To manage this AES process, foreign buyers using the ExWorks Incoterms need to work directly with the following government agencies:
Census Bureau— Foreign Trade Division (FTD): Provides informa-tion on foreign trade statistics, regulainforma-tions, reference materials, and extensive details on AES.
Customs and Border Protection (CBP): Provides access to the Customs Export section, including information on AES; blocked, denied, and debarred persons lists; and export documents, licenses, and requirements.
Department of Commerce— Bureau of Industry and Security (BIS):
Provides information on export control basics, export administra-tion policies and regulaadministra-tions, compliance and enforcement, semi-nars and training, and links to Export Administration Regulations (EAR), including the Commerce Control List (CCL).
Department of the Treasury— Office of Foreign Assets Control (OFAC):
Provides access to specially designated nationals (SDN) and blocked persons lists and sanction programs and country summaries.
Department of State— Directorate of Defense Trade Controls (DDTC):
Provides information for registering with the DDTC and applying for a license to ship items on the U.S. Munitions List (USML). Includes a link to the International Traffic in Arms Regulations (ITAR).
Export.gov— U.S. Commercial Service, International Trade Administrations (ITA): Provides access to all export- related assis-tance and market information offered by the federal government.
Department of Treasury— Internal Revenue Service: Provides detailed information on how to obtain an Employer Identification Number (EIN). Publication 1635, Understanding Your EIN, is posted as a pdf online. This can be accessed to answer FAQs regarding your EIN.
Site is also available in Spanish.
18. Supervise the activity of any transportation provider or third party such as but not limited to the freight forwarder and carrier.
North American Free Trade Agreement (NAFTA)*
Implementation of the North American Free Trade Agreement (NAFTA) began on January 1, 1994. This agreement will remove most barriers to trade and investment among the United States, Canada, and Mexico.
Under the NAFTA, all non- tariff barriers to agricultural trade between the United States and Mexico were eliminated. In addition, many tariffs were eliminated immediately, with others being phased out over periods of 5 to 15 years. This allowed for an orderly adjustment to free trade with Mexico, with full implementation beginning January 1, 2008, continuing into 2012.
The agricultural provisions of the U.S.–Canada Free Trade Agreement, in effect since 1989, were incorporated into the NAFTA. Under these pro-visions, all tariffs affecting agricultural trade between the United States and Canada, with a few exceptions for items covered by tariff- rate quotas, were removed by January 1, 1998.
Mexico and Canada reached a separate bilateral NAFTA agreement on market access for agricultural products. The Mexican– Canadian agreement eliminated most tariffs either immediately or over 5, 10, or 15 years. Tariffs
* From North American Free Trade Agreement, http://www.fas.usda.gov/itp/policy/nafta/nafta.asp.
Global Regulation and Compliance Management • 141 between the two countries affecting trade in dairy, poultry, eggs, and sugar are maintained.
For trade between the United States and Canada, any Incoterms choice that benefits the parties engaged in the transaction will work. The relation-ship and commonality of trade and business relationrelation-ship between the two countries affords both sellers and buyers with access to all 11 Incoterms.
One only needs to analyze the transaction and determine which Incoterms serve best. But shipments in and out of Mexico to either the United States or Canada need to be carefully reviewed before choosing the best Incoterms.
For example, a company must be domiciled in Mexico and able to provide a Mexican tax ID to become importer of record. The ability to have a “third party” become importer of record is very complicated and almost impos-sible compared with accomplishing that in Canada and the United States.
That circumstance, with respect to importer of record, would make DDP Incoterms option for U.S. and Canadian exporters not a viable option, as they would have difficulty in becoming the importer of record without having a locally registered company and presence.
The DAP Incoterms provides a better option for a Canadian or U.S.
company that wants to deliver goods to an interior place in Mexico, even possibly a final destination, but would not have responsibility for the clear-ance, pedimentos, or other customs charges.
Pedimento Form
A pedimento is the legal document to import or export from Mexico.
There are two main types of pedimentos: definite or temporary.
1. Definite pedimentos are for products that will not be returned to the country of origin. These products are subject to duties and taxes.
Global Regulation and Compliance Management • 143 2. Temporary pedimentos are for products that will be transformed
or be subject of a process and then will be returned to the country of origin. If the products are raw materials they are duty and tax free. Machinery and equipment might be subject to duties and taxes depending on their country of origin.
In Mexico, those customs formalities and responsibilities would be accounted for by the buyer under the DAP option in Incoterms. That understanding makes the statement to U.S. and Canadian exporters who ship to Mexico that the DDP term is a poor choice. All others can be uti-lized more favorably.
Logistically, trucks move freely between Canada and the United States but not between Mexico and the United States and Canada. It is still highly contested that Mexican trucks have problems crossing U.S. and Canadian borders. This is a political issue with lots of debate that has never been truly resolved. It includes U.S. federal and state concerns tied into
“union” issues. Therefore, keep in mind that the best- suited Incoterms are for exports from Mexico where trucks would be used as the main form of carriage on an anticipated “door- to- door” basis. Many carriers will use the same box and chassis, but the cab and driver will change at the border from one of Mexican origin to one of U.S. or Canadian destination.
UNITED STATES FOREIGN TRADE REGULATIONS