Update on the Presidential Proclamation Implementing the U.S.-Bahrain FTA

This is Part II of a two-part series of BP summaries on the Proclamation, and highlights its Annexes I and II. (See ITT's Online Archives or 07/31/06 news, 06073105, for Part I of BP's two-part summary of this proclamation.)

August 1, 2006 Changes Made by Annex I

According to the Proclamation, the BFTA and the changes described in Annex I are in effect for goods entered, or withdrawn from warehouse, for consumption on or after August 1, 2006.

New HTS General Note 30. The Harmonized Tariff Schedule of the United States has been modified to include a new General Note 30. This note describes the requirements for goods to be considered originating under the BFTA, provides definitions of terms, and information on valuation and rules of origin. In addition, Annex I indicates that the HTS "Special" subcolumn symbol for the BFTA is "BH".

Explanations and definitions. Included in General Note 30 are explanations of the following terms for purposes of the note (partial list):

General Note 30 also contains special rules for textile and apparel articles (the 7% weight rule for goods that would otherwise be considered non-originating, and the 10% value rule for retail sets that would otherwise be considered non-originating).

Also described in General Note 30 are the following:

value of materials

packaging and packing materials and containers for retail sale and for shipment

cumulation

indirect materials

interpretation of rules of origin

Tariff shift rules. General Note 30 also contains the BFTA change in tariff-classification rules of origin (used, and sometimes subject to other rules, to determine whether a good is considered originating for purposes of receiving BFTA preferential treatment). The requirement for a change in tariff classification only applies to nonoriginating material.

New HTS Chapter 99, Subchapter XIV. A new Subchapter XIV, with 13 U.S. Notes, is added to Chapter 99, which among other things, establishes a tariff preference level (TPL) and tariff rate quotas (TRQs) for certain BFTA originating goods in HTS 9914, as follows:

TPL for certain textiles and apparel. HTS 9914.90.20 provides a "low duty" TPL of 27,083,333 square meters equivalent (SME) for the period August 1, 2006 through December 31, 2006, and a "low duty" TPL of 65 million SME for each calendar year from 2007 through 2015. 9914.90.20 applies to multiple classifications of textile and apparel goods, as provided in U.S. Note 13 to Subchapter XIV.

TRQs. Certain "low duty" annual TRQ quantities are in place through 2014, as specified in U.S. Note 4 through 12 to Subchapter XIV. These provisions, and their corresponding Chapter 2 - 52 HTS provisions, are as follows:

Bahrain No Longer a GSP Country. HTS General Note 4 and the corresponding HTS Chapter 1-97 numbers are amended to reflect the fact that Bahrain is no longer eligible to receive the benefits of the Generalized System of Preferences (GSP) program. (Although Annex I does not list this change, the Proclamation does.)

BFTA and earlier FTAs - General Note 1. Technical amendments are made to General Note 1, which is entitled "Tariff Treatment of Imported Goods and Vessel Equipments, Parts and Repairs", to reflect the addition of new General Notes for the Singapore FTA, Australia FTA, Morocco FTA, and DR-CAFTA. (A similar technical amendment is listed in Annex I for the Bahrain FTA, that is not reflected in the HTS.)

Duty-free Treatment for Singapore Apparel of Certain Yarns/Fabrics. The text of U.S. Note 2 to Subchapter XXII, HTS Chapter 98, is designated as subdivision (a) and a new subdivision (b) is inserted in order to extend SFTA duty-free treatment under 9822.01.25 to apparel articles made in Singapore, regardless of the source of the listed yarn/fabric inputs, for (1) apparel of certain micro modal fibers and U.S. pima cotton, (2) apparel of certain woven cotton flannel fabrics, (3) blouses of certain woven cotton shirting fabrics, and (4) apparel of certain micro-denier, solution-dyed, open-end spun viscose yarn. These yarn and fabric inputs have been found to be commercially unavailable under the African Growth and Opportunity Act (AGOA), the Caribbean Basin Trade Partnership Act (CBTPA), and/or the Andean Trade Promotion and Drug Eradication Act (ATPDEA). (See ITT's Online Archives or 06/23/05 news, 05062335 for BP summary.)

August 1, 2006 and Other Changes Made by Annex II

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

Immediate Zero Duty Rates. Annex II lists the HTS Chapter 1-98 tariff numbers that are duty-free immediately if they qualify under the terms of the BFTA. For these tariff numbers, the column 1 rate of duty "Special" subcolumn will have the symbol "BH" along with the duty rate of "Free".

Staged BFTA Duty Reductions. The BFTA staged duty reductions (to zero) are listed for each affected HTS Chapter 2-99 eight-digit tariff number. The staged duty reductions take effect annually beginning August 1, 2006 and January 1 of subsequent years variously (until 2015 at the latest), depending on the tariff number's phase-out schedule. By December 31, 2015, all of these tariff numbers should be free of duty under the BFTA.

BFTA TRQs. Annex II also lists the HTS Chapter 2-52 tariff numbers eligible for "low duty" TRQs (see above for this list), and indicates that their duty rates will be zero under the terms of HTS General Note 30, effective January 1, 2016, no matter what quantity entered.

(The BFTA is also abbreviated as the UBFTA.)

Presidential Proclamation 8039, FR Pub 08/01/06, available at http://a257.g.akamaitech.net/7/257/2422/01aug20061200/edocket.access.gpo.gov/2006/pdf/06-6651.pdf

Proclamation 8039's Annexes (ITC publication 3830, dated July 2006) available athttp://www.usitc.gov/tata/hts/other/rel_doc/annex/pub3830.pdf