Courtesy of the NCBFAA and its Customs Counsel Lenny Feldman, on July 1st CBP released two of three highly anticipated regulatory packages that companies claiming the preferential trade criteria should read, comment and integrate into their compliance programs.
It was just a year ago when during the height of the pandemic, the US pushed forward with the implementation of the new terms of the agreement which didn’t just see an update to the continent’s NAFTA acronym and rules implemented in 1993, but also with changes to regional value content, origin determination and other requirements meant to fix what were perceived as disadvantages to American workers with jobs moving to Mexico where companies established manufacturing and production instead.
Available in the Federal Register, the interim first rule is retroactive to July 1, 2020. Note the boldfacing of both interim and 2020 – this rule is retroactive and available for interested parties to submit comments for sixty days from the date of publication.
“The interim final rule specifically implements the provisions in Chapters 1, 2, 5, and 7 of the USMCA related to general definitions, confidentiality, import requirements, export requirements, post importation duty refund claims, drawback and duty-deferral programs, general verifications and determinations of origin, commercial samples, goods re-entered after repair or alteration in Canada or Mexico, and penalties.
The interim final rule also provides amendments to apply the 19 CFR Part 102 non-preferential rules of origin in determining the country of origin for marking purposes.”
There are additional amendments covering sugar-containing products subject to a tariff-rate quota.
We said there were two packages published, and the second is a Notice of Proposed Rulemaking (NPRM) and request for comment – this one with just a thirty day window. The focus of this package, per CBP is:
“..to amend the U.S. Customs and Border Protection (CBP) regulations regarding non-preferential origin determinations for merchandise imported from Canada or Mexico. Specifically, this document proposes that CBP will apply certain tariff- based rules of origin in the CBP regulations for all non-preferential determinations made by CBP, specifically, to determine when a good imported from Canada or Mexico has been substantially transformed resulting in an article with a new name, character, or use.”
Qualifying for reduced or duty-free status using any preferential trade program, whether USMCA, GSP or another bilateral or multilateral program, has conditions governing regional value content and substantial transformation to make products eligible. Putting a product made in one country in a package in the other, for instance, doesn’t make it a product of that second country for the purposes of claiming reduced or duty-free entry for a program that country may have in place with the United States.
Customs brokers like Sobel Network Shipping work with importers and exporters who utilize these trade preference programs to use both CBP’s regulations and the rules laid out in the general notes and chapter notes of the Harmonized Tariff Schedule of the United States (HTSUS) to determine classification and eligibility. Importers are responsible for the correctness of the declaration, but can rely on companies like ours to help reach those determinations or to write for binding rulings from CBP.
For more information and help about determining classification and USMCA-eligibility, as well as ensuring compliance with these new and changing regulations, reach out for help – one of our licensed customs brokers will be glad to speak with you.
