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Your NAFTA Certificate of Origin: Taking a closer look

 
*USMCA/CUSMA replaced NAFTA on July 1st, 2020. Read More...
 
Does it frustrate you when you receive an incomplete NAFTA certificate from your supplier?
 
Do you often wish there was an easier way to check if your NAFTA certificates are valid?
 
Do you wonder whether you can rely on a supplier’s NAFTA certificates to be correct?
 
The NAFTA Certificate of Origin is a legal document that allows importers to claim lower duty rates on qualifying goods traded between the United States, Mexico and Canada. 
 
The certificate of origin must be completed legibly and in full by the exporter and must be in the possession of the importer at the time the NAFTA duty rate isclaimed.
 
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Certificates that are incomplete or contain inaccurate or contradictory information may be subject to additional scrutiny by Customs officials which in turn may lead to a full NAFTA audit.
 
If Customs officials determine that the lower NAFTA duty rate was claimed without a valid certificate, the importer will have to correct past entries and pay the duties owing – plus interest – and may have to pay additional fines on top of that.
 
Taking a closer look at key areas of your NAFTA Certificates will allow you to identify potential risk areas and avoid unnecessary costs.
 
How to be sure?
 
When reviewing the NAFTA certificate, be sure to check that it has been fully completed with all the correct notations.  If this seems obvious, then you may be surprised to know that many certificates are submitted with missing information and invalid notations.
 
Some fields are fairly basic, so checking that they’re complete should suffice. Other fields are more complex and can benefit from closer attention. We recommend paying special attention to the fields detailed in the following section, as mistakes can more easily be made here.
 
The How-To Section
 
The information below should help you ensure your NAFTA certificates are compliant with the requirements:
 
  • Field 6 (HS Tariff Classification Number) – This field must show the correct classification number for each product.  The HS number determines the specific NAFTA rule of origin applicable to the product.  Rules of origin are different for different classifications so it is imperative that the correct HS number is used.
  • Field 7 (Preference Criterion) – This field must show a notation of A through F with the correct preference criterion, depending on where the product was sourced or manufactured, the extent of the manufacturing process and/or the source and place of manufacture of any components used to manufacture the finished good.  Cautionary note: preference criterion A may not be correct unless the product was taken out of the ground, air or waters of a NAFTA country.
  • Field 8 (Producer) - If the exporter is the producer, this field should show YES, otherwise it would show NO(1) NO(2) or NO(3).  Cautionary note A: fields 8 and 3 must match so if one field shows that the exporter is not the producer and another shows that the exporter is the producer, you have a problem.  Cautionary note B:  Even if the instructions allow for certification based on knowledge NO(1) the exporter must have and maintain supporting documentation for the certificate so NO(3) is highly recommended in this field.
  • Field 9 (Net Cost) – This field must show NC if the net cost method was used to calculate regional value content; otherwise this field must show NO.  This field must be complete in conjunction with both field 6 (Does the specific rule of origin for the classification code require/allow a regional value content calculation?) and with field 7 (If your good is wholly obtained from the ground in a NAFTA country then regional value content would not have been calculated using the net cost method).  Cautionary note: A dollar amount is neither required nor permitted in this field.
  • Field 10 (Country of Origin) – This field may show United States, Mexico or Canada.  If the goods are manufactured in a non-NAFTA country and do not qualify for NAFTA, they should not be listed on the NAFTA certificate.  These non-NAFTA items can be included on a separate document containing non-eligible items.
  • Field 11 (Signature) – Someone with knowledge of the facts must sign the NAFTA certificate, thus you should question certificates signed by individuals who may not have sufficient knowledge and understanding of the manufacturing/sourcing process.  The date in this field should be the date on which the certificate was signed (and yes, it is unlikely that the individual was in the office on New Year’s Day signing NAFTA certificates).
We can help!
 
At Cole International, we have a dedicated, experienced NAFTA team that offers services to fit your company’s needs.  If you’d like help with NAFTA certificates or simply want more information, contact one of our NAFTA specialists today.
 
Contact us today!
 
Information provided by: NAFTA & Free Trade Dept. - Cole International
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