FTA Origin Review New York

The review process is typically initiated when CBP has a reason to doubt the validity of an origin claim. This can be triggered by inconsistent documentation, a discrepancy in the declared value, or an identified risk in a specific industry. CBP uses two primary methods for verification: direct and indirect reviews. Direct reviews involve CBP reaching out directly to the exporter, producer, or even the importer to request documentation and conduct on-site inspections. Indirect reviews, on the other hand, involve CBP asking the customs authority of the partner country to verify the information provided by the foreign exporter. Both methods serve to validate that the claimed origin status reflects reality, ensuring fair and legal trade.

Certain sectors, particularly those with intricate sourcing patterns and high-value products, are often subject to more frequent reviews. Industries such as textiles, chemicals, plastics, and steel are under particular scrutiny due to their complex production processes and the potential for significant duty savings. Additionally, under the U.S.–Mexico–Canada Agreement (USMCA), direct reviews of auto parts, electronics, and steel are routine. This trend reflects a broader federal policy to protect domestic industries while maintaining fair competition in the global marketplace. The increasing focus on these sectors demonstrates that companies must have robust compliance systems in place, especially when exporting through major U.S. ports.

The penalties for noncompliance can be severe and multifaceted. For minor or negligent errors, companies may face civil fines or the loss of their tariff benefits, requiring them to repay the duties they had originally saved. More serious offenses, such as deliberate misrepresentation, can lead to seizures and, in some cases, criminal prosecution under federal customs law. These severe consequences underscore the absolute necessity for precision and transparency at every stage of the trade process. To help businesses navigate this complex landscape, federal agencies and local trade offices frequently publish guidelines and notices, providing practical advice to help importers and exporters reduce their risk of unexpected enforcement action.

Beyond internal measures, companies should ensure that their contracts with suppliers explicitly require accurate origin data. By including contractual safeguards, businesses can protect themselves if a supplier provides misleading or incorrect information. This step helps to fairly allocate responsibility across the supply chain and provides a legal recourse if a supplier's error leads to a costly customs review. A strong supply chain management system is the backbone of any effective trade compliance program.

• Misclassification of HS Codes: Incorrectly classifying a product can lead to duty reassessment, fines, and a retroactive review of past imports. This is a fundamental error that can have widespread consequences.
• Invalid or Expired Certificates: Using a certificate of origin that is either expired or improperly completed can result in the loss of tariff benefits and, in some cases, the seizure of goods.
• Inadequate Supplier Records: A lack of clear and complete supplier documentation is a leading cause for the denial of FTA preferences. Without proper records, a company cannot prove its claim.
• False or Misleading Labeling: Any intentional mislabeling or misrepresentation can lead to severe criminal liability, significant brand damage, and heightened scrutiny from customs authorities moving forward.

Each of these risk areas carries real financial and reputational consequences. Addressing them early through robust and proactive compliance programs is the best way to safeguard a company's business and ensure continued success in the global marketplace.