[Federal Register: June 22, 2007 (Volume 72, Number 120)]
[Rules and Regulations]
[Page 34365-34376]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22jn07-3]
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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
[USCBP-2007-0062]
[CBP Dec. 07-43]
RIN 1505-AB82
Haitian Hemispheric Opportunity Through Partnership Encouragement
Act of 2006
AGENCIES: Bureau of Customs and Border Protection, Department of
Homeland Security; Department of the Treasury.
ACTION: Interim regulations; solicitation of comments.
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SUMMARY: This document amends the U.S. Customs and Border Protection
(``CBP'') regulations on an interim basis to implement the duty-free
provisions of the Haitian Hemispheric Opportunity through Partnership
Encouragement (``HOPE'') Act of 2006.
DATES: Interim rule effective June 22, 2007; Comments must be received
by August 21, 2007.
ADDRESSES: You may submit comments, identified by docket number, by one
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments via docket number
USCBP-2007-0062.
Mail: Trade and Commercial Regulations Branch, Regulations
and Rulings, U.S. Customs and Border Protection, 1300 Pennsylvania
Avenue, NW. (Mint Annex), Washington, DC 20229.
Instructions: All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
posted without change to http://www.regulations.gov, including any
personal information provided. For detailed instructions on submitting
comments and additional information on the rulemaking process, see the
``Public Participation'' heading of the
[[Page 34366]]
SUPPLEMENTARY INFORMATION section of this document.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov. Submitted comments
may also be inspected during regular business days between the hours of
9 a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch,
Regulations and Rulings, U.S. Customs and Border Protection, 799 9th
Street, NW., 5th Floor, Washington, DC. Arrangements to inspect
submitted comments should be made in advance by calling Mr. Joseph
Clark at (202) 572-8768.
FOR FURTHER INFORMATION CONTACT:
Textile Operational Aspects: Robert Abels, Office of International
Trade, (202) 344-1959. Non-textile Operational Aspects: Lori
Whitehurst, Office of International Trade, (202) 344-2722.
Legal Aspects: Cynthia Reese, Office of International Trade, (202)
572-8812, or Alexandra Kalb, Office of International Trade, (202) 572-
8791.
SUPPLEMENTARY INFORMATION:
Public Participation
Interested persons are invited to participate in this rulemaking by
submitting written data, views, or arguments on all aspects of the
interim rule. CBP also invites comments that relate to the economic,
environmental, or federalism effects that might result from this
interim rule. Comments that will provide the most assistance to CBP in
developing these regulations will reference a specific portion of the
interim rule, explain the reason for any recommended change, and
include data, information, or authority that supports such recommended
change. See ADDRESSES above for information on how to submit comments.
Background
On December 20, 2006, the President signed into law the Tax Relief
and Health Care Act of 2006 (``the Act''), Public Law 109-432, 120
Stat. 2922. Title V of the Act concerns the extension of certain trade
benefits to Haiti and is referred to in the Act as the ``Haitian
Hemispheric Opportunity through Partnership Encouragement Act of 2006''
(the ``HOPE Act'').
Section 5002 of the Act amended the Caribbean Basin Economic
Recovery Act (the CBERA, also referred to the Caribbean Basin
Initiative, or CBI, statute codified at 19 U.S.C. 2701-2707) by adding
a new Sec. 213A, entitled ``Special Rules for Haiti'' and codified at
19 U.S.C. 2703A, to authorize the President to extend additional trade
benefits to Haiti for a five-year period (ending on December 19, 2011)
if the President determines that the country meets certain specified
eligibility conditions and requirements. New Sec. 213A of the CBERA
consists of six principal subsections, each of which is summarized
below.
Subsection (a) of Sec. 213A of the CBERA sets forth definitions of
several terms used in Sec. 213A, including ``applicable one-year
period,'' which is used in connection with apparel articles described
in paragraph (b)(2) of Sec. 213A, and ``enter; entry''.
Subsection (b) of Sec. 213A specifies the conditions and
requirements that must be met for certain apparel articles from Haiti
to receive duty-free treatment. The apparel articles that may receive
duty-free treatment under this subsection if they are imported directly
from Haiti are as follows:
1. Apparel articles of a producer or entity controlling production
that are wholly assembled or knit-to-shape in Haiti from any
combination of fabrics, fabric components, components knit-to-shape,
and yarns, provided a specified value-content requirement is met during
an applicable one-year period, either on the basis of individual
entries or an annual aggregation calculation, and subject to the
application of annual quantitative limits expressed in square meter
equivalents for each of the five applicable one-year periods
[paragraphs (1) and (2) of subsection (b)];
2. Apparel articles classifiable in Chapter 62 of the Harmonized
Tariff Schedule of the United States (``HTSUS'') (certain woven apparel
articles), other than articles classifiable in subheading 6212.10 of
the HTSUS (brassieres), as in effect on December 20, 2006, that are
wholly assembled or knit-to-shape in Haiti but do not qualify for duty-
free treatment under paragraphs (1) and (2) of subsection (b) because
they fail to meet the applicable value-content requirement, with duty-
free treatment for such articles ending on December 19, 2009, and
subject to the application of annual quantitative limits in addition to
the quantitative limits that apply to apparel articles under paragraphs
(1) and (2) of subsection (b) [paragraph (4) of subsection (b)]; and
3. Articles classifiable in heading 6212.10 of the HTSUS
(brassieres) that are both cut and sewn or otherwise assembled in Haiti
or the United States, or both, without regard to the source of the
fabric or components from which the articles are made, subject to the
application of the quantitative limits that apply to apparel articles
under paragraphs (1) and (2) of subsection (b) [paragraph (5) of
subsection (b)].
Paragraph (3) of subsection (b) sets forth the quantitative limits
that apply during each of the five applicable one-year periods with
respect to apparel articles of a producer or entity controlling
production under paragraphs (1) and (2) of subsection (b).
Subsection (c) of Sec. 213A of the CBERA provides for the duty-
free treatment of any article classifiable in subheading 8544.30.00 of
the HTSUS (wiring sets), as in effect on December 20, 2006, that is the
product or manufacture of Haiti and is imported directly from Haiti
into the customs territory of the United States, provided a specified
value-content requirement is met.
Subsection (d) of new Sec. 213A sets forth certain eligibility
requirements that Haiti must meet as a prerequisite for articles to
receive duty-free treatment under this section. This subsection
requires that the President determine whether Haiti meets these
requirements within 90 days after the date of enactment of the HOPE Act
(or by March 20, 2007).
Subsection (e) of Sec. 213A provides that preferential tariff
treatment for apparel articles under this section shall not apply
unless the President certifies to Congress that Haiti is meeting
certain conditions, such as the adoption of an effective visa system,
that are primarily intended to avoid illegal transshipment situations.
Subsection (f) of Sec. 213A provides that the President shall
issue regulations to carry out this section not later than 180 days
after the date of enactment of the HOPE Act. As the HOPE Act was signed
on December 20, 2006, implementing regulations are due by June 20,
2007. Section 213A(f) further provides that the President shall consult
with the Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate in preparing such
regulations. CBP has consulted with the Committee on Ways and Means and
the Committee on Finance regarding these implementing regulations.
On March 19, 2007, the President signed Proclamation 8114 to
implement the provisions of the HOPE Act, among other purposes. The
Proclamation, which was published in the Federal Register on March 22,
2007 (72 FR 13655), included determinations by the President that Haiti
(1) Meets the eligibility requirements set forth in Sec. 213A(d) of
the CBERA and (2) is meeting the conditions set forth in Sec. 213A(e).
The Proclamation also modified subchapter XX of Chapter 98 of the
Harmonized Tariff Schedule of the United States (``HTSUS'') as set
forth in Annex 1 to the Proclamation. The
[[Page 34367]]
modifications to the HTSUS included the creation of new subheadings
encompassing the various articles that are eligible for duty-free
treatment under the HOPE Act.
The HOPE Act provisions that require implementation through
regulation include subsections (a) through (c) of Sec. 213A of the
CBERA. In order to provide transparency and facilitate their use, the
implementing regulations set forth in this interim rulemaking have been
included within new Subpart O in Part 10 of the CBP regulations (Title
19 Code of Federal Regulations). The regulatory amendments are
discussed below in the order in which they appear in this document.
Discussion of Amendments
Part 10, Subpart O
Section 10.841 outlines the statutory context for Subpart O, Part
10 and is self-explanatory.
Section 10.842 sets forth definitions of various terms used in
Subpart O, Part 10. Although certain of the definitions in this section
are based on definitions contained in the HOPE Act, other definitions
have also been included to clarify the application of the regulatory
texts. Additional definitions that apply in a more limited Subpart O,
Part 10 context are set forth elsewhere with the substantive provisions
to which they relate.
Section 10.843 identifies the articles to which duty-free treatment
applies under new Sec. 213A of the CBERA and includes any required
production standards.
Section 10.844 sets forth the basic conditions and requirements
that apply for purposes of meeting the applicable value-content
requirements for apparel articles of a producer or entity controlling
production, as described in paragraph (b)(2) of Sec. 213A, and for
wiring sets, as described in subsection (c) of the statute.
Paragraph (a)(1) of Sec. 10.844, which is based on subparagraphs
(b)(2)(A) and (b)(2)(E)(i) of Sec. 213A, concerns the value-content
requirement for apparel articles, as described in paragraph (b)(2) of
Sec. 213A, of a producer or entity controlling production. Paragraph
(a)(1) specifies that, except as provided in Sec. 10.844(a)(2),
individual entries of apparel articles will be eligible for duty-free
treatment only if those meet the applicable value-content percentage
for that year. The applicable percentage is 50 percent for each of the
first three applicable one-year periods (December 20, 2006, through
December 19, 2007, December 20, 2007, through December 19, 2008, and
December 20, 2008, through December 19, 2009), 55 percent for the
fourth applicable one-year period (December 20, 2009, through December
19, 2010), and 60 percent for the fifth applicable one-year period
(December 20, 2010, through December 19, 2011). The value-content
requirement is based upon a comparison between the sum of certain
material and direct processing costs incurred in Haiti and one or more
eligible countries (as specified in Sec. 10.844(c)) and the declared
customs value (appraised value) of the article.
Paragraph (a)(2) of Sec. 10.844, which reflects paragraph
(b)(2)(D) of Sec. 213A, provides that the applicable value-content
requirement for apparel articles of a producer or entity controlling
production that are entered during an applicable one-year period may
also be met on the basis of an annual aggregation calculation (as an
alternative to meeting this requirement on an individual entry basis).
Paragraph (a)(2) also reflects the statute's requirement that certain
entries of apparel articles be excluded from the annual aggregation
calculation, unless, in certain instances, the producer or entity
controlling production elects to include those entries.
Paragraph (a)(3) of Sec. 10.844 provides that the annual
aggregation method elected to be used by a producer or entity
controlling production for purposes of meeting the applicable value-
content requirement must be consistently applied to all apparel
articles of that producer or entity controlling production that are
certified as being subject to the aggregation method during that
applicable one-year period. This paragraph further provides that in the
absence of an election by the producer or entity controlling production
to use the annual aggregation method in an applicable one-year period,
all apparel articles of the producer or entity controlling production
must be entered under the individual entry method during that
applicable one-year period.
Paragraph (a)(4) of Sec. 10.844, which is based in part on
paragraph (b)(2)(F)(ii) of Sec. 213A, sets forth the circumstances
under which CBP will deny duty-free treatment to apparel articles of a
producer or entity controlling production when the requirements for
such treatment are not met in an applicable one-year period. Paragraph
(a)(4) also provides for the application of an increased value-content
percentage requirement as a consequence of apparel articles of a
producer or entity controlling production for which a duty-free claim
has been made failing to meet the requirements for duty-free treatment
in an applicable one-year period, or of a producer or entity
controlling production entering into the duty-free program after the
initial applicable one-year period and electing to use the annual
aggregation method. In situations in which apparel articles are
required to meet the increased value-content percentage in an
applicable one-year period, paragraph (a)(4) provides that the importer
of such articles must notify CBP that the increased percentage has been
met by submitting a declaration of compliance.
Paragraph (a)(5) of Sec. 10.844 implements paragraph (b)(2)(G) of
Sec. 213A relating to the inclusion of the cost of certain fabrics or
yarns in short supply in the value-content requirement for apparel
articles of a producer or entity controlling production.
Paragraph (b) of Sec. 10.844, which is derived from paragraph (c)
of Sec. 213A, sets forth the value-content requirement that must be
met for wiring sets from Haiti to receive duty-free treatment.
Paragraph (c) of Sec. 10.844 reflects the definition of
``countries'' found in paragraph (b)(2)(C) of Sec. 213A, as used in
the value-content requirements for apparel articles of a producer or
entity controlling production and wiring sets.
Paragraph (d) of Sec. 10.844 concerns the cost or value of
materials that may be applied toward meeting the value-content
requirements for apparel articles of a producer or entity controlling
production and for wiring sets (see paragraphs (b)(2)(A)(i) and
(c)(1)(A) of Sec. 213A). Paragraph (d)(1) defines the term ``materials
produced in Haiti or one or more eligible countries'', as used in the
value-content requirement for apparel articles of a producer or entity
controlling production, based upon the rules for determining the
country of origin of apparel articles set forth in Sec. 102.21 of the
CBP regulations (19 CFR 102.21). The same term, as it is used in the
value-content requirement for wiring sets, is defined in paragraph (d)
in a manner similar to the approach taken in Sec. 10.196(a) of CBP's
CBERA regulations.
Paragraph (d)(2) of Sec. 10.844 relates to the calculation of the
cost or value of materials for purposes of the value-content
requirements for apparel articles and wiring sets. Paragraph (d)(2)(i),
which closely parallels Sec. 10.196(c) of CBP's CBERA regulations,
sets forth the cost elements to be included in the calculation of the
cost or value of materials. Paragraph (d)(2)(ii), which relates only to
the value-content requirement for apparel articles, implements
paragraphs (b)(2)(B) and (b)(2)(D)(iii) of Sec. 213A, by requiring a
deduction for the cost or value of any
[[Page 34368]]
``foreign materials,'' as defined in Sec. 10.842(h) of these interim
regulations and paragraph (b)(2)(E)(ii) of Sec. 213A.
Paragraph (e) of Sec. 10.844 implements paragraph (b)(2)(A)(ii) of
Sec. 213A by defining ``direct costs of processing operations'' as set
forth in 19 U.S.C. 2703(a)(3).
Section 10.845 reflects paragraph (b)(2)(F)(iii) of Sec. 213A
relating to the requirements and procedures that apply for purposes of
obtaining retroactive application of duty-free treatment for apparel
articles of a producer or entity controlling production that (1) Are
ineligible for duty-free treatment during an applicable one-year period
because the requirements for such treatment were not met during the
preceding period, and (2) satisfy the increased value-content
percentage in that applicable one-year period.
Section 10.846 defines the term ``imported directly'' based upon
the manner in which the same term is defined in Sec. 10.193 of CBP's
CBERA regulations.
Section 10.847 sets forth the procedure for claiming duty-free
treatment at the time of entry for articles eligible for such treatment
under the HOPE Act. This section also provides that if an importer has
reason to believe that a duty-free claim is incorrect, the importer
must promptly correct the claim and pay any duties owing.
Section 10.848 provides that an importer claiming duty-free
treatment for apparel articles, as described in paragraph (b)(2) of
Sec. 213A, that are entered in the aggregate during an applicable one-
year period must submit to CBP a declaration of compliance with the
applicable value-content requirement within 30 days following the end
of the applicable one-year period. Section 10.848 also sets forth the
consequences of failing to comply with this requirement, and describes
the information that the declaration of compliance must include.
Section 10.849 sets forth certain importer obligations regarding
the truthfulness of information and documents submitted in support of a
claim for duty-free treatment under Subpart O of Part 10, CBP
regulations. This section also states that an importer who makes a
claim for duty-free treatment is deemed to have certified that the
article qualifies for such treatment.
Section 10.850 provides that a claim for duty-free treatment under
Subpart O of Part 10, CBP regulations, will be subject to such
verification as CBP deems necessary. This section also sets forth the
circumstances under which CBP may deny a claim based on the results of
the verification. Finally, this section specifies the types of records,
documents, and other information that CBP may review when verifying the
statements and information included on a declaration of compliance.
Part 163
The Appendix to Part 163 of the CBP regulations (19 CFR Part 163),
which sets forth a list of records and information required for the
entry of merchandise (commonly known as the (a)(1)(A) list) has been
modified to include the HOPE Act declaration of compliance.
Part 178
Part 178 sets forth the control numbers assigned to information
collections of CBP by the Office of Management and Budget, pursuant to
the Paperwork Reduction Act of 1995, Pub. L. 104-13. The list contained
in Sec. 178.2 is amended to add the information collections used by
CBP to determine eligibility of articles for duty-free treatment under
the HOPE Act.
Inapplicability of Notice and Delayed Effective Date Requirements
Under Sec. 553 of the Administrative Procedure Act (``APA'') (5
U.S.C. 553), agencies amending their regulations generally are required
to publish a notice of proposed rulemaking in the Federal Register that
solicits public comment on the proposed amendments, consider public
comments in deciding on the final content of the final amendments, and
publish the final amendments at least 30 days prior to their effective
date. However, Sec. 553(b)(B) of the APA provides that notice and
public procedure are not required when an agency for good cause finds
them impracticable, unnecessary, or contrary to the public interest.
CBP has determined that providing prior notice and public procedure for
these interim regulations would be impracticable, unnecessary, and
contrary to the public interest for the reasons explained below.
Pursuant to Annex 1 of Presidential Proclamation 8114 dated March
19, 2007 (72 FR 13655), the HOPE Act tariff benefits became effective
for wiring units from Haiti that were entered, or withdrawn from
warehouse for consumption, on or after January 4, 2007, and for certain
apparel articles from Haiti that were entered, or withdrawn from
warehouse for consumption, on or after March 20, 2007. An important
function of these regulations is to assist importers in determining
whether their merchandise satisfies the applicable production standards
and complex value-content requirements that must be met to qualify for
preferential tariff treatment under the HOPE Act. Given the Act's
complicated statutory scheme, this rulemaking assists in clarifying the
applicable rules by providing definitions of numerous terms that are
not defined in the statute and by providing illustrative examples
regarding certain of these rules. In addition, these amendments set
forth the procedures that must be followed by importers to claim the
benefits of tariff preference under the HOPE Act, including the
specific information that must be submitted in connection with those
claims, to ensure the timely and accurate processing of their claims by
CBP as well as to protect the revenue against false claims. The interim
regulations also inform importers of the types of records and
information that may be the subject of a CBP verification.
As previously stated in the Background portion of this document,
subsection (f) of Sec. 213A of the CBERA (as added by Sec. 5002 of
the Act) provides that the President shall issue regulations to carry
out this section not later than 180 days after the date of enactment of
the HOPE Act (December 20, 2006). The good cause exception set forth in
Sec. 553(b)(B) of the APA applies when there is a statutorily imposed
deadline combined with other relevant factors such as a complicated
statutory scheme or a compelling need for rapid implementation of the
regulation. In this case the statutorily imposed 180 day deadline in
the HOPE Act, coupled with the complex statutory framework, constitute
a recognized basis to invoke the good cause exception. In addition, CBP
is soliciting comments in this interim rule and will consider all
comments it receives before issuing a final rule.
Finally, Sec. Sec. 553(d)(3) of the APA permit agencies to make a
rule effective less than 30 days after publication if the rule grants
or recognizes an exemption or relieves a restriction, or when the
agency finds that good cause exists for dispensing with a delayed
effective date. As these regulations implement the tariff preference
provisions of the HOPE Act and thus grant an exemption from normal duty
rates for qualifying articles, a delayed effective date is not
required. Moreover, pursuant to Sec. 553(d)(3) of the APA, for the
reasons described above, CBP finds that good cause exists to make these
regulations effective without a delayed effective date.
[[Page 34369]]
Executive Order 12866 and Regulatory Flexibility Act
This document does not meet the criteria for a ``significant
regulatory action'' as specified in Executive Order 12866 of September
30, 1993 (58 FR 51735, October 1993). In addition, because a notice of
proposed rulemaking is not required under section 553(b) of the APA for
the reasons described above, CBP notes that the provisions of the
Regulatory Flexibility Act, as amended (5 U.S.C. 601 et seq.), do not
apply to this rulemaking. Accordingly, CBP also notes that this interim
rule is not subject to the regulatory analysis requirements or other
requirements of 5 U.S.C. 603 and 604.
Paperwork Reduction Act
These regulations are being issued without prior notice and public
procedure pursuant to the APA, as described above. For this reason, the
collections of information contained in these regulations have been
reviewed and, pending receipt and evaluation of public comments,
approved by the Office of Management and Budget in accordance with the
requirements of the Paperwork Reduction Act (44 U.S.C. 3507) under
control number 1651-0129.
The collections of information in these regulations are in Sec.
10.847 (claim for duty-free treatment) and Sec. Sec. 10.844(a)(4)(v)
and 10.848 (declaration of compliance). This information is required in
connection with certain claims for duty-free treatment under the HOPE
Act and will be used by CBP to determine eligibility for preferential
tariff treatment under that Act. The likely respondents are business
organizations including importers, exporters and manufacturers.
Estimated total annual reporting burden: 1,333 hours.
Estimated average annual burden per respondent: 39.2 hours.
Estimated number of respondents: 34.
Estimated annual frequency of responses: 117.6.
Comments concerning the collections of information and the accuracy
of the estimated annual burden, and suggestions for reducing that
burden, should be directed to the Office of Management and Budget,
Attention: Desk Officer for the Department of the Treasury, Office of
Information and Regulatory Affairs, Washington, DC 20503. A copy should
also be sent to the Trade and Commercial Regulations Branch,
Regulations and Rulings, U.S. Customs and Border Protection, 1300
Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229.
Signing Authority
This document is being issued in accordance with Sec. 0.1(a)(1) of
the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of
the Secretary of the Treasury (or his/her delegate) to approve
regulations related to certain customs revenue functions.
List of Subjects
19 CFR Part 10
Customs duties and inspection, Imports, Preference programs,
Reporting and recordkeeping requirements.
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, Reporting and recordkeeping requirements.
Amendments to the Regulations
0
Accordingly, chapter I of title 19, Code of Federal Regulations (19 CFR
chapter I), is amended as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
0
1. The general authority citation for Part 10 continues to read, and
the specific authority for new Subpart O is added, to read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,
1623, 1624, 3314;
* * * * *
Sections 10.841 through 10.850 also issued under 19 U.S.C.
2703A.
0
2. Subparts K through N to part 10 are added and reserved.
Subparts K through N--[Added and Reserved]
0
3. Part 10, CBP regulations, is amended by adding a new Subpart O to
read as follows:
Subpart O--Haitian Hemispheric Opportunity through Partnership
Encouragement Act of 2006
Sec.
10.841 Applicability.
10.842 Definitions.
10.843 Articles eligible for duty-free treatment.
10.844 Value-content requirement.
10.845 Retroactive application of duty-free treatment for certain
apparel articles.
10.846 Imported directly.
10.847 Filing of claim for duty-free treatment.
10.848 Declaration of compliance.
10.849 Importer obligations.
10.850 Verification of claim for duty-free treatment.
Subpart O--Haitian Hemispheric Opportunity Through Partnership
Encouragement Act of 2006
Sec. 10.841 Applicability.
Title V of Public Law 109-432, entitled the Haitian Hemispheric
Opportunity through Partnership Encouragement Act of 2006 (HOPE Act),
amended the Caribbean Basin Economic Recovery Act (the CBERA, 19 U.S.C.
2701-2707) by adding a new section 213A (19 U.S.C. 2703A) to authorize
the President to extend additional trade benefits to Haiti. Section
213A of the CBERA provides for the duty-free treatment of certain
apparel articles and certain wiring sets from Haiti. The provisions of
this subpart set forth the legal requirements and procedures that apply
for purposes of obtaining duty-free treatment pursuant to CBERA section
213A.
Sec. 10.842 Definitions.
As used in this subpart, the following terms have the meanings
indicated unless either the context in which they are used requires a
different meaning or a different definition is prescribed for a
particular section of this subpart:
(a) 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;
(b) Applicable one-year period. ``Applicable one-year period''
means each of the following one-year periods:
(1) Initial applicable one-year period. ``Initial applicable one-
year period'' means the period beginning on December 20, 2006, and
ending on December 19, 2007;
(2) Second applicable one-year period. ``Second applicable one-year
period'' means the period beginning on December 20, 2007, and ending on
December 19, 2008;
(3) Third applicable one-year period. ``Third applicable one-year
period'' means the period beginning on December 20, 2008, and ending on
December 19, 2009;
(4) Fourth applicable one-year period. ``Fourth applicable one-year
period'' means the period beginning on December 20, 2009, and ending on
December 19, 2010; and
(5) Fifth applicable one-year period. ``Fifth applicable one-year
period'' means the period beginning on
[[Page 34370]]
December 20, 2010, and ending on December 19, 2011;
(c) Customs territory of the United States. ``Customs territory of
the United States'' means the 50 states, the District of Columbia, and
Puerto Rico;
(d) Declared customs value. ``Declared customs value'' means the
appraised value of an imported article determined in accordance with
section 402 of the Tariff Act of 1930, as amended (19 U.S.C. 1401a);
(e) Enter; entry. ``Enter'' and ``entry'' refer to the entry, or
withdrawal from warehouse for consumption, in the customs territory of
the United States;
(f) 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 Haiti through a contractual
relationship or other indirect means;
(g) Fabric component. ``Fabric component'' means a component cut
from fabric to the shape or form of the component as it is used in the
apparel article;
(h) Foreign material. ``Foreign material'' means a material not
produced in Haiti or any eligible country described in Sec. 10.844(c);
(i) HTSUS. ``HTSUS'' means the Harmonized Tariff Schedule of the
United States;
(j) Knit-to-shape articles. ``Knit-to-shape,'' when used with
reference to apparel articles, means any apparel article of which 50
percent or more of the exterior surface area is formed by major parts
that have been knitted or crocheted directly to the shape used in the
apparel article, with no consideration being given to patch pockets,
appliques, or the like. Minor cutting, trimming, or sewing of those
major parts will not affect the determination of whether an apparel
article is ``knit-to-shape'';
(k) 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'';
(l) Major parts. ``Major parts'' means integral components of an
apparel article but does not include collars, cuffs, waistbands,
plackets, pockets, linings, paddings, trim, accessories, or similar
parts or components;
(m) Producer. ``Producer'' means an individual, corporation,
partnership, association, or other entity or group that exercises
direct, daily operational control over the production process in Haiti;
(n) 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;
(o) Subheading. ``Subheading'' means the first six digits in the
tariff classification number under the HTSUS;
(p) Wholly assembled in Haiti. ``Wholly assembled in Haiti'' means
that all of the components of the apparel article (including thread,
decorative embellishments, buttons, zippers, or similar components)
were joined together in Haiti; and
(q) Wholly the growth, product, or manufacture. ``Wholly the
growth, product, or manufacture,'' when used with reference to Haiti or
one or more eligible countries described in Sec. 10.844(c) of this
subpart, refers both to any article which has been entirely grown,
produced, or manufactured in Haiti or one or more eligible countries
described in Sec. 10.844(c) of this subpart and to all materials
incorporated in an article which have been entirely grown, produced, or
manufactured in Haiti or one or more eligible countries described in
Sec. 10.844(c) of this subpart.
Sec. 10.843 Articles eligible for duty-free treatment.
The duty-free treatment referred to in Sec. 10.841 applies to the
following articles that are imported directly from Haiti into the
customs territory of the United States:
(a) Certain apparel articles. Apparel articles of a producer or
entity controlling production that are wholly assembled or knit-to-
shape in Haiti from any combination of fabrics, fabric components,
components knit-to-shape, and yarns, subject to the applicable
quantitative limits set forth in U.S. Note 6(g), Subchapter XX, Chapter
98, HTSUS, and provided that the applicable value-content requirement
set forth in Sec. 10.844(a) of this subpart is met through the use of:
(1) The individual entry method (see Sec. 10.844(a)(1) of this
subpart); or
(2) The annual aggregation method (see Sec. 10.844(a)(2) of this
subpart).
(b) Certain woven apparel articles. Apparel articles classifiable
in Chapter 62 of the HTSUS (other than articles classifiable in
subheading 6212.10 of the HTSUS), as in effect on December 20, 2006,
that are wholly assembled or knit-to-shape in Haiti from any
combination of fabrics, fabric components, components knit-to-shape,
and yarns, but do not qualify for duty-free treatment under paragraph
(a) of this section because they fail to meet the applicable value-
content requirement set forth in Sec. 10.844(a) of this subpart,
subject to the applicable quantitative limits set forth in U.S. Note
6(h), Subchapter XX, Chapter 98, HTSUS;
(c) Brassieres. Any article classifiable in subheading 6212.10 of
the HTSUS, that is both cut and sewn or otherwise assembled in Haiti or
the United States, or both, without regard to the source of the fabric
or components from which the article is made, subject to the
quantitative limits set forth in U.S. Note 6(g), Subchapter XX, Chapter
98, HTSUS; and
(d) Wiring sets. Any article classifiable in subheading 8544.30.00
of the HTSUS, as in effect on December 20, 2006, that is the product or
manufacture of Haiti, provided the article satisfies the value-content
requirement set forth in Sec. 10.844(b) of this subpart. For purposes
of this paragraph, the term ``product or manufacture of Haiti'' refers
to an article that is either:
(1) Wholly the growth, product, or manufacture of Haiti; or
(2) A new or different article of commerce that has been grown,
produced, or manufactured in Haiti;
Sec. 10.844 Value-content requirement.
(a) Certain apparel articles--(1) General. Except as provided in
paragraph (a)(2) of this section, apparel articles described in Sec.
10.843(a) of this subpart will be eligible for duty-free treatment only
if, for each entry of such articles in the applicable one-year period
for which a duty-free claim is made for such articles under Sec.
10.847(a) of this subpart, the sum of the cost or value of the
materials produced in Haiti or one or more eligible countries described
in paragraph (c) of this section, or any combination thereof, plus the
direct costs of processing operations performed in Haiti or one or more
eligible countries described in paragraph (c) of this section, or any
combination thereof, is not less than (as applicable):
(i) 50 percent or more of the declared customs value of the
articles entered during the initial applicable one-year period, the
second applicable one-year period, and the third applicable one-year
period;
(ii) 55 percent or more of the declared customs value of the
articles entered during the fourth applicable one-year period; and
[[Page 34371]]
(iii) 60 percent or more of the declared customs value of the
articles entered during the fifth applicable one-year period.
(2) Annual aggregation--(i) Initial applicable one-year period. In
the initial applicable one-year period, the applicable value-content
requirement set forth in paragraph (a)(1) of this section may also be
met for apparel articles of a producer or an entity controlling
production that are entered during the initial applicable one-year
period and for which duty-free treatment is claimed under Sec.
10.847(a) of this subpart by aggregating the cost or value of materials
and the direct costs of processing operations, as those terms are used
in paragraph (a)(1) of this section, with respect to all apparel
articles of that producer or entity controlling production that are
wholly assembled or knit-to-shape in Haiti and are entered during the
initial applicable one-year period (except as provided in paragraph
(a)(2)(iii) of this section).
(ii) Other applicable one-year periods. In each of the second,
third, fourth, and fifth applicable one-year periods, the applicable
value-content requirement set forth in paragraph (a)(1) of this section
may also be met for apparel articles of a producer or an entity
controlling production that are entered during the applicable one-year
period and for which duty-free treatment is claimed under Sec.
10.847(a) of this subpart by aggregating the cost or value of materials
and the direct costs of processing, as those terms are used in
paragraph (a)(1) of this section, with respect to all apparel articles
of that producer or entity controlling production that are wholly
assembled or knit-to-shape in Haiti and are entered during the
preceding applicable one-year period (except as provided in paragraph
(a)(2)(iii) of this section).
(iii) Exclusions from annual aggregation calculation. (A) The entry
of a woven apparel article receiving duty-free treatment under Sec.
10.843(b) of this subpart is not to be included in an annual
aggregation under paragraph (a)(2)(i) or (a)(2)(ii) of this section.
(B) The entry of brassieres receiving duty-free treatment under
Sec. 10.843(c) is not to be included in an annual aggregation under
paragraph (a)(2)(i) or (a)(2)(ii) of this section unless the producer
or entity controlling production elects, at the time the annual
aggregation calculation is made, to include such entry in the
aggregation.
(C) The entry of an apparel article that is wholly assembled or
knit-to-shape in Haiti and that is receiving preferential tariff
treatment under any provision of law other than section 213A of the
CBERA (19 U.S.C. 2703A) or is subject to the rate of duty set forth in
the ``General'' subcolumn of column 1 of the HTSUS is not to be
included in an annual aggregation under paragraph (a)(2)(i) or
(a)(2)(ii) of this section unless the producer or entity controlling
production elects, at the time the annual aggregation calculation is
made, to include such entry in the aggregation.
(3) Election to use the annual aggregation method for an applicable
one-year period. A producer or entity controlling production that
elects to use the annual aggregation method for purposes of meeting the
applicable value-content requirement set forth in paragraph (a)(1) of
this section during an applicable one-year period must continue to use
that method for all apparel articles of that producer or entity
controlling production that are certified as articles described in
Sec. 10.843(a) of this subpart during that applicable one-year period
(see Sec. 10.847(b) of this subpart). Unless a producer or entity
controlling production elects to use the annual aggregation method with
respect to an applicable one-year period, all apparel articles of the
producer or entity controlling production for which duty-free treatment
is claimed under Sec. 10.847(a) of this subpart must be entered under
the individual entry method during that applicable one-year period.
(4) Failure to meet applicable requirements.--(i) Initial
applicable one-year period. If CBP determines that apparel articles of
a producer or entity controlling production that are entered as
articles described in Sec. 10.843(a) of this subpart during the
initial applicable one-year period have not met the requirements of
Sec. 10.843(a) of this subpart or the applicable value-content
requirement set forth in paragraph (a)(1) of this section, then:
(A) All apparel articles of the producer or entity controlling
production for which duty-free treatment is claimed under Sec.
10.847(a) of this subpart that are entered under the annual aggregation
method during that initial applicable one-year period will be denied
duty-free treatment;
(B) Those apparel articles of the producer or entity controlling
production for which duty-free treatment is claimed under Sec.
10.847(a) of this subpart that are entered on an individual entry basis
and that fail to meet the requirements of Sec. 10.843(a)(1) of this
subpart or the applicable value-content requirement set forth in
paragraph (a)(1) of this section during that initial applicable one-
year period will be denied duty-free treatment. However, apparel
articles of the producer or entity controlling production for which
duty-free treatment is claimed under Sec. 10.847(a) of this subpart
that are entered on an individual entry basis prior to an election
being made by the producer or entity controlling production to use the
annual aggregation method will be considered to have met the applicable
value-content requirement if that requirement is met through
application of the individual entry method; and
(C) All apparel articles of the producer or entity controlling
production for which duty-free treatment is claimed under Sec.
10.847(a) of this subpart, whether entered on an individual entry or
annual aggregation basis, will be not be eligible for duty-free
treatment during the succeeding applicable one-year periods until the
increased percentage in the value-content requirement specified in
paragraph (a)(4)(iii) of this section has been met by all the apparel
articles of that producer or entity controlling production that are
wholly assembled or knit-to-shape in Haiti and are entered during the
immediately preceding applicable one-year period, unless the articles
qualify for tariff benefits pursuant to the provisions of Sec. 10.845
of this subpart.
(ii) Other applicable one-year periods. If CBP determines that
apparel articles of a producer or entity controlling production that
are entered as articles described in Sec. 10.843(a) of this subpart
during any applicable one-year period following the initial applicable
one-year period have not met the requirements of Sec. 10.843(a) or the
applicable value-content requirement set forth in paragraph (a) of this
section, then:
(A) Those apparel articles of the producer or entity controlling
production for which duty-free treatment is claimed under Sec.
10.847(a) of this subpart that are entered on an individual entry basis
and that fail to meet the requirements of Sec. 10.843(a)(1) or the
applicable value-content requirement set forth in paragraph (a)(1) of
this subpart during that applicable one-year period will be denied
duty-free treatment; and
(B) All apparel articles of the producer or entity controlling
production for which duty-free treatment is claimed under Sec.
10.847(a) of this subpart, whether entered on an individual entry or
annual aggregation basis, will not be eligible for duty-free treatment
during the succeeding applicable one-year periods until the increased
percentage in the value-content requirement specified in paragraph
(a)(4)(iii) of this section has
[[Page 34372]]
been met by all the apparel articles of that producer or entity
controlling production that are wholly assembled or knit-to-shape in
Haiti and are entered during the immediately preceding applicable one-
year period, unless the articles qualify for tariff benefits pursuant
to the provisions of Sec. 10.845 of this subpart.
(iii) Increased percentage. For apparel articles of a producer or
entity controlling production to meet the increased percentage referred
to in paragraphs (a)(4)(i)(C) and (a)(4)(ii)(B) of this section, the
sum of the cost or value of the materials produced in Haiti or one or
more eligible countries described in paragraph (c) of this section, or
any combination thereof, plus the direct costs of processing operations
performed in Haiti or one or more eligible countries described in
paragraph (c) of this section, or any combination thereof, must not be
less than the applicable percentage under paragraph (a)(1) of this
section, plus 10 percent, of the aggregate declared customs value of
all apparel articles of that producer or entity controlling production
that are wholly assembled or knit-to-shape in Haiti and are entered
during the immediately preceding applicable one-year period. Once the
increased value-content percentage has been met for the articles of a
producer or entity controlling production that are entered during an
applicable one-year period, the articles of that producer or entity
controlling production that are entered during the next succeeding
applicable one-year period will be subject to the applicable value-
content percentage specified in paragraph (a)(1) of this section.
(iv) Articles of a new producer or entity controlling production. A
new producer or entity controlling production that elects to use the
annual aggregation method for purposes of meeting the applicable value-
content requirement must first meet the increased value-content
percentage specified in paragraph (a)(4)(iii) of this section as a
prerequisite to receiving duty-free treatment during a succeeding
applicable one-year period. For purposes of this paragraph, a ``new
producer or entity controlling production'' is a producer or entity
controlling production that did not produce or control production of
articles that were entered as articles described in Sec. 10.843(a)
during the immediately preceding applicable one-year period.
Example 1. A Haitian producer begins production of apparel
articles that meet the description in Sec. 10.843(a) of this
subpart during the second applicable one-year period and elects to
use the annual aggregation method for each applicable one-year
period. The producer's articles entered during the second applicable
one-year period meet a value-content percentage of 55%; articles
entered during the third applicable one-year period meet a value-
content percentage of 65%; and articles entered during the fourth
applicable one-year period meet a value-content percentage of 55%.
The producer's articles may not receive duty-free treatment during
the second applicable one-year period because there was no
production (and thus no entered articles) during the immediately
preceding period (the initial applicable one-year period) on which
to assess compliance with the applicable value-content requirement.
The producer's articles also may not receive duty-free treatment
during the third applicable one-year period because the increased
value-content percentage requirement (50% plus 10% = 60%) was not
met in the immediately preceding period (the second applicable one-
year period). However, the producer's articles are eligible for
duty-free treatment during the fourth applicable one-year period
based on compliance with the 60% value-content percentage
requirement in the immediately preceding period (the third
applicable one-year period). The producer's articles also are
eligible for duty-free treatment during the fifth applicable one-
year period based on compliance with the 55% value-content
percentage requirement in the immediately preceding period (the
fourth applicable one-year period).
Example 2. Same facts as in example 1, except that the producer
elects to use the individual entry method for purposes of meeting
the applicable value-content requirement for each applicable one-
year period. The producer's articles entered during the second
applicable one-year period are eligible for duty-free treatment
because these articles meet the requisite 50% value-content
requirement. The producer's articles also may receive duty-free
treatment during the third, fourth, and fifth applicable one-year
periods based on compliance with the applicable value-content
requirements for each of those periods set forth in paragraph (a)(1)
of this section.
(v) Notification of compliance with the increased percentage--(A)
General. If apparel articles of a producer or entity controlling
production are required to meet the increased value-content percentage
described in paragraph (a)(4)(iii) of this section, either because of
failure to meet the requirements of Sec. 10.843(a) or the applicable
value-content requirement set forth in paragraph (a) of this section in
an applicable one-year period, or because the producer or entity
controlling production is a new producer or entity controlling
production, as defined in paragraph (a)(4)(iv) of this section, that
elects to use the annual aggregation method, the importer of such
articles must notify CBP that the increased percentage has been met in
an applicable one-year period by submitting to CBP the declaration of
compliance described in Sec. 10.848 of this subpart within 30 days
following the end of the applicable one-year period. An importer that
is required to submit a declaration of compliance under this paragraph
must submit such a declaration for each importer of record
identification number used by that importer. A declaration of
compliance required under this paragraph must be sent to the address
set forth in Sec. 10.848(a) of this subpart.
(B) Contents. A declaration of compliance required under paragraph
(a)(4)(v)(A) of this section must include, in addition to the
information specified in Sec. 10.848(c) of this subpart, a statement
as to whether the increased value-content percentage was required
because the apparel articles failed to meet the production standards or
the applicable value-content requirement or because the producer or
entity controlling production was a new producer or entity controlling
production that elected to use the annual aggregation method.
(C) Effect of noncompliance. If an importer fails to submit to CBP
the declaration of compliance required under paragraph (a)(4)(v)(A) of
this section within 30 days following the end of the applicable one-
year period during which the increased value-content percentage was met
for apparel articles of a producer or entity controlling production,
CBP may deny duty-free treatment to all apparel articles, as described
in Sec. 10.843(a) of this subpart, of that producer or entity
controlling production that are entered by that importer during the
next succeeding applicable one-year period. Additionally, the timely
submission of a declaration of compliance is a prerequisite for a
producer or entity controlling production to request retroactive
application of duty-free treatment under Sec. 10.845 of this subpart
for apparel articles that meet the increased value-content percentage
during an applicable one-year period. However, the submission of a
declaration of compliance is not a substitute for filing a request for
liquidation or reliquidation of an entry for which retroactive duty-
free treatment is sought under Sec. 10.845 of this subpart.
(5) Inclusion of the cost of fabrics or yarns not available in
commercial quantities in value-content requirement. For purposes of
meeting the applicable value-content requirement set forth in paragraph
(a) of this section, either in regard to individual entries or entries
entered in the aggregate, the following costs may be included:
[[Page 34373]]
(i) The cost of fabrics or yarns to the extent that apparel
articles of such fabrics or yarns would be eligible for preferential
treatment, without regard to the source of the fabrics or yarns, under
Annex 401 of the NAFTA; and
(ii) The cost of fabrics or yarns (without regard to their source)
that are designated as not being available in commercial quantities for
purposes of:
(A) Section 213(b)(2)(A)(v) of the CBERA (19 U.S.C.
2703(b)(2)(A)(v));
(B) Section 112(b)(5) of the African Growth and Opportunity Act (19
U.S.C. 3721(b)(5));
(C) Section 204(b)(3)(B)(i)(III) or 204(b)(3)(B)(ii) of the Andean
Trade Preference Act (19 U.S.C. 3203(b)(3)(B)(i)(III) or
3203(b)(3)(B)(ii)); or
(D) Any other provision, relating to determining whether a textile
or apparel article is an originating good eligible for preferential
treatment, of a law that implements a free trade agreement that enters
into force under the Bipartisan Trade Promotion Authority Act of 2002.
(b) Wiring sets. An article described in Sec. 10.843(d) of this
subpart will be eligible for duty-free treatment during the five-year
period ending on December 19, 2011, only if the sum of the cost or
value of the materials produced in Haiti or one or more eligible
countries described in paragraph (c) of this section, or any
combination thereof, plus the direct costs of processing operations
performed in Haiti or the United States, or both, is not less than 50
percent of the declared customs value of the article.
(c) Eligible countries described. As used in this section, the term
``eligible countries'' includes:
(1) The United States;
(2) Israel, Canada, Mexico, Jordan, Singapore, Chile, Australia,
Morocco, Bahrain, El Salvador, Honduras, Nicaragua, Guatemala,
Dominican Republic, and any other country that is a party to a free
trade agreement with the United States that is in effect on December
20, 2006, or that enters into force under the Bipartisan Trade
Promotion Authority Act of 2002 (19 U.S.C. 3801 et seq.); and
(3) The designated beneficiary countries listed in General Notes 11
(Andean Trade Preference Act), 16 (African Growth and Opportunity Act),
and 17 (Caribbean Basin Trade Partnership Act) of the HTSUS.
(d) Cost or value of materials--(1) Materials produced in Haiti or
one or more eligible countries described in paragraph (c) of this
section defined--(i) Certain apparel articles. As used in paragraph (a)
of this section, the words ``materials produced in Haiti or one or more
eligible countries described in paragraph (c) of this section'' refer
to those materials incorporated into an article that are either:
(A) Wholly obtained or produced, within the meaning of Sec.
102.1(g) of this chapter, in Haiti or one or more eligible countries
described in paragraph (c) of this section; or
(B) Determined to originate in Haiti or one or more eligible
countries described in paragraph (c) of this section by application of
the provisions of Sec. 102.21 of this chapter.
(ii) Wiring sets. As used in paragraph (b) of this section, the
words ``materials produced in Haiti or one or more eligible countries
described in paragraph (c) of this section'' refer to those materials
incorporated into an article that are either:
(A) Wholly the growth, product, or manufacture of Haiti or one or
more eligible countries described in paragraph (c) of this section; or
(B) Substantially transformed in Haiti or one or more eligible
countries described in paragraph (c) of this section into a new or
different article of commerce which is then used in Haiti in the
production of a new or different article of commerce that is imported
into the United States.
(2) Determination of cost or value of materials--(i) Costs
included. (A) For purposes of paragraphs (a) and (b) of this section,
and subject to paragraphs (d)(2)(i)(B) and (d)(2)(ii) of this section,
the cost or value of materials produced in Haiti or one or more
eligible countries described in paragraph (c) of this section includes:
(1) The manufacturer's actual cost for the materials;
(2) When not included in the manufacturer's actual cost for the
materials, the freight, insurance, packing, and all other costs
incurred in transporting the materials to the manufacturer's plant;
(3) The actual cost of waste or spoilage, less the value of
recoverable scrap; and
(4) Taxes and/or duties imposed on the materials by Haiti or one or
more eligible countries described in paragraph (c) of this section,
provided they are not remitted upon exportation.
(B) Where a material is provided to the manufacturer without
charge, or at less than fair market value, its cost or value will be
determined by computing the sum of:
(1) All expenses incurred in the growth, production, or manufacture
of the material, including general expenses;
(2) An amount for profit; and
(3) Freight, insurance, packing, and all other costs incurred in
transporting the material to the manufacturer's plant.
(ii) Costs deducted in regard to certain apparel articles. For
purposes of paragraph (a) of this section, in calculating the cost or
value of materials produced in Haiti or one or more eligible countries
described in paragraph (c) of this section, either in regard to
individual entries or entries entered in the aggregate, deductions are
to be made for the cost or value of:
(A) Any foreign materials used in the production of the apparel
articles in Haiti; and
(B) Any foreign materials used in the production of the materials
produced in Haiti or one or more eligible countries described in
paragraph (c) of this section.
(e) Direct costs of processing operations--(1) Items included. As
used in paragraphs (a) and (b) of this section, the words ``direct
costs of processing operations'' mean those costs either directly
incurred in, or which can be reasonably allocated to, the growth,
production, manufacture, or assembly of the specific articles under
consideration. Such costs include, but are not limited to the
following, to the extent that they are includable in the appraised
value of the imported articles:
(i) All actual labor costs involved in the growth, production,
manufacture, or assembly of the specific articles, including fringe
benefits, on-the-job training, and the cost of engineering,
supervisory, quality control, and similar personnel;
(ii) Dies, molds, tooling, and depreciation on machinery and
equipment which are allocable to the specific articles;
(iii) Research, development, design, engineering, and blueprint
costs insofar as they are allocable to the specific articles; and
(iv) Costs of inspecting and testing the specific articles.
(2) Items not included. The words ``direct costs of processing
operations'' do not include items that are not directly attributable to
the articles under consideration or are not costs of manufacturing the
product. These include, but are not limited to:
(i) Profit; and
(ii) General expenses of doing business that either are not
allocable to the specific articles or are not related to the growth,
production, manufacture, or assembly of the articles, such as
administrative salaries, casualty and liability insurance, advertising,
and salesmen's salaries, commissions, or expenses.
[[Page 34374]]
Sec. 10.845 Retroactive application of duty-free treatment for
certain apparel articles.
(a) General. Notwithstanding 19 U.S.C. 1514 or any other provision
of law, if apparel articles, as described in Sec. 10.843(a) of this
subpart, of a producer or entity controlling production are ineligible
for duty-free treatment in an applicable one-year period because the
apparel articles of the producer or entity controlling production did
not meet the requirements of Sec. 10.843(a) of this subpart or the
applicable value-content requirement set forth in Sec. 10.844(a) of
this subpart, and the apparel articles of the producer or entity
controlling production satisfy the increased value-content percentage
set forth in Sec. 10.844(a)(4)(iii) of this subpart in that same
applicable one-year period, the entry of any such articles made during
that applicable one-year period will be liquidated or reliquidated free
of duty, and CBP will refund any customs duties paid with respect to
such entry, with interest accrued from the date of entry, provided that
the conditions and requirements set forth in paragraph (b) of this
section are met.
(b) Conditions and requirements. The conditions and requirements
referred to in paragraph (a) of this section are as follows:
(1) The articles in such entry would have received duty-free
treatment if they had satisfied the requirements of Sec. 10.843(a) and
the applicable value-content requirement set forth in Sec. 10.844(a)
of this subpart;
(2) A declaration of compliance with the increased value-content
percentage is submitted to CBP within 30 days following the end of the
applicable one-year period during which the increased percentage is met
(see Sec. 10.844(a)(4)(v) of this subpart); and
(3) A request for liquidation or reliquidation with respect to such
entry is filed with CBP before the 90th day after CBP determines and
notifies the importer that the apparel articles of the producer or
entity controlling production satisfy the increased value-content
percentage set forth in Sec. 10.844(a)(4)(iii) of this subpart during
that applicable one-year period.
Example. A Haitian producer of articles that meet the
description in Sec. 10.843(a) of this subpart begins exporting
those articles to the United States during the initial applicable
one-year period and elects to use the annual aggregation method for
purposes of meeting the applicable value-content requirement. The
articles entered during that initial period meet a value-content
percentage of 48%, while articles entered during the second
applicable one-year period meet a value-content percentage of 62%.
The producer's articles may not receive duty-free treatment during
the initial applicable one-year period because the requisite 50%
value-content requirement was not met. The producer's articles also
are ineligible for duty-free treatment during the second applicable
one-year period because the 50% value-content requirement was not
met in the immediately preceding period (the initial applicable one-
year period). However, because the producer's articles entered
during the second applicable one-year period satisfy the increased
value-content percentage requirement (60%), the importer(s) of these
articles may file a request for and receive a refund of the duties
paid with respect to the articles entered during that period,
assuming compliance with the conditions and requirements set forth
in Sec. 10.847 of this subpart. In addition, the producer's
articles entered during the third applicable one-year period are
eligible for duty-free treatment based on compliance with the
increased value-content percentage in the second applicable one-year
period.
Sec. 10.846 Imported directly.
(a) General. To be eligible for duty-free treatment under this
subpart, an article must be imported directly from Haiti into the
customs territory of the United States. For purposes of this
requirement, the words ``imported directly'' mean:
(1) Direct shipment from Haiti to the United States without passing
through the territory of any intermediate country;
(2) If shipment is from Haiti to the United States through the
territory of an intermediate country, the articles in the shipment do
not enter into the commerce of the intermediate country and the
invoices, bills of lading, and other shipping documents show the United
States as the final destination; or
(3) If shipment is through an intermediate country and the invoices
and other documents do not show the United States as the final
destination, the articles in the shipment are imported directly only if
they:
(i) Remained under the control of the customs authority in the
intermediate country;
(ii) Did not enter into the commerce of the intermediate country
except for the purpose of a sale other than at retail, provided that
the articles are imported as a result of the original commercial
transaction between the importer and the producer or the producer's
sales agent; and
(iii) Have not been subjected to operations other than loading and
unloading, and other activities necessary to preserve the articles in
good condition.
(b) Documentary evidence. An importer making a claim for duty-free
treatment under Sec. 10.847 of this subpart may be required to
demonstrate, to CBP's satisfaction, that the articles were ``imported
directly'' as that term is defined in paragraph (a) of this section. An
importer may demonstrate compliance with this section by submitting
documentary evidence. Such evidence may include, but is not limited to,
bills of lading, airway bills, packing lists, commercial invoices,
receiving and inventory records, and customs entry and exit documents.
Sec. 10.847 Filing of claim for duty-free treatment.
(a) General. An importer may make a claim for duty-free treatment
for an article described in Sec. 10.843 of this subpart by including
on the entry summary, or equivalent documentation, the applicable
subheading within Subchapter XX of Chapter 98 of the HTSUS under which
the article is classified, or by the method specified for equivalent
reporting via an authorized electronic data interchange system. The
applicable subheadings within Subchapter XX, Chapter 98, HTSUS, are as
follows:
(1) Subheading 9820.61.25 for apparel articles described in Sec.
10.843(a) of this subpart for which the individual entry method is used
for purposes of meeting the applicable value-content requirement set
forth in Sec. 10.844(a) of this subpart;
(2) Subheading 9820.61.30 for apparel articles described in Sec.
10.843(a) of this subpart for which the annual aggregation method is
used for purposes of meeting the applicable value-content requirement
set forth in Sec. 10.844(a) of this subpart;
(3) Subheading 9820.62.05 for woven apparel articles described in
Sec. 10.843(b) of this subpart;
(4) Subheading 9820.62.12 for brassieres described in Sec.
10.843(c) of this subpart; and
(5) Subheading 9820.85.44 for wiring sets described in Sec.
10.843(d) of this subpart.
(b) Restriction on claims submitted under subheading 9820.61.30,
HTSUS. An importer may make a claim for duty-free treatment under
subheading 9820.61.30, HTSUS, for apparel articles described in Sec.
10.843(a) of this subpart for which the annual aggregation method is
used, only if the importer has a copy of a certification by the
producer or entity controlling production setting forth its election to
use the annual aggregation method for its articles (see Sec.
10.848(c)(3) of this subpart). In the absence of receipt of such
certification from the producer or entity controlling production, an
importer of articles described in Sec. 10.843(a) of this subpart for
which duty-free treatment is sought under this subpart must enter the
[[Page 34375]]
articles under subheading 9820.61.25, HTSUS.
(c) Corrected claim. If, after making a claim for duty-free
treatment under paragraph (a) of this section, the importer has reason
to believe that the claim is incorrect, the importer must promptly make
a corrected claim and pay any duties that may be due. A corrected claim
will be effected by submission of a letter or other written statement
to the CBP port where the claim was originally filed.
Sec. 10.848 Declaration of compliance.
(a) General. Each importer claiming duty-free treatment for apparel
articles, as described in Sec. 10.843(a) of this subpart, of a
producer or entity controlling production that uses the annual
aggregation method to satisfy the applicable value-content requirement
set forth in Sec. 10.844(a) of this subpart with respect to the
entries filed by the importer during an applicable one-year period must
prepare and submit to CBP a declaration of compliance with the
applicable value-content requirement within 30 days following the end
of the applicable one-year period. An importer that is required to
submit a declaration of compliance under this paragraph must submit
such a declaration for each importer of record identification number
used by that importer. The declaration of compliance must be sent to:
Office of International Trade, 1300 Pennsylvania Avenue, NW.,
Washington, DC 20229.
(b) Effect of noncompliance--(1) Initial applicable one-year
period. If an importer fails to submit to CBP the declaration of
compliance required under paragraph (a) of this section within 30 days
following the end of the initial applicable one-year period, CBP may
deny duty-free treatment to all entries of apparel articles, as
described in Sec. 10.843(a), of that producer or entity controlling
production that were filed by that importer during the initial
applicable one-year period and that are entered by that importer during
the next succeeding applicable one-year period.
(2) Other applicable one-year periods. If an importer fails to
submit to CBP the declaration of compliance required by paragraph (a)
of this section within 30 days following the end of any applicable one-
year period (other than the initial applicable one-year period), CBP
may deny duty-free treatment to all entries of apparel articles, as
described in Sec. 10.843(a) of this subpart, of that producer or
entity controlling production that are entered by that importer during
the next succeeding applicable one-year period.
(c) Contents. A declaration of compliance submitted to CBP under
paragraph (a) of this section:
(1) Need not be in a prescribed format but must be in writing or
must be transmitted electronically pursuant to any electronic means
authorized by CBP for that purpose;
(2) Must include the following information:
(i) The applicable one-year period during which the aggregation
method was used (year beginning December 20, 20--, year ending December
19, 20--);
(ii) The legal name, address, telephone, fax number, e-mail address
(if any), and identification number of the importer of record, and the
legal name, telephone, and e-mail address (if any) of the point of
contact;
(iii) With respect to each entry for which duty-free treatment is
claimed for apparel articles described in Sec. 10.843(a) of this
subpart and for which the aggregation method is used, the entry number,
line number(s), port of entry, and line value;
(iv) If the producer or entity controlling production elects to
include in the aggregation calculation entries of brassieres receiving
duty-free treatment under Sec. 10.843(c) of this subpart and entries
of apparel articles that are wholly assembled or knit-to-shape in Haiti
and that are receiving preferential tariff treatment under any
provision of law other than section 213A of the CBERA or are subject to
the rate of duty in the ``General'' subcolumn of column 1 of the HTSUS
(see Sec. 10.844(a)(2)(iii)(B) and (C) of this subpart), the entry
number, line number(s), port of entry, line value, name and address of
the producer(s), and, if applicable, name and address of the entity
controlling production;
(v) The value-content percentage that was met during the applicable
one-year period with respect to each producer or entity controlling
production;
(vi) The name and title of the person who prepared the declaration
of compliance. The declaration must be prepared and signed by a
responsible official of the importer or by the importer's authorized
agent having knowledge of the relevant facts;
(vii) Signature of the person who prepared the declaration of
compliance; and
(viii) Date the declaration of compliance was prepared and signed;
and
(3) Must include as an attachment to the declaration a copy of a
certification from each producer or entity controlling production
setting forth its election to use the annual aggregation method, a
description of the classes or kinds of apparel articles involved, and
the name and address of each producer or entity controlling production.
Sec. 10.849 Importer obligations.
(a) General. An importer who makes a claim for duty-free treatment
under Sec. 10.847 of this subpart for an article described in Sec.
10.843 of this subpart:
(1) Will be deemed to have certified that the article is eligible
for duty-free treatment under this subpart;
(2) Is responsible for the truthfulness of the statements and
information contained in the declaration of compliance, if that
document is required to be submitted to CBP pursuant to Sec. Sec.
10.844(a)(4)(v) or 10.848(a) of this subpart; and
(3) Is responsible for submitting any supporting documents
requested by CBP and for the truthfulness of the information contained
in those documents. When requested, CBP may arrange for the direct
submission by the exporter, producer, or entity controlling production
of business confidential or other sensitive information, including cost
and sourcing information.
(b) Information provided by exporter, producer, or entity
controlling production. The fact that the importer has made a claim for
duty-free treatment or prepared a declaration of compliance based on
information provided by an exporter, producer, or entity controlling
production will not relieve the importer of the responsibility referred
to in paragraph (a) of this section.
Sec. 10.850 Verification of claim for duty-free treatment.
(a) General. A claim for duty-free treatment made under Sec.
10.847 of this subpart, including any declaration of compliance or
other information submitted to CBP in support of the claim, will be
subject to whatever verification CBP deems necessary. In the event that
CBP is provided with insufficient information to verify or substantiate
the claim, including the statements and information contained in a
declaration of compliance (if required under Sec. 10.844(a)(4)(v) or
Sec. 10.848(a) of this subpart), CBP may deny the claim for duty-free
treatment.
(b) Documentation and information subject to verification. A
verification of a claim for duty-free treatment under Sec. 10.847 of
this subpart 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, the producer, the entity controlling production,
or any other person under part 163 of this chapter; and
(2) The documentation and information set forth in paragraphs
[[Page 34376]]
(b)(2)(i) through (b)(2)(v) of this section, when requested by CBP.
This documentation and information may be made available to CBP by the
importer or the importer may arrange to have the documentation and
information made available to CBP directly by the exporter, producer,
or entity controlling production:
(i) Documentation and other information regarding all apparel
articles that meet the requirements specified in Sec. 10.843(a) of
this subpart that were exported to the United States and that were
entered during the applicable one-year period, whether or not a claim
for duty-free treatment was made under Sec. 10.847 of this subpart.
Those records and other information include, but are not limited to,
work orders and other production records, purchase orders, invoices,
bills of lading and other shipping documents;
(ii) Records to document the cost of all yarn, fabric, fabric
components, and knit-to-shape components that were used in the
production of the articles in question, such as purchase orders,
invoices, bills of lading and other shipping documents, and customs
import and clearance documents, work orders and other production
records, and inventory control records;
(iii) Records to document the direct costs of processing operations
performed in Haiti or one or more eligible countries described in Sec.
10.844(c) of this subpart, such as direct labor and fringe expenses,
machinery and tooling costs, factory expenses, and testing and
inspection expenses that were incurred in production;
(iv) Affidavits or statements of origin that certify who
manufactured the yarn, fabric, fabric components and knit-to-shape
components. The affidavit or statement of origin should include a
product description, name and address of the producer, and the date the
articles were produced. An affidavit for fabric components should state
whether or not subassembly operations occurred; and
(v) Summary accounting and financial records which relate to the
source records provided for in paragraphs (b)(2)(i) through (b)(2)(iii)
of this section.
PART 163--RECORDKEEPING
0
4. The authority citation for part 163 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510,
1624.
0
5. The Appendix to part 163 is amended by adding a new listing under
section IV in numerical order to read as follows:
Appendix to Part 163--Interim (a)(1)(A) list.
* * * * *
IV. * * *
Sec. 10.848 HOPE Act Declaration of Compliance.
* * * * *
PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS
0
6. The authority citation for part 178 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.
0
7. Section 178.2 is amended by adding new listings to the table in
numerical order to read as follows:
Sec. 178.2 Listing of OMB control numbers.
------------------------------------------------------------------------
OMB control
19 CFR section Description No.
------------------------------------------------------------------------
* * * * * * *
Sec. 10.847 and 10.848....... Claim for duty-free 1651
treatment under the
HOPE Act.
* * * * * * *
------------------------------------------------------------------------
Deborah J. Spero,
Acting Commissioner of Customs, Customs and Border Protection.
Approved: June 20, 2007.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 07-3101 Filed 6-20-07; 2:17 pm]
BILLING CODE 9111-14-P