Moderator: Linda Abbruzzese
June 9, 2009
2:15 pm CT
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Linda Abbruzzese: Thank you and good afternoon for those of you joining on the East Coast and good morning for those of you joining us on the West Coast. I’d like to thank everybody for joining for our webinar on the Canada webinar series on NAFTA documentation.
I’m Linda Abbruzzese, International Trade Specialist for the Marketing Communications Office, (RDF) Personal Service at the Department of Commerce. This webinar is being brought to you in cooperation by your Commercial Service and the Trade Information Center.
And in this webinar we will talk about the NAFTA documentation requirements. How to properly fill out this documentation as well as how to classify your product.
This (unintelligible) member. This webinar will be presented by JoAnn Queen who is our International Trade Specialist at the Trade Information Center. A question and answer session will follow after this presentation where you can ask your questions and she will be available at the end to help you end your questions.
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Now I’d like to introduce live online our International Trade Specialist of the Trade Information Center, JoAnn Queen.
JoAnn, thank you very much for joining us.
JoAnn Queen: You are so welcome Linda and thank you for those who - thank you to everyone who has signed on and will be a part of this webinar this afternoon.
It’s not going to be a very lengthy presentation, but I definitely want you to, you know, leave with some of the basics and, you know, having an understanding of qualifying your goods and using the most appropriate classification numbers. That is crucial.
And you’re also going to learn some of the frequent misconceptions about NAFTA and doing business with or exporting into Canada. And absolutely become familiar with NAFTA record-keeping requirements. That is very, very crucial because NAFTA certificates can be audited so you want to be able to make certain that all of your documentation and all the proof that your products qualify are in your possession.
And, you know, this is part of the Canada webinar series so we want to consider Canada first. And also think about webcam 2009 which is going to be coming up starting in September. And this is a one-on-one business meeting with potential business partners that you can do business with. And as you’ll see toward the end of my slide presentation, there is information on how to register and who you need to contact.
So back to you Linda.
Linda Abbruzzese: Okay, I’ve moved it to the next slide.
JoAnn Queen: Thank you.
So, you know, when you think about the Free Trade Agreements, and especially NAFTA and doing business in Canada, keep in mind that the objective is to promote trade between the U.S. and Canada and Mexico. The Free Trade Agreements -- and maybe it shouldn’t even say Free Trade Agreement because a lot of people think that means I can just box up my things and send them across the border.
But there’s more to it than that. In addition to promoting trade, it’s giving greater market access to U.S. products and it also helps to promote fair competition when it comes to putting proposals together for contracts with governments in the NAFTA territories. And it also established the framework for further cooperation.
Keep in mind if you get a handle on NAFTA, you’re going to have a much easier time understanding qualifying your products and using the benefits of all the other trade agreements. Go to the next slide, Linda.
Now the immediate benefit and the one that seems to be the most important to our company is the fact that if your goods qualify and you provide the appropriate documentation, you’re not going to have to pay duties. Your customer isn’t going to have pay duties when they accept those goods into Canada. However, elimination of these duties is not automatic.
So you may hear people talk about, you’ve got to qualify your goods. And there are certain steps that must be followed to carry this process out. The bottom line is the products that you are manufacturing or that you are trying to export to Canada; they must contain sufficient North American content to meet the requirements of NAFTA and the NAFTA Rules of Origin. If you’re product was manufactured in China, that is not NAFTA originating.
So in order to take advantage of NAFTA, you - it’s not that you have to be an expert, but I encourage companies to understand some of the elements of the Free Trade Agreement. You can go on export.gov and pull up the text of the agreement and just familiarize yourself with what it says, what it contains.
You also want to ensure that products meet the Free Trade Agreement requirements. And if you are making a product here in the U.S. and it includes some foreign input, you’re going to have to go to the NAFTA Rules of Origin to make certain your good qualifies. And then complete the documentation, because without that document or without a certification statement on your commercial invoice, your Canadian importer won’t get the benefit of the Free Trade Agreement.
So before I get into some of the other sides, some things that I just kind of wanted to put out there right up front were a few of the common misconceptions about NAFTA. And one is that U.S. Canadian and Mexican tariffs are the same. That is a misconception. It also is a misconception that tariffs are zero. Canada has its own tariff schedule. There MSN tariffs and there are NAFTA tariffs.
So under MSN there may be tariffs. So to get the NAFTA percentage rate which is zero, you’re going to have to go through that qualifying process. Originating means purchased in a NAFTA country and I get that often with companies that I counsel. Originating means a little more than that, especially NAFTA originating.
And once you go through the process to qualify your product, it is therefore deemed as NAFTA originating. So it has - it doesn’t mean if - it qualifies if you purchased it in a NAFTA country. Another misconception is that NAFTA certification is mandatory and that NAFTA certificates are required to clear Canada customs. That is a misconception.
Going through the NAFTA process is totally voluntary. You don’t have to do it. It’s up to you. But if you do it, then it’s like selling your product to the - your Canadian customer at a discount. And the lack of a NAFTA Certificate of Origin does not prohibit your item from clearing Canada customs.
A producer -- another misconception is that the producer has to give a supplier or a buyer a NAFTA Certificate of Origin. That is also a misconception. The producer can voluntarily go through the process, complete NAFTA Certificates and give to their customers, but there is no requirement that the producer do this.
Another misconception that came up recently has to do with original NAFTA Certificates of Origin are on yellow paper. That is a misconception. I’m not sure where that came from, but that is not correct. Another thing that I just want to put out there is if you look up Canadian tariffs and under MSN there are zero duties, you don’t need to worry about NAFTA. You don’t have to qualify your goods because when it goes into Canada there are no tariffs that are going to be assessed on your product.
Go to the next slide, Linda. And here’s a list of some of the - well, all of the free trade agreements that are in force as we speak.
The next slide.
So an important thing is qualifying your product. That is so important; it’s not all about, “Well, everything is made in the United States. I made my product in the United States.” That’s great, but that’s only half of the picture.
The other half is going through the process of qualifying your goods. Now if you’re exporting a natural resource, then there’s probably not a whole lot you need to do. But if you have a product that you manufactured and you used some foreign input, you’ve got to go through the process and qualify your product.
Go to the next slide.
So in order to follow - get these steps taken, the first thing you need to do is get the appropriate Harmonized System number for your finished good as well as the appropriate HS code for any foreign input. That’s important.
Then, the next step you could carry out is using the HS number for your finished product, go to the Canadian tariff schedule and check the duty rates. Under MSN it may be zero, it could be 2%, 3%; if it’s 10%, if you want to eliminate that duty for your Canadian importer, you have to go through the requirements and make certain that your product meets the requirements of the specific NAFTA Rule of Origins. And you’re going to find that Rule of Origins by using the HS code. The Rules of Origin are - they’re made out chronologically according to the HS code chapter.
Could I have the next slide?
So, you know, just to, you know, give you some information to help you understand the classification systems, the Harmonize System numbers or HS numbers are the general numbers for certain categories of goods that were created by the World Customs Organization. The Schedule B codes are numbers that were created by the U.S. Now the Schedule B includes the HS code plus four additional digits.
And the Schedule B codes are normally used if you have to comply with the Automated Export System or AES. The Harmonized Tariff Schedule of the United States are codes that are used on goods when they are imported into the United States. But, again, the HTS codes start with the Harmonized System number -- the first six digits are harmonized around the world, and the United States added four more digits behind the six to come up with the Harmonized Tariff Schedule of the United States. And those codes are used for importing goods into the U.S.
Can I have the next slide?
So one of the products that we’re going to look at, look at the classification number and, you know, and understand that, you know, how it was produced and the fact that they were foreign inputs, so of course we’re going to look at the Rule of Origin, but we’re going to use paint, and the Harmonized code is 3208.10 and it’s based on polyesters. And I believe the polyesters were imported.
So what you want to understand is the first two digits represent the chapter, the first four digits represent the heading, and then the subheading are the first six digits, also known as the Harmonized System Number. And then you have the tariff item itself. So it’s important to understand about the chapter’s headings, subheadings, and even tariffs’ item because when you look at the Rule of Origin, it’s going to be saying certain things like “A change to subheading 3208.10 from any other chapter.”
So I want you to understand what that all means and we will take a look at how to apply this within that Rule of Origin.
Could I have the next slide?
And another example we’re going to look at will be plastic bags, also made part of - some of the input was imported. And again, Chapter 39, heading 3923, subheading 392329 and then tariff item 39232990; so chapter, heading, subheading, tariff, item. Very important in the qualifying process.
The next slide.
So to get started with the product classification, the people that I counsel, I usually send them to the Census website to use the Schedule B search engine and they - you can use that to, you know, to determine appropriate classification numbers for both the finished good and any foreign input. Don’t be anxious in classifying your products by looking at the number associated with parts and accessories.
You always want to do a search and find the most appropriate classification number for that item. And that’s the first general rule of interpretation.
Everything you can think of has a classification number. So you want to use that number, not the number specifically - that specifically says “Parts and accessories.” Stay away from that number as much as you can.
Could I have the next slide please?
So we’re coming up to NAFTA Rules of Origin. And, again, because the three NAFTA countries do not have a harmonized custom regime, our tariffs are different. Rules of Origin have to come into play when you make a product and there’s foreign input. So using the Rule of Origin, those rules define how much foreign input is allowed.
And then the Rules of Origin, just like the classification numbers are specific to certain products, the Rules of Origin are specific by product and are based on the Harmonized System. So if you have your HS code for your finished good, all you have to do is pull up the Rules of Origin, they go by chapter. And if your product falls in Chapter 32 or your classification number begins with 32, that’s your chapter; and you’re going to find the Chapter 32 within the Rules of Origin.
The Rules of Origin, they may require what’s called a tariff shift. It may require that you figure out - mathematically figure out the regional value content and another way of looking at regional value content is North American content, so you’re actually being required to mathematically figure out the percentage of North American content in your products.
Some of the Rules of Origin may require a tariff shift and North American content percentages. So the Rules of Origin are very, very important and you are, you know, you need to look at them and go by what that rule says. And of course if you have any questions or you need clarification, in the end you’re going to know who you can call and talk to about whatever NAFTA issue you may have.
Could I have the next slide, Linda?
So here’s the paint example. And the Harmonized number for paints is 3208.10. And it was manufactured in the United States and there was an imported acrylic acetate that was used in production. And the chapter that the acetate falls under is Chapter 39.
So the specific NAFTA Rule of Origin requires a tariff shift. And that just means a change in classification number from whatever the number was for the acrylic acetate into the classification number of the finished good. In this case the paint. So the rule says, “A change to headings 3208 through 3210 from any heading outside that group.” So keep in mind the paint falls in within these headings, 3208 through 3210.
The foreign input has to come from some other harmonized number heading that’s outside of that group. So in other words, if the acrylic acetate was 3206, that’s outside of that group. If it was 3212, that’s outside of that group. As it is, it actually falls in a different chapter altogether -- Chapter 39. So there’s been a change in classification number; the paints meet the requirements of the specific NAFTA Rule of Origin and therefore the paint is NAFTA originating.
Could I have the next slide Linda?
So the next example we’ve got the plastic bags and the harmonized number is 392329. The plastic bags were made from plastic pellets that were imported from Taiwan. And the classification number or the HS code is 3902.10. So keep in mind that’s the foreign input that we’re looking at.
Now in addition, regional value content -- and I’m giving you the answers -- so the regional value content is 75% using either the transaction value equation or the net cost equation. So the rule of origin says and it requires for the rule as it’s written, the requirement is a tariff shift and reason of value content.
So there’s a change to subheading 392329 which is the plastic bag from any other heading except subheading 392020 or 392071. So from any other heading is referring to the foreign plastic pellets from Taiwan. And the subheading for those pellets is 3902. So as you can see if you look at the Rule of Origin that is any other heading, 3902. That’s any other heading. It’s not 392329; it’s not the exception 392020 or 392071.
Okay, so we are good with that.
In addition regional value content or North American content must not be less than 60% using the transaction value equation or 50% if you’re using the net cost equation, okay? So what we’re telling you is that when we worked the regional value content equation and we used the transaction value and the net cost, the North American content is 75%. So therefore again the plastic bags qualify as NAFTA originating, even though there’s foreign input.
So I want you to understand that even though foreign input may be used, it does not totally prohibit your item from being NAFTA originating.
You have to use the Rule of Origin to make the determination your product qualifies as NAFTA originating because it’s got the foreign plastic pellets. Now the next slide Linda. And so as I was talking about the equation these are the equations for the transaction value and for the net cost. And you’re actually going to have to work those equations if regional value content is a requirement in the Rule of Origin for your product.
Okay so can I have the next slide Linda?
So here’s an example. The transaction value or TV minus the value of non-originating material, that’s the VNM divided by transaction value times 100. So this is how your equation is going to appear.
You’re going to have 200 minus the 90 which is the value of the non-originating material and then you’re going to divide by 200 which is the transaction value. And that comes to 110 over 200 times 100. And what you’re getting is 55%. Now if that’s the product, it is not meeting that 60% minimum when you use the transaction value. So under transaction value the product is not qualifying.
Can I have the next slide Linda?
So we’re now going to use net cost; and again, the net cost minus the value of non originating material divided by the net cost times 100 to get that percentage. So we’ve got 182 minus 90 divided by182 times 100. So that works out to be 92 divided 182 times 100. And you get under the net cost equation 50.5%. It is meeting the 50% minimum under net cost therefore using the net cost equation the product qualifies as NAFTA originating. So 60% is the minimum if you use the transaction value, 50% is the minimum if you’re using the net cost equation.
Some of the bigger difference in between transaction value and net cost, transaction value is the amount paid or payable for the item what you’re selling the item for. And the net cost amount will be what it cost to produce that item. There’s also additional information on export.gov that talks about items or expenses that are not included in the net cost. So the transaction value is going to be a higher amount than the net cost.
Can I have the next slide Linda?
Okay so we’ve got - we have paints and we have plastic bags and we have product X that met that 50% minimum under the net cost. So now it’s time to take a look at the preference criteria. And these are going to be letters and they are grouped into categories. And you really have to be careful as you take a look at the explanations for these letters. A lot of people jump to the conclusion that A is going to cover everything, but for the most part A probably would not cover manufactured goods because that is not a natural resource.
So could I have the next slide Linda?
And just, you know, just to, you know, give you some food for thought just keep in mind when you are looking at these letters, keep in mind first and foremost that when we are talking about NAFTA the product has to be produced in the United States, Canada or Mexico. It has to be. You cannot take components and send to Asia to be produced and put together there and bring it back to the US and expect it to be NAFTA originating. That doesn’t work. That item is going to lose the NAFTA benefits.
So wherever you see the good has to be wholly obtained or produced in a NAFTA country, that is exactly what it means; it has to be done here in the US. So if you are growing and harvesting and fishing things or mining things within one of the NAFTA countries, that’s NAFTA originating and you’re going to use A as the preference criterion.
If you are going to -- if you’ve manufactured goods like the paint and the plastic bags and both of those contained foreign parts or components or raw materials but as you notice in the slide it met the requirements of its specific NAFTA Rule of Origin that’s going to be B as in boy.
When you talk about C, C is a product that was manufactured using NAFTA originating parts and components. The same way a totally finished good can be qualified, parts and components that are manufactured in the US can also be qualified. You go through the same process. So if you make a good and you have used exclusively NAFTA originating parts or components and you have information to support your claim, you have proof, that product qualifies automatically. And you’re going to use C.
So you can’t have a foreign something that you put into production with the NAFTA originating parts or components because if that happens, that’s going to go back to being B as in boy. But if that good is manufactured exclusively with NAFTA originating parts or components it qualifies automatically and you are going to use C.
The preference criterion D covers goods where the HS code for the products and its parts is the same. So in this case, a manufacturer is allowed to use regional value content to see whether the good originates.
That - you know, I’ve had many callers who, you know, think they understand what that - what D means and they go ahead and they use D, but once we go over the process and we’re looking at the components and we find out that the components have their own classification number, different from the finished good, then it’s not going to be D.
So D is - D happens what I consider rare instances.
E; E applies to HS code specific, automatic data processing equipment, whereby these HS code specific pieces of equipment, the three countries agreed the actually harmonize the duty amount on these goods.
And even though some of these goods may come from some other place in the world, if they are imported into a NAFTA country, they could then be exported to another NAFTA country getting the benefit of NAFTA. And if that’s the case, you would use preference criterion E.
And F applies to certain agricultural products and one thing that comes to mind it had to do with fur skins. The - that’s only if the fur skin is being exported to Mexico. The agricultural sections were negotiated on a bilateral basis, rather than a trilateral basis.
Linda, can I have the next slide?
So you’ve got paints and you’ve got plastic bags and there is Product X. And so now you know that these three things qualify under NAFTA and we pretty much know the preference criteria for each one.
So then you want to go to the NAFTA Certificate of Origin. You want to pull that up and start putting that together.
Can I have the next slide, Linda?
And I just want to point out that with the NAFTA Certificates of Origin, if you are using the ones that say Department of Homeland Security, you are using the most current NAFTA Certificate of Origin.
If your NAFTA Certificate of Origin has an expiration date in the upper right-hand corner, just ignore that. That expiration date is between U.S. Customs and OMB. So it doesn’t mean that your NAFTA Certificate has now expired. So don’t worry about that.
There are instructions that most of you have probably seen and my personal opinion is that the instructions are an attempt to explain the different fields or what is to go in the different fields. So you can look at the instructions and determine, oh yeah, my product meets (Set) B, so I’m going to use that and fill out a NAFTA form.
And then come to find out that product was manufactured in Turkey. Well, it’s not going to do you any good because Turkey is not part of NAFTA, so you cannot do a NAFTA Certificate.
So let’s just take a look at the different fields. Field 1 is sort of explanatory but not because a lot of people have problem with that. Some people have a problem, you know, indicating themselves as exporter, but if you are exporting the item, if you are selling that item to someone in Canada, you for the purposes of NAFTA are the exporter and your information should be placed in Field 1.
For all of the fields where Tax ID is mentioned, Tax IDs are required. You cannot complete a NAFTA certificate without providing the Tax ID number. The only field that can be left blank is Field 2.
The only time - actually the only time a Field 2 should be completed is if you are selling your NAFTA originating product on a regular basis; monthly, weekly, biweekly basis to your customer in Canada, you can then put dates in there and the dates can be up to a year, which makes your NAFTA Certificate that you send to you Canadian importer valid for up to a year.
So every time you make a shipment to them, they have this one NAFTA Certificate of Origin that will cover that shipment. So you don’t have to worry about completing a NAFTA certificate every single time you ship. Make this one a blanket certificate, send the original to your customer and they are set for the year, unless, of course, something changes about your product.
In Field 3, the manufacturer name and Tax ID is going to be in that field. And in Field 4, the Canadian importer’s information and Tax ID number will be presented.
Now, if the exporter is just the exporter/seller of the item, and the exporter has obtained the goods from a manufacturer in the U.S. and the exporter/seller does not want the Canadian importer to know who the producer is, the exporter seller in Field 3 can put available to customs upon request.
So you don’t have to divulge who the manufacturer is. But if Canada Customs asks you, you have to provide that information to Canada Customs.
The other thing is if you are selling and exporting to multiple companies in Canada, in Field 4 you can say various. That is, it’s acceptable to say various.
And then we come to Description of Goods, and really that’s all is asked for; description of goods. So I can put in here paint, based on acrylic acetate or whatever else. But that’s all I need to put in there.
And then my next item, plastic bags. So I’m going to indicate the classification numbers, the HS codes in Field 6 for each of those NAFTA originating items.
In Field 7 I’m going to use B because these goods were made in the U.S., they contain foreign ingredients, foreign material but they met the rule of origin, so that’s going to be B as in boy.
If I’m the producer, I’m going to say yes in Field 8. If I buy from a manufacturer, I’m going to ask the manufacturer if the goods qualify and if they do, I’m going to ask for a NAFTA Certificate, and in Field 8, I’m going to say no, I’m not the producer and I’m going to follow that up with a 3 which tells the customs people I know the goods qualify because I have a NAFTA certificate from the manufacturer.
There are other number, No 1, No 2, but No 1 requires that you have - if you’re not the manufacturer, you somehow have to have personal intimate knowledge that these products qualify.
And if you are not in the manufacturing plant, then you wouldn’t really have personal intimate knowledge that it qualifies, so I - NAFTA, you know on the NAFTA form, No 3 is in my opinion the best response to place in Field 8, even if you say No 2. That means you have some other written representation from the producer.
For me, the producer if they give me something else other than a NAFTA Certificate, I want it to include the harmonized number of that good, I want them to give me the preference criterion and I want them to tell me if they had to use the net cost equation to qualify their product. I want all that information in that other document.
You know, any other document other than a NAFTA Certificate. I want the same information that would be contained in a NAFTA Certificate.
And then in Field 10 - well, getting to Field 9, if net cost is what we use to qualify the product, we’re going to say put in C for net cost. No, you don’t put any money amount. No money amounts on the NAFTA Certificate.
In Field 9 it’s either going to be NC or No. So if I didn’t use the net cost equation, I used the transaction value equation, I’m going to say No in Field 9. If my rule of origin did not require region of value content, I’m going to say No in Field 9.
And in Field 10, Country of Origin put U.S. for United States or CA for Canada.
Now, most importantly is the certification and it’s really important that whoever is completing this document, whoever is going to sign it read the certification because that also tells you everything that you need to know about completing this form.
And a lot of people just fill out the form and send it on and there’s no supporting information or documentation. That can be a problem, so read the documentation before signing and putting your title and the dates and providing this NAFTA Certificate of Origin to your Canadian importer.
And another thing that comes up every once in a while, some of my callers want to make their commercial invoice and the NAFTA Certificate of Origin the same.
While these are two different documents, one document you’re going to always use and you’re going to always provide that, but NAFTA Certificates of Origin, those are voluntary documents; this is a voluntary exercise so you’re not - you don’t always - you may not always do a NAFTA Certificate of Origin.
So - and as you can see, most of the information is different from what you would find on a commercial invoice.
Under Field 5, I have people putting quantities. I have them putting part numbers and I have them putting SKU numbers. All you need to put is just say what the item is; it’s paint or it’s plastic bags or it’s motor oil. That’s all you need to put in there and then the appropriate HS code.
So NAFTA Certificates of Origin and commercial invoices, they weren’t meant to match, so they do not match.
Can I have the next slide?
The NAFTA Certificate of Origin is completed by the exporting or selling company.
What you want to look at is the transaction - if the transaction is between the seller in the U.S. and the buyer in Canada, and the seller in the U.S. wants to provide a NAFTA Certificate, okay, then, you’re the exporter.
Even if you send your item to someone else and then they take it across into Canada, for the purposes of NAFTA, you’re the exporter. Or if the manufacturer or someone else puts everything together, you know, the product and what have you, and they drop ship it, that commercial transaction is between you and the person in Canada.
So if you’re going to give them a NAFTA Certificate, then your information is going to be in Field 1.
And I always recommend sending the original to the customer. And if you want to run two originals, send one to your customer and keep one in your files along with other records.
Can I have the next slide Linda?
Record keeping is another very, very important element. And importers and exporters should maintain their documents for up to seven years after the goods go into Canada.
And the documents that you want to hold on to relate to the purchase, the cost, the value and payment for all materials, direct or indirect that were used in production.
Customs officials can seek information from either party.
Can I have the next slide?
One of the things that came to my attention some time ago are Bill of Materials.
A lot of people that I talk to don’t quite understand what I’m talking about and they don’t quite understand information that’s going to be important to them in qualifying their good and in answering any questions that may come from the customs authorities in Canada.
So a Bill of Materials chart is a widely used and accepted method of documenting the origin determination. And, you know, just a regular Bill of Material chart can, you know, list the product; what it is. So in other words, I could list paints and under that I’m going to indicate components that go into making my paint.
I’m also going to provide where it came from; the supply stores. Now keep in mind, this information is for my NAFTA technical file. It isn’t something that I’m going to share with the public. Only, only am I going to show that to Canada Customs because they’re the ones who may ask for it. They’re the only ones I have to show this to.
So on this Bill of Material, you want to supply source and of course I want the origin of any foreign input, so like with the paint, I have a foreign input. So I’m going to indicate that it came from Turkey or Pakistan.
I’m also going to have HS code for the paint, I’m going to have a HS code for the foreign inputs and the values on things, because you never know if your rule of origin requires looking at regional value content or North American content.
What is the percentage of North American content?
So a Bill of Materials chart I think is an excellent, excellent tool to use in documenting the origin.
Can I have the next slide?
And, you know, just so that you know that, okay, NAFTA does work, I’ve put some very, you know, quick information about a company or a couple of companies in Illinois; one who exported for the first time.
They found the commercial service and they got all the necessary international trade information and NAFTA assistance, actually both of them did, as well as they got information and they were walked through that qualifying process so that they could make the determination that their products qualified.
And they were able to do that and to fill out the paperwork completely and factually allowing to successfully get their products in to Canada. And one of them, after they got the assistance they needed, they were able to export their product into Canada on the same day.
So I called those some really great NAFTA successes.
Can I have the next?
And then one last thing talks again about Canada First and (left hand) 2009, you know the necessary information is there to answer some of your questions.
On the next slide, Linda, there is information on, you know, registering and who it is you need to contact and there you have, (Madelyn Lopez), who is the project Manager. So if you have additional information about that, please call (Madelyn).
Linda Abbruzzese: Okay, great.
JoAnn Queen: And here’s my information. Questions?
Linda Abbruzzese: Okay, great. Thank you JoAnn for your presentation...
JoAnn Queen: You’re welcome Linda.
Linda Abbruzzese: It was very well said.
Thank and now we’ll go to our written questions from our audience and just remember - just to remind everyone, if you would like to ask a written question, up on the top of your screen there’s an icon with a Q and A letters, and all you need to do is just click on that icon and start typing in your question and we will answer them.
The first question is from (Farzani Arian).
The question is for JoAnn is can you please give an example for a Category E?
JoAnn Queen: Category E, let’s see, they were - well, automatic data processing machine, that’s just a fancy word for a computer, computer hardware.
Linda Abbruzzese: Okay, great. Thank you. The next question here is from (Elizabeth Gant). JoAnn, she wants to know where do you find the list of automatic data processing products if you’re under the Criteria E.
JoAnn Queen: You won’t. I mean, you may, but here’s the thing; this was specially negotiated. The three countries agreed to harmonize the tariffs on these products. Two countries ratified the agreement and the last I heard, the other one had not, and this was quite some time ago.
There’s really no need to use E because these items going into Canada definitely are duty free. So you shouldn’t be using E. There’s no need to use E.
Linda Abbruzzese: Okay.
JoAnn Queen: And email me and we can talk about that more.
Linda Abbruzzese: Okay, great. Thank you. We will open the lines now for written - excuse me, voice questions since there are no more written questions.
Coordinator: Once again, to ask a question, please press star then 1. We have a question from (Debbie Durr). Your line is open.
(Debbie Durr): Hi JoAnn. Great job on setting this.
JoAnn Queen: Hi (Debbie).
(Debbie Durr): Hi. Thank you so much.
JoAnn Queen: Thank you.
(Debbie Durr): Really great information.
My question is when calculating regional value content, many times I’ve seen the example where you have one foreign component or material. What if you have a product that may have 30% of one HS number, 30% of another, 30% of another; they’re mixed, you know, all mixed up, different HS numbers?
How would you then go about calculating - say, two of those might be foreign content; 30%, 30% or something like that, I’m just wondering, get very confused when there is more than one HS number...
JoAnn Queen: Well, okay, do you mean in the part of the Rule of Origin where it talks about a tariff shift or do you mean when you actually go to the equations?
(Debbie Durr): When you see there’s a tariff shift and you may have several HS numbers...
JoAnn Queen: Right.
(Debbie Durr): …that that end product is made from.
JoAnn Queen: Right. So - okay, my example was the plastic bags, so every - any foreign component has to make that shift. So I had the plastic (unintelligible) was 3902, so it made the shift. If I had something that was 2819, another foreign item, it made the shift.
(Debbie Durr): Oh, okay.
JoAnn Queen: If I have something that was 3712, well, it made the shift. The exceptions were 3920.20 and 3920.71, so that’s where you’d have to, you know, watch out...
(Debbie Durr): Okay.
JoAnn Queen: But every foreign input, that’s why it is important to have the appropriate HS codes for the finished goods and the foreign input; all of them because they’ve got to make that shift.
(Debbie Durr): Okay. Okay, great. Thank you.
JoAnn Queen: Thank you.
Coordinator: We do have a question from (Nuresh). Your line is open.
(Nuresh): My question is very similar to the question that was just asked, so if you’re manufacturing a good that has, say, 10 inputs, they’re using the manufacturing process, one of those inputs, for instance, needs to meet like an RVC threshold of 60, however it only has an RVC content of 10, does that mean that that good no longer qualifies?
JoAnn Queen: You know, if you work - let’s say you work both equations, the transaction value and the net cost and let’s say on both of them your answer was 10%, you do not have a NAFTA originating product.
JoAnn Queen: No, it doesn’t - it’s not qualifying. The minimum is 60 under transaction value; the minimum is 50% under the net cost equation...
JoAnn Queen: So that - those are your thresholds that you have to meet. Those are the minimums.
(Nuresh): Okay, well, so then because let’s say, for instance, you have five different inputs so there’s like five tariff shifts, right? So like there’s a tariff shift, you have five different inputs, so let’s say Input Number 5 only comprises 10% of the final good, but it does not meet that threshold, does that mean the entire good does not meet the origin even though...
JoAnn Queen: But - okay, the rule of origin - well, are we talking about a rule of origin with a tariff shift or are we talking about a rule of origin with just regional value content, are we talking about tariff shift and regional value content? What are we talking about?
(Nuresh): Tariff shift and regional...
JoAnn Queen: And what does your rule of origin say?
JoAnn Queen: It’s always better to work with your rule of origin.
JoAnn Queen: What does your rule of origin say?
(Nuresh): Well, this is just more of a hypothetical, so I’m saying...
JoAnn Queen: Okay. Email me.
JoAnn Queen: Email me or call me after this is done and we will - we’ll talk till the cows come home.
(Nuresh): Okay, great. Look forward to it.
JoAnn Queen: Okay.
Coordinator: Once again, to ask a question, please press star then 1. We have a question from (Jose). Your line is open.
(Beth Billingsly): Actually this is (Beth Billingsly) with (Avred Express).
JoAnn Queen: Hi (Beth).
(Beth Billingsly): Hi. We’re a transportation provider in the Southeast and we get a lot of questions from our customers in regards to NAFTA. We really - we don’t really feel comfortable in trying to advise our customers.
The number you’ve got which is on the screen, is that the number that we should advice our customers to call?
JoAnn Queen: You got it.
(Beth Billingsly): Okay. That was my question. Thank you.
JoAnn Queen: You’re welcome.
Coordinator: You have a question from (Nuresh). Your line is open. (Nuresh), your line is open if you wish to ask a question.
(Nuresh): Oh, no, we already just asked that question.
Coordinator: Thank you.
Linda Abbruzzese: Okay.
Coordinator: Once again, to ask a question, press star then 1.
Linda Abbruzzese: Okay, this is Linda. I’ll ask a couple more written questions that we have and then we’ll go one more time back to the verbal questions.
JoAnn Queen: Okay.
Linda Abbruzzese: The next question I have here is from (Greg Pilgrim). The question is what are - how are textiles treated differently being that they are now allowed to use the RVC formula. It appears to be based on weight.
JoAnn Queen: (Greg)...
Linda Abbruzzese: Hello?
JoAnn Queen: Is he there?
Linda Abbruzzese: Oh, no, I don’t know, but...
Coordinator: I can open his line.
JoAnn Queen: That’s okay because I have (Greg)’s - I have his information so I can get in touch with him.
Coordinator: (Greg)’s line is open if he wishes to speak.
(Greg Pilgrim): Hello, I’m here.
JoAnn Queen: Oh, (Greg).
(Greg Pilgrim): Hi JoAnn.
JoAnn Queen: How are you?
(Greg Pilgrim): Good, thank you.
JoAnn Queen: Good.
(Greg Pilgrim): You know, the question we’ve talked about it in the past and I’m still struggling with it is we’re not allowed as a textiles manufacturer in the states to use the RVC formulas. We have to go by percentage weight of content.
JoAnn Queen: Right.
(Greg Pilgrim): And I don’t know why it’s treated that way. I don’t know if it’s specific in the trade agreement itself. It’s much more limiting in my opinion, but...
JoAnn Queen: Right, well, (Greg), let me give you a number for (Martin Walsh).
(Greg Pilgrim): That was going to be my next question, who...
JoAnn Queen: Explore that with them. He’s in the Office of Textiles and Apparel and his number of 202-482-3400. And even if you get voicemail, please leave your name, number, the date and time that you call, and either he or someone in that office, I know they’ll call you back.
(Greg Pilgrim): And it’s the Office of Textiles...
JoAnn Queen: Textiles and Apparel.
(Greg Pilgrim): Okay. And I guess the second part of that question and (Martin) may be the answer to it is, what is the best resource for individual companies in their locale for face-to-face NAFTA questions?
JoAnn Queen: Well, you know, I think you could try the U.S. Exporter Systems Center in your area. I would start with them, because, you know, plenty of my colleagues in the field are familiar with NAFTA stuff, as well.
(Greg Pilgrim): Our local one doesn’t seem to have an expert on it any more.
JoAnn Queen: Oh...
(Greg Pilgrim): That’s why...
JoAnn Queen: Okay, okay. Let’s talk about that and I’ll try and get you someone else.
(Greg Pilgrim): Okay.
JoAnn Queen: Okay.
(Greg Pilgrim): Thank you.
JoAnn Queen: You’re welcome. I’m glad you made it.
(Greg Pilgrim): Me, too.
Linda Abbruzzese: Okay, thank you, JoAnn, and this is our last written question for today. This is from (Carrie Hester). It’s a comment. It’s about when several foreign inputs are used in the production of an end item and a regional value content calculation is required, does this mean the (VNM) means the total aggregate value all non-originating materials.
JoAnn Queen: Yes, yes. It’s a total of all the non-originating material.
Linda Abbruzzese: Okay, great. Thank you. And one last time for voice questions.
Coordinator: At this time I’m showing no questions.
Linda Abbruzzese: Okay. Well, thank you. Thank you everybody for your time. And once again, thank you JoAnn for your excellent presentation.
JoAnn Queen: You’re welcome Linda.
Linda Abbruzzese: I just would like to let everyone know to check out export.gov - www.export.gov for more upcoming events and webinars.
We will also archive this webinar under the Canada webinar Series, along with all the other webinars for that series of export.gov website under the View webinars link. Once again that website is www.export.gov.
Also as a reminder, we also have another webinar for the Canada webinar Series on the U.S./Canada Non-Resident Importer Program. It will be on Wednesday, June 17 of this year from 2:00 to 3:00 p.m. Eastern Time. Once again, it’s Wednesday, June 17 from 2:00 to 3:00 p.m. Eastern Time. It’s the U.S./Canada Non-Resident Importer Program webinar.
If you have any questions, you can email me. We do look forward to your participation and we will also have this in our Series.
Also I’d like to thank again JoAnn for an excellent presentation and everyone for joining us. Thank you.
JoAnn Queen: You’re welcome Linda.
Linda Abbruzzese: And good-bye.
JoAnn Queen: Bye-bye.