Amendments to the Maquila Decree

1. Amendments to the Maquila Decree WMTA – January 19, 2011 Leobardo Tenorio Malof ltenorio@tplegal.net

2. Background • Amendment published on December 24, 2010. • Long negotiation with the authorities by the Maquila Chamber. • It was supposed to be published since October.

3. What was done • Restrict the authorization of new IMMEX programs. • More control over companies that manufacture. • Adapt the definition of “maquila operation”.

4. What was done • Grammatical precision of what is “transformation”. • Merger of the ALTEX and ECEX programs into the IMMEX Decree. • Merger of a customs benefits ruling into the IMMEX Decree. • Provide additional benefits to certified companies.

5. Customs • A new Annex I TER. • Certain steel products as now “sensible products”. • More than 200 hundred item numbers. • Goods can remain in the country for up to 9 months. • In order to import such products, specific requirements must be complied with.

6. Customs • No need to: • Register in the Importer’s Registry Specific Sectors (unless goods pose a health or national security risk). • Include additional raw materials for the manufacturing process into the company’s maquila program. • Include the finished products to be manufactured.

7. Customs • When importing “sensible products”: • Joint inspection visits from SAT and Economy. • The purpose is to verify the installed capacity. • If the importer only has the facilities, Economy will authorized the importation of machinery and equipment. • The company will have 3 months to import equipment and request a new inspection visit.

8. Certified companies • Can import sensible products for longer periods. • Suspension or cancellation may not proceed in certain cases.

9. When do we need to extend the maquila program? • Include “sensible products” into the maquila program. • Include a new modality of program. • Include processes or activities that Economy determines.

10. New obligations • Only import the authorized tariff items of “sensible products”. • Notify to Economy any change of • Shareholders or partners, and; • legal representative.

11. Suspension / Cancellation • Causes for cancellation were reduced but it is only a “clean-up” of the old ones. However, some were, in fact, eliminated. • A new one is the fact that a partners or shareholders where or are “vinculated” to a company to which a maquila program was cancelled.

12. Suspension / Cancellation • Those cases are: • The company is not located at the authorized address or that such addressed are “not located or non-existent”.

13. Suspension / Cancellation • Provided false documentation or supplier/buyer does not exist.

14. Suspension / Cancellation • A suspension will not allow the company to import nor to transfer goods to other IMMEX companies. • Economy will have 3 months to resolve whether the program is cancelled or not.

15. Suspension / Cancellation • No cancellation process in specific cases for certified companies or for those companies that have 500 employees registered with the IMSS and the value of the machinery and equipment is higher than USD$20 million.

16. New Maquila Programs • A favorable opinion from SAT will be required. • Information about partners and/or shareholders. • Detail description of the production process.

17. New Maquila Programs • For a service maquila program or for the importation of “sensible products”: • Investment program of sites. • Machinery and equipment. • Maps of the addresses. • Photographs. • Number of employees.

18. Conclusions • If you are not already, become a certified company. • Better benefits granted to this companies. • Additional information that need to be filed with the Economy. • Plan ahead if you import steel products and verify whether they are listed in Annex I TER.

19. Leobardo Tenorio-Malofltenorio@tplegal.netwww.tplegal.net(664) 634-2808 Thank you!