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Transcript of Free Trade Agreements and Special Trade Programs Rick O’Connell Assistant Area Director, Trade JFK...
Free Trade Agreements and Special Trade Programs
Rick O’Connell
Assistant Area Director, Trade
JFK International Airport
Thursday, November 13, 2008
Reference Material - Websites www.ustr.gov – U.S. Trade Representative
www.usitc.gov – International Trade Commission
www.cbp.gov – U.S. Customs and Border Protection (click “Trade”, “Trade Programs”, then “International Agreements”
www.tradeagreements.gov – U.S. Government (Departments of Agriculture, Commerce, State, Treasury and the Office of the United States Trade Representative) interagency effort
www.otexa.itc.doc.gov – Office of Textiles and Apparel
Trade Agreement vs. Trade ProgramFree Trade Agreement
A reciprocal agreement between two or more parties
Broader provisions beyond Customs issues
Israel, Jordan, NAFTA, Chile, Singapore, Australia, Morocco, CAFTA-DR, Bahrain
Special Trade Program
A unilateral action on the part of the United States
US exporters do not receive benefits
GSP, ATPA/ATPDEA, CBERA/CBI, CBPTA, AGOA
FREE TRADE AGREEMENTS / SPECIAL TRADE PROGRAMS GENERAL NOTE SPI
African Growth and Opportunity Act (AGOA)GN 16 D
Andean Trade Preferences Act (ATPA) & Andean Trade Promotion and Drug Eradication Act (ATPDEA)
GN 11 J, J*, J+
Australia Free Trade Agreement (AFTA)GN 28 AU
Bahrain Free Trade Agreement (BFTA)GN 30 BH
Caribbean Basin Economic Recovery Act (CBERA) and Caribbean Basin Trade Partnership Act (CBTPA)
GN 7/ GN 17 E, E* & R
Central America – Dominican Republic Free Trade Agreement (CAFTA-DR)
GN 29 P, P+
Chile Free Trade Agreement (CFTA)GN 26 CL
Generalized System of Preferences (GSP)GN 4 A, A+, A*
Israel Free Trade Area, West Bank, Gaza Strip, Qualified Industrial Zones (ILFTA)
GN 8 IL, N (QIZ)
Jordan Free Trade Area (JFTA)GN 18 JO
Morocco Free Trade Agreement (MFTA)GN 27 MA
North American Free Trade Agreement (NAFTA)GN 12 CA, MX
Oman Free Trade Agreement None yet None yet
Singapore Free Trade Agreement (SFTA)GN 25 SG, 9999.00.84
(ISI provision)
1. Israel 9/1/85
The United States–Israel Free Trade Area Agreement (US-ILFTA) also affords preferential tariff treatment to goods manufactured by eligible companies in the Egyptian Qualifying Industrial Zones (QIZs) and the Jordanian QIZs.
a) Jordan QIZ 11/21/96 b) Egypt QIZ 12/29/04
2. NAFTA 1/1/94
3. Jordan 12/17/01
4. Chile 1/1/04
5. Singapore 1/1/04
6. Australia 1/1/05
7. Morocco 1/1/06
8. CAFTA-DR 3/1/06 El Salvador; 4/1/06 Honduras, Nicaragua; 7/1/06 Guatemala; 3/1/07 Dominican Republic
9. Bahrain 8/1/06
Current Free Trade Agreements (FTAs)
CAFTA-DR (Costa Rica)
Peru
Oman
Colombia
Panama
South Korea
Ecuador
Malaysia
Thailand
United Arab Emirates
Free Trade Area of the Americas (FTAA) - Efforts to integrate the Western Hemisphere into a free trade area of the region’s 34 democracies
Southern African Customs Union (SACU) – Botswana, Lesotho, Namibia, South Africa and Swaziland
Egypt
Vietnam
Potential &/or Future FTAs
New FTAs based on NAFTA and GSP – each has a dedicated note in the HTS
FTAs not “free” but preferential
Concrete obligations for the importer regarding customs procedures
Commitment to publish laws and regulations on the Internet
The rules are not identical and can only be applied to the respective agreements.
Free Trade Agreement Overview
What is a Rule of Origin?
Wholly Obtained
Product Specific Rules of Origin Tariff Shift (based on international nomenclature,
transparent and not subjective)
Regional Value Content (RVC)
Exclusively from Originating Materials
De Minimis
Current Agreements based on the NAFTA model: Singapore, Chile, Australia and CAFTA-DR
Rules of OriginThe NAFTA Model
Preference Criterion
A good must be “more than” a product of a Party country, it must meet a preference rule of origin
The general rules incorporate different methods for determining origin
An imported good must be “originating” per the general rules of the agreement in order to receive preferential treatment
General Rules of Origin
A good must be “more than” a product of a Party country, it must meet the rules of origin
Wholly Obtained (same principle as found in NAFTA model)
Substantial Transformation + 35% Value Added
Tariff Shift (same principle as found in NAFTA model) Present only in new trade agreements
Imported Directly
Deemed Certification and Declaration Current Agreements based on the GSP model: Israel FTA, Egypt QIZ,
Jordan QIZ, Jordan FTA, Morocco FTA, Bahrain FTA
Rules of OriginThe GSP Model
Objectives
An importer making a claim for preference is deemed to have certified that the goods qualify
Importer must be prepared to submit a signed declaration Description of the good, invoice numbers, quantity Description of operations performed identifying direct cost
of processing Description of materials and value Description of any applicable change in tariff classification
* The concept is not found in NAFTA
Deemed Certification & Declaration
A claim is essentially an assertion by the importer that the good is originating according to the rules of the agreement, based on: Certification, Supporting Statement or Declaration in the
importer’s possession; or Importer Knowledge
Claim is made by placing the Special Program Indicator field “SPI” on the entry summary
Making an FTA ClaimBasis for a Claim
Correspondence is with the importer
Importer should coordinate with the exporter/producer for submission of business confidential information directly to CBP
*NAFTA is an exporter focused agreement
Importer Focus
Certification, Supporting Statement or Declaration
Documents supporting production process, cost data, materials used in production
Information concerning the growth, production or manufacture
Affect of a Claim Based on Importer Knowledge CBP retains authority through the agreement to request
the necessary information to conduct a verification and make a determination
CBP may be required to ask specific detailed questions What preference criteria was used to qualify the good as
originating?
Requesting InformationWhat will CBP ask for?
Can be in any format
CBP requires certain data elements
Must be submitted upon request
May be submitted electronically
Certification/Statement/DeclarationImporter Requirement
Importer
Exporter
Producer
Description of Good
Classification
Data ElementsData Elements
Preference Criteria or Rule of Origin
Single Shipment
Multiple Shipment
Authorized Signature
Certification
For Wholly Obtained Evidence of origin of good and/or all materials used in production.
For Tariff Shift Qualifications Bill of Materials Affidavits of origin for originating materials Production records of finished goods Classification of all non-originating materials Demonstration of tariff shift
For RVC Requirements: Bill of Materials Invoices for all materials Affidavits of origin for originating materials Production records of finished goods Cost breakdown of all expenses related to the production of the good RVC calculation
Supporting Documentation Needed:
Post Entry
Supplemental Information Letters/Post Entry Amendments
19 USC 1514 for liquidated entries in which the entry date of the merchandise is after Dec. 18, 2004
Post Importation
19 USC 1520 (d) post-importation Only method available if provision is present in the
agreement
NAFTA, Chile, CAFTA-DR
Post-Entry Procedures
Comparison Chart Available on CBP.gov
Preferential Trade Agreements & Trade Programs Synopsis
(Non-Textile)
Trade Agreements Branch
Special Enforcement Division
Commercial Targeting and Enforcement
May 2007
General Notes Reference African Growth and Opportunity Act GN 16
Andean Trade Preferences Act & Andean Trade Promotion and Drug Eradication Act (ATPA/ATPDEA)
GN 11
Australia Free Trade Agreement (AFTA) GN 28
Bahrain Free Trade Agreement (BFTA) GN 30
Caribbean Basin Economic Recovery Act (CBERA) GN 7
Caribbean Basin Trade Partnership Act (CBTPA) GN 17
Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) GN 29
Chile Free Trade Agreement (CFTA) GN 26
Generalized System of Preferences (GSP) GN 4
Israel Free Trade Agreement (IFTA) GN 8
Jordan Free Trade Agreement (JFTA) GN 18
Morocco Free Trade Agreement (MFTA) GN 27
North American Free Trade Agreement (NAFTA) GN 12
Singapore Free Trade Agreement (SFTA) GN 25
Effective Date: 10/2/00
Expiration Date: 9/30/15
General Note in HTS: GN 16
Special Indicator in HTS: D
Regulation Cite: 19 CFR 10.178a
US Code: 19 USC 3706
Public Law: 106-200
AGOA References
AGOA SummaryReference General Note 16
SPI D
General Rules of Origin Wholly Obtained, 35% Value Added + Substantial Transformation
Value Content 15% of US cost & value may count towards 35%
Level of Documentation at Importation
Knowledge
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA, 19 USC 1514
MPF No exemption (but products of least-developed beneficiary developing countries General Note 4 (b)(i) are exempt )
Expiration Date: 06/30/07
General Note in HTS: GN 11
Special Indicator in HTS: J, J*, J+
Regulation Cite: 19 CFR 10.201 – 207 & 10.241 - 248
US Code: 19 USC 3201 - 3206
Public Law: 102-182
ATPA/ATPDEA References
ATPA/ATPDEA SummaryReference General Note 11
SPI J, J*, J+
General Rules of Origin (Preference Criteria)
Wholly Growth, 35% Value Added + Substantial Transformation
Regional Value Content 15% of US cost or value can be counted towards 35%
Level of Documentation at Importation
Knowledge (ATPA); CPB Form 449, Signed by the exporter (ATPDEA)
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA, 19 USC 1514
MPF No exemption
Australia Free Trade Agreement
Effective Date: 1/1/05
Expiration Date: None
General Note in HTS: GN 28
Special Indicator in HTS: AU
US Code: 19 USC 3805
Public Law: 108-286
Australia FTA SummaryReference General Note 28
SPI AU
General Rules of Origin (Preference Criteria)
Wholly Obtained, Tariff Shift &/or RVC, Exclusively from Originating Materials, Other Qualifying Method
Regional Value Content Build-up, Build-down, Net Cost
Level of Documentation at Importation
Freeform Statement (10 data elements); Importer Knowledge
Verification Notification Importer, At discretion may contact exporter
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Must support no further production occurred in a 3rd country
Post-Importations SIL/PEA or 19 USC 1514
MPF Exempt for Originating Goods
Effective Date: August 1, 2006
Expiration Date: None
General Note in HTS: GN 30
Special Indicator in HTS: BH
US Code: 19 USC 3805 note
Public Law: 109-169
Bahrain Free Trade Agreement
Bahrain FTA SummaryReference General Note 30
SPI BH
General Rules of Origin (Preference Criteria)
Wholly Growth, 35% Value Added + Substantial Transformation; Tariff Shift for specific goods
Value Content Unlimited US content towards meeting 35%
Level of Documentation at Importation
Supporting Declaration; Importer Knowledge
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA, 19 USC 1514
MPF Exempt for originating goods
Effective Date: 10/2/00
Expiration Date: N/A
General Note in HTS: GN 7
Special Indicator in HTS: E, E*
Regulation Cite: 19 CFR 10.191 - 199
US Code: 19 USC 2701 - 2706
Public Law: 98-67
Caribbean Basin Economic Recovery Act
CBERA SummaryReference General Note 7
SPI E, E*
General Rules of Origin (Preference Criteria)
Wholly Growth, 35% Value Added + Substantial Transformation
Value Content 15% of US cost or value can be counted towards 35%
Level of Documentation at Importation
Knowledge
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA, 19 USC 1514
MPF Exempt for all goods, whether or not they are originating
Expiration Date: 9/30/08
General Note in HTS: GN 17
Special Indicator in HTS: R
Regulation Cite: 19 CFR 10.231 - 237
US Code: 19 USC 2701 - 2707
Public Law: 106-200
Caribbean Basin Trade Preferences Act
CBTPA SummaryReference General Note 17
SPI R
General Rules of Origin (Preference Criteria)
Wholly Obtained, Good originates according to the NAFTA rules of origin
Regional Value Content If applicable per GN 12
Level of Documentation at Importation
CPB Form 450, Signed by the exporter
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA, 19 USC 1514
MPF Exempt for all goods, whether or not they are originating
Central America-Dominican Republic Free Trade Agreement
Effective Dates: 3/1/06 (El Salvador)
4/1/06 (Nicaragua & Honduras)
7/1/06 (Guatemala)
Expiration Date: None
General Note in HTS: GN 29
Special Indicator in HTS: P, P+
US Code: 19 USC 4001 note
Public Law: 109-53
CBI/CBERA/CBTPA/CAFTA-DR Comparison
Caribbean Basin Initiative (CBI)
Caribbean Basin Economic Recovery Act (CBERA)
Caribbean Basin Trade Partnership Act (CBTPA)
Central America-Dom. Rep. Free Trade Agreement (CAFTA-DR)*
Program providing duty free treatment of certain goods
Act that implemented CBI
Expands CBERA benefits to previously excluded articles applying NAFTA rules of origin & tariffs
Reciprocal trade agreement between the US and Central American countries
Countries listed in GN 7(a)
Countries listed in GN 17(a)
Costa Rica, Guatemala, Honduras, El Salvador, Nicaragua, Dominican Republic
SPI “E” or “E*” SPI “R” SPI “P” or “P+”
* CAFTA amends certain provisions of CBERA/CBTPA
CAFTA-DR SummaryReference General Note 29
SPI P, P+
General Rules of Origin (Preference Criteria)
Wholly Obtained, Tariff Shift &/or RVC, Exclusively from Originating Materials; [Qualifying Goods]
Regional Value Content Build-up, Build-down, Net Cost
Level of Documentation at Importation
Freeform Certification (10 data elements); Importer Knowledge
Verification Notification Importer, At discretion may contact exporter
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment No further production; must stay under Customs control
Post-Importations 19 USC 1520(d)
MPF Exempt for Originating Goods & Qualifying Goods
* Imports from CAFTA countries will lose GSP, CBERA & CBTPA eligibility upon implementation of FTA
Chile Free Trade AgreementEffective Date: 1/1/04
Expiration Date: None
General Note in HTS: GN 26
Special Indicator in HTS: CL
Regulation Cite: 19 CFR 10.400 et. seq.
US Code: 19 USC 3805 Note
Public Law: 108-77
Chile FTA SummaryReference General Note 26
SPI CL
General Rules of Origin (Preference Criteria)
Wholly Obtained, Tariff Shift &/or RVC, Exclusively of Originating Materials
Regional Value Content Build-up, Build-down
Level of Documentation at Importation
Freeform Certification (10 data elements); Sufficient Knowledge
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Must support no further production occurred in a 3rd country
Post-Importations 19 USC 1520(d)
MPF Exempt for Originating Goods
* Imports from Chile lost GSP eligibility upon implementation of FTA (Jan 1, 2004)
Effective Date: 1/1/76
Expiration Date: 12/31/08
General Note in HTS: GN 4
Special Indicator in HTS: A, A+, A*
Regulation Cite: 19 CFR 10.171 – 178a
US Code: 19 USC 2461 - 2467
Generalized System of Preferences
GSP SummaryReference General Note 4
SPI A, A+, A*
General Rules of Origin (Preference Criteria)
Wholly Obtained, 35% Value Added + Substantial Transformation
Value Content US cost and value may NOT count towards 35%
Level of Documentation at Importation
Knowledge (Form A no longer required)
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA, 19 USC 1514
MPF Exempt for products of least-developed beneficiary developing countries regardless of whether a claim is made
Israel Free Trade AgreementEffective Date: 9/1/85
Expiration Date: None
General Note in HTS: GN 8
Special Indicator in HTS: IL
US Code: 19 USC 2112
Public Law: 99-47
Israel FTA SummaryReference General Note 8
SPI IL
General Rules of Origin (Preference Criteria)
Wholly Growth, 35% Value Added + Substantial Transformation
Value Content 15% of US cost or value can be counted towards 35%
Level of Documentation at Importation
Knowledge, Form A (optional)
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA, 19 USC 1514
MPF Exempt for all products, whether or not originating
Qualified Industrial Zone (QIZ)
Extension of ILFTA benefits to goods produced in designated regions outside of Israel
Company must be approved by Joint Committees
Separate requirements for inputs regulated by Joint Committees
Imported goods must meet the 35% value added + substantial transformation and imported directly requirement to receive benefits
QIZ General Information
Jordan Qualified Industrial Zone (QIZ)
Effective Date: 11/21/96
Expiration Date: None
General Note in HTS: GN 3(a)(v) & GSN 3(d)
Special Indicator in HTS: IL in HTS, N on 7501
Jordan QIZ SummaryReference General Note 8 and 3(a)(v), General Statistical Note 3(d)
SPI IL in HTS, but N on 7501
General Rules of Origin (Preference Criteria)
Wholly Growth, 35% Value Added + Substantial Transformation
Value Content 15% of US cost or value can be counted towards 35%
Level of Documentation at Importation
Knowledge
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Direct Shipment
Post-Importations SIL/PEA, 19 USC 1514
MPF No exemption
Egypt Qualified Industrial Zone (QIZ)
Effective Date: 12/29/04
Expiration Date: None
General Note in HTS: GN 3(a)(v) & GN 3(d)
Special Indicator in HTS: IL in HTS, N on 7501
US-Israel Free Trade Area Implementation Act: 69 FR 78094
Eligible company list at: Egypt Ministry of Foreign Trade and Industry Website (www.qizegypt.gov.eg)
Egypt QIZ SummaryReference General Note 8 and 3(a)(v), General Statistical Note 3(d)
SPI IL in HTS, but N on 7501
General Rules of Origin (Preference Criteria)
Wholly Growth, 35% Value Added + Substantial Transformation
Value Content 15% of US cost or value can be counted towards 35%
Level of Documentation at Importation
Knowledge
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Direct Shipment
Post-Importations SIL/PEA, 19 USC 1514
MPF No exemption
Effective Date: 12/17/01
Expiration Date: None
General Note in HTS: GN 18
Special Indicator in HTS: JO
US Code: 19 USC 2112
Public Law: 107-43
Jordan Free Trade Agreement
Jordan FTA SummaryReference General Note 18
SPI JO
General Rules of Origin (Preference Criteria)
Wholly Growth, 35% Value Added + Substantial Transformation
Value Content 15% of US cost or value can be counted towards 35%
Level of Documentation at Importation
Knowledge
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA, 19 USC 1514
MPF No exemption
Effective Date: 1/1/06
Expiration Date: None
General Note in HTS: GN 27
Special Indicator in HTS: MA
US Code: 19 USC 3805 note
Public Law: 108-302
Morocco Free Trade Agreement
Morocco FTA SummaryReference General Note 27
SPI MA
General Rules of Origin (Preference Criteria)
Wholly Obtained, Substantial Transformation + 35% Valued Added, Tariff Shift
Value Content Unlimited US content towards meeting 35%
Level of Documentation at Importation
Freeform Declaration (10 data elements); Deemed Certification
Verification Notification Importer
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Imported Directly
Post-Importations SIL/PEA or 19 USC 1514
MPF No Exemption
* Imports from Morocco lost GSP eligibility upon implementation of FTA
North American Free Trade Agreement
Effective Date: 1/1/94
Expiration Date: None
General Note in HTS: GN 12
Special Indicator in HTS: CA / MX
Regulation Cite: 19 CFR 181
US Code: 19 USC 3301 - 3473
Public Law: 103-182
NAFTA SummaryReference General Note 12
SPI MX, CA
General Rules of Origin (Preference Criteria)
Wholly Obtained, Tariff Shift &/or RVC, Wholly of Originating Materials, Exception to Tariff Shift, IT goods
Regional Value Content Transaction Value, Net Cost
Level of Documentation at Importation
Certificate of Origin, CBP Form 434; Alternate CBP Form 434; Computer Generated CBP Form 434
Verification Notification Exporter (Importer must provide C/O prior to verification)
Determination Notification Exporter, Negative Determination issued to Importer
Post-Importations 19 USC 1520(d)
MPF Exempt for Originating Goods
Singapore Free Trade Agreement
Effective Date: 1/1/04
Expiration Date: None
General Note in HTS: GN 25
Special Indicator in HTS: SG
US Code: 19 USC 3805 Note
Public Law: 108-78
Singapore FTA SummaryReference General Note 25
SPI SG
General Rules of Origin Wholly Obtained, Tariff Shift &/or RVC, Integrated Sourcing Initiative
Regional Value Content Build-up, Build-down
Level of Documentation at Importation
Freeform Statement (10 data elements); Importer Knowledge
Verification Notification Importer, At discretion may contact exporter
Determination Notification Importer, Exporter if provided documentation to CBP
Transit/Transshipment Must support no further production occurred in a 3rd country
Post-Importations SIL/PEA or 19 USC 1514
MPF Exempt for Originating Goods and ISI Goods