A good that complies with the USMCA rules of origin may qualify for duty exemption when imported into the United States, Mexico or Canada. The document that certifies such compliance is the certification of origin. This certification includes information about the importer, exporter or producer, certifier, description and harmonized tariff code of the goods, origin criteria, blanket period and authorized signature and date. Completing it seems to be a simple task because such information appears to be relatively basic. Nonetheless, anyone issuing or using this certification should take this as a critical task that can only be done by those who completely understand the rule and criteria of origin applicable to their goods, and are 100% sure that such goods qualify as originating, and moreover, they have the records handy and readily available to prove it. Those whose past experience with NAFTA was not pleasant may attest to it, as sometimes having the records proving the origin may not satisfy the MX customs auditors.
Therefore, companies that have issued or used certifications of origin may remain in a state of uncertainty until the five years statute of limitations expires. In this case, an option that could give some relief and certainty to importers, exporters and producers is if they have a written advance ruling issued by the customs administration of where the importer is located, that sets forth the treatment that customs shall provide to the goods at the time of importation based on the rule of origin of the good, including whether the good qualifies as a USMCA originating good.
According to the USMCA, each member country shall maintain uniform procedures for the issuance of advance rulings, including a detailed description of the information required to process an application for a ruling.
In the case of Mexico, On June 30, 2020, the Secretaria de Hacienda y Credito Publico (Minister of Treasury and Public Revenue) published on the Diario Oficial de la Federacion the General Rules for the application of the USMCA customs provisions. These, along with the Mexican Customs law, the General Customs Rules, all in compliance with Chapter 7 of the USMCA, sets forth the legal provisions applicable to the procedures and requirements to file a request for an advance ruling on origin in Mexico.
Generally, the advanced ruling request must be filed in Spanish and can be done by an entity located abroad in either Canada or the United States before the correspondent MX Customs department (ACAJACE-Central Administration of Legal support for Foreign Trade Audits). Also, the applicant must complete the corresponding official format and attach any evidence proving its statements. The applicant should be ready to furnish the following information and supporting documents to MX Customs:
- Name and address of the applicant (importer, exporter or producer of the good),
- Tax ID number of the applicant,
- Telephone number and email of the person authorized to receive notices in Mexico,
- Description of the activities of the applicant,
- A statement from the applicant stating whether the good subject
of the advance ruling:
- Has been the subject to an origin verification,
- Whether an advance ruling has been requested or obtained for such good,
- The matter is subject of a revision or appeal in the territory of any of the Parties,
- A statement pointing out if the good has been previously imported,
- A description of the relevant facts and circumstances related to the objective of the request including a statement for the reason why the advance ruling is requested,
- A description of the good including classification ruling of the good issued in Mexico, complete description of the good and materials, its nature, composition, state and characteristics, a description of the production process, a description of the packing used to import the good, final destination, final utilization or use of the final good or material, as well as commercial, common or technical name and drawings, photographs, catalogs, fliers or samples of the good or material, etc.
- It should be noted that other requirements and considerations may apply depending on a case by case
Once the request has been filed, MX customs may come back and request additional information from the applicant. MX Customs shall issue the advance ruling in no later than 120 days after it has obtained all necessary information, otherwise it should be deemed that the request was not favorable to the applicant.
One important consideration is that MX customs may decline to issue an advance ruling if the goods subject to the ruling have already been audited and have undergone an administrative or legal claim. However, MX Customs must explain to the applicant the reason why it declined to issue the ruling. Nonetheless, this should not be a reason to discourage the interested party from filing an advanced ruling request because prior to that determination, the applicant must analyze the conditions and facts of the parties involved, suppliers, materials, classification of the goods, etc. and compare who they were at the time of the audit or claim versus the current conditions and facts.
In any given case, the applicant may appeal the non-response from MX customs or may wait until the authority issues a determination.
One final consideration is that MX Customs has not made available for the public advanced rulings on any cases. Thus, there is no information available that can be used as a precedent or basis to support the applicant´s request. Nonetheless, although a successful ruling can never be guaranteed, interested parties can view these rulings procedures as a valuable tool that they may explore and if possible take advantage of it. Should the ruling be favorable to them, they can be more confident and have certainty about their operations when issuing and using a USMCA certifications of origin, because these rulings should be legally binding on MX customs until revoked or amended.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.