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Practical challenges with free trade agreements

Practical challenges with free trade agreements

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Practical challenges with free trade agreements

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  1. Practical challenges with free trade agreements Adriana Ibarra-Fernández

  2. Objectives of Free Trade Agreements Article 102: Objectives 1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favored-nation treatment and transparency, are to: • eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties; • …

  3. Objectives of Free Trade Agreements Article 302: Tariff Elimination 1. Except as otherwise provided in this Agreement, no Party may increase any existing customs duty, or adopt any customs duty, on an originating good. • 2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with its Schedule to Annex 302.2. • …

  4. Objectives of Free Trade Agreements Article 401: Originating Goods Except as otherwise provided in this Chapter, a good shall originate in the territory of a Party where: a) wholly obtained or produced entirely …; b) change in tariff classification / regional value content requirements; c) produced entirely in the territory exclusively from originating materials; or d) except for Chapters 61 through 63, the good does not undergo a change in tariff classification (Rule 2 a / Heading specifically describes the good and its parts).

  5. Certificate of Origin – Practical Problems • Certificates of Origin have been issued without evidencing the originating character of the goods • “Just another document” (P.O., Invoice, COO…) • Country of Origin / Country of Exportation

  6. “There’s nothing free about Free Trade” 80% Exporter X Importer

  7. “There’s nothing free about Free Trade” Objectives of Free Trade Agreements

  8. Origin Analysis / Evidence of Compliance • No origin analysis • Changes of sourcing / origin = No update • Changes to rules of origin / HS

  9. Verifications of Origin • Scope - Too broad • Insufficient knowledge by the Exporter • Language barriers • Different legal / accounting systems

  10. Conclusions • COMPLIANCE • Minimize risk • Change Mindset