Earlier this year Mexico became a member of the Wassenaar Arrangement for multilateral military and dual-use controls. The Wassenaar Arrangement is a group of 41 countries that cooperate in the export control of dual-use goods and technology, items that pose a risk if trade is uncontrolled because of their potential for use in military systems and terrorist activities.
Although Mexico has long been a popular site under NAFTA for manufacturing operations in the consumer goods sector, its absence from the Wassenaar regime has long limited the ability of American and European firms to take full advantage of its potential in the high tech sectors that involve dual-use goods and technology. Mexico’s accession to the Wassenaar Arrangement and institution of export controls now offer opportunities for expanded manufacturing and design activity involving semiconductors, software, aerospace, lasers, sensors and chemical production.
The new Mexican export control law exempts exports to other Wassenaar member countries from the Mexican export licensing requirements. This allows Mexican companies to export such items without export licensing to the United States and the many other Wassenaar countries, which include all the EU member states other than Cyprus, as well as countries such as Australia, Canada, Japan, New Zealand, Russia and Switzerland.
The United States has not yet reciprocated by relaxing dual use export controls with respect to Mexico in the same manner it has done for Canada and many EU countries. Some U.S. export license exceptions are available for Mexico, but there remain important limitations for certain dual-use goods and technology. This is an area to watch, however, given the important step Mexico has taken to institute export controls as a new Wassenaar member.
Meanwhile, the United Kingdom has moved quickly to liberalize its export controls relating to Mexico. It recently amended its Open General License (OGEL) to allow most dual-use goods and technology that previously required an export license to Mexico to be exported there without a license. For example, data for the development or production of 3A001 semiconductor components that previously required a UK export license to Mexico no longer does. This control previously restricted the ability of British firms to collaborate freely with Mexican firms on semiconductor development, but such development technology may now be freely exchanged between UK and Mexican firms provided there is no indication that the technology is for weapons of mass destruction, diversion to embargoed or prohibited destinations or to parties who have committed export violations. UK firms wishing to rely upon this OGEL for Mexico are required to file a notice with the British Secretary of State giving the name and address where copies of the records concerning the exports are kept and available for UK government inspection, and the exporter needs to update this information if it changes.
Other European countries have not moved as fast to liberalize their export controls with respect to Mexico, but many of them may follow the UK’s lead in the coming months.
With these new developments, multinationals with cross-border engineering and development programs will be in a position to consider Mexico for participation in new programs that may not have been practical in years past due to export licensing requirements.