Quebec Studies

Working Document: Basic Elements of the North American Free Trade Agreement

Quebec Studies (1993), 16, (1), 121–124.

Abstract

Quebec Studies, No. 16, 1993 WORKING DOCUMENT: BASIC ELEMENTS OF THE NORTH AMERICAN FREE TRADE AGREEMENT [Extracts from “Description of the Proposed North American Free Trade Agreement Prepared by the Governments of Canada, the United Mexican States and the United States of America, August 12, 1992”l Rules of Origin NAFTA eliminates all tariffs on goods originating in Canada, Mexico and the United States over a “transition period”. Rules of origin are necessary to define which goods are eligible for this preferential tariff treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . The rules of origin specify that goods originate in North America if they are wholly North American. Goods containing non-regional materials are also considered to be North American if the non-regional materials are sufficiently transformed in the NAFTA region so as to undergo a specified change in tariff classification. In some cases, goods must include a specified percentage of North American content in addition to meeting the tariff classification requirement. The rules of origin section also contains a provision similar to one in the Canada-United States Free Trade Agreement (FTA) that allows goods to be treated as originating when the finished good is specifically named in the same tariff subheading as its parts and it meets the required value content test. Trade in Goods National Treatment: The NAFTA incorporates the fundamental national treatment obligation of the GATT. Once goods have been imported into one NAFTA country from another NAFTA country, they must not be the object of discrimination. This commitment extends to provincial and state measures. Market Access: These provisions establish rules governing trade in goods with respect to customs duties and other charges, quantitative restrictions, such as quotas, licenses and permits, and import and export price requirements. They improve and make more secure the access for goods produced and traded within North America. elimination of tariffs: The NAFTA provides for the progressive elimination of all tariffs on goods qualifying as North American under its rules of origin. For most goods, existing customs duties will either be eliminated immediately or phased out in five or 10 equal annual stages. For certain sensitive items, tariffs will be phased out over a period of up to 15 years. Tariffs will be phased out from the applied rates in effect on July 1, 1991,

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