Issue 307, July 3, 2001
Unlike the United States, Mexico requires the presentation of a valid NAFTA Certificate of Origin (Customs Form 434) with each import entry (pedimento) for all items claimed as NAFTA originating. The United States merely requires that importers possess a valid Certificate at the time of entry, but do not require its presentation with each entry. With the full implementation of NAFTA's Article 303 on January 1, 2001, the significance and consequence for obtaining and managing NAFTA Certificates of Origin for those NAFTA eligible items imported into a Mexican Maquiladoras has renewed importance. Prior to Article 303 all materials, components, machinery and equipment imported into a Mexican Maquiladora were automatically exempt from Mexican duties, irrespective of their origin, NAFTA or otherwise. It was not necessary for Mexico Customs purposes to maintain and present NAFTA Certificates of Origin. However, with the full implementation of Article 303, NAFTA Certificates of Origin are the only true means for guaranteeing complete duty free treatment for all eligible materials, components, machinery and equipment.

On January 1, 2001 Mexican Maquiladoras were permitted to import goods into Mexico under one of three different regimes:

1. Full Duty at rates ranging from 10% to 35%. This is not a cost effective option for most Mexican Maquiladoras.
2. PROSEC Program, with rates ranging from 0% to 5% for specifically covered materials, components and finished goods. This program covers 20 different industrial sectors and was designed to reduce duties on those materials and components, which are not NAFTA eligible. It has limited application and only applies to certain HTS numbers. Many Mexican Maquiladoras are still scrambling to cover all their components and raw materials under the program. This program is still fraught with uncertainty and confusion, and some observers in Mexico are questioning its reliability and predictability.
3. NAFTA free of duty for those materials, components, machinery and equipment which specifically qualify as NAFTA originating articles under the applicable NAFTA rules of origin.

The NAFTA option is certainly the best means for insuring complete duty free treatment on any NAFTA eligible article imported into Mexico. With the full implementation of Article 303, those companies importing into a Mexican Maquiladora are now required to assemble and maintain possibly hundreds of NAFTA Certificates of Origin to cover all materials, components, machinery and equipment, which qualify as NAFTA originating articles. Because these certificates must be presented with each import entry (pedimento), importers must establish strong procedures and controls for managing, tracking, maintaining and updating all NAFTA Certificates of Origin.

Our contributing writer, Steven B. Zisser, is an attorney in the San Diego border community of Otay Mesa, where he specializes in the practice of U.S. Customs and International Trade Law. He can be reached at (619) 671-0376 or via email.

Please note that due to the complex nature of the subject matter, Danzas AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with Danzas AEI.