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New Country of Origin Rules?
August 6, 2008

On July 25, 2008, U.S. Customs and Border Protection (\\\"Customs\\\") issued a proposed
rule that, if enacted, would significantly change the manner for determining the country of origin of imported merchandise.

Customs has proposed to eliminate \\\"substantial transformation\\\" as a standard for determining origin, and to extend the application of the country of origin tariff-shift
rules in 19 C.F.R. Part 102 to all \\\"product of\\\" or \\\"country of origin\\\" determinations unless otherwise excepted. Customs is also proposing to modify the tariff shift rules for certain products (e.g:. pipe fittings and flanges, greeting cards, glass optical fiber, and rice preparations) and has proposed changes to the tariff-shift rules in Part 102 for certain textile products.

Currently, the tariff-shift rules in Part 102 are applied only to imports from Canada and
Mexico and most imports of textiles. Customs’ proposed rule would apply the tariff-shift rules to country of origin marking under Part 134, as well as preferential trade programs such as the Generalized System of Preferences (\\\"GSP\\\") that use \\\"substantial transformation\\\" as a standard for determining whether imported goods are a \\\"product of\\\" a beneficiary country. The new rule would not apply to certain trade agreements which specify a separate origin test such as NAFTA, U.S.-Israel FTA, and several others.

If enacted, the proposal could adversely impact numerous determinations based upon
\\\"substantial transformation,\\\" which are published in rulings and otherwise. Importers and
exporters should review the proposed rule and evaluate how it may affect their transactions. In particular, importers participating in preferential trade programs that currently employ a \\\"substantial transformation\\\" standard for eligibility should closely review whether their imports will continue to be entitled to reduced duty rates under the proposed rule.

A copy of Customs proposed rule is available upon request. Written comments are due
on or before September 23, 200