Goods exported to North American Free Trade Agreement (NAFTA) countries

If an article imported under heading 9813.00.05 (articles to be repaired, altered or processed) is subsequently exported (within the required timeframe) to Canada (or Mexico on or after January 1, 2001) the article is considered exported for TIB purposes.
 
Note: Duty will not be assessed on articles that are imported from Canada for repair or alteration, regardless of their origin.
 
However, because the article is being exported into Canada or Mexico, the U.S. importer will be assessed duty on the original article in the following manner. (For brevity, we refer only to Canada, with the understanding that the following will also apply to Mexico after 1/1/2001.)
 
If Canada assesses a duty rate on the import that is less than the U.S. duty rate on the article, then the U.S. importer will owe U.S. Customs the difference.
 
For example, if a pound of steel, dutiable at $1 a pound, is imported into the U.S. under TIB, processed into steel boxes and exported to Canada -- where a duty rate of $.25 is assessed, then the U.S. importer of the steel will owe U.S. Customs $.75 duty on each pound of the steel that is exported to Canada. (If Canada later grants the Canadian importer’s claim for NAFTA preference on the article, and refunds the duty, then the U.S. may reliquidate the U.S. importer’s entry and charge the full dollar of duty owed.)
If Canada assesses a duty rate is the same as or greater then the U.S. duty rate on the article, then the U.S. importer will not owe U.S. duty when it is exported into Canada. For instance, if the Canadian duty rate for steel is $1 or more, then the U.S. importer will owe no U.S. duty.
 
If Canada assesses no duty, then the U.S. importer will owe $1 in U.S. duty.
 
Legally, the formula is explained as follows:
 
For purposes of this subchapter, if an article imported into the United States under heading 9813.00.05 is withdrawn for exportation to the territory of Canada or of Mexico, the duty assessed shall be waived or reduced in an amount that does not exceed the lesser of the total amount of duty payable on the article that would have been payable on importation under chapters 1 through 97, inclusive, of the HTSU, or the total amount of customs duties paid to Canada or to Mexico on the exported article, unless such article is covered by section 203(a)(1) through 203(a)(8), inclusive, of the NAFTA Implementation Act.
 
The amount of duties or refunds calculated on such articles pursuant to this note shall be adjusted to take into account any subsequent claim for preferential treatment made to another NAFTA country. This note shall apply to shipments to Canada on or after January 1, 1996, and to Mexico on or after January 1, 2001.
 
Claims for duty reductions or waivers must generally be filed within 60 days of exportation. Likewise, any duty owed must be paid within 60 days of exportation.
 
 

 

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