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ARTICLE · 06 FEBRUARY 2017

NAFTA Rules Of Origin Renegotiation – Make Trump An Offer He Cannot Refuse

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The Trump Administration has signaled that one of first areas of interest for North American Free Trade Agreement ("NAFTA") renegotiation is the rules of origin.

CanadaInternational Law
Cyndee Todgham Cherniak
Cyndee Todgham Cherniak
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The Trump Administration has signaled that one of first areas of interest for North American Free Trade Agreement ("NAFTA") renegotiation is the rules of origin.  Rules of origin are boring, technical rules in Annex 401, which are permit goods to receive preferential duty-free treatment.  Only goods that originate in a NAFTA country are entitled to receive the benefits of preferential NAFTA tariff rates. Importers of goods that do not originate in a NAFTA country may have to pay duties at the MFN rate, which are a cost.  Unrecoverable costs must be recovered by charging higher prices to Canadian consumers.  This can be a problem when the market will not accept the higher prices.  Also, Canadian manufactured goods may not be competitive in the global market if there are embedded unrecoverable duties.  As a result, there are good reasons to care about any changes to the rules of origin.

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