According to Attorney Mr.Xinyu Lee an Bruce N. Shulman in SSPO (Stein Shostak Shostak Pollack&O’Hara, LLP) that are specialized in U.S. Customs laws, U.S. Customers and Border Protection issued a notice to amend the CBP Regulations to establish uniform rules governing CBP determinations of the country of origin of imported merchandise. The news cause great importance by international trade industry.
CBP applied the substantial transformation standard at present. Under this standard, a good must be substantially transformed in a country in order for it to be considered a product of that country. For example, fabric cutting and sewing in different countries, but the sewing is a country of origin. Because of the sewing process has led to substantial change in products. This standard has existed 100 years in the United States. U.S. Customs implement regulations about goods might be determined to be ‘originating in a NAFTA country’ based on a tariff shift, but using the ‘substantial transformation’ standard for country of origin purposes. If the new rules are authorized, importers need to know not only the origin country of goods but also the composition of origin and customs classification.
Noticeable, U.S. Customs proposed the new rules with the background of preferential trade measures from “the North American Free Trade Agreement” and intend to apply in non-NAFTA countries. The formulation of relevant rules not rooted in any particular legal philosophy or theory, but mainly satisfy the requirements of special industries or companies in U.S., Canada and Mexico. Thus it is a problem of the origin of such rules that apply to ordinary international trade is appropriate or not. Secondly, although the U.S. Customs claimed that the new rules of origin provide an “objective” basis to determine the origin of imported merchandise, for example, importers and manufacturers need to know the each type of raw material or components of origin and customs classification. In many cases, it is difficult to get information from suppliers and dealers. When the material from more than one country, it is more difficult to collect information; in the future, U.S. Customs verification of the origin will become very cumbersome. Foreign suppliers to provide wrong information is likely to lead to punishment form U.S. Customs and U.S. importers and manufacturers have to bear the consequences; currently, the U.S. Court of Customs and Patent Appeals have jurisdiction for dispute of a particular processing caused the substantial transformation. If the U.S. Customs adopt new rules, it will become the rule maker and implementer. U.S Court will be a negligible role. It is largely reduce the function of judicial relief in customs legal disputes.
Attorney Shulman suggested the U.S. international trade industry to make sure the infection of new rules immediately and to assess the possibility of their own enterprises adjust to the new rules in import and logistics procedures. If there are adverse effects, importers and manufacturers should be express their objections before September 23. It is learnt that many U.S. trade organizations have taken measures to prevent the U.S. Customs to implement. There was a successful precedent, U.S. trade sector through various efforts forced the U.S. Customs gave up amend “first sale rule” successfully. Please see detailed information on January 31 this year, the report “U.S. Customs plans to amend the method of valuation ‘first sale rules’”.
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