Thursday, September 01, 2011

Uniform Marking Officially Dead

But, like a brain eater from Zombieland or the upcoming World War Z, it may be back. Remember, always double tap.

Tomorrow, Customs will publish a Federal Register Notice making technical corrections to the Part 102 rules of origin and officially withdrawing the proposal that the U.S. implement tariff shift rules of origin for all commodities. The specific changes relate to pipe fittings and flanges, greeting cards, glass optical fiber, rice preparations, and certain textiles and apparel. If you import those goods, please check the FR Notice when it comes out. I am not giving a link because the link will to tomorrow's Federal Register will be dead tomorrow after the official version is published.

Regarding the proposal to adopt uniform rules of origin primarily based on a tariff shift methodology, Customs reports that it received a total of 70 public comments, 42 of which expressed opposition to the July 25, 2008 proposal. As a result of these comments, Customs and Border Protection states that is has "determined not to proceed with its proposal." For many people, this is a good outcome.

The problem most importers expressed (at least to me) about the proposed rules was not that it was difficult for producers to apply. Generally, it can be assumed that a producer knows the materials used in the production of its products and the materials' country of origin. That would be enough information for them to classify the goods, apply the tariff shift (or descriptive shift) rule to materials to do not originate in the country of production, and determine origin. This gets muddy in situations where raw materials or other commodities are traded many times or commingled, but those are the exceptions.

The problem is that under the proposal, it would be enormously difficult for importers to know any of this information. Importers, who have to act with reasonable care, would have difficulty determining whether they can rely on the representations of producers or exporters. Without a NAFTA-like verification process that put the burden on the producer or exporter, this proposal created a big liability risk for importers.

I know that some people will argue that the current rules do the same thing. There is some truth to that. Ultimately, the importer is currently responsible for the correct country of origin declaration and marking. But, it strikes me that an importer today has a better chance of explaining the traditional substantial transformation test to a supplier and getting reasonably reliable information to support the origin determination.

It will be interesting to see whether this has a zombie-like afterlife. Rumor has it that the U.S. was hoping to push these rules out here and then internationally as a means of creating a global standard. There is a lot to be said for a global standard. But, I think Customs and Border Protection is missing the target. It would be much more valuable to U.S. exporters to have a single, uniform rule on country of origin labeling so that exporters would not need to design origin labels to meet local requirements. Personally, I think a universal label showing an icon for manufacturing (maybe a gear or factory) along with the ISO code and flag for the country of origin might do the trick.

1 comment:

Anonymous said...

people do comes with different opinions and ideas, some are negative and some are positive, some are also pro for them but cons for others. in my opinion if it will be good for the majority of the concerned subject then it would be better to implement it.

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