Box 12.1 A WORD ON CERTIFICATES OF ORIGIN

Specific certificates of origin are sometimes required for countries involved in special trade agreements, such as the North American Free Trade Agreement (NAFTA), which was signed by Canada, Mexico, and the United States. For instance, the NAFTA certificate of origin validates that a good originated in a NAFTA country and is eligible for the preferential duty rate. The U.S.-Israel Free Trade Area also has its own certificate of origin.

Box 12.2 THE HARMONIZED SYSTEM

The World Customs Organization developed the Harmonized System (HS) to describe products for customs purposes. The HS is recognized by 179 countries, customs bureaus, or economic unions, representing 98 percent of world trade.

HOW IT WORKS

Six-digit codes are assigned that represent general categories of goods. Countries that use HS numbers are allowed to define commodities at a more detailed level but must “harmonize” the first six digits to the HS framework.

WHAT THIS MEANS FOR YOU

Using these codes ensures that customs officials are referring to the same item when classifying the product and applying the tariff rate.