[Federal Register: March 25, 2003 (Volume 68, Number 57)]
[Proposed Rules]
[Page 14477-14500]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25mr03-37]
[[Page 14477]]
-----------------------------------------------------------------------
Part II
Department of the Treasury
-----------------------------------------------------------------------
Customs Service
-----------------------------------------------------------------------
19 CFR Parts 10 and 163
Implementation of the Andean Trade Promotion and Drug Eradication Act;
Proposed Rule
[[Page 14478]]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Parts 10 and 163
[T.D. 03-16]
RIN 1515-AD19
Implementation of the Andean Trade Promotion and Drug Eradication
Act
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Interim regulations; solicitation of comments.
-----------------------------------------------------------------------
SUMMARY: This document sets forth interim amendments to the Customs
Regulations to implement the trade benefit provisions for Andean
countries contained in Title XXXI of the Trade Act of 2002. The trade
benefits under Title XXXI, also referred to as the Andean Trade
Promotion and Drug Eradication Act (the ATPDEA), apply to Andean
countries specifically designated by the President for ATPDEA purposes.
The ATPDEA trade benefits involve the entry of specific apparel and
other textile articles free of duty and free of any quantitative
restrictions, limitations, or consultation levels, the extension of
duty-free treatment to specified non-textile articles normally excluded
from duty-free treatment under the Andean Trade Preference Act (ATPA)
program if the President finds those articles to be not import-
sensitive in the context of the ATPDEA, and the entry of certain
imports of tuna free of duty and free of any quantitative restrictions.
The regulatory amendments contained in this document reflect and
clarify the statutory standards for the trade benefits under the ATPDEA
and also include specific documentary, procedural and other related
requirements that must be met in order to obtain those benefits.
DATES: Interim rule effective March 25, 2003; comments must be
submitted by May 27, 2003.
ADDRESSES: Written comments are to be addressed to the U.S. Customs
Service, Office of Regulations and Rulings, Attention: Regulations
Branch, 1300 Pennsylvania Avenue, NW., Washington, DC 20229. Submitted
comments may be inspected at U.S. Customs Service, 799 9th Street, NW.,
Washington, DC.
FOR FURTHER INFORMATION CONTACT: Operational issues regarding textiles:
Robert Abels, Office of Field Operations (202-927-1959).
Other operational issues: Leon Hayward, Office of Field Operations
(202-927-3271). Legal issues regarding textiles: Cynthia Reese, Office
of Regulations and Rulings (202-572-8790).
Other legal issues: Craig Walker, Office of Regulations and Rulings
(202-572-8810).
SUPPLEMENTARY INFORMATION:
Background
Andean Trade Promotion and Drug Eradication Act
On August 6, 2002, the President signed into law the Trade Act of
2002 (the ``Act''), Pub. L. 107-210, 116 Stat. 933. Title XXXI of the
Act concerns trade benefits for Andean countries, is referred to in the
Act as the ``Andean Trade Promotion and Drug Eradication Act'' (the
``ATPDEA''), and consists of sections 3101 through 3108. This document
specifically concerns the trade benefit provisions of section 3103 of
the Act which is headed ``articles eligible for preferential
treatment.''
Subsection (a) of section 3103 of the Act amends section 204 of the
Andean Trade Preference Act (the ATPA, codified at 19 U.S.C. 3201-
3206). The ATPA is a duty preference program that applies to exports
from those Andean region countries that have been designated by the
President as program beneficiaries. The origin and related rules for
eligibility for duty-free treatment under the ATPA are similar to those
under the older Caribbean Basin Economic Recovery Act (the CBERA, also
referred to as the Caribbean Basin Initiative, or CBI, statute,
codified at 19 U.S.C. 2701-2707), and, as in the case of the CBI, all
articles are eligible for duty-free treatment under the ATPA (that is,
they do not have to be specially designated as eligible by the
President) except those articles that are specifically excluded under
the statute.
The changes to section 204 of the ATPA made by subsection (a) of
section 3103 of the Act involve the following: (1) The removal of
section 204(c) which provided for the application of reduced duty rates
(rather than duty-free treatment) for certain handbags, luggage, flat
goods, work gloves, and leather wearing apparel, with a consequential
redesignation of subsections (d) through (g) as (c) through (f),
respectively; and (2) a revision of section 204(b). Prior to the
amendment effected by subsection (a) of section 3103 of the Act,
section 204(b) of the ATPA was headed ``exceptions to duty-free
treatment'' and consisted only of a list of eight specific products or
groups of products excluded from ATPA duty-free treatment.
As a result of the amendment made by subsection (a) of section 3103
of the Act, section 204(b) of the ATPA now is headed ``exceptions and
special rules'' and consists of six principal paragraphs. These six
paragraphs are discussed below.
Paragraphs (1) and (2): Articles That Are Not Import-Sensitive and
Excluded Articles
Paragraph (1) of amended section 204(b) is headed ``certain
articles that are not import-sensitive'' and provides that the
President may proclaim duty-free treatment under the ATPA for any
article described in subparagraph (A), (B), (C), or (D) that is the
growth, product, or manufacture of an ATPDEA beneficiary country, that
is imported directly into the customs territory of the United States
from an ATPDEA beneficiary country, and that meets the requirements of
section 204, if the President determines that the article is not
import-sensitive in the context of imports from ATPDEA beneficiary
countries. Subparagraphs (A), (B), (C), and (D) cover, respectively:
1. Footwear not designated at the time of the effective date of the
ATPA (that is, December 4, 1991) as eligible articles for the purpose
of the Generalized System of Preferences (the GSP, Title V of the Trade
Act of 1974, codified at 19 U.S.C. 2461-2467);
2. Petroleum, or any product derived from petroleum, provided for
in headings 2709 and 2710 of the Harmonized Tariff Schedule of the
United States (HTSUS);
3. Watches and watch parts (including cases, bracelets, and
straps), of whatever type including, but not limited to, mechanical,
quartz digital or quartz analog, if those watches or watch parts
contain any material which is the product of any country with respect
to which HTSUS column 2 rates of duty apply; and
4. Handbags, luggage, flat goods, work gloves, and leather wearing
apparel that were not designated on August 5, 1983, as eligible
articles for purposes of the GSP.
Paragraph (2) of amended section 204(b) is headed ``exclusions''
and provides that, subject to paragraph (3), duty-free treatment under
the ATPA may not be extended to the following:
1. Textile and apparel articles which were not eligible articles
for purposes of the ATPA on January 1, 1994, as the ATPA was in effect
on that date;
2. Rum and tafia classified in subheading 2208.40 of the HTSUS;
3. Sugars, syrups, and sugar-containing products subject to over-
quota duty rates under applicable tariff-rate quotas; and
[[Page 14479]]
4. Tuna prepared or preserved in any manner in airtight containers,
except as provided in paragraph (4).
The effect of new paragraphs (1) and (2) is to divide the former
section 204(b) list of eight types of products excluded from ATPA duty-
free treatment into two groups of four each. The four types of products
covered by paragraph (1) would no longer be excluded from ATPA duty-
free treatment but rather would be eligible for that treatment,
provided that the President makes the appropriate negative import
sensitivity determination. For these products (which include the
handbags, luggage, flat goods, work gloves, and leather wearing apparel
to which reduced duty rates previously applied under removed section
204(c)), the country of origin and value-content and related
requirements under section 204(a) of the ATPA and the regulations
thereunder would apply. The four types of products covered by paragraph
(2) would remain as exclusions from duty-free treatment except as
otherwise provided in paragraph (3) in the case of certain apparel and
textile articles and paragraph (4) in the case of certain tuna
products, and the exclusion in the case of sugar and sugar products has
been reworded to refer to tariff-rate quota applicability rather than
HTSUS classification. Paragraphs (3) through (6) of amended section
204(b), as discussed below, are entirely new provisions.
Paragraph (3): Preferential Treatment of Textile Articles
Paragraph (3) of amended section 204(b) is headed ``apparel
articles and certain textile articles.'' Paragraph (3)(A) provides that
apparel articles that are imported directly into the customs territory
of the United States from an ATPDEA beneficiary country shall enter the
United States free of duty and free of any quantitative restrictions,
limitations, or consultation levels, but only if those articles are
described in subparagraph (B), which states that the apparel articles
referred to in subparagraph (A) are the following:
1. Apparel articles sewn or otherwise assembled in one or more
ATPDEA beneficiary countries, or the United States, or both,
exclusively from any one or any combination of the following [clause
(i)]:
a. Fabrics or fabric components wholly formed, or components knit-
to-shape, in the United States, from yarns wholly formed in the United
States or one or more ATPDEA beneficiary countries (including fabrics
not formed from yarns, if those fabrics are classifiable under heading
5602 or 5603 of the HTSUS and are formed in the United States). Apparel
articles shall qualify under this subclause only if all dyeing,
printing, and finishing of the fabrics from which the articles are
assembled, if the fabrics are knit fabrics, is carried out in the
United States. Apparel articles shall qualify under this subclause only
if all dyeing, printing, and finishing of the fabrics from which the
articles are assembled, if the fabrics are woven fabrics, is carried
out in the United States [subclause (I)];
b. Fabrics or fabric components formed or components knit-to-shape,
in one or more ATPDEA beneficiary countries, from yarns wholly formed
in one or more ATPDEA beneficiary countries, if those fabrics
(including fabrics not formed from yarns, if those fabrics are
classifiable under heading 5602 or 5603 of the HTSUS and are formed in
one or more ATPDEA beneficiary countries) or components are in chief
value of llama, alpaca, or vicuna [subclause (II)];
c. Fabrics or yarns, to the extent that apparel articles of those
fabrics or yarns would be eligible for preferential treatment, without
regard to the source of the fabrics or yarns, under Annex 401 of the
North American Free Trade Agreement (NAFTA) [subclause (III)]; and
d. Fabrics or yarns, to the extent that the President has
determined that the fabrics or yarns cannot be supplied by the domestic
industry in commercial quantities in a timely manner and has proclaimed
the treatment provided under clause (i)(III) [clause (ii)];
2. Apparel articles sewn or otherwise assembled in one or more
ATPDEA beneficiary countries from fabrics or from fabric components
formed or from components knit-to-shape in one or more ATPDEA
beneficiary countries from yarns wholly formed in the United States or
one or more ATPDEA beneficiary countries (including fabrics not formed
from yarns, if those fabrics are classifiable under heading 5602 or
5603 of the HTSUS and are formed in one or more ATPDEA beneficiary
countries), whether or not the apparel articles are also made from any
of the fabrics, fabric components formed, or components knit-to-shape
described in clause (i) (unless the apparel articles are made
exclusively from any of the fabrics, fabric components formed, or
components knit-to-shape described in clause (i)). For these articles,
preferential treatment starts on October 1, 2002, and extends for each
of the four succeeding 1-year periods, subject to the application of
annual quantitative limits expressed in square meter equivalents and
with an equal percentage increase in the limit for each succeeding year
[clause (iii)];
3. A handloomed, handmade, or folklore textile or apparel article
of an ATPDEA beneficiary country that the President and representatives
of the ATPDEA beneficiary country concerned mutually agree upon as
being a handloomed, handmade, or folklore good of a kind described in
section 2.3(a), (b), or (c) or Appendix 3.1.B.11 of Annex 300-B of the
NAFTA and that is certified as such by the competent authority of the
beneficiary country [clause (iv)]; and
4. Brassieres classifiable under subheading 6212.10 of the HTSUS,
if both cut and sewn or otherwise assembled in the United States, or
one or more ATPDEA beneficiary countries, or both, but excluding
articles entered under clause (i), (ii), (iii), or (iv) [clause
(v)(I)]. However, during each of four 1-year periods starting on
October 1, 2003, the articles in question are eligible for preferential
treatment under paragraph (3) only if the aggregate cost of fabrics
(exclusive of all findings and trimmings) formed in the United States
that are used in the production of all such articles of a producer or
an entity controlling production that are entered and eligible under
clause (v)(I) during the preceding 1-year period is at least 75 percent
of the aggregate declared customs value of the fabric (exclusive of all
findings and trimmings) contained in all such articles of that producer
or entity that are entered and eligible under clause (v)(I) during the
preceding 1-year period [clause (v)(II)]; the 75 percent standard rises
to 85 percent for a producer or entity controlling production whose
articles are found by Customs to have not met the clause (v)(II) 75
percent standard in the preceding year [clause (v)(III)].
In addition to the articles described above, paragraph (3)(B)
provides for preferential treatment of the following non-apparel
textile articles:
1. Textile luggage assembled in an ATPDEA beneficiary country from
fabric wholly formed and cut in the United States, from yarns wholly
formed in the United States, that is entered under subheading
9802.00.80 of the HTSUS [clause (vii)(I)]; and
2. Textile luggage assembled from fabric cut in an ATPDEA
beneficiary country from fabric wholly formed in the United States from
yarns wholly formed in the United States [clause (vii)(II)].
Clause (vi) under paragraph (3) sets forth special rules that apply
for purposes of determining the eligibility of articles for
preferential treatment
[[Page 14480]]
under paragraph (3). These special rules are as follows:
1. Clause (vi)(I) sets forth a rule regarding the treatment of
findings and trimmings. It provides that an article otherwise eligible
for preferential treatment under paragraph (3) will not be ineligible
for that treatment because the article contains findings or trimmings
of foreign origin, if those findings and trimmings do not exceed 25
percent of the cost of the components of the assembled product. This
provision specifies the following as examples of findings and
trimmings: sewing thread, hooks and eyes, snaps, buttons, ``bow buds,''
decorative lace trim, elastic strips, zippers (including zipper tapes),
and labels.
2. Clause (vi)(II) sets forth a rule regarding the treatment of
specific interlinings, that is, a chest type plate, ``hymo'' piece, or
``sleeve header,'' of woven or weft-inserted warp knit construction and
of coarse animal hair or man-made filaments. Under this rule, an
article otherwise eligible for preferential treatment under paragraph
(3) will not be ineligible for that treatment because the article
contains interlinings of foreign origin, if the value of those
interlinings (and any findings and trimmings) does not exceed 25
percent of the cost of the components of the assembled article. This
provision also provides for the termination of this treatment of
interlinings if the President makes a determination that United States
manufacturers are producing those interlinings in the United States in
commercial quantities.
3. Clause (vi)(III) sets forth a de minimis rule which provides
that an article that would otherwise be ineligible for preferential
treatment under paragraph (3) because the article contains yarns not
wholly formed in the United States or in one or more APTDEA beneficiary
countries will not be ineligible for that treatment if the total weight
of all those yarns is not more than 7 percent of the total weight of
the good.
4. Finally, clause (vi)(IV) sets forth a special origin rule that
provides that an article otherwise eligible for preferential treatment
under clause (i) or clause (iii) will not be ineligible for that
treatment because the article contains nylon filament yarn (other than
elastomeric yarn) that is classifiable under subheading 5402.10.30,
5402.10.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.41.10,
5402.41.90, 5402.51.00, or 5402.61.00 of the HTSUS from a country that
is a party to an agreement with the United States establishing a free
trade area, which entered into force before January 1, 1995.
Paragraph (4): Preferential Treatment of Tuna
Paragraph (4) of amended section 204(b) concerns the preferential
treatment of tuna. Paragraph (4)(A) provides for the entry in the
United States, free of duty and free of any quantitative restrictions,
of tuna that is harvested by United States vessels or ATPDEA
beneficiary country vessels, that is prepared or preserved in any
manner, in an ATPDEA beneficiary country, in foil or other flexible
airtight containers weighing with their contents not more than 6.8
kilograms each, and that is imported directly into the customs
territory of the United States from an ATPDEA beneficiary country.
Paragraph (4)(B)(i) defines a ``United States vessel'' for purposes of
paragraph (4)(A) as a vessel having a certificate of documentation with
a fishery endorsement under chapter 121 of title 46 of the United
States Code. Paragraph (4)(B)(ii) defines an ``ATPDEA vessel'' for
purposes of paragraph (4)(A) as a vessel (1) which is registered or
recorded in an ATPDEA beneficiary country, (2) which sails under the
flag of an ATPDEA beneficiary country, (3) which is at least 75 percent
owned by nationals of an ATPDEA beneficiary country or by a company
having its principal place of business in an ATPDEA beneficiary
country, of which the manager or managers, chairman of the board of
directors or of the supervisory board, and the majority of the members
of those boards are nationals of an ATPDEA beneficiary country and of
which, in the case of a company, at least 50 percent of the capital is
owned by an ATPDEA beneficiary country or by public bodies or nationals
of an ATPDEA beneficiary country, (4) of which the master and officers
are nationals of an ATPDEA beneficiary country, and (5) of which at
least 75 percent of the crew are nationals of an ATPDEA beneficiary
country.
Paragraph (5): Customs Procedures
Paragraph (5) of amended section 204(b) is entitled ``Customs
procedures'' and sets forth regulatory standards for purposes of
preferential treatment under paragraph (1), (3), or (4). It includes
provisions relating to import procedures, prescribes a specific factual
determination that the President must make regarding the implementation
of certain procedures and requirements by each ATPDEA beneficiary
country, and sets forth the responsibility of Customs regarding the
study of, and reporting to Congress on, cooperative and other actions
taken by each ATPDEA beneficiary country to prevent transshipment and
circumvention in the case of textile and apparel goods. The specific
provisions under paragraph (5) that require regulatory treatment in
this document are the following:
1. Paragraph (5)(A)(i) provides that any importer that claims
preferential treatment under paragraph (1), (3), or (4) must comply
with customs procedures similar in all material respects to the
requirements of Article 502(1) of the NAFTA as implemented pursuant to
United States law, in accordance with regulations promulgated by the
Secretary of the Treasury. The NAFTA provision referred to in paragraph
(5)(A)(i) concerns the use of a Certificate of Origin and specifically
requires that the importer (1) make a written declaration, based on a
valid Certificate of Origin, that the imported good qualifies as an
originating good, (2) have the Certificate in its possession at the
time the declaration is made, (3) provide the Certificate to Customs on
request, and (4) promptly make a corrected declaration and pay any
duties owing where the importer has reason to believe that a
Certificate on which a declaration was based contains information that
is not correct.
2. Paragraph (5)(B) provides that the Certificate of Origin that
otherwise would be required pursuant to the provisions of paragraph
(5)(A)(i) will not be required in the case of an article imported under
paragraph (1), (3), or (4) if that Certificate of Origin would not be
required under Article 503 of the NAFTA (as implemented pursuant to
United States law), if the article were imported from Mexico. Article
503 of the NAFTA sets forth, with one general exception, three specific
circumstances in which a NAFTA country may not require a Certificate of
Origin.
Paragraph (6): Definitions
Paragraph (6) of amended section 204(b) sets forth a number of
definitions that apply for purposes of section 204(b). These
definitions include, in paragraph (6)(B), a definition of ``ATPDEA
beneficiary country'' as any ``beneficiary country,'' as defined in
section 203(a)(1) of the ATPA, which the President designates as an
ATPDEA beneficiary country, taking into account the criteria contained
in sections 203(c) and (d) and other appropriate criteria, including
those specified under new paragraph (6)(B) of amended section 204(b).
On October 31, 2002, the President signed Proclamation 7616
(published in the Federal Register at 67 FR 67283 on
[[Page 14481]]
November 5, 2002) to implement the new trade benefit provisions of
section 3103 of the Act. The Annex to that Proclamation set forth a
number of modifications to the HTSUS to accommodate the ATPDEA program,
and those HTSUS changes were also the subject of a technical
corrections document prepared by the Office of the United States Trade
Representative and published in the Federal Register (67 FR 79954) on
December 31, 2002.
This document sets forth, on an interim basis, amendments to the
Customs Regulations to implement those new trade benefit provisions and
to conform the existing ATPA implementing regulations to those
statutory changes. These regulatory changes are discussed below.
Section-by-Section Discussion of Interim Amendments
Sections 10.201 and 10.202 and Removal of Sec. 10.208
In the existing ATPA implementing regulations, Sec. 10.208 is
removed in order to reflect the removal of paragraph (c) from section
204 of the ATPA, the cross-reference in the introductory text of Sec.
10.202 is modified to reflect that removal, and Sec. 10.201 is revised
to reflect the removal of that reduced-duty provision and to refer to
new Sec. Sec. 10.241-10.248 and 10.251-10.257 discussed below. In
addition, paragraph (b) of Sec. 10.202 is amended by recasting the
list of articles excluded from the ATPA to reflect the terms of
paragraph (2) of amended section 204(b); the articles listed in
paragraph (1) of amended section 204(b) are dealt with in new
Sec. Sec. 10.251-10.257.
New Sec. Sec. 10.241 Through 10.248
New Sec. Sec. 10.241 through 10.248 are intended to implement
those apparel and other textile article preferential treatment
provisions within paragraphs (3), (5) and (6) of amended section 204(b)
of the ATPA statute that relate to U.S. import procedures.
Section 10.241 outlines the statutory context for the new sections
and is self-explanatory.
Section 10.242 sets forth definitions for various terms used in the
new regulatory provisions. The following points are noted regarding
these definitions:
1. The definition of ``apparel articles,'' by referring to goods
classifiable in Chapters 61 and 62 and headings 6501, 6502, 6503, and
6504 and subheadings 6406.99.15 and 6505.90 of the HTSUS, is intended
to reflect the scope of apparel under the Agreement on Textiles and
Clothing annexed to the WTO Agreement and referred to in 19 U.S.C.
3511(d)(4).
2. The definition of ``assembled'' and ``sewn or otherwise
assembled'' in the context of production in one or more ATPDEA
beneficiary countries is based in part on the definition of ``wholly
assembled'' in Sec. 102.21(b)(6) of the Customs Regulations (19 CFR
102.21(b)(6)). However, the definition also allows a prior partial
assembly in the United States, consistent with the overall structure of
the ATPDEA as reflected in the types of operations allowed under the
program.
3. The definition of ``ATPDEA beneficiary country'' is an
adaptation of, and for purposes of this context is consistent with, the
definition contained in section 204(b)(6)(B).
4. The definition of ``chief value'' is based in part on a
definition of that term which appeared in the General Headnotes to the
Tariff Schedules of the United States (TSUS), the predecessor to the
HTSUS, and also relies on the concept of ``value'' used for purposes of
the finding, trimmings, and interlinings provisions discussed below in
connection with Sec. 10.243(c).
5. The definition of ``cut'' in the context of production in one or
more ATPDEA beneficiary countries provides that all fabric components
used in the assembly of an article must be cut in ATPDEA beneficiary
countries except where cutting and partial assembly takes place in the
United States prior to cutting and assembly in the beneficiary
countries. The exception in the case of the United States was included
to ensure consistency with the definition of ``assembled'' and ``sewn
and assembled'' discussed above (which, by allowing a partial assembly
in the United States, implies that some cutting also will take place in
the United States prior to the partial assembly).
6. The definition of ``luggage'' is based on the definition
contained in the headnotes of Subpart D of Schedule 7 of the TSUS (the
current HTSUS contains no definition of luggage).
7. The definition of ``NAFTA'' reflects the definition contained in
section 204(b)(6)(C) of the ATPA.
8. The expression ``wholly formed'' is dealt with in three
definitions, one with reference to yarns and another with reference to
fabrics and the third with reference to fabric components, because each
of these terms is modified by ``wholly formed'' in one or more
provisions of the statute that specify production processes that must
be performed in the United States or ATPDEA beneficiary countries.
These definitions are intended to ensure that all processes essential
for yarn, fabric, and fabric component formation are performed in the
United States or ATPDEA beneficiary countries. The following additional
points are noted regarding these three definitions:
a. The definition that relates to fabric(s) is based in part on the
definition of ``fabric-making process'' in Sec. 102.21(b)(2) of the
Customs Regulations (19 CFR 102.21(b)(2)), and a similar approach is
used in the definition that relates to yarns. The definition that
relates to fabric components requires both formation of the fabric and
formation of the component from that fabric.
b. The definition of ``wholly formed'' yarns includes references to
``drawing to fully orient a filament'' and to ending with a yarn or
``plied yarn.'' The first reference concerns a production process,
draw-texturing, that is applied to partially oriented yarn (POY) in
order to fully orient the filament yarn and thus render it suitable for
use as a yarn; Customs believes that a filament that requires draw-
texturing cannot be considered to be ``wholly formed'' until that
process is completed. The reference to ending with a ``plied yarn''
reflects the position of Customs that a yarn is completed, that is,
``wholly formed,'' only when it is in the form in which it will be used
as a yarn to produce a textile product (for example, a fabric or a
knit-to-shape component); thus, a single ply yarn that will be joined
with other single ply yarns to create a plied yarn is not wholly formed
until the plying procedure is completed.
c. Except in the case of yarns, each definition refers to various
production processes that ``took place in a single country.'' A
different approach is taken in the case of yarns because in several
instances the article descriptions in the ATPDEA statutory and
regulatory texts expressly refer to yarns wholly formed in one or more
ATPDEA beneficiary countries. Thus, the ``wholly formed yarns''
definition refers to production processes that took place ``in the
United States or in one or more ATPDEA beneficiary countries'' in order
to allow for the sharing of yarn production processes among multiple
beneficiary countries. For example, in the case of a single yarn formed
in one beneficiary country and plied with other yarns in a second
beneficiary country, or in the case of POY extruded in one beneficiary
country and draw-textured in a second beneficiary country, the plied
yarn and the draw-textured yarn would meet the ``wholly formed''
standard for yarns under the ATPDEA program.
Section 10.243 identifies the articles to which preferential
treatment applies under paragraph (3) of amended section
[[Page 14482]]
204(b). Paragraph (a) identifies the various groups of apparel and
other textile articles described under paragraph (3)(B) of the statute
and includes in the introductory text an ``imported directly''
requirement, consistent with the terms of the statute. Paragraph (b)
sets forth rules regarding dyeing, printing, finishing, and other
operations. Paragraph (c) covers the special rules contained in
paragraph (3)(B)(vi) of the statute involving findings and trimmings
and interlinings of foreign origin, the de minimis rule for yarns, and
the rule for nylon filament yarn. Paragraph (d) explains what is meant
by ``imported directly.'' The following specific points are noted
regarding these regulatory texts:
1. Paragraph (a)(1) covers the various groups of apparel articles
specified in paragraphs (3)(B)(i) and (3)(B)(ii) of the statute for
preferential treatment individually (rather than in combination).
Paragraph (a)(1)(i) corresponds to paragraph (3)(B)(i)(I) of the
statute; paragraph (a)(1)(ii) corresponds to paragraph (3)(B)(i)(II) of
the statute; paragraph (a)(1)(iii) corresponds to paragraph
(3)(B)(i)(III) of the statute; and paragraph (a)(1)(iv) corresponds to
paragraph (3)(B)(ii) of the statute. The following additional points
are noted regarding these paragraph (a)(1) texts:
a. The regulatory text in paragraph (a)(1)(i) includes the
provision in paragraph (3)(B)(i)(I) of the statute that any dyeing,
printing, or finishing of knit or woven fabrics must take place in the
United States. However, the regulatory text in this context refers to
knitted ``or crocheted'' fabrics, in order to reflect tariff and trade
usage, and also includes a reference to ``fabric components produced
from fabric'' in order to (1) reflect the fact that apparel articles
are most often assembled from apparel components rather than from
fabrics and (2) clarify the Customs position that knitting to shape
does not create a fabric but rather results in the creation of a
component that is ready for assembly without having gone through a
fabric stage.
b. The regulatory text in paragraph (a)(1)(ii) refers to llama,
alpaca, ``and/or'' vicu[ntilde]a in order to ensure, consistent with
what Customs believes is the intent, that these three materials may be
present either singly or in combination with each other (for example,
as a blend) for purposes of the chief value concept. It should also be
noted that imported products containing vicu[ntilde]a are subject to
specific admissibility requirements under regulations administered by
the Fish and Wildlife Service of the U.S. Department of the Interior;
those regulations, set forth in 50 CFR part 17, were recently amended
by a final rule document published in the Federal Register (67 FR
37695) on May 30, 2002, and questions regarding the admissibility of
vicu[ntilde]a products under those regulations should be directed to
the Fish and Wildlife Service.
c. Paragraph (a)(1)(iii) covers fabrics and yarns that are
considered to be in ``short supply'' for purposes of Annex 401 of the
NAFTA (that is, the fabrics or yarns are not required to be originating
within the meaning of the NAFTA, if those fabrics or yarns undergo the
specified tariff shift for that article and that article meets all
other applicable requirements for an originating good). For example,
sweaters of wool classified under subheading 6110.11.00 of the HTSUS
that are knit to shape in a NAFTA country from 40 percent non-
originating silk yarn and 60 percent originating wool yarn may qualify
as originating goods because a tariff shift from silk yarn is allowed
by the applicable tariff shift rule, but sweaters knit to shape from 40
percent originating silk yarn and 60 percent non-originating wool yarn
will not qualify as originating goods because the non-originating wool
yarn is classified under a heading (5106) from which a tariff shift is
not allowed. The paragraph (a)(1)(iii) text also includes a
parenthetical exclusion reference regarding articles classifiable under
subheading 6212.10 of the HTSUS (that is, brassieres, which are
specially treated in paragraph (3)(B)(v)(I) of the statute and
paragraph (a)(4) of Sec. 10.243 as discussed below). This exclusion
language is necessary in order to avoid rendering meaningless the
additional requirements that apply to brassieres under the statute
(which are covered by Sec. 10.248 as discussed below). Customs notes
in this regard that the NAFTA Annex 401 rule for articles classified in
subheading 6212.10 of the HTSUS requires only the performance of
certain specified production processes (that is, ``both cut (or knit to
shape) and sewn or otherwise assembled in the territory of one or more
of the NAFTA parties'') and includes no requirements regarding the
source of the fabrics or yarns. There is little logic in applying the
short supply provision to a product where the NAFTA rule makes no
mention of excluded materials. Thus, Customs believes that brassieres
of subheading 6212.10, HTSUS, are not covered by paragraph
(3)(B)(i)(III) of the statute and Sec. 10.243(a)(1)(iii) of the
regulations.
2. Paragraph (a)(2) covers combinations of two or more of the
various groups of apparel articles specified in paragraphs (3)(B)(i)
and (3)(B)(ii) of the statute. The regulatory text uses the words
``exclusively from a combination of * * *'' in order to clarify the
distinction between the combinations allowed under this provision and
those allowed under the paragraph (a)(7) text discussed below.
3. Paragraph (a)(3) covers the handloomed, handmade, and folklore
articles specified in paragraph (3)(B)(iv) of the statute.
4. Paragraph (a)(4) covers the apparel articles referred to in
paragraph (3)(B)(v) of the statute and refers specifically to
``brassieres'' in order to explain the coverage of the HTSUS provision
referred to in the statute. The regulatory text here reflects only the
general product description of subclause (I) of paragraph (3)(B)(v) of
the statute but also includes a cross-reference to new Sec. 10.248,
discussed below, which treats in detail the 75 and 85 percent U.S.-
formed fabric requirements of subclauses (II) and (III).
5. Paragraphs (a)(5) and (a)(6) cover the two types of textile
luggage referred to in paragraphs (3)(B)(vii)(I) and (3)(B)(vii)(II) of
the statute.
6. Paragraph (a)(7) covers the apparel articles specified in
paragraph (3)(B)(iii) of the statute. The text includes a reference to
articles assembled ``in part but not exclusively'' from any of the
fabrics or components described in paragraph (a)(1). This language is
intended, in combination with the use of the word ``exclusively'' in
paragraph (a)(1), to clarify the effect of the statutory limitation in
paragraph (3)(B)(iii) regarding the use of fabrics or components
described in paragraph (3)(B)(i), the intent of which appears to be to
ensure that there is no overlap (that is, conflict) in product coverage
between the two statutory provisions at issue.
7. Paragraph (b)(1) clarifies the Customs position regarding
dyeing, printing, and finishing operations. In view of the specific
mention of these processes in regard to knit and woven fabrics in
paragraph (3)(B)(i)(I) of the statute and Sec. 10.243(a)(1)(i) of the
regulations, Customs believes that this clarification is necessary to
explain the status of these processes in other contexts under the
statute and regulations. The paragraph (b)(1) text provides that these
processes may be performed on any yarn or fabric or component without
affecting the eligibility of an article for preferential treatment,
provided that the dyeing, printing, or finishing is performed only in
the United States or in an ATPDEA beneficiary country, and subject to
two conditions. As regards the general
[[Page 14483]]
limitation of these processes to the United States and ATPDEA
beneficiary countries, Customs believes that this is consistent with
the overall structure and intent of the ATPDEA which is to benefit U.S.
and Andean textile producers. The first condition, set forth in
paragraph (b)(1)(i), reflects the U.S. dyeing, printing, and finishing
requirement of paragraph (3)(B)(i)(I) of the statute and paragraph
(a)(1)(i) of the regulatory text as discussed above. The second
condition, set forth in paragraph (b)(1)(ii), reflects the principle
that in the case of assembled luggage described in paragraph (a)(5) of
the regulatory text (paragraph (3)(B)(vii)(I) of the statute), an
operation that is incidental to the assembly process may be performed
in an ATPDEA beneficiary country. This provision reflects the terms of
subheading 9802.00.80, HTSUS, and the regulations under that HTSUS
provision which include, in 19 CFR 10.16(c), a list of operations not
considered incidental to assembly.
8. Paragraph (b)(2) covers post-assembly and other operations (for
example, embroidering, stone-washing, perma-pressing, garment-dyeing).
The paragraph provides that these operations will not disqualify an
otherwise eligible article from preferential treatment, provided that
the operation is performed in the United States or in an ATPDEA
beneficiary country and provided that, in the case of assembled luggage
described in paragraph (a)(5), the operation is incidental to the
assembly process in an ATPDEA beneficiary country. This paragraph is
intended to have the same clarifying effect as paragraph (b)(1)
discussed above.
9. Paragraph (c)(1) is divided into three parts: Paragraph
(c)(1)(i) reflects the basic findings, trimmings, interlinings, and de
minimis rules of paragraphs (3)(B)(vi)(I)-(III) of the statute;
paragraph (c)(I)(ii) sets forth definitions of the terms ``cost'' and
``value'' as used in these provisions; and paragraph (c)(1)(iii) is
intended to clarify the relationship between findings and trimmings on
the one hand and yarns on the other hand for purposes of applying the
25 percent by value and 7 percent by weight limitations under the
statute. The following additional points are noted regarding these
paragraph (c)(1) texts:
a. In the first sentence of paragraph (c)(1)(i)(A), the words ``the
value of'' have been added after the word ``if'' to clarify that it is
the value of the findings and trimmings that must not exceed the 25
percent level. In addition, in the second sentence of paragraph
(c)(1)(i)(A), the comma appearing in the statutory text between
``decorative lace'' and ``trim'' has been removed to avoid an ambiguity
between the meanings of ``trimmings'' and ``trim.'' Also in the second
sentence of paragraph (c)(1)(i)(A), the words ``zippers, including
zipper tapes and labels'' in paragraph (3)(B)(vi)(I) of the statute
have been replaced with the words ``zippers (including zipper tapes),
and labels'' because there is no such thing as a ``zipper label'' and
to ensure proper treatment of labels as findings and trimmings in their
own right.
b. A separate paragraph (c)(1)(i)(C) has been included to allow a
combination of findings and trimmings and interlinings up to a total of
25 percent of the cost of the components of the assembled article,
because Customs believes that was the result intended by Congress by
the inclusion of the words ``(and any findings and trimmings)'' in
paragraph (3)(B)(vi)(II)(aa) of the statute.
c. The definitions of ``cost'' and ``value'' in paragraph
(c)(1)(ii) are derived primarily from the regulations that apply to
components and materials under subheading 9802.00.80, HTSUS (in
particular, 19 CFR 10.17), and under the ATPA regulations (in
particular, 19 CFR 10.206(d)(3)).
d. As regards paragraph (c)(1)(iii), Customs believes that some
clarification is appropriate in this context because sometimes a yarn
may be used in an article as a finding or trimming. The statute is
ambiguous as to whether an article is ineligible if the total weight of
all foreign yarns exceeds the 7 percent limit but the value of all
foreign findings and trimmings does not exceed the 25 percent limit.
Thus, the question arises as to which limitation should apply. In the
absence of any guidance on this point in the relevant legislative
history, Customs has concluded that the best approach is to give
precedence to the findings and trimmings limitation. Thus, under
paragraph (c)(1)(iii) a foreign yarn that is used in an article as a
finding or trimming would be subject to the 25 percent by value
limitation rather than the 7 percent by weight limitation.
10. In paragraph (c)(2), which sets forth the special rule for
nylon filament yarn of paragraph (3)(B)(vi)(IV) of the statute,
specific reference is made to Canada, Mexico, and Israel because those
are the only countries with which the United States had a free trade
agreement that entered into force before January 1, 1995.
11. The explanation of ``imported directly'' in paragraph (d)
follows the text used in Sec. 10.204 of the ATPA implementing
regulations (19 CFR 10.204) but incorporates editorial changes to
reflect an ATPDEA context.
Section 10.244 prescribes the use of a Certificate of Origin and
thus reflects the regulatory mandate contained in paragraph (5)(A)(i)
of amended section 204(b). Paragraph (a) of the regulatory text
contains a general statement regarding the purpose and preparation of
the Certificate of Origin and is based in part on Sec. 181.11 of the
implementing NAFTA regulations (19 CFR 181.11). Paragraph (b) sets
forth the form for the Certificate of Origin, which is directed toward
the specific groups of articles described under paragraph (3)(B) of
amended section 204(b) and thus bears no substantive relationship to
the Certificate of Origin used under the NAFTA (which involves
different country of origin standards for preferential duty treatment).
Paragraph (c) sets forth instructions for preparation of this
Certificate of Origin. It should be noted that the Certificate of
Origin prescribed under this section has no effect on the textile
declaration prescribed under Sec. 12.130 of the Customs Regulations
(19 CFR 12.130) which still must be submitted to Customs in accordance
with that section even in the case of textile products that are
entitled to preferential treatment under the ATPDEA program.
Section 10.245 sets forth the procedures for filing a claim for
preferential treatment. Consistent with the mandate in paragraph
(5)(A)(i) of amended section 204(b) for procedures ``similar in all
material respects to the requirements of Article 502(1) of the NAFTA,''
this regulatory text is based on the NAFTA regulatory text contained in
19 CFR 181.21, but includes appropriate changes to conform to the
current context.
Section 10.246 concerns the maintenance of records and submission
of the Certificate of Origin by the importer and follows the NAFTA
regulatory text contained in 19 CFR 181.22 but, again, with appropriate
changes to conform to the current context. The following points are
noted regarding the regulatory text:
1. In paragraph (a) which concerns the maintenance of records,
specific reference is made to ``the provisions of part 163'' which set
forth the basic Customs recordkeeping requirements that apply to
importers and other persons involved in customs transactions. This
requirement parallels the NAFTA recordkeeping requirement in Sec.
181.22.
2. Paragraph (b) concerns submission of the Certificate of Origin
to Customs and thus also relates directly to a requirement contained in
Article 502(1)
[[Page 14484]]
of the NAFTA. The text is based on the NAFTA regulatory text contained
in 19 CFR 181.22(b) but differs from the NAFTA text by not specifying a
4-year period for acceptance of the Certificate by Customs, because
that 4-year period is only relevant in a NAFTA context.
3. Paragraph (c) concerns the correction of defective Certificates
of Origin and the nonacceptance of blanket Certificates in certain
circumstances. The text is based on the NAFTA regulatory text contained
in 19 CFR 181.22(c) but is simplified and does not include any
reference to NAFTA-type origin verifications which do not apply for
ATPDEA purposes.
4. Paragraph (d) sets forth the circumstances in which a
Certificate of Origin is not required. Consistent with the terms of
paragraph (5)(B) of amended section 204(b), this regulatory text
follows the terms of Article 503 of the NAFTA and the NAFTA regulatory
text contained in 19 CFR 181.22(d).
Section 10.247 concerns the verification and justification of
claims for preferential treatment. Paragraph (a) concerns the
verification of claims by Customs and paragraph (b) prescribes steps
that a U.S. importer should take in order to support a claim for
preferential treatment. Although paragraph (a) is derived from
provisions contained in the GSP regulations (19 CFR 10.173(c)), in the
CBI regulations (19 CFR 10.198(c)), and in the ATPA regulations (19 CFR
10.207(e)), the text expands on the GSP/CBI/ATPA approach in the
following respects:
1. In paragraph (a)(1), specific reference is made to the review of
import-related documents required to be made, kept, and made available
by importers and other persons under Part 163 of the regulations.
2. Paragraph (a)(2) sets forth examples of documents and
information relating to production Customs may need to review for
purposes of verifying a claim for preferential treatment.
3. Paragraph (a)(3) refers to evidence to document the use of U.S.
or ATPDEA beneficiary country materials in an article, because the
presence of those materials is a key element for some of the articles
to which preferential treatment applies under the ATPDEA. Accordingly,
U.S. importers must be aware of the fact that their ability to
successfully claim preferential treatment on their imports may be a
function of the nature of the records maintained, for example by an
ATPDEA beneficiary country producer, not only with regard to the
production process but also with regard to the source of the materials
used in that production.
Section 10.248 sets forth additional requirements for preferential
treatment of brassieres described in paragraph (a)(4) of Sec. 10.243
and is directed specifically to the 75 and 85 percent U.S.-formed
fabric requirements of subclauses (II) and (III) of paragraph (3)(B)(v)
of amended section 204(b). The following points are noted regarding
this regulatory text:
1. The definitions of ``cost'' and ``declared customs value'' in
paragraphs (a)(4) and (a)(5) are based in part on principles reflected
in the Customs Regulations provisions that apply for purposes of
subheading 9802.00.80, HTSUS (see, in particular, 19 CFR 10.17) and
under the ATPA see, in particular, 19 CFR 10.206(d)(3)). Moreover, as
regards the definition of ``declared customs value'' in paragraph
(a)(5), Customs notes that because the circumstance in which this
terminology appears in the statute does not relate to a point at which
a value is normally declared to U.S. Customs, the text includes
multiple factual circumstances that reflect all conditions under which
a value of fabric could exist for purposes of comparison to the
``cost'' (of fabrics formed in the United States) defined in paragraph
(a)(4).
2. Paragraph (b)(1) reflects the 75 and 85 percent U.S. fabric
content requirements of paragraphs (3)(B)(v)(II) and (III) of the
statute and also requires the U.S. importer to include a specific
documentation identifier assigned by Customs (see the discussion of
paragraph (c) below) when filing the claim for preferential treatment.
Customs considers a specific documentation identifier necessary. The
following points are noted regarding this paragraph:
a. Paragraph (b)(1)(i), which concerns the 75 percent requirement
of paragraph (3)(B)(v)(II) of the statute, refers to articles that are
``entered as articles described in Sec. 10.243(a)(4),'' whereas
paragraph (b)(1)(ii), which concerns the 85 percent requirement of
paragraph (3)(B)(v)(III) of the statute, refers to articles that
``conform to the production standards set forth in Sec.
10.243(a)(4).'' The difference in wording is necessary in order to
enable the 85 percent standard to operate. Customs notes in this regard
that if the universe of articles that are looked at for purposes of
assessing compliance with the 85 percent standard is the same as that
used for purposes of the 75 percent standard (that is, articles that
were entered under the HTSUS subheading that applies to articles
described in paragraph (3)(B)(v)(I) of the statute and Sec.
10.243(a)(4)), it would be impossible after the end of the first year
of the program (that is, after September 30, 2003) for a new producer
or entity to enter the program, or for a producer or entity that failed
to meet the 75 percent standard in the previous year to reenter the
program. This is because application of the 85 percent standard
presupposes a failure to have met the 75 percent standard in the
preceding year, in which case there could not be any entries in the
next year under the HTSUS subheading that applies to articles described
in paragraph (3)(B)(v)(I) of the statute and Sec. 10.243(a)(4) against
which compliance with the 85 percent standard can be determined. The
wording in paragraph (b)(1)(ii) of the regulatory text, by referring to
articles that meet the U.S./Andean cutting and assembly production
requirement (regardless of the HTSUS subheading under which they are
entered), is intended to avoid this anomalous result.
b. The specific identifier, which is to be noted on the entry
summary or warehouse withdrawal, will serve both the importer and
Customs. The identifier serves the importer as it is a method to
indicate that the importer has at the time of entry a specific basis
for claiming preferential treatment--that either the 75 or the 85
percent requirement has been met in the preceding year--for the
brassieres being entered and thus will facilitate the entry and
clearance process. The identifier serves Customs as it is a means by
which Customs can tie a particular entry to the fact that a producer of
brassieres or an entity controlling production of brassieres has met
the 75 or 85 percent requirement. This is essential in view of the fact
that compliance with the 75 or 85 percent requirement must be
established by a producer or by an entity controlling production who
might not be the U.S. importer.
3. Paragraph (b)(2) sets forth a number of general rules that
Customs believes apply under paragraphs (b)(1)(i) and (b)(1)(ii) and
for purposes of preparing and filing the documentation prescribed under
paragraph (c) by the producer or entity controlling production.
Paragraph (b)(2) also includes some examples to illustrate the
application of those rules.
4. Paragraph (c) provides that, in order for an importer to be able
to include the distinct and unique identifier on the entry summary or
warehouse withdrawal as required under paragraph (b)(1)(iii), the
producer or entity controlling production must have filed with Customs
a declaration of compliance with the applicable 75 or 85 percent
requirement. Paragraph (c) further provides that Customs will advise
the filer of the identifier assigned to that declaration of compliance
so that
[[Page 14485]]
the filer may provide that number to the appropriate U.S. importers for
inclusion on current entry summaries or warehouse withdrawals covering
articles of the producer or entity controlling production in question.
So that each affected importer might know what the appropriate
identifier is prior to the arrival of the goods in the United States,
paragraph (c) provides that the declaration of compliance should be
filed at least 10 days prior to the date of the first shipment of the
goods to the United States; Customs believes that this 10-day period
should afford sufficient time for Customs to assign the identifier to
the declaration of compliance and provide the identifier to the
producer or entity controlling production and for the producer or
entity to then provide it to the appropriate U.S. importer(s).
Paragraph (c) also provides for the filing of an amended declaration of
compliance or for following other appropriate procedures if the initial
filing was based on an estimate because information for the whole year
was not available at the time of the initial filing and the final data
differs from the estimate, or if the producer or entity controlling
production has reason to believe for any other reason that the
declaration of compliance that was filed contained erroneous
information. Finally, paragraph (c) identifies the specific Customs
office at which the filing must take place and prescribes the form the
declaration of compliance must take and includes instructions for its
completion.
5. Paragraph (d) sets forth standards regarding the verification of
a declaration of compliance and is similar to the rules that apply for
purposes of verification of ATPDEA preferential treatment claims under
Sec. 10.247 but with changes to reflect the current context. Paragraph
(d) also specifies the nature of the accounting books and documents
that Customs expects to see when verifying the statements made on a
declaration of compliance. Finally, so that affected U.S. importers
will know when Customs, after performing a verification of a
declaration of compliance, has determined that articles of the producer
or entity controlling production in question failed to meet the
applicable 75 or 85 percent requirement, paragraph (d) provides that
Customs will publish a notice of that determination in the Federal
Register.
New Sec. Sec. 10.251 Through 10.257
New Sec. Sec. 10.251 through 10.257 are intended to implement
those non-textile preferential treatment provisions within paragraphs
(1), (4), (5) and (6) of amended section 204(b) of the ATPA statute
that relate to U.S. import procedures. In view of the similarities
between paragraphs (1), (3) and (4) under the statute, in particular as
regards the use of a Certificate of Origin and related Customs
procedures, the structure and content of new Sec. Sec. 10.251 through
10.257 are based on the structure and content used in this document for
the paragraph (3) textile provisions of new Sec. Sec. 10.241 through
10.247, but with appropriate changes or variations to reflect the
paragraphs (1) and (4) statutory context. The following particular
points are noted regarding the texts of new Sec. Sec. 10.251 through
10.257:
1. In Sec. 10.252, the definitions of ``ATPDEA beneficiary country
vessel'' and ``United States vessel'' (which apply only for purposes of
preferential treatment of tuna under paragraph (4) of amended section
204(b)) follow the definitions that appear in paragraph (4)(B) of the
statute, except that in the first definition the words ``beneficiary
country'' have been included within the defined term (which in the
statute reads simply ``ATPDEA vessel'') in order to reflect the wording
used in the general statutory and regulatory preferential treatment
rule for tuna.
2. In Sec. 10.253(a), which identifies the non-textile articles
eligible for preferential tariff treatment, an ``imported directly''
requirement has been included in the introductory text to reflect the
inclusion of that requirement as a condition of preferential treatment
in paragraphs (1) and (4) of amended section 204(b). The remainder of
Sec. 10.253(a) reflects the terms of paragraphs (1)(A)-(D) and (4)(A)
of the statute.
3. Section 10.253(b) explains the meaning of ``imported directly.''
As in the case of new Sec. 10.243(d) discussed above, the text here
follows the text used in Sec. 10.204 of the ATPA implementing
regulations (19 CFR 10.204) but with some editorial changes to reflect
an ATPDEA context.
4. Sections 10.253(c) and (d) set forth country of origin criteria
and value content requirements that apply for purposes of preferential
treatment for all of the non-textile articles covered by paragraph (1)
of amended section 204(b), that is, all non-textile articles other than
tuna to which different standards apply under paragraph (4) of the
statute. Since paragraph (1) of the statute refers to ``any article
that * * * meets the requirements of this section,'' Customs believes
that the country of origin and value content requirements that apply to
ATPA beneficiary country goods under section 204(a) of the ATPA must
also apply in the present context. Accordingly, the new Sec. Sec.
10.253(c) and (d) texts are based on Sec. Sec. 10.205 and 10.206 of
the ATPA implementing regulations (19 CFR 10.205 and 10.206).
5. Sections 10.254 through 10.256 follow the basic NAFTA
Certificate of Origin and preferential treatment claim filing
procedures (but with modifications to reflect the specific rules that
apply under amended section 204(b) of the ATPA), including the use of a
separate Customs Form for the Certificate of Origin rather than setting
it out in the regulatory texts. Therefore, the Sec. 10.254 text is
considerably shorter than the text of new Sec. 10.244 discussed above
because it does not contain the text of the Certificate and the
instructions for its completion.
Appendix to Part 163
Finally, this document amends Part 163 of the Customs Regulations
(19 CFR part 163) by adding to the list of entry records in the
Appendix (the interim ``(a)(1)(A) list'') references to the ATPDEA
Textile Certificate of Origin prescribed under new Sec. 10.246, the
ATPDEA Declaration of Compliance for brassieres prescribed under new
Sec. 10.248, and the ATPDEA Certificate of Origin for tuna and other
non-textile articles prescribed under new Sec. 10.256.
Comments
Before adopting these interim regulations as a final rule,
consideration will be given to any written comments timely submitted to
Customs, including comments on the clarity of this interim rule and how
it 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), Sec. 1.5 of the Treasury Department
Regulations (31 CFR 1.5), and Sec. 103.11(b) of the Customs
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,
U.S. Customs Service, 799 9th Street, NW., Washington, DC. Arrangements
to inspect submitted comments should be made in advance by calling Mr.
Joseph Clark at (202) 572-8768.
Inapplicability of Notice and Delayed Effective Date Requirements and
the Regulatory Flexibility Act
Pursuant to the provisions of 5 U.S.C. 553(b)(B), Customs has
determined that prior public notice and comment procedures on these
regulations are unnecessary and contrary to the public interest. The
regulatory changes provide trade benefits to the importing public, in
some cases implement direct statutory mandates, and are necessary to
carry out
[[Page 14486]]
the preferential treatment proclaimed by the President under the Andean
Trade Promotion and Drug Eradication Act. Presidential Proclamation
7616 made that preferential treatment effective with respect to goods
entered, or withdrawn from warehouse for consumption, as of the date of
signature, October 31, 2002, and these regulations are needed in order
for importers to know how to file their claims for preferential
treatment. For the same reasons, pursuant to the provisions of 5 U.S.C.
553(d)(1) and (3), Customs finds that there is good cause for
dispensing with a delayed effective date. Because no notice of proposed
rulemaking is required for interim regulations, the provisions of the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply.
Executive Order 12866
This document does not meet the criteria for a ``significant
regulatory action'' as specified in E.O. 12866.
Paperwork Reduction Act
This regulation is being issued without prior notice and public
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553).
For this reason, the collection of information contained in this
regulation has 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 1515-0219.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number.
The collection of information in these interim regulations is in
Sec. Sec. 10.244, 10.245, 10.246, 10.248, 10.254, 10.255, and 10.256.
This information conforms to requirements in 19 U.S.C. 3203 and is used
by Customs to determine whether textile and apparel articles and other
products imported from designated beneficiary countries are entitled to
preferential treatment under the Andean Trade Promotion and Drug
Eradication Act. The likely respondents are business organizations
including importers, exporters, and manufacturers.
Estimated annual reporting and/or recordkeeping burden: 8,000
hours.
Estimated average annual burden per respondent/recordkeeper: 4
hours.
Estimated number of respondents and/or recordkeepers: 2,000.
Estimated annual frequency of responses: 24.
Comments on the collection of information should be sent to the
Office of Management and Budget, Attention: Desk Officer of 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, U.S. Customs
Service, 1300 Pennsylvania Avenue, NW., Washington, DC 20229. Comments
should be submitted within the time frame that comments are due
regarding the substance of the interim regulations.
Comments are invited on: (a) Whether the collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information shall have practical utility; (b) the
accuracy of the agency's estimate of the burden of the collection of
the information; (c) ways to enhance the quality, utility, and clarity
of the information to be collected; (d) ways to minimize the burden of
the collection of information on respondents, including through the use
of automated collection techniques or other forms of information
technology; and (e) estimates of capital or startup costs and costs of
operations, maintenance, and purchase of services to provide
information.
Drafting Information
The principal author of this document was Francis W. Foote, Office
of Regulations and Rulings, U.S. Customs Service. However, personnel
from other offices participated in its development.
List of Subjects
19 CFR Part 10
Andean Trade Preference, Assembly, Bonds, Customs duties and
inspection, Exports, Imports, Preference programs, Reporting and
recordkeeping requirements, Trade agreements.
19 CFR Part 163
Administrative practice and procedure, Customs duties and
inspection, Imports, Reporting and recordkeeping requirements.
Amendments to the Regulations
For the reasons set forth in the preamble, Parts 10 and 163,
Customs Regulations (19 CFR Parts 10 and 163), are amended as set forth
below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
1. The general authority citation for Part 10 continues to read,
the specific authority citation for Sec. Sec. 10.201 through 10.207 is
revised to read, and a new specific authority citation for Sec. Sec.
10.241 through 10.248 and Sec. Sec. 10.251 through 10.257 is added to
read, as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 23, Harmonized
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484,
1498, 1508, 1623, 1624, 3314;
* * * * *
Sections 10.201 through 10.207 also issued under 19 U.S.C. 3203;
* * * * *
Sections 10.241 through 10.248 and Sec. Sec. 10.251 through
10.257 also issued under 19 U.S.C. 3203.
2. Section 10.201 is revised to read as follows:
Sec. 10.201 Applicability.
Title II of Pub. L. 102-182 (105 Stat. 1233), entitled the Andean
Trade Preference Act (ATPA) and codified at 19 U.S.C. 3201 through
3206, authorizes the President to proclaim duty-free treatment for all
eligible articles from any beneficiary country and to designate
countries as beneficiary countries. The provisions of Sec. Sec. 10.202
through 10.207 set forth the legal requirements and procedures that
apply for purposes of obtaining that duty-free treatment for certain
articles from a beneficiary country which are identified for purposes
of that treatment in General Note 11, Harmonized Tariff Schedule of the
United States (HTSUS), and in the ``Special'' rate of duty column of
the HTSUS. Provisions regarding preferential treatment of apparel and
other textile articles under the ATPA are contained in Sec. Sec.
10.241 through 10.248, and provisions regarding preferential treatment
of tuna and certain other non-textile articles under the ATPA are
contained in Sec. Sec. 10.251 through 10.257.
3. In Sec. 10.202, the introductory text is amended by removing
the reference ``10.208'' and adding, in its place, the reference
``10.207'', and paragraph (b) is amended by removing paragraphs (b)(1)
through (b)(8) and adding, in their place, new paragraphs (b)(1)
through (b)(4) to read as follows:
Sec. 10.202 Definitions.
* * * * *
(b) * * *
(1) Textiles and apparel articles which were not eligible articles
for purposes of the ATPA on January 1, 1994, as the ATPA was in effect
on that date, except as otherwise provided in Sec. Sec. 10.241 through
10.248;
(2) Rum and tafia classified in subheading 2208.40, Harmonized
Tariff Schedule of the United States;
(3) Sugars, syrups, and sugar-containing products subject to over-
quota duty rates under applicable tariff-rate quotas; or
[[Page 14487]]
(4) Tuna prepared or preserved in any manner in airtight
containers, except as otherwise provided in Sec. Sec. 10.251 through
10.257.
* * * * *
4. Section 10.208 is removed.
5. Part 10 is amended by adding a new center heading followed by
new Sec. Sec. 10.241 through 10.248 to read as follows:
Apparel and Other Textile Articles Under the Andean Trade Promotion and
Drug Eradication Act
Sec.
10.241 Applicability.
10.242 Definitions.
10.243 Articles eligible for preferential treatment.
10.244 Certificate of Origin.
10.245 Filing of claim for preferential treatment.
10.246 Maintenance of records and submission of Certificate by
importer.
10.247 Verification and justification of claim for preferential
treatment.
10.248 Additional requirements for preferential treatment of
brassieres.
Apparel and Other Textile Articles Under the Andean Trade Promotion and
Drug Eradication Act
Sec. 10.241 Applicability.
Title XXXI of Public Law 107-210 (116 Stat. 933), entitled the
Andean Trade Promotion and Drug Eradication Act (ATPDEA), amended
sections 202, 203, 204, and 208 of the Andean Trade Preference Act (the
ATPA, 19 U.S.C. 3201-3206) to authorize the President to extend
additional trade benefits to countries that are designated as
beneficiary countries under the ATPA. Section 204(b)(3) of the ATPA (19
U.S.C. 3203(b)(3)) provides for the preferential treatment of certain
apparel and other textile articles from those ATPA beneficiary
countries which the President designates as ATPDEA beneficiary
countries. The provisions of Sec. Sec. 10.241 through 10.248 of this
part set forth the legal requirements and procedures that apply for
purposes of obtaining preferential treatment pursuant to ATPA section
204(b)(3) and Subchapter XXI, Chapter 98, HTSUS.
Sec. 10.242 Definitions.
When used in Sec. Sec. 10.241 through 10.248, the following terms
have the meanings indicated:
Apparel articles. ``Apparel articles'' means goods classifiable in
Chapters 61 and 62 and headings 6501, 6502, 6503, and 6504 and
subheadings 6406.99.15 and 6505.90 of the HTSUS.
Assembled or sewn or otherwise assembled in one or more ATPDEA
beneficiary countries. ``Assembled'' and ``sewn or otherwise
assembled'' when used in the context of production of an apparel or
other textile article in one or more ATPDEA beneficiary countries has
reference to a joining together of two or more components that occurred
in one or more ATPDEA beneficiary countries, whether or not a prior
joining operation was performed on the article or any of its components
in the United States.
ATPA. ``ATPA'' means the Andean Trade Preference Act, 19 U.S.C.
3201-3206.
ATPDEA beneficiary country. ``ATPDEA beneficiary country'' means a
``beneficiary country'' as defined in Sec. 10.202(a) for purposes of
the ATPA which the President also has designated as a beneficiary
country for purposes of preferential treatment of apparel and other
textile articles under 19 U.S.C. 3203(b)(3) and which has been the
subject of a determination by the President or his designee, published
in the Federal Register, that the beneficiary country has satisfied the
requirements of 19 U.S.C. 3203(b)(5)(A)(ii).
Chief value. ``Chief value'' when used with reference to llama,
alpaca, and vicu[ntilde]a means that the value of those materials
exceeds the value of any other single textile material in the fabric or
component under consideration, with the value in each case determined
by application of the principles set forth in Sec. 10.243(c)(1)(ii).
Cut in one or more ATPDEA beneficiary countries. ``Cut'' when used
in the context of production of textile luggage in one or more ATPDEA
beneficiary countries means that all fabric components used in the
assembly of the article were cut from fabric in one or more ATPDEA
beneficiary countries, or were cut from fabric in the United States and
used in a partial assembly operation in the United States prior to
cutting of fabric and assembly of the article in one or more ATPDEA
beneficiary countries, or both.
Foreign. ``Foreign'' means of a country other than the United
States or an ATPDEA beneficiary country.
HTSUS. ``HTSUS'' means the Harmonized Tariff Schedule of the United
States.
Knit-to-shape components. ``Knit-to-shape,'' when used with
reference to textile components, means components that are knitted or
crocheted from a yarn directly to a specific shape containing a self-
start edge. Minor cutting or trimming will not affect the determination
of whether a component is ``knit-to-shape.''
Luggage. ``Luggage'' means travel goods (such as trunks, hand
trunks, lockers, valises, satchels, suitcases, wardrobe cases,
overnight bags, pullman bags, gladstone bags, traveling bags,
knapsacks, kitbags, haversacks, duffle bags, and like articles designed
to contain clothing or other personal effects during travel) and brief
cases, portfolios, school bags, photographic equipment bags, golf bags,
camera cases, binocular cases, gun cases, occupational luggage cases
(for example, physicians' cases, sample cases), and like containers and
cases designed to be carried with the person. The term ``luggage'' does
not include handbags (that is, pocketbooks, purses, shoulder bags,
clutch bags, and all similar articles, by whatever name known,
customarily carried by women or girls). The term ``luggage'' also does
not include flat goods (that is, small flatware designed to be carried
on the person, such as banknote cases, bill cases, billfolds, bill
purses, bill rolls, card cases, change cases, cigarette cases, coin
purses, coin holders, compacts, currency cases, key cases, letter
cases, license cases, money cases, pass cases, passport cases, powder
cases, spectacle cases, stamp cases, vanity cases, tobacco pouches, and
similar articles).
NAFTA. ``NAFTA'' means the North American Free Trade Agreement
entered into by the United States, Canada, and Mexico on December 17,
1992.
Preferential treatment. ``Preferential treatment'' means entry, or
withdrawal from warehouse for consumption, in the customs territory of
the United States free of duty and free of any quantitative
restrictions, limitations, or consultation levels as provided in 19
U.S.C. 3203(b)(3).
Wholly formed fabric components. ``Wholly formed,'' when used with
reference to fabric components, means that all of the production
processes, starting with the production of wholly formed fabric and
ending with a component that is ready for incorporation into an apparel
article, took place in a single country.
Wholly formed fabrics. ``Wholly formed,'' when used with reference
to fabric(s), means that all of the production processes, starting with
polymers, fibers, filaments, textile strips, yarns, twine, cordage,
rope, or strips of fabric and ending with a fabric by a weaving,
knitting, needling, tufting, felting, entangling or other process, took
place in a single country.
Wholly formed yarns. ``Wholly formed,'' when used with reference to
yarns, means that all of the production processes, starting with the
extrusion of filament, strip, film, or sheet and including drawing to
fully orient a filament or slitting a film or sheet into strip, or the
spinning of all fibers into yarn, or both, and ending with a yarn or
[[Page 14488]]
plied yarn, took place in the United States or in one or more ATPDEA
beneficiary countries.
Sec. 10.243 Articles eligible for preferential treatment.
(a) General. Subject to paragraphs (b) and (c) of this section,
preferential treatment applies to the following apparel and other
textile articles that are imported directly into the customs territory
of the United States from an ATPDEA beneficiary country:
(1) Apparel articles sewn or otherwise assembled in one or more
ATPDEA beneficiary countries, or in the United States, or in both,
exclusively from any one of the following:
(i) Fabrics or fabric components wholly formed, or components knit-
to-shape, in the United States, from yarns wholly formed in the United
States or in one or more ATPDEA beneficiary countries (including
fabrics not formed from yarns, if those fabrics are classifiable under
heading 5602 or 5603 of the HTSUS and are formed in the United States),
provided that, if the apparel article is assembled from knitted or
crocheted or woven wholly formed fabrics or from knitted or crocheted
or woven wholly formed fabric components produced from fabric, all
dyeing, printing, and finishing of that knitted or crocheted or woven
fabric or component was carried out in the United States;
(ii) Fabrics or fabric components formed, or components knit-to-
shape, in one or more ATPDEA beneficiary countries from yarns wholly
formed in one or more ATPDEA beneficiary countries, if those fabrics
(including fabrics not formed from yarns, if those fabrics are
classifiable under heading 5602 or 5603 of the HTSUS and are formed in
one or more ATPDEA beneficiary countries) or components are in chief
value of llama, alpaca, and/or vicu[ntilde]a;
(iii) Fabrics or yarns, provided that apparel articles (except
articles classifiable under subheading 6212.10 of the HTSUS) of those
fabrics or yarns would be considered an originating good under General
Note 12(t), HTSUS, if the apparel articles had been imported directly
from Canada or Mexico; or
(iv) Fabrics or yarns that the President or his designee has
designated in the Federal Register as fabrics or yarns that cannot be
supplied by the domestic industry in commercial quantities in a timely
manner;
(2) Apparel articles sewn or otherwise assembled in one or more
ATPDEA beneficiary countries, or in the United States, or in both,
exclusively from a combination of fabrics, fabric components, knit-to-
shape components or yarns described in two or more of paragraphs
(a)(1)(i) through (a)(1)(iv) of this section;
(3) A handloomed, handmade, or folklore apparel or other textile
article of an ATPDEA beneficiary country that the President or his
designee and representatives of the ATPDEA beneficiary country mutually
agree is a handloomed, handmade, or folklore article and that is
certified as a handloomed, handmade, or folklore article by the
competent authority of the ATPDEA beneficiary country;
(4) Brassieres classifiable under subheading 6212.10 of the HTSUS,
if both cut and sewn or otherwise assembled in the United States, or in
one or more ATPDEA beneficiary countries, or in both, other than
articles entered as articles described in paragraphs (a)(1) through
(a)(3) and (a)(7) of this section, and provided that any applicable
additional requirements set forth in Sec. 10.248 are met;
(5) Textile luggage assembled in an ATPDEA beneficiary country from
fabric wholly formed and cut in the United States, from yarns wholly
formed in the United States, that is entered under subheading
9802.00.80 of the HTSUS;
(6) Textile luggage assembled in one or more ATPDEA beneficiary
countries from fabric cut in one or more ATPDEA beneficiary countries
from fabric wholly formed in the United States from yarns wholly formed
in the United States; and
(7) Apparel articles sewn or otherwise assembled in one or more
ATPDEA beneficiary countries from fabrics or from fabric components
formed, or from components knit-to-shape, in one or more ATPDEA
beneficiary countries from yarns wholly formed in the United States or
in one or more ATPDEA beneficiary countries (including fabrics not
formed from yarns, if those fabrics are classifiable under heading 5602
or 5603 of the HTSUS and are formed in one or more ATPDEA beneficiary
countries), including apparel articles sewn or otherwise assembled in
part but not exclusively from any of the fabrics, fabric components
formed, or components knit-to-shape described in paragraph (a)(1) of
this section.
(b) Dyeing, printing, finishing and other operations--(1) Dyeing,
printing and finishing operations. Dyeing, printing, and finishing
operations may be performed on any yarn, fabric, or knit-to-shape or
other component used in the production of any article described under
paragraph (a) of this section without affecting the eligibility of the
article for preferential treatment, provided that the operation is
performed in the United States or in an ATPDEA beneficiary country and
not in any other country and subject to the following additional
conditions:
(i) In the case of an article described in paragraph (a)(1),
(a)(2), or (a)(7) of this section that contains a knitted or crocheted
or woven fabric, or a knitted or crocheted or woven fabric component
produced from fabric, that was wholly formed in the United States from
yarns wholly formed in the United States, any dyeing, printing, or
finishing of that knitted or crocheted or woven fabric or component
must have been carried out in the United States; and
(ii) In the case of assembled luggage described in paragraph (a)(5)
of this section, an operation may be performed in an ATPDEA beneficiary
country only if that operation is incidental to the assembly process
within the meaning of Sec. 10.16.
(2) Other operations. An article described under paragraph (a) of
this section that is otherwise eligible for preferential treatment will
not be disqualified from receiving that treatment by virtue of having
undergone one or more operations such as embroidering, stone-washing,
enzyme-washing, acid washing, perma-pressing, oven-baking, bleaching,
garment-dyeing or screen printing, provided that the operation is
performed in the United States or in an ATPDEA beneficiary country and
not in any other country. However, in the case of assembled luggage
described in paragraph (a)(5) of this section, an operation may be
performed in an ATPDEA beneficiary country without affecting the
eligibility of the article for preferential treatment only if it is
incidental to the assembly process within the meaning of Sec. 10.16.
(c) Special rules for certain component materials--(1) Foreign
findings, trimmings, interlinings, and yarns--(i) General. An article
otherwise described under paragraph (a) of this section will not be
ineligible for the preferential treatment referred to in Sec. 10.241
because the article contains:
(A) Findings and trimmings of foreign origin, if the value of those
findings and trimmings does not exceed 25 percent of the cost of the
components of the assembled article. For purposes of this section
``findings and trimmings'' include, but are not limited to, sewing
thread, hooks and eyes, snaps, buttons, ``bow buds,'' decorative lace
trim, elastic strips, zippers (including zipper tapes), and labels;
(B) Interlinings of foreign origin, if the value of those
interlinings does not exceed 25 percent of the cost of the components
of the assembled article. For purposes of this section
[[Page 14489]]
``interlinings'' include only a chest type plate, a ``hymo'' piece, or
``sleeve header,'' of woven or weft-inserted warp knit construction and
of coarse animal hair or man-made filaments;
(C) Any combination of findings and trimmings of foreign origin and
interlinings of foreign origin, if the total value of those findings
and trimmings and interlinings does not exceed 25 percent of the cost
of the components of the assembled article; or
(D) Yarns not wholly formed in the United States or in one or more
ATPDEA beneficiary countries if the total weight of all those yarns is
not more than 7 percent of the total weight of the article.
(ii) ``Cost'' and ``value'' defined. The ``cost'' of components and
the ``value'' of findings and trimmings or interlinings referred to in
paragraph (c)(1)(i) of this section means:
(A) The price of the components, findings and trimmings, or
interlinings when last purchased, f.o.b. port of exportation, as set
out in the invoice or other commercial documents, or, if the price is
other than f.o.b. port of exportation:
(1) The price as set out in the invoice or other commercial
documents adjusted to arrive at an f.o.b. port of exportation price; or
(2) If no exportation to an ATPDEA beneficiary country is involved,
the price as set out in the invoice or other commercial documents, less
the freight, insurance, packing, and other costs incurred in
transporting the components, findings and trimmings, or interlinings to
the place of production if included in that price; or
(B) If the price cannot be determined under paragraph (c)(1)(ii)(A)
of this section or if Customs finds that price to be unreasonable, all
reasonable expenses incurred in the growth, production, manufacture, or
other processing of the components, findings and trimmings, or
interlinings, including the cost or value of materials and general
expenses, plus a reasonable amount for profit, and the freight,
insurance, packing, and other costs, if any, incurred in transporting
the components, findings and trimmings, or interlinings to the port of
exportation.
(iii) Treatment of yarns as findings or trimmings. If any yarns not
wholly formed in the United States or one or more ATPDEA beneficiary
countries are used in an article as a finding or trimming described in
paragraph (c)(1)(i)(A) of this section, the yarns will be considered to
be a finding or trimming for purposes of paragraph (c)(1)(i) of this
section.
(2) Special rule for nylon filament yarn. An article otherwise
described under paragraph (a)(1)(i) through (iii), (a)(2), or (a)(7) of
this section will not be ineligible for the preferential treatment
referred to in Sec. 10.241 because the article contains nylon filament
yarn (other than elastomeric yarn) that is classifiable in subheading
5402.10.30, 5402.10.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60,
5402.41.10, 5402.41.90, 5402.51.00, or 5402.61.00 of the HTSUS and that
is entered free of duty from Canada, Mexico, or Israel.
(d) Imported directly defined. For purposes of paragraph (a) of
this section, the words ``imported directly'' mean:
(1) Direct shipment from any ATPDEA beneficiary country to the
United States without passing through the territory of any country that
is not an ATPDEA beneficiary country;
(2) If the shipment is from any ATPDEA beneficiary country to the
United States through the territory of any country that is not an
ATPDEA beneficiary country, the articles in the shipment do not enter
into the commerce of any country that is not an ATPDEA beneficiary
country while en route to the United States and the invoices, bills of
lading, and other shipping documents show the United States as the
final destination; or
(3) If the shipment is from any ATPDEA beneficiary country to the
United States through the territory of any country that is not an
ATPDEA beneficiary country, and the invoices and other documents do not
show the United States as the final destination, the articles in the
shipment upon arrival in the United States are imported directly only
if they:
(i) Remained under the control of the customs authority of the
intermediate country;
(ii) Did not enter into the commerce of the intermediate country
except for the purpose of sale other than at retail, and the port
director is satisfied that the importation results from the original
commercial transaction between the importer and the producer or the
producer's sales agent; and
(iii) Were not subjected to operations other than loading or
unloading, and other activities necessary to preserve the articles in
good condition.
Sec. 10.244 Certificate of Origin.
(a) General. A Certificate of Origin must be employed to certify
that an apparel or other textile article being exported from an ATPDEA
beneficiary country to the United States qualifies for the preferential
treatment referred to in Sec. 10.241. The Certificate of Origin must
be prepared by the exporter in the ATPDEA beneficiary country in the
format specified in paragraph (b) of this section. Where the ATPDEA
beneficiary country exporter is not the producer of the article, that
exporter may complete and sign a Certificate of Origin on the basis of:
(1) Its reasonable reliance on the producer's written
representation that the article qualifies for preferential treatment;
or
(2) A completed and signed Certificate of Origin for the article
voluntarily provided to the exporter by the producer.
(b) Form of Certificate. The Certificate of Origin referred to in
paragraph (a) of this section must be in the following format:
BILLING CODE 8025-01-P
[[Page 14490]]
[GRAPHIC] [TIFF OMITTED] TP25MR03.000
BILLING CODE 8025-01-C
(c) Preparation of Certificate. The following rules will apply for
purposes of completing the Certificate of Origin set forth in paragraph
(b) of this section:
(1) Blocks 1 through 5 pertain only to the final article exported
to the United States for which preferential treatment may be claimed;
(2) Block 1 should state the legal name and address (including
country) of the exporter;
(3) Block 2 should state the legal name and address (including
country) of
[[Page 14491]]
the producer. If there is more than one producer, attach a list stating
the legal name and address (including country) of all additional
producers. If this information is confidential, it is acceptable to
state ``available to Customs upon request'' in block 2. If the producer
and the exporter are the same, state ``same'' in block 2;
(4) Block 3 should state the legal name and address (including
country) of the importer;
(5) Block 4 should provide a full description of each article. The
description should be sufficient to relate it to the invoice
description and to the description of the article in the international
Harmonized System. Include the invoice number as shown on the
commercial invoice or, if the invoice number is not known, include
another unique reference number such as the shipping order number;
(6) In block 5, insert the letter that designates the preference
group which applies to the article according to the description
contained in the CFR provision cited on the Certificate for that group;
(7) Blocks 6 through 9 must be completed only when the block in
question calls for information that is relevant to the preference group
identified in block 5;
(8) Block 6 should state the legal name and address (including
country) of the fabric producer;
(9) Block 7 should state the legal name and address (including
country) of the yarn producer;
(10) Block 8 should state the name of the folklore article or
should state that the article is handloomed or handmade of handloomed
fabric;
(11) Block 9 should be completed if the article described in block
4 incorporates a fabric or yarn described in preference group C or D
and should state the name of the fabric or yarn that has been
considered as being in short supply in the NAFTA or that has been
designated as not available in commercial quantities in the United
States. Block 9 also should be completed if preference group E or I
applies to the article described in block 4 and the article
incorporates a fabric or yarn described in preference group C or D;
(12) Block 10 must contain the signature of the exporter or of the
exporter's authorized agent having knowledge of the relevant facts;
(13) Block 14 should reflect the date on which the Certificate was
completed and signed;
(14) Block 15 should be completed if the Certificate is intended to
cover multiple shipments of identical articles as described in block 4
that are imported into the United States during a specified period of
up to one year (see Sec. 10.246(b)(4)(ii)). The ``from'' date is the
date on which the Certificate became applicable to the article covered
by the blanket Certificate (this date may be prior to the date
reflected in block 14). The ``to'' date is the date on which the
blanket period expires; and
(15) The Certificate may be printed and reproduced locally. If more
space is needed to complete the Certificate, attach a continuation
sheet.
Sec. 10.245 Filing of claim for preferential treatment.
(a) Declaration. In connection with a claim for preferential
treatment for an apparel or other textile article described in Sec.
10.243, the importer must make a written declaration that the article
qualifies for that treatment. The inclusion on the entry summary, or
equivalent documentation, of the subheading within Chapter 98 of the
HTSUS under which the article is classified will constitute the written
declaration. Except in any of the circumstances described in Sec.
10.246(d)(1), the declaration required under this paragraph must be
based on a Certificate of Origin that has been completed and properly
executed in accordance with Sec. 10.244, that covers the article being
imported, and that is in the possession of the importer.
(b) Corrected declaration. If, after making the declaration
required under paragraph (a) of this section, the importer has reason
to believe that a Certificate of Origin on which a 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 and pay any duties that may be due. A corrected
declaration will be effected by submission of a letter or other written
statement to the Customs port where the declaration was originally
filed.
Sec. 10.246 Maintenance of records and submission of Certificate by
importer.
(a) Maintenance of records. Each importer claiming preferential
treatment for an article under Sec. 10.245 must maintain in the United
States, in accordance with the provisions of part 163 of this chapter,
all records relating to the importation of the article. Those records
must include a copy of the Certificate of Origin referred to in Sec.
10.245(a) and any other relevant documents or other records as
specified in Sec. 163.1(a) of this chapter.
(b) Submission of Certificate. An importer who claims preferential
treatment on an apparel or other textile article under Sec. 10.245(a)
must provide, at the request of the port director, a copy of the
Certificate of Origin pertaining to the article. A Certificate of
Origin submitted to Customs under this paragraph:
(1) Must be in writing or must be transmitted electronically
through any electronic data interchange system authorized by Customs
for that purpose;
(2) If in writing, must be signed by the exporter or by the
exporter's authorized agent having knowledge of the relevant facts;
(3) Must be completed either in the English language or in the
language of the country from which the article is exported. If the
Certificate is completed in a language other than English, the importer
must provide to Customs upon request a written English translation of
the Certificate; and
(4) May be applicable to:
(i) A single importation of an article 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
(ii) Multiple importations of identical articles into the United
States that occur within a specified blanket period, not to exceed 12
months, set out in the Certificate by the exporter. For purposes of
this paragraph and Sec. 10.244(c)(14), ``identical articles'' means
articles that are the same in all material respects, including physical
characteristics, quality, and reputation.
(c) Correction and nonacceptance of Certificate. If the port
director determines that a Certificate of Origin is illegible or
defective or has not been completed in accordance with paragraph (b) of
this section, the importer will be given a period of not less than five
working days to submit a corrected Certificate. A Certificate will not
be accepted in connection with subsequent importations during a period
referred to in paragraph (b)(4)(ii) of this section if the port
director determined that a previously imported identical article
covered by the Certificate did not qualify for preferential treatment.
(d) Certificate not required--(1) General. Except as otherwise
provided in paragraph (d)(2) of this section, an importer is not
required to have a Certificate of Origin in his possession for:
(i) An importation of an article for which the port director has in
writing waived the requirement for a Certificate of Origin because the
port director is otherwise satisfied that the article qualifies for
preferential treatment;
[[Page 14492]]
(ii) A non-commercial importation of an article; or
(iii) A commercial importation of an article whose value does not
exceed US$2,500, provided that, unless waived by the port director, the
producer, exporter, importer or authorized agent includes on, or
attaches to, the invoice or other document accompanying the shipment
the following signed statement:
I hereby certify that the article covered by this shipment
qualifies for preferential treatment under the ATPDEA.
Check One:
( ) Producer
( ) Exporter
( ) Importer
( ) Agent
-----------------------------------------------------------------------
Name
-----------------------------------------------------------------------
Title
-----------------------------------------------------------------------
Address
-----------------------------------------------------------------------
Signature and Date
(2) Exception. If the port director determines that an importation
described in paragraph (d)(1) of this section forms part of a series of
importations that may reasonably be considered to have been undertaken
or arranged for the purpose of avoiding a Certificate of Origin
requirement under Sec. Sec. 10.244 through 10.246, the port director
will notify the importer in writing that for that importation the
importer must have in his possession a valid Certificate of Origin to
support the claim for preferential treatment. The importer will have 30
calendar days from the date of the written notice to obtain a valid
Certificate of Origin, and a failure to timely obtain the Certificate
of Origin will result in denial of the claim for preferential
treatment. For purposes of this paragraph, a ``series of importations''
means two or more entries covering articles arriving on the same day
from the same exporter and consigned to the same person.
Sec. 10.247 Verification and justification of claim for preferential
treatment.
(a) Verification by Customs. A claim for preferential treatment
made under Sec. 10.245, including any statements or other information
contained on a Certificate of Origin submitted to Customs under Sec.
10.246, will be subject to whatever verification 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 need not be limited to, a
review of:
(1) All records required to be made, kept, and made available to
Customs 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, 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
(3) Evidence to document the use of U.S. or ATPDEA beneficiary
country materials in the production of the article in question, such as
purchase orders, invoices, bills of lading and other shipping
documents, and customs import and clearance documents.
(b) Importer requirements. In order to make a claim for
preferential treatment under Sec. 10.245, the importer:
(1) Must have records that explain how the importer came to the
conclusion that the apparel or other textile article qualifies for
preferential treatment. Those records must include documents that
support a claim that the article in question qualifies for preferential
treatment because it is specifically described in one of the provisions
under Sec. 10.243(a). If the importer is claiming that the article
incorporates fabric or yarn that was wholly formed in the United States
or in an ATPDEA beneficiary country, the importer must have records
that identify the producer of the fabric or yarn. A properly completed
Certificate of Origin in the form set forth in Sec. 10.244(b) is a
record that would serve these purposes;
(2) Must establish and implement internal controls which provide
for the periodic review of the accuracy of the Certificates of Origin
or other records referred to in paragraph (b)(1) of this section;
(3) Must have shipping papers that show how the article moved from
the ATPDEA beneficiary country to the United States. If the imported
article was shipped through a country other than an ATPDEA beneficiary
country and the invoices and other documents from the ATPDEA
beneficiary country do not show the United States as the final
destination, the importer also must have documentation that
demonstrates that the conditions set forth in Sec. 10.243(d)(3)(i)
through (iii) were met; and
(4) Must be prepared to explain, upon request from Customs, how the
records and internal controls referred to in paragraphs (b)(1) through
(b)(3) of this section justify the importer's claim for preferential
treatment.
Sec. 10.248 Additional requirements for preferential treatment of
brassieres.
(a) Definitions. When used in this section, the following terms
have the meanings indicated:
(1) Producer. ``Producer'' means an individual, corporation,
partnership, association, or other entity or group that exercises
direct, daily operational control over the production process in an
ATPDEA beneficiary country.
(2) Entity controlling production. ``Entity controlling
production'' means an individual, corporation, partnership,
association, or other entity or group that is not a producer and that
controls the production process in an ATPDEA beneficiary country
through a contractual relationship or other indirect means.
(3) Fabrics formed in the United States. ``Fabrics formed in the
United States'' means fabrics that were produced by a weaving,
knitting, needling, tufting, felting, entangling or other fabric-making
process performed in the United States.
(4) Cost. ``Cost'' when used with reference to fabrics formed in
the United States means:
(i) The price of the fabrics when last purchased, f.o.b. port of
exportation, as set out in the invoice or other commercial documents,
or, if the price is other than f.o.b. port of exportation:
(A) The price as set out in the invoice or other commercial
documents adjusted to arrive at an f.o.b. port of exportation price; or
(B) If no exportation to an ATPDEA beneficiary country is involved,
the price as set out in the invoice or other commercial documents, less
the freight, insurance, packing, and other costs incurred in
transporting the fabrics to the place of production if included in that
price; or
(ii) If the price cannot be determined under paragraph (a)(4)(i) of
this section or if Customs finds that price to be unreasonable, all
reasonable expenses incurred in the growth, production, manufacture, or
other processing of the fabrics, including the cost or value of
materials (which includes the cost of non-recoverable scrap generated
in forming the fabrics) and general expenses, plus a reasonable amount
for profit, and the freight, insurance, packing, and other costs, if
any, incurred in transporting the fabrics to the port of exportation.
(5) Declared customs value. ``Declared customs value'' when used
with reference to fabric contained in an article means the sum of:
[[Page 14493]]
(i) The cost of fabrics formed in the United States that the
producer or entity controlling production can verify; and
(ii) The cost of all other fabric contained in the article,
exclusive of all findings and trimmings, determined as follows:
(A) In the case of fabric purchased by the producer or entity
controlling production, the f.o.b. port of exportation price of the
fabric as set out in the invoice or other commercial documents, or, if
the price is other than f.o.b. port of exportation:
(1) The price as set out in the invoice or other commercial
documents adjusted to arrive at an f.o.b. port of exportation price,
plus expenses for embroidering and dyeing, printing, and finishing
operations applied to the fabric if not included in that price; or
(2) If no exportation to an ATPDEA beneficiary country is involved,
the price as set out in the invoice or other commercial documents, plus
expenses for embroidering and dyeing, printing, and finishing
operations applied to the fabric if not included in that price, but
less the freight, insurance, packing, and other costs incurred in
transporting the fabric to the place of production if included in that
price;
(B) In the case of fabric for which the cost cannot be determined
under paragraph (a)(5)(ii)(A) of this section or if Customs finds that
cost to be unreasonable, all reasonable expenses incurred in the
growth, production, or manufacture of the fabric, including the cost or
value of materials (which includes the cost of non-recoverable scrap
generated in the growth, production, or manufacture of the fabric),
general expenses and embroidering and dyeing, printing, and finishing
expenses, plus a reasonable amount for profit, and the freight,
insurance, packing, and other costs, if any, incurred in transporting
the fabric to the port of exportation;
(C) In the case of fabric components purchased by the producer or
entity controlling production, the f.o.b. port of exportation price of
those fabric components as set out in the invoice or other commercial
documents, less the cost or value of any non-textile materials, and
less expenses for cutting or other processing to create the fabric
components other than knitting to shape, that the producer or entity
controlling production can verify, or, if the price is other than
f.o.b. port of exportation:
(1) The price as set out in the invoice or other commercial
documents adjusted to arrive at an f.o.b. port of exportation price,
less the cost or value of any non-textile materials, and less expenses
for cutting or other processing to create the fabric components other
than knitting to shape, that the producer or entity controlling
production can verify; or
(2) If no exportation to an ATPDEA beneficiary country is involved,
the price as set out in the invoice or other commercial documents, less
the cost or value of any non-textile materials, and less expenses for
cutting or other processing to create the fabric components other than
knitting to shape, that the producer or entity controlling production
can verify, and less the freight, insurance, packing, and other costs
incurred in transporting the fabric components to the place of
production if included in that price; and
(D) In the case of fabric components for which a fabric cost cannot
be determined under paragraph (a)(5)(ii)(C) of this section or if
Customs finds that cost to be unreasonable: all reasonable expenses
incurred in the growth, production, or manufacture of the fabric
components, including the cost or value of materials (which does not
include the cost of recoverable scrap generated in the growth,
production, or manufacture of the fabric components) and general
expenses, but excluding the cost or value of any non-textile materials,
and excluding expenses for cutting or other processing to create the
fabric components other than knitting to shape, that the producer or
entity controlling production can verify, plus a reasonable amount for
profit, and the freight, insurance, packing, and other costs, if any,
incurred in transporting the fabric components to the port of
exportation.
(6) Year. ``Year'' means a 12-month period beginning on October 1
and ending on September 30 but does not include any 12-month period
that began prior to October 1, 2002.
(7) Entered. ``Entered'' means entered, or withdrawn from warehouse
for consumption, in the customs territory of the United States.
(b) Limitations on preferential treatment--(1) General. During the
year that begins on October 1, 2003, and during any subsequent year,
articles of a producer or an entity controlling production that conform
to the production standards set forth in Sec. 10.243(a)(4) will be
eligible for preferential treatment only if:
(i) The aggregate cost of fabrics (exclusive of all findings and
trimmings) formed in the United States that were used in the production
of all of those articles of that producer or that entity controlling
production that are entered as articles described in Sec. 10.243(a)(4)
during the immediately preceding year was at least 75 percent of the
aggregate declared customs value of the fabric (exclusive of all
findings and trimmings) contained in all of those articles of that
producer or that entity controlling production that are entered as
articles described in Sec. 10.243(a)(4) during that year; or
(ii) In a case in which the 75 percent requirement set forth in
paragraph (b)(1)(i) of this section was not met during a year and
therefore those articles of that producer or that entity controlling
production were not eligible for preferential treatment during the
following year, the aggregate cost of fabrics (exclusive of all
findings and trimmings) formed in the United States that were used in
the production of all of those articles of that producer or that entity
controlling production that conform to the production standards set
forth in Sec. 10.243(a)(4) and that were entered during the
immediately preceding year was at least 85 percent of the aggregate
declared customs value of the fabric (exclusive of all findings and
trimmings) contained in all of those articles of that producer or that
entity controlling production that conform to the production standards
set forth in Sec. 10.243(a)(4) and that were entered during that year;
and
(iii) In conjunction with the filing of the claim for preferential
treatment under Sec. 10.245, the importer records on the entry summary
or warehouse withdrawal for consumption (Customs Form 7501, column 34),
or its electronic equivalent, the distinct and unique identifier
assigned by Customs to the applicable documentation prescribed under
paragraph (c) of this section.
(2) Rules of application--(i) General. For purposes of paragraphs
(b)(1)(i) and (b)(1)(ii) of this section and for purposes of preparing
and filing the documentation prescribed in paragraph (c) of this
section, the following rules will apply:
(A) The articles in question must have been produced in the manner
specified in Sec. 10.243(a)(4) and the articles in question must be
entered within the same year;
(B) Articles that are exported to countries other than the United
States and are never entered are not to be considered in determining
compliance with the 75 or 85 percent standard specified in paragraph
(b)(1)(i) or paragraph (b)(1)(ii) of this section;
(C) Articles that are entered under an HTSUS subheading other than
the HTSUS subheading which pertains to articles described in Sec.
10.243(a)(4) are not to be considered in determining compliance with
the 75 percent
[[Page 14494]]
standard specified in paragraph (b)(1)(i) of this section;
(D) For purposes of determining compliance with the 85 percent
standard specified in paragraph (b)(1)(ii) of this section, all
articles that conform to the production standards set forth in Sec.
10.243(a)(4) must be considered, regardless of the HTSUS subheading
under which they were entered;
(E) Fabric components and fabrics that constitute findings or
trimmings are not to be considered in determining compliance with the
75 or 85 percent standard specified in paragraph (b)(1)(i) or paragraph
(b)(1)(ii) of this section;
(F) Beginning October 1, 2003, in order for articles to be eligible
for preferential treatment in a given year, a producer of, or entity
controlling production of, those articles must have met the 75 percent
standard specified in paragraph (b)(1)(i) of this section during the
immediately preceding year. If articles of a producer or entity
controlling production fail to meet the 75 percent standard specified
in paragraph (b)(1)(i) of this section during a year, articles of that
producer or entity controlling production:
(1) Will not be eligible for preferential treatment during the
following year;
(2) Will remain ineligible for preferential treatment until the
year that follows a year in which articles of that producer or entity
controlling production met the 85 percent standard specified in
paragraph (b)(1)(ii) of this section; and
(3) After the 85 percent standard specified in paragraph (b)(1)(ii)
of this section has been met, will again be subject to the 75 percent
standard specified in paragraph (b)(1)(i) of this section during the
following year for purposes of determining eligibility for preferential
treatment in the next year.
(G) A new producer or new entity controlling production, that is, a
producer or entity controlling production who did not produce or
control production of articles that were entered as articles described
in Sec. 10.243(a)(4) during the immediately preceding year, must first
establish compliance with the 85 percent standard specified in
paragraph (b)(1)(ii) of this section as a prerequisite to preparation
of the declaration of compliance referred to in paragraph (c) of this
section;
(H) A declaration of compliance prepared by a producer or by an
entity controlling production must cover all production of that
producer or all production that the entity controls for the year in
question;
(I) A producer would not prepare a declaration of compliance if all
of its production is covered by a declaration of compliance prepared by
an entity controlling production;
(J) In the case of a producer, the 75 or 85 percent standard
specified in paragraph (b)(1)(i) or paragraph (b)(1)(ii) of this
section and the declaration of compliance procedure under paragraph (c)
of this section apply to all articles of that producer for the year in
question, even if some but not all of that production is also covered
by a declaration of compliance prepared by an entity controlling
production;
(K) The U.S. importer does not have to be the producer or the
entity controlling production who prepared the declaration of
compliance; and
(L) The exclusion references regarding findings and trimmings in
paragraph (b)(1)(i) and paragraph (b)(1)(ii) of this section apply to
all findings and trimmings, whether or not they are of foreign origin.
(ii) Examples. The following examples will illustrate application
of the principles set forth in paragraph (b)(2)(i) of this section.
Example 1. An ATPDEA beneficiary country producer of articles
that meet the production standards specified in Sec. 10.243(a)(4)
in the first year sends 50 percent of that production to ATPDEA
region markets and the other 50 percent to the U.S. market; the cost
of the fabrics formed in the United States equals 100 percent of the
value of all of the fabric in the articles sent to the ATPDEA region
and 60 percent of the value of all of the fabric in the articles
sent to the United States. Although the cost of fabrics formed in
the United States is more than 75 percent of the value of all of the
fabric used in all of the articles produced, this producer could not
prepare a valid declaration of compliance because the articles sent
to the United States did not meet the minimum 75 percent standard.
Example 2. A producer sends to the United States in the first
year three shipments of articles that meet the description in Sec.
10.243(a)(4); one of those shipments is entered under the HTSUS
subheading that covers articles described in Sec. 10.243(a)(4), the
second shipment is entered under the HTSUS subheading that covers
articles described in Sec. 10.243(a)(7), and the third shipment is
entered under subheading 9802.00.80, HTSUS. In determining whether
the minimum 75 percent standard has been met in the first year for
purposes of entry of articles under the HTSUS subheading that covers
articles described in Sec. 10.243(a)(4) during the following (that
is, second) year, consideration must be restricted to the articles
in the first shipment and therefore must not include the articles in
the second and third shipments.
Example 3. A producer in the second year begins production of
articles that conform to the production standards specified in Sec.
10.243(a)(4); some of those articles are entered in that year under
HTSUS subheading 6212.10 and others under HTSUS subheading
9802.00.80 but none are entered in that year under the HTSUS
subheading which pertains to articles described in Sec.
10.243(a)(4) because the 75 percent standard had not been met in the
preceding (that is, first) year. In this case the 85 percent
standard applies, and all of the articles that were entered under
the various HTSUS provisions in the second year must be taken into
account in determining whether that 85 percent standard has been
met. If the 85 percent was met in the aggregate for all of the
articles entered in the second year, in the next (that is, third)
year articles of that producer may receive preferential treatment
under the HTSUS subheading which pertains to articles described in
Sec. 10.243(a)(4).
Example 4. An entity controlling production of articles that
meet the description in Sec. 10.243(a)(4) buys for the U.S.,
Canadian and Mexican markets; the articles in each case are first
sent to the United States where they are entered for consumption and
then placed in a commercial warehouse from which they are shipped to
various stores in the United States, Canada and Mexico.
Notwithstanding the fact that some of the articles ultimately ended
up in Canada or Mexico, a declaration of compliance prepared by the
entity controlling production must cover all of the articles rather
than only those that remained in the United States because all of
those articles had been entered for consumption.
Example 5. Fabric is cut and sewn in the United States with
other U.S. materials to form cups which are joined together to form
brassiere front subassemblies in the United States, and those front
subassemblies are then placed in a warehouse in the United States
where they are held until the following year; during that following
year all of the front subassemblies are shipped to an ATPDEA
beneficiary country where they are assembled with elastic strips and
labels produced in an Asian country and other fabrics, components or
materials produced in the ATPDEA beneficiary country to form
articles that meet the production standards specified in Sec.
10.243(a)(4) and that are then shipped to the United States and
entered during that same year. In determining whether the entered
articles meet the minimum 75 or 85 percent standard, the fabric in
the elastic strips and labels is to be disregarded entirely because
the strips and labels constitute findings or trimmings for purposes
of this section, and all of the fabric in the front subassemblies is
countable because it was all formed in the United States and used in
the production of articles that were entered in the same year.
Example 6. An ATPDEA beneficiary country producer's entire
production of articles that meet the description in Sec.
10.243(a)(4) is sent to a U.S. importer in two separate shipments,
one in February and the other in June of the same calendar year; the
articles shipped in February do not meet the minimum 75 percent
standard, the articles shipped in June exceed the 85 percent
standard, and the articles in the two shipments, taken together, do
meet the 75 percent standard; the articles covered by the February
shipment are entered for consumption on March 1 of that calendar
[[Page 14495]]
year, and the articles covered by the June shipment are placed in a
Customs bonded warehouse upon arrival and are subsequently withdrawn
from warehouse for consumption on November 1 of that calendar year.
The ATPDEA beneficiary country producer may not prepare a valid
declaration of compliance covering the articles in the first
shipment because those articles did not meet the minimum 75 percent
standard and because those articles cannot be included with the
articles of the second shipment on the same declaration of
compliance since they were entered in a different year. However, the
ATPDEA beneficiary country producer may prepare a valid declaration
of compliance covering the articles in the second shipment because
those articles did meet the requisite 85 percent standard which
would apply for purposes of entry of articles in the following year.
Example 7. A producer in the second year begins production of
articles exclusively for the U.S. market that meet the production
standards specified in Sec. 10.243(a)(4), but the entered articles
do not meet the requisite 85 percent standard until the third year.
The producer's articles may not receive preferential treatment
during the second year because there was no production (and thus
there were no entered articles) in the immediately preceding (that
is, first) year on which to assess compliance with the 75 percent
standard. The producer's articles also may not receive preferential
treatment during the third year because the 85 percent standard was
not met in the immediately preceding (that is, second) year.
However, the producer's articles are eligible for preferential
treatment during the fourth year based on compliance with the 85
percent standard in the immediately preceding (that is, third) year.
Example 8. An entity controlling production (Entity A) uses five
ATPDEA beneficiary country producers (Producers 1-5), all of which
produce only articles that meet the description in Sec.
10.243(a)(4); Producers 1-4 send all of their production to the
United States and Producer 5 sends 10 percent of its production to
the United States and the rest to Europe; Producers 1-3 and Producer
5 produce only pursuant to contracts with Entity A, but Producer 4
also operates independently of Entity A by producing for several
U.S. importers, one of which is an entity controlling production
(Entity B) that also controls all of the production of articles of
one other producer (Producer 6) which sends all of its production to
the United States. A declaration of compliance prepared by Entity A
must cover all of the articles of Producers 1-3 and the 10 percent
of articles of Producer 5 that are sent to the United States and
that portion of the articles of Producer 4 that are produced
pursuant to the contract with Entity A, because Entity A controls
the production of those articles. There is no need for Producers 1-3
and Producer 5 to prepare a declaration of compliance because they
have no production that is not covered by a declaration of
compliance prepared by an entity controlling production. A
declaration of compliance prepared by Producer 4 would cover all of
its production, that is, articles produced for Entity A, articles
produced for Entity B, and articles produced independently for other
U.S. importers; a declaration of compliance prepared by Entity B
must cover that portion of the production of Producer 4 that it
controls as well as all of the production of Producer 6 because
Entity B also controls all of the production of Producer 6. Producer
6 would not prepare a declaration of compliance because all of its
production is covered by the declaration of compliance prepared by
Entity B.
(c) Documentation--(1) Initial declaration of compliance. In order
for an importer to comply with the requirement set forth in paragraph
(b)(1)(iii) of this section, the producer or the entity controlling
production must have filed with Customs, in accordance with paragraph
(c)(4) of this section, a declaration of compliance with the applicable
75 or 85 percent requirement prescribed in paragraph (b)(1)(i) or
(b)(1)(ii) of this section. After filing of the declaration of
compliance has been completed, Customs will advise the producer or the
entity controlling production of the distinct and unique identifier
assigned to that declaration. The producer or the entity controlling
production will then be responsible for advising each appropriate U.S.
importer of that distinct and unique identifier for purposes of
recording that identifier on the entry summary or warehouse withdrawal.
In order to provide sufficient time for advising the U.S. importer of
that distinct and unique identifier prior to the arrival of the
articles in the United States, the producer or the entity controlling
production should file the declaration of compliance with Customs at
least 10 calendar days prior to the date of the first shipment of the
articles to the United States.
(2) Amended declaration of compliance. If the information on the
declaration of compliance referred to in paragraph (c)(1) of this
section is based on an estimate because final year-end information was
not available at that time and the final data differs from the
estimate, or if the producer or the entity controlling production has
reason to believe for any other reason that the declaration of
compliance that was filed contained erroneous information, within 30
calendar days after the final year-end information becomes available or
within 30 calendar days after the date of discovery of the error:
(i) The producer or the entity controlling production must file
with the Customs office identified in paragraph (c)(4) of this section
an amended declaration of compliance containing that final year-end
information or other corrected information; or
(ii) If that final year-end information or other corrected
information demonstrates noncompliance with the applicable 75 or 85
percent requirement, the producer or the entity controlling production
must in writing advise both the Customs office identified in paragraph
(c)(4) of this section and each appropriate U.S. importer of that fact.
(3) Form and preparation of declaration of compliance--(i) Form.
The declaration of compliance referred to in paragraph (c)(1) of this
section may be printed and reproduced locally and must be in the
following format:
BILLING CODE 8025-01-P
[[Page 14496]]
[GRAPHIC] [TIFF OMITTED] TP25MR03.001
BILLING CODE 8025-01-C
(ii) Preparation. The following rules will apply for purposes of
completing the declaration of compliance set forth in paragraph
(c)(3)(i) of this section:
(A) In block 1, fill in the year commencing October 1 and ending
September 30 of the calendar year during which the applicable 75 or 85
percent standard specified in paragraph (b)(1)(i) or paragraph
(b)(1)(ii) of this section was met;
(B) Block 2 should state the legal name and address (including
country) of the preparer and should also include the preparer's
importer identification number (see Sec. 24.5 of this chapter), if the
preparer has one;
(C) Block 3 should state the legal name and address (including
country) of the ATPDEA beneficiary country producer if that producer is
not already identified in block 2. If there is more than one producer,
attach a list stating the legal name and address (including country) of
all additional producers;
(D) Blocks 4 and 5 apply only to articles that were entered during
the year identified in block 1; and
(E) In block 7, the signature must be that of an authorized
officer, employee, agent or other person having knowledge of the
relevant facts and the date must be the date on which the declaration
of compliance was completed and signed.
(4) Filing of declaration of compliance. The declaration of
compliance referred to in paragraph (c)(1) of this section:
(i) Must be completed either in the English language or in the
language of the country in which the articles covered by the
declaration were produced. If the declaration is completed in a
language other than English, the producer or the entity controlling
production must provide to Customs upon request a written English
translation of the declaration; and
(ii) Must be filed with the New York Strategic Trade Center, U.S.
Customs Service, 1 Penn Plaza, New York, New York 10119.
(d) Verification of declaration of compliance--(1) Verification
procedure. A declaration of compliance filed under this section will be
subject to whatever verification Customs deems necessary. In the event
that Customs for any reason is prevented from verifying the statements
made on a declaration of compliance, Customs may deny any claim for
preferential treatment made
[[Page 14497]]
under Sec. 10.245 that is based on that declaration. A verification of
a declaration of compliance may involve, but need not be limited to, a
review of:
(i) All records required to be made, kept, and made available to
Customs by the importer, the producer, the entity controlling
production, or any other person under part 163 of this chapter;
(ii) Documentation and other information regarding all articles
that meet the production standards specified in Sec. 10.243(a)(4) that
were exported to the United States and that were entered during the
year in question, whether or not a claim for preferential treatment was
made under Sec. 10.245. Those records and other information include,
but are not limited to, work orders and other production records,
purchase orders, invoices, bills of lading and other shipping
documents;
(iii) Evidence to document the cost of fabrics formed in the United
States that were used in the production of the articles in question,
such as purchase orders, invoices, bills of lading and other shipping
documents, and customs import and clearance documents, work orders and
other production records, and inventory control records;
(iv) Evidence to document the cost or value of all fabric other
than fabrics formed in the United States that were used in the
production of the articles in question, such as purchase orders,
invoices, bills of lading and other shipping documents, and customs
import and clearance documents, work orders and other production
records, and inventory control records; and
(v) Accounting books and documents to verify the records and
information referred to in paragraphs (d)(1)(ii) through (d)(1)(iv) of
this section. The verification of purchase orders, invoices and bills
of lading will be accomplished through the review of a distinct audit
trail. The audit trail documents must consist of a cash disbursement or
purchase journal or equivalent records to establish the purchase of the
fabric. The headings in each of these journals or other records must
contain the date, vendor name, and amount paid for the fabric. The
verification of production records and work orders will be accomplished
through analysis of the inventory records of the producer or entity
controlling production. The inventory records must reflect the
production of the finished article which must be referenced to the
original purchase order or lot number covering the fabric used in
production. In the inventory production records, the inventory should
show the opening balance of the inventory plus the purchases made
during the accounting period and the inventory closing balance.
(2) Notice of determination. If, based on a verification of a
declaration of compliance filed under this section, Customs determines
that the applicable 75 or 85 percent standard specified in paragraph
(b)(1)(i) or paragraph (b)(1)(ii) of this section was not met, Customs
will publish a notice of that determination in the Federal Register.
6. Part 10 is amended by adding a new center heading followed by
new Sec. Sec. 10.251 through 10.257 to read as follows:
Extension of ATPA Benefits to Tuna and Certain Other Non-Textile
Articles
Sec.
10.251 Applicability.
10.252 Definitions.
10.253 Articles eligible for preferential treatment.
10.254 Certificate of Origin.
10.255 Filing of claim for preferential treatment.
10.256 Maintenance of records and submission of Certificate by
importer.
10.257 Verification and justification of claim for preferential
treatment.
Extension of ATPA Benefits to Tuna and Certain Other Non-Textile
Articles
Sec. 10.251 Applicability.
Title XXXI of Public Law 107-210 (116 Stat. 933), entitled the
Andean Trade Promotion and Drug Eradication Act (ATPDEA), amended
sections 202, 203, 204, and 208 of the Andean Trade Preference Act (the
ATPA, 19 U.S.C. 3201-3206) to authorize the President to extend
additional trade benefits to ATPA beneficiary countries that have been
designated as ATPDEA beneficiary countries. Sections 204(b)(1) and
(b)(4) of the ATPA (19 U.S.C. 3203(b)(1) and (b)(4)) provide for the
preferential treatment of certain non-textile articles that were not
entitled to duty-free treatment under the ATPA prior to enactment of
the ATPDEA. The provisions of Sec. Sec. 10.251-10.257 of this part set
forth the legal requirements and procedures that apply for purposes of
obtaining preferential treatment pursuant to ATPA sections 204(b)(1)
and (b)(4).
Sec. 10.252 Definitions.
When used in Sec. Sec. 10.251 through 10.257, the following terms
have the meanings indicated:
ATPA. ``ATPA'' means the Andean Trade Preference Act, 19 U.S.C.
3201-3206.
ATPDEA beneficiary country. ``ATPDEA beneficiary country'' means a
``beneficiary country'' as defined in Sec. 10.202(a) for purposes of
the ATPA which the President also has designated as a beneficiary
country for purposes of preferential treatment of products under 19
U.S.C. 3203(b)(1) and (b)(4) and which has been the subject of a
finding by the President or his designee, published in the Federal
Register, that the beneficiary country has satisfied the requirements
of 19 U.S.C. 3203(b)(5)(A)(ii).
ATPDEA beneficiary country vessel. ``ATPDEA beneficiary country
vessel'' means a vessel:
(a) Which is registered or recorded in an ATPDEA beneficiary
country;
(b) Which sails under the flag of an ATPDEA beneficiary country;
(c) Which is at least 75 percent owned by nationals of an ATPDEA
beneficiary country or by a company having its principal place of
business in an ATPDEA beneficiary country, of which the manager or
managers, chairman of the board of directors or of the supervisory
board, and the majority of the members of those boards are nationals of
an ATPDEA beneficiary country and of which, in the case of a company,
at least 50 percent of the capital is owned by an ATPDEA beneficiary
country or by public bodies or nationals of an ATPDEA beneficiary
country;
(d) Of which the master and officers are nationals of an ATPDEA
beneficiary country; and
(e) Of which at least 75 percent of the crew are nationals of an
ATPDEA beneficiary country.
HTSUS. ``HTSUS'' means the Harmonized Tariff Schedule of the United
States.
Preferential treatment. ``Preferential treatment'' means entry, or
withdrawal from warehouse for consumption, in the customs territory of
the United States free of duty and free of any quantitative
restrictions in the case of tuna described in Sec. 10.253(a)(1) and
free of duty in the case of any article described in Sec.
10.253(a)(2).
United States vessel. ``United States vessel'' means a vessel
having a certificate of documentation with a fishery endorsement under
chapter 121 of title 46 of the United States Code.
Sec. 10.253 Articles eligible for preferential treatment.
(a) General. Preferential treatment applies to any of the following
articles, provided that the article in question is imported directly
into the customs territory of the United States from an ATPDEA
beneficiary country within the meaning of paragraph (b) of this
section:
(1) Tuna that is harvested by United States vessels or ATPDEA
beneficiary country vessels, that is prepared or preserved in any
manner, in an
[[Page 14498]]
ATPDEA beneficiary country, in foil or other flexible airtight
containers weighing with their contents not more than 6.8 kilograms
each; and
(2) Any of the following articles that the President has determined
are not import-sensitive in the context of imports from ATPDEA
beneficiary countries, provided that the article in question meets the
country of origin and value content requirements set forth in
paragraphs (c) and (d) of this section:
(i) Footwear not designated on December 4, 1991, as eligible
articles for the purpose of the Generalized System of Preferences (GSP)
under Title V, Trade Act of 1974, as amended (19 U.S.C. 2461 through
2467);
(ii) Petroleum, or any product derived from petroleum, provided for
in headings 2709 and 2710 of the HTSUS;
(iii) Watches and watch parts (including cases, bracelets, and
straps), of whatever type including, but not limited to, mechanical,
quartz digital or quartz analog, if those watches or watch parts
contain any material which is the product of any country with respect
to which HTSUS column 2 rates of duty apply; and
(iv) Handbags, luggage, flat goods, work gloves, and leather
wearing apparel that were not designated on August 5, 1983, as eligible
articles for purposes of the GSP.
(b) Imported directly defined. For purposes of paragraph (a) of
this section, the words ``imported directly'' mean:
(1) Direct shipment from any ATPDEA beneficiary country to the
United States without passing through the territory of any country that
is not an ATPDEA beneficiary country;
(2) If the shipment is from any ATPDEA beneficiary country to the
United States through the territory of any country that is not an
ATPDEA beneficiary country, the articles in the shipment do not enter
into the commerce of any country that is not an ATPDEA beneficiary
country while en route to the United States and the invoices, bills of
lading, and other shipping documents show the United States as the
final destination; or
(3) If the shipment is from any ATPDEA beneficiary country to the
United States through the territory of any country that is not an
ATPDEA beneficiary country, and the invoices and other documents do not
show the United States as the final destination, the articles in the
shipment upon arrival in the United States are imported directly only
if they:
(i) Remained under the control of the customs authority of the
intermediate country;
(ii) Did not enter into the commerce of the intermediate country
except for the purpose of sale other than at retail, and the port
director is satisfied that the importation results from the original
commercial transaction between the importer and the producer or the
producer's sales agent; and
(iii) Were not subjected to operations other than loading or
unloading, and other activities necessary to preserve the articles in
good condition.
(c) Country of origin criteria--(1) General. Except as otherwise
provided in paragraph (c)(2) of this section, an article described in
paragraph (a)(2) of this section may be eligible for preferential
treatment if the article is either:
(i) Wholly the growth, product, or manufacture of an ATPDEA
beneficiary country; or
(ii) A new or different article of commerce which has been grown,
produced, or manufactured in an ATPDEA beneficiary country.
(2) Exceptions. No article will be eligible for preferential
treatment by virtue of having merely undergone simple (as opposed to
complex or meaningful) combining or packaging operations, or mere
dilution with water or mere dilution with another substance that does
not materially alter the characteristics of the article. The principles
and examples set forth in Sec. 10.195(a)(2) will apply equally for
purposes of this paragraph.
(d) Value content requirement--(1) General. An article may be
eligible for preferential treatment only if the sum of the cost or
value of the materials produced in an ATPDEA beneficiary country or
countries, plus the direct costs of processing operations performed in
an ATPDEA beneficiary country or countries, is not less than 35 percent
of the appraised value of the article at the time it is entered.
(2) Commonwealth of Puerto Rico, U.S. Virgin Islands and CBI
beneficiary countries. For the specific purpose of determining the
percentage referred to in paragraph (d)(1) of this section, the term
``ATPDEA beneficiary country'' includes the Commonwealth of Puerto
Rico, the U.S. Virgin Islands, and any CBI beneficiary country as
defined in Sec. 10.191(b)(1). Any cost or value of materials or direct
costs of processing operations attributable to the Virgin Islands or
any CBI beneficiary country must be included in the article prior to
its final exportation to the United States from an ATPDEA beneficiary
country as defined in Sec. 10.252.
(3) Materials produced in the United States. For purposes of
determining the percentage referred to in paragraph (d)(1) of this
section, an amount not to exceed 15 percent of the appraised value of
the article at the time it is entered may be attributed to the cost or
value of materials produced in the customs territory of the United
States (other than the Commonwealth of Puerto Rico). The principles set
forth in paragraph (d)(4)(i) of this section will apply in determining
whether a material is ``produced in the customs territory of the United
States'' for purposes of this paragraph.
(4) Cost or value of materials--(i) ``Materials produced in an
ATPDEA beneficiary country or countries'' defined. For purposes of
paragraph (d)(1) of this section, the words ``materials produced in an
ATPDEA beneficiary country or countries'' refer to those materials
incorporated in an article which are either:
(A) Wholly the growth, product, or manufacture of an ATPDEA
beneficiary country or two or more ATPDEA beneficiary countries; or
(B) Substantially transformed in any ATPDEA beneficiary country or
two or more ATPDEA beneficiary countries into a new or different
article of commerce which is then used in any ATPDEA beneficiary
country as defined in Sec. 10.252 in the production or manufacture of
a new or different article which is imported directly into the United
States. For purposes of this paragraph (d)(4)(i)(B), no material will
be considered to be substantially transformed into a new or different
article of commerce by virtue of having merely undergone simple (as
opposed to complex or meaningful) combining or packaging operations, or
mere dilution with water or mere dilution with another substance that
does not materially alter the characteristics of the article. The
examples set forth in Sec. 10.196(a), and the principles and examples
set forth in Sec. 10.195(a)(2), will apply for purposes of the
corresponding context under paragraph (d)(4)(i) of this section.
(ii) Failure to establish origin. If the importer fails to maintain
adequate records to establish the origin of a material, that material
may not be considered to have been grown, produced, or manufactured in
an ATPDEA beneficiary country or in the customs territory of the United
States for purposes of determining the percentage referred to in
paragraph (d)(1) of this section.
(iii) Determination of cost or value of materials. (A) The cost or
value of materials produced in an ATPDEA beneficiary country or
countries or in the customs territory of the United States includes:
[[Page 14499]]
(1) The manufacturer's actual cost for the materials;
(2) When not included in the manufacturer's actual cost for the
materials, the freight, insurance, packing, and all other costs
incurred in transporting the materials to the manufacturer's plant;
(3) The actual cost of waste or spoilage, less the value of
recoverable scrap; and
(4) Taxes and/or duties imposed on the materials by any ATPDEA
beneficiary country or by the United States, provided they are not
remitted upon exportation.
(B) Where a material is provided to the manufacturer without
charge, or at less than fair market value, its cost or value will be
determined by computing the sum of:
(1) All expenses incurred in the growth, production, or manufacture
of the material, including general expenses;
(2) An amount for profit; and
(3) Freight, insurance, packing, and all other costs incurred in
transporting the material to the manufacturer's plant.
(5) Direct costs of processing operations--(i) Items included. For
purposes of paragraph (d)(1) of this section, the words ``direct costs
of processing operations'' mean those costs either directly incurred
in, or which can be reasonably allocated to, the growth, production,
manufacture, or assembly of the specific merchandise under
consideration. Those costs include, but are not limited to the
following, to the extent that they are includable in the appraised
value of the imported merchandise:
(A) All actual labor costs involved in the growth, production,
manufacture, or assembly of the specific merchandise, including fringe
benefits, on-the-job training, and the cost of engineering,
supervisory, quality control, and similar personnel;
(B) Dies, molds, tooling, and depreciation on machinery and
equipment which are allocable to the specific merchandise;
(C) Research, development, design, engineering, and blueprint costs
insofar as they are allocable to the specific merchandise; and
(D) Costs of inspecting and testing the specific merchandise.
(ii) Items not included. For purposes of paragraph (d)(1) of this
section, the words ``direct costs of processing operations'' do not
include items which are not directly attributable to the merchandise
under consideration or are not costs of manufacturing the product.
These include, but are not limited to:
(A) Profit; and
(B) General expenses of doing business which either are not
allocable to the specific merchandise or are not related to the growth,
production, manufacture, or assembly of the merchandise, such as
administrative salaries, casualty and liability insurance, advertising,
and salesmen's salaries, commissions, or expenses.
(6) Articles wholly the growth, product, or manufacture of an
ATPDEA beneficiary country. Any article which is wholly the growth,
product, or manufacture of an ATPDEA beneficiary country as defined in
Sec. 10.252, and any article produced or manufactured in an ATPDEA
beneficiary country as defined in Sec. 10.252 exclusively from
materials which are wholly the growth, product, or manufacture of an
ATPDEA beneficiary country or countries, will normally be presumed to
meet the requirement set forth in paragraph (d)(1) of this section.
Sec. 10.254 Certificate of Origin.
A Certificate of Origin as specified in Sec. 10.256 must be
employed to certify that an article described in Sec. 10.253(a) being
exported from an ATPDEA beneficiary country to the United States
qualifies for the preferential treatment referred to in Sec. 10.251.
The Certificate of Origin must be prepared by the exporter in the
ATPDEA beneficiary country. Where the ATPDEA beneficiary country
exporter is not the producer of the article, that exporter may complete
and sign a Certificate of Origin on the basis of:
(a) Its reasonable reliance on the producer's written
representation that the article qualifies for preferential treatment;
or
(b) A completed and signed Certificate of Origin for the article
voluntarily provided to the exporter by the producer.
Sec. 10.255 Filing of claim for preferential treatment.
(a) Declaration. In connection with a claim for preferential
treatment for an article described in Sec. 10.253(a), the importer
must make a written declaration that the article qualifies for that
treatment. The written declaration should be made by including on the
entry summary, or equivalent documentation, the symbol ``J+'' as a
prefix to the subheading of the HTSUS in which the article in question
is classified. Except in any of the circumstances described in Sec.
10.256(d)(1), the declaration required under this paragraph must be
based on a complete and properly executed original Certificate of
Origin that covers the article being imported and that is in the
possession of the importer.
(b) Corrected declaration. If, after making the declaration
required under paragraph (a) of this section, the importer has reason
to believe that a Certificate of Origin on which a 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 and pay any duties that may be due. A corrected
declaration will be effected by submission of a letter or other written
statement to the Customs port where the declaration was originally
filed.
Sec. 10.256 Maintenance of records and submission of Certificate by
importer.
(a) Maintenance of records. Each importer claiming preferential
treatment for an article under Sec. 10.255 must maintain in the United
States, in accordance with the provisions of part 163 of this chapter,
all records relating to the importation of the article. Those records
must include the original Certificate of Origin referred to in Sec.
10.255(a) and any other relevant documents or other records as
specified in Sec. 163.1(a) of this chapter.
(b) Submission of Certificate. An importer who claims preferential
treatment on an article under Sec. 10.255(a) must provide, at the
request of the port director, a copy of the Certificate of Origin
pertaining to the article. A Certificate of Origin submitted to Customs
under this paragraph:
(1) Must be on Customs Form 449, including privately-printed copies
of that Form, or, as an alternative to Customs Form 449, in an approved
computerized format or other medium or format as is approved by the
Office of Field Operations, U.S. Customs Service, Washington, DC 20229.
An alternative format must contain the same information and
certification set forth on Customs Form 449;
(2) Must be signed by the exporter or by the exporter's authorized
agent having knowledge of the relevant facts;
(3) Must be completed either in the English language or in the
language of the country from which the article is exported. If the
Certificate is completed in a language other than English, the importer
must provide to Customs upon request a written English translation of
the Certificate; and
(4) May be applicable to:
(i) A single importation of an article 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
[[Page 14500]]
(ii) Multiple importations of identical articles into the United
States that occur within a specified blanket period, not to exceed 12
months, set out in the Certificate by the exporter. For purposes of
this paragraph, ``identical articles'' means articles that are the same
in all material respects, including physical characteristics, quality,
and reputation.
(c) Correction and nonacceptance of Certificate. If the port
director determines that a Certificate of Origin is illegible or
defective or has not been completed in accordance with paragraph (b) of
this section, the importer will be given a period of not less than five
working days to submit a corrected Certificate. A Certificate will not
be accepted in connection with subsequent importations during a period
referred to in paragraph (b)(4)(ii) of this section if the port
director determined that a previously imported identical article
covered by the Certificate did not qualify for preferential treatment.
(d) Certificate not required--(1) General. Except as otherwise
provided in paragraph (d)(2) of this section, an importer is not
required to have a Certificate of Origin in his possession for:
(i) An importation of an article for which the port director has in
writing waived the requirement for a Certificate of Origin because the
port director is otherwise satisfied that the article qualifies for
preferential treatment;
(ii) A non-commercial importation of an article; or
(iii) A commercial importation of an article whose value does not
exceed US$2,500, provided that, unless waived by the port director, the
producer, exporter, importer or authorized agent includes on, or
attaches to, the invoice or other document accompanying the shipment
the following signed statement:
I hereby certify that the article covered by this shipment
qualifies for preferential tariff treatment under the ATPDEA.
Check One:
( ) Producer
( ) Exporter
( ) Importer
( ) Agent
-----------------------------------------------------------------------
Name
-----------------------------------------------------------------------
Title
-----------------------------------------------------------------------
Address
-----------------------------------------------------------------------
Signature and Date
(2) Exception. If the port director determines that an importation
described in paragraph (d)(1) of this section forms part of a series of
importations that may reasonably be considered to have been undertaken
or arranged for the purpose of avoiding a Certificate of Origin
requirement under Sec. Sec. 10.254 through 10.256, the port director
will notify the importer in writing that for that importation the
importer must have in his possession a valid Certificate of Origin to
support the claim for preferential treatment. The importer will have 30
calendar days from the date of the written notice to obtain a valid
Certificate of Origin, and a failure to timely obtain the Certificate
of Origin will result in denial of the claim for preferential
treatment. For purposes of this paragraph, a ``series of importations''
means two or more entries covering articles arriving on the same day
from the same exporter and consigned to the same person.
Sec. 10.257 Verification and justification of claim for preferential
treatment.
(a) Verification by Customs. A claim for preferential treatment
made under Sec. 10.255, including any statements or other information
contained on a Certificate of Origin submitted to Customs under Sec.
10.256, will be subject to whatever verification 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 need not be limited to, a
review of:
(1) All records required to be made, kept, and made available to
Customs 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, 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
(3) Evidence to document the use of U.S. or ATPDEA beneficiary
country materials in the production of the article in question, such as
purchase orders, invoices, bills of lading and other shipping
documents, and customs import and clearance documents.
(b) Importer requirements. In order to make a claim for
preferential treatment under Sec. 10.255, the importer:
(1) Must have records that explain how the importer came to the
conclusion that the article 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
country of origin and value content requirements set forth in Sec.
10.253(c) and (d). A properly completed Certificate of Origin in the
form prescribed in Sec. 10.254(b) is a record that would serve this
purpose;
(2) Must establish and implement internal controls which provide
for the periodic review of the accuracy of the Certificate of Origin or
other records referred to in paragraph (b)(1) of this section;
(3) Must have shipping papers that show how the article moved from
the ATPDEA beneficiary country to the United States. If the imported
article was shipped through a country other than an ATPDEA beneficiary
country and the invoices and other documents from the ATPDEA
beneficiary country do not show the United States as the final
destination, the importer also must have documentation that
demonstrates that the conditions set forth in Sec. 10.253(b)(3)(i)
through (iii) were met; and
(4) Must be prepared to explain, upon request from Customs, how the
records and internal controls referred to in paragraphs (b)(1) through
(b)(3) of this section justify the importer's claim for preferential
treatment.
PART 163--RECORDKEEPING
7. 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.
8. The Appendix to Part 163 is amended by adding three new listings
under section IV in numerical order to read as follows:
Appendix to Part 163--Interim (a)(1)(A) List
* * * * *
IV. * * *
Sec. 10.246 ATPDEA Textile Certificate of Origin
Sec. 10.248 ATPDEA Declaration of Compliance for Brassieres
Sec. 10.256 ATPDEA Non-textile Certificate of Origin
* * * * *
Robert C. Bonner,
Commissioner of Customs.
Approved: February 27, 2003.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 03-6867 Filed 3-24-03; 8:45 am]
BILLING CODE 4820-02-P