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Pharma, Apparels, Auto, Pharma And Solar Panels May Fail US Rule Of Origin Scrutiny
@Source: deccanchronicle.com
Chennai: After the imposition of tariffs, exports of products with Chinese parts and ingredients like apparels, smartphones, laptops, pharmaceuticals, automobiles, solar panels and food products from India are likely to fail Rule of Origin scrutiny of the US.Exporters to the US have to grapple with the complex and often misunderstood US non-preferential rules of origin (RoO) laws, which determine a product’s real origin.If a product contains high Chinese content and fails to meet the “substantial transformation” test, it may still be classified as Chinese and subjected to punitive tariffs, finds GTRI. For manufactured goods, the product must go through a process in a country that gives it a new name, use, or character. Basic steps like assembling parts, packaging, or labeling are not enough. In the case of apparels, the country where fabric is made decides the origin and not where it's cut or sewn. So, if a country imports fabric and just stitches garments, those exports may not qualify as originating from that country. In smartphones and laptops, origin depends on where key parts like motherboards or logic boards are assembled and programmed and just assembling may not be enough. In pharmaceuticals, changing the chemical structure counts as origin. But turning an imported API into tablets doesn’t count if the core chemical does not change. Similarly, building the full vehicle qualifies as transformation and not assembling parts. In food products, cooking, roasting, or fermenting counts as transformation but freezing, peeling, or simple packaging does not. In solar panels the key part is the solar cell. Even if a panel is assembled in a country, if the cell is made in another country, the product’s origin is still that country. Many panels assembled in the country fail this test because they use imported cells from China. “The most durable export strategy is one built on genuine value addition, supply chain transparency, and adherence to US customs rules,” said Ajay Srivastava, founder GTRI.
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