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government-trade

Wal-Mart Mexico City Unit Reopens After Shutdown

WASHINGTON -- Wal-Mart Inc.'s Supercenter in Mexico City reopened at midday Thursday after Mexican trade officials shut it, saying it had violated the country's labeling laws.<BR><BR>"It was closed for less than 24 hours. The situation has been...

WASHINGTON — Wal-Mart Inc.’s Supercenter in Mexico City reopened at midday Thursday after Mexican trade officials shut it, saying it had violated the country’s labeling laws.

“It was closed for less than 24 hours. The situation has been resolved,” a Wal-Mart spokesman said, speaking from the chain’s Bentonville, Ark., offices. The closing of the 240,000-square-foot store, which opened last September as part of Wal-Mart’s joint venture with Mexico’s discount king, Cifra SA, followed an inspection last Thursday, June 16, by Secofi, the government’s commerce department.

At the time, the government gave store officials 30 days to rectify labeling concerns, but on Wednesday, six days later, it ordered the store closed.

“It came out of the blue,” the spokesman said of the closing.

“It’s an unfortunate misunderstanding regarding the labeling laws. They are very technical in nature. We were able to get together with government officials and correct the violations,” the spokesman said, noting they applied “mostly” to apparel.

Wal-Mart declined to comment on the business lost during the time it was closed, but based on analysts’ estimates for $120 million in annual volume for the Supercenter, a one-day closure could mean losing about $330,000 in sales.

The spokesman claimed not to know what labeling infractions had been incurred. Officials at the store in Mexico could not immediately be reached for comment.

However, labeling requirements for imported goods have been a source of confusion among U.S. companies doing business in Mexico, even after the North American Free Trade Agreement went into effect Jan. 1.

Secofi has been in the process of reworking its labeling laws after issuing preliminary regulations in October 1992. It is possible that Wal-Mart ran afoul of regulations after Mexico issued on March 7 what seemed to be a final set of rules, said Michael Eads, a trade analyst with International Business-Government Counselors, Washington. The disruption brought on by the March 7 law caused the government to say it would issue clarifying regulations, with a 90-day grace period, Eads said.

These were issued this week and Eads described those he had seen as “vague.”

The March 7 regulations, however, are the ones now being enforced, Eads said. They

call for imported products to list, in Spanish, the name of the product or merchandise; the name or business name and address of the importer; the importer’s Mexican tax ID number and/or its industry association registration number; the name or business name of the exporter; the product’s net contents; warnings or precautions on hazardous materials, and use, handling and care instructions for the product.

Textile and apparel products imported into Mexico, including those made of leather, must meet most of these same requirements, as well as others that require a listing of fiber content. The U.S., Mexico and Canada still are working to develop a set of pictographs for a care label that could be used instead of words.

Apparel industry officials have noted that Mexico’s new labeling regulations generally are the same as those in the U.S. and Canada. Industry officials, who asked not to be named, said it is the precipitous way Mexico implements new regulations and uneven enforcement that creates trade problems.

Eads couldn’t give specifics about the Wal-Mart closure, although he had heard about it. “The political process in Mexico is not as transparent as in the U.S., so U.S. companies must either know what is going on, or they can be hurt, as we saw with Wal-Mart today,” he said Thursday.

A spokesman at Secofi listed only the products found in violation of the labeling law but would not discuss the labeling requirements. Officials at the Mexican Embassy in Washington could not be reached for comment.