RESTRICTEDWORLD TRADE
ORGANIZATIONTCA/TSC/W/5
20 December 1999
(99-5488)
Committee on Trade in Civil Aircraft Original:  English
"DUAL-USE" PRODUCTS
Submission by the United States on the Implementation
of the WTO Agreement on Trade in Civil Aircraft
The following communication, has been received on 21 July 1999, from the Permanent
Mission of the United States.
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At a 30 November 1998 meeting of the WTO Committee on Trade in Civil Aircraft, the
Chairman of the Committee requested delegations to submit information concerning their end-use
customs administration with respect to the Agreement on Trade in Civil Aircraft.  These submissions
were requested to update information Signatories previously provided on how they distinguishbetween civil and military aircraft (AIR/TSC/W/49).  The United States provides the following
information pursuant to this request.
Relevant provisions in the Agreement on Trade in Civil Aircraft
Article 1.1 of the Agreement on Trade in Civil Aircraft, Product Coverage , states:
This Agreement applies to the following products:
(a) all civil aircraft,
(b) all civil aircraft engines and their parts and components,
(c) all other parts, components, and sub-assemblies of civil aircraft,
(d) all ground flight simulators and their parts and components,
whether used as original or replacement eq uipment in the manufacture, repair, maintenance,
rebuilding, modification or conversion of civil aircraft.
The Agreement explicitly excludes military aircraft from the definition of "civil aircraft".
Article 1.2 states:
For the purposes of this Agreement "civil aircraft" means (a) all aircraft other than military
aircraft and (b) all other products set out in Article 1.1 above.
The Agreement contains an annex of covered products.  The annex currently lists 248
Harmonized System product codes.  Raw or unf inished products are excluded from coverage.
Article 2.1.1 requires that Signatories eliminate customs duties and other charges for products listed in
the annex "…  if such products are for use in a civil aircraft , and incorporation therein, in the course
of its manufacture, repair, maintenance, rebuilding, modification or conversion. "  (Emphasis added).TCA/TSC/W/5
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Historical setting
"Civil" aircraft appears to have been defined in  the negative, i.e. an aircraft that is not
"military" is "civil".  Because "military" is not defined in the Agreement, discussions have taken place
among the Signatories on the precise application of product coverage.
Complete aircraft which are unequivocally military in nature, such as bombers, fighters, and
attack aircraft, clearly would seem to be outside the Agreement's coverage.
The status of "dual-use" aircraft has been less clear.  "Dual-use" refers to aircraft which may
be operated in both civil and military applications, with little or no need to modify the aircraft.
Examples of such aircraft include those that are used for executive transport, surveillance, and cargooperations.  For instance, in the United States, the Department of Defence operates Gulfstream GIV
aircraft for transporting senior military officers.  The identical aircraft is used by corporations and
individuals.
For any aircraft parts and components and ground flight simulators that could be used in both
military or civilian aircraft and may be otherwise identical, treating these differently for tariff
purposes because of the nature of the end-user could also be problematic.
Questions have arisen over how some Signatories define "military".  The United States
understands that some Signatories have defined "military" solely by the nature of the end-user, as didthe United States before 1996.  The United States we lcomes Signatories' clarification of their policies
and the description of their military end-users.
US implementation
The key principle in how the United States im plements the Agreement is that "civil" is no
longer defined solely by the nature of the aircraft operator or end-user (airline vs. defence unit) but in
addition by whether the aircraft is certificated by the Federal Aviation Administration (FAA) directly
or pursuant to the recognized approval by the F AA of the airworthiness authority in the country of
exportation.  Except in limited circumstances, FAA certification is not required of aircraft operated
exclusively by the Department of Defence or Coast Guard.  (These circumstances include the
operation of aircraft for the transport of passengers or property for "commercial" purposes.)
Dual-use aircraft, and their parts, components and subassemblies, purchased for use by
military entities such as the Department of Defence and the Coast Guard may enter the United States
duty-free under the Agreement on Trade in Civil Aircraft, provided that the aircraft is certificated by
the FAA, or a recognized foreign airworthine ss authority, or an FAA certificate is pending.
Application of these provisions is liberal.  Aircraft parts which could be used in both a civil
aircraft and a military aircraft (such as a bomber) are considered "civil" by the United States Customs
Service for purposes of the Agreement.  Only parts which clearly have no application in a civil
aircraft (such as aiming devices used to target bombs) are deemed to be "military" by theUnited States.
US implementation of the Agreement on Trade in Civil Aircraft was changed in 1996
following enactment of a US law, the Miscellaneous Trade and Technical Corrections Act of 1996.
That law liberalized implementation of the Agr eement by the United States in several ways.TCA/TSC/W/5
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Elimination of separat e importer's statement :  Prior to 1996, US law required that US
importers file a separate statement with the US Customs Service with each entry document claiming
duty-free importation of a product under the Agreemen t on Trade in Civil Aircraft.  That statement
attested to the product's use in civil aircraft and to the FAA's approval of the product in the sense of its
airworthiness.  The 1996 law eliminated this requirement, reducing the paperwork burden on US
importers.
New definition of "civil" :  Prior to 1996, the United States defined "civil aircraft", for
purposes of the Agreement on Trade in Civil Aircraft, as "all aircraft other than aircraft purchased for
use by the Department of Defence or the United States Coast Guard."  Changes in the 1996 US law
facilitate the operation of the Agreement for US importers in two ways.
(a) Aircraft components imported for use in an aircraft purchased for use by the Department of
Defence (DOD) or the US Coast Guard were not eligible for duty-free entry prior to 1996,
under the Agreement, even if the aircraft to be used by DOD or the US Coast Guard was the
same model of aircraft the manufacturer provided to airlines and other private operators (such
as small aircraft used for executive transportation).  Following enactment of the 1996 law,such components may be imported into the United States duty free, provided that the aircraft
used by DOD and the US Coast Guard are aircraft certificated by the FAA.
(b) The pre-1996 regime led to complications for both exporters and for companies which
imported aircraft components, some of which were used in the assembly of aircraft sold toairlines and other private operators, and some of which were used in the assembly of the same
aircraft sold to DOD or the United States Coast Guard.  Since the importer could not know at
the time of importation which components would be used in which aircraft, the importer
either had to pay duties on the entire importation of components or request that the entry not
be finalized, or "liquidated".  In the case of the latter, the importer could be required to post abond for the full tariff liability.  Upon liquidation of the entry, the importer could receive a
credit on the tariff for those components used in "civil" aircraft, provided that the importer
took care to carefully track the components through the various stages of aircraft assembly,
segregating those that were used in aircraft sold to  private operators from those used in
aircraft sold to DOD and the US Coast Guard, and the importer could document this tracking
of components to the US Customs Service.  Following the 1996 law, no segregation of the
aircraft components is necessary.  All the co mponents would be eligible for duty-free entry
into the United States under the Agreement.
Description of "civil aircraft" for US Customs purposes
Under United States law, "civil aircraft", for the purposes of implementing the Agreement on
Trade in Civil Aircraft, is defined as any aircraft, aircraft engine, or ground flight simulator (including
parts, components, and subassemblies thereof) that meets two tests:
A. It is used as original or replacement equipment in the design, development, testing,
evaluation, manufacture, repair, maintenance, rebuilding, modification, or conversion ofaircraft.  This prevents duty-free treatment being required of products, listed on the product
coverage annex, when they are imported into the United States for use other than in civil
aircraft.  (For example, "windshields, of la minated safety glass" [HS Code 7007.21] would
not be eligible for duty-free entry into the United States if the glass were imported for use in
automobiles.)
B. It is manufactured or operated pursuant to an FAA certificate attesting to the product's
airworthiness.  This certificate may be any one of three different types of certificates issued
by the FAA:TCA/TSC/W/5
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Type Certificate:  this is issued for an aircraft  (or aircraft engine or propeller) attesting that
the design of the aircraft conforms with FAA-approved standards.
Production Certificate:  this authorizes the production of aircraft the design of which has been
approved by the FAA through a type certificate.  Among other things, a production certificate
indicates FAA approval of a manufacturer's quality control system.
Airworthiness Certificate:  this is issued for a specific  aircraft (not model of aircraft)
following manufacture to ensure that it conforms to the type certificate and is in condition for
safe operation.
Satisfaction of test B can be met through a number of variations on the above requirements.
These include that for the aircraft, engine, or ground flight simulator (including parts, components and
subassemblies thereof):
• there is approval by the airworthiness authority of the country of export, provided that such
approval is recognized by the FAA and the FAA certificates the product;
• for aircraft under development in the United States, there is an application for type certification
pending with the FAA;  or
• an application for type certification will be submitted to the FAA, pending the completion of
design or other technical requirements stipulated by the FAA.  This option allows for the duty-
free entry into the United States of foreign-produced parts that may be used in the production ofaircraft while the aircraft is still being designed – and for which it is not possible to have an FAA
certificate.  This option applies only to such quantities of the parts, components and
subassemblies as are required to meet the design and technical requirements stipulated by the
FAA.
Almost all of the products listed in the product coverage annex to the Agreement on Trade in
Civil Aircraft are components of aircraft or aircraft engines.  The FAA does not provide any
certification for components per se , except for complete engines and propellers.  The United States
allows for duty free entry of the components on the product coverage list if they are incorporated or
are to be incorporated in a complete aircraft (or en gine) which is certificated by the FAA, or meet any
of the other certification options discussed above.
US law provides that the term "civil aircraft" does not include any aircraft, aircraft engine or
ground flight simulator (or parts, components and subassemblies thereof) purchased for use by the
Department of Defence or the Coast Guard, unless such aircraft, aircraft engine or ground flight
simulator (or parts, components and subassemblies thereof) satisfies the requirements of test A and
test B, above, except that the option related to th e future submission of an application for an FAA
certificate does not apply.  (This is the option that addresses the importation of components to be used
in an aircraft being designed for which no application can be submitted.)
Legal citation
The 1996 law which liberalized US administration of the Agreement on Trade in Civil
Aircraft is Public Law 104-295, Miscellaneous Trade and Technical Corrections Act of 1996.
Section 12 of that act deals with the Agreement on Trade in Civil Aircraft.  Pursuant to this law,
General Note 6 of the US tariff schedule was changed.  The text of the revised general note is
attached.TCA/TSC/W/5
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HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (1998)
General Note 6
Articles Eligible for Duty-Free Treatment Pursuant to the Agreement on Trade in Civil
Aircraft.
(a) Whenever a product is entered under a provision for which the rate of duty 'Free (C)' appears
in the 'Special' subcolumn and a claim for such rate of duty is made, the importer –
(i) shall maintain such supporting documentation as the Secretary of the Treasury shall
require;  and
(ii) shall be deemed to certify that the imported article is a civil aircraft, or has been
imported for use in a civil aircraft and will so be used.
The importer may amend the entry or file a written statement to claim a free rate of duty
under this note at any time before the liquidation of the entry becomes final, except that,
notwithstanding section 505 (c) of the Tariff Act of 1930 (19 U.S.C. 1505(c)), any refund resulting
from any such claim shall be without interest.
(b) (i) For purposes of the tariff schedule, the term 'civil aircraft' means any aircraft, aircraft
engine, or ground flight simulator (including parts, components, and subassemblies
thereof) –
(A) that is used as original or replacement equipment in the design, development,
testing, evaluation, manufacture, repair, maintenance, rebuilding, modification,
or conversion of aircraft, and
(B)   (1) that is manufactured or operated pursuant to a certificate issued by the
Administrator of the Federal Aviation Administration (hereafter referred
to as the 'FAA') under section 44704 of title 49, United States Code, or
pursuant to the approval of the airworthiness authority in the country ofexportation, if such approval is recognized by the FAA as an acceptable
substitute for such an FAA certificate;
(2) for which an application for such certificate has been submitted to, and
accepted by, the Administrator of the FAA by an existing type andproduction certificate holder pursuant to section 44702 of title 49,
United States Code, and regulations promulgated thereunder;  or
(3) for which an application for such approval or certificate will be
submitted in the future by an existing type and production certificateholder, pending the completion of design or other technical requirements
stipulated by the Administrator of the FAA.
(ii) The term 'civil aircraft' does not include any aircraft, aircraft engine, or ground flight
simulator (or parts, components, and subassemblies thereof) purchased for use by theDepartment of Defence or the United States Coast Guard, unless such aircraft, aircraft
engine, or ground flight simulator (or parts, components, and subassemblies thereof)
satisfies the requirements of subdivisions (i)(A) and (i)(B) (1) or (2).TCA/TSC/W/5
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(iii) Subdivision (i)(B)(3) shall apply only to such quantities of the parts components, and
subassemblies as are required to meet the design and technical requirements stipulated
by the Administrator.  The Commissioner of Customs may require the importer to
estimate the quantities of parts, components, and subassemblies covered for such
purposes of such subdivision.
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