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“ ITA - Plus Program ”

“ ITA - Plus Program ”. Goals.

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“ ITA - Plus Program ”

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  1. “ITA - Plus Program”

  2. Goals The “ITA-Plus” Program was published on September 4th, 2002 in the Diario Oficial de la Federación (DOF), as the Mexico’s reaction to the entry in force of the ITA (“Information Technology Agreement”), which is an agreement signed under the WTO among 56 countries that considers the tariff elimination on diverse goods of computer and telecommunications sectors, including their subassemblies.

  3. Goals As in the “ITA”, Mexico’s “ITA-Plus”: • Completely eliminates tariffs by January, 2004 on goods from three sectors: computer (computers, monitors, printers, scanners), telecommunications (modems, cellular phones, carrier - current line systems and telephone centers, broadcasting equipment for T.V. and radio), and other electronic devices (calculators, photocopiers, register machines) to import into Mexico from any country.

  4. Goals This liberalization allows electronic goods traders to offer larger variety, higher quality and cheaper products, providing a wide range of benefits from a restaurant to a small grocery stores, from banks to wholesale stores, as well as all modern manufacturing process and all the office services, consequently promoting benefits in productivity and competitiveness in the whole economy.

  5. Goals Additional goals of the ITA-Plus are: • To promote Mexico’s competitiveness in the global scenery, not exclusively in thetelecommunications and computer subsectors, but in all electronics, including consumer electronics (TVs, stereos, CDs, video equipments). • To keep the tariff consistency along the productive chains, in order to additionally promote the production of subassemblies and components in Mexico.

  6. Advantages over the ITA The advantages of the “ITA-Plus” over the ITA are: 1) The ITA-Plus considers backward linkages in productive chains, by including additionally the raw materials (steel, plastics) required by the components producers. 2) It benefits manufacturing in the consumerelectronics subsector, which is now excluded from the ITA, through the liberalization of the inputs required in the whole chain of production, including raw materials.

  7. CONSUMER ELECTRONICS INPUTS FINAL GOODS ITA Not Included Computer / Telecommunications Subassemblies only ITA - PLUS Consumer Electronics Subassemblies, Components and Raw Materials Computer / Telecommunications Subassemblies and Components Subassemblies, Raw Materials Advantages over the ITA

  8. Characteristics of the ITA-Plus The “ITA-Plus considers two packages: 1) Tariff elimination for all the imports of parts, components and final goods in computer and telecommunications. 2) Tariff elimination on inputs, parts and components under the PROSEC for the electronic sector currently in force (only for use in manufacturing of electronic products).

  9. Parts and components for telecommunications, computers consumer electronics and office equipment. BASKET 1: (entry into force) BASKET 2: (2003) Computer Final Goods. BASKET 3: (2004) Telecommunication final goods. Characteristics of the ITA-Plus The tariff elimination for all imports under 290 HTS codes will be applied according to three “baskets””:

  10. Characteristics of the ITA-Plus The ITA Plus considers the tariff elimination on raw materials and inputs from sectors such as steel, plastics and chemicals only to be used in the manufacturing of electronic products. Therefore, 278 additional HTS codes were incorporated into the PROSEC of the electronic sector currently in force.

  11. ProgramDuty Free3-5% 15%Total Prior PROSEC 3,309 16 2 3,327 ITA-Plus* - MFN Year 2002 207 207 Year 2003 22 22 Year 2004 61 61 ITA - PROSEC 278 2 280 TOTAL 3,877 18 2 3,897 Coverage The total of HTS Codes liberalized are almost 4,000: * Tariff elimination according to three “baskets”.

  12. Program for the Competitiveness of the Electronics Industry In order to further promote the competitiveness of the electronics sector, the Government of Mexico jointly with the productive sector, put in place on october 9th, 2002 the “Program for the Competitiveness of the Electronics Industry” (PCIE).

  13. Program for the Competitiveness of the Electronics Industry The PCIE considers, among other strategies: 1) Design a competitive fiscal policy. 2) Promote a competitive tariff structure. 3) Make more efficient international transactions. 4) Develop supply chains. 5) Promote technological development in Mexico. 6) Promote the human factor. 7) Generate an adequate infrastructure.

  14. Conclusions Through the “ITA-Plus”, Mexico establishes an aggressive tariff scheme that promotes: 1) Competitiveness in the whole economy. 2) The e-Economy (e-Commerce, e-Government). 3) The demand for software, as well as for the skilled labor needed to design and to operate the software.

  15. Conclusions 4) Trade of electronic goods. 5) The local manufacturing of electronic goods, and 6) The production of electronic subassemblies and components in México

  16. Conclusions The “ITA-Plus” program, complemented with the strategies undertaken under the PCIE, constitute a fundamental factor to promote the competitiveness of a strategic sector with influence in the productivity of the entire economy, while promoting the competitive development of Mexico towards High Technology.

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