What is Country of Origin?
The country of origin, for customs purposes, is the country of manufacture, production, or growth of any article. If only one country is involved in the production, manufacture, or growth of the article, that is the country of origin.
It is not always so easy, though, if a number of countries are involved in the production and manufacture of a product. For instance, a product might be made of raw materials from China, but undergo processing operations in Germany. What then, is the country of origin in that case?
What is Substantial Transformation?
However, for articles that are manufactured or produced with materials from more than one country, or which undergo further production or manufacture in more than one country, the country of origin is the country where the article last underwent a “substantial transformation.” Substantial transformation is defined as the process whereby the article is turned into a new and different article of commerce, with a different and distinct name, character, and use from the article as it was previously.
What is Country of Origin marking?
Every foreign product entering the U.S. must have marked on it the English name of its country of origin, unless some narrow exceptions apply. The country of origin mark must be it must be conspicuously located on the article and also be legible, indelible, and permanent.
What if there is no Country of Origin marking?
If there is no country of origin marking, Customs will deny entry (importation) of the goods or could require that they be re-delivered if they have already been released.
Customs can impose an additional duty of 10% before allowing release. Before release, Customs will require that the article be marked with the correct country of origin and until marked duties paid.
Do the origin rules differ for Free Trade Agreements?
Yes, origin rules differ under Free Trade Agreements. The substantial transformation rule applies as described above only for countries that the U.S. does not have a trade agreement with that alters origin determinations. Substantial transformation might still be an analysis that needs to be made, but it may apply differently.
So, for example, there are different country of origin rules under the new NAFTA (USCMA – United States-Canada-Mexico Agreement), Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, and Singapore.
What is an Origin Verification?
An origin verification is process where Customs attempts to verify the goods qualify as “originating goods” under any of the Free Trade Agreements mentioned above. An origin verification will typically involve providing customs an importer’s declaration, and
- Identity and contact information of the exporter and producer
- Material value and costs
- Detailed description of operations involved in the growth, production, or manufacture of the good
- A description and value of materials
- Direct and indirect costs of processing
And a host of other supporting documents. An origin verification is usually conducted by CBP through a Request for Information (CBP Form 28) or a Notice of Proposed Action (CBP Form 29).
Have more questions?
If you have a question about country of origin, marking, CBP is condut an origin verification (or you want to be sure your goods qualify for duty-free treatment under a free trade agreement, give us a call or send us a message on our contact page.