In an era where information equates to power, staying ontop of the latest developments is imperative. This article presents an incisive analysis of three significant news stories currently influencing the spheres of supply chains and global economics. These topics are at the forefront of today’s discourse, demanding our attention and understanding.
Navigating Trade Compliance: Insights into Mexico’s “Regla Octava” for Sensitive Goods
Alma is a valued team member and customs supervisor of TradeFlex Group and Borderflex, and is keeping abreast of the ongoing changes to the customs rules and regulations. She helped prepare the information for this article.
The Ministry of Economy (Secretaría de Economía—SE) has recently proposed its criteria for the temporary importation of “sensitive goods” under the “8th rule” (Regla Octava). The 8th rule goods are listed for the elaboration of final products established in the PROSEC Decree. These goods consist mainly of steel, aluminum, textile, and other sensitive goods.
Companies that have an IMMEX registration and PROSEC authorization to import under the 8th rule may import such goods through any of the HTS Codes of heading 98.02 of the tariff of the general import and export taxes (TIGIE), solely and exclusively to expand an industrial plant, replace equipment or integrate an article manufactured or assembled in Mexico.
However, the SE has detected some issues with the use of the 8th rule. These include lack of control of what is actually imported, inability to trace goods, lack of control of compliance with non-tariff regulations and restrictions (NOMs, import notices, estimated prices, etc.), inability to generate statistics, and discrepancies in descriptions declared at the time of requesting the permit and in the import pediments. For these reasons, the SE has determined that the importation of “sensitive goods” under the 8th rule is not applicable because “the regulations impose specific requirements to avoid diluting their control and surveillance during and after customs clearance”.
In light of these updates, it’s crucial for companies to stay informed and adapt their strategies accordingly. With the right guidance and tools companies can effectively navigate these changes and continue to benefit from Mexico’s trade facilitation programs. It’s also important to note that while the 8th rule provides significant benefits, companies must ensure strict compliance with all regulations to avoid potential penalties and disruptions.
While the Regla Octava offers significant benefits, it’s crucial for companies to stay updated with the latest changes and ensure strict compliance with all regulations. With the right knowledge and tools, companies can effectively navigate the complexities of trade compliance and continue to reap the benefits of this provision.
Navigating the Waves of Disruption: The Container Crunch Impacting Global Trade and Consumer Cost
The global trade industry is facing a significant challenge with a sudden container crunch, causing a dramatic increase in ocean freight rates. The convergence of the peak shipping season, longer transit times to avoid the Red Sea, and adverse weather conditions in Asia have disrupted trade on key routes. Ocean carriers are skipping ports or reducing their time at port, and not picking up empty containers to keep vessels on schedule. This container capacity crunch has resulted in freight spot rates increasing by approximately 30% over the past few weeks. Freight intelligence firm Xeneta warns that rates could rise through June, surpassing the Red Sea spike, ultimately impacting consumer prices.
The consumer impact of the container crunch is likely to be felt by consumers, with prices expected to rise as a result. Emily Stausbøll, a senior shipping analyst at Xeneta, suggests that the current situation could bring back memories of the chaos caused by lack of available capacity during the Covid-19 pandemic.
Container crunch crisis has significantly impacted certain regions, including China and Europe, the Far East, North America, and Oceania, the United States and Europe, and South America and West Africa. China-to-Europe trade lanes have seen surges in trading spot rates and leasing rates. The decline in container trade is also significant in Europe, North America, and Oceania. These regions are experiencing the most significant impacts due to a combination of factors such as longer transit times, port congestion, and a shortage of available containers.
Early data from Xeneta suggests that rates will increase further at the start of June, aligning with warnings from DHL about a container crunch since January due to longer routes needed to avoid the Red Sea since the Houthi attacks began. The current container crunch and the resulting increase in ocean freight rates highlight the vulnerability of the global trade industry to unexpected disruptions.
Mexico’s Economic Surprises: Quintana Roo, Oaxaca, and San Luis Potosí Lead the Way
When it comes to the strongest economic growth most expect big federal entities, or states, like Mexico city, Nuevo Leon, Tamaulipas, or Baja California. However, in 2023 Quintana Roo, Oaxaca and San Luis Potosí recorded the strongest economic growth among Mexico’s 32 federal entities. Things only look up even further as Fourteen states recorded economic growth above the 3.2% annual figure for the Mexican economy as a whole last year, while growth was below that level in 2018.
Quintana Roo, the Caribbean coast state home to tourism destinations such as Cancún, Playa del Carmen and Tulum, was the only state in the country to record double-digit annual growth last year. Its economy grew 10.2% last year. Oaxaca ranked second with annual growth of 8.3% in 2023, while San Luis Potosí ranked third with an economic expansion of 7.9%. BMW, the German Luxury car company, can be thanked as it is one of San Luis Potosí’s major investors. Meanwhile, Tourism, public investment and the broad coverage of government social programs all benefited the economy of Oaxaca last year. Quintana Roo received significant government resources in 2023 to complete projects such as the Maya Train railroad and the Tulum airport.
Nearshoring, the practice of relocating business operations to a nearby country to increase benefits for both parties, has become extremely popular in Mexico due to its many ports and having close connections to the United States, Canad, and South America, taking advantage of several trade routes. Mexico surpassing China in 2023 has a lot to thank the nearshoring practice on and it only continues to grow! It’s expected that Nearshoring can help add an additional 3% to its GDP in the next 5 years due to increased investments and job opportunities. Just over 9,000 additional jobs were created in Oaxaca last year whereas the figure for Quintana Roo was over 37,000.
Moreover, 2023 marked a year of surprising economic growth for Mexico, with Quintana Roo, Oaxaca, and San Luis Potosí emerging as unexpected frontrunners. The practice of nearshoring further propelled this growth, contributing to job creation and potential GDP expansion. These trends not only signal a bright future for Mexico’s economy but also underscore the transformative power of adaptability and the right support in the dynamic world of economics.
Here at TradeFlex we provide business model analysis, manufacturing management strategies, duty tariff optimization , compliance management, regulatory consultation, duty reduction programs, supply chain and tariff engineering, and cross-border solutions. With over 30 years of expertise, we help businesses land softly in Mexico, ensuring efficient, compliant, and cost-effective cross-border operations. Come work with us today at https://trade-flex.com.
