Livingston International: a Partner to Comply with Trade RulesBy Andrea Villar | Tue, 10/13/2020 - 05:00
Q: What are Livingston International’s main differentiators from other customs brokers?
RC: In Mexico, the automotive industry is like our birthplace. Part of the company’s early history in the country is directly related to this sector. Our first project here was with the largest assembly plant in the country almost 20 years ago. The products and services that we have developed throughout the years have had a great influence on the industry since we customized these services for that OEM.
The biggest service we offer is the management of operations for Mexico’s benefits program called Fiscal Deposit for the Automotive Industry. This includes the software to manage merchandise and also to ensure regulatory compliance. Currently, a company cannot manage the entry and exit of so much material without a technological tool, which is used mostly by assembly plants and auto parts companies. The purpose of the Fiscal Deposit is for automotive companies to enter raw materials to produce vehicles in national territory without having to comply at the import moment with all regulations and fiscal requirements but until the moment the vehicle is finished. Currently, as many as 15,000 individual components are required for some vehicles. We specialize in managing exceptionally large databases of products for classification, including exceptions, such as goods previously exported for repairs with no determined value. All that inventory in the bonded warehouse must be managed within the software and Livingston International pioneered this outsourced service in Mexico.
BC: There are three major factors to be mentioned when talking about what we do. The first is that our specialty is regulatory compliance, which creates many challenges for the industry as it has become increasingly complex. The second factor is the speed at which products cross the border. Several amendments to the regulations in recent months aim to speed up the customs process using technology by having information available before products arriving at the border. Such is the case of vehicle powertrains that do not even stop at the border since all customs clearance is done in parallel with the shipment. Finally, the third factor is the cost. These are the three main areas in which the work of an international trade department is normally evaluated. All these factors are being challenged in the current environment. The automotive industry is facing substantial changes regarding rules of origin. These changes make compliance a challenge when companies seek to reduce costs and increase shipment speeds. All of these factors play an essential role in the industry and we specialize in addressing all of them.
The speed of regulatory change in international trade has increased gradually. 2020 has been particularly challenging, so we decided to create an area within the company solely to monitor all regulatory developments. We have faced USMCA’s enforcement and the incorporation of the sixth amendment of the World Customs Organization, which includes changes in tariff classification. Furthermore, this year, we also witnessed the entry of the National Guard and the Navy to customs administration, which has implications in the speed of operations.
Q: What are the advantages of Livingston International's software for OEMs?
BC: The software is developed together with our customers to fit perfectly with their operations. Reciprocal reliance is required to connect all systems and to automate the flow of information. There is no point of comparison as we are fully designed and customized for our clients’ operations. Likewise, working to comply with international regulations, increasing the speed of border crossings, lowering costs, and automating operations is a never-ending process.
RC: Knowing each of our clients' products is crucial. We have to make sure that our customers comply with all regulations: tariff and non-tariff requirements. If we know our clients' products in-depth, we can recommend personalized services. For example, today, USMCA is relevant in the industry because companies have to adapt to the new rules of origin to continue getting tax benefits when importing.
Q: How does the company help its customers to comply with all international regulations and make their operations easier?
BC: We are responsible for monitoring all regulations. The first thing we do is to supply our clients with relevant information, specific for their industry, of what is coming and the possible implications of regulations on their operations. This works as a regulatory pre-alert. We then move from the abstract of the regulation to the particular, such as the impact on costs, systems, and processes. We can also adjust the software in advance and start working with clients to automate processes. We were among the first in the market to generate certificates of origin for USMCA at the time the government was finishing issuing the rules. The advantage of this is that in an industry like automotive, having all the certifications was crucial for our customers to avoid payments in the nationalization of their products or with their exports.
Moreover, USMCA is not the only free trade agreement that companies have to comply with. Mexico has 53 trade agreements (12 FTA, 32 RPPA, 9 ALADI) and we also help our clients to comply with Latin American agreements with Brazil, Chile, or Argentina, for example. Thanks to our global presence, Livingston International ensures that each treaty is analyzed by experts in each country and standard procedures are generated to streamline and automate as much as possible. Foresight and preparation in regulatory compliance and process automation is our hallmark.
Q: What are companies' weakest points in terms of compliance and how do you support them?
RC: Few companies have an area fully dedicated to managing regulatory issues and they do not have a compliance policy to guide them when foreign trade is updated. Every day, on the Official Journal of the Federation (DOF), many changes are published that impact all industries. Livingston has people who read the DOF every day and update customers to keep their forecasts and software up to date. It is more cost-effective for companies to invest in compliance compared to the latent risk that importing and exporting companies face by not having someone monitoring all regulations.
BC: This is particularly true for the maquila industry because these are companies characterized by their very light structure, low cost, and high productivity. Having staff positions for regulatory compliance is not part of their business model. This is where our services come in.
Livingston International is a Canadian company specialized in trade compliance, imports and exports, customs brokerage, trade consulting and global trade management and freight forwarding solutions