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The Importance of NAFTA in An Era of Increased Compliance
The Importance of NAFTA in An Era of Increased Compliance
The Importance of NAFTA in An Era of Increased Compliance
Presented by: Ron Ubels A & A Contract Customs Brokers Ltd. in partnership with U.S. Commercial Service.
Low Value Shipments (LVS) Courier shipments where the value is greater than CDN $20.00 but less than CDN $1600.00 High Value Shipments Any shipment valued at more than CDN$1600.00; courier and other modes of transport, require formal clearance before release. There are a number of Customs initiatives that can expedite the clearance of these shipments. * A Canada Customs Invoice or Commercial Invoice is required to clear goods through Customs.
The NAFTA Certificate of Origin will not expedite your goods through Customs or delay the process The NAFTA Certificate is a post release document. .
Example of statement:
STATEMENT OF ORIGIN FOR COMMERCIAL IMPORTATIONS OF LESS THAN CDN $1,600.00
I certify that the goods referenced in this invoice/sales contract originate under the rules of origin specified for these goods in the North American Free Trade Agreement (NAFTA), and that further production or any other operation outside the territories of the Parties has not occurred subsequent to production in the territories. NAME:__________________________________________________________________ TITLE:__________________________________________________________________ COMPANY______________________________________________________________ STATUS: EXPORTER________PRODUCER__________OF THE CERTIFIED GOODS TELEPHONE_________________________FAX________________________________ COUNTRY OF ORIGIN_________________________________ (For purposes of determining the applicable preferential rate of duty as set out in Annex 302.2, in accordance with the marking rules or in each Party's schedule of tariff elimination.)
High Value Shipment requirements: For goods that are valued over CDN$1600.00, a formal NAFTA Certificate is required a) NAFTA Certificate per shipment b) Blanket NAFTA Certificate covering one calendar year
The NAFTA grants benefits to a variety of goods from the region (Canada, United States, and Mexico). For a good to originate, it must meet the requirements set out in the Rules of Origin Article 401 of the Agreement. Within the context of NAFTA the words origin, originate, or originating are used differently than in the context of determining country of origin.
Article 401 of NAFTA defines originating in four ways: 1. Wholly obtained or produced in the NAFTA region
2.
Goods taken from the seabed, the soil or the air in the NAFTA territories
3. 4. Goods meeting the Annex 401 origin rule Unassembled goods, and goods classified with their parts, which do not meet the Annex 401 rule of origin, but contain 60% regional value content using the transaction method, or 50% using the net cost method
Goods can originate in Canada, Mexico, or the United States, even if they contain non-originating materials, as long as the materials satisfy the rules of origin specified in Annex 401 of the Agreement
NAFTA
The Keys to a True and Accurate Certificate
Tariff Classification
If your goods are initially misclassified, all work done to establish eligibility will be meaningless.
The rules of origin ensure that parts and materials that do not originate in the NAFTA territory undergo a sufficient amount of processing which then transforms into qualifying products.
The rules of origin are based on tariff classification, therefore it is important that you have the correct HS tariff classification for the finished product, and any nonoriginating parts and materials. In most cases the HS tariff classification is required to the six digit level only. For the purposes of the Rules of Origin, it is important to understand the structure of the tariff. Example: Tariff classification: 2007.99
20 2007 -
The tariff item for the strawberries does not need to be determined, since they originate in one of the NAFTA territories. The rule of origin for tariff 2007.99 reads as follows:
20.01 20.07 A change to heading Nos. 20.01 through 20.07 from any other chapter.
Since the sugar (Jamaica), is from outside of headings 20.01 through 20.07; the jam is originating and qualifies under the NAFTA duty free tariff.
Regional Value Content As well as a required tariff change, the specific rules of origin may ask that a Regional Value Content (RVC) be met. The RVC, which is always expressed as a percentage, may be determined by using one of the following two formulas: RVC = Transaction Value Value of Non-Originating Materials X 100 Transaction Value OR RVC = Net Cost Value of Non-Originating Materials X 100 Net Cost It is the exporters choice to use either the Transaction Value or Net Cost The transaction value must be at least 60% of the value The net cost must be at least 50% of the value
8703.10 A change to subheading No. 8703.10 from any other heading number, provided there is a regional value content of not less than: a)
b)
Assuming the first specific rule of tariff change has been met, the RVC calculation is as follows: Transaction Value: RVC = $3600.00 - $1495.00 X 100 = 2105.00 X 100 3600.00 3600.00 = 58%
Must be at least 60%, so it doesnt qualify under this method Net Cost RVC = $3500.00 $1495.00 X 100 = 2005.00 X 100 3500.00 3500.00
= 57%
Criterion C Goods must be produced entirely in the territory of one or more of the NAFTA countries using only originating materials. In this case some of the materials are originating due to the fact that they have undergone a tariff and/or RVC.
NOTE: Criterion D, E and F are rarely used or used in very specific cases only
CERTIFICATE OF ORIGIN
1
For confidential reasons always state To be completed for Blanket Certificates only 2 Blanket Period Available to Customs upon request if the FROM is the date upon which the Certificate producer is different from the exporter. If becomes applicable to the good covered by the ABC Exports DD MM YY DD MM YY same as exporter state SAME if the Certificate. TO is the date upon which the 1550 Executive Drive From To 3 0 1 1 0 6 0 1 1 state 2 0 5 is unknown UNKNOWN. blanket period of a San Diego, CA expires. The importationproducer good for which a good for preferential tariff 92101 If the exporter is established as a treatment is claimed based on this Certificate Non-Resident Importer show exporter Tax Identification Number: must occur dates. name and between address.these If Canadian FullName legal name and Importers and Address: Producers Name and company isAddress: the importer and there are 4 address and the legal multiple importers state VARIOUS. Available Upon Request ABC Exports tax ID (employers Id 1550 Executive Drive, or Social Security) San Diego, CA number of the exporter. 92101
Exporters Name and Address:
Tax Identification Number: Tax Identification Number:
(1) your knowledge For each good described of in whether Field 5, the Northin American Free Trade Agreement For each good described Field 5, state good qualifies an originating If you are not the producer of the Provide a good, full description of state each good. what criterion (Aas through F) CERTIFICATE OF ORIGIN YES if you are the producer of the good. good; state NO followed by (1), (2), or (3), should be the is The description same as that The key ones used applicable. depending on whether this certificate shown on the subsequent invoices and are be A, B, or C. Show the name of the Country of Origin For each good described in was based on: inproducers a generic language. (ie: US for goods from the US). (2) your reliance onoriginating the Field 5, identify 6 HS Tariff 8 the HS tariff 9 7 Preference 10 written representation that the Country classification to the six digit level. Producer Net Cost Description of Goods Classification Criterion goods qualify, or of Origin
Number
B Yes Strawberry 2007.99 isJam subject to a regional value content (RVC) requirement,
No
US
indicate NC if the RVC is calculated according to the net cost method; otherwise indicate NO. (3) a completed and signed Certificate for the good voluntary provided by the producer.
CERTIFICATE OF ORIGIN
11 I certify that: __ the information on this document is true and accurate and I assume the responsibility for proving such representations. I understand that I am liable for any false statements or material omissions made on or in connection with this document;
To be completed, signed and dated by on the date the Certificate __ uponexporter request, documentation necessary to support this Certificate, and to inform, in I agree to maintain, and presentthe writing, all persons to whom the Certificate was given of any changes that was completed. would affect the accuracy or validity of this
Certificate;
the goods originated in the territory of one or more of the parties, and comply with the origin requirements specified for __ those goods in the North American Free Trade Agreement, and unless specifically exempted in Article 411 or Annex 401, there has been no further production or any other operation outside the territories of the Parties; and this Certificate consists of _____ 1 pages, including all attachments. __
Authorized Signature: Company:
Name:
Mr. Smith
Telephone:
Title:
Date:
05/10/00
Exporters Responsibilities
NAFTA records must be kept for a period of six years
Exporters or producers that prepare Certificates of Origin must maintain records pertaining to the exportation for 6 years. Exporters or producers must notify all parties to whom the certificate was given of any changes that could affect its accuracy or validity Exporters or producers must provide copies of the NAFTA Certificate to their own customs administration on request.
Questionnaires are usually sent to the exporter or producer, who completed the Certificate of Origin and are used to determine if the goods in fact qualify. The information should be readily available to the exporter or producer as it would be the information they used to determine qualification under NAFTA before the Certificate was signed.
Verification visits are conducted by the importing countries customs administration. Before conducting a verification visit, customs must provide written notification of their intention to conduct a visit to the exporter or producer. The exporter or producer can have their customs broker present during the audit
cont.
NAFTA Certificate of - For product that qualifies under NAFTA a Certificate of Origin is required. A Blanket Certificate of Origin, valid for one year, can be completed by U.S. shippers and kept on file for goods frequently imported into Canada. A Blanket Certificate will eliminate the need to provide a certificate with each shipment.
The following information is required on your commercial invoice to make it acceptable for clearance through Canada Customs. This can be in any format.
Vendor Purchaser Importer of Record Description Number of Packages Number of Units in Shipment Unit Price Value Country of Origin Country of Settlement Conditions of Sale
cont.
Opening Up the Canadian Market Using the Border as an Advantage to Grow your Business.
NRI FAQs
What does it cost?
Nothing. All that is required is to set up an account with a broker of your choice.
Consolidated Program
As your cross-border package volume grows it is important to look at way to streamline your processing, improve your time to market and create cost savings that can reduce the delivered price of your product.
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