Proposed Changes to Compliance Standards for the Trade Agreements Act May Add Complexity


Determining compliance with the Trade Agreements Act (?TAA?) of 1979 has never been easy, but proposed rule changes intended to create predictability may add new complexity to the process. The U.S. Customs and Border Protection (?CBP?) has statutory and regulatory authority to issue country-of-origin advisory rulings and final determinations, including the TAA?s ?rule of origin? standard.[1] Determining the country of origin of manufactured goods under the TAA has been more of an art than a science, requiring companies to make country of origin determinations using the highly subjective ?substantial transformation? test. On July 25, 2008, CBP proposed extending application of the ?tariff shift? test and related rules set forth in 19 Code of Federal Regulations (?C.F.R.?) Part 102 to all country-of-origin determinations made under the customs and related laws and navigation laws of the United States, with certain exceptions.[2] The tariff shift test, which currently applies to trade among North American Free Trade Agreement (?NAFTA?) countries, would essentially replace the traditional substantial transformation test, including the test for making TAA country-of-origin determinations.

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