Chemical Industry Groups Call for Variety of Rules of Origin in Updated NAFTA
Chemical industry groups in the U.S., Canada and Mexico proposed a series of 10 rules of origin for chemical products in a revised NAFTA agreement, in a letter dated Jan. 11. Rules of origin for chemicals of chapters 28, 29, 31, 32, 34, 35, 38, 39 and 40 of each country’s respective tariff schedule should confer NAFTA status based on the “last substantial transformation,” with importers and exporters to select from a non-hierarchical menu of 10 ways chemicals may be transformed into NAFTA products, the letter said.
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Tariff shift rules should be available to importers and exporters, as should a de minimis rule conferring NAFTA status if the value of all non-originating materials does not exceed 15 percent of the good’s total value. Regional value content rules should also apply, set at either 60 percent non-originating materials based on the ex-works price or transaction value, or at 70 percent non-originating materials based on net cost, said the letter, signed by the American Chemistry Council, the Chemistry Industry Association of Canada and the National Chemical Industry Association of Mexico.
Chemicals should also be granted NAFTA-originating status based on manufacturing processes, the letter said. Chemical reactions that result in a molecule with a new structure should confer origin, except for certain processes involving water or solvents, the letter said. Mixing and blending that result in the production of a good with new physical or chemical characteristics relevant to use should also confer origin, as should purification to certain levels or for certain uses, including pharmaceutical, cosmetic or food. Other processes that confer origin should include production of standard materials, isomer separation, change in particle size and biotechnological processes such as fermentation, the letter said.
For goods that are eligible for NAFTA treatment, the U.S., Canada and Mexico should agree to fix the time period for records retention at five years from the date of entry, and should agree to establish “direct origin verifications, where the importing party is notified” of the verification procedure, the letter said. The U.S., Canada and Mexico should also make the “customs process more flexible” by allowing importers and exporters to issue certificates of origin “using invoices issued containing the minimum necessary information,” it said.