Preparing for New Trade Scenarios Amid USMCA Review

The trade landscape between the United States and Mexico could face significant transformations as the mandated period for reviewing the United States-Mexico-Canada Agreement (USMCA) approaches.

The outcome of this review could shape the regulatory framework, potentially forcing companies to rethink nearshoring and outsourcing strategies.

Understanding the Impact of USMCA on Trade Practices

As businesses assess potential regulatory shifts, there is a growing and compelling need for advanced compliance support systems that enhance operational efficiency. Adopting technology solutions, particularly for companies that run SAP, represents a pathway for many organizations to meet these challenges head-on. As over 80% of international trade is conducted through SAP platforms, companies have a unique opportunity to leverage these technologies.

A critical component of this technological infrastructure is SAP Global Trade Services (GTS), which automates compliance tasks associated with complex regulations. Automating processes such as calculating duty rates and rules of origin for products with intricate bills of materials saves time and increases accuracy—essential factors in an era marked by compliance vigilance.

Looking Ahead: The Future of Trade and Compliance

For businesses navigating the complexities attached to the USMCA review and adapting to the growing trend of nearshoring, it becomes increasingly important to reevaluate trade strategies and recognize the importance of integrating advanced compliance solutions with localized expertise.

The path forward will require the implementation of sophisticated technological solutions and an ongoing commitment to adaptation and innovation. By embracing these changes, organizations can position themselves to survive and excel in a rapidly changing trade environment. Those prioritizing compliance, efficiency, and adaptability in this new landscape will undoubtedly lead the charge into a successful future: Mexico and the US.

How Origen Tech Supports Clients in the Changing Trade Landscape

Origen Tech is the leader company offering a complete global trade solution from SAP – SAP GTS – that is localized for the Mexican and Brazilian markets.

Origen’s solutions are improving the standing of companies operating in key industries, such as the automotive sector, which could be one of the most affected by the USMCA review, because it requires a higher percentage of a vehicle’s parts to come from North America 75%, up from 62.5% under NAFTA. A significant portion of the parts must be manufactured by workers earning at least $16 per hour.

This has led to concerns over the cost of production and supply chain adjustments. For instance, SAP GTS can swiftly compute rules of origin for finished products with intricate bills of materials (BOMs) containing hundreds or thousands of components. This automated process, which can be executed in seconds with 100% accuracy, alleviates the burden of manual compliance—an often tedious and error-prone task.

By ensuring accuracy and efficiency, Origen Tech empowers its clients to focus on their core operations without worrying about falling foul of new regulations. One of the key services Origen offers is their IMMEX innovation solution, which allows businesses to take advantage of tax and duty exemptions or deferrals for temporary imports, as long as those imports are later exported as parts included in the finished product.

Origen’s IMMEX solution calculates the imported parts included in finished goods during the production operation, which is a delicate process, as Origen’s solution does not just match a generic part, but traces a specific part imported and used in a precise production activity, thus providing total traceability and visibility using a real-time inventory control system.

Tailored Localization Expertise

Being an SAP Solution Sales Value-Add Reseller, Product Development and Consulting  Partner in the US, Mexico, and Brazil gives Origen Tech an edge in promoting compliance and localization needs among multinational corporations in these regions as they can act as a “one stop shop” solutions provider to include the SAP License, infrastructure, services, sustainability and support components, all delivered in one easy-to-consume subscription model that provides flexibility and cost efficiency on behalf of the customer. The company’s alliances and collaborations ensure clients receive optimum assistance tailored to their operational realities.

Real-World Success: Case Studies

A shining example of Origen’s commitment to its clients can be seen in a current project involving the implementation of SAP GTS for a large retail and manufacturing corporation in Mexico. This client faced significant concerns regarding compliance automation, integration, and visibility of imports—an acute issue in the current trade climate. Leveraging its in-depth knowledge of the regulatory landscape, Origen Tech customized the SAP GTS system to meet the client’s unique requirements while ensuring full compliance with cross-border trade regulations.

The successful outcome of this implementation not only reinforces Origen’s leadership in facilitating compliance but also demonstrates its ability to provide flexible solutions that cater to the unique needs of diverse industries.

In addition, Origen has extensive SAP ERP products, experience and deployment capabilities in the areas of SAP S/4HANA, SAP Document Reporting & Compliance, and SAP Global Trade Services, which includes acting on areas of localization currently not available by SAP.  The firm also offers post implementation Application Management Services (AMS), so customers in the nearshore region can rest assured that the implemented solution will be supported from within the same time zone.