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August 26th, 2014
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  1. Infrastructure and Logistics Panel August 26th, 2014

  2. Economic figures • From January to June 2014, the total worth of import and export goods was 386 billion dollars (bd), 3.7% more than that of the same period in 2013. • During the same time, taxes collected from foreign trade operations totaled 13.2 bd, a growth of 5.5% regarding with the same period of last year. Such amount represents 18.7% of total revenue collection. • Furthermore, Customs collected 45.9% of the total value-added tax paid in the country between January and June 2014. • The following operations are registered daily in Ports of Entry across the country: • 44,500 operations (automated selection device) and more than 28,000 cargo vehicles participating in foreign trade. • More than 184,000 privately-owned vehicles and around 944,000 people cross the border into our country. • Almost 49,000 international passengers arrive through the airports. 1

  3. Modernization Plan of Customs Infrastructure 2013-2018 • Mexican Customs Administration has set a policy to modernize its infrastructure in order to properly meet the dynamics of foreign trade. • The modernization plan for this administration (2013-2018) includes 56 projects, classified as new facilities, reorganizing of current facilities, and expansion of facilities. • The plan aims to improve and optimize current infrastructure in order to facilitate foreign trade and promote competitiveness. Infrastructure Projects The execution of this plan will require an investment of over 700 Million Dollars between 2013 and 2018. 2

  4. Innovative aspects of the projects • Automated clearance (pilot program in Nuevo Laredo III). • Benefits in customs clearance for certified enterprises. • Exclusive lanes for certified enterprises (AEO Mexico, CTPAT-FAST). • New scanning technology for license plate identification. • Relocation and updating of non-intrusive inspection equipment. • Optimizing of non-intrusive inspection procedures to expedite clearance. • Integrated systems to automate operations and improve risk assessment. • Sharing of images from non-intrusive equipment in the US-Mexico border (pilot program in Matamoros-Brownsville rail crossing). • Deployment of identification mechanisms for pedestrian crossings. • Development of “mirror customs” (pilot program in Otay II-Otay-Mesa East). 3

  5. Modernization Plan of Customs Infrastructure 2013-2018 Progress to July, 2014 Tijuana Reynosa Matamoros Relocation of lanes Progress: Starting in the near future (September, 2014) Investment: 381 thousand Dlls. New pedestrian access “Puerta Este” Progress: Starting in the near future (September, 2014). Investment: 5.1 MD (State Government funding) New rail crossing Matamoros-Brownsville Progress: Starting in the near future (September, 2014) Investment: 84 MD (SCT/Licensee funding) 4

  6. Modernization Plan of Customs Infrastructure 2013-2018 Prospective 2014 Ciudad Juárez Ojinaga Full reorganizing of bridge “Zaragoza-Ysleta” 50% increased capacity in inspection platforms, 66% in import exit lanes and 25% in equipment. Progress: Starting in the near future (September, 2014). Investment: 26.58 MD New bridge crossing and port facilities “Guadalupe Tornillo” New infrastructure POV and cargo inspection. Progress:Starting in the near future (September, 2014). Investment: 14.30 MD Expanding overall facilities (Phase I) Progress: Starting in the near future (September 2014). Investment: 11.46 MD Nuevo Laredo Project Outlines to expanding and reorganizing 6 different ports of entry. New certified enterprises lanes and buffer zone Progress: Starting in the near future (August, 2014). Investment: 1.15 MD (State Government funding) Tecate, Acuña, Puerto Palomas, Ojinaga, Mexicali II y Subteniente López Progress: Under design (December, 2014). Investment: 2.7 MD 5

  7. Joint projects with California, USA Tijuana Airport Tecate - Tecate Mexicali I – Calexico West Mexicali II – Calexico West • Pedestrian Connection • 100% increase in infrastructure for Customs personnel and expanding of passenger inspection area. • Progress: 80% completed • Completion date: 2014-2015 • Expanding of Border crossing • Construction of a new building for pedestrian inspection, improved connections with the city’s roadways, and greater capacity for crossings north and southbound. • Completion date: 2015-2017 • Investment: Over 42 MD. • Project outline for expanding Customs facilities • 100% increase in infrastructure and equipment for cargo inspection areas and expanding of POV and pedestrian inspection areas. • Completion date: 2014-2015 • Investment: Nearly 250 thousand Dlls. • Reorganizing of cargo inspection areas • 75% increase in capacity for import and export cargo inspection and high specification equipment. • Completion date: 2014-2016 • Investment: Over 175 thousand Dlls. (import area) and nearly 13 MD (export area). El Chaparral – San Ysidro Otay-Otay Mesa Otay II – Otay Mesa East • Pedestrian crossing “Puerta Este” • Progress: 80% completed • New northbound lanes • Progress: To be initiated once connection of I5 to El Chaparral is completed (2015). • Reorganizing of import area • 50% increase in capacity for cargo clearance. • Completion date: 2014-2016 • Investment: Over 52 MD. • Construction of new toll border crossing • Completion date: 2017-2018 • Connection to I5 and 9 northbound lanes • Progress: Project outline completed • New pedestrian inspection and administrative building • Completion date: 2015 • Construction of toll intermodal port for commercial and non-commercial traffic • Completion date: 2017-2018 6 USA projects

  8. Single Rail Manifest • Unifies data contained in the cargo manifests, allowing carriers to submit information to Customs authorities in Mexico and the United States (SAT and CBP) simultaneously in electronic format. • Enables customs authorities of both countries to perform joint risk assessment. Additionally, traders will benefit from having an identical format to convey information, resulting in faster and less expensive procedures. • Rail freight. A pilot program is being deployed for northbound traffic (from Mexico to the US) at Nogales, Sonora – Nogales, Arizona, and at Mexicali, Baja California – Calexico, California. It is expected to be operating by the end of 2014. • Land cargo: The Mexican Revenue Service (SAT) will develop a manifest for truck cargo, starting with northbound traffic. Pilot testing will start in 2016. • Sea and air cargo: Pilot testing of harmonized manifests is expected to begin in 2015.  7

  9. Cargo Pre-inspection • CBP and SAT will conduct a joint inspection at a single checkpoint, facilitating customs clearance. • The project includes three initial pilots: • Laredo (Texas) Airport to clear air cargo destined to 7 Mexican airports. • Tijuana Port of Entry, at Mesa de Otay, to clear agriculture products. • “Foxconn” facilities, near Ciudad Juárez Port of Entry, to clear computer shipments. 8

  10. Authorized Economic Operator- Mexico • AEO Mexico certifies manufacturing enterprises, shippers (transporters) and customs brokers. In the near future, the program will extend to other parties in the supply chain to include industrial parks, port operators and couriers. • By July 31th, 2014, 447 applications have been submitted (not including shippers), among which: • 390 have been authorized • 35 are being processed • 12 have relinquished • 10 have been denied • The 390 certified enterprises have a total of 763 facilities, of which 276 are C-TPAT. 390 Certified Enterprises 763 Certified Facilities 9

  11. Certified Cargo Infrastructure Pilot Program: Certified cargo confined lanes Main objectives Develop infrastructure, equipment and operation rules to expedite clearance for AEO Mexico and US. Benefits are divided in four stages: Reaching Customs facilities. Entering Customs facilities. Inspection and verification at Mexican ports of entry. Inspection and verification at CBP. • Pilot Program selection process • Review built in capacity and traffic flows in customs facilities along US/MX border. • Joint visits in the following crossings: • Zaragoza/Ysleta • Mexicali/Calexico • Tijuana/Otay • Nuevo Laredo/Laredo • 3. Recommendation for pilot execution based on: • Required infrastructure • Potential impact • Stakeholder support 10

  12. Certified Cargo Infrastructure Pilot Program: Certified cargo confined lanes • Next steps • Project timeline approval • Stakeholders outreach • Certified companies • State and local authorities • Define operation rules and communication plan • Improve existing infrastructure • Define milestones • Benchmarking (before/after) • Monitoring • Stakeholder feedback POE reconfiguration 11

  13. Mutual Recognition Agreement • Mexico has the most solid Authorized Economic Operator (AEO) in Latin America. Therefore, various countries have approached Mexico with the intention of subscribing a Mutual Recognition Agreement (MRA). • An MRA allows for the recognition between the AEOs of two countries and the compatibility of their respective levels of exigency. Both parties in an MRA recognize their counterpart as reliable, promoting the development of new supply chains between the two Nations. • On March 11th, the MRA between Mexico’s and Korea’s AEOs was signed, constituting the first MRA in Mexico and Latin America. • We are currently completing the last phase in the negotiation to subscribe a similar agreement with the United States of America’s C-TPAT program. Once this agreement is formalized, the benefits for certified enterprises that take part in foreign trade with the US will be tangible. 12

  14. Facilitation Strategies for Passengers • Improved Passenger Inspection • A new procedure was recently implemented in 12 airports, by which baggage inspection is done using X-ray equipment, and only if the automated selection device requires it, reducing the time for passenger customs clearance. • Trusted Traveler Program (Viajero Confiable) • A Trusted Traveler will be able to clear immigration and customs through special desks located at the Mexico City, Cancun and Los Cabos airports. By June 30th, there were 468 members of the program. • Payment of duties for exceeding personal exemption at point-of-sale (POS) terminals • By June 30th, 125 POS terminals have been installed in 46 Ports of Entry across the Country, registering a total of 44,569 operations that equal 3.7 million dollars in revenue collection. 13