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As we approach the year’s end, it’s crucial for businesses engaged in North American trade to ensure they are compliant with NAFTA and USMCA origin verification and audit proceedings. This aspect of trade compliance remains a focal point for customs authorities in the United States, Canada, and Mexico.

Under these trade agreements, authorities continue to scrutinize the origin of goods claiming preferential treatment under a NAFTA certificate of origin. Mexican Customs, in particular, conducts verification audits either through questionnaires or by visiting producers and exporters in the US and Canada. They meticulously examine records detailing the procurement, cost, value, and payment of goods exported to Mexico, as well as the materials used in their production. These audits are pivotal in determining whether the goods genuinely qualify under NAFTA’s criteria and if the certificates of origin are valid.

Notably, a significant number of these audits result in a determination that the goods are non-NAFTA originating. This leads Mexican Customs to seek recovery of import duties, taxes, and fees that were waived based on the NAFTA certificate issued by US or Canadian entities. Given the high value of operations covered by NAFTA certificates, these audits are not only lucrative for customs authorities but are also expected to increase in frequency.

For US and Canadian producers/exporters and Mexican importers, it’s imperative to understand that they can challenge these determinations using available legal remedies. However, time is of the essence. Any delay in responding within the statutory timeline could render the customs’ decision final and binding, adversely affecting the involved parties.

Moreover, with the transition from NAFTA to USMCA, it is essential to maintain supporting documents for both certificates. For NAFTA, keep records for five years after the date of importation up until June 30, 2025. Post this date, if you’ve transitioned to USMCA certifications of origin, continue to uphold this recordkeeping standard for at least five years following the date of importation. The USMCA, much like its predecessor, includes similar origin verification procedures.

At Edward J. Zarach & Associates, we recognize the complexities and challenges of adhering to these trade agreements. With our deep understanding of customs and trade matters, we are well-equipped to guide and support your business through these verification processes. Our expertise, rooted in over two decades of experience, positions us uniquely to assist you in navigating these intricate compliance requirements efficiently. Reach out to us today to learn more.