[Federal Register: March 7, 2005 (Volume 70, Number 43)]
[Rules and Regulations]
[Page 10868-10885]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07mr05-6]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 10, 24, 162, 163, 178 and 191
[CBP Dec. 05-07]
RIN 1505-AB47
United States-Chile Free Trade Agreement
AGENCY: U.S. Customs and Border Protection; Department of Homeland
Security; Department of the Treasury.
ACTION: Interim regulations; solicitation of comments.
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SUMMARY: This document amends the Customs and Border Protection
(``CBP'') Regulations on an interim basis to implement the preferential
tariff treatment and other customs-related provisions of the United
States-Chile Free Trade Agreement entered into by the United States and
the Republic of Chile.
DATES: Interim rule effective March 7, 2005; comments must be received
by June 6, 2005.
ADDRESSES: You may submit comments, identified by the Regulatory
Information Number (``RIN'') and/or by the title ``United States-Chile
Free Trade Agreement,'' by one of the following methods:
EPA Federal Partner EDOCKET Web Site: http://www.epa.gov/feddocket.
Follow instructions for submitting comments on the Web site.
The Department of Homeland Security (``DHS''), including CBP, has
joined the Environmental Protection Agency (``EPA'') online public
docket and comment system on its Partner Electronic Docket System
(``Partner EDOCKET''). As an agency of the DHS, CBP will use the EPA
Federal Partner EDOCKET system.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail, hand delivery or courier: paper, disk or CD-ROM
submissions may be mailed or delivered to the Regulations Branch,
Office of Regulations and Rulings, Bureau of Customs and Border
Protection, 1300 Pennsylvania Avenue, NW. (Mint Annex), Washington, DC
20229.
Instructions: All submissions received must include the agency name
and docket number (if available) or RIN number for this rulemaking. All
comments received will be posted without change to http://www.epa.gov/feddocket
, including any personal information provided.
Docket: For access to the docket to read background documents or
comments received, go to http://www.epa.gov/feddocket You may also access the Federal eRulemaking Portal at http://www.regulations.gov.
Comments may be inspected at the Regulations Branch, Office of
Regulations and Rulings, Bureau of Customs and Border Protection, 799
9th Street, NW., (5th Floor), Washington, DC during regular business
hours.
FOR FURTHER INFORMATION CONTACT:
Textile Operational Aspects: Robert Abels, Office of Field
Operations, (202) 344-1959.
Other Operational Aspects: Lori Whitehurst, Office of Field
Operations, (202) 344-2722.
Audit Aspects: Mark Hanson, Office of Regulatory Audit, (202) 344-
2877.
Legal Aspects: Edward Leigh, Office of Regulations and Rulings,
(202) 572-8827.
SUPPLEMENTARY INFORMATION:
Background
On June 6, 2003, the United States and the Republic of Chile (the
``Parties'') entered into an agreement, the U.S.-Chile Free Trade
Agreement (``US-CFTA''). The stated objectives of the US-CFTA are to:
Encourage expansion and diversification of trade between the Parties;
eliminate barriers to trade in, and facilitate the cross-border
movement of, goods and services between the territories of the Parties;
promote conditions of fair competition in the free trade area;
substantially increase investment opportunities in the territories of
the Parties; provide adequate and effective protection and enforcement
of intellectual property rights in each Party's territory; create
effective procedures for the implementation and application of the US-
CFTA, for its joint administration and for the resolution of disputes;
and establish a framework for further bilateral and multilateral
cooperation to expand and enhance the benefits of the US-CFTA.
The provisions of the US-CFTA were adopted by the United States
with the enactment of the United States-Chile Free Trade Agreement
Implementation Act (the ``Act''), Pub. L. 108-77, 117 Stat. 909 (19
U.S.C. 3805 note)(2003).
Customs and Border Protection (CBP) has the responsibility to
administer the provisions of the US-CFTA and the Act which relate to
the importation of goods into the United States from Chile. Those
customs-related US-CFTA provisions which require implementation through
regulation include certain tariff and non-tariff provisions within
Chapter Three (National Treatment and Market Access for Goods) and the
provisions of Chapter Four (Rules of Origin and Origin Procedures) and
Chapter Five (Customs Administration).
The tariff-related provisions within US-CFTA Chapter Three which
require regulatory action by CBP are Article 3.7 (Temporary Admission
of Goods), Article 3.8 (Drawback and Duty Deferral Programs), Article
3.9 (Goods Re-Entered after Repair or Alteration), Article 3.10 (Duty-
Free Entry of Commercial Samples of Negligible Value and Printed
Advertising Materials) and Article 3.20 (Rules of Origin and Related
Matters).
Chapter Four of the US-CFTA sets forth the rules for determining
whether an imported good qualifies as an originating good of the United
States or Chile (US-CFTA country) and, as such, is therefore eligible
for preferential tariff (duty-free or reduced duty) treatment as
provided for under Article 4.1 and Annex 4.1 of the US-CFTA. Under
Article 4.1 within that Chapter, originating goods may be grouped in
three broad categories: (1) Goods which are wholly obtained or produced
entirely in one or both of the Parties; (2) goods which are produced
entirely in those countries and which satisfy the specific rules of
origin in US-CFTA Annex 4.1 (change in tariff classification
requirement and/or regional value content requirement); and (3) goods
which are produced entirely in one or both of the Parties exclusively
from materials that originate in those countries. Article 4.2 sets
forth the methods for calculating the regional value content of a good.
Article 4.3 sets forth the rules for determining the value of materials
for purposes of calculating the regional value content of a good and
applying the de minimis rule. Article 4.4 sets forth the rules for
determining whether accessories, spare parts or tools delivered with a
good qualify as material used in the production of such good. Article
4.6 provides for accumulation of production by two or more producers.
Article 4.7 provides a de minimis criterion. The remaining Articles
within Section A of Chapter
[[Page 10869]]
Four consist of additional sub-rules, applicable to the originating
good concept, involving fungible materials, packaging materials,
packing materials, transshipment, and non-qualifying operations. The
basic rules of origin in Chapter Four of the US-CFTA are set forth in
General Note 26, Harmonized Tariff Schedule of the United States
(HTSUS). In addition, Section B of Chapter Four sets forth the
procedural requirements which apply under the US-CFTA, in particular
with regard to claims for preferential tariff treatment.
Chapter Five sets forth the customs operational provisions related
to the implementation and continued administration of US-CFTA.
In order to provide transparency and facilitate their use, the
majority of the US-CFTA implementing regulations set forth in this
document have been included within new subpart H in Part 10 of the CBP
Regulations (19 CFR). However, in those cases in which US-CFTA
implementation is more appropriate in the context of an existing
regulatory provision, the US-CFTA regulatory text has been incorporated
in an existing Part within the CBP Regulations. In addition, this
document sets forth a number of cross-references and other
consequential changes to existing regulatory provisions to clarify the
relationship between those existing provisions and the new US-CFTA
implementing regulations. The regulatory changes are discussed below in
the order in which they appear in this document.
To create new subpart H of 19 CFR part 10, the existing sections in
that part have been re-designated into subparts A through G.
Discussion of Amendments
Part 10
Section 10.31(f) concerns temporary importations under bond. It is
amended by adding a sentence at the end stating that, as regards the
goods described in the added sentence, no bond or other security will
be required in the case of goods originating in Chile. The provisions
of US-CFTA Article 3.7 (temporary admission of goods) are already
reflected in existing temporary importation bond or other provisions
contained in part 10 of the CBP Regulations and in Chapter 98 of the
HTSUS.
Part 10, Subpart H
General Provisions
Section 10.401 outlines the scope of new subpart H, part 10. This
section also clarifies that, except where the context otherwise
requires, the requirements contained in subpart H, part 10 are in
addition to general administrative and enforcement provisions set forth
elsewhere in the CBP Regulations. Thus, for example, the specific
merchandise entry requirements contained in subpart H, part 10 are in
addition to the basic entry requirements contained in parts 141-143 of
the regulations.
Section 10.402 sets forth definitions of common terms used in
multiple contexts or places within subpart H, part 10. Although the
majority of the definitions in this section are based on definitions
contained in Article 2.1 and Annex 2.1 of the US-CFTA or in Sec. 3 of
the Act, other definitions have also been included to clarify the
application of the regulatory texts. Additional definitions which apply
in a more limited subpart H context are set forth elsewhere with the
substantive provisions to which they relate.
Import Requirements
Section 10.410 sets forth the procedure for claiming US-CFTA tariff
benefits at the time of importation and, as provided in US-CFTA Article
4.12, requires a U.S. importer to file a declaration, and to correct a
declaration that contains incorrect information, in connection with the
claim. Section 10.410 also implements US-CFTA Article 4.12 by requiring
that the declaration that the goods are US-CFTA originating goods be
based on a certification of origin which is in the possession of the
importer.
Section 10.411 implements US-CFTA Article 4.14 which concerns the
obligations of an importer regarding the submission of a certification
of origin to CBP and the maintenance of the certification and other
relevant records regarding the imported good. Included in Sec. 10.411
is a provision that a certification of origin may be used either for a
single importation or for multiple importations of identical goods.
Section 10.416, which is based on US-CFTA Article 4.16, authorizes
the denial of US-CFTA tariff benefits if the importer fails to comply
with the requirements of Subpart H, Part 10.
Tariff Preference Level
Sections 10.420 and 10.421, which are based on US-CFTA Article
3.20, require an importer claiming preferential tariff treatment under
a tariff preference level (TPL) to make a statement containing
information demonstrating that a good satisfies the requirement for
entry under the TPL.
Export Requirements
Section 10.430 implements US-CFTA Article 4.15 which concerns use
of a certification of origin for purposes of certifying that an
exported good is an originating good and thus entitled to preferential
tariff treatment under the US-CFTA. This section also implements US-
CFTA Article 4.15.3 which requires an exporter or producer to promptly
provide written notification of errors in a certification to any person
to whom the certification was given.
Section 10.430 concerns the maintenance of records by a U.S.
exporter or producer who executes a certification of origin, as
required by US-CFTA Article 4.15 and by 19 U.S.C. 1508 as amended by
Sec. 207 of the Act. Section 10.430 also concerns the availability of
those records both to CBP and to the Chilean customs administration.
Section 10.431 concerns measures applied for a failure of a U.S.
exporter or producer to comply with a requirement of subpart H, part 10
and is based on US-CFTA Article 4.16.
Post-Importation Duty Refund Claims
Sections 10.440 through 10.442 implement US-CFTA Article 4.12,
which allows an importer, who did not claim US-CFTA tariff benefits on
a qualifying good at the time of importation, or a non-qualifying
apparel good claiming a TPL, to apply for a refund of any excess duties
at any time within one year after the date of importation. Such a claim
may be made even if liquidation of the entry would otherwise be
considered final under other provisions of law.
Rules of Origin
Sections 10.450 through 10.463 provide the implementing regulations
regarding the rules of origin provisions of HTSUS General Note 26 and
US-CFTA Chapter Four.
Definitions
Section 10.450 sets forth terms that are defined for purposes of
the Rules of Origin.
General Rules of Origin
Section 10.451 sets forth the basic rules of origin established in
Chapter Four of the US-CFTA. The provisions of Sec. 10.451 apply both
to the determination of the status of an imported good as an
originating good for purposes of preferential tariff treatment and to
the determination of the status of a material as an originating
material used in a good which is subject to a determination under
General Note 26, HTSUS.
[[Page 10870]]
Section 10.451(a) lists those goods which are originating goods
because they are wholly obtained or produced entirely in the U.S.,
Chile, or both. Section 10.451(c) provides that goods, produced
entirely in the U.S. or Chile from originating materials, are
originating goods.
Section 10.451(b) sets forth the basic rules of origin for goods
which are produced with any non-originating material content. Essential
to the rules in Sec. 10.451(b) are the specific rules of General Note
26(n), HTSUS, which are incorporated by reference. Under paragraph
(b)(1) of Sec. 10.451, a good will qualify as an originating good only
if all non-originating materials used in the production of the good
undergo the applicable change in tariff classification, set forth in
General Note 26(n), as a result of processing performed entirely in the
US-CFTA countries. Under paragraph (b)(2) of Sec. 10.451, a regional
value content requirement must be satisfied in addition to a change in
tariff classification for certain cases as specified by the rules of
General Note 26(n), and, for other cases, only a regional value content
must be satisfied. In all cases, the good must also satisfy all other
requirements of the note.
Section 10.452 sets forth the rule that a good or material is not
an originating good or material as a result of simple combining or
packaging operations or mere dilution with a substance that does not
materially alter the characteristics of the good or material.
Value Content
Section 10.454 sets forth the basic rules which apply for purposes
of determining whether an imported good satisfies a minimum regional
value content (RVC) requirement. Section 10.455 sets forth the rules
for determining the value of a material for purposes of calculating the
regional value content of a good as well as for purposes of applying
the de minimis rules.
Accessories, spare parts or tools. Section 10.456 specifies when
certain accessories, spare parts or tools will be treated as a material
used in the production of the good.
Fungible goods and materials. Section 10.457 sets forth the rules
by which ``fungible'' goods or materials may be claimed as originating.
Accumulation of Production
Section 10.458 sets forth the rule by which originating goods or
materials from the territory of Chile or the United States that are
used in the production of a good in the territory of the other country
will be considered to originate in the territory of such other country.
In addition, this section also establishes that a good that is produced
by one or more producers in the territory of Chile or the United
States, or both, is an originating good if the good satisfies all of
the applicable requirements of the rules of origin of the US-CFTA.
De Minimis
Section 10.459 sets forth a de minimis rule by which goods that
fail to qualify as originating under the rules in Sec. 10.451 may be
considered originating goods for preferential tariff treatment. There
are a number of exceptions to the de minimis rule as well as a separate
rule for textile and apparel goods.
Indirect materials. Section 10.460 provides that indirect materials
are considered to be originating materials without regard to where they
are produced.
Packaging materials; packing materials. Sections 10.461 and 10.462
provide that retail packaging materials and packing materials for
shipment are to be disregarded with respect to their actual origin for
purpose of the change in tariff classification requirement of the
General Note 26(n). These sections also set forth the treatment of
packaging and packing materials for purposes of the regional value
content requirement of the note.
Transshipment
Section 10.463 sets forth the rule that with certain exceptions, an
originating good loses its originating status and is treated as a non-
originating good if, subsequent to the production in a US-CFTA country
that qualifies the good as originating, the good undergoes production
in a territory outside that of a US-CFTA country.
Origin Verifications and Determinations
Sections 10.470 through 10.474 implement the provisions of US-CFTA
Article 4.16 which concerns the conduct of verifications to determine
whether imported goods are originating goods entitled to US-CFTA
preferential duty treatment and the issuance and application of origin
determinations resulting from such verifications. These sections also
govern the conduct of verifications directed to producers of materials
that are used in the production of a good for which US-CFTA
preferential duty treatment is claimed.
Section 10.470 provides for the verification by CBP of a claim for
US-CFTA tariff treatment and any information submitted in support of
the claim. This section further provides that, if CBP is prevented from
conducting a verification, the claim may be denied.
Section 10.471 provides for textile and apparel goods imported into
the United States to be reviewed by Chilean authorities (at the request
of CBP), regardless of whether a claim is made for preferential tariff
treatment. CBP may also assist in a verification in Chile under this
section.
Section 10.471 also provides for specific actions to be taken
during and after the verification if directed by the Committee for the
Implementation of Textile Agreements. These actions can be taken on the
specific goods subject to the verification or to similar goods, or to
any textile or apparel goods being imported into the United States by
the entity subject to the verification.
Section 10.472 provides for textile and apparel goods exported from
the United States to Chile to be reviewed by CBP (at the request of
Chilean authorities),
Section 10.473 implements US-CFTA Article 4.16.3 by providing for
the issuance of a written determination of origin based on an analysis
of the results of the origin verification. This section also prescribes
the information required to be included in the written determination
and includes special content and issuance requirements in the case of a
negative origin determination.
Penalties
Section 10.480 concerns the general application of penalties to US-
CFTA transactions and is based on US-CFTA Article 5.9.
Section 10.481 reflects US-CFTA Article 4.16 with regard to
exceptions to the application of penalties in the case of an importer
who voluntarily makes a corrected declaration (as provided for in US-
CFTA Article 4.12--see Sec. 10.410(b)).
Section 10.482 reflects US-CFTA Article 4.15 with regard to
exceptions to the application of penalties in the case of an exporter
or producer who voluntarily provides notice of an incorrect
certification of origin (see Sec. 10.411). Section 10.483, which sets
forth standards for determining whether the correction or notice is
effected ``voluntarily'', is based on the standards applied for prior
disclosures under 19 U.S.C. 1592 as set forth in Sec. 162.74 of the
CBP Regulations.
Goods Returned After Repair or Alteration
Section 10.490 implements US-CFTA Article 3.9 regarding duty
treatment on goods re-entered after repair or alteration in Chile.
[[Page 10871]]
Part 24
A paragraph is added to Sec. 24.23(c), which concerns the
merchandise processing fee (MPF) to implement Sec. 204 of the US-CFTA,
providing that the MPF is not applicable to goods that qualify as
originating goods as provided for in the US-CFTA.
Part 162
Part 162 contains regulations regarding the inspection and
examination of merchandise involved in importation. A cross-reference
is added to Sec. 162.0, which is the scope section of the part, to
refer readers to the additional US-CFTA records maintenance and
examination provisions contained in new subpart H, part 10.
Part 163
A conforming amendment is made to Sec. 163.1 to include the
completion of a Chile certification of origin and any other supporting
documentation pursuant to the US-CFTA as an activity for which records
must be maintained. Also, the list appearing in Appendix to Sec. 163
(commonly known as the (a)(1)(A) list) is also amended to add the Chile
certification of origin, required by new Sec. 10.410.
Part 178
Part 178 sets forth the control numbers assigned to information
collections of CBP by the Office of Management and Budget, pursuant to
the Paperwork Reduction Act of 1995, Pub. L. 104-13. The list contained
in Sec. 178.2 is amended to add the information collections used by
CBP to determine eligibility for a tariff preference or other rights or
benefits under the US-CFTA and the Act.
Part 191
Part 191 contains regulations regarding drawback. A cross-reference
is added to Sec. 191.0, which is the scope section of the part, to
refer readers to the additional US-CFTA drawback provisions contained
in new subpart H, part 10.
Comments
Before adopting these interim regulations as a final rule,
consideration will be given to any written comments timely submitted to
CBP by e-mail, mail, hand delivery or courier, including comments on
the clarity of these interim regulations and how they may be made
easier to understand. Comments submitted will be available for public
inspection in accordance with the Freedom of Information Act (5 U.S.C.
552), and Sec. 103.11(b) of the CBP Regulations (19 CFR 103.11(b)), on
regular business days between the hours of 9 a.m. and 4:30 p.m. at the
Office of Regulations and Rulings, Customs and Border Protection, 799
9th Street, NW., (5th Floor), Washington, DC. Arrangements to inspect
submitted comments should be made in advance by calling Mr. Joseph
Clark at 202-572-8768. Comments may also be accessed on the EPA Partner
EDOCKET Web site or Federal eRulemaking Portal. For additional
information on accessing comments via the EPA Partner EDOCKET Web site
or Federal eRulemaking Portal, see the ADDRESSES section of this
document.
Inapplicability of Notice and Delayed Effective Date Requirements
Under section 553 of the Administrative Procedure Act (APA) (5
U.S.C. 553), agencies amending their regulations generally are required
to publish a notice of proposed rulemaking in the Federal Register that
solicits public comment on the proposed amendments, consider public
comments in deciding on the final content of the final amendments, and
publish the final amendments at least 30 days prior to their effective
date. However, section 553(a)(1) of the APA provides that the standard
notice and comment procedures and requirement for a delayed effective
date do not apply to agency rulemaking that involves the foreign
affairs function of the United States. CBP has determined that these
interim regulations involve the foreign affairs function of the United
States, as they implement preferential tariff treatment and related
provisions of the US-CFTA.
In addition, section 553(b)(B) of the APA provides that notice and
public procedure are not required when an agency for good cause finds
them impracticable, unnecessary, or contrary to the public interest.
CBP finds that providing notice and public procedure for these
regulations would be impracticable, unnecessary, and contrary to the
public interest because they establish procedures that the public needs
to know in order to claim the benefit of a tariff preference under the
Act. The US-CFTA went into effect on January 1, 2004, and the importing
public needs the certainty of regulations as soon as possible.
Finally, section 553(d)(1) and (d)(3) of the APA exempt agencies
from the requirement of publishing notice of final rules at least 30
days prior to their effective date when a substantive rule grants or
recognizes an exemption or relieves a restriction and when the agency
finds that good cause exists for not meeting the advance publication
requirement. For the reasons described above, CBP has determined that
these regulations grant an exemption and relieve restrictions and that
good cause exists for dispensing with a delayed effective date.
Executive Order 12866 and Regulatory Flexibility Act
CBP has determined that this document is not a regulation or rule
subject to the provisions of Executive Order 12866 of September 30,
1993 (58 FR 51735, October 1993), because it pertains to a foreign
affairs function of the United States and implements an international
agreement, as described above, and therefore is specifically exempted
by section 3(d)(2) of Executive Order 12866. Because a notice of
proposed rulemaking is not required under section 553(b) of the APA for
the reasons described above, CBP notes that the provisions of the
Regulatory Flexibility Act, as amended (5 U.S.C. 601 et seq.), do not
apply to this rulemaking. Accordingly, CBP also notes that this interim
rule is not subject to the regulatory analysis requirements or other
requirements of 5 U.S.C. 603 and 604.
Paperwork Reduction Act
These regulations are being issued without prior notice and public
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553).
For this reason, the collections of information contained in these
regulations have been reviewed and, pending receipt and evaluation of
public comments, approved by the Office of Management and Budget in
accordance with the requirements of the Paperwork Reduction Act (44
U.S.C. 3507) under control number 1651-0117.
The collections of information in these regulations are in
Sec. Sec. 10.410 and 10.411. This information is required in
connection with claims for preferential tariff treatment and for the
purpose of the exercise of other rights under the US-CFTA and the Act
and will be used by CBP to determine eligibility for a tariff
preference or other rights or benefits under the US-CFTA and the Act.
The likely respondents are business organizations including importers,
exporters and manufacturers.
Estimated total annual reporting burden: 8,000 hours.
Estimated average annual burden per respondent: 0.2 hours.
Estimated number of respondents: 40,000.
Estimated annual frequency of responses: 1.
[[Page 10872]]
Comments concerning the collections of information and the accuracy
of the estimated annual burden, and suggestions for reducing that
burden, should be directed to the Office of Management and Budget,
Attention: Desk Officer for the Department of the Treasury, Office of
Information and Regulatory Affairs, Washington, DC 20503. A copy should
also be sent to the Regulations Branch, Office of Regulations and
Rulings, Bureau of Customs and Border Protection, 1300 Pennsylvania
Avenue, NW., Washington, DC 20229.
Drafting Information
The principal author of this document is Fernando Pe[ntilde]a,
Attorney, Office of Regulations and Rulings, Customs and Border
Protection. However, personnel from other offices and the Department of
the Treasury participated in its development.
Signing Authority
This document is being issued in accordance with Sec. 0.1(a)(1) of
the CBP Regulations (19 CFR 0.1(a)(1)) pertaining to the authority of
the Secretary of the Treasury (or her/her delegate) to approve
regulations related to certain CBP revenue functions.
List of Subjects
19 CFR Part 10
Alterations, Bonds, Customs duties and inspection, Exports,
Imports, Preference programs, Repairs, Reporting and recordkeeping
requirements, Trade agreements (United States-Chile Free Trade
Agreement).
19 CFR Part 24
Accounting, Customs duties and inspection, Financial and accounting
procedures, Reporting and recordkeeping requirements, Trade agreements,
User fees.
19 CFR Part 162
Administrative practice and procedure, Customs duties and
inspection, Penalties, Trade agreements.
19 CFR Part 163
Administrative practice and procedure, Customs duties and
inspection, Export, Import, Reporting and recordkeeping requirements,
Trade agreements.
19 CFR Part 178
Administrative practice and procedure, Exports, Imports, Reporting
and recordkeeping requirements.
19 CFR Part 191
Commerce, Customs duties and inspection, Drawback, Reporting and
recordkeeping requirements, Trade agreements.
Amendments to the Regulations
0
Accordingly, chapter I of title 19, Code of Federal Regulations (19 CFR
chapter I), is amended as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
0
1. The general authority citation for part 10 is revised, and the
specific authority for new subpart H is added, to read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,
1623, 1624, 3314;
* * * * *
Sections 10.401 through 10.490 also issued under Pub. L. 108-77,
117 Stat. 909 (19 U.S.C. 3805 note).
0
2. Sections 10.1 through 10.183 are designated as new Subpart A and a
subpart heading is added previous to the undesignated heading
``Articles Exported and Returned'' to read as follows:
Subpart A--General Provisions
* * * * *
0
3. Sections 10.191 through 10.199 are designated as new Subpart B, the
undesignated heading ``Caribbean Basin Initiative'' is removed, and in
its place, a subpart heading is added to read as follows:
Subpart B--Caribbean Basin Initiative
* * * * *
0
4. Sections 10.201 through 10.207 are designated as new Subpart C, the
undesignated heading ``Andean Trade Preference'' is removed, and in its
place, a subpart heading is added to read as follows:
Subpart C--Andean Trade Preference
* * * * *
0
5. Sections 10.211 through 10.217 are designated as new Subpart D, the
undesignated heading ``Textile and Apparel Articles Under the African
Growth and Opportunity Act'' is removed, and in its place, a subpart
heading is added to read as follows:
Subpart D--Textile and Apparel Articles Under the African Growth
and Opportunity Act
* * * * *
0
6. Sections 10.221 through 10.237 are designated as new Subpart E and a
subpart heading is added previous to the undesignated heading ``Textile
and Apparel Articles Under the United States-Caribbean Basin Trade
Partnership Act'' to read as follows:
Subpart E--United States-Caribbean Basin Trade Partnership Act
* * * * *
0
7. Sections 10.241 through 10.257 are designated as new Subpart F and a
new subpart heading is added previous to the undesignated heading
``Apparel and Other Textile Articles Under the Andean Trade Promotion
and Drug Eradication Act'' to read as follows:
Subpart F--Andean Trade Promotion and Drug Eradication Act
* * * * *
0
8. Sections 10.301 through 10.311 are designated as new Subpart G, the
undesignated heading ``United States-Canada Free Trade Agreement'' is
removed, and in its place, a subpart heading is added to read as
follows:
Subpart G--United States-Canada Free Trade Agreement
* * * * *
0
9. In Sec. 10.31, paragraph (f), the last sentence is revised to read
as follows:
Sec. 10.31 Entry; bond.
* * * * *
(f) * * * In addition, notwithstanding any other provision of this
paragraph, in the case of professional equipment necessary for carrying
out the business activity, trade or profession of a business person,
equipment for the press or for sound or television broadcasting,
cinematographic equipment, articles imported for sports purposes and
articles intended for display or demonstration, if brought into the
United States by a resident of Canada, Mexico or Chile and entered
under Chapter 98, Subchapter XIII, HTSUS, no bond or other security
will be required if the entered article is a good originating in
Canada, Mexico or Chile within the meaning of General Note 12 or 26,
HTSUS.
* * * * *
Sec. 10.36a [Amended]
0
10. In Sec. 10.36a, the first sentence of paragraph (a) is amended by
removing the words ``(as defined in Sec. Sec. 10.8 and 181.64 of this
chapter)'' and adding, in their place, the words ``(as defined in
Sec. Sec. 10.8, 10.490 and 181.64 of this chapter)''.
[[Page 10873]]
0
11. Part 10, CBP Regulations, is amended by adding a new Subpart H to
read as follows:
Subpart H--United States-Chile Free Trade Agreement
General Provisions
10.401 Scope.
10.402 General definitions.
Import Requirements
10.410 Filing of claim for preferential tariff treatment upon
importation.
10.411 Certification of origin.
10.412 Importer obligations.
10.413 Validity of certification.
10.414 Certification not required.
10.415 Maintenance of records.
10.416 Effect of noncompliance; failure to provide documentation
regarding transshipment.
Tariff Preference Level
10.420 Filing of claim for tariff preference level.
10.421 Goods eligible for tariff preference claims.
10.422 Submission of certificate of eligibility.
10.423 Certificate of eligibility not required.
10.424 Effect of noncompliance; failure to provide documentation
regarding transshipment of non-originating cotton or man-made fiber
fabric or apparel goods.
10.425 Transit and transshipment of non-originating cotton or man-
made fiber fabric or apparel goods.
Export Requirements
10.430 Export requirements.
10.431 Failure to comply with requirements.
Post-Importation Duty Refund Claims
10.440 Right to make post-importation claim and refund duties.
10.441 Filing procedures.
10.442 CBP processing procedures.
Rules of Origin
10.450 Definitions.
10.451 Originating goods.
10.452 Exclusions.
10.453 Treatment of textile and apparel sets.
10.454 Regional value content.
10.455 Value of materials.
10.456 Accessories, spare parts or tools.
10.457 Fungible goods and materials.
10.458 Accumulation.
10.459 De minimis.
10.460 Indirect materials.
10.461 Retail packaging materials and containers.
10.462 Packing materials and containers for shipment.
10.463 Transit and transshipment.
Origin Verifications and Determinations
10.470 Verification and justification of claim for preferential
treatment.
10.471 Special rule for verification in Chile of U.S. imports of
textile and apparel products.
10.472 Verification in the United States of textile and apparel
goods.
10.473 Issuance of negative origin determinations.
10.474 Repeated false or unsupported preference claims.
Penalties
10.480 General.
10.481 Corrected declaration by importers.
10.482 Corrected certification of origin by exporters or producers.
10.483 Framework for correcting declarations and certifications.
Goods Returned After Repair or Alteration
10.490 Goods re-entered after repair or alteration in Chile.
Subpart H--United States-Chile Free Trade Agreement
General Provisions
Sec. 10.401 Scope.
This subpart implements the duty preference and related customs
provisions applicable to imported goods under the United States-Chile
Free Trade Agreement (the US-CFTA) entered into on June 6, 2003, and
under the United States-Chile Free Trade Agreement Implementation Act
(the Act; 117 Stat. 909). Except as otherwise specified in this
subpart, the procedures and other requirements set forth in this
subpart are in addition to the customs procedures and requirements of
general application contained elsewhere in this chapter. Additional
provisions implementing certain aspects of the US-CFTA and the Act are
contained in parts 12, 24, 162, 163 and 191 of this chapter.
Sec. 10.402 General definitions.
As used in this subpart, the following terms will have the meanings
indicated unless either the context in which they are used requires a
different meaning or a different definition is prescribed for a
particular section of this subpart:
(a) Certification. ``Certification'' means, either when used by
itself or in the expression ``certification of origin'', the
certification established under article 4.13 of the US-CFTA, that a
good qualifies as an originating good under the US-CFTA;
(b) Claim of origin. ``Claim of origin'' means a claim that a
textile or apparel good is an originating good or a good of a Party;
(c) Claim for preferential tariff treatment. ``Claim for
preferential tariff treatment'' means a claim that a good is entitled
to the duty rate applicable under the US-CFTA to an originating good;
(d) Customs authority. ``Customs authority'' means the competent
authority that is responsible under the law of a Party for the
administration of customs laws and regulations;
(e) Customs Valuation Agreement. ``Customs Valuation Agreement''
means the Agreement on Implementation of Article VII of the General
Agreement on Tariffs and Trade 1994, which is part of the WTO
Agreement;
(f) Days. ``Days'' means calendar days;
(g) Customs duty. ``Customs duty'' includes any customs or import
duty and a charge of any kind imposed in connection with the
importation of a good, including any form of surtax or surcharge in
connection with such importation, but, for purposes of implementing the
US-CFTA, does not include any:
(1) Charge equivalent to an internal tax imposed consistently with
Article III:2 of the GATT 1994; in respect of like, directly
competitive, or substitutable goods of the Party, or in respect of
goods from which the imported good has been manufactured or produced in
whole or in part;
(2) Antidumping or countervailing duty; and
(3) Fee or other charge in connection with importation commensurate
with the cost of services rendered;
(h) Enterprise. ``Enterprise'' means any entity constituted or
organized under applicable law, whether or not for profit, and whether
privately-owned or governmentally-owned, including any corporation,
trust, partnership, sole proprietorship, joint venture, or other
association;
(i) GATT 1994. ``GATT 1994'' means the General Agreement on Tariffs
and Trade 1994, which is part of the WTO Agreement;
(j) Goods. ``Goods'' means domestic products as these are
understood in the GATT 1994 or such goods as the Parties may agree, and
includes originating goods of that Party. A good of a Party may include
materials of other countries;
(k) Harmonized System. ``Harmonized System (HS)'' means the
Harmonized Commodity Description and Coding System, including its
General Rules of Interpretation, Section Notes, and Chapter Notes, as
adopted and implemented by the Parties in their respective tariff laws;
(l) Heading. ``Heading'' means the first four digits in the tariff
classification number under the Harmonized System;
(m) HTSUS. ``HTSUS'' means the Harmonized Tariff Schedule of the
United States as promulgated by the U.S. International Trade
Commission;
(n) Indirect material. ``Indirect material'' means a good used in
the production, testing, or inspection of a good in the territory of
the United States
[[Page 10874]]
or Chile but not physically incorporated into the good, or a good used
in the maintenance of buildings or the operation of equipment
associated with the production of a good in the territory of the United
States or Chile, including--
(1) Fuel and energy;
(2) Tools, dies, and molds;
(3) Spare parts and materials used in the maintenance of equipment
and buildings;
(4) Lubricants, greases, compounding materials, and other materials
used in production or used to operate equipment and buildings;
(5) Gloves, glasses, footwear, clothing, safety equipment, and
supplies;
(6) Equipment, devices, and supplies used for testing or inspecting
the goods;
(7) Catalysts and solvents; and
(8) Any other goods that are not incorporated into the good but
whose use in the production of the good can reasonably be demonstrated
to be a part of that production;
(o) National. ``National'' means a natural person who has the
nationality of a Party according to Annex 2.1 of the US-CFTA or a
permanent resident of a Party;
(p) Originating. ``Originating'' means qualifying under the rules
of origin set out in Chapter Four (Rules of Origin and Origin
Procedures) of the US-CFTA;
(q) Party. ``Party'' means the United States or the Republic of
Chile;
(r) Person. ``Person'' means a natural person or an enterprise;
(s) Preferential tariff treatment. ``Preferential tariff
treatment'' means the duty rate applicable under the US-CFTA to an
originating good;
(t) Subheading. ``Subheading'' means the first six digits in the
tariff classification number under the Harmonized System;
(u) Tariff preference level. ``Tariff preference level'' means a
quantitative limit for certain non-originating textiles and textile
apparel goods that may be entitled to preferential tariff treatment as
if such goods were originating based on the goods meeting the
production requirements set forth in Sec. 10.421 of this subpart.
(v) Textile or apparel good. ``Textile or apparel good'' means a
good listed in the Annex to the Agreement on Textiles and Clothing
(commonly referred to as ATC), which is part of the WTO Agreement;
(w) Territory. ``Territory'' means:
(1) With respect to Chile, the land, maritime and air space under
its sovereignty, and the exclusive economic zone and the continental
shelf within which it exercises sovereign rights and jurisdiction in
accordance with international law and its domestic law; and
(2) With respect to the United States,
(i) The customs territory of the United States, which includes the
50 states, the District of Columbia, and Puerto Rico,
(ii) The foreign trade zones located in the United States and
Puerto Rico, and
(iii) Any areas beyond the territorial seas of the United States
within which, in accordance with international law and its domestic
law, the United States may exercise rights with respect to the seabed
and subsoil and their natural resources;
(x) WTO Agreement. ``WTO Agreement'' means the Marrakesh Agreement
Establishing the World Trade Organization of April 15, 1994.
Import Requirements
Sec. 10.410 Filing of claim for preferential tariff treatment upon
importation.
(a) Declaration. In connection with a claim for preferential tariff
treatment for an originating good under the US-CFTA, the U.S. importer
must make a written declaration that the good qualifies for such
treatment. The written declaration is made by including on the entry
summary, or equivalent documentation, the symbol ``CL'' as a prefix to
the subheading of the HTSUS under which each qualifying good is
classified, or by the method specified for equivalent reporting via
electronic interchange.
(b) Corrected declaration. If, after making the declaration
required under paragraph (a) of this section, the U.S. importer has
reason to believe that the declaration or the certification on which
the declaration was based contains information that is not correct, the
importer must, within 30 calendar days after the date of discovery of
the error, make a corrected declaration, submit a letter or other
written statement to the CBP office where the original declaration was
filed specifying the correction and pay any duties that may be due.
Sec. 10.411 Certification of origin.
(a) Contents. An importer who claims preferential tariff treatment
on a good must submit, at the request of the port director, a
certification that the good qualifies as originating. A certification
submitted to CBP under this paragraph:
(1) Need not be in a prescribed format but must be in writing or
must be transmitted electronically pursuant to any electronic means
authorized by CBP for that purpose;
(2) Must include the following information:
(i) The legal name, address, telephone and e-mail address of the
importer of record of the good (if known);
(ii) The legal name, address, telephone and e-mail address of the
exporter of the good (if different from the producer);
(iii) The legal name, address, telephone and e-mail address of the
producer of the good (if known);
(iv) A description of the good, which must be sufficiently detailed
to relate it to the invoice and the HS nomenclature;
(v) The HTSUS tariff classification, to six or more digits, as
necessary for the specific change in tariff classification rule for the
good set forth in General Note 26(n), HTSUS;
(vi) The preference criterion as set forth in paragraph (e) of this
section;
(vii) For multiple shipments of identical goods, the blanket period
in ``mm/dd/yyyy to mm/dd/yyyy'' format (12-month maximum); and
(3) Must include a statement, in substantially the following form:
``I Certify that:
The information on this document is true and accurate and I
assume the responsibility for proving such representations. I
understand that I am liable for any false statements or material
omissions made on or in connection with this document;
I agree to maintain, and present upon request, documentation
necessary to support this certification, and to inform, in writing,
all persons to whom the certification was given of any changes that
could affect the accuracy or validity of this certification; and
The goods originated in the territory of one or more of the
parties, and comply with the origin requirements specified for those
goods in the United States-Chile Free Trade Agreement; there has
been no further production or any other operation outside the
territories of the parties, other than unloading, reloading, or any
other operation necessary to preserve it in good condition or to
transport the good to the United States; and
This document consists of -------- pages, including all
attachments.''
(b) Responsible official or agent. The certification required to be
submitted under paragraph (a) of this section must be signed and dated
by a responsible official of the importer; exporter; producer; or by
the importer's, exporter's, or producer's authorized agent having
knowledge of the relevant facts. If the person making the certification
is not the producer of the good, or the producer's authorized agent,
the person may sign the certification of origin based on:
(1) A certification that the good qualifies as originating issued
by the producer; or
(2) Knowledge of the exporter or importer that the good qualifies
as an originating good.
(c) Language. The certification must be completed either in the
English or
[[Page 10875]]
Spanish language. If the certification is completed in Spanish, the
importer must also provide to the port director, upon request, a
written English translation of the certification.
(d) Applicability of certification. A certification may be
applicable to:
(1) A single importation of a good into the United States,
including a single shipment that results in the filing of one or more
entries and a series of shipments that results in the filing of one
entry; or
(2) Multiple importations of identical goods into the United States
that occur within a specified blanket period, not exceeding 12 months,
set out in the certification. For purposes of this paragraph,
``identical goods'' means goods that are the same in all respects
relevant to the production that qualifies the goods as originating.
(e) Preference criteria. The preference criterion to be included on
the certification as required in paragraph (a)(2)(vi) of this section
is as follows:
(1) Preference criterion ``A'', refers to a good that is wholly
obtained or produced entirely in the territory of Chile or of the
United States, or both (see General Note 26(b)(i), HTSUS);
(2) Preference criterion ``B'', refers to a good that is produced
entirely in the territory of Chile or the United States, or both (see
General Note 26(b)(ii), HTSUS), and
(i) Each of the non-originating materials used in the production of
the good undergoes an applicable change in tariff classification
specified in General Note 26(n), HTSUS, or
(ii) The good otherwise satisfies any applicable regional value
content or other requirements specified in General Note 26(n), HTSUS;
(3) Preference criterion ``C'' refers to a good that is produced
entirely in the territory of Chile or the United States, or both,
exclusively from originating materials (see General Note 26(b)(iii),
HTSUS).
Sec. 10.412 Importer obligations.
(a) General. An importer who makes a declaration under Sec.
10.410(a) is responsible for the truthfulness of the declaration and of
all the information and data contained in the certification, for
submitting any supporting documents requested by CBP, and for the
truthfulness of the information contained in those documents.
(b) Compliance. In order to make a claim for preferential treatment
under Sec. 10.410 of this subpart, the importer:
(1) Must have records that explain how the importer came to the
conclusion that the good qualifies for preferential treatment. Those
records must include documents that support a claim that the article in
question qualifies for preferential treatment because it meets the
applicable rules of origin set forth in General Note 26, HTSUS, and in
this subpart. Those records may include a properly completed
certification as set forth in Sec. 10.411 of this subpart; and
(2) May be required to demonstrate that the conditions set forth in
Sec. 10.463 of this subpart were met if the imported article was
shipped through an intermediate country.
(c) Information provided by exporter or producer. The fact that the
importer has issued a certification based on information provided by
the exporter or producer will not relieve the importer of the
responsibility referred to in paragraph (a) of this section. A U.S.
importer who voluntarily makes a corrected declaration will not be
subject to penalties for having made an incorrect declaration (see
Sec. 10.481 of this subpart).
(d) Internal controls. In accordance with Part 163 of this chapter,
importers are expected to establish and implement internal controls
which provide for the periodic review of the accuracy of the
certifications or other records referred to in paragraph (b)(1) of this
section.
Sec. 10.413 Validity of certification.
A certification that is completed, signed and dated in accordance
with the requirements listed in Sec. 10.411 will be accepted by CBP as
valid for four years from the date on which the certification was
signed. If the port director determines that a certification is
illegible or defective or has not been completed in accordance with
Sec. 10.411, the importer will be given a period of not less than five
business days to submit a corrected certification.
Sec. 10.414 Certification not required.
(a) General. Except as otherwise provided in paragraph (b) of this
section, an importer will not be required to submit a certification
that the good qualifies for preferential tariff treatment for:
(1) A non-commercial importation of a good; or
(2) A commercial importation of a good whose value does not exceed
U.S. $2,500, or the equivalent amount in Chilean currency.
(b) Exception. If the port director determines that an importation
described in paragraph (a) of this section may reasonably be considered
to have been carried out or planned for the purpose of evading
compliance with the rules and procedures governing claims for
preference under the US-CFTA, the port director will notify the
importer in writing that for that importation the importer must submit
to CBP a valid certification that the good qualifies as originating.
The importer must submit such a certification within 30 calendar days
from the date of the written notice. Failure to timely submit the
certification or information will result in denial of the claim for
preferential tariff treatment.
Sec. 10.415 Maintenance of records.
(a) General. An importer claiming preferential treatment for a good
imported into the United States must maintain in the United States, for
five years after the date of importation of the good, a certification
(or a copy thereof) that the good qualifies as originating, and any
records and documents that the importer has relating to the origin of
the good, including records and documents associated with:
(1) The purchase of, cost of, value of, and payment for, the good;
(2) Where appropriate, the purchase of, cost of, value of, and
payment for, all materials, including recovered goods and indirect
materials, used in the production of the good; and,
(3) Where appropriate, the production of the good in the form in
which the good was exported.
(b) Method of maintenance. The records referred to in paragraph (a)
of this section must be maintained by importers as provided in Sec.
163.5 of this chapter.
Sec. 10.416 Effect of noncompliance; failure to provide documentation
regarding transshipment.
(a) Effect of noncompliance. If the importer fails to comply with
any requirement under this subpart, including submission of a
certification of origin under Sec. 10.411(a) or submission of a
corrected certification under Sec. 10.413, the port director may deny
preferential tariff treatment to the imported good.
(b) Failure to provide documentation regarding transshipment. Where
the requirements for preferential tariff treatment set forth elsewhere
in this subpart are met, the port director nevertheless may deny
preferential tariff treatment to an originating good if the good is
shipped through or transshipped in a country other than Chile or the
United States, and the importer of the good does not provide, at the
request of the port director, copies of documents demonstrating to the
satisfaction of the port director that the requirements set forth in
Sec. 10.463 were met.
[[Page 10876]]
Tariff Preference Level
Sec. 10.420 Filing of claim for tariff preference level.
A cotton or man-made fiber fabric or apparel good described in
Sec. 10.421 that does not qualify as an originating good under Sec.
10.451 may nevertheless be entitled to preferential tariff treatment
under the US-CFTA under an applicable tariff preference level (TPL). To
make a TPL claim, the importer must include on the entry summary, or
equivalent documentation, the applicable subheading in Chapter 99 of
the HTSUS (9911.99.20 for a good described in Sec. 10.421(a) or (b) or
9911.99.40 for a good described in Sec. 10.421(c)) immediately above
the applicable subheading in Chapter 52 through 62 of the HTSUS under
which each non-originating cotton or man-made fiber fabric or apparel
good is classified.
Sec. 10.421 Goods eligible for tariff preference claims.
The following goods are eligible for a TPL claim filed under Sec.
10.420:
(a) Woven fabrics. Certain woven fabrics of Chapters 52, 54 and 55
of the HTS (Headings 5208 to 5212; 5407 and 5408; 5512 to 5516) that
meet the applicable conditions for preferential tariff treatment under
the US-CFTA other than the condition that they are originating goods,
if they are wholly formed in the U.S. or Chile regardless of the origin
of the yarn used to produce these fabrics.
(b) Cotton or man-made fabric goods. Certain cotton or man-made
fabric goods of Chapters 58 and 60 of the HTS that meet the applicable
conditions for preferential tariff treatment under the US-CFTA other
than the condition that they are originating goods if they are wholly
formed in the U.S. or Chile regardless of the origin of the fibers used
to produce the spun yarn or the yarn used to produce the fabrics.\1\
---------------------------------------------------------------------------
\1\ The relevant HTS subheadings for fabric goods in Chapters 58
or 60 eligible under HTS 9911.99.20 are as follows: 5801.21,
5801.22, 5801.23, 5801.24, 5801.25, 5801.26, 5801.31, 5801.32,
5801.33, 5801.34, 5801.35, 5801.36, 5802.11, 5802.19, 5802.20.0020,
5802.30.0030, 5803.10, 5803.90.30, 5804.10.10, 5804.21, 5804.29.10,
5804.30.0020, 5805.00.30, 5805.00.4010, 5806.10.10, 5806.10.24,
5806.10.28, 5806.20, 5806.31, 5806.32, 5807.10.05, 5807.10.2010,
5807.10.2020, 5807.90.05, 5807.90.2010, 5807.90.2020, 5808.10.40,
5808.10.70, 5808.90.0010, 5809.00, 5810.10, 5810.91, 5810.92,
5811.00.20, 5811.00.30, 6001.10, 6001.21, 6001.22, 6001.91, 6001.92,
6002.40, 6002.90, 6003.20, 6003.30, 6003.40, 6004.10, 6004.90,
6005.21, 6005.22, 6005.23, 6005.24, 6005.31, 6005.32, 6005.33,
6005.34, 6005.41, 6005.42, 6005.43, 6005.44, 6006.21, 6006.22,
6006.23, 6006.24, 6006.31, 6006.32, 6006.33, 6006.34, 6006.41,
6006.42, 6006.43, 6006.44.
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(c) Cotton or man-made apparel goods. Cotton or man-made apparel
goods in Chapters 61 and 62 of the HTS that are both cut (or knit-to-
shape) and sewn or otherwise assembled in the U.S. or Chile regardless
of the origin of the fabric or yarn, provided that they meet the
applicable conditions for preferential tariff treatment under the US-
CFTA, other than the condition that they are originating goods.
Sec. 10.422 Submission of certificate of eligibility.
(a) Contents. An importer who claims preferential tariff treatment
on a non-originating cotton or man-made fiber fabric or apparel good
must submit, at the request of the port director, a certificate of
eligibility containing information demonstrating that the good
satisfies the requirements for entry under the applicable TPL, as set
forth in Sec. 10.421. A certificate of eligibility submitted to CBP
under this section:
(1) Need not be in a prescribed format but must be in writing or
must be transmitted electronically pursuant to any electronic means
authorized by CBP for that purpose;
(2) Must include the following information:
(i) The legal name, address, telephone and e-mail address of the
importer of record of the good;
(ii) The legal name, address, telephone and e-mail address of the
exporter of the good (if different from the producer);
(iii) The legal name, address, telephone and e-mail address of the
producer of the good (if known);
(iv) A description of the good, which must be sufficiently detailed
to relate it to the invoice and the HS nomenclature;
(v) The HTSUS tariff classification of the good, to six or more
digits, as well as the applicable subheading in Chapter 99 of the HTSUS
(9911.99.20 or 9911.99.40);
(vi) For a single shipment, the commercial invoice number;
(vii) For multiple shipments of identical goods, the blanket period
in ``mm/dd/yyyy to mm/dd/yyyy'' format (12-month maximum); and
(3) Must include a statement, in substantially the following form:
``I Certify that:
The information on this document is true and accurate and I
assume the responsibility for proving such representations. I
understand that I am liable for any false statements or material
omissions made on or in connection with this document;
I agree to maintain and present upon request, documentation
necessary to support this certificate, and to inform, in writing,
all persons to whom the certificate was given of any changes that
could affect the accuracy or validity of this certificate; and
The goods were produced in the territory of one or more of the
parties, and comply with the preference requirements specified for
those goods in the United States-Chile Free Trade Agreement and
Chapter 99, subchapter XI of the HTSUS. There has been no further
production or any other operation outside the territories of the
parties, other than unloading, reloading, or any other operation
necessary to preserve it in good condition or to transport the good
to the United States; and
This document consists of ---- pages, including all
attachments.''
(b) Responsible official or agent. The certificate of eligibility
required to be submitted under this section must be signed and dated by
a responsible official of the importer or by the importer's authorized
agent having knowledge of the relevant facts.
(c) Language. The certificate of eligibility must be completed
either in the English or Spanish language. If the certificate is
completed in Spanish, the importer must also provide to the port
director, upon request, a written English translation of the
certificate;
(d) Applicability of certificate of eligibility. A certificate of
eligibility may be applicable to:
(1) A single importation of a good into the United States,
including a single shipment that results in the filing of one or more
entries and a series of shipments that results in the filing of one
entry; or
(2) Multiple importations of identical goods into the United States
that occur within a specified blanket period, not exceeding 12 months,
set out in the certification. For purposes of this paragraph,
``identical goods'' means goods that are the same in all respects
relevant to the production that qualifies the goods for preferential
tariff treatment under an applicable TPL.
Sec. 10.423 Certificate of eligibility not required.
(a) General. Except as otherwise provided in paragraph (b) of this
section, an importer will not be required to submit a certificate of
eligibility for:
(1) A non-commercial importation of a good; or
(2) A commercial importation of a good whose value does not exceed
U.S. $2,500, or the equivalent amount in Chilean currency.
(b) Exception. If the port director determines that an importation
described in paragraph (a) of this section may reasonably be considered
to have been carried out or planned for the purpose of evading
compliance with the rules and procedures governing TPL claims for
preference under the US-CFTA, the port director will notify the
importer in writing that for that importation the importer must submit
to CBP a valid certificate of eligibility. The
[[Page 10877]]
importer must submit such a certificate within 30 calendar days from
the date of the written notice. Failure to timely submit the
certificate will result in denial of the claim for preferential tariff
treatment.
Sec. 10.424 Effect of noncompliance; failure to provide documentation
regarding transshipment of non-originating cotton or man-made fiber
fabric or apparel goods.
(a) Effect of noncompliance. If the importer fails to comply with
any requirement under this subpart, including submission of a
certificate of eligibility under Sec. 10.422, the port director may
deny preferential tariff treatment to the imported good.
(b) Failure to provide documentation regarding transshipment. Where
the requirements for preferential tariff treatment set forth elsewhere
in this subpart are met, the port director nevertheless may deny
preferential tariff treatment to a good for which a TPL claim is made
if the good is shipped through or transshipped in a country other than
Chile or the United States, and the importer of the good does not
provide, at the request of the port director, copies of documents
demonstrating to the satisfaction of the port director that the
requirements set forth in Sec. 10.425 were met.
Sec. 10.425 Transit and transshipment of non-originating cotton or
man-made fiber fabric or apparel goods.
(a) General. A good will not be considered eligible for
preferential tariff treatment under an applicable TPL by reason of
having undergone production that occurs entirely in the territory of
Chile, the United States, or both, that would enable the good to
qualify for preferential tariff treatment if subsequent to that
production the good undergoes further production or any other operation
outside the territories of Chile and the United States, other than
unloading, reloading, or any other process necessary to preserve the
good in good condition or to transport the good to the territory of
Chile or the United States.
(b) Documentary evidence. An importer making a claim for
preferential tariff treatment may be required to demonstrate, to CBP's
satisfaction, that no further production or subsequent operation, other
than permitted under paragraph (a) of this section, occurred outside
the territories of Chile or the United States. An importer may
demonstrate compliance with this section by submitting documentary
evidence. Such evidence may include, but is not limited to, bills of
lading, packing lists, commercial invoices, and customs entry and exit
documents.
Export Requirements
Sec. 10.430 Export requirements.
(a) Submission of certification to CBP. An exporter or producer in
the United States that signs a certification of origin for a good
exported from the United States to Chile must provide a copy of the
certification (or such other medium or format approved by the Chile
customs authority for that purpose) to CBP upon request.
(b) Notification of errors in certification. An exporter or
producer in the United States who has completed and signed a
certification of origin, and who has reason to believe that the
certification contains or is based on information that is not correct,
must immediately after the date of discovery of the error notify in
writing all persons to whom the certification was given by the exporter
or producer of any change that could affect the accuracy or validity of
the certification.
(c) Maintenance of records--(1) General. An exporter or producer in
the United States that signs a certification of origin for a good
exported from the United States to Chile must maintain in the United
States, for a period of at least five years after the date the
certification was signed, all records and supporting documents relating
to the origin of a good for which the certification was issued,
including records and documents associated with:
(i) The purchase of, cost of, value of, and payment for, the good;
(ii) Where appropriate, the purchase of, cost of, value of, and
payment for, all materials, including recovered goods and indirect
materials, used in the production of the good; and
(iii) Where appropriate, the production of the good in the form in
which the good was exported.
(2) Method of maintenance. The records referred to in paragraph (c)
of this section must be maintained in accordance with the Generally
Accepted Accounting Principles applied in the country of production and
in the case of exporters or producers in the United States must be
maintained in the same manner as provided in Sec. 163.5 of this
chapter.
(3) Availability of records. For purposes of determining compliance
with the provisions of this part, the exporter's or producer's records
required to be maintained under this section must be stored and made
available for examination and inspection by the port director or other
appropriate CBP officer in the same manner as provided in part 163 of
this chapter.
Sec. 10.431 Failure to comply with requirements.
The port director may apply such measures as the circumstances may
warrant where an exporter or a producer in the United States fails to
comply with any requirement of this part. Such measures may include the
imposition of penalties pursuant to 19 U.S.C. 1508(g) for failure to
retain records required to be maintained under Sec. 10.430.
Post-Importation Duty Refund Claims
Sec. 10.440 Right to make post-importation claim and refund duties.
Notwithstanding any other available remedy, where a good would have
qualified as an originating good when it was imported into the United
States but no claim for preferential tariff treatment was made, the
importer of that good may file a claim for a refund of any excess
duties at any time within one year after the date of importation of the
good in accordance with the procedures set forth in Sec. 10.441 of
this part. Subject to the provisions of Sec. 10.416 of this part, CBP
may refund any excess duties by liquidation or reliquidation of the
entry covering the good in accordance with Sec. 10.442(c) of this
part.
Sec. 10.441 Filing procedures.
(a) Place of filing. A post-importation claim for a refund under
Sec. 10.440 of this part must be filed with the director of the port
at which the entry covering the good was filed.
(b) Contents of claim. A post-importation claim for a refund must
be filed by presentation of the following:
(1) A written declaration stating that the good qualified as an
originating good at the time of importation and setting forth the
number and date of the entry or entries covering the good;
(2) Subject to Sec. 10.413 of this part, a copy of a certification
that the good qualifies for preferential tariff treatment;
(3) A written statement indicating whether or not the importer of
the good provided a copy of the entry summary or equivalent
documentation to any other person. If such documentation was so
provided, the statement must identify each recipient by name, CBP
identification number and address and must specify the date on which
the documentation was provided; and
(4) A written statement indicating whether or not any person has
filed a protest or a petition or request for reliquidation relating to
the good under any provision of law; and if any such protest or
petition or request for reliquidation has been filed, the statement
must identify the protest, petition or request by number and date.
[[Page 10878]]
Sec. 10.442 CBP processing procedures.
(a) Status determination. After receipt of a post-importation claim
under Sec. 10.441 of this part, the port director will determine
whether the entry covering the good has been liquidated and, if
liquidation has taken place, whether the liquidation has become final.
(b) Pending protest, petition or request for reliquidation or
judicial review. If the port director determines that any protest or
any petition or request for reliquidation relating to the good has not
been finally decided, the port director will suspend action on the
claim filed under this subpart until the decision on the protest,
petition or request becomes final. If a summons involving the tariff
classification or dutiability of the good is filed in the Court of
International Trade, the port director will suspend action on the claim
filed under this subpart until judicial review has been completed.
(c) Allowance of claim--(1) Unliquidated entry. If the port
director determines that a claim for a refund filed under this subpart
should be allowed and the entry covering the good has not been
liquidated, the port director will take into account the claim for
refund under this subpart in connection with the liquidation of the
entry.
(2) Liquidated entry. If the port director determines that a claim
for a refund filed under this subpart should be allowed and the entry
covering the good has been liquidated, whether or not the liquidation
has become final, the entry must be reliquidated in order to effect a
refund of duties pursuant to this subpart. If the entry is otherwise to
be reliquidated based on administrative review of a protest or petition
for reliquidation or as a result of judicial review, the port director
will reliquidate the entry taking into account the claim for refund
under this subpart.
(d) Denial of claim--(1) General. The port director may deny a
claim for a refund filed under Sec. 10.441 of this part if the claim
was not filed timely, if the importer has not complied with the
requirements of Sec. 10.441 of this part, if the certification
submitted under Sec. 10.441(b)(2) of this part cannot be accepted as
valid (see Sec. 10.413 of this part), or if, following initiation of
an origin verification under Sec. 10.470 of this part, the port
director determines either that the imported good did not qualify as an
originating good at the time of importation or that a basis exists upon
which preferential tariff treatment may be denied under Sec. 10.470 of
this part.
(2) Unliquidated entry. If the port director determines that a
claim for a refund filed under this subpart should be denied and the
entry covering the good has not been liquidated, the port director will
deny the claim in connection with the liquidation of the entry, and
written notice of the denial and the reason for the denial will be
given to the importer.
(3) Liquidated entry. If the port director determines that a claim
for a refund filed under this subpart should be denied and the entry
covering the good has been liquidated, whether or not the liquidation
has become final, the claim may be denied without reliquidation of the
entry. If the entry is otherwise to be reliquidated based on
administrative review of a protest or petition for reliquidation or as
a result of judicial review, such reliquidation may include denial of
the claim filed under this subpart. In either case, the port director
will give written notice of the denial and the reason for the denial to
the importer.
Rules of Origin
Sec. 10.450 Definitions.
For purposes of Sec. Sec. 10.450 through 10.463:
(a) Adjusted value. ``Adjusted value'' means the value determined
in accordance with Articles 1 through 8, Article 15, and the
corresponding interpretative notes of the Customs Valuation Agreement,
adjusted, if necessary, to exclude any costs, charges, or expenses
incurred for transportation, insurance, and related services incident
to the international shipment of the merchandise from the country of
exportation to the place of importation and the value of packing
materials and containers for shipment as defined in Sec. 10.450(m) of
this subpart;
(b) Exporter. ``Exporter'' means a person who exports goods from
the territory of a Party;
(c) Fungible goods or materials. ``Fungible goods or materials''
means goods or materials that are interchangeable for commercial
purposes and whose properties are essentially identical;
(d) Generally Accepted Accounting Principles. ``Generally Accepted
Accounting Principles'' means the principles, rules, and procedures,
including both broad and specific guidelines, that define the
accounting practices accepted in the territory of a Party;
(e) Good. ``Good'' means any merchandise, product, article, or
material;
(f) Goods wholly obtained or produced entirely in the territory of
one or both of the Parties. ``Goods wholly obtained or produced
entirely in the territory of one or both of the Parties'' means:
(1) Mineral goods extracted in the territory of one or both of the
Parties;
(2) Vegetable goods, as such goods are defined in the Harmonized
System, harvested in the territory of one or both of the Parties;
(3) Live animals born and raised in the territory of one or both of
the Parties;
(4) Goods obtained from hunting, trapping, or fishing in the
territory of one or both of the Parties;
(5) Goods (fish, shellfish, and other marine life) taken from the
sea by vessels registered or recorded with a Party and flying its flag;
(6) Goods produced on board factory ships from the goods referred
to in paragraph (f)(5) provided such factory ships are registered or
recorded with that Party and fly its flag;
(7) Goods taken by a Party or a person of a Party from the seabed
or beneath the seabed outside territorial waters, provided that a Party
has rights to exploit such seabed;
(8) Goods taken from outer space, provided they are obtained by a
Party or a person of a Party and not processed in the territory of a
non-Party;
(9) Waste and scrap derived from:
(i) Production in the territory of one or both of the Parties, or
(ii) Used goods collected in the territory of one or both of the
Parties, provided such goods are fit only for the recovery of raw
materials;
(10) Recovered goods derived in the territory of a Party from used
goods, and utilized in the Party's territory in the production of
remanufactured goods; and
(11) Goods produced in the territory of one or both of the Parties
exclusively from goods referred to in paragraphs (f)(1) through (f)(10)
of this section, or from their derivatives, at any stage of production;
(g) Importer. ``Importer'' means a person who imports goods into
the territory of a Party;
(h) Issued. ``Issued'' means prepared by and, where required under
a Party's domestic law or regulation, signed by the importer, exporter,
or producer of the good;
(i) Location of the producer. ``Location of the producer'' means
site of production of a good;
(j) Material. ``Material'' means a good that is used in the
production of another good, including a part, ingredient, or indirect
material;
(k) Non-originating good. ``Non-originating good'' means a good
that does not qualify as originating under this subpart;
[[Page 10879]]
(l) Non-originating material. ``Non-originating material'' means a
material that does not qualify as originating under this subpart;
(m) Packing materials and containers for shipment. ``Packing
materials and containers for shipment'' means the goods used to protect
a good during its transportation to the United States, and does not
include the packaging materials and containers in which a good is
packaged for retail sale;
(n) Producer. ``Producer'' means a person who engages in the
production of a good in the territory of a Party;
(o) Production. ``Production'' means growing, mining, harvesting,
fishing, raising, trapping, hunting, manufacturing, processing,
assembling, or disassembling a good;
(p) Recovered goods. ``Recovered goods'' means materials in the
form of individual parts that are the result of:
(1) The complete disassembly of used goods into individual parts;
and
(2) The cleaning, inspecting, testing, or other processing of those
parts as necessary for improvement to sound working condition by one or
more of the following processes: welding, flame spraying, surface
machining, knurling, plating, sleeving, and rewinding in order for such
parts to be assembled with other parts, including other recovered parts
in the production of a remanufactured good of Annex 4.18, US-CFTA;
(q) Remanufactured goods. ``Remanufactured goods'' means industrial
goods assembled in the territory of a Party, listed in Annex 4.18, US-
CFTA, that:
(1) Are entirely or partially comprised of recovered goods;
(2) Have the same life expectancy and meet the same performance
standards as new goods; and
(3) Enjoy the same factory warranty as such new goods; and
(r) Self-produced material. ``Self-produced material'' means a
material that is produced by the producer of a good and used in the
production of that good; and
(s) Value. ``Value'' means the value of a good or material for
purposes of calculating customs duties or for purposes of applying this
subpart.
Sec. 10.451 Originating goods.
A good imported into the customs territory of the United States
will be considered an originating good under the US-CFTA only if:
(a) The good is wholly obtained or produced entirely in the
territory of Chile or of the United States, or both; or
(b) The good is produced entirely in the territory of Chile or of
the United States, or both, satisfies all other applicable requirements
of this subpart, and
(1) Each of the non-originating materials used in the production of
the good undergoes an applicable change in tariff classification
specified in General Note 26(n), HTSUS, and
(2) The good otherwise satisfies any applicable regional value
content or other requirements specified in General Note 26(n), HTSUS;
or
(c) The good is produced entirely in the territory of Chile or the
United States, or both, exclusively from originating materials.
Sec. 10.452 Exclusions.
A good will not be considered to be an originating good and a
material will not be considered to be an originating material by virtue
of having undergone:
(a) Simple combining or packaging operations; or
(b) Mere dilution with water or with another substance that does
not materially alter the characteristics of the good or material.
Sec. 10.453 Treatment of textile and apparel sets.
Notwithstanding the specific rules specified in General Note 26(n),
HTSUS, textile and apparel goods classifiable as goods put up in sets
for retail sale as provided for in General Rule of Interpretation 3,
HTSUS, will not be regarded as originating goods unless each of the
goods in the set is an originating good or the non-originating goods in
the set do not exceed 10 percent of the adjusted value of the set.
Sec. 10.454 Regional value content.
Where General Note 26, subdivision (n), HTSUS, sets forth a rule
that specifies a regional value content test for a good, the regional
value content of such good may be calculated, at the choice of the
person claiming the tariff treatment authorized by this note for such
good, on the basis of the build-down method or the build-up method
described in this section, unless otherwise specified in the note.
(a) Build-down method. For the build-down method, the regional
value content must be calculated on the basis of the formula RVC =
((AV-VNM)/AV) x 100, where RVC is the regional value content, expressed
as a percentage; AV is the adjusted value; and VNM is the value of non-
originating materials used by the producer in the production of the
good; or
(b) Build-up method. For the build-up method, the regional value
content must be calculated on the basis of the formula RVC = (VOM/AV) x
100, where RVC is the regional value content, expressed as a
percentage; AV is the adjusted value; and VOM is the value of
originating materials used by the producer in the production of the
good.
Sec. 10.455 Value of materials.
(a) Calculating the regional value content. For purposes of
calculating the regional value content of a good under General Note
26(n), HTSUS, and for purposes of applying the de minimis (see Sec.
10.459) provisions of subdivision (e) of the note, the value of a
material is:
(1) In the case of a material imported by the producer of the good,
the adjusted value of the material;
(2) In the case of a material acquired in the territory where the
good is produced, except for a material to which paragraph (a)(3) of
this section applies, the producer's price actually paid or payable for
the material;
(3) In the case of a material provided to the producer without
charge, or at a price reflecting a discount or similar reduction, the
sum of--
(i) All expenses incurred in the growth, production or manufacture
of the material, including general expenses, and
(ii) A reasonable amount for profit; or
(4) In the case of a material that is self-produced, the sum of--
(i) All expenses incurred in the production of the material,
including general expenses, and
(ii) A reasonable amount for profit.
(b) Adjustments to value. The value of materials may be adjusted as
follows:
(1) For originating materials, the following expenses, if not
included under paragraph (a) of this section, may be added to the value
of the originating material:
(i) The costs of freight, insurance, packing and all other costs
incurred in transporting the material within or between the territory
of Chile, the United States, or both, to the location of the producer;
(ii) Duties, taxes and customs brokerage fees on the material paid
in the territory of Chile or of the United States, or both, other than
duties and taxes that are waived, refunded, refundable or otherwise
recoverable, including credit against duty or tax paid or payable; and
(iii) The cost of waste and spoilage resulting from the use of the
material in the production of the good, less the value of renewable
scrap or by-product; and
(2) For non-originating materials, if included under paragraph (a)
of this section, the following expenses may be deducted from the value
of the non-originating material:
[[Page 10880]]
(i) The costs of freight, insurance, packing and all other costs
incurred in transporting the material within or between the territory
of Chile, the United States, or both, to the location of the producer;
(ii) Duties, taxes and customs brokerage fees on the material paid
in the territory of Chile or of the United States, or both, other than
duties and taxes that are waived, refunded, refundable or otherwise
recoverable, including credit against duty or tax paid or payable;
(iii) The cost of waste and spoilage resulting from the use of the
material in the production of the good, less the value of renewable
scrap or by-products; and
(iv) The cost of originating materials used in the production of
the non-originating material in the territory of Chile or of the United
States.
(c) Accounting method. Any cost or value referenced in General Note
26(n), HTSUS and this subpart, must be recorded and maintained in
accordance with the generally accepted accounting principles applicable
in the territory of the country in which the good is produced (whether
Chile or the United States).
Sec. 10.456 Accessories, spare parts or tools.
Accessories, spare parts or tools that form part of the good's
standard accessories, spare parts or tools and are delivered with the
good will be treated as a material used in the production of the good,
if--
(a) The accessories, spare parts or tools are classified with and
not invoiced separately from the good; and
(b) The quantities and value of the accessories, spare parts or
tools are customary for the good.
Sec. 10.457 Fungible goods and materials.
(a) A person claiming preferential tariff treatment under the US-
CFTA for a good may claim that a fungible good or material is
originating either based on the physical segregation of each fungible
good or material or by using an inventory management method. For
purposes of this subpart, the term ``inventory management method''
means--
(1) Averaging,
(2) ``Last-in, first-out,''
(3) ``First-in, first-out,'' or
(4) Any other method that is recognized in the generally accepted
accounting principles of the country in which the production is
performed (whether Chile or the United States) or otherwise accepted by
that country.
(b) A person selecting an inventory management method under
paragraph (a) of this section for particular fungible goods or
materials must continue to use that method for those fungible goods or
materials throughout the fiscal year of that person.
Sec. 10.458 Accumulation.
(a) Originating goods or materials of Chile or the United States
that are incorporated into a good in the territory of the other country
will be considered to originate in the territory of the other country
for purposes of determining the eligibility of the goods or materials
for preferential tariff treatment under the US-CFTA.
(b) A good that is produced in the territory of Chile, the United
States, or both, by one or more producers, will be considered as an
originating good if the good satisfies the applicable requirements of
Sec. 10.451 and General Note 26, HTSUS.
Sec. 10.459 De minimis.
(a) Except as provided in paragraphs (b) and (c) of this section, a
good that does not undergo a change in tariff classification pursuant
to General Note 26(n), HTSUS, will nonetheless be considered to be an
originating good if--
(1) The value of all non-originating materials that are used in the
production of the good and do not undergo the applicable change in
tariff classification does not exceed 10 percent of the adjusted value
of the good;
(2) The value of such non-originating materials is included in
calculating the value of non-originating materials for any applicable
regional value-content requirement under this note; and
(3) The good meets all other applicable requirements of General
Note 26(n), HTSUS.
(b) Paragraph (a) of this section does not apply to:
(1) A non-originating material provided for in Chapter 4 of the
Harmonized System, or a non-originating dairy preparation containing
over 10 percent by weight of milk solids provided for in subheadings
1901.90 or 2106.90 of the Harmonized System, that is used in the
production of a good provided for in Chapter 4 of the Harmonized
System;
(2) A non-originating material provided for in Chapter 4 of the
Harmonized System, or non-originating dairy preparations containing
over 10 percent by weight of milk solids provided for in subheading
1901.90 of the Harmonized System, that are used in the production of
the following goods: infant preparations containing over 10 percent in
weight of milk solids provided for in subheading 1901.10 of the
Harmonized System; mixes and doughs, containing over 25 percent by
weight of butterfat, not put up for retail sale, provided for in
subheading 1901.20 of the Harmonized System; dairy preparations
containing over 10 percent by weight of milk solids provided for in
subheadings 1901.90 or 2106.90 of the Harmonized System; goods provided
for in heading 2105 of the Harmonized System; beverages containing milk
provided for in subheading 2202.90 of the Harmonized System; or animal
feeds containing over 10 percent by weight of milk solids provided for
in subheading 2309.90 of the Harmonized System;
(3) A non-originating material provided for in heading 0805 of the
Harmonized System or subheadings 2009.11 through 2009.30 of the
Harmonized System that is used in the production of a good provided for
in subheadings 2009.11 through 2009.30 of the Harmonized System, or in
fruit or vegetable juice of any single fruit or vegetable, fortified
with minerals or vitamins, concentrated or unconcentrated, provided for
in subheadings 2106.90 or 2202.90 of the Harmonized System;
(4) A non-originating material provided for in Chapter 15 of the
Harmonized System that is used in the production of a good provided for
in headings 1501 through 1508, 1512, 1514, or 1515 of the Harmonized
System;
(5) A non-originating material provided for in heading 1701 of the
Harmonized System that is used in the production of a good provided for
in headings 1701 through 1703 of the Harmonized System;
(6) A non-originating material provided for in Chapter 17 or in
heading 1805 of the Harmonized System that is used in the production of
a good provided for in subheading 1806.10 of the Harmonized System;
(7) A non-originating material provided for in headings 2203
through 2208 of the Harmonized System that is used in the production of
a good provided for in heading 2207 or 2208 of the Harmonized System;
and
(8) A non-originating material used in the production of a good
provided for in Chapters 1 through 21 of the Harmonized System unless
the non-originating material is provided for in a different subheading
than the good for which origin is being determined under this section.
(c) A textile or apparel good provided for in Chapters 50 through
63 of the Harmonized System that is not an originating good because
certain fibers or yarns used in the production of the
[[Page 10881]]
component of the good that determines the tariff classification of the
good do not undergo an applicable change in tariff classification set
out in General Note 26(n), HTSUS, shall nonetheless be considered to be
an originating good if the total weight of all such fibers or yarns in
that component is not more than seven percent of the total weight of
that component. A good containing elastomeric yarns in the component of
the good that determines the tariff classification of the good shall be
considered to be an originating good only if such yarns are wholly
formed in the territory of a Party. For purposes of this paragraph, if
a good is a fiber, yarn or fabric, the component of the good that
determines the tariff classification of the good is all of the fibers
in the yarn, fabric or group of fibers.
Sec. 10.460 Indirect materials.
An indirect material, as defined in Sec. 10.402(n), will be
considered to be an originating material without regard to where it is
produced.
Example. Chilean Producer C produces good C using non-
originating material A. Producer C imports non-originating rubber
gloves for use by workers in the production of good C. Good C is
subject to a tariff shift requirement. As provided in Sec.
10.451(b)(1) and General Note 26(n), each of the non-originating
materials in good C must undergo the specified change in tariff
classification in order for good C to be considered originating.
Although non-originating material A must undergo the applicable
tariff shift in order for good C to be considered originating, the
rubber gloves do not because they are indirect materials and are
considered originating without regard to where they are produced.
Sec. 10.461 Retail packaging materials and containers.
Packaging materials and containers in which a good is packaged for
retail sale, if classified with the good for which preferential tariff
treatment under the US-CFTA is claimed, will be disregarded in
determining whether all non-originating materials used in the
production of the good undergo the applicable change in tariff
classification set out in General Note 26(n), HTSUS. If the good is
subject to a regional value content requirement, the value of such
packaging materials and containers will be taken into account as
originating or non-originating materials, as the case may be, in
calculating the regional value content of the good.
Example 1. Chilean Producer A of good C imports 100 non-
originating blister packages to be used as retail packaging for good
C. As provided in Sec. 10.455(a)(1), the value of the blister
packages is their adjusted value, which in this case is $10. Good C
has a regional value content requirement. The United States importer
of good C decides to use the build-down method, RVC = ((AV-VNM)/AV)
x 100 (see Sec. 10.454(a)), in determining whether good C satisfies
the regional value content requirement. In applying this method, the
non-originating blister packages are taken into account as non-
originating. As such, their $10 adjusted value is included in the
VNM, value of non-originating materials, of good C.
Example 2. Same facts as in Example 1, but the blister packages
are originating. In this case, the adjusted value of the originating
blister packages would not be included as part of the VNM of good C
under the build-down method. However, if the United States importer
had used the build-up method, RVC = (VOM/AV) x 100 (see Sec.
10.454(b)), the adjusted value of the blister packaging would be
included as part of the VOM, value of originating material.
Sec. 10.462 Packing materials and containers for shipment.
(a) Packing materials and containers for shipment, as defined in
Sec. 10.450(m), are to be disregarded in determining whether the non-
originating materials used in the production of the good undergo an
applicable change in tariff classification set out in General Note
26(n), HTSUS. Accordingly, such materials and containers do not have to
undergo the applicable change in tariff classification even if they are
non-originating.
(b) Packing materials and containers for shipment, as defined in
Sec. 10.450(m), are to be disregarded in determining the regional
value content of a good imported into the United States. Accordingly,
in applying either the build-down or build-up method for determining
the regional value content of the good imported into the United States,
the value of such packing materials and containers for shipment
(whether originating or non-originating) is disregarded and not
included in AV, adjusted value, VNM, value of non-originating
materials, or VOM, value of originating materials.
Example. Chilean Producer A produces good C. Producer A ships
good C to the United States in a shipping container which it
purchased from Company B in Chile. The shipping container is
originating. The value of the shipping container determined under
section Sec. 10.455(a)(2) is $3. Good C is subject to a regional
value content requirement. The transaction value of good C is $100,
which includes the $3 shipping container. The U.S. importer decides
to use the build-up method, RVC = (VOM/AV) x 100 (see Sec.
10.454(b)), in determining whether good C satisfies the regional
value content requirement. In determining the AV, adjusted value, of
good C imported into the U.S., paragraph (b) of this section
requires a $3 deduction for the value of the shipping container.
Therefore, the AV is $97 ($100-$3). In addition, the value of the
shipping container is disregarded and not included in the VOM, value
of originating materials.
Sec. 10.463 Transit and transshipment.
(a) General. A good will not be considered an originating good by
reason of having undergone production that occurs entirely in the
territory of Chile, the United States, or both, that would enable the
good to qualify as an originating good if subsequent to that production
the good undergoes further production or any other operation outside
the territories of Chile and the United States, other than unloading,
reloading, or any other process necessary to preserve the good in good
condition or to transport the good to the territory of Chile or the
United States.
(b) Documentary evidence. An importer making a claim that a good is
originating may be required to demonstrate, to CBP's satisfaction, that
no further production or subsequent operation, other than permitted
under paragraph (a) of this section, occurred outside the territories
of Chile or the United States. An importer may demonstrate compliance
with this section by submitting documentary evidence. Such evidence may
include, but is not limited to, bills of lading, packing lists,
commercial invoices, and customs entry and exit documents.
Origin Verifications and Determinations
Sec. 10.470 Verification and justification of claim for preferential
treatment.
(a) Verification by CBP. A claim for preferential treatment made
under Sec. 10.410, including any statements or other information
submitted to CBP in support of the claim, will be subject to such
verification as the port director deems necessary. In the event that
the port director for any reason is prevented from verifying the claim,
the port director may deny the claim for preferential treatment. A
verification of a claim for preferential treatment may involve, but is
not limited to, a review of:
(1) All records required to be made, kept, and made available to
CBP by the importer or any other person under part 163 of this chapter;
(2) Documentation and other information regarding the country of
origin of an article and its constituent materials, including, but not
limited to, production records, supporting accounting and financial
records, information relating to the place of production, the number
and identification of the types of machinery used in production, and
the number of workers employed in production; and
[[Page 10882]]
(3) Evidence that documents the use of U.S. or Chilean materials in
the production of the article subject to the verification, such as
purchase orders, invoices, bills of lading and other shipping
documents, customs import and clearance documents, and bills of
material and inventory records.
(b) Applicable accounting principles. When conducting a
verification of origin to which Generally Accepted Accounting
Principles may be relevant, CBP will apply and accept the Generally
Accepted Accounting Principles applicable in the country of production.
Sec. 10.471 Special rule for verifications in Chile of U.S. imports
of textile and apparel products.
(a) Procedures to determine whether a claim of origin is accurate.
For the purpose of determining that a claim of origin for a textile or
apparel good is accurate, CBP may request that the government of Chile
conduct a verification, regardless of whether a claim is made for
preferential tariff treatment. While a verification under this
paragraph is being conducted, CBP may take appropriate action, as
directed by The Committee for the Implementation of Textile Agreements
(CITA), which may include suspending the application of preferential
treatment to the textile or apparel good for which a claim of origin
has been made. If CBP is unable to make the determination described in
this paragraph within 12 months after a request for a verification, CBP
may take appropriate action with respect to the textile and apparel
good subject to the verification, and with respect to similar goods
exported or produced by the entity that exported or produced the good,
if directed by CITA.
(b) Procedures to determine compliance with applicable customs laws
and regulations of the U.S. For purposes of enabling CBP to determine
that an exporter or producer is complying with applicable customs laws,
regulations, and procedures in cases in which CBP has a reasonable
suspicion that a Chilean exporter or producer is engaging in unlawful
activity relating to trade in textile and apparel goods, CBP may
request that the government of Chile conduct a verification, regardless
of whether a claim is made for preferential tariff treatment. A
``reasonable suspicion'' for the purpose of this paragraph will be
based on relevant factual information, including information of the
type set forth in Article 5.5 of the US-CFTA, that indicates
circumvention of applicable laws, regulations or procedures regarding
trade in textile and apparel goods. CBP may undertake or assist in a
verification under this paragraph by conducting visits in Chile, along
with the competent authorities of Chile, to the premises of an
exporter, producer or any other enterprise involved in the movement of
textile or apparel goods from Chile to the United States. While a
verification under this paragraph is being conducted, CBP may take
appropriate action, as directed by CITA, which may include suspending
the application of preferential tariff treatment to the textile and
apparel goods exported or produced by the Chilean entity where the
reasonable suspicion of unlawful activity relates to those goods. If
CBP is unable to make the determination described in this paragraph
within 12 months after a request for a verification, CBP may take
appropriate action with respect to any textile or apparel goods
exported or produced by the entity subject to the verification, if
directed by CITA.
(c) Assistance by CBP to Chilean authorities. CBP may undertake or
assist in a verification under this section by conducting visits in
Chile, along with the competent authorities of Chile, to the premises
of an exporter, producer or any other enterprise involved in the
movement of textile or apparel goods from Chile to the United States.
(d) Treatment of documents and information provided to CBP. Any
production, trade and transit documents and other information necessary
to conduct a verification under this section, provided to CBP by the
government of Chile consistent with the laws, regulations, and
procedures of Chile, will be considered confidential as provided for in
Article 5.6 of the US-CFTA.
(e) Notification to Chile. Prior to commencing appropriate action
under paragraph (a) or (b) of this section, CBP will notify the
government of Chile. CBP may continue to take appropriate action under
paragraph (a) or (b) of this section until it receives information
sufficient to enable it to make the determination described in
paragraphs (a) and (b) of this section.
(f) Retention of authority by CBP. If CBP requests a verification
before Chile fully implements its obligations under Article 3.21 of the
US-CFTA, the verification will be conducted principally by CBP,
including through means described in paragraphs (a) and (b) of this
section. CBP retains the authority to exercise its rights under
paragraphs (a) and (b) of this section.
Sec. 10.472 Verification in the United States of textile and apparel
goods.
(a) Procedures to determine whether a claim of origin is accurate.
CBP will endeavor, at the request of the government of Chile, to
conduct a verification for the purpose of determining that a claim of
origin for a textile or apparel good is accurate. A verification will
be conducted under this paragraph regardless of whether a claim is made
for preferential tariff treatment. If the government of Chile is unable
to make the determination described in this paragraph within 12 months
after a request for a verification, Chile may take appropriate action
with respect to the textile and apparel good subject to the
verification, and with respect to similar goods exported or produced by
the entity that exported or produced the good.
(b) Procedures to determine compliance with applicable customs laws
and regulations of Chile. CBP will endeavor to conduct a verification
at the request of the government of Chile for purposes of enabling
Chile to determine that the U.S. exporter or producer is complying with
applicable customs laws, regulations, and procedures, if Chile has a
reasonable suspicion that a U.S. exporter or producer is engaging in
unlawful activity relating to trade in textile and apparel goods. A
verification will be conducted under this paragraph regardless of
whether a claim is made for preferential tariff treatment. A
``reasonable suspicion'' for the purpose of this paragraph will be
based on relevant factual information, including information of the
type set forth in Article 5.5 of the US-CFTA, that indicates
circumvention of applicable laws, regulations or procedures regarding
trade in textile and apparel goods. If the government of Chile is
unable to make the determination described in this paragraph within 12
months after a request for a verification, it may take action as
permitted under its laws with respect to any textile or apparel goods
exported or produced by the entity subject to the verification.
(c) Visits by CBP. CBP may conduct visits to the premises of a U.S.
exporter or producer or any other enterprise involved in the movement
of textile or apparel goods from the United States to Chile in order to
undertake or assist in a verification pursuant to paragraphs (a) and
(b) of this section.
(d) Initiation of verification by CBP. CBP may conduct, on its own
initiative, a verification for the purpose of determining that a claim
of origin for a textile or apparel good is accurate.
(e) Treatment of documents and information. CBP will endeavor to
provide to the government of Chile, consistent with U.S. laws,
regulations, and procedures, production, trade, and transit documents
and other information
[[Page 10883]]
necessary to conduct a verification under paragraphs (a) and (b) of
this section. Such information will be considered confidential as
provided for in Article 5.6 of the US-CFTA.
Sec. 10.473 Issuance of negative origin determinations.
If CBP determines, as a result of an origin verification initiated
under this section, that the good which is the subject of the
verification does not qualify as an originating good, it will issue a
written determination that sets forth the following:
(a) A description of the good that was the subject of the
verification together with the identifying numbers and dates of the
export and import documents pertaining to the good;
(b) A statement setting forth the findings of fact made in
connection with the verification and upon which the determination is
based;
(c) With specific reference to the rules applicable to originating
goods as set forth in General Note 26, HTSUS, and in the ``Rules of
Origin'' heading under this subpart, the legal basis for the
determination; and,
(d) A notice of intent to deny preferential tariff treatment on the
good which is the subject of the determination.
Sec. 10.474 Repeated false or unsupported preference claims.
Where CBP finds indications of a pattern of conduct by an importer
of false or unsupported representations that a good imported into the
United States qualifies as originating, CBP may deny subsequent claims
for preferential tariff treatment on identical goods imported by that
person until compliance with the rules applicable to originating goods
as set forth in General Note 26, HTSUS is established to the
satisfaction of CBP.
Penalties
Sec. 10.480 General.
Except as otherwise provided in this subpart, all criminal, civil
or administrative penalties which may be imposed on U.S. importers,
exporters and producers for violations of the customs and related laws
and regulations will also apply to U.S. importers, exporters and
producers for violations of the laws and regulations relating to the
US-CFTA.
Sec. 10.481 Corrected declaration by importers.
A U.S. importer who makes a corrected declaration under Sec.
10.410(b) will not be subject to civil or administrative penalties for
having made an incorrect declaration, provided that the corrected
declaration was voluntarily made.
Sec. 10.482 Corrected certifications of origin by exporters or
producers.
Civil or administrative penalties provided for under the U.S.
customs laws and regulations will not be imposed on an exporter or
producer in the United States who voluntarily provides written
notification pursuant to Sec. 10.430(b) with respect to the making of
an incorrect certification.
Sec. 10.483 Framework for correcting declarations and certifications.
(a) ``Voluntarily'' defined. For purposes of this subpart, the
making of a corrected declaration or the providing of written
notification of an incorrect certification will be deemed to have been
done voluntarily if:
(1) Done before the commencement of a formal investigation; or
(2) Done before any of the events specified in Sec. 162.74(i) of
this part have occurred; or
(3) Done within 30 calendar days after either the U.S. importer,
exporter or producer had reason to believe that the declaration or
certification was not correct; and is
(4) Accompanied by a written statement setting forth the
information specified in paragraph (c) of this section; and
(5) In the case of a corrected declaration, accompanied or followed
by a tender of any actual loss of duties and merchandise processing
fees, if applicable, in accordance with paragraph (e) of this section.
(b) Cases involving fraud. Notwithstanding paragraph (a) of this
section, a person who acted fraudulently in making an incorrect
declaration or certification may not make a voluntary correction. For
purposes of this paragraph, the term ``fraud'' will have the meaning
set forth in paragraph (B)(3) of appendix B to part 171 of this
chapter.
(c) Written statement. For purposes of this subpart, each corrected
declaration or notification of an incorrect certification must be
accompanied by a written statement which:
(1) Identifies the class or kind of good to which the incorrect
declaration or certification relates;
(2) In the case of a corrected declaration, identifies each
affected import transaction, including each port of importation and the
approximate date of each importation, and in the case of a notification
of an incorrect certification, identifies each affected exportation
transaction, including each port of exportation and the approximate
date of each exportation. A U.S. producer who provides written
notification that certain information in a certification of origin is
incorrect and who is unable to identify the specific export
transactions under this paragraph must provide as much information
concerning those transactions as the producer, by the exercise of good
faith and due diligence, is able to obtain;
(3) Specifies the nature of the incorrect statements or omissions
regarding the declaration or certification; and
(4) Sets forth, to the best of the person's knowledge, the true and
accurate information or data which should have been covered by or
provided in the declaration or certification, and states that the
person will provide any additional pertinent information or data which
is unknown at the time of making the corrected declaration or
certification within 30 calendar days or within any extension of that
30-day period as CBP may permit in order for the person to obtain the
information or data.
(d) Substantial compliance. For purposes of this section, a person
will be deemed to have voluntarily corrected a declaration or
certification even though that person provides corrected information in
a manner which does not conform to the requirements of the written
statement specified in paragraph (c) of this section, provided that:
(1) CBP is satisfied that the information was provided before the
commencement of a formal investigation; and
(2) The information provided includes, orally or in writing,
substantially the same information as that specified in paragraph (c)
of this section.
(e) Tender of actual loss of duties. A U.S. importer who makes a
corrected declaration must tender any actual loss of duties at the time
of making the corrected declaration, or within 30 calendar days
thereafter, or within any extension of that 30-day period as CBP may
allow in order for the importer to obtain the information or data
necessary to calculate the duties owed.
(f) Applicability of prior disclosure provisions. Where a person
fails to meet the requirements of this section because the correction
of the declaration or the written notification of an incorrect
certification is not considered to be done voluntarily as provided in
this section, that person may nevertheless qualify for prior disclosure
treatment under 19 U.S.C. 1592(c)(4) and Sec. 162.74 of this chapter.
[[Page 10884]]
Goods Returned After Repair or Alteration
Sec. 10.490 Goods re-entered after repair or alteration in Chile.
(a) General. This section sets forth the rules which apply for
purposes of obtaining duty-free treatment on goods returned after
repair or alteration in Chile as provided for in subheadings 9802.00.40
and 9802.00.50, HTSUS. Goods returned after having been repaired or
altered in Chile, whether or not pursuant to a warranty, are eligible
for duty-free treatment, provided that the requirements of this section
are met. For purposes of this section, ``repairs or alterations'' means
restoration, addition, renovation, re-dyeing, cleaning, re-sterilizing,
or other treatment which does not destroy the essential characteristics
of, or create a new or commercially different good from, the good
exported from the United States.
(b) Goods not eligible for treatment. The duty-free treatment
referred to in paragraph (a) of this section will not apply to goods
which, in their condition as exported from the United States to Chile,
are incomplete for their intended use and for which the processing
operation performed in Chile constitutes an operation that is performed
as a matter of course in the preparation or manufacture of finished
goods.
(c) Documentation. The provisions of Sec. 10.8(a), (b), and (c) of
this part, relating to the documentary requirements for goods entered
under subheading 9802.00.40 or 9802.00.50, HTSUS, will apply in
connection with the entry of goods which are returned from Chile after
having been exported for repairs or alterations and which are claimed
to be duty free.
PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE
0
12. The general authority citation for part 24 is revised, and the
specific authority for Sec. 24.23 continues, to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General
Note 3(i), Harmonized Tariff Schedule of the United States) 1505,
1520, 1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 9701; Public Law 107-
296, 116 Stat. 2135 (6 U.S.C. 1 et seq.).
* * * * *
Section 24.23 also issued under 19 U.S.C. 3332
* * * * *
0
13. Section 24.23 is amended by adding paragraphs (c)(6) and (c)(7) to
read as follows:
Sec. 24.23 Fees for processing merchandise.
* * * * *
(c) * * *
(6) [Reserved]
(7) The ad valorem fee, surcharge, and specific fees provided under
paragraphs (b)(1) and (b)(2)(i) of this section will not apply to goods
that qualify as originating goods under Sec. 202 of the United States-
Chile Free Trade Agreement Implementation Act (see also General Note
26, HTSUS) that are entered, or withdrawn from warehouse for
consumption, on or after January 1, 2004.
PART 162--INSPECTION, SEARCH, AND SEIZURE
0
14. The authority citation for part 162 continues to read in part as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1592, 1593a, 1624.
* * * * *
0
15. Section 162.0 is amended by adding a sentence at the end to read as
follows:
Sec. 162.0 Scope.
* * * Additional provisions concerning records maintenance and
examination applicable to U.S. importers, exporters and producers under
the U.S.-Chile Free Trade Agreement are contained in Part 10, Subpart H
of this chapter.
PART 163--RECORDKEEPING
0
16. The authority citation for part 163 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510,
1624.
* * * * *
0
17. Section 163.1(a)(2) is amended by re-designating paragraph
(a)(2)(vi) as (a)(2)(vii) and adding a new paragraph (a)(2)(vi) to read
as follows:
Sec. 163.1 Definitions.
* * * * *
(a) * * *
(2) * * *
(vi) The completion and signature of a Chile FTA certification of
origin and any other supporting documentation pursuant to the United
States-Chile Free Trade Agreement.
* * * * *
0
18. The Appendix to part 163 is amended by adding a new listing under
section IV in numerical order to read as follows:
Appendix to Part 163--Interim (a)(1)(A) List
* * * * *
IV. * * *
Sec. 10.410 US-CFTA Certification of origin and supporting records.
* * * * *
PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS
0
19. The authority citation for part 178 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.
0
20. Section 178.2 is amended by adding new listings to the table in
numerical order to read as follows:
Sec. 178.2 Listing of OMB control numbers.
------------------------------------------------------------------------
OMB control
19 CFR section Description No.
------------------------------------------------------------------------
* * * * * * *
Sec. Sec. 10.410 and 10.411 Claim for preferential 1651-0117
tariff treatment under the
US-Chile Free Trade
Agreement.
* * * * * * *
------------------------------------------------------------------------
PART 191--DRAWBACK
0
21. The general authority citation for part 191 is revised to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i),
Harmonized Tariff Schedule of the United States), 1313, 1624.
* * * * *
0
22. Section 191.0 is amended by adding a sentence at the end to read as
follows:
Sec. 191.0 Scope.
* * * Those provisions relating to the United States-Chile Free
Trade
[[Page 10885]]
Agreement are contained in subpart H of part 10 of this chapter.
Robert C. Bonner,
Commissioner of Customs and Border Protection.
Approved: February 28, 2005.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 05-4156 Filed 3-4-05; 8:45 am]
BILLING CODE 4820-02-P