IT-Silkroad

[Origin Certification System of the United States]

■ Outline

ㅇ A country of origin system is a set of standards and procedures that determine the origin of goods for import and export and, accordingly, preferential or non-preferential trade measures. The origin related laws and regulations of the United States are divided into the place-of-origin indication system, FTA rules of origin (non-preferential and preferential rules of origin), and domestic regulations of each treaty.

- In general, non-preferential treatment is applied and the rules of origin of the WTO Agreement are limited to non-preferential.

    - Preferential origin is governed by a bilateral agreement.

ㅇ In the United States, the rules of country of origin prescribe both the preferential rules of origin and non-preferential rules of origin in the Customs Act, and preferential rules of origin in accordance with bilateral agreements with specific countries, such as FTAs, and each individual regulation is re-determined in accordance with domestic laws and regulations.

ㅇThe rules of origin guarantee consumers' choice by providing consumers with the precise production of goods, and encompass consumer and producer protection, industrial and trade policy functions, trade barriers, health and hygiene and nature protection.

■ Origin determination standards of imported goods

ㅇ An Origin Verification process is required to determine origin. Origin verification means that the customs authorities of the importing country have a legitimate Originating Status for the imported goods and that they have been registered for customs clearance in accordance with the Origin Procedure.

ㅇ If there is an objection to the verification of origin, the relevant administrative or judicial authority shall be able to determine the place of origin, and the judgment shall be based on the precedent and the Customs Act. The U.S. Court of International Trade provides precedents for procedural requirements, proof of liability, negligence, evidence, and item classification of origin rules.

ㅇ The rules of origin are categorized as preferential origin rules that grant preferential world privileges and non-preferential rules of origin that apply to purposes other than customs benefits.

ㅇ In the case of non-preferential origin determination criteria, the basis of the actual variation standard is based mainly on the case law, and it is judged based on the change in properties and usage when determining the place of origin.

ㅇ For general goods, change in tariff heading standards are mainly applied, but regarding textile, we have set separate origin determination standards for the purpose of quantity control.

ㅇ In the United States, proof of origin for imported goods is optional, but not mandatory.

■ Legal Bases

☉ Non-preferential origin rules

ㅇ Case law

    - Ahheuser-Busch judgment (Supreme Court, June 1, 1907)

    - Belcrest Linens judgment (Federal Court of Appeals, 1984)

    - National Justice Coalition case (1986)

    - Superior Wire case (US International Trade Court, 1987)

ㅇ International law

    - 1994 GATT Implementation Act

ㅇ 1930 Indication of origin of Article 1304 of the Customs Act

- 19 U.S.C.§1304

- 19 CFR§Part 134

- 19 CFR§102.0

ㅇ Government procurement origin indication

- 19 U.S.C.§2511 et seq.(19 CFR§177.21)

ㅇ Textile and textile product origin indication

- 7 U.S.C.§1854

- 19 CFR§3592

- 19 CFR§12.130, 102.21

ㅇ Anti-Dumping Law

ㅇ Automotive labeling Act

    - Vehicles manufactured on or after October 1, 1994 specify the country of automobile assembly, the proportion of parts made in the United States, and the duty to display the origin of an automobile engine and transmission.

ㅇ Buy American Act

    - According to the Buy American Act, if the US manufactured goods produced in the United States for government procurement purposes exceed 50% of parts made in the United States, the country of origin may be denominated in the United States.

☉ Preferential rules of origin

ㅇ FTA preference

    - US - Israel FTA

    - US-Canada FTA, CUFTA

    - US - Mexico, NAFTA

    - US - Jordan FTA

    - US - Chile FTA

- US - Singapore FTA

    - US - Australia FTA

    - US - Morocco FTA

    - CAFTA-DR (El Salvador, Guatemala, Honduras, Nicaragua, Dominican Republic, Costa Rica)

    - US - Oman FTA

    - US - Peru TPA

    - US-Republic of Korea FTA

    - US - Colombia FTA

    - US - Panama FTA

ㅇ General tariff preference system (GSP)

- General Note 4 (19 U.S.C.§1202)

- 19 U.S.C.§2461

- 19 CFR§10.171

ㅇ Preferential system of the Caribbean coast

- General Note 7(19 U.S.C.§1202)

- 19 U.S.C.§2701

- 19 CFR§10.191

ㅇ Africa Growth and Opportunity Agreement

- General Note 16(19 U.S.C.§1202)

- 19 U.S.C.§3701

- 19 CFR§10.178a, 10.211

ㅇ US dependant territories preferential system

■ Non-preferential origin rules

ㅇ Non-preferential origin determination criteria apply to material variation standards for goods imported from countries other than NAFTA. It is based on the change in name, property, and purpose of use, and has been developed through court precedents.

    ※ NAFTA applies full production standards.

ㅇ The actual deformation standard means that, the standard for determining the place of origin by whether a substantial deformation has occurred to the extent that the intrinsic characteristics of the article change, such as a new name, characteristic, or shape, in the region when the production of a specific good has been completed through more than two countries.

- The following criteria apply to the extent of substantial deformation.

      1) When the tariff heading is changed

      2) If a certain percentage of added value is created

      3) In case of a specific machining process

    - There is a tendency to place emphasis on the nature, use change, value-added and investment amount when determining the place of origin by the actual transformation standard.

    - Exceptionally, non-preferential origin judgment of textile products is subject to the full production standard and the tariff change standard.

ㅇ In the case of goods which are fully produced (or obtained) for all items except textiles and clothing, and those which are produced solely from domestic raw materials and contain foreign raw materials, the country of origin of the product shall be determined if it meets the criteria for each item. If the country of origin can not be determined, the country of origin of the single raw material to which the essential characteristics are assigned, and the country of origin determined by the inventory management technique in the case of the substitutable product, is granted.

ㅇFor other goods, mixtures and composites, the origin of each raw material that contributes equally to the essential characterization shall be determined by the country of origin.

ㅇ A simple processed product and a simple assembled product shall be granted the origin of each raw material producing country and each part producing country equally contributing to the essential characterization of the article and if it can not be determined, the final producing country is recognized as the country of origin.

ㅇ In addition, the "Customs Act" sets the standards for substitutable goods, micro standards, indirect materials, and unrecognized processes and individual items. For textile, the origin is determined based on the full production standard and tariff heading change standard.

ㅇ The US Automobile Notification Act states that vehicles manufactured after October 1, 1994 are obligated to display the country of origin of the vehicle assembly, the proportion of US components, and the car engines and transmissions.

ㅇ According to the "Buy American Act", if the United States manufactured parts manufactured in the United States for government procurement purposes exceed 50%, the United States marks the country of origin.

ㅇ The United States does not mandate proof of origin for imported goods, but if you submit false evidence, you must be careful because you are seized or fined according to Article 1592 of the US Customs Act 1930.

■ Preferential rules of origin

ㅇ Preferential origin rules vary from agreement to agreement, and preferential tariffs can be granted through fulfillment of the requirements. The United States is actively utilizing the application of preferential origin, for example, a large number of court precedents for the rules of origin.

- The preferential origin is the free trade agreement (FTA), the multilateral trade agreement, the general preferential tariff (GSP), and the Global System of Trade Preferences Among Developing Countries (GSTP). Each of the free trade agreements or unilateral trade preferential schemes has its own origin regulations.

    - There is a change in tariff heading standards, value added criteria, and specific process criteria, and there are selection criteria or combination criteria.

※ The NAFTA Agreement provides the following four preferential tariff requirements:

- based on a legitimate certificate of origin, the applicant must declare in writing that the item meets the rules of origin,

- at the time of the application for preferential tariff, the certificate of origin must be carried,

- when requesting customs, submit a copy of the certificate of origin,

- if there is a good reason to believe that the information contained in the certificate of origin that is the basis of the preferential application is wrong, the preferential tariff application must be corrected and the tariff paid immediately.

* However, importers who can not meet the relevant requirements at the time of import declaration can get back the duties paid by applying for preferential tariff within one year from the date of import.

ㅇ If a preferential tariff is granted without fulfilling the preferential rules of origin, it should be noted that cancellation of the preferential tariff by the customs investigation may result in fines, compensation for exporters, and loss of customers.

ㅇ The United States regulates the strict adherence to procedural requirements of FTAs when determining preferential origin.

    - The certificate of origin must be submitted within one year from the date of import.

    - The applicant's period of appeal is 180 days from the date of the importer's notice.

    - As far as customs duties are concerned, the importer must observe the post-application period even if it is a customs fault or inevitable.

ㅇ In addition to the procedural requirements, the verdicts may vary according to the requirements of proof of liability, negligence, reasonable caution, evidence, and item classification.

    - If you do not fulfill the burden of proof, or if the evidence is not available, the preferential rules of origin can not be applied.

■ Origin Form

There are CBP Form 28 and CBP Form 29 in origin form.

ㅇ CBP Form 28 is a Request for Information form sent by the US Customs to the US importer.

    - In the case of origin verification, the phrase "** FTA verification" is included in Form 28, and the importer in the United States will send Form 28 to the exporter to request the cooperation of the data.

ㅇ CBP Form 29 will notify you of the suitability of the origin through the materials submitted by the US Customs officer in the Notice of Action form.

    - Form 29 can be issued twice in total. If it is not possible to judge the appropriateness of origin by the submitted documents, it will issue a proposal according to Form 29.