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Importation in Mexico: Opportunities, Rules, and Risks

Importation in Mexico: Opportunities, Rules, and Risks

Mexico has the 15th largest economy in the world and the second-largest economy in Latin America after Brazil. Mexico ranks 60th in the World Bank's "Ease of Doing Business" index managed by a federal republic. Mexico, the 10th most populous country globally, has a labor force participation rate of 60% and an unemployment rate of 3.3% among its population of 127.5 million.

In 2020, import and export data reflected poorly for Mexico during the pandemic process, as it did for all countries. If we evaluate the 2020 OECD data, Mexico's largest import products were: electrical machinery and equipment valued at $82.8 billion USD, machinery and mechanical appliances valued at $65.8 billion USD, vehicles valued at $31 billion USD, and mineral fuels valued at $25.1 billion USD. In the list below, you can find the import data of the 10 most imported products in Mexico for the last 3 years.

According to Comtrade data, Mexico imported a total of $455 billion USD in 2019; in 2020, imports fell to $383 billion USD. The five countries that Mexico imports the most are the USA, China, South Korea, Japan, and Germany. In addition to the imports made by public institutions and large companies, thousands of small-scale companies in Mexico import. Suppose companies based in Mexico are to import for the first time. In that case, they should research the customs system operating in the country, the current procedures, the taxation system, different product groups, and tariffs applied to different products.

How to Import in Mexico: Documents Requested at Mexican Customs

If you are going to import as a company residing in Mexico, or if you have established a company based in Mexico that will import goods you will export to Mexico, you must perform the following processes:

  • Your company must have domestic sales authority for the product group that it plans to be imported and registered with the city's tax office where you were established.
  • Register in Mexico's Official Register of Importers
  • Authorize a customs broker authorized to transact through Mexican customs.

Suppose you have a company authorized to import in Mexico when the transport vehicle arrives at the Mexican customs points. In that case, the documents listed below must be delivered to your customs consultant to be presented to the customs authorities in full. Our advice to importing companies is to include the HS Code (HTS Code) of the imported product, both on the commercial invoice and on the bill of landing. HS codes enable a product to be recognized as the same product all over the world. In this way, customs duties and other obligations are applied without causing confusion.

The importer company should prepare the document set called "pedimentos" and complete it in accordance with the content requested by the Mexican Customs Authorities.

  • A commercial invoice (it is recommended to be in both English and Spanish)
  • Packing List (Weight List)
  • Certificate of Origin (this the certificate shows the origin of the product)
  • Bill of Lading
  • Documents demonstrating compliance with Mexican product safety and performance regulations (According to product Type)
  • Identification of the product (according to product type, brand certificate, and serial numbers)

Mexican importer companies should be aware of the new LIGIE (Ley de los Impuestos Generales de Importacion y de Exportacion) regulations that effect since January 1st, 2021. HS Codes are used as 8-10-12 codes from country to country. HTS level name NICO (Número de Identificación Comercial) in Mexico using with 8 to 10 digits as shown in the structure below:

Doing Business in Mexico: Opportunities for Importers

Mexico is a developing country. Especially in the 2000s, we see that the income level of the middle-income class has increased. In every country, the middle class is the most resourceful and the largest spender on consumer goods, and the same is true in Mexico. In these conditions, we see that Mexico's demand for imported products has increased over the years. Mexican imports, which were $168 billion USD in 2001, were $455 billion USD in 2019. In other words, we see that imports have tripled in the last 20 years.

The Mexican market offers opportunities for foreign companies wishing to export to Mexico. Mexican importers, on the other hand, are struggling to grab a share from the growing market. At this point, some difficulties await companies that want to enter the Mexican market. First of all, Mexico is a country with very high geographical and demographic differences. There are different challenges of doing business in different cities of the country. The country's commercial laws, customs laws, and all factors affecting the sale of foreign products need to be evaluated.

Mexico has significant potential in many areas, including: textile and apparel, electricity and electronics, food, air conditioning, chemistry, machinery, automotive, furniture, construction materials, carpets and rugs, mining, healthcare, renewable energy, contracting, and TV series sectors.

According to the National Institute of Statistics and Geography (INEGI) data, private sector investments are among the fixed investments realized in Mexico. It decreased by 33% in the second quarter of 2020 compared to the first quarter. The pandemic process has an impact on these statistics, but Mexican public investments were also negative in 2019. In addition to the decrease in demand, the cessation of operations of companies due to the pandemic has led to a decrease in machinery and equipment investments.

In the report titled "The Ability of Countries to Access Foreign Markets" published by the World Trade Forum, there are significant advantages to trade with Mexico. Among 138 countries, Mexico is listed as the 29th most advantageous with advantages such as:

  • Encountered tariffs
  • Number of documents required for import
  • Customs transparency
  • Openness to foreign participation
  • Openness to multilateral trade rules

USMCA and Mexican Implications for US Trade
For Mexico, the USA is the most important trading partner. The USMCA, established after NAFTA, contains clauses whose content changes the balance of trade between the USA and Mexico in favor of the USA, particularly in areas such as intellectual property rights, digital commerce, labor obligations, environmental obligations, and automotive manufacturing. The main purpose of USMCA was to reduce the advantages of Mexican companies exporting to the USA, such as cheap labor and tax-free trade. On the other hand, it has brought some advantages and disadvantages regarding the importation of US-origin goods into Mexico for Mexican importers.

Doing Business in Mexico: Risks and Considerations
Entering the Mexican market through distributors may seem like a more effortless and safer way for foreign companies. Still, the geographic size of Mexico and the difficulty of doing business across the country will make it difficult to find a partner on a national scale.

The Mexican legal system may contain unforeseen differences for European and US companies. That's why we recommend that you work with an authorized law firm in Mexico and prepare your agreements and contracts in this way before you start doing business with Mexican companies or before the importer company you established in Mexico starts working with suppliers.

While the banking system in Mexico shows signs of growth after years of recession in the US and Europe, interest rates remain relatively high. In particular, small and medium-sized businesses may find it difficult to find financing at affordable rates, despite the Mexican government's efforts to increase access to capital.

As in many developing countries, some risks increase costs for importers due to reasons such as the failure to implement clear procedures and various irregularities during the customs clearance process.

In Mexico, there are differences compared to other countries in terms of customs laws, import permits, standards set for products, document requests, permits, and many more. Therefore, for goods to be imported into Mexico, careful research must be done beforehand, and all import permits and documents must be obtained in advance.

In some parts of Mexico, organized crime organizations make it unsafe to trade in those regions, and these organizations also interfere with trade. Companies that will do business in Mexico or import into Mexico by partnering with Mexican companies are advised to be cautious of these conditions.