How To Avoid Paying Section 301 Duties (NAFTA / USMCA Paradox)

As a merchant / importer, can you avoid paying Section 301 duties? Yes, there are a number of options you can use to avoid paying Section 301 duties.

The purpose of free trade agreements is to eliminate trade barriers and facilitate the flow of goods and services. As a result, an increase in investment or relocations opportunities arises with this. Companies are always seeking ways to advantage of free trade agreements. Their motivation is to enhance their bottom line by reducing production costs to remain competitive in their environment.

Before any decision to relocate a production operation is made, most companies are guided by a customs expert attorney to pre-qualify their goods. This is done by classifying the finished good and applying the rules of origin of the product. The most common ways to qualify a product for Free Trade Agreement are Regional Value Content and a Tariff Shift.

In the case of the RVC, it determines what type of operations needs to be performed.

The current economic environment and the trade wars with China have altered all the Free Trade Agreements. The greatest impact has been when such as when determining the country of origin for payment of duties. Traditionally you apply the rules of origin to qualify your goods to take advantage of the FTA. But to apply current trade remedies under Section 301, 232, and 201, the substantial transformation analysis is applicable. So, under this guideline, the country of origin for marking purposes could be one country. The country of origin for purposes of the trade remedies under Section 301, 232, and 201 could be China.

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