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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

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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

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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

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• 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

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• 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

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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

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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

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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

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© Copyright 2013 Mike Allocca. All

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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)

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© Copyright 2010 Mike Allocca. All

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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

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© 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

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© 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