Background on CBP Country of Origin Determination and USMCA
All merchandise of foreign origin imported into the United States (U.S.) must generally be marked with its country of origin, and it is subject to a country of origin (COO) determination by CBP. The country of origin of imported goods may be used as a factor to determine eligibility for preferential trade treatment under a free trade agreement.
What Happened
On October 30, 2021, Hong Kong, China requested consultations with the United States regarding U.S. measures affecting origin markings on goods imported from Hong Kong to the United States. On November 24, 2020, the United States and Hong Kong held consultations on the matter. On January 14, 2021, Hong Kong requested the World Trade Organization (“WTO”) to establish a dispute settlement panel. In response, the WTO established a dispute settlement panel on February 22, 2021.
On Tuesday, August 11, 2020, United States Customs and Border Protection (CBP) announced via Federal Register Notice that all items made in Hong Kong and destined for the U.S. must now indicate “China” as the country of origin.
Hong Kong’s unique political situation as an autonomous city-state initially called for specially tailored laws and regulations governing items imported into the United States. For more than 20 years the US recognized the separation between China and Hong Kong, evidenced by the requirements to distinguish between the two. Additionally, in light of the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation; as well as the regime’s human rights and forced labor abuses, the United States is especially keen on identifying items produced in China.
What is a Binding Ruling?
Pursuant to the Customs Modernization Act, when importing merchandise into the U.S., it is now the responsibility of the importer of record to use “reasonable care” to “enter,” “classify,” and “value” the goods and provide any other information necessary to enable U.S. Customs and Border Protection (CBP) to properly assess duties, collect accurate statistics, and determine whether all other applicable legal requirements are met.
A binding ruing request can be extremely beneficial to importers, because it can provide them with certainty regarding concerns they may have about their merchandise. […]
The SAT of the Mexican Government has issued hundreds of questionnaires to U.S. exporters demanding proof that the country of origin of the merchandise shipped from the United States to Mexico really qualified under NAFTA. The problem is that U.S. exporters are not taking the Mexican Government questionnaires seriously enough, resulting in the Mexican Government penalizing the Mexican importer which then sues the U.S. exporter.