19 U.S.C. § 202
RULES OF ORIGIN.
“(a)Originating Goods.—“(1)In general.—For purposes of this Act and for purposes of implementing the tariff treatment provided for under the Agreement, except as otherwise provided in this section, a good is an originating good if—“(A) the good is wholly obtained or produced entirely in the territory of Chile, the United States, or both;“(B) the good—“(i) is produced entirely in the territory of Chile, the United States, or both, and “(I) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in Annex 4.1 of the Agreement, or “(II) the good otherwise satisfies any applicable regional value-content or other requirements specified in Annex 4.1 of the Agreement; and“(ii) satisfies all other applicable requirements of this section; or“(C) the good is produced entirely in the territory of Chile, the United States, or both, exclusively from materials described in subparagraph (A) or (B).“(2)Simple combination or mere dilution.—A good shall not be considered to be an originating good and a material shall not be considered to be an originating material by virtue of having undergone—“(A) simple combining or packaging operations; or“(B) mere dilution with water or another substance that does not materially alter the characteristics of the good or material.“(b)De Minimis Amounts of Nonoriginating Materials.—“(1)In general.—Except as provided in paragraphs (2) and (3), a good that does not undergo a change in tariff classification pursuant to Annex 4.1 of the Agreement 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 does not exceed 10 percent of the adjusted value of the good;“(B) the value of such nonoriginating materials is included in the value of nonoriginating materials for any applicable regional value-content requirement; and“(C) the good meets all other applicable requirements of this section.“(2)Exceptions.—Paragraph (1) does not apply to the following:“(A) A nonoriginating material provided for in chapter 4 of the HTS, or a nonoriginating dairy preparation containing over 10 percent by weight of milk solids provided for in subheading 1901.90 or 2106.90 of the HTS, that is used in the production of a good provided for in chapter 4 of the HTS.“(B) A nonoriginating material provided for in chapter 4 of the HTS, or nonoriginating dairy preparations containing over 10 percent by weight of milk solids provided for in subheading 1901.90 of the HTS, that are used in the production of the following goods:“(i) Infant preparations containing over 10 percent in weight of milk solids provided for in subheading 1901.10 of the HTS.“(ii) Mixes and doughs, containing over 25 percent by weight of butterfat, not put up for retail sale, provided for in subheading 1901.20 of the HTS.“(iii) Dairy preparations containing over 10 percent by weight of milk solids provided for in subheading 1901.90 or 2106.90 of the HTS.“(iv) Goods provided for in heading 2105 of the HTS.“(v) Beverages containing milk provided for in subheading 2202.90 of the HTS.“(vi) Animal feeds containing over 10 percent by weight of milk solids provided for in subheading 2309.90 of the HTS.“(C) A nonoriginating material provided for in heading 0805 of the HTS, or any of subheadings 2009.11.00 through 2009.39 of the HTS, that is used in the production of a good provided for in any of subheadings 2009.11.00 through 2009.39 of the HTS, or in fruit or vegetable juice of any single fruit or vegetable, fortified with minerals or vitamins, concentrated or unconcentrated, provided for in subheading 2106.90 or 2202.90 of the HTS.“(D) A nonoriginating material provided for in chapter 15 of the HTS that is used in the production of a good provided for in any of headings 1501.00.00 through 1508, 1512, 1514, and 1515 of the HTS.“(E) A nonoriginating material provided for in heading 1701 of the HTS that is used in the production of a good provided for in any of headings 1701 through 1703 of the HTS.“(F) A nonoriginating material provided for in chapter 17 of the HTS or in heading 1805.00.00 of the HTS that is used in the production of a good provided for in subheading 1806.10 of the HTS.“(G) A nonoriginating material provided for in any of headings 2203 through 2208 of the HTS that is used in the production of a good provided for in heading 2207 or 2208 of the HTS.“(H) A nonoriginating material used in the production of a good provided for in any of chapters 1 through 21 of the HTS, unless the nonoriginating material is provided for in a different subheading than the good for which origin is being determined under this section.“(3)Goods provided for in chapters 50 through 63 of the hts.—“(A)In general.—Except as provided in subparagraph (B), a good provided for in any of chapters 50 through 63 of the HTS that is not an originating good because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification set out in Annex 4.1 of the Agreement, shall be considered to be an originating good if the total weight of all such fibers or yarns in that component is not more than 7 percent of the total weight of that component.“(B)Certain textile or apparel goods.—A textile or apparel good containing elastomeric yarns in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed in the territory of Chile or the United States.“(c)Accumulation.—“(1)Originating goods incorporated in goods of other country.—Originating goods or materials of Chile or the United States that are incorporated into a good in the territory of the other country shall be considered to originate in the territory of the other country.“(2)Multiple procedures.—A good that is produced in the territory of Chile, the United States, or both, by 1 or more producers, is an originating good if the good satisfies the requirements of subsection (a) and all other applicable requirements of this section.“(d)Regional Value-Content.—“(1)In general.—For purposes of subsection (a)(1)(B), the regional value-content of a good referred to in Annex 4.1 of the Agreement shall be calculated, at the choice of the person claiming preferential tariff treatment for the good, on the basis of the build-down method described in paragraph (2) or the build-up method described in paragraph (3), unless otherwise provided in Annex 4.1 of the Agreement.“(2)Build-down method.—“(A)In general.—The regional value-content of a good may be calculated on the basis of the following build-down method:
“(B)Definitions.—For purposes of subparagraph (A):“(i) The term ‘RVC’ means the regional value-content, expressed as a percentage.“(ii) The term ‘AV’ means the adjusted value.“(iii) The term ‘VNM’ means the value of nonoriginating materials used by the producer in the production of the good.“(3)Build-up method.—“(A)In general.—The regional value-content of a good may be calculated on the basis of the following build-up method:
“(B)Definitions.—For purposes of subparagraph (A):“(i) The term ‘RVC’ means the regional value-content, expressed as a percentage.“(ii) The term ‘AV’ means the adjusted value.“(iii) The term ‘VOM’ means the value of originating materials used by the producer in the production of the good.“(e)Value of Materials.—“(1)In general.—For purposes of calculating the regional value-content of a good under subsection (d), and for purposes of applying the de minimis rules under subsection (b), the value of a material is—“(A) in the case of a material that is imported by the producer of the good, the adjusted value of the material with respect to that importation;“(B) in the case of a material acquired in the territory in which the good is produced, except for a material to which subparagraph (C) applies, the producer’s price actually paid or payable for the material;“(C) in the case of a material provided to the producer without charge, or at a price reflecting a discount or similar reduction, the sum of—“(i) all expenses incurred in the growth, production, or manufacture of the material, including general expenses; and“(ii) an amount for profit; or“(D) in the case of a material that is self-produced, the sum of—“(i) all expenses incurred in the production of the material, including general expenses; and“(ii) an amount for profit.“(2)Further adjustments to the value of materials.—“(A)Originating materials.—The following expenses, if not included in the value of an originating material calculated under paragraph (1), may be added to the value of the originating material:“(i) The costs of freight, insurance, packing, and all other costs incurred in transporting the material to the location of the producer.“(ii) Duties, taxes, and customs brokerage fees on the material paid in the territory of Chile, the United States, or both, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duty or tax paid or payable.“(iii) 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 byproduct.“(B)Nonoriginating materials.—The following expenses, if included in the value of a nonoriginating material calculated under paragraph (1), may be deducted from the value of the nonoriginating material:“(i) The costs of freight, insurance, packing, and all other costs incurred in transporting the material to the location of the producer.“(ii) Duties, taxes, and customs brokerage fees on the material paid in the territory of Chile, the United States, or both, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duty or tax paid or payable.“(iii) 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.“(iv) The cost of originating materials used in the production of the nonoriginating material in the territory of Chile or the United States.“(f)Accessories, Spare Parts, or Tools.—Accessories, spare parts, or tools delivered with a good that form part of the good’s standard accessories, spare parts, or tools shall be regarded as a material used in the production of the good, if—“(1) the accessories, spare parts, or tools are classified with and not invoiced separately from the good; and“(2) the quantities and value of the accessories, spare parts, or tools are customary for the good.“(g)Fungible Goods and Materials.—“(1)In general.—“(A)Claim for preferential treatment.—A person claiming preferential tariff treatment for a good may claim that a fungible good or material is originating either based on the physical segregation of each fungible good or material or by using an inventory management method.“(B)Inventory management method.—In this subsection, the term ‘inventory management method’ means—“(i) averaging;“(ii) ‘last-in, first-out’;“(iii) ‘first-in, first-out’; or“(iv) any other method— “(I) recognized in the generally accepted accounting principles of the country in which the production is performed (whether Chile or the United States); or “(II) otherwise accepted by that country.“(2)Election of inventory method.—A person selecting an inventory management method under paragraph (1) for particular fungible goods or materials shall continue to use that method for those goods or materials throughout the fiscal year of that person.“(h)Packaging Materials and Containers for Retail Sale.—Packaging materials and containers in which a good is packaged for retail sale, if classified with the good, shall be disregarded in determining whether all nonoriginating materials used in the production of the good undergo the applicable change in tariff classification set out in Annex 4.1 of the Agreement, and, if the good is subject to a regional value-content requirement, the value of such packaging materials and containers shall be taken into account as originating or nonoriginating materials, as the case may be, in calculating the regional value-content of the good.“(i)Packing Materials and Containers for Shipment.—Packing materials and containers for shipment shall be disregarded in determining whether—“(1) the nonoriginating materials used in the production of the good undergo an applicable change in tariff classification set out in Annex 4.1 of the Agreement; and“(2) the good satisfies a regional value-content requirement.“(j)Indirect Materials.—An indirect material shall be considered to be an originating material without regard to where it is produced.“(k)Transit and Transshipment.—A good that has undergone production necessary to qualify as an originating good under subsection (a) shall not be considered to be an originating good if, subsequent to that production, the good undergoes further production or any other operation outside the territory of Chile or the United States, other than unloading, reloading, or any other process necessary to preserve the good in good condition or to transport the good to the territory of Chile or the United States.“(l)Textile and Apparel Goods Classifiable as Goods Put Up in Sets.—Notwithstanding the rules set forth in Annex 4.1 of the Agreement, textile and apparel goods classifiable as goods put up in sets for retail sale as provided for in General Rule of Interpretation 3 of the Harmonized System shall not be considered to be originating goods unless each of the goods in the set is an originating good or the total value of the nonoriginating goods in the set does not exceed 10 percent of the value of the set determined for purposes of assessing customs duties.“(m)Application and Interpretation.—In this section:“(1) The basis for any tariff classification is the HTS.“(2) Any cost or value referred to in this section shall be recorded and maintained in accordance with the generally accepted accounting principles applicable in the territory of the country in which the good is produced (whether Chile or the United States).“(n)Definitions.—In this section:“(1)Adjusted value.—The term ‘adjusted value’ means the value determined in accordance with articles 1 through 8, article 15, and the corresponding interpretive notes of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 referred to in section 101(d)(8) of the Uruguay Round Agreements Act [19 U.S.C. 3511(d)(8)], except that such value may be adjusted to exclude any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation.“(2)Fungible goods or fungible materials.—The terms ‘fungible goods’ and ‘fungible materials’ mean goods or materials, as the case may be, that are interchangeable for commercial purposes and the properties of which are essentially identical.“(3)Generally accepted accounting principles.—The term ‘generally accepted accounting principles’ means the principles, rules, and procedures, including both broad and specific guidelines, that define the accounting practices accepted in the territory of Chile or the United States, as the case may be.“(4)Goods wholly obtained or produced entirely in the territory of chile, the united states, or both.—The term ‘goods wholly obtained or produced entirely in the territory of Chile, the United States, or both’ means—“(A) mineral goods extracted in the territory of Chile, the United States, or both;“(B) vegetable goods, as such goods are defined in the Harmonized System, harvested in the territory of Chile, the United States, or both;“(C) live animals born and raised in the territory of Chile, the United States, or both;“(D) goods obtained from hunting, trapping, or fishing in the territory of Chile, the United States, or both;“(E) goods (fish, shellfish, and other marine life) taken from the sea by vessels registered or recorded with Chile or the United States and flying the flag of that country;“(F) goods produced on board factory ships from the goods referred to in subparagraph (E), if such factory ships are registered or recorded with Chile or the United States and fly the flag of that country;“(G) goods taken by Chile or the United States or a person of Chile or the United States from the seabed or beneath the seabed outside territorial waters, if Chile or the United States has rights to exploit such seabed;“(H) goods taken from outer space, if the goods are obtained by Chile or the United States or a person of Chile or the United States and not processed in the territory of a country other than Chile or the United States;“(I) waste and scrap derived from—“(i) production in the territory of Chile, the United States, or both; or“(ii) used goods collected in the territory of Chile, the United States, or both, if such goods are fit only for the recovery of raw materials;“(J) recovered goods derived in the territory of Chile or the United States from used goods, and used in the territory of that country in the production of remanufactured goods; and“(K) goods produced in the territory of Chile, the United States, or both, exclusively—“(i) from goods referred to in any of subparagraphs (A) through (I), or“(ii) from the derivatives of goods referred to in clause (i), at any stage of production.“(5)Harmonized system.—The term ‘Harmonized System’ means the Harmonized Commodity Description and Coding System.“(6)Indirect material.—The term ‘indirect material’ means a good used in the production, testing, or inspection of a good but not physically incorporated into the good, or a good used 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;“(C) spare parts and materials used in the maintenance of equipment or buildings;“(D) lubricants, greases, compounding materials, and other materials used in production or used 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 goods that are not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be a part of that production.“(7)Material.—The term ‘material’ means a good that is used in the production of another good, including a part, ingredient, or indirect material.“(8)Material that is self-produced.—The term ‘material that is self-produced’ means a material that is an originating good produced by a producer of a good and used in the production of that good.“(9)Nonoriginating good or nonoriginating material.—The terms ‘nonoriginating good’ and ‘nonoriginating material’ mean a good or material, as the case may be, that does not qualify as an originating good under this section.“(10)Packing materials and containers for shipment.—The term ‘packing materials and containers for shipment’ means the goods used to protect a good during its transportation, and does not include the packaging materials and containers in which a good is packaged for retail sale.“(11)Preferential tariff treatment.—The term ‘preferential tariff treatment’ means the customs duty rate that is applicable to an originating good pursuant to chapter 3 of the Agreement.“(12)Producer.—The term ‘producer’ means a person who engages in the production of a good in the territory of Chile or the United States.“(13)Production.—The term ‘production’ means growing, mining, harvesting, fishing, raising, trapping, hunting, manufacturing, processing, assembling, or disassembling a good.“(14)Recovered goods.—“(A)In general.—The term ‘recovered goods’ means materials in the form of individual parts that are the result of—“(i) the complete disassembly of used goods into individual parts; and“(ii) the cleaning, inspecting, testing, or other processing of those parts as necessary for improvement to sound working condition by one or more of the processes described in subparagraph (B), in order for such parts to be assembled with other parts, including other parts that have undergone the processes described in this paragraph, in the production of a remanufactured good.“(B)Processes.—The processes referred to in subparagraph (A)(ii) are welding, flame spraying, surface machining, knurling, plating, sleeving, and rewinding.“(15)Remanufactured good.—The term ‘remanufactured good’ means an industrial good assembled in the territory of Chile or the United States, that is listed in Annex 4.18 of the Agreement, and—“(A) is entirely or partially comprised of recovered goods;“(B) has the same life expectancy and meets the same performance standards as a new good; and“(C) enjoys the same factory warranty as such a new good.“(o)Presidential Proclamation Authority.—“(1)In general.—The President is authorized to proclaim, as part of the HTS—“(A) the provisions set out in Annex 4.1 of the Agreement; and“(B) any additional subordinate category necessary to carry out this title consistent with the Agreement.“(2)Modifications.—“(A)In general.—Subject to the consultation and layover provisions of section 103(a), the President may proclaim modifications to the provisions proclaimed under the authority of paragraph (1)(A), other than provisions of chapters 50 through 63 of the HTS, as included in Annex 4.1 of the Agreement.“(B)Additional proclamations.—Notwithstanding subparagraph (A), and subject to the consultation and layover provisions of section 103(a), the President may proclaim—“(i) modifications to the provisions proclaimed under the authority of paragraph (1)(A) that are necessary to implement an agreement with Chile pursuant to article 3.20(5) of the Agreement; and“(ii) before the 1st anniversary of the date of the enactment of this Act, modifications to correct any typographical, clerical, or other nonsubstantive technical error regarding the provisions of chapters 50 through 63 of the HTS, as included in Annex 4.1 of the Agreement.