Friday, September 02, 2005

Do I Smell NAFTA in the Air?

September? Really, already?

September is the cruelest month. Those of us with summer avocations (like cycling and sailing) know that the end of the season is bearing down on us. I have already scheduled a date to get my little boat out of the water for the winter.

But, fall also means we enter the heart of the NAFTA season. Those of you responsible for NAFTA compliance should know that this is the time of year to be getting out supplier solicitations for Certificates of Origin. You want to have your required certified materials before the first of the year so that, when your existing CO's expire on January 1, you don't have a gap in your import or production records.

Here's three hints that I hope are clear to most people (but I know are not clear to everyone):

  1. Don't waste your time an effort sending requests for CO's to every supplier in your database. It may seem obvious, but it is worth noting, that you should only get completed CO's from North American suppliers.
  2. Check your particular NAFTA rules. It is entirely possible (if not likely) that you only need CO's for a limited number of materials. Don't chase down CO's for materials which make the qualifying change in tariff classification. It just doesn't matter where they come from, so why try and prove it? OK, I know why; sometimes you ship the part. But, don't let the exceptions drive the system.
  3. If you have to satisfy a regional value content test, sort by value. If a minority of originating parts make up the majority of your value, there is no point in chasing CO's for every nut, bolt, and screw you consume. Remember, the test is pass/fail. There is no real difference between a solid 51% and a 95% RVC. Again, I know there are some exceptions for automotive goods, etc.

Don't let it sit too long. We all know that some suppliers will wait to respond and others will respond wrong (e.g., most of those preference criterion "A" items floating out there). You don't want to start paying duty on materials on January 1 just because you haven't received the paperwork from your supplier.

If anyone is in Chicago and wants to here me talk about this, I am doing a seminar Sept. 23. Let me know and I'll send the details.

Oh, while you are at it, you may as well get out your Australia, Singapore, Chile, and CAFTA requests. But, do it after the long weekend.

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