AGREEMENT ESTABLISHING RULES OF CERTIFICATION OF ORIGIN IN TRADE BETWEEN MEXICO AND THE EUROPEAN COMMUNITY

VOLUME 2000
September 27, 2000
Number 20
Foreign Tax Law
Bi-Weekly Bulletin

MEXICO
AGREEMENT ESTABLISHING RULES OF CERTIFICATION OF ORIGIN IN TRADE BETWEEN MEXICO AND THE EUROPEAN COMMUNITY
The Agreement by which Rules for Certification of Origin of Decision 2/2000 of the Joint Council of the Provisional Agreement on Trade and Problems Related to Trade between Mexico and the European Community was published on June 26, 2000 in the Diario Oficial of Mexico. The text of the Agreement without the Annexes follows.

TITLE I. GENERAL DISPOSITIONS (EU Trade Agreement)
1. This Agreement's goal is to establish the rules of application and administration relative to Chapter I and II of Title II of Decision 2/2000 of the Joint Council on the Provisional Agreement on Trade and Problems Related to the Trade between Mexico and the European Community.

2. For the purposes of this Agreement, unless a disposition to the contrary exists, the following will be understood:

a) "Community", the European Community;

b) "Decision", Decision 2/2000 of the Joint Council on the Provisional Agreement on Trade and Problems Related to the Trade between Mexico and the European Community;

c) "shipment", the products that are sent either, simultaneously by an exporter to a consignee or under a single transportation document that covers its delivery from the exporter to the consignee, or in the absence of such document, under a single invoice sole, and

d) "Minister", the Minister of Trade and Industrial Promotion.

TITLE II. TRADE OF GOODS (EU Trade Agreement)
Chapter I. Proofs of Origin (EU Trade Agreement)
3. In accordance with article 15 of Annex III of the Decision and for the purpose of which the Community applies the custom tariff on the import of products import originating in Mexico pursuant to annex I (The Community's Calendar of Tax Reductions) of the Decision, the exporter must supply a proof of origin to the consignee in the form of a certificate of merchandise traffic - EUR.1, the model of which is in Appendix III of Annex III of the Decision, or of a declaration on the invoice, whose text appears in Appendix IV of Annex III of the Decision, except in the situations stipulated in article 25 of Annex III of the Decision, in which case the presentation of the proofs of origin to which this rule refers shall not be necessary.

4. The certificates of traffic - EUR.1 or the exporter authorized to issue a declaration in an invoice pursuant to article 20(1)(a) of Annex III of the Decision will be issued by the Minister upon petition of the exporters located in Mexico, provided that they comply with that which is provided in Annex III of the Decision and with the other requirements stipulated in this Agreement.

5. For purposes of that which is provided in rule 4 and articles 16(3) and 20(3) of annex III of the Decision, exporters whose merchandise complies with origin pursuant to the Decision and require the issue of a certificate of merchandise traffic - EUR.1 or to obtain the authorization as an authorized exporter, must fill up, sign and file before the Ministry, a "Questionnaire for the obtainment of a certificate of merchandise traffic - EUR.1 or the concession of the authorization of authorized exporter" (henceforth, "the questionnaire") that is included in the Annex 1 of this Agreement. The format of the questionnaire may be reproduced at will.

6. Nevertheless, the provisions of rule 5 and pursuant to article 20(1)(b) of annex III of the Decision, the exporters may extend a declaration on the invoice, without the necessity of filling the questionnaire to which rule 6 makes reference, if the total value of the shipment constituted by one or several originating product bundles does not exceed 6,000 Euros or in the event of being invoiced in national currency or other currency of the Community, the amount stipulated in Annex 4 of this Agreement must be applied.

In this case, the declaration on the invoice must contain the autographed signature of the exporter.

7. For the purposes of article 21(2) of annex III of the Decision, the Minister may grant the authorization as authorized exporter to all those persons that:

a) are registered in a maquila program pursuant to the "Decree for the Promotion and Operation of the Maquiladora Export Industry", published in the Diario Oficial of the Federation of June 1, 1998 as amended by a decree published on November 13, 1998; are registered in the ALTEX program pursuant to the "Decree for the Promotion and Operation of Mostly Exporting Enterprises" published in the Diario Oficial of the Federation of May 3, 1990, as amended through decrees of May 17, 1991 and May 11, 1995; or are registered in the PITEX program pursuant to the "Decree that establishes temporary import programs to produce export commodities" published in the Diario Oficial of the Federation May 3, 1990, as amended through decrees published on May 11, 1995 and November 13, 1998; and that furthermore export at least US$5,000,000 annually;

b) export perishable products, according to the list established by the Minister, or

c) export artisan products, according to the list established by the Minister.

The interested parties must comply with the other requirements provided in this Agreement.

8. Interested parties that are in any of the programs stipulated in rule 7(a) must insert the approval number of said programs approval in the space for "ALTEX, PITEX or Maquila Number" of the questionnaire. If more than one of these programs are engaged in, only one of them will be indicated in that space.

9. Rules 6 and 7 will not apply for products covered in Chapter IV of Title II of this Agreement.

10. The questionnaire must include the information necessary to demonstrate the origination of the product in accordance with Annex III of the Decision, and it must be filled up pursuant to its instructions and be signed by the exporter of the product. A questionnaire for each product must be filled up.

11. An exporter who tries to export merchandise under the Decision must file the questionnaire in its original and a copy for acknowledgement of receipt, at the time that the Minister shall determine, in the following offices:

a) Minister of Trade and Industrial Promotion, Certificates of Origin Window, ground floor, Insurgentes Sur 1940s, colonia Florida, Delegation Alvaro Obregón, Mexico, D.F., or

b) in the federal delegations, federal sub-delegations or service offices of this Minister.

12. Within the business day following the filing of the questionnaire, the Minister will inform the interested party of any omission therein, so that the latter may correct it.

13. Once that which was established in rules 10 and 11 is fulfilled, the Minister must issue an answer within the two business days following the filing of the questionnaire or will notify if a physical verification of the productive facilities of the undertaking will be required. In this case, the Minister will issue its answer within the 10 business days following the filing of the questionnaire.

14. If the Minister determines that the questionnaire filed by the exporter is valid, it will inform the exporter in writing through an authorization number if the exporter was granted authorization to be an authorized exporter or if it will certify through the issue of certificates of merchandise trafficking - EUR.1.

15. The questionnaire shall be in force one year as from the authorization date granted in accordance with that which is provided in rule 14.

For a product that complies with the criteria of being totally obtained in accordance with article 4 of annex III of the Decision, the questionnaire that has been authorized by the Minister, will be in force for three years as from the authorization date granted in accordance with that which is provided in rule 15 .

The exporter and the Minister must preserve the information contained in the questionnaire for a period of three years.

16. Notwithstanding that which is provided in rule 15, in case that the facts and circumstances that gave validity to the merchandise mentioned in the questionnaire have changed, the exporter must immediately file a new questionnaire with the Minister for its validation pursuant to rules 5, 10 and 11.

17. When the Minister has validated a questionnaire for purposes of certificates of traffic of merchandise - EUR.1, the formats of petition and of the certificate of traffic of merchandise will be available in the offices stipulated in rule 11. Said formats will be available to the exporter in the Spanish and English languages, according to what the exporter requires to fill them up and sign them. The exporter must not fill up the field that establishes the EUR. 1 number, nor field 11.

Formats of petitions and certificates of merchandise traffic - EUR.1 may not be freely reproduced.

18. For purposes of filling up field 5 of the format of petition and of certificate of merchandise traffic -EUR.1, the exporter will indicate the country to which he desires to export the merchandise. In the event of several countries he may indicate the word Community.

19. Once the exporter has duly filled up and signed the format of petition and the certificate of traffic of merchandise - EUR.1 to which rule 17 refers, he will be directed before the office stipulated in rule 11 and will file these documents and indicate the authorization number granted pursuant to rule 14 for the products for which he had filled up and signed petitions and the certificate of merchandise traffic - EUR.1, in the format of the Statistical Annex published in the Diario Oficial of the Federation of March 22, 1999 as amended on January 17, 2000.

20. Once the Minister has verified that the exporter has filed the documents stipulated in rule 19 and checked that the format of petition and the certificate of merchandise traffic - EUR.1 has been filled up in accordance with article 16(2) of annex III of the Decision, the Minister will number both the format of petition as well as the certificate of merchandise traffic - EUR.1 in the field that establishes the number of the EUR.1; and will stamp them, indicating the day of the issue and will sign in field 11 of the latter.

21. The Minister will deliver the merchandise traffic certificate - EUR.1 to the exporter and will preserve the petition format for a period of three years as from the issue date. As from its issue, and in accordance with article 22 of annex III of the Decision, the merchandise traffic certificate - EUR.1 will have a validity of 10 months to be filed before the customs authorities of the Community, except in the cases stipulated in article 22(2) and (3) of said annex .

22. The merchandise traffic certificate - EUR.1 original is the document that must be filed in the customhouse corresponding to the Community, in order to have a right to the custom tariff on the import of products originating in Mexico according to annex I (The Community's Calendar of Tax Reductions) of the Decision.

Copies of the certificate may not be filed to claim that customs tariff, however, the exporter may maintain a copy thereof in his possession.

23. When the Minister grants the exporter authorization of being an authorized exporter through the authorization number pursuant to rule 14, the latter must be included in the corresponding space of the declaration on the invoice the text of which appears in appendix IV of annex III of the Decision.

24. In accordance with article 20(5) of annex III of the Decision, the authorized exporter will not have the obligation of signing the declaration on the invoice provided that he filed a declaration before the Minister in which he expressed under oath that he assumes full responsibility for all invoice declarations issued by him.

The invoice declaration will have a validity of 10 months as from the time the exporter issues it to be filed before the customs authorities of the Community, except in the situations specified in article 22(2) and (3) of annex III of the Decision.

25. The exporter may only use the authorization of authorized exporter for the product or products for which the Minister has granted an authorization number in accordance with rule 14.

26. If the Minister determines that, in the light of the information contained in the questionnaire, the product does not qualify as originating in Mexico, it will inform the exporter of the reasons for his arrival at this conclusion.

27. In the case in which the exporter is not the producer of the merchandise and petitions the issue of a merchandise traffic certificate - EUR.1 or the authorization of an authorized exporter, he may:

a) fill up the questionnaire if he has the information necessary, or

b) file a letter before the Minister in which the producer of the merchandise who has previously filled up and signed a questionnaire, authorizes said exporter to use the authorization key of the questionnaire granted by the Minister to that producer.

28. For purposes of rule 27(b), the producer of the merchandise must file a questionnaire in accordance with the procedures established in rules 5, 10 and 11. However, the space to which the "procedure to be carried out" refers must be left blank, as well as the space corresponding to the "ALTEX, PITEX or Maquila Number".

Once the Minister determines that the questionnaire filed by the producer is valid, within the period established in rule 13, it shall inform that producer of the authorization key of the questionnaire.

29. An exporter that is not the producer of the merchandise and that has the letter to which rule 27(b) refers, will file that letter in the office specified in rule 11, and will annex a questionnaire in which only the blanks corresponding to: (1) the procedure to be carried out, (2) the "ALTEX, PITEX or Maquila Number", in the event of applying for authorization as an authorized exporter, and (3) field I (personal data) will be filled up, pursuant to their instructions, and it will be signed by the exporter.

The Minister will grant an authorization number in accordance with rule 14.

30. In accordance with article 17 of annex III of the Decision, the Minister may issue a merchandise traffic certificate EUR.1 a posteriori, that is to say, after the export, only in the case in which it was not issued at the moment the export was made, either by errors, involuntary omissions, special circumstances or if is demonstrated that the Minister issued a certificate EUR.1 and it was not accepted upon import into the territory of the Community for technical reasons.

31. In the event of an authorization number in accordance with rule 14, the interested parties in obtaining a merchandise traffic certificate EUR.1 issued retrospectively, must indicate in field 7 of the petition of the certificate the phrase "EXPEDIDO A POSTERIORI" in the event of its being filled up in Spanish; or "ISSUED RETROSPECTIVELY" in the event of being filled up in English, and the following must be annexed:

a) a short explanation of the reasons for the petition in free handwriting, and

b) presentation of the authorization number for the product that a merchandise traffic certificate EUR.1 "issued retrospectively" is being petitioned.

In the event of not having an authorization number pursuant to rule 14, the interested party must comply with the provisions in rules 5, 10 and 11, in addition to attaching a short explanation of the reasons for the petition.

32. For the purpose of article 17(4) of annex III of the Decision, and once the requirements of rule 31 are covered, the Minister may issue a certificate EUR.1 in accordance with rule 20, in which the phrase: "EXPEDIDO A POSTERIORI" must be indicated if it is filled up in Spanish or "ISSUED RETROSPECTIVELY" in case it is filled up in English, in field 7 of the certificate.

33. In accordance article 18 of annex III of the Decision, the Minister may issue a duplicate of the merchandise traffic certificate EUR.1, only in the event of theft, loss or destruction of an original traffic certificate EUR.1. In such a case, the Minister must indicate in field 7 of the certificate, the phrase: "DUPLICADO" in the event of its being filled up in Spanish; or "DUPLICATE" in the event of its being filled up in English.

34. The parties interested in obtaining a duplicate of the merchandise traffic certificate EUR.1, must indicate in field 7 of the petition for the certificate, the word "DUPLICADO" in the event of its being filled up in Spanish; or "DUPLICATE" in the event of its being filled up in English, and the following must be annexed:

a) a copy of the original merchandise traffic certificate EUR.1, in the event of this being indicated in accordance with rule 22 or the number of the original certificate EUR.1 granted in accordance with rule 21, and

b) a short explanation, in free hand writing, of the reasons for the petition.

35. The number of the duplicate merchandise traffic certificate EUR.1 that the Minister issues must coincide with the number of the original merchandise traffic certificate EUR.1.

36. The duplicate will be valid as of the issue date of the original merchandise traffic certificate EUR.1. The duration period of the certificate to which rule 21 refers will be computed as of the issue date of the original merchandise traffic certificate EUR.1.

37. In the case of exporting merchandise that qualifies as originating through a declaration on an invoice in accordance with rule 3, where the invoice thereof was issued by a person located outside of Mexico, such declaration may not be extended in that invoice, however it may be issued in the shipping guide or in any other commercial document issued in Mexico.

Chapter II. Exhibits (EU Trade Agreement)
38. When the exporter uses materials originating in the Community in the process of production of the merchandise that is trying to be exported to the Community, the proofs of origin to demonstrate this will be through the merchandise traffic certificate EUR.1 or the declaration on the invoice in accordance with article 15 of annex III of the Decision, of which the exporter must have a copy.

39. For purposes of article 26 of annex III of the Decision, the proof of origin that will verify the source or the degree of elaboration or transformation of the materials manufactured in Mexico and used by the exporter in the process of production of the merchandise that is trying to be exported to the Community, will be through the declaration of the supplier established in rule 40.

This rule must not be interpreted in the sense of obliging the provider of an input to furnish said declaration to the exporter of the product.

40. The supplier of inputs of a product that is going to be exported to the Community may deliver a "declaration of the provider" to the exporter, pursuant to the format that is included in the annex 2 of this Agreement, relative to the nature of the inputs supplied.

41. The declaration of the provider may be issued in the format contained in annex 2 of this Agreement which may be freely reproduced, or else a declaration of the provider may be issued in free format, as long as it contains the necessary information, such as name of the provider, name of the client, name and description of the product, if the product qualifies as originating in Mexico or the degree as elaboration or transformation of the inputs manufactured in Mexico in conformity with annex III of the Decision, as well as the signature of the provider.

42. The declaration of the provider will be valid as long as the circumstances that were in place at the time of its issue do not change.

43. The supplier of the input must inform the buyer of the input immediately if the facts or circumstances by which the declaration of the provider receives its validity for the products mentioned in the declaration should change.

44. The exporter must preserve the exhibits mentioned in this chapter, during a period of at least three years, in accordance with article 27 of annex III of the Decision.

For the same period of time, the exporter must preserve any other document that verifies the origin of the product exported to the Community, for example his accounting books and records, including those referring to the acquisition, the costs, the value and the payment of the exported merchandise; the acquisition, the costs, the value and the payment of all the inputs, including the neutral elements used in the production of the exported merchandise; and the production of the commodities in the form that was exported.

45. All the information specified in this chapter must be maintained and be registered pursuant to generally accepted accounting principles, published by the Mexican Institute of Public Accountants, A.C. (IMCP) including its complementary bulletins.

Chapter III. Separate Accounting (EU Trade Agreement)
46. For the purposes of article 8 of annex III of the Decision, producers of the merchandise that fill up a questionnaire and maintain separate inventories of materials used in their manufacturing process originating in Mexico and those not originating therein, which are identical and interchangeable, must file the "Application for authorization of the use of the separate accounting method" that is included in annex 3 of this Agreement in the office indicated in rule 11, which may be freely reproduced.

It shall be understood that the application is approved at the moment of its presentation, through the corresponding authorization number. In the event the producer no longer uses the separate accounting method, he must give notice to the Minister in order to revoke the validity of such authorization as of that moment.

47. The exporter must preserve the documents mentioned in this chapter, for a period of at least three years, in accordance with article 27 of annex III of the Decision.

48. Producers that request the authorization to which rule 49 refers must maintain and register their inventories pursuant to generally accepted accounting principles, published by the Mexican Institute of Public Accountants, A.C. (IMCP) including its complementary bulletins.

Chapter IV. Certification for products subject to quotas to be imported to the Community (EU Trade Agreement)

49. For products subject to quotas included in annex I, sections A, B and C of the article 8 (7) and note 12.1 of appendix II (a) of annex III of the Decision, as the case may be, that are exported from Mexico to the Community, merchandise traffic certificates EUR.1 will be issued in accordance with chapter I of title II of this Agreement only in a form limited to the amount of the quota corresponding in each case.

The procedures and allotment of the quotas to which the preceding paragraph refers will be determined by the Minister, pursuant to the law of the matter.

50. For purposes of the quota established in note 12.1 of appendix II (a) of annex III, the interested party must indicate in field 7 of the application and of the merchandise traffic certificate EUR.1 the following legend: "cumple con la norma de origen especifica establecida en la nota 12.1 del apendice II (a)", in the event it is filled up in Spanish; or "meets the rule of origin as set out in note 12.1 of appendix II (a)" in the event it is filled up in English.

Chapter V. Final provisions (EU Trade Agreement)
51. For the purposes of article 40 of annex III of the Decision, the commodities that are in transit, temporarily stored, in a fiscal warehouse or in free trade zones, as from the date of entry into force of the Decision and within the following four months of that date, exporters may request a certificate issued retrospectively, in accordance with rule 30 and comply with what was established in rule 31.

52. When the Community requests the verification of one or several proofs of origin, pursuant to article 31 of annex III of the Decision, or during the effective period of the questionnaire and if the Minister considers it necessary, it may require the exporter to supply some type of proof of origin, inspect the accounting thereof or require any other information that is considered necessary to check the origin of the merchandise or of its inputs, as well as carry out inspection visits to the physical facilities of the undertaking in accordance with article 16 fraction VIII of the Delegatory Powers of the Minister Agreement.

The foregoing also will apply to verify the accuracy of a declaration of the provider or of the authorization of the method of separate accounting.

TRANSITORY (EU Trade Agreement)
SOLE.- The present Agreement shall come into effect the day following its publication.