On January 6th, the Mexican Government published a new list of apparel and textile goods with “estimated prices.” These prices are the minimum reference price that goods ranging from raw materials to finished products may be imported into Mexico and is categorized by Harmonized Tariff Schedule classification number. Shipments entered below these prices will be considered “undervalued” and would likely be subject to an investigation and potential penalties. If the parties to the transaction are related entities, this may also trigger larger questions as to the intercompany pricing (i.e., transfer pricing policy) behind the transactions as well. The measure entered into force on January 18, 2016. The announcement is attached here (in Spanish).
While the use of reference and minimum prices to determine the customs value is prohibited by Article 7 of the World Trade Organization Customs Valuation Agreement, countries will instead purport to use these prices as reference or guidelines thereby able to assert that they do not determine the customs value of the imported merchandise. The use of reference prices have been a point of contention between industry and customs authorities and have been the growing topic of discussion within the World Trade Organization and World Customs Organization. Companies experiencing challenges with different customs authorities should consider in what capacity they can participate in this discussion.
For more information, please contact Jini Koh, jkoh@crowell.com.