CAFTA-DR: how to use preferential tariffs with the United States

There's an agreement that can significantly reduce what you pay in duties when importing from the United States — and an equally widespread confusion that makes many importers lose it without realizing. Here's what to understand about CAFTA-DR before closing your next purchase.

What CAFTA-DR is

CAFTA-DR is the free trade agreement between the United States, Central America and the Dominican Republic. For Costa Rica it's the framework governing trade with its largest commercial partner.

What matters to the importer: goods that qualify as originating in one of the agreement's countries may receive preferential tariff treatment on entry. That can mean paying less — or no — duty on those goods.

And it works both ways: it also applies to what Costa Rica exports to the United States, giving Costa Rican exporters a competitive edge over origins without an agreement.

The confusion that costs money

Think of it this way: a store in Miami sells tools manufactured in China, electronics assembled in Vietnam and clothing made in Bangladesh. All of it is bought in the United States — but none of it originates in the United States for the agreement's purposes.

Origin isn't determined by the country where you made the purchase, nor by where the cargo shipped from. It's determined by where the goods were produced or transformed, and whether that meets the agreement's rules.

What "originating" means

Broadly, goods may be considered originating when:

• They were wholly obtained or produced in the territory of one of the agreement's parties — for example, an agricultural product grown there.
• They were produced from originating materials of the parties.
• They underwent sufficient transformation under the specific rules for their tariff heading, even if they incorporate inputs from third countries.

That third category is the most common and the most technical: each product has its own rule of origin based on its tariff classification. Which is why there's no general answer — the answer is per product.

* Rules of origin and their application depend on the specific tariff heading and current regulations. This article is orientation only: the actual determination is made by your customs broker with your goods' classification in hand.

The document you need

The benefit isn't applied automatically. It has to be claimed and supported with the corresponding certification of origin, backing that the goods meet the agreement's rules.

Three practical points:

• The supplier holds the information, not you. They know where it was manufactured and with what inputs. Ask before buying.
• It must be consistent with the rest of the documentation. If the invoice says one thing and the certification another, the process stops.
• It gets retained. Supporting documentation must be kept in case the authority requests it later.

How this document works in general — for any agreement, not just CAFTA-DR — is explained in certificates of origin: what they're for. And if you also import from Europe, the equivalent mechanism is in the EU–Central America agreement.

How to check before buying

• 1. Identify your product's tariff heading. Without it there's no way to know which rule applies or what you'd pay without preference.
• 2. Ask the supplier for the real origin of the goods — country of manufacture, not of sale.
• 3. Consult your customs broker on whether those goods, with that origin and heading, qualify.
• 4. Request the certification of origin from the supplier if they qualify, and confirm the details match the invoice.
• 5. Recalculate your budget with and without preference. The difference can completely change whether the deal makes sense.

For the rest of the cost calculation, see how much importing from the USA to Costa Rica costs and how import duties are calculated.

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