Mexico: The New Certified Companies Scheme

A Lastest News about Law and Compliance in Mexico

Posted on: 1 Mar 2012

Describes a new Mexican Framework of Standards to Secure and Facilitate Trade

martín mendalde 1755 – PB av. moctezuma 3515 col. del valle, c.p. 03100, méxico, d.f. ASTRAL PLAZA tel. +52 (55) 5534 3636 local mezanine int. 103 fax +52 (55) 5534 9195 col. ciudad del sol, c.p. 45050 zapopan, jalisco, méxico tel. +52 (33) 3880 1208 Mexico: The New Certified Companies Scheme. Summary and comments by Horacio A. López-Portillo1 Many things can be said about the security, employment and economic policies of Mexico’s current administration. Voices have been raised in favor and against these policies. However, regardless of one’s opinion in connection with President Calderón’s administration, some efforts have been made to bring Mexico into full compliance with the country’s WTO, WCO and OECD obligations and, thus, improve or strengthen its competitiveness and foreign trade capabilities. For instance, Mexico has created or updated regulations applicable to new customs options or procedures: Mexico’s Foreign Trade Sole Portal, or Ventanilla Única de Comercio Exterior Mexicano (VUCEM 2) and Electronic Proof of Value, or Comprobante de Valor Electronico (COVE). These options have intended to be quicker and more secure methods used by Mexican Customs to receive importer and exporter information, with the added benefit that they also seek to create a “paperless” culture. The Foreign Trade Sole Portal and the Electronic Proof of Value –generated through VUCEM or by third party vendors- will allow the Mexican customs authorities to have all the documentation information submitted electronically for the verification and release of shipments. Mexico also recently became a member of the Wassenaar Agreement, thereby obligating itself to higher standards of customs security with a view to attracting greater investment in the high technology and aerospace sectors. It is in this context, the elevation of customs standards, that in 2011 the Mexican Government began taking steps towards the implementation of a new scheme of certified companies in accordance with its WCO commitments and, particularly, the SAFE Framework of Standards to Secure and Facilitate Global Trade. This implementation entered into full force as of January 2012. New Certified Companies Scheme The New Certified Companies Scheme (or NEEC, by its initials in Spanish) is a program entrusted to Customs Mexico (Administración General de Aduanas) the purpose of which is to provide for security and quality assurance in Mexican logistics chain procedures that contribute to mitigating the risk of contamination of shipments of goods involved in international trade. To this end the program seeks to implement globally acknowledged minimum security standards in cooperation with businesses, thereby affording participating companies certain benefits. 1 Horacio A. López-Portillo is a partner at the firm Vázquez Tercero & Zepeda in Mexico City, a boutique firm with over 35 years of experience in International Trade and Customs matters, where he heads the Export Controls and Customs Security Practice. Mr. López-Portillo is grateful for the insights and suggestions of his partners regarding the content of this article, and assumes full responsibility for such content. Mr. López Portillo is Vice-Chair of the Export Controls, Sanctions and Anti-Corruption Subcommittee of the International Sales Committee of the International Bar Association (IBA). 2 Similar to the Automated Export System of the U.S. The benefits afforded by the program are currently available only for manufacturing and commercialization companies that have conducted foreign trade operations for the past five years or more. These benefits relate to customs dispatch procedures, including, (i) priority customs dispatch and verification; (ii) provision of special services, such as the use of exclusive customs dispatch lanes and of V-5 import and export summaries (pedimento 3s) , which were formerly available to all certified IMMEX companie 4s , and are now only available for NEEC IMMEX companies; (iii) customs inspections conducted by non-intrusive technologies; (iv) exclusive lanes for NEEC companies; (v) priority cargo services in case of renewed activities as a result of any incident; and (vi) personalized dealing by qualified professionals. NEEC has been designed taking into consideration the criteria indicated by the SAFE Framework and has mimicked consolidated programs such as the Customs-Trade Partnership against Terrorism (or C-TPAT) of the United States, and Partners in Protection of Canada. The intended goal of this NAFTA-wide harmonization is to facilitate compliance in Mexico for companies who are already familiar with programs currently in place in other NAFTA territories. I. Minimum Security Standards NEEC provides for eleven security standards, namely, a general plan for the implementation of security in the supply chain; physical security of shipments; specific controls on physical access to shipments and storage facilities; a clear identification and selection of trading partners; process security; standardized customs processes; specific security measures on freight vehicles, trailers and other containers; specific measures for personnel security; specific measures for information and documentation security; constant training in security and awareness programs; and, specific processes for the management and investigation of incidents. II. Registration Procedure Registration as a NEEC company shall have two separate stages: Ruling and Authorization, which must be completed within a maximum period of 9 months. However, Mexican companies that currently have certifications based on similar foreign programs, such as C-TPAT or Partners in Protection, may see this 9-month period reduced5. 3 The benefit provided by the use of V-5 import and export summaries consists in that the foreign resident company may sell its products that were manufactured by a NEEC IMMEX company to a domestic company that does not have a foreign trade program without having to return the products to the foreign resident and conduct a new importation by the domestic buyer; i.e., virtual transfers of goods that benefit logistics and expedited trade. 4 An IMMEX company can generally be defined as an company that is entitled to temporarily import certain goods or inputs that will be transformed, manufactured or repaired without the payment of General Import Tax (GIT) and Value Added Tax (VAT), provided such goods are thereafter returned abroad. 5 The reduction of the term for becoming a NEEC company is the result of the informal application of C-TPAT standards to Mexican companies by Customs Mexico. These standards are not a part of the relevant rules and regulations governing NEEC companies and should not, in our opinion, be mandatory. Ruling (100 days). Customs Mexico shall issue a favorable ruling to those companies that comply with the documentary and physical requirements provided for obtaining such ruling. The stages and requiremen 6ts of the ruling are the following:  Submission of an Application for Ruling along with a Company Profile (in electronic media).  Analysis of strict and full compliance of tax and customs obligation 7s .  Documentary and electronic analysis of Company Profile8.  On-site Verification.  Ruling. Authorization (40 days). Once the relevant company has obtained a favorable ruling from the Central Administration for International Affairs, it shall be entitled to submit such ruling to the Central Administration for Customs Regulation, which has the authority to conduct the authorization process and issue the relevant determination. Payment of a fee of the equivalent of $2000 Dollars is currently required for obtainment of NEEC status. The authorization process may be conducted personally or through the VUCEM referenced above. III. Expected Benefits  Mutual recognition with countries that have a similar program for the reduction of costs in foreign trade verification proce 9sses .  Improve Mexico’s competitiveness rating, since the country will improve foreign perception as a promoter of responsible foreign trade.  Reinforce the security of international logistics chains through the implementation of minimum security standards, thereby benefitting participating companies.  Strengthen the ties and co-responsibilities between business and the Federal Government. 6 Which should be submitted to the Central Administration for International Affairs (Administración Central de Asuntos Internacionales) of Customs Mexico. 7 Two of the specific requirements for a NEEC company is the capacity to issue electronic tax vouchers, as well as evidence of full compliance with its tax obligations. 8 For instance, the relevant company must be able to prove that it has conducted foreign trade operations in an orderly and legal fashion for at least five years. 9 For instance, Argentina, Canada, China, Costa Rica, European Union, Guatemala, Japan, Jordan, Korea, Malaysia, Norway, New Zealand, Singapore, Switzerland and the United States. IV. Expectations and Conclusions Customs Mexico expects that the implementation of the NEEC program will enable facilitation of the many aspects of customs dispatch, as well as a strengthening of its enforcement powers. By the same token, it is expected a scheme such as the one discussed above will allow reinforcement of the day-to- day relationships between businesses and the Mexican Government, as well as clearer guidelines for maintenance of benefits through the continuous improvement of processes for participating companies and the granting of incentives to compliant oness; all of which result in reductions in time and operating costs that lead to the increase in competitiveness sought by the Mexican Government. Whether or not these expectations will be met is yet to be seen. Thus far, devoted efforts have been made by both industry associations involved in international trade and the Mexican Government. The basic framework for operation of the NEEC program has been enacted through rules published in Mexico’s Federal Official Daily on December 15, 2011. Many companies with a high volume of foreign trade have expressed interest in becoming NEEC companies, and their day-to-day experiences, along with the international acknowledgment of countries with tested customs facilitation programs, shall determine the success of Mexico’s new program. However, to many of us the challenges faced by Mexico are facilitating foreign trade, reduction of logistics costs and improvement of competitiveness, while affording our principal trade partners the certainty that our foreign trade procedures are truly safe; a balance that is not easy to achieve. Accordingly, we believe that the incentives to become a NEEC company should be greater, the process more open, and the discretionary authority of Customs Mexico less.■
Posted: 01 March 2012

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