Ministry of Trade, Industry and Energy Holds Briefing on Mexico Tariff Reduction System

"Continued Promotion of Korea-Mexico FTA Agreement"

On the 28th, the Ministry of Trade, Industry and Energy held the 'Mexico Tariff Reduction System Briefing' at COEX in collaboration with the Embassy of Mexico in Korea and the Korea International Trade Association.

This briefing was held to support Korean companies in actively utilizing the tariff reduction system amid growing interest in investment and expansion into Mexico due to the United States-Mexico-Canada Agreement (USMCA) and the Inflation Reduction Act (IRA).

Mexico is Korea's largest trading partner in Latin America, with over 400 Korean companies operating in key industries such as automobiles, parts, and electronics. However, since a Free Trade Agreement (FTA) has not yet been concluded with Mexico, tariffs are imposed on exports from Korean companies. Only products exported for use in production processes in Mexico can receive preferential tariff benefits (0-5%) through Mexico's industrial promotion program (PROSEC), which applies to parts and materials imported for manufacturing products in 22 industrial sectors including steel, automobiles and parts, electrical and electronics, and chemicals.

An official from the Ministry of Trade, Industry and Energy stated, "So far, steel products used in automobile and home appliance manufacturing processes in Mexico have been the main beneficiaries among our exports. However, since Mexico raised import tariffs on 392 items including steel for countries without an FTA in August last year, whether tariff benefits apply has become a major concern for Korean companies aiming to utilize Mexico's nearshoring opportunities."

The Ministry reported that despite the tariff increase, the use of the PROSEC system has limited the impact, with Korean steel exports to Mexico increasing by about 10%. However, it is seen that companies need to prepare for mid- to long-term responses. Accordingly, at this briefing, officials from the Mexican Ministry of Foreign Affairs and local experts provided detailed guidance on the system’s content, conditions, application, and practical usage for companies.

Yoon Chang-hyun, Director General of Trade Policy, said in his opening remarks, "The Ministry of Trade, Industry and Energy will strengthen industrial and trade cooperation with Mexico, actively resolve difficulties faced by Korean companies entering Mexico, and continue to pursue the conclusion of a Korea-Mexico FTA. Following this briefing, the Ministry plans to hold a meeting with Korean companies operating in Mexico in early March to enhance communication with them."