CBP Issues its Colombia TPA Instructions, Including Origin Rule Get-Around
U.S. Customs and Border Protection issued its instructions for the U.S.-Colombia Trade Promotion Agreement (CTPA), which takes effect for qualifying goods entered or withdrawn from warehouse for consumption on or after May 15, 2012. The notice gives an overview of the CTPA rules of origin, as well as instructions for handling "WCO tariff number" discrepancies. CBP also provides information on its process for verifying importer claims, the SPI "CO", post-importation claims and protests, etc.
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Highlights of these instructions include the following (see CBP's notice for full details):
Origination. A CTPA originating good eligible for CTPA duty rates must meet the general and/or product specific rules of origin set out in General Note (GN) 34 and all other requirements of the CTPA.
Making a preference claim. A claim for CTPA preference may be made at time of entry summary via ACS or ACE by prefacing the HTS number of the applicable good on CBP Form 7501 with the Special Program Indicator (SPI "CO"). Post importation claims may also be made within one year of importation.
Transit and transshipment. Goods that undergo further production outside the territory of Colombia or the U.S., other than unloading, reloading or other processes to preserve the condition of the good or to transport the good to the territory of Colombia or the U.S., or goods that do not stay under customs control in the territory of a non-Party, will not be considered originating.
RVC calculation methods. For most goods that are subject to an RVC requirement, the Agreement provides for two calculation methods: (1) the build-up method based on the value of originating materials; and (2) the build-down method, based on the value of non-originating materials. For certain automotive goods, the net cost method, based on the production costs, must be used.
De minimis (non-textile). The CTPA has a 10 percent (by value) de minimis provision for most goods, with the exception of textiles in GN 34(d)(ii) and other goods listed in GN 34(e)(ii).
Fiber or yarn forward for yarn, fabric, apparel. Generally, for CTPA yarn, the fiber must originate in either the U.S. or Colombia. For CTPA fabric, the yarn must generally originate in either the U.S. or Colombia. However, cotton and man-made knit fabric are under fiber forward rules, meaning the fiber must originate in Colombia or the United States to qualify for preferential treatment. For apparel, generally yarn must originate in Colombia or the U.S. for apparel to qualify for CTPA tariff benefits.
De minimis (textiles). The CTPA has a 10 percent (by weight) de minimis provision for textile or apparel goods that are not originating (when certain fibers or yarns used in the production of the component that determines the classification do not undergo an applicable tariff change as set out in Annex I or GN 34(o). However, elastomeric yarn in the component of the good that determines tariff classification is required to be originating regardless of this rule.
Visible linings. Fabric used for visible linings in certain apparel, such as suits, coats and skirts, must be wholly formed and finished in a CTPA beneficiary country.
Short supply. Fibers, yarns or fabrics determined to be unavailable in commercial quantities in a timely manner among the Parties, will be listed in Chapter 98, subchapter XXII, U.S. Note 33. Importers making a short supply claim must use HTS number 9822.08.25 for textile and apparel goods in Chapters 42, 50 through 63 and 94. Importers are cautioned to check any updates on the Office of Textile and Apparel (OTEXA) website for the most recent list of allowable short supply inputs.
Ag quotas. For CTPA agricultural products subject to quantitative limits, the applicable HTS numbers are 9918.02.01, 9918.04.01, 9918.04.04, 9918.04.50, 9918.04.60, 9918.21.10, and 9918.24.10. These tariff rate quotas (TRQs) are addressed in separate CBP instructions, here.
Treatment of sets. Goods classified under GRI 3 as goods put up in sets for retail sale shall not be regarded as originating unless each good is originating or the total value of non-originating goods does not exceed 10 percent (textile) or 15% (non-textile) of the adjusted value.
MPF exemption. Originating goods are exempt from the Merchandise Processing Fee.
Correcting/unsupported claims. An importer making a false or unsupported preference claim must submit a correction within 30 days of discovery and pay all duties and fees due.
Certification. The importer may make a claim for preferential tariff treatment based on a written or electronic certification issued by the exporter or producer, or based on the importer's knowledge, including a reasonable reliance on information in his possession. The importer must submit, upon request by CBP, the certification and other information substantiating the preference claim. The importer is responsible for providing the substantiating documentation to CBP upon request, including that information provided to CBP directly by the exporter or producer.
TCRs based on 2002 HTS. Until revised tariff change rules (TCRs) are published for the CTPA (that take into account the World Customs Organization's 2007 and 2012 HS changes), importers of affected goods should classify both the good and its materials in accordance with the 2002 HTS when performing TCR analysis. In addition, the certification should indicate both the current and 2002 HTS numbers used to perform the TCR analysis. ITC's online 2002 HTS available here.
Verification by CBP. Under the CTPA, the importer is responsible for substantiating the validity of a preference claim, which may be based on a certification, other documentation, or the importer's knowledge. CBP will initiate a verification via a CBP Form 28, Request for information, to the importer. (See notice for list of information CBP requires in such a verification check, including, flow charts on manufacturing process, bill of materials, purchase orders, etc.). CBP notes that the producer may elect to provide this information directly to CBP to protect its confidentiality, and that verification visits to the producer may occur. CBP's verification determinations (either positive or negative) will be issued on the CBP Form 29, Notice of Determination (Proposed). Negative final CBP Form 29 determinations regarding origin are protestable.
(See ITT's Online Archives 12051628 for summary of CBP announcing that ACS and ACE are programmed for the CTPA and that the HS update for it has been issued. See ITT's Online Archives 12051815 for summary of Proclamation 8818 on the CTPA.)
ITC Report 4320 (May 2012) available here.
CTPA Proclamation (FR Pub 05/18/12) available here.