Mexico

NATIONAL TRADE ESTIMATES REPORT 2014

  • Mexican poultry industry seeking review of SECON decision not to apply antidumping duties to certain U.S. chicken products
  • Long and costly delays in issuing licenses to import certain steel products
  • Insufficient prior notification of procedural changes to customs administration
  • Inconsistent interpretation of regulatory requirements at different border posts
  • Uneven enforcement of Mexican standards and labeling rules
  • Verifying NAFTA origin of products involves overly burdensome information and provision of confidential business information
  • Burdensome customs procedures and lack of pre-clearance for express packages
  • Some delays and difficulty with new Single Window for Trade
  • Wide availability of pirated and counterfeit goods via physical and online markets
  • Criminal enforcement of IPR lacks coordination, resources, sustained investigations and deterrent penalties
  • Mexican customs officials should have ex-officio authority
  • Empower the Attorney General to prosecute transshipments of alleged counterfeit and pirated goods
  • Strengthen copyright regime eg implement WIPO Internet treaties and stop unauthorized camcording of movies
  • Legislation on telecoms needs to set out treatment of dominant players and rules for new entrants following recent constitutional reform
  • Stricter advertising restrictions on Pay TV than free-to-air (domestic operators duopoly)
  • New energy sector laws increase private sector participation in oil and gas, but state still owns hydrocarbons
  • Ban on foreign ownership of residential real estate in zones near coast and land border
  • National Foreign Investment Commission reviews foreign investment restricted sectors and unrestricted sectors above threshold

REPORT ON TECHNICAL BARRIERS TO TRADE 2014

  • Concerns about transparency of new consolidated standards development organization and funding for ambitious goal to develop many new standards
  • Two regulations on energy efficiency labeling of electronic products are burdensome, costly, inconsistent with US regulation, lack real energy efficiency purpose and duplicate

REPORT ON SANITARY AND PHYTOSANITARY MEASURES 2014

  • Work to finalise agreed veterinary certification for imports of U.S. beef from cattle aged over 30 months
  • U.S. proposal for export of live cattle to Mexico
  • Ban on unpasteurized commercial milk from the U.S.
  • Quarantine requirements pose barriers to U.S. peach, nectarine, and apricot exporters
  • Mexican government inspections of California stone fruit are high cost to US producers
  • Work plan to address temporary suspension of stone fruit imports from Georgia and South Carolina
  • Stonefruit from Pacific Northwest needs minimal oversight by Mexican inspectors because of low risk of disease

SPECIAL 301 REPORT 2014 (IP)

  • Widespread availability of pirated and counterfeit goods
  • Increased internet piracy
  • Inefficient coordination among federal and sub-federal officials
  • More resources needed for IPR enforcement
  • More IPR-related prosecutions should be brought
  • Stronger penalties to deter infringers
  • Customs officials should have ex officio authority
  • Stronger copyright regime should include full implementation of WIPO Internet Treaties
  • Stronger protections needed against unauthorized camcording of motion pictures
  • Revoke policy only to act against transshipments of suspected counterfeit or pirated goods where there is evidence of “intent for commercial gain”
NATIONAL TRADE ESTIMATES REPORT: Mexico http://www.ustr.gov/sites/default/files/2014%20NTE%20Report%20on%20FTB%20Mexico.pdf

IMPORT POLICIES

Tariffs and Market Access

Pursuant to the terms of the NAFTA, on January 1, 2003, Mexico eliminated tariffs on all remaining industrial products and most agricultural products imported from the United States. On January 1, 2008, Mexico eliminated its remaining tariffs and tariff-rate quotas on all U.S. agricultural exports (see the section on agriculture below for additional details on specific farm products).

Mexico imposes a value-added tax (VAT) on sales of goods and services. Certain food products are exempt from the VAT. U.S. producers have complained that, while Mexico imposes the VAT on imports of U.S. nutritional supplements at the time of entry, it does not collect the VAT on sales of similar domestic products at the point of sale.

The Mexican government passed fiscal reform in October 2013, which included harmonization of the VAT along the northern border to 16 percent, imposition of the VAT on temporary imports, a new sugary beverage tax, and taxes on “junk” food, pet food, and chewing gum. The “junk food tax” is an additional 8 percent tax applied to nine food categories, and is based on the caloric density of those foods, which includes cereals, snack foods, confectionary, and flavored beverages.

Agricultural Products

The United States exported $18.9 billion in agricultural, fishery, and forestry products to Mexico in calendar year 2013, compared to $19.7 billion in 2012. Mexico is the United States’ third largest agricultural export market.

Chicken

On February 8, 2011, the Mexican Secretariat of Economy (SECON) announced an antidumping investigation on U.S. fresh, chilled, and frozen chicken leg quarters (CLQ). SECON issued the final determination in the investigation on August 6, 2012. Final dumping margins ranging from 25.7 percent to 127.5 percent were identified, but corresponding antidumping duties were not imposed. Rather, the Mexican Foreign Trade Commission (COCEX) determined that additional duties might increase prices at a time when Mexico’s chicken industry was suffering an outbreak of highly pathogenic avian influenza. On September 3, 2012, interested U.S. parties filed an appeal of the final antidumping determination with the NAFTA Secretariat. The NAFTA panel is currently being composed. On October 9, 2012, members of the Mexican poultry industry filed a notification with SECON asking it to rescind its decision not to apply antidumping duties and to deem illegal its decision to identify, in its final determination, lower dumping margins than it identified in its preliminary determination. The U.S. Government continues to monitor the situation while all duties are in abeyance and the respective administrative processes are stalled.

Import Licensing

On December 5, 2013, Mexico published, in the Mexican government gazette, new licensing procedures for the importation of certain steel products. These procedures were made effective on January 27, 2014. Two of the stated goals of the procedures are to combat fraud and improve statistical monitoring.

Although the new import licensing system is supposed to issue licenses automatically, industry representatives have reported long delays in the review and issuance of licenses. These administrative delays have led to disruptions back through the supply chain, as shipments must remain at the border, thereby incurring additional costs. The U.S. Government is collecting additional information on the problem and will work with industry stakeholders and the Mexican government to address the issue.

Administrative Procedures and Customs Practices

Despite improvement in some areas, U.S. exporters continue to express concerns about Mexican customs administrative procedures, including: insufficient prior notification of procedural changes; inconsistent interpretation of regulatory requirements at different border posts; and uneven enforcement of Mexican standards and labeling rules.

Numerous U.S. companies reported in 2012 that the Servicio de Administración Tributaria (SAT), Mexico’s tax authority, is verifying NAFTA origin for the entry of products dating back to 2007. While verifications are permitted under NAFTA, the breadth of these verifications and the extent of the information being requested were reportedly overly burdensome and required the submission of confidential business information with no assurance that it would be protected from disclosure. In some cases, SAT reportedly denied an exporter’s claim for NAFTA preference, even after the submission of documentation demonstrating that the products meet NAFTA’s rules of origin requirement. The fines and penalties in such cases can be very high (in excess of $10 million), and there are substantial costs associated with complying with the verification and even greater legal costs for appealing the rulings. Following discussions with various stakeholders, SAT committed to adopt new procedures to address industry complaints, including a “selective sampling” procedure implemented on a case-by-case basis. The U.S. Government will continue to monitor the situation and urge SAT to resolve all pending audit cases in a timely manner.

Customs procedures for express packages continue to be burdensome, although Mexico has raised the de minimis level (below which shipments are exempt from customs duties) from $1 to $50. Mexican regulations still hold the courier 100 percent liable for the contents of shipments. U.S. exporters have highlighted the benefits of harmonizing the hours of customs operation on the U.S. and Mexican sides of the border, but exporters cite delays stemming from the lack of pre-clearance procedures, which the Mexican government claims are not permitted under current law. The U.S. and Mexican Governments are actively working to find a solution that would allow pre-clearance pilot programs.

On June 1, 2012, the Mexican government implemented the Ventanilla Unica de Comercio Exterior Mexicana (VUCEM), or Single Window for Trade. The VUCEM allows users to transmit trade information required by Mexican authorities electronically. Mexican importers and U.S. exporters have experienced some delays and difficulties with the process, but the Mexican government has been working to address these concerns.

GOVERNMENT PROCUREMENT

The Mexican government uses several “electronic government” Internet sites to increase the transparency of government procurement processes and to provide guidelines for the conduct of government officials. One such site, CompraNet, provides an online interface for conducting government procurement at the federal level. CompraNet was developed by Mexico’s Ministry of Public Administration to modernize and increase transparency in the procurement of goods, services, leases and public works for the federal public administration and the governments of Mexican states that use the online service. Under Mexican legislation, all federal agencies must post on CompraNet the calls for bids, terms, notes, results and contracts related to their procurement. In addition, all state, national, and international bids funded with federal monies are announced through CompraNet.

The 2012 law on Public-Private Partnership (PPP) allows the Mexican government to enter into infrastructure and service provision contracts with private companies for up to 40 years. The PPP Law also provides more legal certainty to private investors through the equal distribution of risks, facilitating access to bank loans, and harmonizing existing public-partnership models into one federal law. All investors are allowed to participate in bidding processes, except for some restricted sectors in accordance with the existing Foreign Direct Investment Law. Mexico is not a signatory to the WTO Agreement on Government Procurement.

INTELLECTUAL PROPERTY RIGHTS PROTECTION

Mexico was listed on the Watch List in the 2013 Special 301 report.

The report noted inadequate intellectual property rights (IPR) enforcement and the wide availability of pirated and counterfeit goods mostly via physical and online notorious markets.

Criminal enforcement of IPR suffers from weak coordination among federal, state, and municipal officials, limited resources for prosecutions, lack of long-term sustained investigations to target high-level suppliers of counterfeit and pirated goods, and the need for deterrent level penalties.

The United States continued to encourage Mexico to provide its customs officials with ex-officio authority; to provide Mexican Customs and the Mexican Industrial Property Institute (IMPI) with the authority to act administratively against the transshipment of alleged counterfeit and pirated goods; to give the Attorney General’s Office the authority to prosecute transshipments of alleged counterfeit and pirated goods; and to enact legislation to strengthen its copyright regime, including by implementing the World Intellectual Property Organization (WIPO) Internet treaties and by providing stronger protection against the unauthorized camcording of motion pictures in theaters.

Mexico took some positive steps in 2013, such as formally joining the Madrid Protocol, which provides a simple streamlined process for rights holders to apply for trademark protection in Mexico and other member countries. The United States continues to work with Mexico to resolve IPR concerns through bilateral, regional, and other means of engagement.

SERVICES BARRIERS

Telecommunications

OECD surveys have recommended that Mexico improve mandatory access to the local loop; formally regulate fixed-to-mobile termination charges; and introduce mandatory roaming to enable smaller mobile companies to use the network of Telcel, (Mexico’s largest mobile phone company). The OECD also suggested that the industry regulator, Cofetel (the Federal Telecommunications Commission), needs greater independence both from leading companies in the sector and from its parent ministry, the Ministry of Communications and Transportation (SCT).

In June 2013, the Mexican Congress passed (and then the Mexican states ratified) a sweeping constitutional reform that aims to open up the telecommunications sector to more competition and improve services for Mexican consumers, addressing the majority of concerns outlined in the OECD survey of Mexico’s telecommunications sector. The reform will directly affect telecommunication giant America Movil, which serves 70 percent of mobile subscribers, and television heavyweights Televisa and TV Azteca, which together hold 90 percent of their respective market of free-to-air TV. The reform creates a new telecommunication regulator, the Federal Telecommunications Institute (IFT), and gives both IFT and the Comision Federal de Competencia Economica (CFCE) constitutional autonomy and more regulatory authority, including market regulation and tools for combating monopolies and monopolistic practices. Furthermore, the reform amends the constitution to address the telecommunication industry’s abuse of legal injunctions (amparos). Under the amendment, IFT’s regulations would not be subject to delays upon the institution of an amparo and would remain in effect while a case is being reviewed. The fixed and satellite telecommunications market has been opened up to 100 percent foreign direct investment and the government plans to develop a shared public telecommunications network geared toward the latest 4G/4G LTE technology to take advantage of reclaimed spectrum in the 700MHz band.

Although the recently enacted reform may address a number of the services barriers that have deterred investment and stunted the growth and development of Mexico’s telecommunications industry, the Mexican legislature needs to pass implementing legislation that outlines how regulators will determine and treat dominant players in the market and established the “rules of the road” for new market entrants. The lack of such legislation has created uncertainty in the market for both existing participants and possible new entrants. Legislators have stated publicly that they will review the legislation in the first quarter of 2014.

Broadcasting

In Mexico, pay television, which is the primary outlet for foreign programmers, is subject to significantly more stringent advertising restrictions than free-to-air broadcast television, which is the primary outlet for domestic operators. The two national broadcasters, Televisa and TV Azteca, control about 90 percent of the national broadcast television market. In June 2012, the Dirección General de Radio, Televisión y Cinematografía (RTC) notified affected cable channels that the programmers were now limited to six minutes per hour of advertising. This announcement followed a decade in which pay TV programmers were allocated an average of 12 minutes per hour for advertising (without exceeding 144 minutes per day). There was no official change in law or regulation, and, prior to announcing the change, the RTC had confirmed in a 2011 letter to the cable channel industry association that the longstanding practice was lawful. Free-to-air broadcasters may allot their permitted 259 minutes per day of advertising with no hourly limits. Mexican authorities have indicated that they continue to work on establishing “a clear legal framework” for pay TV advertising that will occur soon.

INVESTMENT BARRIERS

Mexico’s oil and gas sector remains largely closed to private investment, with the exception of the liquefied natural gas sector, natural gas distribution, and the marketing of petroleum products. Only Mexican nationals may own gas stations. In December 2013, Mexico’s Congress passed energy reform legislation that opens Mexico’s state-run oil industry to private sector participation and allows greater private investment in power generation. The legislation was ratified by Mexican states that same month. The energy reform amends the Mexican constitution to allow the private sector to enter into competitive contracts that include profit-sharing, production-sharing, and license contracts with the government or state-owned petroleum company Pemex for the exploration and extraction of hydrocarbons. The reform also allows private sector companies to participate in downstream operations, such as refining, petrochemicals, transport, retail, and supply. The Mexican constitution still mandates state ownership of hydrocarbons. Legislation to implement the reform is expected to be submitted to the Mexican Congress in early 2014.

Other laws limit participation in certain sectors or activities (e.g., forestry) to Mexican nationals.

Investment restrictions prohibit foreign ownership of residential real estate within 50 kilometers of Mexico’s coasts and 100 kilometers of its land borders (although foreigners may acquire use of residential property in these zones through trusts administered by Mexican banks). There is legislation currently pending in Mexican congress that would revise this restriction.

An interagency National Foreign Investment Commission reviews foreign investment in Mexico’s restricted sectors, as well as investments in unrestricted sectors in which foreign equity exceeds 49 percent and which have a value greater than $165 million (adjusted annually).

REPORT ON TECHNICAL BARRIERS TO TRADE (pg. 87): Mexico

http://www.ustr.gov/sites/default/files/2014%20TBT%20Report.pdf

Bilateral Engagement

The United States continues to discuss TBT matters with Mexico during WTO TBT Committee meetings. The United States and Mexico also engage on standards and regulatory issues in the NAFTA Committee on Standards Related Measures, which met in February and October of 2012, and as part of the United States–Mexico High-Level Regulatory Cooperation Council, which met in August 2013.

Standards System Overhaul

Mexico is moving to consolidate all Mexican standards development organizations (SDOs) into a single Mexican SDO, AMEXNOR. U.S. stakeholders are concerned Mexico has set the ambitious goal of AMEXNOR developing between 5,000 and15,000 standards in the next several years. It is unclear how standards development is to be funded, but Mexico has indicated it is considering expanding and codifying the current fee structure, under which all certification bodies pay ten percent of their profits into a trust. Most U.S. SDOs are already engaged with the Mexican Bureau of Standards (Dirección General de Normas, part of the Secretariat of Economy) but nonetheless; contend the process is not fully transparent. The United States and industry stakeholders will monitor standards development in Mexico to ensure that the process is fair and transparent, and allows for an opportunity to comment.

Energy Efficiency Labeling and Standby Power Usage Regulations

On September 10, 2010, Mexico published a “Catalogue of equipment and appliances used by manufacturers, importers, distributors and marketers that require mandatory inclusion of energy consumption information,” a regulation on energy efficiency labeling that is applicable to a significant number of electrical and electronic products and equipment. U.S. industry stakeholders expressed their concern that implementation of the regulation would impose additional burdensome and costly labels to their exports to Mexico. The regulation became mandatory on September 11, 2011. U.S. and industry stakeholders remain concerned that this regulation sets a poor precedent and places unnecessary regulations on an extensive list of electronic products that operate at a relatively low wattage and are not regulated in the United States. On November 14, 2012, Mexico published proposed changes to NOM-032, a regulation that would provide standby energy consumption limits, testing methods, and labeling requirements for certain electrical and electronic equipment, including digital television adapters, decoders for television reception, audio reproduction units, image reproduction equipment, and televisions with LED, LCD, or plasma displays. NOM-032 covers most of the same products as the previous aforementioned catalogue, and nearly duplicates, though does not replace it. U.S. industry stakeholders requested a delay in the implementation of NOM-032 so that the proposed changes could be analyzed, modified, and clarified. Mexico only granted a slight delay of the implementation period of 240 days; it finalized and published the regulation in the Official Gazette on January 23, 2014. U.S. industry is concerned that the two regulations together lead to duplicative labeling and conformity assessment regimes, resulting in unnecessary barriers to trade. U.S. industry argues that there is no real energy efficiency purpose behind the regulations and that they impose burdensome costs and procedural requirements without offering any added energy efficiency information for the consumer. Additionally, U.S. industry contends that there are likely no energy savings associated with the regulations and that NOM-032 does not consider or attempt to achieve harmony with well-established U.S. and Canadian energy efficiency or disclosure programs, such as Energy Star. U.S. industry met with Mexico’s National Commission for Efficient Energy Use (CONUEE) several times in 2013 to discuss the regulations when they were still in draft form. Although CONUEE was responsive on engaging in discussions of NOM-032 requirements, it did not alter or revise the regulation to address U.S. industry’s concerns. The United States will continue to monitor this issue in 2014.

Sanitation Pipes

As noted in prior TBT Reports, the United States was concerned that Mexico’s National Water Commission (NWC) had not recertified certain U.S.-origin plastic pipes for waste water systems, drinking water systems, and domestic service connections, under the Mexican recertification standard applicable at the time (NOM-001-CONAGUA-1995). According to U.S. industry, NWC had instead sought to enforce an obsolete ISO standard on high density polyethylene (HDPE) plastic pipes, that was not incorporated into the Mexican recertification standard and that relied on design and descriptive characteristics, rather than performance abilities. Furthermore, although both HDPE pipe and polyvinyl chloride (PVC) pipe –a competing product –could not satisfy the design characteristics of the ISO standard, NWC appeared to only be enforcing this standard on HDPE pipe and not PVC pipe, the latter of which is manufactured predominantly by the domestic industry. U.S. industry reported that HDPE pipe met the recertification standard contained in NOM-001-CONAGUA-199, as well as relevant performance characteristics as described in other, more up to date, state of the art international standards. The new certification standard adopted by Mexico appeared to benefit Mexican made pipes at the expense of U.S. made HDPE pipes. The exclusion of U.S. made HDPE pipes was significant, as the collective market for plastic pipe in Mexico at its peak was well in excess of US $100 million.

The United States raised this issue with Mexico both bilaterally and in the WTO TBT Committee meetings, and requested that Mexico ensure that the standards NWC adopted applied on a non-discriminatory basis, were science-based, and were developed through transparent processes as required by the TBT Agreement. Additionally, the United States encouraged Mexico to apply the Mexican standard as written. On February 17, 2012, NWC released an amended mandatory standard, NOM-001-CONAGUA-2011, which authorized acceptance and use of standards that are utilized in the markets of Mexico’s trading partners, including the United States. Despite accepting U.S. HDPE manufacturers’ requests for recertification and the completion of relevant testing, NWC stated in February 2013 that it still could not recertify HDPE plastic pipe. NWC suggested that it was unable to confirm that ASTM International is an internationally recognized standard setting body, notwithstanding the facts that the amended mandatory recertification standard did not appear to limit the standards for recertification to only those produced by internationally recognized standards setting bodies and that ASTM International is generally recognized as such a body.

In 2013, the United States continued to raise this issue with Mexico both bilaterally and in the WTO TBT Committee. As a result, in November 2013, NWC finally issued U.S made HDPE plastic pipe a three year certification. The United States will continue to monitor developments to ensure that U.S. manufacturers of sanitation pipes can compete on a non-discriminatory basis.

Sanitary and Phytosanitary Report (pg. 70): Mexico

http://www.ustr.gov/sites/default/files/FINAL-2014-SPS-Report-Compiled.pdf

Food Safety

Live Cattle, Beef, and Beef Products

In March 2004, Mexico became one of the first major markets previously closed to U.S. beef and beef products due to BSE concerns to reopen. However, through 2013, Mexico retained prohibitions on the importation of U.S. beef derived from animals over 30 months of age. Until 2012, Mexico also retained restrictions on the importation of U.S. weasand meat, ground beef, head meat, and small intestines from cattle under 30 months of age. However, in the fall of 2012, the United States and Mexico reached agreement to allow the importation of these products from the United States, provided they meet certain requirements.

Moreover, in response to the OIE’s recognition last year of the negligible risk status of the United States with respect to BSE, Mexico notified the United States on September 27, 2013 that U.S. beef products would be authorized for importation into Mexico regardless of the age of the cattle from which they were derived, with the exception of traditional SRMs. The United States and Mexico are currently working to finalize a set of agreed veterinary certifications for the exportation to Mexico of U.S. beef derived from cattle over 30 months of age. In addition, the United States has submitted a proposal to Mexico to permit the exportation of U.S. live cattle to Mexico.

Dairy

Mexico refuses to allow the importation of unpasteurized commercial milk from the United States until it completes a risk assessment on the safety of U.S. unpasteurized commercial milk. However, Mexico has not initiated this risk assessment due to budgetary and personnel limitations. As a result, the United States is unable to send unpasteurized milk to Mexico for further processing. The United States will continue to urge Mexico to undertake the necessary risk assessment for this product.

Stone Fruit

U.S. peach, nectarine, and apricot growers encounter problems exporting to Mexico due to Mexico’s requirements to control the oriental fruit moth and other pests considered to be quarantine pests by Mexico. The United States has worked to address these measures as they apply to growers in California, Georgia, South Carolina, and the Pacific Northwest.

California

Under the California Stone Fruit Work Plan, Mexico imposes a high level of direct oversight on the operations of California stone fruit producers shipping to Mexico as a condition for access to Mexico’s market. This program requires the U.S. industry to pay for several inspectors representing the Mexican government to inspect their operations for the oriental fruit moth and other pests. The United States has sought to reduce the expensive Mexican government oversight of U.S. producers through on-going bilateral discussions. A draft protocol that would reduce oversight requirements is under discussion.

Georgia and South Carolina

In 2008, USDA asked Mexico to open its market for stone fruit from Georgia and South Carolina. Mexico agreed to complete a PRA in connection with the request. During technical discussions in January 2011, Mexico agreed to let Georgia and South Carolina export stone fruit in the absence of a completed PRA under a pilot project, based on the California Stone Fruit Work Plan. Although the work plan is more stringent and expensive to implement than necessary, it allowed Georgia and South Carolina producers to begin shipping to Mexico in February 2011. In October 2011, due to interceptions of plum curculio, Mexico temporarily suspended shipments. As an alternative to the work plan, Mexico has proposed allowing importation of Georgia and South Carolina peaches using methyl bromide fumigation treatment under the direct oversight of Mexican inspectors. The industry is also interested in using irradiation treatment as means of securing market access with reduced oversight by Mexico. A draft PRA and proposed Irridiation Operational Work Plan are under review by Mexico.

Pacific Northwest

USDA is awaiting a PRA from Mexico to address a request to allow peaches, nectarines, and plums from the Pacific Northwest to be shipped to Mexico. Mexico has stated that in the absence of the PRA, it would accept peaches, nectarines, and plums from this region only if they were produced under oversight similar to that conducted in California. Pacific Northwest producers believe that due to the low risk associated with the region, any Mexican export program should require minimal oversight. The United States and Mexico continue to have technical discussions on this issue.

301 (IP) Report (pg. 54): Mexico

http://www.ustr.gov/sites/default/files/USTR%202014%20Special%20301%20Report%20to%20Congress%20FINAL.pdf

Mexico remains on the Watch List in 2014.

Positive developments in Mexico in 2013 included entry into force of the Madrid Protocol, implementation of amendments to the copyright law that allow rights holders to seek damages in civil courts before an administrative infringement decision is issued or becomes final, and progress in the destruction of seized illegal goods, although overall seizure numbers have declined.

However, serious concerns remain, particularly with respect to the widespread availability of pirated and counterfeit goods in Mexico, including at the Notorious Markets Tepito and San Juan de Dios, and also increased Internet piracy due in part to higher broadband penetration.

Although coordination has been increasing, criminal enforcement suffers from inefficient coordination among federal and sub-federal officials, as well as a lack of resources. In addition, to combat high levels of IPR infringement, Mexico needs to devote additional resources, bring more IPR-related prosecutions, and impose deterrent penalties against infringers.

The United States continues to urge Mexico to provide its customs officials with ex officio authority and to enact legislation to strengthen its copyright regime, including by fully implementing the WIPO Internet Treaties and providing stronger protection against the unauthorized camcording of motion pictures in theaters.

Prior to 2011, Mexican customs authorities and the Attorney General’s Office worked jointly to intercept and prosecute transshipments of counterfeit and pirated goods. Following a shift in policy, however, Mexican Authorities now only take action against transshipments of suspected infringing goods if there is evidence of “intent for commercial gain” in Mexican territory, which is very difficult to prove. The United States strongly urges Mexico to revert to the previous policy that allowed for the interception of potentially dangerous counterfeit trademark goods in transit to the United States and other countries.

The United States looks forward to continuing to work with Mexico to address these and other issues, including through the TPP negotiations.