{"id":5504,"date":"2021-09-21T08:45:34","date_gmt":"2021-09-21T12:45:34","guid":{"rendered":"https:\/\/diaztradelaw.com\/?p=5388"},"modified":"2021-09-21T08:45:34","modified_gmt":"2021-09-21T12:45:34","slug":"comment-now-cbp-proposed-rule-on-country-of-origin-determination-for-imports-under-usmca","status":"publish","type":"post","link":"https:\/\/diaztradelaw.com\/comment-now-cbp-proposed-rule-on-country-of-origin-determination-for-imports-under-usmca\/","title":{"rendered":"Comment Now – CBP Proposed Rule on Country of Origin Determination for Imports under USMCA"},"content":{"rendered":"

Background on CBP Country of Origin Determination and USMCA<\/em><\/strong><\/p>\n

All merchandise of foreign origin imported into the United States (U.S.) must generally be marked with its country of origin, and it is subject to a country of origin (COO) determination by CBP. The country of origin of imported goods may be used as a factor to determine eligibility for preferential trade treatment under a free trade agreement.<\/p>\n

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The country of origin of imported goods is also used to determine non-preferential trade treatment, such as admissibility, marking, and trade relief (310 duties, antidumping and countervailing duties (AD\/CVD). CBP uses the \u201csubstantial transformation<\/a>\u201d standard to determine the COO of goods for non-preferential purposes. For a substantial transformation to occur, \u201ca new and different article must emerge, `having a distinctive name, character or use.’\u201d Anheuser-Busch Brewing Ass’n v. United States<\/a>, 207 U.S. 556, 562 (1908) (quoting Hartranft v. Wiegmann, 121 U.S. 609, 615 (1887)).<\/p>\n

CBP applies two different methods to determine if goods have been substantially transformed \u2013 even though both are intended<\/strong> <\/em>to produce the same<\/em> origin determinations:<\/p>\n

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  1. Case-by-case decision based on court decision and CBP rulings (often criticized because of the varied case-specific interpretations of the basic rule that has resulted in a lack of predictability and increased uncertainty both within CBP and in the trade community). Using this method, the effect of a particular type of processing could have on impact on\u00a0 origin determination.<\/li>\n
  2. Rules of Origin in 19 CFR 102 \u2013 these rules are included in the Harmonized Tariff Schedule of the U.S. (HTSUS) under General Notes and are often referred to as the \u201cchange in tariff classification\u201d or \u201ctariff shift\u201d method.<\/li>\n<\/ol>\n

    Prior to the USMCA<\/a>, under the NAFTA, COO marking determinations were made using the NAFTA marking rules codified in 19 CFR 102, to determine if substantial transformation existed when a good imported from Canada or Mexico (was not entirely of Canadian or Mexican origin). The 102 rules helped determine whether or not goods were substantially transformed through processes that resulted in changes in the tariff classification (i.e., tariff shifts) in Canada or Mexico. To determine the country of origin of goods imported from Canada or Mexico for other non-preferential purposes (i.e., purposes other than marking), CBP employed case-by-case adjudication to determine whether such goods were substantially transformed in those NAFTA countries. These different non-preferential country of origin-determination methods required some importers to determine and declare two different countries of origin for the same imported good!<\/p>\n

    The Current Problem with COO Determinations Under USMCA<\/em><\/strong><\/p>\n

    Importers from Canada and Mexico are subject to two different non-preferential origin determinations for imported merchandise:<\/p>\n