There is little doubt that the North American Free Trade Agreement (NAFTA) needs updating since it entered into force in 1994. As the first round of the NAFTA negotiations among the United States, Canada and Mexico get underway in Washington, D.C. on August 16, 2017, it is not likely the negotiators will do away with the agreement altogether. US companies claiming preferential tariff treatment under NAFTA stand to lose significant duty savings unless the framework stays in place. In fact, Mexico and Canada are the top markets for exports from Texas. In 2016, Texas exported over $92 million in goods to Mexico and over $19 million in goods to Canada.
NAFTA eliminates U.S. import duties on most goods originating in Canada, Mexico, and the United States. The benefits are reserved for goods that “originate” within the NAFTA region as defined in Article 401 of the NAFTA. This limitation means U.S. Customs and Border Protection (CBP) will deny false NAFTA claims on non-qualifying goods, and importers must carefully review the regulations to ensure their claims are valid.
