RESTRICTED
WORLD TRADE G/SG/W/131
27February 1996
ORGANIZATION(96-0715)
Original: Spanish Committee onSafeguards
REPLIES TOQUESTIONS POSED BYTHE UNITED STATES1CONCERNING
THE NOTIFICATION OFLAWS AND REGULATIONS OFMEXICO2
UNDER ARTICLE 12.6OFTHE AGREEMENT
Thefollowing communication, dated 9February 1996, hasbeenreceived fromthePermanent
Mission ofMexico.
_______________
A. General
1. What isthestatus oftheAgreement onSafeguards inMexican law,andhowdoesitrelate
totheForeign Trade ActandRegulations thereto? Intheevent ofaconflict, which takes
precedence currently, andwhich willtakeprecedence should theActorRegulations beamended?
TheAgreementonSafeguardshasthestatusofaninternationalagreement,sinceitwasconcluded
bythePresidentoftheRepublicandapprovedbytheSenate(seeArticle89,paragraphX,andArticle76,
paragraph I,oftheConstitution). Accordingly, thisinstrument hasthesame rankasfederal laws.
Consequently, theAgreement onSafeguards andtheForeign Trade Actarecomplementary.
Under theterms ofArticle 2oftheAct,thelatter willapply without prejudice totheprovisions in
theAgreement.
Intheevent ofaconflict, theprovisions intheAgreement takeprecedence, andthiswould
notneedanychange inthelaw.
2. What isthe"Commission" referred toinArticle 76oftheAct,andwhat isitsrole?
Thisrefers totheForeign Trade Commission (COCEX). Thisauxiliary bodyistobeconsulted
onamandatory basisbythedepartments andentities oftheFederal Public Administration inmatters
concerning foreign trade andinternational trade negotiations. COCEX resolutions arenotbinding;
theyareopinions.
COCEX ismade upofrepresentatives oftheMinistries ofForeign Affairs, Finance andPublic
Credit, Social Development, Trade andIndustrial Promotion, Agriculture, Water Resources andRural
Development, Health, andoftheCentral Bank andtheFederal Competition Commission.
1G/SG/W/101.
2G/SG/N/1/MEX/1.G/SG/W/131
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COCEX isempowered tocarryoutregular reviews ofmeasures regulating orrestricting foreign
trade, forthepurposes ofrecommending, where appropriate, anychanges insuchmeasures. COCEX
mayholdpublic consultations withtheinterested parties inorder toobtain better information onthe
matters inquestion.
Thefunctions ofCOCEX areoutlined inArticle 9oftheRegulations under theForeign Trade
Act. Under paragraph IXofthisArticle, COCEX iscompetent toissue anopinion oninstituting
safeguard measures.
B. Procedures
3. Article 53oftheActprovides thatinterested parties shallbeprovided aperiod of30days
from publication ofinitiation oftheinvestigation "toprepare their defence andsubmit the
information requested". What istheinformation requested? Isitthequestionnaire response?
Ifso,does thismean thequestionnaire isissued onthesame daythenotice ofinitiation is
published?
Inthecaseofsafeguards, noinvestigation questionnaire isissued totheinterested parties.
However, should theMinistry ofTrade andIndustrial Promotion (SECOFI) require information which
onlytheexporters orthegovernments oftheexporting countries canprovide, itwould make astatement
tothiseffect inthenotification ofinitiation oftheinvestigation. Thiswould beissued onthesame
dayastheinitiation resolution ispublished intheOfficial Journal.
4. Article 83oftheActandChapter VIoftheRegulations refertoverifications ofinformation
submitted. Arethese provisions applicable tosafeguards investigations, oronlytoanti-dumping
andcountervailing dutyinvestigations? Iftheyareapplicable tosafeguards investigations, what
typeofentities might besubject toverification, andforwhat purpose?
Theprovisions contained inArticle 83oftheForeign Trade Actapply bothtounfair practices
andtosafeguards, sincethisArticle isplaced inTitleVII"Procedure inrelation toUnfair International
Trade Practices andSafeguards Measures", Chapter IV"Other Common Provisions Relating tothe
Proceedings".
Importers andproducers, bothlocated inMexico, whoareinterested parties, might besubject
toverification forthepurpose ofverifying whether theinformation andevidence submitted bythem
during theprocedure conform tothecompany accounts, collating thedocuments intheadministrative
dossier ormaking thenecessary attested copies.
5. What provisions oftheFederal TaxCode, referenced inArticle 85oftheAct,might be
applicable tosafeguards investigations?
Itwould betime-consuming todetail allthetaxprovisions thatwould apply onthisbasis to
safeguards procedures. TheFederal TaxCode willapply bydefault intheabsence ofaprovision in
theAct,inallmatters inkeeping withthenature ofthose procedures. Thiswillnotapply inrespect
ofnotifications andsearches forthepurpose ofverification.G/SG/W/131
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C. Injury methodology/standards
6. Article 74oftheRegulations refers todatacovering athree-year period preceding the
request forrelief; Article 119refers toasix-month period ofinvestigation. How dothese two
provisions relate?
Article 74oftheRegulations under theForeign Trade Actstates thattheparties requesting
thesafeguard measure willsubmit information ontherelevant factors andindicators andcharacteristics
oftheindustry covering atleastthethree years preceding thesubmission oftherequest, including the
periodunderinvestigation,forthepurposesofevaluatingsuchinformationinthecontextoftheeconomic
cycle andtheconditions ofcompetition specific totheindustry affected. Furthermore, Article 119
oftheRegulations provides thattheperiod ofinvestigation, inrespect ofthepresumed existence of
imports inquantities andunder conditions suchastocause orthreaten tocause serious injury tothe
domestic industry, shallbesixmonths.
7. Article 118oftheRegulations refers to"thesoleorprincipal cause" ofinjury; Article
128oftheRegulations refers to"substantial cause" ofinjury; Article 45oftheActdoesnotuse
anycomparable adjectives butjustrefers towhether imports "cause" (orthreaten) injury. Which
ofthese standards, ifany,isapplied indetermining causal link?
Article 45oftheForeign Trade Actprovides thatthesafeguard measures willbeimposed only
when ithasbeendetermined thatthegoods arebeing imported insuchincreased quantities andunder
suchconditions astocause orthreaten tocause serious injury tothedomestic industry, inother words,
"cause" isnotqualified. However, Article 70oftheRegulations provides thatsafeguard measures
maybeapplied onlyifitisdetermined ontheevidence thattheproduct investigated isbeing imported
insuchincreased totalquantities andunder suchconditions astoconstitute asubstantial cause ofserious
injury orthreat ofserious injury tothedomestic producers ofidentical, likeordirectly competitive
goods.
Since theRegulations contain theprovisions required toclarify, specify andimplement the
content oftheAct,theRegulations willbecomplied with. Onnoaccount willmeasures incompatible
withtheprovisions ofArticle 2oftheAgreement onSafeguards beapplied.
D. Relief
8. Arethere provisions inMexican laworregulations forapplying thelimitations onrelief
found inArticles 5and7oftheAgreement onSafeguards, pertaining toquantitative restrictions,
degressivity, mid-term reviews, andrepeat actions onthesame product?
Theappropriate provisions, apart fromthemeasures contained inArticle 7oftheAgreement
onSafeguards, arecontained inArticles 133and134oftheRegulations under theForeign Trade Act.
Astoreviews, Article 133provides that"Once theappropriate safeguard measure hasbeenimposed,
theMinistry shallregularly review theprogress oftheadjustment programme inorder tomake sure
thatitisbeing dulyimplemented and,where necessary, shallconsider anychange ofcircumstances
thatmaybepreventing itsimplementation, authorizing theappropriate changes andmodifications."
Atthesame time, forthepurposes ofdetermining theduration ofthemeasures, Article 134
stipulatesthattheMinistrywillevaluatetheimplementationoftheadjustmentprogrammeand,moreover,
willcomply withtheprovisions ontheduration ofthemeasure contained intheinternational treaties
andconventions towhich Mexico isaparty. Thismeans that,forallGATT Member States, Article 7
oftheAgreement onSafeguards oftheGATT 1994willapply inrelation tothe"duration andreview
ofsafeguard measures".G/SG/W/131
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Again, inviewofthefactthattheForeign Trade ActandtheRegulations donotcontain any
specific provisions concerning limitations onquantitative restrictions, progressive liberalization of
safeguard measures ortheapplication ofsafeguard measures toproducts which havealready beensubject
tosuchmeasures, inthisregard theprovisions contained intheinternational treaties andconventions
towhich Mexico isaparty, suchastheAgreement onSafeguards oftheGATT 1994, willbeobserved.
9. Article 77oftheActprovides thatrelief maynotbeapplied formore than fouryears
"except incases where alonger period isjustified". Does thisexception refer tocases inwhich
relief isextended pursuant toafinding required under Article 7oftheAgreement? Ifso,what
aretheprocedures andstandards applied inmaking suchanextension determination?
Article 77oftheForeign Trade Actspecifies that"Except incases where alonger period is
justified, safeguard measures maynotbeapplied formore thanfouryears". Similarly, Article 134
oftheRegulations under theForeign Trade Actprovides that"Thesafeguard measures shallbeapplied
onlyforsuchperiod oftimeasmaybenecessary toprevent orremedy serious injury andtofacilitate
adjustment ...Inanycase, therequirements oftheinternational treaties andconventions towhich
Mexico isaparty shallbemet."
Notwithstanding theabove, where anextension oftheapplication ofasafeguard measure is
requested, theterms ofArticles 7.2,7.3and9.2oftheAgreement onSafeguards willbeobserved.
10. Articles 78-79 oftheActandArticle 130oftheRegulations refer toprovisional measures.
What types ofmeasures maybeapplied, andisthere apreference fortariff increases overother
possible measures?
Theprovisions contained inArticle 6oftheGATT Agreement onSafeguards willapply in
relation toprovisional measures, i.e.Mexico mayonlyapply tariff measures.