NAFTA Objectives

Promote trade Greater market access Promote fair competition Establish framework for further cooperation

Immediate Benefit: No Duties

Elimination is not automatic Certain steps must be followed Products must contain sufficient North

American content to meet the requirements of the NAFTA Rules of Origin

Taking Advantage of Free Trade Agreements

Understand the specific free trade

agreement
Ensure products meet the FTA

requirements
Complete the documentation

A Few Common Misconceptions

U.S., Canadian & Mexican Tariffs are the same Originating means purchased in a NAFTA Country NAFTA Certification is Mandatory NAFTA Certificates are required to clear Canada customs A producer is required to supply a buyer with a NAFTA Certificate of Origin

NAFTA Rules of Origin

Define how much foreign input is allowed Specific by product and are based on the harmonized system (HS) May require a Tariff Shift, Regional Value Content, or Both

Preference Criteria
A Natural resources, e.g., anything grown, harvested,

fished, or mined in any one of the NAFTA countries. B Manufactured goods that contain foreign parts, components, or raw materials and meet the requirements of its specific NAFTA Rule of Origin. C Goods manufactured exclusively with NAFTA originating parts or components. D Covers goods where the HS code for the product and its parts is the same and the manufacturer is allowed to use Regional Value Content to determine whether the good originates. E HS code-specific Automatic Data Processing equipment. F Applies to certain agricultural products exported only to Mexico.

NAFTA Certificate of Origin

Completed by the exporting (or selling) company Original is forwarded to customer Importers and exporters should maintain documents

to support a NAFTA claim for up to seven years after importation

Documents relate to the purchase, cost, value, and

payment for all materials, direct or indirect, used in production

Customs officials can seek information from either

party

 Bill of Materials (BOM) chart is a

widely employed and accepted method of documenting origin determinations

BOM chart lists all inputs by product

description, supply source, origin, HS classification, and value

Turner Marine in Neoga, IL - Exporting for the first time, contacted the Commercial Service and received necessary international trade information and NAFTA assistance allowing them to successfully export to Canada.
Roe Sales in Peoria, IL - Called the Commercial Service and received NAFTA information and assistance with qualifying their product. It was later learned that they had successfully completed a NAFTA Certificate of Origin and exported their product the same day to Canada.

NAFTA ten years later

Mexico has lower growth than ten

years before High inequality, low innovation, low wages growth and some of the poorest worse off as a consequence of US agricultural subsidies Shows at the very least dream has not been realized

BBJBJ]
NAFTA was not really a free and fair trade agreement
With massive US agricultural subsidies With retention of non-tariff barriers Which were used when Mexico made inroads into Americas market

NAFTA intruded into basic areas of national sovereignty

Chapter 11 made environmental regulations more difficult Not really intended for basic investor protection

Trade is important, but trade isnt everything Trade liberalization is important, but it isnt everything

Difficulties in competing with China Making Mexico more dependent on US Significant loss of revenue from loss of tariffs Revenue needed for public investments in infrastructure and education Major impediment to economic success

FTA Agreements at force

Israel NAFTA Jordan Chile Singapore Australia Morocco CAFTA-DR Bahrain Costa Rica Oman Peru

January 1, 1985 January 1, 1994 December 17, 2001 January 1, 2004 January 1, 2004 January 1, 2005 January 1, 2006 March/April 1, 2006 August 1, 2006 January 1, 2009 January 1, 2009 January 1, 2009

Problems ..
NAFTA was not really a free and fair trade agreement
With massive US agricultural subsidies With retention of non-tariff barriers

Which were used when Mexico made inroads into Americas market

NAFTA intruded into basic areas of national sovereignty

Chapter 11 made environmental regulations more difficult Not really intended for basic investor protection

Trade is important, but trade isnt everything Trade liberalization is important, but it isnt everything
Difficulties in competing with China Making Mexico more dependent on US Significant loss of revenue from loss of tariffs Revenue needed for public investments in infrastructure and education Major impediment to economic success

likely to be more unfair