Friday, November 17, 2017

U.S.-Morocco Free Trade Agreement Frequently Asked Questions (FAQ’s)

On November 16, 2017, U.S. Customs and Border Protection published these U.S.-Morocco Free Trade Agreement Frequently Asked Questions (FAQ’s)

Question #1: Where can I find information on importing from Morocco under the U.S.-Morocco Free Trade Agreement (MAFTA)?

Answer #1: For questions about importing from Morocco under the U.S.-Morocco FTA, see the U.S. Customs and Border Protection (CBP) Morocco FTA page by searching “Morocco” at www.cbp.gov.

Question #2: What information is available on the www.cbp.gov U.S.-Morocco (MAFTA) FTA webpage?

Answer #2: The Morocco Free Trade Agreement (MAFTA) went into effect on January 1, 2006; following information is available from the Morocco FTA webpage:

Question #3: Where can I find information on exporting to Morocco?

Answer #3: Answers to questions on exporting to Morocco can be found on www.export.gov.

Making a Claim for Preferential Tariff Treatment

Question #4: How does an importer make a preference claim under the U.S.-Morocco FTA?

Answer #4: A U.S.-Morocco FTA claim is made by prefacing the tariff item on the entry summary with the Special Program Indicator “BH” (19 CFR 10.763) or by filing a PEA/PSC claim within one year of importation.

Question #5: May a post-importation preference claim be made using a 19 USC 1520(d)

Answer #5: No a 19 USC 1520(d) is not an option.

Question #6: What responsibilities does an importer assume by making a U.S.-Morocco FTA preference claim?

Answer #6: By making a U.S.-Morocco FTA preference claim, the importer attests that the good is eligible for U.S.-Morocco FTA preference and accepts responsibility for the truthfulness and accuracy of the claim. The importer is also responsible for providing the certification of origin and supporting documentation to CBP upon request. (19 CFR 10.765)

Declaration (Certification of Origin) and Required Data Elements

Question #7: If CBP requests a U.S.-Morocco FTA certification of origin, which one should the importer provide to CBP – the exporter’s, the producer’s, or his own?

Answer #7: If the U.S.-Morocco FTA claim is based on the exporter’s or producer’s Declaration, the importer should provide that Declaration to CBP. If the U.S.-Morocco FTA claim is based on the importer’s Declaration or importer knowledge, the importer should provide its own certification of origin.

Question #8: Is there an official form or format for the Declaration under the U.S.-Morocco FTA?

Answer #8: Although there is no official Declaration form or format required under the U.S.- Morocco FTA, a free-form Declaration with all of the data elements in 19 CFR 10.764 may also be made.

Question #9: When must the importer provide a U.S.-Morocco FTA Declaration to CBP?

Answer #9: The importer must provide CBP with a U.S.-Morocco FTA Declaration upon request by CBP.

Question #10: Can an importer make a U.S.-Morocco FTA claim without an exporter or producer Declaration?

Answer #10: If the importer has knowledge that the goods originate and can provide documentation to substantiate the claim, then the importer need not possess an exporter or producer Declaration.

Question #11: Will CBP accept an unsigned or undated Declaration?

Answer #11: No, the certification of origin must be signed and dated by an individual with knowledge of the facts and the authority to legally bind the company.

Question #12: Will CBP accept a Declaration if the HTSUS number is incorrect?

Answer #12: CBP may accept a Declaration with an incorrect HTSUS number or request that amended Declaration be submitted with a copy of the original Declaration as an attachment. The correct HTSUS number on the Declaration is an important indicator that the origination analysis was performed using the correct product-specific rule in HTSUS General Note 27(h).

Question #13: Can an importer submit a Declaration to CBP dated after the preference claim?

Answer #13: An exporter or producer Declaration signed after the date of the preference claim could not have been in the importer’s possession at the time of such claim. However, if the preference claim is based on importer’s knowledge, no exporter/producer certification is required.

Requesting Documentation and Verification

Question #14: CBP has requested that the importer provide documentation substantiating that the good originates. Morocco has a wholly the growth, product, or manufacture" or Value Content + 19 CFR 102 or Product-Specific Tariff shift. What information must be provided?

Answer #14: The information required to substantiate an origination claim depends on the rule of origin and the nature of the good. In the case of a manufactured good using a product-specific rule of origin in GN 27(h), at a minimum, the following documentation should be provided:

  • copy of the product specific rule of origin
  • descriptive literature, diagrams, etc. to support classification of the imported good
  • bill of materials (with a description, HTSUS number, and the originating status of each material)
  • affidavit or certification attesting to the originating status of all originating materials that would otherwise fail the product-specific rule
  • cost data, if the product-specific rule has a regional value content (RVC) requirement
  • the regional value content (RVC) calculation US/Morocco materials + direct cost of processing at least (35%) of appraised value. 19 CFR 10.770; 19 CFR 10.773-776; GN 27(b) & (c).

Question #15: CBP has requested manufacturing information to substantiate the originating status of a good, but as the importer, I do not have those records in my possession. Must I comply?

Answer #15: Yes, the importer is responsible for ensuring that CBP receives documentation substantiating that the good meets a rule of origin and otherwise complies with the terms of the U.S.-Morocco FTA. If the importer hasn’t the information, he should contact the exporter and/or producer to ensure that the information is provided to CBP. To protect confidentiality, a manufacturer may provide documentation directly to CBP. Per 19 CFR 103.35, CBP is barred from releasing business confidential information to the importer or any other party without obtaining consent.

Question #16: If CBP requests a Supporting Statement, can the importer provide it via fax or as an email attachment?

Answer #16: Yes, CBP will accept a digitized certification of origin as long as it contains a handwritten signature or the image of a handwritten signature.

Origination

Question #17: How does a good “originate” under the U.S.-Morocco FTA?

Answer #17: In order to be an “originating” good, a good must meet a rule of origin and all other requirements (GN 27 and 19 CFR 10.770).

Question #18: What are the rules of origin under the U.S.-Morocco FTA?

Answer #18: Generally speaking, a good will originate if:

  1. The good is wholly obtained or produced entirely in the territory of Morocco or of the United States, or both; or
  2. The good is produced entirely in the territory of Morocco or of the United States, or both, satisfies all other applicable requirements of this subpart, and
    1. Each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in General Note 27(h), HTSUS and
    2. The good otherwise satisfies any applicable regional value content or other requirements specified in General Note 27(h), HTSUS; or
  3. The good is produced entirely in the territory of Morocco or the United States, or both, exclusively from originating materials. (19 CFR 10.770)

Question #19: How does a producer know if a material used to produce his good originates?

Answer #19: Generally speaking, the producer will know that a material originates because his supplier will provide a certification or affidavit upon request. If a material supplier will not provide a certification or affidavit, then the producer should consider the material to be non-originating.

Question #20: If the imported good is substantially manufactured in Morocco, can the U.S. importer assume that it meets the terms of the U.S.-Morocco FTA and make a preference claim?

Answer #20: No, the importer would not be exercising reasonable care and may be subject to penalties if the good were found not to originate. By making a preference claim, the importer is certifying that the good meets the terms of the agreement and that the importer/exporter/producer will provide CBP with substantiating documentation upon request.

Question #21: Can a chemical reaction result in origination?

Answer #21: No, there is no chemical reaction rule of origin for goods of HTSUS Chapter 27 from Morocco.

Question #22: Can purification result in origination?

Answer #22: No, there is no purification rule of origin for goods of HTSUS chapter 27.

Question #23: What is the Repair and Alteration Provision?

Answer #23: Repair and Alteration Provision rules that apply for purposes of obtaining duty-free treatment on goods returned after repair or alteration in Morocco as provided for in subheadings 9802.00.40 and 9802.00.50, 19 CFR 10.787.

Question #24: Is there a provision to allow for goods to originate even if they have been commingled with non-originating goods? What if originating materials have been commingled with non- originating materials?

Answer #24: No, there is no fungible goods and material provision for the Morocco FTA.

Question #25: What does it mean when a producer says that a good meets a product-specific rule of origin?

Answer #25: It means that all non-originating materials, with the possible exception of a small de minimis value, used to produce the good undergo a tariff shift prescribed in General Note 27(h).

Question #26: What is de minimis?

Answer #26: There is no de minimis rule for the Morocco FTA.

Question #27: What if the good in question does not have a product-specific rule of origin?

Answer #27: For the Morocco FTA tariff items are (Certain goods in HTSUS 6-9, 12-13, 20-22, 39, 42, 50-63, 70, 72, 85, 87 & 94) all other are either Wholly the growth, or 35% DCP + VOM, and new article of commerce Unlimited US value may count towards 35%.

Regional Value Content (RVC)

Question #28: When should the RVC formula be used under the U.S.-Morocco FTA?

Answer #28: The RVC formula should be used where it applies (Direct cost of processing, value of originating materials, adjusted value of imported goods.

Question #29: When performing the RVC calculation, how is the value of the good and the materials used to produce it determined? What adjustments can be made?

Answer #29: The value of a good and its constituent materials is determined in accordance with General Note 27(b)(ii), (c), (f) and 19 CFR 10.770.

Indirect Materials

Question #30: How does the U.S.-Morocco FTA treat indirect materials?

Answer #30 Indirect materials are to be disregarded in determining whether a good qualifies as an originating good under 19 CFR 10.777 of this subpart and General Note 27 (d) (v), HTSUS, except that the cost of such indirect materials may be included in meeting the value-content requirement specified in 19 CFR 10.770(b) of this subpart.

Third Country Transportation

Question #31: May a U.S.-Morocco FTA claim be made on goods that entered the commerce of a non-Party or that were further processed while under customs control in a non-Party country?

Answer #31: Yes, Imported Directly: May leave customs' control, may not undergo further production in a 3rd country, limited operations specified; GN 27(d)(v); 19 CFR 10.777.

Goods Subject to Tariff Rate Quotas

Question #32: Does the U.S.-Morocco FTA provide for Tariff Rate Quotas?

Answer #32: No, Morocco quotas ended January 1, 2015.

U.S. Goods Returned

Question #33: May U.S. goods returned from Morocco to the United States be claimed under the U.S.-Morocco FTA?

Answer #33: No, U.S. goods returned cannot be claimed under the U.S.-Morocco FTA, but may be exempt from duty under HTSUS 9801.00.10.

Merchandise Processing Fee (MPF)

Question #34: Are originating goods exempt from MPF under the U.S.-Morocco FTA?

Answer #34: No, there is no exemption from MPF per 19 CFR 24.23(c).

Duty Rates and Staging (Phase Out)

Question #35: Duty rates on originating goods under the U.S.-Morocco FTA phase out on January 1, 2023. Where can I find the phase out schedule?

Answer #35: USITC Publication 3721, Annex 2, Section B, is available at a link from the Morocco FTA webpage

Question #36: Where can I get additional information with respect to importing into the U.S. under the U.S.-Morocco FTA?

Answer #36: Questions may be addressed to our mailbox at fta@dhs.gov. Also visit the Morocco FTA webpage.

USITC to Study U.S. Trade and Investment with Sub-Saharan Africa

On November 17, 2017, the U.S. International Trade Commission ("USITC") announced it has launched an investigation to examine U.S. trade in goods and services and investment in Sub-Saharan Africa ("SSA").

The investigation, U.S. Trade and Investment with Sub-Saharan Africa: Recent Developments, was requested by the United States Trade Representative (USTR) in a letter received on October 23, 2017.

As requested, the USITC, an independent, nonpartisan, factfinding federal agency, will:

  • provide an overview of U.S. exports to and imports from SSA of goods and services, identifying the sectors and countries in which U.S. exports and imports have increased the most, in both value and percentage terms, and the principal factors behind such growth;
  • provide profiles of seven SSA economies -- Cameroon, Côte d'Ivoire, Ethiopia, Kenya, Mauritius, Nigeria, and South Africa -- describing these countries' macroeconomic environment, and trade flows and foreign direct investment (FDI) with the United States;
  • provide a summary of recent developments in regional integration efforts in SSA, including progress on negotiations of the Continental Free Trade Area (CFTA);
  • describe U.S. imports of goods from SSA countries under the African Growth Opportunity Act (AGOA), as well as summarize strategies by AGOA countries to increase trade with the United States;
  • perform a qualitative and, to the extent possible, quantitative assessment of the non-crude petroleum sectors and SSA markets that present the greatest potential for growth in U.S. exports and imports of goods and services, as well as FDI flows; and
  • discuss exports of goods and services from U.S. small and medium-sized enterprises (SMEs) to SSA and the challenges faced by U.S. SMEs exporting to the region.

The USITC expects to deliver the report to USTR by April 30, 2018.

The USITC will hold a public hearing in connection with the investigation on January 23, 2018. Requests to appear at the hearing should be filed no later than 5:15 p.m. on January 9, 2018, with the Secretary, U.S. International Trade Commission, 500 E Street, SW, Washington, DC 20436. For further information, call 202-205-2000.

Wednesday, November 15, 2017

Santa's Not So Jolly After Seeing His U.S. Customs Bill

On October 31, 2017, Mark A. Barnett, issued his opinion in RUBIES COSTUME CO., Plaintiff, v. UNITED STATES, Defendant. (See Customs Bulletin Vol. 51 No. 46. pages 69-96.)

"In this case, the court addresses the issue of the proper classification of a Santa Claus costume. Is it a 'festive article' entitled to duty free treatment, or is it fancy dress, of textile, akin to wearing apparel, dutiable at the rates applicable to the particular parts of the costume? Application of classification principles in this case (the General Rules of Interpretation, which direct the court to apply the terms of the Harmonized Tariff Schedule, and relevant judicial precedent) leads to a finding that, while flimsy and non-durable costumes (whether for Halloween, Christmas, or any other holiday) generally receive duty free treatment as festive articles, and non-flimsy, durable Christmas sweaters may also receive duty free treatment as festive articles (because they are not fancy dress), a relatively well-made, durable, dry clean only Santa Claus costume constitutes fancy dress, of textile, and is, therefore, excluded from classification as a festive article."

There is quite a bit at stake in this case, as Rubie's suggested classification would have resulted in zero import duty, while the court's opinion, if it stands, will result in import duties as high as 32%.

Rubie Costume and the U.S. government have been arguing over classification of Hallowe'en and other seasonal costumes for at least 20 years. Clients of Agathon Associates can read more at http://www.agathonassociates.com/textile-pri/festive-articles/index.htm. You will need to enter your username and password. If you do not know your username and password email David Trumbull at david@agathonassociates.com.

Miscellaneous Tariff Bill Filed

On November 9, 2017, House Ways and Means Chairman Kevin Brady (R-TX), Ranking Member Richard Neal (D-MA), Senate Finance Committee Chairman Orrin Hatch (R-UT), and Ranking Member Ron Wyden (D-OR) introduced the bipartisan, bicameral Miscellaneous Tariff Bill Act of 2017 (MTB) (H.R. 4318). After reviewing the U.S. International Trade Commission (ITC)’s final report to Congress, the lawmakers have prepared this legislation to implement the ITC’s recommendations.

Background: Last year, Congress overwhelmingly passed the bipartisan American Manufacturing Competitiveness Act of 2016 (AMCA) to establish an open and transparent process for consideration of the MTB. Pursuant to the AMCA, American businesses were able to petition for tariff relief from the ITC. The ITC then determined whether each petition met the requirements of the AMCA, including the requirement that there be no domestic producer of a like product who objects to the tariff reduction or suspension at issue. In August, the ITC, with input from DOC and CBP, provided a final report to Congress that included recommendations concerning more than 2,500 petitions. The ITC recommended that more than 1,800 of the petitions be included in MTB legislation to be considered by Congress. The Committees have reviewed the ITC’s final report and prepared this legislation to implement the ITC’s recommendations. Pursuant to the AMCA, Congress may not include products that were not recommended by the ITC, and only non-controversial provisions will be included in the MTB.

Some observations by Agathon Associates --

  • The bill is huge, 510 pages in length, with 1675 individual duty suspension or reduction provisions.
  • For the first time in several years Congress has undertaken a complete repeal and replacement of the Chapter 99 Subchapter II duty suspensions and reductions. Many hundreds of provisions expired at the end of 2012 but are still printed in the 2017 Harmonized Tariff Schedule of the United States ("HTSUS"), and to make it even more confusing, provisions that expired at the end of 2009 and 2006 are also still listed. Currently all provisions have expired, and Congress, in Section 1 of the bill, strikes out all of them and replaces them with the new ones. We welcome this clearing up of the HTSUS.
  • Because the old duty suspensions and reductions were the results of various bills passed at different times and with the order of the provisions of the bills relating more to the happenstances of the dates they were filed, the was, in Chapter 99 Subchapter II, no logical order to the provisions, so if you wanted to find a provision relating to, say, rayon staple fiber, you'd have to start at the beginning and read straight through to the end to be sure of finding all relevant provisions. In this bill Congress put the duty suspensions and reductions in order by HTSUS classification number. So, for example, to find all provisions for rayon staple fiber, you can start as the first provision that begins with the "55" and stop once you get to a provision for staple yarn.
  • On the question of whether the MTB should (1) be solely a vehicle to promote American Manufacturing Competitiveness (which after is the name of the law that created this process) by providing duty relief to manufacturers who import inputs not available domestically or (2) provide duty relief for anyone importing articles not available domestically, including end-use consumer products, Congress in this bill chose the latter. Among the consumer articles included are certain:
    • Articles of knit apparel,
    • Articles of non-knit apparel,
    • Hats, and
    • Footwear.
  • TIMING. The amendments made by this Act apply to goods entered, or withdrawn from warehouse for consumption, on or after the 30th day after the date of the enactment of this Act.

Clients of Agathon Associates can get more details at http://www.agathonassociates.com/textile-pri/mtb/index.htm. You will need to enter your username and password. If you do not know your username and password email David Trumbull at david@agathonassociates.com.

Pendleton Woolen Mills Opens Two New Retail Stores in the Pacific Northwest

Pendleton Woolen Mills, a global lifestyle brand headquartered in Portland, Oregon, announces the opening of two new retail stores, Pendleton River Park Square in Spokane, Washington and Pendleton Boise Towne Square in Boise, Idaho. These new stores feature an exceptional selection of “best in brand” for all product offerings in women’s and men’s apparel, home and blankets, and accessories categories. Pendleton Spokane and Boise locations are part of the company’s new experiential design, offering customers opportunity to interact with the brand, with added insight in to the history and culture.

Considered one of the original makers in Oregon, dating back to the company’s founding in 1863, Pendleton embraces the Pacific Northwest lifestyle and it is reflected in the heritage and overall aesthetic, gearing towards a younger millennial shopper. Casual and contemporary styling is reflected in the brand’s focus toward relaxed outdoor and western design, while maintaining quality and authenticity for which Pendleton is known.

About Pendleton -- Setting the standard for classic American style, Pendleton is a lifestyle brand recognized worldwide as a symbol of American heritage, authenticity and craftsmanship. With six generations of family ownership, since 1863, the company celebrates 154 years of weaving fabric in the Pacific Northwest in 2017. Known for fabric innovation, Pendleton owns and operates two of America’s remaining woolen mills, constantly updating them with state-of-the-art looms and eco-friendly technology. Inspired by its heritage, the company designs and produces apparel for men and women, blankets and accessories, home décor and gifts. Pendleton is available through select retailers in the U.S., Canada, Europe, Japan, Korea and Australia as well as Pendleton stores, company catalogs and direct-to-consumer channels, including the Pendleton website: http://www.pendleton-usa.com

Army Combat Boot Contract Awarded

McRae Industries Inc., Mt. Gilead, North Carolina, has been awarded a maximum $40,434,006 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for hot weather combat boots. This was a competitive acquisition with two responses received. This is a one-year base contract with four one-year option periods. Maximum dollar amount is for the life of the contract. Location of performance is North Carolina, with a Nov. 14, 2022, performance completion date. Using military service is Army. Type of appropriation is fiscal 2018 through 2023 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE1C1-18-D-1011).

Federal Business Opportunities through November 15, 2017

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Clients of Agathon Associates and subscribers to Agathon Associates' Trade Advisor Service can find links to the full solicitations at www.agathonassociates.com/textile-pri/berry/fbo.htm. You will need to enter your username and password. If you do not know your username and password email David Trumbull at david@agathonassociates.com.