DRAFT NAFTA TARIFF PHASING DESCRIPTIONS Four main staging categories exist for tariff elimination under NAFTA: A - tariff elimination immediately upon implementation of the Agreement, i.e., January 1, 1994. B - tariff to be eliminated in five equal annual stages, beginning January 1, 1994 and ending January 1, 1998. C - tariff to be eliminated in ten equal annual stages, beginning January 1, 1994 and ending January 1, 2003. D - tariff already MFN free. In addition to the above general phasing categories, the following categories exist for specific cases: Ex - excluded from tariff elimination. This category applies to supply-managed goods (dairy, poultry, eggs) and to several tariff items for sugar. Bl - tariff to be eliminated in six equal annual stages, beginning January 1, 1994 and ending January 1, 1999. (Applies to 43 items in textile tariffs.) B+ - tariff to be eliminated in seven stages as follows: 20% reduction on January 1, 1994, zero reduction on January 1, 1995, 10% reduction per year for years January 1, 1996 to January 1, 2000 and 30% reduction on January 1, 2001. (Applies to most textile tariffs as well as 3902.1000 and 6403.5900.) B8 - tariff to be eliminated in two stages as follows: 50% reduction on January 1, 1998 and 50% reduction on January 1, 2001. (Applies to four Mexican tariff items in the paper sector.) Ba - tariff to be eliminated in five stages as follows: 50% reduction on January 1, 1994 with remaining 50% to be phased out in four equal annual reductions ending January 1, 1998. (Applies to two light truck items.) Bg- tariff to be eliminated in five stages as follows: reduction to the FTA rate on January 1, 1994 and then follow the FTA C phasing schedule ending January 1, 1998. (Applies to Canadian agricultural tariff items for Mexico). Bp- tariff to be eliminated in three stages as follows: 20% reduction on January 1, 1997; 10% reduction on January 1, 1998 and 70% reduction on January 1, 1999. BM - tariff to be eliminated according to B staging. For joint Mexican-U.S. production (goods subject to paragraph 8 of Annex 402.2 of the Agreement), phasing to start from the MFN rate. ABM - tariff to be eliminated immediately. For goods subject to paragraph 8 of Annex 402.2 of the Agreement, tariff to be eliminated according to B staging and phasing to start from the MFN rate. ACM - tariff to be eliminated immediately. For goods subject to paragraph 8 of Annex 402.2 of the Agreement, tariff to be eliminated according to C staging and phasing to start from the MFN rate. CM - tariff to be eliminated according to C staging. For goods subject to paragraph 8 of Annex 402.2 of the Agreement, phasing to start from the MFN rate. Ca - tariff to be eliminated in 10 stages as follows: 50% reduction on January 1, 1994; remaining 50% to be eliminated in nine equal annual stages ending January 1, 2003. (Applies to passenger vehicles in heading 8703.) C10 - tariff to be eliminated in nine stages as follows: 20% reduction on January 1, 1994; no reduction year 2; remaining 80% to be reduced in eight annual equal stages ending January 1, 2003. (Applies to one footwear item for Canada, numerous footwear items for the U.S. and Mexico, several items in heading 3204 (paints and dyes) for the U.S. and Mexico, and several U.S. ceramic items.) Cm - tariff to be eliminated in three stages as follows: 40% reduction on January 1, 1994; freeze years 2, 3, and 4; 20% reduction year 5; freeze years 6, 7, 8, and 9; 40% reduction on January 1, 2003. (Applies to several Mexican furniture tariff items.) C8 - tariff to be eliminated in eight stages as follows: 10% reduction per year starting January 1, 1994 for seven years; 30% reduction on January 1, 2001. (Applies to several Mexican and U.S. glass items.) Cb+ - tariff to be eliminated in three stages as follows: 30% reduction on January 1, 1994; 20% reduction on January 1, 2000; and 50% reduction on January 1, 2005. (Applies to one U.S. item for corn brooms.) C+ - tariff to be eliminated in 15 equal annual stages starting January 1, 1994 and ending January 1, 2008. Cz+ - tariff to be eliminated in 13 stages as follows: 20% reduction on January 1, 1994; freeze years 2 and 3; remaining 80% to be phased out equally over remaining 12 years ending January 1, 2008. (Applies to several U.S. ceramic items.) Cq - for the following tariff items, the quantities specified below imported by Mexico shall enter free of duty. For quantities above these levels, the rate of duty shall be reduced according to the staging category C. From the U.S. From Canada (metric tonnes) 4401.2101 66,500 3,500 4403.1001 14,250 750 4407.1001 9,500 500 4407.1002 119,700 6,300 4407.1003 950 50 4407.9101 3,325 175 4407.9999 2,470 130 Ctq - tariff to be eliminated in ten equal stages begining on January 1, 1994 and accompanied by the application of tariff rate quotas. (Applies to certain agricultural products). CAg - tariff to be eliminated in ten stages as follows: six annual reductions of 4% begining January 1, 1994 the remaining 76% being eliminated in four equal, annual steps ending on January 1, 2003. (Applies to some Mexican agricultural tariff items). C+Ag - tariff to be eliminated in 15 steps as follows: six annual reductions of 4% begining January 1, 1994 the remaining 76% being eliminated in nine equal, annual steps ending on January 1, 2008. (Applies to some Mexican agricutural tariff items). Sug - refers to special considerations which apply to certain tariff items for sugar and sugar products as outlined in notes appended to the draft agreement. Pro - refers to a small number of Mexican tariff items for prohibited goods. The following phasing codes relate to textile tariff items between the U.S. and Mexico only. They are: B6 - tariff to be eliminated in six stages as follows: on January 1, 1994 a reduction equal in percentage terms to the base rate; six equal annual reductions of 20% of the rate in effect on January 1, 1994 starting January 1, 1995 and ending January 1, 1999. Bw - tariff to be eliminated in six stages as follows: rate of duty on January 1, 1994 will be 15%; on January 1, 1995, rate of duty will be 14.5%; on January 1, 1996, rate of duty will be 10.8%; on January 1, 1997, 7.2%; on January 1, 1998, 3.6%; and zero on January 1, 1999. Bo - tariff to be eliminated in six stages as follows: rate of duty on January 1, 1994 and January 1, 1995 will be 15%; on January 1, 1996, the rate of duty will be 12%; on January 1, 1997, rate of duty will be 8%; on January 1, 1998, rate of duty will be 4% and zero on January 1, 1999. Bf - tariff to be eliminated in six stages as follows: rate of duty on January 1, 1994 and January 1, 1995 will be 20%; rate of duty on January 1, 1996 will be 10%; rate of duty on January 1, 1997 will be 6.6%; rate of duty on January 1, 1998 will be 3.3% and zero on January 1, 1999. NOTE:The 6-Digit tariff description presented in the following pages is an abbreviated one. For full description, see the Candian Customs Tariffs, Revenue Canada Customs and Excise.