NAFTA Exporter Eligibility

Steps to determining eligibility of my products under NAFTA

1. Identify the exported good and determine the tariff classification number (HTS to six digits or Schedule B Number) of the finished product(s). Schedule B numbers can be found at www.census.gov. For HTS numbers, go to the Classification using the harmonized tariff schedule section.

   What is an HS/Schedule B number? Schedule B, is a statistical classification of domestic and foreign commodities that are exported from the United States. All of these commodities are assigned a ten-digit Schedule B number. The first 6 digits of the Schedule B number are the same as the corresponding Harmonized Tariff Schedule number for imported commodities. This harmonized system is a universal classification method in which the same 6-digit number is assigned to a good regardless of the country of origin.

2. Check the duty rate for the product being shipped to Canada or Mexico. If you are using the HTS system, look at the first column or Most Favored Nations (MFN). If the duty rate for "Most Favored Nations" is zero, a NAFTA certificate is not necessary. If there is a duty and the product qualifies for NAFTA, the customer can receive preferential duty rates on the product. Duty rates can be found at www.usitc.gov/taffairs.htm or by calling the U.S. Trade Information Center at 1-800-USATRADE (please have the first six digits of the HTS or Schedule B Number ready).

3. Find the NAFTA rule of origin that applies to the finished product. A brief explanation of the rules of origin can be found at the Preference Criteria section. Apply tariff shift and/or RVC rule for foreign components. For more detailed information visit www.customs.gov/nafta/rulesorg.htm

4. Review the bill of material and prepare a list of components and intermediate materials used to produce the finished product. Determine Country of Origin and cost for each immediate component.

5. Determine which of the components or materials used to produce the finished product are NAFTA originating (of U.S., Mexico or Canada origin), and which are NON-ORIGINATING. If all components are NAFTA origin, STOP, goods qualify for NAFTA under Rule C. If the exported item contains ANY non-NAFTA (foreign) components, PROCEED to

6. Find the classification number using the harmonized tariff schedule of all NON-ORIGINATING components or materials.

7. Apply the rules of origin Preference Criterion and determine whether the tariff shift or change in tariff classification occurs and/or whether the regional value content (RVC) rules are met for NON-ORIGINATING components or materials.

8. If Tariff Shift is required for eligibility,
   1. Each non-NAFTA component needs to be classified with HTS classification.
   2. Determine whether the component undergoes "substantial transportation" from component classification to finished article classification (shift in tariff).
   3. If required tariff shift (according to rule) does not take place, STOP - the good does not qualify for NAFTA (unless De Minimus applies).
   4. If required tariff shift is met and value content is not required, STOP - the good qualifies for NAFTA under Rule B.
   5. If required tariff shift is met and value content needs to be determined - PROCEED.

9. If Regional Value Content (RVC) is required for eligibility
   1. Determine value (Customer's cost) of each foreign component.
   2. Establish NAFTA valuation methodology to be used, Transaction Value or Net Value.
   3. For Net Value, the total cost of all foreign components must not exceed 50% of the manufacturing cost to produce the exported good.
   4. For Transaction Value, the total costs of all foreign components must not exceed 40% of the transaction cost to your NAFTA customer.
   5. If RVC is met, STOP - the good qualifies for NAFTA under rule B.
   6. If RVC is NOT met, STOP - the good does NOT qualify for NAFTA.

10. Complete the NAFTA Certificate of Origin for all goods that qualify for NAFTA.