Foreign Trade considerations in Mexico: Customs Valuation

The customs valuation is the customs procedure applied to determine the customs value of the imported goods. If an ad-valorem duty is applied, the customs value is essential to determine the duty payable for the imported product.

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When it comes to assessing a merchandise applying the method of identical and similar merchandise, it is because it was not possible to apply the transaction value method, since surely one of the following situations occurred:

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• The importation is not a consequence of a sale for export to the importing country.
• Presents terms of sale that cannot be quantified.
• The link that exists between the buyer and the seller has influenced the negotiated price.
• There are no objective and quantifiable data to make an adjustment.
• Customs has reasonable doubts to accept the declared price and the importer cannot prove the veracity of the same.
• The merchandise presented to be valued is different from the one negotiated.

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It is important to consider that identical merchandise must be the same in everything, that is, physical characteristics, quality and commercial prestige; while similar goods, although they are not equal in everything, have similar characteristics and composition that allow them to fulfill the same functions and be commercially interchangeable.

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Identical and similar goods must be produced in the same country as the goods subject to valuation, in this way merchandise produced in the same country and by the same manufacturer must first be considered, secondly, another manufacturer can be approached, always and when it is the same country of production; must be excluded goods that incorporate elements of engineering, creation and improvement, artistic works, designs, drawings and sketches made in the country of import.

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Another important aspect to consider is that the identical or similar goods taken for the valuation should have been exported at the same time or at a time close to that of the imported goods that will be valued, this in order not to alter the essential part of the conditions of the negotiation of the goods that are compared.

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The quality appoints value to an object, hence the price-quality ratio, price being an indicator of quality, likewise when talking about quality, it is necessary to take into account the materials, brand, distributor and design, which influences the quality levels that can be null, little, good or excellent.

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In Mexico, the valuation of merchandise is regulated by the Customs Law and its Regulation (Ley Aduanera y su Reglamento), while internationally it is foreseen in the WTO Agreement on the Application of Article VII of the GATT 1994 and it only applies to the valuation of the goods to effects of the application of ad-valorem duties on imports.

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