Common use of Example of the application of De Minimis Clause in Contracts

Example of the application of De Minimis. for goods other than textile goods (Article 31 and subparagraph (e) (i) in Part 1 of Annex 2) Company A produces baby carriages (HS8715.00) in Japan and plans to export them to Indonesia under the Agreement. The PSRs for baby carriages (HS8715.00) under the Agreement are: A change to subheading 8701.10 through 8716.90 from any other subheading; or No required change in tariff classification to subheading 8701.10 through 8716.90, provided that there is a qualifying value content of not less than 40 percent. To prove that the baby carriage qualifies as an originating good of Japan, Company A decided to choose the CTC rule in this case. The baby carriage is made from Indian aluminum bar (HS7604.10) and Chinese handle grip (HS8715.00). Since the handle grip does not undergo “change in tariff classification from any other subheading,” the baby carriage does not meet the CTC rule. But if the value of the handle grip (HS8715.00) is equivalent to 10% of F.O.B. price of the baby carriage or less, Company A is allowed to disregard the portion of the handle grip for the purposes of the CTC rule pursuant to de minimis provision of Article 31.

Example of the application of De Minimis. for goods other than textile goods (Article 31 and subparagraph (eg) (i) in Part 1 of Annex 2) Company A produces baby carriages (HS8715.00) in Japan and plans to export them to Indonesia under the Agreement. The PSRs for baby carriages (HS8715.00) under the Agreement are: A change to subheading 8701.10 through 8716.90 from any other subheading; CTSH or No required change in tariff classification to subheading 8701.10 through 8716.90, provided that there is a qualifying value content of not less than QVC 40 percent. To prove that the baby carriage qualifies as an originating good of Japan, Company A decided to choose the CTC rule in this case. The baby carriage is made from Indian aluminum bar (HS7604.10) and Chinese handle grip (HS8715.00). Since the handle grip does not undergo “change in tariff classification from any other subheading,” the baby carriage does not meet the CTC rule. But if the value of the handle grip (HS8715.00) is equivalent to 10% of F.O.B. price of the baby carriage or less, Company A is allowed to disregard the portion of the handle grip for the purposes of the CTC rule pursuant to de minimis provision of Article 31.