Uniform Rules of Origin for Imported Merchandise

October 23, 2008 Trade and Commercial Regulations Branch Regulations and Rulings Office of International Trade U.S. Customs and Border Prtoection 1300 Pennsylvania Avenue NW Washington, DC 20229 Federal Portal: http://www.regulations.gov RE: RIN: 1505-AB49, Notice of Proposed Rulemaking, Uniform Rules of Origin for Imported Merchandise, 73 Federal Register 43385, July 25, 2008 Dear Sir or Madam: The Grocery Manufacturers Association (GMA) appreciates the opportunity to respond to the above referenced notification related to the proposed application of the country of origin rules codified in 19 CFR part 102. GMA member companies manufacture a broad range of processed foods and beverages for which they import ingredients sourced globally. The finished products are produced both for the domestic market and export. Food manufacturers must comply with complex labeling requirements set forth by the U.S. Food and Drug Administration and the U.S. Department of Agriculture as well as (for export products) regulations of other national governments. In addition, they have historically been challenged by inconsistent and confusing origin marking regulations and, consequently, agree in concept with CBP's attempt to develop uniform marking rules. GMA, however, has some significant concerns with the proposal. First, GMA has always been a strong advocate for the concept of "substantial transformation: to confer origin. The "substantial transformation" test appropriately confers origin to the manufacturer who is ultimately held accountable for the safety and quality of the product when it reaches the consumer. Saying this, GMA and the National Food Processors Association (NFPA), now part of GMA, have submitted comments to U.S. Customs Service on several occasions requesting clarifications in origin determinations and/or noting inconsistencies in the rules applied to NAFTA countries and the remainder of the world. Inconsistencies also exist in the "Made in U.S.A." marking rules of the Federal Trade Commission (FTC) and understand a need to move towards a more uniform approach. Implementation Should be Delayed Even recognizing the critical need for a uniform approach to rules of origin, this proposal will make a substantial change in business operational decisions. U.S. importers who are currently not participating in a trade preference program do not always track the initial inputs into products that are purchased "substantially transformed." U.S. importers will be burdened with new responsibilities for tracking and documenting the origin of ingredients that may be blended into a finished product in a foreign location and then exported into the U.S. This is impractical, expensive and time consuming. GMA believes that a thorough economic impact assessment should be undertaken to determine the actual affect on U.S. importers prior to implementation of the proposal. Furthermore, work towards harmonization within the World Customs Organization (WCO) within the WTO has been underway for over a decade. Increasing globalization of trade in food products and ingredients demands harmonization of rules of origin. However, changes in the U.S. rules are not appropriate until after completion of the WTO work. Premature implementation of new rules could ultimately increase inconsistencies and be counterproductive to the intent of the proposal. NAFTA Rules are Outdated and Should be Re-examined. Part 102 was intended to implement specific rules related to the NAFTA agreement. NAFTA was negotiated over 15 years ago and since that time, several other trade agreements have been negotiated also with unique rules which may or may not reflect more recent CBP decisions and rulings. While GMA does not support negotiating separate rules through each trade agreement, GMA believes that it would be appropriate for CBP to analyze rulings and subsequent agreements in order to determine whether a broad implementation of…