Describes Mexico's export control legal framework and steps taken since its implementation
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Mexico’s Export Controls Regime: Long strides and skipped steps*
Horacio A. López-Portillo
Since the creation of the United Nations, Mexico has been a strong proponent of
peace and individual state sovereignty. However, only until recently did our country
actively pursue international efforts towards avoidance of the proliferation of weapons
and their delivery systems, as we became a member of the committee of the U.N.
Security Council created pursuant to Security Council Resolution 1540i, and applied for
membership to the Wassenaar Arrangemen iit , the Australia Groupiii and the Nuclear
Particularly, early in 2011 Mexico proudly announced its application to the
Wassenaar Arrangement (“WA”), the stated objective of which is to “contribute to
regional and international security and stability, by promoting transparency and greater
responsibility in transfers of conventional arms and dual-use goods and technologies,
thus preventing destabilising accumulations v” , and, consequently, issued directives and
resolutions that sought to achieve this stated objectivevi. So, how well does Mexico’s
new legislation and its implementation by the General Directorate for Foreign Trade of
the Ministry of Economy (the “Mexican Central Authority”) comply with the rules and
objectives provided by the WA?
Six months after Mexico became a WA participant, and the latest regulatory
provisions were issuedvii, this paper seeks to provide summary and preliminary
responses to the questions below:
2. What is the actual purpose sought by Mexico for export controls?
The Mexican Central Authority states that Mexico’s membership in the export controls
regime has two main objectives, namely, to ensure that Mexican law adheres to international
standards on export controls with a view to avoiding the proliferation of weapons, and to allow
Mexico to fully exploit its potential as a producer of high technology goods. To achieve these two
goals, Mexico intends to comply with international non-proliferation best practices and, at the
same time, remain friendly to Mexico’s industry so as to continue to be considered safe for
Accordingly, we identify three distinct governmental objectives: (a) Compliance with
international standards for export controls practices in order to avoid proliferation of conventional
As published in the Newsletter of the International Bar Association, Legal Practice Division, International Sales,
Number 30, August 2012, pages 13-17.
arms; (b) promotion of the country’s potential as a manufacturer of high-tech goods, including,
dual-use goods and technologies; and (c) further promotion of Mexico as a foreign investment
friendly nation. We believe all three objectives are equally valid; however, in order to remain
non-exclusive, the actions taken to pursue them must be sound and capable of striking an
adequate balance between the security and stability goals of the WA and the commercial and
trade promotion targets sought by Mexico.
3. Are goods classified appropriately pursuant to the WA?
Pursuant to the WA, dual-use goods and technologies subject to control are those which
are major or key elements for the indigenous development, production, use or enhancement of
military capabilitiesviii. Accordingly, the most important criteria for classification is whether the
goods or technologies have the capacity to further military capabilities, and bear (or should bear)
no relationship with the how or why they are classified under the Harmonized Tariff Systemix
since the WA seeks to classify goods based on their nature and use, instead of their origin or
with a view to the collection of taxes or duties. It is, essentially, a non-tariff control system.
However, and perhaps with the intention of facilitating a smooth transition for those
individuals and entities in Mexico that trade in dual-use goods and technologies who are
unfamiliar with the new export controls regime, the Mexican Central Authority has sought to
classify goods based on the Harmonized Tariff Schedule, and provide exceptions based on the
WA and its Control Listsx. How it actually works is yet to be tested, since until May 31, 2012 only
a small number of export controls applications had been filed before the Mexican Central
For instance, goods classified under tariff item 8523.52.01 of the Mexican Tariff Schedule
(“smart cards”) shall be subject to obtainment of an export controls permit, except for “smart
cards and electronic smart card players or scanners (both with limited encryption capacity) that
incorporate or utilize encryption, the main function of which is to send, receive or store
information, or whose encryption functionality is limited to use in monetary transactions, mobile
telephony for civilian use, wireless civilian telephony and/or civil use networks, and which cannot
be re-programmed for any other use, or that are designed for the protection of the personal data
stored therein, the cryptographic capacity of which is not available to their use xir” .
Thus, if the example is representative of how classification is conducted, based on
experience there is reason to worry that codification by exception leads to serious difficulties in
the classification of goods subject to export controls, and may give rise to excess discretion by
the persons in charge of classifying the relevant goods and the authorities responsible for
authorising the relevant export operation. For example, the new system relies heavily on
customs classification professionals that are not necessarily experts in export controls or even
securityxii or, as currently happens, on a limited number of officers of the Mexican Central
Au xiiithority. On the other hand, the official responsible for actually conducting the customs
dispatch of the relevant goods is not a subordinate of the Mexican Central Authorityxiv, the
mandate of whom is to strictly apply the Harmonized Tariff Schedule regardless of the
exceptions provided, and who, in fact, may be unaware of such exceptions.
4. Are the security aspects of export controls adequately addressed by Mexico?
In furtherance of the stated objectives of the WA indicated above, Mexico and other
participating states are obligated to ensure that transfers of conventional arms, dual-use goods
and technologies do not facilitate the development or are diverted to enhance military
capabilities xv. Mexico should comply with this objective through its own national policies and the
application of sovereign discretion based on certain “best practices” recommended within the
For the purpose of assessing how well Mexico has complied with the security aspects of
an adequate export controls regime, we will focus our analysis only on the “Statement of
Understanding on Implementation of End-Use Controls for Dual-Use Items” xvi. This statement, in
addition to other sets of “best practices”, including the “Best Practice Guidelines on Internal
Compliance Programmes for Dual-Use Goods and Technologies” xvii, the “Best Practices for
Implementing Intangible Transfer of Technology Controls”xviii and the “Best Practices for
Effective En xixforcement” (to which we will refer in the next section), are unquestionably a good
way to measure the effectiveness of export controls legislation.
So, if end-use controls must be risk based and flexible, with special emphasis on risk
management assessments on a case by case basis in order to determine the sensitivity of a
particular export transaction, the authorities and exporters must work together to achieve the
greatest degree of preventive and corrective risk mitigation. Accordingly, while use end-user
certificates such as those provided by paragraph 10 of the Export Controls Directive are
important, they cannot be deemed sufficient in the absence of complete evaluation of risks by
both the licensing authority and the exporter. Thus, the fact that many Mexican exporters lack
internal compliance programmes leaves little doubt that the basic elements of the pre-licensing
phase of export controls are not fully met at this time in Mexicoxx.
On a positive note, it should be said that most of the basic elements for the application
and post-export phases of the export controls seem to be currently in place both for the Mexican
Central Authority and exporters. From reports provided from the Mexican Central Authority there
is reason to believe some additional elements, such as pre-license checks conducted by the
relevant authorities, have been implemented. However, the process seems to be one-sided,
since we are unaware of any Mexican exporter that voluntarily presents a separate confirmation
of specific data by the person responsible for exports (a compliance officer) or submits so-called
Delivery Verification Certificates or provides Private Post-Shipment Controls, the latter of which
although unenforceable, are valuable tools for risk assessment and monitoring xxi.
Thus, in lieu of adequate preventive measures undertaken by all parties involved in the
export process, the security aspects of export controls seem left to corrective actions that
depend on effective enforcement.
5. How are export controls currently enforced in Mexico?
Although not binding, the Best Practice for Effective Enforcement agreed at the
WA Plenary of 1 December 2000 (the “WA Enforcement Practices”) provide a good set
of guidelines for the establishment of an enforcement program since they are the result
of the various policies followed by the different Participating States. Of particular
importance is the fact that best enforcement practices are divided into (a) enforcement
and (b) punishment and follow up xxii.
Thus, based on our experiencexxiii we know that Mexico complies with the
punishment and follow up section of the WA Enforcement Practices, and will assess in
the following table whether Mexico complies with “preventive” enforcement, thereby truly
enforcing export controls, or solely limiting its enforcement to punishment and follow up:
WA Enforcement Practices Mexico
1. Utilization of threat assessment Mexico’s Central Authority maintains
techniques and procedures. adequate threat assessment techniques.
However, the implementation of such
techniques is left to Mexican Customs.
Experience indicates that this dichotomy of
authorities responsible for the
establishment and the implementation of
threat assessments often results in
2. Maintenance of list of problem end- Filings have been so few that it is still early
users. to comment on this practice. However, it is
worth noting that the Export Controls
Directive provides for the existence of a
registry of export brokers and the sharing of
relevant data with international authorities.
3. Confirmation of stated end-user and Mexico does not have this policy in place.
actual end-user of export items prior to
issuance of licence.
4. Obtainment of assurances of end-use Mexico does not have this policy in place.
and non re-export.
5. Examination of goods and This activity is reserved for and fully
documentation required to be complied by Mexican Customs.
presented at point of export.
6. Confirmation that exports have Mexico does not have this policy in place.
reached stated destination.
7. Conduct industry awareness The Mexican Central Authority has
programmes. conducted industry awareness programmes
with the selected industries that are sought
to be promoted (see Item 1 above).
8. Seek voluntary compliance by industry. Mexico does not have a policy in place for
8.1 Development of Internal voluntary industry compliance, and has met
Compliance Programs strong resistance from exporters that make
8.2 Keep industry and general public consolidated shipments.
appraised of penalties and No publication of penalties or successful
examples of successful prosecution has occurred to date.
prosecution. We understand only two investigations
8.3 Conduct investigations. have been concluded thus far, with one
suspension of shipment prior to export.
9. Designate law enforcement This activity is reserved for Mexican
responsibilities for detection, Customs.
prevention and punishment of
violations to export control laws.
10. Provide adequate resources and This activity is reserved for Mexican
training for enforcement officers. Customs.
11. Ensure national laws and regulations Pursuant to Articles 67 and 92 et. seq. of
have statutes of limitations that are the Federal Tax Code, the applicable
long enough to allow detection and statute of limitations is five years. However,
prosecution. it is important to highlight the fact that a
criminal complaint must be filed by Mexican
Customs, not the Mexican Central
Authority, thereby requiring a close
relationship between both authorities.
Based on the above, it is clear that the Mexican Central Authority is responsible
for the conceptual aspects of enforcement and could be responsible for preventive
enforcement, while Mexican Customs is responsible for the punitive and follow up
aspects of enforcement; a situation that may give rise to difficulties based on failures in
communication and familiar “turf wars” between the relevant Ministries.xxiv
It is unquestionable that Mexico has taken the steps necessary to ensure its admission
as a WA participant very quickly, and seems on track for acceptance within the other
export controls regimes it has applied to. However, in taking these long and positive
strides, smaller, equally important steps have been missed. These missed steps appear
as opportunities for private-sector industry participants that should be pursued in
conjunction with the Mexican Central Authority. Fortunately, the Mexican export controls
system is relatively new, so the time is ripe for remedial action.
Which Committee was chaired by Mexico from 2009 to 2010.
Mexico was accepted as the 41st member on January 25, 2012.
Application submitted in March 2011.
Mexico initially applied in 2007 and renewed its application in 2011.
See: Wassenaar Arrangement – Guidelines & Procedures, including the Initial Elements, at:
http://www.wassenaar.org/guidelines/docs/5%20-%20Initial%20Elements.pdf, page 2
For instance, the Directive that provides for the obtainment of a permit prior to the exportation of conventional weapons, their parts
and components, dual-use goods, software and technologies that may be subject to deviation for the fabrication and proliferation of
conventional and mass destruction weapons published in in Mexico’s Official Daily Gazette on June 16, 2011 (the “Export Controls
Directive”); the Resolution that amends the Directive that provides for the obtainment of a permit prior to the exportation of
conventional weapons, their parts and components, dual-use goods, software and technologies that may be subject to deviation for
the fabrication and proliferation of conventional and mass destruction weapons, published in Mexico’s Official Daily Gazette on
December 13, 2011 (the “Export Controls Amendment”); the Resolution that provides for the classification and codification of
goods the import and export of which are subject to authorization by the Ministry of Energy”, published in Mexico’s Official Daily
Gazette on February 22, 2012 (the “Energy Controls Resolution”); and the Resolution that amends the Directive that provides for
the obtainment of a permit prior to the exportation of conventional weapons, their parts and components, dual-use goods, software
and technologies that may be subject to deviation for the fabrication and proliferation of conventional and mass destruction weapons,
published in Mexico’s Official Daily Gazette on June 7, 2012 (the “Nuclear Controls Amendment”).
Although we know of more regulations that are pending enactment, including that referenced in Note 21 below.
See: Wassenaar Arrangement – Criteria for Selection of Dual Use Items, at:
http://www.wassenaar.org/controllists/2005/Criteria_as_updated_at_the_December_2005_PLM.pdf, page 1
The purposes of Harmonized Tariff Schedule may be said to be the facilitation of the (a) systemization of international trade
statistics; (b) the establishment of rules of origin; (c) collection of domestic taxes on foreign trade; and other equally valid purposes.
The Export Controls Directive and the Export Controls Amendment contain Annexes that provide a classification of goods based on
the Harmonized Tariff Schedule, as adopted by Mexico, with qualifications and exceptions based on the Controls Lists of the WA,
including the Categories of the List of Dual-Use Goods and Technologies.
See: Annex I, Dual-Use Goods, to the Export Controls Amendment. Translation is the responsibility of the author.
In Mexico, customs classification is mandatorily entrusted to customs brokers who, although qualified customs classification and
valuation professionals, are not experts in security. Thus, more often than not customs brokers will be wary to classify a certain
product as an exception since the responsibility for goods classification is shared by the relevant importer/exporter and the customs
We have been informed by the Central Authority that they are currently responsible for determining the relevant exceptions, and
are able to respond export controls permit applications within a week. Yet, these officers will necessarily be insufficient to respond to
the number and complexity of the applications filed in the not so distant future.
An officer of Mexican Customs (Aduana México), an entity of the Ministry of Finance and Public Credit.
Agreed at the 2007 Plenary of the WA. See:
Agreed during the 2011 Plenary of the WA. See:
A pending subject for most, if not all, WA participating countries.
Agreed at the 2000 Plenary of the WA. See: http://www.wassenaar.org/publicdocuments/2000/2000_effectiveenforcement.html
Additional elements for exporters, such as, physical and security arrangements at their facilities, are even harder to find in Mexican
companies who do not have corporate ties to companies whose main office is located at another WA member state. On the other
hand, additional elements for the Mexican Central Authority currently seem to be working well. This, however, is possible in light of
the limited number of export license applications.
The fact that Mexico has focused on a corrective, instead of a preventive manner of addressing the security aspects of export
controls is exemplified by the un-published Resolution that prohibits the export or import of military and dual-use goods to Somalia,
Afghanistan, Iraq, Liberia, Congo, Sudán, Iran, Cote d’Ivoire, North Korea, Libia, and Eritrea (an arms embargo), when the first
United Nations resolution that supports an action such as this was adopted in 1992 (Somalia), and most are at least five or six years
old. We have obtained a copy of the draft resolution (“Acuerdo mediante el cual se prohíbe la exportación o la importación de
diversas mercancías a los países, entidades y personas que se indican”, which will be eventually signed by the Minister of Economy.
The document is divided in two sections called Preventive Enforcement and Effective Enforcement. Based on the definition of
“enforcement” (the act of compelling observance of or compliance with a law, rule, or obligation) given by the Oxford Dictionaries
(http://oxforddictionaries.com/definition/enforcement?region=us&q=enforcement) we contend that the former is actual enforcement,
while the latter relates solely to the punishment and follow-up phases of enforcement.
We are aware of two instances of detainment of exports allegedly in violation of export control regulations, and have been
informed by the Mexican Central Authority that the international cooperation and information exchange guidelines of the WA
Enforcement Practices are fully complied with.
Turf wars between the Mexican Ministries of Economy and Finance are traditional. Thus, the current good relationship between
the Mexican Central Authority and Mexican Customs is a welcome change that results from export controls enforcement.