Trade Information Center 1-800-USA-TRADE
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| Trade Information Center 1-800-USA-TRADE | |
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The North American Free Trade Agreement (NAFTA) grants benefits to a variety of goods from North America. Maximum benefits are reserved for those goods that ”originate” in the region. There are six preference criteria: A through F. These letters tell Customs and the importer how the goods qualified as originating. It is impossible to choose an origin criterion without first reading and fully understanding the rules of origin frequently referred to as Article 401 of the NAFTA and Annex 401. Changes to the NAFTA rules of origin (Annex 401) are published in Federal Register notices that are posted to the website of the Office of the United States Trade Representative (USTR). General Note 12 (t) of the Harmonized Tariff Schedule of the United States (HTSUS) reflects the updated version of Annex 401. General Note 12 (t) is available on the NAFTA Customs website. (Select NAFTA Topics, then Annex 401). For updates click on General Note 12(t). CRITERION A corresponds to goods wholly obtained or produced entirely in Canada, Mexico or the United States. "Obtained" has a unique meaning in the NAFTA context; it does not mean "purchased," but is simply used to acknowledge that production is not the only way goods are created. For a good to qualify under this criterion, it must contain no non-North American parts or materials anywhere in the production process. It is generally reserved for basic products such as those harvested, mined or fished in the NAFTA territory, although can include a manufactured good with no non NAFTA inputs. CRITERION B: Article 401 (b) indicates that goods may “originate” in Canada, Mexico or the United States, even if they contain non-originating material, if the materials satisfy the rule of origin specified in Annex 401 of the Agreement. The Annex 401 rules of origin are commonly referred to as specific rules of origin and are based on a change in tariff classification, a regional value-content requirement, or both. When a rule of origin is based on a change in tariff classification, each of the non-originating materials used in the production of the goods must undergo the applicable change as a result of production occurring entirely in Canada, Mexico and/or the United States. The specific rule of origin defines exactly what change in tariff classification must occur for the goods to be considered “originating.” Some specific rules of origin require that a good have a minimum North American regional value content or (RVC). There are two formulas for calculation the regional value content, the “transaction value” method or the “net cost” method, requiring, in most situations, either 60% or 50% value added, respectively. Exporters should refer to the rule associated with the product being exported. Exporters may only use regional value content when it is allowed under a product-specific rule. CRITERION C corresponds to goods produced entirely in Canada, Mexico and/or the United States exclusively from materials that are already originating. CRITERION D: In a very few cases a good that has not undergone the required tariff change can still qualify for preferential NAFTA treatment if a regional value content requirement is met. CRITERION E applies to certain automatic data processing goods and their parts, specified in Annex 308.1. CRITERION F applies to certain agricultural goods imported into Mexico. For more information, please call the Foreign Agricultural Service at (202) 720-7420. Please visit the NAFTA Certificate of Origin page for more information on NAFTA documentation. Note: This document is meant to be a guide on the Rules of Origin provisions of the North American Free Trade Agreement. Exporters should keep in mind that only the NAFTA text itself and the customs regulations of each country that may be issued to implement NAFTA are definitive. For complex issues or where interpretation is required, exporters should seek legal assistance or an advanced ruling from the Customs Administration in the country to which they are exporting. Information Source: Trade Information Center | ||
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Last Accessed 01/23/2002; Document created 04/12/2000; last modified 01/11/2002 | |||
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