The North American Free Trade Agreement (NAFTA) created one of the world’s largest free trade areas, linking over 450 million people and producing over $17 trillion in goods and services. Notably, NAFTA helped establish a more stable and predictable environment for foreign investors.

One of NAFTA’s most famous chapters is Chapter 11, otherwise known as the Investor-State Dispute Settlement (ISDS) chapter. ISDS chapters are consistently found in a large number of modern trade agreements across the globe.

Using NAFTA’s Chapter 11 as an example, we will explore how ISDS works, and why being knowledgeable about it is important to global investors and international businesses.

What NAFTA’s ISDS does:

NAFTA’s Chapter 11, like most ISDS chapters in trade agreements, establishes obligations for the parties’ treatment of investors and their investments.

If those obligations are breached by a foreign government, investors can seek to have these obligations and/or standards enforced by bringing a claim under NAFTA’s Chapter 11.

Once a claim is made, a tribunal will be established pursuant to Chapter 11, which will determine if the established standards and/or obligations have been breached and whether the investor may be entitled to recover monetary damages.

What are the main Chapter 11 obligations?

1. National Treatment states that a host country must provide NAFTA investors and their investments with treatment that is no less favourable than they provide to domestic investors/ investments in similar circumstances. This means that Canada, for instance, must treat Mexican and American investors no less favourably than it treats Canadian investors.
2. Most Favored Nation (MFN) states that a host country must treat NAFTA investors and their investments no less favourably than investors of any other non-Party nation. This means that Canada, for instance, must treat Mexican and American investors no less favourably than it treats investors from countries that are not part of NAFTA.
3. Expropriation provides that a host country may not expropriate, directly or indirectly, the investment of another Party in its territory without payment of fair compensation. In other words, Canada could not expropriate an American or Mexican investment without providing proper compensation to the investor.

Who can bring a claim?

In order to commence a Chapter 11 claim, one must be an “investor of a Party”. In other words, the investor must be from one of the countries who are part of NAFTA (Canada, Mexico or the United States).

For instance, a Russian investor doing business in Canada could not bring a claim under NAFTA Chapter 11 because he is not an “investor of a Party” to NAFTA, meaning he is not an investor from either Canada, the U.S. or Mexico.

A Canadian investor doing business in the U.S. or Mexico, however, would have standing to bring a claim as an “investor of a Party”, that being Canada.

An “investor” can be any citizen (corporate or individual) of any of the three Party countries (Canada, Mexico, U.S.), who has an investment in one of the three Party countries, but cannot bring a claim against his/her own country. In other words, a Canadian investor could not bring a claim against Canada, but could bring one against the U.S. or Mexico.

Who are the Parties?

NAFTA Chapter 11 allows investors, whether corporate or individual, to bring a claim against one of the three Parties’ governments. This is the only avenue through which private individuals or corporations may seek damages or start a claim against a foreign government entity.

Therefore, returning to the example above, a Canadian investor doing business and/or investing in the U.S. could bring a NAFTA Chapter 11 claim against the U.S. government if the U.S. government has breached any of the obligations outlined in the Chapter.

How it works

In order to start a claim, one of the obligations listed in Chapter 11 must be breached (i.e. national treatment, MFN, expropriation, etc.). If an investor does put forward a claim under NAFTA Chapter 11, they are essentially starting an arbitration process.

Typically, the tribunal will consist of a panel of three arbitrators. One arbitrator is appointed by each party, and the third presiding arbitrator is appointed by agreement between the disputing parties.

Although there are many general criticisms of ISDS, it still remains an important element to consider when doing business and/or investing abroad.

The ISDS chapter in a trade agreement of a country where you are considering doing business or investing could act as a shield against any arbitrary foreign government measures that would negatively impact your business.

For more information on Chapter 11 and how it might apply to your business, contact Catherine Walsh.

Has NAFTA’s Chapter 11 or any other trade agreement’s ISDS impacted your business?

The post NAFTA’s controversial Chapter 11: What’s an ISDS and why does it matter? appeared first on Trade Ready.

The United Nations Convention on Contracts for the International Sale of Goods (“CISG”), sometimes referred to as the Vienna Convention, is a treaty intended to provide a uniform body of laws relating to the sale of goods between nations.

The CISG aims to substantially reduce barriers to international sales by creating modern, substantive rules to govern the respective rights and obligations of parties to an international sales contract.

There are currently approximately 84 countries who have adopted the CISG. By formally adopting the Convention, countries undertake to treat its rules as part of their laws.

In other words, the CISG aims to simplify the process of buying and selling goods in international commerce.

How is the CISG useful to international businesses?

The laws governing sales can differ widely from one country to another. As such, there is often confusion as to which country’s law will govern the contract. This uncertainty is frequently cause for conflict, and certainly does not encourage or assist in facilitating international trade.

The CISG was created to eliminate some of that uncertainty and to provide a body of rules that parties could choose to adhere to in their commercial dealings, outlining obligations and remedies for the parties to international transactions. By applying the CISG, parties can often avoid difficult conflict-of-law issues and fill in gaps in contracts.

Some of the most significant provisions of the CISG address:

• Sellers’ obligations regarding the quality of the goods;
• The buyers’ obligations to take delivery, examine goods and provide notice of any lack of conformity; and
• The buyers’ remedies for breach of contract by the seller.

But when does the CISG come into play?

First, for the CISG to apply, the parties to the contract must have places of business in different countries.

In simpler terms, the CISG will not apply to contracts for the sale of goods between two Canadian corporations.

The Convention could, however, apply to a sales contract between entities from Canada and the U.S.

It is also important to note that the CISG does not apply to contracts for the sale of services alone, nor does it generally apply to the sale of goods purchased for personal use.

A few scenarios to highlight when CISG rules might apply:

• When both parties to the sales contract’s places of business are in countries who have adopted the CISG (the “Contracting States”), the CISG can apply automatically to your transaction.
• When one party is from a Contracting State and the contract expressly states that the law of that Contracting State will govern the agreement, the CISG can apply.
• When neither party is from a Contracting State, but the parties agree in their contract to have the CISG apply.

Keep in mind that parties are free to opt out of applying the CISG, either partially or in its entirety. As such, in the first scenario above where both parties are from Contracting States, they can decide to opt out of the CISG’s otherwise automatic application by so stating within their contract.

Know your country’s domestic laws to make most advantageous contracts

When determining which law will govern the contract, countries will typically look to have their own domestic laws take precedence.

For example, if you are a Canadian company contracting with a company from Japan, it may be in your interest to have Canadian law apply to and govern the contract, as opposed to Japanese law.

This often leads to conflicts between negotiating parties as to which law to apply. The CISG provides an alternative and neutral option to this dilemma.

For a complete list of countries who have adopted the CISG, see https://www.cisg.law.pace.edu/cisg/countries/cntries.html.

Before signing a contract it is crucial to know which countries are Contracting States, and whether or not your transaction may be subject to the CISG’s provisions.

Canada has adopted the CISG, and as such, if you are contracting with another Contracting State, the CISG can automatically apply to your transaction.

Even where the other party is not from a Contracting State, the fact that one side of the transaction is Canadian is enough for the CISG apply, if Canadian law governs the contract.

That’s why it’s so important to look carefully at all laws and conventions before signing a contract, to know which rules and regulations will apply to you.

If you have any questions regarding the CISG and its potential application to your business feel free to contact Catherine Walsh at cwalsh@conlinbedard.com.

Have you solved any contract issues using the CISG provisions?

The post You need to know about this important treaty before signing international contracts appeared first on Trade Ready.

Economic sanctions are measures imposed by national governments on specific countries, organizations or individuals that threaten certain interests or violate international norms of behaviour, in order to try to alter their decisions or actions. 

Iran sanctions origins

Canada originally imposed economic sanctions against Iran in response to its nuclear proliferation program. As a result of the application of these sanctions, there was an effective blanket prohibition on trade with Iran.

These types of sanctions can have an impact on your business in a number of ways, including prohibiting trade or other economic activity with a foreign market, and prohibiting or restricting foreign financial transactions.

Therefore, it is important to know whether your business is transacting with countries, organizations or individuals which may be subject to economic sanctions.

Canada makes “Amendments”

The Government of Canada has recently made important changes to its economic and trade sanctions against Iran (via the “Amendments”) to allow for a controlled economic re-engagement between the two countries.

Through significant roll-backs on prior commercial and trade activity restrictions, the Amendments, which modify both the Special Economic Measures (Iran) Regulations (“SEMA Regulations”) and the Regulations Implementing the United Nations Resolutions on Iran (“UN Regulations”), have resulted in an effective repeal of the blanket prohibition on trade with Iran.

The few surviving restrictions have a much narrower scope, focusing primarily on nuclear-related activity, ballistic missile activity, and transactions involving designated or listed persons.

As a result of the Amendments, business between Canada and Iran will generally be permitted unless:

• The consumer, or any intermediary in the transaction, is a Listed Person in Schedule 1 of the SEMA Regulations, or is a restricted party designated by the United Nations;
• The product being sold is listed in Schedule 2 of the SEMA Regulations; or
• The transaction is prohibited by restrictions under the UN Regulations.

It is also important for Canadian businesses to keep in mind that the SEMA Regulations still contain:

• A prohibition for any person in Canada or any Canadian outside Canada to provide any financial or related service to a Listed Person (which includes both individuals and corporate entities appearing in Schedule 1 of the SEMA Regulations) or to a person acting for the benefit of a Listed Person (Special Economic Measures (Iran) Regulations SOR/2010-165 (s.3(d));

• A prohibition against any person in Canada or any Canadian outside of Canada to export, sell, supply or ship any of the goods listed in Schedule 2, or to transfer, provide, or disclose any technical data related to the goods listed in Schedule 2, wherever situated, to Iran, to a person in Iran, or to a person for the purposes of a business carried on in or operated from Iran (Special Economic Measures (Iran) Regulations SOR/2010-165 (s.4(1) and (2));

• Most of the goods listed in Schedule 2 are nuclear-related materials and technology, weapons, arms and related materials, as well as goods or technology in relation to Iran’s ballistic missile program.

The UN Regulations contain restrictions on:

• The provision of nuclear-related material and technology to Iran;
• The provision of goods, technology, technical assistance, financial or related services in relation to Iran’s ballistic missile program and to the development of nuclear weapon delivery systems;
• The availability of property or financial services to Iran for the purpose of investing in specified nuclear-related activities in Canada;
• The provision of heavy arms and related material to Iran or services related to Iran’s use of such arms and related materials; and
• The procurement of arms and related material from Iran.

Canadian businesses, proceed with caution

Although it seems as though the doors may be open for Canadians looking to do business with or in Iran, it is important for Canadian businesses to keep in mind that despite the Amendments, certain restrictions and prohibitions are still very much applicable.

Ignorance of these restrictions and actions taken that violate the existing prohibitions under the sanctions could lead to serious consequences for those involved.

It is critical for businesses to keep in mind that diligence will absolutely be required in screening potential suppliers, partners and/or customers against Listed Persons to ensure proper compliance.

The post Canadian blanket ban on trade with Iran lifted but serious restrictions remain appeared first on Trade Ready.

As Canadian businesses increasingly enter new international markets, effective intellectual property protection should become a top priority.

IP is often a company’s most valuable asset – it can strengthen your position in export markets and increase enterprise value. As such, properly protecting those assets prior to foreign market entry is crucial.

Don’t wait until you are faced with a possible issue before thinking about protecting your IP rights. Be proactive and plan ahead!

Failing to properly research and understand IP rules and regulations in the markets where you conduct business could expose you to unnecessary costs and risks that may ultimately have a detrimental impact on your bottom line.

IP rights are territorial

One of the most important things for businesses to know about IP in international markets is that rights protection is not universal.  One of the most common mistakes entrepreneurs make is assuming that their registered intellectual property rights in Canada protect those same rights in other countries.

Registration of your IP rights in a particular country will typically only grant you protection within those national borders. Therefore, national IP offices can only grant protection for their respective national jurisdictions.

For instance, if you register a patent in Canada, your patent rights will only be protected in Canada. If you are operating in multiple jurisdictions, failure to properly register your IP beyond Canada’s borders could be a costly mistake.

So, how do you protect your trademarks, patents, designs and trade secrets in multiple international markets?

Typically, there are two main options: multiple individual national applications; and streamlined international applications.

1. National Applications – This route requires the applicant to seek IP protection in each individual country in which they plan to conduct business, according to each country’s domestic laws and regulations, by applying directly to the respective national Industrial/Intellectual Property Offices.

This route is often quite lengthy and can become extremely costly. It requires payment of application fees for each individual country, translation of application documents into the requisite language, and often an obligation to hire an IP agent to submit applications.

2. International Applications- There are international organizations, such as the World Intellectual Property Organization (WIPO) that allow for simultaneous IP rights registration in multiple foreign markets.

The international application route streamlines the process of applying for IP protection in multiple countries. In this case an applicant only needs to file one application, in one language, accompanied by the payment of a single application fee.

It’s always a good idea to have a quick look at whether the foreign market you will be conducting business in is part of any international conventions or agreements with your home country that would allow for a streamlined application process to avoid having to register individually in every country.

Tips to help you protect your IP internationally and avoid common pitfalls:

1. Do your homework. Make sure you know about the basic IP rights legal framework in your target markets and identify any potential trade agreements or conventions that would allow for multijurisdictional protection of those rights.

2. Make sure you know the value of your IP rights by conducting an IP audit. Intellectual property is often undervalued and the opportunities it creates for future profit, such as generation of income through licensing or sale, is often underestimated.

3. Develop a tailored IP strategy for your business with policies and procedures to address how your rights are protected and dealt with in international markets.

4. Make sure you search IP databases in your target markets to avoid infringement or potential conflicts with existing rights holders in that jurisdiction.

5. Register your IP – either in each individual jurisdiction where you will conduct business, or through multijurisdictional applications under WIPO or conventions and trade agreements. It is important to file applications and begin the registration procedures as early in the process as possible.

6. Monitor the market on an ongoing basis to promote early detection of any IP infringement.

Complete IP protection for your business on an international scale can often seem to be a daunting task. Taking the time to conduct proper due diligence and consult with experts, when necessary, can help you avoid common pitfalls, costly mistakes and oversights.

Take advantage of the great online resources available, such as WIPO and make sure to have a strategy in place that deals specifically with your business IP.

The post Is your IP vulnerable? How to protect your company’s rights in multiple international markets appeared first on Trade Ready.

Operating a business will always involve some level of risk. When operating a business venture on an international scale, the risks typically become higher in number and more complex in nature.

Conducting proper due diligence is always a good first layer of protection against some of those risks, but is often not enough on its own. International businesses need to focus on mitigating some of the more prevalent risks inherent in conducting business abroad.

Protecting your paycheck internationally is a whole different ballgame

In my experience, one of the highest risks encountered by international entrepreneurs is the risk of non-payment.

What if I ship my product over to the buyer but never get paid? In a domestic scenario, for instance, where both companies are located in Ontario, Canada, the process would be fairly straightforward.

Typically, the unpaid seller will send a formal demand letter asking for the monies owed. If the payment still isn’t made, you would then start a lawsuit in the Ontario Superior Court to attempt to obtain a judgment in your favour, which would allow you to legally collect the monies owed to you by seizing the assets of the buyer.

But what happens if the seller is a Canadian business and the buyer is halfway across the world in China, for example? How do international businesses protect against the risk of non-payment when the transaction and/or the parties are located in different areas around the globe?

Always start with an ironclad contract

In a previous blog, I highlighted the importance of both an arbitration clause and a governing law clause in an international contract as a means to protect your business abroad.

To recap, if a dispute arises between a Canadian seller and a buyer in China, the courts will look to the contract to determine the right course of action. The contract is king.

The governing law clause will dictate which laws will apply to the matter, whether they are Canadian, Chinese, or from another third party altogether.

The arbitration clause will outline the agreed upon process for dispute resolution between the parties. Although these clauses provide certainty in terms of process and help avoid costly disputes, the specific risk of non-payment highlighted in the example above can be mitigated even further. This is done through a widely used instrument of international payment called the Letter of Credit.

The LOC could be the best tool in your arsenal

The Letter of Credit, also commonly known as the LOC, is considered to be one of the most secure instruments to reduce the risk of non-payment in international transactions, and is widely used by international businesses in their daily operations.

As an example, in the scenario above where a Canadian seller of widgets is shipping goods to a buyer in China, the Chinese buyer would request the LOC from their bank, and that bank then undertakes to pay the Canadian seller upon presentation of certain documents to the bank.

The LOC is like an insurance policy for the seller, in the sense that it guarantees payment to the seller when the proper documents are presented.

The seller is guaranteed payment one way or another, regardless of other events like bankruptcy or civil strife in the buyer’s country that could otherwise make it difficult to transfer payment from buyer to seller.

If the buyer is unable to make the payment, the bank will cover the outstanding amount.

Get your documents in order

It is important to keep in mind that the issuing bank will only release the funds to the seller when it presents certain documents, including:

• a certificate of origin;
• an inspection certificate;
• a bill of lading;
• an insurance certificate;
• a commercial invoice;
• and a packing list

As long as the seller provides the necessary documents and they are compliant, the bank releases the funds to the seller. Therefore, the LOC is one of the best tools for exporters or sellers to use to reduce the risk of non-payment in international transactions.

The seller is assured to receive payment for the goods shipped provided they meet the conditions listed in the LOC in terms of presenting the required documentation to the bank, thus mitigating one of the biggest risks to exporters in global trade. Don’t trade without it!

Have you ever been faced with issues of non-payment? How did you resolve the issue and move forward?

The post The one thing that will guarantee you get paid in international business deals appeared first on Trade Ready.

Taking your business abroad can be a great way to expand your customer base, increase market share and lower production costs.

Although the benefits of an international business venture are plentiful, they are accompanied by a significant amount of risk, which, if not properly mitigated, can far outweigh the rewards.

Due diligence is your best ally in risk mitigation, even more so when it comes to international contracts.

The contract is king

Your contract, whether national or international, is always the first point of reference when a dispute arises between two commercial parties, and will guide an arbitrator or judge in determining your respective rights, obligations and remedies.

If you are conducting business internationally, an airtight contract is by far the best way to ensure predictability and efficiency in your business transactions, and properly protect your interests in the case of a disagreement.

An international contract can take on many forms, but all solid contracts have this one thing in common: they clearly outline the detailed rights and obligations of the parties involved.

Unfortunately, it’s common for entrepreneurs, in a rush to close a deal and get their business up and running, to neglect taking the proper time to review the agreements that will govern their business relationships, much to their detriment.

Although your contract is unique in that it will reflect your company’s specific needs and goals, there are at least two provisions which you should always include in your agreement:

(1) governing law; and

(2) dispute resolution. 

In my experience, these are the clauses that are most often overlooked, and that have the potential to cause the most damage when not properly addressed in your contract.

Clearly identify the jurisdiction of authority in your “Governing Law Clause”

Governing law, otherwise known as “choice of law”, is a fundamental component of an international contract.

What this means is that somewhere in your contract, you should clearly state the mutually agreed upon law of a jurisdiction that will apply to and govern the terms of your contract in the event of a challenge.

An example of what this would look like in your contract is:

1.1 Governing Law – This Agreement shall be governed, construed and enforced in accordance with the laws of the Province of Ontario. Any dispute arising between the parties shall be dealt with exclusively in the courts of that Province.

In international trade, the contracting parties are typically able to choose the law that will govern their contract. Whether it be U.S. law, Ontario law, or Shari’a law, the choice is open to the parties. You are not limited to choosing the domestic law(s) of one of the contracting parties.

For instance, if your business is in Ontario and you are contracting with a Japanese company for the supply of widgets, you can choose to have Ontario law, Japanese law, or the law of any other jurisdiction apply to govern your contract, that might be advantageous to your situation (i.e. U.S. law).

Avoid a geographical headache

If a dispute arises without a clearly defined choice of law clause in your contract, you will face additional time and expense in determining which country, state or province has jurisdiction.

It is therefore imperative that that all parties to the contract properly negotiate and mutually agree on the governing law at the outset, so that there are no surprises down the line and expectations are clear.

Litigation? Arbitration? Choose the best option in your “Dispute Resolution Clause”

A dispute resolution clause is important in any international contract because it clearly defines the methods and procedures for the resolution of disputes between the parties, whether it is through arbitration, litigation, or any number of other available options.

Although you may have an established business relationship with a partner you can trust, disputes, although not intentional, can still sometimes arise.

Simply put, having a dispute resolution clause is somewhat comparable to having an insurance policy on your car. You don’t expect to have an accident, but if you do, you’re protected.

Similarly, in the contract scenario, you don’t anticipate having any issues with your partner, but if you do, you are both aware of what process you will follow and what remedies are available to you.

Including a clear dispute resolution plan in your contract will reduce both the time and the cost of international litigation.

More and more international contracts provide for arbitration as an effective and efficient way to resolve disputes between contracting parties.

An arbitration clause could read something like this:

“All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”

You will also want your clause to address the governing law to be applied to the arbitration, the place and language of the arbitration, and the number of arbitrators to be involved.

Avoid a referee headache

A strong dispute resolution clause that is enforceable and clear is a critical step in the conclusion of commercial conflicts. Always keep in mind that your contract is what governs the relationship between you and your commercial partners.

A contract is not something to be taken lightly and not something that you will have an opportunity to correct retroactively.

Do your due diligence, and engage experts, when necessary, to make sure your contract properly protects you and your interests.

Have you ever missed a step in a contract that ended up costing you? What other items are crucial to a fair and protective contract?

The post Nail down these two international contract clauses to save yourself future legal headaches appeared first on Trade Ready.

As part of NAFTA, the United States, Canada and Mexico (the “Parties”) have all agreed to reduce and/or eliminate tariffs on goods that originate from their respective territories.

However, the Parties continue to apply significantly higher tariffs to goods that do not originate in one of the NAFTA countries.

Maximum benefits (i.e. duty free entry into the NAFTA market) are only conferred upon goods that are said to “originate” in one of the three NAFTA countries. Rules of Origin are therefore extremely important, because they act as the mechanism that determines which goods can be properly classified as “originating” in the NAFTA territory.

Consequently, this decides which goods are entitled to preferential tariff treatment.

Why you need to know the rules

A proper understanding of the rules and their application is critical for any importer/exporter conducting business in the NAFTA region. This knowledge enables them to leverage available preferences and reduce the likelihood of stiff monetary penalties and fines.

As a start, the Rules of Origin inform what information an exporter will put on their Certificate of Origin, which is a necessary document to claiming and obtaining a NAFTA tariff preference for imported goods.

The Certificate of Origin requires that the exporter properly identify the Country of Origin of the goods they are shipping – in other words, the exporter is responsible for the correct determination of the “origin” of the exported goods.

Invalid Certificates of Origin based on an improper or incorrect classification of the “origin” of a good, have recently become one of the largest problem areas for exporters, often resulting in significant fines and penalties.

An invalid NAFTA Certificate of Origin will result in the denial of NAFTA origin duty free treatment. And be warned, duties can be applied retroactively.

The complicated world of determining origin

In an increasingly global marketplace, where final products are commonly composed of inputs from various geographic locations, it can often be difficult to properly determine the origin of a good.

As mentioned earlier, NAFTA tariff preferences will only apply to goods that are found to “originate” in one of the three NAFTA countries. Goods originating from countries other than the U.S., Mexico and Canada – that are merely shipped through, or go through minimal transformations in the NAFTA region – are not eligible for NAFTA benefits.

However, if inputs from non-NAFTA countries go through a certain amount of processing or transformation within the NAFTA region, they may qualify as NAFTA originating goods.

The predominant way in which a good, which uses non-NAFTA-originating inputs, can qualify as a NAFTA-originating good, is through what is called a change in tariff classification, otherwise known as a tariff-shift.

The tariff-shift serves as an indicator of whether sufficient processing or transformation of the non-originating inputs has taken place in the NAFTA region, enabling the final product to qualify as NAFTA-originating.

Determining origin through sufficient transformation – Consider biscuits

Sufficient transformation requires that the non-originating inputs be classified under one tariff provision before processing, but be classified under a different tariff provision after processing is complete.

As an example:
If biscuits (tariff number 1905.90) are being produced in Canada entirely from NAFTA-originating inputs except for the flour (tariff Chapter 11), which originates or is imported from Europe, can the biscuits, which contain non-NAFTA originating inputs (sugar) still qualify as NAFTA originating because a sufficient transformation has taken place?

The applicable Rule of Origin for biscuits states that a tariff-shift will have occurred if there is “a change to heading 1902 through 1905 from any other chapter.” Since the flour (tariff Chapter 11) is outside headings 1902 through 1905, the tariff-shift rule has been met and the biscuits would be found to originate in Canada and therefore qualify for NAFTA duty free tariff.

It is important to keep in mind that the rules are not always clear, and when multiple non-originating inputs are involved in the production of a good, the determination can become that much more complicated.

Exporters should err on the side of caution.

When in doubt, contact a trade professional and seek an Advanced Customs Ruling from the CBSA, an effective way of avoiding uncertainty and potential costly penalties.

CBSA Advanced Rulings can determine, before importation is made:

1. Whether an imported good properly qualifies as a NAFTA originating good and therefore qualifies for preferential treatment;

2. Whether a tariff classification change has been met for the good to qualify as NAFTA originating.

To sum it all up, if exporters are cautious and do their due diligence in research, consulting the rules of origin before exporting, they will gain access to the many benefits of NAFTA originating products and will avoid unnecessary and costly fines.

If you have questions about the Rules of Origin, NAFTA benefits, international trade law, business or investment, contact Woods LaFortune LLP.

Have you gotten caught in owing with unexpected fines and penalties because of your products’ origins?

The post Exporters and Rules of Origin: Get in on NAFTA’s benefits and avoid heavy penalties appeared first on Trade Ready.