Origin Engineering

What is origin engineering?

The practice of relocating part, but not all, of the manufacturing of a product from one country to another country to avoid unfavorable trade restrictions, such as higher duty rates or quotas.

Origin engineering requires an in-depth analysis of the rules of origin for the product to determine which manufacturing processes determine the country of origin of the product.

How does origin engineering work?

Companies shift specific production steps, such as final assembly, to a country with a lower duty rate or better trade access. Whether it works depends on the importing country's rules of origin, which define the manufacturing or value-added thresholds that change a product's origin.

What are the risks?

Customs authorities scrutinize origin claims. If the processing in the new country doesn't meet the rules, authorities can reject the claim and assess back duties and penalties. Routing goods through another country with little or no processing doesn't change origin and may be treated as evasion. Talk to a customs broker or trade counsel before you change your supply chain.

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