As previously reported, Mexico and China signed an agreement last year under which Mexico committed to eliminate its anti-dumping duty orders on a broad range of mainland Chinese products. As part of the agreement, 73 percent of Mexico's AD duties on imports from the mainland (covering 749 tariff lines) were eliminated on 15 October 2008. The vast majority of the remaining 27 percent of the AD duties (covering 204 tariff lines) were rescinded and replaced with so-called "transition duties", also effective from 15 October 2008.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 gradually phased out over a three-year period culminating in their complete elimination on 12 December 2011.

The regulation issued by the Mexican government to implement the bi-lateral agreement with China also included a provision that maintained 533 percent AD duties on the following four apparel items until such time as the Ministry of Economy issued a notice in Mexico's official journal.

• HTSMX 6109.10.01 - cotton knitted t-shirts, singlets, tank tops and similar garments
• HTSMX 6109.90.01 - man-made fibre knitted t-shirts, singlets, tank tops and similar garments
• HTSMX 6109.90.99 - knitted t-shirts, singlets, tank tops and similar garments, other than of cotton, man-made fibres or containing more than 70 percent by weight of silk
• HTSMX 6110.20.99 - cotton knitted garments of subheading 6110.20, with the exception of sweaters, pullovers and vests

The ME was forced to continue to assess AD duties on imports of these products from China as a result of a court order stemming from a judicial proceeding in which a Mexican company asked for special legal protection/relief from the government's decision to eliminate the AD duties on these specific items. The court issued a ruling in favour of the petitioner several months ago, which effectively maintained the 533 percent AD duties on these products.

Notwithstanding the adverse court ruling, the ME rescinded the AD duties on these items effective from 21 May as part of an administrative review. The review was initiated in December 2007 and was terminated upon entry into force of the transition duties with respect to all apparel and textile made-ups that were previously subject to AD duties. However, the review continued with respect to the items identified above and was terminated on 20 May because no domestic supplier provided any evidence of dumping or injury. The ME notes that the decision to rescind these AD duties is strictly the result of the administrative review, irrespective of any of the provisions included in Mexico's bi-lateral textile agreement with China. The practical implications of this action are as follows.

• Mexico's imports of mainland Chinese apparel classified under HTSMX 6109.10.01, 6109.90.01, 6109.90.99 and 6110.20.99 are no longer subject to 533 percent AD duties.
• In addition to regular MFN duties (the rate is currently 30 percent), mainland Chinese apparel classified under HTSMX 6109.10.01, 6109.90.01 and 6110.20.99 is now subject to transition duties of 130 percent. These duties will fall to 120 percent from 12 December 2009, to 80 percent from 12 December 2010 and will be eliminated altogether on 12 December 2011.

Mainland Chinese apparel classified under HTSMX 6109.90.99 is not subject to transition duties. It is only subject to the regular MFN rate, currently 30 percent.