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| Rules of Origin | 10.450 – 10.463 | |||||||||||||||||||||||||||||||||||||||||||
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19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 1498, 1508, 1623, 1624, 4513. Section 10.17 also issued under 19 U.S.C. 1401a, 1402; Sections 10.25 and 10.26 also issued under 19 U.S.C. 3592; See Part 10 for more
28 FR 14663, Dec. 31, 1963, unless otherwise noted.
CBP Dec. 05-07, 70 FR 10873, Mar. 7, 2005, unless otherwise noted.
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Nomenclature changes to part 10 appear by CBP Dec. 16-26, 81 FR 93010, Dec. 20, 2016.
For purposes of §§ 10.450 through 10.463 of this subpart:
(a) Adjusted value. “Adjusted value” means the value determined in accordance with Articles 1 through 8, Article 15, and the corresponding interpretative notes of the Customs Valuation Agreement, adjusted, if necessary, to exclude any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation and the value of packing materials and containers for shipment as defined in § 10.450(m) of this subpart;
(b) Exporter. “Exporter” means a person who exports goods from the territory of a Party;
(c) Fungible goods or materials. “Fungible goods or materials” means goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical;
(d) Generally Accepted Accounting Principles. “Generally Accepted Accounting Principles” means the principles, rules, and procedures, including both broad and specific guidelines, that define the accounting practices accepted in the territory of a Party;
(e) Good. “Good” means any merchandise, product, article, or material;
(f) Goods wholly obtained or produced entirely in the territory of one or both of the Parties. “Goods wholly obtained or produced entirely in the territory of one or both of the Parties” means:
(1) Mineral goods extracted in the territory of one or both of the Parties;
(2) Vegetable goods, as such goods are defined in the Harmonized System, harvested in the territory of one or both of the Parties;
(3) Live animals born and raised in the territory of one or both of the Parties;
(4) Goods obtained from hunting, trapping, or fishing in the territory of one or both of the Parties;
(5) Goods (fish, shellfish, and other marine life) taken from the sea by vessels registered or recorded with a Party and flying its flag;
(6) Goods produced on board factory ships from the goods referred to in paragraph (f)(5) provided such factory ships are registered or recorded with that Party and fly its flag;
(7) Goods taken by a Party or a person of a Party from the seabed or beneath the seabed outside territorial waters, provided that a Party has rights to exploit such seabed;
(8) Goods taken from outer space, provided they are obtained by a Party or a person of a Party and not processed in the territory of a non-Party;
(9) Waste and scrap derived from:
(i) Production in the territory of one or both of the Parties, or
(ii) Used goods collected in the territory of one or both of the Parties, provided such goods are fit only for the recovery of raw materials;
(10) Recovered goods derived in the territory of a Party from used goods, and utilized in the Party's territory in the production of remanufactured goods; and
(11) Goods produced in the territory of one or both of the Parties exclusively from goods referred to in paragraphs (f)(1) through (f)(10) of this section, or from their derivatives, at any stage of production;
(g) Importer. “Importer” means a person who imports goods into the territory of a Party;
(h) Issued. “Issued” means prepared by and, where required under a Party's domestic law or regulation, signed by the importer, exporter, or producer of the good;
(i) Location of the producer. “Location of the producer” means site of production of a good;
(j) Material. “Material” means a good that is used in the production of another good, including a part, ingredient, or indirect material;
(k) Non-originating good. “Non-originating good” means a good that does not qualify as originating under this subpart;
(l) Non-originating material. “Non-originating material” means a material that does not qualify as originating under this subpart;
(m) Packing materials and containers for shipment. “Packing materials and containers for shipment” means the goods used to protect a good during its transportation to the United States, and does not include the packaging materials and containers in which a good is packaged for retail sale;
(n) Producer. “Producer” means a person who engages in the production of a good in the territory of a Party;
(o) Production. “Production” means growing, mining, harvesting, fishing, raising, trapping, hunting, manufacturing, processing, assembling, or disassembling a good;
(p) Recovered goods. “Recovered goods” means materials in the form of individual parts that are the result of:
(1) The complete disassembly of used goods into individual parts; and
(2) The cleaning, inspecting, testing, or other processing of those parts as necessary for improvement to sound working condition by one or more of the following processes: welding, flame spraying, surface machining, knurling, plating, sleeving, and rewinding in order for such parts to be assembled with other parts, including other recovered parts in the production of a remanufactured good of Annex 4.18, US-CFTA;
(q) Remanufactured goods. “Remanufactured goods” means industrial goods assembled in the territory of a Party, listed in Annex 4.18, US-CFTA, that:
(1) Are entirely or partially comprised of recovered goods;
(2) Have the same life expectancy and meet the same performance standards as new goods; and
(3) Enjoy the same factory warranty as such new goods; and
(r) Self-produced material. “Self-produced material” means a material that is produced by the producer of a good and used in the production of that good; and
(s) Value. “Value” means the value of a good or material for purposes of calculating customs duties or for purposes of applying this subpart.
[CBP Dec. 05-07, 70 FR 10873, Mar. 7, 2005, as amended by CBP Dec. 06-39, 71 FR 76133, Dec. 20, 2006]
A good imported into the customs territory of the United States will be considered an originating good under the US-CFTA only if:
(a) The good is wholly obtained or produced entirely in the territory of Chile or of the United States, or both; or
(b) The good is produced entirely in the territory of Chile or of the United States, or both, satisfies all other applicable requirements of this subpart, and
(1) Each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in General Note 26(n), HTSUS, and
(2) The good otherwise satisfies any applicable regional value content or other requirements specified in General Note 26(n), HTSUS; or
(c) The good is produced entirely in the territory of Chile or the United States, or both, exclusively from originating materials.
A good will not be considered to be an originating good and a material will not be considered to be an originating material by virtue of having undergone:
(a) Simple combining or packaging operations; or
(b) Mere dilution with water or with another substance that does not materially alter the characteristics of the good or material.
Notwithstanding the specific rules specified in General Note 26(n), HTSUS, textile and apparel goods classifiable as goods put up in sets for retail sale as provided for in General Rule of Interpretation 3, HTSUS, will not be regarded as originating goods unless each of the goods in the set is an originating good or the non-originating goods in the set do not exceed 10 percent of the adjusted value of the set.
Where General Note 26, subdivision (n), HTSUS, sets forth a rule that specifies a regional value content test for a good, the regional value content of such good may be calculated, at the choice of the person claiming the tariff treatment authorized by this note for such good, on the basis of the build-down method or the build-up method described in this section, unless otherwise specified in the note.
(a) Build-down method. For the build-down method, the regional value content must be calculated on the basis of the formula RVC = ((AV-VNM)/AV) × 100, where RVC is the regional value content, expressed as a percentage; AV is the adjusted value; and VNM is the value of non-originating materials used by the producer in the production of the good; or
(b) Build-up method. For the build-up method, the regional value content must be calculated on the basis of the formula RVC = (VOM/AV) × 100, where RVC is the regional value content, expressed as a percentage; AV is the adjusted value; and VOM is the value of originating materials used by the producer in the production of the good.
(a) Calculating the regional value content. For purposes of calculating the regional value content of a good under General Note 26(n), HTSUS, and for purposes of applying the de minimis (see § 10.459) provisions of subdivision (e) of the note, the value of a material is:
(1) In the case of a material imported by the producer of the good, the adjusted value of the material with respect to that importation;
(2) In the case of a material acquired in the territory where the good is produced, except for a material to which paragraph (a)(3) of this section applies, the producer's price actually paid or payable for the material;
(3) In the case of a material provided to the producer without charge, or at a price reflecting a discount or similar reduction, the sum of—
(i) All expenses incurred in the growth, production or manufacture of the material, including general expenses, and
(ii) A reasonable amount for profit; or
(4) In the case of a material that is self-produced, the sum of—
(i) All expenses incurred in the production of the material, including general expenses, and
(ii) A reasonable amount for profit.
(b) Permissible additions to, and deductions from, the value of materials. The value of materials may be adjusted as follows:
(1) For originating materials, the following expenses, if not included under paragraph (a) of this section, may be added to the value of the originating material:
(i) The costs of freight, insurance, packing and all other costs incurred in transporting the material to the location of the producer;
(ii) Duties, taxes and customs brokerage fees on the material paid in the territory of Chile or of the United States, or both, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable; and
(iii) The cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or by-product; and
(2) For non-originating materials, if included under paragraph (a) of this section, the following expenses may be deducted from the value of the non-originating material:
(i) The costs of freight, insurance, packing and all other costs incurred in transporting the material to the location of the producer;
(ii) Duties, taxes and customs brokerage fees on the material paid in the territory of Chile or of the United States, or both, other than duties and taxes that are waived, refunded, refundable or otherwise recoverable, including credit against duty or tax paid or payable;
(iii) The cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or by-products; and
(iv) The cost of originating materials used in the production of the non-originating material in the territory of Chile or of the United States.
(c) Accounting method. Any cost or value referenced in General Note 26(n), HTSUS, and this subpart, must be recorded and maintained in accordance with the generally accepted accounting principles applicable in the territory of the Party in which the good is produced (whether Chile or the United States).
[CBP Dec. 05-07, 70 FR 10873, Mar. 7, 2005, as amended by CBP Dec. 06-39, 71 FR 76133, Dec. 20, 2006]
Accessories, spare parts or tools that form part of the good's standard accessories, spare parts or tools and are delivered with the good will be treated as a material used in the production of the good, if—
(a) The accessories, spare parts or tools are classified with and not invoiced separately from the good; and
(b) The quantities and value of the accessories, spare parts or tools are customary for the good.
(a) A person claiming preferential tariff treatment under the US-CFTA for a good may claim that a fungible good or material is originating either based on the physical segregation of each fungible good or material or by using an inventory management method. For purposes of this subpart, the term “inventory management method” means—
(1) Averaging,
(2) “Last-in, first-out,”
(3) “First-in, first-out,” or
(4) Any other method that is recognized in the generally accepted accounting principles of the Party in which the production is performed (whether Chile or the United States) or otherwise accepted by that Party.
(b) A person selecting an inventory management method under paragraph (a) of this section for particular fungible goods or materials must continue to use that method for those fungible goods or materials throughout the fiscal year of that person.
[CBP Dec. 05-07, 70 FR 10873, Mar. 7, 2005, as amended by CBP Dec. 06-39, 71 FR 76134, Dec. 20, 2006]
(a) Originating goods or materials of Chile or the United States that are incorporated into a good in the territory of the other Party will be considered to originate in the territory of the other Party for purposes of determining the eligibility of the goods or materials for preferential tariff treatment under the US-CFTA.
(b) A good that is produced in the territory of Chile, the United States, or both, by one or more producers, will be considered as an originating good if the good satisfies the applicable requirements of § 10.451 and General Note 26, HTSUS.
[CBP Dec. 05-07, 70 FR 10873, Mar. 7, 2005, as amended by CBP Dec. 06-39, 71 FR 76134, Dec. 20, 2006]
(a) Except as provided in paragraphs (b) and (c) of this section, a good that does not undergo a change in tariff classification pursuant to General Note 26(n), HTSUS, will nonetheless be considered to be an originating good if—
(1) The value of all non-originating materials that are used in the production of the good and do not undergo the applicable change in tariff classification does not exceed 10 percent of the adjusted value of the good;
(2) The value of such non-originating materials is included in calculating the value of non-originating materials for any applicable regional value-content requirement under this note; and
(3) The good meets all other applicable requirements of General Note 26(n), HTSUS.
(b) Paragraph (a) of this section does not apply to:
(1) A non-originating material provided for in Chapter 4 of the Harmonized System, or a non-originating dairy preparation containing over 10 percent by weight of milk solids provided for in subheadings 1901.90 or 2106.90 of the Harmonized System, that is used in the production of a good provided for in Chapter 4 of the Harmonized System;
(2) A non-originating material provided for in Chapter 4 of the Harmonized System, or non-originating dairy preparations containing over 10 percent by weight of milk solids provided for in subheading 1901.90 of the Harmonized System, that are used in the production of the following goods: infant preparations containing over 10 percent in weight of milk solids provided for in subheading 1901.10 of the Harmonized System; mixes and doughs, containing over 25 percent by weight of butterfat, not put up for retail sale, provided for in subheading 1901.20 of the Harmonized System; dairy preparations containing over 10 percent by weight of milk solids provided for in subheadings 1901.90 or 2106.90 of the Harmonized System; goods provided for in heading 2105 of the Harmonized System; beverages containing milk provided for in subheading 2202.90 of the Harmonized System; or animal feeds containing over 10 percent by weight of milk solids provided for in subheading 2309.90 of the Harmonized System;
(3) A non-originating material provided for in heading 0805 of the Harmonized System or subheadings 2009.11 through 2009.30 of the Harmonized System that is used in the production of a good provided for in subheadings 2009.11 through 2009.30 of the Harmonized System, or in fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins, concentrated or unconcentrated, provided for in subheadings 2106.90 or 2202.90 of the Harmonized System;
(4) A non-originating material provided for in Chapter 15 of the Harmonized System that is used in the production of a good provided for in headings 1501 through 1508, 1512, 1514, or 1515 of the Harmonized System;
(5) A non-originating material provided for in heading 1701 of the Harmonized System that is used in the production of a good provided for in headings 1701 through 1703 of the Harmonized System;
(6) A non-originating material provided for in Chapter 17 or in heading 1805 of the Harmonized System that is used in the production of a good provided for in subheading 1806.10 of the Harmonized System;
(7) A non-originating material provided for in headings 2203 through 2208 of the Harmonized System that is used in the production of a good provided for in heading 2207 or 2208 of the Harmonized System; and
(8) A non-originating material used in the production of a good provided for in Chapters 1 through 21 of the Harmonized System unless the non-originating material is provided for in a different subheading than the good for which origin is being determined under this section.
(c) A textile or apparel good provided for in Chapters 50 through 63 of the Harmonized System that is not an originating good because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification set out in General Note 26(n), HTSUS, shall nonetheless be considered to be an originating good if the total weight of all such fibers or yarns in that component is not more than seven percent of the total weight of that component. A good containing elastomeric yarns in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed in the territory of a Party. For purposes of this paragraph, if a good is a fiber, yarn or fabric, the component of the good that determines the tariff classification of the good is all of the fibers in the yarn, fabric or group of fibers.
An indirect material, as defined in § 10.402(o), will be considered to be an originating material without regard to where it is produced.
Example. Chilean Producer C produces good C using non-originating material A. Producer C imports non-originating rubber gloves for use by workers in the production of good C. Good C is subject to a tariff shift requirement. As provided in § 10.451(b)(1) and General Note 26(n), each of the non-originating materials in good C must undergo the specified change in tariff classification in order for good C to be considered originating. Although non-originating material A must undergo the applicable tariff shift in order for good C to be considered originating, the rubber gloves do not because they are indirect materials and are considered originating without regard to where they are produced.
[CBP Dec. 05-07, 70 FR 10873, Mar. 7, 2005, as amended by CBP Dec. 06-39, 71 FR 76134, Dec. 20, 2006]
Packaging materials and containers in which a good is packaged for retail sale, if classified with the good for which preferential tariff treatment under the US-CFTA is claimed, will be disregarded in determining whether all non-originating materials used in the production of the good undergo the applicable change in tariff classification set out in General Note 26(n), HTSUS. If the good is subject to a regional value content requirement, the value of such packaging materials and containers will be taken into account as originating or non-originating materials, as the case may be, in calculating the regional value content of the good.
Example 1. Chilean Producer A of good C imports 100 non-originating blister packages to be used as retail packaging for good C. As provided in § 10.455(a)(1), the value of the blister packages is their adjusted value, which in this case is $10. Good C has a regional value content requirement. The United States importer of good C decides to use the build-down method, RVC = ((AV-VNM)/AV) × 100 (see § 10.454(a) of this subpart), in determining whether good C satisfies the regional value content requirement. In applying this method, the non-originating blister packages are taken into account as non-originating. As such, their $10 adjusted value is included in the VNM, value of non-originating materials, of good C.
Example 2. Same facts as in Example 1, but the blister packages are originating. In this case, the adjusted value of the originating blister packages would not be included as part of the VNM of good C under the build-down method. However, if the United States importer had used the build-up method, RVC = (VOM/AV) × 100 (see § 10.454(b)), the adjusted value of the blister packaging would be included as part of the VOM, value of originating material.
[CBP Dec. 05-07, 70 FR 10873, Mar. 7, 2005, as amended by CBP Dec. 06-39, 71 FR 76134, Dec. 20, 2006]
(a) Packing materials and containers for shipment, as defined in § 10.450(m), are to be disregarded in determining whether the non-originating materials used in the production of the good undergo an applicable change in tariff classification set out in General Note 26(n), HTSUS. Accordingly, such materials and containers do not have to undergo the applicable change in tariff classification even if they are non-originating.
(b) Packing materials and containers for shipment, as defined in § 10.450(m), are to be disregarded in determining the regional value content of a good imported into the United States. Accordingly, in applying either the build-down or build-up method for determining the regional value content of the good imported into the United States, the value of such packing materials and containers for shipment (whether originating or non-originating) is disregarded and not included in AV, adjusted value, VNM, value of non-originating materials, or VOM, value of originating materials.
Example. Chilean Producer A produces good C. Producer A ships good C to the United States in a shipping container which it purchased from Company B in Chile. The shipping container is originating. The value of the shipping container determined under section § 10.455(a)(2) is $3. Good C is subject to a regional value content requirement. The transaction value of good C is $100, which includes the $3 shipping container. The U.S. importer decides to use the build-up method, RVC = (VOM/AV) × 100 (see § 10.454(b)), in determining whether good C satisfies the regional value content requirement. In determining the AV, adjusted value, of good C imported into the U.S., paragraph (b) of this section requires a $3 deduction for the value of the shipping container. Therefore, the AV is $97 ($100-$3). In addition, the value of the shipping container is disregarded and not included in the VOM, value of originating materials.
(a) General. A good will not be considered an originating good by reason of having undergone production that occurs entirely in the territory of Chile, the United States, or both, that would enable the good to qualify as an originating good if subsequent to that production the good undergoes further production or any other operation outside the territories of Chile and the United States, other than unloading, reloading, or any other process necessary to preserve the good in good condition or to transport the good to the territory of Chile or the United States.
(b) Documentary evidence. An importer making a claim that a good is originating may be required to demonstrate, to CBP's satisfaction, that no further production or subsequent operation, other than permitted under paragraph (a) of this section, occurred outside the territories of Chile or the United States. An importer may demonstrate compliance with this section by submitting documentary evidence. Such evidence may include, but is not limited to, bills of lading, packing lists, commercial invoices, and customs entry and exit documents.