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International Trade and Customs—Continued
North American Free Trade Agreement (NAFTA)
The NAFTA has been in effect since January 1994 and is the world’s largest free trade area.
One of the principal purposes of the NAFTA is to eliminate barriers to trade and facilitate the
cross-border movement of goods and services throughout the free trade area.
In order to be considered originating under the NAFTA, all goods must be either wholly
produced or manufactured in Canada, Mexico or the United States, or they must meet the
Specific Rules of Origin of Annex 401 of the NAFTA. The Specific Rules of Origin require either
a tariff classification change (non-originating goods undergo sufficient processing to change
the classification), the application of a regional value content costing methodology, or both. A
NAFTA Certificate of Origin must be provided by the vendor, producer or exporter of the goods
verifying they meet the specific rule of origin requirements and qualify as originating under the
NAFTA before the goods can move into another NAFTA country under the preferential duty
rates.
Other Free Trade Agreements
The Government of Canada has embarked on an aggressive trade negotiation agenda with
many of Canada’s trading partners. As a result, goods shipped directly to Canada from certain
countries may be entitled to benefit from lower or “free” duty rates.
In addition to the NAFTA, Canada also has trade agreements in place with Chile, Columbia,
Costa Rica, Israel, Peru, Panama, Jordan and the European Free Trade Association which
includes the countries Iceland, Liechtenstein, Norway and Switzerland. Trade agreements
have also been signed with Honduras, but will not be implemented until legislation has been
passed. The Canadian Government is also currently conducting trade negotiations with 13
additional countries and trading blocs.
Similar to the NAFTA, under these other free trade agreements, the exporter or producer of
the goods must provide the Canadian importer with a Certificate of Origin certifying that the
imported goods meet the specific rule of origin requirement for that product.
Current as of June 30, 2013
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