G/RO/ LDC/N/USA/4  
 
30 November 2018  
(18-7576) Page: 1/5 
Committee on Rules of Origin  Original: English  
 
NOTIFICATION OF PREF ERENTIAL RULES OF OR IGIN FOR  
LEAST DEVELOPED COUN TRIES  
UNITED STATES 
The following communication, dated 20 November 2018, is being circulated at the request of the 
delegation of United States . 
_______________  
 
Paragraph 4.3 of the 2015 Ministerial Decision on preferential rules of origin for least developed 
countries (WT/L/917/Add.1) requires preference -granting Members  to notify preferential rules o f 
origin as per the established procedures1. In addition, as mandated by the Ministe rial Decision, the 
Committee on Rules of Origin agreed, at its meeting of 2 March 2017, to a template  for such 
notifications (G/RO/84 ). 
 
Following such requirements, the following notification has been received from: United States . 
 
A. BASIC INFORMATION  
 
1)  Notifying member  United States  
2)  Date of entering into force of Rules 
of origin and any substantive  
modification thereof  15 December 2016.  
Text of the Trade Facilitation and Trade Enforcement Act of 
2015 (19 U.S.C. 4454): 
https://www.congress.gov/114/plaws/publ125/PLAW -
114publ125.pdf  
Proclamation implementing the preference program: 
https://www.gpo.gov/fdsys/pkg/FR -2016-12-20/pdf/2016 -
30738.pdf  
3)  Date of expiration of Rules of origin 
if applicable  31 December 2025. See Section 915(f) of the Trade 
Facilitation and Trade Enforcement Act of 2015. 19 U.S.C. 
4454(f)  
4)  Title of  the preferential scheme for 
which legislation on Rules of origin 
is applicable  Nepal Trade Preference Program  
5)  Authority(ies) granting the 
preferential treatment  President of the United States ( www.whitehouse.gov ) 
6)  National authorities in charge of 
Rules of origin administration  Office of the U.S. Trade Representative ( www.ustr.gov ) 
Office of South Asia  
1-202-395-9658 
correspondence@ustr. eop.gov   
 
                                                
1 The relevant notification requirements are contained in Paragraph 2(d) of Annex 1 of the Transparency 
Mechanism for Preferential Trade Arrangements (WT/L/806) and in Paragraph 4 of Annex II of the Agreement 
on Rules of Origin.  G/RO/LDC/N/USA/4  
 
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  B. INFORMATION ON RULES OF ORIGIN  
I.  BENEFICIARIES  
1)  List of Beneficiaries  Nepal. See https://www.gpo.gov/fdsys/pkg/FR -2016-12-
20/pdf/2016 -30738.pdf . 
2)  Eligibility  Section 915(b)(1) of the Trade Facilitation and Trade 
Enforcement Act of 2015 (19 U.S.C. 4454(b)(1)): 
https://www.congress.gov/114/plaws/publ125/PLAW -
114publ125.pdf  
 
II.  CRITERIA FOR DETERMINING SUBSTANTIAL TRANSFORMATION  
1)  General criteria, if applicable for all 
products   The general rules of origin can be found in Trade Facilitation 
and Trade Enforcement Act of 2015, Section 915(c) 
(19 U.S.C. 4454(c)).  
"(c) Eligible articles  
 (1) In general  
 An article described in paragraph (2) may enter the 
customs territory of the United States free of duty.  
  (2) Articles described  
 (A) In general  
 An article is described in this paragraph if - 
 (i)  (I) the article is the  growth, product, or 
manufacture of Nepal; and  
      (II)  in the case of a textile or apparel article, 
Nepal is the country of origin of the article, as 
determined under section 102.21 of title 19, 
Code of Federal Regulations (as in effect on 
the day befo re 24 February 2016);  
   (ii) the article is imported directly from 
Nepal into the customs territory of the 
United States;  
   (iii)  the article is classified under any of 
the following subheadings of the 
Harmonized Tariff Schedule of the 
United States (as  in effect on the day 
before 24 February 2016):  
4202.11.00; 4202.12.21; 4202.12.29 ; 4202.12.40 ; 
4202.12.60 ; 4202.12.81 ; 4202.12.89 ; 4202.21.60 ; 
4202.21.90 ; 4202.22.15 ; 4202.22.40 ; 4202.22.45 ; 
4202.22.60;  4202.22.70 ; 4202.22.81 ; 4202.22.89 ; 
4202.29.50 ; 4202.29.90 ; 4202.31.60 ; 4202.32.40 ; 
4202.32.80 ; 4202.32.91 ; 4202.32.93 ; 4202.32.99 ; 
4202.91.00 ; 4202.91.90;  4202.92.08 ; 4202.92.15 ; 
4202.92.20 ; 4202.92.31 ; 4202.92.33 ; 4202.92.39 ; 
4202.92.45 ; 4202.92.60 ; 4202.92.91 ; 4202.92.93 ; 
4202.92.94 ; 4202.92.97 ; 4202.99.90;  4203.29.50 ; 
5701.10.90 ; 5702.31.20 ; 5702.49.20 ; 5702.50.40 ; 
5702.50.59 ; 5702.91.30 ; 5702.91.40 ; 5702.92.90 ; 
5702.99.15 ; 5703.10.20 ; 5703.10.80 ; 5703.90.00;  
5705.00.20 ; 6117.10.60 ; 6117.80.85 ; 6214.10.10 ; 
6214.10.20 ; 6214.20.00 ; 6214.40.00 ; 6214.90.00 ; 
6216.00.80 ; 6217.10.85 ; 6301.90.00 ; 6308.00.00 ; 
6504.00.90;  6505.00.08 ; 6505.00.15 ; 6505.00.20 ; 
6505.00.25 ; 6505.00.30 ; 6505.00.40 ; 6505.00.50 ; 
6505.00.60 ; 6505.00.80 ; 6505.00.90 ; 6506.99.30 ; 
6506.99.60  
   (iv) the President determines, after 
receiving the advice of the United 
States International Trade Commission 
in accordance with section 503(e) of 
the Trade Act of 1974 
(19 U.S.C.  2463(e)), that the article is G/RO/LDC/N/USA/4  
 
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  not import -sensitive in the context of 
imports from Nepal; and  
   (v) subject to su bparagraph (C), the sum 
of the cost or value of the materials 
produced in, and the direct costs of 
processing operations performed in, 
Nepal or the customs territory of the 
United States is not less than 35 % of 
the appraised value of the article at 
the tim e it is entered. " 
Please note that following the enactment of the legislation 
authorizing the trade preferences, the U.S. Harmonized 
Tariff System was modified, and the number of tariff lines 
for which Nepal is exempt from customs duties increased to 
77 8-digit tariff lines. These are the lines that appear 
above, not the original 66 lines.  
 (a) Definition of wholly obtained 
products  The statute that established the Nepal preferences does not 
provide a definition of "wholly obtained products " of Nepal.  
However, 19 U.S.C. 4454(c)(2)(A)(i) states that an eligible 
article is one that "is the growth, product, or manufacture 
of Nepal. " 
 (b)  Describe the criteria for not -
wholly produced products  The statute that established the Nepal preferences does not 
provide a definition of "wholly obtained products " of Nepal.  
However, 19 U.S.C. 4454(c)(2)(B) provides a list of 
activities that do not confer origin.  
 (c)  Insert the formula for 
calculating ad valorem  
percentage  The formula for calculating the regional value content of the 
article can be found in 19 USC 4454 (c)(2)(A)(v): "subject 
to subparagraph (C), the sum of the cost or value of the 
materials produced in, and the direct costs of processing 
operations performed  in, Nepal or the customs territory of 
the United States is not less than 35 % of the appraised 
value of the article at the time it is entered. " 
Subparagraph (C): "Limitation on United States Cost.  —For 
purposes of subparagraph (A)(v), the cost or value of 
materials produced in, and the direct costs of processing 
operations performed in, the customs territory of the United 
States and attributed to the 35 -percent requirement under 
that subparagraph may not exceed 15 percent of the 
appraised value of the artic le at the time it is entered. " 
2)  Product specific rules of origin, where applicable  
 (a)  Insert  the link where the 
complete list of product 
specific rules of origin can be 
found.  19 U.S.C. 4454(c)(2)(A)(i)(II) states that "in the case of a 
textile or apparel article, Nepal is the country of origin of 
the article, as determined under section 102.21 of title 19, 
Code of Federal Regulations (as in effect on the day before 
24 February 2016) ".   
Those regulations can be found at the following URL: 
https://www.ecfr.gov/cgi -bin/text -
idx?SID=ba149088a98c53f1ab43460b34861584&mc=true&
node=se19.1.102_121&rgn=di v8 
 (b)  Insert the formula for 
calculating ad valorem  
percentage, when applied for 
product specific rule  Not applicable.  
3) Definition of non -originating 
material and originating material, if 
any Not applicable.  
4) List of insufficient working process,  
if any  19 U.S.C. 4454(c)(2)(B) provides a list of activities that do 
not confer origin.  
5) Rules for application of cumulation 
and related procedures if any  Please see response to 1(c), above.  
6) Any other information that member 
deems necessary  None.  
 G/RO/LDC/N/USA/4  
 
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  III.   DOCUMENTARY REQUIREMENTS  
1)  Certificate of origin and other proofs of origin  
 (a)  Requirement for certificate of 
origin and/or any other proof 
of origin, if any  A certificate of origin is not required, but when the article is 
not wholly the growth, product, or manufacture of Nepal, 
the exporter of the merchandise or other appropriate party 
having knowledge of the relevant facts shall be prepared to 
submit a declar ation setting forth all pertinent detailed 
information concerning the production or manufacture of 
the merchandise.  See 19 CFR 10.173: 
https://www.ecfr.gov/cgi -bin/text -
idx?SID=61efe140c8a30e01ae54661a8c33c917&mc=true&
node=se19.1.10_1173&rgn=div8  
 (b)  Authority to be designated for 
issuance of certificate of origin  See subsection (a) above.  
 (c)  Prescribed form of Certificate 
of origin and/or any other 
proof of origin  See subsection (a) above.  
 (d)  Any other procedures applied 
for certificate of origin and/or 
any other proof of origin, if 
any Not applicable.  
2)  Direct shipment  
 (a)  Rules applicable for direct 
shipment, if  any In order to qualify for preferential treatment, the eligible 
article must be imported directly from Nepal to the United 
States. (See 19 U.S.C. 4454(c)(2)(ii). The term "imported 
directly " is defined at 19 CFR 10.175.)  
Under Section 915 (c)(3) of the legislation (see Subsection 
A.2, above for hyperlink), the Commissioner of U.S. 
Customs and Border Protection shall conduct quarterly 
verifications to ensure that textile and apparel goods 
receiving preferential treatment are not being unlawfully 
transshipped to the United States.  
 (b)  Documentary requirement for 
proof of direct shipment 
including when the transport 
of consignment involves 
transit through one or more 
intermediate countries, if any  The documentary requ irements can be found at 
19 CFR 10.175. In general, if the shipment from Nepal to 
the United States passes through the territory of any other 
country, the merchandise in the shipment cannot enter into 
the commerce of any other country while en route to the 
United States, and the invoice,  bills of lading, and other 
shipping documents must show the United States as the 
final destination; or if the goods are shipped from the 
beneficiary developing country to the United States through 
a free trade zone in a beneficiary developing country, the  
merchandise cannot enter into the commerce of the 
country maintaining the free trade zone.  
 
IV.  VERIFICATION AND PENALTIES  
1)  Procedure for verification of proofs 
of origin  The regulations related to examination, sampling, and 
testing of merchandise can be found at 19 CFR 151.1 
through 151.16.   
https:// www.ecfr.gov/cgi -bin/text -
idx?SID=6a6d50ad25a755802a02b7b576771fdc&mc=true&n
ode=pt19.2.151&rgn=div5  
2)  Penalties for fraud and false 
declarations  In general, if a claim for preference under the Nepal 
Preference Program is incorrect, the importer’s claim of 
preference will be denied, and the importer must pay the 
applicable duty.  If a Customs and Border Protection Officer 
finds any package that cont ains an article not specified on 
the invoice, and there is reason to believe the article was 
omitted from the invoice by fraud, gross negligence, 
negligence on the part of the seller, shipper, owner, or 
agent, a monetary penalty may be imposed, or in some G/RO/LDC/N/USA/4  
 
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  cases, the merchandise may be seized or forfeited. 
(See e.g., 19 U.S.C. 1592, 19 CFR 162.)  
http://www.gpo.gov/fdsys/pkg/USCODE -2016-
title19/pdf/USCODE -2016-title19 -chap4 -subtitleIII -partV -
sec1592.pdf  
https://www.ecfr.gov/cgi -bin/text -
idx?SID=6a6d50ad25a755802a02b 7b576771fdc&mc=true&n
ode=pt19.2.162&rgn=div5  
3)  Authorities and procedures for 
appeal in the case of dispute on 
verification  An importer may disagree with the dutiable status after the 
entry has been liquidated. A decision at this stage of the 
entry transaction is requested by filing a protest and 
application for further review on CBP Form 19:  
https://www.cbp.gov/sites/default/files/documents/CBP_For
m_19.pdf  
4) Requirement for preserving the 
documents related to issuance of 
certificate of origin  The Nepal Preference Program does not include a certificate 
of origin.  
5) Any other relevant information  The following documents provide additional information on 
the Nepal Trade Preferences.  
WT/COMTD/PTA/3/1:  Factual presentation - United States 
trade preferences for Nepal - Report by the Secretariat  
WT/COMTD/N/52:  Notification of preferential trade 
arrangement - United States  
 
V.  REFERENCE TEXTS  
(a) The legislative texts in one of the 
official WTO languages containing 
the preferential rules of origin 
applicable under a PTA granted 
under the Decision on Measures 
in Favour of Least -Developed 
Countries (Annex F of the Hong 
Kong Ministerial Declaration)  See Subsection B.I.2 above.  
(b) The full text of the administrative 
regulations concerning modalities 
for issuance, acceptance, 
retrospective is suance and 
replacement of certificates of 
origin or any equivalent 
declarations to be made, 
including any requirements 
related to stamps to be used 
along with notification of stamps  See Subsection III.1 above.  
(c) The full text and related 
administrative regulations of the 
modalities for the proof of 
movement of the consignment of 
the goods from the beneficiary 
countries to preference -giving 
countries including transit 
through third countries  See Subsection III.2 above.  
(d) The full texts of the modalities of 
the verification procedures and 
related penalties  See Section IV above.  
__________