According to a Thomson Reuters-KPMG International
Survey/Report, 70% of multi-national companies surveyed are not
fully utilizing the benefits under existing free trade agreements
(FTAs). The problem has been reported to be complex and
disparate compliance requirements in home jurisdictions and other
As an international trade lawyer, I hear this often. Many
North American multi-national companies do not claim NAFTA benefits
when importing goods from another NAFTA Party. This is
because the act of claiming NAFTA tariff treatment allows customs
officials to come and visit. The completion of a certificate
of origin permits customs officials to visit an exporter and that
exporter will be required to prove that the good meets the NAFTA
rule of origin. To prove to another Party’s customs officials
that a good satisfies a rule of origin requires documentation to be
maintained and provided. Sensitive costing information may
need to be reviewed. Documents relating to sensitive
commercial relationships may need to be reviewed. The secret
formula may have to be provided. Some companies say
“Why bother?” and they avoid the trouble that NAFTA
treatment will bring. Instead, they choose to not seek NAFTA
beneficial treatment and importers pay more customs duties for the
Furthermore, many small-to-medium sized businesses do not have
and cannot afford to implement solutions to manage vast amounts of
information. Many companies use manual processes rather than
computerized solutions. Customized computer programs are
expensive (and you have to keep documentary records in any event).
Since the rules are not the same under each FTA and new FTAs are
being negotiated constantly, the computerized program is complex to
start with and may be outdated soon after implementation.
These issues are complex and become more complicated with each
FTA. However, as companies avoid taking the first steps, they get
further and further behind.
The first step in getting started is to identify where cost
(customs duties) savings are possible in the supply chain.
Then the cost savings should be quantified. Then the budget
can be developed to bring about the simple changes. As time
goes on, more changes can be made.
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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While that agreement mandated export measures on Canadian softwood lumber exports destined for the United States, it also protected those lumber exports from the potential imposition of onerous import measures by the U.S.
On September 29, 2016, the Supreme Court of Canada issued its first tariff classification decision since Canada signed the International Convention on the Harmonized Commodity Description and Coding System in 1998.
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