§4033 Rules of Origin

Summary

Defines when a product made in the United States or in Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua counts as an "originating" good so it can get the lower tariff rate the trade deal provides. Tariff headings come from the Harmonized Tariff Schedule (HTS). Costs and values must be kept using the usual accounting rules of the country where the good is made. A product is originating if it is wholly obtained there, or if it is made there and either the non‑originating parts get the required change in tariff classification or the product meets the required regional value‑content (RVC) or other tests in the Agreement, or if it is made entirely from originating materials. RVC can be calculated either by a build‑down method (adjusted value minus value of non‑originating materials, divided by adjusted value), a build‑up method (value of originating materials divided by adjusted value), or for many automotive goods by a net‑cost method (net cost minus non‑originating materials, divided by net cost). Automotive producers may average RVCs across similar models, plants, buyers, or time periods as allowed. Material value rules: an imported material uses its adjusted value, a local purchase uses customs valuation rules applied to non‑imports, and a self‑produced material uses its production expenses plus a normal profit. Certain transport, duties, and waste costs may be added to originating materials or deducted from non‑originating materials when calculating value. Originating materials shipped between CAFTA‑DR countries keep their originating status. If a product fails the tariff‑change test, it can still qualify if the value of the non‑originating materials that did not change classification stays within the allowed de minimis limit, except for many specific foods, textile, and other items listed in the Agreement and statute. For textile goods, up to 10 percent by weight of certain fibers or yarns in the tariff‑determining component may be allowed, but elastomeric yarns must be wholly formed in a CAFTA‑DR country. Fungible goods can be treated as originating by physical segregation or by an inventory method (averaging, FIFO, LIFO, or another accepted accounting method), and that method must be used for the whole fiscal year. Standard accessories, spare parts, or tools sent with a good count as originating if they are not invoiced separately and are customary in quantity and value; retail packaging is ignored for tariff‑change tests but counted in RVC, and shipping packing is ignored. Indirect materials (like fuel, tools, or testing supplies) are always treated as originating. If a good that qualified as originating is later further worked on outside the CAFTA‑DR countries (other than simple handling, preservation, or transport) or leaves customs control, it stops being originating. Goods sold in retail sets only count as originating if every item originates or the total value of non‑originating items does not exceed 10 percent for textile sets or 15 percent for other sets. Key terms (short descriptions): adjusted value — the customs valuation amount used for RVC; CAFTA‑DR country — the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua; net cost — total cost minus sales promotion, marketing and after‑sales service costs, royalties, shipping/packing, and nonallowable interest; nonallowable interest — interest costs more than 700 basis points above the country’s official rate; fungible good — interchangeable goods with identical properties; generally accepted accounting principles — the recognized accounting rules in the producing country; goods wholly obtained — basic examples like plants, animals, minerals, fish, recovered or remanufactured goods obtained or produced entirely in the listed countries; producer — a person who makes the good; production — growing, mining, manufacturing, assembling, etc.; material — a part or ingredient used to make another good; material that is self‑produced — a material a producer makes and then uses in the same product; total cost — all product, period, and other costs for a good.