| Title: | FACT SHEET 30 |
|---|---|
| Date: | 1994-03-09 |
| To: | abi |
| Links: | previous, next |
TO : ALL ABI BROKERS.
FROM : LISA CROSBY
SUBJECT : NAF-FACT SHEET 30
DATE : 03/09/94
4062072
MARCH 3, 1994
CATEGORY: NAF CO:TO:T:T LAC
TO : REGIONAL DIRECTORS FOR COMMERCIAL OPERATIONS, DISTRICT
AND PORT DIRECTORS
FROM : ACTING DIRECTOR, OFFICE OF TRADE OPERATIONS
SUBJECT: FACT SHEET 30: QS AND AS ON THE NAFTA CERTIFICATE OF
ORIGIN
PASS TO: NON-ABI BROKERS, IMPORTERS AND OTHER INTERESTED PARTIES
BACKGROUND:
THE FOLLOWING QUESTIONS AND ANSWERS ON THE NAFTA CERTIFICATE
ORIGIN ARE DESIGNED TO ASSIST MEXICAN AND CANADIAN EXPORTERS AND
PRODUCERS TO UNDERSTAND AND COMPLETE THE NAFTA CERTIFICATE OF
ORIGIN.
Q: HOW DO EXPORTERS/PRODUCERS KNOW IF THEIR GOODS ORIGINATE
UNDER NAFTA AND THEY MAY THEREFORE COMPLETE A CERTIFICATE OF
ORIGIN?
A: GENERALLY, THE INSTRUCTIONS ON THE CERTIFICATE OF ORIGIN
ALONE ARE INSUFFICIENT TO DETERMINE WHETHER A GOOD
ORIGINATES. FOR EXAMPLE WASTE AND SCRAP DERIVED FROM USED
GOODS COLLECTED IN CANADA OR MEXICO, PROVIDED SUCH GOODS ARE
FIT ONLY FOR THE RECOVERY OF RAW MATERIALS, ARE CONSIDERED
WHOLLY OBTAINED OR PRODUCED IN CANADA OR MEXICO, REGARDLESS
OF WHERE THE USED GOODS WERE ACTUALLY PRODUCED. YET A
PRODUCER OR EXPORTER WOULD NOT BE AWARE OF THIS BY MERELY
REFERRING TO THE INSTRUCTIONS ON THE CERTIFICATE OF ORIGIN.
EXPORTERS/PRODUCERS SHOULD BEGIN BY READING ARTICLES 401 AND
415 OF THE AGREEMENT, AS WELL AS OTHER RELEVANT PROVISIONS
OF THE AGREEMENT (E.G., ANNEX 300-B FOR TEXTILES, ANNEX
703.2 FOR AGRICULTURAL GOODS). CUSTOMS PUBLICATION 571--
"NAFTA: A GUIDE TO CUSTOMS PROCEDURES"--ALSO PROVIDES AN
OVERVIEW OF THE NAFTA RULES OF ORIGIN, WITH EXAMPLES OF
EACH. THE EXPORTER MAY COMPLETE THE CERTIFICATE OF ORIGIN
BASED ON: 1) THE EXPORTER'S KNOWLEDGE THAT THE GOOD
ORIGINATES; 2) THE PRODUCER'S WRITTEN DECLARATION THAT THE
GOOD ORIGINATES; 3) A CERTIFICATE OF ORIGIN COMPLETED BY THE
PRODUCER AND GIVEN TO THE EXPORTER. WHERE THE EXPORTER IS
THE PRODUCER, THE EXPORTER WILL PREPARE THE CERTIFICATE
BASED ON 1).
Q: WHAT SHOULD I PUT IN BLOCK 9 OF THE CERTIFICATE OF ORIGIN
(CUSTOMS FORM 434)?
A: IF YOUR GOOD IS SUBJECT TO A REGIONAL VALUE-CONTENT
REQUIREMENT AND YOU USE THE NET COST METHOD TO CALCULATE THE
REGIONAL VALUE CONTENT REQUIREMENT, PUT "NC" AND IF THE RVC
IS CALCULATED OVER A PERIOD OF TIME, IDENTIFY THE BEGINNING
AND ENDING DATES OF THAT PERIOD. YOU SHOULD NOT INDICATE
ANY DOLLAR AMOUNT OR PERCENTAGE. IF YOUR GOOD IS SUBJECT TO
A REGIONAL VALUE CONTENT REQUIREMENT BUT YOU USE THE
TRANSACTION VALUE METHOD, INDICATE "NO." IF YOUR GOOD IS
NOT SUBJECT TO A REGIONAL VALUE CONTENT REQUIREMENT, LEAVE
THIS FIELD BLANK.
Q: HOW DO I KNOW IF MY GOOD IS SUBJECT TO A REGIONAL VALUE
CONTENT REQUIREMENT?
A: IF YOUR GOOD IS WHOLLY OBTAINED OR PRODUCED IN A NAFTA
COUNTRY (PREFERENCE CRITERION "A"), OR IS PRODUCED ENTIRELY
IN THE NAFTA TERRITORY EXCLUSIVELY FROM ORIGINATING
MATERIALS (PREFERENCE CRITERION "C"), IT IS NOT SUBJECT TO A
REGIONAL VALUE CONTENT REQUIREMENT. IF YOU ARE USING
PREFERENCE CRITERION "D," THE GOODS ARE DEFINITELY SUBJECT
TO A REGIONAL VALUE CONTENT REQUIREMENT. IF THE GOOD MEETS
THE SPECIFIC RULE OF ORIGIN (PREFERENCE CRITERION "B"), THE
SPECIFIC RULE OF ORIGIN IN ANNEX 401 OF THE AGREEMENT WILL
INDICATE WHETHER THE GOOD IS SUBJECT TO A REGIONAL VALUE
CONTENT REQUIREMENT.
Q: WHICH HTS NUMBER SHOULD APPEAR IN BLOCK 6--THE U.S. TARIFF
NUMBER OR THE CANADIAN OR MEXICAN TARIFF NUMBER?
A: SINCE THE GOODS WILL BE IMPORTED INTO THE U.S., THE CANADIAN
OR MEXICAN EXPORTER/PRODUCER SHOULD USE THE APPROPRIATE
NUMBER FROM THE HARMONIZED TARIFF SCHEDULE OF THE UNITED
STATES.
Q: MAY CUSTOMS BROKERS SIGN CERTIFICATES OF ORIGIN?
A: YES, IF THEY POSSESS A VALID POWER OF ATTORNEY FROM THE
PARTY WHO WOULD OTHERWISE COMPLETE THE CERTIFICATE (I.E.,
THE EXPORTER OR PRODUCER). A CUSTOMS BROKER MAY NOT PREPARE
A CERTIFICATE BASED ON POWER OF ATTORNEY FROM THE IMPORTER
SINCE THE IMPORTER IS NOT AUTHORIZED TO SIGN THE
CERTIFICATE.
Q: IN A TRANSACTION INVOLVING NUMEROUS PARTIES, IT IS OFTEN
HARD TO DETERMINE WHO IS THE EXPORTER. ARE THERE ANY
GUIDELINES ON THIS ISSUE?
A: THE EXPORTER IS GENERALLY THE PERSON IN THE TRANSACTION WHO
LAST CAUSED THE GOODS TO LEAVE THE COUNTRY OF EXPORT. THIS
DOES NOT INCLUDE A CUSTOMS BROKER OR FREIGHT FORWARDER, WHO
MERELY ACTS AS AN AGENT FOR ANOTHER PARTY.
EXAMPLE: COMPANY A SENDS JUICE CONCENTRATE TO COMPANY B IN
CANADA TO BE COMBINED WITH WATER, PRESERVATIVES AND
CARBONATION. THE MIXTURE IS THEN BOTTLED AND RETURNED TO
COMPANY A. THE CONCENTRATE IS NOT SOLD TO COMPANY B AND IS
ENTERED INTO CANADA AS A TEMPORARY ADMISSION. COMPANY B
MUST PREPARE THE CERTIFICATE SINCE IT WAS THE LAST PARTY TO
CAUSE THE GOODS TO LEAVE CANADA. THIS IS GENERALLY TRUE
EVEN IF COMPANY B IS THE WHOLLY OWNED SUBSIDIARY OF COMPANY
A.
EXAMPLE: COMPANY C SENDS COMPUTER COMPONENTS TO MEXICO TO
BE ASSEMBLED INTO MOTHERBOARDS BY MAQUILADORA D. ALL
COMPONENTS ARE PROVIDED BY COMPANY C AT NO COST TO
MAQUILADORA D, WHO ONLY CHARGES COMPANY C FOR THE COST OF
ASSEMBLY. MAQUILADORA D MUST PREPARE THE CERTIFICATE OF
ORIGIN SINCE IT WAS THE LAST PARTY TO CAUSE THE GOODS TO
LEAVE MEXICO.
Q: MY GOOD IS MADE OF MATERIALS THAT ARE WHOLLY OBTAINED OR
PRODUCED IN THE NAFTA REGION EXCEPT FOR ONE MATERIAL WHOSE
VALUE IS LESS THAN SEVEN PERCENT OF THE TOTAL VALUE OF THE
GOOD. I UNDERSTAND THAT THIS MATERIAL IS CONSIDERED DE
MINIMIS BUT WHICH PREFERENCE CRITERION SHOULD I USE--"A"
(WHOLLY OBTAINED OR PRODUCED) OR "B" (MEETING THE SPECIFIC
RULE OF ORIGIN)?
A: USE PREFERENCE CRITERION "A."
Q: WHAT'S THE DIFFERENCE BETWEEN PREFERENCE CRITERION A AND C?
A: IT'S A SLIGHT OVERSIMPLIFICATION, BUT THINK OF CRITERION A
(WHOLLY ORIGINATING) AS APPLYING TO GOODS WITH NOT ONE ATOM
OF FOREIGN MATTER (OR WHERE THE FOREIGN MATTER IS DE
MINIMIS). CRITERION C, ON THE OTHER HAND, COVERS GOODS MADE
FROM MATERIALS WHICH MIGHT HAVE SOME FOREIGN MATTER OR
INPUTS, BUT WHICH BECAME ORIGINATING BY MEETING THE RULES OF
ARTICLE 401, PARAGRAPHS A-D.
Q: CAN MORE THAN ONE PREFERENCE CRITERION APPLY? CAN PERSONS
PREPARING THE CERTIFICATE OF ORIGIN CHOOSE THE PREFERENCE
CRITERION THEY LIKE BEST?
A: THE ONLY PREFERENCE CRITERIA THAT MAY OVERLAP ARE A AND C.
CRITERION C INCLUDES ALL THE PRODUCTS CONTAINING MATERIALS
COVERED BY CRITERION A AS WELL AS GOODS MADE FROM MATERIALS
THAT ORIGINATE UNDER ARTICLE 401(B) AND (D). FOR GOODS THAT
COULD USE EITHER CRITERION A OR C, THE PARTY PREPARING THE
CERTIFICATE MAY CHOOSE EITHER CRITERION.
Q: HOW DO EXPORTERS/PRODUCERS DETERMINE WHICH PREFERENCE
CRITERION APPLIES TO THEIR GOODS? CAN CUSTOMS TELL
EXPORTERS/PRODUCERS WHICH CRITERION TO USE?
A: EXPORTERS/PRODUCERS MUST DETERMINE WHETHER THEIR GOODS
ORIGINATE BY CAREFULLY RESEARCHING THE RULES OF ORIGIN
(CHAPTER 4) AS WELL AS THE SPECIFIC RULES OF ORIGIN (ANNEX
401; ANNEX 703.2, SECTION A; ANNEX 300-B, APPENDIX 6; OR
ANNEX 308.1). ALTHOUGH U.S. CUSTOMS PERSONNEL CAN EXPLAIN
EACH OF THE PREFERENCE CRITERIA IN GENERAL AND PROVIDE
EXAMPLES OF EACH, IT IS INCUMBENT UPON THE EXPORTER/PRODUCER
TO DETERMINE WHICH CRITERION APPLIES TO ITS GOODS BASED ON A
THOROUGH INVESTIGATION OF THE TERMS OF THE AGREEMENT. U.S.
IMPORTERS AND CANADIAN AND MEXICAN EXPORTERS AND PRODUCERS
MAY REQUEST ADVANCE RULINGS FROM U.S. CUSTOMS ON WHETHER A
GOOD ORIGINATES. SEE 19 C.F.R. 181.93.
Q: MUST ALL FIELDS ON THE CERTIFICATE OF ORIGIN BE COMPLETED?
A: ALL APPLICABLE FIELDS MUST BE COMPLETED TO THE BEST OF THE
EXPORTER'S KNOWLEDGE. A VALID CERTIFICATE OF ORIGIN IS
DEFINED AS BEING COMPLETE, SIGNED, AND DATED. AN INCOMPLETE
CERTIFICATE MAY LEAD TO THE DENIAL OF PREFERENTIAL TARIFF
TREATMENT UNDER NAFTA.
Q: MUST THE IMPORTER POSSESS A VALID CERTIFICATE OF ORIGIN FOR
ALL GOODS ENTERED USING THE SPECIAL PROGRAM INDICATORS "MX"
OR "CA" AS A PREFIX TO THE TARIFF NUMBERS?
A: NO. THE SPECIAL PROGRAM INDICATORS ARE USED TO CLAIM THE
PREFERENTIAL NAFTA RATE FOR ORIGINATING GOODS AND IN THIS
CASE THE IMPORTER MUST POSSESS A VALID CERTIFICATE.
HOWEVER, THESE INDICATORS ARE ALSO USED TO CLAIM THE
PREFERENTIAL NAFTA RATE FOR GOODS SUBJECT TO TARIFF
PREFERENCE LEVELS AND FOR GOODS REPAIRED OR ALTERED IN
MEXICO OR CANADA. IN THESE LATTER CASES, A VALID
CERTIFICATE OF ORIGIN IS NOT REQUIRED AND, INDEED, WOULD BE
INAPPROPRIATE SINCE THE GOODS ARE NOT ORIGINATING.
QUESTIONS REGARDING THIS MESSAGE MAY BE DIRECTED TO THE
NAFTA HELP DESK AT (202)927-0066.
JANET L. LABUDA