NAFTA TUTORIAL COMPLETING A VALID NAFTA CERTIFICATE
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NAFTA TUTORIAL
COMPLETING A VALID NAFTA CERTIFICATE
This tutorial is a step-by-step guide to help you understand how to complete an accurate
and valid NAFTA certificate. With the implementation of AMPS (Administrative Monetary
Penalty System) it is essential to have fully completed and accurate certificates on file to
ensure compliance. Invalid NAFTA certificates of origin are one of the largest areas of
concern for non-compliance. To claim the duty free status, a valid certificate must be on
file. Anything less is unacceptable and subject to penalty assessment.
NAFTA Tutorial – Completing a Valid NAFTA Certificate Tutorial by A&A Contract Customs Brokers Ltd.
NOTE: This document is only a guide. Do not use it as your only reference source on this
subject.
If you have any questions regarding this document or would like more information regarding our
NAFTA consulting services, please contact A&A Contract Customs Brokers Ltd. at:
Email: nafta@aacb.com
Toll Free: (800) 663-4270
or Phone: (604) 538-1042
Fax: -3994
Page 2 NAFTA Tutorial – Completing a Valid NAFTA Certificate Tutorial by A&A Contract Customs Brokers Ltd.
Table of Contents:
Introduction..........................................................................................................4
Shipment Requirements..........................................................................................4
Low Value ...
Publié par
Langue
English
NAFTA TUTORIAL COMPLETING A VALID NAFTA CERTIFICATE This tutorial is a step - by- step guide to help you understand how to complete an accurate and valid NAFTA certificate. With the implementation of AMPS (Administrative Monetary Penalty System) it is essential to have fully completed and accurate certificates on file to ensure compliance. Invalid NAFTA certificates of origin are one of the largest areas of concern for non- compliance. To claim the duty free status, a valid certificate must be on file. Anything less is unacceptable and subject to penalty assessment.
NAFTA Tuto rial Completing a Valid NAFTA Certificate
Tutorial by A&A Contract Customs Brokers Ltd.
NOTE: This document is only a guide. Do not use it as your only reference source on this subject.
If you have any questions regarding this document or would like mor e information regarding our NAFTA consulting services, please contact A&A Contract Customs Brokers Ltd. at:
Email: nafta@aacb.com Toll Free: (800) 663 - 4270 or Phone: (604) 538 - 1042 Fax: (604) 538 - 3994
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NAFTA Tuto rial Completing a Valid NAFTA Certificate
Table o f Contents:
Tutorial by A&A Contract Customs Brokers Ltd.
Introduction ................................ ................................ ................................ .......... 4 Shipment Requirements................................ ................................ .......................... 4 Low Value Shipment Requirement ................................ ................................ ...... 4 High Value Shipment Requirement ................................ ................................ ..... 4 The Importance of the NAFTA Certificate................................ ................................ .... 5 NAFTA: Article 401 The Rules of Origin ................................ ................................ .... 5 Tariff Classification................................ ................................ ................................ . 5 Regional Value Content ................................ ................................ ........................... 6 Determining Origin Criteria ................................ ................................ ...................... 7 NAFTA - Certificate of Origin Form ................................ ................................ ............ 8 Exporter's Responsibilities ................................ ................................ ..................... 10 Importer's Responsibilities ................................ ................................ ..................... 11 How Can A&A Help Me? ................................ ................................ ......................... 12 Appendix A Preference Criteria ................................ ................................ ............ 13
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Tutorial by A&A Contract Customs Brokers Ltd.
NAFTA Tuto rial Completing a Valid NAFTA Certificate I ntroduction The importer is ultimately responsible for having a fully completed and valid NAFTA certificate on file for any goods claiming the duty free rate of duty under NAFTA. Exporters, producers or manufacturers are responsible for determining qualification under NAFTA and completing an accurate certificate. Only importers who possess a valid NAFTA certificate of origin can claim preferential tariff treatment. Shipment Requirements Low Value Shipme nt Requirement For goods which are valued at less than CDN$1,600.00, Customs will accept an informal statement of origin which may be handwritten, typed or otherwise indicated on the paperwork. Example of statement: STATEMENT OF ORIGIN FOR COMMERCIAL IMP ORTATIONS OF LESS THAN CDN $1,600.00 I certify that the goods referenced in this invoice/sales contract originate under the rules of origin specified for these goods in the North American Free Trade Agreement (NAFTA), and that further production or any other operation outside the territories of the Parties has not occurred subsequent to production in the territories. _____________________________________ NAME: TITLE: _____________________________________ COMPANY: _____________________________________ ______ ________ STATUS: EXPORTER PRODUCER OF THE CERTIFIED GOODS _________________ ________ TELEPHONE: FAX: COUNTRY OF ORIGIN: ___________________________ (For purposes of determining the applicable preferential rate of duty as set out in Annex 302.2, in accordance with the marking rules or in each Party's schedule of tariff elimination.) High Value Shipment Requirement For goods that are valued over CDN$1600.00, a formal NAFTA certificate is required. Either a NAFTA certificate per shipment, or a blanket NAFTA certificate covering one calendar year.
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NAFTA Tuto rial Completing a Valid NAFTA Certificate Tutorial by A&A Contract Customs Brokers Ltd. The Importance of the NAFTA Certificate Importers using an invalid NAFTA Certificate of Origin will be denied NAFTA origin duty free status, and duties will be applied retroactively. Duty rates will apply based on the classification number declared at time of import. Exporters are responsible for determining qualification under NAFTA and for completing an accurate certificate. The importer of record is ultimately responsible for un- remitted duty and GST o n imported goods, as well as applicable penalties. NAFTA: Article 401 The Rules of Origin For a good to originate it must meet the requirements set out in the Rules of Origin - Article 401 of the NAFTA Agreement The NAFTA grants benefits to a variety o f goods from the region (Canada, United States and Mexico). For a good to “originate, it must meet the requirements set out in the Rules of Origin Article 401 of the Agreement. Within the context of NAFTA the words origin, originate, or originating are used differently than in the context of determining country of origin. Article 401 of NAFTA defines originating in four ways: 1. Wholly obtained or produced in the NAFTA region. 2. Goods produced in the NAFTA region wholly from originating materials. Goods taken from the seabed, the soil or the air in the NAFTA territories. 3. Goods meeting the Annex 401 origin rule. 4. Unassembled goods, and goods classified with their parts, which do not meet the Annex 401 rule of origin, but contain 60% regional value conten t using the transaction method, or 50% using the net cost method. Goods can originate in Canada, Mexico, or the United States, even if they contain non - originating materials, as long as the materials satisfy the rules of origin specified in Annex 401 of t he Agreement.
Tariff Classification If your goods are initially misclassified, all work done to establish eligibility will be meaningless. · The rules of origin ensure that parts and materials that do not originate in the NAFTA territory undergo a sufficient amount of processing which then transforms into qualifying products.
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NAFTA Tuto rial Completing a Valid NAFTA Certificate Tutorial by A&A Contract Customs Brokers Ltd.
· The rules of origin are based on tariff classification, therefore it is important that you have the correct HS tariff classification for the finished product, and any non -originating parts and materials. · In most cases, the HS tariff classification is required to the six digit level only. For the purposes of the Rules of Origin, it is important to understand the structure of the tariff. Example: Tariff classification: 2007.99 20 - First two digits are the chapter 2007 - Third and fourth digits are the header 2007.99 - Fifth and sixth digits are the subheader Example: Tariff Change Strawberry jam is manufactured in the United States from sugar that is the product of J amaica, and strawberries that are the product of Mexico.
The tariff of the finished product, Strawberry Jam is: 2007.99 The tariff for the sugar (Jamaica): 1701.99 The tariff item for the strawberries does not need to be determined, since they originate in one of the NAFTA territories. The rule of origin for tariff 2007.99 reads as follows: 20.01 20.07 A change to heading Nos. 20.01 through 20.07 from any other chapter. Since the sugar (Jamaica), is from outside of headings 20.01 through 20.07 ; the j am is originating and qualifies under the NAFTA duty free tariff. Regional Value Content As well as a required tariff change, the specific rules of origin may ask that a Regional Value Content (RVC) be met. The RVC, which is always expressed as a percent age, may be determined by using one of the following two formulas: RVC = (T ransaction Value Value of Non- Originating Materials) X 100 Transaction Value OR RVC = ( Net Cost Value of Non- Originating Materials) X 100 Net Cost
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Tutorial by A&A Contract Customs Brokers Ltd.
NAFTA Tuto rial Completing a Valid NAFTA Certificate It is the exporters choice to use either the Transaction Value or Net Cost. The transaction value must be at least 60% of the value. The net cost must be at least 50% of the value. Example Regional Value Content Goods of tariff (subheading) 8703.10, are shipped to Canada from Mex ico. The transaction value of the goods is $3,600.00; the net cost of the good is $3,500.00; and the value of the non- originating material is $1,495.00. The Specific rule of origin for 8703.10 states: 8703.10 A change to subheading No. 8703.10 from any ot her heading number, provided there is a regional value content of not less than: 60 percent where the transaction value method is used, or 50 percent where the net cost method is used Assuming the first specific rule of tariff change has been met, the RVC calculation is as follows: Transaction Value:
RVC = ($3600.00 - $1495.00) X 100 = 58% 3600.00 Must be at least 60%, so it doesn’t qualify under this method. Net Cost
RVC = ($3500.00 $1495.00 ) X 100 = 57% 3500.00 Must be at least 50%, so the goods q ualify under this method. Determining Origin Criteria All goods which qualify under the NAFTA rates of duty, must fall into one of six criteria (must be indicated on field 7 of the Certificate of Origin). Criterion A Goods must be “wholly obtained or produced entirely in the territory of one or more of the NAFTA countries. No foreign materials. For goods of Criterion A, there is no tariff change or Regional Value requirements that must be met.
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NAFTA Tuto rial Completing a Valid NAFTA Certificate Tutorial by A&A Contract Customs Brokers Ltd. Criterion B Goods which are produced entirely in Canada, the United States, or Mexico, and satisfy one of the rules set out in the Annex 401 of the Agreement (change in tariff or regional value content requirements; or combination of the two). Criterion C Goods must be produced entirely in the territory o f one or more of the NAFTA countries using only originating materials. In this case some of the materials are originating due to the fact that they have undergone a change in tariff and/or RVC. NOTE: Criterion D, E and F are rarely used, or used in very s pecific cases only. A copy of CCRA’s Rules of Origin Guide can be downloaded from http://www.aacb.com/nafta/rulesoforigin.pdf
NAFTA - Certificate of Origin Form
Field 1 - State the full legal name, address and legal tax identification number of the exporter. Legal tax identification number is: in Canada, employer number or importer/exporter number assigned by Revenue Canada; in the United States, employer's identification number or Social Security Number. Field 2 - Complete field if the certificate covers multiple shipments of identical goods as described in Field 5, that are imported into a NAFTA country for a specified period of up to one year (blanket period). Certificates can be issued to cover an entire year, or completed for each shipment. Field 3 - State the full legal name, address and legal tax identification number, as defined in Field 1, of the pro ducer. If you wish this information to be confidential, it is acceptable to state "Available to Customs upon request". If the producer and the exporter are the same,
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NAFTA Tuto rial Completing a Valid NAFTA Certificate Tutorial by A&A Contract Customs Brokers Ltd. complete field with "SAME". If the producer is unknown, it is acceptable to state "UNKNOWN . " Field 4 - State the full legal name, address and legal tax identification number, as defined in Field 1, of the importer. If importer is not known, state "UNKNOWN", if multiple importers, state "VARIOUS" . Case Example: ABC Exports is the exporter o f the goods to Canada, and the number 246810 is their employer's identification number. ABC has made this a blanket certificate covering the full year. For confidentiality reasons, Field 3 is marked "Available to Customs Upon Request". Because ABC Exports has multiple importers, they mark Field 5 as "Various".
Field 5 - Provide a full description of each good. The description should be sufficient to relate it to the in voice description and to the Harmonized System (HS) description of the good. If the certificate covers a single shipment of a good, include the invoice number as shown on the commercial invoice. If not known, indicate another unique reference number, such as the shipping order number. Field 6 - For each good described in Field 5, identify the HS tariff classification to six digits. If the good is subject to a specific rule of origin in Annex 401 that requires eight digits, identify to eight digits, using the HS tariff classification of the country into whose territory the goods are imported. Field 7 - For each good described in Field 5, state which criterion (A through F) is applicable. Refer to Appen dix A (page 12) for a more detailed description . Field 8 - For each good described in Field 5, state "YES" if you are the producer of the good. If you are not the producer of the good, state "NO" followed by (1), (2), or (3), depending on whether this certificate was based upon: (1) your knowledge of whether the good qualifies as an originating good; (2) your reliance on the producer's written representation (other than a Certificate of Origin) that the good qualifies as an originating good; or (3) a comp leted and signed certificate for the good, voluntarily provided to the exporter by the producer. Field 9 - For each good described in Field 5, where the good is subject to a regional value content (RVC) requirement, indicate "NC" if the RVC is calculated a ccording to the net cost method; otherwise, indicate "NO". If the RVC is calculated according to the net cost method over a period of time, further identify the beginning and ending dates (DD/MM/YY) of that period. (Reference: Articles 402.1, 402.5) Fiel d 10 - Identify the name of the country ("MX" or "US" for agricultural and textile goods exported to Canada) to which the preferential rate of customs duty applies, as set out in
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NAFTA Tuto rial Completing a Valid NAFTA Certificate Tutorial by A&A Contract Customs Brokers Ltd. Annex 302.2, in accordance with the Marking Rules, or in each Party's schedu le of tariff elimination. For all other originating goods exported to Canada, indicate appropriately "MX" or "US" if the goods originate in that NAFTA country, within the meaning of the NAFTA Rules of Origin Regulations, and any subsequent processing in the other NAFTA country does not increase the transaction value of the goods by more than 7%; otherwise indicate as "JNT" for joint production. Case Example: ABC Exports has provided, for Field 5, the part number (X21) and a description on the make of the Widget (steel) to help classify the product. The HS Tariff Classification number for this product is 7326.90. Because the Widget is "wholly obtained or produced entirely" in the US, the preference criterion is A. Since ABC Exports is not the producer of the Widget, we enter in Field 8, "NO" and follow it by a (1) to indicate that to ABC's knowledge the good qualifies as an originating good. Since the widget is not subject to a regional value content (RVC), we indicate "NO" for Field 9. Because US is the country of origin for this good we indicate "US" in Field 10.
Field 11 - This field must be completed, signed and dated by the exporter. When the certificate is completed by the producer for use by the exporter, it must be completed, signed and dated by the producer. The date must be the date the certificate was completed and signed. Case Example: ABC Exports finishes the NAFTA certificate by going over the statement s in Field 11 and indicating the number of pages the certificate consists of and filling in the required info, as they are the exporter. Remember the date must be the date the certificate was completed and signed.
Exporter's Responsibilities * NAFTA reco rds must be kept for a period of six years * · Exporters or producers that prepare Certificates of Origin must maintain records pertaining to the exportation for a period not less than 6 years.
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NAFTA Tuto rial Completing a Valid NAFTA Certificate
Tutorial by A&A Contract Customs Brokers Ltd.
· Exporters or producers must notify all parties to whom the certificate was given, of any changes that could affect its accuracy or validity. · Exporters or producers must provide copies of the NAFTA certificate to their own customs administration on request.
Importer's Responsibilities
The importer of record is responsible to keep valid NAFTA certificates on file for a period not less than six years. Shipment specific certificates should be kept with the customs clearance supporting documents and blanket certificates can be filed for the year that they cover. I t is the importers responsibility to file any amending entries where goods were entered duty free and they did not qualify, or the status of goods changes. The importer is also responsible to supply Customs with a copy of the NAFTA certificate upon reques t .
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