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ATPDEA Brassiere Provision Customs and Border Protection 2003
Andean Trade Promotion and Drug Eradication Act • H. R. 3009 • Public Law 107 -210 • Signed into law on August 6, 2002 • Will expire on December 31, 2006 – Andean Trade Promotion and Drug Eradication Act (ATPDEA)
Andean Trade Promotion and Drug Eradication Act (ATPDEA) Benefits • Preferential Treatment for Certain Textiles and Apparel and Luggage • Protections Against Transshipment. Obligations
ATPDEA Eligible Countries • • Colombia Ecuador Peru Bolivia
Preference Groups A-E Apparel Assembled from: A B C D E US Fabric or US Components from US or Andean yarns Chief Value Llama, Alpaca, or Vicuna Andean Fabrics/Components from Andean yarns NAFTA Short Supply Designated Short Supply Combination of Groupings A through D
Preference Groups F - I Apparel Assembled from: F G H I Handloomed, Handmade, or Folklore Textile and Apparel Articles Brassieres Assembled in the US/Andean Beneficiary Countries Textile Luggage Assembled from US Fabrics and Yarns Apparel Assembled from Regional Fabrics or Components, Whether or Not in Combination with Groupings A-D
Preference Group G • Brassieres • Cut and Sewn in the US, or one or more ATPDEA beneficiary countries or both • Subject to Value Requirement • Entered under 9821. 19 and 6212. 10, HTSUS 19 CFR 10. 243(a)(4)
19 CFR 10. 248(b) Limitations on Preferential Treatment (1) General. During the year that begins on October 1, 2003, & during any subsequent year, articles of a producer or entity controlling production that conform to the production standards set forth in § 10. 243(a)(4) will be eligible for preferential treatment only if:
Group G Brassieres • In first year, only requirement is that the bras be cut and sewn or otherwise assembled in the US or ATPDEA beneficiary countries or both (no US fabric content required for duty free treatment) • Beginning Oct. 1, 2003, requirement that in the preceding year, the aggregate cost of US fabrics used in the production of a producer’s or entity’s bras was at least 75% of aggregate declared customs value of the fabric in all bras of that producer or entity that were entered and eligible under this provision in preceding 1 -year period 19 CFR 10. 243(a)(4); 19 CFR 10. 248(b)
19 CFR 10. 248(b) Limitations on Preferential Treatment (1)(i) The aggregate cost of fabrics (exclusive of all findings and trimmings) formed in the US that were used in the production of all of those articles of that producer or that entity controlling production that are entered as articles described in § 10. 243(a)(4) during the immediately preceding year was at least 75% of the aggregate declared customs value of the fabric (exclusive of all findings and trimmings) contained in all of those articles of that producer or that entity controlling production that are entered as articles described in § 10. 243(a)(4) during that year; or
19 CFR 10. 248(b) Limitations on Preferential Treatment (1)(ii) In a case in which the 75% requirement set forth in (b)(1)(i) of this section was not met during a year and therefore those articles of that producer or entity controlling production were not eligible for preferential treatment during the following year, the aggregate cost of fabrics (exclusive of all findings and trimmings) formed in the US that were used in the production of all those articles of that producer or that entity controlling production that conform to the production standards set forth in § 10. 243(a)(4) and that were entered during the immediately preceding year was at least 85% of the aggregate declared customs value of the fabric (exclusive of all findings and trimmings) contained in all of those articles of that producer or that entity controlling production that conform to the production standards set forth in § 10. 243(a)(4) and that were entered during that year.
Group G Brassieres • If Producer or Entity Fails to Meet Requirement, Ineligible for the Subsequent Program Year and 85% US Fabric Requirement is Imposed on Same Year – 85% Rule Includes Producers and Entities Not Participating in program in first year, Oct. 1, 2002 to Sept. 30, 2003 • Eligibility Not Reinstated Until Year Following One in which 85% Standard is Met • Return to 75% Standard for Year Following the Reinstatement Year 19 CFR 10. 243(a)(4); 19 CFR 10. 248(b)
Brassieres-19 CFR 10. 248(a) Definitions of Terms • Producer • Entity controlling production • Fabrics formed in the US • Cost • Declared customs value • Year • Entered
Brassieres-19 CFR 10. 248(a) Definitions of Terms • Producer • Individual • Corporation • Partnership • Association • Other Entity or Group • Direct, Daily Control Over Production • In ATPDEA Country
Brassieres-19 CFR 10. 248(a) Definitions of Terms • Entity Controlling Production • Individual • Corporation • Partnership • Association • Other Entity or Group • Not a Producer • Controls Production in ATPDEA Country through Contractual Relationship or other Indirect Method
Brassieres-19 CFR 10. 248(a) Definitions of Terms • Fabrics Formed in the U. S. • Weaving • Knitting • Needling • Tufting • Felting • Entangling • Other Formation Process
Brassieres-19 CFR 10. 248(a) Definitions of Terms • Cost • Price of U. S. -formed fabrics when last purchased FOB port of export, or with adjustments to reach a FOB price • If unable to determine FOB price, or price is determined to be unreasonable, then a Computed Value equivalent for the fabrics plus costs representing freight, insurance, packing, and other costs to get it to port of export
Brassieres-19 CFR 10. 248(a) Definitions of Terms • Cost Examples – U. S. formed fabric, purchased FOB Miami • Price paid is the “cost” – U. S. formed fabric, purchased on the local (ATPDEA) market • “Cost” is price paid, minus: – freight and insurance, from U. S. to ATPDEA country – duty paid at entry to ATPDEA country – mark-up – etc.
Brassieres-19 CFR 10. 248(a) Definitions of Terms • Declared Customs Value • Cost of U. S. Formed Fabric, plus • Cost of All Non-U. S. -Formed Fabric Contained in Article • Value of Findings/Trimmings not Included • Each Figure Must be Verifiable
Findings and Trimmings • Findings - sewing essentials used in garments • Trimmings- decorative or ornamental parts
Findings and Trimmings • Examples: – Sewing Thread – Hooks and Eyes – Snaps – Buttons – “Bow Buds” – Decorative Lace Trim – Zippers, Zipper Tapes – Labels – Elastic Strips
Findings and Trimmings • For Purposes of ATPDEA, Elastic Strip is:
Group G General Rules • Shipments Under Consideration Must be: – Produced as Specified in 10. 243(a)(4) – Entered into the U. S. within the same program year in order to be considered in that year’s value determination • Articles Exported to Countries Other than U. S. not Factored into Relevant Value • Compliance with 75% Rule – Value of Articles Entered Outside of HTS 9821. 19 (Bras/Group G) not Included
Group G General Rules • Compliance with 85% Rule – Include Value of All Articles Meeting Production Standards of 10. 243(a)(4), Regardless of Entered HTSUS Subheading • Value of Findings and Trimmings NOT Considered when Evaluating for 75%/85% Rule Compliance
Declaration of Compliance • In Addition to Certificate Required by 19 CFR 10. 244 • Filed by Producer or Entity Controlling Production Prior to First Shipment • In English or Language of Producing C/O • Specifies and Supports Which % Standard Met • Submitted to New York STC • Unique Number Assigned to Producer/Entity by NY STC – Number Must be Provided to all U. S. Customers – Number Must be Referenced by U. S. Importers at Time of Each Entry/Warehouse Withdrawal
Declaration of Compliance • Amendments • If based on estimates, must be made within thirty days of company determining year end figures • If based on erroneous information, within thirty days of discovery • Filed with NY STC
Declaration of Compliance 1. 2. 3. 4. , 5. 6. 7. Year Commencing October 1, Ending September 30 of Calendar Year in Which Applicable % Standard was Met Legal Name and Address of the Preparer, Including Preparer’s I. R. Number, if Applicable Legal Name(s) and Address(es) of ATPDEA Producer, if not Already Identified in Block 2 Related to Goods Entered During Year in Block 1 Declare Standard: 75% or 85% Signature of Authorized, Knowledgeable Person
Recordkeeping & Verification • All Records in Accordance with 19 CFR 163 • Documents and Other Information Related to Bra Exports to the U. S. , Entered in the Year in Question, Whether or Not a Preference Claim is Made Pursuant to 19 CFR 10. 245 – – – Work Orders Production Orders Purchase Orders Invoices Bills of Lading Others
Recordkeeping & Verification • Documentation of Cost of U. S. Fabric • Documentation of Cost of Foreign Fabric – Both Include: • • • Purchase Orders Invoices Bills of Lading Shipping and Insurance Documents Foreign Customs/Entry Documents Others
Recordkeeping & Verification • Accounting Books/Records • Audit Trail Must Consist of: – Cash Disbursements, Purchase Journal, or Equivalents that Demonstrate Purchase of Fabric • Must Contain Date, Vendor, and Amount Paid – Production Records and Work Orders • Accomplish via Analysis of Inventory Records of Producer/Controlling Entity • Fabric Must be Clearly Traceable from Purchase Order to Finished Article – Inventory Records Demonstrating Opening, Interim, and Ending Balances of Materials
Recordkeeping & Verification • If CBP is Prevented from Verifying Declaration of Compliance, Preference Claim may be Denied • If CBP Determines that 75% / 85% Standard not Met, Name of Producer/Entity and Results will be Published in the Federal Register
Preference Group G-Summary • Brassieres Assembled in the US and/or One or More ATPDEA Beneficiary Countries • 9821. 19, HTSUS – 19 CFR 10. 243(a)(4) • ATPDEA Certificate of Origin • Declaration of Compliance • Traceable Raw Materials and Production
Example 1 • A Producer in an ATPDEA Country: – Manufactures articles that meet 10. 243(a)(4) – In Year 1, sends 50% of production to ATPDEA markets, balance to U. S. – In Year 1, cost of U. S. formed fabric is: • 100% of value for goods sold regionally • 60% of value for goods sold to U. S. • Does this Producer Qualify?
Example 1 • Producer Does NOT Qualify; Does not Meet 75% Standard • Value Analysis Only on Exports to the U. S. when Evaluating for Compliance with the 75% / 85% Standard • To be Eligible in Following Year, Must Meet 85% Standard
Example 2 • A Producer in an ATPDEA Country: – Manufactures Articles that meet 10. 243(a)(4) – In Year 1, Exports three shipments of those articles to the U. S. • One entered as goods covered by 10. 243(a)(4) – 9821. 19 • One entered as goods covered by 10. 243(a)(7) – Not 9821. 19 • One entered under HTS 9802. 00. 80 • Which Shipment(s) Must be Reviewed Under a Compliance Audit?
Example 2 • Shipment 1 Only • When Evaluating for Compliance with the 75% Standard, Analysis Can Only be Made of the Values Related to Merchandise Entered under 10. 243(a)(4) / ATPDEA Group G
Example 3 • A Producer in an ATPDEA Country: – In Year 2, produces goods that meet 10. 243(a)(4) – In that same year, these goods are exported to the U. S. and entered under HTS 6212. 10 and/or 9802. 00. 80, not under HTS 9821. 19 • Previous year, 75% Standard had Not Been Met • For Year 3 Claims, Values for Which Year 2 -Shipments Must be considered for determining compliance? • Assuming Compliance for Year 3, which % Standard Must be Met for Year 4 Claims?
Example 3 • Values for All Shipments of Goods Described in 10. 243(a)(4), Regardless of Entered Classification, Must be Analyzed • Year 4: – Year 1, 75% Not Met – Year 2, No Claims but Must Meet 85% Standard – Year 3, Claims under 9821. 19 based on 85% Standard from Year 2 – Year 4, Claims under 9821. 19 based on 75% Standard from Year 3
Example 4 • In an ATPDEA Country, an Entity Controlling Production of Goods Meeting 10. 243(a)(4): – Buys for US, CA, and MX Markets – All Goods Entered for Consumption in the U. S. , then Distributed to Various Retail Outlets in the Three Markets • Which Portion(s) of these Shipments Must be Covered by the Declaration of Compliance, therefore any CBP Compliance Review?
Example 4 • All Must be Evaluated as All Goods are Entered for Consumption in the U. S. Prior to Redistribution
Example 5 • Fabric Cut and Sewn in U. S. , with Other U. S. Materials to form Cups; Joined in U. S. to form Brassiere Front Sub-assemblies • Sub-assemblies Warehoused until Following Year • Sent to ATPDEA Country and Assembled with: • Elastic Strips and Labels Produced in Asia • Other Materials/Components Produced in the ATPDEA Country to form Goods which meet 10. 243(a)(4) • Values of Which Components Must be Considered in Evaluating the 75% / 85% Standard
Example 5 • To the Extent that the Elastic and Labels Meet the Definition of a Finding or Trimming, they are NOT included in the Value Analysis Relative to the 75% / 85% Standard
Example 6 • A Producer in an ATPDEA Country: – In Single Calendar Year, Sends Entire Production of Goods meeting 10. 243(a)(4) to the U. S. – Consists of Two Shipments • Shipment 1 does not Meet 75% Standard • Shipment 2 Exceeds 85% Standard – Shipment 1 is Entered on March 1 – Shipment 2 is Entered into a Warehouse and not Withdrawn for Consumption until November 1 • For that Calendar Year, Can the Producer Complete a Valid Declaration of Compliance?
Example 6 • No Valid Declaration for that Year can be Completed • Shipment 1 does not Meet 75% Standard • Shipment 2, while Produced and Exported in the Same Calendar Year, was not Entered for Consumption until November 1, the Subsequent Program Year
Example 7 • A Producer in an ATPDEA Country: – In Year 2 of the Program (10/1/03 through 9/30/04), begins production of goods meeting 10. 243(a)(4) for the U. S. Market – Goods do not Meet 85% Standard until Program Year 3 • For the Following Years, are the Producer’s Goods Eligible for a Group G Claim? – Year 2 – Year 3 – Year 4
Example 7 • Year 2 – No, Because there was no Production in the First Program Year, the 75% Standard was not Met Relative to Year 2 • Year 3 – No, Because the Production in Program Year 2 did not Meet the 85% Standard • Year 4 – Yes, Because the Production in Program Year 3 Met the 85% Standard
Example 8 • An Entity (“A”) Controlling Production Uses Five ATPDEA Producers: – All Produce Goods that Meet 10. 243(a)(4) – Producers 1 - 4 Ship 100% of their Production to the U. S. Market – Producer 5 Ships 5% to 10% of Such Production to the U. S. , the Balance to Europe – Producers 1 - 3 and 5 Produce Only Pursuant to Contracts from “A” – Producer 4 Works for Self, for “A, ” and Even Produces for Another Entity Controlling Production, “B” – “B” Controls All Production of Producer 6 • Declarations of Compliance – Who, What, etc.
Example 8 • Declaration of Compliance for Producers 1 -3 – May be Completed by “A” – Declaration not needed from Each Producer as They do not Produce in Absence of “A’s” Contract • Declaration of Compliance for Producer 5 – May be Completed by “A” – Must Cover the 5% to 10% of Production Exported to U. S. • Declaration of Compliance for Producers 4&6 – If Completed by Producer, Must Cover All of Its Production – If Completed by “A, ” Must Cover Relevant Production from 4 – If Completed by “B, ” Must Cover Relevant Production from 4, and All from 6
Additional Information CBP Website: www. cbp. gov OTEXA Website: www. otexa. ita. doc. gov USTR Website: www. ustr. gov