Mexico continues to use three types of tariff rate quotas: those negotiated under the WTO, preferential quotas negotiated under trade agreements, and unilateral quotas.
What are tariff quotas? A measure under which a product is subject to an MFN tariff but a lower tariff, in some cases zero percent, is allowed to be applied to a certain quantity (the “quota”). Tariff quotas apply mainly to trade in agricultural products and may be seasonal.
Under the WTO, Mexico maintains tariff rate quotas for products such as: meat and edible meat offal, milk powder, cheese, coffee, potatoes, beans, wheat, barley, corn, animal fats, sugar and products with high sugar content.
In 2021, most of these quotas were not used, either because the MFN applied tariff was lower than the tariff for imports under quota, because the market access conditions offered under a unilateral quota were more favorable, or because Mexico’s imports under preferential conditions exceeded the volume of the quota negotiated in the WTO.
In addition, according to WTO information, the volume of imports of these products is generally low.
Tariff rate quotas
Mexico has negotiated preferential quotas under its trade agreements with Argentina: ACE No. 6 (56 tariff lines at the 2017 HS 8-digit level) and ACE No. 55, appendix 1 (25 lines); Brazil: ACE No. 53 (8 lines); Colombia (88 lines); Costa Rica (12 lines); Cuba: ACE No. 51 (102 lines); El Salvador (7 lines); Guatemala (12 lines); Honduras (6 lines); Israel (11 lines); Japan (29 lines); Nicaragua (5 lines); Peru (38 lines); Uruguay (21 lines) and the EU (3 lines).
In the case of TIPAT, Mexico also negotiated preferential quotas: Australia (28 lines); Canada, New Zealand, Singapore and Vietnam (20 lines) and Japan (19 lines).
At the same time, Mexico continues to establish unilateral import quotas for a specific period of time to improve the competitiveness of production chains, deal with price increases, supply domestic demand when domestic supply is insufficient or reduce the balance of payments deficit.
In order to determine the volume or value of the quotas, the Ministry of Economy (SE) takes into account supply and supply conditions, as well as the opinion of the members of the production chain and the Foreign Trade Commission (COCEX).
The SE publishes in the Diario Oficial de la Federación (DOF) the volume or value of the quota, as well as the requirements for requesting the license, the allocation procedure and the term of the non-automatic license.
In 2021 Mexico maintained unilateral quotas for 77 tariff lines at the 8-digit HS level, covering both agricultural and manufactured products.
Fourteen of these lines were also subject to tariff rate quotas under the WTO. Such is the case of coffee, beef, pork, poultry, barley, beans and certain cheeses.
For these products, the tariff within the unilateral quota was lower than in the WTO quota; most of these quotas have a zero percent tariff.
All in all, in 2021 imports under the unilateral and WTO quotas were low.
The unilateral quota that was used the most, at 38.4 percent, was coffee extract, followed by the quota for fish fillets (31.4 percent), chicken and turkey cuts (14.3 percent), and milk preparations (9.8 percent).