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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….
Using Export Data to Find Markets and Price
How to Ship Your Product
How to Write an Export Plan
Resources You Should Know
How to Find Valuable Stuff on export.gov
How to Find HS Codes and Calculate Duties and Taxes
New Incoterms 2011
How to Identify International Markets for Your Products
www.export.gov/webinars “Taking Advantage of NAFTA” program
Suggestions to sell in Mexico
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.
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
Check Mexican partner – contact CS Mexico (www.buyusa.gov/mexico) trade specialist per sector – ICP
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.)
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.
c) Import Declaration along a
Commercial Invoice
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.
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).
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
US COMMERCIAL CONTACTS
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]
Contact [email protected] Aliza Totayo 615-736-2225; Geoffrey Bogart 858-467-7052; Robert Queen 915-929-6971
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]
E-mail: [email protected] (Trade Information Center)
TARIFFS 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
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.
Intellectual Property Rights
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.
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.
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 Direccion General de Normas (DGN) who authorizes all independent certification bodies. There are several laboratories accredited by EMA (Entidad Mexicana de Acreditacion) and approved by COFEPRIS (Comision 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)
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
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.
Lighting fixtures
Local telecommunication products, wired (phones, etc.) and wireless (cellular)
Imports of electricity propane, natural gas or battery power products
Compact discs, recorded and unrecorded
Sound recording equipment (CD writers) and others.
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 Admnistracion Tributaria (SAT).
Antidumping & Fines
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.
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
Antidumping & Fines
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
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
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.
QUESTIONS?
U.S. Commercial Service Mexico
Wanda Barquin
Commercial Attaché
