Frequently Asked Questions and Answers
- Does my good qualify for preferential tariff treatment under the NAFTA?
- Where can I obtain a NAFTA certificate of origin?
- Who is permitted temporary entry into another NAFTA country based on the rules of the Agreement?
- What can I do if I am a Canadian citizen experiencing difficulty entering the U.S. or Mexico for the purposes of conducting business under the provisions of the NAFTA?
- How does the NAFTA affect the tariff rates between Canada and the U.S.?
- How does the NAFTA affect the tariff rates between Canada and Mexico?
- 7. Do North American raw materials manufactured into finished goods in Puerto Rico qualify under NAFTA to be shipped into Canada duty free?
- How can I find out which national tariffs apply for different originating goods under the NAFTA?
- How can I obtain information on NAFTA customs procedures?
- My company ships Canadian made products to the United States. Can I submit a blanket NAFTA form with all our products? Who would I submit this form to?
- My company is based in Canada and I am looking to provide maintenance and repair services in the United States. Am I expected to pay taxes in the United States?
- I want to purchase a product from a company based in the United States, but that company refuses to sell to Canadian customers. Is this permitted under the NAFTA?
- What has been NAFTA’s Impact on Labour and Environmental standards in North America?
1. Does my good qualify for preferential tariff treatment under the NAFTA?
In order to claim the NAFTA tariff preference you will need a Certificate of Origin form. This must be completed and signed by the exporter of the goods. Where the exporter is not the producer, the exporter may complete the certificate on the basis of: knowledge that the good originates in the NAFTA region; reasonable reliance on the producer’s written representation that the good originates in the NAFTA region; or, a completed and signed Certificate of Origin voluntarily provided to the exporter by the producer. Please contact the Canadian Border Services Agency for further information on the NAFTA Certificate of Origin.
2. Where can I obtain a NAFTA certificate of origin?
3. Who is permitted temporary entry into another NAFTA country based on the rules of the Agreement?
In order to ensure that the provisions set out in the NAFTA to facilitate business in North America reach their full potential, Chapter Sixteen of the Agreement permits the temporary cross-border movement of business travelers between the NAFTA countries. The provisions contained within Chapter 16 complement rather than replace a NAFTA country's existing provisions for temporary entry.
There are four categories of travelers eligible for temporary entry from one NAFTA country into another. They are: business visitors, traders and investors, intra-company transferees and professionals. There are specific qualifying criteria which every potential entrant must meet under each of the categories in order to be permitted entry into another NAFTA country. For more specific information on the temporary entry criteria set out in the NAFTA, please see Cross Border Movement of Business Persons and the North American Free Trade Agreement.
4. What can I do if I am a Canadian citizen experiencing difficulty entering the U.S. or Mexico for the purposes of conducting business under the provisions of the NAFTA?
It should be noted that any country, including the NAFTA countries, has the sovereign right to determine the admissibility of persons entering its territory. Canadians traveling to the U.S. or Mexico must comply with the existing legal requirements associated with entry into these countries. This includes demonstrating a legitimate purpose for the trip and a well established reason for return, among others.
If you qualify under all of the criteria set out in the NAFTA for one of the four categories of temporary business traveler, have provided the correct documentation upon attempting to enter a NAFTA country under one of these categories, and are still encountering problems entering the U.S. or Mexico for business purposes, you can contact the Department of Foreign Affairs and International Trade by phone at 1-800-267-8376 to report your experience. They may be able to provide you with additional advice.
5. How does the NAFTA affect the tariff rates between Canada and the U.S.?
The NAFTA did not affect the phase-out of tariffs which had been agreed upon under the Canada- U.S. Free Trade Agreement (FTA). The phase-out of FTA tariffs was completed on January 1, 1998. As of that date, virtually all tariffs on Canada- U.S. trade in originating goods were eliminated. Some tariffs remain in place for certain products in Canada's supply-managed sectors (e.g. eggs, dairy and poultry products). In the U.S., tariffs remain in place for certain products such as sugar, dairy, peanut and cotton.
6. How does the NAFTA affect the tariff rates between Canada and Mexico?
On January 1, 2003, the final tariff reduction in the Canada-Mexico phase-out schedule was done. The Mexican Administration showed its commitment to the NAFTA by proceeding with the tariff cuts in the face of significant political opposition from certain sectors. Another good example of our commitment to further trade liberalization through NAFTA is the amendment of rules of origin for certain products, including alcoholic beverages and petroleum/topped crude oil, which was implemented on January 1 as well. These changes make it easier for manufacturers of these products to qualify for duty-free treatment under the NAFTA.
7. Do North American raw materials manufactured into finished goods in Puerto Rico quality under NAFTA to be shipped into Canada duty free?
The NAFTA agreement covers Canada, Mexico and the United States, including the 50 states, the District of Columbia and Puerto Rico. Generally, goods produced in the territory of one or more of the Parties (Canada, United States, Mexico) from materials originating from the NAFTA region can be shipped duty free if they meet the rules of origin requirements.
8. How can I find out which national tariffs apply for different originating goods under the NAFTA?
For Canadian tariff lines, please consult the Canada Border Services Agency to determine the tariff rates which apply. For U.S. rates, please consult the U.S. International Trade Commission website Mexico has posted the NAFTA tariff schedule on their Secretaria de Relaciones Exteriores site.
9. How can I obtain information on NAFTA customs procedures?
The Canada Border Services Agency publication Trilateral Customs Guide to NAFTA provides an overview of the rules of origin and procedural obligations for customs administration.
The Customs administrations of the three NAFTA Parties maintain a NAFTA customs-related websites which contains useful advisory information on all three countries in English, French and Spanish. For Canada, please see the Canada Border Services Agency's NAFTA page.
Further information can also be obtained by contacting the Customs administrations directly.
10. My company ships Canadian made products to the United States. Can I submit a blanket NAFTA form with all our products? Who would I submit this form to?
You will need to complete a separate Certificate of Origin for each shipment to certify that you qualify for the preferential tariff treatment accorded by NAFTA.
Since the goods are entering the United States, you may wish to consult U.S. Customs and Border Protection (U.S. CBP) in order to get an “advance ruling” and any additional information relevant to the goods being exported to the United States. An advance ruling is binding and it would provide you with predictability as to how your goods would be treated when entering the United States and would facilitate movement through the border.
The following link to the U.S. CBP website may be useful in that regard: http://www.cbp.gov/xp/cgov/trade/trade_programs/international_agreements/free_trade/nafta/
11. My company is based in Canada and I am looking to provide maintenance and repair services in the United States. Am I expected to pay taxes in the United States?
The NAFTA agreement establishes principles that are designed to ensure that cross-border trade in services among the three Parties to the NAFTA – Canada, Mexico and the United States – is conducted in a non-discriminatory manner. The principles apply to the provision of services from one NAFTA country to another, within a NAFTA country by an individual provider from another NAFTA country, or the consumption of services in one NAFTA country by consumers from another NAFTA partner.
Normally, if a company does not have a permanent establishment (a place of management, a branch, an office, a factory etc.) in the United States, its profits would not be subject to federal income tax. Please refer to article V “Permanent Establishment” in this link. http://www.fin.gc.ca/treaties-conventions/usa_-eng.asp.
However, for more specific details on taxation in the United States, you are advised to contact the Internal Revenue Service (IRS) as that is the agency best placed to provide information on United States tax rules and regulations.
12. I want to purchase a product from a company in the United States, but the company refuses to sell to customers based in Canada. Is this permitted under the NAFTA?
Most trade in North America is governed by the North American Free Trade Agreement (NAFTA), which has led to the elimination of barriers to trade and facilitated cross-border movement of goods and services between Canada, the United States and Mexico. The NAFTA is a great success story and has provided a business environment in which investment and commerce help secure long-term economic growth for its partners, including Canada. As such, businesses operate within a predictable, rules-based framework allowing commerce to flow unimpeded.
Within this framework, businesses develop their own strategies and make commercial decisions deemed in their best interest in a North American context, including decisions with regard to where and to whom they choose to sell their product. As such, whether retailers choose to sell or not across the border is purely a commercial decision and not within the scope of the NAFTA.
13. What is the Impact of NAFTA on Labour and Environmental standards in North America?
Trade agreements can create opportunities to promote mutually supportive labour and environmental policies. Labour and environmental provisions have been very important in improving the whole scope of our relations with trading partners, and have resulted in an array of cooperative activities in areas of key importance to Canada's international labour and environmental agenda.
The North American Agreement on Labour Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC), which came into force in January 1994, include enforceable provisions that promote transparency and public participation, encourage high levels of domestic labour and environmental protection, and obligate the Parties to effectively enforce their labour and environmental laws. In addition, both the NAALC and NAAEC contain a robust dispute resolution mechanism with monetary penalties and/or trade sanctions as well as a framework to undertake cooperative activities.
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