G/RO/83  
 
10 January 2017  
(17-0155) Page: 1/2 
Committee on Rules of Origin  Original: English  
 
PARAGRAPH 4.2 OF THE  MINISTERIAL D ECISION OF 19 DECEMBE R 2015 ON 
PREFERENTIAL RULES O F ORIGIN FOR LEAST D EVELOPED COUNTRIES  
Communication by the United States  
The following communication, dated 23 December  2016, is being circulated at the request of the 
delegation of the United States . 
_______________  
1  INTRODUCTION  
1.1. Paragraph 4.2 of the Nairobi Ministerial Decision "Preferential Rules of Origin for Least 
Developed Countries " (WT/MIN(15)/47 - WT/L/917) requires developed Preference -granting 
Members to inf orm the Committee on Rules of Origin (CRO) of the measures being taken to 
implement the provisions of that Decision.  This notification provides information on three U.S. 
preference programmes :  the Generalized System of Preferences (GSP) ; the African Grow th and 
Opportunity Act (AGOA) ; and the Caribbean Basin Economic Recovery Act (CBERA).  
1.2. This notification supplements the information that the United States has provided in the past 
through its annual reports to the General Council in support of its wai vers, the guides to U.S. 
preferences programmes  in the WTO Database on Preferential Trade Arrangements, and 
information provided in meetings of the Committee on Rules of Origin and the Committee on Trade 
and Development.  
2  REQUIREMENTS FOR THE  ASESSMENT OF S UFFICIE NT OR SUBSTANTIAL 
TRANSFORMATION  
2.1. Generally speaking, the three aforementioned U.S. preference program mes apply a method 
of calculation based on the amount of originating material.  For each of these program mes, in 
order for a good to qualify fo r preferential treatment, the cost or value of materials produced in 
one or more designated beneficiary countries, plus the direct costs of processing operations 
performed in the beneficiary country, must be at least 35 % of the appraised value of that good .  
In the case of AGOA and CBERA, up to 15 % of the 35 % local value content requirement may be 
attributable to the cost or value of materials produced in the United States.  
2.2. Paragraph 1.1 (c) of the Nairobi Decision states that Preference -granting Member s shall 
"consider the deduction of any costs associated with the transportation and insurance of inputs 
from other countries to LDCs. "  The issue of whether to deduct costs associated with 
transportation and insurance of inputs applies to calculations base d on non -originating material.  
When a calculation system based on originating material is used (as is the case with the 
aforementioned preference programmes ), it is advantageous to add such expenses to value of the 
inputs.  The United States allows the co sts of freight, insurance, packing, and all other costs 
incurred in transporting the materials to the manufacturer's plant to be added to the value of the 
inputs.  
2.3. Paragraph 1.3 (a) of the Nairobi Decision states that "Preference -granting Members shall,  to 
the extent provided for in their respective non -reciprocal preferential trade arrangements, allow as 
follows:  (a) if applied to clothing of chapters 61 and 62 of the Harmonized System nomenclature, 
the rule shall allow assembling of fabrics into finis hed products ".  AGOA provides duty -free 
treatment for apparel made in "lesser developed " beneficiary countries regardless of the source of G/RO/83  
 
- 2 - 
 
  the fabric or yarn, subject to an annual quantitative limit.  The HOPE II Act, as amended by the 
Haiti HELP Act, prov ides for duty -free access for up to 200 million square meter equivalents (SME) 
of knit apparel (with some t -shirt and sweatshirt exclusions) and 200 million SMEs of woven 
apparel without regard to the country of origin of the fabric or components, as long as the apparel 
is wholly assembled or knit -to-shape in Haiti.  
2.4. The United States does not impose a combination of ad valorem , tariff shift, and specific 
manufacturing requirements for determining sufficient transformation under the aforementioned 
preference programmes.  
3  CUMULATION  
3.1. All three of the aforementioned U.S. preference programmes  provide for cumulation, but in 
different ways.  
3.2. All AGOA and CBERA beneficiary countries may cumulate (i.e., use inputs from other 
countries to meet the local value content requirement) with countries in their respective 
programmes .  In the case of AGOA and CBERA, up to 15 % of the 35 % local value content 
requirement may be attributable to the cost or value of materials produced in the United States.  
In addition , AGOA and CBERA beneficiaries may cumulate with former beneficiaries of their 
respective programmes .  A "former beneficiary " is defined as a country that ceases to be 
designated as a beneficiary country under the particular preference program me because th e 
country has become a Party to a free trade agreement with the United States.  
3.3. Under GSP, certain associations of countries are treated as one country for origin purposes.  
In other words, inputs from certain beneficiary countries in specific regional  groupings may 
contribute to satisfying the local value content requirement.  The specific countries and regional 
groupings can be found in General Note 4 of the Harmonized Tariff Schedule of the United States.  
4  DOCUMENTARY REQUIREM ENTS  
4.1. Paragraph 3.1 (a) of the Nairobi Decision states that Preference -granting Members shall "[a]s 
a general principle, refrain from requiring a certificate on non -manipulation for products originating 
in a LDC but shipped across countries unless there are concerns regarding t ransshipment, 
manipulation, or fraudulent documentation ".  For each of the three aforementioned U.S. 
preference programmes , an originating article maintains its originating status if it was shipped 
through a beneficiary country or was shipped through a cou ntry other than a beneficiary country 
and the invoices and other documents from the beneficiary country do show the United States as 
the final destination.  If not the case, the importer must have documentation that demonstrates 
that the conditions set for th in the regulations were met; and must be prepared to explain, upon 
request from U.S. Customs and Border Protection, how the records and internal controls referred 
to above justify the importer 's claim for preferential treatment.  However, the United Sta tes does 
not require a certificate of non -manipulation if other documentation demonstrates these 
conditions.  
4.2. The United States has procedures to expedite customs clearance for low value shipments.  
In the United States, an "informal entry " involves t he importation of merchandise that does not 
exceed US $2,500 in value.  Informal entries do not require a posting of a Customs bond and are 
liquidated at the time of release.  Informal entries are used for both personal and commercial 
importations.  Informa l entries may not be used for commercial importations of goods subject to 
quota, Anti -dumping or Countervailing duties.  In addition, in March 2016, the United States raised 
the value of a shipment of merchandise imported by one person on one day that gene rally may be 
imported free of duties and taxes from US $200 to US $800.   
__________