Question

Question 1

A. Explain the U.S. ‘non-preferential rules of origin.’

B. When a product is imported/exported, how is the country of origin determined under ‘rules of origin’? Provide an example for each criterion.

Answer 1

A. Explain the U.S. ‘non-preferential rules of origin.’

Nonpreferential rule of Origin are the method used to determine the nationality of a product when it enters the US. These rule will determine that tariff quota, anti dumpling laws, most favored nation treatment and customs duties applicable to the product. The product can them be certified to have been manufactured by the specific country.

B. When a product is imported/exported, how is the country of origin determined under ‘rules of origin’? Provide an example for each criterion.

The product is imported and the rule of origin according to WTO states that (1) the country from which the good is wholly obtained or (2) if more than one country is involved in the production of the good that the country where last substantial transformation took place.

There is no unified rule determining the country of origin it may vary for WTO member countries. The criterion used to determine substantial transformation by the US government are as follows:

• Change in character is evaluated by if there is substantial alteration in the characteristics of the imported products. If changes to the imported products are merely cosmetic. The amount of labor and cost involved in making the end product.
• Change in use is evaluated i.e. if the end use of the imported product is interchangeable with the use of the product after post-importation processing. And if the end use of the imported material was predetermined at the time of importation.
• Change in name evaluates if the imported parts/ components retain their names after being assembled into products.

For example, if the paper is made entirely in the US with raw material from US trees. It is clearly made in the US. The paper will be exported as a made in US product.

In case the product components are imported from China for a car manufacturing and major Assembling and finishing is done in the US it is a made in US product. In case the product is fully assembled in China, for example, mobile device and only nametag is revised in the US it is made in China and will be treated accordingly under the tariff rules of the US.