The European Union and six additional countries supported Mexico in its consultation before the WTO for subsidies to the textil and clothing sector from China

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Ministry of Economy Mr. Bruno Ferrari, informed today that the World Trade Organization (WTO) accepted the Mexico’s request to carry out the consultations with the China Government asking for subsidies to its textile and clothing products.

He declared that Australia, Brazil, United States, Guatemala, Honduras, Peru, and the European Union have given its support to Mexico and formally requested to add themselves to these consultations.

In a press conference, Ministry of Economy said that it is planned to achieve these consultants during the third week of November at the central office of WTO. He said “In case these consultations are not able to solve the differences before December the 15th as established by the WTO, Mexico would be able to request the establishment of a panel in charge of solving the controversy”.

Mr. Ferrari ratified that Mexico is in favor of free trade and willing to compete in the international markets but in equal conditions. Therefore, this process was initiated because we are convinced that subsidies given by China to their textile and clothing products are not complying with the rules established by the WTO and induce an unfair competition that causes a great affectation to these important industries in Mexico.

On 15 October, Government of Mexico requested consultations with China on the WTO framework in order to find a negotiated solution to the unfair practices implemented by the Chinese Government. After over a year of works conducted by experts in foreign trade, subsidies and unfair practices, and with the support of the Camara Nacional de la Industria Textil (CANAINTEX) and the Camara Nacional de la Industria del Vestido (CANAIVE), a number of measures that the Government of China has adopted to support irregularly to its textile sector were identified. 

The Economy Minister explained that these measures implemented by the Chinese Government include exemptions or reduction of taxes, mainly income tax; preferential granting of goods and services such as row materials, land and electricity; and direct transference of funds as preferential loans, debt forgiveness and even through donations.

He said that it was identified that these subsidies are subservient to the exportation results or the utilization of national products with preference on the imported inputs, which is forbidden by the WTO regulations.

Mr. Ferrari pointed that the subsidies have caused that exportations of these goods gain space in the international markets, particularly in U.S., moving both the Mexican exports as those from other countries. 

He said that it is estimated that from 2001 to 2011, the Mexican exports of textiles and clothing to the United States were reduced from 9 thousand 829 million to 5 thousand 821 million dollars. It is to say, a decrease of almost 4 thousand million dollar in ten years. Also, the subsidies of the Asian country has provoked a reduction in prices of the U.S. market because these have been commercialized to lower prices in order to compete with the Chinese products.

That is why the Mexican government decided to take the case before the international instances and defend the Mexican textile products based on the regulations in matter of international trade.

The Ministry of Economy explained that the textile and clothing industry is a priority sector for the Mexican economy as it generates 400 thousand direct jobs, one million two hundred thousand indirect jobs, and they are an important part of the manufacturing sector.

Meanwhile, Mr. Sergio Lopez De la Cerda, President of the CANAINVE, and Mr. Moises Kalach Mizrahi, President of the CANAINTEX, emphasize the relevance of the adhesion of more advanced economies and other rising economies to the Mexico’s initiative as it proves the coincidence with the Mexican government to go on advancing in the globalization accomplishing with multilateral legal framework. 

They informed that the Mexican textile and clothing industries generate 10 percent of the manufacturing jobs and contribute to the regional development of entities such as Coahuila, Estado de México, Hidalgo, Jalisco, Puebla, Tlaxcala, Yucatán and Distrito Federal, among others.

Both chambers agreed that the restoration of the legality in the international competence is absolutely necessary for companies of this value chain continue their evolution process based on the innovation and fashion, and reiterated the implications of the actions taken by the government of Mexico through the Ministry of Economy to fight against the practices that have given a disadvantage to the domestic industry.



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