Key Requirements for U.S. Companies to Export Textiles

An Expert's View about Textiles in Mexico

Posted on: 30 Dec 2011

Summary
The Mexican textile industry is very sensitive to external and internal factors such as changes in the production model, inclusion of China and Asian competitors in WTO, antidumping, counterfit among others due that reasons, U.S. exporters must be aware of key aspects and requirements for exporting to Mexico. This report will provide a geneneral overview of the Mexican textile industry and will share the key aspects and requirements to export textiles.

Market Data
The textile and apparel industries account for 6% of Mexico’s manufacturing GDP (textiles 3.2%, apparel 2.8%) and both sectors account for nearly 20% of all manufacturing employment in Mexico.
Mexico is a major textile producer, with an industry based on competitive labor costs and geographic proximity to the U.S. According to the National Institute of Statistics and Geography (INEGI) 63% of the Mexican Textile Industry is concentrated in the central parts of the country. Below chart depicts the percentage of textile companies located by State.
The Mexican Textile industry is very sensitive to price and dollar fluctuation; in 2009 this sector lost 68,000 jobs and several companies closed. Currently, Mexico is the fourth supplier of textile and apparel products to the U.S. and the import market grew in 26% in 2010.

Best Prospects and Key Suppliers
Mexico's geographic proximity permits lower transportation costs and fast delivery from the U.S; the largest segment of the market is centered in Guadalajara, Monterrey, and Mexico City.
The best prospects in textile industry are:
• Synthetic fibers mixed with rayon
• Other fabrics with textured polyester dyes
• Other taffeta fabrics with discontinuous dyes made of polyester fibers
• Fabrics with artificial fibers
• Cotton fabrics with 85% denim
• Other fine wool fabrics
• Silk (for garments to be exported)

In addition, since Mexican yarn producers do not cover all the needs of the fabrics sector, a significant amount of yarn is imported (especially polyester/viscose and polyester/cotton).

Market Entry
Agents and distributors are commonly used in the Mexican market. The best way to approach the market is visiting potential clients or distributors, provide promotional materials in Spanish and offer good after-sales service. Price is a key factor to penetrate the market.

Market Issues & Obstacles
U.S. exporters must be prepared and well documented to export textiles in the Mexican market. However, the exporter must be aware of following key aspects:

1.NAFTA Certificate of Origin
When Mexico signed the North American Free Trade Agreement (NAFTA), on January 1, 1994, Mexico gradually reduced its tariffs on textile and apparel imports from the United States meeting the NAFTA rules of origin (i.e., wholly processed in the United States, Canada and Mexico).
Documents to support the Certificate of Origin must be maintained for a period of ten years, this may include accounting records, inventory and other purchasing records. Importers, producers, exporter are required to keep these records; Mexican Tax Ministry (SAT) can request information to support the NAFTA origin or audit the company.
For more information on the NAFTA Certificate of Origin and how to filling out the Certificate please go to: http://export.gov/FTA/nafta/eg_main_017790.asp

2. Rules of Origin
Qualification for preferential duty treatment under NAFTA depends on whether they may qualify as goods produced in the NAFTA region. NAFTA rules concerning Textile are complex and detailed. Specific tariff information may be obtained by calling the U.S. Department of Commerce, Trade Information Center at 1-800-USA-TRADE or the Office of Textile and Apparel (OTEXA).
Please be aware of any letter or questionnarie sent by SAT requesting information on the product´s rules of origin, comply with the deadlines and answer the request as soon as you receive it
On November 30, 2011 the U.S. Commercial Service in Mexico in conjunction with the Mexican Tax Ministry (SAT) organized a webinar to better understand the compliance procedures for exporting textiles in the Mexican market for more information please go to: http://www.export.gov/mexico/SATwebinar_textiles2011
In case of further questions on any requirement or letter sent by the Mexican Tax Ministry (SAT) contact the U.S. Commercial Service in Mexico City or OTEXA.

Read the full market research report
 


Posted: 30 December 2011

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