Valuation, origin, USMCA and marking

This glossary covers Valuation, origin, USMCA and marking terms used by importers, customs brokers and trade-compliance teams.

price actually paid or payable

The price actually paid or payable: the total payment, direct or indirect, made or to be made by the buyer to or for the benefit of the seller for the imported goods, the starting point of transaction value under 19 U.S.C. 1401a(b); not the invoice total by default.

assists

Assists: goods or services the buyer supplies to the seller free or at reduced cost for use in producing or selling the imported goods (materials, components, tools, dies, molds, engineering or design work done outside the United States) whose value must be added to the price; not buyer-paid freight and not a royalty.

dutiable royalties

Dutiable royalties: royalties and license fees related to the imported goods that the buyer must pay, directly or indirectly, as a condition of the sale for export, which are added to the price actually paid or payable under 19 U.S.C. 1401a(b)(1)(D); not every royalty an importer pays.

buying commission

Buying commission: a fee the importer pays its own agent for services in buying the imported goods (finding suppliers, placing orders, inspecting), which is not part of transaction value when the agent is a bona fide buying agent acting for the buyer; not a selling commission.

selling commission

Selling commission: a commission the buyer pays to an agent acting for the seller in the sale of the imported goods, which must be added to the price actually paid or payable when not already included; not a buying commission.

first sale

First sale (first sale for export): the rule allowing transaction value to be based on the price in an earlier sale in a multi-tiered transaction (manufacturer to middleman) rather than the middleman's price to the importer, when that earlier sale is a bona fide arm's-length sale of goods clearly destined for the United States; not a discount program.

Nissho Iwai

Nissho Iwai: Nissho Iwai American Corp. v. United States, the 1992 Federal Circuit decision that set the first-sale-for-export test (a bona fide sale, at arm's length, of goods clearly destined for the United States), the case brokers and counsel cite when entering a manufacturer's price; not a CBP ruling.

related party

Related party (related persons): a buyer and seller related under 19 U.S.C. 1401a(g) (family, officers or directors, partners, employer and employee, five percent or more of voting stock, direct or indirect control), which requires the importer to show the relationship did not influence the price before transaction value is accepted; not merely the ACE related-party indicator.

circumstances of sale

Circumstances of sale: the first of the two ways a related-party price is accepted as transaction value, by showing the relationship did not influence the price because it was settled consistent with the industry's normal pricing practice, or as the seller settles prices with unrelated buyers, or at a level adequate to recover all costs plus a profit representative of the firm's sales of the same class of goods; not a percentage test.

test values

Test values: the second acceptance path for related-party transaction value, comparing the declared price with previously accepted values of identical or similar merchandise sold to unrelated buyers, or deductive or computed values of such merchandise, exported at or about the same time; not hypothetical benchmarks.

computed value

Computed value: the valuation method that builds the value from the producer's cost of materials and fabrication, profit and general expenses, assists and packing, used when transaction, identical or similar merchandise, and deductive values cannot be applied (or when the importer elects it before deductive value); not a cost-plus invoice.

deductive value

Deductive value: the valuation method that starts from the unit price at which the imported goods (or identical or similar goods) are sold in the United States in the greatest aggregate quantity to unrelated buyers, less commissions or profit and general expenses, transportation and insurance, duties and taxes, and further-processing value where applicable; not simply the resale price.

transfer pricing adjustments

Transfer pricing adjustments: post-importation changes to related-party prices (year-end true-ups, retroactive intercompany price changes) made under a transfer-pricing policy, which change the customs value of entries already filed and must be reported to CBP; not a tax-only event.

NDC

Non-dutiable charges (NDC): the charges included in an invoice price that are not part of transaction value and are deducted before entering the value, chiefly international freight, insurance and related charges incident to the international shipment and post-importation charges; in the customs workflow NDC is never the FDA National Drug Code.

19 CFR 152.103

19 CFR 152.103, Transaction value: the CBP regulation defining the price actually paid or payable, the statutory additions, assists, royalties, exclusions, and the related-party tests (circumstances of sale, test values) and the rejection notice; not the statute itself (19 U.S.C. 1401a).

currency conversion date

Currency conversion date: the date whose exchange rate converts a foreign-currency invoice into U.S. dollars for customs value, which is the date of exportation of the goods, using the rate CBP publishes or certifies for that date (the quarterly certified rate, or a daily rate when the currency moves five percent or more); not the invoice date and not the payment date.

substantial transformation

Substantial transformation: the origin test under which an article becomes a product of the country where it was last transformed into a new and different article with a new name, character or use, applied by CBP for country-of-origin marking (outside USMCA goods), for Section 301 and 232 duty origin, for government procurement and in AD/CVD and EAPA cases; not a tariff-shift rule and not the assembly location by default.

tariff shift

Tariff shift: an origin rule requiring that each non-originating material undergo a specified change in tariff classification (chapter, heading or subheading) as a result of production in the territory, used in the USMCA product-specific rules and in the 19 CFR part 102 marking rules; not substantial transformation and not a value test.

RVC net cost

Regional value content, net cost method: the USMCA (and earlier NAFTA) value test computing regional value content as net cost minus the value of non-originating materials, divided by net cost, expressed as a percentage, mandatory for certain automotive goods and available as an alternative under other product-specific rules; not the transaction value method.

LVC

Labor value content (LVC): the USMCA automotive requirement that a set share of a covered vehicle's value be produced by workers earning at least a specified hourly wage, certified by the vehicle producer in an LVC certification filed with CBP; not a regional value content calculation and not an importer filing.

steel purchasing requirement

Steel purchasing requirement: the USMCA automotive rule that a vehicle producer's purchases of steel (and, separately, aluminum) in North America meet a required share, certified in steel and aluminum purchasing certifications the producer files with CBP; not the Section 232 steel tariff and not a melt-and-pour declaration.

USMCA certification 9 data elements

USMCA certification of origin, nine minimum data elements: the Annex 5-A data set (certifier, exporter, producer, importer with contact details, description and HS classification to six digits, origin criterion, blanket period, authorized signature and date with the certification statement) that any valid USMCA certification must carry; not a prescribed form.

Annex 4-B

USMCA Annex 4-B: the agreement's annex holding the product-specific rules of origin (tariff shift, regional value content and process rules by HS subheading, plus the automotive appendix), applied through HTSUS General Note 11; not the marking rules of 19 CFR part 102.

PSR

Product-specific rule (PSR): the origin rule assigned to a particular tariff subheading in a free trade agreement's rules of origin annex (USMCA Annex 4-B and the equivalents in other agreements) that non-originating materials must satisfy, by tariff shift, regional value content or process; not a generic origin test.

accumulation

Accumulation: the free trade agreement rule under which originating materials and, for USMCA, production performed in any party's territory count toward the good's origin, so that inputs from another USMCA country or processing there build the good's regional content; not a tolerance rule.

USMCA de minimis 10%

USMCA de minimis 10 percent: the tolerance allowing a good to originate although some non-originating materials fail the tariff shift, provided their value does not exceed 10 percent of the good's transaction value or total cost, with textile goods measured by weight and certain agricultural exclusions; not the Section 321 de minimis and not a duty threshold.

verification questionnaire

Verification questionnaire: the written request CBP sends an importer, exporter or producer in a free trade agreement verification (USMCA, 19 CFR 182.72) asking for the certification of origin, origin worksheets, material classifications, regional value content or net cost data and production records, with a deadline; not a CBP Form 28 on value.

19 CFR 102

19 CFR part 102, Rules of Origin: CBP's codified origin rules (tariff shift and other rules) used for country-of-origin marking of USMCA-country goods, for textile and apparel origin under 102.21 for all countries, and for the manufacturer identification code for textiles under 102.23; not the preference rules of part 182.

J-list

The J-list: the list of articles exempt from individual country-of-origin marking under 19 U.S.C. 1304(a)(3)(J), codified at 19 CFR 134.33, whose outermost container reaching the ultimate purchaser must still be marked; not a general marking waiver and not the 134.32 exceptions.

19 CFR 134

19 CFR part 134, Country of Origin Marking: CBP's regulations implementing 19 U.S.C. 1304 (the marking requirement, exceptions, the J-list, methods and special rules, notices to mark or redeliver, the 10 percent marking duty and liquidated damages); not the FTC labeling rules.

marking duty 10%

The 10 percent marking duty: the additional duty of 10 percent of the final appraised value assessed under 19 U.S.C. 1304(i) when imported articles are not legally marked at the time of importation and are not exported, destroyed or marked under CBP supervision before liquidation; not a penalty and not the 1592 duty demand.

ultimate purchaser

Ultimate purchaser: the last person in the United States who receives the article in the form in which it was imported (for USMCA goods, the last person who purchases it in that form), whose knowledge of origin the marking must reach and the test for whether the article or its container must be marked; not the importer of record.