Aha. Cotton is under NAFTA if it's made or woven in the North America. The origin is what's important here, and what's done where. Woven in North America from "domestic" thread, or *sometimes* woven in north america from raw materials from elsewhere. (Egyptian Terry Cloth Towels are under Nafta if they're woven in Canada, but not if they're woven in Egypt and "Finished" in Canada, for example.) There's very little fabric made in North America. Moda, which is made in (IIRC) korea, or the beautiful Bali batiks I'm so addicted to, wouldn't count. IIRC, Connecting Threads is made in mexico, and that would be considered duty free.
(I learned more than I ever wanted to know about the production of men's boxer shorts in the research on this topic. Fascinating stuff, really.)
As an aside, this is why VERY few stores in Canada offer FQ bundles. I tried to special-order moda's Hometown and was quoted $180 for the bundle, largely due to the duty. This is why our fabric prices are so damn expensive, we basically pay either way.
That being said, for those near the border:
If you stay down for 24 hours (or less, most border guards don't care_, you can bring back $50 worth, duty free, regardless of origin.
If you stay down for 48 hours, you can bring back $450 worth of stuff.
If you stay down for 48 hours - 6 months (the max time you can spend in the US as a visitor without a visa) you can bring back $750 worth of stuff.
This is per person, not per vehicle. So if my mom, my best friend, and I all go to visit my husband for a week, we can bring back $2250 worth of fabric, duty free. If we bought $3,000 worth of stuff, we would pay duty and taxes (yay hst! - Don't forget, on top of canadian fabric prices, our sales tax in ontario is 13%) on $750.
When I go visit the Texan, I pack the car FULL for my return trip. Last time I had bolts of W&N, and it gave the border guard fits. She couldn't figure out why I would do that. I explained that $5 a yard is significantly less than the $17 / yard I pay at Len's for the same stuff.