Quebec Studies, No. 16, 1993
WORKING DOCUMENT: BASIC ELEMENTS OF THE NORTH
AMERICAN FREE TRADE AGREEMENT
[Extracts from â€œDescription 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, 1992â€l
Rules of Origin
NAFTA eliminates all tariffs on goods originating in Canada, Mexico
and the United States over a â€œtransition periodâ€. 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,