Common NAFTA Mistakes to Avoid

The North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico was launched in 1994 to reduce trading costs and increase business investment. NAFTA has tripled trade between the three countries since 1994, growing from $297 billion to $1.6 trillion. For importers, NAFTA presents opportunities to reduce duty payout for eligible goods, which can amount to significant savings.

In order to fully reap the benefits of NAFTA, however, you’ll need to avoid these common mistakes:

Mistake #1: Not Determining if your Goods are NAFTA Eligible

You must verify that your goods are indeed eligible for NAFTA. This can be an immense challenge for importers who must rely on foreign vendors to determine how their products qualify. You’ll need to find out where the good was produced and if your vendors use any amount of raw materials sourced from outside North America.

Mistake #2: Not Understanding NAFTA Rules of Origin and Exceptions

You need to have a general understanding of how all of NAFTA’s rules and exceptions work if you want to take full advantage of them. In NAFTA, the Rules of Origin are product specific rules that outline what must happen to products from non-NAFTA countries in order for the final exported product to qualify for benefits. If your products aren’t meeting these rules, you could face penalties.

Mistake #3: Incorrectly Filling out a NAFTA Certificate of Origin (or Not Having a Valid Certificate of Origin)

In order to be eligible, all goods must be certified and declared on a NAFTA Certificate of Origin, which must be completed correctly and signed by the exporter. If you claim NAFTA for a good you must have a valid certificate of origin to support it. The certificate is a legal document with legal consequences, so you must ensure that the certificates are not missing required details nor have any inaccurate information.

Mistake #4: Not Having a NAFTA Management Program

If you are audited by customs, you will need to produce your certificates of origin and any supporting documents. Canada requires certificates to be retained for 6 years, and in the US the required retention period is 5 years. Retaining your certificates and making them readily available can save you tremendous headaches and ensure a smooth process should you ever face an audit.

The worst situation for your company to find itself in would be after importing a product for many years assuming that it qualifies under NAFTA, you then discover through a customs audit that the goods do not qualify.

If you are unsure whether your goods are eligible for NAFTA, or if you are making any of the above mistakes, enlist the help of a trusted customs broker to review and help you implement a compliance program to take full advantage of NAFTA.

Have any questions?

Talk with our NAFTA Specialists and let us answer any questions you might have about NAFTA certificates, product eligibility, and NAFTA management programs!



Stay Informed

Get the latest developments on US and Canadian customs, international trade topics and border updates that are specific to your importing or exporting needs.

Back to Farrow Library

The information contained throughout Farrow’s Website or via Social Media (for eg. webinar, white papers, articles or other communication) is for informational purposes only do not purport to be legal and/or professional advice or a definitive interpretation of any law.. The information contained therein of a general nature and non-binding. No information published on the website or provided via social media constitutes professional or legal advice, a solicitation, an offer, or a recommendation to effect any transactions, or to conclude any legal act of any kind whatsoever. Farrow shall have no liability for the accuracy of the information in relation to any individual business operation and shall not be liable for any loss or damage of whatever nature which may arise as a result of the use of the information provided. Anyone contemplating action in respect of matters set out in this website or as a result of information communicated to you please contact your local Farrow representative for additional information or advice specific to your unique requirements.





Sign up to receive Industry news/information by email:

Sign Up Today!

Recent News

Teamsters Union Gives Strike Notice To CP Rail

April 18, 2018

Read more

How can we help?

To discuss how our team can help your business achieve true results,


Canada's Best Managed

Farrow One of Canada's Best Managed Companies

Contact Us

Get in Touch

Russell A. Farrow Limited 2001 Huron Church Road Windsor, ON N9C 2L6, Canada (519) 966-3003