Major Economic Indicators

Recent Developments

• Falling oil prices and faltering exports, especially to the US, have prompted the Mexican economy into a crippling recession, given its heavy dependence on the US and weak internal demand following the global economic crisis, not to mention the serious outbreak of swine flu. While the country is struggling out of the economic slump, the rising joblessness and still soft external demand are expected to prompt the Mexican economy to shrink by 7.3% in 2009, before returning to growth of 3.3% in 2010 and 4.9% in 2011. 

• Hong Kong’s total exports to Mexico decreased by 35% to US$852 million in the first three quarters of 2009, while its imports from Mexico rose by 3% to US$268 million.

Current Economic Situation

Faltering oil prices and plummeting exports in the wake of the global economic crisis have gripped the Mexican economy since the last quarter of 2008. What’s worse is the outbreak of swine flu in April 2009, which brought the country’s economic activities, especially tourism, to a shuddering halt. Falling external demand, given the high degree of integration between Mexican and US industry, has led to a severe contraction in the Mexican industrial sector, in particular, due to the lacklustre performance in the US automotive market as US demand falls. Construction activities have remained weak on the back of deteriorating job prospects and investment sentiment. On the other hand, worsening employment and business conditions have weighed on consumption spending and private investment.

Looking ahead, despite the revenue constraints faced by the central government, ongoing countercyclical measures, to a certain extent, will continue to underpin domestic demand, employment and industrial production, while the slowly recovering external demand, especially from the US, will help boost both domestic production and exports. Investment sentiment, in the meantime, is expected to improve on the back of gradual improvements in credit conditions and a return of foreign capital and remittances. All in all, ravaged by rising joblessness, the Mexican economy is forecast to contract by 7.3% in 2009, before returning to growth of 3.3% in 2010 and 4.9% in 2011.

Trade Policy

The Harmonised System is used for goods classification and customs clearance in Mexico. Tariffs are levied on most products entering Mexico, applying ad valorem to the CIF values of imports. Besides, most imports are subject to a 15% value-added tax (VAT). Certain medicines and basic food are VAT exempt. In addition, a 0.8% ad valorem customs processing fee is levied on imports.

Import Documentations

Import documents required include the "pedimiento de importacion"- customs import declaration, commercial invoice, bill of lading, packing list and documents demonstrating compliance with Mexican product safety and performance regulations, if applicable. In addition, an importer has to issue a "Declaration of Value" to assist the Mexican customs in assessing import duties.

Commercial Invoices

Commercial invoices should observe the regulations and include specific information as follows:

• original invoice signed by the exporter;
• invoice must be in Spanish or accompanied by an equivalent Spanish translation;
• each invoice comprising one original and two copies;
• showing the place and the date of its issue;
• company names and addresses of both importer and exporter shown in the invoice;
• showing the number of packages, contents, quantity, quality and marks of the goods;
• detailed description of each item of shipment, including quantity, unit prices and total prices;
• the goods must reach the Mexican Customs within 90 days of the invoice; and
• showing all freight and insurance charges.

Bill of Lading

The bill of lading must show the serial numbers, quantity of packages, gross weight in metric terms and the marks. The packing list has to contain the information including the total number of packages and the gross, net and legal weights of the shipment. It should be submitted in triplicate.

Product Standards

Products selling in Mexico have to comply with the mandatory product standards, called Official Mexican Standards or NOMs. Normally, an importer of an electrical appliance has to bring the product to a laboratory to check if it complies with the specific NOMs. After the laboratory has issued the results, the importer has to present the product and laboratory results to the certification body to have the product certified. The product will be certified if it is proved to have met the stipulated NOMs. Officials from the certification body may also visit the importer up to two times to ensure that imported products continue to meet the NOMs. A product can only be imported if proper NOM certification has been secured. The Mexican authority from time to time updates the list of products that are subject to NOMs.

Anti-Dumping

Mexico and China have signed an agreement in 2008 under which Mexico committed to eliminate its anti-dumping (AD) duty orders on a broad range of mainland products. As part of the agreement, 73% of Mexico’s AD duties on imports from China (covering 749 tariff lines) were eliminated on 15 October 2008. This action covered products such as certain organic chemicals, certain textiles and apparel, certain footwear, brass padlocks, and certain tools, toys, bicycles, and electrical machinery and equipment. The vast majority of the remaining 27% of the AD duties (covering 204 tariff lines) were rescinded and replaced with so-called “transition duties,” also effective from 15 October 2008. These duties, which are generally significantly lower than the AD duties that were previously in place, will be phased out over a three-year period and apply to a range of products, including certain organic chemicals, certain textiles and apparel, certain footwear, certain tools, certain electrical machinery and equipment, baby carriages, door knob locks, pencils, non-refillable pocket lighters, and certain bicycles, toys and iron and steel valves.

Hong Kong’s Trade with Mexico^

Mexico is Hong Kong’s largest export market in Latin America. Hong Kong’s total exports to Mexico decreased by 35% in the first three quarters of 2009, after growing by 9% in 2008. Major exports to Mexico in January-September 2009 included telecommunications equipment and parts (shared 36% of the total), electrical apparatus for electrical circuits (7%), parts & accessories of office machines/computers (6%), electric power machinery & parts (6%), and semi-conductors, electronic valves & tubes (6%).

On the other hand, Mexico is Hong Kong’s 4th largest source of imports in Latin America, with total imports from Mexico increasing by 3% in the first three quarters of 2009, following a 30% increase in 2008. Leading import items in January-September 2009 included computers (shared 20% of the total), telecommunications equipment & parts (14%), waste, parings and scrap, of plastics (10%), leather (7%), parts & accessories of office machines/computers (6%).

 ^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.