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5/6/2013
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© Copyright 2012 Mike Allocca. All
rights reserved.
Introduction to NAFTA (overview of 3 new FTA’s)
NASBITE International Conference
Albuquerque, NM April 11, 2013
11:15 a.m. - 12:30 p.m.
© Copyright 2012 Mike Allocca. All
rights reserved.
Importer/Exporter Responsibilities
It is the importer/exporter’s responsibility to be aware of and comply to, all existing and future regulations of any and all U.S./Canadian/Mexican government agencies controlling NAFTA imports/exports within the NAFTA territories. Every effort is made to ensure that the information presented is current and accurate. I assume no liability or responsibility for the application of the information presented, or any changes, updates, additions or corrections that may exist at the time of presentation. This training is not intended as legal advice or legal guidance. You should consult with an attorney to obtain legal advice.
No portion of this material maybe copied or distributed without the express written permission from Mike Allocca.
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© Copyright 2012 Mike Allocca. All
rights reserved.
Table of Contents • What is NAFTA
• Overview of the 3 new FTA’s
• Steps to determine if your products qualify
• Originating material
• Rules of Origin /Annex 401
• Preference criteria
• Examples/NAFTA Resources
• Summary
© Copyright 2012 Mike Allocca. All
rights reserved.
What is NAFTA
• Free trade agreement with CA,MX,US
• Effective Jan 1, 1994
• 15 year phase in period (free trade on all
eligible goods by end of 2008)
• 1st agreement that allows other governments
customs officials to come into USA
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S. Korea - US FTA
© Copyright 2013 Mike Allocca. All
rights reserved.
• Oct 21, 2011 President signed legislation
approving agreement. March 15th,2012 went
into effect.
• 95% of US exports of eligible
consumer/industrial products to S. Korea
will become duty free within 5 years; if
products meet rule of origin
• Remaining tariffs phased out over 10 years
Colombia - US FTA
© Copyright 2013 Mike Allocca. All
rights reserved.
• Oct 21, 2011 President signed legislation
approving agreement. May 15th, 2012 went
into effect.
• 80% of US exports of eligible
consumer/industrial products to Colombia
will become duty free immediately; if
products meet rule of origin
• Remaining tariffs phased out over 10 years
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Panama - US FTA
• Oct 21, 2011 President signed legislation
approving agreement. Oct 31st, 2012 went
into effect.
• 87% of US exports of eligible
consumer/industrial products to Panama
will become duty free immediately; if
products meet rule of origin
• Remaining tariffs phased out over 10 years © Copyright 2013 Mike Allocca. All
rights reserved.
© Copyright 2013 Mike Allocca. All
rights reserved.
What is NAFTA
• Free trade agreement with CA,MX,US
• Effective Jan 1, 1994
• 15 year phase in period (free trade on all
eligible goods by end of 2008)
• 1st agreement that allows other governments
customs officials to come into USA
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© Copyright 2013 Mike Allocca. All
rights reserved.
NAFTA Benefits
• Benefits the importer,
reduced or duty free
goods.
• No MPF from Canada
for NAFTA goods
• Can make the exporter
more competitive then
other non-participating
countries
• 345% increase in trade
among the 3 countries.
• Increase market access
within each country.
• Saves your client a
step if it is an
intermediate product
www.export.gov/fta
© Copyright 2008 Mike Allocca. All
rights reserved.
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© Copyright 2013 Mike Allocca. All
rights reserved.
Determining if your products
qualify – Step 1
1. Should you be filling out a NAFTA certificate?
2. Determine your proper HTS classification for
each item.
3. Look up the duty rate , if any, in country of
destination. http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2012/01-99/tblmod-
eng.html
Steps to Classify your products
with the correct HTS code 1) You must use the GRI- General Rules of interpretation –
mandatory by law
2) You must read the chapter/section notes – mandatory by
law
3) Strongly recommend you use the CROSS- not mandatory
but should be
4) Strongly recommend you consider purchasing the (EN)
Explanatory Notes to the WCO – not mandatory but should
be
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© Copyright 2008 Mike Allocca. All
rights reserved.
Sample Canadian Import Database
Looking up Duty rates http://export.customsinfo.com/Default.aspx
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http://export.gov/FTA/ftatarifftool/index.asp
© Copyright 2012 Mike Allocca. All
rights reserved.
Determining if your products
qualify – Step 2 4. Look up definitions of originating/ non-
originating material.
5/6. Determine if you are or are not the mfg and
have supporting documentation.
7. Look up the specific rule of origin for each of
your products. (annex 401) http://www.nafta-sec-alena.org/en/view.aspx?x=343&mtpiID=158#SectionB
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Rules of Origin Websites
• Panama- Rules of origin http://www.ustr.gov/sites/default/files/uploads/agreements/fta/panama/asset_upl
oad_file527_10897.pdf
• Colombia – Rules of origin http://www.ustr.gov/sites/default/files/uploads/agreements/fta/colombia/asset_u
pload_file13_10153.pdf
• S. Korea – Rules of origin http://www.ustr.gov/sites/default/files/uploads/agreements/fta/korus/asset_uploa
d_file680_12704.pdf
© Copyright 2013 Mike Allocca. All
rights reserved.
© Copyright 2013 Mike Allocca. All
rights reserved.
Examples
• Electric train set - Tariff shift
• Wooden Furniture – Tariff shift & RVC
• Formulas for RVC – Transaction Value/
Net Cost for NAFTA only
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Determining if your products
qualify – Step 3 • If you meet each of the rules of origin for
Colombia, Panama and Korea FTA’s notify your
customer in writing that your product is eligible
(there are NO official FTA forms or certificates
for these (3) three FTA’s. However an unofficial
form does exist.)
• Record keeping requirements. (5 years)
© Copyright 2013 Mike Allocca. All
rights reserved.
© Copyright 2010 Mike Allocca. All
rights reserved.
Determining if your products
qualify – Step 4 • If you meet each of the rules of origin,
begin to fill out a NAFTA certificate.
• Determine what is your correct preference
criteria.
• Be aware of blanket NAFTA’s, DeMinimis
Rule/Fungible goods rule.
• Record keeping requirements.
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Common Errors to avoid when
declaring eligibility • Use 1st (6) six digits of HTS code only
• There is no official certificate- do not use an old
NAFTA form for the (3) three new FTA’s
• There are NO preference criterion (letters A-E) like
under NAFTA
• There is NO Net cost or transaction value like under
NAFTA. They are called the build up and build down
method.
• Country of origin – (2) two choices per certificate
© Copyright 2013 Mike Allocca. All
rights reserved.
© Copyright 2010 Mike Allocca. All
rights reserved.
Other FTA’s
• 14 FTA’s in effect currently covering 20
countries.
• 5 FTA’s in negotiations
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14 US Free Trade Agreements
Currently in effect covering 20 countries
1. Australia
2. Bahrain
3. CAFTA (6 countries + US)
4. Chile
5. Israel
6. Jordan
7. Morocco
8. NAFTA (2 countries + US)
9. Oman
10. Peru
11. Singapore
12. Korea
13. Colombia
14. Panama
© Copyright 2013 Mike Allocca. All
rights reserved.
© Copyright 2012 Mike Allocca. All
rights reserved.
NAFTA Resources
• Dept of Commerce - Trade Information
Center
• CBP – HTS numbers
• NAFTA Interactive Certificate of Origin
• Office of NAFTA & Inter-American affairs
• Formal training programs/ Trade
consultants
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Summary 1. Create a FTA Team. Get a Team Leader.
2. Begin determining qualifications whenever you source new/existing products.
3. Ask, does an FTA make sense for your business?
4. Continually ask for sourcing changes from your suppliers.
5. Review your FTA policy, procedures, training as needed.
6. Learn about other FTA’s as they are implemented
© Copyright 2012 Mike Allocca. All
rights reserved.
Thank You Allocca Enterprises, Inc.
Mike Allocca
mallocca@alloccaenterprises.com
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