The normal U.S. tariff (most-favored-nation rate) for car imports is only 2.5%. This leaves very little room for North American countries to make mistakes in articulating and implementing the new USMCA rules of origin for the automotive sector. The rules are designed to encourage suppliers to strengthen their supplier base in North America, but if the rules become too strict – too complicated and too costly to comply with – the opposite could easily happen. Once companies decide to forego the benefits of the USMCA and simply pay the 2.5% rate, they can expand their supply chains wherever they want, including in Asia or Europe. CBP proposes to amend the scope provision of Part 102 of 19 CFR to uniformly apply the essential processing standard to the country of origin provisions that CBP establishes for goods imported from THE USMCA countries, Canada and Mexico, for non-preferential purposes. [5] In particular, CBP proposes to amend section 102.0 to extend the scope of Part 102 to include the rules set out in sections 102(1) to 102.18 and 102.20 to apply to CBP`s country of origin provisions for non-preferential purposes for goods imported from Canada and Mexico. Regional Value Content (RVC) rules require that a property contain a certain percentage of FTA content. To benefit from a free trade agreement, your product must have added value from the United States or FTA partner countries. This value may result from the cost of FTA-related materials or skilled labour. Each text of the FTA has its own product-specific rules of origin that dictate the RVC method(s) you can use to qualify your product for preferential rights.

Keep in mind that not all products may be subject to cvN rules: This document proposes to amend U.S. Customs and Border Protection (CBP) regulations regarding non-preferential origin regulations for goods imported from Canada or Mexico. In particular, this document proposes that CBP apply certain duty-based rules of origin in the CBP Regulations for all non-preferential findings made by CBP, in particular to determine when a product imported from Canada or Mexico has been substantially processed, resulting in an article with a new name, character or use. For the sake of consistency, this document also proposes to amend the CBP rules applicable to certain country of origin rules for public procurement. Overall, the amendments proposed in this Notice of Proposed Rules are intended to reduce administrative burden and inconsistency in determining the non-preferential origin of goods imported from Canada or Mexico for the purposes of implementing the Agreement between the United States of America, the United Mexican States and Canada (USMCA). Elsewhere in this issue of the Federal Register, CBP publishes a preliminary final rule amending various provisions implementing the USMCA for preferential tariff treatment claims. The final transitional provisions amend the CBP regulations, among other things, to apply certain duty-based rules of origin to determine the country of origin for the marking of goods imported from Canada or Mexico. The Regulatory Flexibility Act does not set thresholds of economic importance, but gives authorities the flexibility to determine the appropriate threshold for a particular rule.

Moving from case-by-case decisions to other non-preferential origin purposes to the Part 102 Duty Transfer Rules may impose certain costs on importers of goods from Canada and Mexico. Importers who switch from the use of these two methods of determination for non-preferential origin purposes to the rules of Part 102 with these regulations alone may incur minor one-time costs in adapting their inventory tracking systems and automated entries into the business environment to reflect the non-preferential country of origin based on Part 102, without labelling, not preferential for their goods. For example, if an importer has an inventory tracking system that identifies the unlabelled and non-preferential country of origin of its products from Canada and Mexico based on existing decision rules on a case-by-case basis, that importer may need to revise the system with those regulations to ensure that it identifies goods under Part 102 rules when the importer imports goods: which are subject to inconsistent rules of origin in accordance with current practice ….