Uniform Rules of Origin for Imported Merchandise

(Please see attachment to this submission). The Honorable Michael Chertoff Secretary of Homeland Security U.S. Department of Homeland Security 3801 Nebraska Avenue N.W. Washington D.C. 20528 W. Ralph Basham Commissioner Office of International Trade U.S Customs and Border Protection 1300 Pennsylvania Avenue, NW (Mint Annex) Washington, DC 20229. Re: Response to Proposal for Uniform Rules of Origin for Imported Merchandise, Docket Number USCBP-2007-0100 (73 FR 43385) Dear Secretary Chertoff and Commissioner Basham: The Information Technology Industry Council ("ITI") appreciates the opportunity to respond to the U.S. Customs and Border Protection's (CBP) proposal published July 25, 2008 on establishing uniform rules of origin for imported merchandise based on the North American Free Trade Agreement (NAFTA) 19 CFR "Part 102" rules, commonly known as the "tariff shift" approach. In general, we appreciate CBP's goals of promoting more "objective, transparent and predictable" rules, but question whether the proposed new approach is appropriate especially in light of the weak state of the global economy, and request that the proposal be withdrawn. The Information Technology Industry Council (ITI), a US industry association, represents the leading global providers of information technology (IT) products and services. ITI is the voice of the high tech community, advocating policies that advance industry leadership in technology and innovation; open access to new and emerging markets; promote ecommerce expansion; protect consumer choice; and enhance the global competitiveness of its member companies. As global manufacturers and leading suppliers of high-technology goods and services, we believe the Information Communication Technology (ICT) sector would be adversely affected by the proposed sweeping changes to existing rules of origin. In particular, we believe that (i) CBP's approach to determining uniform rules for country of origin could result in less predictable and inconsistent origin determination; (ii) potential conflicts could arise with existing country of origin rulings and legal precedent, and other rules such as for government procurement; (iii) the proposed approach would raise the burden on manufacturers to determine classification for complex hi-tech products; and (iv) extending application of the Part 102 rules of origin to all country of origin determinations appears to be premature given the ongoing work to harmonize non-preferential rules of origin by the World Trade Organization (WTO). We have articulated our primary concerns below: Subjective nature of classification: The proposal would entrust CBP with considerable authority to determine country of origin based on the "tariff shift" approach, as opposed to current practices where country of origin determination for non-NAFTA parties is made on a case-by-case basis. We are concerned that the rather subjective nature of determining classification (and given CBP practices of revoking and revising such rulings) would undermine efforts to establish more objective and transparent rules. Potential conflict with existing rulings and rules: Classification based origin determinations may conflict with existing administrative rulings and judicial precedent and impact eligibility for government procurement. Currently products substantially transformed in designated end-countries are eligible for sale to the US government. If the NAFTA marking rules are adopted, the country of origin of many products currently considered qualifying will be altered. Many US companies with global supply chains will be unable to compete in government contracts without incurring significant costs to restructure supply chains. Excessive burdens to determine classification: ICT companies would be burdened by considerable costs in order to determine the classification for raw materials or components for their products, many of which are currently not classified. Given the complex amount o…