DR-CAFTA: Problems with Certificates of Origin

U.S. products are arriving with certificates of origin stating they are part of NAFTA, the trade agreement between the U.S., Canada and Mexico, which means that when they enter Guatemala they lose their tax privileges from the FTA with Central America.

Wednesday, August 10, 2011

The Guatemalan Minister of Economy, Luis Velasquez, has submitted a proposal to the Council of Ministers of Economy of Central America (Comieco) which aims to add an amendment to DR-CAFTA on error correction mechanisms.

According to the minister, certificates of origin of U.S. products are wrongly labelled as NAFTA, the trade agreement with the U.S., Canada and Mexico - meaning that when they enter the country they lose the tariff preferences of the regional FTAs.

"In March a proposal was sent on behalf of Central America and The Dominican Republic to the U.S. Trade Office, but they have not paid anyattention to it, so we are therefore insisting" he said.

Carolina Castellanos, executive director of the Guatemalan-American Chamber, said that under the FTA products do not require certificates of origin, only affidavits.

"However, perhaps due to ignorance, U.S. exporters are erroneously sending certified products with the NAFTA stamp, so on admission, the Superintendency of Tax Administration (SAT) is applying tariffs, believing that there is no assurance as to whether the product is from the U.S., Canada or Mexico", he said.

Raul Diaz, head of Customs at the SAT, said that the regional treaty states that the only way to prove the origin of a product is with a certificate – although it does not establish a single parameter - and when they are imported with mistakes they are accepted, and amended but the tariff preferences are lost.

"The law is clear and the only thing that the SAT is doing is applying the rules", said Diaz.

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