End-Use Key to USMCA Eligibility for Heavy Truck Starters, Customs Rules

Aftermarket vs OEM Use of Automotive Parts

Trade Update • OCTOBER 13, 2021

In a recent classification ruling, U.S. Customs and Border Protection indicated that eligibility for preferential tariff treatment of electric starters for heavy trucks under the United States-Mexico-Canada Agreement depends on the intended end-use of the goods.

Made in Mexico Motors

The heavy duty starters in question are assembled in Mexico using both originating and non-originating materials. Based on information provided by Mitsubishi Electric Automotive America, Inc., CBP was able to determine that no non-originating materials are classified in the same subheading as the finished starter (i.e., 8511.40, Harmonized Tariff Schedule of the United States), thus qualifying it as a Mexican-made product by meeting the tariff shift requirement called for in the USMCA rules of origin.

Automotive Rules of Origin

One of the requirements of qualification under the USMCA’s automotive rules of origin is that vehicles and parts used in their manufacture must contain a specified amount of North American content.

General Note 11 of the HTSUS, which outlines the special rules for automotive goods under USMCA, stipulates that motor vehicles and listed parts are subject to regional value content requirements in accordance with the agreement’s multi-year staging regime.

In the case of heavy trucks, the current level of RVC for “principal parts” such as starters (listed in Table D of the automotive appendix) is 60% of the net cost or 70% of the transaction value.

End-Use Provisions

According to Mitsubishi, the starters will be imported primarily for use as original equipment in new heavy trucks produced by Freightliner, Daimler, Navistar, and other manufacturers. However, a certain quantity will also be supplied to aftermarket dealers in the U.S. for use as aftermarket parts.

With regards to end-use, the Uniform Regulations on the interpretation of the USMCA’s origin rules and procedures make a clear distinction in GN 11(k)(i) between aftermarket parts and automotive parts that are used as original equipment in the production of a motor vehicle.

When used as aftermarket parts, the applicable rule of origin is contained in GN 11(o)/85.29, which requires a “change to subheadings 8511.10 through 8511.80 from any other subheading, including another subheading within that group.” As previously noted, CBP determined that the starters satisfy the tariff shift requirement, thereby making them eligible for preferential tariff treatment under the USMCA when used as aftermarket parts.

However, when used as original equipment in the manufacture of heavy trucks, the starters must, in addition to satisfying the tariff shift rule, also meet the RVC requirements in GN 11(k)(iii)(K) in order to qualify for preferential tariff treatment under the USMCA. The ruling does not state whether the subject goods meet the required RVC threshold in this instance.

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