Escobedo, Nashielly

Seimandi, Alejandro Garcia

Vazquez, Adrian

English

University of New Mexico

United States - Mexico Law Journal
Volume 12 Presentations at the Twelfth Annual
Conference Article 19
3-1-2004
Panel Discussion: Mexico's Preferential Customs
Programs
Adrian Vazquez
Nashielly Escobedo
Alejandro Garcia Seimandi
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Recommended Citation
Adrian Vazquez, Nashielly Escobedo & Alejandro G. Seimandi, Panel Discussion: Mexico's Preferential Customs Programs, 12 U.S.-Mex.
L.J. 129 (2004).
Available at: https://digitalrepository.unm.edu/usmexlj/vol12/iss1/19
PANEL DISCUSSION: MEXICO'S PREFERENTIAL
CUSTOMS PROGRAMS*
MODERATOR: ADRIAN VAZQUEZ*
PANELISTS: NASHIELLY ESCOBEDO AND
ALEJANDRO GARCIA SEIMANDI
RICHARD M. KRUMBEIN:' This question is for Nashielly Escobedo. If a
company has established a PITEX or maquiladora2 program at a particular site and
wants to go under the Recinto Fiscalizado Estratogico (RFE),3 does that mean they
are going to have to relocate the operation into an approved RFE or a customs
facility?
NASHIELLY ESCOBEDO: We have two situations. The first is that the
company will have to locate themselves at another facility. We are open to
analyzing the possibility of locating companies at industrial parks that have, for
example, a strategic location that would justify locating a RFE at that location.
Additionally, the Mexican Customs Authority must be able to provide the required
customs services at that facility, and the industrial park must have the necessary
infrastructure to support a RFE facility.
DAVID HURTADO BADIOLA:4 This question is for Alejandro. I do not think
I agree with your conclusion that maquiladora and PITEX systems no longer make
sense with the changes in Mexican law. I believe that maquiladoras are still useful
since they can sell practically all their production in Mexico, provided that they
comply with minimum requirements of U.S. $500,000 of exports or 10% of their
production exported. So with that scenario, does it not make sense to have a
maquiladora program just to temporarily import duty-free goods in order to take
advantage of financial benefits and then export or sell domestically whatever is
remaining of their production?
ALEJANDRO GARCIA SEIMANDI: The problem is not a financial issue
because if you temporarily import products and you then decide to sell those
products in Mexico, you have to change the customs program and pay the
corresponding import duties, and on top of that, you have to adjust for inflation. But
the answer to this question depends on how much is being exported, how much is
being sold in the Mexican domestic market, and how difficult it is for companies to
* The views expressed here are those of the panelists and should not be taken to represent the views of
their employers or other organizations with whom they may be affiliated.
** A summary of the panelists' background appears on the last page of the panel discussion.
1. Richard Krumbein is a partner in the firm of Snell & Wilmer, L.L.P. in Denver, Colorado.
2. A maquiladora is a Mexican corporation that operates under a maquila program approved by the
Mexican Secretary of Economy (SE). Mexican corporations operating under this program are entitled to foreign
investment participation in capital and management. Additionally, these corporations are entitled to special customs
preferences that allow duty-free importation of macttinery, equipmxent, pats and materials, and administrative
equipment such as computers and communications devices, which are subject only to posting a bond guaranteeing
that such goods will not remain in Mexico permanently. Normally maquiladora products are exported either
directly or indirectly through sale to another maquiladora or exporter. Aureliano GonzAlez Baz, What is a
Maquiladora?, at http://www.udel.edu/leipzig/texts2/voxl28.htm (February 7, 2004) (last visited April 7, 2004).
3. Customs regulations issued by the Mexican presidency. Mexican Laws In English, at http://www.
mexicanlaws.comicustoms-egulationindex.htm (last visited April 7, 2004).
4. David Hurtado Badiola is a partner in the firm of Jduregui Navarrete Nader y Rojas, S.C. in Mexico City.
U.S.-MEXICO LAW JOURNAL
control their inventories. If everything is imported under a temporary import
program and just a small percentage of the goods leave the country, the company
will pay the same amount of import duties coupled with a large administrative
burden, and would be required to be registered under a maquiladora program. Does
it make sense to import everything permanently in order to avoid heavy
administrative burdens, and if you export a small percentage of your production,
then claim drawbacks? The maquiladora program is shifting to a case-by-case
basis. If a company imports from Asia to supply Guatemala, then NAFTA is not a
problem and the maquiladora program still works perfectly because the company
is fully exempt from import duties.
HURTADO: So why does it make sense to still have maquiladoras in Mexico?
GARCiA: It does not make sense to totally ban them. You cannot just eliminate
the maquiladora program because there is a high volume of machinery that is still
temporarily imported into Mexico and if you cancelled all the maquiladoras, you
would have to import all goods as if they were to be permanently imported into
Mexico. This would require companies to pay import duties and value-added tax
on all imported goods. Therefore, it does not make sense to completely eliminate
the maquiladora program. They are just slowly becoming obsolete while they are
overlapping with the new programs.
HURTADO: This question is for Nashielly Escobedo. Obviously the most
criticized aspect of these new certified companies are the threshold requirements.
Many people think that the volume of sales requirements to qualify for becoming
a certified company is too high. So far only 165 companies have been granted that
benefit. Are there any new rules forthcoming related to the lowering of the volume
requirement? I pose this question because many companies that are as reliable as
the certified companies claim that it is unfair to base certification only on the
volume of exports.
ESCOBEDO: An alternative to the import-volume requirement is the fulfillment-
level requirement. Companies that do not reach the volume requirement can submit
an application to qualify as a certified company under the fulfillment-level
requirement and then be evaluated on this separate basis. The first stage is to certify
the maquiladoras based strictly on the fulfillment-level requirement. We will
evaluate each maquiladora company that applies, by making visits to the company
in order to evaluate their policies, their capacity to implement the import program,
and other issues, in order to determine if they are suitable to qualify for the registry.
However, there will be no requirement that the maquiladora company meet the
import-volume requirement. Later the same fulfillment-level requirements will be
applied to the remaining companies, even if they do not meet the import-volume
amount.
JIMMIE REYNA:5 This question is for Nashielly Escobedo. It seems to me that
one of the significant benefits under this new program that you are describing is still
5. Jimmie Reyna is a trade attorney and partner in the firm of Williams Mullen in Washington, D.C.
[Vol. 12
Spring 2004] PANEL DISCUSSION: MEXICO'S PREFERENTIAL CUSTOMS PROGRAMS 131
duty deferral. Is it true that under Article 303 of NAFTA you are not going to be
able to defer those duties for NAFTA-traded goods?
ESCOBEDO: No. We cannot leave out NAFTA's Article 303, but as long the
goods do not enter into the rest of the country, we are going maintain the exemption.
It is similar to the United States' free trade zones. If the goods are imported on a
permanent or temporary basis, they have to fulfill the normal importation
requirements under Article 303. We cannot violate any treaty regulations.
GARCIA: Let me just add something. The Customs Authority expressly refers to
that point and says that import duty exemptions under this program are limited by
international treaties.
ADRIAN VAZQUEZ: This question is for Alejandro Garcfa. What is the reason
behind having different decrees for the PITEX companies and for maquiladora
companies? In the end, it seems to me that maquiladora and PITEX companies
operate under the temporary import and entries requirements, so therefore why not
have only one body of legislation or regulations that encompasses both programs?
GARCIA: The reason why the maquiladora and PITEX programs are treated
separately is purely historical. The maquiladoras began operating under a decree
aimed at Mexican companies that imported production services goods and then
exported manufactured goods. Maquiladora companies never owned the goods.
They were really service manufacturers. This is the true essence of the
maquiladora, but all the Mexican producers started complaining that they needed
a program similar to the maquiladora program because they were purchasing goods
and imports while not rendering services, then selling their product. Historically,
these individuals fell within the scope of the PITEX program. The point is that the
maquiladoras association has achieved real, important political power and they are
very protective of their backyard. They are not willing to let PITEX companies
come in. So what we see is that in the past ten years the maquiladora and PITEX
programs have become the same. The PITEX and maquiladora decrees are like
mirrors, so that is why they are categorized together but have separate legislation
and regulations.
VAZQUEZ: This next question is for Nashielly Escobedo. Do you agree with
Alejandro Garcfa that maquiladoras are becoming obsolete? Perhaps we could see
a shift in the maquiladoras in several years and eventually have them operate under
the Recintos Fiscalizados Estratigicos (RFE).
ESCOBEDO: Whether the maquiladora program should be maintained depends
mostly on the evolution of the new programs. One limitation is the location of RFE
companies. There is not enough space for all the maquiladoras to relocate at these
new facilities. It will also depend upon whether Mexican customs decides to open
the gate to the maquiladoras or whether Mexican customs decides to shut the
maquiladoras out of the customs facilities.
U.S.-MEXICO LAW JOURNAL
JOHN ROGERS: 6 As you described it, the maquiladora industry, or many of the
maquiladoras, are becoming extinct and maybe many more of these companies will
go out of business. Much of the machinery and equipment that was imported
temporarily is now no longer usable. To what extent can that machinery and
equipment be sold for scrap value in Mexico, rather than at its original pedimento-
established invoice value at the time it was imported many years earlier?
GARCIA: Mexican customs law provides that you can reduce the value of the
equipment and machinery yearly in accordance with the depreciation term set by the
income tax law. So machinery and equipment that has been temporarily imported
for more than ten years are most likely subject to a customs value of zero when
changing their status to a permanent import. Companies will still have to pay
whatever the customs value is before selling it as scrap.
BIOGRAPHICAL SUMMARIES
Lic. Adridn B. V.zquez specializes in international trade and customs matters and
has practiced in this area since 1987. He has advised and represented a number of
national and multinational companies, as well as foreign governments in trade and
custom issues. Lic. V;izquez frequently appears before the Federal Trade Court,
Federal Courts of Appeals and NAFTA Bi-national Panels. He was appointed by
the former Minister of the Mexican Department of Commerce to appear in the
Roster of Mexican Panelists authorized to solve NAFTA's Chapter 19 trade
disputes. He is the author of the book "Sistema Anti-Dumping Mexicano." Lic.
Vzquez is a member of the Evaluation Committee of the National Export Award,
International Associate of the American Bar Association, honorary member of the
Center for International Legal Studies, member of the International Bar Association,
and he is a member of the Institute of Mexican Executives on Foreign Trade. He is
the treasurer and founding member of the International Trade Practices Advisors
Association and member of the Foreign Trade Commission of the Mexican Institute
of Public Accountants. Lic. Vazquez received his Licenciatura en Derecho from the
Universidad Nacional Aut6noma de M9xico.
Lic. Alejandro Garcia Seimandi is a partner in the firm Ramirez Abogados, S.C.,
who specializes in trade and custom issues. He began his professional practice at
the Ministry of Finance and Public Credit, first as a supervisor of legal procedures
in the Mexican Customs Service and later as a legal consultant in the central
administration of Customs and Foreign Trade. He is an active member of the
International Trade and Customs Committee of the Mexican Bar Association (Barra
Mexicana), of the Foreign Trade Committee of the Mexican College of Public
Accountants, and of the International Trade Commission of the Mexican Institute
of Public Accountants. Lic. Garcia received his Licenciatura en Derecho from the
Escuela Libre de Derecho.
Lic. Nashielly Escobedo graduated from the Universidad Tecnol6gica de Mixico.
She later graduated from the Universidad Panamericana in trade and international
6. John Rogers is a partner in the firm of Strasburger & Price, L.L.P. in Mexico City.
[Vol. 12
Spring 2004 PANEL DISCUSSION: MEXICO'S PREFERENTIAL CUSTOMS PROGRAMS 133
law. She has worked for the Customs office since 1994 and was recently appointed
as Administradora de los Recintos Fiscalizados. She is fluent in both English and
German.



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