North American Free Trade Agreement
Annex 300-A: Trade and Investment in the Automotive Sector
Appendix 300-A.2: Mexico
Definitions
27. For purposes of this Appendix:
abnormal production disruption means a disruption in a
manufacturer's production capability resulting from a natural
disaster, fire, explosion or other unforeseen event beyond the
manufacturer's control;
automotive products (referred to as "productos automotrices"
in rule 1, paragraph III of the Auto Decree Implementing Regulations)
means motor vehicles and autoparts;
autoparts (referred to as "partes y componentes automotrices"
in article 2, paragraph X of the Auto Decree) means parts and
components intended for use in a motor vehicle;
autotransportation parts means parts and components intended
for use in an autotransportation vehicle;
autotransportation vehicle means a vehicle of one of the
following types:
(a) a vehicle without a chassis and with an integrated body, intended
for the transport of more than 10 persons, with a gross vehicle
weight of more than 8,864 kilograms, provided for in items 8702.10.02,
8702.10.03, 8702.90.03, 8702.90.04, 8705.20.01 or 8705.40.01 of
the Tariff Schedule of the General Import Duty Act;
(b) a vehicle with a chassis, intended for the transport of goods
or more than 10 persons, with a gross vehicle weight of more than
8,864 kilograms, provided for in items 8702.10.01, 8702.10.03,
8702.90.02, 8702.90.04, 8704.22.99, 8704.23.99, 8704.32.99, 8705.20.01,
8705.40.01 or 8706.00.99 of the Tariff Schedule of the General
Import Duty Act; or
(c) a vehicle with two or three axles, either with integrated
equipment or intended for the transport of goods by hauling a
trailer, or semi-trailer, provided for in items 8701.20.01, 8705.20.01,
8705.40.01 or 8706.00.99 of the Tariff Schedule of the General
Import Duty Act;
base value means the average for model years 1991 and 1992
of a manufacturer's production in Mexico for sale in Mexico (VTVd),
adjusted annually for cumulative inflation, based on the Mexican
National Producer Price Index of Vehicles, Autoparts, and other
Transportation Goods ("Indice Nacional de Precios al
Productor de vehículos, refacciones y otros materiales
de transporte"), or any successor index, published by the
Bank of Mexico ("Banco de Mexico") in its "Economic
Indicators" ("Indicadores Económicos") (hereinafter
"Mexican NPPI"). To adjust the base value for cumulative
inflation up to 1994 or a subsequent year, the average for model
years 1991 and 1992 of the manufacturer's VTVd shall be multiplied
by the ratio of:
(a) the Mexican NPPI for that year, to
(b) the Mexican NPPI for 1992,
provided that the price indices set out in subparagraphs (a) and
(b) have the same base year;
enterprise of the autoparts industry (referred to as "empresa
de la industria de autopartes" in article 2, paragraph V,
and articles 6 and 7 of the Auto Decree) means an enterprise constituted
or organized under the law of, and operating in, Mexico that produces
autoparts and:
(a) whose annual invoice value of sales of autoparts to manufacturers,
for use as original equipment by the manufacturer in its production
of automotive products for sale in Mexico, constitutes more than
60 percent of the enterprise's annual total invoice value of sales,
calculating its annual invoice value of sales of autoparts to
manufacturers in accordance with rule 20 of the Auto Decree Implementing
Regulations as of August 12, 1992, or any other measure adopted
by Mexico that is no more restrictive than such rule;
(b) complies with the national value added requirements pursuant
to paragraphs 2 and 3 of this Appendix;
(c) complies with the capital structure required under the Law
to Promote Mexican Investment and Regulate Foreign Investment
("Ley para Promover la Inversión Mexicana y Regular
la Inversión Extranjera"), March 9, 1973, and the
Regulations of the Law to Promote Mexican Investment and to
Regulate Foreign Investment ("Reglamento de la Ley para
Promover la Inversión Mexicana y Regular la Inversión
Extranjera"), May 16, 1989, as applied consistently with
Mexico's commitments set out in its Schedule to Annex I of Part
Five (Investment, Services and Related Matters); and
(d) that, on the fulfillment of the requirements under (a), (b)
and (c), is registered with the Ministry of Trade and Industrial
Development ("Secretaría de Comercio y Fomento Industrial")
("SECOFI") as an enterprise of the autoparts industry,
except that SECOFI may grant registration to an enterprise that
complies with subparagraphs (b) and (c) but does not comply
with subparagraph (a);
extended trade balance for a manufacturer is equal to S + T +
W+0.3I + SFt - Y, where:
(a) S denotes the manufacturer's trade balance;
(b) T denotes the transfer of
(i) trade balance surpluses between the manufacturer and other
manufacturers, and
(ii) foreign exchange to the manufacturer that an enterprise of
the autoparts industry has earned from exports of autoparts, excluding
the value of import content in such exports, and excluding foreign
exchange that the enterprise has earned from exports of autoparts
that were promoted by the manufacturer,
applied in accordance with rule 8 of the Auto Decree Implementing
Regulations as of August 12, 1992, or any other measure adopted
by Mexico that is no more restrictive than such rule;
(c) W denotes the transfer to the manufacturer of foreign exchange
that a maquiladora has earned from the export of automotive products,
excluding the value of the import content in such exports, provided
that the maquiladora is not a national supplier, and one or more
of the following conditions is met
(i) the manufacturer is, directly or indirectly, a majority shareholder
of the maquiladora,
(ii) the manufacturer and the maquiladora have a majority shareholder
in common, or
(iii) the manufacturer is a promoter of the automotive goods exported
by such maquiladora,
calculated in accordance with article 9 of the Auto Decree and
rule 8 of the Auto Decree Implementing Regulations as of August
12, 1992, or any other measure adopted by Mexico that is no more
restrictive than that article or rule;
(d) I denotes the value of the manufacturer's investments in fixed
assets of Mexican origin destined for permanent use in Mexico,
excluding machinery and equipment purchased in Mexico but not
produced in Mexico, that the manufacturer may transfer to its
extended trade balance, applied in accordance with article 11
of the Auto Decree and rule 8 of the Auto Decree Implementing
Regulations as of August 12, 1992, or any other measure adopted
by Mexico that is no more restrictive than the article or rule;
(e) SFt denotes the manufacturer's trade balance surpluses unused
in prior years and transferred to the current year, calculated
in accordance with rules 17 and 19 of the Auto Decree Implementing
Regulations as of August 12, 1992, as modified by paragraph 16
of this Appendix, or any other measure adopted by Mexico that
is no more restrictive than such rules; and
(f) Y denotes the adjustment factor calculated in accordance with
paragraph 15;
independent maquiladora means an enterprise registered
as an export maquiladora enterprise under the existing MaquiladoraDecree,
that has no majority shareholder in common with any manufacturer,
and in which no manufacturer is directly or indirectly a majority
shareholder;
manufacturer (referred to as "empresa de la industria
terminal"in article 2, paragraph IV, and articles 3, 4 and
5 of the Auto Decree) means an enterprise constituted or organized
under the law of, and operating in, Mexico, that is:
(a) registered with SECOFI; and
(b) engaged in Mexico in the manufacture or final assembly of
motor vehicles;
manufacturer of autotransportation vehicles means an enterprise constituted
or organized under the law of, and operating in, Mexico:
(a) that is registered with SECOFI;
(b) that manufactures autotransportation vehicles in Mexico; and
(c) where the enterprise's
(i) total invoice value of sales of autotransportation vehicles
and autotransportation parts that it produces in Mexico, minus
(ii) total invoice value of autotransportation parts that the
enterprise imports directly, plus the value of the import content
of autotransportation parts that it purchases in Mexico,
is equal to at least 40 percent of its total invoice value of
sales of autotransportation vehicles and autotransportation parts
that the enterprise produces in Mexico;
manufacturer's production in Mexico for sale in Mexico
(VTVd) means the total invoice value of a manufacturer's sales
in Mexico of motor vehicles and autoparts it produced in Mexico,
excluding the manufacturer's sales of imported motor vehicles;
manufacturer's total sales in Mexico means the manufacturer's
total invoice value of sales of motor vehicles it produced in
Mexico for sale in Mexico plus the total invoice value of its
sales of imported motor vehicles;
model year (referred to as "año-modelo"
in article 2, paragraph IX of the Auto Decree) means a 12-month
period beginning November 1;
motor vehicle (referred to as "vehículos automotores"
in article 2, paragraph IV of the Auto Decree) means an automobile,
a compact automobile of popular use, a commercial truck, a light
duty truck or a medium duty truck, where:
(a) automobile means a vehicle intended for the transport
of up to 10 persons, provided for in items 8703.21 through 8703.33,
8703.90.99, 8706.00.01, 8706.00.02 or 8706.00.99 of the Tariff
Schedule of the General Import Duty Act;
(b) compact automobile of popular use means a vehicle that
complies with the characteristics set out in the existing Decree
that Establishes Exemptions for Compact Automobiles of Popular
Use ("Decreto que Otorga Exenciones a los Automóviles
Compactos de Consumo Popular"), August 2, 1989, provided
for in items 8703.21 through 8703.33, 8703.90.99, 8706.00.01,
8706.00.02 or 8706.00.99 of the Tariff Schedule of the General
Import Duty Act;
(c) commercial truck means a vehicle with or without a
chassis, intended for the transport of goods or more than 10 persons,
with a gross vehicle weight of up to 2,727 kilograms provided
for in items 8702.10, 8702.90.02, 8702.90.03, 8702.90.04, 8703.21 through
8703.33, 8703.90.99, 8704.21.99, 8704.31.99, 8705.20.01, 8705.40.01,
8706.00.01, 8706.00.02 or 8706.00.99 of the Tariff Schedule of
the General Import Duty Act;
(d) light duty truck means a vehicle with or without a
chassis, intended for the transport of goods or more than 10 persons,
with a gross vehicle weight of more than 2,727 but no more than
7,272 kilograms provided for in items 8702.10, 8702.90.02, 8702.90.03,
8704.90.04, 8704.21.99, 8704.22.99, 8704.31.99, 8704.32.99, 8705.20.01, 8705.40.01,
8706.00.01, 8706.00.02 or 8706.00.99 of the Tariff Schedule of
the General Import Duty Act; and
(e) medium duty truck means a vehicle with or without a
chassis, intended for the transport of goods or more than 10 persons,
with a gross vehicle weight of more than 7,272 but no more than
8,864 kilograms provided for in items 8702.10, 8702.90.02, 8702.90.03,
8702.90.04, 8704.22.99, 8704.32.99, 8705.20.01, 8705.40.01, 8706.00.01, 8706.00.02
or 8706.00.99 of the Tariff Schedule of the General Import
Duty Act;
national supplier (referred to as "proveedor nacional"
in article 2, paragraph VII of the Auto Decree) means an enterprise
constituted or organized under the law of, and operating in, Mexico:
(a) that supplies to manufacturers autoparts classified in categories
26, 40, 41, 42, 43 and 57 of the input-output matrix of the National
Institute of Statistics, Geography and Informatics ("Instituto
Nacional de Estadística, Geografía e Informática"),
published in 1980;
(b) that is registered with SECOFI;
(c) in which no manufacturer, directly or indirectly, is a majority
shareholder;
(d) that has no majority shareholders that are also majority shareholders
of any manufacturer; and
(e) that complies with the national value added requirements pursuant
to paragraphs 2 and 3;
national value added from suppliers (VANp) (referred to
as "VANp" in rule 18 of the Auto Decree Implementing
Regulations) means, for a manufacturer, the sum of:
(a) the national value added contained in the autoparts that the
manufacturer purchases from national suppliers and from enterprises
of the autoparts industry, excluding purchases of autoparts from
such suppliers and enterprises destined for the aftermarket, and
(b) the foreign exchange attributable to the value of exports
of autoparts, excluding the value of import content in the exports,
produced by national suppliers and enterprises of the autoparts
industry, where the export of the autoparts was promoted by the
manufacturer,
calculated in accordance with formula 7 of rule 18 in the Auto
Decree Implementing Regulations as of August 12, 1992, or any
other measure adopted by Mexico that is no more restrictive than
such formula;
national value added means, for an enterprise of the autoparts
industry or a national supplier, the total value of sales of such
enterprise or supplier minus the value of its total imports, direct
and indirect, excluding those imports incorporated in autoparts
destined for the aftermarket, as modified by paragraphs 2 and
3;
total national value added (VANt) (referred to as "valor
agregado nacional de la empresa de la industria terminal"
in rule 18 of the Auto Decree Implementing Regulations) means,
for a manufacturer, either:
(a) the sum of the manufacturer's production in Mexico for sale
in Mexico (VTVd) plus the manufacturer's trade balance (S), where
the trade balance (S) is greater than zero; or
(b) the manufacturer's production in Mexico for sale in Mexico
(VTVd), where the manufacturer's trade balance (S) is negative;
total sales means, for a national supplier or an enterprise
of the autoparts industry, the sum of:
(a) the invoice value of sales of autoparts by that supplier or
enterprise to a manufacturer that are intended for use as original
equipment in the motor vehicles or autoparts that the manufacturer
produces, excluding autoparts destined for the aftermarket; and
(b) the value of autoparts that the supplier or enterprise exports,
either directly or through a manufacturer, less the value of the
imported content of such autoparts; and
trade balance (S) (referred to as "saldo en balanza comercial"
in rule 9 of the Auto Decree Implementing Regulations), for a
manufacturer, is equal to X + TP - ID - IP, where:
(a) X denotes the value of the manufacturer's direct exports of
motor vehicles and autoparts that it produces,
(b) TP denotes the foreign exchange attributable to the value
of exports of autoparts, excluding the value of import content
in the exports, produced by national suppliers and enterprises
of the autoparts industry, where the exportation of such autoparts
was promoted by the manufacturer,
(c) ID denotes the value of the manufacturer's direct imports,
excluding duties and domestic taxes, and whether the imports are
for domestic consumption ("definitivas") or for re-export
("temporales"), incorporated in the motor vehicles and
autoparts produced by the manufacturer, excluding autoparts destined
for the aftermarket, and
(d) IP denotes the value of import content in the autoparts purchased
by the manufacturer from an enterprise of the autoparts industry
or a national supplier that are incorporated in the motor vehicles
and autoparts produced by the manufacturer, excluding the import
content of autoparts destined for the aftermarket, calculated
in accordance with rules 10, 12, 13, 14, and 15 of the Auto Decree
Implementing Regulations as of August 12, 1992, or any other measure
adopted by Mexico that is no more restrictive than such rules,
provided that, for purposes of subparagraphs (c) and (d), the
value of imports for domestic consumption ("definitivas")
shall be discounted in accordance with paragraph 12.
Appendix 300-A.3
United States - Corporate Average Fuel Economy
1. In accordance with the schedule set out in paragraph 2, for
purposes of the Energy Policy and Conservation Act of 1975,
42 U.S.C. 6201 et seq. ("the CAFE Act"),
the United States shall consider an automobile to be domestically
manufactured in any model year if at least 75 percent of the cost
to the manufacturer of such automobile is attributable to value
added in Canada, Mexico or the United States, unless the assembly
of the automobile is completed in Canada or Mexico and such automobile
is not imported into the United States prior to the expiration
of the 30 days following the end of the model year.
2. Paragraph 1 shall apply to all automobiles produced by a manufacturer
and sold in the United States, wherever produced and irrespective
of car line or truck line, in accordance with the following schedule:
(a) with respect to a manufacturer that initiated the production
of automobiles in Mexico before model year 1992, the enterprise
subject to the fuel economy requirements for those automobiles
under the CAFE Act may make a one-time election at any time between
January 1, 1997 and January 1, 2004, to have paragraph 1 applied
beginning with the next model year after its election;
(b) with respect to a manufacturer initiating the production of
automobiles in Mexico after model year 1991, paragraph 1 shall
apply beginning with the next model year after either January
1, 1994 or the date that the manufacturer initiates the production
of automobiles in Mexico, whichever is later;
(c) with respect to any other manufacturer producing automobiles
in the territory of a Party, the enterprise subject to the fuel
economy requirements for those automobiles under the CAFE Act
may make a one-time election at any time between January 1, 1997
and January 1, 2004, to have paragraph 1 applied beginning with
the next model year after its election. If such a manufacturer
initiates the production of automobiles in Mexico, it shall be
subject to subparagraph (b) on the date it initiates such production;
(d) with respect to all manufacturers of automobiles not producing
automobiles in the territory of a Party, paragraph 1 shall apply
beginning with the next model year after January 1, 1994; and
(e) with respect to a manufacturer of automobiles covered by subparagraph
(a) or (c), paragraph 1 shall apply beginning with the next
model year after January 1, 2004, where the enterprise subject
to the fuel economy requirements for those automobiles under the
CAFE Act, has not made an election under subparagraph (a) or (c).
3. The United States shall ensure that any measure it adopts pertaining
to the definition of domestic production in the CAFE Act or its
implementing regulations shall apply equally to value added in
Canada or Mexico.
4. Nothing in this Appendix shall be construed to require the
United States to make any changes in its fuel economy requirements
for automobiles, or to prevent the United States from making any
changes in its fuel economy requirements for automobiles that
are otherwise consistent with this Appendix.
5. For greater certainty, the differences in treatment pursuant
to paragraphs 1 through 3 shall not be considered to be inconsistent
with Article 1103 (Investment - Most-Favored- Nation Treatment).
6. For purposes of this Appendix:
automobile means "automobile" as defined in the
CAFE Act and its implementing regulations;
manufacturer means "manufacturer" as defined
in the CAFE Act and its implementing regulations; and
model year means "model year" as defined in the
CAFE Act and its implementing regulations.
Continue on to Annex 300-B: Textile and Apparel Goods
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