PUBLIC SUBMISSION | As of: February 11, 2009 Tracking No. 8073f1ac Comments Due: December 01, 2008 |
Docket: USCBP-2007-0100
Uniform Rules of Origin for Imported Merchandise
Comment On: USCBP-2007-0100-0001
Uniform Rules of Origin for Imported Merchandise
Document: USCBP-2007-0100-0010
Comment Submitted by Ohad Cohen, Commercial Attache, Embassy of Israel
October 8, 2008
Ms. Monika Brenner
Ms. Heather K. Pinnock
Trade and Commercial Regulations Branch
Regulations and Rulings, Office of International Trade
U.S. Customs and Border Protection
1300 Pennsylvania Avenue, NW (Mint Annex)
Washington, DC 20229
Re: Docket number USCBP-2007-0100
Regulation Identifier Number: 1505-AB49
Dear Ms. Brenner and Ms. Pinnock:
On Friday, July 25, 2008 the Department of Homeland Security, Customs Border
Protection (CBP) and the Department of Treasury (Treasury) issued a notice of
proposed rulemaking to amend the CBP Regulations to establish uniform rules
(with certain exceptions) governing CBP determinations of the country of origin for
preferential and marking purposes based on a tariff shift. The proposed changes
raise a number of issues that should be addressed by CBP, particularly as those
issues relate to treatment of products from Israel.
Under the U.S-Israel Free Trade Agreement and current CBP Regulations, the
rules of origin for all Israeli goods for both preferential purposes and for marking
purposes utilize a substantial transformation test. That would no longer be the
case under CBP’s proposal, which will create inconsistencies and thereby could
be harmful to trade between our countries.
As a general matter, the proposed amendments to CBP’s regulations will lead to
different determinations of origin with respect to some imports from Israel due to
use of the substantial transformation test for making origin determinations for
preferential purposes and use of the tariff shift test for making origin determinations
for marking purposes. This could result in certain goods qualifying as Israeli
products for preferential treatment but not for marking purposes or certain goods
qualifying as Israeli products for marking purposes but not for preferential
treatment (even if the additional 35% value added test for preferential treatment is
met). This will result in an inefficient use of limited resources, and will serve as a
barrier to trade from Israel, due to the inconsistent treatment of products from
Israel and the additional burdens that will be imposed on exporters and importers
in order to comply with the proposed amended regulations.
In particular, under the proposed amendment, Israeli non-textile goods will require
a separate basis for country of origin determinations for preferential purposes and
for marking purposes. In addition, under the proposed regulations as currently
written, Israeli textile and apparel goods also may require a separate basis for
country of origin determinations for preferential purposes and for marking
purposes.
CBP’s notice makes clear that the proposed amendments would not alter (1) the
preferential rules of origin for non-textiles under the U.S.-Israel FTA or (2) the
preferential rules of origin for Israeli textiles and apparel under 19 CFR § 102.22.
In addition, under the proposed amendments, it is clear that for all countries, the
country of origin for marking purposes for non-textile merchandise would change
from 19 CFR part 134 to a tariff shift under 19 CFR §§ 102.1-102.21.
However, under the proposed amendments as currently written, it is unclear when
determining the country of origin for marking purposes for Israeli textiles and
apparel, whether (1) the tariff shift in 19 CFR §§ 102.1-102.21 would apply or (2)
the substantial transformation test in 19 CFR § 102.22 will continue to apply.
Under the proposed amendment to 19 CFR § 134.1(b), the country of origin for
marking purposes means “the country of manufacture, production, or growth of any
article entering the United States as determined under §§ 102.1-102.21.”
19 CFR § 102.21(a), Textiles and Apparel Products, states that it is applicable for
purposes of determining the country of origin for textiles and apparel products
except when “determining whether the goods originate in Israel or are the growth,
product, or manufacture of Israel.” (Emphasis added.)
19 CFR §102.22, Rules of Origin for Textile and Apparel Products of Israel, which
codifies the substantial transformation test, states that “[t]he provisions of this
section will control for purposes of determining whether a textile or apparel
product, as defined in Sec. 102.21(b)(5), is considered a product of Israel for
purposes of the customs laws and the administration of quantitative limitations. A
textile or apparel product will be a product of Israel if it is wholly the growth,
product, or manufacture of Israel.” (Emphasis added.)
Since a country of origin determination for marking is one of the “purposes of the
customs laws,” it is our view that, when determining the country of origin for
marking purposes for Israeli textiles and apparel, the substantial transformation
test in 19 CFR § 102.22 should continue to apply. This will result in Israeli textile
and apparel products using the same basis for the country of origin determination
for both preferential purposes and for marking purposes.
Thus, 19 CFR §§ 102.1-102.22 should be applied when determining the country of
origin for marking purposes, not 19 CFR §§ 102.1-102.21. This can be clarified by
modifying the proposed amendment to 19 CFR § 134.1(b) to include 19 CFR §
102.22.
More generally, as a matter of consistency and efficiency, and in light of the U.S.-
Israel Free Trade Agreement, it is our view that the substantial transformation
tests under the U.S.-Israel FTA and the current CBP Regulations for determining
the country of origin for preferential and marking purposes for all Israeli goods
should remain in force. In particular, we note that these comments should not be
viewed as acquiescence by Israel as to whether the tariff shift tests proposed by
CBP provide an appropriate definition of substantial transformation (for any
purpose) or whether the tariff shift tests proposed by CBP appropriately override
the substantial transformation test. Indeed, in light of the issues addressed above,
there are significant questions as to whether CBP’s proposed action, as it may
affect trade between Israel and the United States, is appropriate in light of the
Parties’ rights and obligations under the U.S.-Israel Free Trade Agreement.
Thank you for your time and consideration,
Ohad Cohen
Commercial Attaché
Embassy of Israel
Washington, D.C.
Copies:
Mr. Mark Mowrey, Deputy Assistant US Trade Representative, Europe & Middle
East
Mr. Bruce R. Hirsh, Deputy Assistant US Trade Representative for WTO and
Multilateral Affairs
| USCBP-2007-0100-0010.1 | Comment Submitted by Ohad Cohen, Commercial Attache, Embassy of Israel (Attachment) |