On March 28, 2013, the U.S. International Trade Commission (ITC) initiated an investigation into the potential economic impact of proposed modifications to the North American Free Trade Agreement (NAFTA). The proposed modifications would amend the rules of origin that are applied to determine if a product qualifies to receive preferential tariff treatment pursuant to NAFTA. A broad range of products are affected, including edible preparations, mineral fuels, chemical products, plastics, rubber articles, cork, glass and glassware, base metals, machinery and parts, rail locomotives, trailers, optical and medical instruments, furniture, toys and games, lighters, and smoking pipes. Public comments on the proposed modifications are due by June 4, 2013.
The proposed modifications are to Annex 401 of the NAFTA. This annex, along with Chapter 4 and Annex 403 of the NAFTA, set forth the changes that products must undergo in Canada, Mexico, or the United States in order to receive the benefits provided by the agreement. In other words, if a product satisfies the applicable rule of origin, it is a NAFTA-originating product that is entitled to preferential tariff treatment. Thus, modifications to these rules could have sweeping effects on the importation of certain products among the three countries under the agreement, potentially reducing tariffs on a wide range of merchandise.
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