in previous years. "In certain projects in the construction industry, there has been an increase in direct awards for government contracts," the report stressed.

Three other points highlighted by the USTR annual report were the scarce protection of intellectual property in Mexico and the barriers that exist to provide telecommunications services and trigger digital commerce.

Finally, the eighth point of the report notes that there are barriers to investing in Mexico, particularly in the energy sector.

"The United States has raised concerns with Mexico regarding the deteriorating business climate for U.S. investors in the energy sector in Mexico, emphasizing that the U.S. government is committed to ensuring that U.S. investors are treated fairly and that Mexico fulfills its T-MEC commitments," it noted.

By Mexicanist