NAFTA Countries of Origin Marking Rules
Memorandum D11-3-3

ISSN 2369-2391

Ottawa, October 20, 2015

This document is also available in PDF (168 Kb) [help with PDF files]

In Brief

1. Paragraph 3 of the Guidelines and General Information has been revised to update the reference to the tariff code for importations with any description that may be false or misleading as to the geographic origin of the goods. Tariff code 99.67 has been replaced with tariff item 9897.00.00.

2. Any reference made in this memorandum to Memorandum D11-3-4 has been deleted.

3. Appendix F – Marking Expert has been removed from this memorandum.

4. The editing revisions made in this memorandum do not affect or change any of the existing policies or procedures.

This memorandum outlines and explains the legislation, regulations, and general guidelines that apply to the country of origin marking for goods imported from a North American Free Trade Agreement (NAFTA) country (i.e., the United States or Mexico).

Information pertaining to the country of origin marking for goods imported from a non-NAFTA country is found in Memorandum D11-3-1, Marking of Imported Goods.

Legislation

Customs Act
Customs Tariff
Currency Act
Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations
NAFTA Rules of Origin Regulations
NAFTA Tariff Preference Regulations
North American Free Trade Agreement (NAFTA)

Guidelines and General Information

Definitions

1. The "Interpretation" section of the Regulations contains definitions that are important in understanding the administration of the Regulations. For purposes of this memorandum, the following terms are also important:

accessories, spare parts or tools
means goods that are delivered with a good, whether or not they are physically affixed to that good, and that are used for the transport, protection, maintenance or cleaning of the good, for instruction in the assembly, repair or use of that good, or as replacements for consumable or interchangeable parts of that good.
country of origin
means the country of origin that must be marked on the good by the application of the rules set out in Sections 4 through 10 of the Regulations.
countries of origin
means the countries of origin that must be marked on the good by the application of the rules set out in Sections 5 through 7 or 10 of the Regulations
HS
means the Harmonized Commodity Description and Coding System that is used for the classification of goods.
packaging materials and containers
means materials and usual containers in which a good is packaged for retail sale.
packing materials and containers
means materials and outermost usual containers that are used to protect a good during transportation, but does not include packaging materials and containers.
paragraph
means a subset of a section of the Regulations (for example paragraph 7(a) sets out the method for determining the country of origin for marking a good when the good is produced by minor processing).
section
means a portion of the Regulations (for example: Section 9 pertains to Production Outside Canada).
subsection
means a subset of a section of the Regulations (for example subsection 2(1) sets out the definitions found in the Regulations).
the Regulations
means the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations.
outermost usual container
means a shipping container used to transport goods. In some cases, goods may reach the ultimate purchaser in the outermost usual (shipping) container.

General

2. This memorandum applies to goods that have been imported from a NAFTA country (i.e., the United States or Mexico). For the purposes of marking, the imported goods do not need to "originate" within the meaning of the NAFTA Rules of Origin Regulations.

3. The requirement for country of origin marking should not be confused with labelling requirements of other government departments, such as Agriculture and Agri-food Canada or Industry Canada. For example,Industry Canada's regulations require that certain product-related information, such as fabric content of wearing apparel, be shown on the product label.

4. All goods, which contain a description that might mislead a person as to the country of origin of the goods, are prohibited entry into Canada under the provisions of tariff item 9897.00.00. Information concerning the provisions of tariff item 9897.00.00 is set out in Memorandum D9-1-9, False Description of Geographical Origin of Goods and Goods With Trade Marks – Tariff Item 9897.00.00.

5. Only certain goods are required to be marked to clearly indicate the country in which the goods were made. Those goods that are required to be marked are set out in Schedule I of the Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations (the Regulations) and Appendix A to Memorandum D11-3-1.

6. Certain types of goods, or goods imported under specific conditions may be exempt from the requirement for country of origin marking. There are 21 exemptions that apply to goods imported from a NAFTA country. These exemptions are listed in Schedule II of the Regulations and Appendix B to Memorandum D11-3-1.

7. Under section 4 of the Regulations, reference is made to Schedule III, the "Tariff Shift Rules." The Tariff Shift Rules are set out in Schedule III of theRegulationsand can also be found on the Department of Justice Web site.

8. For goods imported from a NAFTA country, the purpose of the marking requirement is to inform the ultimate purchaser of the country or countries of origin of the goods. The ultimate purchaser is the last person in Canada who purchases the goods in the form in which they are imported, whether or not that purchaser is the last person to use the goods in Canada. In order to have an ultimate purchaser, a purchase or transaction must occur.

Methods of Determining the Country of Origin for Marking

9. When determining the country of origin for the marking of goods imported from a NAFTA country, a set of marking rules is used. These are technical rules that are applied systematically to determine the country or countries of origin that are to be marked on the goods. These rules are set out in Sections 4 through 7 of the Regulations.

10. Section 4, paragraphs 7(b) and 7(c) and Section 8 of the Regulations only allow for a single country of origin to be marked on a good.

11. Sections 5 and 6 and paragraph 7(a) of the Regulations allow for either a single country or multiple countries of origin to be marked on a good.

12. Section 9 of the Regulations can affect the country or countries of origin determined under Sections 4 through 7.

13. Section 10 of the Regulations can affect which country or countries of origin may be marked on a fungible good.

14. Appendices A and B provide charts (Charts 1 and 2 respectively) to assist in the understanding of the application of Sections 4 through 7 of the Regulations. The charts should be used in conjunction with the application of these sections and not in isolation.

15. Appendix C provides a Table to assist in the application of Section 8 of the Regulations entitled "Tariff Preference Override." Section 8 can affect the country or countries of origin determined under Sections 4 to 7.

Application of Section 4 of the Regulations (Refer to Chart 1 in Appendix A)

16. Paragraph 4(1)(a) of the Regulations allows that a single country be marked on a good if the good is wholly obtained or produced in one country. "Wholly obtained" does not mean a good purchased in one country. The definition of "wholly obtained or produced" is set out in subsection 4(2) of the Regulations.

17. Paragraph 4(1)(b) of the Regulations allows that a single country be marked on a good if the good is produced exclusively from domestic materials. This means that the components or materials that are incorporated into the good, each qualifies in its own right as being either "wholly obtained or produced," or meeting a tariff classification change rule under Schedule III of the Regulations. The materials must qualify as a domestic material (i.e., the same country as that in which the good is produced).

18. Paragraph 4(1)(c) of the Regulations allows that a single country be marked on a good, provided that each of the foreign materials incorporated in the good undergoes a change in tariff classification as set out in Schedule III of the Regulations and meets any other applicable provisions of the Regulations, such as sections 12 and 13.

19. If a foreign material that is incorporated into a good does not make a tariff classification change as set out in Schedule III of the Regulations, section 11, de minimis, may be applicable (refer to Section 11: de minimis).

20. Paragraph 4(1)(d) of the Regulations allows that a single country of origin be marked on a good as set out by an applicable Chapter Note in Schedule III of the Regulations.

21. If, by the application of paragraph 4(1)(d) of the Regulations, a single non-NAFTA country is determined, Section 8 may be applied (refer to Section 8: Tariff Preference Override and Appendix C).

22. When a single country of origin cannot be determined under section 4, then section 5 of the Regulations would be considered.

Application of Section 5 of the Regulations (Refer to Chart 2 in Appendix B)

23. Section 5 of the Regulations is applicable to all goods, except those that are described as a set in Schedule I of the Customs Tariff, or are classified as a set by the application of Rule 3 of the General Rules for the Interpretation of the Harmonized System. If the good is described or classified as a set, proceed directly to section 6 of the Regulations.

24. Section 5 of the Regulations provides that the country or countries of origin of the single material that imparts the essential character of the goods shall be the country or countries of origin marked on the goods. The definition of essential character is found in subsection 2(2) of the Regulations.

25. For purposes of essential character, the materials which are taken into consideration are as follows:

26. Under subsection 5(1) of the Regulations, where a single material imparts the essential character of a good; the good can be marked with the country or countries of origin of that material.

27. Under subsection 5(2) of the Regulations, if the single material that imparts the essential character of the goods is fungible (i.e. interchangeable) and commingled (physically combined or mixed) in inventory so that the direct physical identification of the country or countries of origin of the single material is not practical, then the goods shall be marked with the country or countries of origin of each fungible material by the application of either subsection 5(1) or 5(2).

28. Furthermore, under subsection 5(2) of the Regulations, if the single material that imparts the essential character of the goods is fungible (i.e. interchangeable) and commingled (physically combined or mixed) in inventory, so that the direct physical identification of the country or countries of origin of the single material is not practical, then the goods shall be marked with the country or countries of origin of each fungible material on the basis of an approved inventory management method as described in subsection 5(2).

29. Under subsection 5(3) of the Regulations, the country of origin of the single material that imparts the essential character of complete or finished television receivers is determined by the application of a Chapter Note to goods of Chapter 85 of the Customs Tariff. The Chapter Note can only be applied in certain circumstances to goods of subheading Nos. 8528.10 and 8528.20. The Note is found in Schedule III of the Regulations.

30. Section 8 of the Regulations: Tariff Preference Override may be applicable if a single non-NAFTA country or multiple countries have been determined under Section 5 (refer to Section 8 and Appendix C).

Application of Section 6 of the Regulations (Refer to Chart 2 in Appendix B)

31. This section is only applicable to goods which are specifically described in the Customs Tariff, as a set or a mixture, or are classified as a set, a mixture or composite good by the application of Rule 3 of the General Rules for the Interpretation of the Harmonized System (HS).

32. A travel kit consisting of a shaving brush (heading No. 96.03 of the Customs Tariff), a razor (heading No. 82.12), a hair brush (heading No. 96.03), a toothbrush (heading No. 96.03) and a comb (heading No. 96.15) put up in a leather case (heading No. 42.02) is classified under heading No. 96.03 as a set by the application of Rule 3 of the General Rules for the Interpretation of the Harmonized System.

33. Section 6 of the Regulations provides that the country or countries of origin of the goods shall be the country or countries of origin of all the materials that merit equal consideration as imparting the essential character of the good.

34. The country of origin of the plastic mechanical train sets cannot be determined by the application of section 4 of the Regulations, as the goods are not wholly obtained or produced, they are not made exclusively from domestic material, there is no change in tariff classification and there is no Chapter Note set out in Schedule III of the Regulations. Section 5 does not provide for goods described as sets, therefore that section cannot be applied.

35. By the application of the Regulations, the engine, caboose and cars would be considered as imparting the essential character of the train sets. Therefore, by the application of section 6 of the Regulations, the sets would be marked as a product of England, Germany and Denmark.

36. Section 8 of the Regulations, the Tariff Preference Override may be applicable for determining the country of origin to be marked on the imported goods (refer to section 8 and Appendix C).

Application of Section 7 of the Regulations (Refer to Chart 2 in Appendix B)

37. When goods are produced by minor processing, the country or countries of origin of the goods are determined by the country or countries of origin of all the materials which impart the essential character of the goods by the application of paragraph 7(a) of the Regulations. Note that the Tariff Preference Override (section 8) is not applicable when goods are produced by minor processing.

38. The country of origin of the goods (i.e. bicycles) cannot be determined by the application of section 4 of the Regulations, as the goods are not wholly obtained or produced, they are not made exclusively from domestic material, there is no change in tariff classification and there is no Chapter Note set out in Schedule III of the Regulations. When the factors for determining essential character are applied, the frame parts from Mexico, or the wheel rims and spokes from Germany could be used to determine the essential character of the bicycle. Therefore, section 5 is not applicable as this section only allows for a single material. The bicycle is not a set, mixture or composite good, therefore section 6 is not applicable.

39. The bicycles are produced by merely packaging the bicycle components. This is a form of minor processing as described in subsection 2(2) of the Regulations. Therefore paragraph 7(a) can be used to determine the country or countries of origin of the bicycles. Since the frame parts and the wheel rims and spokes merit equal consideration as imparting the essential character of the bicycles, the bicycles would be marked as a good of Mexico and Germany.

40. Under paragraph 7(b) of the Regulations, the country of origin of the goods is determined by the country of origin of the parts that determine the essential character of the goods. Multiple countries of origin cannot be determined by the application of paragraph 7(b) because the parts must be from the same country. In addition, the good must be produced by simple assembly. The Tariff Preference Override may apply if either a single NAFTA or non-NAFTA country is determined (refer to section 8 and Appendix C).

41. The country of origin of the purses cannot be determined by the application of section 4 of the Regulations, as the goods are not wholly obtained or produced, they are not made exclusively from domestic materials, the tariff shift rule is not met, and there is no Chapter Note set out in Schedule III of the Regulations. As either the bovine or crocodile leather could be used to determine the essential character of the purses, section 5 cannot be applied. Section 5 only allows for a single material. The purses are not a set, mixture or composite good, therefore section 6 is not applicable.

42. The good is produced by simple assembly. Therefore, paragraph 7(b) of the Regulations can be used to determine the origin of the purses. The bovine and crocodile leather components merit equal consideration as imparting the essential character of the purses and both components are from Brazil. Therefore, by the application of paragraph 7(b), the country of origin of the purses would be determined to be Brazil.

43. Paragraph 7(c) of the Regulations can only be applied when the country of origin for marking of goods cannot be determined under sections 4 through 6, or by paragraphs 7(a) or 7(b). The Tariff Preference Override may apply if either a single NAFTA or non-NAFTA country is determined (refer to section 8 and Appendix C).

44. The country of origin of the artificial flowers cannot be determined by the application of sections 4, 5 or 6 of the Regulations, therefore, section 7 must be reviewed.

45. The artificial flowers are produced by more than minor processing; therefore, paragraph 7(a) of the Regulations is not applicable. There are more than five foreign components, from two different countries, that are to be assembled. Therefore, paragraph 7(b) cannot be used to determine the country of origin of the goods. By the application of paragraph 7(c), the artificial flowers would be marked as a product of Mexico as that is the last country in which the goods underwent production.

Section 8 of the Regulations: Tariff Preference Override

46. This section must be applied where a single NAFTA country has not been determined under sections 4 or 5 of the Regulations, therefore the country of origin for marking purposes will be the last NAFTA country where the goods underwent production.

47. This section may only apply to goods that qualify as "originating" under the NAFTA Rules of Origin Regulations and for which a NAFTA certificate of origin has been completed and signed. If it is determined that the production is by minor processing, then section 8 of the Regulations is not applicable.

Section 9 of the Regulations: Production Outside Canada

48. This section is only applicable where:

49. If the production is determined to fall within the definition of minor processing (refer to the definition in subsection 2(2) of the Regulations), then the country of origin for marking of the goods would remain as Canada.

Section 10 of the Regulations: Fungible Goods

50. Subsection 10(1) of the Regulations deals with the commingling of two or more fungible goods where direct physical identification of the country or countries of origin of the goods can be determined.

51. Subsection 10(2) of the Regulations deals with the commingling of fungible goods where direct physical identification of the country or countries of origin of the goods is not practical.

52. Subsection 10(2) of the Regulations allows the importer of the goods a choice of the following:

Section 11 of the Regulations: De Minimis

53. This section is only applicable when the country of origin is being determined under paragraph 4(1)(c) of the Regulations.

54. Any foreign materials that are incorporated into a good and that do not undergo a tariff classification change can be disregarded when determining the country of origin of the good, provided the total value of those non-qualifying foreign material is not greater than 7% of the total value of the good.

55. For beverages, spirits and vinegar classified in Chapter 22 of the Customs Tariff, the total of the de minimis value is 10% or less of the total value of the goods.

56. For textiles and textile articles of Chapters 50 to 63 of the Customs Tariff, the de minimis provision provides that the combined weight of all non-qualifying foreign materials cannot exceed 7% of the total weight of the goods.

57. The de minimisprovision does not apply to materials that are incorporated into goods that are classified under Chapters 1 to 4, 6 to 8, 11, 12, 15, 17, or 20 of the Customs Tariff.

58. For the purposes of subsection 11(2) of the Regulations, the importer of the goods can determine the "value of materials" in two ways. The first method, set out in paragraph 11(2)(a), provides that the value of materials is the value for duty as determined according to sections 45 to 56 of the Customs Act. The reference to the Currency Act in section 55 of the Customs Act should be read as subsection 3(1) of the NAFTA Rules of Origin Regulations.

59. The second method, set out in paragraph 11(2)(b) of the Regulations, provides that the value of materials is determined according to Schedule VIII of the NAFTA Rules of Origin Regulations.

60. For purposes of subsection 11(3) of the Regulations, the "value of any goods" is determined by the same method that the importer chose to determine the "value of materials." In other words, paragraph 11(3)(a) provides that the value of any good is the value for duty as determined according to sections 45 to 56 of the Customs Act. The reference to the Currency Act in section 55 of the Customs Act should be read as subsection 3(1) of the NAFTA Rules of Origin Regulations. Paragraph 11(3)(b) provides that the value of any goods is the value as determined according to Schedule VIII of the NAFTA Rules of Origin Regulations. Any reference in Schedule VIII to material should be read as a reference to goods.

Section 12 of the Regulations: Change in Tariff Classification

61. When paragraph 4(1)(c) of the Regulations is used to determine the country of origin for the marking of goods, Section 12 lists certain materials that are to be disregarded when applying the tariff shift rules. The materials that are to be disregarded are as follows:

62. Accessories, spare parts and tools include such articles as an operational manual for a television, bicycle tool kit, brush or other tool to clean out a machine, and electrical cords and power bars for use with electronic goods.

63. Indirect materials include such goods as fuel and energy, tools, dies and moulds, gloves, glasses, footwear and safety equipment. For a complete definition of indirect materials, refer to subsection 2(1) of the Regulations.

64. Under subsection 12(2) of the Regulations, a change to a good from another good/material that is classified under the same HS classification as the finished good, is only allowed when such a change is set out in a rule in Schedule III of the Regulations.

Section 13 of the Regulations: Non-qualifying Operations

65. When determining if a foreign material undergoes an applicable change in tariff classification in Schedule III of the Regulations or satisfies any other applicable requirements, Section 13 of the Regulations defines certain operations that cannot be used to qualify the good.

Tariff Treatment

66. The marking rules are to be used to determine the tariff treatment for agricultural goods described under Article 708 of the NAFTA, and textile and apparel goods described under Appendix 1.1. of Annex 300-B of the NAFTA, as set out in the NAFTA Tariff Preference Regulations(refer to Memorandum D11-4-19, The Determination of When Goods are Entitled to the Benefit of the United States Tariff, Mexico Tariff or the Mexico-United States Tariff).

67. For example, paragraph 4(1)(d) of the Regulations provides that the country of origin of a good is the country in which the good is considered to originate by an applicable Chapter Note set out in Schedule III of the Regulations.

68. For further information concerning tariff treatment refer to Memorandum D11-4-19.

Additional Information

69. For more information, within Canada call the Border Information Service at 1-800-461-9999. From outside Canada call 204-983-3500 or 506-636-5064. Long distance charges will apply. Agents are available Monday to Friday (08:00 – 16:00 local time / except holidays). TTY is also available within Canada: 1-866-335-3237.

Appendix A

Chart 1

Appendix B

Chart 2

Appendix C

Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations

Section 8

Does the Tariff Preference Override Apply?

May Apply – Where the good is "originating" under the NAFTA Rules of Origin Regulations and a Certificate of Origin has been completed and signed for the good, section 8 of the Regulations will be used to determine the country of origin of the good.

I – The Tariff Preference Override does not apply where a single NAFTA country is determined under the Regulations.

II – The Tariff Preference Override would not apply if the good is not "originating" under the NAFTA Rules of Origin Regulations.

III – The Tariff Preference Override would not apply if only one country can be determined under the Regulations.

IV – The Tariff Preference Override does not apply where a good is merely minor-processed under subsection 7(a) of the Regulations.

NAFTA Marking Regulations Where Single NAFTA country determined Where Single non-NAFTA country determined Where Multiple countries determined
4(1)(a) No, (I) No, (II) No, (III)
4(1)(b) No, (I) No, (II) No, (III)
4(1)(c) No, (I) No, (II) No, (III)
4(1)(d) No, (I) May apply No, (III)
5 No, (I) May apply May apply
6 May apply May apply May apply
7(a) No, (IV) No, (IV) No, (IV)
7(b) May apply May apply No, (III)
7(c) May apply May apply No, (III)

References

Issuing office:
Trade and Anti-dumping Programs Directorate
Headquarters file:
 
Legislative references:
Customs Act
Customs Tariff
Currency Act
Determination of Country of Origin for the Purposes of Marking Goods (NAFTA Countries) Regulations
NAFTA Tariff Preference Regulations
North American Free Trade Agreement (NAFTA)
Other references:
D9-1-9, D11-3-1, D11-4-19
Superseded memorandum D:
D11-3-3 dated
Date modified: