Rules of Origin and Trade Agreements
This domain tests two questions candidates routinely merge: preferential origin (does the good get FTA duty treatment?) and non-preferential origin (what country do we mark, and where do quota and AD/CVD apply?). They use different rules and can produce different answers for the same good.
Preferential - USMCA
- The product-specific rule in the USMCA Annex 4-B must be met: tariff shift, regional value content (RVC), or both.
- RVC = (value of originating materials + direct cost of processing) ÷ value of the good, on a transaction-value or net-cost basis.
- De minimis: a good that fails a tariff shift solely because of non-originating inputs may still qualify if those inputs are 10% or less of value.
- A certification of origin is required but kept in the importer's records, not filed with CBP; retain it 5 years.
- Preference may be claimed at entry or later by post-importation refund claim within 1 year of importation.
Non-preferential
19 C.F.R. Part 102 tariff-shift rules govern marking and USMCA-party origin; for other countries the tests are wholly obtained or substantial transformation (change in name, character, or use).
Worked example
A good is valued at $10.00; originating materials are $5.00 and direct processing costs $1.50. RVC = 6.50 ÷ 10.00 = 65%. Against a 60% requirement the good qualifies; against a 75% requirement it fails, and a tariff shift cannot substitute where the rule demands RVC.
Traps that cost marks
- Using NAFTA formulas or thresholds instead of USMCA ones.
- Assuming origin equals country of shipment or invoice.
- Confusing marking origin with preference origin.
- Claiming preference without a certification or supportable cost data.