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U.S.- CAFTA-DR Free Trade Agreement

Frequently Asked Questions

What is the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)?

The CAFTA-DR is a trade agreement between the United States and the countries of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.  This Agreement is currently in force for the all the signatory countries.

The CAFTA-DR requires important reforms of the domestic legal and business environment that encourage competitive business development and investment, protect intellectual property rights, and promote transparency and rule-of-law in the democratic systems that have solidified in the region over the past decade. The Agreement is an important instrument to support U.S. national security interests; the FTA promotes closer economic cooperation among the Central American countries, thereby advancing regional integration and contributing to greater peace and stability in the region.

How does the agreement benefit U.S. exporters?

Among other benefits from the elimination of non-tariff barriers, the FTA allows the U.S. supplier to be more price-competitive in the Central American and Dominican market simply due to duty reduction and elimination. A U.S. exporter whose goods qualify under the Agreement may afford its buyer considerable savings. U.S. exporters will also be more competitive in Central America and the Dominican Republic against competing third country products that do not have the duty benefits.

How can my product qualify to take advantage of the CAFTA-DR?

The product must qualify as an “originating” good under the terms of the Agreement. This means that the product must have sufficient U.S., Nicaraguan, Guatemalan, Honduran, Salvadoran, Costa Rican, and/or Dominican content or processing to meet the criteria of the Agreement. If goods contain only U.S. or Central American or Dominican Republic inputs, they qualify. If they contain some inputs from other countries, they still might qualify if they meet specific criteria set out in the Rules of Origin of the Agreement. Each product has a unique rule, based on its tariff classification. Most of the rules require either that the non-originating inputs undergo a specified transformation through processing in the United States or one or more of the other signatory countries (tariff shift method) and/or that they have a sufficient level of originating content as determined by a formula (regional value content method).

Does this FTA require additional paperwork for all of my shipments to Central America and the Dominican Republic?

No. This Agreement does not require any additional paperwork for shipments to Central America or the Dominican Republic unless the parties to a transaction desire to take advantage of the benefits available under the Agreement. In those instances, the exporter/producer will need to generate supporting documentation that should include certification stating that the product meets the relevant origin criterion of the Agreement.

In order to be eligible for preferential duty rates, is it necessary to fill out a certificate of origin?

The CAFTA-DR calls for the importer to make a claim of preferential treatment. This Agreement does not require that the importer provide a certificate of origin in support of the claim of preference unless requested by the customs authority. However, an importer's claim of preference must be based on a written or electronic (Footnote 1) certification or the importer's knowledge that the good is originating (Footnote 2). Additionally, importers claiming a preference for a good must be prepared to submit, upon request by customs authorities, information supporting the claim for preferential treatment.

The importer may therefore ask the exporter for such supporting information. The exporter may give confirmation, in an un-prescribed format, of why the goods qualify as “originating,” which the importer may use to validate its claim. It is advisable to work with your importer and provide your importer with a written statement of origin upon request.

Why do I need to go through the process of qualifying my good if I don't even need a certificate of origin?

Any claim for preferential treatment under the CAFTA-DR is a declaration whose truthfulness may be verified or audited by a customs authority. If a preference has been claimed and the goods are found not to qualify, the duty benefit will be lost and penalties may be assessed. Declarations that are found after the fact to be deliberately false may result in significant penalties.

Can I use a North American Free Trade Agreement (NAFTA) Certificate of Origin to declare that my products qualify for preferential duty treatment under the CAFTA-DR?

No. The CAFTA-DR differs from NAFTA. Under the CAFTA-DR, there is no standard certificate of origin document to be completed and the rules of origin are different. Each free trade agreement to which the United States is a party has its own unique requirements. 

I have heard that packaging materials and containers are not taken into consideration when qualifying a good under the CAFTA-DR.  Is this true?

When the packing materials and containers are being used for shipping purposes, they are disregarded in determining the origin of the good being shipped.

In cases where the packaging material or container is for retail sale, it will be disregarded in determining whether the good qualifies under the FTA only if it is classified with the good and qualification of the good is determined using the tariff shift method. If the container is not classified with the good, or the regional value content method is used, the material or container will need to be considered in determining whether the good qualifies as originating.

I often send accessories for my product separately from the product. Will these qualify automatically if the main product qualifies?

No. When accessories, spare parts, or tools are delivered with a good, they are regarded as a material used in the production of the good as long as 1) they form part of the good’s standard package and are not invoiced or classified separately from the good and 2) the quantities and values are customary for the good. However, when these ancillary items are sent separately from the original good, they are treated as a separate export and must qualify as such.

What if my good is produced in the United States, but is transshipped through a third country on its way to a CAFTA-DR country? Can it still qualify for preferential treatment?

It can, provided it does not undergo processing in the third country. According to CAFTA-DR, a good that undergoes subsequent production or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve it in good condition or to transport the good to the territory of a Party can no longer qualify for preferential treatment under the Agreement.

If I believe after thoroughly reviewing my product, its inputs, and the applicable rule of origin, that there remains ambiguity as to the "originating" status of the product under the CAFTA-DR, is there a way that I can find out the position of the customs authority in the receiving country prior to the arrival of my goods in that country?

The customs authority of importing country will issue "advance rulings" at the written request of the importer, exporter, or producer on questions of tariff classification, customs valuation, country of origin marking, and whether the good qualifies as originating under the Agreement. Extensive information regarding the facts and circumstances of the inquiry will be required by the customs authority prior to issuing such a ruling.

For how long am I required to keep records related to a declaration of origin under the CAFTA-DR?

Customs officials can require importers to maintain documents relating to purchases and costs for a minimum of five years after the date of importation, should investigation and verification of claims be required.  Customs officials can also seek information from exporters in verifying claims. The Agreement states that the exporter or producer that provides a certification in accordance with Article 4.16 shall maintain, for a minimum of five years from the date the certification was issued, all records and documents necessary to demonstrate that a good was originating.

Please note:

1) Each Central American Party and the Dominican Republic shall authorize importers to provide electronic certifications beginning no later than three years after the date of entry into force of this Agreement.

2) Each Central American Party and the Dominican Republic shall implement subparagraph (b) no later than three years after the date of entry into force of this Agreement.

Prepared by the International Trade Administration
Trade Information Center