TeeSquared
Rough_Rock
- Joined
- Aug 11, 2022
- Messages
- 15
I just asked about the duty free option and was sent this:
Wanted to share more details regards to the FTA;
As for the FTA , we usually do provide a COO & FTA form for Fedex to submit to the customs.
It's known as the Certificate of Origin + FTA application form.
However, it is to be noted that the FTA for diamond rings to the USA is not valid ultimately.
But how the USA customs works, they go by self-certification which means clients can try to submit the FTA doc, but ultimately it's up to customs approval, and not within yours or ours control.
I will explain more below on why it is not valid:
Giving you an idea of how this works, I'll try to break this down for you: Sorry it can be a little confusing.
To qualify for the waiver, certain rules of origin have to be met using some calculation methods.
Generally, we do have to identify the origins of our raw materials and sub them into these below categories.
To qualify: there are two ways:
1. Our raw materials are from either SG or USA. (if we are exporting to Australia, our raw materials can be qualified if they are from either SG or AUS).
In our case, we would have to check whether our raw materials are from either SG or US.
2. If they are not, in order for them to quality, certain conditions to have to be met: (which is the formula below)
In our case, we will be using a) Change in tariff classification (as our raw materials are not from US or SG)
Since the raw materials are not from US or SG, after using the formula, we do not qualify for the FTA.
(I'll explain to you further below)
The a) Change in tariff classic method requires the HS code of the final good to differ from the raw materials (non-orginating materials).
HS code of our final good (Decagon Ring): 7113.19.50.30
HS code of our setting: 7113.19.50.90
As there is no change in heading (7113), we have failed to qualify for FTA waiver.
This is where the question comes in, to be honest, the setting can originate from many countries.
Our settings (gold/platinum) is purchased in HK by our Mastercrafters but the origins cannot be fully proven, and if we cannot prove its origins, the no-change in header rule still remains. (7113)
But US customs works by self-certification, meaning that we can still try to apply (subjected to approval).
Hence, I'm going to 'assume' that our gold/platinum is from the USA (since our raw materials are from 'USA', it automatically qualifies for the waiver).
To be honest with you, among all clients that have requested for the FTA, about 15 of them now, only the first client Steven, as well as one other back in 2021-2022 got it but it was also rejected at first, and they went through 5-8 months of back and forth with the US customs, and have to pay a US 90 fee to get a case opened. Ultimately it was approved after 9 months, but they are the first and only clients that got it. So I'm guessing the US customs knows that it's not valid and subsequently, all the future clients got rejected.
That's interesting. I wasn't aware of the Change in Classification. I would assume settings' materials are purchased, but the actual crafting occurs in-house and employed under JP (since they allow for custom and bespoke designs). It might help to explore classifying the settings' materials as semimanufactured metals (7108 Gold, 7109 Silver, 7110 Platinum), rather than completed settings. So prove that JP worked a gold bar or dust into shape and setting diamond into the piece thereby changing classification from 7108 (Gold) and 7102 (Diamonds, not mounted or set) to 7113 (Articles of Jewelry).
Or if the value of your diamonds are high enough, you might be able to use the Regional Value Content method? The US-SFTA has a de minimis provision of 10% so if the non-originating materials contributes no more than 10% of the adjusted value of the goods, you may receive preferential tariff treatment.
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