[Federal Register: August 7, 2006 (Volume 71, Number 151)]
[Rules and Regulations]
[Page 44564-44584]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07au06-5]
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DEPARTMENT OF HOMELAND SECURITY
Bureau of Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 10, 163 and 178
[CBP Dec. 06-21]
RIN 1505-AB37
Implementation of the Andean Trade Promotion and Drug Eradication
Act
AGENCY: Customs and Border Protection, Department of Homeland Security;
Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This document adopts as a final rule, with some changes,
interim amendments to the Customs and Border Protection (CBP)
Regulations which were published in the Federal Register on March 25,
2003, as T.D. 03-16, 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 adopted as a final rule 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: This final rule is effective on September 6, 2006.
FOR FURTHER INFORMATION CONTACT: Operational issues regarding textiles:
Robert Abels, Office of Field Operations (202-344-1959).
Other operational issues: Lori Whitehurst, Office of Field
Operations (202-344-2722). Legal issues: Cynthia Reese, Office of
Regulations and Rulings (202-572-8812).
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''), Public Law 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). 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
4. Tuna prepared or preserved in any manner in airtight containers,
except as provided in paragraph (4).
[[Page 44565]]
The effect of 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 vicu[ntilde]a [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 and Border Protection (CBP) 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 under paragraph (3). These special rules are as
follows:
1. Clause (vi)(I) sets forth a rule regarding the treatment of
findings and
[[Page 44566]]
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 ATPDEA 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) has been amended by the Miscellaneous Trade and
Technical Corrections Act of 2004 to define 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)(i)(I)] or in the case of a
vessel without a fishery endorsement, a vessel that is documented under
the laws of the United States and for which a license has been issued
pursuant to section 9 of the South Pacific Tuna Act of 1988 [paragraph
(4)(B)(i)(II)]. 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 CBP 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 CBP 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)
[[Page 44567]]
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 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.
Interim Regulatory Amendments in T.D. 03-16
On March 25, 2003, CBP published in the Federal Register (68 FR
14478) as T.D. 03-16 (corrected at 68 FR 67338 on December 1, 2003), an
interim rule document setting forth amendments to the CBP Regulations
that implement the trade benefit provisions for Andean countries. The
regulatory changes in T.D. 03-16 implemented the new trade benefit
provisions and conformed the ATPA implementing regulations to those
statutory changes and involved, among other things, the following: (1)
The addition of Sec. Sec. 10.241 through 10.248 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; (2) the addition of
Sec. Sec. 10.251 through 10.257 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; (3) the removal of the reference to Sec. 10.208 in
the introductory text of Sec. 10.202; (4) the revision of Sec. 10.201
to reflect the removal of that reduced-duty provision and to refer to
Sec. Sec. 10.241-10.248 and 10.251-10.257; (5) the amendment of
paragraph (b) of Sec. 10.202 to recast the list of articles excluded
from the ATPA to reflect the terms of paragraph (2) of amended section
204(b); and (6) the amendment of Part 163 of the CBP 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 Sec. 10.246, the ATPDEA
Declaration of Compliance for brassieres prescribed under Sec. 10.248,
and the ATPDEA Certificate of Origin for tuna and other non-textile
articles prescribed under Sec. 10.256. For a complete section-by-
section discussion of each regulatory change, see T.D. 03-16. Please
note that on December 1, 2003, two correction documents pertaining to
T.D. 03-16 were published in the Federal Register (68 FR 67338).
Although the interim regulatory amendments were promulgated without
prior public notice and comment procedures and took effect on March 25,
2003, T.D. 03-16 nevertheless provided for the submission of public
comments which would be considered before adoption of the interim
regulations as a final rule. The prescribed public comment period
closed on May 27, 2003. A discussion of the comments received by CBP is
set forth below.
Discussion of Comments
A total of 6 commenters responded to the solicitation of public
comments in the March 25, 2003, interim rule document referred to
above. All of the comments received involved the regulatory provisions
for the preferential treatment of apparel and other textile articles.
Finishing Processes
Comment
One commenter agrees with the decision to have a single provision
in the regulations, Sec. 10.243(b), address dyeing and finishing
requirements contained in the ATPDEA. Further, the commenter agrees
that ``the restrictions (requiring the operations be performed in the
United States) only apply to the dyeing, printing, and finishing of
knit or woven U.S. fabrics, or the U.S. fabric components formed from
those fabrics, of garments described only in Sec. 10.243(a)(1) or
(a)(2).'' Based on the language in the provision, the commenter also
believes that U.S. knit-to-shape components are not subject to the
dyeing, printing, and finishing restriction which is consistent with
CBP's position that knit-to-shape components are not fabrics.
The commenter disagrees, however, with CBP's conclusion that U.S.
knit or woven fabrics or fabric components made from such U.S. fabrics
that are used in apparel provided for in Sec. 10.243(a)(7) are also
subject to the requirement that the knit or woven fabric, or components
made from such fabric be dyed, printed or finished in the United
States. The commenter believes ``that such U.S. fabrics or components,
used in conjunction with (a)(7) DO NOT face a dyeing, printing and
finishing restriction.'' The commenter believes CBP has misread the
statute and reached an erroneous conclusion.
In making the argument that CBP has misread the statute, the
commenter refers to a ``hybrid provision'' in the statute, cites to the
language in Sec. 204(b)(3)(B)(iii)(I), and states the provision
``permits the inclusion of `fabrics, fabric components formed, or
components knit to shape described in clause (i).' '' The commenter
maintains that the requirement in subclause (i)(I) that U.S. knit or
woven fabric and fabric components from such fabric be dyed, printed,
or finished in the United States applies only with regard to apparel
articles qualifying under subclause (i)(I). The commenter argues that
the dyeing, printing, and finishing requirement does not apply to U.S.
knit and woven fabric or fabric components when these inputs are used
in apparel which qualifies for preferential treatment under another
provision of the ATPDEA, namely apparel described in Sec.
10.243(a)(7).
The commenter points to ``common commercial practice'' to argue
that this dyeing, printing, and finishing requirement would not apply
to U.S. inputs when used in conjunction with regional inputs as ``the
dyeing, printing, and finishing operations all need to occur in the
same location to ensure consistency for all the components of the
garment.'' The commenter argues that CBP's interpretation which applies
the dyeing, printing and finishing requirement to knit and woven U.S.
fabric and fabric components will result in apparel companies choosing
not to buy U.S. inputs for hybrid U.S./regional garments.
CBP's Response
The commenter is correct that CBP does not view the dyeing,
printing, and finishing requirement to extend to knit-to-shape
components as such components are not considered ``fabric'' but are
components created directly from yarn. CBP disagrees with the
commenter's reading of the statute to limit the dyeing, printing, and
finishing requirement contained in subclause (i)(I) to apparel articles
qualifying for preferential treatment under that subclause only. CBP
views the dyeing, printing, and finishing requirement contained in
subclause (i)(I) as part of the description of the fabric, and fabric
components formed from such fabric, provided for under that subclause.
Consequently, the language in subclause (iii)(I) which allows for the
use of fabrics, fabric components formed, or components knit-to-shape
described in clause (i) is interpreted by CBP to include the dyeing,
printing, and finishing requirement contained in subclause (i)(I) with
regard to fabrics or fabric components wholly formed from
[[Page 44568]]
fabric which are described in that subclause. In the Conference Report
to the Trade Act of 2002, Report No. 107-624, at page 251, it is
clearly stated with regard to the dyeing, finishing and printing
requirement: ``Apparel made of U.S. knit or woven fabric assembled in
an Andean beneficiary country qualifies for benefits only if the U.S.
knit or woven fabric is dyed and finished in the United States.'' CBP's
interpretation of the dyeing, printing and finishing requirement as
part of the descriptive of the ``inputs'' provided for in subclause
(i)(I) carries out the intent of Congress to ensure that U.S.-formed
fabric and fabric components are finished in the United States. To
interpret the provision, as suggested by the commenter (to apply the
requirement only in the case when all the fabric and fabric components
in an apparel article are wholly formed in the United States of yarns
wholly formed in the United States or one or more ATPDEA beneficiary
countries) would mean that the introduction of any other fabric or
fabric component within the apparel article (provided the fabric or
fabric component is described within one of the other provisions of the
ATPDEA) would negate the requirement regarding U.S. finishing so
specifically stated by Congress in this Act and obstruct their intent
as stated in the Conference Report previously cited.
As to the commenter's argument that ``common commercial practice''
dictates that the requirement to dye, print, and finish U.S.-formed
fabric (and fabric components from such fabric) in the United States
does not apply when U.S. ``inputs'' are combined with regional fabrics,
we disagree. We agree that normally fabric for apparel production is
dyed by lot and a manufacturer wants to use fabric from the same dye
lot in the production of an apparel article, assuming the apparel
article is constructed of one fabric. However, if fabrics from the
United States and the region are being combined in the production of
apparel, it is likely the fabrics will not be exactly the same. Dyes,
inks and finishes will affect different fabrics of different
constructions and different fiber compositions differently. Therefore,
CBP rejects the proposition that ``common commercial practice''
dictates an interpretation of the dyeing, printing, and finishing
requirement for U.S.-formed fabric which is contrary to the stated
intent of Congress.
Comment
A commenter noted that the interim regulations do not provide a
definition of the terms ``dyeing,'' ``printing,'' and ``finishing.''
The commenter would like CBP to publish definitions of these terms so
as to clarify the requirements with regard to these processes.
CBP's Response
As technological advances may occur with regard to dyeing, printing
and finishing processes, CBP will not attempt to provide a finite
definition of these terms because the definition may not encompass such
unforeseen advances. It is prudent to rely on the common and commercial
meanings of these terms which may change over time with scientific and
technological advances. Questions of whether a particular process
constitutes a dyeing, printing, or finishing process will continue to
be addressed on a case-by-case basis.
Interlinings
Comment
There is no clear translation into Spanish of the terms ``chest
type plate,'' ``hymo piece,'' and ``sleeve header.'' Assistance in this
regard is requested. In addition, the same commenter requests that CBP
not object to the use of other interlinings originating in third
countries since the type of products exported by Peru use a minimum
amount of such interlinings. Finally, the commenter asks if the use of
interlinings originating in a country other than the United States or a
beneficiary country and that is not one of the three types mentioned
above, will preclude preferential treatment under the ATPDEA even
though such interlinings, along with other accessories, represent less
than 25% of the cost of the garment.
CBP's Response
CBP does not have the authority to allow the use of foreign (third
country) interlinings beyond the three named and described in the
ATPDEA. The use of other foreign interlinings in apparel articles,
regardless of the amount, will preclude preferential treatment under
the ATPDEA.
With regard to the lack of a clear translation into Spanish for the
terms ``chest type plate,'' ``hymo piece,'' and ``sleeve header,'' CBP
is able to offer some descriptive information about these interlinings,
which are used in the production of suit and suit-type jackets, which
may be helpful when translated into Spanish.
A ``sleeve header,'' which may also be referred to as a
``sleevehead interlining,'' is an interlining piece sewn between the
shell fabric and lining fabric along the outside shoulder seam where
the sleeve joins the body of the garment. This interlining provides
fullness along the seam and enhances the appearance of a jacket at the
point where the sleeve meets the shoulder. See Headquarters Ruling
Letter (HQ) 559552, dated February 14, 1996, and HQ 966510, dated
August 27, 2003.
A ``chest type plate'' may also be referred to as a ``chest
piece.'' This interlining piece is placed in the chest area of a jacket
for strength and shape. It serves to stabilize the jacket, enhancing
its appearance. See HQ 966510; http://www.actk.nl/; and http://www
.resil.com/dictionary.
The term ``hymo'' is defined as ``Fabric of mohair and linen, used
in tailoring to reinforce body of a coat.'' See A Dictionary of Costume
and Fashion, Historic and Modern, by Mary Brooks Picken, at 181 (Dover
Publications, Inc., 1985). Similarly, from Fairchild's Dictionary of
Textiles, edited by Dr. Isabel B. Wingate, at 289, ``hymo'' is defined
as ``A fabric made of mohair and linen. Used in tailoring to reinforce
the body section of a coat.'' (Fairchild Publications, Inc., 1970).
Based on these definitions, a ``hymo piece'' may be considered a type
of ``chest piece'' or ``chest type plate.'' The distinction between
these two types of interlinings is that the ``hymo piece'' is
constructed specifically of fabric of mohair and linen.
Short Supply
Comment
With regard to the designation of additional short supply fabrics
and yarns, the commenter asks what criteria will be used by the
President to determine that a fabric or yarn is scarce in the U.S.
market, and when such determinations will be published in the Federal
Register.
CBP's Response
Congress authorized the President to proclaim additional fabrics
and yarns as eligible for preferential treatment under clause (i)(III)
of section 3103(b)(3)(B) of the ATPDEA. This authority, provided in
section 3103(b)(3)(B)(ii), has been delegated to the Committee for the
Implementation of Textile Agreements (CITA). See ``Notice of
Redelegation of Authority and Further Assignment of Functions'' which
was published on December 2, 2002 (67 FR 71606). Questions regarding
designations of fabrics or yarns as commercially unavailable, such as
the criteria for making such determinations and the procedures
involved, should be directed to the Chairman, Committee for the
Implementation of Textile Agreements, Room H3100, U.S. Department of
[[Page 44569]]
Commerce, 14th and Constitution Avenue, NW., Washington, DC 20230.
Information on ``commercial availability'' requests under the ATPDEA
may be found at the Web site for the Office of Textiles and Apparel,
Department of Commerce, at http://www.otexa.ita.doc.gov.
Comment
A commenter notes with appreciation a Textile Book Transmittal
(TBT) publication by CBP (which is available on the CBP Web site), TBT-
03-013 ``List of Short Supply Fabrics for Trade Agreements,'' and the
use of the term ``short supply'' by CBP; the commenter believes CBP's
use of the term ``reflects both an accurate description of this
provision and the way the trade views this process.'' However, the
commenter takes issue with the language included in the TBT describing
the general treatment for apparel produced from short supply fabrics or
yarns designated by the Committee for the Implementation of Textile
Agreements (CITA). The language at issue indicates that apparel
incorporating short supply fabrics designated by CITA must use fabrics
wholly formed in the United States from yarns wholly formed in the
United States for all other fabric components in the garment for which
the short supply fabric is not used.
The commenter cites to the language in the Conference Report for
the Trade Act of 2002 (H. Rept 107-624) which clarifies congressional
intent regarding the treatment of short supply inputs in apparel
qualifying for preferential treatment under the trade program. The
commenter refers to this report language to assert that when the short
supply fabric determines the essential character of an apparel article,
the remaining fabrics used in the apparel article may originate from
anywhere; and, when the short supply fabric does not impart the
essential character of an apparel article, it will not disqualify the
apparel article from qualifying for preferential treatment under the
ATPDEA. The use of the same short supply provision in the AGOA and
CBTPA leads the commenter to conclude that designated short supply
fabrics and yarns should be extended the same treatment, i.e.,
consideration of only the fabric or yarn that determines the essential
character of the apparel article.
The commenter notes that the interim regulations on the ATPDEA are
silent on how CBP ``expects to treat garments entered claiming a short
supply fabric or yarn designated by CITA.''
CBP's Response
In Section 3103(b)(3)(B)(ii) of the ATPDEA, the President is
authorized to designate additional fabrics and yarns as in ``short
supply'' and thus allowable in the construction of apparel articles
under the ATPDEA regardless of the origin of the fabrics or yarns. This
authority to designate additional fabrics and yarns has been delegated
to CITA pursuant to Executive Order No. 13277 (67 FR 70305) and the
United States Trade Representative's Notice of Redelegation of
Authority and Further Assignment of Functions (67 FR 71606).
The tariff provision which implements this provision of the ATPDEA
is subheading 9821.11.10, HTSUS, which provides for: ``Apparel articles
sewn or otherwise assembled in one or more such countries, or the
United States, or both, exclusively from any of the following: Fabrics
or yarns designated by the appropriate U.S. government authority in the
Federal Register as fabrics or yarns that cannot be supplied by the
domestic industry in commercial quantities in a timely manner, under
any terms as such authority may provide.''
The interim regulations were silent on how CBP will treat apparel
articles under Sec. 10.243(a)(1)(iv) of the regulations which pertains
to apparel articles provided for in subheading 9821.11.10, HTSUS,
because the authority to designate the fabrics or yarns allowed under
this provision and the authority to designate any terms or requirements
to be applied to the allowance of these fabrics or yarns in eligible
apparel resides with CITA, pursuant to the language of the tariff. CBP
will follow the language of the designation notices issued by CITA
(which will appear in the Federal Register) in applying this provision
to apparel articles as CITA is the designated U.S. government authority
to make such determinations.
Comment
A commenter objects to the exclusion of brassieres from eligibility
for preferential treatment under Sec. 10.243(a)(1)(iii). The commenter
claims that in the CBTPA changes contained in section 3107 of the Trade
Act of 2002 and provisions of the ATPDEA, Congress included language
that specifically envisions brassieres being imported under the
respective short supply provisions in each of those two trade
preference programs. This statutory language stands in sharp contrast
to CBP's view that brassieres are not eligible for short supply
treatment in those trade programs.
CBP's Response
The commenter argues that in both CBTPA and ATPDEA legislative
changes made by Congress, specifically listing exceptions for certain
provisions, Congress clearly envisioned brassieres being imported under
these respective provisions, including the short supply provisions. In
CBP's opinion, the specific exception language added to both the ATPDEA
in section 3103(b)(3)(B)(v)(I) and the CBTPA in section 3107(a)(5)(iv)
does not indicate that brasseries should therefore, be eligible under
any or all of these excepted provisions. This clarifying language
merely states that in determining eligibility requirements under the
cited provisions, any brassieres classified in one of the exceptions
would not be included in determining the eligibility under section
3103(b)(3)(B)(v)(I) and section 3107(a)(5)(iv). In fact, one of the
exceptions listed in both section 3103(b)(3)(B)(v)(I) of the ATPDEA and
section 3107(a)(5)(iv) of the CBTPA is a provision covering
``Handloomed, Handmade, and Folklore Articles''. CBP is not aware of
any brassieres that could be claimed under this provision and yet this
is one of the exceptions listed. CBP believes that the Congress did not
intend the listing of these exceptions to mean that brassieres would be
classifiable in all these provisions.
Brassieres
Comment
A commenter is concerned that Sec. 10.243(b)(2) requires
brassieres to be produced and entered during the same year in order to
qualify for inclusion in the calculations of a year's shipments in
order to determine eligibility of brassieres for preferential treatment
in the following year. The commenter points to Example 6 in the interim
regulations as illustrating this point. The commenter strongly
disagrees with requiring brassieres to be produced and entered in the
same year for the purpose of determining eligibility and asserts that
the language adopted by Congress in drafting this provision of the
ATPDEA requires that the calculation to determine eligibility be
performed on brassieres `` `that are entered and eligible during the
preceding 1-year period,' regardless of when those actual brassieres
are produced.''
CBP's Response
The commenter has misread Example 6 in the interim regulations. A
proper reading of the example reveals that it actually supports the
view of the commenter that in determining the
[[Page 44570]]
brassieres to be included in calculating the aggregate value of the
fabric formed in the United States which is present in brassieres in a
1-year period (October 1 to September 30) for the purpose of
determining eligibility of brassieres for preferential treatment under
this provision of the ATPDEA in the subsequent 1-year period, one
includes brassieres which are entered and eligible during the preceding
1-year period and the year of production is not a determinative factor.
In Example 6, brassieres not meeting the minimum 75 percent fabric
standard are shipped to the United States in February. A second
shipment of brassieres, meeting the 75 percent fabric standard and
actually exceeding the 85 percent standard, is shipped in June. If
these two shipments are entered in the same 1-year period year, the
aggregate value would meet the 75 percent standard. However, the
February shipment is entered for consumption on March 1 of the same
calendar year; the June shipment is not entered for consumption until
November 1 of that calendar year. Although entered for consumption in
the same calendar year, these shipments were entered for consumption in
different eligibility years which run from October 1 to September 30.
Therefore, a valid declaration of compliance cannot be prepared for the
shipment entered in March as it failed to meet the 75 percent standard;
however, a valid declaration may be prepared for the shipment entered
in November since it exceeded the 85 percent standard which would be
applicable for brassieres entered in that year because of the failure
to meet the 75 percent standard in the preceding year. The year of
production of the brassieres is not a consideration in the example.
Scope of the Term ``Elastic Strips''
Comment
Three commenters submitted observations concerning the scope of the
term ``elastic strips'' in the list of examples of ``findings and
trimmings'' set forth in Sec. 10.243(c)(1)(A). [The ATPDEA includes a
special rule that permits the use of foreign findings and trimmings in
producing eligible textile and apparel articles, provided the value of
those findings and trimmings does not exceed 25% of the cost of the
components of the assembled article.] The commenters noted that the
term ``elastic strips'' is not defined in the interim regulations and
therefore the regulations provide manufacturers and importers little
guidance regarding the scope of the term. All three commenters urged
CBP to narrowly construe the term so that it excludes most, if not all,
narrow elastic fabrics. The commenters made the following specific
points in support of their position:
1. The exception for foreign findings and trimmings under the
ATPDEA ``was necessarily intended to be of a restrictive nature, as the
intent of the statute was to ensure that all fabric components be
formed [in the] U.S. or ATPDEA region.''
2. If the exception for foreign ``elastic strips'' is interpreted
as including narrow elastic fabrics, an entire segment of the U.S.
textile industry (the weavers and knitters of narrow elastic fabric)
will be adversely affected as it will receive absolutely no benefit
from the fabric origin requirements of the ATPDEA. In passing this
statute, Congress did not intend to exclude from its benefits all U.S.
producers of narrow elastic fabrics.
3. In the textile industry, the word ``strip'' is used to describe
cut (slit) pieces of flat rubber or other elastic material of a rubber-
like consistency throughout. Narrow elastic fabrics that are essential
components are not normally considered elastic strips.
4. CBP rulings support the view that most fabric components ``that
serve a purpose'' are not findings. See HQ 559522 dated February 14,
1996. In addition, CBP rulings have generally not considered fabric
components to be trimmings.
5. It is noted that the ATPDEA did not replicate language in the
Caribbean Basin Trade Partnership Act (CBTPA) limiting ``elastic
strips'' in the findings and trimmings exception to elastic strips of
less than one-inch in width and used in the production of brassieres.
By omitting this language in the ATPDEA, Congress intended to exclude
elastic fabric brassiere straps from the findings and trimmings
exception. This is consistent with the belief that Congress intended to
exclude from the findings and trimmings exception fabric components,
such as waistbands, leg gatherings and brassiere straps, that are
essential to the garment and are not primarily decorative.
CBP's Response
Section 10.243(c)(1)(A) essentially repeats the language found in
the statute (amended section 402(b)(B)(vi)(I) of the ATPA) relating to
the exception for findings and trimmings and the examples set forth
therein. Therefore, CBP acknowledges that the regulation provides no
guidance as to what is meant by ``elastic strips'' in the findings and
trimmings rule. However, as further explained below, CBP believes that,
generally speaking, determinations regarding the scope of that term
should be made on a case-by-case basis through the CBP rulings process.
CBP agrees with the assertion by one commenter that the exception
for foreign findings and trimmings in the ATPDEA was necessarily
intended to be of a restrictive nature. With few exceptions, the
preferential treatment accorded to textile and apparel articles under
the ATPDEA, like the treatment accorded to similar articles under the
AGOA and CBTPA, is based upon the requirement that all fabric
components be formed in the United States or the ATPDEA region.
Therefore, CBP believes that the scope of the term ``findings and
trimmings'' should be limited to the specific items set forth as
examples in the statute as well as items that are closely analogous to
the cited examples.
In response to the argument that Congress did not intend to exclude
an entire segment of the U.S. textile industry (producers of narrow
elastic fabric) from benefiting from the ATPDEA, CBP notes that it
attempts to discern Congressional intent from the specific wording in
the statute as well as the legislative history. In regard to the use of
the term ``elastic strips'' in the ATPDEA, the statute's legislative
history sheds no light on how the term should be defined. However, as
one commenter pointed out, Congress did not include language limiting
the scope of the term ``elastic strips'' in the ``findings and
trimmings'' rule to elastic strips that are ``each less than 1 inch in
width and used in the production of brassieres,'' as it did in the AGOA
and CBTPA statutes.
One seemingly inescapable conclusion that can be drawn from the
above omission in the ATPDEA is that Congress did not intend that the
term ``elastic strips'' would be subject to the ``less than 1 inch in
width'' brassiere strip limitation. Therefore, in future considerations
of whether particular items qualify as ``elastic strips'' under the
``findings and trimmings'' exception in the ATPDEA, CBP will not
disqualify an item solely because it is an inch or more in width and
used in the production of garments other than brassieres.
However, CBP agrees with the assertion by one commenter that, by
failing to limit the term ``elastic strips'' in the ATPDEA to certain
narrow elastic brassiere strips, Congress intended to exclude elastic
fabric brassiere straps from being considered findings and trimmings
under this statute. HQ 562018 dated March 22, 2002, concerned whether
the use of foreign-origin \1/2\ inch wide polyurethane strips
[[Page 44571]]
in the construction of brassieres would disqualify the brassieres from
receiving preferential treatment under the CBTPA. CBP concluded
initially that the polyurethane strips are outside the scope of the
exception for ``elastic strips'' because the language limiting that
exception to certain narrow elastic strips used in the production of
brassieres related only to elastic fabric strips. CBP then determined
in HQ 562018 that the polyurethane strip is not a ``finding or
trimming'' inasmuch as it is not a ``supplementary element used to
construct the garment, but, rather, is a brassiere strap, a major
component of the brassiere.'' Because the polyurethane strip was
neither a textile component nor a ``finding or trimming,'' CBP
concluded that the strip's presence in the brassiere would not preclude
the article from receiving preferential treatment under the CBTPA.
Consistent with HQ 562018, CBP believes that brassiere straps, whether
made of fabric or a non-textile material, do not qualify as ``findings
or trimmings'' for purposes of the ATPDEA.
Concerning whether the term ``elastic strips'' should be construed
as encompassing narrow elastic fabrics or only non-textile rubber
strips, or both, it is noted that in rulings interpreting ``elastic
strips'' as that term appears in the AGOA and CBTPA, CBP determined
that the term encompassed only ``narrow elastic fabric less than one
inch in width used in the production of brassieres.'' (Emphasis added.)
See, for example, HQs 965909 dated January 7, 2003, 562018 dated July
10, 2001, and 966495 dated July 3, 2003. However, the basis for this
conclusion was a statement in the legislative history of the CBTPA
indicating that that program was to be administered in a manner
consistent with the ``Special Access Program'' (SAP). A directive
issued in connection with the SAP stated that ``the foreign origin
exception for elastic strips is clarified as limited to narrow elastic
fabric less than one inch in width used in the production of brassieres
only.'' (Emphasis added.) As previously indicated, the term ``elastic
strips'' in the ATPDEA ``findings and trimmings'' rule is not limited
to strips less than 1 inch in width used in the production of
brassieres. Moreover, there is no similar reference in the ATPDEA's
legislative history to the SAP. As a result, CBP concludes that the
above rulings relating to the AGOA and CBTPA are not controlling with
respect to this issue and that ``elastic strips'' in the ATPDEA should
not be construed as encompassing only narrow elastic fabric strips.
By the same token, CBP cannot agree with the contention that the
term ``elastic strips'' should be construed as encompassing only non-
textile (e.g., rubber) strips as CBP is not aware of any evidence
indicating that Congress intended such a construction. Rather, CBP
believes that, in determining whether certain items qualify as
``elastic strips'' under the ATPDEA, consideration should be given to
items consisting of elastic fabric material as well as items consisting
of non-textile elastic material.
CBP also does not agree with the argument that elastic fabric
strips used in waistbands and leg gatherings are automatically excluded
from the ``findings and trimmings'' exception under the ATPDEA.
Previous CBP rulings on the scope of the ``findings and trimmings''
exception under other preference programs and provisions have defined
``findings'' as ``sewing essentials used in textile goods'' and
``trimmings'' as ``decoration or ornamental parts.'' Rubber tape used
to provide secure fittings in the leg and arm openings of garments,
such as bathing suits, underwear and sweatpants, have been held to
qualify as ``findings'' under the CBTPA and subheading 9802.00.90,
HTSUS. See HQs 966239 dated May 16, 2003, 966317 dated June 9, 2003,
and 561868 dated July 10, 2001. By analogy, elastic fabric strips
serving the same functions would also qualify as findings under the
ATPDEA. Whether elastic fabric strip used in waistbands would also
qualify as findings will be determined pursuant to the CBP rulings
process.
Comment
A commenter commends CBP for the inclusion in Sec. 10.243(b)(2) of
language ``that clarifies that a series of post-assembly finishing
operations will not disqualify a garment entered under specific
provisions.''
CBP's Response
CBP appreciates the comment.
Certificate of Origin
Comment
A commenter believes the Certificate of Origin may be further
simplified into one form to serve the AGOA, the CBTPA and the ATPDEA as
the requirements for all three programs are the same. The commenter
also requests that ``available upon request'' be permitted with regard
to information requested on the certificate for thread, fabric and yarn
names and addresses.
CBP's Response
We would certainly be open to any suggestions concerning the
simplification of the certificate of origin. However, developing one
form to accommodate AGOA, CBTPA and ATPDEA would make the form more
complex, especially for the exporter or producer who is required to
complete the form and is responsible for ensuring that the information
is accurate. A combining of the form could include groupings or
requirements that would be in place for AGOA, e.g. knit to shape with
50 percent by more of weight of fine wool that do not exist for CBTPA
or ATPDEA.
However with regard to the commenter's second point, CBP will not
accept ``available upon request'' where information is needed on the
name and address of the yarn, fabric and thread suppliers. The
certificate of origin is not a document that is required for entry
purposes. The importer must have it in their possession when making the
claim. When CBP requests the certificate of origin all information must
be on that form to assist CBP in confirming the accuracy of the claim.
CBP does not want to make a second request to see what should have been
available when a request was made to see the certificate of origin on
the first request.
Comment
A commenter inquired about reproduction of the Certificates of
Origin shown in the Federal Register notice.
CBP's Response
The Textile Certificate of Origin shown in the interim regulations
is shown to illustrate the format in which the information should be
presented; it is not a form. This format may be reproduced locally.
Handloomed, Hand-Made and Folklore Articles
Comment
A commenter raises questions with regard to the provision of the
ATPDEA which provides for handloomed, hand-made, and folklore articles.
Specifically, the commenter wants to know how and when certification of
such goods will be effectuated, particularly in light of the fact that
Peru already has a system in place for the authorization of export
invoices under the ``Administrative Agreement of Authorization and
Certification of Textile Products'' which includes handloomed, hand-
made and folklore articles. The commenter inquires as to whether a
separate certification is necessary when there
[[Page 44572]]
already is a certification process in place and whether textile
articles other than garments, such as pillows, carpets, covers, and
tablecloths will also enjoy preferential treatment.
CBP's Response
CBP does not have the authority to answer these questions
concerning the administration of the ``Handloomed, Handmade, and
Folklore Articles'' provisions under the ATPDEA. These authorities and
functions, which were granted to the President under the ATPDEA, were
delegated in an Executive Order 13277 to USTR, including the authority
to redelegate these authorities and functions. In a notice published in
the Federal Register on Monday, December 2, 2002, such authorities and
functions were assigned to the Secretary of State, the Secretary of the
Treasury, the Secretary of Labor, the Secretary of Commerce, and the
United States Trade Representative Office. The responsibility to
administer this provision lies with the Committee for the
Implementation of Textile Agreements (CITA). It is suggested that you
contact them directly by writing to the Chairman, Committee for the
Implementation of Textile Agreements, U.S. Department of Commerce, ITA/
TD/OTEXA, Room H-3100, 14th and Constitution Avenue, NW., Washington,
DC 20230.
Changes to the Regulations
While there are no changes to the interim regulations made in
connection with the public comments, CBP in this final rule document
has made a number of other changes to the interim regulatory texts for
editorial and clarification purposes. These changes are as follows:
1. In Sec. 10.242, CBP has determined that the definition of
``foreign'' as set forth in the interim regulations could cause some
confusion and might lead to anomalous and unintended results in certain
circumstances. That definition (which has relevance only in the context
of the findings and trimmings and interlinings provisions of Sec.
10.243(c)) in the interim texts simply read ``of a country other than
the United States or an ATPDEA beneficiary country.'' However, because
the various textile and apparel articles to which preferential
treatment applies are described in Sec. 10.243(a) with reference to
specific production processes in the case of yarns, fabrics and
components that must take place in the United States or in an ATPDEA
beneficiary country or both, more is required than that the yarn or
fabric or component be ``of'' (that is, have its origin in) the United
States or an ATPDEA beneficiary country. For example, Sec.
10.243(a)(1) refers to articles ``assembled'' in one or more ATPDEA
beneficiary countries from ``fabric wholly formed and cut'' in the
United States from ``yarns wholly formed'' in the United States. A
fabric that was wholly formed in the United States but from yarns
formed outside the United States would not meet the Sec. 10.243(a)(1)
standard and also would not be considered ``foreign'' under the interim
definition because it is ``of'' (that is, it has its origin in) the
United States by virtue of its having been formed in the United States.
Therefore, that fabric could not be present in the article under the
findings or trimmings or interlinings rule exception; consequently,
even if all of the other fabric in the article was wholly formed and
cut in the United States from yarns wholly formed in the United States
and the article was assembled in an ATPDEA beneficiary country, the
assembled article would not qualify for preferential treatment. On the
other hand, a fabric formed outside the United States or the ATPDEA
region, if used as a finding or trimming or interlining within the 25
percent limit, would not disqualify the article. Thus, under the
interim definition of ``foreign,'' U.S. and ATPDEA beneficiary country
textile materials could be at a disadvantage vis-a-vis materials from
outside the United States and the ATPDEA region, contrary to the
overall thrust of the ATPDEA program as discussed in the comment
discussion set forth above in this document. CBP believes that the
interim definition was appropriate in the case of non-textile findings
and trimmings. However, in the case of textile findings and trimmings
and interlinings the concept of ``foreign'' logically only has
relevance in the context of an exception to the production standards
that apply to articles eligible for preferential treatment.
Accordingly, the definition of ``foreign'' has been replaced by a
definition of ``foreign origin'' to address these concerns.
2. In Sec. 10.242, CBP has added a new definition for the term
``self start edge'' and modified the definition of ``knit-to-shape
components'' by adding the phrase ``that is, the shape or form of the
component as it is used in the apparel article, containing at least one
self start edge'' after the words ``specific shape.''
3. In Sec. 10.243(b)(1)(i), CBP has added the words ``or in one or
more ATPDEA beneficiary countries, as described in paragraph (a)(1)(i)
of this section'' after the phrase ``from yarns wholly formed in the
United States''. This change is being made because of the inadvertent
omission of this statutory language in section 3103(b)(3)(B)(i)(I) of
the ATPDEA which limits the dyeing, printing, and finishing requirement
to certain fabrics.
4. With reference to the findings, trimmings and interlinings
provisions under Sec. 10.243(c)(1)(ii), CBP has used an f.o.b. port of
exportation basis for determining the ``cost'' of the components and
the ``value'' of the findings and trimmings and interlinings. However,
CBP now believes that the use of an ex-factory standard in lieu of the
f.o.b. port of exportation standard would be more accurate because it
eliminates transportation costs from the comparison between the
``value'' of foreign findings and trimmings and/or foreign interlinings
and the ``cost'' of the components of the assembled article. Therefore,
CBP has revised Sec. 10.243(c)(1)(ii) in this final rule to
incorporate an ex-factory standard in lieu of the f.o.b. port of
exportation standard.
5. With regard to who may sign the textile Certificate of Origin,
Sec. Sec. 10.244(a), 10.244(c)(12), 10.246(b)(2), and 10.254 refer to
the exporter (and the exporter's authorized agent in the latter two
provisions), but none of these provisions mentions the producer in this
specific context. CBP has determined that the producer or the
producer's authorized agent having knowledge of the relevant facts
should be permitted to sign the Certificate of Origin in addition to
the exporter or the exporter's authorized agent. The producer clearly
is in the best position to attest to the accuracy of the information
set forth in the Certificate. Therefore, Sec. Sec. 10.244(a),
10.244(c)(12), 10.246(b)(2), 10.254, and 10.256(b)(2) have been changed
to provide that the Certificate of Origin must be signed by the
exporter or producer or by the exporter's or producer's authorized
agent having knowledge of the relevant facts. CBP notes that this
change is consistent with changes to the implementing regulations under
the Caribbean Basin Trade Partnership Act (CBTPA) and the African
Growth and Opportunity Act (AGOA) relating to the textile Certificate
of Origin and thus brings uniformity to the three programs in this
regard.
6. In Sec. 10.248(b)(2)(ii), Example 5 has been changed to clarify
that elastic strips used as brassiere straps are not considered
findings or trimmings.
7. In Sec. 10.248(c)(3)(i), CBP has amended blocks 4-6 of the
declaration of compliance for brassieres by adding exclusion language
regarding findings and trimmings after each reference to fabric(s) for
purposes of calculating whether the minimum 75 or 85 percent
[[Page 44573]]
standard was met. This change is being made because of the inadvertent
omission of this language in the interim rule.
8. In addition to those changes already noted above, references to
the U.S. Customs Service within the regulatory text in Sec. Sec.
10.244, 10.245, 10.246, 10.247 and 10.248 have been changed to CBP.
9. In Sec. 10.252, the definition of the term ``United States
vessel'' has been amended to reflect a change made by the Miscellaneous
Trade and Technical Corrections Act of 2004 (MTTCA). The MTTCA added to
the definition of a ``United States vessel'' to include the case of a
vessel without a fishery endorsement that is documented under the laws
of the United States and for which a license has been issued pursuant
to section 9 of the South Pacific Tuna Act of 1988. Accordingly, in
Sec. 10.252, the definition of the term ``United States vessel'' has
been amended by adding the phrase ``or in the case of a vessel without
a fishery endorsement, a vessel that is documented under the laws of
the United States and for which a license has been issued pursuant to
section 9 of the South Pacific Tuna Act of 1988'' at the end of the
sentence.
Conclusion
Based on the analysis of comments and the discussion above
regarding CBP's further consideration of the interim rule, CBP is
adopting as final some of the interim regulations published in T.D. 03-
16 and amending certain of those interim provisions.
Concerning Sec. Sec. 10.241 through 10.248 (provisions concerning
textile articles), the following sections have been amended:
1. In Sec. 10.242, the definition of ``foreign'' has been replaced
by a definition of ``foreign origin''; a new definition for the term
``self start edge'' has been added; and the definition of ``knit-to-
shape components'' has been amended;
2. Sec. 10.243(b)(1)(i) is revised by adding the words ``or in one
or more ATPDEA beneficiary countries, as described in paragraph
(a)(1)(i) of this section'' after the phrase ``from yarns wholly formed
in the United States'';
2. Sec. 10.243(c)(1)(ii) is revised to incorporate an ex-factory
standard in lieu of the f.o.b. port of exportation standard;
3. Sec. Sec. 10.244(a), 10.244(c)(12), and 10.246(b)(2) have been
changed to provide that the Certificate of Origin must be signed by the
exporter or producer or by the exporter's or producer's authorized
agent having knowledge of the relevant facts;
4. In Sec. 10.248(b)(2)(ii), Example 5 has been changed to clarify
that the scope of findings and trimmings with regard to elastic strips
does not include elastic strips used as brassiere straps;
5. In Sec. 10.248(c)(3)(ii), blocks 4-6 of the declaration of
compliance for brassieres have been amended by adding exclusion
language regarding findings and trimmings after each reference to
fabric(s); and
6. Sec. Sec. 10.244, 10.245, 10.246, 10.247 and 10.248 have been
amended to change U.S. Customs Service to CBP.
Except as discussed above, interim Sec. Sec. 10.241 through 10.248
are adopted as final. In view of the multiple changes throughout the
textile and apparel regulatory provisions contained in Sec. Sec.
10.241 through 10.248, those provisions are set forth in their entirety
in this final rule document.
Concerning Sec. Sec. 10.251 through 10.257 (provisions concerning
non-textile articles), the following sections have been amended:
1. In Sec. 10.252, the definition of the term ``United States
vessel'' has been amended; and
2. Sec. Sec. 10.254 and 10.256(b)(2) have been changed to provide
that the Certificate of Origin must be signed by the exporter or
producer or by the exporter's or producer's authorized agent having
knowledge of the relevant facts;
Except as discussed above, interim Sec. Sec. 10.251 through 10.257
as published in T.D. 03-16 are adopted as final.
In addition, the following interim provisions published in T.D. 03-
16 are adopted as final without change:
1. Interim Sec. Sec. 10.201 and 10.202; and
2. The interim amendments to the Appendix to part 163.
Signing Authority
The amendments set forth in this document are being issued in
accordance with Sec. 0.1(a)(1) of the CBP Regulations (19 CFR
0.1(a)(1)) pertaining to the authority of the Secretary of the Treasury
(or his/her delegate) to approve regulations relating to certain CBP
revenue functions.
Executive Order 12866
This document does not meet the criteria for a ``significant
regulatory action'' as specified in E.O. 12866.
Regulatory Flexibility Act
The regulations to implement the trade benefit provisions for
Andean countries were previously published as interim regulations and
provide trade benefits to the importing public. Pursuant to the
provisions of 5 U.S.C. 553(b)(B), CBP issued the regulations as interim
rules because it had determined that prior public notice and comment
procedures on these regulations were unnecessary and contrary to the
public interest. Because no notice of proposed rulemaking was required,
the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
do not apply. Accordingly, this final rule is not subject to the
regulatory analysis or other requirements of 5 U.S.C. 603 and 604.
Paperwork Reduction Act
The collection of information contained in this final rule has been
reviewed and approved by the Office of Management and Budget in
accordance with the requirements of the Paperwork Reduction Act (44
U.S.C. 3507) under control number 1651-0091. 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 assigned by OMB.
The collection of information in these final 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 CBP 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.
The estimated average annual burden associated with the collection
of information in this final rule is 4 hours per respondent or
recordkeeper. Comments concerning the accuracy of this burden estimate
and suggestions for reducing this burden should be directed to Customs
and Border Protection, Information Services Group, Office of Finance,
1300 Pennsylvania Avenue, NW., Washington, DC 20229, and the Office of
Management and Budget, Attention: Desk Officer of the Department of the
Treasury, Office of Information and Regulatory Affairs, Washington, DC
20503.
Part 178 of the regulations (19 CFR part 178), containing the list
of approved information collections, is revised to reflect this
additional information collection.
List of Subjects
19 CFR Part 10
Andean Trade Preference, Assembly, Bonds, Customs duties and
inspection,
[[Page 44574]]
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.
19 CFR Part 178
Administrative practice and procedure, Collections of information,
Imports, Paperwork requirements, Reporting and recordkeeping
requirements.
Amendments to the Regulations
0
Accordingly, the interim rule amending parts 10 and 163, Customs and
Border Protection Regulations (19 CFR parts 10 and 163), which was
published at 68 FR 14478-14500 on March 25, 2003, and corrected at 68
FR 67338 on December 1, 2003, is adopted as a final rule with the
following changes.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
0
1. The general authority citation for part 10 and the specific
authority citation for Sec. Sec. 10.241 through 10.248 and Sec. Sec.
10.251 through 258 continue to read, as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484,
1498, 1508, 1623, 1624, 3314;
* * * * *
Sections 10.241 through 10.248 and Sec. Sec. 10.251 through
10.257 also issued under 19 U.S.C. 3203.
0
2. Sections 10.241 through 10.248 are revised to read as follows:
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 origin. ``Foreign origin'' means, in the case of a finding
or trimming of non-textile materials, that the finding or trimming is a
product of a country other than the United States or a ATPDEA
beneficiary country and, in the case of a finding, trimming, or
interlining of textile materials, that the finding, trimming, or
interlining does not meet all of the U.S. and ATPDEA beneficiary
country production requirements for yarns, fabrics, and/or components
specified under Sec. 10.243(a) for the article in which it is
incorporated.
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, that is, the shape
or form of the component as it is used in the apparel article,
containing at least one 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
[[Page 44575]]
restrictions, limitations, or consultation levels as provided in 19
U.S.C. 3203(b)(3).
Self-start edge. ``Self-start edge'' when used with reference to
knit-to-shape components means a finished edge which is finished as the
component comes off the knitting machine. Several components with
finished edges may be linked by yarn or thread as they are produced
from the knitting machine.
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
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 or in one or more ATPDEA
beneficiary countries, as described in paragraph (a)(1)(i) of this
section, 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
[[Page 44576]]
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 ``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 ex-factory price of the components, findings and trimmings,
or interlinings as set out in the invoice or other commercial
documents, or, if the price is other than ex-factory, the price as set
out in the invoice or other commercial documents adjusted to arrive at
an ex-factory price; or
(B) If the price cannot be determined under paragraph (c)(1)(ii)(A)
of this section or if CBP 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.
(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 in the ATPDEA beneficiary country by the producer or
exporter or by the producer's or exporter's authorized agent in the
format specified in paragraph (b) of this section. If the person
preparing the Certificate of Origin is not the producer of the article,
the person may complete and sign a Certificate of Origin on the basis
of:
(1) The person's 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 person 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:
Andean Trade Promotion and Drug Eradication Act Textile Certificate of
Origin
------------------------------------------------------------------------
------------------------------------------------------------------------
1. Exporter Name & Address:
------------------------------------------------------------------------
2. Producer Name & Address:
------------------------------------------------------------------------
[[Page 44577]]
3. Importer Name & Address:
------------------------------------------------------------------------
4. Description of Article:
------------------------------------------------------------------------
5. Preference Group:
------------------------------------------------------------------------
Group................ Each Description Below Is Only 19 CFR
a Summary of the Cited CFR
Provision.
------------------------------------------------------------------------
A.................... Apparel assembled from U.S. 10.243(a)(1)(i).
formed, dyed, printed and
finished fabrics or fabric
components, or U.S. formed
knit-to-shape components from
U.S. or Andean yarns.
B.................... Apparel assembled from Andean 10.243(a)(1)(ii).
chief value llama, alpaca or
vicu[ntilde]a fabrics, fabric
components, or knit-to-shape
components, from Andean yarns.
C.................... Apparel assembled from fabrics 10.243(a)(1)(iii)
or yarns considered as being .
in short supply in the NAFTA.
D.................... Apparel assembled from fabrics 10.243(a)(1)(iv).
or yarns designated as not
available in commercial
quantities in the United
States.
E.................... Apparel assembled from a 10.243(a)(2).
combination of two or more
yarns, fabrics, fabric
components, or knit-to-shape
components described in
preference groups A though D.
F.................... Handloomed, handmade, or 10.243(a)(3).
folklore textile and apparel
goods.
G.................... Brassieres assembled in the 10.243(a)(4).
U.S. and/or one or more
Andean beneficiary countries.
H.................... Textile luggage assembled from 10.243(a)(5)&(6).
U.S. formed fabrics from U.S.
yarns.
I.................... Apparel assembled from Andean 10.243(a)(7).
formed fabrics, fabric
components, or knit-to-shape
components from U.S. or
Andean yarns, whether or not
also assembled, in part, from
yarns, fabrics and fabric
components described in
preference groups A through D.
------------------------------------------------------------------------
6. U.S./Andean Fabric Producer Name & Address:
------------------------------------------------------------------------
7. U.S./Andean Yarn Producer Name & Address:
------------------------------------------------------------------------
8. Handloomed, Handmade, or Folklore Article:
------------------------------------------------------------------------
9. Name of Short Supply Fabric or Yarn:
------------------------------------------------------------------------
I certify that the information on this document is complete and accurate
and I assume the responsibility for proving such representations. I
understand that I am liable for any false statements or material
omissions made on or in connection with this document. I agree to
maintain, and present upon request, documentation necessary to support
this certificate.
------------------------------------------------------------------------
10. Authorized Signature:
------------------------------------------------------------------------
11. Company:
------------------------------------------------------------------------
12. Name: (Print or Type)
------------------------------------------------------------------------
13. Title:
------------------------------------------------------------------------
14. Date: (DD/MM/YY)
------------------------------------------------------------------------
15. Blanket Period:
From:
To:
------------------------------------------------------------------------
16. Telephone:
Facsimile:
------------------------------------------------------------------------
(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 and Border Protection (CBP)
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;
[[Page 44578]]
(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 producer or
exporter or the producer's or 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 CBP 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 CBP under this paragraph:
(1) Must be in writing or must be transmitted electronically
through any electronic data interchange system authorized by CBP for
that purpose;
(2) If in writing, must be signed by the producer or exporter or
the producer's or 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 CBP 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;
(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
[[Page 44579]]
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 CBP. A claim for preferential treatment made
under Sec. 10.245, including any statements or other information
contained on a Certificate of Origin submitted to CBP 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
CBP by the importer or any other person under part 163 of this chapter;
(2) Documentation and other information regarding the country of
origin of an article and its constituent materials, including, but not
limited to, production records, 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 CBP, 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 CBP 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:
(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 CBP finds that cost
to be
[[Page 44580]]
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 CBP
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 (CBP Form 7501, column 34), or
its electronic equivalent, the distinct and unique identifier assigned
by CBP 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 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
[[Page 44581]]
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 fi