20 December 2007

[U.S.] Justice drops NAFTA records case against Ford

The following was reported on in the 19 December 2007 edition of “Journal of Commerce”.

In a case that has broad implications for U.S. importers of goods from Canada and Mexico, the Department of Justice has told Ford Motor Co. that it will walk away from its earlier attempts to penalize the automaker for its failure to keep complete records on its imports from Mexico.

In September, a U.S. District Court in Texas rejected Ford’s argument that its suppliers in Mexico, not Ford, were responsible for keeping such documents. Customs then slapped Ford with a $41.9-million penalty.

While dropping their case this week, government attorneys said in an internal memo that they are “reconsidering” their position on the issue of recordkeeping and enforcement under the North American Free Trade Agreement. In return, Ford has promised not to counter-sue the government.

The long-term impact of the case is unclear, and whether Customs will require importers to bear the burden of certificate-of-origin recordkeeping. Recent bilateral free-trade pacts negotiated by Washington with Central American countries, Singapore, and Australia clearly state that importers do have such a recordkeeping burden.

Amending NAFTA law seems unlikely because it would require approval by both Canada and Mexico. Neither country has expressed any desire to change the regulations.