[Federal Register: March 21, 2003 (Volume 68, Number 55)]
[Rules and Regulations]
[Page 13820-13827]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr03-5]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Part 10
[T.D. 03--15]
RIN 1515-AD20
Trade Benefits Under the African Growth and Opportunity Act
AGENCY: Customs Service, Department of the Treasury.
ACTION: Interim regulations; solicitation of comments.
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SUMMARY: This document sets forth interim amendments to those
provisions of the Customs Regulations that implement the trade benefits
for sub-Saharan African countries contained in the African Growth and
Opportunity Act (the AGOA). The interim regulatory amendments involve
the textile and apparel provisions of the AGOA and in part reflect
changes made to those statutory provisions by section 3108 of the Trade
Act of 2002. The specific statutory changes addressed in this document
involve the amendment of several provisions to clarify the status of
apparel articles assembled from knit-to-
[[Page 13821]]
shape components, the inclusion of a specific reference to apparel
articles formed on seamless knitting machines, a change of the wool
fiber diameter specified in one provision, and the addition of a new
provision to cover additional production scenarios involving the United
States and AGOA beneficiary countries. This document also includes a
number of other changes to the AGOA implementing regulations to clarify
a number of issues that arose after their original publication.
DATES: Interim rule effective March 21, 2003; comments must be
submitted by May 20, 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: Robert Abels,
Office of Field Operations (202-927-1959). Legal issues: Cynthia Reese,
Office of Regulations and Rulings (202-572-8790).
SUPPLEMENTARY INFORMATION:
Background
The African Growth and Opportunity Act
The African Growth and Opportunity Act (the AGOA, Title I of Public
Law 106-200, 114 Stat. 251) authorizes the President to extend certain
trade benefits to designated countries in sub-Saharan Africa. Section
112 of the AGOA, codified at 19 U.S.C. 3721, provides for the
preferential treatment of certain textile and apparel articles from
designated beneficiary countries. The provisions of section 112 of the
AGOA are reflected for tariff purposes in Subchapter XIX, Chapter 98,
Harmonized Tariff Schedule of the United States (HTSUS).
Sections 10.211 through 10.217 of the Customs Regulations (19 CFR
10.211 through 10.217) set forth the legal requirements and procedures
that apply for purposes of obtaining preferential treatment on textile
and apparel articles pursuant to section 112 of the AGOA. Those
regulations were adopted on an interim basis in T.D. 00-67, published
in the Federal Register (65 FR 59668) on October 5, 2000, and took
effect on October 1, 2000. Action to adopt those interim regulations as
a final rule was withheld pending anticipated action on the part of
Congress to amend the underlying statutory provisions.
Trade Act of 2002 Amendments
On August 6, 2002, the President signed into law the Trade Act of
2002 (the ``Act''), Public Law 107-210, 116 Stat. 933. Sections 3108(a)
and (b) of the Act amended section 112(b) of the AGOA (19 U.S.C.
3721(b)) which specifies the textile and apparel articles to which
preferential treatment applies under the AGOA. The amendments made by
section 3108(a) of the Act to section 112(b) of the AGOA were as
follows:
1. The article description in the introductory text of paragraph
(b)(1) was amended to refer to apparel articles ``sewn or otherwise''
assembled and to include a reference to articles assembled ``from
components knit-to-shape.'' The amended statutory text reads as
follows:
Apparel articles sewn or otherwise assembled in one or more
beneficiary sub-Saharan African countries from fabrics wholly formed
and cut, or from components knit-to-shape, in the United States from
yarns wholly formed in the United States, (including fabrics not
formed from yarns, if such fabrics are classifiable under heading
5602 or 5603 of the Harmonized Tariff Schedule of the United States
and are wholly formed and cut in the United States) that are * * *
2. The article description in paragraph (b)(2) was reorganized in
order to accommodate the addition of references to apparel articles
``sewn or otherwise'' assembled and to apparel articles assembled
``from components knit-to-shape in the United States from yarns wholly
formed in the United States.'' The amended statutory text reads as
follows:
Apparel articles sewn or otherwise assembled in one or more
beneficiary sub-Saharan African countries with thread formed in the
United States from fabrics wholly formed in the United States and
cut in one or more beneficiary sub-Saharan African countries from
yarns wholly formed in the United States, or from components knit-
to-shape in the United States from yarns wholly formed in the United
States, or both (including fabrics not formed from yarns, if such
fabrics are classifiable under heading 5602 or 5603 of the
Harmonized Tariff Schedule of the United States and are wholly
formed in the United States).
3. The article description in the introductory text of paragraph
(b)(3) was amended by removing the words ``and cut'' after ``wholly
formed'' within the parenthetical phrase, by adding a reference to
articles assembled ``from components knit-to-shape in one or more
beneficiary sub-Saharan African countries from yarns originating either
in the United States or one or more beneficiary sub-Saharan African
countries,'' and by adding a reference to ``apparel articles wholly
formed on seamless knitting machines in a beneficiary sub-Saharan
African country from yarns originating either in the United States or
one or more beneficiary sub-Saharan African countries.'' The amended
statutory text reads as follows:
?Apparel articles wholly assembled in one or more
beneficiary sub-Saharan African countries from fabric wholly formed
in one or more beneficiary sub-Saharan African countries from yarns
originating either in the United States or one or more beneficiary
sub-Saharan African countries (including fabrics not formed from
yarns, if such fabrics are classified under heading 5602 or 5603 of
the Harmonized Tariff Schedule of the United States and are wholly
formed in one or more beneficiary sub-Saharan African countries), or
from components knit-to-shape in one or more beneficiary sub-Saharan
African countries from yarns originating either in the United States
or one or more beneficiary sub-Saharan African countries, or apparel
articles wholly formed on seamless knitting machines in a
beneficiary sub-Saharan African country from yarns originating
either in the United States or one or more beneficiary sub-Saharan
African countries, subject to the following:
4. The article description in paragraph (b)(3)(B)(i), which sets
forth a special rule for lesser developed beneficiary sub-Saharan
African countries, was amended to refer to preferential treatment
``under this paragraph,'' to refer to apparel articles wholly assembled
``or knit-to-shape and wholly assembled, or both,'' and to refer to
preferential treatment regardless of the country of origin of the
fabric ``or the yarn.'' The amended statutory text reads as follows:
Subject to subparagraph (A), preferential treatment under this
paragraph shall be extended through September 30, 2004, for apparel
articles wholly assembled, or knit-to-shape and wholly assembled, or
both, in one or more lesser developed beneficiary sub-Saharan
African countries regardless of the country of origin of the fabric
or the yarn used to make such articles.
5. The definition of ``lesser developed beneficiary sub-Saharan
African country'' in paragraph (b)(3)(B)(ii) was amended by replacing
the reference to the World Bank with a reference to the International
Bank for Reconstruction and Development and by the addition of separate
subparagraph references to Botswana and Namibia. The latter amendment
in effect removes those two countries from the maximum per capita gross
national product standard that applies to other countries covered by
the definition. Neither of these changes affects the AGOA implementing
regulations.
[[Page 13822]]
6. In paragraph (b)(4)(B), the reference to wool measuring ``18.5''
microns in diameter or finer was amended to read ``21.5'' microns in
diameter or finer.
7. Finally, a new paragraph (b)(7) was added to cover hybrid
operations, that is, combinations of various production scenarios
described in other paragraphs under section 112(b). This new provision
reads as follows:
Apparel articles sewn or otherwise assembled in one or more
beneficiary sub-Saharan African countries with thread formed in the
United States from components cut in the United States and one or
more beneficiary sub-Saharan African countries from fabric wholly
formed in the United States from yarns wholly formed in the United
States, or from components knit-to-shape in the United States and
one or more beneficiary sub-Saharan African countries from yarns
wholly formed in the United States, or both (including fabrics not
formed from yarns, if such fabrics are classifiable under heading
5602 or 5603 of the Harmonized Tariff Schedule of the United
States).
Section 3108(b) of the Act amended section 112(b) of the AGOA by
increasing the applicable percentage used for determining the
quantitative limits that apply to apparel articles entitled to
preferential treatment under paragraph (b)(3). This change does not
affect the AGOA implementing regulations.
On November 13, 2002, the President signed Proclamation 7626
(published in the Federal Register at 67 FR 69459 on November 18, 2002)
which, among other things, in Annex II sets forth modifications to the
HTSUS to implement the changes to section 112(b) of the AGOA made by
section 3108 of the Act. The Proclamation provides that the HTSUS
modifications that implement the changes made by section 3108(a) of the
Act are effective with respect to eligible articles entered, or
withdrawn from warehouse for consumption, on or after August 6, 2002.
The Proclamation further provides that the HTSUS modifications that
implement the change to the applicable quantitative limit percentage
made by section 3108(b) of the Act are effective with respect to
eligible articles entered, or withdrawn from warehouse for consumption,
on or after October 1, 2002.
Changes to the Interim Regulatory Texts
As a consequence of the statutory changes described above and as a
result of the modifications to the HTSUS made by Proclamation 7626, the
interim AGOA implementing regulations published in T.D. 00-67 no longer
fully reflect the current state of the law. In addition, following
publication of those interim regulations, a number of other issues came
to the attention of Customs that warrant clarification in the AGOA
implementing regulations. Accordingly, this document sets forth interim
amendments to the AGOA implementing regulations, with provision for
public comment on those changes, to reflect the amendments to the
statute mentioned above and to clarify or otherwise improve those
previously published regulations. It is the intention of Customs, after
the close of the public comment period prescribed in this document, to
publish one document that (1) addresses both the comments submitted on
the interim regulations published in T.D. 00-67 and the comments
submitted on the interim regulations set forth in this document and (2)
adopts, as a final rule, the AGOA implementing regulations contained in
the two interim rule documents with any additional changes as may be
appropriate based on issues raised in the submitted public comments.
The interim regulatory changes contained in this document are discussed
below.
Amendments To Reflect the Statutory Changes
The interim regulatory amendments set forth in this document that
are in response to the statutory changes made to section 112(b) of the
AGOA by section 3108 of the Act are as follows:
1. In Sec. 10.212, a new definition covering knit-to-shape
components is added to reflect the inclusion of references to
``components knit-to-shape'' in paragraphs (b)(1), (b)(2), (b)(3), and
(b)(7) of the statute. Also, as a consequence of the addition of this
new definition, the interim definition of ``knit-to-shape'' is recast
as a definition covering knit-to-shape articles but without any other
change to the wording of the definition.
2. In Sec. 10.212, a new definition of ``wholly formed on seamless
knitting machines'' is added to clarify the meaning of this expression
as used in the amended text of paragraph (b)(3) of the statute (Sec.
10.213(a)(4) of the regulatory texts).
3. In Sec. 10.213, paragraphs (a)(1) and (a)(2) are revised to
conform to the amendment of the product description in the introductory
text of paragraph (b)(1) of the statute.
4. In Sec. 10.213, paragraph (a)(3) is revised to conform to the
amendment of the product description in paragraph (b)(2) of the
statute.
5. In Sec. 10.213, paragraph (a)(4) is revised to conform to the
amendment of the product description in the introductory text of
paragraph (b)(3) of the statute.
6. In Sec. 10.213, paragraph (a)(5) is revised to conform to the
amendment of the product description that applies to lesser developed
beneficiary countries in paragraph (b)(3)(B)(i) of the statute.
7. In Sec. 10.213, the reference to ``18.5'' microns in paragraph
(a)(7) is changed to read ``21.5'' microns to reflect the amendment
made to paragraph (b)(4)(B) of the statute.
8. In Sec. 10.213, a new paragraph (a)(11) is added to cover the
hybrid operations described in new paragraph (b)(7) of the statute.
9. Finally, the preference group descriptions on the Certificate of
Origin set forth under paragraph (b) of Sec. 10.214 are revised to
reflect the amended product descriptions in the statute and to include
a reference to articles covered by new paragraph (b)(7) of the statute
and paragraph (a)(11) of Sec. 10.213.
Other Amendments
In addition to the regulatory amendments described above that
result from the changes made to section 112(b) of the AGOA by section
3108 of the Act, Customs has included in this document a number of
other changes to the interim regulations published in T.D. 00-67. These
additional changes, which are intended to clarify or otherwise improve
the interim regulatory texts, are as follows:
1. In the definition of ``wholly formed'' as it relates to yarn in
the interim regulations, Customs failed to provide for textile strip of
headings 5404 and 5405, HTSUS. Textile strip of headings 5404 and 5405,
HTSUS, may be formed by extrusion, similar to the formation of
filaments, or may be formed by slitting plastic film or sheet. With
regard to what may be considered to be a yarn, Customs notes that
``yarn'' is defined in the Dictionary of Fiber & Textile Technology
(KoSa, 1999), at 222, as follows: ``A generic term for a continuous
strand of textile fibers, filaments, or material in a form suitable for
knitting, weaving, or otherwise intertwining to form a textile fabric.
Yarn occurs in the following forms: (1) A number of fibers twisted
together (spun yarn), (2) a number of filaments laid together without
twist (a zero-twist yarn), (3) a number of filaments laid together with
a degree of twist, (4) a single filament with or without twist (a
monofilament), or (5) a narrow strip of material, such as paper,
plastic film, or metal foil, with or without twist, intended for use in
a textile construction.'' The identical definition is found in
Dictionary of Fiber & Textile Technology (Hoechst Celanese, 1990) at
[[Page 13823]]
181. There is nothing to indicate that Congress intended textile strip
to be excluded from use in the AGOA, and Customs believes the term
``yarn'' may be understood to include that type of material.
Accordingly, this document revises the Sec. 10.212 definition of
``wholly formed'' as it relates to yarn to include a reference to
textile strip. In addition, this document divides that definition of
``wholly formed'' into two definitions, one with reference to wholly
formed fabrics and the other with reference to wholly formed yarns (and
the latter definition is further corrected by removing the words ``and
thread'' to reflect the fact that the statute and regulations do not
use the word ``wholly'' in the context of thread formation); Customs
believes that this approach will better clarify that there are distinct
contexts in which ``wholly formed'' is used in the statute and
regulations, which now also include the new seamless knitting machine
context referred to above. Finally, at the end of the ``wholly formed
fabrics'' definition, the words ``in a single country'' are replaced by
``in the United States or in one or more beneficiary countries'' in
order to reflect the fact that fabric may be wholly formed in more than
one beneficiary country in the case of articles covered by section
112(b)(3) of the AGOA and Sec. 10.213(a)(4) of the regulatory texts.
2. As noted above, quantitative limits apply for preferential
treatment purposes in the case of articles covered by section 112(b)(3)
of the AGOA which is reflected in Sec. 10.213(a)(4) and (5) of the
regulatory texts. Those quantitative limit provisions are set forth in
U.S. Note 2 to Subchapter XIX of Chapter 98, HTSUS, which requires the
Committee for the Implementation of Textile Agreements to publish in
the Federal Register the applicable aggregate quantity of imports
allowed for each 12-month period. Customs believes that it would be
helpful for a reader of the regulatory texts to know that those
quantitative limits apply to the subject products. Accordingly, revised
paragraphs (a)(4) and (a)(5) of Sec. 10.213 as set forth in this
document also include appropriate references to the quantitative limit
provisions of U.S. Note 2 to Subchapter XIX of Chapter 98, HTSUS.
3. Section 112(b)(5)(A) of the AGOA, which is reflected in Sec.
10.213(a)(8) of the regulatory texts, covers apparel articles that are
constructed of either fabrics or 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. Customs notes that the corresponding HTSUS provision
(subheading 9819.11.21) contains a more explanatory description of the
Annex 401 short supply rule; the regulatory text is revised in this
document to conform to the approach used in the HTSUS provision.
Customs further notes that the same short supply language appears
within the textile provisions of the United States-Caribbean Basin
Trade Partnership Act (the CBTPA) and the Andean Trade Promotion and
Drug Eradication Act (the ATPDEA), and in those contexts the short
supply provision can only be interpreted to not apply to brassieres
classifiable under subheading 6212.10 of the HTSUS because applying it
would render meaningless the extensive provisions on brassieres in
those Acts. Consequently, Customs has decided that the short supply
provision does not apply to brassieres under the CBTPA and ATPDEA and
that the same interpretation must apply for purposes of the AGOA.
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 section
112(b)(5)(A) of the AGOA and Sec. 10.213(a)(8) of the regulations. The
revised text of Sec. 10.213(a)(8) set forth in this document therefore
also includes appropriate exclusionary language to reflect this
interpretation.
4. With reference to the findings, trimmings and interlinings
provisions under Sec. 10.213(b)(1), Customs believes that it would be
useful to specify in the regulatory texts an appropriate basis for
determining the ``cost'' of the components and the ``value'' of the
findings and trimmings and interlinings. Customs further believes that
the standard should be based on the regulations that apply to
components and materials under subheading 9802.00.80, HTSUS (in
particular, 19 CFR 10.17), and under the GSP (in particular, 19 CFR
10.177(c)). Accordingly, this document adds a new subparagraph (2) to
Sec. 10.213(b) to address this point and redesignates former
subparagraph (2) of the interim regulatory texts as subparagraph (3).
5. In addition to the modification of the preference group
descriptions on the Textile Certificate of Origin set forth under Sec.
10.214(b) as discussed above, the format of the Certificate is modified
and some of the blocks are moved and renumbered, solely for purposes of
clarity. The instructions for completion of the Certificate in
paragraph (c) of Sec. 10.214 are also revised to reflect the changes
made to the Certificate and to provide additional clarification
regarding its completion, including provision for signature by an
exporter's authorized agent having knowledge of the relevant facts.
6. In the case of articles described in Sec. 10.213(a)(1), interim
Sec. 10.215(a) provided for the inclusion of the symbol ``D'' as a
prefix to the applicable Chapter 98, HTSUS, subheading (that is
subheading 9802.00.80) as the means for making the required written
declaration on the entry documentation. This procedure was adopted
because, contrary to the case of the other articles described in Sec.
10.213(a), no unique HTSUS subheading had been identified for the
articles covered by Sec. 10.213(a)(1) when the interim regulations
were published. A unique HTSUS subheading now exists for those articles
(that is, subheading 9802.00.8042). Accordingly, Sec. 10.215(a) is
revised in this document to prescribe the same entry documentation
declaration procedure for all articles described in Sec. 10.213, that
is, inclusion of the HTSUS Chapter 98 subheading under which the
article is classified.
7. In Sec. 10.216(b)(4)(ii), the cross-reference to ``Sec.
10.214(c)(14)'' is changed to read ``Sec. 10.214(c)(15)'' to reflect
the addition of the provision regarding signature by the exporter or
the exporter's authorized agent.
8. Finally, in Sec. 10.217(a)(2) and (a)(3), the words ``in a
beneficiary country'' are removed in recognition of the fact that
[[Page 13824]]
verification of documentation and other information regarding country
of origin and verification of evidence regarding the use of U.S.
materials might take place outside a beneficiary country, for example,
within the United States.
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 the preferential treatment and United States tariff changes
proclaimed by the President under the African Growth and Opportunity
Act. 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
The collection of information contained in this interim rule has
previously been reviewed and approved by the Office of Management and
Budget (OMB) in accordance with the requirements of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.) under OMB control number
1515-0224.
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.
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 in 19 CFR Part 10
Assembly, Bonds, Customs duties and inspection, Exports, Imports,
Preference programs, Reporting and recordkeeping requirements, Trade
agreements.
Amendments to the Regulations
For the reasons set forth in the preamble, part 10 of the Customs
Regulations (19 CFR part 10) is amended as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
1. The authority citation for part 10 continues to read in part 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 10.211 through 10.217 also issued under 19 U.S.C. 3721;
* * * * *
2. In Sec. 10.212, the definition of ``knit-to-shape'' and the
definition of ``wholly formed'' are removed and new definitions of
``knit-to-shape articles'' and ``knit-to-shape components'' and
``wholly formed fabrics'' and ``wholly formed on seamless knitting
machines'' and ``wholly formed yarns'' are added in appropriate
alphabetical order to read as follows:
Sec. 10.212 Definitions.
* * * * *
Knit-to-shape articles. ``Knit-to-shape,'' when used with reference
to sweaters or other apparel articles, means any apparel article of
which 50 percent or more of the exterior surface area is formed by
major parts that have been knitted or crocheted directly to the shape
used in the apparel article, with no consideration being given to patch
pockets, appliques, or the like. Minor cutting, trimming, or sewing of
those major parts will not affect the determination of whether an
apparel article is ``knit-to-shape.''
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.''
* * * * *
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 the United States or in one or more beneficiary countries.
Wholly formed on seamless knitting machines. ``Wholly formed on
seamless knitting machines,'' when used to describe apparel articles,
has reference to a process that created a knit-to-shape apparel article
by feeding yarn(s) into a knitting machine to result in that article.
When taken from the knitting machine, an apparel article created by
this process either is in its final form or requires only minor cutting
or trimming or the addition of minor components or parts such as patch
pockets, appliques, capping, or elastic strip.
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 slitting a
film or sheet into strip, or the spinning of all fibers into yarn, or
both, and ending with a yarn or plied yarn, took place in a single
country.
3. In Sec. 10.213:
a. Paragraphs (a)(1) through (a)(5) are revised;
b. Paragraph (a)(7) is amended by removing the words ``18.5
microns'' and adding, in their place, the words ``21.5 microns'';
c. Paragraph (a)(8) is revised;
d. A new paragraph (a)(11) is added; and
e. Paragraph (b)(2) is redesignated as paragraph (b)(3) and a new
paragraph (b)(2) is added.
The revisions and additions read as follows:
Sec. 10.213 Articles eligible for preferential treatment.
(a) * * *
(1) Apparel articles sewn or otherwise assembled in one or more
beneficiary countries from fabrics wholly formed and cut, or from
components knit-to-shape, in the United States, from yarns wholly
formed in the United States, (including fabrics not formed from
[[Page 13825]]
yarns, if those fabrics are classifiable under heading 5602 or 5603 of
the HTSUS and are wholly formed and cut in the United States) that are
entered under subheading 9802.00.80 of the HTSUS;
(2) Apparel articles sewn or otherwise assembled in one or more
beneficiary countries from fabrics wholly formed and cut, or from
components knit-to-shape, in the United States, from yarns wholly
formed in the United States, (including fabrics not formed from yarns,
if those fabrics are classifiable under heading 5602 or 5603 of the
HTSUS and are wholly formed and cut in the United States) that are
entered under Chapter 61 or 62 of the HTSUS, if, after that assembly,
the articles would have qualified for entry under subheading 9802.00.80
of the HTSUS but for the fact that the articles were embroidered or
subjected to stone-washing, enzyme-washing, acid washing, perma-
pressing, oven-baking, bleaching, garment-dyeing, screen printing, or
other similar processes in a beneficiary country;
(3) Apparel articles sewn or otherwise assembled in one or more
beneficiary countries with thread formed in the United States from
fabrics wholly formed in the United States and cut in one or more
beneficiary countries from yarns wholly formed in the United States, or
from components knit-to-shape in the United States from yarns wholly
formed in the United States, or both (including fabrics not formed from
yarns, if those fabrics are classifiable under heading 5602 or 5603 of
the HTSUS and are wholly formed in the United States).
(4) Apparel articles wholly assembled in one or more beneficiary
countries from fabric wholly formed in one or more beneficiary
countries from yarns originating either in the United States or one or
more beneficiary countries (including fabrics not formed from yarns, if
those fabrics are classified under heading 5602 or 5603 of the HTSUS
and are wholly formed in one or more beneficiary countries), or from
components knit-to-shape in one or more beneficiary countries from
yarns originating either in the United States or in one or more
beneficiary countries, or apparel articles wholly formed on seamless
knitting machines in a beneficiary country from yarns originating
either in the United States or in one or more beneficiary countries,
subject to the applicable quantitative limit published in the Federal
Register pursuant to U.S. Note 2, Subchapter XIX, Chapter 98, HTSUS;
(5) Apparel articles wholly assembled, or knit-to-shape and wholly
assembled, or both, in one or more lesser developed beneficiary
countries regardless of the country of origin of the fabric or the yarn
used to make the articles, subject to the applicable quantitative limit
published in the Federal Register pursuant to U.S. Note 2, Subchapter
XIX, Chapter 98, HTSUS;
* * * * *
(8) Apparel articles, other than brassieres classifiable under
subheading 6212.10, HTSUS, that are both cut (or knit-to-shape) and
sewn or otherwise assembled in one or more beneficiary countries, from
fabrics or yarn that is not formed in the United States or a
beneficiary country, provided that apparel articles of those fabrics or
yarn would be considered an originating good under General Note 12(t),
HTSUS, if the apparel articles had been imported directly from Canada
or Mexico;
* * * * *
(11) Apparel articles sewn or otherwise assembled in one or more
beneficiary countries with thread formed in the United States:
(i) From components cut in the United States and in one or more
beneficiary countries from fabric wholly formed in the United States
from yarns wholly formed in the United States (including fabrics not
formed from yarns, if those fabrics are classifiable under heading 5602
or 5603 of the HTSUS);
(ii) From components knit-to-shape in the United States and one or
more beneficiary countries from yarns wholly formed in the United
States; or
(iii) From any combination of two or more of the cutting or
knitting-to-shape operations described in paragraph (a)(11)(i) or
paragraph (a)(11)(ii) of this section.
(b) * * *
(2) ``Cost''and ``value'' defined. The ``cost'' of components and
the ``value'' of findings and trimmings or interlinings referred to in
paragraph (b)(1) of this section means:
(i) 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:
(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 a 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
(ii) If the price cannot be determined under paragraph (b)(2)(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 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.
* * * * *
4. In Sec. 10.214, paragraphs (b) and (c) are revised to reads as
follows:
Sec. 10.214 Certificate of Origin.
* * * * *
(b) Form of Certificate. The Certificate of Origin referred to in
paragraph (a) of this section must be in the following format:
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[[Page 13826]]
[GRAPHIC] [TIFF OMITTED] TR21MR03.001
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[[Page 13827]]
(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 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) In block 4, insert the number and/or letter that identifies the
preference group which applies to the article according to the
description contained in the CFR provision cited on the Certificate for
that group;
(6) Block 5 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;
(7) Blocks 6 through 10 must be completed only when the block in
question calls for information that is relevant to the preference group
identified in block 4;
(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 legal name and address (including
country) of the thread producer;
(11) Block 9 should state the name of the folklore article or
should state that the article is handloomed or handmade;
(12) Block 10 should be completed only when the preference group
identifier ``8'' and/or ``H'' is inserted in block 4 and should state
the name of the fabric or yarn that is in short supply in the NAFTA or
that has been designated as not available in commercial quantities in
the United States;
(13) Block 11 must contain the signature of the exporter or of the
exporter's authorized agent having knowledge of the relevant facts;
(14) Block 15 should reflect the date on which the Certificate was
completed and signed;
(15) Block 16 should be completed if the Certificate is intended to
cover multiple shipments of identical articles as described in block 5
that are imported into the United States during a specified period of
up to one year (see Sec. 10.216(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 15). The ``to'' date is the date on which the
blanket period expires;
(16) The telephone and facsimile numbers included in block 17
should be those at which the person who signed the Certificate may be
contacted; and
(17) The Certificate may be printed and reproduced locally. If more
space is needed to complete the Certificate, attach a continuation
sheet.
5. In Sec. 10.215, paragraph (a) is revised to read as follows:
Sec. 10.215 Filing of claim for preferential treatment.
(a) Declaration. In connection with a claim for preferential
treatment for a textile or apparel article described in Sec. 10.213,
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.
10.216(d)(1), the declaration required under this paragraph must be
based on an original Certificate of Origin that has been completed and
properly executed in accordance with Sec. 10.214, that covers the
article being imported, and that is in the possession of the importer.
* * * * *
Sec. 10.216 [Amended]
6. In Sec. 10.216, the second sentence of paragraph (b)(4)(ii) is
amended by removing the reference ``Sec. 10.214(c)(14)'' and adding,
in its place, the reference ``Sec. 10.214(c)(15)''.
Sec. 10.217 [Amended]
7. In Sec. 10.217, paragraphs (a)(2) and (a)(3) are amended by
removing the words ``in a beneficiary country''.
Robert C. Bonner,
Commissioner of Customs.
Approved: February 25, 2003.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 03-6760 Filed 3-20-03; 8:45 am]
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