MEXICO CITY — Mexico launched a textile aid package valued at 990 million pesos, or $70 million at current exchange, to shield its industry from undervalued Asian imports and bolster its competitiveness at a time of weakening economic growth.
The six-point scheme will see the Economy Ministry inject 540 million pesos to help lift domestic clothing consumption and exports. At the same time, the government will lend small and midsize producers up to 450 million pesos through state bank Nafinsa.
“This is a very good measure with necessary steps to generate justice and equity in international commerce, which we have needed for a long time,” Sergio Lopez de la Cerda, president of top apparel industry trade group CANAIVE, told WWD. “It will support the development of our industry in a more harmonic and structured way.”
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Public Credit and Finance Minister Luis Videgaray said the textiles and apparel industry “is key for Mexico’s life and the economy of many regions,” generating some 500,000 jobs.
However, “it faces huge competitive challenges,” notably low labor productivity (about a third below the general manufacturing sector) and a rising volume of subvalued imports from Asia, particularly China.
The scheme will see the introduction of a key registry or log forcing all fiber and garment importers to list themselves so customs authorities can more easily track and identify them. Importers will also be forced to give five-day international shipment notices. Alongside such requirements, they will need to show original-goods purchase receipts identifying suppliers as well as other paper work proving cargo is legal and insured.
“With this mechanism, tax authorities will be able to evaluate if custom statements are linked to undervalued prices and move and define appropriate review procedures in advance,” Videgaray said.
Tax authorities will also establish a new system to chase importers of subvalued transactions and their clients on a more “constant basis” than before.
“On top of being checked at customs, the SAT [tax collection authority], will introduce a program to permanently review and audit importers suspected of engaging in illegal commerce,” the minister added.
Bowing to industry pressure, the administration will maintain a 25 percent average duty on 80 textile and garment categories until 2018. Such duties were expected to come down to 20 percent in January. The government will also roll out so-called price guarantee programs.
Videgaray said more available and affordable financing is crucial to help struggling small- and medium-size firms accounting for the bulk of the industry to boost productivity and competitiveness.
As part of this effort, development bank Nacional Financiera will launch a loan program to help firms modernize manufacturing machinery and equipment as well as innovate and develop new products.
“We hope that in the next 12 months, this program will usher credits worth 450 million pesos for the many small and midsize companies competing in these sectors,” Videgaray said.
Export-promotion bank Bancomext will also enlarge a program to finance the industry’s internationalization. It will boost working capital, equipment and investment project loans for exporters, as well as factoring services (receivables discounting) and letters of credit.
Another scheme called Acerca will be resurrected to help manufacturers purchase Made in Mexico cotton, as most fiber is spun from foreign supplies.
In a press conference in Mexico City’s National Palace, Videgaray said the recent crackdown of a major organized group funneling underpriced textiles from Asia is bearing fruit.
“Nearly two months after the action, we are seeing a major decline in subvalued merchandise imports,” Videgaray said, citing comments from Moisés Kalach, president of Mexico’s textiles manufacturing trade group Canaintex, for confirmation.
Videgaray added a similar package launched in August to protect the footwear sector has seen undervalued imports decline 70 percent since then.