This document provides information on exporting to Mexico, including: 1) An overview of Mexico's economy and its strong dependence on trade with the US. Mexico's top three export destinations are the US, Canada, and Germany, while its top import partners are the US, Canada, and China. 2) Guidelines for exporting to Mexico, including utilizing trade agreements and finding products that satisfy client needs to gain comparative advantage. 3) Details on import regulations, duties, customs processes and requirements like using a licensed customs broker and ensuring proper documentation. 4) Opportunities for trade like cheap labor, free trade agreements, and Mexico's geographic proximity to the US.

1. Exporting
to
MExico
The NAFTA Group, LLC.
International Trade Advisors
Mexico, USA, Canada & China
Hispanic Metropolitan Chamber of Commerce
Portland, Oregon – March 15, 2007

2. General Background - Mexico
• Economic activity in Mexico decreased in 2006 with a
GDP growth rate at 4% compared to a 4.4% in 2004.
This situation is due to high oil prices and a relaxing
monetary policy.
• One of the weakest points of the Mexican economy is its
strong dependence to the American economy : 80%+ of
Mexican exports and imports are carried out with the
US.
• Mexico's three largest export destinations are the
United States, Canada and Germany. Its three largest
import countries are the United States, Canada and
China.

3. How to export to Mexico
• To compete effectively in today’s business world it
is imperative that local companies have means to
address the global challenge and turn to
international trade to diversify products, mitigate
risk, and reap the benefits of globalization.
• Comparative advantage can be attained by finding
the right product to satisfy clients needs.
• International trade agreements can increase the
benefits of sourcing and selling
products in foreign markets.

4. Import regulations and duties
• Since Mexico joined the GATT in 1986, few goods
have been subject to import license. For the
products which are still subject to import licenses,
the administration in charge of import license is
the Ministry of the Economy.
• All import products have to handle a certificate of
origin, and particularly strict requirements are
demanded for textiles, toys, hydrocarbons, and
other sensitive industries.

5. Import Process / Customs
• To be able to import or export merchandise it is
required to present official approved document called
"pedimento“ (or petition to import) and it has to be
completed by a licensed Customs broker.
• The petition is filed at the port of import/export (air,
land or sea port) and has a three day window for
validation purposes.
• In the case in which the merchandise is subject to
regulations and non-duty restrictions, the
“pedimento” has to include the electronic signature
that proves fulfillment of the same requirements.

6. Role of the Customs Broker
Foreign trade projects, public or private, require
constant bringing up to date in different aspects such as
codes regulations, custom formalities, duties and legal
aspects and precepts.
Therefore, custom brokers more than just take the
necessary steps to put the merchandise through
customs, they became advisors in foreign trade and
international logistics.
Result = clients not only obtain the best applicable
tariffs, but through consulting and deliberating, work
together with other areas of the enterprise in developing
better products, system and strategies by devising
leaner and more efficient international supply chains.

7. Import Requirements Check List
Before initiating operations:
• Have a Mexican importer of record – must be in
the import registry and a Customs Broker
assigned for import operations.
• Provide the documentation to the Mexican
Customs Broker to begin the clearance process
• Check that the merchandise complies with all
the non-duty requirements (registration in
specific sectors, permits, labeling, packaging,
etc.) in both the exporting and importing
countries.

8. Import Requirements Check List
Document Requirements:
•Commercial Invoice (English, Spanish or French)
•Airway bill, Bill of Lading or Cargo Manifest
•Packing Lists
•Certificates of Origin
•The document that proves the fulfillment of regulations and
non-duty restrictions that proceed
•Estimated price guarantee in case Mexican authority estimates
a higher than declared value on the merchandise being imported
•In case of it being merchandise that is identifiable by serial
number, make, model, and technical specifications.

9. Import taxes
• VAT (IVA) applied on imports:
- standard rate: 15%
- reduced rate: there are two reduced rates:
10% when the company's activities occur in a
border region, and 0% in the case of some
goods (bare necessities, food, books,
medications, and agricultural products).
• Customs royalty (DTA): 0.8% on the declared
value.

10. Customs duties
• As a WTO member, Mexico applies the Harmonized
Tariff System. Customs duties are calculated Ad
valorem on the value for customs of the goods and the
terms of sale (Inco terms).
• There are customs duty discounts (and even
exemptions) for products helping in the development of
the local industry (“Maquiladora” program).
• Mexico signed a number of trade agreements resulting
in the creation of free trade areas (NAFTA) and
preferential tariffs for a broad array of products.

11. Maquiladora System Overview
• Manufacturing Companies that receive duty and tax
exemptions on imported materials that are used for
transformation and subsequently exported.
• Provides opportunity to North American companies
for sourcing products that may have foreign
components. After transformation through this
program, these final or intermediate goods are
classified as Mexican Origin (Annex 401 NAFTA).
• Products that meet the criteria may enter the U.S.
and Canadian markets duty free.

12. Sample process for a Maquiladora
Lumber
From
Indonesia
Hardware
From
China
Barnish and
Enamel from
Mexico
Importduty&taxfree
Manufacturing of
Furniture – Product is
Mexican Origin
(See Annex 401)
Maquila Mexico
Importduty&taxfree
Canada

13. Transportation of goods
• By road
The road network counts 310,000 km of roads.
50,000 km are federal roads, 60,000 km are State
roads and the rest are countryside roads.
The State network is in bad shape because of the
obsolescence of infrastructure and poor
maintenance, despite the efforts made by the
Ministry of Communication and Transport in
recent years.

14. Transportation of goods
• By rail
The rail network extends over 26,000 km and it mainly
consists of three North-South routes:
1. Along the Pacific Coast
2. Central region
3. Northeast region.
A fourth axis connects Mexico City with Yucatán.
The network connects the 10 sea ports and allows 10 access
points with the United States.
Freight represents 95% of the railway activity.

15. Transportation of goods
• By sea
Mexico has 22 commercial ports. Since 1995, the government
decentralized the harbor administration and privatized the
exploitation of terminal operations in certain ports.
The 4 main ports, which handle +60% of the traffic, are Altamira
and Veracruz in the Gulf of Mexico and Manzanillo and Lazaro
Cardenas on the Pacific Coast.
In 2006 29% of the goods imported to Mexico were transported
by ocean.

16. Transportation of goods
• By air
Mexico has the most developed airport
infrastructure in Latin America, with airports in
every cities of more than 500,000 inhabitants.
Among the 83 airports of the country, 53 handle
international flights and cargo.

17. Advantages to trade with Mexico
• Cheap labor force, skilled and non-skilled
• High levels of quality and production
• Rule of Law – International Property Rights
• Abundant resources and infrastructure
• International Trade Agreements
• Geographical location: proximity and faster
reaction times to problems or market changes

18. 5 Most Common Mistakes
1) Jump the gun and not have a registered importer with the
necessary permits and registrations.
2) Forget to file for a licensed customs broker.
3) Expedite cargo without the proper documentation.
4) Cargo does not match or is not easily identifiable with
importing documents.
5) Document errors:
- Incorrect information (invoice, certificate of origin)
- Incomplete forms (fields, stamps, signatures)
- Illegible documents or copies
- Unofficial formats and print outs

19. International Trade Solutions
Conduct your export activities with due diligence to avoid
costly delays and potential loss of profits.
Choose your partners adequately. Create synergies between
your customers, suppliers, and service providers.
Maintain an updated database of requirements for the
products that you export or wish to export.
Communicate effectively and share information with all
involved parties for a smooth customs clearance.

20. Important Contacts/Resources
Mexican Export Bank – Bancomext
www.bancomext.com
North American Free Trade Agreement - TLC
www.nafta-sec-alena.org
Ministry of Economy – Secretaria de Economia
www.economia.gob.mx
Treasury Department – S.A.T.
www.sat.gob.mx
Mexican Customs – Aduanas Mexico
www.aduanas.sat.gob.mx
MX Customs Brokers Association – CAAAREM
www.caaarem.org.mx

21. Questions ?
Thank you
www.naftagroup.com