Are the goods you are importing properly marked with the country of origin?
The Country of Origin Marking helps the final buyer know where a product comes from. Country of origin determines duty rates, preferential trade agreements, trade sanctions and import quotas. Because of the revenue and admissibility issues involved, Customs is vigilant about verifying accurate country of origin.
How do you determine Country of Origin?
The country of origin refers to the country of manufacture, production, or growth where a product or article comes from. Simply shipping a product through another country does not change the origin. Purchasing Cuban Tobacco from Denmark does not change its country of origin to “Made in Denmark”.
Wholly Obtained or Wholly Produced
To help determine the country of origin, figure out where the product or article is wholly obtained or produced from. For example, an importer may not label an item as “Made in U.S.A” unless it is composed wholly, or almost wholly, of United States origin materials, and is made almost completely with United States labor.
If a product is made with any significant imported materials, or any significant foreign labor, no unconditional “Made in the U.S.A.” claim can be made. However, the Federal Trade Commission may authorize a conditional claim, such as “Made in the U.S.A. from Chinese materials”, or words of similar import.
De Minimis Rule
De Minimis is a Latin expression meaning “about minimal things”. It is a customs provision that allows goods to qualify as originating provided such non-originating materials are not more than a certain percentage (7% in most cases) of the transaction worth of the goods adjusted to an F.O.B basis or, in some cases, of the total cost of the goods.
The De Minimis rule also provides that a product or article that is otherwise subject to a regional value-content requirement shall not be required to satisfy such requirement if the value of all non-originating materials used in the production of the good is not more than 7 percent of the transaction value of the good, adjusted to an F.O.B. basis.
Substantial Transformation Rule
Substantial Transformation is a rule stating that a good originates from the last country where it emerged from a given process with a new name, new character, and new use. This rule captures the purpose of origin determination in a simple, concise manner: a good is a product of the country where it last underwent a substantial transformation.
It’s important to note that classifications can be subjective. Customs Officers have the final say on the classification based on how they interpret the scene.
Determining the origin is important since all article of foreign origin should contain markings with their country of origin. The markings must meet the approved language guidelines:
- Full English Name (Except for North American Free Trade Agreement NAFTA)
- Adjectival Form
It is also important to remember that the marking must be legible, readable, and apparent. The writing must be indelible and permanent. Additionally, the country of origin marking needs to be seen by the final customer.
Properly determining the country of origin is vital for a successful import process. Experts at Gallagher Transport can guide you and your team all throughout this process.