NAFTA Rules of Origin – Advance Rulings
6/23/2003 - by Sue Senger

Since I began writing this column on the North American Free Trade Agreement (NAFTA), I have received a number of questions from readers about whether or not their specific products qualify for preferential duty under the NAFTA Rules of Origin.

If in doubt, importers, exporters and producers of goods can (and should) obtain advance rulings from the Customs Administrations of Canada, Mexico and the United States for importations of goods into each country under NAFTA. Advance rulings will be issued on a wide range of NAFTA related issues, including:

• Whether an imported good qualifies as an originating good and thus qualifies for preferential treatment under the NAFTA.
• Whether a specific regional value-content requirement or tariff classification change requirement is met.
• Whether the proposed marking of a good satisfies country of origin marking requirements.

Canada, Mexico and the United States are bound by the rulings that they issue. Rulings will be applied to importations covered by the rulings beginning on the date of issuance or on a later date as specified in the ruling. An advance rule may not apply if the imported goods differ materially from the goods that were the subject of the ruling, or if the person requesting the ruling has failed to act in accordance with the terms and conditions of the ruling.

If an advance ruling is no longer valid, it may be modified or revoked. Generally the modifications or revocation will only apply to importations that occur after the date of the modification or revocation. Reassessments will only be made retroactively in certain limited circumstances such as when the person to whom the advance ruling was issued has not acted in accordance with its terms and conditions or when the modification or revocation is to the benefit of the person who requested the ruling.

A person who has received an advance ruling has the right to appeal that ruling.

Procedures in Mexico

Importers in Mexico and exporters and producers in the United States and Canada may request an advance ruling from:

Administracion General Juridica de Ingresos
del Servicio de Administracion Tributaria de Mexico
Av. Hidalgo No. 77, Modulo 1 P.B.
Col. Guerrero 06300
Mexico
Fax: 011-52-555-228-6802

Requests for advance rulings may also be made through a Mexican Customs broker. Requests should be made in Spanish.

Applications must be submitted in writing and limited to matters described in Article 509 of the agreement. Mexican Customs must treat the information received as confidential. Therefore, details of the ruling will only be released to the person to whom the ruling was issued.

The ruling must be made within four months. Exporters who need to ship goods to Mexico before the advance ruling is issued should be aware that their importers can make a claim for NAFTA tariff preference up to one year after the importation of a good and apply for a refund of customs duties paid as a result of the good not being accorded preferential tariff treatment at the time of importation.

U.S. companies are advised that the requests should be as detailed as possible. For example, if an exporter wishes to have an advance ruling on whether or not a certain input disqualifies the exported good from meeting the NAFTA rule of origin because a tariff shift requirement may not be met, the exporter should describe both the input and finished product to such an extent that Mexican officials could determine the tariff classification of the input and finished product. Incomplete requests will only delay the issuance of a ruling.

Procedures in Canada

Importers in Canada and exporters of goods in Mexico and the United States may obtain an advance ruling regarding future importations. Requests should be made in writing to the Chief of Rulings and Appeals in the customs region in which most of the importations will occur. Requests for advance customs rulings should be made online using the advanced ruling form.

Customs will review all written applications and will advise the applicant of any additional information that is required. Canada will issue these rulings within 120 days from the receipt of complete information.

An advance ruling number can be noted on the Certificate of Origin, the Canada Customs Invoice, or in the description field on the B3 accounting document. Although anyone importing the goods covered can use the number and is encouraged to do so, the ruling is only binding with regard to the person(s) to whom the ruling was issued. All information received is treated as confidential and therefore details of the rulings will only be released to the persons to whom the ruling was issued.

Procedures in the United States

Importers in the United States, and exporters and producers of goods in Canada and Mexico may obtain advance rulings regarding application of the Agreement to prospective transactions from the U.S. Customs Service (Homeland Security). Advance rulings may be requested in accordance with the procedures described in Title 19 of the code of Federal Regulations, Part 181.92.

Requests must be written and should be directed to:

Office of Regulations and Rulings
1301 Constitution Ave. NW
Washington, DC 20229