NAFTA Facts #3010

TEMPORARY ENTRY OF GOODS UNDER THE NAFTA

Temporary importation provisions can enhance a company's marketing abilities by increasing the product exposure in the market at lower initial cost to the exporter. The North American Free Trade Agreement (NAFTA) ensures that future Canadian and Mexican laws will not discriminate against U.S. business. Most importantly, the NAFTA requires Canada, Mexico, and the United States to grant duty-free temporary admission to certain classes of goods imported from another NAFTA country. Duty-free entry cannot be conditioned on whether or not directly competitive or substitutable goods are available in the importing country. Finally, the goods do not have to originate (be a product of Mexico, Canada or the United States) in a NAFTA country to qualify under the temporary entry provisions.

Also of relevance to U.S. exporters are the service trade provisions of the NAFTA. U.S. exporters of technical equipment and machinery to Canada and Mexico often require after-sales repair and training services. As a result of the NAFTA, companies can now send their service personnel, along with their tools, to Canada and Mexico. The temporary entry provisions for after-sales service providers and professionals in the NAFTA facilitate expedited clearance through immigration.

Note:See document #7407 for more detailed information on temporary entry of goods into Canada.

Certain Professional Equipment, Sports Goods, and Goods for Display.

A business traveler may temporarily import certain goods duty-free. Goods which qualify are professional equipment (tools of the trade), equipment for the press or for sound or television broadcasting, cinematographic equipment, goods for sports purposes, and goods for display or demonstration. As a condition of duty-free entry, a NAFTA country may require that these goods:

• not be sold or leased while in its territory;
• be accompanied by a bond if they are not originating goods as defined in Chapter 4 of the NAFTA;
• only remain in the importing country until the departure of the person or within a reasonable time established by each country;
• be capable of being identified when exported;
• be imported in no greater quantity than is reasonable for its intended use;
• be imported by a national or resident of another NAFTA country that seeks temporary entry;
• be used solely by or under the personal supervision of the person importing the good in the exercise of the business activity, trade or profession;
• be accompanied by a bond (or other security) no greater than 110% of the charges that would otherwise be owed on final importation. (A bond for customs duties will not be required for an "originating" good.)

Items in the above categories can be imported into Canada duty-free under the following tariff numbers: professional equipment (tools of the trade)-9823.10.00; equipment for the press-9823.20.00; equipment for sound or television broadcasting-9823.30.00; cinematographic equipment-9823.40.00; goods for sports purposes-9823.50.00; and goods intended for display or demonstration-9823.60.00.

Commercial Samples and Advertising Films.

Commercial samples and advertising films may also be imported temporarily without payment of duties. As a condition of duty-free entry, a NAFTA country may require that these goods:

• be imported solely for the solicitation of orders for goods, or services from another country;
• not be sold, leased or put to any use other than exhibition or demonstration while in its territory;
• be capable of identification when exported (necessary paperwork to ensure re-entry of the product into the United States should be secured prior to entry into Canada or Mexico);
• be exported within such period as is reasonably related to the purpose of the temporary admission; and
• be imported in no greater quantity than is reasonable for its intended use.

Under NAFTA, commercial samples exported from the United States or Mexico may enter Canada free of duty under tariff number 9824.00.00, regardless of the origin of the samples.

Canada may require that:

• the samples have a value, individually or in the aggregate as shipped, of not more than U.S. $1 or equivalent in Canadian dollars;
• the samples be marked, torn, perforated or otherwise treated so that they are unsuitable for sale or for use except as commercial samples.

Advertising films are allowed duty-free entry under tariff number 9823.80.00. Goods imported into Canada for a period not exceeding six months for the purpose of display at a convention or a public exhibition at which the goods of various manufacturers or producers are displayed, are allowed duty-free entry under tariff number 9819.00.00.

Advertising Material

Under NAFTA, printed advertising material of Chapter 49 (including brochures, pamphlets, leaflets, trade catalogues, yearbooks published by trade associations, tourist promotional materials and posters) that are exported from the United States or Mexico to Canada are duty free under tariff number 9825.00.00, regardless of the country or origin of the material.

Canada requires that the advertising materials:

• be used to promote, publicize or advertise a good/service;
• be supplied free of charge; and
• be imported in packets containing no more than one copy of such material and that the material/packets are not part of a larger consignment.

Repairs and Alterations Pursuant to a Warranty

None of the NAFTA countries may assess customs duties on goods that are exported for repair or alteration in another NAFTA country pursuant to a warranty and then re-imported. This is true regardless of the origin of the goods and regardless of whether the goods could have been repaired or altered in the exporting country. Goods to be repaired may enter the United States duty free under tariff numbers 9801.00.10 (products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad) and 9813.00.15 which includes articles to be repaired, altered or processed (including processes which result in articles manufactured or produced in the United States). Tariff number 9820.00.00 provides for duty-free entry of goods returned to Canada after having been exported for repair under warranty.

Repairs and Alterations Not Pursuant to a Warranty

A NAFTA country may, however, choose to assess customs duties on the value of the repairs or alterations performed in another NAFTA country that are not pursuant to a warranty. The rate of duty applied is the preferential NAFTA rate, regardless of whether the goods repaired or altered are originating. Canada will assess duties on the value of such repairs or alterations performed in Mexico and the United State using the rate of duty applicable under the Canada-United States Free Trade Agreement, as incorporated into Annex 307.1 of the NAFTA, for goods from both countries. Mexico will not assess duties on repair or alterations performed in the United States or Canada. The United States will not assess duties on repairs or alterations not pursuant to a warranty performed in Mexico, but will assess duties on those performed in Canada. Goods entering Canada from the United States or Mexico after non-warranty repair or alteration are dutiable (tariff number 98.22.00.00) on the value of the repair/alteration only.