As mentioned by john d daniels lee h radebough and

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As mentioned by John D. Daniels, Lee H. Radebough and Daniel P. Sullivan (International Business, environments and operations, Fourteenth Editions, Pearson ), many countries have some years followed the import substitution strategy and then shifted to export promotion strategy. In fact most of industrial exports from India today originate from industries which were established earlier as import substitution nits. QUESTION 13: What are the rules of origin and regional content provisions of NAFTA? An important component of NAFTA is the concept of rules of origin and regional content As it is a free trade agreement and not a custom union, each North American Free Trade Agreement (NAFTA) country retains its external tariffs vis-à-vis non-members' goods and levies a lower tariff on the goods "originating" from the other NAFTA members .
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Since one of the primary objectives of a free-trade agreement is to reduce and eventually eliminate all tariffs among the Party nation s, it is essential that rules are established to identify which products produced in the countries involved in the agreement will receive the preferential tariff treatment . These rules, then, become the essential core of the agreement and insure that the benefits of the agreement are accorded to the signatory nations while at the same time precluding a non-party nation from accessing these benefits . The NAFTA explains these rules in Chapter 4, entitled “Rules of Origin”. A rule of origin might contain: - a change in tariff classification - a regional value-content requirement; or - both a change in tariff classification and a regional value content requirement. Rules of Origin includes both the General Rules of Origin used to determine whether or not a good or a material is eligible for NAFTA preferential treatment and the Specific Rules of Origin used to determine if a foreign material becomes originating in the NAFTA territories. It is necessary to refer to the rule associated with the product being exported. Regional value content can only be applied when it is allowed under a product specific rule. The Certificate of Origin is a trilaterally agreed upon form used by Canada, Mexico, and the United States to certify that goods qualify for the preferential tariff treatment accorded by NAFTA. The Certificate of Origin must be completed by the exporter. A producer or manufacturer may also complete a certificate of origin in a NAFTA territory to be used as a basis for an Exporter’s Certificate of Origin. For purposes of obtaining preferential tariff treatment, the importer must possess a certificate of origin at the time the declaration is made. As highlighted by John D. Daniels, Lee H. Radebough and Daniel P. Sullivan (International Business, environments and operations , Fourteenth Editions, Pearson), according to the regional content rules, for the product to be considered as local in terms of country or origin is at least 50 percent of the net cost or more of most products must
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come from the NAFTA region. The exception are 55 percent for footwear, 62.5 for
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