[Federal Register Volume 77, Number 187 (Wednesday, September 26, 2012)]
[Rules and Regulations]
[Pages 59064-59081]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23604]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
DEPARTMENT OF THE TREASURY
19 CFR Parts 10, 24, 162, 163, and 178
[USCBP-2012-0017; CBP Dec. 12-16]
RIN 1515-AD88
United States-Colombia Trade Promotion Agreement
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security; Department of the Treasury.
ACTION: Interim regulations; solicitation of comments.
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SUMMARY: This rule amends the U.S. Customs and Border Protection (CBP)
regulations on an interim basis to implement the preferential tariff
treatment and other customs-related provisions of the United States-
Colombia Trade Promotion Agreement entered into by the United States
and the Republic of Colombia.
DATES: Interim rule effective September 26, 2012; comments must be
received by November 26, 2012.
ADDRESSES: You may submit comments, identified by docket number, by one
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments via docket number USCBP-2012-0017.
Mail: Trade and Commercial Regulations Branch, Regulations
and Rulings, Office of International Trade, U.S. Customs and Border
Protection, 799 9th Street NW., 5th Floor, Washington, DC 20229-1179.
Instructions: All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
posted without change to http://www.regulations.gov, including any
personal information provided. For
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detailed instructions on submitting comments and additional information
on the rulemaking process, see the ``Public Participation'' heading of
the SUPPLEMENTARY INFORMATION section of this document.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov. Submitted comments
may also be inspected during regular business days between the hours of
9 a.m. and 4:30 p.m. at the Trade and Commercial Regulations Branch,
Regulations and Rulings, Office of International Trade, U.S. Customs
and Border Protection, 799 9th Street NW., 5th Floor, Washington, DC.
Arrangements to inspect submitted comments should be made in advance by
calling Mr. Joseph Clark at (202) 325-0118.
FOR FURTHER INFORMATION CONTACT:
Textile Operational Aspects: Nancy Mondich, Trade Policy and Programs,
Office of International Trade, (202) 863-6524.
Other Operational Aspects: Katrina Chang, Trade Policy and Programs,
Office of International Trade, (202) 863-6532.
Legal Aspects: Karen Greene, Regulations and Rulings, Office of
International Trade, (202) 325-0041.
SUPPLEMENTARY INFORMATION:
Public Participation
Interested persons are invited to participate in this rulemaking by
submitting written data, views, or arguments on all aspects of the
interim rule. U.S. Customs and Border Protection (CBP) also invites
comments that relate to the economic, environmental, or federalism
effects that might result from this interim rule. Comments that will
provide the most assistance to CBP in developing these regulations will
reference a specific portion of the interim rule, explain the reason
for any recommended change, and include data, information, or authority
that support such recommended change. See ADDRESSES above for
information on how to submit comments.
Background
On November 22, 2006, the United States and Colombia (the
``Parties'') signed the United States-Colombia Trade Promotion
Agreement (``CTPA'' or ``Agreement''), and on June 28, 2007, the
Parties signed a protocol amending the Agreement. The CTPA provides for
reciprocal trade liberalization between the United States and Colombia.
It is a comprehensive, trade opening agreement that will eliminate
tariffs and other barriers to trade, open each county's market for
service providers, and promote investment.
On October 21, 2011, the President signed into law the United
States-Colombia Trade Promotion Agreement Implementation Act (the
``Act''), Public Law 112-42, 125 Stat. 462 (19 U.S.C. 3805 note), which
approved and made statutory changes to implement the CTPA. Section 103
of the Act requires that regulations be prescribed as necessary to
implement the provisions of the CTPA.
On May 14, 2012, the President signed Proclamation 8818 to
implement the CTPA. The Proclamation, which was published in the
Federal Register on May 18, 2012, (77 FR 29519), modified the
Harmonized Tariff Schedule of the United States (``HTSUS'') as set
forth in Annexes I and II of Publication 4320 of the U.S. International
Trade Commission. The modifications to the HTSUS included the addition
of new General Note 34, incorporating the relevant CTPA rules of origin
as set forth in the Act, and the insertion throughout the HTSUS of the
preferential duty rates applicable to individual products under the
CTPA where the special program indicator ``CO'' appears in parenthesis
in the ``Special'' rate of duty subcolumn. The modifications to the
HTSUS also included a new Subchapter XXI to Chapter 99 to provide for
temporary tariff-rate quotas and applicable safeguards implemented by
the CTPA, as well as modifications to Subchapter XXII of HTSUS Chapter
98. After the Proclamation was signed, CBP issued instructions to the
field and the public implementing the Agreement by allowing the trade
to receive the benefits under the CTPA effective on or after May 15,
2012.
U.S. Customs and Border Protection (``CBP'') is responsible for
administering the provisions of the CTPA and the Act that relate to the
importation of goods into the United States from Colombia. Those
customs-related CTPA provisions, which require implementation through
regulation, include certain tariff and non-tariff provisions within
Chapter One (Initial Provisions and General Definitions), Chapter Two
(National Treatment and Market Access for Goods), Chapter Three
(Textiles and Apparel), Chapter Four (Rules of Origin and Origin
Procedures), and Chapter Five (Customs Administration and Trade
Facilitation).
Certain general definitions set forth in Chapter One of the CTPA
have been incorporated into the CTPA implementing regulations. These
regulations also implement Article 2.6 (Goods Re-entered After Repair
or Alteration) of the CTPA.
Chapter Three of the CTPA sets forth provisions relating to trade
in textile and apparel goods between Colombia and the United States.
The provisions within Chapter Three that require regulatory action by
CBP are Articles 3.2 (Customs Cooperation and Verification of Origin),
Article 3.3 (Rules of Origin, Origin Procedures, and Related Matters),
and Article 3.5 (Definitions).
Chapter Four of the CTPA sets forth the rules for determining
whether an imported good is an originating good of a Party and, as
such, is therefore eligible for preferential tariff (duty-free or
reduced duty) treatment under the CTPA as specified in the Agreement
and the HTSUS. The basic rules of origin in Section A of Chapter Four
are set forth in General Note 34, HTSUS.
Under Article 4.1 of Chapter Four and section 203(b) of the Act,
originating goods may be grouped in three broad categories: (1) Goods
that are wholly obtained or produced entirely in the territory of one
or both of the Parties; (2) goods that are produced entirely in the
territory of one or both of the Parties and that satisfy the product-
specific rules of origin in CTPA Annex 4.1 (Specific Rules of Origin;
change in tariff classification requirement and/or regional value
content requirement) or Annex 3-A (Textile and Apparel Specific Rules
of Origin) and all other applicable requirements of Chapter Four; and
(3) goods that are produced entirely in the territory of one or both of
the Parties exclusively from originating materials. Article 4.2
(section 203(c) of the Act) sets forth the methods for calculating the
regional value content of a good. Articles 4.3 and 4.4 (section 203(d)
of the Act) set forth the rules for determining the value of materials
for purposes of calculating the regional value content of a good.
Article 4.5 (section 203(e) of the Act) provides that production that
takes place in the territory of one or both of the Parties may be
accumulated such that, provided other requirements are met, the
resulting good is considered originating. Article 4.6 (section 203(f)
of the Act) provides a de minimis criterion. The remaining Articles
within Section A of Chapter Four consist of additional sub-rules
applicable to the originating good concept, involving: fungible goods
and materials (Article 4.7; section 203(g) of the Act); accessories,
spare parts, and tools (Article 4.8; section 203(h) of the Act); sets
of goods (Article 4.9; section 203(m) of the Act); packaging materials
and containers for retail sale (Article 4.10; section 203(i) of the
Act); packing
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materials and containers for shipment (Article 4.11; section 203(j) of
the Act); indirect materials (Article 4.12; section 203(k) of the Act);
transit and transshipment (Article 4.13; section 203(l) of the Act);
and consultation and modifications (Article 4.14) . All Articles within
Section A are reflected in the CTPA implementing regulations, except
for Article 4.14 (Consultation and Modifications).
Section B of Chapter Four sets forth procedures that apply under
the CTPA in regard to claims for preferential tariff treatment.
Specifically, Section B includes provisions concerning: claims for
preferential tariff treatment (Article 4.15); exceptions to the
certification requirement (Article 4.16); recordkeeping requirements
(Article 4.17); verification of preference claims (Article 4.18);
obligations relating to importations (Article 4.19) and exportations
(Article 4.20); common guidelines (Article 4.21); implementation
(Article 4.22); and definitions of terms used within the context of the
rules of origin (Article 4.23). All Articles within Section B, except
for Articles 4.21 (Common Guidelines) and 4.22 (Implementation) are
reflected in these implementing regulations.
Chapter Five sets forth operational provisions related to customs
administration and trade facilitation under the CTPA. Article 5.9
(section 205 of the Act), concerning the general application of
penalties to CTPA transactions, is the only provision within Chapter
Five that is reflected in the CTPA implementing regulations.
The majority of the CTPA implementing regulations set forth in this
document have been included within Subpart T in Part 10 of the CBP
regulations (19 CFR Part 10). However, in those cases in which CTPA
implementation is more appropriate in the context of an existing
regulatory provision, the CTPA regulatory text has been incorporated in
an existing Part within the CBP regulations. In addition, this document
sets forth several cross-references and other consequential changes to
existing regulatory provisions to clarify the relationship between
those existing provisions and the new CTPA implementing regulations.
The regulatory changes are discussed below in the order in which they
appear in this document.
Discussion of Amendments
Part 10
Section 10.31(f) concerns temporary importations under bond. It is
amended by adding references to certain goods originating in Colombia
for which, as in the case of goods originating in Canada, Mexico,
Singapore, Chile, Morocco, El Salvador, Guatemala, Honduras, Nicaragua,
the Dominican Republic, Costa Rica, Bahrain, Oman, Peru, or Korea, no
bond or other security will be required when imported temporarily for
prescribed uses. The provisions of CTPA Article 2.5 (Temporary
Admission of Goods) are already reflected in existing temporary
importation bond or other provisions contained in Part 10 of the CBP
regulations and in Chapter 98 of the HTSUS.
Part 10, Subpart T
General Provisions
Section 10.3001 outlines the scope of Subpart T, Part 10 of the CBP
regulations. This section also clarifies that, except where the context
otherwise requires, the requirements contained in Subpart T, Part 10,
are in addition to general administrative and enforcement provisions
set forth elsewhere in the CBP regulations. Thus, for example, the
specific merchandise entry requirements contained in Subpart T, Part 10
are in addition to the basic entry requirements contained in Parts 141-
143 of the CBP regulations.
Section 10.3002 sets forth definitions of common terms used within
Subpart T, Part 10. Although the majority of the definitions in this
section are based on definitions contained in Article 1.3 and Annex 1.3
of the CTPA, and section 3 of the Act, other definitions have also been
included to clarify the application of the regulatory texts. Additional
definitions that apply in a more limited Subpart T, Part 10, context
are set forth elsewhere with the substantive provisions to which they
relate.
Import Requirements
Section 10.3003 sets forth the procedure for claiming CTPA
preferential tariff treatment at the time of entry and, as provided in
CTPA Article 4.15.1, states that an importer may make a claim for CTPA
preferential tariff treatment based on a certification by the importer,
exporter, or producer or the importer's knowledge that the good is an
originating good. Section 10.3003 also provides, consistent with CTPA
Article 4.19.4(d), that when an importer has reason to believe that a
claim is based on inaccurate information, the importer must correct the
claim and pay any duties that may be due.
Section 10.3004, which is based on CTPA Articles 4.15 and 4.19.4,
requires a U.S. importer, upon request, to submit a copy of the
certification of the importer, exporter, or producer if the
certification forms the basis for the claim. Section 10.3004 specifies
the information that must be included on the certification, sets forth
the circumstances under which the certification may be prepared by the
exporter or producer of the good, and provides that the certification
may be used either for a single importation or for multiple
importations of identical goods.
Section 10.3005 sets forth certain importer obligations regarding
the truthfulness of information and documents submitted in support of a
claim for preferential tariff treatment. Section 10.3006, which is
based on CTPA Article 4.16, provides that the certification is not
required for certain non-commercial or low-value importations.
Section 10.3007 implements CTPA Article 4.17 concerning the
maintenance of relevant records regarding the imported good.
Section 10.3008, which reflects CTPA Article 4.19.2, authorizes the
denial of CTPA tariff benefits if the importer fails to comply with any
of the requirements under Subpart T, Part 10, CBP regulations.
Export Requirements
Section 10.3009, which implements CTPA Articles 4.20.1 and 4.17.1,
sets forth certain obligations of a person who completes and issues a
certification for a good exported from the United States to Colombia.
Paragraphs (a) and (b) of Sec. 10.3009, reflecting CTPA Article
4.20.1, require a person who completes such a certification to provide
a copy of the certification to CBP upon request and to give prompt
notification of any errors in the certification to every person to whom
the certification was given. Paragraph (c) of Sec. 10.3009 reflects
Article 4.17.1, concerning the recordkeeping requirements that apply to
a person who completes and issues a certification for a good exported
from the United States to Colombia.
Post-Importation Duty Refund Claims
Sections 10.3010 through 10.3012 implement CTPA Article 4.19.5 and
section 206 of the Act, which allow an importer who did not claim CTPA
tariff benefits on a qualifying good at the time of importation to
apply for a refund of any excess duties at any time within one year
after the date of importation. Such a claim may be made even if
liquidation of the entry would otherwise be considered final under
other provisions of law.
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Rules of Origin
Sections 10.3013 through 10.3025 provide the implementing
regulations regarding the rules of origin provisions of General Note
34, HTSUS, Chapter Four and Article 3.3 of the CTPA, and section 203 of
the Act.
Definitions
Section 10.3013 sets forth terms that are defined for purposes of
the rules of origin as found in section 203(n) of the Act.
General Rules of Origin
Section 10.3014 sets forth the basic rules of origin established in
Article 4.1 of the CTPA, section 203(b) of the Act, and General Note
34, HTSUS. The provisions of Sec. 10.3014 apply both to the
determination of the status of an imported good as an originating good
for purposes of preferential tariff treatment and to the determination
of the status of a material as an originating material used in a good
which is subject to a determination under General Note 34, HTSUS.
Section 10.3014(a), reflecting section 203(b)(1) of the Act,
specifies those goods that are originating goods because they are
wholly obtained or produced entirely in the territory of one or both of
the Parties.
Section 10.3014(b), reflecting section 203(b)(2) of the Act,
provides that goods that have been produced entirely in the territory
of one or both of the Parties from non-originating materials, each of
which undergoes an applicable change in tariff classification and
satisfies any applicable regional value content or other requirement
set forth in General Note 34, HTSUS, are originating goods. Essential
to the rules in Sec. 10.3014(b) are the specific rules of General Note
34, HTSUS, which are incorporated by reference.
Section 10.3014(c), reflecting section 203(b)(3) of the Act,
provides that goods that have been produced entirely in the territory
of one or both of the Parties exclusively from originating materials
are originating goods.
Value Content
Section 10.3015 reflects CTPA Article 4.2 and section 203(c) of the
Act concerning the basic rules that apply for purposes of determining
whether an imported good satisfies a minimum regional value content
(``RVC'') requirement. Section 10.3016, reflecting CTPA Articles 4.3,
4.4 and section 203(d) of the Act, sets forth the rules for determining
the value of a material for purposes of calculating the regional value
content of a good as well as for purposes of applying the de minimis
rules.
Accumulation
Section 10.3017, which is derived from CTPA Article 4.5 and section
203(e) of the Act, sets forth the rule by which originating materials
from the territory of a Party that are used in the production of a good
in the territory of the other Party will be considered to originate in
the territory of that other country. In addition, this section also
establishes that a good that is produced by one or more producers in
the territory of one or both of the Parties is an originating good if
the good satisfies all of the applicable requirements of the rules of
origin of the CTPA.
De Minimis
Section 10.3018, as provided for in CTPA Article 4.6 and section
203(f) of the Act, sets forth de minimis rules for goods that may be
considered to qualify as originating goods even though they fail to
qualify as originating goods under the rules specified in Sec.
10.3014. There are a number of exceptions to the de minimis rule set
forth in CTPA Annex 4.6 (Exceptions to Article 4.6) as well as a
separate rule for textile and apparel goods.
Fungible Goods and Materials
Section 10.3019, as provided for in CTPA Article 4.7 and section
203(g) of the Act, sets forth the rules by which ``fungible'' goods or
materials may be claimed as originating.
Accessories, Spare Parts, or Tools
Section 10.3020, as provided for in CTPA Article 4.8 and section
203(h) of the Act, specifies the conditions under which a good's
standard accessories, spare parts, or tools are: (1) Treated as
originating goods; and (2) disregarded in determining whether all non-
originating materials undergo an applicable change in tariff
classification under General Note 34, HTSUS.
Goods Classifiable as Goods Put Up in Sets
Section 10.3021, as provided for in CTPA Articles 3.3.10 and 4.9
and section 203(m) of the Act, provides that, notwithstanding the
specific rules of General Note 34, HTSUS, goods classifiable as goods
put up in sets for retail sale as provided for in General Rule of
Interpretation 3, HTSUS, will not qualify as originating goods unless:
(1) Each of the goods in the set is an originating good; or (2) the
total value of the non-originating goods in the set does not exceed 15
percent of the adjusted value of the set, or 10 percent of the adjusted
value of the set in the case of textile or apparel goods.
Packaging Materials and Packing Materials
Sections 10.3022 and 10.3023, as provided for in CTPA Articles 4.10
and 4.11 and sections 203(i) and (j) of the Act, respectively, provide
that retail packaging materials and packing materials for shipment are
to be disregarded with respect to their actual origin in determining
whether non-originating materials undergo an applicable change in
tariff classification under General Note 34, HTSUS. These sections also
set forth the treatment of packaging and packing materials for purposes
of the regional value content requirement of the note.
Indirect Materials
Section 10.3024, as provided for in CTPA Article 4.12 and section
203(k) of the Act, provides that indirect materials, as defined in
Sec. 10.3013(h), are considered to be originating materials without
regard to where they are produced.
Transit and Transshipment
Section 10.3025, as provided for in CTPA Article 4.13 and section
203(l) of the Act, sets forth the rule that an originating good loses
its originating status and is treated as a non-originating good if,
subsequent to production in the territory of one or both of the Parties
that qualifies the good as originating, the good: (1) Undergoes
production outside the territories of the Parties, other than certain
specified minor operations; or (2) does not remain under the control of
customs authorities in the territory of a non-Party.
Origin Verifications and Determinations
Section 10.3026 implements CTPA Article 4.18 which concerns the
conduct of verifications to determine whether imported goods are
originating goods entitled to CTPA preferential tariff treatment. This
section also governs the conduct of verifications directed to producers
of materials that are used in the production of a good for which CTPA
preferential duty treatment is claimed.
Section 10.3027, as provided for in CTPA Article 3.2 and section
208 of the Act, sets forth the verification and enforcement procedures
specifically relating to trade in textile and apparel goods.
Section 10.3028 also implements CPTA Articles 3.2 and 4.18, and
sections 205, 208 and 209 of the Act and provides the procedures that
apply when preferential tariff treatment is
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denied on the basis of an origin verification conducted under Subpart T
of Part 10 of the CBP regulations.
Section 10.3029 implements CTPA Article 4.18.5 and section 205(b)
of the Act, concerning the denial of preferential tariff treatment in
situations in which there is a pattern of conduct by an importer,
exporter, or producer of false or unsupported CTPA preference claims.
Penalties
Section 10.3030 concerns the general application of penalties to
CTPA transactions and is based on CTPA Article 5.9 and section 205 of
the Act.
Section 10.3031 implements CTPA Article 4.19.3 and section
205(a)(1) of the Act with regard to an exception to the application of
penalties in the case of an importer who promptly and voluntarily makes
a corrected claim and pays any duties owing.
Section 10.3032 implements CPTPA Article 4.20.2 and section
205(a)(2) of the Act, concerning an exception to the application of
penalties in the case of a U.S. exporter or producer who promptly and
voluntarily provides notification of the making of an incorrect
certification with respect to a good exported to Colombia.
Section 10.3033 sets forth the circumstances under which the making
of a corrected claim or certification by an importer or the providing
of notification of an incorrect certification by a U.S. exporter or
producer will be considered to have been done ``promptly and
voluntarily.'' Corrected claims or certifications that fail to meet
these requirements are not excepted from penalties, although the U.S.
importer, exporter, or producer making the corrected claim or
certification may, depending on the circumstances, qualify for a
reduced penalty as a prior disclosure under 19 U.S.C. 1592(c)(4).
Section 10.3033(c) also specifies the content of the statement that
must accompany each corrected claim or certification, including any
certifications and records demonstrating that a good is an originating
good.
Goods Returned After Repair or Alteration
Section 10.3034 implements CTPA Article 2.6 regarding duty-free
treatment for goods re-entered after repair or alteration in Colombia.
Other Amendments
Part 24
An amendment is made to Sec. 24.23(c) (19 CFR 24.23(c)), which
concerns the merchandise processing fee, to implement section 204 of
the Act providing that the merchandise processing fee is not applicable
to goods that qualify as originating goods under the CTPA.
Part 162
Part 162 contains regulations regarding the inspection and
examination of, among other things, imported merchandise. A cross-
reference is added to Sec. 162.0 (19 CFR 162.0), which prescribes the
scope of that part, to refer readers to the additional CTPA records
maintenance and examination provisions contained in Subpart T, Part 10,
CBP regulations.
Part 163
A conforming amendment is made to Sec. 163.1 (19 CFR 163.1) to
include the maintenance of any documentation, as required by section
207 of the Act, that the importer may have in support of a claim for
preference under the CTPA as an activity for which records must be
maintained. Also, the list of records and information required for the
entry of merchandise appearing in the Appendix to Part 163 (commonly
known as the ``(a)(1)(A) list'') is also amended to add the records
that the importer may have in support of a CTPA claim for preferential
tariff treatment.
Part 178
Part 178 sets forth the control numbers assigned to information
collections of CBP by the Office of Management and Budget, pursuant to
the Paperwork Reduction Act of 1995, Public Law 104-13. The list
contained in Sec. 178.2 (19 CFR 178.2) is amended to add the
information collections used by CBP to determine eligibility for
preferential tariff treatment under the CTPA and the Act.
Inapplicability of Notice and Delayed Effective Date Requirements
Under the Administrative Procedure Act (``APA'') (5 U.S.C. 553),
agencies generally are required to publish a notice of proposed
rulemaking in the Federal Register that solicits public comment on the
proposed regulatory amendments, consider public comments in deciding on
the content of the final amendments, and publish the final amendments
at least 30 days prior to their effective date. However, section
553(a)(1) of the APA provides that the standard prior notice and
comment procedures do not apply to an agency rulemaking to the extent
that it involves a foreign affairs function of the United States. CBP
has determined that these interim regulations involve a foreign affairs
function of the United States because they implement preferential
tariff treatment and related provisions of the CTPA. Therefore, the
rulemaking requirements under the APA do not apply and this interim
rule will be effective upon publication. However, CBP is soliciting
comments in this interim rule and will consider all comments received
before issuing a final rule.
Executive Order 12866 and Regulatory Flexibility Act
CBP has determined that this document is not a regulation or rule
subject to the provisions of Executive Order 12866 of September 30,
1993 (58 FR 51735, October 4, 1993), because it pertains to a foreign
affairs function of the United States and implements an international
agreement, as described above, and therefore is specifically exempted
by section 3(d)(2) of Executive Order 12866. Because a notice of
proposed rulemaking is not required under section 553(b) of the APA for
the reasons described above, the provisions of the Regulatory
Flexibility Act, as amended (5 U.S.C. 601 et seq.), do not apply to
this rulemaking. Accordingly, this interim rule is not subject to the
regulatory analysis requirements or other requirements of 5 U.S.C. 603
and 604.
Paperwork Reduction Act
The collections of information contained in these regulations are
under the review of the Office of Management and Budget in accordance
with the requirements of the Paperwork Reduction Act (44 U.S.C. 3507)
under control numbers 1651-0117, which covers many of the free trade
agreement requirements that CBP administers, and 1651-0076, which
covers general recordkeeping requirements. The addition of the CTPA
requirements will result in an increase in the number of respondents
and burden hours for this information collection. Under the Paperwork
Reduction Act, an agency may not conduct or sponsor, and an individual
is not required to respond to, a collection of information unless it
displays a valid OMB control number.
The collections of information in these regulations are in
Sec. Sec. 10.3003, 10.3004, and 10.3007. This information is required
in connection with general recordkeeping requirements (Sec. Sec.
10.3007), as well as claims for preferential tariff treatment under the
CTPA and the Act and will be used by CBP to determine eligibility for
tariff preference under the CTPA and the Act (Sec. Sec. 10.3003 and
10.3004). The likely respondents are business organizations
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including importers, exporters and manufacturers.
Estimated total annual burden: 8,000.
Estimated number of respondents: 40,000.
Estimated annual frequency of responses per respondent: 1.
Estimated average annual burden per response: .2 hours.
Comments concerning the collections of information and the accuracy
of the estimated annual burden, and suggestions for reducing that
burden, should be directed to the Office of Management and Budget,
Attention: Desk Officer for the Department of the Treasury, Office of
Information and Regulatory Affairs, Washington, DC 20503. A copy should
also be sent to the Trade and Commercial Regulations Branch,
Regulations and Rulings, Office of International Trade, U.S. Customs
and Border Protection, 799 9th Street NW., 5th Floor, Washington, DC
20229-1179.
Signing Authority
This document is being issued in accordance with Sec. 0.1(a)(1) of
the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of
the Secretary of the Treasury (or his/her delegate) to approve
regulations related to certain customs revenue functions.
List of Subjects
19 CFR Part 10
Alterations, Bonds, Customs duties and inspection, Exports,
Imports, Preference programs, Repairs, Reporting and recordkeeping
requirements, Trade agreements.
19 CFR Part 24
Accounting, Customs duties and inspection, Financial and accounting
procedures, Reporting and recordkeeping requirements, Trade agreements,
User fees.
19 CFR Part 162
Administrative practice and procedure, Customs duties and
inspection, Penalties, Trade agreements.
19 CFR Part 163
Administrative practice and procedure, Customs duties and
inspection, Exports, Imports, Reporting and recordkeeping requirements,
Trade agreements.
19 CFR Part 178
Administrative practice and procedure, Exports, Imports, Reporting
and recordkeeping requirements.
Amendments to the Regulations
Accordingly, chapter I of title 19, Code of Federal Regulations (19
CFR chapter I), is amended as set forth below.
PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE,
ETC.
0
1. The general authority citation for part 10 continues to read, and
the specific authority for new subpart T is added, to read as follows:
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508,
1623, 1624, 3314.
* * * * *
Sections 10.3001 through 10.3034 also issued under 19 U.S.C.
1202 (General Note 34, HTSUS), 19 U.S.C. 1520(d), and Pub. L. 112-
42, 125 Stat. 462 (19 U.S.C. 3805 note).
0
2. In Sec. 10.31(f):
0
a. The words ``Customs Form'' are removed each place that they appear
and the words ``CBP Form'' are added in each place; and
0
b. The sixth sentence is revised.
The revision to Sec. 10.31(f) reads as follows:
Sec. 10.31 Entry; bond.
* * * * *
(f) * * * In addition, notwithstanding any other provision of this
paragraph, in the case of professional equipment necessary for carrying
out the business activity, trade or profession of a business person,
equipment for the press or for sound or television broadcasting,
cinematographic equipment, articles imported for sports purposes and
articles intended for display or demonstration, if brought into the
United States by a resident of Canada, Mexico, Singapore, Chile,
Morocco, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican
Republic, Costa Rica, Bahrain, Oman, Peru, the Republic of Korea, or
Colombia and entered under Chapter 98, Subchapter XIII, HTSUS, no bond
or other security will be required if the entered article is a good
originating, within the meaning of General Note 12, 25, 26, 27, 29, 30,
31, 32, 33, and 34, HTSUS, in the country of which the importer is a
resident.
* * * * *
0
3a. Part 10, CBP regulations, is amended by adding and reserving
subpart S.
0
3b. Part 10, CBP regulations, is amended by adding subpart T to read as
follows:
Subpart T--United States-Colombia Trade Promotion Agreement
General Provisions
Sec.
10.3001 Scope.
10.3002 General definitions.
Import Requirements
10.3003 Filing of claim for preferential tariff treatment upon
importation.
10.3004 Certification.
10.3005 Importer obligations.
10.3006 Certification not required.
10.3007 Maintenance of records.
10.3008 Effect of noncompliance; failure to provide documentation
regarding transshipment.
Export Requirements
10.3009 Certification for goods exported to Colombia.
Post-Importation Duty Refund Claims
10.3010 Right to make post-importation claim and refund duties.
10.3011 Filing procedures.
10.3012 CBP processing procedures.
Rules of Origin
10.3013 Definitions.
10.3014 Originating goods.
10.3015 Regional value content.
10.3016 Value of materials.
10.3017 Accumulation.
10.3018 De minimis.
10.3019 Fungible goods and materials.
10.3020 Accessories, spare parts, or tools.
10.3021 Goods classifiable as goods put up in sets.
10.3022 Retail packaging materials and containers.
10.3023 Packing materials and containers for shipment.
10.3024 Indirect materials.
10.3025 Transit and transshipment.
Origin Verifications and Determinations
10.3026 Verification and justification of claim for preferential
tariff treatment.
10.3027 Special rule for verifications in Colombia of U.S. imports
of textile and apparel goods.
10.3028 Issuance of negative origin determinations.
10.3029 Repeated false or unsupported preference claims.
Penalties
10.3030 General.
10.3031 Corrected claim or certification by importers.
10.3032 Corrected certification by exporters or producers.
10.3033 Framework for correcting claims or certifications.
Goods Returned After Repair or Alteration
10.3034 Goods re-entered after repair or alteration in Colombia.
[[Page 59070]]
Subpart T--United States-Colombia Trade Promotion Agreement
General Provisions
Sec. 10.3001 Scope.
This subpart implements the duty preference and related customs
provisions applicable to imported and exported goods under the United
States-Colombia Trade Promotion Agreement (the CTPA) signed on November
22, 2006, and under the United States-Colombia Trade Promotion
Agreement Implementation Act (the ``Act''), Public Law 112-42, 125
Stat. 462 (19 U.S.C. 3805 note). Except as otherwise specified in this
subpart, the procedures and other requirements set forth in this
subpart are in addition to the customs procedures and requirements of
general application contained elsewhere in this chapter. Additional
provisions implementing certain aspects of the CTPA and the Act are
contained in Parts 24, 162, and 163 of this chapter.
Sec. 10.3002 General definitions.
As used in this subpart, the following terms will have the meanings
indicated unless either the context in which they are used requires a
different meaning or a different definition is prescribed for a
particular section of this subpart:
(a) Claim for preferential tariff treatment. ``Claim for
preferential tariff treatment'' means a claim that a good is entitled
to the duty rate applicable under the CTPA to an originating good and
to an exemption from the merchandise processing fee;
(b) Claim of origin. ``Claim of origin'' means a claim that a
textile or apparel good is an originating good or satisfies the non-
preferential rules of origin of a Party;
(c) Customs authority. ``Customs authority'' means the competent
authority that is responsible under the law of a Party for the
administration of customs laws and regulations;
(d) Customs duty. ``Customs duty'' includes any customs or import
duty and a charge of any kind imposed in connection with the
importation of a good, including any form of surtax or surcharge in
connection with such importation, but does not include any:
(1) Charge equivalent to an internal tax imposed consistently with
Article III:2 of GATT 1994 in respect of like, directly competitive, or
substitutable goods of the Party, or in respect of goods from which the
imported good has been manufactured or produced in whole or in part;
(2) Antidumping or countervailing duty that is applied pursuant to
a Party's domestic law; or
(3) Fee or other charge in connection with importation commensurate
with the cost of services rendered;
(e) Customs Valuation Agreement. ``Customs Valuation Agreement''
means the Agreement on Implementation of Article VII of the General
Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO
Agreement;
(f) Days. ``Days'' means calendar days;
(g) Enterprise. ``Enterprise'' means any entity constituted or
organized under applicable law, whether or not for profit, and whether
privately-owned or governmentally-owned, including any corporation,
trust, partnership, sole proprietorship, joint venture, or other
association;
(h) Enterprise of a Party. ``Enterprise of a Party'' means an
enterprise constituted or organized under a Party's law;
(i) Goods of a Party. ``Goods of a Party'' means domestic products
as these are understood in the GATT 1994 or such goods as the Parties
may agree, and includes originating goods of that Party.
(j) GATT 1994. ``GATT 1994'' means the General Agreement on Tariffs
and Trade 1994, which is part of the WTO Agreement;
(k) Harmonized System. ``Harmonized System'' means the Harmonized
Commodity Description and Coding System, including its General Rules of
Interpretation, Section Notes, and Chapter Notes, as adopted and
implemented by the Parties in their respective tariff laws;
(l) Heading. ``Heading'' means the first four digits in the tariff
classification number under the Harmonized System;
(m) HTSUS. ``HTSUS'' means the Harmonized Tariff Schedule of the
United States as promulgated by the U.S. International Trade
Commission;
(n) Identical goods. ``Identical goods'' means goods that are the
same in all respects relevant to the rule of origin that qualifies the
goods as originating goods;
(o) Originating. ``Originating'' means qualifying for preferential
tariff treatment under the rules of origin set out in Article 3.3
(Textiles and Apparel) or Chapter Four (Rules of Origin and Origin
Procedures) of the CTPA, and General Note 34, HTSUS;
(p) Party. ``Party'' means the United States or Colombia;
(q) Person. ``Person'' means a natural person or an enterprise;
(r) Preferential tariff treatment. ``Preferential tariff
treatment'' means the duty rate applicable under the CTPA to an
originating good, and an exemption from the merchandise processing fee;
(s) Subheading. ``Subheading'' means the first six digits in the
tariff classification number under the Harmonized System;
(t) Textile or apparel good. ``Textile or apparel good'' means a
good listed in the Annex to the Agreement on Textiles and Clothing
(commonly referred to as ``the ATC''), which is part of the WTO
Agreement, except for those goods listed in Annex 3-C of the CTPA;
(u) Territory. ``Territory'' means:
(1) With respect to Colombia, in addition to its continental
territory, the archipelago of San Andr[eacute]s, Providencia and Santa
Catalina, the islands of Malpelo, and all the other islands, islets,
keys, headlands and shoals that belong to it, as well as air space and
the maritime areas over which Colombia has sovereignty or sovereign
rights or jurisdiction in accordance with its domestic law and
international law, including applicable international treaties; and
(2) With respect to the United States:
(i) The customs territory of the United States, which includes the
50 states, the District of Columbia, and Puerto Rico;
(ii) The foreign trade zones located in the United States and
Puerto Rico; and
(iii) Any areas beyond the territorial seas of the United States
within which, in accordance with international law and its domestic
law, the United States may exercise rights with respect to the seabed
and subsoil and their natural resources;
(v) WTO. ``WTO'' means the World Trade Organization; and
(w) WTO Agreement. ``WTO Agreement'' means the Marrakesh Agreement
Establishing the World Trade Organization of April 15, 1994.
Import Requirements
Sec. 10.3003 Filing of claim for preferential tariff treatment upon
importation.
(a) Basis of claim. An importer may make a claim for CTPA
preferential tariff treatment, including an exemption from the
merchandise processing fee, based on either:
(1) A written or electronic certification, as specified in Sec.
10.3004, that is prepared by the importer, exporter, or producer of the
good; or
(2) 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.
(b) Making a claim. The claim is made by including on the entry
summary, or equivalent documentation, the letters ``CO'' as a prefix to
the subheading of the HTSUS under which each qualifying good is
classified, or by the method
[[Page 59071]]
specified for equivalent reporting via an authorized electronic data
interchange system.
(c) Corrected claim. If, after making the claim specified in
paragraph (b) of this section, the importer has reason to believe that
the claim is based on inaccurate information or is otherwise invalid,
the importer must, within 30 calendar days after the date of discovery
of the error, correct the claim and pay any duties that may be due. The
importer must submit a statement either in writing or via an authorized
electronic data interchange system to the CBP office where the original
claim was filed specifying the correction (see Sec. Sec. 10.3031 and
10.3033).
Sec. 10.3004 Certification.
(a) General. An importer who makes a claim pursuant to Sec.
10.3003(b) based on a certification by the importer, exporter, or
producer that the good is originating must submit, at the request of
the port director, a copy of the certification. The certification:
(1) Need not be in a prescribed format but must be in writing or
must be transmitted electronically pursuant to any electronic means
authorized by CBP for that purpose;
(2) Must be in the possession of the importer at the time the claim
for preferential tariff treatment is made if the certification forms
the basis for the claim;
(3) Must include the following information:
(i) The legal name, address, telephone number, and email address of
the certifying person;
(ii) If not the certifying person, the legal name, address,
telephone number, and email address of the importer of record, the
exporter, and the producer of the good, if known;
(iii) The legal name, address, telephone number, and email address
of the responsible official or authorized agent of the importer,
exporter, or producer signing the certification (if different from the
information required by paragraph (a)(3)(i) of this section);
(iv) A description of the good for which preferential tariff
treatment is claimed, which must be sufficiently detailed to relate it
to the invoice and the HS nomenclature;
(v) The HTSUS tariff classification, to six or more digits, as
necessary for the specific change in tariff classification rule for the
good set forth in General Note 34, HTSUS; and
(vi) The applicable rule of origin set forth in General Note 34,
HTSUS, under which the good qualifies as an originating good;
(vii) Date of certification;
(viii) In case of a blanket certification issued with respect to
multiple shipments of identical goods within any period specified in
the written or electronic certification, not exceeding 12 months from
the date of certification, the period that the certification covers;
and
(4) Must include a statement, in substantially the following form:
``I certify that:
The information on this document is true and accurate and I assume
the responsibility for proving such representations. I understand that
I am liable for any false statements or material omissions made on or
in connection with this document;
I agree to maintain and present upon request, documentation
necessary to support these representations;
The goods comply with all requirements for preferential tariff
treatment specified for those goods in the United States-Colombia Trade
Promotion Agreement; and
This document consists of ------ pages, including all
attachments.''
(b) Responsible official or agent. The certification provided for
in paragraph (a) of this section must be signed and dated by a
responsible official of the importer, exporter, or producer, or by the
importer's, exporter's, or producer's authorized agent having knowledge
of the relevant facts.
(c) Language. The certification provided for in paragraph (a) of
this section must be completed in either the English or Spanish
language. In the latter case, the port director may require the
importer to submit an English translation of the certification.
(d) Certification by the exporter or producer. (1) A certification
may be prepared by the exporter or producer of the good on the basis
of:
(i) The exporter's or producer's knowledge that the good is
originating; or
(ii) In the case of an exporter, reasonable reliance on the
producer's certification that the good is originating.
(2) The port director may not require an exporter or producer to
provide a written or electronic certification to another person.
(e) Applicability of certification. The certification provided for
in paragraph (a) of this section may be applicable to:
(1) A single shipment of a good into the United States; or
(2) Multiple shipments of identical goods into the United States
that occur within a specified blanket period, not exceeding 12 months,
set out in the certification.
(f) Validity of certification. A certification that is properly
completed, signed, and dated in accordance with the requirements of
this section will be accepted as valid for four years following the
date on which it was issued
Sec. 10.3005 Importer obligations.
(a) General. An importer who makes a claim for preferential tariff
treatment under Sec. 10.3003(b):
(1) Will be deemed to have certified that the good is eligible for
preferential tariff treatment under the CTPA;
(2) Is responsible for the truthfulness of the claim and of all the
information and data contained in the certification provided for in
Sec. 10.3004; and
(3) Is responsible for submitting any supporting documents
requested by CBP, and for the truthfulness of the information contained
in those documents. When a certification prepared by an exporter or
producer forms the basis of a claim for preferential tariff treatment,
and CBP requests the submission of supporting documents, the importer
will provide to CBP, or arrange for the direct submission by the
exporter or producer of, all information relied on by the exporter or
producer in preparing the certification.
(b) Information provided by exporter or producer. The fact that the
importer has made a claim or submitted a certification based on
information provided by an exporter or producer will not relieve the
importer of the responsibility referred to in paragraph (a) of this
section.
(c) Exemption from penalties. An importer will not be subject to
civil or administrative penalties under 19 U.S.C. 1592 for making an
incorrect claim for preferential tariff treatment or submitting an
incorrect certification, provided that the importer promptly and
voluntarily corrects the claim or certification and pays any duty owing
(see Sec. Sec. 10.3031 through 10.3033).
Sec. 10.3006 Certification not required.
(a) General. Except as otherwise provided in paragraph (b) of this
section, an importer will not be required to submit a copy of a
certification under Sec. 10.3004 for:
(1) A non-commercial importation of a good; or
(2) A commercial importation for which the value of the originating
goods does not exceed U.S. $2,500.
(b) Exception. If the port director determines that an importation
described in paragraph (a) of this section is part of a series of
importations carried out or planned for the purpose of evading
compliance with the certification requirements of Sec. 10.3004,
[[Page 59072]]
the port director will notify the importer that for that importation
the importer must submit to CBP a copy of the certification. The
importer must submit such a copy within 30 days from the date of the
notice. Failure to timely submit a copy of the certification will
result in denial of the claim for preferential tariff treatment.
Sec. 10.3007 Maintenance of records.
(a) General. An importer claiming preferential tariff treatment for
a good (based on either the importer's certification or its knowledge,
or on the certification issued by the exporter or producer) imported
into the United States under Sec. 10.3003(b) must maintain, for a
minimum of five years after the date of importation of the good, all
records and documents that the importer has demonstrating that the good
qualifies for preferential tariff treatment under the CTPA. These
records are in addition to any other records that the importer is
required to prepare, maintain, or make available to CBP under Part 163
of this chapter.
(b) Method of maintenance. The records and documents referred to in
paragraph (a) of this section must be maintained by importers as
provided in Sec. 163.5 of this chapter.
Sec. 10.3008 Effect of noncompliance; failure to provide
documentation regarding transshipment.
(a) General. If the importer fails to comply with any requirement
under this subpart, including submission of a complete certification
prepared in accordance with Sec. 10.3004 of this subpart, when
requested, the port director may deny preferential tariff treatment to
the imported good.
(b) Failure to provide documentation regarding transshipment. Where
the requirements for preferential tariff treatment set forth elsewhere
in this subpart are met, the port director nevertheless may deny
preferential tariff treatment to an originating good if the good is
shipped through or transshipped in a country other than a Party to the
CTPA, and the importer of the good does not provide, at the request of
the port director, evidence demonstrating to the satisfaction of the
port director that the conditions set forth in Sec. 10.3025(a) were
met.
Export Requirements
Sec. 10.3009 Certification for goods exported to Colombia.
(a) Submission of certification to CBP. Any person who completes
and issues a certification for a good exported from the United States
to Colombia must provide a copy of the certification (written or
electronic) to CBP upon request.
(b) Notification of errors in certification. Any person who
completes and issues a certification for a good exported from the
United States to Colombia and who has reason to believe that the
certification contains or is based on incorrect information must
promptly notify every person to whom the certification was provided of
any change that could affect the accuracy or validity of the
certification. Notification of an incorrect certification must also be
given either in writing or via an authorized electronic data
interchange system to CBP specifying the correction (see Sec. Sec.
10.3032 and 10.3033).
(c) Maintenance of records--(1) General. Any person who completes
and issues a certification for a good exported from the United States
to Colombia must maintain, for a period of at least five years after
the date the certification was issued, all records and supporting
documents relating to the origin of a good for which the certification
was issued, including the certification or copies thereof and records
and documents associated with:
(i) The purchase, cost, and value of, and payment for, the good;
(ii) The purchase, cost, and value of, and payment for, all
materials, including indirect materials, used in the production of the
good; and
(iii) The production of the good in the form in which the good was
exported.
(2) Method of maintenance. The records referred to in paragraph (c)
of this section must be maintained as provided in Sec. 163.5 of this
chapter.
(3) Availability of records. For purposes of determining compliance
with the provisions of this part, the records required to be maintained
under this section must be stored and made available for examination
and inspection by the port director or other appropriate CBP officer in
the same manner as provided in Part 163 of this chapter.
Post-Importation Duty Refund Claims
Sec. 10.3010 Right to make post-importation claim and refund duties.
Notwithstanding any other available remedy, where a good would have
qualified as an originating good when it was imported into the United
States but no claim for preferential tariff treatment was made, the
importer of that good may file a claim for a refund of any excess
duties at any time within one year after the date of importation of the
good in accordance with the procedures set forth in Sec. 10.3011.
Subject to the provisions of Sec. 10.3008, CBP may refund any excess
duties by liquidation or reliquidation of the entry covering the good
in accordance with Sec. 10.3012(c).
Sec. 10.3011 Filing procedures.
(a) Place of filing. A post-importation claim for a refund must be
filed with the director of the port at which the entry covering the
good was filed.
(b) Contents of claim. A post-importation claim for a refund must
be filed by presentation of the following:
(1) A written or electronic declaration or statement stating that
the good was an originating good at the time of importation and setting
forth the number and date of the entry or entries covering the good;
(2) A copy of a written or electronic certification prepared in
accordance with Sec. 10.3004 if a certification forms the basis for
the claim, or other information demonstrating that the good qualifies
for preferential tariff treatment;
(3) A written statement indicating whether the importer of the good
provided a copy of the entry summary or equivalent documentation to any
other person. If such documentation was so provided, the statement must
identify each recipient by name, CBP identification number, and address
and must specify the date on which the documentation was provided; and
(4) A written statement indicating whether any person has filed a
protest relating to the good under any provision of law; and if any
such protest has been filed, the statement must identify the protest by
number and date.
Sec. 10.3012 CBP processing procedures.
(a) Status determination. After receipt of a post-importation claim
made pursuant to Sec. 10.3011, the port director will determine
whether the entry covering the good has been liquidated and, if
liquidation has taken place, whether the liquidation has become final.
(b) Pending protest or judicial review. If the port director
determines that any protest relating to the good has not been finally
decided, the port director will suspend action on the claim filed under
Sec. 10.3011 until the decision on the protest becomes final. If a
summons involving the tariff classification or dutiability of the good
is filed in the Court of International Trade, the port director will
suspend action on the claim filed under Sec. 10.3011 until judicial
review has been completed.
(c) Allowance of claim--(1) Unliquidated entry. If the port
director determines that a claim for a refund filed under Sec. 10.3011
should be allowed and the entry covering the good has not been
liquidated, the port director will
[[Page 59073]]
take into account the claim for refund in connection with the
liquidation of the entry.
(2) Liquidated entry. If the port director determines that a claim
for a refund filed under Sec. 10.3011 should be allowed and the entry
covering the good has been liquidated, whether or not the liquidation
has become final, the entry must be reliquidated in order to effect a
refund of duties under this section. If the entry is otherwise to be
reliquidated based on administrative review of a protest or as a result
of judicial review, the port director will reliquidate the entry taking
into account the claim for refund under Sec. 10.3011.
(d) Denial of claim--(1) General. The port director may deny a
claim for a refund filed under Sec. 10.3011 if the claim was not filed
timely, if the importer has not complied with the requirements of Sec.
10.3008 and 10.3011, or if, following an origin verification under
Sec. 10.3026, the port director determines either that the imported
good was not an originating good at the time of importation or that a
basis exists upon which preferential tariff treatment may be denied
under Sec. 10.3026.
(2) Unliquidated entry. If the port director determines that a
claim for a refund filed under this subpart should be denied and the
entry covering the good has not been liquidated, the port director will
deny the claim in connection with the liquidation of the entry, and
notice of the denial and the reason for the denial will be provided to
the importer in writing or via an authorized electronic data
interchange system.
(3) Liquidated entry. If the port director determines that a claim
for a refund filed under this subpart should be denied and the entry
covering the good has been liquidated, whether or not the liquidation
has become final, the claim may be denied without reliquidation of the
entry. If the entry is otherwise to be reliquidated based on
administrative review of a protest or as a result of judicial review,
such reliquidation may include denial of the claim filed under this
subpart. In either case, the port director will provide notice of the
denial and the reason for the denial to the importer in writing or via
an authorized electronic data interchange system.
Rules of Origin
Sec. 10.3013 Definitions.
For purposes of Sec. Sec. 10.3013 through 10.3025:
(a) Adjusted value. ``Adjusted value'' means the value determined
in accordance with Articles 1 through 8, Article 15, and the
corresponding interpretative notes of the Customs Valuation Agreement,
adjusted, if necessary, to exclude:
(1) Any costs, charges, or expenses incurred for transportation,
insurance and related services incident to the international shipment
of the good from the country of exportation to the place of
importation; and
(2) The value of packing materials and containers for shipment as
defined in paragraph (n) of this section;
(b) Class of motor vehicles. ``Class of motor vehicles'' means any
one of the following categories of motor vehicles:
(1) Motor vehicles classified under subheading 8701.20, motor
vehicles for the transport of 16 or more persons classified under
8704.10 or 8702.90, HTSUS, and motor vehicles classified under
subheading 8704.10, 8704.22, 8704.23, 8704.32, or 8704.90, or heading
8705 or 8706;
(2) Motor vehicles classified under subheading 8701.10 or
subheadings 8701.30 through 8701.90, HTSUS;
(3) Motor vehicles for the transport of 15 or fewer persons
classified under subheading 8702.10 or 8702.90, HTSUS, and motor
vehicles of subheading 8704.21 or 8704.31, HTSUS; or
(4) Motor vehicles classified under subheadings 8703.21 through
8703.90, HTSUS;
(c) Exporter. ``Exporter'' means a person who exports goods from
the territory of a Party;
(d) Fungible good or material. ``Fungible good or material'' means
a good or material, as the case may be, that is interchangeable with
another good or material for commercial purposes and the properties of
which are essentially identical to such other good or material;
(e) Generally Accepted Accounting Principles. ``Generally Accepted
Accounting Principles'' means the recognized consensus or substantial
authoritative support in the territory of a Party, with respect to the
recording of revenues, expenses, costs, assets, and liabilities, the
disclosure of information, and the preparation of financial statements.
These principles may encompass broad guidelines of general application
as well as detailed standards, practices, and procedures;
(f) Good. ``Good'' means any merchandise, product, article, or
material;
(g) Goods wholly obtained or produced entirely in the territory of
one or both of the Parties. ``Goods wholly obtained or produced
entirely in the territory of one or both of the Parties'' means:
(1) Plants and plant products harvested or gathered in the
territory of one or both of the Parties;
(2) Live animals born and raised in the territory of one or both of
the
Parties;
(3) Goods obtained in the territory of one or both of the Parties
from live animals;
(4) Goods obtained from hunting, trapping, fishing, or aquaculture
conducted in the territory of one or both of the Parties;
(5) Minerals and other natural resources not included in paragraphs
(g)(1) through (g)(4) of this section that are extracted or taken in
the territory of one or both of the Parties;
(6) Fish, shellfish, and other marine life taken from the sea,
seabed, or subsoil outside the territory of the Parties by:
(i) Vessels registered or recorded with Colombia and flying its
flag; or
(ii) Vessels documented under the laws of the United States;
(7) Goods produced on board factory ships from the goods referred
to in paragraph (g)(6) of this section, if such factory ships are:
(i) Registered or recorded with Colombia and fly its flag; or
(ii) Documented under the laws of the United States;
(8) Goods taken by a Party or a person of a Party from the seabed
or subsoil outside territorial waters, if a Party has rights to exploit
such seabed or subsoil;
(9) Goods taken from outer space, provided they are obtained by a
Party or a person of a Party and not processed in the territory of a
non-Party;
(10) Waste and scrap derived from:
(i) Manufacturing or processing operations in the territory of one
or both of the Parties; or
(ii) Used goods collected in the territory of one or both of the
Parties, if such goods are fit only for the recovery of raw materials;
(11) Recovered goods derived in the territory of one or both of the
Parties from used goods, and used in the territory of one or both of
the Parties in the production of remanufactured goods; and
(12) Goods produced in the territory of one or both of the Parties
exclusively from goods referred to in any of paragraphs (g)(1) through
(g)(10) of this section, or from the derivatives of such goods, at any
stage of production;
(h) Indirect Material. ``Indirect material'' means a good used in
the production, testing, or inspection of another good in the territory
of one or both of the Parties but not physically incorporated into that
other good, or a good used in the maintenance of
[[Page 59074]]
buildings or the operation of equipment associated with the production
of another good, including:
(1) Fuel and energy;
(2) Tools, dies, and molds;
(3) Spare parts and materials used in the maintenance of equipment
or buildings;
(4) Lubricants, greases, compounding materials, and other materials
used in production or used to operate equipment or buildings;
(5) Gloves, glasses, footwear, clothing, safety equipment, and
supplies;
(6) Equipment, devices, and supplies used for testing or inspecting
the good;
(7) Catalysts and solvents; and
(8) Any other good that is not incorporated into the other good but
the use of which in the production of the other good can reasonably be
demonstrated to be a part of that production.
(i) Material. ``Material'' means a good that is used in the
production of another good, including a part or an ingredient;
(j) Model line. ``Model line'' means a group of motor vehicles
having the same platform or model name;
(k) Net cost. ``Net cost'' means total cost minus sales promotion,
marketing, and after-sales service costs, royalties, shipping and
packing costs, and non-allowable interest costs that are included in
the total cost;
(l) Non-allowable interest costs. ``Non-allowable interest costs''
means interest costs incurred by a producer that exceed 700 basis
points above the applicable official interest rate for comparable
maturities of the Party in which the producer is located;
(m) Non-originating good or non-originating material. ``Non-
originating good'' or ``non-originating material'' means a good or
material, as the case may be, that does not qualify as originating
under General Note 34, HTSUS, or this subpart;
(n) Packing materials and containers for shipment. ``Packing
materials and containers for shipment'' means the goods used to protect
a good during its transportation to the United States, and does not
include the packaging materials and containers in which a good is
packaged for retail sale;
(o) Producer. ``Producer'' means a person who engages in the
production of a good in the territory of a Party;
(p) Production. ``Production'' means growing, mining, harvesting,
fishing, raising, trapping, hunting, manufacturing, processing,
assembling, or disassembling a good;
(q) Reasonably allocate. ``Reasonably allocate'' means to apportion
in a manner that would be appropriate under Generally Accepted
Accounting Principles;
(r) Recovered goods. ``Recovered goods'' means materials in the
form of individual parts that are the result of:
(1) The disassembly of used goods into individual parts; and
(2) The cleaning, inspecting, testing, or other processing that is
necessary to improve such individual parts to sound working condition;
(s) Remanufactured good. ``Remanufactured good'' means an
industrial good assembled in the territory of one or both of the
Parties that is classified in Chapter 84, 85, 87, or 90 or heading
9402, HTSUS, other than a good classified in heading 8418 or 8516,
HTSUS, and that:
(1) Is entirely or partially comprised of recovered goods as
defined in paragraph (r) of this section; and
(2) Has a similar life expectancy and enjoys a factory warranty
similar to such new goods;
(t) Royalties. ``Royalties'' means payments of any kind, including
payments under technical assistance agreements or similar agreements,
made as consideration for the use of, or right to use, any copyright,
literary, artistic, or scientific work, patent, trademark, design,
model, plan, secret formula or process, excluding those payments under
technical assistance agreements or similar agreements that can be
related to specific services such as:
(1) Personnel training, without regard to where performed; and
(2) If performed in the territory of one or both of the Parties,
engineering, tooling, die-setting, software design and similar computer
services;
(u) Sales promotion, marketing, and after-sales service costs.
``Sales promotion, marketing, and after-sales service costs'' means the
following costs related to sales promotion, marketing, and after-sales
service:
(1) Sales and marketing promotion; media advertising; advertising
and market research; promotional and demonstration materials; exhibits;
sales conferences, trade shows and conventions; banners; marketing
displays; free samples; sales, marketing, and after-sales service
literature (product brochures, catalogs, technical literature, price
lists, service manuals, sales aid information); establishment and
protection of logos and trademarks; sponsorships; wholesale and retail
restocking charges; entertainment;
(2) Sales and marketing incentives; consumer, retailer or
wholesaler rebates; merchandise incentives;
(3) Salaries and wages, sales commissions, bonuses, benefits (for
example, medical, insurance, pension), traveling and living expenses,
membership and professional fees, for sales promotion, marketing, and
after-sales service personnel;
(4) Recruiting and training of sales promotion, marketing, and
after-sales service personnel, and after-sales training of customers'
employees, where such costs are identified separately for sales
promotion, marketing, and after-sales service of goods on the financial
statements or cost accounts of the producer;
(5) Product liability insurance;
(6) Office supplies for sales promotion, marketing, and after-sales
service of goods, where such costs are identified separately for sales
promotion, marketing, and after-sales service of goods on the financial
statements or cost accounts of the producer;
(7) Telephone, mail and other communications, where such costs are
identified separately for sales promotion, marketing, and after-sales
service of goods on the financial statements or cost accounts of the
producer;
(8) Rent and depreciation of sales promotion, marketing, and after-
sales service offices and distribution centers;
(9) Property insurance premiums, taxes, cost of utilities, and
repair and maintenance of sales promotion, marketing, and after-sales
service offices and distribution centers, where such costs are
identified separately for sales promotion, marketing, and after-sales
service of goods on the financial statements or cost accounts of the
producer; and
(10) Payments by the producer to other persons for warranty
repairs;
(v) Self-produced material. ``Self-produced material'' means an
originating material that is produced by a producer of a good and used
in the production of that good;
(w) Shipping and packing costs. ``Shipping and packing costs''
means the costs incurred in packing a good for shipment and shipping
the good from the point of direct shipment to the buyer, excluding the
costs of preparing and packaging the good for retail sale;
(x) Total cost. ``Total cost'' means all product costs, period
costs, and other costs for a good incurred in the territory of one or
both of the Parties. Product costs are costs that are associated with
the production of a good and include the value of materials, direct
labor costs, and direct overhead. Period costs are costs, other than
product costs, that are expensed in the period in which they are
incurred, such as selling expenses and general and administrative
expenses. Other costs are all costs recorded on the books of the
producer that are not product costs or period
[[Page 59075]]
costs, such as interest. Total cost does not include profits that are
earned by the producer, regardless of whether they are retained by the
producer or paid out to other persons as dividends, or taxes paid on
those profits, including capital gains taxes;
(y) Used. ``Used'' means utilized or consumed in the production of
goods; and
(z) Value. ``Value'' means the value of a good or material for
purposes of calculating customs duties or for purposes of applying this
subpart.
Sec. 10.3014 Originating goods.
Except as otherwise provided in this subpart and General Note 34,
HTSUS, a good imported into the customs territory of the United States
will be considered an originating good under the CTPA only if:
(a) The good is wholly obtained or produced entirely in the
territory of one or both of the Parties;
(b) The good is produced entirely in the territory of one or both
of the Parties and:
(1) Each non-originating material used in the production of the
good undergoes an applicable change in tariff classification specified
in General Note 34, HTSUS, and the good satisfies all other applicable
requirements of General Note 34, HTSUS; or
(2) The good otherwise satisfies any applicable regional value
content or other requirements specified in General Note 34, HTSUS, and
satisfies all other applicable requirements of General Note 34, HTSUS;
or
(c) The good is produced entirely in the territory of one or both
of the Parties exclusively from originating materials.
Sec. 10.3015 Regional value content.
(a) General. Except for goods to which paragraph (d) of this
section applies, where General Note 34, HTSUS, sets forth a rule that
specifies a regional value content test for a good, the regional value
content of such good must be calculated by the importer, exporter, or
producer of the good on the basis of the build-down method described in
paragraph (b) of this section or the build-up method described in
paragraph (c) of this section.
(b) Build-down method. Under the build-down method, the regional
value content must be calculated on the basis of the formula RVC =
((AV-VNM)/AV) x 100, where RVC is the regional value content, expressed
as a percentage; AV is the adjusted value of the good; and VNM is the
value of non-originating materials that are acquired and used by the
producer in the production of the good, but does not include the value
of a material that is self-produced.
(c) Build-up method. Under the build-up method, the regional value
content must be calculated on the basis of the formula RVC = (VOM/AV) x
100, where RVC is the regional value content, expressed as a
percentage; AV is the adjusted value of the good; and VOM is the value
of originating materials that are acquired or self-produced and used by
the producer in the production of the good.
(d) Special rule for certain automotive goods--(1) General. Where
General Note 34, HTSUS, sets forth a rule that specifies a regional
value content test for an automotive good provided for in any of
subheadings 8407.31 through 8407.34 (engines), subheading 8408.20
(diesel engine for vehicles), heading 8409 (parts of engines), or
headings 8701 through 8705 (motor vehicles), and headings 8706
(chassis), 8707 (bodies), and 8708 (motor vehicle parts), HTSUS, the
regional value content of such good shall be calculated by the
importer, exporter, or producer of the good on the basis of the net
cost method described in paragraph (d)(2) of this section.
(2) Net cost method. Under the net cost method, the regional value
content is calculated on the basis of the formula RVC = ((NC-VNM)/NC) x
100, where RVC is the regional value content, expressed as a
percentage; NC is the net cost of the good; and VNM is the value of
non-originating materials that are acquired and used by the producer in
the production of the good, but does not include the value of a
material that is self-produced. Consistent with the provisions
regarding allocation of costs set out in Generally Accepted Accounting
Principles, the net cost of the good must be determined by:
(i) Calculating the total cost incurred with respect to all goods
produced by the producer of the automotive good, subtracting any sales
promotion, marketing, and after-sales service costs, royalties,
shipping and packing costs, and non-allowable interest costs that are
included in the total cost of all such goods, and then reasonably
allocating the resulting net cost of those goods to the automotive
good;
(ii) Calculating the total cost incurred with respect to all goods
produced by the producer of the automotive good, reasonably allocating
the total cost to the automotive good, and then subtracting any sales
promotion, marketing, and after-sales service costs, royalties,
shipping and packing costs, and non-allowable interest costs that are
included in the portion of the total cost allocated to the automotive
good; or
(iii) Reasonably allocating each cost that forms part of the total
costs incurred with respect to the automotive good so that the
aggregate of these costs does not include any sales promotion,
marketing, and after-sales service costs, royalties, shipping and
packing costs, or non-allowable interest costs.
(3) Motor vehicles--(i) General. For purposes of calculating the
regional value content under the net cost method for an automotive good
that is a motor vehicle provided for in any of headings 8701 through
8705, an importer, exporter, or producer may average the amounts
calculated under the formula set forth in paragraph (d)(2) of this
section over the producer's fiscal year using any one of the categories
described in paragraph (d)(3)(ii) of this section either on the basis
of all motor vehicles in the category or those motor vehicles in the
category that are exported to the territory of one or both Parties.
(ii) Categories. The categories referred to in paragraph (d)(3)(i)
of this section are as follows:
(A) The same model line of motor vehicles, in the same class of
vehicles, produced in the same plant in the territory of a Party, as
the motor vehicle for which the regional value content is being
calculated;
(B) The same class of motor vehicles, and produced in the same
plant in the territory of a Party, as the motor vehicle for which the
regional value content is being calculated; and
(C) The same model line of motor vehicles produced in the territory
of a Party as the motor vehicle for which the regional value content is
being calculated.
(4) Other automotive goods--(i) General. For purposes of
calculating the regional value content under the net cost method for
automotive goods provided for in any of subheadings 8407.31 through
8407.34, subheading 8408.20, heading 8409, 8706, 8707, or 8708, HTSUS,
that are produced in the same plant, an importer, exporter, or producer
may:
(A) Average the amounts calculated under the formula set forth in
paragraph (d)(2) of this section over any of the following: the fiscal
year, or any quarter or month, of the motor vehicle producer to whom
the automotive good is sold, or the fiscal year, or any quarter or
month, of the producer of the automotive good, provided the goods were
produced during the fiscal year, quarter, or month that is the basis
for the calculation;
(B) Determine the average referred to in paragraph (d)(4)(i)(A) of
this section separately for such goods sold to one or more motor
vehicle producers; or
[[Page 59076]]
(C) Make a separate determination under paragraph (d)(4)(i)(A) or
(d)(4)(i)(B) of this section for automotive goods that are exported to
the territory of Colombia or the United States.
(ii) Duration of use. A person selecting an averaging period of one
month or quarter under paragraph (d)(4)(i)(A) of this section must
continue to use that method for that category of automotive goods
throughout the fiscal year.
Sec. 10.3016 Value of materials.
(a) Calculating the value of materials. Except as provided in Sec.
10.3024, for purposes of calculating the regional value content of a
good under General Note 34, HTSUS, and for purposes of applying the de
minimis (see Sec. 10.3018) provisions of General Note 34, HTSUS, the
value of a material is:
(1) In the case of a material imported by the producer of the good,
the adjusted value of the material;
(2) In the case of a material acquired by the producer in the
territory where the good is produced, the value, determined in
accordance with Articles 1 through 8, Article 15, and the corresponding
interpretative notes of the Customs Valuation Agreement, of the
material, i.e., in the same manner as for imported goods, with
reasonable modifications to the provisions of the Customs Valuation
Agreement as may be required due to the absence of an importation by
the producer (including, but not limited to, treating a domestic
purchase by the producer as if it were a sale for export to the country
of importation); or
(3) In the case of a self-produced material, the sum of:
(i) All expenses incurred in the production of the material,
including general expenses; and
(ii) An amount for profit equivalent to the profit added in the
normal course of trade.
(b) Examples. The following examples illustrate application of the
principles set forth in paragraph (a)(2) of this section:
Example 1. A producer in Colombia purchases material x from an
unrelated seller in Colombia for $100. Under the provisions of
Article 1 of the Customs Valuation Agreement, transaction value is
the price actually paid or payable for the goods when sold for
export to the country of importation adjusted in accordance with the
provisions of Article 8. In order to apply Article 1 to this
domestic purchase by the producer, such purchase is treated as if it
were a sale for export to the country of importation. Therefore, for
purposes of determining the adjusted value of material x, Article 1
transaction value is the price actually paid or payable for the
goods when sold to the producer in Colombia ($100), adjusted in
accordance with the provisions of Article 8. In this example, it is
irrelevant whether material x was initially imported into Colombia
by the seller (or by anyone else). So long as the producer acquired
material x in Colombia, it is intended that the value of material x
will be determined on the basis of the price actually paid or
payable by the producer adjusted in accordance with the provisions
of Article 8.
Example 2. Same facts as in Example 1, except that the sale
between the seller and the producer is subject to certain
restrictions that preclude the application of Article 1. Under
Article 2 of the Customs Valuation Agreement, the value is the
transaction value of identical goods sold for export to the same
country of importation and exported at or about the same time as the
goods being valued. In order to permit the application of Article 2
to the domestic acquisition by the producer, it should be modified
so that the value is the transaction value of identical goods sold
within Colombia at or about the same time the goods were sold to the
producer in Colombia. Thus, if the seller of material x also sold an
identical material to another buyer in Colombia without
restrictions, that other sale would be used to determine the
adjusted value of material x.
(c) Permissible additions to, and deductions from, the value of
materials--(1) Additions to originating materials. For originating
materials, the following expenses, if not included under paragraph (a)
of this section, may be added to the value of the originating material:
(i) The costs of freight (``cost of freight'' includes the costs of
all types of freight, including in-land freight incurred within a
Party's territory, regardless of the mode of transportation),
insurance, packing, and all other costs incurred in transporting the
material within or between the territory of one or both of the Parties
to the location of the producer;
(ii) Duties, taxes, and customs brokerage fees on the material paid
in the territory of one or both of the Parties, other than duties and
taxes that are waived, refunded, refundable, or otherwise recoverable,
including credit against duty or tax paid or payable; and
(iii) The cost of waste and spoilage resulting from the use of the
material in the production of the good, less the value of renewable
scrap or byproducts.
(2) Deductions from non-originating materials. For non-originating
materials, if included under paragraph (a) of this section, the
following expenses may be deducted from the value of the non-
originating material:
(i) The costs of freight (``cost of freight'' includes the costs of
all types of freight, including in-land freight incurred within a
Party's territory, regardless of the mode of transportation),
insurance, packing, and all other costs incurred in transporting the
material within or between the territory of one or both of the Parties
to the location of the producer;
(ii) Duties, taxes, and customs brokerage fees on the material paid
in the territory of one or both of the Parties, other than duties and
taxes that are waived, refunded, refundable, or otherwise recoverable,
including credit against duty or tax paid or payable;
(iii) The cost of waste and spoilage resulting from the use of the
material in the production of the good, less the value of renewable
scrap or by-products; and
(iv) The cost of originating materials used in the production of
the non-originating material in the territory of one or both of the
Parties.
(d) Accounting method. Any cost or value referenced in General Note
34, HTSUS, and this subpart, must be recorded and maintained in
accordance with the Generally Accepted Accounting Principles applicable
in the territory of the Party in which the good is produced.
Sec. 10.3017 Accumulation.
(a) Originating materials from the territory of a Party that are
used in the production of a good in the territory of another Party will
be considered to originate in the territory of that other Party.
(b) A good that is produced in the territory of one or both of the
Parties by one or more producers is an originating good if the good
satisfies the requirements of Sec. 10.3014 and all other applicable
requirements of General Note 34, HTSUS.
Sec. 10.3018 De minimis.
(a) General. Except as provided in paragraphs (b) and (c) of this
section, a good that does not undergo a change in tariff classification
pursuant to General Note 34, HTSUS, is an originating good if:
(1) The value of all non-originating materials used in the
production of the good that do not undergo the applicable change in
tariff classification does not exceed 10 percent of the adjusted value
of the good;
(2) The value of the non-originating materials described in
paragraph (a)(1) of this section is included in the value of non-
originating materials for any applicable regional value content
requirement for the good under General Note 34, HTSUS; and
(3) The good meets all other applicable requirements of General
Note 34, HTSUS.
(b) Exceptions. Paragraph (a) of this section does not apply to:
[[Page 59077]]
(1) A non-originating material provided for in Chapter 4, HTSUS, or
a non-originating dairy preparation containing over 10 percent by
weight of milk solids provided for in subheading 1901.90 or 2106.90,
HTSUS, that is used in the production of a good provided for in Chapter
4, HTSUS;
(2) A non-originating material provided for in Chapter 4, HTSUS, or
a non-originating dairy preparation containing over 10 percent by
weight of milk solids provided for in subheading 1901.90, HTSUS, which
is used in the production of the following goods:
(i) Infant preparations containing over 10 percent by weight of
milk solids provided for in subheading 1901.10, HTSUS;
(ii) Mixes and doughs, containing over 25 percent by weight of
butterfat, not put up for retail sale, provided for in subheading
1901.20, HTSUS;
(iii) Dairy preparations containing over 10 percent by weight of
milk solids provided for in subheading 1901.90 or 2106.90, HTSUS;
(iv) Goods provided for in heading 2105, HTSUS;
(v) Beverages containing milk provided for in subheading 2202.90,
HTSUS; or
(vi) Animal feeds containing over 10 percent by weight of milk
solids provided for in subheading 2309.90, HTSUS;
(3) A non-originating material provided for in heading 0805, HTSUS,
or any of subheadings 2009.11 through 2009.39, HTSUS, that is used in
the production of a good provided for in any of subheadings 2009.11
through 2009.39, HTSUS, or in fruit or vegetable juice of any single
fruit or vegetable, fortified with minerals or vitamins, concentrated
or unconcentrated, provided for in subheading 2106.90 or 2202.90,
HTSUS;
(4) A non-originating material provided for in heading 0901 or
2101, HTSUS, that is used in the production of a good provided for in
heading 0901 or 2101, HTSUS;
(5) A non-originating material provided for in headings 1501
through 1508, HTSUS, or headings 1511 through 1515, HTSUS;
(6) A non-originating material provided for in heading 1701, HTSUS,
that is used in the production of a good provided for in any of
headings 1701 through 1703, HTSUS;
(7) A non-originating material provided for in Chapter 17, HTSUS,
that is used in the production of a good provided for in subheading
1806.10, HTSUS; or
(8) Except as provided in paragraphs (b)(1) through (b)(7) of this
section and General Note 34, HTSUS, a non-originating material used in
the production of a good provided for in any of Chapters 1 through 24,
HTSUS, unless the non-originating material is provided for in a
different subheading than the good for which origin is being determined
under this subpart.
(c) Textile and apparel goods--(1) General. Except as provided in
paragraph (c)(2) of this section, a textile or apparel good that is not
an originating good because certain fibers or yarns used in the
production of the component of the good that determines the tariff
classification of the good do not undergo an applicable change in
tariff classification set out in General Note 34, HTSUS, will
nevertheless be considered to be an originating good if:
(i) The total weight of all such fibers or yarns in that component
is not more than 10 percent of the total weight of that component; or
(ii) The yarns are nylon filament yarns (other than elastomeric
yarns) that are provided for in subheading 5402.11.30, 5402.11.60,
5402.19.30, 5402.19.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60,
5402.45.10, 5402.45.90, 5402.51.00, or 5402.61.00, HTSUS, and that are
products of Canada, Mexico, or Israel.
(2) Exception for goods containing elastomeric yarns. A textile or
apparel good containing elastomeric yarns (excluding latex) in the
component of the good that determines the tariff classification of the
good will be considered an originating good only if such yarns are
wholly formed in the territory of a Party. For purposes of this
paragraph, ``wholly formed'' means that all the production processes
and finishing operations, starting with the extrusion of all filaments,
strips, films, or sheets, or the spinning of all fibers into yarn, or
both, and ending with a finished yarn or plied yarn, took place in the
territory of a Party.
(3) Yarn, fabric, or fiber. For purposes of paragraph (c) of this
section, in the case of a textile or apparel good that is a yarn,
fabric, or fiber, the term ``component of the good that determines the
tariff classification of the good'' means all of the fibers in the
good.
Sec. 10.3019 Fungible goods and materials.
(a) General. A person claiming that a fungible good or material is
an originating good may base the claim either on the physical
segregation of the fungible good or material or by using an inventory
management method with respect to the fungible good or material. For
purposes of this section, the term ``inventory management method''
means:
(1) Averaging;
(2) ``Last-in, first-out;''
(3) ``First-in, first-out;'' or
(4) Any other method that is recognized in the Generally Accepted
Accounting Principles of the Party in which the production is performed
or otherwise accepted by that country.
(b) Duration of use. A person selecting an inventory management
method under paragraph (a) of this section for a particular fungible
good or material must continue to use that method for that fungible
good or material throughout the fiscal year of that person.
Sec. 10.3020 Accessories, spare parts, or tools.
(a) General. Accessories, spare parts, or tools that are delivered
with a good and that form part of the good's standard accessories,
spare parts, or tools will be treated as originating goods if the good
is an originating good, and will be disregarded in determining whether
all the non-originating materials used in the production of the good
undergo an applicable change in tariff classification specified in
General Note 34, HTSUS, provided that:
(1) The accessories, spare parts, or tools are classified with, and
not invoiced separately from, the good, regardless of whether they are
specified or separately identified in the invoice for the good; and
(2) The quantities and value of the accessories, spare parts, or
tools are customary for the good.
(b) Regional value content. If the good is subject to a regional
value content requirement, the value of the accessories, spare parts,
or tools is taken into account as originating or non-originating
materials, as the case may be, in calculating the regional value
content of the good under Sec. 10.3015.
Sec. 10.3021 Goods classifiable as goods put up in sets.
Notwithstanding the specific rules set forth in General Note 34,
HTSUS, goods classifiable as goods put up in sets for retail sale as
provided for in General Rule of Interpretation 3, HTSUS, will not be
considered to be originating goods unless:
(a) Each of the goods in the set is an originating good; or
(b) The total value of the non-originating goods in the set does
not exceed;
(1) In the case of textile or apparel goods, 10 percent of the
adjusted value of the set; or
(2) In the case of a good other than a textile or apparel good, 15
percent of the adjusted value of the set.
[[Page 59078]]
Sec. 10.3022 Retail packaging materials and containers.
(a) Effect on tariff shift rule. Packaging materials and containers
in which a good is packaged for retail sale, if classified with the
good for which preferential tariff treatment under the CTPA is claimed,
will be disregarded in determining whether all non-originating
materials used in the production of the good undergo the applicable
change in tariff classification set out in General Note 34, HTSUS.
(b) Effect on regional value content calculation. If the good is
subject to a regional value content requirement, the value of such
packaging materials and containers will be taken into account as
originating or non-originating materials, as the case may be, in
calculating the regional value content of the good.
Example 1. Colombian Producer A of good C imports 100 non-
originating blister packages to be used as retail packaging for good
C. As provided in Sec. 10.3016(a)(1), the value of the blister
packages is their adjusted value, which in this case is $10. Good C
has a regional value content requirement. The United States importer
of good C decides to use the build-down method, RVC=((AV-VNM)/AV) x
100 (see Sec. 10.3015(b)), in determining whether good C satisfies
the regional value content requirement. In applying this method, the
non-originating blister packages are taken into account as non-
originating. As such, their $10 adjusted value is included in the
VNM, value of non-originating materials, of good C.
Example 2. Same facts as in Example 1, except that the blister
packages are originating. In this case, the adjusted value of the
originating blister packages would not be included as part of the
VNM of good C under the build-down method. However, if the U.S.
importer had used the build-up method, RVC=(VOM/AV) x 100 (see Sec.
10.3015(c)), the adjusted value of the blister packaging would be
included as part of the VOM, value of originating materials.
Sec. 10.3023 Packing materials and containers for shipment.
(a) Effect on tariff shift rule. Packing materials and containers
for shipment, as defined in Sec. 10.3013(n), are to be disregarded in
determining whether the non-originating materials used in the
production of the good undergo an applicable change in tariff
classification set out in General Note 34, HTSUS. Accordingly, such
materials and containers are not required to undergo the applicable
change in tariff classification even if they are non-originating.
(b) Effect on regional value content calculation. Packing materials
and containers for shipment, as defined in Sec. 10.3013(n), are to be
disregarded in determining the regional value content of a good
imported into the United States. Accordingly, in applying the build-
down, build-up, or net cost method for determining the regional value
content of a good imported into the United States, the value of such
packing materials and containers for shipment (whether originating or
non-originating) is disregarded and not included in AV, adjusted value,
VNM, value of non-originating materials, VOM, value of originating
materials, or NC, net cost of a good.
Example. Colombian producer A produces good C. Producer A ships
good C to the United States in a shipping container that it
purchased from Company B in Colombia. The shipping container is
originating. The value of the shipping container determined under
section Sec. 10.3016(a)(2) is $3. Good C is subject to a regional
value content requirement. The transaction value of good C is $100,
which includes the $3 shipping container. The U.S. importer decides
to use the build-up method, RVC=(VOM/AV) x 100 (see Sec.
10.3015(c)), in determining whether good C satisfies the regional
value content requirement. In determining the AV, adjusted value, of
good C imported into the U.S., paragraph (b) of this section and the
definition of AV require a $3 deduction for the value of the
shipping container. Therefore, the AV is $97 ($100-$3). In addition,
the value of the shipping container is disregarded and not included
in the VOM, value of originating materials.
Sec. 10.3024 Indirect materials.
An indirect material, as defined in Sec. 10.3013(h), will be
considered to be an originating material without regard to where it is
produced.
Example. Colombian Producer A produces good C using non-
originating material B. Producer A imports non-originating rubber
gloves for use by workers in the production of good C. Good C is
subject to a tariff shift requirement. As provided in Sec.
10.3014(b)(1) and General Note 34, each of the non-originating
materials in good C must undergo the specified change in tariff
classification in order for good C to be considered originating.
Although non-originating material B must undergo the applicable
tariff shift in order for good C to be considered originating, the
rubber gloves do not because they are indirect materials and are
considered originating without regard to where they are produced.
Sec. 10.3025 Transit and transshipment.
(a) General. A good that has undergone production necessary to
qualify as an originating good under Sec. 10.3014 will not be
considered an originating good if, subsequent to that production, the
good:
(1) Undergoes further production or any other operation outside the
territories of the Parties, other than unloading, reloading, or any
other operation necessary to preserve the good in good condition or to
transport the good to the territory of a Party; or
(2) Does not remain under the control of customs authorities in the
territory of a non-Party.
(b) Documentary evidence. An importer making a claim that a good is
originating may be required to demonstrate, to CBP's satisfaction, that
the conditions and requirements set forth in paragraph (a) of this
section were met. An importer may demonstrate compliance with this
section by submitting documentary evidence. Such evidence may include,
but is not limited to, bills of lading, airway bills, packing lists,
commercial invoices, receiving and inventory records, and customs entry
and exit documents.
Origin Verifications and Determinations
Sec. 10.3026 Verification and justification of claim for preferential
tariff treatment.
(a) Verification. A claim for preferential tariff treatment made
under Sec. 10.3003(b) or Sec. 10.3011, 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, or the port director
finds a pattern of conduct, indicating that an importer, exporter, or
producer has provided false or unsupported declarations or
certifications, or the exporter or producer fails to consent to a
verification visit, the port director may deny the claim for
preferential treatment. A verification of a claim for preferential
tariff treatment under CTPA for goods imported into the United States
may be conducted by means of one or more of the following:
(1) Written requests for information from the importer, exporter,
or producer;
(2) Written questionnaires to the importer, exporter, or producer;
(3) Visits to the premises of the exporter or producer in the
territory of Colombia, to review the records of the type referred to in
Sec. 10.3009(c)(1) or to observe the facilities used in the production
of the good, in accordance with the framework that the Parties develop
for conducting verifications; and
(4) Such other procedures to which the Parties may agree.
(b) Applicable accounting principles. When conducting a
verification of origin to which Generally Accepted Accounting
Principles may be relevant, CBP will apply and accept the Generally
Accepted Accounting Principles applicable in the country of production.
[[Page 59079]]
Sec. 10.3027 Special rule for verifications in Colombia of U.S.
imports of textile and apparel goods.
(a) Procedures to determine whether a claim of origin is accurate--
(1) General. For the purpose of determining that a claim of origin for
a textile or apparel good is accurate, CBP may request that the
Government of Colombia conduct a verification, regardless of whether a
claim is made for preferential tariff treatment.
(2) Actions during a verification. While a verification under this
paragraph is being conducted, CBP, if directed by the President, may
take appropriate action, which may include:
(i) Suspending the application of preferential tariff treatment to
the textile or apparel good for which a claim for preferential tariff
treatment has been made, if CBP determines there is insufficient
information to support the claim;
(ii) Denying the application of preferential tariff treatment to
the textile or apparel good for which a claim for preferential tariff
treatment has been made that is the subject of a verification if CBP
determines that a person has provided incorrect information to support
the claim;
(iii) Detention of any textile or apparel good exported or produced
by the person subject to the verification if CBP determines there is
insufficient information to determine the country of origin of any such
good; and
(iv) Denying entry to any textile or apparel good exported or
produced by the person subject to the verification if CBP determines
that the person has provided incorrect information as to the country of
origin of any such good.
(3) Actions following a verification. On completion of a
verification under this paragraph, CBP, if directed by the President,
may take appropriate action which may include:
(i) Denying the application of preferential tariff treatment to the
textile or apparel good for which a claim for preferential tariff
treatment has been made that is the subject of a verification if CBP
determines there is insufficient information, or that the person has
provided incorrect information, to support the claim; and
(ii) Denying entry to any textile or apparel good exported or
produced by the person subject to the verification if CBP determines
there is insufficient information to determine, or that the person has
provided incorrect information as to, the country of origin of any such
good.
(b) Procedures to determine compliance with applicable customs laws
and regulations of the United States--(1) General. For purposes of
enabling CBP to determine that an exporter or producer is complying
with applicable customs laws, regulations, and procedures regarding
trade in textile and apparel goods, CBP may request that the government
of Colombia conduct a verification.
(2) Actions during a verification. While a verification under this
paragraph is being conducted, CBP, if directed by the President, may
take appropriate action which may include:
(i) Suspending the application of preferential tariff treatment to
any textile or apparel good exported or produced by the person subject
to the verification if CBP determines there is insufficient information
to support a claim for preferential tariff treatment with respect to
any such good;
(ii) Denying the application of preferential tariff treatment to
any textile or apparel good exported or produced by the person subject
to the verification if CBP determines that the person has provided
incorrect information to support a claim for preferential tariff
treatment with respect to any such good;
(iii) Detention of any textile or apparel good exported or produced
by the person subject to the verification if CBP determines there is
insufficient information to determine the country of origin of any such
good; and
(iv) Denying entry to any textile or apparel good exported or
produced by the person subject to the verification if CBP determines
that the person has provided incorrect information as to the country of
origin of any such good.
(3) Actions following a verification. On completion of a
verification under this paragraph, CBP, if directed by the President,
may take appropriate action which may include:
(i) Denying the application of preferential tariff treatment to any
textile or apparel good exported or produced by the person subject to
the verification if CBP determines there is insufficient information,
or that the person has provided incorrect information, to support a
claim for preferential tariff treatment with respect to any such good;
and
(ii) Denying entry to any textile or apparel good exported or
produced by the person subject to the verification if CBP determines
there is insufficient information to determine, or that the person has
provided incorrect information as to, the country of origin of any such
good.
(c) Denial of permission to conduct a verification. If a person
does not consent to a verification under this section, CBP may deny
preferential tariff treatment to the type of goods of the person that
would have been the subject of the verification.
(d) Assistance by U.S. officials in conducting a verification
abroad. U.S. officials may undertake or assist in a verification under
this section by conducting visits in the territory of Colombia, along
with the competent authorities of Colombia, to the premises of an
exporter, producer, or any other person involved in the movement of
textile or apparel goods from Colombia to the United States.
(e) Continuation of appropriate action. CBP may continue to take
appropriate action under paragraph (a) or (b) of this section until it
receives information sufficient to enable it to make the determination
described in paragraphs (a) and (b) of this section.
Sec. 10.3028 Issuance of negative origin determinations.
If, as a result of an origin verification initiated under this
subpart, CBP determines that a claim for preferential tariff treatment
under this subpart should be denied, it will issue a determination in
writing or via an authorized electronic data interchange system to the
importer that sets forth the following:
(a) A description of the good that was the subject of the
verification together with the identifying numbers and dates of the
import documents pertaining to the good;
(b) A statement setting forth the findings of fact made in
connection with the verification and upon which the determination is
based; and
(c) With specific reference to the rules applicable to originating
goods as set forth in General Note 34, HTSUS, and in Sec. Sec. 10.3013
through 10.3025, the legal basis for the determination.
Sec. 10.3029 Repeated false or unsupported preference claims.
Where verification or other information reveals a pattern of
conduct by an importer, exporter, or producer of false or unsupported
representations that goods qualify under the CTPA rules of origin set
forth in General Note 34, HTSUS, CBP may suspend preferential tariff
treatment under the CTPA to entries of identical goods covered by
subsequent representations by that importer, exporter, or producer
until CBP determines that representations of that person are in
conformity with General Note 34, HTSUS.
Penalties
Sec. 10.3030 General.
Except as otherwise provided in this subpart, all criminal, civil,
or
[[Page 59080]]
administrative penalties which may be imposed on U.S. importers,
exporters, and producers for violations of the customs and related laws
and regulations will also apply to U.S. importers, exporters, and
producers for violations of the laws and regulations relating to the
CTPA.
Sec. 10.3031 Corrected claim or certification by importers.
An importer who makes a corrected claim under Sec. 10.3003(c) will
not be subject to civil or administrative penalties under 19 U.S.C.
1592 for having made an incorrect claim or having submitted an
incorrect certification, provided that the corrected claim is promptly
and voluntarily made.
Sec. 10.3032 Corrected certification by U.S. exporters or producers.
Civil or administrative penalties provided for under 19 U.S.C. 1592
will not be imposed on an exporter or producer in the United States who
promptly and voluntarily provides written notification pursuant to
Sec. 10.3009(b) with respect to the making of an incorrect
certification.
Sec. 10.3033 Framework for correcting claims or certifications.
(a) ``Promptly and voluntarily'' defined. Except as provided for in
paragraph (b) of this section, for purposes of this subpart, the making
of a corrected claim or certification by an importer or the providing
of written notification of an incorrect certification by an exporter or
producer in the United States will be deemed to have been done promptly
and voluntarily if:
(1)(i) Done before the commencement of a formal investigation,
within the meaning of Sec. 162.74(g) of this chapter; or
(ii) Done before any of the events specified in Sec. 162.74(i) of
this chapter have occurred; or
(iii) Done within 30 days after the importer, exporter, or producer
initially becomes aware that the claim or certification is incorrect;
and
(2) Accompanied by a statement setting forth the information
specified in paragraph (c) of this section; and
(3) In the case of a corrected claim or certification by an
importer, accompanied or followed by a tender of any actual loss of
duties and merchandise processing fees, if applicable, in accordance
with paragraph (d) of this section.
(b) Exception in cases involving fraud or subsequent incorrect
claims--(1) Fraud. Notwithstanding paragraph (a) of this section, a
person who acted fraudulently in making an incorrect claim or
certification may not make a voluntary correction of that claim or
certification. For purposes of this paragraph, the term ``fraud'' will
have the meaning set forth in paragraph (C)(3) of Appendix B to Part
171 of this chapter.
(2) Subsequent incorrect claims. An importer who makes one or more
incorrect claims after becoming aware that a claim involving the same
merchandise and circumstances is invalid may not make a voluntary
correction of the subsequent claims pursuant to paragraph (a) of this
section.
(c) Statement. For purposes of this subpart, each corrected claim
or certification must be accompanied by a statement, submitted in
writing or via an authorized electronic data interchange system, which:
(1) Identifies the class or kind of good to which the incorrect
claim or certification relates;
(2) In the case of a corrected claim or certification by an
importer, identifies each affected import transaction, including each
port of importation and the approximate date of each importation;
(3) Specifies the nature of the incorrect statements or omissions
regarding the claim or certification; and
(4) Sets forth, to the best of the person's knowledge, the true and
accurate information or data which should have been covered by or
provided in the claim or certification, and states that the person will
provide any additional information or data which is unknown at the time
of making the corrected claim or certification within 30 days or within
any extension of that 30-day period as CBP may permit in order for the
person to obtain the information or data.
(d) Tender of actual loss of duties. A U.S. importer who makes a
corrected claim must tender any actual loss of duties at the time of
making the corrected claim, or within 30 days thereafter, or within any
extension of that 30-day period as CBP may allow in order for the
importer to obtain the information or data necessary to calculate the
duties owed.
Goods Returned After Repair or Alteration
Sec. 10.3034 Goods re-entered after repair or alteration in Colombia.
(a) General. This section sets forth the rules which apply for
purposes of obtaining duty-free treatment on goods returned after
repair or alteration in Colombia as provided for in subheadings
9802.00.40 and 9802.00.50, HTSUS. Goods returned after having been
repaired or altered in Colombia, regardless of whether such repair or
alteration could be performed in the territory of the Party from which
the good was exported for repair or alteration, are eligible for duty-
free treatment, provided that the requirements of this section are met.
For purposes of this section, ``repairs or alterations'' means
restoration, addition, renovation, re-dyeing, cleaning, re-sterilizing,
or other treatment that does not destroy the essential characteristics
of, or create a new or commercially different good from, the good
exported from the United States.
(b) Goods not eligible for duty-free treatment after repair or
alteration. The duty-free treatment referred to in paragraph (a) of
this section will not apply to goods which, in their condition as
exported from the United States to Colombia, are incomplete for their
intended use and for which the processing operation performed in
Colombia constitutes an operation that is performed as a matter of
course in the preparation or manufacture of finished goods.
(c) Documentation. The provisions of paragraphs (a), (b), and (c)
of Sec. 10.8, relating to the documentary requirements for goods
entered under subheading 9802.00.40 or 9802.00.50, HTSUS, will apply in
connection with the entry of goods which are returned from Colombia
after having been exported for repairs or alterations and which are
claimed to be duty free.
PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE
0
4. The general authority citation for Part 24 and specific authority
for Sec. 24.23 continue to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General
Note 3(i), Harmonized Tariff Schedule of the United States), 1505,
1520, 1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 9701; Public Law 107-
296, 116 Stat. 2135 (6 U.S.C. 1 et seq.).
* * * * *
Section 24.23 also issued under 19 U.S.C. 3332;
* * * * *
0
5. Section 24.23 is amended by adding paragraph (c)(13) to read as
follows:
Sec. 24.23 Fees for processing merchandise.
* * * * *
(c) * * *
(13) The ad valorem fee, surcharge, and specific fees provided
under paragraphs (b)(1) and (b)(2)(i) of this section will not apply to
goods that qualify as originating goods under section 203 of the United
States-Colombia Trade Promotion Agreement Implementation Act (see also
General
[[Page 59081]]
Note 34, HTSUS that are entered, or withdrawn from warehouse for
consumption, on or after May 15, 2012.
* * * * *
PART 162--INSPECTION, SEARCH, AND SEIZURE
0
6. The authority citation for Part 162 continues to read in part as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1592, 1593a, 1624.
* * * * *
0
7. Section 162.0 is amended by revising the last sentence to read as
follows:
Sec. 162.0 Scope.
* * * Additional provisions concerning records maintenance and
examination applicable to U.S. importers, exporters and producers under
the U.S.-Chile Free Trade Agreement, the U.S.-Singapore Free Trade
Agreement, the Dominican Republic-Central America-U.S. Free Trade
Agreement, the U.S.-Morocco Free Trade Agreement, the U.S.-Peru Trade
Promotion Agreement, the U.S.-Korea Free Trade Agreement, and the U.S-
Colombia Trade Promotion Agreement are contained in Part 10, Subparts
H, I, J, M, Q, R, and T of this chapter, respectively.
PART 163--RECORDKEEPING
0
8. The authority citation for Part 163 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510,
1624.
0
9. Section 163.1 is amended by redesignating paragraph (a)(2)(xv) as
(a)(2)(xvi) and adding a new paragraph (a)(2)(xv) to read as follows:
Sec. 163.1 Definitions.
* * * * *
(a) * * *
(2) * * *
(xv) The maintenance of any documentation that the importer may
have in support of a claim for preferential tariff treatment under the
United States-Colombia Trade Promotion Agreement (CTPA), including a
CTPA importer's certification.
* * * * *
0
10. The Appendix to Part 163 is amended by adding a new listing under
section IV in numerical order to read as follows:
Appendix to Part 163--Interim (a)(1)(A) List
* * * * *
IV. * * *
Sec. 10.3005 CTPA records that the importer may have in support of a
CTPA claim for preferential tariff treatment, including an importer's
certification.
* * * * *
PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS
0
11. The authority citation for Part 178 continues to read as follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.
0
12. Section 178.2 is amended by adding new listings for ``Sec. Sec.
10.3003 and 10.3004'' to the table in numerical order to read as
follows:
Sec. 178.2 Listing of OMB control numbers.
------------------------------------------------------------------------
19 CFR Section Description OMB control No.
------------------------------------------------------------------------
* * * * * * *
Sec. Sec. 10.3003 and Claim for 1651-0117
10.3004.. preferential tariff
treatment under the
US-Colombia Trade
Promotion
Agreement..
* * * * * * *
------------------------------------------------------------------------
David V. Aguilar,
Deputy Commissioner, U.S. Customs and Border Protection.
Approved: September 20, 2012.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2012-23604 Filed 9-25-12; 8:45 am]
BILLING CODE 9111-14-P