§4033 Rules of origin

Summary

Explains how to tell when a product counts as "originating" so it can get the CAFTA–DR tariff benefits. The Harmonized Tariff Schedule (HTS) is the rulebook for classification, and any chapter or heading mentioned means the HTS. Costs and values must be kept using the generally accepted accounting rules of the country where the good is made. A good is "originating" if it is wholly obtained in a CAFTA–DR country, made only from originating materials, or made in a CAFTA–DR country using nonoriginating parts that either change tariff classification as listed in Annex 4.1 of the Agreement or meet the regional value‑content (RVC) or other tests in Annex 4.1. RVC can be worked out three ways: the build‑down method (RVC = (adjusted value – value of nonoriginating materials) ÷ adjusted value × 100), the build‑up method (RVC = value of originating materials ÷ adjusted value × 100), or for certain automotive goods the net‑cost method (RVC = (net cost – value of nonoriginating materials) ÷ net cost × 100). Automotive goods covered include those in subheadings 8407.31–8407.34, 8408.20, heading 8409, and headings 8701–8708, and some averaging rules for producers and plants are allowed. Also important: a product that does not change tariff classification can still qualify if the nonoriginating materials’ value is counted for any RVC test and other rules are met, but many specific agricultural and food items and certain chapters have special exceptions. Fungible goods can be treated as originating by physical segregation or by an inventory method such as averaging, LIFO, FIFO, or another method accepted under the country’s GAAP, and the chosen method must be used for the whole fiscal year. Standard accessories, spare parts, and retail packaging that are not invoiced separately are treated as part of the good for origin tests (and their value counts in RVC if applicable), while packing for shipment is ignored. Indirect materials (like fuel, tools, and testing equipment) count as originating no matter where made. A good loses originating status if it is further worked on outside CAFTA–DR (except simple preservation or transport) or leaves customs control outside CAFTA–DR. Key defined terms (one line each): adjusted value — the value set using the GATT‑1994 valuation rules, adjusted to exclude international transport costs; CAFTA–DR country — the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua while the Agreement is in force with that country; net cost — total cost minus sales promotion, marketing and after‑sales service costs, royalties, shipping and packing costs, and nonallowable interest costs; nonallowable interest costs — interest above 700 basis points over the official comparable interest rate.