ARTICLE 48: CONCEPT OF CENTRALLY PLANNED ECONOMY AND OF SUBSTITUTE COUNTRY

For the purposes of article 33 of the Law (LCE: Art. 33), centrally planned economies are understood to be non-market economies, regardless of the name with which they are designated, whose cost and price structures do not reflect market principles, or in which companies in the sector or industry under investigation that have cost and price structures that are not determined according to these principles.

In order to determine whether an economy is a market economy, the following criteria will be taken into account, among others: that the currency of the foreign country under investigation is generally convertible in international currency markets; that the salaries of that foreign country be established through free negotiation between workers and employers; that the decisions of the sector or industry under investigation on prices, costs and supply of inputs, including raw materials, technology, production, sales and investment, are taken in response to market signals and without significant interference from the State; that foreign investments and co-investments with foreign firms be allowed; that the industry under investigation exclusively owns a set of accounting records that are used for all purposes, and that are audited in accordance with generally accepted accounting principles; that the production costs and financial situation of the sector or industry under investigation are not distorted in relation to depreciation of assets, nonperforming credits, barter trade and debt compensation payments, or other factors that are considered relevant.

A substitute country means a third world country with a market economy similar to the exporting country with a non-market economy. The similarity between the substitute country and the exporting country will be reasonably defined, so that the normal value in the exporting country can be approximated on the basis of the internal price in the substitute country. In particular, for the purpose of selecting the substitute country, should be considered the economic criteria such as the similarity of production processes, the cost structure of factors that are intensively used in said process, corresponding to the product under investigation or, if not possible, to the most restricted group or range of products that include it both in the country of origin and in the substitute country.

The merchandise on which the normal value is determined must originate in the substitute country. When the normal value is determined according to the export price of the substitute country to a third party, said price must refer to a market other than Mexico. If there is no substitute country with a market economy in which identical or similar merchandise to those exported by the country with a non-market economy are produced, the Mexican market itself may be considered as a substitute country.