HQ 0000112 - Blanket certificate; Exporter's Certificate of Origin; changed circumstances; United States-Canada Free-Trade Agreement; CFTA - United States International Trade Commision Rulings

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HQ 000112

November 14, 1991

CLA-2 CO:R:C:M 000112 JLV

CATEGORY: CLASSIFICATION

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.

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.

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.

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

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