Trade Commission of Mexico Newsletter May 2001                                                                                                                      continued from front page

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U.S. HTS Classification vs. Mexican HTS Classification continued from front page

All of these are legitimate options and all of these appear in the HTS. Here is where subjective dispositions take place, and here is where disagreements are easy and were lawyers get busy.
An assembler of power supplies assembled a PCBA that functioned as a panel board containing connectors, switches and fuses. The PCBA was made exclusively for a power supply. Should it be classified as a "part of a power supply" or should it be classified as "panel board with components for electrical circuitry" Each has its own classification, both are correct but only one classification can be used. How then can one expect that Mexican Customs classifications of components, materials and finished products be in sync with the U.S. Customs classifications.  Likely in specified products, not likely in non-specified products and products that are amply described in more than one classification of the HTS.
But there is where a potential problem arises. Mexican Customs will use the Mexican brokers classifications to decide which PROSEC applies, and which duties will be applied, if any. It is under no obligation to use the classifications determined by a U.S. broker or U.S. company.
U.S. Customs and the U.S. Court of International Trade have already determined that they will not accept the Mexican tariff classification in determining whether a product qualifies for NAFTA when it is imported into the USA. U.S. Customs will make its NAFTA verification on the basis of the U.S. tariff classifications of the components, materials and finished imported product.
The classification of the finished product is where the greatest potential for problem exists. NAFTA 303   allows    the   maquiladora   to     

the same subheading. In practice, however, this is far from fact.
Indeed, even within the USA, there is no universal agreement where certain products are to be classified. Disagreements on where to classify an item happen all the time. U.S. Customs maintains an entire administrative infrastructure of National Import Specialists in New York, to determine correct classifications of products. The National Import Specialist are there to help not only the importing industry, but U.S. Customs field offices as well. Not only that, the U.S. Government has a Court of International Trade wherein an importer who does not agree with the classification of a product, can take Customs to court to adjudicate the disagreement.
There's a whole slew of lawyers making a good living arguing before the court as to the importer's classification of a product vs. Customs classification. And we are all using the same classification book.
There are many products that have very clear classifications, in that the HTS spells out the description very specifically. For example, capacitors, transistors, power supplies, rivets, transformers, keyboards, monitors all have very specific classifications. But then there are products that have multi-functions or are composite products and which are not specifically mentioned on the HTS. For example; an automotive sensor. There is no such specific classification. What does the sensor do? It measures the level of gasoline and at a certain level it generates a signal that switches on an indicator light in the dashboard. Is it a liquid meter? Is it a switch? Is it an automotive component? Is it an automatic measuring device? Is it a signal generator?
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