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What are the benefits of NAFTA on Manufacturing?

15 Jul 2014

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NAFTA is a trilateral agreement between Canada, United States, and Mexico to facilitate trade among these countries. In more specific terms, manufacturers in Mexico that import goods into Mexico which originate in a NAFTA country, are exempt from paying import duties.

The key term here is “originate,” which is not to be confused with shipped from. To determine if a good “originates” in a NAFTA country, the rules of origin must be applied to the goods themselves. Rules are listed in General Note 12(t) of the Harmonized Tariff Schedule of the United States

In addition, goods leaving Mexico for subsequent entry into Canada or the U.S. are also duty-free in the receiving country if the good originates in a NAFTA country. It is important to note that shipping a good manufactured in Mexico to the U.S. does not necessarily mean it satisfies the rules of origin under the NAFTA. To determine if it does, one must consult General Note 12(t) of the Harmonized Tariff Schedule.