Notes: If you have a product that sells well in the U.S., chances are good that you can sell in markets all over the world. Hello, I am WB, from the Commercial Section of the U.S. Embassy in Mexico. Every day my colleagues and I talk to people who make everything from dog shampoo to devises that kill water born deceases with pulses of light, and we help them find buyers, get financing, fill out shipping documents and learn how to make sale to new customers. If you thought about going global but you are too small or you think it is too complicated, give the Commercial Service a call. You may start by calling the Trade Information Center at 1-800-USA-TRADE 1-800-872-8723
TOYS, DOLLS & GAMES SOUTH OF THE BORDER
Reviving demand from the U.S. led the Mexican economy out of the economic slump in 2010 and allowed the country to grow by some 4.0% per year in the past two years. The improvements in the credit market and industrial activities have helped consumers and businesses regain confidence, while a recovering U.S. economy has propped up Mexico’s exports.
There has never been a better time to grow your business by selling abroad. Easy and Profitable Ways to Export if you do it right
Register on export.gov. Resources: A Basic Guide to Exporting 18
part series webinar http://export.gov/basicguide and many
more….
yUsing Export Data to Find Markets and Price
yHow to Ship Your Product yHow to Write an Export Plan yResources You Should Know yHow to Find Valuable Stuff on
U.S. Licensed Freight Forwarder and you Sell - Remember: Mexican importers need permits, you cannot send your products “directly” to a customer if not registered. You will need to identify a Mexican Customs broker to export to Mexico unless your export is worth less than USD 2,000 and shipped via courier services.
Presenter
FF: Logistics/documentation on your behalf with a power of attorney + confidentiality agreement. Can file AES direct export filings within the US. Ensure that your information is not illegally shared with a third party.
Become aware of different negotiating styles, stating expectations Assess market potential – use CS market research (export.gov) The U.S. Commercial Service has a Commercial Assistant dedicated to the toy industry in Mexico. Alejandra Calderon can reached by email at [email protected] or by phone at 52-55-5140-2651 Review import requirements and logistics – it will affect your price
Arrange meetings if need a distributor/agent in person or virtually contact CS Mexico (GK)
Visit Mexican trade fairs – contact CS Mexico for listing
Selling to the Mexican government? – contact CS Mexico for strategic support, high-level introductions, business cocktails with who’s who and targeted advocacy
Trade Complaints? – Problems with Customs? Problems getting paid?
Contact CS Mexico
for assistance
A LOT of considerations before shipping, involve your Sales & Marketing Team, Order Management Team, R&D,
Import Procedures Country controllers, Shipping Logistics Division, Trade Compliance, IT Groups within your organization
a) US HTS code – Harmonized Tariff Schedule
TIP
(www.usitc.gov/tata/hts) or Schedule B code needed when filing export declaration (electronic export information or EEI (www.aesdirect.gov). Do it yourself, FF, use vender software to submit EEI using a paid AES service provider or create 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 if product needs an import permit and whether it is dutiable - confirm with Mexican Customs Broker! Imports are subject to a 16% value-added tax (VAT) plus a 0.8% ad valorem customs processing fee is levied on imports (11% VAT at border region) (www.census.gov/foreign-trade). (The processing fee does not apply to NAFTA-qualifying goods.)
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Notes: ALL exports MUST be screened PRIOR to release so it doesn’t go to the “bad boy” list. If Export licenses are needed or special provisions must be adhered to, apply with enough lead time. Export indicators go on the Pro-Forma and Commercial Invoice.
b) INCOTERMS 2010: Business decision (www.iccwbo.org/incoterms/id3025/index.html)
FOB applies to vessels
only! Whomever is
the authorized
importer of record is
responsible to send
product to the
Mexican Customs
broker or buyer.
Presenter
Tariff Treatment of Low Value Exports - Shipped Via Courier Services��In general, Mexico requires that the importer use a Mexican customs broker for all importations into Mexico. However, when low value shipments -- those valued at less than USD 2,000 -- are sent to Mexico via a courier or package service, this requirement may be waived. If the importer does not use a broker the shipment may be treated in the manner described below. If the exporter is interested in making the entry into Mexico using a broker, they should discuss the feasibility of this with both their importer and the courier service.��Treatment of Goods made in the United States, Canada or Chile��Courier services, using informal entry procedures in Mexico, may opt to pay import duties applied at a rate of 22.92% for goods that are imported into Mexico as long as those goods:��i. have marks or labels which distinguish them as originating in a NAFTA country or Chile, or are accompanied by the applicable NAFTA certificate of origin.��ii. are obtained from the countries of Canada, Chile or the United States.��iii. do not exceed the numerical limit of goods listed below:��electronic games 5�clothing and accessories 10�footwear 10�sports equipment 2�motorcycles and bicycles 1�household appliances 5�computer equipment parts 1�computer programs 10�professional equipment 2�tools 5�art objects, of a collection or antiques 3�imitation jewelry 10�jewels 15�records, cassettes or compact disks 25�books 150� Please note that the 22.92% rate is an increase over the 1994 original 20.8% rate. While the tariff rate for low-value shipments is being phased out like other NAFTA tariffs, Mexico raised its value-added tax, the IVA, from 10 to 16%. This accounts for the increased low-value rate. �In addition, up to 12 liters of alcoholic beverages may be imported via a courier service with the payment of import duties ranging from 53.84% to 107.32% depending on the strength of the alcoholic beverage if the alcoholic beverage has a mark or label identifying it as a product of Canada or the United States. �Treatment of Goods Made outside of the United States, Canada or Chile. For low value shipments of goods made outside of the United States, Canada or Chile, courier services may opt to pay import duties applied at a rate of 38.92% for goods imported into Mexico, except for goods made in Colombia, Venezuela, Bolivia, and Costa Rica, for which the rate is 25.12%, as long as: � I. the value of goods does not exceed the equivalent of $US 2,000. II. the shipment does not exceed the limits established for specific good listed above. Again, please note that the tariff has increased over the former 32.8% as a result of the increase in the IVA. In addition, up to 12 liters of alcoholic beverages may be imported via a courier service. Import duties range from 54.98% to 108.47% if the beverages originate in Colombia, Venezuela, Costa Rica, or Bolivia, and from 68.78% to 122.27% for beverages from all other countries, depending on the strength of the alcoholic beverage. (Note: to learn how to qualify your good and to obtain NAFTA certificate of origin visit www.export.gov/NAFTA). Also Note: Even though you export less than $1,000, your good needs to qualify for NAFTA duty rates.
All Mexican Imports should be accompanied by an Import Declaration along a Commercial Invoice (not a Pro-Forma), with correct Price (Value declaration). Importer keeps declaration. Price should include duties, charges at the border, insurance, etc. (NOT transportation after importation). Transaction Value method mostly used. TIP: Don’t guess. Visit Customs Border Protection (CBP) website. CBP uses pro-forma invoices to assess duties/taxes and examines goods, but the Mexican importer of record is required to post a BOND and produce a commercial invoice within 120 days from the date of entry. Make sure prices match everywhere, including the label!
d) Pro-Forma If letter of credit (LoC) is
involved, packing list forms and applicable airways bill or bill of lading should have all required information documented per LoC requirements or you will have problems getting paid timely! Send copies of commercial invoice to Mexican broker and shipper in advance
Is a confirmed P.O., including cost used as sales quote and usually considered a binding agreement even though the price might change in advance of final sale. The Commercial Invoice is needed for the Customs clearance process and requires the true value. Is used to record accounts receivable for the seller and accounts payable for the buyer.
Presenter
Notes: ALL exports MUST be screened PRIOR to release so it doesn’t go to the “bad boy” list. If Export licenses are needed or special provisions must be adhered to, apply with enough lead time. Export indicators go on the Pro-Forma and Commercial Invoice.
e) Export Control Classification Number (ECCN) Export Administrations Regulations (EAR) determine level of control needed for certain articles, technology and software PRIOR to shipping.
For lower products or products that do not need control “EAR99” is the code used by the Department of Commerce (DOC) Bureau of Industry and Security (BIS).
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Note: Most likely, export controls won’t apply to toys.
f) Mexico does not require a Certificate of Origin BUT if the product qualifies to receive benefits under the North American Free Trade Agreement (NAFTA), the exporter has to prepare it and send copies to Mexican Customs broker to claim NAFTA tariff rate (if less than USD 1,000 state reason on Commercial Invoice). To classify under NAFTA see Rules of Origin (http://tcc.export.gov/Trade_Agreements/All_Trade_Agreements/NAFTA_Part2_Chapter4.asp)
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Notes: How long should copies of the Certificate of Origin be retained? In the US, the exporter is required to retain a copy of the Certificate (or the Original) for five years from the date of signature. The importer is required to retain the Certificate and all other documentation relating to the importation of the goods for 5 years after the importation of the goods. The facts asserted in the Certificate must be supported by adequate records relating to the goods, their materials and production. According to NAFTA, If documents must be kept beyond the five-year period it is only because the national customs authority (i.e., US, Canadian, or Mexican Customs) requires that the importer or exporter retain records for a longer period. Mexican customs can’t require a U.S. party to comply with their record-keeping requirements beyond the scope of NAFTA. That responsibility would only apply to a Mexican party, unless: (for exports) The U.S. exporter is sending goods under DAP terms beyond the Mexican border, or sending DDU terms into Mexico, or sending via “DDP” terms through a Comercializadora. In Mexico, Mexican exporters must maintain a copy of the Certificate for 10 years. In Canada, Canadian importers and exporters are required to keep the Certificate for six years from the time of the transaction for the importer and six years from the date of signing for the Canadian exporter. http://www.nafta-sec-alena.org/en/view.aspx (Note: it most likely would not apply for toys…)
US COMMERCIAL CONTACTS
y Get in contact with your closest U.S. Export Assistance Center (USEAC) - Sacramento EAC - Tel: 916-566-7011 - Mobile: 916-202-7425 - E-mail: [email protected]
y Contact [email protected] Aliza Totayo 615-736-2225; Geoffrey Bogart 858-467-7052; Robert Queen 915-929-6971
y Questions? Call Trade Information Center at 1-800-USA-TRADE = 1-800-872-8723 or Roza Pace, at 202-482-1354 E-mail: [email protected]
TARIFFS y Mexico has eliminated all tariffs on toy products (NAICS 33993).
This sector includes dolls, video games, billiard tables and bowling equipment, as well as traditional toys. Mexico can exercise the right to restrict the number of companies that have the right to import toys to Mexico as well as the types and quantities that these companies can import.
Intellectual Property Rights y In accordance with the WTO agreement on
Trade-Related Intellectual Property Rights (TRIPs), Mexico is obligated to comply with internationally accepted norms for protecting and enforcing the intellectual property rights of U.S. and other foreign companies and individuals under Mexican law.
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Note: In Mexico, “propiedad industrial” refers to patents and marks only. The “Instituto Mexicano de la Propiedad Industrial” (Mexican Industry of Industrial Property, or IMPI by its Spanish initials), is under the aegis of the Secretariat of Economy (www.impi.gob.mx). Intellectual property rights encompasses patents, marks and copyrights (derechos de autor). “Derechos de autor” is the responsibility of the “Instituto Nacional del Derecho de Autor” (INDAUTOR) which is part of the Secretariat of Public Education (http://www.indautor.gob.mx). On Monday, May 5, 2013, the International Trademark Association (INTA) signed a Memorandum of Understanding (MOU) with the Mexican Patent and Trade Office, known as the “Mexican Institute for Industrial Property” (IMPI by its initials in Spanish) in Dallas, Texas, in order to harmonize the Intellectual Property (IP) regime in light of the interconnection of the two economies and effectively protect trademarks and other related matters. Over the next three years they will build partnerships through collaborative programs for their mutual benefit representing IP stakeholders. Even though the MOU is not legally binding, the parties are expected to engage in technical cooperation activities to develop education and public awareness programs regarding trademarks; offer members opportunities to participate as panelists, speakers and advisers; cooperate in the development of studies of draft legal provisions in the field of trademarks and other related areas, aimed to contribute with the improvement and harmonization in the field; and cooperate to advocate for enforcement mechanisms for IP rights protection.
Intellectual Property Rights y Even though Mexico needs to strengthen their enforcement activities
on patents, trademarks, and copyrights, having a valuable brand always 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.
y It is advisable to protect your intellectual property through local Mexican law and it is advisable to hire a local counsel in order to do so. Please check IPR Toolkit at the Stopfakes.gov website. Continued innovation, bringing products to the market that shifts the people’s paradigms while capturing their imagination, offering better solutions while delighting them and helping them grow will always help to ensure your continued success too.
Presenter
Note: Madrid Protocol – Patents - As of February 2013, 88 countries have joined the Madrid Protocol, including Mexico and the United States. It allows patents from one country to be registered simultaneously in the other 87 signatory countries (see instructions below). On Monday, May 5, 2013, during the first day of the 135th Annual Meeting of the International Trademark Association (INTA) a Memorandum of Understanding (MOU) was signed between the INTA and the Mexican PTO, the Mexican Institute for Industrial Property (IMPI). One of the main goal of the agreement was to assist Mexico in the implementation of the Madrid Protocol, which entered into force in Mexico on February 19th, 2013. he IMPI has already been working on its online trademark application system -which is a required feature to the Madrid protocol’s members- and is expected to be completely functional by 2014. It should cover the entire process for trademark registration. During the first 3 months of Mexico’s membership to the Madrid Protocol, 12 international applications were been filed by Mexican applicants, and the country has been a designated country in around 100 international applications. These were relatively low numbers for an economy the size of Mexico’s, especially taking into account the high level of economic integration that the country has reached with the implementation of several free trade agreements, and its strong ties to the U.S. economy. Madrid Protocol Signatory Countries: These countries are called "Contracting Parties." A current list of the Contracting Parties is available online at the World Intellectual Property Organization (WIPO) website: http://www.wipo.int/treaties/en/ShowResults.jsp?lang=en&treaty_id=8. The Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol) is an international treaty that allows a trademark owner to seek registration in any of the countries that have joined the Madrid Protocol by filing a single application, called an "international application." The International Bureau of the World Intellectual Property Organization, in Geneva, Switzerland administers the international registration system. The resulting "international registration" serves as a means for seeking protection in member countries, each of which apply their own rules and laws to determine whether or not the mark may be protected in their jurisdiction. Neither the Madrid Protocol nor the Madrid Agreement provide for registration of an "internationally effective" trademark. A U.S. trademark owner needs to file an international application through the USPTO (http://teasi.uspto.gov/TEASi or http://www.wipo.int/madrid/en). See “Tips for Paper Filers” http://www.uspto.gov/trademarks/law/madrid/forms/madrid_tipspaperfilers.jsp The USPTO must certify (review and confirm) that certain information in an international application based on a U.S. basic application or registration is the same as the information contained in the basic application or registration. The USPTO then forwards the international application to the International Bureau. There are two (2) fees: an international applicant must pay fees to the USPTO and to the International Bureau. The USPTO charges a fee for certifying international applications and transmitting them to the International Bureau, called a "certification fee" (USD 100.00, per class, if the international application is based on a single U.S. application or registration. The certification fee is USD 150.00, per class, if the international application is based on more than one U.S. application or registration). The International Bureau requires payment of fees based on whether the reproduction of the mark is in black and white and/or in color, the particular Contracting Parties designated in the international application and the number of classes of goods and services indicated in the international application. The schedule of fees, individual fees and International Bureau Fee Calculator are posted on the WIPO web site at: http://www.wipo.int/madrid/en/ (the international application fees must be paid directly to the International Bureau in Swiss francs).
Technical Barriers to Trade & Non-Technical Barriers to
Trade (Product Standards & Labeling Requirements)
Most of the Mexican standards and certificates are in line with U.S. standards. Mandatory Technical Regulations to guarantee safety (NOMs) include labeling requirements for “informed consumption reasons.” Voluntary Standards (NMX) are issued by recognized national standardization bodies to promote quality. Reference Standards (NRs) are drawn for products and services subject of government procurement. Hot line for label inquiries in Mexico: 525-729-9486.
The United States and Canadian Safety Marks (like U/L, ETL, CSA) are not recognized in Mexico and NOMs are required for electronics/electrical products for home, office and factory computers local area network (LAN) equipment to be able to commercialize these products. Even though the NMX NOM Mark is a Voluntary Mexican product safety mark, it is usually required in governmental tenders and a requirement for the majority of electronic items, since it certifies that the product meets the local safety requirements. The shipper needs to ensure that their products are NOM compliant.
Technical Barriers to Trade & Non-Technical Barriers to
Trade (Product Standards & Labeling Requirements)
The certification process is administered by the Secretariat of Economy’s Dirección General de Normas (DGN) who authorizes all independent certification bodies. There are several laboratories accredited by EMA (Entidad Mexicana de Acreditación) and approved by COFEPRIS (Comisión Federal de Sanidad) that can perform safety tests in-country. Their reports are submitted to the clients who, in turn, present them to COFEPRIS.
Technical Barriers to Trade & Non-Technical Barriers to
Trade (Product Standards & Labeling Requirements)
There are three major classifications for certification purposes: security chemical tests and labeling. Depending on the types of products more than one NOM may be required, from more than one Secretariat (i.e., NOM-015-SCFI-2007 covers labeling for toys for commercial information per Secretariat of Economy, NOM-252-SSA1-2011 covers labeling and metals on toy products per Secretariat of Health).
Technical Barriers to Trade & Non-Technical Barriers to
Trade (Product Standards & Labeling Requirements)
y The regulatory environment is Mexico is constantly changing, exporters are encouraged to check with a Mexican broker for any new regulations made. The NOM certificates should be received prior to importation. Samples are needed for testing. A number of products are subject to the mandatory standards (NOMs) set by the Mexican government, including:
MANDATORY STANDARDS NORMS
y Tires, toys and school supplies – Please note that pencils are not only subject to comply with NOM regulations but a sanitary notice from the Mexican Secretariat of Health is required before shipment.
y Lighting fixtures y Local telecommunication products, wired
(phones, etc.) and wireless (cellular) y Imports of electricity propane, natural gas or
battery power products
y Compact discs, recorded and unrecorded y Sound recording equipment (CD writers) and
others. y Another local standard contacts of interest
“Sociedad Mexican de Nomalizacion y Certificacion, SC – NORMEX (Mexican Standards and Certification Society). For more information, please visit Normas Oficiales Mexicanas www.economia-noms.gob or Servicio de Admnistración Tributaria (SAT).
y If U.S. Customs have reasons to doubt the truth or accuracy of declared values they will look at Automated Export System (AES) export filing and will probably conduct an audit on the U.S. exporter. If Mexican Customs is suspicious of a product being undervalued they will check with the U.S. seller. U.S. and Mexican Customs share all information and Mexican Customs have offices in the United States and can audit you too.
y Your product may qualify to be non-dutiable but it will be taxable. If a product is valued more than USD 200, free, temporary shipment, going for repairs, sample, bonded warehouse, duty drawback, foreign trade zone, sold “on special offer” or on loan, please make sure it is duly noted in the INCOTERMS or somewhere in the commercial invoice. If the U.S. export does not have a legal presence, the importer of record pays for the importation.
Antidumping & Fines
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Note: Check to see if it makes business sense to get an ATA Carnet if you carry demo equipment, to many countries, often. A Carnet is an international customs and temporary export-import document. It is used to clear customs in 82 countries and territories without paying duties and import taxes on merchandise that will be re-exported within 12 months (in most cases). Carnets are also known as Merchandise Passports or Passports for Goods. Mexico allows carnets but their cost depends on the insured value of the goods. By presenting an ATA Carnet document to foreign customs, you pass duty free and import tax free into a carnet country for up to one year. ATA Carnets also serve as the U.S. Certificate of Registration of goods (CBP 4455) upon re-importation. Most merchandise can be listed on a Carnet: Commercial Samples Professional Equipment (Tools of the Trade) Goods for Fairs & Exhibitions (limited to 6 months) To get more information about Carnets please call the CIB Carnet HelpLine℠ at (800) ATA-2900/ (800)282-2900 see the LinkedIn ATA Carnet User & Discussion Group, or email at [email protected]. A carnet can be issued and delivered to an applicant within 1 day. Technically, a carnet cannot be extended beyond the validity period. However, in some instances foreign customs may allow a replacement carnet to be issued to extend the time the goods are in the carnet country. In all cases, the replacement carnet must be applied for prior to the expiration of the original carnet. On a USD8,700 piece of equipment coming into Mexico, the U.S. exporter would pay about USD400 for the ATA carnet and it is likely to last ONLY 6 months. Mexican Customs will list final data of re-exportation, but it is usually 6 months from entry date, but may vary.
Antidumping & Fines
y To avoid fines and having your shipment impounded, avoid discrepancies between commercial invoices and labels. TIP: If Mexican Customs seize your merchandise because you over shipped less than 10% than the declared value, you may be fined and get the products back. If the discrepancy is for more than 10% of the declared value, you are likely to pay a hefty fine and your products will be impounded –forever- by the Mexican authorities.
Reporting Problems & Trade Agreements Monitoring y While U.S. toy companies have not reported any
problems exporting to Mexico and enjoy no tariffs, they can still encounter non-tariff barriers. Companies that encounter problems exporting are encouraged to report their problem to the International Trade Administration’s Trade Compliance Center. The U.S. Department of Commerce working in conjunction with USTR and the Commercial staff at Embassies abroad have resolved numerous non-tariff trade barriers for U.S. companies including issues pertaining to import licenses, safety standards, and labeling requirements.
Reporting Problems & Trade Agreements Monitoring
y The Trade Compliance Center (www.trade.gov/tcc) is your one-stop shop for getting U.S. government assistance in resolving the trade barriers or unfair situations you encounter in foreign markets. Policy questions related to this industry should be directed to the toy industry analyst at [email protected] or at 202-48-25783.
