Working group on rules of origin, comprising representatives of each party, to ensure. Rules of origin are the criteria used to determine the nationality of a product. In nafta, the rules of origin refer to product specific rules that stipulate what must happen to inputs from non nafta countries for the final, exported product to qualify for nafta benefits. Specifically, adopted the same basic origin rule as has governed the 1988 uscanada fta. There is no applicable regional valuecontent requirement for this heading. Goods produced in the nafta region wholly from originating materials 3. Nafta rules of origin require goods to originate in the region or be significantly transformed. The office of regulations has prepared this publication on u. The parties shall establish by january 1, 1994 a certificate of origin for the purpose of certifying that a good being exported from the territory of a party into the territory of another party qualifies as an originating good, and may thereafter revise the certificate by agreement.
Negotiators of the agreement sought to make the nafta s rules of origin very. The rules of origin roo may be found in the final text of the fta. The us is seeking to strengthen rules of origin in order to incentivize the sourcing of goods and materials from the united. Purposewholly obtained or producedmeets annex 401 origin criterionproduced in the nafta territory wholly of originating materialsunassembled goods and goods classified with their parts chapter 2 rules of origin u. The north american free trade agreement nafta export. Rules of origin under nafta should be clear, simple, and transparent. This video provides further explanation of nafta rules of origin. Rules of origin are the rules to attribute a country of origin to a product in order to determine its economic nationality. Rules of origin under nafta there are three types in nafta originate in nafta change in tariff heading regional value content rvc trend is more flexibility over time. Learn more about how to read and apply fta rules of origin. The nafta rules of origin and the certificate of origin.
Identify and apply the appropriate country of origin marking rules. As a result, supply chain professionals need to pay attention to the negotiations and outcomes, as even minor changes to nafta will have a major impact on procurement and. As with other trade policies, the devil is in the details, and they can be found in the 304page annex 401 to nafta that specifies the rules of origin at the product level. The rules determining country of origin can be very simple if a product is wholly grown or manufactured and assembled primarily in one country.
Chapter 4 of nafta describes the rules of origin requirements. This criterion corresponds to goods produced entirely in canada, mexico, andor the united states exclusively from nafta materials. Nafta originating goods are those deemed to originate in one of the. The nafta rules of origin regulations schedule i specific rules of origin are referenced in pages 141 through 304 in sor9414. Extending nafta to the south, as wonnacott 19 96 pointed out, has st ronger potential to generate. There is a rules of origin scheme that is used to determine the country of origin of a product for purposes of mostfavorednation or normaltraderelations ntr duty treatment. Productspecific rules of origin, the producer of the good, adjusted in accordance with the principles of articles 81,83, and 84 of the customs valuation agreement, regardless of whether the good or material is sold for export. Rules of origin provide the basis for customs officials to make determinations about which goods are entitled preferential tariff treatment under the nafta.
Annex 401 of the north america free trade agreement 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. The goal should be to reduce transactional time and costs to the maximum extent possible to the benefit of commerce industry of the parties. However, it is the original 1992 document without updates. Specific rules of origin part i general interpretative notes 1. North american free trade agreement certificate of origin instructions customs form 434 121793back for purposes of obtaining preferential tariff treatment, this document must be completed legibly and in full by the exporter and be in the possession of the importer at the time the declaration is made. By paul fudacz, senior attorney, braumiller law group. How changes to nafta rules of origin could threaten supply. Examine the nafta rules of origin to determine if your products qualify for nafta.
This video shows you how to use the harmonized code system and what to do when foreign components are. Nafta marking rules are the rules to be used to determine the country of. They shall not pose unduly strict requirements or require the. For more than 20 years, douglas cohen has been at the forefront of international trade and transactions. A primer on rules of origin and ttip rules of origin are a necessary corollary of free trade agreements ftas, yet in the past both the eu and the u. Specific rules of origin section a general interpretative note for purposes of interpreting the rules of origin set out in this annex. The requirements of the nafta rules of origin differ from good to good. Nafta and the united statesmexicocanada agreement usmca congressional research service 2 negotiated. The nafta rules of origin were negotiated to determine eligibility for favorable treatment and to preclude third countries from obtaining unlawful benefits. Within the context of nafta the words origin, originate, or originating are used differently than in the context of determining country of origin. Tightening them could perversely lead to lower regional content in final goods and disrupt regional supply chains, as more importers eschew nafta preferences because of costly rules of origin and instead trade under standard.
Whether marking is optional or imposed by the regulation of the importing country, these above rules of origin should have the preference to any other rule relating to the establishment of the country of origin. Nafta country of origin marking rules braumiller law group. Rules of origin substantial transformation country of origin is an important consideration when shipping products internationally. Understanding the rules of origin and certificate of. The objective of this report is to examine the rules of origin roo for the least. Regional value content formula word, pdf for questions, send email.
They are a significant part of international trade policy because roo are needed to properly assess tariffs, enforce trade remedies such as. Rules of origin roo are laws, regulations, and procedures used to. North american free trade agreement nafta rules of origin. Most trade professionals are quite familiar with the longstanding country of origin marking rules applicable to foreign produced goods imported and sold into the u. Nov 15, 2017 as nafta renegotiations continue into their fifth round, cigi senior fellow meredith lilly discusses one of the key american negotiating points rules of origin.
Canadian rules of origin and a comparison of the rules of. Appendix to 19 cfr 181, section 4 originating goods. Section 4 describes the tpp rules of origin and compares them with the rules of origin found in the 32 rtas involving tpp signatories. Certificate of origin instructions peninsula customs. Some changes were made to the underlying rules of origin as of january 1, 2005. The annex 401 rules of origin are commonly referred to as specific rules of origin and are based on a change in tariff classification, a regional valuecontent requirement, or both.
It should be the right of the importer and exporter of record to select. Nafta rules of origin chapter 61 articles of apparel and clothing accessories. The rules are listed in htsus general note 12t by hs code heading or subheading and may require a tariff shift which means that the foreign input must. The nafta rules of origin regulations can be found on pages 1 through 140 on sor9414. Rosss proposed nafta rules of origin changes would jeopardize the u. Nafta 1994 more strict than uschile 2004, which is more strict than drcafta 2005, which are more strict than usperu or us columbia 2006. For purposes of interpreting the rules of origin set forth in this annex.
Nafta rules of origin regulations 1784 kb pdf full document. Additional tightening may actually be counterproductive. Nafta rules to all country of origin determinations made by cbp, unless otherwise specified. Oct 10, 2017 us to seek strict rules of origin in nafta talks, sources say published tue, oct 10 2017 4. They are a significant part of international trade policy because roo are needed to properly assess tariffs, enforce trade remedies such as antidumping and. For a good to originate, it must meet the requirements set out in the rules of origin article 401 of the agreement. On the contrary, simplification measures should be investigated. Chapter 2 of guide to customs procedures rules of origin. Understanding the nafta rules of origin negotiations. The rules of origin under nafta are the criteria used to determine the country of origin of a product that is being imported or exported within the nafta region. For all other originating goods exported to canada, indicate appropriately mx or us if the goods originate in that nafta country, within the meaning of the nafta rules of origin regulations, and any subsequent processing in the other nafta country does not increase the transaction value of the goods by more than 7%. General note 12a, 12b, 12o, 12r of the harmonized tariff schedule of the united states htsus. The nafta certificate of origin is used by canada, mexico, puerto rico, and the united states to determine if goods imported into their countries receive reduced or eliminated duty as specified by the north american free trade agreement nafta.
For nafta, article 401 and its annex contain the defining set of origin. They have been put into place to make sure that items traded on a dutyfree basis within the block are actually made in the united states, canada, and mexico. It employs the wholly obtained criterion for goods that are wholly the growth, product, or manufacture of a particular country. Freund finds nafta rules of origin are strict and highly complex, as compared with rules in other free trade agreements. Changing naftas rules of origin would jeopardize the u. This memorandum provides a stable link to the department of justice for the official version of the nafta rules of origin regulations schedule i specific rules of origin that are used to determine the entitlement of goods to preferential tariff treatment under the north american free trade agreement nafta. Determining the origin of the goods is even more important in determining if a product is eligible for preferential tariff rates, including free trade agreement rates. Identify and apply rules of origin international trade.
This video shows you how to use the harmonized code system and what to do when foreign components are included in your product which triggers using the rules of origin. Most goods must undergo sufficient processing with north america to result in a change in tariff. Rules of origin for chemical chapters under nafta american. Chapter four rules of origin and origin procedures section a. Schedule iv list of tariff provisions for the purposes of section 9.
For more information, within canada call the border information service at 18004619999. Accurately complete the nafta certificate of origin. Preference criterion c is used when the producerexporter is able to document that the finished good is produced. North american free trade agreement nafta trilateral. Annex 401 specific rules of origin section a general. Nafta rules of origin nafta rules of origin among other things, nafta provides for dutyfree trade between canada, the united states, and mexico for socalled naftaoriginating goods. In short, if all inputs used in the manufacture of goods bound for export to nafta countries are themselves, imported from nafta countries, there are theoretically no duties or tariffs on those inputs, and potentially on the exported finished products. The third section provides a general description of the rules of origin found in the 32 rtas involving tpp countries. Originating goods 1 except as otherwise provided in this chapter, each party shall provide that a good is originating where it is.
Rules of origin rules of origin roo are laws, regulations, and procedures used to determine the country of origin of an imported product. Nafta rules of origin regulations 2000 kb regulations are current to. More about the rules of origin b except for a good that is specifically described in the harmonized system as a set, or is classified as a set pursuant to general rule of interpretation 3, where the country of origin cannot be determined under paragraph a of this section. Nafta roo has proven to be more objective and transparent and. Articles 303 restriction on drawback and duty deferral programs, 308 mostfavorednation rates of duty on certain goods and 311, chapter four, this chapter, the marking rules and the uniform. For each fta there is a set of definitions that describe fta origin i. Rules of origin may also require that exported products with foreign inputs contain at least a certain amount of valueadded from the u. For forms completed online, this application is designed for goods whose origin is the u. General note 12 a, 12 b, 12 o, 12 r of the harmonized tariff schedule of the united states htsus january 19, 2018. Chapter four rules of origin and origin procedures section. Cohen has developed significant expertise in import export compliance, international negotiations, intellectual property, and internet laws.
The application of rules of origin should not create new administrative burdens neither for international trade operators nor for customs administrations. Rules of origin were designed as an uncontroversial, neutral device essential to implementing discriminatory trade policies, compiling economic statistics, and marking a good. The current version of the nafta rules of origin regulations schedule i specific rules of origin may be found on the department of justice web site. The need to establish rules of origin stems from the fact that the implementation of trade policy measures, such as tariffs, quotas, trade remedies, in various cases, depends on the country of origin of the product at hand. The nafta rules of origin are fundamentally important to the functioning of the north american free trade agreement as envisioned by the signatory nations. Understand and meet the recordkeeping requirements under nafta. Nafta rules of origin regulations justice laws website. Regulations respecting the uniform interpretation, application and administration of the rules of origin under the north american free trade agreement. Sep 25, 2017 the rules of origin in nafta are already considered more restrictive than those found in other trade agreements. Naftas rules of origin roo are poised to be a key element in the trump administrations pursuit of its nafta negotiating objectives, including reducing the us goods trade deficit with the other nafta parties. Apr, 2010 nafta rules of origin are crucial for qualifying your products for the dutyfree benefit.
As part of nafta, the united states, canada and mexico the parties have all agreed to reduce andor eliminate tariffs on goods that originate from their respective. For nafta, article 401 and its annex contain the defining set of origin specifications. Guidelines and general information additional information. For goods that are not wholly obtained, you must meet the products rule of origin, usually through tariff shift or regional value content. Stricter rules do not guarantee more local content 9. With positions in private law practice, the us department of commerce, the european union, iata, and american airlines, mr. Nafta rules of origin regulations 2000 kb regulations are current to 20200421 and last amended on 20190617. As of january 1, 2008, all tariffs and quotas were eliminated on u.
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