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NAFTA

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MILLAR KREKLEWETZ LLP is a boutique Canadian law firm with lawyers who have significant expertise in matters involving the North American Free Trade Agreement.

The following is a short introduction to the North American Free Trade Agreement, and various aspects of its implementation under Canada's customs and trade laws.


NAFTA

In broad terms, the North American Free Trade Agreement (NAFTA) provides for duty free trade between its member parties, namely Canada, the US and Mexico. However, this preferential status comes with various strings attached, namely the requirements relating to:

  • Tariff classification
  • Origin
  • Value for Duty
  • Marking

Generally, these requirements must be complied with in order for goods flowing between NAFTA countries to be entitled to the NAFTA preferential duty treatment (note that NAFTA also addresses trade in services, intellectual property and investments).

Canadas Customs Laws

Domestically, Canada has implemented these NAFTA requirements into its relevant customs laws, namely the Customs Act, its regulations and the Customs Tariffs.

Customs Penalties and Sanctions

Note that the Canadian laws implementing the NAFTA preferential status impose penalties for violating the customs requirements. In addition to losing NAFTA preferential status, importers and exporters face sanctions and penalties such as seizure, ascertained forfeiture, civil and criminal sanctions, and Administrative Monetary Penalties.

Cross-Border Investments Disputes

Finally, NAFTA also contains detailed dispute resolution provisions, including those in Chapter 11 of the NAFTA (Chapter 11) for resolving disputes relating to cross-border investments.

Chapter 11 is one of the most controversial chapters in NAFTA, dealing with both the mutual obligations that each NAFTA party owes to foreign investors, and the rules for resolving the disputes that are going to arise from time to time. Chapter 11 enables private corporations in one NAFTA country with the right to sue, through an arbitration process, the national government of another NAFTA party where that governments actions negatively affect the first partys investment rights under NAFTA.

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