International Trade:

Rule of Origin for the U.S.-Canada Free Trade Area

NSIAD-88-46BR: Published: Nov 16, 1987. Publicly Released: Nov 16, 1987.

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Pursuant to a congressional request, GAO provided information regarding the proposed United States-Canada Free Trade Area Agreement (FTA), focusing on its rule of origin.

GAO noted that the agreement's rule of origin, based on the Department of the Treasury's proposal: (1) confers U.S. or Canadian origin on products containing foreign-source parts, components, or materials when sufficient additional manufacturing occurs within the United States or Canada to change a product's tariff heading classification; (2) specifies which tariff heading changes are sufficient to confer origin and which are not; and (3) confers U.S. or Canadian origin on products when assembly adds at least 50 percent to the total value of the final article. GAO also noted that the proposed rule of origin: (1) differs from the current U.S. rule, which requires case-by-case decisionmaking and was unacceptable to Canada; and (2) is contingent on the planned U.S. conversion to the internationally standardized system of tariff classifications and nomenclature.

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