Reviving demand from the U.S. led the Mexicaneconomy out of the economic slump in 2010 andallowed the country to grow by some 4.0% per year inthe past two years. The improvements in the creditmarket and industrial activities have helpedconsumers and businesses regain confidence, while arecovering U.S. economy has propped up Mexico’sexports.
There has never been a bettertime to grow your business byselling abroad.Easy and Profitable Ways toExport if you do it right
Register on export.gov. Resources: A Basic Guide to Exporting 18part series webinar http://export.gov/basicguide and manymore….Using Export Data to Find Markets andPriceHow to Ship Your ProductHow to Write an Export PlanResources You Should KnowHow to Find Valuable Stuff onexport.gov
How to Find HS Codes and Calculate Dutiesand TaxesNew Incoterms 2011How to Identify International Markets forYour Productswww.export.gov/webinars “Taking Advantageof NAFTA” program
Suggestions to sell in MexicoU.S. Licensed Freight Forwarder and you Sell - Remember:Mexican importers need permits, you cannot send yourproducts “directly” to a customer if not registered. You willneed to identify a Mexican Customs broker to export toMexico unless your export is worth less than USD 2,000 andshipped via courier services.
Become aware of different negotiating styles,stating expectationsAssess market potential – use CS marketresearch (export.gov)The U.S. Commercial Service has a CommercialAssistant dedicated to the toy industry inMexico. Alejandra Calderon can reached byemail at Alejandra.Calderon@trade.com or byphone at 52-55-5140-2651Review import requirements and logistics – itwill affect your price
Check Mexican partner – contact CS Mexico(www.buyusa.gov/mexico) trade specialist per sector – ICPArrange meetings if need a distributor/agent in person orvirtually contact CS Mexico (GK)Visit Mexican trade fairs – contact CS Mexico for listingSelling to the Mexican government? – contact CS Mexico forstrategic support, high-level introductions, businesscocktails with who’s who and targeted advocacy
A LOT ofconsiderationsbefore shipping,involve yourSales & MarketingTeam,OrderManagementTeam,R&D,Import ProceduresCountrycontrollers,ShippingLogisticsDivision,TradeCompliance,IT Groupswithinyourorganization
a) US HTS code – Harmonized Tariff ScheduleTIP(www.usitc.gov/tata/hts) or Schedule B code needed whenfiling export declaration (electronic export information orEEI (www.aesdirect.gov). Do it yourself, FF, use vendersoftware to submit EEI using a paid AES service provider orcreate your own AES program. Pre-Departure (Post-departure privileges requires approval from Census, CBP,BIX, DDTC and others).HS code is important because it will determine ifproduct needs an import permit and whether it isdutiable - confirm with Mexican Customs Broker!Imports are subject to a 16% value-added tax (VAT)plus a 0.8% ad valorem customs processing fee islevied on imports (11% VAT at border region)(www.census.gov/foreign-trade). (The processingfee does not apply to NAFTA-qualifying goods.)
b) INCOTERMS 2010: Business decision(www.iccwbo.org/incoterms/id3025/index.html)FOB applies to vesselsonly! Whomever isthe authorizedimporter of record isresponsible to sendproduct to theMexican Customsbroker or buyer.
c) Import Declaration along aCommercial InvoiceAll Mexican Imports should be accompanied by anImport Declaration along a Commercial Invoice (nota Pro-Forma), with correct Price (Value declaration).Importer keeps declaration. Price should includeduties, charges at the border, insurance, etc. (NOTtransportation after importation). Transaction Valuemethod mostly used. TIP: Don’t guess. VisitCustoms Border Protection (CBP) website. CBP usespro-forma invoices to assess duties/taxes andexamines goods, but the Mexican importer of recordis required to post a BOND and produce a commercialinvoice within 120 days from the date of entry. Makesure prices match everywhere, including the label!
d) Pro-FormaIf letter of credit (LoC) isinvolved, packing listforms and applicableairways bill or bill oflading should have allrequired informationdocumented per LoCrequirements or you willhave problems gettingpaid timely! Send copiesof commercial invoice toMexican broker andshipper in advanceIs a confirmed P.O.,including cost used as salesquote and usuallyconsidered a bindingagreement even though theprice might change inadvance of final sale. TheCommercial Invoice isneeded for the Customsclearance process andrequires the true value. Isused to record accountsreceivable for the sellerand accounts payable forthe buyer.
e) Export Control Classification Number (ECCN)Export Administrations Regulations (EAR) determinelevel of control needed for certain articles, technologyand software PRIOR to shipping.For lower products or productsthat do not need control “EAR99”is the code used by theDepartment of Commerce(DOC) Bureau of Industry andSecurity (BIS).
f) Mexico does not require a Certificate ofOrigin BUT if the product qualifies toreceive benefits under the North AmericanFree Trade Agreement (NAFTA), theexporter has to prepare it and send copiesto Mexican Customs broker to claim NAFTAtariff rate (if less than USD 1,000 statereason on Commercial Invoice). To classifyunder NAFTA see Rules of Origin(http://tcc.export.gov/Trade_Agreements/All_Trade_Agreements/NAFTA_Part2_Chapter4.asp)
US COMMERCIAL CONTACTSGet in contact with your closest U.S. Export AssistanceCenter (USEAC) - Sacramento EAC - Tel: 916-566-7011 -Mobile: 916-202-7425 - E-mail: Anthony.Hill@trade.govContact email@example.com Aliza Totayo 615-736-2225; Geoffrey Bogart 858-467-7052; Robert Queen 915-929-6971Questions? Call Trade Information Center at 1-800-USA-TRADE = 1-800-872-8723 or Roza Pace, at 202-482-1354 E-mail: firstname.lastname@example.orgE-mail: email@example.com (Trade Information Center)
TARIFFSMexico has eliminated all tariffs on toy products (NAICS 33993).This sector includes dolls, video games, billiard tables andbowling equipment, as well as traditional toys. Mexico canexercise the right to restrict the number of companies that havethe right to import toys to Mexico as well as the types andquantities that these companies can import.
Intellectual Property RightsIn accordance with the WTO agreement onTrade-Related Intellectual Property Rights(TRIPs), Mexico is obligated to comply withinternationally accepted norms forprotecting and enforcing the intellectualproperty rights of U.S. and other foreigncompanies and individuals under Mexicanlaw.
Intellectual Property RightsEven though Mexico needs to strengthen their enforcement activitieson patents, trademarks, and copyrights, having a valuable brandalways helps since there is nothing better than the original. However,in Mexico you will want to defend your product against knock-offs.According to the Mexican Confederation of Industrial Chambers,contraband from China is prevalent.It is advisable to protect your intellectual property through localMexican law and it is advisable to hire a local counsel in order to do so.Please check IPR Toolkit at the Stopfakes.gov website. Continuedinnovation, bringing products to the market that shifts the people’sparadigms while capturing their imagination, offering bettersolutions while delighting them and helping them grow will alwayshelp to ensure your continued success too.
Technical Barriers to Trade & Non-Technical Barriers toTrade (Product Standards & Labeling Requirements)Most of the Mexican standards and certificatesare in line with U.S. standards. MandatoryTechnical Regulations to guarantee safety (NOMs)include labeling requirements for “informedconsumption reasons.” Voluntary Standards (NMX)are issued by recognized national standardizationbodies to promote quality. Reference Standards(NRs) are drawn for products and services subject ofgovernment procurement. Hot line for labelinquiries in Mexico: 525-729-9486.
The United States and Canadian Safety Marks (likeU/L, ETL, CSA) are not recognized in Mexico and NOMsare required for electronics/electrical products forhome, office and factory computers local area network(LAN) equipment to be able to commercialize theseproducts. Even though the NMX NOM Mark is aVoluntary Mexican product safety mark, it is usuallyrequired in governmental tenders and a requirement forthe majority of electronic items, since it certifies thatthe product meets the local safety requirements. Theshipper needs to ensure that their products are NOMcompliant.Technical Barriers to Trade & Non-Technical Barriers toTrade (Product Standards & Labeling Requirements)
The certification process is administered by theSecretariat of Economy’s Dirección General de Normas(DGN) who authorizes all independent certificationbodies. There are several laboratories accredited byEMA (Entidad Mexicana de Acreditación) and approvedby COFEPRIS (Comisión Federal de Sanidad) that canperform safety tests in-country. Their reports aresubmitted to the clients who, in turn, present them toCOFEPRIS.Technical Barriers to Trade & Non-Technical Barriers toTrade (Product Standards & Labeling Requirements)
There are three major classifications for certificationpurposes:securitychemical tests andlabeling.Depending on the types of products more than one NOMmay be required, from more than one Secretariat (i.e., NOM-015-SCFI-2007 covers labeling for toys for commercialinformation per Secretariat of Economy, NOM-252-SSA1-2011covers labeling and metals on toy products per Secretariat ofHealth).Technical Barriers to Trade & Non-Technical Barriers toTrade (Product Standards & Labeling Requirements)
The regulatory environment is Mexico isconstantly changing, exporters are encouraged tocheck with a Mexican broker for any newregulations made. The NOM certificates shouldbe received prior to importation. Samples areneeded for testing. A number of products aresubject to the mandatory standards (NOMs) set bythe Mexican government, including:MANDATORY STANDARDS NORMS
Tires, toys and school supplies – Please note thatpencils are not only subject to comply with NOMregulations but a sanitary notice from theMexican Secretariat of Health is required beforeshipment.Lighting fixturesLocal telecommunication products, wired(phones, etc.) and wireless (cellular)Imports of electricity propane, natural gas orbattery power products
Compact discs, recorded and unrecordedSound recording equipment (CD writers) andothers.Another local standard contacts of interest“Sociedad Mexican de Nomalizacion yCertificacion, SC – NORMEX (Mexican Standardsand Certification Society). For more information,please visit Normas Oficiales Mexicanaswww.economia-noms.gob or Servicio deAdmnistración Tributaria (SAT).
Antidumping & FinesIf U.S. Customs have reasons to doubt the truth oraccuracy of declared values they will look atAutomated Export System (AES) export filing andwill probably conduct an audit on the U.S.exporter. If Mexican Customs is suspicious of aproduct being undervalued they will check withthe U.S. seller. U.S. and Mexican Customs shareall information and Mexican Customs have officesin the United States and can audit you too.
Your product may qualify to be non-dutiable butit will be taxable. If a product is valued more thanUSD 200, free, temporary shipment, going forrepairs, sample, bonded warehouse, dutydrawback, foreign trade zone, sold “on specialoffer” or on loan, please make sure it is duly notedin the INCOTERMS or somewhere in thecommercial invoice. If the U.S. export does nothave a legal presence, the importer of record paysfor the importation.Antidumping & Fines
Antidumping & FinesTo avoid fines and having your shipment impounded,avoid discrepancies between commercial invoices andlabels. TIP: If Mexican Customs seize yourmerchandise because you over shipped less than 10%than the declared value, you may be fined and get theproducts back. If the discrepancy is for more than10% of the declared value, you are likely to pay a heftyfine and your products will be impounded –forever- bythe Mexican authorities.
Reporting Problems & Trade AgreementsMonitoringWhile U.S. toy companies have not reported anyproblems exporting to Mexico and enjoy no tariffs,they can still encounter non-tariff barriers.Companies that encounter problems exporting areencouraged to report their problem to theInternational Trade Administration’s TradeCompliance Center. The U.S. Department ofCommerce working in conjunction with USTR and theCommercial staff at Embassies abroad have resolvednumerous non-tariff trade barriers for U.S. companiesincluding issues pertaining to import licenses, safetystandards, and labeling requirements.
Reporting Problems & Trade AgreementsMonitoringThe Trade Compliance Center(www.trade.gov/tcc) is your one-stop shop forgetting U.S. government assistance in resolvingthe trade barriers or unfair situations youencounter in foreign markets. Policy questionsrelated to this industry should be directed to thetoy industry analyst at Jamie.Ferman@trade.govor at 202-48-25783.