January 7, 2009

MEMORANDUM FOR: DIRECTORS, FIELD OPERATIONS

FROM: Executive Director, Trade Policy and Programs

Office of International Trade

SUBJECT: U.S. - Oman Free Trade Agreement Implementation Instructions

**Background**

The U.S.-Oman Free Trade Agreement Implementation Act ("the Act"; Public
Law 109-283; 120 Stat. 1191; 19 U.S.C. 3805 note) was signed on
September 26, 2006. The Act allowed for the Agreement to take effect on
or after January 1, 2007 with the actual implementation date to be
determined by the President. Sections 201 and 202 of the Act authorize
the President to proclaim the tariff modifications and provide the rules
of origin for preferential tariff treatment with respect to goods of
Oman provided for under the Agreement. The final text of the Agreement
can be found on-line at the U.S. Trade Representative (USTR) website at:

[http://www.ustr.gov](http://www.ustr.gov/)

Presidential Proclamation 8332, dated December 29, 2008 and published in
the Federal Register on December 31, 2008, implemented the U.S.-Oman
Free Trade Agreement (UOFTA) for goods entered or withdrawn from
warehouse for consumption on or after January 1, 2009. The Proclamation
incorporated, by reference, Publication 4050 of the United States
International Trade Commission (USITC). Annex I of Publication 4050 of
the USITC, amends the Harmonized Tariff Schedule (HTS) by adding a new
General Note 31 containing specific information regarding the UOFTA and
a new Subchapter XVI to Chapter 99 to provide for temporary tariff rate
quotas (TRQs) implemented by the UOFTA. Annex II of Publication 4050
amends the HTS to provide for immediate and staged tariff reductions.
Publication 4050 has been posted to the USITC's website at:

[http://www.usitc.gov](http://www.usitc.gov/)

The Agreement provides for the immediate or staged elimination of duties
and barriers to bilateral trade in goods and services originating in the
United States and/or Oman.

This memorandum provides instruction for the filing and acceptance of
claims for preferential treatment of goods made under the UOFTA.

Title 19, Code of Federal Regulations (C.F.R.) will be amended to
implement the Agreement and the Act. Accordingly, these instructions are
subject to change until the regulations are issued.

**General Rules of Origin**

Section 202 of the UOFTA Implementation Act specifies the general rules
of origin to be used in determining if a good qualifies for preferential
tariff treatment under the Agreement. The HTS has been amended to
include General Note 31, containing rules of origin, definitions and
other provisions used to determine whether a good originates under the
UOFTA.

Generally, under the UOFTA, a good is originating where it is imported
directly from Oman, and:

a\. the good is wholly obtained or produced entirely in Oman, the United
States or both;

b\. the good, other than that covered by (c) below, is a new or
different article of commerce that has been grown, produced, or
manufactured in the territory of Oman, the United States or both; and
the sum of:

> \(i\) the value of materials produced in the territory of Oman, the
> United States or both; plus
>
> \(ii\) the direct cost of processing operations performed in the
> territory of Oman, the United States or both;
>
> is not less than 35 percent of the appraised value of the good at the
> time it is imported into the United States; or

c\. a textile or apparel good specified in Annex 3-A of the Agreement or
agricultural goods specified in Annex 4-A of the Agreement undergo an
applicable change in tariff classification specified in General Note
31(h).

For purposes of the UOFTA, the expression "a new or different article of
commerce" means a good that has been substantially transformed from a
good or material that is not wholly the growth, product, or manufacture
of Oman, the United States or both and that has a new name, character,
or use distinct from the good or material from which it was transformed.

A good, which has undergone simple combining or packaging operations or
mere dilution with water or other substances, shall not be considered
originating.

**Cumulation**

The UOFTA contains a "cumulation" provision, which provides that the
value of materials produced in the United States or Oman and the direct
cost of processing performed in the U.S. or Oman may be counted without
limitation toward satisfying the 35 percent direct cost of processing
requirement.

**Direct Shipment / Transit and Transshipment**

In addition to meeting the rules of origin, the UOFTA requires that a
good be imported directly from the territory of one Party into a
territory of the other Party in order to be considered originating. A
good shall not be considered to be imported directly from the territory
of the other Party if the good undergoes subsequent production,
manufacturing, or any other operation outside the territories of the
Parties, other than unloading, reloading, or any other operation
necessary to preserve it in good condition or to transport the good to
the territory of the other Party.

**Claims at Entry Summary**

A claim for preferential tariff treatment may be filed on originating
goods at the time of entry summary by placing the Special Program
Indicator (SPI) "OM" as a prefix to the HTS subheading for each good or
line item for which treatment is being claimed.

**Declaration Requirements**

The importer may make a claim for preferential tariff treatment based on
the importer's knowledge or information in the importer's possession
that the good qualifies as an originating good according to the rules of
origin. The importer must be prepared to submit upon CBP's request a
signed declaration with the data elements outlined in Attachment A as
well as manufacturing, cost and other data necessary to substantiate
compliance with the Agreement. The declaration need not be in a
prescribed format, may be submitted electronically, and may cover a
single shipment or multiple shipments of identical goods, not to exceed
a 12-month time period.

Importers are required to maintain for five years after the date of
importation all records relating to the importation of the good. This
includes, but is not limited to, records concerning the purchase of,
cost of, value of, and payment for the good, as well as all materials
used in the production of the good in its exported form.

**Textiles and Apparel**

Textiles and apparel products may qualify as originating under UOFTA if
they meet the requirements specified in the Agreement. The duty rate for
these goods will be "free" as identified in the "Special" column.
Although some differences exist, these requirements are similar to those
of the NAFTA.

Below is a summary of the processes required for some of the more basic
products to be considered eligible for the UOFTA. Depending on the type
of product, it may be exempt from these requirements. For more specific
information and specific tariff shift rules for the article being
imported, refer to General Note 31(h).

a\) Yarn -- generally, fiber must originate in Oman or United States in
order to qualify for preferential tariff treatment.

b\) Fabric -- generally, yarn must originate in Oman or United States to
qualify for preferential tariff treatment. Cotton and man-made knit
fabric are under fiber forward rules.

c\) Apparel -- generally, yarn must originate in Oman or United States
in order to qualify for preferential tariff treatment.

**Tariff Preference Levels (TPL) Textiles & Apparel -- Quantitative
Restraint**

A TPL has been established for qualifying cotton and manmade fiber
apparel, fabric and made-up goods. These TPL's cover cotton and manmade
fiber apparel goods provided for in Chapters 61 and 62 of the HTS. The
apparel goods must be cut or knit to shape, or both, and sewn or
otherwise assembled in Oman, regardless of the origin of the fabric or
yarn used to produce the goods.

This TPL is provided for in Chapter 99, Subchapter XVI, Note 13 and is
covered by HTS number 9916.99.20.

To date, there is no requirement that a certificate of eligibility
issued by the government of Oman be submitted to make entry under the
TPL

**Other Textile and Apparel Goods of Oman**

If a good does not qualify as originating under UOFTA or under the
established TPLs, but is nevertheless considered to be a product of
Oman, then the normal trade relations rate under column 1 of the HTS
apply.

**De Minimis (Textiles)**

A textile or wearing 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 31, shall nonetheless be considered to be an originating good if
the total weight of all such fibers or yarns in that component is not
more than seven percent of the total weight of that component.

Notwithstanding the preceding paragraph regarding de minimis, a good
containing elastomeric yarns in the component of the good that
determines the tariff classification of the good shall be considered to
be an originating good only if such yarns are wholly formed in the
territory of a Party.

**Treatment of Sets (Textiles)**

Notwithstanding the specific rules of origin set out in General Note 31,
textile or apparel goods classified under General Rule of Interpretation
3 of the HTS as goods put up in sets for retail sale shall not be
regarded as originating goods unless each of the goods in the set is an
originating good or the total value of the non-originating goods in the
set does not exceed ten percent of the value of the set as determined
for purposes of assessing customs duties.

**Agricultural Tariff Rate Quotas (TRQ)**

The UOFTA provides quantitative restraints associated with a reduced
duty rate for agricultural products such as cheese, butter, dairy
products, beef, sugar, peanuts, cotton, and tobacco provided for in
Chapter 99, Subchapter XVI, U.S. Notes 3 through 12. The agricultural
quotas are covered by HTS numbers 9916.0205 - 9916.52.40.

**Quota (TPL and TRQ)**

For agricultural products subject to a tariff-rate quota, the Special
Program Indicator (SPI) "OM" must be placed in front of the Heading 9916
HTS number when the entry is filed. In addition to the 9916 HTS number,
the appropriate Chapter 1-97 HTS number must be identified on the CBP
form 7501.

The application of tariff rate quotas for the UOFTA will be addressed in
separate instructions issued in the form of QBTs by the Headquarters
Quota Branch. These instructions are available to CBP field officers as
well as the importing community and include the quota period, procedures
for quota openings, restraint limits, applicable HTS numbers, and any
special processing instructions. These messages are posted on the CBP
Internet site, [www.cbp.gov](http://www.cbp.gov/), under the TEXTILES
AND QUOTA section under the TRADE PROGRAMS section of the TRADE page. In
addition to QBTs, there is also a link to the Commodity Status Report.
This weekly report lists the fill rates for the tariff rate quotas. The
past four reports are maintained on the site.

**Eligible Articles (Non-Textile and Textile) / Immediate and Staged
Reductions**

The list of HTS item numbers that are eligible for immediate duty free
treatment can be found in Annex II of USITC Publication 4050.

**CBP Verification**

The UOFTA places the responsibility of substantiating the validity of a
claim for preferential tariff treatment on the importer. An importer may
make a claim for preferential tariff treatment based on knowledge or
information in his possession that the good is originating. When
verifying the validity of a claim, CBP will direct inquiries to the
importer via a CBP Form 28, Request for Information.

Upon request by CBP, the importer shall provide the declaration and
substantiating documentation to establish the validity of the claim. The
declaration need not be in a prescribed format; however, it must contain
the data elements in attachment A. The substantiating documentation may
include but is not limited to a description of the good and the
manufacturing operations, the value, origin and originating status of
all materials, and the identification of the direct costs of processing.
The importer shall provide the declaration and all other supporting
documentation to CBP within 30 days of a request.

**Determination of a Claim**

If CBP determines that the good qualifies for preferential tariff
treatment, CBP will notify the importer of the positive determination
via a CBP Form 29, Notice of Action. The CBP Form 29 will state that the
good qualifies as originating, and will include the HTS number,
description of the good and the relevant rule of origin applied to the
good.

If the importer fails to submit the requested information, CBP will
issue a negative determination via a "Proposed" CBP Form 29. The notice
shall specify why the good does not qualify for preferential tariff
treatment and allow the importer an additional 20 days to provide the
requested information. The proposed CBP Form 29 will cite the applicable
statutes and/or regulations and detail the rate and/or value advance, as
appropriate.

If the importer fails to submit the information requested in the
proposed CBP Form 29 within 20 days of the date of the notice, or
provides a declaration and/or supporting documentation, and CBP
determines, based on the information submitted, that the good does not
qualify for preferential tariff treatment, a negative determination will
be sent to the importer in the form of a CBP Form 29 "Action Taken". The
notice will specify why the good does not originate pursuant to the
UOFTA rules of origin, cite the applicable statutes and/or regulations
and detail the rate and/or value advance, as appropriate.

Claims for preferential tariff treatment must be supported by a
declaration that pertains to a single shipment or a blanket declaration
covering shipments for a period of up to 12 months. When a negative
determination is made with respect to a blanket declaration, CBP shall
deny preferential tariff treatment on all importations of identical
goods covered by that blanket declaration for all entries that have not
reached final liquidation.

If CBP finds that subsequent to a negative determination, an importer
submits an additional preference claim on identical goods that is found
by means of another verification to be unsubstantiated or false, CBP may
suspend preferential tariff treatment on identical goods imported by
that party until the importer has shown to CBP's satisfaction that the
goods originate.

**Post-Importation Claims**

If a claim for preference was not made at the time of entry summary, the
UOFTA permits the importer to make a post-importation claim for
preferential tariff treatment and request a refund of excess duties
and/or merchandise processing fee (MPF). The importer may make a
post-importation claim no later than one year after the date of
importation and must comply with the requirements of 19 U.S.C. 1520(d).
The importer shall submit a claim in writing to the port where the good
was entered with the following:

1\) A written statement that the good qualified as an originating good
at the time of importation and the number and date of the entry or
entries covering the good;

2\) A copy of a declaration or supporting documentation containing the
required data elements in Attachment A demonstrating that the good
qualified as originating;

3\) A statement indicating whether the entry summary or equivalent
documentation was provided to any other person;

4\) A statement indicating whether a protest, petition or request for
reliquidation has been filed relating to the good and identification of
such filing(s).

If CBP determines that a declaration or other information containing the
required data elements is illegible, defective or has not been completed
in accordance with the requirements, the importer shall be granted no
less than five working days to submit a corrected declaration. Failure
to provide a corrected declaration or other information shall result in
denial of the post-importation claim.

In addition, CBP shall deny a claim that was not filed timely, or that
was based on an invalid declaration, or other information. A claim may
be denied following an origin verification if CBP makes a negative
determination based on findings discovered during the verification.

**Correction of UOFTA Claims**

An importer who learns that a claim for preferential tariff treatment
was made in error is required to make a corrected declaration and comply
with 19 C.F.R. 162.74, Prior Disclosure, requirements.

**Protest Rights**

An Importer or other interested party may file a protest to contest a
negative origin determination pursuant to 19 U.S.C. 1514 within 180 days
of the date of liquidation. The protest may enable the importer to
receive a refund of duties and/or MPF for eligible goods entered, or
withdrawn from warehouse, for consumption.

**Merchandise Processing Fees (MPF) and Harbor Maintenance Fees (HMF)**

Originating goods under the UOFTA, in addition to being subject to
reduced or free rates of duty, are exempt from MPF. Goods eligible for
preferential treatment under a TPL are non-originating and thus
ineligible for the MPF exemption.

In addition, goods are not exempt from the Harbor Maintenance Fee (HMF)
regardless of their originating status.

**Termination of the Agreement**

There is no set expiration date for the UOFTA. However, the provisions
of and amendments made by the Act will cease to be effective upon the
termination of the Agreement by written notification from either the
United States or Oman.

**Action**

Effective January 1, 2009, importers and brokers may file claims for
preferential tariff treatment on goods that originate under the UOFTA.
These claims may be made at the time of entry summary by placing the SPI
"OM" on the CBP Form 7501 as a prefix to the HTS item number for each
line on which preferential treatment is claimed.

The programming updates to the Automated Commercial System (ACS)
allowing for automated processing have not yet been completed.
Therefore, until further notice, importers claiming preference under the
UOFTA should file manual entries or file ABI entries at release with
manual entry summaries.

Copies of this memorandum should be made available to Port Directors,
Assistant Port Directors, Import and Entry Specialists, CBP Officers,
Brokers, Importers and other interested parties.

Questions regarding the non-textile provisions of the UOFTA should be
directed to Seth Mazze, International Coordination Branch at (202)
863-6567.

Questions regarding textile and wearing apparel provisions under the
UOFTA, should be directed to Robert Abels, Textile Operations Branch at
(202) 863-6503.

Questions regarding quota issues should be directed to Laurie Dempsey,
Quota Branch at (202) 863-6509.

/s/

Brenda B. Smith

Attachment