Tariff Response 119 FAQ, Part 2: Origin Determination

A: Origin is generally determined using three major standards. (1) Wholly obtained: products produced entirely in one country, such as agricultural or mineral products. (2) Substantial transformation: when inputs from two or more countries are used, origin is assigned to the country that gives the final product its essential character. This is often judged by a change in tariff heading at the 4-digit level (CTH) or 6-digit level (CTSH). (3) Value-added: origin may be conferred if the value added in a given country exceeds a required threshold, such as 35-55%. Because each FTA applies its own origin test, the relevant agreement text must always be checked.

A: Not necessarily. Simple assembly alone may not qualify a product as Korean origin. There must be substantial transformation. Under U.S. CBP practice, the product must undergo a change in name, character, or use. For example, Chinese components assembled in Korea into a finished good may qualify, but simple packaging, labeling, or inspection generally does not change origin. Tariff 119 can analyze whether a given product meets the substantial transformation standard.

A: The Korea-US FTA uses a self-certification system. The exporter, producer, or importer may prepare the origin certification directly, and no issuance by a chamber of commerce or customs authority is required. However, false origin statements can lead to criminal penalties, including fines of up to USD 10,000 and imprisonment in the United States. Accurate origin analysis must therefore come first. Tariff 119 provides pre-verification support for origin compliance.

A: Origin errors can create serious legal and financial exposure. In the United States, false origin declarations may trigger duty reassessment with interest, civil penalties that can reach up to four times the value of the goods, criminal prosecution in cases of intentional fraud, and even import restrictions such as blacklisting. Under the Korea-US FTA, origin-related documents must be retained for five years, and U.S. CBP may request post-entry verification.

A: An advance origin ruling from the Korea Customs Service allows exporters to obtain formal confirmation before shipment. The ruling remains valid for three years and can serve as strong supporting evidence if the importing country later reviews origin. A separate advance ruling can also be requested from U.S. CBP. Securing confirmation from both Korean and U.S. authorities significantly strengthens legal certainty.