19 USC 4532 - Special rules for automotive goods

Collapse to view only § 4532. Special rules for automotive goods

§ 4531. Rules of origin
§ 4532. Special rules for automotive goods
§ 4533. Actions regarding verification of claims under the USMCA
§ 4534. Drawback
§ 4535. Regulations

§ 4531. Rules of origin

(a) DefinitionsIn this section:

(1) Aquaculture

(2) Customs Valuation Agreement

(3) Fungible good or fungible material

(4) Good wholly obtained or produced entirely in the territory of one or more USMCA countriesThe term “good wholly obtained or produced entirely in the territory of one or more USMCA countries” means any of the following:

(A) A mineral good or other naturally occurring substance extracted or taken from the territory of one or more USMCA countries.

(B) A plant, plant good, vegetable, or fungus grown, cultivated, harvested, picked, or gathered in the territory of one or more USMCA countries.

(D) A good obtained in the territory of one or more USMCA countries from a live animal.

(E) An animal obtained by hunting, trapping, fishing, gathering, or capturing in the territory of one or more USMCA countries.

(F) A good obtained in the territory of one or more USMCA countries from aquaculture.

(G) A fish, shellfish, or other marine life taken from the sea, seabed, or subsoil outside the territory of one or more USMCA countries and outside the territorial sea of any country that is not a USMCA country by—

(i) a vessel that is registered or recorded with a USMCA country and flying the flag of that country; or

(ii) a vessel that is documented under the laws of the United States.

(H) A good produced on board a factory ship from goods referred to in subparagraph (G), if such factory ship—

(i) is registered or recorded with a USMCA country and flies the flag of that country; or

(ii) is a vessel that is documented under the laws of the United States.

(I) A good, other than a good referred to in subparagraph (G), that is taken by a USMCA country, or a person of a USMCA country, from the seabed or subsoil outside the territory of a USMCA country, if that USMCA country has the right to exploit such seabed or subsoil.

(J) Waste and scrap derived from—

(i) production in the territory of one or more USMCA countries; or

(ii) used goods collected in the territory of one or more USMCA countries, if such goods are fit only for the recovery of raw materials.

(K) A good produced in the territory of one or more USMCA countries exclusively from goods referred to in any of subparagraphs (A) through (J), or from their derivatives, at any stage of production.

(5) Indirect materialThe term “indirect material” means a material used or consumed in the production, testing, or inspection of a good but not physically incorporated into the good, or a material used or consumed in the maintenance of buildings or the operation of equipment associated with the production of a good, including—

(A) fuel and energy;

(B) tools, dies, and molds;

(D) lubricants, greases, compounding materials, and other materials used or consumed in production or to operate equipment or buildings;

(E) gloves, glasses, footwear, clothing, safety equipment, and supplies;

(F) equipment, devices, and supplies used for testing or inspecting the good;

(G) catalysts and solvents; and

(H) any other material that is not incorporated into the good, if the use of the material in the production of the good can reasonably be demonstrated to be a part of that production.

(6) Intermediate material

(7) Material

(8) Net cost

(9) Net cost of a good

(10) Nonallowable interest costs

(11) Nonoriginating good or nonoriginating material

(12) Originating good; originating material

(13) Packaging materials and containers

(14) Packing materials and containers

(15) Producer

(16) ProductionThe term “production” means—

(A) growing, cultivating, raising, mining, harvesting, fishing, trapping, hunting, capturing, breeding, extracting, manufacturing, processing, or assembling a good; or

(B) the farming of aquatic organisms through aquaculture.

(17) Reasonably allocate

(18) Recovered materialThe term “recovered material” means a material in the form of individual parts that are the result of—

(A) the disassembly of a used good into individual parts; and

(B) the cleaning, inspecting, testing, or other processing that is necessary for improvement to sound working condition of such individual parts.

(19) Remanufactured goodThe term “remanufactured good” means a good classified in the HTS under any of chapters 84 through 90 or under span 9402, other than a good classified under span 8418, 8509, 8510, 8516, or 8703 or subspan 8414.51, 8450.11, 8450.12, 8508.11, or 8517.11, that—

(A) is entirely or partially composed of recovered materials;

(B) has a life expectancy similar to, and performs in a manner that is the same as or similar to, such a good when new; and

(20) RoyaltiesThe term “royalties” means payments of any kind, including payments under technical assistance or similar agreements, made as consideration for the use of, or right to use, a copyright, literary, artistic, or scientific work, patent, trademark, design, model, plan, or secret formula or secret process, excluding payments under technical assistance or similar agreements that can be related to a specific service such as—

(A) personnel training, without regard to where the training is performed; or

(B) if performed in the territory of one or more USMCA countries, engineering, tooling, die-setting, software design and similar computer services, or other services.

(21) Sales promotion, marketing, and after-sales service costs

(A) Sales and marketing promotion, media advertising, advertising and market research, promotional and demonstration materials, exhibits, sales conferences, trade shows, conventions, banners, marketing displays, free samples, sales, marketing, and after-sales service literature (product brochures, catalogs, technical literature, price lists, service manuals, and sales aid information), establishment and protection of logos and trademarks, sponsorships, wholesale and retail charges, and entertainment.

(B) Sales and marketing incentives, consumer, retailer, or wholesaler rebates, and merchandise incentives.

(C) Salaries and wages, sales commissions, bonuses, benefits (such as medical, insurance, and pension benefits), traveling and living expenses, and membership and professional fees for sales promotion, marketing, and after-sales service personnel.

(D) Product liability insurance.

(E) Rent and depreciation of sales promotion, marketing, and after-sales service offices and distribution centers.

(F) Payments by the producer to other persons for warranty repairs.

(G) If the costs are identified separately for sales promotion, marketing, or after-sales service of goods on the financial statements or cost accounts of the producer, the following:

(i) Property insurance premiums, taxes, utilities, and repair and maintenance of sales promotion, marketing, and after-sales service offices and distribution centers.

(ii) Recruiting and training of sales promotion, marketing, and after-sales service personnel, and after-sales training of customers’ employees.

(iii) Office supplies for sales promotion, marketing, and after-sales service of goods.

(iv) Telephone, mail, and other communications.

(22) Self-produced material

(23) Shipping and packing costs

(24) Territory

(25) Total cost

(A) In generalThe term “total cost”—

(i) means all product costs, period costs, and other costs for a good incurred in the territory of one or more USMCA countries; and

(ii) does not include—(I) profits that are earned by the producer of the good, regardless of whether the costs are retained by the producer or paid out to other persons as dividends; or(II) taxes paid on those profits, including capital gains taxes.

(B) Other definitionsIn this paragraph:

(i) Other costs

(ii) Period costs

(iii) Product costs

(26) Transaction valueThe term “transaction value” means the price—

(A) actually paid or payable for a good or material with respect to a transaction of a producer; and

(B) adjusted in accordance with the principles set forth in paragraphs 1, 3, and 4 of article 8 of the Customs Valuation Agreement.

(27) USMCA country

(28) Value

(b) Application and interpretationIn this section:

(1) Tariff classification

(2) Reference to HTS

(3) Cost or value

(1) In generalFor purposes of this Act and for purposes of implementing the preferential tariff treatment provided for under the USMCA, except as otherwise provided in this section, a good is an originating good if—

(A) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;

(B) the good is produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in Annex 4–B of the USMCA; or

(C) the good is produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;

(D) except for a good provided for under any of chapters 61 through 63—

(i) the good is produced entirely in the territory of one or more USMCA countries;

(ii) one or more of the nonoriginating materials provided for as parts under the HTS and used in the production of the good do not satisfy the requirements set forth in Annex 4–B of the USMCA because—(I) both the good and its materials are classified under the same subspan or under the same span that is not further subdivided into subheadings; or(II) the good was imported into the territory of a USMCA country in an unassembled form or a disassembled form but was classified as an assembled good pursuant to rule 2(a) of the General Rules of Interpretation of the HTS; and

(iii) the regional value span of the good is not less than 60 percent if the transaction value method is used, or not less than 50 percent if the net cost method is used and the good satisfies all other applicable requirements of this section; or

(E) the good itself, as imported, is listed in table 2.10.1 of the USMCA and is imported into the territory of the United States from the territory of a USMCA country.

(2) Remanufactured goods

(3) Special rule for foreign-trade zones

(d) Regional value span

(1) In generalExcept as provided in paragraph (5), for purposes of subparagraphs (B) and (D) of subsection (c)(1), the regional value span of a good shall be calculated, at the choice of the importer, exporter, or producer of the good, on the basis of—

(A) the transaction value method described in paragraph (2); or

(B) the net cost method described in paragraph (3).

(2) Transaction value method

(A) In general

(B) DefinitionsIn this paragraph:

(i) RVC

(ii) TV

(iii) VNM

(3) Net cost method

(A) In general

(B) DefinitionsIn this paragraph:

(i) NC

(ii) RVC

(iii) VNM

(4) Value of nonoriginating materials

(A) In general

(B) Special rule for certain componentsThe following components of the value of nonoriginating materials used by the producer in the production of a good may be counted as originating span for purposes of determining whether the good meets the regional value span requirement set forth in Annex 4–B of the USMCA:

(i) The value of processing the nonoriginating materials undertaken in the territory of one or more USMCA countries.

(ii) The value of any originating materials used or consumed in the production of the nonoriginating materials undertaken in the territory of one or more USMCA countries.

(5) Net cost method required in certain cases

(6) Net cost method allowed for adjustments

(A) In general

(B) Review of adjustmentNothing in subparagraph (A) shall be construed to prevent any review or appeal available in accordance with article 5.15 of the USMCA with respect to an adjustment to or a rejection of—

(i) the transaction value of a good; or

(ii) the value of any material used in the production of a good.

(7) Calculating net costThe producer of a good may, consistent with regulations implementing this section, calculate the net cost of the good under paragraph (3) by—

(A) calculating the total cost incurred with respect to all goods produced by that producer, subtracting any sales promotion, marketing, and after-sales services costs, royalties, shipping and packing costs, and nonallowable interest costs that are included in the total cost of those goods, and then reasonably allocating the resulting net cost of those goods to the good;

(B) calculating the total cost incurred with respect to all goods produced by that producer, reasonably allocating the total cost to the good, and subtracting any sales promotion, marketing, and after-sales service costs, royalties, shipping and packing costs, and nonallowable interest costs, that are included in the portion of the total cost allocated to the good; or

(C) reasonably allocating each cost that is part of the total cost incurred with respect to the good so that the aggregate of those costs does not include any sales promotion, marketing, and after-sales service costs, royalties, shipping and packing costs, and nonallowable interest costs.

(8) Value of materials used in productionFor purposes of calculating the regional value span of a good under this subsection, applying the de minimis rules under subsection (f), and calculating the value of nonoriginating components in a set under subsection (m), the value of a material used in the production of a good is—

(A) in the case of a material that is imported by the producer of the good, the transaction value of the material at the time of importation, including the costs incurred in the international shipment of the material;

(B) in the case of a material acquired in the territory in which the good is produced—

(i) the price paid or payable by the producer in the USMCA country where the producer is located;

(ii) the value as determined under subparagraph (A), as set forth in regulations prescribed by the Secretary of the Treasury providing for the application of transaction value in the absence of an importation by the producer; or

(iii) the earliest ascertainable price paid or payable in the territory of the country; or

(i) all expenses incurred in the production of the material, including general expenses; and

(ii) an amount for profit equivalent to the profit added in the normal course of trade or equal to the profit that is usually reflected in the sale of goods of the same class or kind as the material.

(9) Intermediate materials

(A) In general

(B) Materials used in production of intermediate materials

(10) Further adjustments to value of materialsThe following expenses, if included in the value of a nonoriginating material calculated under paragraph (8), may be deducted from the value of the nonoriginating material:

(A) The costs of freight, insurance, packing, and all other costs incurred in transporting the material to the location of the producer.

(B) Duties, taxes, and customs brokerage fees on the material paid in the territory of one or more USMCA countries, other than duties or taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duty or tax paid or payable.

(C) The cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or byproducts.

(e) Accumulation

(1) Producers

(2) Originating materials used in production of goods of a USMCA country

(3) Production undertaken on nonoriginating materials used in the production of goods

(f) De minimis amounts of nonoriginating materials

(1) In generalExcept as provided in paragraphs (2) through (4), a good that does not undergo a change in tariff classification or satisfy a regional value span requirement set forth in Annex 4–B of the USMCA is an originating good if—

(A) the value of all nonoriginating materials that are used in the production of the good, and do not undergo the applicable change in tariff classification set forth in Annex 4–B of the USMCA—

(i) does not exceed 10 percent of the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good; or

(ii) does not exceed 10 percent of the total cost of the good;

(B) the good meets all other applicable requirements of this section; and

(C) the value of such nonoriginating materials is included in the value of nonoriginating materials for any applicable regional value span requirement for the good.

(2) Exceptions for dairy and other productsParagraph (1) does not apply to the following:

(A) A nonoriginating material of headings 0401 through 0406, or a nonoriginating dairy preparation containing over 10 percent by dry weight of milk solids of subspan 1901.90 or 2106.90, used or consumed in the production of a good of headings 0401 through 0406.

(B) A nonoriginating material of headings 0401 through 0406, or nonoriginating dairy preparation containing over 10 percent by dry weight of milk solids of subspan 1901.90 or 2106.90, used or consumed in the production of any of the following goods:

(i) Infant preparations containing over 10 percent by dry weight of milk solids, of subspan 1901.10.

(ii) Mixes and doughs containing over 25 percent by dry weight of butterfat, not put up for retail sale, of subspan 1901.20.

(iii) A dairy preparation containing over 10 percent by dry weight of milk solids, of subspan 1901.90 or 2106.90.

(iv) A good of span 2105.

(v) Beverages containing milk of subspan 2202.90.

(vi) Animal feeds containing over 10 percent by dry weight of milk solids of subspan 2309.90.

(C) A nonoriginating material of span 0805, or any of subheadings 2009.11 through 2009.39, used or consumed in the production of a good of subheadings 2009.11 through 2009.39, or a fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins, concentrated or unconcentrated, of subspan 2106.90 or 2202.90.

(D) A nonoriginating material of chapter 9 used or consumed in the production of instant coffee, not flavored, of subspan 2101.11.

(E) A nonoriginating material of chapter 15 used or consumed in the production of a good of any of headings 1501 through 1508 1

1 So in original. Probably should be followed by a comma.

1512, 1514, or 1515.

(F) A nonoriginating material of span 1701 used or consumed in the production of a good of any of headings 1701 through 1703.

(G) A nonoriginating material of chapter 17 or span 1805 used in the production of a good of subspan 1806.10.

(H) Nonoriginating peaches, pears, or apricots of chapter 8 or 20, used in the production of a good of span 2008.

(I) A nonoriginating single juice ingredient of span 2009 used or consumed in the production of a good of—

(i) subspan 2009.90, or tariff item 2106.90.54 (concentrated mixtures of fruit or vegetable juice, fortified with minerals or vitamins); or

(ii) tariff item 2202.99.37 (mixtures of fruit or vegetable juices, fortified with minerals or vitamins).

(J) A nonoriginating material of any of headings 2203 through 2208 used or consumed in the production of a good provided for under span 2207 or 2208.

(3) Goods provided for under chapters 1 through 27

(4) Textile or apparel goods

(A) Goods classified under chapters 50 through 60

(B) Goods classified under chapters 61 through 63

(i) Goods classified under chapters 50 through 60 or span 9619

(ii) Goods classified under chapters 61 through 63

(g) Fungible goods and materials

(1) Fungible materials used in production

(2) Fungible goods commingled and exported

(3) Use of inventory management method

(h) Accessories, spare parts, tools, and instructional or other information materials

(1) In generalSubject to paragraph (2), accessories, spare parts, tools, or instructional or other information materials delivered with a good shall—

(A) be treated as originating if the good is an originating good;

(B) be disregarded in determining whether a good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries or satisfies a process or change in tariff classification set forth in Annex 4–B of the USMCA; and

(C) be taken into account as originating or nonoriginating materials, as the case may be, in calculating any applicable regional value span of the good set forth in Annex 4–B of the USMCA.

(2) ConditionsParagraph (1) shall apply only if—

(A) the accessories, spare parts, tools, or instructional or other information materials are classified with and delivered with, but not invoiced separately from, the good; and

(B) the types, quantities, and value of the accessories, spare parts, tools, or instructional or other information materials are customary for the good.

(i) Packaging materials and containers for retail sale

(j) Packing materials and containers for shipment

(k) Indirect materials

(l) Transit and transshipmentA good that has undergone production necessary to qualify as an originating good under subsection (c) shall not be considered to be an originating good if, subsequent to that production, the good—

(1) undergoes further production or any other operation outside the territory of a USMCA country, other than—

(A) unloading, reloading, separation from a bulk shipment, storing, labeling, or marking, as required by a USMCA country; or

(B) any other operation necessary to preserve the good in good condition or to transport the good to the territory of the importing USMCA country; or

(2) does not remain under the control of customs authorities in a country other than a USMCA country.

(m) Goods classifiable as goods put up in sets

(1) Goods other than textile or apparel goods

(A) each of the goods in the set is an originating good; or

(B) the total value of the nonoriginating goods in the set does not exceed 10 percent of the value of the set.

(2) Textile or apparel goodsNotwithstanding the rules set forth in Annex 4–B of the USMCA, goods classifiable as goods put up in sets for retail sale as provided for in rule 3 of the General Rule of Interpretation of the HTS shall not be considered to be originating goods unless—

(A) each of the goods in the set is an originating good; or

(B) the total value of the nonoriginating goods in the set does not exceed 10 percent of the value of the set.

(n) Nonqualifying operationsA good shall not be considered to be an originating good merely by reason of—

(1) mere dilution with water or another substance that does not materially alter the characteristics of the good; or

(2) any production or pricing practice with respect to which it may be demonstrated, by a preponderance of the evidence, that the object of the practice was to circumvent this section.

(o) Effective date

(1) In generalThis section shall—

(A) take effect on the date on which the USMCA enters into force; and

(B) apply with respect to a good entered for consumption, or withdrawn from warehouse for consumption, on or after that date.

(2) Transition from NAFTA treatment

(Pub. L. 116–113, title II, § 202, Jan. 29, 2020, 134 Stat. 20; Pub. L. 116–260, div. O, title VI, § 601(b), Dec. 27, 2020, 134 Stat. 2150.)

§ 4532. Special rules for automotive goods

(a) DefinitionsIn this section:

(1) Alternative staging regime

(2) Alternative staging regime period

(3) Automotive appendix

(4) Automotive goodThe term “automotive good” means—

(A) a covered vehicle; or

(B) a part, component, or material listed in table A.1, A.2, B, C, D, or E of the automotive appendix.

(5) Automotive rules of origin

(6) Commissioner

(7) Covered vehicle

(8) Interagency committee

(9) Passenger vehicle; light truck; heavy truck

(10) USMCA country

(b) Establishment of interagency committee

(1) In generalNot later than 30 days after January 29, 2020, the President shall establish an interagency committee—

(A) to provide advice, as appropriate, on the implementation, enforcement, and modification of provisions of the USMCA that relate to automotive goods, including the alternative staging regime; and

(B) to review the operation of the USMCA with respect to trade in automotive goods, including—

(i) the economic effects of the automotive rules of origin on the United States economy, workers, and consumers; and

(ii) the impact of new technology on such rules of origin.

(2) MembersThe members of the interagency committee shall be the following:

(A) The Trade Representative.

(B) The Secretary of Commerce.

(D) The Secretary of Labor.

(E) The Chair of the International Trade Commission.

(F) Any other members determined to be necessary by the Trade Representative.

(3) Chair

(4) Use of information

(A) Information sharing

(B) Confidentiality of information

(1) Certification relating to labor value span requirements

(A) In generalA covered vehicle shall be eligible for preferential tariff treatment only if the producer of the covered vehicle—

(i) provides a certification to the Commissioner that the production of covered vehicles by the producer meets the labor value span requirements, including the high-wage material and manufacturing expenditures, high-wage technology expenditures, and high-wage assembly expenditures, as set forth in article 7 of the automotive appendix or, if the producer is subject to the alternative staging regime, articles 7 and 8 of that appendix, and includes the calculations of the producer related to the labor value span requirements; and

(ii) has information on record to support those calculations.

(B) ImplementationFor purposes of meeting the requirements under subparagraph (A)—

(i) the Secretary of Labor, in consultation with the Commissioner, shall ensure that the certification of a producer under subparagraph (A)(i) does not contain omissions or errors before the certification is considered properly filed; and

(ii) a calculation described in subparagraph (A)(i) based on a producer’s preceding fiscal or calendar year is valid for the producer’s subsequent fiscal or calendar year, as the case may be, as set forth in articles 7 and 8 of the automotive appendix.

(2) Certification relating to steel and alumispan purchase requirements

(A) In generalA covered vehicle shall be eligible for preferential tariff treatment only if the producer of the covered vehicle—

(i) provides a certification to the Commissioner that the production of covered vehicles by the producer meets the steel and alumispan purchase requirements set forth in article 6 of the automotive appendix or, if the producer is subject to the alternative staging regime, articles 6 and 8 of that appendix; and

(ii) has information on record to support the calculations relied on for the certification.

(B) ImplementationFor purposes of meeting the requirements under subparagraph (A)—

(i) the Commissioner shall ensure that the certification of a producer under subparagraph (A)(i) does not contain omissions or errors before the certification is considered properly filed; and

(ii) a calculation described in subparagraph (A)(ii) based on a producer’s preceding fiscal or calendar year is valid for the producer’s subsequent fiscal or calendar year, as the case may be, as set forth in articles 6 and 8 of the automotive appendix.

(d) Alternative staging regime

(1) Publication of requirementsNot later than 90 days after January 29, 2020, the Trade Representative, in consultation with the interagency committee, shall publish in the Federal Register requirements, procedures, and guidance required to implement the alternative staging regime, including with respect to the following:

(A) The procedures, calculation methodology, timeframe, specific regional value span thresholds, and other minimum requirements, consistent with article 8 of the automotive appendix, with which a producer of covered vehicles subject to the alternative staging regime is required to comply during the alternative staging regime period for such vehicles to be eligible for preferential tariff treatment pursuant to the alternative staging regime.

(B) The date by which requests for the alternative staging regime are required to be submitted.

(C) The information a producer of passenger vehicles or light trucks is required to provide, in the producer’s request to use the alternative staging regime, to demonstrate the actions that the producer will take to be prepared to meet all the requirements set forth in articles 2 through 7 of the automotive appendix after the alternative staging regime period has expired, including the following:

(i) A statement identifying which of the requirements set forth in articles 2 through 7 of the automotive appendix that the producer expects it will be unable to meet upon entry into force of the USMCA based on current business plans.

(ii) A statement indicating whether the passenger vehicles or light trucks for which the producer seeks to use the alternative staging regime account for 10 percent or less, or more than 10 percent, of the total production of passenger vehicles or light trucks, as the case may be, in USMCA countries by the producer during the 12-month period preceding the date on which the USMCA enters into force, or the average of such production during the 36-month period preceding that date, whichever is greater.

(iii) In the case of a producer that seeks to use the alternative staging regime for more than 10 percent of the producer’s total production of passenger vehicles or light trucks, as the case may be, in USMCA countries—(I) a detailed and credible plan describing with specificity the actions the producer intends to take to bring production of the passenger vehicles or light trucks, as the case may be, into compliance with the requirements set forth in articles 2 through 7 of the automotive appendix after the alternative staging regime period expires; and(II) a statement indicating the time period for which the producer is requesting to use the alternative staging regime, if that time period is greater than 5 years after the USMCA enters into force.

(D) The procedures for accepting and reviewing requests for the alternative staging regime, including that the Trade Representative will—

(i) notify a producer of any deficiencies in the request of the producer that would result in a denial of the request not later than 30 days after the request is submitted; and

(ii) provide producers the opportunity to submit supplemental information.

(E) The criteria the Trade Representative, in consultation with the interagency committee, will consider when determining whether to approve a request for the alternative staging regime. Such criteria shall only include elements necessary for the producer to demonstrate the producer’s ability to meet the requirements specified in subparagraphs (A) and (B). The criteria shall also describe the information to meet those requirements in sufficient detail to allow the producer to identify the information necessary to complete a request for the alternative staging regime.

(F) The opportunity for a producer described in subparagraph (C)(iii) to modify the producer’s request for the alternative staging regime.

(2) Review of requests for alternative staging regime

(A) In generalIn reviewing the request of a producer of passenger vehicles or light trucks for the alternative staging regime, the Trade Representative, in consultation with the interagency committee, shall determine—

(i) whether the request covers 10 percent or less, or more than 10 percent, of the production of passenger vehicles or light trucks in USMCA countries by the producer; and

(ii) whether the producer has identified with specificity which of the requirements set forth in articles 2 through 7 of the automotive appendix the producer is unable to meet based on current business plans.

(B) Approval of alternative staging regime for passenger vehicle or light truck production not exceeding 10 percent of North American productionThe Trade Representative shall authorize the use of the alternative staging regime if the Trade Representative, in consultation with the interagency committee, determines that—

(i) the request for the alternative staging regime covers passenger vehicles or light trucks that do not exceed 10 percent of the production of passenger vehicles or lights 1

1 So in original. Probably should be “light”.

trucks, as the case may be, in USMCA countries by the producer; and

(ii) the producer has identified with specificity which of the requirements set forth in articles 2 through 7 of the automotive appendix the producer is unable to meet based on current business plans.

(C) Approval of alternative staging regime for passenger vehicle or light truck production exceeding 10 percent of North American productionThe Trade Representative shall authorize the use of the alternative staging regime if the Trade Representative, in consultation with the interagency committee, determines that—

(i) the request for the alternative staging regime covers more than 10 percent of the production of passenger vehicles or lights 1 trucks, as the case may be, in USMCA countries by the producer;

(iii) the detailed and credible plan of the producer submitted under paragraph (1)(C)(iii) is based on substantial evidence and reasonably calculated to bring the production of the passenger vehicles or light trucks, as the case may be, into compliance with the requirements set forth in articles 2 through 7 of the automotive appendix after the alternative staging regime period has expired.

(3) Procedures related to reviewing and approving requests

(A) Deadline for reviewNot later than 120 days after receiving a request of a producer for the alternative staging regime, the Trade Representative, in consultation with the interagency committee, shall—

(i) review the request;

(ii) make a determination with respect to whether to authorize the use of the alternative staging regime; and

(iii) provide to each producer a response in writing stating whether the producer may use the alternative staging regime.

(B) Establishment of a public list

(4) Alternative staging regime review and modification

(A) Material changes to circumstances

(i) Notification

(ii) Requests for modification of plans(I) In general(II) Determination regarding modificationNot later than 90 days after receiving a request submitted under subclause (I), the Trade Representative, in consultation with the interagency committee, shall—(aa) review the request;(bb) make a determination with respect to whether the modified plan is based on substantial evidence and reasonably calculated to ensure that the producer will still be able to meet the requirements set forth in articles 2 through 7 of the automotive appendix after the alternative staging regime period has expired;(cc) if the Trade Representative makes an affirmative determination under item (bb), approve the modified plan; and(dd) notify the producer in writing of the determination.

(iii) Inability to meet requirements

(5) Failure to meet requirements for alternative staging regime

(A) In generalIf, at any time, the Trade Representative, in consultation with the interagency committee, makes a determination described in subparagraph (B) with respect to a producer of covered vehicles subject to the alternative staging regime—

(i) any claim for preferential tariff treatment under the alternative staging regime for any covered vehicle of that producer shall be considered invalid; and

(ii) notwithstanding the finality of a liquidation of an entry, the importer of any covered vehicle of that producer shall be liable for the duties, taxes, and fees that would have been applicable to that vehicle if preferential tariff treatment pursuant to the alternative staging regime had not applied when the vehicle was entered for consumption, or withdrawn from warehouse for consumption, plus interest assessed on or after the date of entry and before the date of the determination.

(B) Determination describedA determination described in this subparagraph is a determination that a producer of covered vehicles subject to the alternative staging regime—

(i) has failed to take the steps set forth in the producer’s request for the alternative staging regime and, as a result of that failure, the producer will no longer be able to meet the requirements set forth in articles 2 through 7 of the automotive appendix after the alternative staging regime period has expired;

(ii) has provided false or misleading information in the producer’s request; or

(iii) in the case of a producer authorized to use the alternative staging regime for more than 10 percent of the total production of passenger vehicles or light trucks in USMCA countries by the producer, has failed to notify the Trade Representative under paragraph (4)(A) of material changes to circumstances that will prevent the producer from meeting any of the requirements set forth in articles 2 through 7 of the automotive appendix after the alternative staging regime period has expired.

(e) Verification of labor value span requirements

(1) In general

(2) Role of Secretary of Labor

(3) Role of Secretary of the TreasuryThe Secretary of the Treasury shall participate in any verification conducted under paragraph (1) by verifying—

(A) the components of the labor value span requirements not covered by paragraph (2), including the annual purchase value and cost components of the high-wage material and manufacturing expenditures, within the meaning given those terms in article 7 of that appendix; and

(B) whether the producer has met the labor value span requirements.

(4) Actions by Secretary of Labor

(A) In generalIn participating in a verification conducted under paragraph (1), the Secretary of Labor shall assist the Secretary of the Treasury to do the following:

(i) Examine, or cause to be examined, upon reasonable notice, any record (including any statement, declaration, document, or electronically generated or machine readable data) described in the notice with reasonable specificity.

(ii) Request information from any officer, employee, or agent of a producer of automotive goods, as necessary, that may be relevant with respect to whether the production of covered vehicles meets the high-wage components of the labor value span requirements set forth in article 7 of the automotive appendix or, if the producer is subject to the alternative staging regime under subsection (d), articles 7 and 8 of that appendix.

(B) Nature of information requested

(5) Whistleblower protections

(A) Unlawful actsIt is unlawful to intimidate, threaten, restrain, coerce, blacklist, discharge, or in any other manner discriminate against any person for—

(i) disclosing information to a Federal agency or to any person relating to a verification under this subsection; or

(ii) cooperating or seeking to cooperate in a verification under this subsection.

(B) Enforcement

(6) Protests of decisions of U.S. Customs and Border Protection

(A) In generalIf a protest under section 1514 of this title of a decision of U.S. Customs and Border Protection with respect to the eligibility for preferential tariff treatment of a covered vehicle relates to the analysis of the Department of Labor relating to the high-wage components of the labor value span requirements described in paragraph (1), the Secretary of Labor shall—

(i) conduct an administrative review of the portion of the decision relating to such requirements; and

(ii) provide the results of that review to the Commissioner.

(B) No accelerated disposition

(f) Administration by Department of Labor

(g) Review and reports

(1) Periodic review on automotive rules of origin

(A) In generalThe Trade Representative, in consultation with the interagency committee, shall conduct a biennial review of the operation of the USMCA with respect to trade in automotive goods, including—

(i) to the extent practicable, a summary of actions taken by producers to demonstrate compliance with the automotive rules of origin, use of the alternative staging regime, enforcement of such rules of origin, and other relevant matters; and

(ii) whether the automotive rules of origin are effective and relevant in light of new technology and changes in the span, production processes, and character of automotive goods.

(B) Report

(i) In general

(ii) Initial report

(iii) Termination of reporting requirement

(2) Report by International Trade CommissionNot later than 1 year after the submission of the first report required by paragraph (1)(B), and every 2 years thereafter until the date that is 12 years after the date on which the USMCA enters into force, the International Trade Commission shall submit to the appropriate congressional committees and the President a report on—

(A) the economic impact of the automotive rules of origin on—

(i) the gross domestic product of the United States;

(ii) exports from and imports into the United States;

(iii) aggregate employment and employment opportunities in the United States;

(iv) production, investment, use of productive facilities, and profit levels in the automotive industries and other pertinent industries in the United States affected by the automotive rules of origin;

(v) wages and employment of workers in the automotive sector in the United States; and

(vi) the interests of consumers in the United States;

(B) the operation of the automotive rules of origin and their effects on the competitiveness of the United States with respect to production and trade in automotive goods, taking into account developments in technology, production processes, or other related matters;

(D) such other matters as the International Trade Commission considers relevant to the economic impact of the automotive rules of origin, including prices, sales, inventories, patterns of demand, capital investment, obsolescence of equipment, and diversification of production in the United States.

(3) Report by Comptroller General

(4) Public participationBefore submitting a report under paragraph (1)(B) or (2), the agency responsible for the report shall—

(A) solicit information relating to matters that will be addressed in the report from producers of automotive goods, labor organizations, and other interested parties;

(B) provide for an opportunity for the submission of comments, orally or in writing, from members of the public relating to such matters; and

(C) after submitting the report, post a version of the report appropriate for public viewing on a publicly available internet website for the agency.

(h) Effective dateThis section shall—

(1) take effect on January 29, 2020; and

(2) apply with respect to goods entered, or withdrawn from warehouse for consumption, on or after the date on which the USMCA enters into force.

(Pub. L. 116–113, title II, § 202A, Jan. 29, 2020, 134 Stat. 33.)

§ 4533. Actions regarding verification of claims under the USMCA

(a) Verification

(1) Origin verification

(A) In general

(B) Additional requirementsIf the Secretary conducts a verification under subparagraph (A), the President may direct the Secretary—

(i) during the verification process, to release the good only upon payment of duties or provision of security; and

(ii) if the Secretary makes a negative determination under subsection (b), to take action under subsection (c).

(2) Textile and apparel goods

(A) In general

(B) Additional requirementsIf the Secretary conducts a verification under subparagraph (A) with respect to a textile or apparel good, the President may direct the Secretary—

(i) during the verification process, to take appropriate action described in subparagraph (D); and

(ii) if the Secretary makes a negative determination described in subsection (b), to take action under subsection (c).

(i) a verification of whether the good qualifies for preferential tariff treatment under the USMCA; or

(ii) a verification of whether customs offenses are occurring or have occurred with respect to the good.

(D) Action during verificationAppropriate action described in this subparagraph may consist of—

(i) release of the textile or apparel good that is the subject of a verification described in subparagraph (C) upon payment of duties or provision of security;

(ii) suspension of preferential tariff treatment under the USMCA with respect to—(I) the textile or apparel good that is the subject of a verification described in subparagraph (C)(i), if the Secretary determines that there is insufficient information to support the claim for preferential tariff treatment; or(II) any textile or apparel good exported or produced by a person that is the subject of a verification described in subparagraph (C)(ii) if the Secretary of the Treasury determines that there is insufficient information to support the claim for preferential tariff treatment made with respect to that good;

(iii) denial of preferential tariff treatment under the USMCA with respect to—(I) the textile or apparel good that is the subject of a verification described in subparagraph (C)(i) if the Secretary determines that incorrect information has been provided to support the claim for preferential tariff treatment; or(II) any textile or apparel good exported or produced by a person that is the subject of a verification described in subparagraph (C)(ii) if the Secretary determines that the person has provided incorrect information to support the claim for preferential tariff treatment that has been made with respect to that good;

(iv) detention of any textile or apparel good exported or produced by a person that is the subject of a verification described in subparagraph (C) if the Secretary determines that there is insufficient information to determine the country of origin of that good; and

(v) denial of entry into the United States of any textile or apparel good exported or produced by a person that is the subject of a verification described in subparagraph (C) if the Secretary determines that the person has provided incorrect information regarding the country of origin of that good.

(b) Negative determination

(1) In generalA negative determination described in this subsection with respect to a good imported, exported, or produced by an importer, exporter, or producer is a determination by the Secretary, based on a verification conducted under subsection (a), that—

(A) a claim by the importer, exporter, or producer that the good qualifies as an originating good under section 4531 of this title is inaccurate; or

(B) the good does not qualify for preferential tariff treatment under the USMCA because—

(i) the importer, exporter, or producer failed to respond to a written request for information or failed to provide sufficient information to determine that the good qualifies as an originating good;

(ii) after receipt of a written notification for a visit to conduct verification under subsection (a), the exporter or producer did not provide written consent for that visit;

(iii) the importer, exporter, or producer does not maintain, or denies access to, records or documentation required under section 1508(l) of this title;

(iv) in the case of verification conducted under subsection (a)(2)—(I) access or permission for a site visit is denied;(II) officials of the United States are prevented from completing a site visit on the proposed date and the exporter or producer does not provide an acceptable alternative date for the site visit; or(III) the exporter or producer does not provide access to relevant documents or facilities during a site visit; or

(v) the importer, exporter, or producer—(I) otherwise fails to comply with the requirements of this section; or(II) based on the preponderance of the evidence, circumvents the requirements of this section.

(2) Requests for informationThe Secretary shall not make a negative determination described in paragraph (1)(B) unless—

(A) in a case in which the Secretary conducts a verification with respect to a good by written request or questionnaire submitted to the importer under article 5.9.1(a) of the USMCA and the claim for preferential tariff treatment under the USMCA is based on a certification of origin completed by the exporter or producer of the good, the Secretary requests information from the exporter or producer that completed the certification; or

(B) in a case in which the Secretary conducts a verification with respect to a textile or apparel good by requesting a site visit under article 6.6.2 of the USMCA, the Secretary requests information from the importer and from any exporter or producer that provided information to the Secretary to support the claim for preferential tariff treatment.

(1) Denial of preferential tariff treatment

(2) Withholding of preferential tariff treatment based on pattern of conduct

(d) Prevention of circumvention

(Pub. L. 116–113, title II, § 207, Jan. 29, 2020, 134 Stat. 49.)

§ 4534. Drawback

(a) “Good subject to USMCA drawback” definedFor purposes of this Act, the term “good subject to USMCA drawback” means any imported good other than the following:

(1) A good entered under bond for transportation and exportation to a USMCA country.

(2) A good exported to a USMCA country in the same condition as when imported into the United States. For purposes of this paragraph—

(A) processes such as testing, cleaning, repacking, sorting, marking, or inspecting a good, or preserving it in its same condition, shall not be considered to change the condition of the good, and

(B) except for a good referred to in paragraph 11 of Annex 3–B of the USMCA that is exported to Mexico, if a good described in the first sentence of this paragraph is commingled with fungible goods and exported in the same condition, the origin of the good may be determined on the basis of the inventory methods provided for in the regulations implementing this title.1

1 See References in Text note below.

(3) A good—

(A) that is—

(i) deemed to be exported from the United States,

(ii) used as a material in the production of another good that is deemed to be exported to a USMCA country, or

(iii) substituted for by a good of the same kind and quality that is used as a material in the production of another good that is deemed to be exported to a USMCA country, and

(B) that is delivered—

(i) to a duty-free shop,

(ii) for ship’s stores or supplies for ships or aircraft, or

(iii) for use in a project undertaken jointly by the United States and a USMCA country and destined to become the property of the United States.

(4) A good exported to a USMCA country for which a refund of customs duties is granted by reason of—

(A) the failure of the good to conform to sample or specification, or

(B) the shipment of the good without the consent of the consignee.

(5) A good that qualifies under the rules of origin set out in section 202 1 that is—

(A) exported to a USMCA country,

(B) used as a material in the production of another good that is exported to a USMCA country, or

(C) substituted for by a good of the same kind and quality that is used as a material in the production of another good that is exported to a USMCA country.

(6) A good provided for in subspan 1701.13.20 or 1701.14.20 of the HTS that is imported under any re-export program or any like program and that is—

(A) used as a material, or

(B) substituted for by a good of the same kind and quality that is used as a material,

in the production of a good provided for in existing Canadian tariff item 1701.99.00 or existing Mexican tariff item 1701.99.01, 1701.99.02, or 1701.99.99 (relating to refined sugar).

(7) A citrus product that is exported to Canada.

(8) A good used as a material, or substituted for by a good of the same kind and quality that is used as a material, in the production of—

(A) apparel, or

(B) a good provided for in subspan 6307.90.99 (insofar as it relates to furniture moving pads), 5811.00.20, or 5811.00.30 of the HTS,

that is exported to Canada and that is subject to Canada’s most-favored-nation rate of duty upon importation into Canada.

Where in paragraph (6) a good referred to by an item is described in parentheses following the item, the description is provided for purposes of reference only.

(b) Same kind and qualityFor purposes of paragraphs (3)(A)(iii), (5)(C), (6)(B), and (8) of subsection (a), and for purposes of obtaining refunds, waivers, or reductions of customs duties with respect to a good subject to USMCA drawback under section 1313(n)(2) of this title, a good is a good of the same kind and quality as another good—

(1) for a good described in such paragraph (6)(B), if the good would have been considered of the same kind and quality as the other good on the day before the date on which the USMCA enters into force; or

(2) for other goods if—

(A) the good is classified under the same 8-digit HTS subspan number as the other good; or

(B) drawback would be allowed with respect to the goods under subsection (b)(4), (j)(1), or (p) of section 1313 of this title.

(d) Inapplicability to countervailing and antidumping duties

(e) Action on claim

(1) In general

(2) Claims describedA claim described in this paragraph is a claim for—

(A) a refund, waiver, or reduction of duty, under any applicable provision of law; or

(B) a credit against a bond under section 1312(d)(1) of this title.

(Pub. L. 116–113, title II, § 208, title V, § 501(a)–(d), Jan. 29, 2020, 134 Stat. 52, 67, 68; Pub. L. 116–260, div. O, title VI, § 601(c)(1), Dec. 27, 2020, 134 Stat. 2150.)

§ 4535. Regulations

(a) Secretary of the Treasury

(b) Secretary of Labor

(Pub. L. 116–113, title II, § 210, Jan. 29, 2020, 134 Stat. 53.)