Issue 341, April 16, 2002
Ever since the implementation of NAFTA's Article 303 on January 1, 2001, operating a Mexican Maquiladora has not been the same. Companies can no longer be complacent about Mexican Customs compliance. Day-to-day dealings with Mexican Customs has taken on a renewed sense of urgency and importance. Today's Mexican Maquiladora must develop sufficient controls and procedures for managing the origin and valuations of all its materials, components, machinery and equipment. A lapse in these controls can now result in substantial duty liability and excessively high penalty exposure.

Machinery and Equipment: May be fully dutiable on importation into a Maquiladora unless such machinery and equipment qualifies as NAFTA originating. Unlike U.S. Customs, Mexican Customs requires presentation of the NAFTA Certificate of Origin for all items claimed as NAFTA originating at the time of entry.

Materials and Components: This area is fraught with uncertainty and constant changes. Since, January 2001 there have been over 10 different amendments covering the importation of materials and components under Article 303. The use of NAFTA originating materials and components still remains the best method for insuring total duty free treatment on imports into a Maquiladora. However, for a majority of companies this is not always possible. In order to reduce or eliminate their duty exposure altogether, many companies are forced to rely on the Sector Promotion Program (PROSEC), which is made up of 22 industrial sectors where the duty rates can range from 0% to 10%. Companies not covered by the PROSEC can also rely on a temporary duty elimination program known as Regulation 8 (Regla Octava), where duties are temporarily eliminated for six-month intervals. During the six-month period the company must seek out a Mexican supplier. If one cannot be located, the company may become eligible for coverage under the PROSEC program.

Under the guise of improving its import/export automation systems, Mexico has imposed a new fee of 125 pesos on each import and export entry (pedimento), with a VAT of 10% on the border and 15% in the interior of Mexico. This new fee, in addition to the regular validation center fee of 17 pesos, totals to approximately 155 pesos (US$16) and began on April 1, 2002. Many Maquiladoras and national associations have argued that the new fee is contrary to the NAFTA, which specifically eliminated all user fees for NAFTA originating articles. However, the new pedimento fee makes no distinction between NAFTA and non-NAFTA articles. Moreover, the fee equally applies to all imports into Mexico and all exports from Mexico. Notwithstanding these many challenges, Mexico has held firm and will proceed with the new fee.

View previous issues of Danzas AEI Resoure of same topic:

Issue 307, July 3, 2001: NAFTA Certificates of Origin For Mexico
Issue 298, April 5, 2001: Rules Still Unclear for Mexican Maquiladora Program
Issue 283, December 8, 2000: Mexico Update
Issue 277, November 3, 2000: Mexico Extends Duty Deferral Status For Maquiladoras
Issue 276, October 31, 2000: NAFTA Article 303 and its Impact on the United States
Issue 270, September 6, 2000: To Save Duties, Mexican Maquiladoras Rush to Participate in the Sectoral Promotion Program
Issue 242, January 25, 2000: Mexican Maquiladora Industry Prepares for New Rules

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

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