What Is Country Of Origin?

Determining Country of Origin

Importers must be aware of the country of origin of their products. While it may seem simple when a product is entirely grown or manufactured in a single country, in today’s global economy, it can be challenging to establish the country of origin for customs purposes. This information holds significant importance due to its impact on duty rates, preferential trade agreements, trade sanctions, import quotas, and marking requirements.

Significance of Country of Origin

U.S. Customs and Border Protection (CBP) place great emphasis on verifying accurate country of origin due to revenue and admissibility considerations. Additionally, marking regulations require informing end users about the country of origin of imported articles.

Determining Country of Origin for Duty Purposes

For products subject to free trade agreements or duty preference programs, the definition of country of origin is meticulously outlined. Detailed rules based on the Harmonized Tariff Schedule (HTS) classification of goods are provided in the HTS’s general notes. Other trade agreements and duty preference programs have less detailed rules, primarily consisting of two requirements: direct shipment from the beneficiary country to the United States and meeting a regional value content (usually 35%), which may include U.S. components.

Country of Origin for Non-Preferential Trade

If a product is ineligible for duty preference or free trade, the regulations define the country of origin in two areas. These definitions, found in § 134.1 and § 177.22 of the regulations, are similar and straightforward. They state that the country of origin refers to the country of manufacture, production, or growth of any foreign article entering the United States. Substantial transformation is a key factor in determining the country of origin, which can be identified by the country where the product obtained its essential character or where it acquires its HTS number.

Marking Requirements and Exceptions

Usually, the definitions for country of origin also apply to marking purposes, except in the case of textiles, which have their own rules. Textile products falling within specific HTS chapters and other headings must adhere to the regulations at 19 CFR §102.21, incorporating processes unique to the textile trade. Importers should refer to 19 CFR §102.22 for specialized origin rules related to textiles from Israel.

Processes That Do Not Confer Country of Origin

Certain minor manufacturing and distribution processes have no impact on the country of origin determination. These processes include simple assembly, finishing work, packaging, repairs, cleaning, alterations, dilution, and similar actions. Importers must take steps to accurately identify the country of manufacture for products that undergo such processes.

Country of Origin and Free Trade Qualification

Determining the country of origin does not guarantee favorable duty treatment under a free trade agreement. The definition of country of origin for marking purposes is generally less stringent than the requirements for participation in free trade agreements.

Ensuring Proper Documentation

Practices for documenting country of origin vary based on product complexity and supply chains. Importers may visit manufacturers to observe their processes, including investigating the origin of materials used. For textile and apparel importers, establishing a document trail for fabric origin and manufacturing processes is essential. Other importers may compare purchasing, invoicing, and shipping records with the product itself. Some importers still rely on the old NAFTA marking rules detailed in 19 CFR §102.20 for non-free trade agreement goods, as they provide a more objective measurement. When in doubt, importers can seek country of origin determinations from CBP.