CBP's Interim Rule on the U.S.-Singapore FTA (Part IV - Originating Goods and Verifications)

Comments must be received by August 10, 2007.

This is Part IV of a multi-part series of summaries on CBP's interim rule regarding the SFTA and highlights originating goods and origin verifications as found in new 19 CFR Subpart I. (See ITT's Online Archives or 06/12/07, 06/14/07, and 06/18/07 news, 07061205, 07061420, and 07061820, for Parts I-III, respectively.)

SFTA Originating Goods

Determination as SFTA originating. With two exceptions, new 19 CFR 10.531 indicates that a good imported into the U.S. will be considered an originating good under the SFTA only if:

1. the good is wholly obtained or produced entirely in the U.S. and/or Singapore; or
2. the good is transformed in the U.S. and/or Singapore so that: (a) each non-originating material undergoes an applicable change in tariff classification specified in HTS General Note 25(o), as a result of production occurring entirely in the U.S. and/or Singapore; and (b) the good otherwise satisfies any applicable regional value content (RVC) or other requirements specified in HTS General Note 25(o).

Exceptions for certain apparel or ISI technology/medical devices. According to new 19 CFR 10.543, a textile apparel article of HTS Chapter 61 or 62 will also be considered an originating good under the SFTA if it is both cut (or knit to shape) and sewn or otherwise assembled in the U.S. and/or Singapore from fabric or yarn, regardless of origin, that was designated in certain 2001 and 2002 notices by the Committee for the Implementation of Textile Agreements (CITA) as not available in commercial quantities in a timely manner in the U.S.

Specifically, such designations by CITA must have been made by notices published in the Federal Register no later than November 15, 2002 (See BP Note). For purposes of 19 CFR 10.543, any reference in these notices to fabric or yarn formed in the U.S. will be interpreted as also including fabric or yarn formed in Singapore.

New 19 CFR 10.531(c) and 10.532 provide originating status under the SFTA for certain information technology products and medical devices, regardless of origin, which in their condition as imported into the U.S. from Singapore are enumerated as Integrated Sourcing Initiative (ISI) goods in HTS General Note 25(m), and satisfy the conditions and requirements of new 19 CFR 10.542 relating to third country transportation.

New 19 CFR 10.532 also provides that a good enumerated in HTS General Note 25(m) that is used in the production of another good in Singapore will not be considered an originating material for purposes of determining the eligibility for preferential tariff treatment of such other good unless: (1) the good enumerated in HTS General Note 25(m) satisfies an applicable rule of origin set out in HTS General Note 25(o), or (2) the good enumerated in HTS General Note 25(m) is imported into Singapore from the U.S. prior to being used in the production of a good in Singapore.

(See the Interim Rule for additional SFTA rule of origin regulations on topics such as de minimis, accumulation, RVC, value of materials, packing materials and containers for shipment, third country transportation, etc.)

Verification of SFTA Claims

CBP may verify claims for SFTA preferential treatment. According to new 19 CFR 10.550, a claim for SFTA preferential treatment for originating goods made under new 19 CFR 10.510(a) (including any statements or other information submitted to CBP in support of the claim) will be subject to such verification as the port director deems necessary. In the event that the port director is provided with insufficient information to verify or substantiate the claim, the port director may deny the claim for preferential treatment.

A verification of a claim for preferential tariff treatment may be conducted by means of one or more of the following: (i) requests for information from the importer, (ii) written requests for information to the exporter or producer, (iii) requests for the importer to arrange for the exporter or producer to provide information directly to CBP, (iv) visits to the premises of the exporter or producer in Singapore, in accordance with procedures that the U.S. and Singapore adopt pertaining to verification, and (v) such other procedures as the U.S. and Singapore may agree to.

Textile and apparel verifications may result in exclusion of an enterprise's products. Under new 19 CFR 10.553, U.S. officials may conduct site visits to enterprises in Singapore together with responsible officials of the Government of Singapore and in accordance with the laws of Singapore. If the responsible enterprise does not consent to the site visit, CBP will, if directed by CITA, exclude from the U.S. the textile or apparel goods produced or exported by the enterprise until CITA determines that the enterprise's production of, and capability to produce, such goods is consistent with statements by the enterprise that textile or apparel goods it produces or has produced are originating goods or products of Singapore.

If CITA finds that an enterprise in Singapore has knowingly or willfully engaged in circumvention, CBP will, if directed by CITA, exclude from the U.S. the textile or apparel goods produced or exported by that enterprise for a period no longer than six months (for the first finding) or two years (for a subsequent finding).

The interim rule defines 'circumvention' as providing a false claim or false information for the purpose of, or with the effect of, violating or evading existing customs, country of origin labeling, or trade laws of the SFTA party into which the textile or apparel goods are imported, if such action results in the avoidance of tariffs, obtaining preferential tariff treatment, etc. Examples of circumvention include: illegal transshipment; rerouting; fraud; false claims concerning country of origin, fiber content, quantities, description, or classification; falsification of documents; and smuggling.

(See ITT's Online Archives or 12/31/03 news, 03123105, for BP summary of the President issuing the proclamation to implement the SFTA. See ITT's Online Archives or 02/11/04 news, 04021110, for BP summary of CBP's original instructions on filing and substantiating claims under the SFTA.)

CBP interim rule (D/N USCBP-2007-0057; CBP Dec. 07-28, FR Pub 06/11/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-11078.pdf

BP Note

According to CBP sources, only textile apparel products made from the yarns or fabrics designated as commercially unavailable in the Federal Register notices published on the following dates may be considered as SFTA originating goods under new 19 CFR 10.543: September 25, 2001; November 19, 2001; April 10, 2002; May 28, 2002; and September 5, 2002.

Note that these FR notices were issued under the African Growth and Opportunity Act (AGOA) and Caribbean Basin Trade Partnership Act (CBTPA); however, CBP sources explain that these five "commercially unavailable" designations now also apply to SFTA apparel. Additional yarns or fabrics considered to be unavailable in commercial quantities for purposes of the SFTA would have to be negotiated.

(See ITT's Online Archives or 09/26/01, 11/21/01, 04/11/02, 05/29/02, and 09/10/02 news, 01092626, 01112125, 02041115, 02052925, and 02091015 for BP summaries regarding the above-mentioned CITA designations of certain yarns, etc. as commercially unavailable under AGOA and CBTPA.)