Types of Trade Barriers

● Tarifs (import duties - arancelarias)

● Non tarriff barriers - no arancelarias

En México las podemos encontrar en

- SNICE
- HTS (Harmonized Tariff Schedule)

Trade Barriers are obstacles to trade that consist of tariffs, general taxes on foreign trade.
According to Article 12 of the Foreign Trade Law, tariffs are quotas or fees for general import or export taxes.
Non-tariff barriers: any obstacle to foreign trade other than tariffs, such as:

● prior permits
● automatic notifications
● maximum quotas
● labeling regulations
● origin marking,
● certificate of origin,
● sanitary,
● zoosanitary,
● phytosanitary regulations,
● technical barriers,
● quality standards like Official Mexican Standards,
● ISO standards. etc.

Customs regimes
The regimes contemplated by Mexican legislation in Article 90 of the Customs Law.
Basic customs regimes: import and export
Customs regime of importation:

● Definitive - remains in the country indefinitely

● Temporary - entry of goods for a limited time or for a specific purpose, after which they may return abroad.

Definitive importation and exportation are subject to the payment of general import or export taxes.
If it's temporary, it's only subject to a guarantee.
For example: If John is a tourist coming from the USA with a trailer, he enters the country as a temporary importation,
and he won't have to pay the general import tax. He'll only need to provide a guarantee, and when he returns to the
USA, the guarantee will be refunded for the trailer.
3 TYPES OF TARIFFS
*Ad valorem: They are calculated as a percentage of the customs value of the merchandise (invoice value) (% on the
customs value of the merchandise). More than 90% of the tariffs contained in the TIGIE, which is part of the LIGIE, are
of this type. (5% on the value of the merchandise)
*Specific: They are expressed in monetary terms per unit of measurement (a predetermined amount of money per
unit of measurement.)
For example:If they pay 2 pesos per unit, 500 x ton, 5 pesos per kilogram.
*Compound duty: A combination of ad valorem and specific duty. When for the same operation, both ad valorem
duty and specific duty are charged. For example: If I import something and I'm charged 2% of the value of the
merchandise + $20 pesos per unit, I will pay two taxes for the same transaction.
ELEMENTS OF THE GENERAL IMPORT AND EXPORT TAX.
According to Article 2 of the Federal Fiscal Code, we can identify the following elements:

• Subject: Natural or legal person obliged to pay the tax.

• Object: The activity that is taxed, which when carried out, requires payment of a tax.
• Base: It will serve us for the calculation of the tax.
• Rate: Fee or percentage that we will apply to the base for the payment of the tax.
• Moment of Causation (accural): Instant when the obligation to pay the tax arises.
• Payment Period: The moment when the obligation to pay the tax is due.
• The moment of causation and payment period can be the same or different.

Quotas: Numerical limits placed on specific classes of imports.

It is the maximum quantity, volume, or value that can be imported or exported of a particular commodity, based on
Article 23, paragraphs 1 and 3 of the Foreign Trade Law.
Who establishes the quotas? The Ministry of Economy.
4 ways in which the Ministry of Economy grants quotas:
 • Public tender (published in the Official Gazette of the Federation, awarded to the company demonstrating the
best production capacity).
• Direct allocation.
• First come, first served principle.
• Mixed.

Import and export quotas can be of two types:

- Maximum quotas (cannot be exceeded).
- Quotas within a tariff quota (can be exceeded, but if not exceeded, a minimum, preferential, or tax-exempt rate
applies, and if exceeded, a maximum or higher rate applies).
- Maximum Quotas: These are explicitly set by the Ministry of Economy and cannot be exceeded. The quantity,
volume, or value established cannot be surpassed within a specified period of time (usually one year). Example: If you
are given a maximum quota for the importation of chicken wings of 500 tons, you cannot import more than this
amount.
- They are published in the Official Gazette of the Federation.

SNICE - National System of Foreign Trade Information, and on its website, you can consult the current
quotas, available quotas, and the historical record of quotas.

What is the purpose of establishing a quota?

• To fulfill an international agreement

• To guarantee the supply of a certain product or merchandise
• To protect the domestic industry
• To address a food emergency

Two types (modalidades) of tariffs:

- Seasonal tariff: varies, increases, or decreases depending on the time of year. For example, the tariff for toys or
clothing in September, October, November, and December is not the same as the rest of the year.
- Quota tariff: Tariff that has two rates, a minimum one (when it does not exceed the quota established by the S.E.)
and a maximum or higher one (when it exceeds the quota)
Prior authorization (Permiso previo)
It is a non-tariff barrier and is the authorization granted by the S.E or other agencies to import or export certain
merchandise. Not all merchandise is subject to the prior authorization requirement, and to determine which
merchandise is subject to this, you must consult Annex 2.2.1 of the classification and coding of merchandise whose
import and export are subject to the prior authorization
The HS uses a six-digit nomenclature structure to classify goods.
Prior authorizations can be for: The nomenclature structure consists of the following components:
The first two digits represent the section of the nomenclature in which the
• Permanent importation
commodity is located.
• Permanent exportation
• Temporary importation The next two digits represent the division within the section.
• Temporary exportation The last two digits represent the item within the division.
In addition, the Harmonized system also includes explanatory notes and
interpretation
Tariff Classification: A 10-digit numerical codingrules
systemto help
usedapply the nomenclature
to identify consistently.
any merchandise in foreign trade, in
accordance with the Harmonized System of the World Customs Organization.
Why do we classify a commodity? Why do we determine the tariff classification of a commodity?
To understand the regulatory framework of the commodity.
To determine the general taxes I will pay when importing or exporting it.
To know if I will pay other taxes.
To understand the non-tariff regulations and restrictions of the commodity.
If the tariff classification of the commodity is incorrect: Everything is wrong. We don't pay the correct taxes, nor
comply with the tariff and non-tariff regulations of the commodity.
What will happen? They will detain the merchandise at customs, and they will apply Administrative Procedure in
Customs Matters (PAMA)
Merceology (merciología): It is the discipline of foreign trade that studies the origin, composition, and function of
goods, with the purpose of carrying out a correct tariff classification in accordance with the Harmonized System of the
WCO, answering questions such as: What is it? What is it made of? What is it used for?
Fracción arancelaria: Capitulo: primeros 2 dígitos del código, • Partida: primeros 4 dígitos del código, • Subpartida:
primeros 6 dígitos del código, • Fracción arancelaria: Los 8 dígitos formados por los dígitos de capítulo, partida y
subpartida.
What is a NICO? Commercial Identification Number (Número de Identificación Comercial), it serves to facilitate the
statistical identification of all goods imported and exported, and does not entail regulatory burden