FTA: Content Maintenance Procedures - De Minimis (General Tolerance) Provisions

Standard De Minimis Percentage -

Most agreements use a single De Minimis percentage, typically 10%. This percentage is applied across all chapters unless otherwise specified.

De Mininis Variations by Chapter -

Textile chapters (50-63) may have different De Minimis percentages: Often 7% or 10% of weight, rather than value based. Other chapters maintain the standard value-based De Minimis percentage. Our system can currently handle only one De Minimis percentage per agreement. When multiple percentages exist, we use the main percentage until system updates are implemented. A pending development request aims to allow multiple De Minimis percentages per agreement. This will account for different rates in chapters 1-24/27 and 50-63.

The following FTAs may have multiple De Minimis percentages, but are currently limited to one in our system:

De Minimis Exclusion rules

- We know that many FTAs have provisions that define certain materials where De Minimis would not apply or a different De minimis approach would be used like the Subheading shift requirement. For these rules, we essentially block the overarching De Minimis provision from applying to the specified heading/subheading and/or require a shift at the subheading level for non-originating materials. We do this by loading exclusions to the De Minimis Rules. Below is an example from JAPAN-US that features a subparagraph with non-originating materials of different headings/subheadings that do not meet the De Minimis criteria:

Description-based De Minimis Exclusions

- Many agreements have description text exceptions incorporated into the list of Exclusion rules. As we are not classification experts and do not always know all the aspects of goods, we can’t provide an HS number for the specifically described materials/items. Thus, we do not have a good way to exclude De Minims from applying unless you provide us with the HS number to be used. When provided, we will save that rule locally for that client with the HS number added in their rule. For example, in the paragraph above, we would need the client to provide the HS classification representing "processed cheese of subheading 0406.30" to exclude only that specifically described material. Otherwise, we would conservatively exclude all of subheading 0406.30 from applying the De Minimis provisions.

Description-based De Minimis Exclusions in the Product Specific Rules

- Similarly, some agreements have description text exceptions to the subheading exclusions rules within the PSRs. These would be handled in a similar way to the above with a client providing a more specific HS number representing the specifically described material or we would conservatively exclude at the heading/subheading level. However, since PSR-based exclusions are mainly in the Food and Beverage chapters, and we do not have any Food/Beverage clients using these FTAs, it is not typically an issue.

This is a case where the tariff schedule updates more frequently than the FTA rules of origin, such as 3402.20 being reclassified as 3402.50. This is not unusual. When this happens, we work with our clients using Customs guidelines to create a rule configured locally on their partner to handle this scenario using the new HS number. We have attached excerpts from the current US tariff schedule and CAFTA-DR Legal Text reflecting the changes in the HS, but not the rule of origin.