Do Your Goods Qualify for NAFTA Certification?
Hi, I’m Tanya Copet, Client Relations Representative here at GHY International. Today I am going to talk to you about NAFTA, or more specifically, key elements that should be considered when deciding if your goods qualify for preferential tariff treatment.
The NAFTA Certificate of Origin is used by the United States, Canada, Mexico and Puerto Rico to reduce or eliminate duty. 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.
There are many misconceptions surrounding this topic. Many exporters believe that if the goods are made in, or exported from, a NAFTA country, they automatically qualify for NAFTA Certification and as such feel obligated to provide a Certificate upon request of the importer or their broker. This is not always the case, and today I am going to talk about the most common NAFTA errors.
Many people confuse country of origin with country of export and believe that they are one in the same. Country of origin means the country in which the goods are manufactured, obtained or wholly produced. Country of Origin can also mean the country in which the goods have undergone a substantial transformation. On the other hand, country of export is simply the country from which the goods are shipped.
Once you have determined the country of origin to be Canada, United States, Mexico or Puerto Rico, it is important to understand that they do not necessarily qualify for NAFTA Certification. The exporter must first determine the HS tariff Classification, and subsequently meet the applicable rules of origin as outlined in Chapter 4 of the NAFTA Agreement.
It is important to remember that a NAFTA Certificate is not a requirement when goods are moving between NAFTA countries. The submission of a valid NAFTA Certificate is the choice of the shipper and declaring NAFTA should be considered carefully, as the validity of a NAFTA Certificate must be proven in the event of a future Custom’s audit situation.
For a NAFTA Certificate to be valid, it must be completed and signed by the exporter. In cases where the exporter is not the producer, the exporter may complete the Certificate on the basis of:
- a) knowledge that the goods originate;
- b) reasonable reliance on the producer’s written representation that the goods originate; or,
- c) a completed and signed Certificate of Origin voluntarily provided by the producer.
An exception occurs when shipping items which are of low value. An exporter can opt to provide a low-value statement for commercial goods under $2500 Canadian in lieu of a formal NAFTA Certificate. However, the same level of compliance must be maintained.
A NAFTA Certificate of Origin can be provided to the importer on a per shipment basis or can be valid for a blanket period of up to one year. In Canada, the importer must maintain records for six years plus the current year. If the importer is found to be non-compliant with record-keeping, they will be subject to AMPS penalties, and possible duties owing.
If you do not have a certificate at time of importation, you have up to one year to obtain and provide a valid NAFTA Certificate in order to recover duties paid.
On November 30, 2018, the new Canada-United States-Mexico Agreement was signed*. We are sure to be seeing many changes to NAFTA in the near future. (*Please note: the "new" NAFTA - CUSMA, USMCA, T-MEC has been signed, but not yet ratified, or in effect.)
For more information, please contact our Consulting Department | 204-947-6700 ext. 209.
We are always here to help.
*Due to the complexity of Trade Regulations, the information in this video should not be considered as binding. If you would like a review of a specific situation please contact us.