By Brenda Cordova, Braumiller Law Group Mexico Legal Counsel
This article covers some of the legal requirements that should be taken into consideration if your company is already exporting to Mexico or is considering doing so.
If you are relocating to Mexico, or you are a producer, distributor, seller, etc., and the recipient of your goods is in Mexico because your client, final consumer, manufacturer, distributor, service provider, etc. is there, then, it is more than likely that you will be the exporter or the party responsible for reviewing and preparing some or all of the records needed to ship the goods to Mexico. Meanwhile, your counterpart in Mexico, who in most cases will be the importer, will be using most of those records to process the importation of the goods into Mexico and will be the one required to submit and file them before the Mexican customs authorities.
Exports, along with imports, make up international trade and business and thus, in order for the goods to arrive to its final destination smoothly, a good communication and coordination between the exporter and importer is a priority. This implies that the exporter, prior to shipping any goods to Mexico, should produce the corresponding records in a timely manner and make all necessary efforts to confirm they are correct, complete, consistent, and accurate.
From the customs and international trade law perspective, this is relevant in terms of the regulations that will govern the relationship in order for the parties to be in compliance of the law. Parties should be more diligent specially when the exporter is in a country where the legal system is different from Mexico, For example, the U.S. has a common law system whereas MX has a civil law system. This means that the way in which the authorities from each country publish, interpret, analyze, and execute the law can be considerably different from one to another, and thus an error on the records can imply a violation that will be handled differently by each country (this is regardless of the fact that MX and the U.S. are part of the USMCA, because their import and export proceedings are governed by the domestic laws of each country).
Thus, when a company from abroad intends to send goods to Mexico, it should know the requirements the importer will need to comply with, as well as the potential implications, so that the risk of unexpected restrictions, delays, sanctions, including confiscation of the goods can be minimized.
There are tariff and non-tariff barriers that the goods must comply with before they enter Mexico. Generally, tariff barriers can be import duties, taxes, and processing fees. Non-tariff barriers can be licenses, quotas, dumping, countervailing, labeling, marking, packing, certifications.
To determine which of the above barriers apply to any specific exportation to Mexico, the exporter should provide to the Mexican importer the complete and correct information and records needed for the importation into Mexico. There are many and they can vary depending on various factors such as the industry type, type of goods, purpose of the importation, etc. The following are some of the main aspects to take into consideration to identify the applicable barriers:
Harmonized tariff classification code. In Mexico, a vast majority of the tariff and non-tariff barriers can be identified by this code. Therefore, having the correct one is a key element for customs compliance. To obtain this, a complete technical and commercial description, among other information is a must. Although the codes between the country of export and Mexico should be the same (provided the exporter, like Mexico, is also part of the World Customs Organization) there have been cases where the codes determined by each country may vary even from one Chapter to another. The exporter and importer should discuss any discrepancies and provide the overall information to the Mexican customs broker who bears a great level of responsibility regarding the correct classification of the goods.
Mexican customs regime. There are different reasons why an exporter may send goods to Mexico: to sell them, to manufacture or produce another good, to repair them, to provide services, to lease them, etc. Depending on this, the Mexican importer will be responsible for identifying the applicable “customs regime”, which basically helps determine the purpose of the importation and is also important to identify the tariff and non-tariff barriers. For example, a customs regime for a definitive importation, implies the exporter is selling to the Mexican importer because the goods will stay in Mexico for consumption. Consequently, the importer will be required to document a sale and pay import duties, valued added tax, labeling, licenses, permits, among other requirements. On the other hand, sending components to manufacture goods, implies that the components will be in Mexico for a specific period of time and thus will be imported under a customs regime of a temporary importation. Under this scenario, provided the Mexican importer has the required certifications and programs, the import duties, valued added tax, and other requirements may be waived.
Value of the goods. Goods must be appraised and valued for the purpose of accessing import duties, taxes, and fees. Generally, the basis of appraisement is the customs value. Customs value is the transaction value. Transaction value is the price paid or payable. Price paid or payable is the total payment made or to be made by the MX importer, directly or indirectly, to or for the benefit of the seller for the imported goods. Most of the documentation produced by the exporter in this regard will be used by the importer to obtain the correct value of the goods to be declared and used as a basis of appraisement. Some of these are: I. invoice, II. bill of lading, packing list, airway bill and/or other transport documents, III. country of origin and country of export, IV. bond (estimated prices) V. proof of the payment of goods, VI. transportation, insurance, and other related expenses, VII. business contracts VIII. assists and additional charges, IX. any other information and documentation necessary to determine the customs value.
Country of origin. Country of export is not always the same as the country of origin. Country of origin is the place where substantial production takes place which gives the origin to the goods exported to Mexico. Depending on the origin of the goods and corresponding certifications, the import duties and processing fees may vary. For example, if the goods are considered to be originated in the United States or Canada, and the exporter provides to the Mexican importer a certificate of origin issued under the USMCA, the Mexican importer can request preferential treatment and therefore save import duties and the customs processing fee.
The above are just some of the main aspects that should be taken into consideration by any party exporting to Mexico. Other requirements may apply or may vary depending on various factors such as the type of good or industry.
Keep in mind that the legal responsibility in Mexico of anyone that exports to, or imports into, Mexico does not end when the shipment leaves the territory of the exporting country, or when the goods clear customs, or when they are delivered to its final destination. This is due to the statute of limitations, which is the length of time the authority has to review compliance of a specific operation before a violation to the law can be considered to be too old to review compliance, and can be over 5 years and in some cases longer. Although the ultimate party responsible before the eyes of the Mexican authorities for goods entering Mexico, is the importer, should the importer be sanctioned due to the fact the exporter provided them with incorrect or false documents related to the shipment, the importer can later file charges against the exporter by other means and venues.
Therefore, to prevent any related issues or risks, it is recommended that the exporter confirms the information, documents, and records produced to be used by the importer in Mexico are accurate, correct and complete. Also, that both parties are in constant communication and understand each ones responsibilities. Both the foreign exporter and importer into Mexico should have a good understanding of the process which will make for a better business relationship with benefits for everyone.
This article is written for informational purposes only. It is not intended to provide legal advice. Should your company need help on these topics, please feel free to reach out to any of our expert attorneys.
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