FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA

POUR LE GOUVERNEMENT DES ÉTATS-UNIS D'AMÉRIQUE
POR EL GOBIERNO DE LOS ESTADOS UNIDOS DE AMERICA

FOR THE GOVERNMENT OF CANADA
POUR LE GOUVERNEMENT DU CANADA
POR EL GOBIERNO DE CANADÁ

FOR THE GOVERNMENT OF THE UNITED MEXICAN STATES
POUR LE GOUVERNEMENT DES ÉTATS-UNIS MEXICAINS
POR EL GOBIERNO DE LOS ESTADOS UNIDOS MEXICANOS

NOTES

1.

Article 301 (Market Access - National Treatment): "goods of the Party" as used in paragraph 2 includes goods produced in the state or province of that Party.

2.

Article 302(1) (Tariff Elimination): this paragraph is not intended to prevent any Party from modifying its non-NAFTA tariffs on originating goods for which no NAFTA tariff preference is claimed.

3. Article 302(1) (Tariff Elimination): this paragraph does not prohibit a Party from raising a tariff back to an agreed level in accordance with the NAFTA's phase-out schedule following a unilateral reduction.

4.

Article 302(1) and (2) (Tariff Elimination): paragraphs 1 and 2 are not intended to prevent a Party from maintaining or increasing a customs duty as may be authorized by any dispute settlement provision of the GATT or any agreement negotiated under the GATT.

5. Article 303 (Restriction on Drawback and Duty Deferral): in applying the definition of "used" in Article 415 to this Article, the definition of "consumed" in Article 318 shall not apply.

6.

Article 305(2)(d) (Temporary Admission of Goods): where another form of monetary security is used, it shall not be more burdensome than the bonding requirement referred to in this subparagraph. Where a Party uses a non-monetary form of security, it shall not be more burdensome than existing forms of security used by that Party.

7.

Article 307(1) (Market Access - Goods Re-Entered after Repair or Alteration): this paragraph does not cover goods imported in bond, into foreign-trade zones or in similar status, that are exported for repairs and are not re-imported in bond, into foreigntrade zones or in similar status.

8.

Article 307(1) (Market Access - Goods Re-Entered after Repair or Alteration): for purposes of this paragraph, alteration includes laundering used textile and apparel goods and sterilizing previously sterilized textile and apparel goods.

9.

Article 318 (Market Access - Definitions): 10-digit items set out in the Tariff Schedule of Canada are included for statistical purposes only.

10.

Article 318 (Market Access - Definitions): with respect to the definition of "repair and alteration", an operation or process that is part of the production or assembly of an unfinished good into a finished good is not a repair or alteration of the unfinished good; a component of a good is a good that may be subject to repair or alteration.

11.

Annex 300-A (Trade and Investment in the Automotive Sector), Appendix 300A.1 - Canada: paragraphs 1 and 2 shall not be construed to modify the rights and obligations set out in Chapter Ten of the Canada - United States Free Trade Agreement, except that the NAFTA rules of origin shall replace the Canada - United States Free Trade Agreement rules of origin for purposes of Article 1005(1).

12. Annex 300-A (Trade and Investment in the Automotive Sector), Appendix 300A.2 - Mexico: citations to the Auto Decree and the Auto Decree Implementing Regulations included in parentheses are provided for purposes of reference only.

13. Annex 300-B (Textile and Apparel Goods) Section 1 (Scope and Coverage): the general provisions of Chapter Two (Definitions), Chapter Three (Market Access), Chapter Four (Rules of Origin) and Chapter Eight (Emergency Action) are subject to the specific rules for textiles and apparel goods set out in the Annex.

14.

Annex 300-B (Textile and Apparel Goods) Section 2 (Tariff Elimination): with respect to paragraph 1, "as otherwise provided in this Agreement" refers to such provisions as Section 4, Article 802 (Global Emergency Action) and Chapter 22 (General Exceptions).

15. Annex 300-B (Textile and Apparel Goods) Sections 4 and 5 - Bilateral Emergency Actions (Tariff Actions): for purposes of Sections 4 and 5:

(a)

(b)

"increased quantities" is intended to be interpreted more broadly than the standard provided in Article 801(1), which considers imports "in absolute terms" only. For purposes of these Sections, "increased quantities" is intended to be interpreted in the same manner as this standard is interpreted in the draft Agreement on Textiles and Clothing, contained in the Draft Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations (GATT document MTN.TNC/W/FA) issued by the Director-General of the GATT on December 20, 1991 ("Draft Uruguay Round Agreement on Textiles and Clothing"); and

"serious damage" is intended as a less stringent standard than "serious injury" under Article 801(1). The "serious damage" standard is drawn from the Draft Uruguay Round Agreement on Textiles and Clothing. The factors to be considered in determining whether the standard has been met are set out in Section 4.2 and are also drawn from that Draft. "Serious

16.

damage" is to be interpreted in the light of its meaning in Annex A of the

Multifiber Arrangement or any successor agreement.

Annex 300-B (Textile and Apparel Goods) Section 5 (Bilateral Emergency Actions - Quantitative Restrictions): in paragraph 5(c), the term "equitable treatment" is intended to have the same meaning as it has in customary practice under the Multifiber Arrangement.

17.

Annex 300-B (Textile and Apparel Goods) Section 7, paragraph 1(c) (Review and Revision of Rules of Origin): for subheading 6212.10, the rule and paragraph 1 shall not be applied if the Parties agree, prior to entry into force of this Agreement, on measures to ease the administrative burden and reduce costs associated with the application of the rule for headings 62.06 through 62.11 to the apparel in subheading 6212.10.

18. Annex 300-B (Textile and Apparel Goods) Section 7, paragraph (2)(d)(ii) (Review and Revision of Rules of Origin): with respect to provisions (a) through (i) of the rule for subheadings 6205.20 through 6205.30, prior to the entry into force of this Agreement the Parties will extend cooperation as necessary in an effort to encourage production in the free trade area of shirting fabrics specifically identified in the rule.

19. Annex 300-B (Textile and Apparel Goods), Appendix 3.1, paragraph 17: for purposes of applying paragraph 17, the determination of the component that determines the tariff classification of the good shall be based on GRI 3(b) of the Harmonized System, and if the component cannot be determined on the basis of GRI 3(b), then the determination will be based on GRI 3(c) or, if GRI 3(c) is inapplicable, GRI 4. When the component that determines the tariff classification is a blend of two or more yarns or fibers, all yarns and, where applicable, fibers, in that component are to be considered.

20. Annex 300-B (Textile and Apparel Goods) Schedule 3.1.3. (Conversion Factors): the conversion factors in this Schedule are those used for imports into the United States. Canada and Mexico may by mutual agreement develop their own conversion factors for trade between them.

21. Article 401 (Rules of Origin - Originating Goods): the phrase "specifically describes" is intended solely to prevent Article 401(d) from being used to qualify a part of another part, where the heading or subheading covers the final good, the part made from the other part and the other part.