Logistics Update: Join Us for Our Mexico Customs Webinar Series
The international trade community often faces new challenges due to changes to various national and international regulations and laws, and the Mexican customs landscape is no different. Recent adjustments to the Official Mexican Standards (i.e. NOMs) have created implications for cross-border trade; additionally, ICC’s Incoterms rules, the world’s essential terms of trade for the sale of goods, are currently being updated for 2020. These ongoing changes make it critical for shippers to stay informed to keep their supply chains running as smoothly as possible.
To help keep shippers up-to-date, we’ve launched a webinar series for our Spanish-speaking customers discussing how these changes have made an impact on those companies shipping across the U.S.-Mexico border. The first webinar in the series covered the recent changes to NOM standards, and the second discussed Incoterms and their anticipated updates in 2020.
There will be additional webinars in the series discussing the current state of Mexican customs to come.
What shippers should know: Recent changes to NOM standards
The General Directorate of Commerce of the Secretariat of Economy recently made sweeping changes to the mandatory Mexican standard known as a NOM, which is imposed on products for health and safety reasons. A product that is subject to a NOM cannot be imported into Mexico unless it has been certified in compliance with the NOM; and many products shipped into Mexico were under the exception of a declaration under protest that the product would not be sold in national territory, until the recent change which took effect in June 2019. These changes affect 64 NOMs, which represent 514 HTS codes.
Mexican authorities tasked with overseeing these regulations had realized that nearly half of the goods passing into the country were not being properly inspected—and through a regulatory loophole, many of these goods could be exempted from compliance with NOMs. Given the volume of exempted goods, the Mexican government set out to tighten its control to avoid unfair competition and overlooked violations of fair-trade laws.
Shippers should be aware that electronics and other household goods that rely on component parts are particularly impacted by this change, since certain individual parts of their products may be affected. Therefore, companies may have to seek certification for a multitude of parts in order to ultimately ship a product such as a television to a retailer in Mexico. And due to the large volume of parts, it may be nearly impossible for these companies to identify all the parts that are now subject to NOMS changes.
While compliance with NOMs is now required, there are some ways for shippers to work around full compliance, including:
- Certificates of Equivalence only for NOM-001-SCFI – NOM-016-SCFI – NOM-019-SCFI
- Mutual Recognition Agreements
- Certificates that cover parts and components of a final product
- IMMEX operations
- Deposito fiscal, Automotive industry
- PROSEC operations (definitive)
- By margin of application or excluding from the NOM (Except/Only)
What shippers should know: Incoterms 2020
The Incoterms 2020 are currently being prepared by a drafting committee within the International Chamber of Commerce. The Drafting Group has about 150 member countries, including China and Australia for the first time. The new Incoterms are expected to appear in Q4 of 2019, coinciding with the centenary of the International Chamber of Commerce, and will be enforced beginning January 1, 2020. Depending on the incoterm selected, the customs clearance procedures will depend on the seller or buyer.
Included in Incoterms 2010
- EXW. The buyer is responsible for export and import procedures.
- F: FCA, FAS and FOB. In this group, the seller is obliged to deliver the merchandise using a means of transport chosen by the buyer, once the export procedures have been carried out by the seller (not including insurance).
- C: CFR, CIF, CPT and CIP: In this group, the seller is obliged to deliver the merchandise using a means of transport that it hires once the export procedures have been carried out by the seller. (CIF and CIP include insurance from the seller).
- D: DAP, DAT and DDPL: In this group, the seller assumes all costs and risks until the merchandise is delivered to the agreed destination.
Highlights of Incoterms 2020
Some of the modifications which have been informally reported include:
- The terms FAS and EXW will be deleted.
- The DDP term will be divided and the terms DTP (Delivered at Terminal Paid) and DPP (Delivered at Place Paid) will be created.
- Term FCA will also suffer a division in which it will be sought to specify its use, one for sea ways and one for land ways.
- In the terms CIF and FOB, modifications will be made to cover the needs of containerized traffic.
- A new term CNI (Cost and Insurance) will be created where the transport risk is transmitted at the port of departure, including international insurance by the seller.
How shippers can stay informed and prepared
The recent NOMs changes and the pending upcoming Incoterms changes make it critical for companies to complete advanced research and planning to determine what is required of them to secure shipments—without negatively impacting the efficiency of their supply chain.
Additionally, we are still awaiting the ratification of the USMCA by the United States to achieve the definitive replacement of NAFTA, which will also have a major impact on cross-border operations in the near future. Since there is still much uncertainty and more changes on the horizon, it is important that shippers fully understand how their products are affected by the new regulations and be prepared to update their supply chain operations accordingly.
What questions do you have about the cross-border process between the U.S. and Mexico?