C.2-Chile Rules of OriginChile - Origin [Rules of]
The U.S.-Chile FTA's rules of origin was largely modeled upon the NAFTA rules of origin. There are some important differences which require the close attention of the US exporter. If you are new to this process, you may wish to read the section below on How to Read the Rules of Origin prior to reviewing the U.S.-Chile FTA Rules of Origin.
The rules of origin are available at the U.S. International Trade Commission's website. On the International Trade Commission's website, click on "Current HTSA Edition by Chapter," which is located on the right side in the "HTS Tools" box. Then, in the body of the text, click on "General Notes; General Rules of Interpretation; General Statistical Notes." Within the "General Notes" you will find the U.S.-Chile FTA Rules of Origin in General Note 26.
How To Read the Rules of Origin
Rules of origin are written in terms of the Harmonized System of Tariff Classification, otherwise known as Schedule B codes. Therefore, the first step to using the “rules” is to obtain the appropriate code for the product in question.
A rule of origin may consist of:
Some Examples
An example of a rule that employs a simple tariff shift is:
Rule of Origin: "A change to heading 1902 through 1905 from any other chapter."
Products: Breads, pastries, cakes, biscuits (HS 1905.90)
Non-U.S. or Chilean input: Flour (classified in HS chapter 11), imported from Europe.
Explanation: For all products classified in HS headings 1902 through 1905, all non-U.S. or Chilean inputs, must be classified in an HS chapter other than HS chapter 19 in order for the product to obtain preferential duty treatment. These baked goods would qualify for tariff preference because the non-originating goods are classified outside of HS chapter 19. (The flour is in chapter 11). However, if these products were produced with non-originating mixes, then these products would not qualify because mixes are classified in HS chapter 19, the same chapter as baked goods.
An example of a rule that employs both the “tariff shift” and “regional value content” is:
Rule of Origin: “A change to subheading 9403.10 through 9403.80 from any other heading; or
A change to subheading 9403.10 through 9403.80 from any other subheading, including another subheading within that group, provided there is a regional value content of not less than:
(a) 35 percent when the build-up method is used, or
(b) 45 percent when the build-down method is used.”
Product: Wooden Furniture (HS # 9403.50)
Non US or Chilean input: Parts of furniture (classified in 9403.90), imported from Asia.
Explanation: Wooden furniture can qualify for preferential tariff treatment in two different ways – through a tariff shift, or a combination of a tariff shift and regional value content requirement.
Because the non-U.S. Or Chilean input is classified in the same heading (9403) as the final product in this case, the good does not make the simple “tariff shift” in the first rule. Moving down to the second rule though, the good can meet the tariff shift because the non-originating component is from a different subheading than the final product. For the good to qualify as originating, however, it must also pass the regional value content test.
Regional Value Content
To view necessary information about calculating the Regional Value Content, click here.
To view examples of how to calculate the Regional Value Content, click here.
This FTA requires the following percentages be met:
Build-Down Method: 45%
Build-Up Method: 35%
In addition to the rules of origin, it is sometimes appropriate to consider other factors found in Chapter Four of the US Chile-FTA when determining the origin of a product. Prepared by the International Trade Administration. With its network of 108 offices across the United States and in more than 75 countries, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
The rules of origin are available at the U.S. International Trade Commission's website. On the International Trade Commission's website, click on "Current HTSA Edition by Chapter," which is located on the right side in the "HTS Tools" box. Then, in the body of the text, click on "General Notes; General Rules of Interpretation; General Statistical Notes." Within the "General Notes" you will find the U.S.-Chile FTA Rules of Origin in General Note 26.
How To Read the Rules of Origin
Rules of origin are written in terms of the Harmonized System of Tariff Classification, otherwise known as Schedule B codes. Therefore, the first step to using the “rules” is to obtain the appropriate code for the product in question.
A rule of origin may consist of:
1) A change in tariff classification;
2) A regional value-content requirement;
3) Both a change in tariff classification and a regional value content requirement.
Note: It is necessary to refer to the rule associated with the product being exported. Regional value content can only be applied when it is allowed under a product-specific rule.2) A regional value-content requirement;
3) Both a change in tariff classification and a regional value content requirement.
Some Examples
An example of a rule that employs a simple tariff shift is:
Rule of Origin: "A change to heading 1902 through 1905 from any other chapter."
Products: Breads, pastries, cakes, biscuits (HS 1905.90)
Non-U.S. or Chilean input: Flour (classified in HS chapter 11), imported from Europe.
Explanation: For all products classified in HS headings 1902 through 1905, all non-U.S. or Chilean inputs, must be classified in an HS chapter other than HS chapter 19 in order for the product to obtain preferential duty treatment. These baked goods would qualify for tariff preference because the non-originating goods are classified outside of HS chapter 19. (The flour is in chapter 11). However, if these products were produced with non-originating mixes, then these products would not qualify because mixes are classified in HS chapter 19, the same chapter as baked goods.
An example of a rule that employs both the “tariff shift” and “regional value content” is:
Rule of Origin: “A change to subheading 9403.10 through 9403.80 from any other heading; or
A change to subheading 9403.10 through 9403.80 from any other subheading, including another subheading within that group, provided there is a regional value content of not less than:
(a) 35 percent when the build-up method is used, or
(b) 45 percent when the build-down method is used.”
Product: Wooden Furniture (HS # 9403.50)
Non US or Chilean input: Parts of furniture (classified in 9403.90), imported from Asia.
Explanation: Wooden furniture can qualify for preferential tariff treatment in two different ways – through a tariff shift, or a combination of a tariff shift and regional value content requirement.
Because the non-U.S. Or Chilean input is classified in the same heading (9403) as the final product in this case, the good does not make the simple “tariff shift” in the first rule. Moving down to the second rule though, the good can meet the tariff shift because the non-originating component is from a different subheading than the final product. For the good to qualify as originating, however, it must also pass the regional value content test.
Regional Value Content
To view necessary information about calculating the Regional Value Content, click here.
To view examples of how to calculate the Regional Value Content, click here.
This FTA requires the following percentages be met:
Build-Down Method: 45%
Build-Up Method: 35%
In addition to the rules of origin, it is sometimes appropriate to consider other factors found in Chapter Four of the US Chile-FTA when determining the origin of a product. Prepared by the International Trade Administration. With its network of 108 offices across the United States and in more than 75 countries, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.