Of the many agents involved in international trade, customs brokers, as insiders, have without doubt some of the most interesting views to share. Having asked many for help and for tips over the years, we have decided to share some of their knowledge and advice regarding trade in Latin America with you. Whether you are importing from Latin America or exporting to the continent, these experts have a wealth of knowledge and experience to share with all of us. We have approached customs brokers in three countries: Mexico, Uruguay and Argentina.
Mexico is a large economy with over 112 million people and recognised as one of the world’s most open economies. It is part of the North American Free Trade Agreement (NAFTA) with the US and Canada.
Argentina is one of the largest economies in South America, with 40 million people, and also a commodities powerhouse, as the main worldwide producer and exporter of lemons and biodiesel, for example.
Colombia is one of South America’s recent economic success stories. A country of under 50 million people, it has witnessed record levels of economic growth in the past few years as well as growth in investment, boosted by the recent massive improvement in its international investment grading. Colombia is part of the “Comunidad Andina” with Peru, Ecuador and Bolivia. It has also contributed to the creation, very recently, of the “Alianza del Pacífico”, with Chile, Mexico and Perú.
First of all, we have asked customs brokers across the continent about the ease with which British businesses can expect to do export to their country.
Oscar Rueda, our Mexico contact, explains: “In general, Mexican Customs have implemented actions since 2008 aimed at making our country more attractive to investment and international trade. There are many facilities for importing and we process all orders electronically.” Oscar also highlights the Mexico/EU Free Trade Agreement FTA) but explains that there are some more “sensitive” sectors where importation can be a bit trickier and he quotes in particular “textiles and confections, toys, shoes and bicycles”.
Alejandro Louzao, from Alcomex SA in Argentina, explains that protectionism is increasing daily and that “new barriers to imports appear almost every day”, no matter what the country of origin is. This means that UK exporters will be punished as much as those from other countries when trying to export to Argentina. Alejandro emphasises not just the operational obstacles but the currency exchange barriers that are making it very difficult to engage in international trade in his country.
Miguel Florez from Aviomar in Colombia, explains that there will be variations across sectors in terms of the advantages and disadvantages of trade between both countries. The key is to back up strategy with solid research. Colombia is overall an open economy, and electronic processes are now making it easier to deal with this country. Miguel emphasises that it is not just a question of knowing customs procedures and rules, but also the overall regulatory framework for a particular product. He believes that is where obstacles normally appear, and hence he would recommend British exporters to partner with someone in Colombia who understands the full regulatory framework.
We have also asked the experts what advice they would give British exporters wanting to start trading their countries.
Oscar, from Mexico, suggests:
- understand the “rule of origin” which are key in the application of customs preferences
- identify if a product actually has sufficient demand in Mexico and whether it can compete in price
- have reliable advice in terms of which obligations the exporter has (not just in terms of duty) for each product exporter – this is where a good customs brokers can be truly invaluable
Alejandro, from Argentina, asks for UK exporters to “ensure that the importer has enough professional and credit capacity to carry out the importation” and he encourages UK exporters to “ask about non-automatic licences, restrictions, payment terms and declarations, which can all delay imports considerably”.
Miguel, from Colombia, suggests:
- Making sure that the partner you intend to deal with in Colombia is actually exists and is legally allowed to act as an importer. Miguel suggests using the services of the Colombian Embassy in the UK for this purpose.
- Researching the quality of the products that the company already deals with in Colombia, and what its overall position in the national market is.
- Make sure that your export pricing accurately reflects the real costs of getting your products to Colombia. For example, some areas of the country are notoriously difficult and hence expensive to reach, and this must be factored in your export pricing. Miguel also recommends factoring in insurance and allowing for delays. He considers it essential to very accurately classify your products for international trade under international tariff codes, since mistakes or misunderstandings can be extremely costly. Once that code is identified, a customs broker can be extremely useful in identifying any additional internal licenses or regulations that apply (above any customs duties and regulations)... “it is better to ask than to regret”, he sums up.
International trade is two-ways, so customs brokers can also advise on importing Latin American products into the UK (and the EU). What advice would customs brokers give British importers?
Oscar, from Mexico, emphasises the broad export offer of this country, which is attractive to European markets, such as food products, decoration items and crafts, but also industrial exports. He would recommend British importers to deal with well-established businesses with solid and clear processes and export experience.
In the case of Argentina, Alejandro suggests “research well the continuity of exports, quality of the products and payment terms”.
Miguel recommends making use of ProExport in Colombia (proexport.com.co), who have plenty of information on Colombia exporters, as well as seeking the support of the binational chambers of commerce.
With huge thanks to:
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