Sino-U.S. Trade War: Determination Of Origin Is The Key
- Apr 08, 2018 -

Sino-U.S. trade war: determination of origin is the key

Jindu Institute·2018-04-07 09:06:14 Comments 0 Bookmarks 0 Authors Liu Xinyu

Sino-U.S. trade war: determination of origin is the key

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In order to balance the losses caused by the U.S. 232 measures to China and safeguard China’s national and industrial interests, the State Council’s Customs Tariff Commission approved the approval of the State Council (Tax Paper [2018] No. 13) to suspend tariffs on certain imported goods originating in the United States. The duty of concession, from April 2 onwards, imposes tariffs on a total of 128 items in 7 categories, among which 120 items of imported goods such as fruits and products are subject to a 15% tariff, and 8 items such as pork and products are subject to a 25% tariff. On April 3, the U.S. Trade Representative’s Office announced the list of Chinese goods for which tariffs are to be imposed, and proposed to impose a 25% tariff on 1300 products from China, mainly involving information and communications technology, aerospace, robotics, medicine, and machinery. The products of other industries have an annual import value of about 50 billion U.S. dollars, and the Sino-U.S. trade war has kicked off. In this trade war with strong smells and smokes, both China and the United States have resorted to heavy measures to increase taxes, and the key to their implementation is the issue of origin, that is, the original "Specific products produced in the United States" are similar to those produced in the United States by the 232 measure. Then, how to determine whether the goods originate in the United States or China has become a key issue. What is a country of origin and what are the rules of origin in international trade? Original origin refers to the place of origin or origin. The origin of international trade is vividly called the “economic nationality” of commodities. That is because most countries in the world will consider different sources of imported products according to their own interests and give them different treatment. For example, the application of the preferential tax rate or the addition of retaliatory tariffs in accordance with anti-dumping, countervailing, and other trade protection needs is like the addition of 15%-25% tariffs in the Sino-US trade war. In order to implement these tariff differential treatment, quantitative restrictions or other measures related to trade, the customs must determine the country of origin of the imported goods according to the rules of origin rules and give corresponding customs treatment. Therefore, the identification of origin is an important basis and prerequisite for the effective implementation of tariff treatment and trade measures adopted by a country. The rules of origin are an important part of international trade policies. The main content of the rules is the country of origin, that is, according to what kind of standards to determine the origin of the import and export goods. It is worth noting that currently there is no unified rules of origin in the world, and countries have established their own standards for the identification of origin, but there are still some internationally accepted rules. For example, in the export of mineral products mined in the territory of country A, the acquisition of this mineral product originates entirely from country A. This is the “full acquisition” rule of origin, and it is easy to determine. For example, the relevant product purchases raw materials from A, processes the main processes in B, performs final assembly in C, and finally exports them in D. What is the origin of the product? This is more difficult to determine. The prevailing rule is that the country or region that ultimately produces a "substantial change" in the product is the place of origin. This is the "substantial change" rule for the recognition of origin. This standard originated in the United States. With the refinement of the international division of labor and the development of multinational corporations, more and more products involve multiple countries and regions in production and manufacturing. The "substantial change" rule has become the basic criterion for judging origin. However, what are the specific criteria for “substantial change” and the regulations of different countries are different, so there is no unified rules of origin. Are the rules of origin in China and the United States the same and what are the differences in the standards? Like most countries, the rules of origin in China and the United States are also divided into "Preferential Rules of Origin" and "Non-Preferential Rules of Origin." The “Preferential Rules of Origin” is to implement preferential tariff arrangements. The most representative is the rules of origin applicable to the “agreement tax rate” under the free trade agreement, which are generally determined by the countries that signed the free trade agreement after consultation. The rules of origin in the Sino-US trade war are different. The “non-preferential rules of origin” applies in the trade war. The U.S. has not yet adopted a statutory law on non-preferential rules of origin (U.S. preferential rules of origin generally have written rules of origin in the FTA, which are more detailed and specific). U.S. Customs relies on a series of court decisions, customs regulations, and customs interpretation Judging the origin of goods, usually consider the following factors: 1. Does the nature, name, and use of the product change? Whether the value-added of the product production process reaches a certain proportion; 3. The most essential feature of a product is whether it is conferred by the production process or by the raw material. However, whether or not a “substantial change” in the product is ultimately determined still relies on the determination of the individual case, lacking stability and transparency. China is a statutory country. China’s “non-preferential rules of origin” are mainly regulated by the “Regulations on the Origin of Imported and Exported Goods of the People’s Republic of China” and “Provisions on Substantive Changes in Non-Preferential Rules of Origin” (Order of the General Administration of Customs No. 122). No.) setting is also the main basis for the customs to determine the origin of import and export goods. The main criteria include: 1. Goods wholly obtained in a country (region) with the country (region) as the origin; more than two countries (regions) ) The goods involved in production shall be the country of origin (sub-area) that has undergone a substantial change. 2. The criteria for the determination of substantial changes shall be changed to basic standards by the classification of tariffs; supplemented by the percentage of ad valorem, manufacturing or processing procedures. Specifically, the goods included in the “List of Goods Applicable to Manufacturing or Processing Procedures and Valuation of Ad valorem Standards” shall be subject to substantive changes based on the specific criteria specified in the list; substantial changes shall not be included in the “list” goods. , tax classification should be applied to change the standard. The “classification of changes in tariffs” standard refers to the four-digit level of goods obtained in the “Import and Export Tariff of the People’s Republic of China” after a country (region) manufactures and processes non-country-originated materials. The classification of tax items has changed. The “ad valorem percentage” standard means that the value added in a certain country (region) after the manufacture and processing of materials not originally produced in the country (region) exceeds 30% of the value of the goods obtained. The "manufacturing and processing steps" standard refers to the main steps that are performed in a certain country (region) to give the basic characteristics of the goods obtained after manufacture and processing. In the trade war between China and the US, the customs will determine whether the imported goods originate from the United States or China in accordance with the “non-preferential rules of origin” mentioned above. Moreover, before the relevant tax increase policy ceases to be implemented, the customs authorities in China and the United States will carry out key supervision and inspection of imported goods from the other country to ensure that the tax increase policy is effectively implemented. Therefore, the import and export companies need to make relevant responses and preparations based on understanding the rules of origin in China and the United States and safeguard their rights and interests according to law. 1. For products exported to the United States According to the U.S. Customs Act, U.S. Customs will determine the origin of all imported goods. If the mark of the product (including the original country of origin) is incorrect, the customs office may refuse to release the goods. Regarding the question of origin proposed by the customs, the importer may submit a defense based on the rules of origin of the United States and the actual conditions of the product, and provide corresponding certification materials. For example, the relevant product is simply packaged in China, and the nature, name, and use of the product are not Changes have occurred; or the amount of incremental value generated by processing operations in China is small, and does not constitute a material change. Relief channels: The importer may submit a reconsideration to the customs within 90 days from the date of the decision made by the customs to refuse to release, and the customs shall make a reconsideration decision within 30 days. The importer can also apply for an extension of time to prepare evidence during the reconsideration process. If the importer is dissatisfied with the final decision made by the customs, he may file a lawsuit with Court 0f International Trrade within 180 days after the final decision is made. If they are dissatisfied with the judgment of the International Trade Court, they may appeal to the United States Court of Appeals for the Federal Circuit. 2. For products imported from the United States, in accordance with the relevant provisions of the "Customs Law of the People's Republic of China" and the "Regulations of the People's Republic of China on Import and Export Declaration of Customs Goods," the consignee of imported goods shall truthfully declare the origin of the goods to the customs according to law, and Paying Taxes. An enterprise shall determine the origin of the goods in accordance with China's rules of origin and report them on the customs declaration form when applying for import. The Customs will review the documents accompanying the cargo as required, conduct inspections when necessary, or require the company to further provide relevant materials to determine the origin of the goods. After the completion of the customs clearance process, within three years from the date of release of the goods, China Customs still has the right to conduct inspections on imported goods. If it is determined that the origin of the goods has been declared incorrectly, the customs will make a decision on the inspection and taxation according to law. If it is considered that it constitutes a violation of customs supervision regulations or is suspected of smuggling, it will be transferred to the customs anti-smuggling department for administrative punishment or investigation of criminal liability. Relief channels: The enterprise is dissatisfied with the decision on origin and taxation made by the customs, and may apply for administrative reconsideration to the Customs at the next higher level within 60 days. The administrative reconsideration agency shall make an administrative reconsideration decision within 60 days from the date of accepting the application. Extended for 30 days. If the applicant still refuses to accept the administrative reconsideration decision, he may file an administrative lawsuit with the court within 15 days of receiving the reconsideration decision. It is worth noting that the implementation of the “reconsideration front-end” procedure for customs tax disputes, that is to say, the company’s dissatisfaction with the decision on the origin of the customs, such as the direct impact on the collection of taxes, should be applied to the Customs at the next higher level for reconsideration and dissatisfaction with the reconsideration decision. It is possible to sue the court and cannot directly file an administrative lawsuit with the court.


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