The six preference criteria A-F tell Customs authorities and the importer how the goods qualified for preferential treatment under the NAFTA. Preference Criterion A Preference Criterion A corresponds to goods wholly obtained or produced entirely in Canada, Mexico, or the United States.
- Silver mined in Mexico extracted in the territory.
- Wheat grown in Canada harvested in the territory.
- Live animals born and raised in Canada, Mexico or the United States.
- Goods obtained from hunting, trapping or fishing in Canada, Mexico or the United States.
How do you qualify for preferential treatment under the NAFTA?
To qualify for preferential treatment under the North American Free Trade Agreement, goods must comply with the NAFTA Rules of Origin. The six preference criteria classifications define how a good qualifies. Use this guide to determine which preference criteria to use when completing a NAFTA form. Preference Criteria A
What is preference criterion C of NAFTA?
Preference Criterion C This criterion corresponds to goods produced entirely in Canada, Mexico, and/or the United States exclusively from NAFTA materials.
What is not included in an originating good under NAFTA?
It does not include goods or materials that were imported from a non-NAFTA country. A good is considered originating if that good meets the requirements of a specific rule of origin for that product, as listed in NAFTA Annex 401. There are three possible ways a product can qualify as originating under this rule:
What are the procedures for presenting a NAFTA claim?
The procedures for presenting a NAFTA claim are different in Canada, Mexico, and the United States. 19 CFR 181.21-.23 - Import Requirements can be found in sections 181.21 – 181.23 3550-070 Filing and Processing Claims Under the North American Free Trade Agreement (NAFTA) Generally, NAFTA claims are made at the time of importation.
What is the preference criterion for NAFTA?
Preference Criterion A corresponds to goods wholly obtained or produced entirely in Canada, Mexico, or the United States. For a good to qualify under this criterion, it must contain no non-North American parts or materials anywhere in the production process.
What is preferential treatment under USMCA?
The USMCA allows for preferential treatment claims on U.S.-origin goods. Under the NAFTA, such claims were not allowed. Unlike the NAFTA, the USMCA does not require that a good qualify to be marked as a product of Canada or Mexico to receive preferential treatment, so long as the USMCA Rules of Origin are satisfied.
What is preferential duty treatment?
The term “preferential tariff treatment” means the customs duty rate that is applicable to an originating good (as defined in section 4531(a) of this title ) under the USMCA.
What are the three tariff treatments under NAFTA?
There are three NAFTA tariff treatments: the United States Tariff ( UST ), the Mexico Tariff ( MT ) and the Mexico-United States Tariff ( MUST ).
How do you know if an item qualifies for USMCA?
In order to qualify, the product must comply with USMCA rules of origin, which distinguish between “origin of goods” versus “originating in a North American country.” The rules of origin specify that goods originate in North America if they are wholly North American.
How do you determine non preferential origin?
Non-preferential origin is obtained where goods are "wholly obtained" in one country or, when two or more countries are involved in the manufacture of a product, origin is obtained where goods underwent their last, substantial, economically-justified processing or working, in an undertaking equipped for that purpose, ...
What is preferential treatment in international trade?
Under the GSP, developed countries offer non-reciprocal preferential treatment (such as zero or low duties on imports) to products originating in developing countries. Preference-giving countries unilaterally determine which countries and which products are included in their schemes.
Which of the following is an example of preferential tariff?
Since World War II the United States, France, Belgium, and the Netherlands have used preferential tariffs. For example, virtually all primary goods imported into the United States from the countries of Latin America and from the Philippines are so taxed and in many cases are imported duty-free.
What does preferential origin mean?
Preferential origin is conferred on goods from particular countries, which have fulfilled certain criteria allowing preferential rates of duty to be claimed. Preferential origin is conferred on goods from particular countries, which have fulfilled certain criteria.
What is a preferential tariff?
A Preferential Tariff is one that falls under a preferential trade agreement. Basically, countries make a deal in which they agree to charge a lower rate than the MFN rate.
What is General Preferential tariff?
The GPT was first implemented in 1974 and offers lower-than-normal tariff rates for imports from developing countries into Canada. Under the GPT, Canada currently offers duty-free or preferential market access to imports of most products from a list of designated countries.
What is tariff treatments?
Origin is represented by a tariff treatment (a 2-digit code declared on the Customs Coding Form, B3-3). Many tariff treatments lower the rate of duty normally payable on imported goods. This is done through free trade agreements or other preferential treatments.
When is preference criteria used?
Preference Criterion B is used when the good being certified is produced using materials that the producer/exporter is unable to prove qualify as originating goods in their own right. The finished product will be originating if the requirements of the applicable rule of origin are met.
Does preference criteria apply to manufactured goods?
As a general rule, however, Preference Criterion A rarely applies to manufactured goods. If the good contains any non-NAFTA materials, it will not qualify under Preference Criterion A. Preference Criterion B. Even if your good contains non-NAFTA materials, it can qualify as B if the materials satisfy the Rules of Origin.
The Future of NAFTA
The North American Free Trade Agreement will be replaced by the U.S.-Mexico-Canada (USMCA) Free Trade Agreement on July 1, 2020. (See the article, NAFTA vs. USMCA, for more details.)
Column 7: Preference Criteria
There are five ways that goods qualify as originating under the NAFTA Rules of Origin. The five ways are called Preference Criteria, which is column 7 on the certificate of origin. The Preference Criteria are referred to with the letters shown below.
Column 8: Producer
Column 8 indicates whether you are the producer of the goods. If you are, then the answer is an easy Yes. If you aren’t, there are three choices: No1, No2 or No3.
Column 9: Net Cost
If you think you must enter a dollar value in column 9, I’m sorry to tell you that you’re wrong. The choices are NC or NO. This field applies to items that qualify for preferential treatment under NAFTA because they satisfy a regional value content (RVC) requirement.
NAFTA in Shipping Solutions Export Software
The Preference Criteria, Producer and Net Cost are entered on the EZ Start-Product Details screen in a section called NAFTA/Other FTAs. You can also store this information for each of your products in the Products screen on the Databases tab.
Learn More
Now is the time to get ready for USMCA. While some portions of the agreement are similar to NAFTA, other areas have changed more significantly. Check out the blog post, NAFTA vs. USMCAT: The North American Free Trade Agreement and the U.S.-Mexico-Canada Agreement for a summary of the difference between the two agreement.
What is the NAFTA preference rate?
These rules, which are established in Chapter Four of the NAFTA, specify the production that must occur in order for a product to be eligible for NAFTA treatment. For example, a product imported into one NAFTA country from outside North America, then shipped onward to another NAFTA country may not qualify for duty-free treatment.
What is a NAFTA certificate of origin?
The NAFTA Certificate of Origin is used by the United States, Canada, and Mexico to determine if imported goods are eligible to receive reduced or eliminated duty as specified by the NAFTA. For purposes of obtaining preferential tariff treatment, this document must be completed legibly and in full by the exporter and be in the possession ...
What is the tariff code for Canada?
The U.S. tariff schedule uses the codes “CA” and “MX” for Canada and Mexico, respectively. The Canadian tariff schedule uses the codes “US” and “MX” for the United States and Mexico, respectively. In the case of Mexico, there is a section labeled “Tariff applied to trade partners” that uses the codes “EE.UU.” and “Canada” for ...
Do you need a copy of a NAFTA certificate to import?
While the Certificate does not have to accompany the shipment, the importer must have a copy of the Certificate in hand before claiming the NAFTA tariff preference at customs. Certificates of Origin may, at the discretion of the exporter, cover a single importation of goods or multiple importations of identical goods.
Is a NAFTA certificate of origin required?
All products classified under these subheadings or tariff numbers are eligible for duty-free treatment, and the NAFTA Certificate of origin is not required. If the rate in the “general” column is not zero, the exporter should next check the rate in the “Special/Preferential” column. The U.S. tariff schedule uses the codes “CA” ...
Does NAFTA require exporters to provide certificates of origin?
NAFTA does not obligate a producer who is not an exporter to provide the ultimate exporter with a NAFTA Certificate of Origin. However, if the non-exporting producer does complete the NAFTA Certificate of Origin, they are subject to the same obligations regarding record. keeping and other obligations as is the exporter.
Step 1: Is your product made or substantially transformed in the U.S. (FTA partner country)?
In general, to receive preferential tariff treatment under an FTA, the exported good must be produced or substantially transformed in the FTA territory. For example, a good made in Germany shipped from the United States, will not qualify for U.S.-Australia FTA preferential rate. Learn more about Rules of Origin - Substantial Transformation .
Step 2: Determine is there an advantage to claiming preferential treatment?
Look up the HS code for your product. You can classify your product by visiting Census website Product Classification Number This link will direct you to a non-government website (referred to an HS or Harmonized System number or Schedule B number) and convert it into the HS code. Learn more about HS classification codes .
Step 4: Certify your shipment
If you determine there is tariff benefit and your product originates/qualifies for an FTA, you need to be able to certify that the product originates/qualifies for a specific FTA. For small shipments, state on a commercial invoice that your product qualifies (each FTA determines what qualifies as a small shipment.
Step 5: Ship
Remember that FTAs require direct shipment (or if transshipped, minimal processing may be allowed). Each FTA has its unique requirement.