Tuesday, May 25, 2010

Free Trade Tuesday - NAFTA

Welcome to Free Trade Tuesday! This week we are discussing the North American Free Trade Agreement.

The North American Free Trade Agreement (NAFTA) was implemented in 1994 between Canada, Mexico and the U.S. to reduce and eliminate duties, remove barriers to trade and facilitate cross border movement of goods and services between the territories. Goods eligible under NAFTA for duty-free or reduced-duty status are designated by a "CA" or "MX" in the "Special" sub-column of the HTSUS. No other Free Trade Act has had a greater impact on U.S. trade than NAFTA. Many of the subsequent FTA's are modeled after NAFTA.

Preferential NAFTA treatment will only be afforded to goods that “originate” in a NAFTA country as that term is defined in NAFTA. A product will be considered to be originating and eligible for NAFTA treatment if:

· It is wholly obtained or produced in a NAFTA country.
· Its raw materials or components undergo a qualifying change in tariff classification and/or satisfy any regional value content requirement in a NAFTA country.
· It is produced wholly of originating materials in a NAFTA territory.
· The goods are unassembled, or goods classified with their parts, which do not meet the Annex 401 rule of origin, but contain 60% regional value content using the transaction value method or 50% using the net cost method.

To make a claim for NAFTA preferential tariff treatment, the importer must be in possession of a valid NAFTA certificate of origin. However, the importer has a right to make a post importation claim to obtain a refund of duties when imported merchandise would have qualified as originating when it was imported, but no claim for preferential tariff treatment was made at the time. The importer may file a claim for a refund of any excess duties at any time within one year after the date of importation of the goods. See
19 CFR 181 for information concerning NAFTA Certificates of Origin, drawback and more!

NAFTA - Key Facts

Expiration: None

HTS General Note: GN 12

Imported Directly: Yes - unloading/reloading in third countries allowed. No additional production allowed.


De Minimis:
7% - Non Textiles (Value)
7% - Textiles (Weight)
Some Exceptions

Origin Criteria
Tariff Shift

MPF: Originating goods exempt

Regulations: 19 CFR 181

Join us again next Tuesday when we continue our discussion of NAFTA.

1 comment:

Anonymous said...

Thanks for doing this. I'm enjoying the series so far. I don't think I'll ever really understand these agreements.