by Sue Senger
 
Editor's Note: In honor of the 20th Anniversary of the North American Free Trade Agreement, I am pleased to republish the most popular article that has ever appeared on the International Business Training website. This article first appeared in 2003.
Over the past several years of writing NAFTA articles, I have received many questions about NAFTA issues. I have compiled a list of the top 10 questions and wanted to share them.
 
1. Which Harmonized Number should appear in Block 6 of the NAFTA Certificate of Origin: the US, Canadian or Mexican tariff number?
 
The numbers should be the same in all tariffs at the 6-digit level, but if they are different, the producer should determine if the number provided by the buyer is acceptable. If it is, then use the Harmonized System (H.S.) number.
The prudent exporter/producer should obtain a ruling when there is a H.S. number difference between countries. Canada now requires that invoices indicate the full 10 digits of the Canadian tariff schedule.
 
2. May Customs Brokers sign certificates?
 
Yes, if they possess a valid power of attorney from the party who would otherwise complete the certificate (exporter/producer). A customs broker may not prepare a certificate based on a power of attorney from the importer. The importer is not authorized to sign the certificate.
 
3. How do I know if my good is subject to an RVC (regional value content) requirement?
 
If your good is wholly obtained or produced in a NAFTA country (all materials traced to earth, preference criteria A), or is produced entirely in the NAFTA territory exclusively from originating materials (preference criteria C), it is not subject to RVC requirements.
If the good meets the specific rule of origin (preference criteria B), the specific rule of origin in General Note 12 will indicate whether or not the good is subject to an RVC requirement.
 
4. Can more than one preference criterion apply? Can persons preparing the certificate choose the preference criterion they like best?
 
It is possible for a product to fit into preference criteria A, B and C. The party may use any preference criterion that allows qualification.
 
5. How important is the Harmonized System number? Do I need to know that number before I can determine if our goods qualify under NAFTA?
 
The benefits of NAFTA, for most products, are based on either Tariff-Shift or Value-Content Rules. Since determining the specific rule of origin applicable to a product is according to the Harmonized System, it is imperative the correct classification number be determined. If you have the wrong classification number, you will choose the wrong rule of origin, fill out the NAFTA Certificate of Origin incorrectly, and the importer will incorrectly claim the goods are eligible for NAFTA.
Many rules of origin require classification of the bill of materials to determine qualification under NAFTA. Understanding the Harmonized System of tariff classification is a critical prerequisite for applying the rules of origin.
 
6. Our freight forwarder determined our classification number. Can we hold the freight forwarder responsible for an incorrect classification number?
 
No, the exporter of record is responsible for determining qualification under NAFTA, including the correct classification. Relying on a freight forwarder to classify a product is very risky.
In order to properly determine the classification of a product, you need detailed knowledge of that product. That may require that you involve an engineer or production manager while you are reviewing the legal notes at the beginning of chapters and sections of the tariff to determine proper classification.
 
7. I am a documentation clerk at my company. Should I sign the NAFTA Certificate of Origin?
 
The person who signs the NAFTA Certificate of Origin must be knowledgeable and responsible and have authority to commit the exporter. Customs authorities will question certification by clerks and others who are neither knowledgeable nor authorized to represent the exporter.
There are penalties associated with incorrect completion of the NAFTA Certificate of Origin. The person signing the NAFTA Certificate must understand their liability. Export companies must realize that a person completing the certificate without proper training and understanding of the qualification process established by the NAFTA Rules of Origin is subject to criminal and civil penalties. Therefore, they should carefully decide which person should their NAFTA Certificates of Origin.
 
8. Does our product qualify for NAFTA if made in the United States?
 
Not automatically. The product must meet NAFTA rules of origin to qualify. There is a clear distinction in "origin of goods" versus "originating in a North American country."
Rules of origin are designed to ensure NAFTA benefits are accorded only to goods produced in the North American region, not goods made wholly or in a large part in other countries.
The rules of origin specify that goods originate in North America if they are wholly North American. Goods containing non-regional materials are also considered to be North American if the non-regional materials are sufficiently transformed in the NAFTA region so as to undergo a specified change in tariff classification.
 
9. How long do I have to keep records on NAFTA shipment?
 
Records are to be kept for a minimum of five years after the date the Certificate was signed or for periods longer than five years if specified. Article 505 of the NAFTA Agreement specifies that along with the Certificate of Origin, other records required to be kept for five years are:
The purchase of, cost of, value of, and payment for the good that is exported from its territory,
The purchase of, cost of, value of, and payment for all materials, including indirect materials, used in the production of the good that is exported from its territory, and
The production of the good in the form in which the good is exported from its territory.
 
10. What should an exporter in the United States do if, after completing and signing a Certificate of Origin, they have reason to believe that the certificate contains information that is not correct?
 
Within 30 calendar days of finding this error, the exporter must notify in writing all persons to whom the certificate was given of any change that could affect the accuracy or validity of the certificate. ( Vivian )18 Dec,2012

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