North American Free Trade Agreement

An advance ruling is a written document received from the customs authority from a NAFTA country. It provides binding information on specific NAFTA questions you may have about future imports of goods into Canada, Mexico and the United States.

An advance ruling is a written document received from the customs authority from a NAFTA country. It provides binding information on specific NAFTA questions you may have about future imports of goods into Canada, Mexico and the United States.

NAFTA Marking Rulings Issued by U.S. Customs and Border Protection

Chapter 11 - Advance Ruling Procedures

19 CFR 181.91-.102 - Advance Ruling Procedures can be found in section 181.91 - 181.102.

Advance Rulings: A Complete Review

Customs Rulings Online Search System (CROSS) - Turn on NAFTA filter

Annex 401 of the NAFTA provides the specific rule of origin that is applied to determine whether a good qualifies as an originating good under the terms of the NAFTA.

Appeals

These procedures are used by importers, exporters or producers of goods to request a second review of NAFTA decisions given by the customs administrations.

• Article 510 of the NAFTA
• Chapter 12 - Appeal Procedures
• 19 CFR 181.111-.116 - Review and Appeal of Adverse Marking Decisions can be found in sections 181.111 – 181.116
• 19 CFR 181.75 - Origin Determination Appeals

Select Annex 401 to learn more.

This is a trilaterally agreed upon form used by Canada, Mexico, and the United States to certify that goods qualify for the preferential tariff treatment accorded by NAFTA. The Certificate of Origin must be completed by the exporter. A producer or manufacturer may also complete a certificate of origin in a NAFTA territory to be used as a basis for an Exporter’s Certificate of Origin. To make a claim for NAFTA preference, the importer must possess a certificate of origin at the time the claim is made.

Select Certificate of Origin to learn more.

A claim for preferential treatment is usually made at the time of importation on the customs document used by the importing country. The Agreement allows NAFTA claims up to one year from the date of importation. The procedures for presenting a NAFTA claim are different in Canada, Mexico, and the United States.

Select Claiming Preferential Treatment to learn more.

• Article 306 of the NAFTA - Duty-Free Entry of Certain Commercial Samples and Printed Advertising Materials
• 19 CFR 181.62 - Commercial Samples of Negligible Value can be found in section 181.62

Select Commercial Samples and Printed Advertising Materials to learn more.

This section contains NAFTA specific information on certain traded commodities.

Select Commodity Specific Information to learn more.

Article 507(1) of the NAFTA, requires that each country protect the confidentiality of business information provided to them in the course of conducting government business. In addition, the governments of Canada, Mexico and the United States must ensure that this business information is not disclosed to third parties and does not prejudice the competitive positions of the persons providing the information.

Article 507 of the NAFTA - Confidentiality

19 CFR 181 Subpart K - Confidentiality of Business Information

Country of origin marking is used to clearly indicate to the ultimate purchaser of a product where it is made. NAFTA marking rules are also used to determine the rate of duty, staging and country of origin applicable for NAFTA goods.

• Article 311 - Country of Origin Marking
• 19 CFR 134 - Country of Origin Marking
• Chapter 4 - Rules of Origin
• 19 CFR 102 - Rules of Origin
• 19 CFR 12.130 - Textiles and textile products country of origin
• 19 CFR 181.111-.116 - Review and Appeal of Adverse Marking Decisions
• Marking of Country of Origin on U.S. Imports
• NAFTA Marking Rulings Issued by U.S. Customs and Border Protection
  • Note: U.S. Customs Rulings are available at Customs Rulings Online Search System (CROSS)

19 CFR Part 181, Appendix Part 1, Section 3

Currency conversion is a means to determine the value of a good or material when currency is expressed in a currency other than that of the producer. The currency used in Canada is the Canadian dollar. In Mexico, it is the peso. The United States uses the American dollar.

This topic includes various subjects such as Certificate of Origin, Advance Rulings, NAFTA Claims, Verifications, Determinations, and Appeals to name a few. This information is gathered from a variety of Customs published documents.
 

Advance Rulings

An advance ruling is a written document received from the customs authority from a NAFTA country. It provides binding information on specific NAFTA questions you may have about future imports of goods into Canada, Mexico and the United States.

Certificate of Origin

This is a trilaterally agreed upon form used by Canada, Mexico, and the United States to certify that goods qualify for the preferential tariff treatment accorded by NAFTA. The Certificate of Origin must be completed by the exporter. A producer or manufacturer may also complete a certificate of origin in a NAFTA territory to be used as a basis for an Exporter’s Certificate of Origin. To make a claim for NAFTA preference, the importer must possess a certificate of origin at the time the claim is made.

Confidentiality

Article 507(1) of the NAFTA, requires that each country protect the confidentiality of confidential business information provided to the them in the course of conducting government business. In addition, the governments of Canada, Mexico and the United States must ensure that this business information is not disclosed to third parties and does not prejudice the competitive positions of the persons providing the information.

Country of Origin Marking

used to clearly indicate to the ultimate purchaser of a product where it is made. NAFTA marking rules are also used to determine the rate of duty, staging and country of origin applicable for NAFTA goods.

Exporter Obligations - Article 504 of the NAFTA

Generally Accepted Accounting Principles (GAAP) - Appendix to 19 CFR 181, Schedule XII

Importer Obligations - Article 502 of the NAFTA

Verifications

Verifications is the process used to by the customs authorities to determine whether a good qualifies as NAFTA originating when a preferential duty rate has been claimed.

Recordkeeping

All records related to a preferential duty claim under NAFTA must be kept for a minimum of five years.

• Article 505 of the NAFTA - Records
• 19 CFR 181.12 - Maintenance and availability of records
• 19 CFR 181.22 - Maintenance of records and submission of Certificate by importer
• 19 CFR 181.49 - Retention of records

Appeals

These procedures are used by importers, exporters or producers of goods to request a second review of NAFTA decisions given by the customs administrations.

• Uniform Regulations - Article 511 of the NAFTA
• Uniform Regulations - Appendix to 19 CFR 181
• Working Groups and Customs Subgroups - Article 513 of the NAFTA

Drawback

Drawback is a refund, reduction or waiver in whole or in part of Customs duties collected upon importation of an article or materials which are subsequently exported. Under NAFTA, this refunded amount is the lesser of the amount of duties paid upon importation into the NAFTA territory and the total amount paid on the finished good is the NAFTA country to which it is exported. Drawback became effective for trade between Canada and the United States on January 1, 1996, and for trade between Mexico, the United States and Canada, this program became effective on January 1, 2001.

• Article 303 : Restriction on Drawback and Duty Referral Programs
• Annex 303.6 : Goods Not Subject to Article 303
• Annex 303.7 : Effective Dates for the Application of Article 303
• Annex 303.8 : Exception to Article 303(8) for Certain Color Cathode-Ray Television Picture Tubes
   

Duty Deferral

Country of origin marking is used to clearly indicate to the ultimate purchaser of a product where it is made. NAFTA marking rules are also used to determine the rate of duty, staging and country of origin applicable for NAFTA goods.

• Harmonized Tariff Schedule of the U.S., Chapter 98, Subchapter XIII, U.S. Note 1(c)
• NAFTA Duty Deferral Regulations - 19 CFR 181.53 and 19 CFR 181.54

Select Drawback and Duty Deferral Programs to learn more.

Goods brought into Canada, Mexico and the United States are subject to customs duties and taxes. Each country has its own rate of duties. The amount of duties charged is based on the harmonized tariff system classification number of the good, value and origin.

A customs user fee is an amount of money charged for processing goods through customs. NAFTA allows the Parties to maintain existing merchandise processing fees, however, no Party may adopt customs user fees for originating goods.

NAFTA details specific conditions regarding the nature and scope of responsibility with respect to intellectual property rights of the United States, Mexico, and Canada. Intellectual property rights refers to copyright and related rights, trademark rights, patent rights, rights in layout designs of semiconductor integrated circuits, trade secret rights, plant breeders' rights, rights in geographical indications and industrial design rights.

• Chapter 17 of the NAFTA - Intellectual Property
• 19 CFR 133 - Trademarks, Trade Names, and Copyright

List of harmonized laboratory methods accepted by the customs laboratories of Canada, Mexico and the United States for determining the specified physical and chemical properties for customs processing including admissibility and classification within the Harmonized Tariff System.

• Technical Documents: Laboratory Methods

Under NAFTA, packaging and packing are used in different contexts. Packing refers to the materials and containers used to protect a good during transportation, but does not include packaging materials and containers.
 

Packaging Materials and Containers for Retail Sale

• Article 409 of the NAFTA - Packaging Materials and Containers for Retail Sale 
• Packaging for Retail Sale
• General Note 12(j) of the Harmonized Tariff Schedule of the United States

Packing Materials and Containers for Shipment

• Article 410 of the NAFTA - Packing Materials and Containers for Shipment
• Packing for Shipment
• General Note 12(k) of the Harmonized Tariff Schedule of the United States

Penalties

Under NAFTA, Canada, Mexico or the United States may impose criminal, civil or administrative penalties for violation of their laws and customs procedures.

• Chapter 9 - Penalties
• 19 CFR 181.81-.82 - Penalties

Generally, NAFTA claims are made at the time of importation. However, NAFTA allows for a NAFTA claim to be made by the importer within one year after the date of importation.

Post-Importation NAFTA Claims - Information Notice

Article 502 : Obligations Regarding Importations

Chapter 7 - Entry Procedures

19 CFR 181.31-.33  - Post importation duty refund claims

19 CFR 181.52  - Subsequent claims for preferential tariff treatment

Reconciliation

Quota

The following Canadian goods may be subject to a reduced tariff rate quota (TRQ): sugar, beef, dairy, peanut butter and paste, cotton, apparel and cotton.

The following Mexican goods may be subject to a reduced tariff rate quota (TRQ): beef, apparel, fabric and yarn.

Click here for an overview of quota. Go to the Commodity Graph Report for current fill levels.  Go to the TPL Threshold to Fill List to see almost closed and closed quotas.

Recordkeeping

All records related to a preferential duty claim under NAFTA must be kept for a minimum of five years.

• Article 505 of the NAFTA - Records
• 19 CFR 181.12 - Maintenance and availability of records
• 19 CFR 181.22 - Maintenance of records and submission of Certificate by importer
• 19 CFR 181.49 - Retention of records

Rules of Origin includes both the General Rules of Origin used to determine whether or not a good or material is eligible for NAFTA preferential treatment and the Specific Rules of Origin used to determine if a foreign material becomes originating in the NAFTA territories.

• NAFTA Specific Rules of Origin Updated to Comply with the Post-2006 HTSUSA; Implementation of the NAFTA Track III Liberalizations
• Liberalization of Certain NAFTA Rules of Origin, Track Two
• Liberalization of Certain NAFTA Rules of Origin for Goods of Mexico, Track One
• Liberalization of Certain NAFTA Rules of Origin for Goods of Canada, Track One
• Accessories, Spare Parts and Tools
• Accumulation
• Autos/Parts
• De Minimis
• Fungibility
• Indirect Materials
• Intermediate Materials
• Inventory Management Systems - 19 CFR 181 Appendix, Schedule X (Fungible Materials)
• Non-qualifying Operations
• Regional Value Content
• Rules of Origin – General
• Specific Rules of Origin
  • Definition & Examples
    • Article 415 of the NAFTA
    • General Note 12(n), 12(p) and 12(q) of the Harmonized Tariff Schedule of the United States
    • Appendix to 19 CFR 181 Section 4(1) - Originating Goods

Temporary Importation

Article 305: Temporary Admission of Goods requires duty-free admission of certain goods from another NAFTA country.

Under limited specific circumstances, NAFTA allows goods to leave the NAFTA territories and re-enter the territories with a NAFTA claim.
 

Value (NAFTA)

This section covers specifics on calculating NAFTA value, determining the regional value content of goods and materials, regional value content for automobiles, etc.

• Appendix to 19 CFR 181, Section 7 - Materials
• Appendix to 19 CFR 181, Section 9 - Light-duty automotive goods
• Appendix to 19 CFR 181, Section 10 - Heavy-duty automotive goods
• Appendix to 19 CFR 181, Schedule II - Value of goods
• Appendix to 19 CFR 181, Schedule III - Unacceptable transaction value
• Appendix to 19 CFR 181, Schedule VII - Reasonable allocation of costs
• Appendix to 19 CFR 181, Schedule IX - Methods for determining the value of non-originating materials that are identical materials and that are used in the production of a good. 

Select Transshipment to learn more.

Verifications is the process used to by the customs authorities to determine whether a good qualifies as NAFTA originating when a preferential duty rate has been claimed.

General Note 12(t) - Harmonized Tariff Schedule of the United States

• Article 505: Records
• Chapter 8 - Origin Verifications
• NAFTA Verification Audit Manual
• What to Expect From a NAFTA Verification
• 19 CFR 181.54 - Verification of claim for drawback, waiver or reduction of duties.
• 19 CFR 181.71-76 - Denial of preferential tariff treatment dependent on origin verification and determination.