The Canada - European Free Trade Association (EFTA) Free Trade Agreement (Canada-EFTA FTA) does not follow the NAFTA model for origin verifications. In some respects, the Canada-EFTA FTA model is better for Canadian importers as certificates of origin can be approved by the government of the exporting Party. The EFTA countries are Iceland, Norway, Lichtenstein and Switzerland.
What this means for Canadian importers is that they can use the Canada-EFTA provisions and customs laws to minimize origin assessment risk. By origin assessment risk, I mean the risk of claiming preferential treatment under the free trade agreement and finding out later that the benefits are denied because the certificate of origin was incorrect.
Article 8 of the Canada-EFTA FTA states that "[t]he provisions on rules of origin and administrative co-operation are set out in Annex C." For a copy of Annex C, please go to the following link - http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/EFTA-AnnexC-en.pdf
Article 24 of Annex C addresses verifications and provides, in part:
1. The customs administration of a Party of import may verify whether a product is originating by:
(a) requesting in writing that the customs administration of a Party of export conduct a verification as to whether a product is originating; and
(b) providing the customs administration of the Party of export with:
(i) the subject and scope of the verification and any supporting documentation relevant to the request; and
(ii) where appropriate, a request for specific documentation or information to be provided to the customs administration of the Party of import.
The Party of export has 12 months to complete the export verification.
In the Record of Understanding to the Canada-EFTA FTA (see http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/efta-agr-acc-rou-pde.aspx?lang=en), the Parties state the following with respect to Article 24 of Annex C:
1. It is understood that the customs administration of the Party of export will, in conducting an origin verification at the request of the customs administration of the Party of import, assume all expenses associated with conducting the origin verification within its territory, except for travel and incidental expenses incurred by the customs administration of the Party of import.
2. It is further understood that the customs administrations of the Parties will discuss the overall operation and administration of the verification process, including forecasting of workload and discussing priorities. Where there is an unusual increase in the number of verification requests, the customs administrations of the Parties concerned will consult to establish priorities and consider steps to manage the workload, with consideration of operational requirements.
This is an important customs program that is available to importers of goods from the EFTA countries. A Canadian business may ask the government of Canada to make request for an EFTA exporter verification prior to signing an agreement with an EFTA manufacturer or exporter. The Canadian importer may also ask for the exporter verification after goods are imported, but they may have to address problems if the certificates of origin were incorrect at the time of importation.
In addition, the EFTA Countries have established an "approved exporter" program. It is possible that and EFTA exporter may be approved under an "approved exporter" program.
These obligations are implemented in part in Canadian law in sections 42.1, 42.2 (CBSA conducting a verification) and 97.201 (Canada asking EFTA authority to conduct verification) of the Customs Act.
At the present time, the request process is administrative in nature in Canada because the regulations have not been promulgated. On June 29, 2009, the Canada Border Services Agency issued Customs Notice 09-014 "Proposed regulatory Amendments and Proposed New Regulations Related to the Implementation of the Canada - European Free Trade Association Free Trade Agreement". For a copy of Customs Notice CN 09-014, please go to the following link - http://cbsa-asfc.gc.ca/publications/cn-ad/cn09-014-eng.pdf
In that Customs Notice, the public is informed that the CEFTA Verification of Origin of Exported Goods Regulations will be promulgated and set out the customs procedures for the exporter verifications.
For more information about how a Canadian business can minimize customs assessment risk regarding origin, please contact Cyndee Todgham Cherniak, a customs lawyer, at 416-307-4168.