Madison International Trade Association: NAFTA

Last Tuesday, along with Mike Carroll of Canusa Logistics, we attended the February luncheon meeting of the Madison International Trade Association.  The topic covered exporting to Canada and Mexico from the United States and featured three guest speakers; representatives of  Canadian and Mexican freight forwarders as well as a US importer and exporter who recounted her experiences and suggestions for other companies who are thinking about doing business there as well.

Two big things came out of the meeting for me.  The first was about a program going into Mexico where a foreign company can take advantage of an individual or company called a Commercializadora who can, in effect, act as a trading company buying the goods from a US exporter, taking responsibility for entry (even though they have no ownership interest in the goods) and then sell them to a Mexican company.  Different from a distributor, this company collects for the value of the goods in pesos and then remits to the US company.  There is considerable risk based on the currency spread, so these firms are not immune to the risks of the global currency market.

The second thing is that for companies who are looking to do business in North America, the harmonized tariff numbers between the countries are not identical, and it would be a good business practice to maintain the US, Mexican and Canadian HTS numbers in the product records to facilitate shipping into each country.

After listening to the presentation by the Canadian freight forwarder which discussed the compliance risks and rewards of being a non-resident importer going into Canada, Mike felt it lacked on GST.  I asked him to explain himself further.