Details of the Proclamation Implementing the DR-CAFTA for El Salvador (Part IV)

According to the Proclamation, the DR-CAFTA for El Salvador is generally in effect for goods entered, or withdrawn from warehouse, for consumption on or after March 1, 2006.

This is Part IV of a multi-part series of BP summaries of Proclamation 7987, and highlights some of the March 1, 2006 provisions in Annex I. See future issues of ITT for BP summaries highlighting the remaining provisions in Annexes I and II. (See ITT's Online Archives or 03/02/06, 03/10/06, and 03/13/06 news, 06030200, 06031005, and 06031310, for Parts I-III.)

Highlights of March 1, 2006 Changes Made by Annex I (continued)

According to Annex I, the following changes are effective with respect to goods entered, or withdrawn from warehouse, for consumption on or after March 1, 2006 (partial list):

New General Note 29 (CAFTA-DR)

Annex I contains a new General Note 29, highlights of which are provided below. (See Part III for previously summarized aspects of new General Note 29).

Claims for preferential treatment. An importer may make a claim for the tariff and other treatment provided for under the terms of General Note 29 based on either (a) a written or electronic certification by the importer, exporter, or producer; or (b) the importer's knowledge that the good is an originating good, including reasonable reliance on information in the importer's possession that the good is an originating good; in such form and manner as may be required in applicable regulations.

Recordkeeping requirements. An importer of a good, for which entry is claimed under the terms of General Note 29, shall maintain, for a minimum of five years from the date of importation of the good, all records and documents necessary to demonstrate that the good qualified for the tariff and other treatment provided for under the terms of this note, in such form and manner as may be required in applicable regulations.

Verification. For purposes of determining whether a good imported into the customs territory of the U.S. from the territory of another party to the CAFTA-DR qualifies as an originating good under the provisions of General Note 29, the appropriate Customs officer may conduct a verification as set for the in pertinent regulations.

(See ITT's Online Archives or 03/08/06 and 03/13/06 news, 06030805 and 06031305, for BP summaries of CBP's CAFTA-DR implementation instructions, which provide details on claims for preferential treatment, recordkeeping requirements, and verification.)

Interpretation and application of DR-CAFTA tariff shift/other rules of origin. General Note 29(m) contains information on interpreting and applying the DR-CAFTA change in tariff classification rules (including tariff shift rules) found in General Note 29(n), as well as certain other origin rules, as follows:

(For purposes of General Note 29(m) and (n), a tariff provision is a "heading" if its article description is not indented; a provision is a "subheading" if it is designated by 6 digits under the Harmonized System; and the terms "chapter" and "section" refer to a chapter or section, respectively, of the tariff schedule.)

Non-originating materials. General Note 29(m) states that unless otherwise specified, the requirements of any rule in General Note 29(n) that is set out adjacent to a heading or subheading of the HTS and specifies a change in tariff classification applies only to nonoriginating materials.

Specific rules that exclude tariff provisions. Where a specific rule in General Note 29(n) is defined using the criterion of a change in tariff classification, and the rule is written to exclude tariff provisions at the level of a chapter, heading or subheading of the HTS, such rule shall be construed to require that materials classified in those excluded provisions be originating for the good to qualify as originating.

Heading or subheading subject to alternative specific rules. When a heading or subheading of the HTS is subject to alternative specific rules in General Note 29(n), the rule will be considered to be met if a good satisfies one of the alternatives.

Single rule applicable to a group of headings or subheadings. When a single rule is applicable to a group of headings or subheadings, and that rule of origin specifies a change of heading or subheading, the requirement shall be interpreted so that the change of heading or subheading may occur within a single heading or subheading or between headings or subheadings of the group. When, however, a rule refers to a change in heading or subheading "outside that group," such change in heading or subheading must occur from a heading or subheading that is outside the group of headings or subheadings set out in the rule.

References to weight for HTS Chapters 1-24. References to weight in the rules set forth the General Note 29(n) for goods provided for in HTS Chapters 1-24 are to dry weight, unless otherwise specified.

Agricultural or horticultural goods in HTS Chapters 6-14. For purposes of applying General Note 29(m) to goods of HTS Chapters 6-14, inclusive, agricultural and horticultural goods shall be treated as originating in the territory of a CAFTA-DR party even if grown from seeds, bulbs, rootstock, cuttings, grafts, shoots, buds or other live parts of plants imported from a country other than a CAFTA-DR party.

Origin conferring processes. For relevant products in the HTS Chapters (and headings) identified below, origin is conferred by certain processes, etc. (see GN 29(m)(vii)) for complete details). Notwithstanding this, a good is originating if it meets the applicable change in tariff classification rules specified in General Note 29(n). An outline of these HTS Chapters (and headings) and processes can be found below:

9822.05.01: textile goods of HTS Chapters 50-60. A textile good of HTS Chapters 50 through 60 and imported under HTS 9822.05.01 shall be considered originating if it is wholly formed in the territory of one or more CAFTA-DR parties from (a) one or more fibers and yarns listed in HTS Chapter 98, Subchapter XXII, U.S. Note 20; or (b) a combination of fibers and yarns listed in U.S. Note 20 and one or more fibers and yarns that originate under General Note 29(m)^1.

9822.05.01: apparel goods of HTS Chapters 61 or 62. An apparel good of HTS Chapter 61 or 62 and imported under HTS 9822.05.01 shall be considered originating if it is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of one or more CAFTA-DR parties, and if the fabric of the outer shell, exclusive of collars and cuffs where applicable, is wholly of (a) one or more fabrics listed in HTS Chapter 98, Subchapter XXII, U.S. Note 20; or (b) one or more fabrics formed in the territory of one or more of the CAFTA-DR parties from one or more of the yarns listed in U.S. Note 20; or (c) any combination of the fabrics referred to in (a) or (b) above, or one or more fabrics originating under General Note 29(m)².

9822.05.01: textile goods of HTS Chapters 63 or 64. A textile good of HTS Chapter 63 or 64 and imported under HTS 9822.05.01 shall be considered originating if it is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of one or more CAFTA-DR parties, if the component that determines the tariff classification of the good is wholly of (a) one or more fabrics listed in HTS Chapter 98, Subchapter XXII, U.S. Note 20; or (b) one or more fabrics formed in the territory of one or more of the CAFTA-DR parties from one or more of the yarns listed in U.S. Note 20; or (c) any combination of the fabrics referred to in (a) or (b) above, or one or more fabrics originating under General Note 29(m)².

Change in tariff-classification rules. New General Note 29(n) contains the CAFTA-DR change in tariff-classification rules, which include certain tariff shift rules as well as certain chapter, heading, and subheading rules.

¹ the originating fibers and yarns may contain up to 10% by weight of fibers or yarns that do not undergo an applicable change in tariff classification set out in General Note 29(n). Any elastomeric yarn contained in a textile good of HTS Chapters 50 through 60 must be formed in the territory of one or more of CAFTA-DR parties.

² the originating fabrics may contain up to 10% by weight of fibers or yarns that do not undergo an applicable change in tariff classification set out in General Note 29(n). Any elastomeric yarn contained in a fabric referred to in (a), (b), or (c) of this provision must be formed in the territory of one or more of CAFTA-DR parties.

Presidential Proclamation 7987 (FR Pub 03/02/06) available at http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-2084.pdf.

Annexes for CAFTA-DR Proclamation 7987 (USITC Publication 3829, dated 02/06, available at http://www.usitc.gov/tata/hts/other/rel_doc/annex/index.htm