Many Canadian businesses are not receiving properly completed
NAFTA certificates of origin. The purpose of a NAFTA certificate of
origin is to provide the Canada Border Services Agency (CBSA) with
information so that the CBSA may determine that the goods being
imported into Canada are entitled to NAFTA beneficial duty-free
Of the NAFTA certificates of origin I have reviewed recently, I
have discovered the same errors repeated in a number of cases. In
all cases, the NAFTA certificates of origin were improperly
completed by exporters in the United States (there are more imports
into Canada from the USA than from Mexico). I should note that
Canadian exporters make the same mistakes on certificates of origin
provided to U.S. importers. The top mistakes are:
a certificate of origin is
provided when goods are shipped from China: The good for
which the NAFTA certificate of origin is provided must be directly
imported from the United States or Mexico (if imported into
Canada). A U.S.-made good that is shipped from the United States is
not entitled to NAFTA treatment. U.S.-made goods lose their NAFTA
preference when transshipped through a third country;
improperly indicating that
the exporter is the "producer": Many U.S.
exporters improperly answer 'Yes" in the
"Producer" column of the certificate of origin when they
are a distributor or a person other than the manufacturer of the
improperly using Preference
Criteria "A": Preference Criterion "A"
is used when a good is wholly obtained or produced in one or more
of the NAFTA countries. Preference Criterion "A" is used
when the fruits are grown on a tree in the NAFTA country or made
from wood from a tree grown in the NAFTA country. However,
Preference Criterion "A" does not apply when one molecule
of the good is made from foreign material or possibly foreign
Preference Criterion "B" is used when the good is
produced entirely in a NAFTA country and satisfies a specific rule
of origin (e.g., undergoes the necessary tariff shift and or
regional value content test).
Preference Criterion "C" is used when a good is produced
entirely in the territory exclusively from originating materials.
This Preference Criterion is used when you have a raw material, an
intermediate product and a final product.
For example, Raw material: U.S. grown cotton fibre
Intermediate product: red yarn made from U.S. raw materials and
red dye from China (which is considered to be originating in the
USA due to specific rules of origin for yarn)
Final product: red cotton fabric: woven in the USA from the
originating red yarn; and
improperly stating the origin
is the "USA" when the goods are foreign and not entitled
to NAFTA duty-free treatment: The exporter must determine
if the good originates under the NAFTA rules of origin. It is
important for manufacturers/producers to make a list/bill of
materials detailing all of the inputs into the final good. Then the
manufacturer/producer should obtain information from its suppliers
of inputs to ensure that intermediate goods meet NAFTA
requirements. Exporters of goods must maintain adequate
documentation relating to the inputs (either certificates of origin
or manufacturer affidavits for all raw materials/inputs).
If a good was produced in a non-NAFTA country (e.g., China) and
is shipped to Canada from the United States, the good does not
originate under NAFTA.
The above list is not all inclusive. Incorrect tariff
classifications are also very common.
If the NAFTA certificate of origin does not accompany the goods,
NAFTA duty free treatment may be denied. If the information of the
certificate of origin is incorrect, the CBSA may impose AMPS
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In a consent order dated November 9, 2016, the Federal Court ordered the setting aside of a Cabinet order requiring a Chinese investor to divest control of a Canadian business for national security reasons.
The Belgian government reached an agreement with Wallonia on October 27, 2016 which allowed Belgium's parliament to support CETA, provided certain conditions are met as outlined in what is being termed the Belgian declaration.
We have previously blogged here on CETA, the trade agreement which is Canada's largest trade initiative since NAFTA and, if implemented, would provide Canadian exporters preferential access to the sizable EU market.
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