NAFTA: Annexes | Page 2

(December 22, 1989) (the "Maquiladora Decree").
4a. For purposes of paragraph 4, "independent maquiladora" means an enterprise registered as an export maquiladora enterprise under the Maquiladora Decree which has no common majority shareholder with any manufacturer, and for which no manufacturer is directly or indirectly a majority shareholder.
National Value Added
5. Mexico may provide that a manufacturer ("empresa de la industria terminal") calculate its required national value added from suppliers (VANp) as a percentage of:
(a) a manufacturer's reference value as defined in paragraph 8; or
(b) a manufacturer's total national value added (VANt),
whichever is greater.
6. Mexico shall not require that the percentage referred to in paragraph 5 be greater than:
(a) 34 percent for each of the first five years beginning January 1, 1994;
(b) 33 percent for 1999;
(c) 32 percent for 2000;
(d) 31 percent for 2001;
(e) 30 percent for 2002; and
(f) 29 percent for 2003.
7. Notwithstanding paragraph 6, Mexico shall allow a manufacturer that produced vehicles in Mexico before model year 1992 to use as its percentage referred to in paragraph 5 the ratio of actual national value added from suppliers (VANp) to total national value added (VANt) that such manufacturer attained in model year 1992, for so long as that ratio is lower than the applicable percentage specified under paragraph 6. In determining such ratio for 1992, purchases that such manufacturer made from independent maquiladoras that would have been eligible to receive national supplier status had paragraphs 2, 3 and 4 of this Appendix been in effect at that time, shall be included in the calculation of the manufacturer's national value added from suppliers (VANp), in the same manner as parts and components from any other national supplier or enterprise of the autoparts industry.
8. "The annual reference value for a manufacturer" ("reference value") shall be:
(a) for each of the years 1994 through 1997, the base value for the manufacturer, plus no more than 65 percent of the difference between the manufacturer's total sales in Mexico in that year and its base value;
(b) for each of the years 1998 through 2000, the base value for the manufacturer, plus no more than 60 percent of the difference between the manufacturer's total sales in Mexico in that year and its base value; and
(c) for each of the years 2001 through 2003, the base value for the manufacturer, plus no more than 50 percent of the difference between the manufacturer's total sales in Mexico in that year and its base value.
9. Mexico shall provide that where a manufacturer's total sales in Mexico in a year are lower than its base value, the reference value for such manufacturer for that year shall be equal to the manufacturer's total value of sales in Mexico for the year.
9a. For purposes of paragraphs 8 and 9:
(a) "base value" means the average annual value of the manufacturer's production in Mexico for sale in Mexico (VTVd) in model years 1991 and 1992, adjusted for inflation, using the Mexican producer price index for automotive goods published by the Bank of Mexico ("Banco de Mexico"); and
(b) "manufacturer's total sales in Mexico in that year" means the invoice value of sales by a manufacturer of vehicles it produced in Mexico for sale in Mexico plus the invoice value of its sales of imported vehicles.
10. In the event an abnormal production disruption affects a manufacturer's production capability, Mexico shall allow such manufacturer to seek a reduction in its reference value before the Intersecretariat Automotive Industry Commission, established under
Chapter V
of the Auto Decree. If the Commission finds that the production capability of the manufacturer has been impaired by such an abnormal production disruption, the Commission shall reduce the manufacturer's reference value in an amount commensurate to such event.
10a. For purposes of paragraph 10, "abnormal production disruption" means a disruption in a manufacturer's production capability resulting from a natural disaster, fire, explosion or other unforeseen event beyond the manufacturer's control.
11. If, upon the request of a manufacturer, the Intersecretariat Automotive Industry Commission finds that the production capability of such manufacturer has been significantly disrupted as a result of a major retooling or plant conversion in the facilities of the manufacturer, the Commission shall reduce the reference value for the manufacturer for that year in an amount commensurate with the disruption, provided that such reduction in that manufacturer's required national value added from suppliers (VANp) that may result from the Commission's determination to lower the manufacturer's reference value shall be fully made up by the manufacturer over the following two model years.
11a. For purposes of paragraph 11, "significant disruption" means a sizable impairment in the manufacturer's production capability that lasts at least six months but no longer than 12 months.
Trade Balance
12. Mexico shall not require a manufacturer to include in the calculation of its trade balance (S) a percentage of the value of direct and indirect imports of parts and