Background

U.S. Customs and Border Protection has extended through Sept. 7 the deadline for public comments on a proposed rule that would amend CBP’s regulations regarding non-preferential origin determinations for goods imported from Canada or Mexico.

To determine the country of origin of imported goods for non-preferential purposes CBP determines whether a substantial transformation has occurred; i.e., if a new and different article having a distinctive name, character, or use has emerged. To make this determination CBP uses one of two methods: (1) one involving case-by-case adjudication that relies primarily on tests articulated in judicial precedent and past administrative rulings, and (2) the tariff shift rules in 19 CFR part 102.

While both methods are intended to produce the same origin determinations, CBP has acknowledged that the former “often involves subjective judgments” and has resulted in “a lack of predictability which in turn has engendered a significant degree of uncertainty both within Customs and in the trade community as regards the effect that a particular type of processing should have on an origin determination.” On the other hand, CBP believes the part 102 rules “are a reliable, simplified, and standardized method for CBP when determining the country of origin for customs purposes.”

CBP is therefore proposing to apply the part 102 rules to all country of origin determinations for non-preferential purposes (e.g., admissibility, quota, government procurement, and section 301 tariffs) for goods imported from Canada and Mexico. CBP states that while it has not previously applied these rules for such goods other than for textile products and determining country of origin marking, it does have significant experience applying these rules to imports from Canada and Mexico and the importing community has made extensive efforts to comply with them.

CBP notes that this change would not affect similar determinations made by other agencies, such as the Department of Commerce’s scope determinations in antidumping or countervailing duty proceedings, determinations by the Agricultural Marketing Service under the country of origin labeling law, or origin determinations made by other agencies for purposes of government procurement.

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