CLA-2 CO:R:C:M 000112 JLV
Regional Director
Regulatory Audit Division
Northeast Region
10 Causeway Street
Boston, Massachusetts 02222-1059
RE: Blanket certificate; Exporter's Certificate of Origin;
changed circumstances; United States-Canada Free-Trade
Agreement; CFTA
Dear Sir:
In a memorandum of October 24, 1991, you requested advice
under section 177.11 of the Customs Regulations (19 CFR 177.11)
on the record-keeping requirements for, and use of a blanket
Exporter's Certificate of Origin for products claimed as
originating goods under the United States-Canada Free-Trade
Agreement (CFTA). This ruling is our decision.
FACTS:
There is no specific merchandise identified in the request.
Rather, the question relates to a situation in which a blanket
Exporter's Certificate of Origin has been issued to support a
claim that goods qualify as originating goods under the CFTA. In
the situation described in your request for advice, the
merchandise consists of various components manufactured in the
United States and exported to Canada. The required Exporter's
Certificate of Origin was a blanket certificate, issued for a
period of one year, and covered multiple shipments of the
components. These components were subsequently used in the
production of motor vehicles in Canada. The motor vehicle
manufacturer has claimed the value of these components as
territorial costs for the purpose of satisfying the 50 percent
value-content test for the motor vehicles when exported to the
United States as Canadian articles under the Automotive Products
Trade Act of 1965, as amended.
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The exporter who issued the blanket Exporter's Certificate
of Origin has not, or cannot document that the goods in each
shipment satisfy the claim that they meet the change in
classification rule and, when applicable, the value-content test
required by the CFTA rules of origin. It is your position that
a blanket Exporter's Certificate of Origin does not allow an the
exporter to base its certification on an averaging of costs (if a
value-content test is applicable to the goods). In your opinion,
therefore, goods cannot qualify as "originating goods" if an
exporter fails to maintain records verifying that the goods of
each shipment, certified on a blanket Exporter's Certificate of
Origin, actually satisfy the CFTA origin criteria. We note that
this question does not involve the right of a motor vehicle
manufacturer to elect to average its calculation of the value
content requirement for vehicles of the same class or sister
vehicles which are assembled in the same plant pursuant to
section 10.310, Customs Regulations, (19 CFR 10.310).
ISSUE:
For purposes of the CFTA, must all the goods in each
shipment, if documented by a blanket Exporter's Certificate of
Origin, actually satisfy the CFTA rule of origin, and, if so,
must the certifier keep sufficient records to document that the
goods on each shipment actually qualify as originating goods?
LAW AND ANALYSIS:
Goods may qualify for the tariff preferences under the CFTA
if they are "originating goods" as defined in the CFTA.
Originating goods may be either goods "wholly obtained or
produced" in Canada or the United States, or, if produced in part
or entirely from third-country materials, goods which satisfy
certain tariff changes or value-content requirements. It is the
second situation which concerns the question in this ruling.
Article 301, paragraph 2, Chapter 3 of the CFTA, states that
goods may qualify as originating goods if they have been
transformed so as to be subject to a change in tariff
classification as described in Annex 301.2 or to such other
requirements as the Annex may provide when there is no change in
tariff classification, and they meet the other conditions set out
in that Annex. With the exception of the right of motor vehicle
manufacturers to average the calculation of the value content
requirement for vehicles of the same class or sister class which
are assembled in the same plant, the rules in the Annex do not
authorize an averaging principle or similar principle based on
accounting methods by which goods, manufactured over a period of
time, may satisfy the requirements of the rules. Therefore, we
conclude that any goods presented as "originating goods" must
themselves actually satisfy the requirements of the rules of
origin.
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Customs Form 353, the Exporter's Certificate of Origin, is
required by section 10.307 of the Customs Regulations (19 CFR
10.307), and is a signed statement that the specific goods in
question satisfy the rule of origin in Chapter 3 of the CFTA.
This regulation was promulgated by the U.S. Customs Service to
implement the certification requirements of Annex 406 of Chapter
4 of the CFTA. An Exporter's Certificate of Origin is required
for each shipment of goods and covers specific goods that have
been exported from the territory of one Party (from either Canada
or the United States) and which are claimed as "originating
goods" when imported into the territory of the other.
Item 2 on the certificate provides for a blanket
certification. The instructions for Item 2 state the following:
2. Complete with the effective and expiration
dates (Maximum 12 months), if this
certificate is to cover multiple FTA
qualified shipments to the same importer.
NOTE: It is the exporter's responsibility to
notify everyone to whom a blanket certificate
is issued if changes occur in materials,
costs, or production sites that would
materially affect the accuracy or validity of
the certification during the period. Failure
to do so could make the exporter subject to
penalties.
In view of the fact that an Exporter's Certificate of Origin is
a statement covering the status of goods on a specific shipment,
the instruction concerning the use of a blanket certification is
clear. A blanket certification is valid only to the extent that
it accurately identifies the shipment of goods in issue and
states that the actual goods shipped under that blanket
certification qualify under the CFTA rules of origin. The
certification must be supported by adequate records of the
production process. Documentation in support of the claims made
on the blanket certification must be retained in accordance with
section 10.308 of the Customs Regulations (19 CFR 10.308) and
made available as requested in accordance with section 10.309 of
the Customs Regulations (19 CFR 10.309).
If material changes occur at any time during the production
process so as to affect the validity of the blanket
certification, the exporter must notify everyone to whom it has
been issued.
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HOLDING:
A blanket Exporter's Certificate of Origin, issued for goods
claimed as originating goods under the CFTA, can only be issued
if a certifying exporter can verify that the goods on each
shipment to be made under the blanket certification actually
qualify under the rules of the CFTA. The exporter must retain
supporting records that will permit a review of the eligibility
of the goods in each shipment, both as to the change in
classification requirement and the value-content test. A
blanket certification does not permit an exporter to average its
costs over the certification period.
It is the responsibility of the certifier to document
changes in sources or cost of materials that affect the status
of the goods, and, to the extent that the goods no longer
qualify, to cancel the blanket certification and to notify
importers that the certification is no longer valid.
Sincerely,
Harvey B. Fox
Director
Office of Regulations and Rulings