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In order to receive preferential treatment under the U.S.-Peru Trade Promotion Agreement (TPA) U.S. goods exported to Peru, must qualify as originating as prescribed under the Rules of Origin section.
To go directly to the product specific rules of origin (Annex 4.1 of the Agreement).
Except as otherwise provided in Chapter 4 of the U.S.-Peru TPA, a good is deemed originating under the Agreement where:
1. It is wholly obtained or produced entirely in the United States and/or Peru.
Note: "Obtained" has a unique meaning in the U.S.-Peru TPA context; it does not mean "purchased," but is simply used to acknowledge that production is not the only way goods are created. For a good to qualify under this criterion, it must contain no parts or materials anywhere in the production process that originated from outside the signatory countries. It is generally reserved for basic products such as those harvested, mined, or fished in the signatory territories, although can include a manufactured good with no non-U.S. and/or non-Peruvian inputs. Very few manufactured goods will qualify under this criterion.
2. It is produced entirely in the United States and/or Peru using non-originating material (i.e., materials from outside the countries listed above) that satisfy the rule of origin specified in Annex 4.1 of the Agreement.
3. It is produced entirely in the United States and/or Peru exclusively from materials that are already originating (by meeting the qualifications described above).
The product-specific rules of origin are written in terms of the Harmonized System (HS) of Tariff Classification. The HS classification system uses six to ten digit codes to identify goods. The first six digits of an HS number are harmonized among the majority of the world's countries. The last four digits are unique to each country. The vast majority of the product-specific rules of origin under the U.S.-Peru TPA use an HS classification number. The United States uses Schedule B Codes to classify exported products from the United States and these numbers are based on the international HS system. Therefore, the first step in interpreting the "rules" is to obtain the appropriate code for the good in question. (Note: the first two digits of an HS number are referred to as a "chapter," the first four digits are called a "heading" (e.g., 1905), and the first six digits are called a "subheading" (e.g., 1905.90).)
A rule of origin may consist of:
1. A required change in tariff classification (also called a tariff shift);
2. A regional value-content (RVC) requirement;
3. Both a change in tariff classification and a regional value content requirement.
Note: It is necessary to refer to the rule associated with the product being exported. Regional value content can be applied only when it is allowed under a product-specific rule.
An example of a rule that employs a simple tariff shift is:
Explanation: For all final goods classified under HS headings 19.05, all non-U.S. or non-Peruvian inputs must be classified in an HS chapter other than HS chapter 19 in order for the product to obtain preferential duty treatment. In this example, these baked goods would qualify for preferential treatment because the only non-originating input is classified outside of HS chapter 19. In other words, the good qualifies as originating because the imported flour (i.e., the non-originating input in this example) classified under chapter 11 (HS #11.01) shifted tariff numbers from 11.01 to 19.05 when incorporated into the finished good. However, if these products were produced with non-originating mixes (i.e., not manufactured in the United States or Peru), which are classified in HS chapter 19, then these products would not qualify because a tariff shift at the chapter level did not occur as prescribed under this rule of origin.
Another example of a rule that employs both the "tariff shift" and "regional value content" is: