Volatile Prices Affect Mexico Cotton

MEXICO - The Post/New MY (market year) 2012/13 total Mexican cotton production is forecast to decrease approximately 17 per cent due to a drop in planted area resulting from continued volatility in international cotton prices and a contraction in domestic consumption.

The MY 2012/13 internal consumption estimate is expected to decrease substantially as imports of clothing and textiles from China should increase substantially with the removal of protective duties as of January 1, 2012. Industry sources estimate thatfor MY 2011/12, 85 per cent of the total area planted used GE seeds with an average yield of 8.55 bales per hectare (ha). Conventional hybrid cotton seeds yield, on average, only 7.24 bales/ha.

The transitional duties that Mexico placed on 112 apparel items, 14 textile items, a range of footwear and various other products originating in mainland China were eliminated on December 12, 2011.

These duties were originally implemented on October 15, 2008, as part of a deal that required Mexico to replace the non-WTO-compliant and extremely high antidumping duties that had been in place on most textiles and apparel for many years with a temporary measure on a significantly narrower group of products that would give Mexican manufacturers additional time to prepare for fully-fledged competition.

The Mexican government unveiled in December 2008 a program that established a schedule for the reduction in five annual stages of the MFN duty rates on approximately 97 per cent of manufactured imports. The most recent round of cuts took place on January 1, 2012, and included 479 tariff lines, including 355 apparel tariff lines of Chapters 61 and 62, 41 textile made-ups of Chapter 63 and 26 items of Chapter 42.

The duty rates on covered apparel and textile made-ups were reduced from 25 per cent to 20 per cent or from 30 per cent to 25 per cent, depending on the product. Another batch of cuts (to a 20 per cent duty) will take place on January 1, 2013, for certain apparel, textile made-ups and footwear.

This means that the MFN duty rate for apparel and textile made-ups imported into Mexico is either already at 20 per cent or will reach that level on January 1, 2013.