Trade Agreements and Special Programs
Trade Agreements and Special Programs
This domain tests preferential tariff treatment: who qualifies, how origin is proven, and the deadlines that eliminate the benefit.
Rules of origin
Free trade agreements use product-specific rules, usually a tariff shift (the non-originating inputs must change heading), a regional value content test, or both. USMCA RVC can be calculated on transaction value or net cost. A de minimis allowance of 10% of transaction value lets small amounts of non-originating material be ignored. Origin is claimed on the entry summary using the special Column 1 rate and a valid certification of origin, which may be completed by the importer, exporter, or producer and need not follow a prescribed form.
Other programs
- Duty drawback refunds duties on imported goods that are later exported.
- Temporary importation under bond suspends duty on goods imported for a defined temporary use.
- Foreign trade zones defer duty until goods leave the zone for U.S. consumption.
- AGOA and CBI provide duty-free treatment for qualifying goods from designated countries; GSP has lapsed and is not currently available.
Worked example
A Mexican exporter claims USMCA on a power tool. The applicable rule requires a change to the subheading from any other heading and an RVC of 60% under the transaction value method. The foreign motor is classified in the same subheading as the finished tool, so the tariff shift fails and the good is non-originating. No preference, even with a signed certification.
Traps
- Claiming preference based on a certificate alone without checking the product-specific rule.
- Missing the one-year deadline for a post-importation refund claim under 19 U.S.C. 1520(d).
- Applying de minimis to goods where the rule excludes it.