59668 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

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 subSaharan 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 subSaharan 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 importsensitive 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 importsensitive 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

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

59670 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

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 subSaharan 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 subSaharan 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 subSaharan 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 subSaharan 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

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

§§ 10.171(a), 10.175(e), and 10.176(c) of

the Customs Regulations contain out-ofdate 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

§ 10.176 as set forth in this document

follows the corresponding CBI

regulatory provision (§ 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

§ 10.175 (this does not modify the GSP

imported directly requirement).

59672 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

In addition, paragraph (c) of this

section is amended to correct an out-ofdate reference to a provision within the

GSP statute.

New § 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 dutyfree 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

§ 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, §§ 10.171, 10.173,

and 10.175 through 10.178) but with

certain specified exceptions or

variations to conform to the AGOA

context.

New §§ 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 selfexplanatory.

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 § 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 § 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

§ 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

§ 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 nonbeneficiary 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

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

§ 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 § 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.

59674 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

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

§ 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), § 1.4,

Treasury Department Regulations (31

CFR 1.4), and § 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 §§ 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 §§ 10.171 through

10.178 is revised to read, and a new

specific authority citation for §§ 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;

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

§ 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 § 10.178a is added to read

as follows:

§ 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 importsensitive in the context of the GSP.

59676 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

(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 §§ 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

§ 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 § 10.175(c) will

not apply; and

(4) For purposes of determining

compliance with the 35 percent value

content requirement set forth in

§ 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 § 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 subSaharan 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 subSaharan 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 § 10.176(a)

and paragraph (d) of this section. A

properly completed GSP declaration in

the form set forth in § 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 § 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 § 10.176(a) and

paragraph (c) of this section. A properly

completed GSP declaration in the form

set forth in § 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

§§ 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

§ 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 §§ 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.

§ 10.212 Definitions.

When used in §§ 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

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

§ 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.

§ 10.213 Articles eligible for preferential

treatment.

(a) General. The preferential treatment

referred to in § 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, enzymewashing, 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-toshape 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 § 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

59678 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

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 nonbeneficiary 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 nonbeneficiary 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.

§ 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 § 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

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59679

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

59680 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

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

§ 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.

§ 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

§ 10.213, the importer must make a

written declaration that the article

qualifies for that treatment. In the case

of an article described in § 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 § 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 § 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 § 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.

§ 10.216 Maintenance of records and

submission of Certificate by importer.

(a) Maintenance of records. Each

importer claiming preferential treatment

for an article under § 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

§ 10.215(a) and any other relevant

documents or other records as specified

in § 163.1(a) of this chapter.

(b) Submission of Certificate. An

importer who claims preferential

treatment on a textile or apparel article

under § 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 § 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:

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59681

I hereby certify that the article covered by

this shipment qualifies for preferential

treatment under the AGOA.

Check One:

( ) Producer

( ) Exporter

( ) Importer

( ) Agent

lllllllllllllllllllll

Name

lllllllllllllllllllll

Title

lllllllllllllllllllll

Address

lllllllllllllllllllll

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

§§ 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.

§ 10.217 Verification and justification of

claim for preferential treatment.

(a) Verification by Customs. A claim

for preferential treatment made under

§ 10.215, including any statements or

other information contained on a

Certificate of Origin submitted to

Customs under § 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 § 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 § 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 § 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 § 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

* * * * *

§ 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