IBUS International Business Law Chapter 11

Domestic or regional value content test

common preferential rule of origin and type of value-added test, which requires that some minimum percentage of the value of materials and direct processing operations be performed in a country in order for it to have "originated" there.

Rule of Relative Specificity

If an article can be classified under two or more headings or subheadings, it must be classified under the one that most specifically—most narrowly—describes the article with the greatest degree of accuracy and certainty (GRI 3a). This is common with goods that are made of several materials or components.

Ultimate Purchaser

Is the last person in the United States who receives an article in the form in which it was imported."

Transaction Value

Is the price actually paid or payable for the merchandise when sold for export to the United States, plus the following amounts if not included in the purchase price.

Tariff Engineering

Is the process of modifying or engineering a product prior to importation, or importing it at an earlier stage of manufacturing, for the purposes of obtaining a lower rate of duty."

Import Rules for Individual (Traveling and declaring)

"As of 2016, shipments valued at $800 or less may be imported by any one person, on any one day without the payment of duties (provided the shipment is not one of several that were send separately for the purpose of evading a tariff ). This will mostly affect travelers to the United States and business-to-consumer e-commerce."

Articles Substantially Transformed

"If an article is not wholly the growth, product, or manufacture of one country, but has been produced in multiple countries, then the country of origin is that country where the article last underwent a substantial transformation into a new and different article of commerce."

General Rules of Interpretation (GRIs)

"The first step in determining the dutiable status of an article is to determine its tariff classification using the General Rules of Interpretation (GRI), found at the beginning of the tariff schedule. Using the rules requires specialized training and experience, or the services of a professional customs broker or customs attorney. This section gives only an overview, and most references to specific GRI numbers are omitted in this chapter."

Substitutional Drawbacks

Are duties paid on imported goods may be received by a U.S. firm that imports goods and then exports other goods of the "same kind and quality." Substitution drawbacks usually deal with fun-gible goods or agricultural commodities.

Composite Goods

Articles made of different materials or components are considered

Column 2 Rates

Column 2 rates are the original rates from the Smoot-Hawley Tariff Act of 1930, as amended,that today are applicable only to countries not granted nor-mal trade relations. Prior to the 1990s, the Column 2 rates had applied to goods from communist countries. As of 2017, only goods from Cuba and North Korea fell into this category (which face additional and more severe trade restrictions). Column 2 tariff rates are so high that imports from these countries become cost-prohibitive. This is determined by Congress.

"Harmonized Commodity Description and Cod-ing System (the "harmonized system"),"

an international agreement developed by the World Customs Organiza-tion (WCO), an intergovernmental organization located in Brussels with 180 member nations. The harmonized system standardizes the nomenclature used to identify, chapter 12 "Imports, Customs, and Tariff Law 309 describe, and classify goods. The WCO administers the numbering and descriptions of goods listed in the schedule, reviews changes in technology and new prod-ucts, and revises the harmonized schedules every five years. The most recent was effective in 2017.

Rules of Origin

are the legal rules used to determine the country of origin of imported products. They are found in trade agreements, national statutes, and the regulations of customs authorities.

Non-preferential rules of origin

are those applicable to imports from developed countries that receive normal tariff treatment (or that have normal trade relations

Free Movement throughout the European Union

"The right to free movement of people is subject to limitations on the grounds of public policy, security, and health, and they do not apply to public employment. Additionally, EU citizens must not become an undue burden on their country of residence. Citizens of member states may reside in another member state for up to three months without being subject to any condition or formalities other than the requirement to hold a valid passport or identity card. After three months, such persons may be required to register with local government authorities. After five years, the right to residence is permanent without any preconditions.Free movement of people has also resulted in the removal of border controls when traveling by land between 22 of the member states. Border controls remain in place in 6 states and, of course, for travelers entering from outside of the EU. Additionally, several states, including Austria, Denmark, France, Germany, Poland, and Sweden, reimposed border controls in response to the migrant crisis of 2016."

Essential Character

"This method is helpful to determine the classification of assembled products, foodstuffs, and mixtures blended together (assuming that there is no classification that fits entire article)."

Preferential rules of origin

"are those applicable to: (1) goods traded within a free trade area or customs union, (2) goods imported from countries that receive special tariff treatment pursuant to a trade agreement (such as the WTO Agreement on Government Procurement), or (3) goods imported under a trade preference programs for developing countries.

Same Conditioned Drawback

"is a drawback of duties paid on imported goods that are reexported in the "same condition" as they were imported, provided they were not significantly altered."

Drawback

"is a refund of duties and taxes paid on merchandise that is imported, subjected to manufacture or production, and then exported within five years. "

Rejected Merchandise Drawbacks

"is allowed for imported merchandise that was shipped without con-sent, is defective, or does not conform to specifications or to samples (e.g., zippers that do not zip). The mer-chandise is returned to U.S. Customs within three years and either destroyed or reexported."

Custom Value (Dutiable Goods)

"is the transaction value of the goods."

Dutiable Status

"refers to the legal status of imported goods at the time of entry for purposes of compliance with the tariff and customs laws."

(Informal Entries) Import Rules sending Commercial or Personal

Personal and commercial shipments valued at $2,500 or less may be cleared through an informal entry process. A surety bond is not required for informal entries, and import duties are payable immediately at the time of entry. Mail entries less than $2,500 may be processed through the U.S "Postal Service, in which case the goods are forwarded to a U.S. Customs mail branch for clearance.

Tariff-Shift Rule

States that the country of origin is the last country in which all "inputs" (raw materials, component parts, etc.) into the finished article underwent a required change in tariff classification.

Dutiable Status Process

The time to begin thinking about an article's dutiable status is not when the goods arrive at the port of entry—which is far too late. Dutiable status—which ultimately deter-mines the tariff rate, possible quotas, country of origin marking and labeling, and more—should be considered in the earliest planning stages. It gives the importer and product manager essential information for determining product costs, pricing, marking and labeling, and it may even affect a product's design characteristics and choice of suppliers. The first step in determining the dutiable status of an item is to locate it in the tariff schedule of the country of import.

Tariff Schedule

is a listing of specific items, coded numerically and described by name or use. The tariff rate for each item is given according to the country of origin

Country of Origin

is that country from which an imported article is said to have originated according to specific rules, known as rules of origin.

Principal Use

is the ordinary use to which articles of the same class and kind as those being imported are usually put and which is greater than any other single use of the article.

Substantial Transformation

occurs when the original article loses its identity as such and is transformed into a new and different article of commerce having "a new name, character, or use" different from that of the original item.