Customs Ruling Country of Origin Food Products Case 01

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Country of Origin – Food Products

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Country of Origin

Case Study 1: Country of Origin of Frozen Precooked Tuna Loins 

The food product under consideration is “Frozen Precooked Tuna Loins.” Albacore tuna (Thunnus alalunga) is caught in Thailand from which the head, tail, fins, skin and guts will be removed. The fish is precooked by steaming, processed into loins then vacuum-sealed in bags with a net weight of 6.8 kilogram and frozen.

The finished product was initially exported to the United States; however, it has been exported to Ecuador where the product was defrosted then repackaged into retort pouches with a net weight of 2.6 ounces and frozen. The “Frozen Precooked Tuna Loins” will be imported to the United States for retail sale to supermarkets.

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Country of Origin and Substantial Transformation Standard

The “country of origin” is defined as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the 'country of origin' within the meaning of this part.

The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing (United States v. Gibson-Thomsen Co., Inc. (1940)).

However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred (Uniroyal, Inc. v. United States (1982)). 

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In-Depth Coverage: Country of Origin

In Koru North America v. United States (CIT 1988), the court considered whether the processing of headed and gutted fish in South Korea by thawing, skinning, boning, trimming, freezing, and packaging as fillets constituted a substantial transformation. The court concluded that the processing performed in South Korea into “quick- frozen” fillets substantially transformed the headed fish because there was a change in name and character.

The court noted that while the fish arrived in South Korea with the look of a whole fish, when they left they no longer possessed the essential shape of a fish. The fillets were considered discrete commercial goods and had a different tariff classification.

In the case under consideration, Albacore tuna, which is harvested in Thailand, is stripped of the head, tail, fins, skin and guts. The fish is precooked by steaming, processed into loins, vacuum-sealed in 6.8 kilogram bags then frozen. The finished product was initially shipped to the United States before it was exported to Ecuador where it was defrosted and repackaged into 2.6-ounce retort pouches then frozen. The finished product will subsequently be shipped to the United States for retail sale.

In this case, CBP determines that the tuna has not been substantially transformed due to the processing in Ecuador, and that therefore the country of origin of the “Frozen Precooked Tuna Loins,” is Thailand.

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Country of Origin or Country of Manufacture – CBP and FDA

The country of origin of the imported products must be report to both CBP and the FDA.  Unfortunately, the country of origin for the purpose of report to CBP and FDA can be different. This discrepancy is because the FDA generally determines country of origin based on the last country of manufacture, while CBP generally considers the country of origin to be the last country where processing resulted in a substantial transformation.

In this case under consideration, the country of origin for the purpose of CBP report is Thailand, but Ecuador is the country of the last manufacture and thus may need to be report to FDA.  Moreover, FDA requires any food product contains a label identifying the name and place of the manufacturer, packer, or distributor.

Customs Ruling―NY N306414: The country of origin of Frozen Precooked Tuna Loins (Oct 23, 2019)

In-Depth Coverage: Importing Food Products 

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Case 2: Cooking Rice Does Not Result in a Substantial Transformation

The product under consideration is identified as a pre-cooked long grain rice. The rice is grown in Vietnam and shipped to China for washing, boiling and packaging prior to importation into the United States. What is the country of origin of the pre-cooked rice?

Country of Origin – Substantial Transformation Standard

Customs Regulations 19 CFR Section 134.1(b) defines the country of origin as the country of manufacture, production or growth of any article of foreign origin entering the U.S.  Further work or material added to an article in another country must effect a substantial transformation in order to render such country the country of origin within the meaning of Part 134 of the regulations.

A substantial transformation occurs when a new and different article of commerce emerges from a process with a new name, character or use different from that possessed by the article prior to processing. However, a substantial transformation will not result from a minor manufacturing or combining process that leaves the identity of the article intact.

The essence of the substantial transformation rule is that whether operations and/or materials added to products in the country of exportation are of such a substantial nature so as to justify the conclusion that the resulting product is a manufacture of that country. 

Thermal processing or cooking

In HQ 967925 (2006), CBP determined that thermal processing or cooking did not result in the “Wild Rice” product with a different name, character, or use. The essential character of the “Wild Rice” product was retained. The wild rice ingredient of U.S. origin had not undergone a substantial transformation.

In this case under consideration, the washing and boiling of the long grain rice in China do not constitute a substantial transformation. The country of origin of the pre-cooked long grain rice will be Vietnam. Therefore, the long grain rice is excluded from the Section 301 additional rate of duty as it is not a product of China.

In-Depth Coverage: Importing USDA-Regulated Products 

Additional Requirements for Food Prodcuts

Country of origin and country of manufacture: CBP vs. FDA

When FDA regulated products are imported into the United States, information is required to be reported to the CBP and the FDA.  FDA regulated products include, but not limited to, foods, beverages, dietary supplements, drugs, medical devices, radiation-emitting electronic devices, and cosmetics. The country of origin of the imported products must be reported to both CBP and the FDA.  Unfortunately, the country of origin for the purpose of the report to CBP and FDA can be different. This disagreement is because the FDA generally determines the country of origin based on the last country of manufacture, while CBP considers the country of origin to be the last country where processing resulted in a substantial transformation. If the production operations occur in more than one country, customs law requires the importer of record to determine a single country of origin based on where the product underwent last substantial transformation.

In this case under consideration, the country of origin for the purpose of the CBP report is Vietnam, but China is the country of the last manufacture and thus may need to be reported to FDA.  Moreover, the FDA requires any food product contains a label identifying the name and place of the manufacturer, packer, or distributor.

The Bioterrorism Act – Food Establishment Registration and Prior Notice

The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act) requires that food facilities register with FDA and FDA must be given advance notice on shipments of imported food.

The FDA Food Safety Modernization Act (FSMA)

The FDA Food Safety Modernization Act (FSMA) require that facilities engaged in manufacturing, processing, packing, or holding food for consumption in the United States submit additional registration information to FDA, including an assurance that FDA will be permitted to inspect the facility at the times and in the manner permitted by the Federal Food, Drug, and Cosmetic Act (FD&C Act). It also requires food facilities required to register with FDA to renew such registrations every other year, and provides FDA with the authority to suspend the registration of a food facility in certain circumstances. Specifically, if FDA determines that food manufactured, processed, packed, received, or held by a registered food facility has a reasonable probability of causing serious adverse health consequences or death to humans or animals, FDA may by order suspend the registration of a facility that: Created, caused, or was otherwise responsible for such reasonable probability; or Knew of, or had reason to know of, such reasonable probability; and packed, received, or held such food. 

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FSMA Final Rule for Preventive Controls for Human and Animal Food

Generally, domestic and foreign food facilities that are required to register with section 415 of the Food, Drug, & Cosmetic Act must comply with the requirements for risk-based preventive controls mandated by the FDA Food Safety Modernization Act (FSMA) as well as the modernized Current Good Manufacturing Practices (CGMPs) of this rule (unless an exemption applies).  This rule requires food facilities to have a food safety plan in place that includes an analysis of hazards and risk-based preventive controls to minimize or prevent the identified hazards. The written food safety plan required of food facilities must be prepared, or its preparation overseen, by one or more preventive controls qualified individuals. And the preventive controls qualified individual is charged with overseeing the validation that preventive controls are capable of controlling identified hazards and the records review. 

Foreign Supplier Verification Programs (FSVP)

The FDA FSMA rule on Foreign Supplier Verification Programs (FSVP) for Importers of Food for Humans and Animals requires that FSVP importers perform certain risk-based activities to verify that food imported into the United States has been produced in a manner that meets applicable U.S. safety standards.

The FSVP importer is the U.S. owner or consignee of the food offered for import (i.e., owns the food, has purchased it, or has agreed in writing to purchase it at the time of U.S. entry). The key is that there be an FSVP importer in the United States who takes responsibility for meeting the FSVP requirements. FSVP Importers subject to the FSVP regulation must ensure that their FSVP is developed and applied by a “qualified individual”.

Intention Adulteration Rule (IA Rule) – Food Defense Plan

As part of the FDA Food Safety Modernization Act (FSMA), the FDA issued on May 27, 2016 a final rule to require domestic and foreign food facilities, with some exceptions, to address hazards that may be introduced with the intention to cause wide-scale harm to public health.  These food facilities are required to identify significant vulnerabilities and take steps to minimize or prevent them. The rule does this by requiring that certain facilities develop and implement a food defense plan.  It applies both to domestic facilities and foreign facilities that export food to the United States.

The IA rule requires special qualifications for individuals who do or oversee the following activities (food defense qualified individual), which require the most food defense expertise:  preparation of the FDP; conduct of a vulnerability assessment; identification and explanation of mitigation strategies; and performance of the reanalysis.

Customs Ruling―NY N306050: The tariff classification, Country of Origin, and Section 301 determination of pre-cooked long grain rice from Vietnam (September 27, 2019)

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Importer Security Filing (ISF)

An ISF is required when cargo (ocean only) laden on vessel at a foreign port is destined for shipment to the U.S.  Under ISF rule, some importing information and details regarding cargo must be transmitted to the CBP at least 24 hours before goods are loaded onto the vessel, or at least 24 hours prior to the departure to the U.S. 

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