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CBP Reminder on Indicating Preference Criterion on FTA Certificates of Origin

Friday, November 22, 2013
Sandler, Travis & Rosenberg Trade Report

A recent reminder from U.S. Customs and Border Protection highlights the importance of accurate claims for duty-free treatment under U.S. free trade agreements. As such claims are subject to heightened CBP scrutiny, it is important to ensure that not only is supporting documentation maintained and presented to CBP as necessary but also that the merchandise for which duty-free treatment is claimed does actually qualify for that treatment. Importers are therefore encouraged to conduct regular reviews of their preference claims, especially for new products or parts as well as any changes in manufacturing processes or costs.  

In a Nov. 19 message to the trade community, CBP stated that when a producer, exporter or importer issues an FTA certification of origin, the “Preference Criterion” field should indicate how the good originates (meets the terms of the FTA) with the greatest specificity possible. In particular, for FTAs that do not have specified criteria indicators (like NAFTA, which provides for criteria “A,” “B,” “C” and "D") or other specific methods, importers should cite to the HTSUS General Note under which the good qualifies or to the rule in the FTA itself.

As an example, CBP states that for an importation of lead sheet (classified under HTSUS 7804.11.00) under the U.S.-Peru Trade Promotion Agreement the “Preference Criterion” field should be marked as follows.

- if the good is wholly obtained in Peru: HTSUS General Note 32(b)(i) or Peru TPA Article 4.1(1)(a)

- if the good is produced entirely in Peru and all non-originating materials undergo the required tariff shift (and/or regional value content) specified in the corresponding specific rule of origin: HTSUS General Note 32(n)78.2 or Peru TPA Annex 4.1, Chapter 78, Item 2

- if the good is produced entirely in Peru exclusively from originating materials: HTSUS General Note 32(b)(iii) or Peru TPA Article 4.1(1)(c)

CBP states that this methodology should be used for all tariff-shift FTAs (NAFTA, DR-CAFTA and the FTAs with Chile, Singapore, Australia, Peru, Colombia and Panama) unless the FTA, regulations or other officially published material provides for an alternate method. CBP also reminds importers that if no rule of origin is met, FTA preference cannot be claimed.

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