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UPDATE ON NAFTA CERTIFICATES
In light of the renegotiating of NAFTA there are some questions regarding the validity of keeping a NAFTA on file. Negotiations for changes begin in August however any and all changes to the present NAFTA will have to be agreed upon by all parties. This agreement will include an effective date for any changes.
NAFTA in its present state is valid until any changes are determined, agreed upon and implemented.
For your benefit, we are posting this article on the Benefits of NAFTA Certificates, Risks and Exposure and Thompson Ahern NAFTA Management Services.
BENFITS of NAFTA CERTIFICATES
Having a valid NAFTA Certificate for any imported good will confirm the duty free status of the good. Even if CBSA does not agree with the Classification, the NAFTA certificate provides assurance that the product qualifies for duty free status. One of the many recommendations for change to the NAFTA is the removal of the HS Classification of the product from the certificate. In its place will be Part Number and Product Description.
RISK and EXPOSURE
Is your company open to unnecessary risk and exposure? Have you taken all necessary steps to mitigate unforeseen eventualities? Generally this is done by taking out an insurance policy for which you pay a small premium to protect you from something that if it occurred would incur large losses. We don’t expect that the misfortune will occur, but it does not stop us from obtaining the necessary protection and continuing to pay our insurance premiums to provide us with the peace of mind that if the unexpected does occur we are adequately covered.
Importers commit this oversight when dealing with the management of their NAFTA certificates. In the interests of saving a few dollars, they will forgo the services that their customs service provider has offered for the collection, review and maintenance of these important documents for which an administrative fee is charged. Rather than to pay this service fee, the importer opts to take full control and responsibility for the management of all aspects of the NAFTA certificate process. They do this without fully understanding or appreciating the liability that they have undertaken by doing this.
When such a waiver is issued to the service provider it generally permits the carte blanche entry of all and any goods that are invoiced as originating from a NAFTA country without regard to whether a NAFTA certificate is in fact available to cover the goods as Customs declared. The importer is completely responsible for that declaration and must when requested by the CBSA, be able to produce a valid and correct document to substantiate the application of the NAFTA certificate.
Failures to have a valid and correct NAFTA certificate can lead to Administrative Monetary Penalty fines and also to the loss of a claim to preferential duty free entry causing additional duty payments. Importers who have opted for these waivers have not anticipated the need to have a designated and knowledgeable person within their company to review all entries where the NAFTA Tariff was declared. This is necessary to ensure that a valid document was available to cover the specific goods as declared and/or to arrange for corrections to these documents and to make any necessary voluntary corrections to the CBSA where NAFTA was incorrectly declared.
Companies opting to self-administer their NAFTA certificates may not have factored in the additional resources required to effectively manage these documents for purposes of maintaining their Customs compliance obligations. Any real savings can be quickly erased if errors are made and you are faced with multiple AMPS penalties which are issued on a per transaction basis. The first level penalty under AMPS Contravention C152 for importers or owners of goods who have failed to furnish the proof of origin upon request begins at $150.00 per occurrence. This is a graduated penalty increasing to $225.00 for the second reoccurrence of the same contravention and is further increased to $450.00 for the third and subsequent infractions.
There is something to be said about sticking to ones knitting and doing the things that we do best and not trying to undertake tasks that are better left to those with the necessary skills and knowledge to carry them out. Let Thompson Ahern International provide you with their NAFTA management services and get on with your business.