[Federal Register Volume 65, Number 194 (Thursday, October 5, 2000)]
[Rules and Regulations]
[Pages 59668-59681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25518]



[[Page 59667]]

-----------------------------------------------------------------------

Part VII





Department of the Treasury





-----------------------------------------------------------------------



Customs Service



-----------------------------------------------------------------------



19 CFR Parts 10 and 163



African Growth and Opportunity Act and Generalized System of 
Preferences; Final Rule

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / 
Rules and Regulations

[[Page 59668]]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 10 and 163

[T.D. 00-67]
RIN 1515-AC72


African Growth and Opportunity Act and Generalized System of 
Preferences

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Interim regulations; solicitation of comments.

-----------------------------------------------------------------------

SUMMARY: This document sets forth interim amendments to the Customs 
Regulations to implement the trade benefit provisions for sub-Saharan 
Africa contained in Title I of the Trade and Development Act of 2000. 
The trade benefits under Title I, also referred to as the African 
Growth and Opportunity Act (the AGOA), apply to sub-Saharan African 
countries designated by the President and involve: The extension of 
duty-free treatment under the Generalized System of Preferences (GSP) 
to non-textile articles normally excluded from GSP duty-free treatment 
that are not import-sensitive; and the entry of specific textile and 
apparel articles free of duty and free of any quantitative limits. The 
regulatory amendments contained in this document reflect and clarify 
the statutory standards for preferential treatment under the AGOA and 
also include specific documentary, procedural and other related 
requirements that must be met in order to obtain that treatment. 
Finally, this document also includes some interim amendments to the 
existing Customs Regulations implementing the GSP to conform those 
regulations to previous amendments to the GSP statute.

DATES: Interim rule effective October 1, 2000; comments must be 
submitted by December 4, 2000.

ADDRESSES: Written comments may be addressed to, and inspected at, the 
Regulations Branch, U.S. Customs Service, 1300 Pennsylvania Avenue, 
N.W., 3rd Floor, Washington, DC 20229.

FOR FURTHER INFORMATION CONTACT:
    Operational issues: Cathy Sauceda, Office of Field Operations (202-
927-4198).
    Legal issues regarding textiles: Cynthia Reese, Office of 
Regulations and Rulings (202-927-1361).
    Other legal issues: Craig Walker, Office of Regulations and Rulings 
(202-927-1116).

SUPPLEMENTARY INFORMATION:

Background

African Growth and Opportunity Act

    On May 18, 2000, President Clinton signed into law the Trade and 
Development Act of 2000 (the ``Act''), Public Law 106-200, 114 Stat. 
251. Title I of the Act concerns the extension of certain trade 
benefits to sub-Saharan Africa and is referred to in the Act as the 
``African Growth and Opportunity Act'' (the ``AGOA'').
    Subtitle A of Title I of the Act concerns trade policy for sub-
Saharan Africa. Subtitle A is codified at 19 U.S.C. 3701-3706 and 
includes section 104 (19 U.S.C. 3703) which (1) authorizes the 
President to designate a sub-Saharan African country as an ``eligible'' 
sub-Saharan African country if the President determines that the 
country meets specified eligibility requirements and (2) requires that 
the President terminate a designation if the President determines that 
an eligible country is not making continual progress in meeting those 
requirements. Subtitle A also includes section 107 (19 U.S.C. 3706) 
which, for purposes of Title I, defines the terms ``sub-Saharan 
Africa'' and ``sub-Saharan African country'' and variations of those 
terms with reference to 48 listed countries.
    Subtitle B of Title I of the Act concerns trade benefits under the 
AGOA. The provisions within Subtitle B to which this document relates 
are sections 111, 112 and 113.

Section 111

    Subsection (a) of section 111 of the Act amends Title V of the 
Trade Act of 1974 (the Generalized System of Preferences, or GSP, 
statute which previously consisted of sections 501-507, codified at 19 
U.S.C. 2461-2467) by inserting after section 506 a new section 506A 
entitled ``Designation of sub-Saharan African countries for certain 
benefits'' and codified at 19 U.S.C. 2466a.
    Subsection (a) of new section 506A authorizes the President, 
subject to referenced eligibility requirements and criteria, to 
designate a country listed in section 107 of the Act as a beneficiary 
sub-Saharan African country eligible for the benefits described in 
subsection (b). This subsection (a) also requires that the President 
terminate a designation if the President determines that a beneficiary 
sub-Saharan African country is not making continual progress in meeting 
the requirements for designation.
    Subsection (b) of new section 506A concerns preferential tariff 
treatment for certain articles and consists of the following two 
paragraphs:
    1. Paragraph (1) authorizes the President to provide duty-free 
treatment for any article described in section 503(b)(1) (B) through 
(G) of the GSP statute that is the growth, product, or manufacture of a 
beneficiary sub-Saharan African country. A beneficiary sub-Saharan 
African country is a country listed in section 107 of the Act that has 
been designated by the President as eligible under subsection (a) of 
new section 506A. The President is authorized to provide duty-free 
treatment for an article if, after receiving the advice of the 
International Trade Commission in accordance with section 503(e) of the 
GSP statute, the President determines that the article is not import-
sensitive in the context of imports from beneficiary sub-Saharan 
African countries. The articles described in section 503(b)(1) (B) 
through (G) of the GSP statute are those that are normally excluded 
from duty-free treatment under the GSP and consist of the following:
    a. Watches, except those watches entered after June 30, 1989, that 
the President specifically determines, after public notice and comment, 
will not cause material injury to watch or watch band, strap, or 
bracelet manufacturing and assembly operations in the United States or 
the United States insular possessions;
    b. Import-sensitive electronic articles;
    c. Import-sensitive steel articles;
    d. Footwear, handbags, luggage, flat goods, work gloves, and 
leather wearing apparel which were not eligible articles for purposes 
of the GSP on January 1, 1995, as the GSP was in effect on that date;
    e. Import-sensitive semimanufactured and manufactured glass 
products; and
    f. Any other articles which the President determines to be import-
sensitive in the context of the GSP.
    2. Paragraph (2) provides that the duty-free treatment under 
paragraph (1) will apply to any article described in that paragraph 
that meets the requirements of section 503(a)(2) (that is, the basic 
GSP origin and related rules). Paragraph (2) also makes application of 
those basic rules in this context subject to the following two 
additional rules:
    a. If the cost or value of materials produced in the customs 
territory of the United States is included with respect to that 
article, an amount not to exceed 15 percent of the appraised value of 
the article at the time it is entered that is attributed to that United 
States cost or value may be applied toward determining the percentage 
referred to in subparagraph (A) of section 503(a)(2); and

[[Page 59669]]

    b. The cost or value of the materials included with respect to that 
article that are produced in one or more beneficiary sub-Saharan 
African countries shall be applied in determining that percentage.
    Thus, in order for an article described in paragraph (1) to receive 
duty-free treatment, that article must meet the basic origin and 
related rules that apply to all eligible articles from any GSP-eligible 
country, but subject to two additional rules. In other words, (1) the 
article must have become the growth, product, or manufacture of a 
beneficiary sub-Saharan African country by some process other than a 
simple combining or packaging operation or the mere dilution with water 
or the mere dilution with another substance that does not materially 
alter the characteristics of the article, (2) the article must be 
imported directly from a beneficiary sub-Saharan African country into 
the customs territory of the United States, (3) the article must have 
at least 35 percent of its appraised value attributed to the sum of the 
direct costs of processing operations performed in the beneficiary sub-
Saharan African country or in any two or more beneficiary sub-Saharan 
African countries that are members of the same association of countries 
and are treated as one country under section 507(2) of the GSP statute, 
plus the cost or value of the materials produced in the beneficiary 
sub-Saharan African country or in any two or more beneficiary sub-
Saharan African countries, and (4) as variations from the general GSP 
35 percent value-content rule (the two additional rules): the 
cumulation of the cost or value of materials from different beneficiary 
countries is not dependent on those beneficiaries being members of an 
association of countries; and the cost or value of materials produced 
in the customs territory of the United States (the 50 States and the 
District of Columbia and Puerto Rico) may be counted toward the 35 
percent requirement to a maximum of 15 percent of the article's 
appraised value.
    Subsection (c) of new section 506A defines the terms ``beneficiary 
sub-Saharan African country'' and ``beneficiary sub-Saharan African 
countries'' for purposes of the AGOA as a country or countries listed 
in section 107 of the Act that the President has determined is eligible 
under subsection (a) of new section 506A.
    Subsection (b) of section 111 of the Act revises section 
503(c)(2)(D) of the GSP statute in order to accommodate inclusion of a 
reference to ``any beneficiary sub-Saharan African country.'' The 
effect of this amendment is to preclude the withdrawal of GSP duty-free 
treatment from a beneficiary sub-Saharan African country by application 
of the GSP competitive need limitation provisions. This amendment is 
not addressed in the regulatory changes set forth in this document.
    It is noted that section 114 of the Act also amends the GSP statute 
by inserting after new section 506A another new section 506B (codified 
at 19 U.S.C. 2466b and entitled ``Termination of benefits for sub-
Saharan African countries'') which provides for continuation of GSP 
duty-free treatment through September 30, 2008, in the case of a 
beneficiary sub-Saharan African country as defined in section 506A(c).

Section 112

    Section 112 of the Act sets forth new rules that provide for the 
preferential treatment of certain textile and apparel products. These 
rules are codified at 19 U.S.C. 3721 and thus are outside the GSP 
statutory framework. Moreover, these rules in effect operate as an 
exception to the approach under the GSP because section 503(b)(1)(A) of 
the GSP statute excludes most textile and apparel articles from 
preferential (that is, duty-free) treatment under the GSP.
    Subsection (a) of section 112 contains the basic preferential 
treatment statement. It provides that textile and apparel articles 
described in subsection (b) that are imported directly into the customs 
territory of the United States from a beneficiary sub-Saharan African 
country described in section 506A(c) of the GSP statute shall enter the 
United States free of duty and free of any quantitative limitations in 
accordance with the provisions set forth in subsection (b), if the 
country has satisfied the requirements set forth in section 113 of the 
Act.
    Subsection (b) of section 112 lists the specific textile and 
apparel products to which the preferential treatment described in 
subsection (a) applies. These products are as follows:
    1. Apparel articles assembled in one or more beneficiary sub-
Saharan African countries from fabrics wholly formed and cut in the 
United States, from yarns wholly formed in the United States, 
(including fabrics not formed from yarns, if those fabrics are 
classifiable under heading 5602 or 5603 of the Harmonized Tariff 
Schedule of the United States (HTSUS) and are wholly formed and cut in 
the United States) that are entered under subheading 9802.00.80 of the 
HTSUS [paragraph (b)(1)(A)];
    2. Apparel articles assembled in one or more beneficiary sub-
Saharan African countries from fabrics wholly formed and cut in the 
United States, from yarns wholly formed in the United States, 
(including fabrics not formed from yarns, if those fabrics are 
classifiable under heading 5602 or 5603 of the HTSUS and are wholly 
formed and cut in the United States) that are entered under Chapter 61 
or 62 of the HTSUS, if, after that assembly, the articles would have 
qualified for entry under subheading 9802.00.80 of the HTSUS but for 
the fact that the articles were embroidered or subjected to stone-
washing, enzyme-washing, acid washing, perma-pressing, oven-baking, 
bleaching, garment-dyeing, screen printing, or other similar processes 
[paragraph (b)(1)(B)];
    3. Apparel articles cut in one or more beneficiary sub-Saharan 
African countries from fabric wholly formed in the United States from 
yarns wholly formed in the United States, (including fabrics not formed 
from yarns, if those fabrics are classifiable under heading 5602 or 
5603 of the HTSUS and are wholly formed in the United States) if those 
articles are assembled in one or more beneficiary sub-Saharan African 
countries with thread formed in the United States [paragraph (b)(2)];
    4. Apparel articles wholly assembled in one or more beneficiary 
sub-Saharan African countries from fabric wholly formed in one or more 
beneficiary sub-Saharan African countries from yarn originating either 
in the United States or one or more beneficiary sub-Saharan African 
countries (including fabrics not formed from yarns, if those fabrics 
are classifiable under heading 5602 or 5603 of the HTSUS and are wholly 
formed and cut in one or more beneficiary sub-Saharan African 
countries), subject to rules or conditions involving (1) application of 
quantitative limits on preferential treatment (in effect, tariff rate 
quotas) for each of eight 1-year periods beginning on October 1, 2000, 
with a percentage increase in each year, (2) subject to those tariff 
rate quota provisions and until September 30, 2004, application of 
preferential treatment to apparel articles wholly assembled in one or 
more lesser developed beneficiary sub-Saharan African countries 
regardless of the country of origin of the fabric used to make the 
articles, and (3) application of an import surge safeguard mechanism 
that could lead to suspension by the President of duty-free treatment 
for an article if increased imports of that article cause serious 
damage, or the threat of serious damage, to a domestic industry 
producing a like or directly competitive article [paragraph (b)(3)];
    5. Cashmere sweaters, that is, sweaters in chief weight of 
cashmere, knit-to-shape in one or more beneficiary

[[Page 59670]]

sub-Saharan African countries and classifiable under subheading 6110.10 
of the HTSUS [paragraph (b)(4)(A)];
    6. Wool sweaters containing 50 percent or more by weight of wool 
measuring 18.5 microns in diameter or finer, knit-to-shape in one or 
more beneficiary sub-Saharan African countries [paragraph (b)(4)(B)];
    7. Apparel articles that are both cut (or knit-to-shape) and sewn 
or otherwise assembled in one or more beneficiary sub-Saharan African 
countries, from fabric or yarn that is not formed in the United States 
or a beneficiary sub-Saharan African country, to the extent that 
apparel articles of those fabrics or yarns would be eligible for 
preferential treatment, without regard to the source of the fabric or 
yarn, under Annex 401 to the North American Free Trade Agreement 
(NAFTA). (This AGOA provision in effect applies to apparel articles 
which are originating goods, and thus are entitled to preferential duty 
treatment, under the NAFTA tariff shift and related rules based on the 
fact that the fabrics or yarns used to produce them were determined to 
be in short supply in the context of the NAFTA. The subject fabrics and 
yarns include fine count cotton knitted fabrics for certain apparel, 
linen, silk, cotton velveteen, fine wale corduroy, Harris Tweed, 
certain woven fabrics made with animal hairs, certain lightweight, high 
thread count poly-cotton woven fabrics, and certain lightweight, high 
thread count broadwoven fabrics used in the production of men's and 
boys' shirts--see House Report 106-606, 106th Congress, 2d Session, at 
page 77.) [paragraph (b)(5)(A)];
    8. Apparel articles that are both cut (or knit-to-shape) and sewn 
or otherwise assembled in one or more beneficiary sub-Saharan African 
countries, from fabric or yarn that is not formed in the United States 
or a beneficiary sub-Saharan African country and that is not described 
in paragraph (b)(5)(A), to the extent that the President has determined 
that the fabric or yarn cannot be supplied by the domestic industry in 
commercial quantities in a timely manner and has proclaimed the 
treatment provided under paragraph (b)(5)(A) [paragraph (b)(5)(B)]; and
    9. A handloomed, handmade, or folklore article of a beneficiary 
sub-Saharan African country or countries that is certified as such by 
the competent authority of the beneficiary country or countries, 
subject to a determination by the President regarding which, if any, 
particular textile and apparel goods of the country or countries will 
be treated as being handloomed, handmade, or folklore articles 
[paragraph (b)(6)].
    Subsection (c) of section 112 concerns the elimination of existing 
quotas on textile and apparel articles imported into the United States 
from Kenya and Mauritius. This provision is not addressed in the 
regulatory changes set forth in this document.
    Subsection (d) of section 112 sets forth special rules that apply 
for purposes of determining the eligibility of articles for 
preferential treatment under section 112. These special rules are as 
follows:
    1. Paragraph (d)(1)(A) sets forth a general rule regarding the 
treatment of findings and trimmings. It provides that an article 
otherwise eligible for preferential treatment under section 112 will 
not be ineligible for that treatment because the article contains 
findings or trimmings of foreign origin, if the value of those foreign 
findings and trimmings does not exceed 25 percent of the cost of the 
components of the assembled article. This provision specifies the 
following as examples of findings and trimmings: sewing thread, hooks 
and eyes, snaps, buttons, ``bow buds,'' decorative lace trim, elastic 
strips (but only if they are each less than 1 inch in width and used in 
the production of brassieres), zippers (including zipper tapes), and 
labels. However, as an exception to the paragraph (d)(1)(A) general 
rule, paragraph (d)(1)(C) provides that sewing thread will not be 
treated as findings or trimmings in the case of an article described in 
paragraph (b)(2) of section 112 (because that paragraph specifies that 
the thread used in the assembly of the article must be formed in the 
United States and thus cannot be of ``foreign'' origin).
    2. Paragraph (d)(1)(B) sets forth a general rule regarding the 
treatment of specific interlinings, that is, a chest type plate, a 
``hymo'' piece, or ``sleeve header,'' of woven or weft-inserted warp 
knit construction and of coarse animal hair or man-made filaments. 
Under this rule, an article otherwise eligible for preferential 
treatment under section 112 will not be ineligible for that treatment 
because the article contains interlinings of foreign origin, if the 
value of those interlinings (and any findings and trimmings) does not 
exceed 25 percent of the cost of the components of the assembled 
article. The paragraph also provides for the termination of this 
treatment of interlinings if the President makes a determination that 
United States manufacturers are producing those interlinings in the 
United States in commercial quantities.
    3. Finally, paragraph (d)(2) sets forth a de minimis rule which 
provides that an article otherwise eligible for preferential treatment 
under section 112 will not be ineligible for that treatment because the 
article contains fibers or yarns not wholly formed in the United States 
or one or more beneficiary sub-Saharan African countries if the total 
weight of all those fibers and yarns is not more than 7 percent of the 
total weight of the article.
    Subsection (e) of section 112 defines certain terms for purposes of 
sections 112 and 113 of the Act and, in paragraph (e)(2), states that 
the terms ``beneficiary sub-Saharan African country'' and ``beneficiary 
sub-Saharan African countries'' have the same meaning as those terms 
have under new section 506A(c) discussed above.
    Finally, subsection (f) of section 112 provides that section 112 
takes effect on October 1, 2000, and will remain in effect through 
September 30, 2008.

Section 113

    Section 113 of the Act sets forth standards and conditions for the 
designation of beneficiary sub-Saharan African countries and for the 
granting of preferential treatment to textile and apparel articles 
under section 112. These provisions are primarily intended to avoid 
transshipment situations and thus ensure that preferential treatment is 
applied to goods as intended by Congress.
    Subsection (a) of section 113 sets forth various terms and 
conditions that a potential beneficiary sub-Saharan African country 
must meet for purposes of preferential treatment under section 112. 
These terms and conditions involve enforcement and related actions to 
be taken by, and within, those potential beneficiary sub-Saharan 
African countries and thus, except in the case of paragraphs (a)(1)(F) 
and (a)(2), do not relate to matters that require regulatory action in 
this document. Paragraph (a)(1)(F) requires a country to agree to 
report, on a timely basis, at the request of the U.S. Customs Service, 
documentation establishing the country of origin of covered articles as 
used by that country in implementing an effective visa system. For 
purposes of paragraph (a)(1)(F), paragraph (a)(2) states that 
documentation regarding the country of origin of the covered articles 
includes documentation such as production records, information relating 
to the place of production, the number and identification of the types 
of machinery used in production, the number of workers employed in 
production, and certification from both the manufacturer and the 
exporter.
    Subsection (b) of section 113 sets forth regulatory standards for 
purposes

[[Page 59671]]

of preferential treatment under section 112, prescribes a specific 
factual determination that the President must make regarding the 
implementation of certain procedures and requirements by each 
beneficiary sub-Saharan African country, prescribes a penalty that the 
President must impose on an exporter if the President determines that 
the exporter has engaged in transshipment, specifies when 
``transshipment'' occurs for purposes of the subsection, and sets forth 
responsibilities of Customs regarding monitoring and reporting to 
Congress on actions taken by countries in sub-Saharan Africa. The 
specific provisions under subsection (b) that require regulatory 
treatment in this document are the following:
    1. Paragraph (b)(1)(A) provides that any importer that claims 
preferential treatment under section 112 must comply with customs 
procedures similar in all material respects to the requirements of 
Article 502(1) of the NAFTA as implemented pursuant to United States 
law, in accordance with regulations promulgated by the Secretary of the 
Treasury. The NAFTA provision referred to in paragraph (b)(1)(A) 
concerns the use of a Certificate of Origin and specifically requires 
that the importer (1) make a written declaration, based on a valid 
Certificate of Origin, that the imported good qualifies as an 
originating good, (2) have the Certificate in its possession at the 
time the declaration is made, (3) provide the Certificate to Customs on 
request, and (4) promptly make a corrected declaration and pay any 
duties owing where the importer has reason to believe that a 
Certificate on which a declaration was based contains information that 
is not correct.
    2. Paragraph (b)(2) provides that the Certificate of Origin that 
otherwise would be required pursuant to the provisions of paragraph 
(b)(1)(A) will not be required in the case of an article imported under 
section 112 if that Certificate of Origin would not be required under 
Article 503 of the NAFTA (as implemented pursuant to United States 
law), if the article were imported from Mexico. Article 503 of the 
NAFTA sets forth, with one general exception, three specific 
circumstances in which a NAFTA country may not require a Certificate of 
Origin.
    Finally, subsection (c) of section 113 requires Customs to provide 
technical assistance to the beneficiary sub-Saharan African countries 
and to send production verification teams to at least four beneficiary 
sub-Saharan African countries each year, and subsection (d) of section 
113 contains an appropriation authorization to carry out these duties. 
These provisions are not addressed in the regulatory changes set forth 
in this document.

Other Changes to the GSP Program

    Section 226 of the Customs and Trade Act of 1990 (Pub. L. 101-382, 
104 Stat. 660) amended section 503 of the GSP statute (19 U.S.C. 2463) 
in order to include explicit country of origin language in the 
statutory text. The amendments involved (1) inclusion of a reference to 
an eligible article which is ``the growth, product, or manufacture'' of 
a beneficiary developing country, (2) inclusion of a requirement that 
the implementing regulations promulgated by the Secretary of the 
Treasury provide that, in order to be eligible for duty-free treatment, 
an article must be ``wholly the growth, product, or manufacture of a 
beneficiary developing country, or must be a new or different article 
of commerce which has been grown, produced, or manufactured in the 
beneficiary developing country,'' and (3) inclusion of a limitation on 
the conferring of origin for purposes of duty-free treatment in the 
case of simple combining or packaging operations or the mere dilution 
with water or the mere dilution with another substance that does not 
materially alter the characteristics of the article. The Customs 
Regulations implementing the GSP were originally published in 1975 and 
were never amended to reflect the 1990 statutory amendments. This 
document therefore sets forth conforming regulatory amendments for this 
purpose.
    In addition, in Proclamation 6942 of October 17, 1996 (published in 
the Federal Register at 61 FR 54719 on October 21, 1996), President 
Clinton amended the GSP in a number of respects. One of those changes 
involved the termination of the designation of Malaysia both as a 
beneficiary developing country for purposes of the GSP and as a member 
of the Association of South East Asian Nations for purposes of the GSP. 
Section 10.175 of the Customs Regulations (19 CFR 10.175) sets forth 
standards for the GSP direct importation requirement and, in paragraph 
(e)(1), permits shipment, with some restrictions, from a member of an 
association designated for GSP purposes through a former beneficiary 
developing country whose designation as a member of that same 
association for GSP purposes was terminated by the President; paragraph 
(e)(2) of that section lists three former beneficiary developing 
countries whose designation was terminated as described in paragraph 
(e)(1). This document adds Malaysia to that paragraph (e)(2) list.
    Finally, Customs notes that Secs. 10.171(a), 10.175(e), and 
10.176(c) of the Customs Regulations contain out-of-date references to 
various GSP statutory provisions. This document conforms those 
references to the current GSP statute.

Section-by-Section Discussion of Interim Amendments

Section 10.171

    The amendment of this section involves an amendment of the first 
sentence of paragraph (a) to reflect the correct codification of the 
GSP statute.

Section 10.175

    The amendments of this section involve (1) corrections to various 
GSP statutory citations in paragraphs (e)(1) and (e)(2), and (2) the 
addition of Malaysia to the list of countries in paragraph (e)(2) to 
reflect the action taken by the President in Proclamation 6942 as 
discussed above.

Section 10.176

    The amendments to this section include the revision of paragraph 
(a) to reflect the changes to the GSP statute previously made by 
section 226 of the Customs and Trade Act of 1990 as discussed above. It 
is noted that the amended GSP statutory text regarding the basic rules 
of origin closely follows the wording of the corresponding Caribbean 
Basin Initiative (CBI) statutory text (section 213(a)(1) and (2) of the 
Caribbean Basin Economic Recovery Act (CBERA), codified at 19 U.S.C. 
2703(a)(1) and (2)), and the legislative history relating to section 
226 clearly indicates that the CBI statute was the model for this 
change to the GSP statute (see House Report 101-650, 101st Congress, 2d 
Session, at page 137). Accordingly, revised paragraph (a) of 
Sec. 10.176 as set forth in this document follows the corresponding CBI 
regulatory provision (Sec. 10.195(a) of the Customs Regulations, 19 CFR 
10.195(a)) but with appropriate textual variations to reflect a GSP 
context. It should also be noted that in the revised GSP text (1) 
reference is no longer made to merchandise which is the ``assembly'' of 
a beneficiary developing country because, similar to the CBI, that term 
is not used in the statute and in any event is covered by the phrase 
``growth, product, or manufacture,'' and (2) the reference to the 
``imported directly'' requirement has not been retained because that 
requirement is already separately and adequately addressed in 
Sec. 10.175 (this does not modify the GSP imported directly 
requirement).

[[Page 59672]]

    In addition, paragraph (c) of this section is amended to correct an 
out-of-date reference to a provision within the GSP statute.

New Sec. 10.178a

    This section is intended to cover the preferential tariff treatment 
provisions of subsection (b) of new section 506A of the GSP statute.
    Paragraphs (a) and (b) of the regulatory text reflect the terms of 
section 506A(b)(1). Paragraph (a) sets the statutory context for the 
section and paragraph (b) describes the designation authority of the 
President and lists the articles that may be designated for duty-free 
treatment.
    Paragraph (c) specifies the manner in which a claim for duty-free 
treatment under the section should be made. It follows the procedure 
specified in Sec. 10.172 of the GSP regulations but provides for use of 
the symbol ``D'' (rather than ``A'') as the special program indicator 
on the entry.
    Paragraph (d) of the regulatory text reflects the rules of origin 
principles contained in section 506A(b)(2). In order to avoid 
unnecessary duplication of regulatory text, and in consideration of the 
fact that the statute provides for application of the GSP origin and 
related rules in this context (subject to two exceptions in the case of 
the 35 percent value content requirement), paragraph (d) provides for 
application of the relevant existing GSP regulatory provisions (that 
is, Secs. 10.171, 10.173, and 10.175 through 10.178) but with certain 
specified exceptions or variations to conform to the AGOA context.

New Secs. 10.211 Through 10.217

    These new sections are intended to implement those textile and 
apparel preferential treatment provisions within sections 112 and 113 
of the Act that relate to U.S. import procedures and thus are 
appropriate for treatment in the Customs Regulations.
    Section 10.211 outlines the statutory context for the new sections 
and is self-explanatory.
    Section 10.212 sets forth definitions for various terms used in the 
new regulatory provisions. The following points are noted regarding 
these definitions:
    1. The definition of ``apparel articles,'' by referring to goods 
classifiable in Chapters 61 and 62 and headings 6501, 6502, 6503, and 
6504 and subheadings 6406.99 and 6505.90 of the HTSUS, is intended to 
reflect the scope of apparel under the Agreement on Textiles and 
Clothing annexed to the WTO Agreement and referred to in 19 U.S.C. 
3511(d)(4).
    2. The definition of ``assembled in one or more beneficiary 
countries'' is based in part on the definition of ``wholly assembled'' 
in Sec. 102.21(b)(6) of the Customs Regulations (19 CFR 102.21(b)(6)) 
but also adds a reference to thread as a material that is not 
considered to be a component for purposes of the definition. In 
addition, the definition is intended to allow a prior partial assembly 
in the United States, consistent with the overall structure of the AGOA 
as reflected in the types of operations allowed under the program.
    3. The definition of ``cut in one or more beneficiary countries'' 
precludes any cutting operation performed in a country other than a 
beneficiary country in accordance with the clear language of the 
statute.
    4. The definition of ``knit-to-shape'' follows the definition in 
Sec. 102.21(b)(3) of the Customs Regulations (19 CFR 102.21(b)(3)).
    5. The definition of ``major parts'' is taken from the definition 
in Sec. 102.21(b)(4) of the Customs Regulations (19 CFR 102.21(b)(4)).
    6. The definition of ``NAFTA'' reflects the definition contained in 
section 112(e)(3) of the Act.
    7. The definition of ``originating'' refers to the Customs 
Regulations that implement section 334 of the Uruguay Round Agreements 
Act and therefore is consistent with the intent of Congress (see House 
Report 106-606, 106th Congress, 2d Session, at page 77).
    8. The definition of ``wholly assembled in'' is intended to ensure, 
consistent with the wording of the statute and the clear meaning of 
``wholly'' in this context, that all assembly operations (including any 
initial partial assembly or any tail-end assembly operation) will be 
performed in the countries that are the intended beneficiaries of the 
AGOA program.
    9. The definition of ``wholly formed'' relies in part on the 
definition of ``fabric-making process'' in Sec. 102.21(b)(2) of the 
Customs Regulations (19 CFR 102.21(b)(2)) and also uses a similar 
approach for yarns and thread because the Act uses these terms with 
reference to fabrics, yarns, and thread. The definition is intended to 
ensure that all processes essential for yarn or thread or fabric 
formation are performed in the United States or beneficiary countries.
    Section 10.213 identifies the specific articles to which 
preferential treatment applies under section 112 of the Act. Paragraph 
(a) repeats the ``imported directly'' requirement of section 112(a) of 
the Act and identifies the various types of articles described within 
sections 112(b)(1)-(6) of the Act. Paragraph (b) covers the special 
rules for findings, trimmings, and interlinings and the de minimis rule 
contained in section 112(d) of the Act. Paragraph (c) explains what is 
meant by ``imported directly.'' The following specific points are noted 
regarding these regulatory texts:
    1. With regard to paragraph (a)(2), which corresponds to section 
112(b)(1)(B) of the Act, Customs notes that the statutory provision 
does not address the issue of whether the embroidery or stone-washing 
and other processes mentioned in that provision (which are principally 
finishing operations normally done after assembly) must be done in 
beneficiary countries. The relevant legislative history does not 
address the issue. The statute could be read to allow these processes 
to be done in a non-beneficiary country provided that, after these 
processes are completed, the article is returned to a beneficiary 
country for direct importation into the United States. However, Customs 
believes that this interpretation would lead to a result that is 
contrary to the Congressional statement of policy set forth in section 
103 of the Act which mentions, among other things, the encouragement of 
increased trade and investment between the United States and sub-
Saharan Africa and the strengthening and expansion of the private 
sector in sub-Saharan Africa, because it could have the effect of 
diverting those finishing operations to third countries and thus away 
from the intended beneficiaries under the Act. Customs has determined 
that limiting the performance of those processes to beneficiary 
countries would further the stated policy of Congress and would be more 
consistent with the intent of the Act. Accordingly, in paragraph (a)(2) 
of the regulatory text, the words ``in a beneficiary country'' have 
been added at the end after ``processes.''
    2. In paragraph (a)(3), which corresponds to section 112(b)(2) of 
the Act, no comma has been included before the parenthetical expression 
and a comma has been added after that parenthetical expression, in 
order to correct an apparent inadvertent drafting or printing error and 
thus ensure proper grammatical sense (this makes the regulatory text 
consistent with a corresponding statutory text set forth under section 
211 of the Act, which is not the subject of this document).
    3. In paragraph (a)(7), which corresponds to section 112(b)(4)(B) 
of the Act, no mention is made of

[[Page 59673]]

``merino'' wool because, notwithstanding the use of this word in the 
heading of the statutory provision, Customs interprets the statutory 
language as reflecting the intent of Congress to set a maximum (18.5 
micron) diameter limitation without regard to the type of animal from 
which the wool was obtained.
    4. In paragraph (a)(9), which corresponds to section 112(b)(5)(B) 
of the Act, no reference has been made at the end to treatment provided 
``for yarns or fabrics'' because treatment in this context must be read 
in the context of section 112(b)(5)(A) of the Act and therefore can 
only have reference to articles made from yarns or fabric.
    5. Paragraph (b) is divided into two parts: Paragraph (b)(1) 
reflects the basic rules of section 112(d) of the Act and paragraph 
(b)(2) is intended to clarify the relationship between findings and 
trimmings on the one hand and fibers and yarns on the other hand for 
purposes of applying the 25 percent by value and 7 percent by weight 
limitations under section 112(d). As regards paragraph (b)(2), Customs 
believes that some clarification is appropriate in this context because 
sometimes a fiber or yarn may be used in an article as a finding or 
trimming. The statute is ambiguous as to whether an article is 
ineligible if the total weight of all foreign fibers or yarns exceeds 
the 7 percent limit but the value of all foreign findings and trimmings 
does not exceed the 25 percent limit. Thus, the question arises as to 
which limitation should apply. In the absence of any guidance on this 
point in the relevant legislative history, Customs has concluded that 
the best approach is to give precedence to the findings and trimmings 
limitation. Thus, under paragraph (b)(2) a foreign yarn, for example, 
that is used in an article as a trimming would be subject to the 25 
percent by value limitation rather than the 7 percent by weight 
limitation. In addition, the following is noted regarding the paragraph 
(b) texts:
    a. In paragraph (b)(1)(i) the words ``and zippers, including zipper 
tapes and labels'' in section 112(d)(1)(A) of the Act have been 
replaced with the words ``zippers (including zipper tapes), labels'' 
because there is no such thing as a ``zipper label'' and to ensure 
proper treatment of labels as findings and trimmings in their own 
right. Customs believes that this wording of the regulatory text is 
consistent with the intent of Congress as reflected in the explanation 
of the provision in the relevant legislative history (see House Report 
106-606, 106th Congress, 2d Session, at page 79); and
    b. A separate paragraph (b)(1)(iii) has been included to allow a 
combination of findings and trimmings and interlinings up to a total of 
25 percent of the cost of the components of the assembled article, 
because Customs believes that was the result intended by Congress by 
the inclusion of the words ``(and any findings and trimmings)'' in 
section 112(d)(1)(B)(i) of the Act.
    6. The explanation of ``imported directly'' in paragraph (c) is 
consistent with current regulatory practice. The text follows that used 
in the Caribbean Basin Initiative (CBI) implementing regulations (see 
19 CFR 10.193) rather than the text used in the corresponding GSP 
regulation (19 CFR 10.175) because the CBI text allows for 
contributions from multiple beneficiary countries without affecting 
compliance with the imported directly requirement and thus is more 
appropriate for the production scenarios permitted under section 112(b) 
of the Act.
    Section 10.214 prescribes the use of a Certificate of Origin and 
thus reflects the regulatory mandate contained in section 113(b)(1)(A) 
of the Act. Paragraph (a) contains a general statement regarding the 
purpose and preparation of the Certificate of Origin and is based in 
part on Sec. 181.11 of the implementing NAFTA regulations (19 CFR 
181.11). Paragraph (b) sets forth the form for the Certificate of 
Origin, which is directed toward the specific articles described in 
section 112(b) of the Act and thus bears no substantive relationship to 
the Certificate of Origin used under the NAFTA which involves different 
country of origin standards for preferential duty treatment. Paragraph 
(c) sets forth instructions for preparation of the Certificate of 
Origin. It should be noted that the Certificate of Origin prescribed 
under this section has no effect on the textile declaration prescribed 
under Sec. 12.130 of the Customs Regulations (19 CFR 12.130) which 
still must be submitted to Customs in accordance with that section even 
in the case of textile products that are entitled to preferential 
treatment under the AGOA program.
    Section 10.215 sets forth the procedures for filing a claim for 
preferential treatment. Consistent with the mandate in section 
113(b)(1)(A) of the Act for procedures ``similar in all material 
respects to the requirements of Article 502(1) of the NAFTA,'' this 
regulatory text is based on the NAFTA regulatory text contained in 19 
CFR 181.21, but includes appropriate changes to conform to the current 
context. However, contrary to the NAFTA regulatory text, paragraph (a) 
of Sec. 10.215 does not allow for a declaration based on a copy of an 
original Certificate of Origin.
    Section 10.216 concerns the maintenance of records and submission 
of the Certificate of Origin by the importer and follows the NAFTA 
regulatory text contained in 19 CFR 181.22 but, again, with appropriate 
changes to conform to the current context. The following points are 
noted regarding the regulatory text:
    1. In paragraph (a) which concerns the maintenance of records, 
specific reference is made to ``the provisions of part 163'' which sets 
forth the basic Customs recordkeeping requirements that apply to 
importers and other persons involved in customs transactions. The 
effect is the same as that under the NAFTA Sec. 181.22 text.
    2. Paragraph (b) concerns submission of the Certificate of Origin 
to Customs and thus also relates directly to a requirement contained in 
Article 502(1) of the NAFTA. The text is based on the NAFTA regulatory 
text contained in 19 CFR 181.22(b) but differs from the NAFTA text by 
not specifying a 4-year period for acceptance of the Certificate by 
Customs, because that 4-year period is only relevant in a NAFTA 
context.
    3. Paragraph (c) concerns the correction of defective Certificates 
of Origin and the nonacceptance of blanket Certificates in certain 
circumstances. The text is based on the NAFTA regulatory text contained 
in 19 CFR 181.22(c) but is simplified and does not include any 
reference to NAFTA-type origin verifications which do not apply for 
AGOA purposes.
    4. Paragraph (d) sets forth the circumstances in which a 
Certificate of Origin is not required. Consistent with the terms of 
section 113(b)(2) of the Act, this regulatory text follows the terms of 
Article 503 of the NAFTA and the NAFTA regulatory text contained in 19 
CFR 181.22(d).
    Finally, section 10.217 concerns the verification and justification 
of claims for preferential treatment. Paragraph (a) concerns the 
verification of claims by Customs and paragraph (b) prescribes steps 
that a U.S. importer should take in order to support a claim for 
preferential treatment. Although paragraph (a) is derived from 
provisions contained in the GSP regulations (19 CFR 10.173(c)) and in 
the CBI regulations (19 CFR 10.198(c)), the text expands on the GSP/CBI 
approach in the following respects:
    1. In paragraph (a)(1), specific reference is made to the review of 
import-related documents required to be made, kept, and made available 
by importers and other persons under Part 163 of the Customs 
Regulations.

[[Page 59674]]

    2. Paragraph (a)(2) sets forth examples of documents and 
information relating to production in a beneficiary country that 
Customs may need to review for purposes of verifying a claim for 
preferential treatment. This paragraph is based on the specifics 
regarding country of origin documentation contained in section 
113(a)(2) of the Act.
    3. Finally, paragraph (a)(3) refers to evidence in a beneficiary 
country to document the use of U.S. materials in an article produced in 
the beneficiary country, because the presence of U.S. materials is a 
key element for many of the articles to which preferential treatment 
applies under the AGOA. Accordingly, U.S. importers must be aware of 
the fact that their ability to successfully claim preferential 
treatment on their imports may be a function of the nature of the 
records maintained by the beneficiary country producer not only with 
regard to the production process but also with regard to the source of 
the materials used in that production.

Appendix to Part 163

    Finally, this document amends Part 163 of the Customs Regulations 
(19 CFR Part 163) by adding to the list of entry records in the 
Appendix (the interim ``(a)(1)(A) list'') a reference to the 
Certificate of Origin and supporting documentation prescribed under new 
Sec. 10.216.

Comments

    Before adopting this interim regulation as a final rule, 
consideration will be given to any written comments timely submitted to 
Customs, including comments on the clarity of this interim rule and how 
it may be made easier to understand. Comments submitted will be 
available for public inspection in accordance with the Freedom of 
Information Act (5 U.S.C. 552), Sec. 1.4, Treasury Department 
Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs Regulations (19 
CFR 103.11(b)), on regular business days between the hours of 9 a.m. 
and 4:30 p.m. at the Regulations Branch, Office of Regulations and 
Rulings, U.S. Customs Service, 1300 Pennsylvania Avenue, N.W., 3rd 
Floor, Washington, DC.

Inapplicability of Notice and Delayed Effective Date Requirements 
and the Regulatory Flexibility Act

    Pursuant to the provisions of 5 U.S.C. 553(b)(B), Customs has 
determined that prior public notice and comment procedures on these 
regulations are unnecessary and contrary to the public interest. The 
regulatory changes provide trade benefits to the importing public, in 
some cases implement direct statutory mandates, and are necessary to 
carry out the preferential treatment proclaimed by the President under 
the African Growth and Opportunity Act. For the same reasons, pursuant 
to the provisions of 5 U.S.C. 553(d)(1) and (3), Customs finds that 
there is good cause for dispensing with a delayed effective date. 
Because no notice of proposed rulemaking is required for interim 
regulations, the provisions of the Regulatory Flexibility Act (5 U.S.C. 
601 et seq.) do not apply.

Executive Order 12866

    This document does not meet the criteria for a ``significant 
regulatory action'' as specified in E.O. 12866.

Paperwork Reduction Act

    This regulation is being issued without prior notice and public 
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). 
For this reason, the collection of information contained in this 
regulation has been reviewed and, pending receipt and evaluation of 
public comments, approved by the Office of Management and Budget in 
accordance with the requirements of the Paperwork Reduction Act (44 
U.S.C. 3507) under control number 1515-0224.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless the collection of 
information displays a valid control number.
    The collection of information in these interim regulations is in 
Secs. 10.214, 10.215, and 10.216. This information conforms to 
requirements in 19 U.S.C. 3722(b)(1)(A) and is used by Customs to 
determine whether textile and apparel articles imported from designated 
beneficiary sub-Saharan African countries are entitled to duty-free 
entry under the African Growth and Opportunity Act. The likely 
respondents are business organizations including importers, exporters, 
and manufacturers.
    Estimated annual reporting and/or recordkeeping burden: 10,400 
hours.
    Estimated average annual burden per respondent/recordkeeper: 23 
hours.
    Estimated number of respondents and/or recordkeepers: 440.
    Estimated annual frequency of responses: On occasion.
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Attention: Desk Officer of the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503. A copy should also be sent to the 
Regulations Branch, Office of Regulations and Rulings, U.S. Customs 
Service, 1300 Pennsylvania Avenue, NW., 3rd Floor, Washington, DC 
20229. Comments should be submitted within the time frame that comments 
are due regarding the substance of the interim regulations.
    Comments are invited on: (a) Whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information shall have practical utility; (b) the 
accuracy of the agency's estimate of the burden of the collection of 
the information; (c) ways to enhance the quality, utility, and clarity 
of the information to be collected; (d) ways to minimize the burden of 
the collection of information on respondents, including through the use 
of automated collection techniques or other forms of information 
technology; and (e) estimates of capital or startup costs and costs of 
operations, maintenance, and purchase of services to provide 
information.

Drafting Information

    The principal author of this document was Francis W. Foote, Office 
of Regulations and Rulings, U.S. Customs Service. However, personnel 
from other offices participated in its development.

List of Subjects

19 CFR Part 10

    Assembly, Bonds, Caribbean Basin Initiative, Customs duties and 
inspection, Exports, Generalized System of Preferences, Imports, 
Preference programs, Reporting and recordkeeping requirements, Trade 
agreements.

19 CFR Part 163

    Administrative practice and procedure, Customs duties and 
inspection, Imports, Reporting and recordkeeping requirements.

Amendments to the Regulations

    For the reasons set forth in the preamble, Parts 10 and 163, 
Customs Regulations (19 CFR Parts 10 and 163), are amended as set forth 
below.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, 
ETC.

    1. The general authority citation for Part 10 continues to read, 
the specific authority citation for Secs. 10.171 through 10.178 is 
revised to read, and a new specific authority citation for Secs. 10.211 
through 10.217 is added to read, as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 22, Harmonized 
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 
1498, 1508, 1623, 1624, 3314;

[[Page 59675]]

    Sections 10.171 through 10.178a also issued under 19 U.S.C. 2461 et 
seq.;
* * * * *
    Sections 10.211 through 10.217 also issued under 19 U.S.C. 3721;
* * * * *

    2. In Sec. 10.171, the first sentence of paragraph (a) is amended 
by removing the reference ``(19 U.S.C. 2461-2465)'' and adding, in its 
place, the reference ``(19 U.S.C. 2461-2467)'.
    3. In Sec. 10.175:
    a. Paragraph (e)(1) is amended by removing the words ``section 
502(a)(3), Trade Act of 1974, as amended (19 U.S.C. 2462(a)(3))'' and 
adding, in their place, the words ``section 507(2), Trade Act of 1974, 
as amended (19 U.S.C. 2467(2))'' and by removing the words ``section 
504, Trade Act of 1974, as amended (19 U.S.C. 2464)'' and adding, in 
their place, the words ``section 502(d), Trade Act of 1974, as amended 
(19 U.S.C. 2462(d))'; and
    b. Paragraph (e)(2) is amended by removing the words ``section 504 
of the Trade Act of 1974 (19 U.S.C. 2464)'' and adding, in their place, 
the words ``section 502(d) of the Trade Act of 1974 (19 U.S.C. 
2462(d))'' and by adding ``Malaysia'' in appropriate alphabetical order 
in the list of countries at the end of the paragraph.

    4. In Sec. 10.176, paragraph (a) is revised, and paragraph (c) is 
amended by removing the words ``section 502(a)(3) of the Trade Act of 
1974 as amended (19 U.S.C. 2462(a)(3))'' and adding, in their place, 
the words ``section 507(2) of the Trade Act of 1974 (19 U.S.C. 
2467(2))''. The revision of paragraph (a) reads as follows:


Sec. 10.176  Country of origin criteria.

    (a) Merchandise produced in a beneficiary developing country or any 
two or more countries which are members of the same association of 
countries--(1) General. Except as otherwise provided in this section, 
any article which either is wholly the growth, product, or manufacture 
of, or is a new or different article of commerce that has been grown, 
produced, or manufactured in, a beneficiary developing country may 
qualify for duty-free entry under the Generalized System of Preferences 
(GSP). No article will be considered to have been grown, produced, or 
manufactured in a beneficiary developing country by virtue of having 
merely undergone simple (as opposed to complex or meaningful) combining 
or packaging operations or mere dilution with water or mere dilution 
with another substance that does not materially alter the 
characteristics of the article. Duty-free entry under the GSP may be 
accorded to an article only if the sum of the cost or value of the 
materials produced in the beneficiary developing country or any two or 
more countries that are members of the same association of countries 
and are treated as one country under section 507(2) of the Trade Act of 
1974, as amended (19 U.S.C. 2467(2)), plus the direct costs of 
processing operations performed in the beneficiary developing country 
or member countries, is not less than 35 percent of the appraised value 
of the article at the time it is entered.
    (2) Combining, packaging, and diluting operations. No article which 
has undergone only a simple combining or packaging operation or a mere 
dilution in a beneficiary developing country within the meaning of 
paragraph (a)(1) of this section will be entitled to duty-free 
treatment even though the processing operation causes the article to 
meet the value requirement set forth in that paragraph. For purposes of 
this section:
    (i) Simple combining or packaging operations and mere dilution 
include, but are not limited to, the following:
    (A) The addition of batteries to devices;
    (B) Fitting together a small number of components by bolting, 
glueing, soldering, etc.;
    (C) Blending foreign and beneficiary developing country tobacco;
    (D) The addition of substances such as anticaking agents, 
preservatives, wetting agents, etc.;
    (E) Repacking or packaging components together;
    (F) Reconstituting orange juice by adding water to orange juice 
concentrate; and
    (G) Diluting chemicals with inert ingredients to bring them to 
standard degrees of strength;
    (ii) Simple combining or packaging operations and mere dilution 
will not be taken to include processes such as the following:
    (A) The assembly of a large number of discrete components onto a 
printed circuit board;
    (B) The mixing together of two bulk medicinal substances followed 
by the packaging of the mixed product into individual doses for retail 
sale;
    (C) The addition of water or another substance to a chemical 
compound under pressure which results in a reaction creating a new 
chemical compound; and
    (D) A simple combining or packaging operation or mere dilution 
coupled with any other type of processing such as testing or 
fabrication (for example, a simple assembly of a small number of 
components, one of which was fabricated in the beneficiary developing 
country where the assembly took place); and
    (iii) The fact that an article has undergone more than a simple 
combining or packaging operation or mere dilution is not necessarily 
dispositive of the question of whether that processing constitutes a 
substantial transformation for purposes of determining the country of 
origin of the article.
* * * * *
    5. A new Sec. 10.178a is added to read as follows:


Sec. 10.178a  Special duty-free treatment for sub-Saharan African 
countries.

    (a) General. Section 506A of the Trade Act of 1974 (19 U.S.C. 
2466a) authorizes the President to provide duty-free treatment for 
certain articles otherwise excluded from duty-free treatment under the 
Generalized System of Preferences (GSP) pursuant to section 
503(b)(1)(B) through (G) of the Trade Act of 1974 (19 U.S.C. 
2463(b)(1)(B) through (G)) and authorizes the President to designate a 
country listed in section 107 of the African Growth and Opportunity Act 
(19 U.S.C. 3706) as an eligible beneficiary sub-Saharan African country 
for purposes of that duty-free treatment.
    (b) Eligible articles. The duty-free treatment referred to in 
paragraph (a) of this section will apply to any article within any of 
the following classes of articles, provided that the article in 
question has been designated by the President for that purpose and is 
the growth, product, or manufacture of an eligible beneficiary sub-
Saharan African country and meets the requirements specified or 
referred to in paragraph (d) of this section:
    (1) Watches, except those watches entered after June 30, 1989, that 
the President specifically determines, after public notice and comment, 
will not cause material injury to watch or watch band, strap, or 
bracelet manufacturing and assembly operations in the United States or 
the United States insular possessions;
    (2) Certain electronic articles;
    (3) Certain steel articles;
    (4) Footwear, handbags, luggage, flat goods, work gloves, and 
leather wearing apparel which were not eligible articles for purposes 
of the GSP on January 1, 1995, as the GSP was in effect on that date;
    (5) Certain semimanufactured and manufactured glass products; and
    (6) Any other articles which the President determines to be import-
sensitive in the context of the GSP.

[[Page 59676]]

    (c) Claim for duty-free treatment. A claim for the duty-free 
treatment referred to in paragraph (a) of this section must be made by 
placing on the entry document the symbol ``D'' as a prefix to the 
subheading of the Harmonized Tariff Schedule of the United States for 
each article for which duty-free treatment is claimed;
    (d) Origin and related rules. The provisions of Secs. 10.171, 
10.173, and 10.175 through 10.178 will apply for purposes of duty-free 
treatment under this section. However, application of those provisions 
in the context of this section will be subject to the following rules:
    (1) The term ``beneficiary developing country,'' wherever it 
appears, means ``beneficiary sub-Saharan African country;'
    (2) In the GSP declaration set forth in Sec. 10.173(a)(1)(i), the 
column heading ``Materials produced in a beneficiary developing country 
or members of the same association'' should read ``Material produced in 
a beneficiary sub-Saharan African country or in the U.S.;''
    (3) The provisions of Sec. 10.175(c) will not apply; and
    (4) For purposes of determining compliance with the 35 percent 
value content requirement set forth in Sec. 10.176(a):
    (i) An amount not to exceed 15 percent of the appraised value of 
the article at the time it is entered may be attributed to the cost or 
value of materials produced in the customs territory of the United 
States, and the provisions of Sec. 10.177 will apply for purposes of 
identifying materials produced in the customs territory of the United 
States and the cost or value of those materials; and
    (ii) The cost or value of materials included in the article that 
are produced in more than one beneficiary sub-Saharan African country 
may be applied without regard to whether those countries are members of 
the same association of countries.
    (e) Importer requirements. In order to make a claim for duty-free 
treatment under this section, the importer:
    (1) Must have records that explain how the importer came to the 
conclusion that the article qualifies for duty-free treatment;
    (2) Must have records that demonstrate that the importer is 
claiming that the article qualifies for duty-free treatment because it 
is the growth of a beneficiary sub-Saharan African country or because 
it is the product of a beneficiary sub-Saharan African country or 
because it is the manufacture of a beneficiary sub-Saharan African 
country. If the importer is claiming that the article is the growth of 
a beneficiary sub-Saharan African country, the importer must have 
records that indicate that the product was grown in that country, such 
as a record of receipt from a farmer whose crops are grown in that 
country. If the importer is claiming that the article is the product 
of, or the manufacture of, a beneficiary sub-Saharan African country, 
the importer must have records that indicate that the manufacturing or 
processing operations reflected in or applied to the article meet the 
country of origin rules set forth in Sec. 10.176(a) and paragraph (d) 
of this section. A properly completed GSP declaration in the form set 
forth in Sec. 10.173(a)(1) is one example of a record that would serve 
this purpose;
    (3) Must establish and implement internal controls which provide 
for the periodic review of the accuracy of the declarations or other 
records referred to in paragraph (e)(2) of this section;
    (4) Must have shipping papers that show how the article moved from 
the beneficiary sub-Saharan African country to the United States. If 
the imported article was shipped through a country other than a 
beneficiary sub-Saharan African country and the invoices and other 
documents from the beneficiary sub-Saharan African country do not show 
the United States as the final destination, the importer also must have 
documentation that demonstrates that the conditions set forth in 
Sec. 10.175(d)(1) through (3) were met;
    (5) Must have records that demonstrate the cost or value of the 
materials produced in the United States and the cost or value of the 
materials produced in a beneficiary sub-Saharan African country or 
countries and the direct costs of processing operations incurred in the 
beneficiary sub-Saharan African country that were relied upon by the 
importer to determine that the article met the 35 percent value content 
requirement set forth in Sec. 10.176(a) and paragraph (c) of this 
section. A properly completed GSP declaration in the form set forth in 
Sec. 10.173(a)(1) is one example of a record that would serve this 
purpose; and
    (6) Must be prepared to produce the records referred to in 
paragraphs (e)(1), (e)(2), (e)(4), and (e)(5) of this section within 30 
days of a request from Customs and must be prepared to explain how 
those records and the internal controls referred to in paragraph (e)(3) 
of this section justify the importer's claim for duty-free treatment.

    6. Part 10 is amended by adding a new center heading followed by 
new Secs. 10.211 through 10.217 to read as follows:

Textile and Apparel Articles Under the African Growth and 
Opportunity Act

Sec.
10.211   Applicability.
10.212   Definitions.
10.213   Articles eligible for preferential treatment.
10.214   Certificate of Origin.
10.215   Filing of claim for preferential treatment.
10.216   Maintenance of records and submission of Certificate by 
importer.
10.217   Verification and justification of claim for preferential 
treatment.

Textile and Apparel Articles Under the African Growth and 
Opportunity Act


Sec. 10.211  Applicability.

    Title I of Public Law 106-200 (114 Stat. 251), entitled the African 
Growth and Opportunity Act (AGOA), authorizes the President to extend 
certain trade benefits to designated countries in sub-Saharan Africa. 
Section 112 of the AGOA, codified at 19 U.S.C. 3721, provides for the 
preferential treatment of certain textile and apparel articles from 
beneficiary countries. The provisions of Secs. 10.211-10.217 of this 
part set forth the legal requirements and procedures that apply for 
purposes of obtaining preferential treatment pursuant to section 112.


Sec. 10.212  Definitions.

    When used in Secs. 10.211 through 10.217, the following terms have 
the meanings indicated:
    Apparel articles. ``Apparel articles'' means goods classifiable in 
Chapters 61 and 62 and headings 6501, 6502, 6503, and 6504 and 
subheadings 6406.99 and 6505.90 of the HTSUS.
    Assembled in one or more beneficiary countries. ``Assembled in one 
or more beneficiary countries'' when used in the context of a textile 
or apparel article has reference to a joining together of two or more 
components (other than thread, decorative embellishments, buttons, 
zippers, or similar components) that occurred in one or more 
beneficiary countries, whether or not a prior joining operation was 
performed on the article or any of its components in the United States.
    Beneficiary country. ``Beneficiary country'' means a country listed 
in section 107 of the African Growth and Opportunity Act (19 U.S.C. 
3706) which has been the subject of a finding by the President, 
published in the Federal Register, that the country has satisfied the 
requirements of section 113 of the African Growth and Opportunity Act 
(19 U.S.C. 3722) and which the President has designated as a

[[Page 59677]]

beneficiary sub-Saharan African country under section 506A of the Trade 
Act of 1974 (19 U.S.C. 2466a).
    Cut in one or more beneficiary countries. ``Cut in one or more 
beneficiary countries'' when used with reference to apparel articles 
means that all fabric components used in the assembly of the article 
were cut from fabric in one or more beneficiary countries.
    Foreign. ``Foreign'' means of a country other than the United 
States or a beneficiary country.
    HTSUS. ``HTSUS'' means the Harmonized Tariff Schedule of the United 
States.
    Knit-to-shape. The term ``knit-to-shape'' applies to any apparel 
article of which 50 percent or more of the exterior surface area is 
formed by major parts that have been knitted or crocheted directly to 
the shape used in the apparel article, with no consideration being 
given to patch pockets, appliques, or the like. Minor cutting, 
trimming, or sewing of those major parts will not affect the 
determination of whether an apparel article is ``knit-to-shape.''
    Major parts. ``Major parts'' means integral components of an 
apparel article but does not include collars, cuffs, waistbands, 
plackets, pockets, linings, paddings, trim, accessories, or similar 
parts or components.
    NAFTA. ``NAFTA'' means the North American Free Trade Agreement 
entered into by the United States, Canada, and Mexico on December 17, 
1992.
    Originating. ``Originating'' means having the country of origin 
determined by application of the provisions of Sec. 102.21 of this 
chapter.
    Preferential treatment. ``Preferential treatment'' means entry, or 
withdrawal from warehouse for consumption, in the customs territory of 
the United States free of duty and free of any quantitative limitations 
as provided in 19 U.S.C. 3721.
    Wholly assembled in. When used with reference to a textile or 
apparel article in the context of one or more beneficiary countries or 
one or more lesser developed beneficiary countries, the expression 
``wholly assembled in'' means that all of the components of the textile 
or apparel article (including thread, decorative embellishments, 
buttons, zippers, or similar components) were joined together in one or 
more beneficiary countries or one or more lesser developed beneficiary 
countries.
    Wholly formed. ``Wholly formed,'' when used with reference to yarns 
or thread, means that all of the production processes, starting with 
the extrusion of filament or the spinning of all fibers into yarn or 
both and ending with a yarn or plied yarn, took place in a single 
country, and, when used with reference to fabric(s), means that all of 
the production processes, starting with polymers, fibers, filaments, 
textile strips, yarns, twine, cordage, rope, or strips of fabric and 
ending with a fabric by a weaving, knitting, needling, tufting, 
felting, entangling or other process, took place in a single country.


Sec. 10.213  Articles eligible for preferential treatment.

    (a) General. The preferential treatment referred to in Sec. 10.211 
applies to the following textile and apparel articles that are imported 
directly into the customs territory of the United States from a 
beneficiary country:
    (1) Apparel articles assembled in one or more beneficiary countries 
from fabrics wholly formed and cut in the United States, from yarns 
wholly formed in the United States, (including fabrics not formed from 
yarns, if those fabrics are classifiable under heading 5602 or 5603 of 
the HTSUS and are wholly formed and cut in the United States) that are 
entered under subheading 9802.00.80 of the HTSUS;
    (2) Apparel articles assembled in one or more beneficiary countries 
from fabrics wholly formed and cut in the United States, from yarns 
wholly formed in the United States, (including fabrics not formed from 
yarns, if those fabrics are classifiable under heading 5602 or 5603 of 
the HTSUS and are wholly formed and cut in the United States) that are 
entered under Chapter 61 or 62 of the HTSUS, if, after that assembly, 
the articles would have qualified for entry under subheading 9802.00.80 
of the HTSUS but for the fact that the articles were embroidered or 
subjected to stone-washing, enzyme-washing, acid washing, perma-
pressing, oven-baking, bleaching, garment-dyeing, screen printing, or 
other similar processes in a beneficiary country;
    (3) Apparel articles cut in one or more beneficiary countries from 
fabric wholly formed in the United States from yarns wholly formed in 
the United States (including fabrics not formed from yarns, if those 
fabrics are classifiable under heading 5602 or 5603 of the HTSUS and 
are wholly formed in the United States), if those articles are 
assembled in one or more beneficiary countries with thread formed in 
the United States;
    (4) Apparel articles wholly assembled in one or more beneficiary 
countries from fabric wholly formed in one or more beneficiary 
countries from yarn originating either in the United States or one or 
more beneficiary countries (including fabrics not formed from yarns, if 
those fabrics are classifiable under heading 5602 or 5603 of the HTSUS 
and are wholly formed and cut in one or more beneficiary countries);
    (5) Apparel articles wholly assembled in one or more lesser 
developed beneficiary countries regardless of the country of origin of 
the fabric used to make the articles;
    (6) Sweaters, in chief weight of cashmere, knit-to-shape in one or 
more beneficiary countries and classifiable under subheading 6110.10 of 
the HTSUS;
    (7) Sweaters, containing 50 percent or more by weight of wool 
measuring 18.5 microns in diameter or finer, knit-to-shape in one or 
more beneficiary countries;
    (8) Apparel articles that are both cut (or knit-to-shape) and sewn 
or otherwise assembled in one or more beneficiary countries, from 
fabric or yarn that is not formed in the United States or a beneficiary 
country, to the extent that apparel articles of those fabrics or yarns 
would be eligible for preferential treatment, without regard to the 
source of the fabric or yarn, under Annex 401 to the NAFTA;
    (9) Apparel articles that are both cut (or knit-to-shape) and sewn 
or otherwise assembled in one or more beneficiary countries, from 
fabric or yarn that is not formed in the United States or a beneficiary 
country and that is not described in paragraph (a)(8) of this section, 
to the extent that the President has determined that the fabric or yarn 
cannot be supplied by the domestic industry in commercial quantities in 
a timely manner and has proclaimed the preferential treatment provided 
under paragraph (a)(8) of this section; and
    (10) A handloomed, handmade, or folklore article of a beneficiary 
country or countries that is certified as a handloomed, handmade, or 
folklore article by the competent authority of the beneficiary country 
or countries, provided that the President has determined that the 
article in question will be treated as being a handloomed, handmade, or 
folklore article.
    (b) Special rules for certain component materials--(1) General. An 
article otherwise described under paragraph (a) of this section will 
not be ineligible for the preferential treatment referred to in 
Sec. 10.211 because the article contains:
    (i) Findings and trimmings of foreign origin, if the value of those 
findings and trimmings does not exceed 25 percent of the cost of the 
components of the assembled article. For purposes of this section 
``findings and trimmings'' include, but are not limited to, hooks

[[Page 59678]]

and eyes, snaps, buttons, ``bow buds,'' decorative lace trim, elastic 
strips (but only if they are each less than 1 inch in width and are 
used in the production of brassieres), zippers (including zipper 
tapes), labels, and sewing thread except in the case of an article 
described in paragraph (a)(3) of this section;
    (ii) Interlinings of foreign origin, if the value of those 
interlinings does not exceed 25 percent of the cost of the components 
of the assembled article. For purposes of this section ``interlinings'' 
include only a chest type plate, a ``hymo'' piece, or ``sleeve 
header,'' of woven or weft-inserted warp knit construction and of 
coarse animal hair or man-made filaments;
    (iii) Any combination of findings and trimmings of foreign origin 
and interlinings of foreign origin, if the total value of those 
findings and trimmings and interlinings does not exceed 25 percent of 
the cost of the components of the assembled article; or
    (iv) Fibers or yarns not wholly formed in the United States or one 
or more beneficiary countries if the total weight of all those fibers 
and yarns is not more than 7 percent of the total weight of the 
article.
    (2) Treatment of fibers and yarns as findings or trimmings. If any 
fibers or yarns not wholly formed in the United States or one or more 
beneficiary countries are used in an article as a finding or trimming 
described in paragraph (b)(1)(i) of this section, the fibers or yarns 
will be considered to be a finding or trimming for purposes of 
paragraph (b)(1) of this section.
    (c) Imported directly defined. For purposes of paragraph (a) of 
this section, the words ``imported directly'' mean:
    (1) Direct shipment from any beneficiary country to the United 
States without passing through the territory of any non-beneficiary 
country;
    (2) If the shipment is from any beneficiary country to the United 
States through the territory of any non-beneficiary country, the 
articles in the shipment do not enter into the commerce of any non-
beneficiary country while en route to the United States and the 
invoices, bills of lading, and other shipping documents show the United 
States as the final destination; or
    (3) If the shipment is from any beneficiary country to the United 
States through the territory of any non-beneficiary country, and the 
invoices and other documents do not show the United States as the final 
destination, the articles in the shipment upon arrival in the United 
States are imported directly only if they:
    (i) Remained under the control of the customs authority of the 
intermediate country;
    (ii) Did not enter into the commerce of the intermediate country 
except for the purpose of sale other than at retail, and the port 
director is satisfied that the importation results from the original 
commercial transaction between the importer and the producer or the 
producer's sales agent; and
    (iii) Were not subjected to operations other than loading or 
unloading, and other activities necessary to preserve the articles in 
good condition.


Sec. 10.214  Certificate of Origin.

    (a) General. A Certificate of Origin must be employed to certify 
that a textile or apparel article being exported from a beneficiary 
country to the United States qualifies for the preferential treatment 
referred to in Sec. 10.211. The Certificate of Origin must be prepared 
by the exporter in the beneficiary country in the form specified in 
paragraph (b) of this section. Where the beneficiary country exporter 
is not the producer of the article, that exporter may complete and sign 
a Certificate of Origin on the basis of:
    (1) Its reasonable reliance on the producer's written 
representation that the article qualifies for preferential treatment; 
or
    (2) A completed and signed Certificate of Origin for the article 
voluntarily provided to the exporter by the producer.
    (b) Form of Certificate. The Certificate of Origin referred to in 
paragraph (a) of this section must be in the following format:
BILLING CODE 4820-02-P

[[Page 59679]]

[GRAPHIC] [TIFF OMITTED] TR05OC00.000

BILLING CODE 4820-02-C
    (c) Preparation of Certificate. The following rules will apply for 
purposes of completing the Certificate of Origin set forth in paragraph 
(b) of this section:
    (1) Blocks 1 through 5 pertain only to the final article exported 
to the United States for which preferential treatment may be claimed;
    (2) Block 1 should state the legal name and address (including 
country) of the exporter;
    (3) Block 2 should state the legal name and address (including 
country) of the producer. If there is more than one producer, attach a 
list stating the legal name and address (including country) of all 
additional producers. If this information is confidential, it is 
acceptable to state ``available to Customs upon request'' in block 2. 
If the producer and the exporter are the same, state ``same'' in block 
2;
    (4) Block 3 should state the legal name and address (including 
country) of the importer;
    (5) Block 4 should provide a full description of each article. The 
description should be sufficient to relate

[[Page 59680]]

it to the invoice description and to the description of the article in 
the international Harmonized System. Include the invoice number as 
shown on the commercial invoice or, if the invoice number is not known, 
include another unique reference number such as the shipping order 
number;
    (6) In block 5, insert the letter that designates the preference 
group which applies to the article according to the description 
contained in the CFR provision cited on the Certificate for that group;
    (7) Blocks 6 through 10 must be completed only when the block in 
question calls for information that is relevant to the preference group 
identified in block 5;
    (8) Block 6 should state the legal name and address (including 
country) of the fabric producer;
    (9) Block 7 should state the legal name and address (including 
country) of the yarn producer;
    (10) Block 8 should state the legal name and address (including 
country) of the thread producer;
    (11) Block 9 should state the name of the folklore article or 
should state that the article is handloomed or handmade;
    (12) Block 10, which should be completed only when preference group 
``H'' is inserted in block 5, should state the name of the fabric or 
yarn that is not formed in the United States or a beneficiary country 
or that is not available in commercial quantities in the United States;
    (13) Block 16a should reflect the date on which the Certificate was 
completed and signed;
    (14) Block 16b should be completed if the Certificate is intended 
to cover multiple shipments of identical articles as described in block 
4 that are imported into the United States during a specified period of 
up to one year (see Sec. 10.216(b)(4)(ii)). The ``from'' date is the 
date on which the Certificate became applicable to the article covered 
by the blanket Certificate (this date may be prior to the date 
reflected in block 16a). The ``to'' date is the date on which the 
blanket period expires; and
    (15) The Certificate may be printed and reproduced locally. If more 
space is needed to complete the Certificate, attach a continuation 
sheet.


Sec. 10.215  Filing of claim for preferential treatment.

    (a) Declaration. In connection with a claim for preferential 
treatment for a textile or apparel article described in Sec. 10.213, 
the importer must make a written declaration that the article qualifies 
for that treatment. In the case of an article described in 
Sec. 10.213(a)(1), the written declaration should be made by including 
on the entry summary, or equivalent documentation, the symbol ``D'' as 
a prefix to the subheading within Chapter 98 of the HTSUS under which 
the article is classified, and, in the case of any article described in 
Sec. 10.213(a)(2) through (a)(10), the inclusion on the entry summary, 
or equivalent documentation, of the subheading within Chapter 98 of the 
HTSUS under which the article is classified will constitute the written 
declaration. Except in any of the circumstances described in 
Sec. 10.216(d)(1), the declaration required under this paragraph must 
be based on an original Certificate of Origin that has been completed 
and properly executed in accordance with Sec. 10.214, that covers the 
article being imported, and that is in the possession of the importer.
    (b) Corrected declaration. If, after making the declaration 
required under paragraph (a) of this section, the importer has reason 
to believe that a Certificate of Origin on which a declaration was 
based contains information that is not correct, the importer must 
within 30 calendar days after the date of discovery of the error make a 
corrected declaration and pay any duties that may be due. A corrected 
declaration will be effected by submission of a letter or other written 
statement to the Customs port where the declaration was originally 
filed.


Sec. 10.216  Maintenance of records and submission of Certificate by 
importer.

    (a) Maintenance of records. Each importer claiming preferential 
treatment for an article under Sec. 10.215 must maintain in the United 
States, in accordance with the provisions of part 163 of this chapter, 
all records relating to the importation of the article. Those records 
must include the original Certificate of Origin referred to in 
Sec. 10.215(a) and any other relevant documents or other records as 
specified in Sec. 163.1(a) of this chapter.
    (b) Submission of Certificate. An importer who claims preferential 
treatment on a textile or apparel article under Sec. 10.215(a) must 
provide, at the request of the port director, a copy of the Certificate 
of Origin pertaining to the article. A Certificate of Origin submitted 
to Customs under this paragraph:
    (1) Must be in writing or must be transmitted electronically 
pursuant to any electronic data interchange system authorized by 
Customs for that purpose;
    (2) Must be signed by the exporter or by the exporter's authorized 
agent having knowledge of the relevant facts;
    (3) Must be completed either in the English language or in the 
language of the country from which the article is exported. If the 
Certificate is completed in a language other than English, the importer 
must provide to Customs upon request a written English translation of 
the Certificate; and
    (4) May be applicable to:
    (i) A single importation of an article into the United States, 
including a single shipment that results in the filing of one or more 
entries and a series of shipments that results in the filing of one 
entry; or
    (ii) Multiple importations of identical articles into the United 
States that occur within a specified blanket period, not to exceed 12 
months, set out in the Certificate by the exporter. For purposes of 
this paragraph and Sec. 10.214(c)(14), ``identical articles'' means 
articles that are the same in all material respects, including physical 
characteristics, quality, and reputation.
    (c) Correction and nonacceptance of Certificate. If the port 
director determines that a Certificate of Origin is illegible or 
defective or has not been completed in accordance with paragraph (b) of 
this section, the importer will be given a period of not less than five 
working days to submit a corrected Certificate. A Certificate will not 
be accepted in connection with subsequent importations during a period 
referred to in paragraph (b)(4)(ii) of this section if the port 
director determined that a previously imported identical article 
covered by the Certificate did not qualify for preferential treatment.
    (d) Certificate not required--(1) General. Except as otherwise 
provided in paragraph (d)(2) of this section, an importer is not 
required to have a Certificate of Origin in his possession for:
    (i) An importation of an article for which the port director has in 
writing waived the requirement for a Certificate of Origin because the 
port director is otherwise satisfied that the article qualifies for 
preferential treatment;
    (ii) A non-commercial importation of an article; or
    (iii) A commercial importation of an article whose value does not 
exceed US$2,500, provided that, unless waived by the port director, the 
producer, exporter, importer or authorized agent includes on, or 
attaches to, the invoice or other document accompanying the shipment 
the following signed statement:

[[Page 59681]]

    I hereby certify that the article covered by this shipment 
qualifies for preferential treatment under the AGOA.

Check One:
    (  ) Producer
    (  ) Exporter
    (  ) Importer
    (  ) Agent

----------------------------------------------------------------------
Name
----------------------------------------------------------------------
Title
----------------------------------------------------------------------
Address
----------------------------------------------------------------------
Signature and Date

    (2) Exception. If the port director determines that an importation 
described in paragraph (d)(1) of this section forms part of a series of 
importations that may reasonably be considered to have been undertaken 
or arranged for the purpose of avoiding a Certificate of Origin 
requirement under Secs. 10.214 through 10.216, the port director will 
notify the importer in writing that for that importation the importer 
must have in his possession a valid Certificate of Origin to support 
the claim for preferential treatment. The importer will have 30 
calendar days from the date of the written notice to obtain a valid 
Certificate of Origin, and a failure to timely obtain the Certificate 
of Origin will result in denial of the claim for preferential 
treatment. For purposes of this paragraph, a ``series of importations'' 
means two or more entries covering articles arriving on the same day 
from the same exporter and consigned to the same person.


Sec. 10.217  Verification and justification of claim for preferential 
treatment.

    (a) Verification by Customs. A claim for preferential treatment 
made under Sec. 10.215, including any statements or other information 
contained on a Certificate of Origin submitted to Customs under 
Sec. 10.216, will be subject to whatever verification the port director 
deems necessary. In the event that the port director for any reason is 
prevented from verifying the claim, the port director may deny the 
claim for preferential treatment. A verification of a claim for 
preferential treatment may involve, but need not be limited to, a 
review of:
    (1) All records required to be made, kept, and made available to 
Customs by the importer or any other person under part 163 of this 
chapter;
    (2) Documentation and other information in a beneficiary country 
regarding the country of origin of an article and its constituent 
materials, including, but not limited to, production records, 
information relating to the place of production, the number and 
identification of the types of machinery used in production, and the 
number of workers employed in production; and
    (3) Evidence in a beneficiary country to document the use of U.S. 
materials in the production of the article in question, such as 
purchase orders, invoices, bills of lading and other shipping 
documents, and customs import and clearance documents.
    (b) Importer requirements. In order to make a claim for 
preferential treatment under Sec. 10.215, the importer:
    (1) Must have records that explain how the importer came to the 
conclusion that the textile or apparel article qualifies for 
preferential treatment. Those records must include documents that 
support a claim that the article in question qualifies for preferential 
treatment because it is specifically described in one of the provisions 
under Sec. 10.213(a). If the importer is claiming that the article 
incorporates fabric or yarn that originated or was wholly formed in the 
United States, the importer must have records that identify the U.S. 
producer of the fabric or yarn. A properly completed Certificate of 
Origin in the form set forth in Sec. 10.214(b) is a record that would 
serve these purposes;
    (2) Must establish and implement internal controls which provide 
for the periodic review of the accuracy of the Certificate of Origin or 
other records referred to in paragraph (b)(1) of this section;
    (3) Must have shipping papers that show how the article moved from 
the beneficiary country to the United States. If the imported article 
was shipped through a country other than a beneficiary country and the 
invoices and other documents from the beneficiary country do not show 
the United States as the final destination, the importer also must have 
documentation that demonstrates that the conditions set forth in 
Sec. 10.213(c)(3) (i) through (iii) were met; and
    (4) Must be prepared to explain, upon request from Customs, how the 
records and internal controls referred to in paragraphs (b)(1) through 
(b)(3) of this section justify the importer's claim for preferential 
treatment.

PART 163--RECORDKEEPING

    1. The authority citation for Part 163 continues to read as 
follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510, 
1624.


    2. The Appendix to Part 163 is amended by adding a new listing 
under section IV in numerical order to read as follows:

Appendix to Part 163--Interim (a)(1)(A) List

* * * * *


Sec. 10.216  AGOA Textile Certificate of Origin and supporting records

* * * * *

Raymond W. Kelly,
Commissioner of Customs.
    Approved: September 29, 2000.
Timothy E. Skud,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-25518 Filed 10-2-00; 8:45 am]
BILLING CODE 4820-02-P