The Harley Davidson Origin Case: What the Judgment Means for Production Relocations and Non-Preferential Origin

The Harley Davidson origin case is the most significant non-preferential origin judgment the Court of Justice of the European Union has delivered in recent years. Its importance for businesses lies not in the specific facts of motorcycle production but in what it establishes about the burden of proof when a production relocation coincides with a commercial policy measure.

The judgment makes clear that where objective evidence shows the principal or dominant purpose of a relocation was to avoid an EU commercial policy measure, the relocation cannot be considered economically justified under Article 33 of the UCC Delegated Regulation. It is then for the business to demonstrate that this was not the case, and that demonstration must be grounded in evidence that existed at the time the decision was made, not in justifications assembled after a challenge arises.

The Facts

In 2018, the Trump administration imposed additional tariffs on EU goods: 25% on steel and 10% on aluminium. The EU responded by imposing retaliatory additional customs duties on certain US products under Regulation 2018/886, including Harley-Davidson motorcycles. The total duty burden on Harley-Davidson motorcycles entering the EU rose to 31% from June 2018 and to 56% from June 2021.

Faced with this escalating cost, Harley-Davidson decided to shift production of motorcycles destined for the EU market from the United States to its facility in Thailand. Goods of Thai origin would not be subject to the EU’s retaliatory tariffs, which applied to US-origin goods.

To obtain certainty on the origin determination, Harley-Davidson applied for a Binding Origin Information decision from the Belgian customs authority. Belgium initially issued a BOI confirming Thai origin. The European Commission subsequently intervened and in 2021 revoked the BOI, on the basis that the production shift had as its principal purpose the avoidance of the EU’s commercial policy measures. The revocation was made under Article 34(11) of the Union Customs Code (Regulation (EU) No 952/2013), which allows the Commission to require member states to revoke binding origin decisions to ensure uniformity across the EU.

The Legal Question

The central legal question was the interpretation of Article 33 of the UCC Delegated Regulation, which provides that any processing or working operation carried out in another country shall be deemed not to be economically justified if it is established, on the basis of the available facts, that the purpose of that operation was to avoid the application of commercial policy measures.

Harley-Davidson argued that the avoidance of the tariffs was not the sole purpose of the relocation, that other commercial reasons existed, and that the Commission had failed to undertake an objective assessment of the economic justification for the production shift. They drew an analogy with earlier case law, in particular Brother International (C-26/88), in which the Court had held that the transfer of assembly from one country to another did not in itself justify the presumption that the sole object was circumvention.

The Court’s Analysis

The General Court rejected all six pleas advanced by Harley-Davidson and dismissed the action. The Court of Justice dismissed the subsequent appeal in November 2024 (Case C-297/23 P), confirming and clarifying the General Court’s reasoning on the key points.

On the interpretation of “purpose,” the Court confirmed that Article 33 does not require avoidance to be the sole purpose of a relocation. The term “purpose” is used in the singular, but a relocation may have multiple objectives. What matters is whether avoidance of the commercial policy measure was the “principal,” “dominant,” or “decisive” purpose. If it was, Article 33 applies and the operation cannot be considered economically justified, regardless of the presence of other commercial reasons.

On the standard of evidence, the Court confirmed that the assessment of whether avoidance was the dominant purpose must be made by reference to facts available at the time the decision was taken, not by reference to justifications assembled after the event. Harley-Davidson’s difficulty was that its own Form 8-K filing to the United States Securities and Exchange Commission had publicly stated that the purpose of the production shift was to avoid the EU tariff burden. That contemporaneous statement was treated as objective evidence of dominant purpose. The subsequent search for commercial justifications could not displace it.

On the burden of proof, the Court confirmed that once objective evidence establishes that the principal or dominant purpose of a relocation was to avoid a commercial policy measure, the burden shifts to the economic operator to demonstrate that this was not the case. The operator must prove that the dominant purpose at the time of the decision was not avoidance.

The Court also confirmed, departing from the earlier Brother International approach, that businesses can no longer rely on the ability to structure activity in order to limit fiscal liability through production relocations where those relocations are triggered by commercial policy measures. The objective test is applied to the purpose of the relocation, not merely to the physical characteristics of the processing.

What This Means for Businesses

The judgment has two direct implications for any business that has relocated, or is considering relocating, production in response to trade policy measures.

The first is evidential. The timing of a relocation decision matters in a way it did not before this judgment. A decision to relocate production that is taken after the imposition of a commercial policy measure, and that reduces the duty burden as a result, will attract scrutiny. The business must be able to demonstrate, from evidence that existed at the time the decision was made, that the dominant purpose was not avoidance. Board minutes, internal analyses, commercial projections, and strategic planning documents prepared before or contemporaneously with the decision are the relevant evidence. Documents prepared after a challenge arises carry significantly less weight.

The second is governance. Businesses that use production location as part of their customs strategy, whether through the selection of manufacturing facilities, the structuring of supply chains, or the routing of production between entities, must now assess each such decision against the dominant purpose test before it is implemented. Where a commercial policy measure is in place and a proposed relocation would reduce the duty burden, the business should document the other commercial objectives that drive the decision, and ensure that documentation is contemporaneous with the decision itself.

The case does not prohibit production relocations that have the effect of reducing duty exposure. It requires that where such relocations occur in the context of commercial policy measures, the business can demonstrate that duty reduction was not the dominant purpose. That demonstration depends on evidence created at the time, not on analysis constructed in response to a challenge.

For the legal framework governing non-preferential origin and where the compliance exposure sits for businesses not using trade agreements, the Non-Preferential Rules of Origin article (see Related Articles below) sets out the applicable rules in detail. For the audit mechanisms through which customs authorities challenge origin positions and what a defensible evidentiary position requires, the Rules of Origin Audit Risk article addresses those questions directly.

If this judgment raises questions about your production strategy or your non-preferential origin position, feel free to reach out directly.