After years of downplaying its interest in the Trans-Pacific Partnership trade talks, Canada recently said it wants to join the club, a move being seen by analysts as a watershed moment in
the Harper government's approach to Asian markets.

Harper announced the government's interest in the TPP on Nov. 13 while in Hawaii for the Asia-Pacific Economic Co-operation forum. "We are indicating today our formal intention, we're expressing formally our willingness to join the Trans-Pacific Partnership,"

Mr. Harper said. "We will make an application and I am optimistic we will participate in the future."

This came one day after leaders whose countries are already part of the TPP talks announced that they had achieved broad outlines of an agreement that aims to "promote innovation, economic growth and development, and support the creation and retention of jobs."  The countries currently at the table include the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. As well, Japan and Mexico have expressed interest in joining the TPP.

Canada's protectionist dairy and poultry supply manage-ment system could be on the chopping block, International Trade Minister Ed Fast said that it would be vigorously defended. "Canada will seek to defend and promote our specific interests in every sector of our economy, including supply management," he told reporters.

Canada and the European Union completed the ninth round of negotiations on Oct. 21 in Ottawa, moving towards a Comprehensive Economic and Trade Agreement that is said to be larger in scope than NAFTA and is expected to increase Canada's annual GDP by $12 billion.

The first round of negotiations to modernize the Canada-Costa Rica Free Trade Agreement wrapped up in Ottawa on Nov. 10. 

The Canada-Costa Rica Free Trade Agreement, which entered into force in 2002, focuses mainly on trade in goods. An expanded free trade agreement will deepen market access in services and government procurement. It will also cover e-commerce, telecommunications, investment and technical barriers to trade.

Costa Rica is Canada's largest trading partner in Central America, accounting for 31% of Canada's two-way merchandise trade with the region in 2010. 

Blanket Certificates of Origin Need to be Renewed for 2012 
 

Blanket certificates of origin, most usually for NAFTA but also for other free trade agreements, are usually filled-out to begin on January 1 and to expire, 12 months later, on Dec. 31. Accordingly, the majority of blanket certificates in our databases are currently due to expire December 31, 2011.

Shipments without a 2012 Certificate on file effective January 1, 2012 will be released and accounted for "NON-NAFTA" (i.e., the Most Favoured Nations tariff treatment will apply). If you provide NAFTA certification after this date please indicate at the same time whether you would like us to pursue refunds for duties (and MPF in the case of U.S. entries) on previous shipments that year.

Products throughout the year that are not on your Blanket NAFTA will be processed as Non-NAFTA; therefore, if you add or remove products over the course of the year, please provide us with the 

additional or updated information so that we can avoid the risk of unnecessary duty overpayments or non-compliance situations by ensuring that our database is as comprehensive and accurate as possible.

Upon receipt of your 2012 Certificate, our annual administrative fee of $25.00 US will be billed to your company for validating, archiving and correlating your blanket certificate and updating our system for your eligibility.   
 
If you have any questions please contact our Nafta Administrator Jason Nordin 1-701-825-6474 ext#37 or jason@ghy.com.

Many Canadian businesses are not receiving properly completed NAFTA certificates of origin. The purpose of a NAFTA certificate of origin is to provide the Canada Border Services Agency (CBSA) with information so that the CBSA may determine that the goods being imported into Canada are entitled to NAFTA beneficial duty-free treatment.

Based on our reviews of NAFTA certificates of origin, some of the most common mistakes are: 

1) Improper tariff classification:

Because NAFTA rules of origin are largely based on specified shifts in tariff classification, using the correct classification codes is imperative. Improper classification automatically invalidates the certificate. Often this problem stems from the use of imprecise or overly vague product descriptions with the result of goods being classified as "other" when they are more properly classified under their own named heading.

2) Improperly indicating that the exporter is the "producer":

Many U.S. exporters improperly answer 'Yes" in the "Producer" column of the certificate of origin when they are a distributor or a person other than the manufacturer of the goods;

3) Improperly using Preference Criteria "A":

Preference Criterion "A" is used when a good is wholly obtained or produced in one or more of the NAFTA countries. For example, Preference Criterion "A" is used when the fruits are grown on a tree in the NAFTA country or made from wood from a tree grown in the NAFTA country. However, Preference Criterion "A" does NOT apply when one molecule of the good is made from foreign material or possibly foreign material. A manufactured product would be difficult to qualify under preference criterion A.

Preference Criterion "B" is used when the good is produced entirely in a NAFTA country and satisfies a specific rule of origin (e.g., undergoes the necessary tariff shift and or regional value content test).

Preference Criterion "C" is used when a good is produced entirely in the territory exclusively from originating materials. This Preference Criterion is used when you have a raw material, an intermediate product and a final product.

4) Certificate of origin is provided when goods are shipped from China (or other countries outside the NAFTA region):

The good for which the NAFTA certificate of origin is provided must be directly imported from the United States or Mexico (if imported into Canada). U.S.-made goods lose their NAFTA preference when transshipped through a third country.

5) Improperly stating the origin is the "USA" when the goods are foreign and not entitled to NAFTA duty-free treatment:

The exporter must determine if the good originates under the NAFTA rules of origin. It is important for manufacturers/producers to make a list/bill of materials detailing all of the inputs into the final good. Then the manufacturer/producer should obtain information from its suppliers of inputs to ensure that intermediate goods meet NAFTA requirements. Exporters of goods must maintain adequate documentation relating to the inputs (either certificates of origin or manufacturer affidavits for all raw materials/inputs).

If a good was produced in a non-NAFTA country (e.g., China) and is shipped to Canada from the United States, the good does not originate under NAFTA. While this may seem completely obvious, it is not an uncommon problem.

Many specific NAFTA Rules of Origin require that a good have a minimum Regional Value Content (RVC), meaning that a certain percentage of the value of the goods must be from North America. There are two formulas for calculating the regional value content. The exporter or producer may choose between these two formulas: the transaction value method or the net cost method.

The transaction value method is generally simpler to use therefore most often employed. The transaction method calculates the value of the non-originating materials as a percentage of the transaction value of the good. Because the transaction value method permits the producer to count all of its costs and profit as territorial, the required percentage of regional value content under this method is higher than under the net cost method (60 percent as opposed to 50 percent where the net cost method is used). 

It is vitally important that the information being used to establish the RVC is current. If the sourcing of inputs changes from that of domestic manufacturers to offshore suppliers this would result in the RVC calculation being negatively affected. Even so, in many instances these sourcing changes over the course of time may not be communicated to the department in charge of completing the NAFTA Certificate. In fact, the RVC may have been established years ago and never reviewed since with the result that it no longer accurately reflects the NAFTA content of the product(s) in question. 

In recent NAFTA verification reviews conducted by Customs authorities, importers have pulled out records from their original calculations which revealed say a 90 percent qualification under the transaction value method. However, when required to provide details for current-year imports, the RVC calculation arrives at a much lower rate, sometimes even under the required 60 percent threshold. The resulting discrepancy leaves the importer open to a significant compliance risk in the form of pentalties and duties owed on the imported product, not only for the current year but potentially for prior years also.