Advance Rulings Under NAFTA

By Margaret M. Gatti, Esquire
(Article appeared in the 1994 North American Trade Guide)

All Rights Reserved

NAFTA benefits are available only with respect to goods which NAFTA considers qualifying goods. While NAFTA takes great pains in defining the nature of qualifying goods, instances do, nonetheless, arise where it is unclear whether specified goods qualify for NAFTA benefits or where it is important for management to be certain that specific goods qualify for NAFTA benefits. A solution to such lack of clarity and such uncertainty is an advance ruling.

An advance ruling in the context of NAFTA is a declaration by a NAFTA signatory (Canada, US or Mexico) that specific goods comply with NAFTA's definition of qualifying goods. NAFTA deals with the issue of advance rulings in Article 509. Article 509 requires each NAFTA signatory to provide for the expeditious issuance of written advance rulings upon the receipt of an advance ruling request presented either by an importer in the NAFTA signatory's territory or by an exporter in another NAFTA signatory's territory. Advance rulings are issued on the basis of the individual facts and circumstances presented in an advance ruling request. Article 509 limits the scope of advance ruling requests to the following topics:

1. determining whether the non-NAFTA materials which have been used to produce a product in a NAFTA country have undergone the requisite change in tariff classification to enable the product produced in the NAFTA country to qualify as an originating good (NAFTA, Annex 401);

2. determining whether a product produced in a NAFTA country satisfies the regional value content requirement under either the transaction value method or the net cost method (NAFTA, Chapter 4);

3. determining the appropriate basis or method for value to be applied in calculating the transaction value of a good or of the materials used in the production of a good;

4. determining the appropriate basis or method for reasonably allocating costs in calculating the net cost of the good or the value of an intermediate material;

5. determining whether a good complies with NAFTA's Rules of Origin and thereby qualifies as an originating good (NAFTA, Chapter 4);

6. determining whether a good that re-enters a NAFTA country qualifies for NAFTA treatment after such good has been exported to another NAFTA country for repair or alteration (NAFTA, Article 307);

7. determining whether the proposed or actual marking of a good satisfies NAFTA's country of origin marking requirements (NAFTA, Article 311);

8. determining whether an originating good qualifies as the good of a particular NAFTA country (NAFTA: Annex 300-B, Textile and Apparel Goods; Annex 302.2, Tariff Elimination; and Chapter 7, Agriculture and Sanitary and Phytosanitary Measures);

9. determining whether a good is a qualifying good under NAFTA, Chapter 7, Agriculture and Sanitary and Phytosanitary Measures; and

10. determining such other matters as the NAFTA countries may agree.

In presenting an advance ruling request, an importer or exporter must comply with the relevant NAFTA country's requirements, i.e. if requesting an advance ruling from Mexico, the importer or exporter must comply with Mexico's advance ruling requirements. Each NAFTA country has its own advance ruling requirements and Article 509 obligates the NAFTA countries to make information on their advance ruling requirements readily available. Information on the advance ruling requirements of the individual NAFTA countries may be obtained by contacting:

Canada: The Division Manager of the Canadian Customs' Office in the relevant Canadian region;

Mexico: Secretaria de Hacienda y Credito Publico

US: US Customs Service

While acknowledging that differences do exist among the NAFTA countries' individual advance ruling requirements, it is fair to state that the requirements do exhibit certain common features as indicated below:

1. Each NAFTA country requires advance ruling requests to be presented in writing.

2. Each NAFTA country requires advance ruling requests to contain a purpose statement.

3. Each NAFTA country requires advance ruling requests to be as detailed as possible, with the details relevant to the stated purpose.

4. Each NAFTA country requires advance ruling requests to designate the authority of the individual who presents the advance ruling request.

5. Each NAFTA country requires advance ruling requests to contain the name and address of the individual who is to be notified regarding the status and resolution of the advance ruling request.

Specific advance ruling requests should be addressed as follows:

Canada: Chief Rulings and Appeals in the Canadian Customs Office of the relevant Canadian Customs Region.

Mexico: Secretaria de Hacienda y Credito Publico

Division General de Politico de Ingresos y

Asuntos Fiscales Internationales

US: US Customs Service

Office of Regulations and Rulings