EXPORTING TO THE USA: ORIGIN

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EXPORTING TO THE USAORIGIN BEYOND

• Brian Staples
• Trade Facilitation Services
• Ottawa Canada
• brianstaples_at_rogers.com

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EXPORTING TO THE USA

• Why? CAFTA
• Why a Canadian?
• Why rules of origin?
• Why beyond?

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EXPORTING TO THE USA

• Getting into any market what is required?
• Even the smallest detail can lead to success or
  failure - nylon filament yarn 204
  (b)(3)(B)(vi)(IV)
• A short guide into the legal landscape and legal
  history of the United States rule of law the
  role of imports.

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Exporting to the USA

• The role and definition of importer in the USA.
• Simple obligations goods cannot be released
  unless bond has been posted.
• 19 CFR Part 113 agreement to pay duties, taxes,
  charges, complete entry, produce documents,
  rectify non-compliance, reimburse Customs, use
  the goods in accordance with imported
  requirements, supply electronic information

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The Role of the Importer

• Importer has to supply a commercial invoice with
  each shipment in accordance with 19 CFR 141
• names and contact information of buyer, shipper
  and seller, detailed product description, product
  marks, weights, measures, detailed price
  information including currency, charges
  (insurance, container charges, freight,
  packing,), country of origin, drawback, all goods
  and services furnished for the production of the
  imported goods, inland charges where applicable.

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The Role of the Importer Customs

• The Customs Mod Act (otherwise known as the
  North American Free Trade Implementation Act),
  legally introduced the doctrine of informed
  compliance and shared responsibility on
  December 8th, 1988.
• Customs is responsible for clearly communicating
  and documenting the legal obligations of
  importing goods into the United States to the
  trade community and ensuring that these legal
  obligations are being met (they do!!).The
  importing community shares the responsibility to
  ensure that all legal and regulatory trade
  requirements are being satisfied.

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The Role of the Importer

• For example, under Section 484 of the Tariff Act,
  as amended (19 U.S.C. 1484), the importer of
  record is responsible for using reasonable care
  to enter, classify and determine the value of
  imported merchandise and to provide any other
  information necessary to enable U.S. Customs and
  Border Protection to properly assess duties,
  collect accurate statistics, and determine
  whether other applicable legal requirements, if
  any, have been met. CBP is then responsible for
  fixing the final classification and value of the
  merchandise. An importer of records failure to
  exercise reasonable care could delay release of
  the merchandise and, in some cases, could result
  in the imposition of penalties.

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Reasonable Care

• CAFTA Chapter 4 (Rules of Origin and Origin
  Procedures) Article 4.15 (Obligations Relating
  to Importations).
• 3. No party may be subject an importer to any
  penalty for making an invalid claim for
  preferential tariff treatment if the importer
• did not engage in negligence, gross negligence,
  or fraud in making the claim and pays any customs
  duty owing or
• On becoming aware that such a claim is not valid,
  promptly and voluntarily corrects the claim and
  pays any customs duty owiing

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Reasonable Care

• These expressions come right out of 19 USC 1592
  (penalties) with extensive practice before the US
  courts.
• seeking guidance from the Customs Service
  through the pre-import or formal ruling program
  consulting with a customs broker, a Customs
  consultant, or a public accountant or attorney
  using in-house employees, such as counsel, a
  Customs administrator, or if valuation is an
  issue, a corporate controller, who have
  experience and knowledge of Customs laws,
  regulations, and procedures and, when
  appropriate, obtaining analyses from accredited
  laboratories

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Reasonable Care

• Informed compliance publications
• Reasonable Care Compliance Checklist
• Around 50 questions!! (textile issues)

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Reasonable Care

• Importer responsibility for record keeping
• 19 USC 1509 (a)(1)(A) list of records
• 5 ½ pages
• Only for entry purposes (not drawback, bonded
  warehouse)

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Importer Liability

• Focused Assessment Program
• (1) For fraudulent violations, the domestic value
  of the merchandise
• (2) For grossly negligent violations,
• (i) The lesser of the domestic value of the
  merchandise or four times the loss of duties,
  taxes and fees or
• (ii) If there is no loss of duties, taxes and
  fees 40 percent of the dutiable value of the
  merchandise and
• (3) For negligent violations,
• (i) The lesser of the domestic value of the
  merchandise or two times the loss of duties,
  taxes and fees or
• (ii) If there is no loss of duties, taxes and
  fees 20 percent of the dutiable value of the
  merchandise. PRIOR DISCLOSURE

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The Importer

• In light of the above, certification by the
  importer, from the US perspective, is perfectly
  logical and natural.
• They are already responsible
• Procurement, marking, refunds
• But there is a paradox here
• CAFTA Chapter 3- Article 3.24

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Now.The Producer

• 3-The importing Party, through its competent
  authority, may assist in a verification
• conducted under paragraph 2(a), or, at the
  request of the exporting Party, undertake such a
• verification, including by conducting, along with
  the competent authority of the exporting Party,
• visits in the territory of the exporting Party to
  the premises of an exporter, producer, or any
  other
• enterprise involved in the movement of textile or
  apparel goods from the territory of the
• exporting Party to the territory of the importing
  Party.
• 4-(iv) an assessment of whether the enterprises
  production records and other
• documents support its claims for preferential
  tariff treatment for

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The Producer

• 4.15 - when a certification by a producer or
  exporter forms the basis for the claim, either
  provide or have in place, at the importers
  option, an arrangement to have the producer or
  exporter provide, on request of the importing
  Partys customs authority, all information relied
  on by such producer or exporter in making such
  certification
• 4.16.3 - Each Party shall provide that a
  certification by the producer or exporter of the
  good may be completed on the basis of
• (a) the producers or exporters knowledge that
  the good is originating or
• (b) in the case of an exporter, reasonable
  reliance on the producers written or electronic
  certification that the good is originating.

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4.19

• 1. Each Party shall provide that an exporter or a
  producer in its territory that provides a
  certification in accordance with Article 4.16
  shall maintain, for a minimum of five years from
  the date the certification was issued, all
  records and documents necessary to demonstrate
  that a good for which the producer or exporter
  provided a certification was an originating good,
  including records and documents concerning
• (a) the purchase of, cost of, value of, and
  payment for, the exported good
• (b) the purchase of, cost of, value of, and
  payment for, all materials, including
• indirect materials, used in the production of the
  exported good and
• (c) the production of the good in the form in
  which it was exported.
• 2. Each Party shall provide that an importer
  claiming preferential tariff treatment for a good
  imported into the Partys territory shall
  maintain, for a minimum of five years from the
  date of importation of the good, all records and
  documents necessary to demonstrate the good
  qualified for the preferential tariff treatment.

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Producer versus Importer

• A basic contradiction within CAFTA
• Uniform Regulations
• A flood of verifications?
• Existing US parties
• National green light program that rewards
  cooperative exporters (a condition for goods)
• Deny entry (textiles only)
• Jam ongoing negotiations
• WTO/WCO/UCR/
• Education Automation

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Always the Producer

• Whatever the origin system the producer is
  always the core (new textile rules)
• Convergence or car wreck?
• WTO (no certification or verification)
• EU GSP
• ICC
• FTA
• Security Standards

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E-ORIGIN AIT

• AUTOMATIC IDENTIFICATION TECHNOLOGY
• BAR CODES AND RADIO FREQUENCY IDENTIFICATION -
  RFID
• IDENTIFICATION FRIEND OR FOE 194OS WW II

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E-ORIGIN AIT

• DEPARTMENT OF DEFENSE WAL-MART
• RFID TAG TRANSPONDER AND DIGITAL MEMORY CHIP
• TAG READER ANTENNA, TRANSCEIVER AND DECODER

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E-ORIGIN AIT

• PASSIVE TAGS ACTIVE TAGS
• PASSIVE TAGS ACTIVATED BY READERS POWER SUPPLY
  (9/10)
• DIFFERENT FREQUNCY BANDS UP TO MICROWAVE (ONSTAR)

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E-ORIGIN AIT

• NO LINE OF SIGHT REQUIREMENT NO UNLOADING AND
  LOADING
• AUTOMATICALLY READS ALL TAGS
• NO LABEL SPACE LIMITATIONS
• ELIMINATES HUMAN SCANNING ERRORS
• READ THROUGH PLASTIC, DIRT, MUD, PAINT NOT
  LIKELY TO TO RIPPED

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E-ORIGIN AIT

• LIBRARIES
• SUB-DERMAL (PATIENTS, PRISONERS AND PETS)
• COWS AND PHARMACEUTICALS
• TOLLBOOTHS
• VIP CLIENTS
• POLICE IN MEXICO CITY - FILES

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E-ORIGIN AIT

• 25TH ANNIVERSARY UNIVERSAL PRODUCT CODES
  OPTICAL BAR CODES
• 23 INDUSTRIES 140 COUNTRIES 1 MILLION
  COMPANIES 17 BILLION
• WILL NEVER BE ELIMINATED BY RFID

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GDSN

• GLOBAL DATA SYNCHRONIZATION NETWORK
• COMMERCIAL ENTITIES AND THEIR PRODUCT
  DESCRIPTIONS
• GLOBAL LOCATION NUMBER SECURITY AND COMMERCIAL
  RISK
• GLOBAL TRADE ITEM NUMBER
• EAN.UCC APPROVED GS 1
• EPC GLOBAL GS 1

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EPC GLOBAL BENEFITS

• TOTAL, REAL TIME, END-TO-END SUPPLY CHAIN
  VISIBILITY AND TRANSPARANCT (SECURITY/UCR
  COMMERCIAL BENEFITS)
• IN-STORE REPLENISHMENT
• REDUCE 2 SHRINK REDUCTION
• BETTER TRACKING
• REDUCE DOCUMENTATION ERRORS
• REDUCED INVENTEORIES AND LOGISTICS COSTS AND
  LABOUR COSTS