Generalized System of Preferences (United States)
President Clinton terminated the designation of Mexico as a beneficiary developing country for purposes of the Generalized System of Preferences (GSP), effective January 1, 1994. Goods of Mexico entered on or after January 1, 1994 must meet the NAFTA rules of origin to qualify for reduced rates of duty; if they do not, they are dutiable at the MFN rate.
General Preferential Tariff (Canada)
As different preferential tariff schemes each have their own unique rules of origin, it is possible that goods exported from Mexico which cannot be considered originating under the NAFTA might still be eligible for the General Preferential Tariff (GPT) when imported into Canada. However, traders should be aware that the GPT is separate from the NAFTA and Canada is not under any obligation to continue such benefits.
Most-Favored-Nation Rates of Duty
Generally, the NAFTA does not affect the countries' most-favored-nation (MFN) rates of duty. That is, each country continues to assess duty on non-NAFTA goods as it did in the past. Products processed in Canada, Mexico and/or the United States that do not qualify for NAFTA preferential treatment also continue to be subject to MFN rates of duty (or to GPT rates, in the case of Mexican products imported into Canada).
With limited exceptions, Canada, Mexico and the United States will not harmonize their MFN rates of duty. Canada, Mexico and the United States are harmonizing, in a series of staged reductions, their MFN tariff rates on computers, computer parts and certain computer peripherals. Once the duty rates for these articles are harmonized, duties on these goods will be payable only upon entering the NAFTA territory. Once within the NAFTA territory, these articles may move among Canada, Mexico and the United States without payment of duty.
In addition, on January 1, 1994, the three countries changed their MFN tariff rates to free on virtually all semiconductors and all local area network apparatus.