The NAFTA Working Group on Rules of Origin has the mandate to recommend rectifications to the rules of origin and regulations. In May and October 2001, the Working Group on Rules of Origin agreed to two packages of technical rectifications to NAFTA Annex 300-B (special provisions for textiles and apparel goods), Annex 401 (product-specific rules of origin), Annex 403.1 (the list of tariff provisions on automotive goods for calculating regional value content), the Uniform Regulations for Chapters Three and Five (customs procedures) and the Uniform Regulations for Chapter Four (rules of origin regulations). These technical rectifications were formally agreed trilaterally in mid-December 2001 through an exchange of letters between Canada, the United States and Mexico to rectify the relevant portions of the Annexes and Uniform Regulations.

There are two different types of technical rectifications involved. The first type of technical rectifications is for the purpose of rectifying the tariff references for goods in Appendix 6 of Annex 300-B (rule A(b) - a special provision respecting trade in sweaters between Mexico and the United States), Annex 401, Annex 403.1 and the Uniform Regulations for Chapter Four to take into account changes in the forthcoming 2002 tariff schedules of Canada, the United States and Mexico. The changes to the references to tariff provisions in the forthcoming Tariff Schedule of each Party are the result of the Amendments to Nomenclature of the Harmonized Commodity Description and Coding System (Harmonized System - an internationally developed and implemented system of tariff nomenclature upon which the Parties' tariff schedules are based) that will come into effect on January 1, 2002. These technical rectifications are set out in the attached Appendices 1 through 4.

The second is a set of technical rectifications to the Uniform Regulations for the purpose of clarifying various audit provisions. The technical rectifications involve one change to the Uniform Regulations of Chapters Three and Five (customs procedures) and various changes to the Uniform Regulations for Chapter Four (rules of origin). These technical rectifications are set out in the attached Appendix 5.

Neither set of technical rectifications constitutes substantive change to either the NAFTA annexes and regulations or the Parties' tariff laws; they are intended only for the purpose of clarification and alignment with the Harmonized System changes and to ensure a uniform application of the regulations by all Parties.

The Tariff Schedules of both Canada and the United States incorporating the changes to the Harmonized System were implemented on January 1, 2002, and both Parties implemented the corresponding technical rectifications to the NAFTA rules of origin and regulations at the same time. However, Mexico has advised that it will not be in a position to implement the 2002 changes to the Harmonized System in its Tariff Schedule until April 1, 2002, and, accordingly, that it will not be implementing the corresponding technical rectifications to the NAFTA rules of origin and regulations until the same date.

Also attached for information purposes are updated consolidated versions of Annex 401, Specific Rules of Origin, and Annex 403.1, List of Tariff Provisions for Article 403(1).