Issue 245, February 4, 2000
The recently concluded Free Trade Agreement (FTA) between Mexico and the European Union offers some interesting opportunities to maquiladoras and Mexican producers. As with the NAFTA, maquiladoras and Mexican producers will have to learn the rules of origin if they are to benefit. Below is a very brief overview:

Under the FTA, a product will obtain preferential duty treatment if it is ?wholly obtained? in the EU or Mexico. The phrase ?wholly obtained? is similar to the NAFTA?s definition of ?wholly obtained or produced.? Alternatively, the FTA provides that a good may obtain preferential duty treatment if it has been ?sufficiently worked or processed? in the EU or Mexico.

?Sufficiently worked? is similar to the NAFTA?s Annex 401. It means that the non-originating materials used to make the good have undergone the required change in tariff classification and/or have sufficient local content. As in the NAFTA, how much content is considered ?sufficient? depends upon the tariff classification of each product.

Once a product obtains preferential origin, the FTA requires, with a few exceptions, that the product be covered by a certificate of origin, known as a ?Movement Certificate,? or by a statement on the commercial invoice or other commercial document indicating where the products originate. Unlike the NAFTA, origin certificates are not issued by exporters. Rather, the exporter must apply to the Customs authorities or other competent government authority for issuance of a Movement Certificate and be prepared to prove to government officials in the export country that the goods qualify as originating. Customs officials in the country of importation may verify the origin of a product by sending a written request to the Customs authorities in the country of exportation.

To utilize a statement on the commercial invoice, the exporter must be an ?approved exporter? or the value of the shipment must be less than 6,000 euros (a little less than $6,000 U.S.). The FTA leaves much discretion to the exporting country as to how to qualify as an ?approved exporter.?

Our contributing writer, Michael Roll, is an attorney at Katten, Muchin & Zavis in Chicago and can be reached via email or at 312-902-5200.

Please note that due to the complex nature of the subject matter, AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with AEI.