Rules of origin for the creation and export of products are regulations that determine the true origin of goods in order to facilitate international trade and protect national industries. In Canada, these rules are essential not only to benefit from free trade agreements with other countries and to ensure compliance with international standards, but also to achieve real tax savings.
To comply, Canadian companies must be aware of these various rules of origin that are applicable to their products, and adhere to them scrupulously. This involves determining whether goods originate in Canada or another country, based on criteria such as place of production, local value added, substantial transformation, etc.
A collection of rules
Rules of origin vary from one trade agreement to another, making the task sometimes complex for exporters. For example, under the Canada-United States-Mexico Agreement (CUSMA, formerly NAFTA), certain products must meet regional content thresholds to be considered as originating from one of the three signatory countries. Similarly, under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), companies must also comply with specific rules to enjoy the tariff benefits provided. The Rules may vary between Agreements and are not necessarily compatible between Agreements.
To ensure compliance with rules of origin, Canadian companies can call on specialist consultants or consult the relevant government departments, such as the Canada Border Services Agency (CBSA) or Global Affairs Canada. A Customs laywer can provide invaluable advice and information on the rules in effect, the procedures to follow, the documents to provide, etc.
For companies that export
In addition, exporting companies must keep accurate and thorough records on the origin of goods, so that they can justify their compliance in the event of an audit or verification by customs authorities. These documents may include invoices, certificates of origin, part lists, production reports, etc.
For companies that import
It is also essential that Canadian companies ensure that their suppliers respect rules of origin and provide the information needed to determine the origin of components and raw materials. In the event of non-compliance, products could be excluded from the benefits provided by trade agreements, leading to additional costs and delays in export operations. The CBSA may demand duties for false or mistaken origin claims up to four years after the importation.
Other possible tools
Finally, to facilitate compliance with rules of origin, Canadian companies can use technological tools such as supply chain management (SCM) systems or customs compliance software. These tools track and analyze commodity flows, automate origin verification processes, and generate reports that comply with regulatory requirements.
In conclusion, rules of origin for the creation and export of products are essential to guarantee the legitimacy of trade and to enjoy the benefits of free trade agreements. Canadian companies need to familiarize themselves with these rules, respect them and put in place the necessary measures to ensure compliance. When in doubt, it is advisable to consult experts and use technological tools to facilitate the compliance process.
