59650 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. 00–68]

RIN 1515–AC76

United States-Caribbean Basin Trade

Partnership Act and Caribbean Basin

Initiative

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 Caribbean Basin

countries contained in Title II of the

Trade and Development Act of 2000.

The trade benefits under Title II, also

referred to as the United StatesCaribbean Basin Trade Partnership Act

(the CBTPA), apply to Caribbean Basin

countries designated by the President

and involve the entry of specific textile

and apparel articles free of duty and free

of any quantitative restrictions,

limitations, or consultation levels and

the extension of NAFTA duty treatment

standards to non-textile articles that are

excluded from duty-free treatment

under the Caribbean Basin Initiative

(CBI) program. The regulatory

amendments contained in this

document reflect and clarify the

statutory standards for the trade benefits

under the CBTPA and also include

specific documentary, procedural and

other related requirements that must be

met in order to obtain those benefits.

Finally, this document also includes

some interim amendments to the

existing Customs Regulations

implementing the CBI to conform those

regulations to previous amendments to

the CBI 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

United States-Caribbean Basin Trade

Partnership 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

II of the Act concerns trade benefits for

the Caribbean Basin and is referred to in

the Act as the ‘‘United States-Caribbean

Basin Trade Partnership Act’’ (the

‘‘CBTPA’’).

Subtitle A of Title II of the Act

concerns trade policy for Caribbean

Basin countries and consists of section

201 (short title), section 202 (findings

and policy), and section 203

(definitions). Subtitle B of Title II of the

Act addresses trade benefits for

Caribbean Basin countries and consists

of section 211 (temporary provisions to

provide additional trade benefits to

certain beneficiary countries), section

212 (duty-free treatment for certain

beverages made with Caribbean rum),

and section 213 (meetings of trade

ministers and USTR). This document

specifically concerns the additional

trade benefit provisions of section 211.

Subsection (a) of section 211 of the

Act revises section 213(b) of the

Caribbean Basin Economic Recovery Act

(the CBERA, also referred to as the

Caribbean Basin Initiative, or CBI,

statute codified at 19 U.S.C. 2701–2707).

The CBI is a duty preference program

that applies to exports from those

Caribbean Basin countries that have

been designated by the President as

program beneficiaries. Although the

origin and related rules for eligibility for

duty-free treatment under the CBI are

similar to those under the older

Generalized System of Preferences dutyfree program (the GSP, Title V of the

Trade Act of 1974, codified at 19 U.S.C.

2461–2467), the CBI differs from the

GSP in a number of respects, including

the fact that under the CBI all articles

are eligible for duty-free treatment (that

is, they do not have to be specially

designated as eligible by the President)

except those that are specifically

excluded under the statute. Prior to the

amendment effected by subsection (a) of

section 211 of the Act, section 213(b) of

the CBI statute was headed ‘‘articles to

which duty-free treatment does not

apply’’ and consisted only of a list of

specific types of products excluded

from CBI duty-free treatment.

As a result of the amendment made by

subsection (a) of section 211 of the Act,

section 213(b) of the CBI statute now is

headed ‘‘import-sensitive articles’’ and

consists of five principal paragraphs.

These five paragraphs are summarized

below.

Paragraph (1) of amended section

213(b) provides that, subject to

paragraphs (2) through (5), the duty-free

treatment provided under the CBI does

not apply to the following:

1. Textile and apparel articles which

were not eligible articles for purposes of

the CBI on January 1, 1994, as the CBI

was in effect on that date [subparagraph

(A)];

2. Footwear not designated at the time

of the effective date of the CBI (that is,

August 5, 1983) as eligible articles for

the purpose of the GSP [subparagraph

(B)];

3. Tuna, prepared or preserved in any

manner, in airtight containers

[subparagraph (C)];

4. Petroleum, or any product derived

from petroleum, provided for in

headings 2709 and 2710 of the

Harmonized Tariff Schedule of the

United States (HTSUS) [subparagraph

(D)];

5. Watches and watch parts (including

cases, bracelets, and straps), of whatever

type including, but not limited to,

mechanical, quartz digital or quartz

analog, if those watches or watch parts

contain any material which is the

product of any country with respect to

which HTSUS column 2 rates of duty

apply [subparagraph (E)]; or

6. Articles to which reduced rates of

duty apply under section 213(h) (that is,

handbags, luggage, flat goods, work

gloves, and leather wearing apparel that

are a product of a CBI beneficiary

country and that were not designated on

August 5, 1983, as eligible articles for

purposes of the GSP) [subparagraph (F)].

The content of this new paragraph (1)

corresponds to that of entire former

section 213(b) but with some minor

wording changes. Therefore, paragraphs

(2) through (5) of amended section

213(b), as discussed below, are entirely

new provisions.

Paragraph (2) of amended section

213(b) concerns textile and apparel

products. Paragraph (2)(A) provides,

during the ‘‘transition period,’’ for the

application of preferential treatment

described in paragraph (2)(B) to specific

textile and apparel articles. Under

paragraph (2)(B), ‘‘preferential

treatment’’ means, except where the

President takes bilateral emergency

action under paragraph (2)(E), that the

articles in question may enter the

United States free of duty and free of

any quantitative restrictions,

limitations, or consultation levels.

Section 213(b)(5)(D) defines ‘‘transition

period’’ for purposes of section 213(b) as

meaning, with respect to a CBTPA

beneficiary country, the period that

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59651

begins on October 1, 2000, and ends on

the earlier of September 30, 2008, or the

date on which a free trade agreement

enters into force with respect to the

United States and the CBTPA

beneficiary country. Section 213(b)(5)(B)

defines ‘‘CBTPA beneficiary country’’

for purposes of section 213(b) as

meaning any ‘‘beneficiary country’’ as

defined in section 212(a)(1)(A) of the

CBI statute (19 U.S.C. 2702(a)(1)(A))

which the President designates as a

CBTPA beneficiary country, taking into

account the designation criteria

specified in sections 212(b) and (c) and

other appropriate designation criteria

including those specified under section

213(b)(5)(B). The textile and apparel

articles under paragraph (2)(A) of

section 213(b) to which the preferential

treatment applies are as follows:

1. Apparel articles assembled in one

or more CBTPA 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

[paragraph (2)(A)(i)(I)];

2. Apparel articles assembled in one

or more CBTPA 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 [paragraph (2)(A)(i)(II)];

3. Apparel articles cut in one or more

CBTPA 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 of those

countries with thread formed in the

United States [paragraph (2)(A)(ii)];

4. Apparel articles knit to shape (other

than socks provided for in heading 6115

of the HTSUS) in a CBTPA beneficiary

country from yarns wholly formed in

the United States, and knit apparel

articles (other than non-underwear tshirts) cut and wholly assembled in one

or more CBTPA beneficiary countries

from fabric formed in one or more

CBTPA beneficiary countries or 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 formed in

one or more CBTPA beneficiary

countries), but subject to the application

of annual quantitative limits expressed

in square meter equivalents during the

8-year transition period and with

percentage increases of those limits in

each of the first four years [paragraph

(2)(A)(iii)(I)];

5. Non-underwear t-shirts, classifiable

under subheadings 6109.10.00 and

6109.90.10 of the HTSUS, made in one

or more CBTPA beneficiary countries

from fabric formed in one or more

CBTPA beneficiary countries from yarns

wholly formed in the United States, but

subject to the application of annual

quantitative limits expressed in dozens

and with percentage increases of those

limits in each of the first four years and

with application of a set quantitative

limit for each year after the fourth year

[paragraph (2)(A)(iii)(III)];

6. Brassieres classifiable under

subheading 6212.10 of the HTSUS, if

both cut and sewn or otherwise

assembled in the United States, or one

or more CBTPA beneficiary countries, or

both, but subject to a requirement that,

in each of seven 1-year periods starting

on October 1, 2001, at least 75 percent

of the value of the fabric contained in

the articles in the preceding year was

attributed to fabric components formed

in the United States (the 75 percent

standard rises to 85 percent for a

producer found by Customs to have not

met the 75 percent standard in the

preceding year) [paragraph (2)(A)(iv)];

7. Apparel articles that are both cut

(or knit-to-shape) and sewn or otherwise

assembled in one or more CBTPA

beneficiary countries, from fabrics or

yarn that is not formed in the United

States or in one or more CBTPA

beneficiary countries, to the extent that

apparel articles of those fabrics or yarn

would be eligible for preferential

treatment, without regard to the source

of the fabrics or yarn, under Annex 401

of the North American Free Trade

Agreement (NAFTA). (This CBTPA

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 fabrics and yarns in question

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, which

explains a substantively identical

provision of the African Growth and

Opportunity Act that is contained in

Title I of the Act.) [paragraph

(2)(A)(v)(I)];

8. Apparel articles that are both cut

(or knit-to-shape) and sewn or otherwise

assembled in one or more CBTPA

beneficiary countries, from fabrics or

yarn that is not formed in the United

States or in one or more CBTPA

beneficiary countries and that is not

described in paragraph (2)(A)(v)(I), 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

(2)(A)(v)(I) [paragraph (2)(A)(v)(II)];

9. A handloomed, handmade, or

folklore textile or apparel article of a

CBTPA beneficiary country that the

President and representatives of the

CBTPA beneficiary country concerned

mutually agree upon as being a

handloomed, handmade, or folklore

good of a kind described in section

2.3(a), (b), or (c) or Appendix 3.1.B.11

of Annex 300-B of the NAFTA and that

is certified as such by the competent

authority of the beneficiary country

[paragraphs (2)(A)(vi) and (2)(C)];

10. Textile luggage assembled in a

CBTPA beneficiary country from fabric

wholly formed and cut in the United

States, from yarns wholly formed in the

United States, that is entered under

subheading 9802.00.80 of the HTSUS

[paragraph (2)(A)(viii)(I)]; and

11. Textile luggage assembled from

fabric cut in a CBTPA beneficiary

country from fabric wholly formed in

the United States from yarns wholly

formed in the United States [paragraph

(2)(A)(viii)(II)].

In addition, paragraph (2)(A)(vii) sets

forth special rules that apply for

purposes of determining the eligibility

of articles for preferential treatment

under paragraph (2). These special rules

are as follows:

1. Paragraph (2)(A)(vii)(I) sets forth a

rule regarding the treatment of findings

and trimmings. It provides that an

article otherwise eligible for preferential

59652 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

treatment under paragraph (2) will not

be ineligible for that treatment because

the article contains findings or

trimmings of foreign origin, if those

findings and trimmings do not exceed

25 percent of the cost of the components

of the assembled product. 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 are

used in the production of brassieres),

zippers (including zipper tapes), and

labels. However, this provision also

provides that sewing thread will not be

treated as findings or trimmings in the

case of an article described in paragraph

(2)(A)(ii) (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 (2)(A)(vii)(II) sets forth a

rule regarding the treatment of specific

interlinings, that is, a chest type plate,

‘‘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 paragraph

(2) 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.

This provision 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. Paragraph (2)(A)(vii)(III) sets forth a

de minimis rule which provides that an

article that would otherwise be

ineligible for preferential treatment

under paragraph (2) because the article

contains fibers or yarns not wholly

formed in the United States or in one or

more CBTPA beneficiary countries will

not be ineligible for that treatment if the

total weight of all those fibers and yarns

is not more than 7 percent of the total

weight of the good. However, this

provision also states that,

notwithstanding the foregoing rule, an

apparel article containing elastomeric

yarns will be eligible for preferential

treatment under paragraph (2) only if

those yarns are wholly formed in the

United States.

4. Finally, paragraph (2)(A)(vii)(IV)

sets forth a special origin rule that

provides that an article otherwise

eligible for preferential treatment under

paragraph (2)(A)(i) or paragraph

(2)(A)(ii) will not be ineligible for that

treatment because the article contains

nylon filament yarn (other than

elastomeric yarn) that is classifiable

under subheading 5402.10.30,

5402.10.60, 5402.31.30, 5402.31.60,

5402.32.30, 5402.32.60, 5402.41.10,

5402.41.90, 5402.51.00, or 5402.61.00 of

the HTSUS duty-free from a country

that is a party to an agreement with the

United States establishing a free trade

area, which entered into force before

January 1, 1995.

Paragraph (3) of amended section

213(b) is entitled ‘‘transition period

treatment of certain other articles

originating in beneficiary countries.’’

Paragraph (3)(A) provides that, except in

the case of any article accorded dutyfree treatment under U.S. Note 2(b) to

Subchapter II of Chapter 98 of the

HTSUS (that is, certain articles

assembled or processed in a CBI

beneficiary country in whole of

components or ingredients that are a

product of the United States), the tariff

treatment accorded at any time during

the transition period to any article

referred to in any of subparagraphs (B)

through (F) of paragraph (1) that is a

‘‘CBTPA originating good’’ will be

identical to the tariff treatment that is

accorded at that time under Annex

302.2 of the NAFTA to an article

described in the same 8-digit

subheading of the HTSUS that is a good

of Mexico and is imported into the

United States. Section 213(b)(5)(C)(i)

defines ‘‘CBTPA originating good’’ for

purposes of section 213(b) as meaning a

good that meets the rules of origin for

a good set forth in Chapter 4 of the

NAFTA as implemented pursuant to

United States law. Section

213(b)(5)(C)(ii) sets forth the following

rules for applying Chapter 4 of the

NAFTA with respect to a CBTPA

beneficiary country for purposes of

section 213(b): (1) Only the United

States and a CBTPA beneficiary country

may be treated as being a party to the

NAFTA; (2) any reference to trade

between the United States and Mexico

will be deemed to refer to trade between

the United States and a CBTPA

beneficiary country; (3) any reference to

a party will be deemed to refer to a

CBTPA beneficiary country or the

United States; and (4) any reference to

parties will be deemed to refer to any

combination of CBTPA beneficiary

countries or to the United States and

one or more CBTPA beneficiary

countries (or any combination of those

countries). In the case of handbags,

luggage, flat goods, work gloves, and

leather wearing apparel to which

reduced rates of duty apply under

section 213(h), paragraph (3)(B) of

section 213(b) provides that, in

implementing the provisions of

paragraph (3)(A), the rate of duty under

section 213(h) will apply if it is lower

than the rate of duty resulting under

paragraph (3)(A).

The effect of paragraph (3) of section

213(b) is to provide for the application

of NAFTA tariff treatment to goods

excluded from the CBI, except for textile

and apparel articles (some of which are

separately addressed under paragraph

(2) of section 213(b) as discussed above).

Thus, imports of footwear, canned tuna,

petroleum and petroleum products,

watches and watch parts, handbags,

luggage, flat goods, work gloves, and

leather wearing apparel would be

eligible for a reduction in duty equal to

the preference Mexican products enjoy

in accordance with the staged duty-rate

reductions set forth in Annex 302.2 of

the NAFTA, provided that the

merchandise in question meets the

origin rules for a ‘‘NAFTA originating

good’’ (in other words, it must meet the

NAFTA rules of origin set forth in

General Note 12 of the HTSUS and in

the Appendix to Part 181 of the Customs

Regulations (19 CFR Part 181)).

Paragraph (4) of amended section

213(b) is entitled ‘‘Customs procedures’’

and sets forth regulatory standards for

purposes of preferential treatment under

paragraph (2) or (3). It includes

provisions relating to import

procedures, prescribes a specific factual

determination that the President must

make regarding the implementation of

certain procedures and requirements by

each CBTPA beneficiary country, and

sets forth responsibilities of Customs

and the United States Trade

Representative regarding the study of,

and reporting to Congress on,

cooperative and other actions taken by

each CBTPA beneficiary country to

prevent transshipment and

circumvention in the case of textile and

apparel goods. The specific provisions

under paragraph (4) that require

regulatory treatment in this document

are the following:

1. Paragraph (4)(A)(i) provides that

any importer that claims preferential

treatment under paragraph (2) or (3)

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

(4)(A)(i) concerns the use of a Certificate

of Origin and specifically requires that

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59653

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 (4)(B) provides that the

Certificate of Origin that otherwise

would be required pursuant to the

provisions of paragraph (4)(A)(i) will

not be required in the case of an article

imported under paragraph (2) or (3) 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.

Other Changes to the CBI Program

Section 235 of the Trade and Tariff

Act of 1984 (Public Law 98–573, 98 Stat.

2948) amended section 213(a) of the CBI

statute (19 U.S.C. 2703(a)) by adding at

the end a new paragraph (a)(3) (now

paragraph (a)(4)). This provision

provides that (1) notwithstanding 19

U.S.C. 1311, the products of a

beneficiary country which are imported

directly from any beneficiary country

into Puerto Rico may be entered under

bond for processing or use in

manufacturing in Puerto Rico, and (2)

no duty will be imposed on the

withdrawal from warehouse of the

product of that processing or

manufacturing if, at the time of that

withdrawal, the product meets the

requirements of section 213(a)(1)(B)

(that is, the CBI 35 percent valuecontent requirement). In connection

with the publication of the final CBI

implementing regulations (see T.D. 84–

237, published in the Federal Register

at 49 FR 47986 on December 7, 1984),

Customs noted that this amendment of

the CBI statute was intended to allow

processing or manufacturing in a

Customs bonded manufacturing

warehouse in Puerto Rico at the tail end

of the manufacturing process so as to

enable a product from a CBI beneficiary

country to meet the 35 percent valuecontent requirement. Customs further

noted in T.D. 84–237 that the

amendment resulted in a significant

change in the CBI rules of origin since

an article could be substantially

transformed in the Puerto Rican

warehouse so as to lose its status as a

product of a beneficiary country but

would still be entitled to duty-free

treatment upon withdrawal from the

warehouse provided that (1) the article

entered in the warehouse was a product

of, and was imported directly from, a

beneficiary country, and (2) the article

withdrawn from the warehouse meets

the 35 percent value-content

requirement. Although no change was

made to the CBI regulatory texts at that

time in response to this statutory

amendment, Customs now believes that

it would be preferable for purposes of

transparency to reflect this aspect of the

CBI statute within the existing CBI

regulatory structure. This document

therefore includes a conforming

amendment to the CBI regulations to

accomplish this.

Section 212 of the Customs and Trade

Act of 1990 (Public Law 101–382, 104

Stat. 629) amended section 213 of the

CBI statute (1) by adding a new

subsection (h) which requires the

President to proclaim specified

reductions in the rates of duty on

handbags, luggage, flat goods, work

gloves, and leather wearing apparel that

are the product of a beneficiary country

and that were not designated on August

5, 1983, as eligible articles for purposes

of the GSP, and (2) by making

consequential conforming changes to

subsection (b) which, as indicated

above, at that time consisted only of a

list of products excluded from duty-free

treatment under the CBI. Although some

of these changes made by section 212 of

the 1990 Act have been superseded by

the changes made by subsection (a) of

section 211 of the Act as discussed

above, the basic reduced duty principle

reflected in section 213(h) of the CBI

statute remains intact and warrants

regulatory treatment. Accordingly,

regulatory amendments are included in

this document for this purpose.

Finally, section 215 of the Customs

and Trade Act of 1990 amended section

213(a) of the CBI statute by adding a

new paragraph (5) which provides that

the duty-free treatment provided for

under the CBI will apply to an article

(other than an article listed in section

213(b)) which is the growth, product, or

manufacture of the Commonwealth of

Puerto Rico if (1) the article is imported

directly from the beneficiary country

into the customs territory of the United

States, (2) the article was by any means

advanced in value or improved in

condition in a beneficiary country, and

(3) if any materials are added to the

article in a beneficiary country, those

materials are a product of a beneficiary

country or the United States. This

amendment was intended to ensure that

a product made in Puerto Rico which is

sent to a CBI beneficiary country for a

minimal amount of processing would be

eligible for duty-free treatment under

the CBI when imported into the United

States even though the article has not

been substantially transformed in the

CBI beneficiary country (see House

Report 101–650, 101st Congress, 2d

Session, at 131). This document

includes an amendment to the Customs

Regulations to prescribe standards for

the application of this provision.

In addition, this document includes a

number of editorial changes to the CBI

regulatory texts to conform those texts

to the statutory changes discussed

above.

Section-by-Section Discussion of

Interim Amendments

Section 10.191

The amendments to this section

involve the definitions in paragraph (b)

and include changing various crossreferences to ‘‘§ 10.198’’ to reflect the

addition of new §§ 10.198a and 10.198b

as discussed below. In addition,

paragraphs (b)(2)(i) and (b)(2)(ii) are

revised, and a new paragraph (b)(2)(vi)

is added, to reflect subparagraphs (1)(A),

(B), and (F) of section 213(b) of the CBI

statute as amended by subsection (a) of

section 211 of the Act.

Sections 10.192 and 10.193

The amendments to these sections

involve cross-reference changes similar

to those made in § 10.191.

Section 10.195

The amendment to this section

involves a revision of paragraph (b)

(which concerns the addition of value in

the U.S. Virgin Islands and in the

Commonwealth of Puerto Rico) to

accommodate the amendment to the CBI

statute made by section 235 of the Trade

and Tariff Act of 1984. The amendment

consists of the designation of the

existing regulatory text as paragraph

(b)(1) and the addition of a new

paragraph (b)(2) to cover manufacturing

in a bonded warehouse in Puerto Rico

after final exportation of an article from

a beneficiary country. The paragraph

(b)(2) text clarifies the statutory

reference to ‘‘products of’’ a beneficiary

country as meaning products that meet

the ‘‘grown, produced, or

manufactured’’ standard set forth in

§ 10.195(a), because the term ‘‘product

of’’ has been consistently interpreted by

Customs to refer to products that meet

that standard and, since Congress is

presumed to have known about that

interpretation when it drafted the

statute, Customs believes that this result

59654 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

would be consistent with Congressional

intent. For the same reason, the

paragraph (b)(2) text clarifies the

meaning of ‘‘imported directly’’ with

reference to the provisions of § 10.193.

New § 10.198a

This section covers the basic duty

reduction principle of section 213(h) of

the CBI statute as added by section 212

of the Customs and Trade Act of 1990.

The exception clause at the beginning of

this new section has been included

because of the potential effect that

paragraph (3) of amended section 213(b)

would have on the application of

reduced duty rates under section 213(h)-

see new § 10.233 discussed and set forth

below. Although the relevant legislative

history is silent on the question of what

origin and preference rules should

apply beyond the ‘‘product of’’ language

of section 213(h), Customs does not

believe that Congress intended that less

stringent rules should apply for these

import-sensitive products than would

apply to other products that are eligible

for full CBI duty-free treatment.

Accordingly, this new § 10.198a

incorporates by reference the ‘‘imported

directly’’ and ‘‘grown, produced, or

manufactured’’ and 35 percent valuecontent requirements of §§ 10.193 and

10.195.

New § 10.198b

This section covers the amendment of

section 213(a) of the CBI statute made

by section 215 of the Customs and Trade

Act of 1990. Contrary to the approach

taken in new § 10.198a and except as

regards the ‘‘imported directly’’

requirement, the § 10.198b text does not

incorporate by reference the normal CBI

origin and preference regulatory

standards because their application here

would in some cases be inconsistent

with the clear wording of the statutory

provision in question.

New §§ 10.221 Through 10.227

These new sections are intended to

implement those textile and apparel

preferential treatment provisions within

paragraphs (2), (4) and (5) of amended

section 213(b) of the CBI statute that

relate to U.S. import procedures and

thus are appropriate for treatment in the

Customs Regulations.

Section 10.221 outlines the statutory

context for the new sections and is selfexplanatory.

Section 10.222 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 CBTPA 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 CBTPA as reflected in

the types of operations allowed under

the program.

3. The definition of ‘‘CBTPA

beneficiary country’’ is an adaptation of,

and for purposes of this context is

consistent with, the definition

contained in section 213(b)(5)(B).

4. The definition of ‘‘cut in one or

more CBTPA beneficiary countries’’

precludes any cutting operation

performed in a country other than a

CBTPA beneficiary country in

accordance with the clear language of

the statute.

5. The definition of ‘‘knit-to-shape’’

follows the definition in § 102.21(b)(3)

of the Customs Regulations (19 CFR

102.21(b)(3)).

6. The definition of ‘‘made in one or

more CBTPA beneficiary countries’’

refers specifically to non-underwear

t-shirts because the defined expression

appears only in paragraph (2)(A)(iii)(III)

of amended section 213(b) which

applies only to non-underwear t-shirts.

Neither the statute nor the legislative

history provides any explanation for the

use of the words ‘‘made in’’ in this

context. Since the statutory text requires

that the articles be made in the CBTPA

region from regionally-formed fabric,

and in view of the fact that the

production of t-shirts from fabric

invariably involves both cutting of the

fabric and assembly of the cut

components, Customs interprets ‘‘made

in’’ to refer to cutting and complete

assembly.

7. 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)).

8. The definition of ‘‘NAFTA’’ is the

same as that used in section 112(e)(3)

under Title I of the Act and is

appropriate for the present context

because a distinction is made under the

statute between the original Agreement

signed by the United States, Canada,

and Mexico (which this definition

reflects) and the implementation of that

Agreement under U.S. law.

9. The definition of ‘‘preferential

treatment’’ reflects the terms of

paragraph (2)(B) of amended section

213(b).

10. The definition of ‘‘wholly

assembled in one or more CBTPA

beneficiary countries’’ 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 CBTPA program.

11. 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 statute 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 CBTPA beneficiary countries.

Section 10.223 identifies the articles

to which preferential treatment applies

under paragraph (2) of amended section

213(b). Paragraph (a) identifies the

various groups of textile and apparel

articles described under paragraph

(2)(A) of the statute and includes in the

introductory text an ‘‘imported directly’’

requirement, consistent with the terms

of the implementing Presidential

Proclamation. Paragraph (b) covers the

special rules contained in paragraph

(2)(A)(vii) of the statute regarding:

findings and trimmings; interlinings; the

de minimis rule; and the rule for nylon

filament yarn. 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 paragraph

(2)(A)(i)(II) of the statute, 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 country that

is not a CBTPA beneficiary country

provided that, after these processes are

completed, the article is returned to a

CBTPA beneficiary country for direct

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59655

importation into the United States.

However, Customs believes that this

interpretation would not be compatible

with the Congressional finding in

section 202 of the Act that offering

temporary benefits to Caribbean Basin

countries will, among other things,

promote the growth of free enterprise

and economic opportunity in those

neighboring countries, 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

CBTPA beneficiary countries would be

in accord with the findings of Congress

and would be more consistent with the

intent of the CBTPA program.

Accordingly, in paragraph (a)(2) of the

regulatory text, the words ‘‘in a CBTPA

beneficiary country’’ have been added at

the end after ‘‘processes.’’

2. In paragraphs (a)(4) and (a)(5)

which correspond to paragraphs

(2)(A)(iii)(I) and (2)(A)(iii)(III) of the

statute, respectively, the parenthetical

cross-reference and the t-shirt reference

have been replaced by a reference to

‘‘non-underwear t-shirts’’ in order to

simplify the text and clarify the

relationship between the two provisions

in this regard.

3. In paragraph (a)(6) which

corresponds to paragraph (2)(A)(iv) of

the statute, specific reference is made to

‘‘brassieres’’ in order to explain the

coverage of the HTSUS provision

referred to in the statute.

4. In paragraph (a)(8), which

corresponds to paragraph (2)(A)(v)(II) of

the statute, no reference has been made

at the end to treatment provided ‘‘for

fabrics and yarn’’ because treatment in

this context must be read in the context

of paragraph (2)(A)(v)(I) of the statute

and therefore can only have reference to

articles made from fabrics and yarn.

5. Paragraph (a)(12) reflects the terms

of new HTSUS subheading 9820.11.18

which is set forth in the Annex to the

implementing Proclamation referred to

above.

6. Paragraph (b)(1) is divided into two

parts: Paragraph (b)(1)(i) reflects the

basic findings, trimmings, interlinings,

and de minimis rules of paragraphs

(2)(A)(vii)(I)–(III) of the statute, and

paragraph (b)(1)(ii) 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 the statute. As regards

paragraph (b)(1)(ii), 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)(1)(ii) 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 points are noted regarding the

paragraph (b)(1) texts:

a. In the first sentence of paragraph

(b)(1)(i)(A), the words ‘‘the value of’’

have been added after the word ‘‘if’’ to

clarify that it is the value of the findings

and trimmings that must not exceed the

25 percent level. In addition, in the

second sentence of paragraph

(b)(1)(i)(A), the comma appearing in the

statutory text between ‘‘decorative lace’’

and ‘‘trim’’ has been removed to clarify

what Customs believes to be the intent

(see section 112(d)(1)(A) of the Act

which is essentially identical to

paragraph (2)(A)(vii)(I) of the statute but

employs the expression ‘‘decorative lace

trim’’). Also in the second sentence of

paragraph (b)(1)(i)(A), the words

‘‘zippers, including zipper tapes and

labels’’ in paragraph (2)(A)(vii)(I) of the

statute 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 the wording of these

regulatory texts in these regards 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);

b. A separate paragraph (b)(1)(i)(C)

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

paragraph (2)(A)(vii)(II)(aa) of the

statute; and

c. The second sentence of paragraph

(2)(A)(vii)(III) of the statute regarding

elastomeric yarns has been included in

the regulatory text as an exception at the

end of paragraph (b)(1)(i)(D), which sets

forth the de minimis rule, because

Customs believes that both the

placement and the wording of the

elastomeric yarn provision in the statute

support the conclusion that it is

intended to operate only as an exception

to the de minimis rule. The regulatory

text refers specifically to any apparel

article described in ‘‘paragraph (a)(1)

through (a)(5)’’ because those are the

only apparel article provisions under

§ 10.223 that specify ‘‘yarns wholly

formed in the United States.’’

7. In paragraph (b)(2), which sets forth

the special rule for nylon filament yarn

of paragraph (2)(A)(vii)(IV) of the

statute, specific reference is made to

Canada, Mexico, and Israel because

those are the only countries with which

the United States had a free trade

agreement that entered into force before

January 1, 1995.

8. The explanation of ‘‘imported

directly’’ in paragraph (c) follows the

text used in § 10.193 of the CBI

implementing regulations (19 CFR

10.193) but incorporates editorial

changes to reflect a CBTPA context.

Section 10.224 prescribes the use of a

Certificate of Origin and thus reflects

the regulatory mandate contained in

paragraph (4)(A)(i) of the statute.

Paragraph (a) of the regulatory text

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 groups of articles

described under paragraph (2)(A) of the

statute 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 this 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 CBTPA program.

Section 10.225 sets forth the

procedures for filing a claim for

preferential treatment. Consistent with

the mandate in paragraph (4)(A)(i) of the

statute 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

59656 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

181.21, but includes appropriate

changes to conform to the current

context. However, contrary to the

NAFTA regulatory text, paragraph (a) of

§ 10.225 does not allow for a declaration

based on a copy of an original

Certificate of Origin.

Section 10.226 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 CBTPA purposes.

4. Paragraph (d) sets forth the

circumstances in which a Certificate of

Origin is not required. Consistent with

the terms of paragraph (4)(B) of the

statute, 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 10.227 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 regulations.

2. Paragraph (a)(2) sets forth examples

of documents and information relating

to production in a CBTPA beneficiary

country that Customs may need to

review for purposes of verifying a claim

for preferential treatment.

3. Finally, paragraph (a)(3) refers to

evidence in a CBTPA beneficiary

country to document the use of U.S.

materials in an article produced in the

CBTPA 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 CBTPA. 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 CBTPA

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.

New §§ 10.231 Through 10.237

These new sections are intended to

implement those non-textile preferential

tariff treatment provisions within

paragraphs (3), (4) and (5) of amended

section 213(b) of the CBI statute that

relate to U.S. import procedures and

thus are appropriate for treatment in the

Customs Regulations. In view of the

similarities between paragraphs (2) and

(3) under the statute, in particular as

regards the use of a Certificate of Origin

and related Customs procedures, the

structure and content of new §§ 10.231

through 10.237 are based on the

structure and content used in this

document for the textile provisions of

new §§ 10.221 through 10.227, but with

appropriate changes or variations to

reflect the paragraph (3) statutory

context. The following particular points

are noted regarding the texts of new

§§ 10.231 through 10.237:

1. The term ‘‘preferential tariff

treatment’’ is used throughout (rather

than ‘‘preferential treatment’’) in order

to reflect the use of the word ‘‘tariff’’ as

a modifier of ‘‘treatment’’ in paragraph

(3) of the statute. The definition of this

term in § 10.232 is based primarily on

paragraph (3)(A)(i) of the statute.

2. The definition of ‘‘CBTPA

originating good’’ in § 10.232 reflects the

terms of paragraph (5)(C)(i) of the statute

but refers specifically to provisions

within the HTSUS and the NAFTA

regulations to clarify the meaning of the

reference in the statute to Chapter 4 of

the NAFTA ‘‘as implemented pursuant

to United States law.’’

3. In § 10.233(a) which identifies the

articles eligible for preferential tariff

treatment under paragraph (3) of the

statute, an ‘‘imported directly’’

requirement has been included for the

same reason stated above in regard to

new § 10.223. The remainder of

§ 10.233(a) reflects the terms of

paragraphs (3)(A)(i) and (ii) of the

statute.

4. Section 10.233(b) sets forth

standards for applying the NAFTA rules

of origin for purposes of determining

whether an article qualifies as a CBTPA

originating good. The regulatory text

follows paragraph (5)(C)(ii) of the

statute.

5. Section 10.233(c) concerns leatherrelated goods to which duty reductions

apply under section 213(h) of the

CBERA and specifically reflects the

terms of paragraph (3)(B) of the statute

regarding application of the lower rate

of duty.

6. Section 10.234 sets forth the basic

NAFTA Certificate of Origin

requirement. In view of the applicability

of the NAFTA rules of origin in this

context, Customs has determined that

the appropriate procedure would be to

use a modified version of the separate

Customs Form used for the NAFTA.

Accordingly, the § 10.234 text is

considerably shorter than the text of

new § 10.224 because it does not

contain the text of the Certificate and

the instructions for its completion.

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’’) references to the CBTPA

Textile Certificate of Origin and

supporting documentation prescribed

under new § 10.226 and to the CBTPA

Non-textile Certificate of Origin and

supporting documentation prescribed

under new § 10.236.

Comments

Before adopting these interim

regulations 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

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59657

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 United StatesCaribbean Basin Trade Partnership 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 1515–0226.

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 §§ 10.224,

10.225, 10.226, 10.234, 10.235, and

10.236. This information conforms to

requirements in 19 U.S.C. 2703 and is

used by Customs to determine whether

textile and apparel articles and other

products imported from designated

beneficiary countries are entitled to

duty-free entry under the United StatesCaribbean Basin Trade Partnership Act.

The likely respondents are business

organizations including importers,

exporters, and manufacturers.

Estimated annual reporting and/or

recordkeeping burden: 18,720 hours.

Estimated average annual burden per

respondent/recordkeeper: 440 hours.

Estimated number of respondents

and/or recordkeepers: 42.

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, 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 §§ 10.191 through

10.198 is revised to read, and a new

specific authority citation for §§ 10.221

through 10.227 and §§ 10.231 through

10.237 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;

* * * * *

Sections 10.191 through 10.198b also

issued under 19 U.S.C. 2701 et seq.;

* * * * *

Sections 10.221 through 10.227 and

§§ 10.231 through 10.237 also issued under

19 U.S.C. 2701 et seq.;

* * * * *

2. The authority citation under the

center heading ‘‘CARIBBEAN BASIN

INITIATIVE’’ is removed.

3. In § 10.191:

a. Paragraph (b)(1) is amended by

removing the reference ‘‘§ 10.198’’ and

adding, in its place, the reference

‘‘§ 10.198b’’;

b. In the introductory text of

paragraph (b)(2), the first sentence is

amended by adding at the end before

the period the words ‘‘or in § 10.198b’’;

c. Paragraphs (b)(2)(i) and (b)(2)(ii) are

revised;

d. Paragraph (b)(2)(iv) is amended by

removing the reference ‘‘Chapter 27’’

and adding in its place the reference

‘‘headings 2709 and 2710’’;

e. Paragraphs (b)(2)(vi) through

(b)(2)(viii) are redesignated as

paragraphs (b)(2)(vii) through (b)(2)(ix)

f. A new paragraph (b)(2)(vi) is added;

g. Paragraph (b)(3) is amended by

removing the reference ‘‘§ 10.198’’ and

adding, in its place, the reference

‘‘§ 10.198a’’; and

h. Paragraph (b)(4) is amended by

removing the reference ‘‘§ 10.198’’ and

adding, in its place, the reference

‘‘§ 10.198b’’.

The revisions and addition read as

follows:

§ 10.191 General.

* * * * *

(b) * * *

(2) * * *

(i) Textile and apparel articles which

were not eligible articles for purposes of

the CBI on January 1, 1994, as the CBI

was in effect on that date.

(ii) Footwear not designated on

August 5, 1983, as eligible articles for

the purpose of the Generalized System

of Preferences under Title V, Trade Act

59658 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

of 1974, as amended (19 U.S.C. 2461

through 2467).

* * * * *

(vi) Articles to which reduced rates of

duty apply under § 10.198a.

* * * * *

4. In § 10.192, the first sentence is

amended by removing the reference

‘‘§ 10.198’’ and adding, in its place, the

reference ‘‘§ 10.198b’’.

5. In § 10.193, the introductory text is

amended by removing the reference

§ 10.198’’ and adding, in its place, the

reference ‘‘§ 10.198b’’.

6. In § 10.195, paragraph (b) is revised

to read as follows:

§ 10.195 Country of origin criteria.

* * * * *

(b) Commonwealth of Puerto Rico and

U.S. Virgin Islands—(1) General. For

purposes of determining the percentage

referred to in paragraph (a) of this

section, the term ‘‘beneficiary country’’

includes the Commonwealth of Puerto

Rico and the U.S. Virgin Islands. Any

cost or value of materials or direct costs

of processing operations attributable to

the U.S. Virgin Islands must be included

in the article prior to its final

exportation from a beneficiary country

to the United States.

(2) Manufacture in the

Commonwealth of Puerto Rico after

final exportation. Notwithstanding the

provisions of 19 U.S.C. 1311, if an

article from a beneficiary country is

entered under bond for processing or

use in manufacturing in the

Commonwealth of Puerto Rico, no duty

will be imposed on the withdrawal from

warehouse for consumption of the

product of that processing or

manufacturing provided that:

(i) The article entered in the

warehouse in the Commonwealth of

Puerto Rico was grown, produced, or

manufactured in a beneficiary country

within the meaning of paragraph (a) of

this section and was imported directly

from a beneficiary country within the

meaning of § 10.193; and

(ii) At the time of its withdrawal from

the warehouse, the product of the

processing or manufacturing in the

Commonwealth of Puerto Rico meets

the 35 percent value-content

requirement prescribed in paragraph (a)

of this section.

* * * * *

7. New §§ 10.198a and 10.198b are

added under the center heading

‘‘CARIBBEAN BASIN INITIATIVE’’ to

read as follows:

§ 10.198a Duty reduction for certain

leather-related articles.

Except as otherwise provided in

§ 10.233, reduced rates of duty as

proclaimed by the President will apply

to handbags, luggage, flat goods, work

gloves, and leather wearing apparel that

were not designated on August 5, 1983,

as eligible articles for purposes of the

Generalized System of Preferences

under Title V, Trade Act of 1974, as

amended (19 U.S.C. 2461 through 2467),

provided that the article in question at

the time it is entered:

(a) Was grown, produced, or

manufactured in a beneficiary country

within the meaning of § 10.195;

(b) Meets the 35 percent value-content

requirement prescribed in § 10.195; and

(c) Was imported directly from a

beneficiary country within the meaning

of § 10.193.

§ 10.198b Products of Puerto Rico

processed in a beneficiary country.

Except in the case of any article

described in § 10.191(b)(2)(i) through

(vi), the duty-free treatment provided for

under the CBI will apply to an article

that is the growth, product, or

manufacture of the Commonwealth of

Puerto Rico and that is by any means

advanced in value or improved in

condition in a beneficiary country,

provided that:

(a) If any materials are added to the

article in the beneficiary country, those

materials consist only of materials that

are a product of a beneficiary country or

the United States; and

(b) The article is imported directly

from the beneficiary country into the

customs territory of the United States

within the meaning of § 10.193.

8. Part 10 is amended by adding a

new center heading followed by new

§§ 10.221 through 10.227 to read as

follows:

Textile and Apparel Articles Under the

United States-Caribbean Basin Trade

Partnership Act

Sec.

10.221 Applicability.

10.222 Definitions.

10.223 Articles eligible for preferential

treatment.

10.224 Certificate of Origin.

10.225 Filing of claim for preferential

treatment.

10.226 Maintenance of records and

submission of Certificate by importer.

10.227 Verification and justification of

claim for preferential treatment.

Textile and Apparel Articles Under the

United States-Caribbean Basin Trade

Partnership Act

§ 10.221 Applicability.

Title II of Public Law 106–200 (114

Stat. 251), entitled the United StatesCaribbean Trade Partnership Act

(CBTPA), amended section 213(b) of the

Caribbean Basin Economic Recovery Act

(the CBERA, 19 U.S.C. 2701–2707) to

authorize the President to extend

additional trade benefits to countries

that have been designated as beneficiary

countries under the CBERA. Section

213(b)(2) of the CBERA (19 U.S.C.

2703(b)(2)) provides for the preferential

treatment of certain textile and apparel

articles from CBERA beneficiary

countries. The provisions of §§ 10.221–

10.227 of this part set forth the legal

requirements and procedures that apply

for purposes of obtaining preferential

treatment pursuant to CBERA section

213(b)(2).

§ 10.222 Definitions.

When used in §§ 10.221 through

10.227, 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 CBTPA

beneficiary countries. ‘‘Assembled in

one or more CBTPA 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.

CBERA. ‘‘CBERA’’ means the

Caribbean Basin Economic Recovery

Act, 19 U.S.C. 2701–2707.

CBTPA beneficiary country. ‘‘CBTPA

beneficiary country’’ means a

beneficiary country’’ as defined in

§ 10.191(b)(1) for purposes of the

CBERA which the President also has

designated as a beneficiary country for

purposes of preferential treatment of

textile and apparel articles under 19

U.S.C. 2703(b)(2).

Cut in one or more CBTPA beneficiary

countries. ‘‘Cut in one or more CBTPA

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 CBTPA beneficiary

countries.

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59659

Foreign. ‘‘Foreign’’ means of a country

other than the United States or a CBTPA

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.’’

Made in one or more CBTPA

beneficiary countries. ‘‘Made in one or

more CBTPA beneficiary countries’’

when used with reference to nonunderwear t-shirts means cut in one or

more CBTPA beneficiary countries and

wholly assembled in one or more

CBTPA beneficiary countries.

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.

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

restrictions, limitations, or consultation

levels as provided in 19 U.S.C.

2703(b)(2).

Wholly assembled in one or more

CBTPA beneficiary countries. ‘‘Wholly

assembled in one or more CBTPA

beneficiary countries’’ when used in the

context of a textile or apparel article has

reference to a joining together of all

components (including thread,

decorative embellishments, buttons,

zippers, or similar components) that

occurred only in one or more CBTPA

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.

§ 10.223 Articles eligible for preferential

treatment.

(a) General. The preferential treatment

referred to in § 10.221 applies to the

following textile and apparel articles

that are imported directly into the

customs territory of the United States

from a CBTPA beneficiary country:

(1) Apparel articles assembled in one

or more CBTPA 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 CBTPA 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 CBTPA beneficiary

country;

(3) Apparel articles (other than

articles described in paragraph (a)(12) of

this section) cut in one or more CBTPA

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 CBTPA

beneficiary countries with thread

formed in the United States;

(4) Apparel articles knit to shape

(other than socks provided for in

heading 6115 of the HTSUS) in a

CBTPA beneficiary country from yarns

wholly formed in the United States, and

knit apparel articles (other than nonunderwear t-shirts) cut and wholly

assembled in one or more CBTPA

beneficiary countries from fabric formed

in one or more CBTPA beneficiary

countries or 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 formed in one or

more CBTPA beneficiary countries);

(5) Non-underwear t-shirts,

classifiable under subheadings

6109.10.00 and 6109.90.10 of the

HTSUS, made in one or more CBTPA

beneficiary countries from fabric formed

in one or more CBTPA beneficiary

countries from yarns wholly formed in

the United States;

(6) Brassieres classifiable under

subheading 6212.10 of the HTSUS, cut

and sewn or otherwise assembled in the

United States, or one or more CBTPA

beneficiary countries, or both;

(7) Apparel articles that are both cut

(or knit-to-shape) and sewn or otherwise

assembled in one or more CBTPA

beneficiary countries, from fabrics or

yarn that is not formed in the United

States or in one or more CBTPA

beneficiary countries, to the extent that

apparel articles of those fabrics or yarn

would be eligible for preferential

treatment, without regard to the source

of the fabrics or yarn, under Annex 401

of the NAFTA;

(8) Apparel articles that are both cut

(or knit-to-shape) and sewn or otherwise

assembled in one or more CBTPA

beneficiary countries, from fabrics or

yarn that is not formed in the United

States or in one or more CBTPA

beneficiary countries and that is not

described in paragraph (a)(7) of this

section, to the extent that the President

has determined that the fabrics 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)(7) of this section;

(9) A handloomed, handmade, or

folklore textile or apparel article of a

CBTPA beneficiary country that the

President and representatives of the

CBTPA beneficiary country mutually

agree is a handloomed, handmade, or

folklore article and that is certified as a

handloomed, handmade, or folklore

article by the competent authority of the

CBTPA beneficiary country;

(10) Textile luggage assembled in a

CBTPA beneficiary country from fabric

wholly formed and cut in the United

States, from yarns wholly formed in the

United States, that is entered under

subheading 9802.00.80 of the HTSUS;

(11) Textile luggage assembled from

fabric cut in a CBTPA beneficiary

country from fabric wholly formed in

the United States from yarns wholly

formed in the United States; and

(12) Knitted or crocheted apparel

articles (other than non-underwear tVerDate 11<MAY>2000 16:39 Oct 04, 2000 Jkt 194001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\05OCR2.SGM pfrm08 PsN: 05OCR2
59660 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

shirts described in paragraph (a)(5) of

this section) cut and wholly assembled

in one or more CBTPA beneficiary

countries or the United States from

fabrics 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), provided that the

assembly is with thread formed in the

United States.

(b) Special rules for certain

component materials—(1) Foreign

findings, trimmings, interlinings, fibers

and yarns—(i) General. An article

otherwise described under paragraph (a)

of this section will not be ineligible for

the preferential treatment referred to in

§ 10.221 because the article contains:

(A) 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

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;

(B) 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;

(C) 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

(D) Fibers or yarns not wholly formed

in the United States or in one or more

CBTPA 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, except in the case

of any apparel article described in

paragraph (a)(1) through (a)(5) of this

section containing elastomeric yarns

which will be eligible for preferential

treatment only if those yarns are wholly

formed in the United States.

(ii) 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)(A) of this section, the

fibers or yarns will be considered to be

a finding or trimming for purposes of

paragraph (b)(1)(i) of this section.

(2) Special rule for nylon filament

yarn. An article otherwise described

under paragraph (a)(1), (a)(2) or (a)(3) of

this section will not be ineligible for the

preferential treatment referred to in

§ 10.221 because the article contains

nylon filament yarn (other than

elastomeric yarn) that is classifiable

under subheading 5402.10.30,

5402.10.60, 5402.31.30, 5402.31.60,

5402.32.30, 5402.32.60, 5402.41.10,

5402.41.90, 5402.51.00, or 5402.61.00 of

the HTSUS duty-free from Canada,

Mexico or Israel.

(c) Imported directly defined. For

purposes of paragraph (a) of this section,

the words ‘‘imported directly’’ mean:

(1) Direct shipment from any CBTPA

beneficiary country to the United States

without passing through the territory of

any country that is not a CBTPA

beneficiary country;

(2) If the shipment is from any CBTPA

beneficiary country to the United States

through the territory of any country that

is not a CBTPA beneficiary country, the

articles in the shipment do not enter

into the commerce of any country that

is not a CBTPA 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 CBTPA

beneficiary country to the United States

through the territory of any country that

is not a CBTPA beneficiary country, and

the invoices and other documents do

not show the United States as the final

destination, the articles in the shipment

upon arrival in the United States are

imported directly only if they:

(i) Remained under the control of the

customs authority of the intermediate

country;

(ii) Did not enter into the commerce

of the intermediate country except for

the purpose of sale other than at retail,

and the port director is satisfied that the

importation results from the original

commercial transaction between the

importer and the producer or the

producer’s sales agent; and

(iii) Were not subjected to operations

other than loading or unloading, and

other activities necessary to preserve the

articles in good condition.

§ 10.224 Certificate of Origin.

(a) General. A Certificate of Origin

must be employed to certify that a

textile or apparel article being exported

from a CBTPA beneficiary country to

the United States qualifies for the

preferential treatment referred to in

§ 10.221. The Certificate of Origin must

be prepared by the exporter in the

CBTPA beneficiary country in the form

specified in paragraph (b) of this

section. Where the CBTPA 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 59661

BILLING CODE 4820–02–P

(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

59662 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

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

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

‘‘G’’ is inserted in block 5, should state

the name of the fabric or yarn that is not

formed in the United States or a CBTPA

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

§ 10.226(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.

§ 10.225 Filing of claim for preferential

treatment.

(a) Declaration. In connection with a

claim for preferential treatment for a

textile or apparel article described in

§ 10.223, the importer must make a

written declaration that the article

qualifies for that treatment. In the case

of an article described in § 10.223(a)(1)

or (a)(10), the written declaration should

be made by including on the entry

summary, or equivalent documentation,

the symbol ‘‘R’’ 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 § 10.223(a)(2) through (a)(9)

and (a)(11), 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

§ 10.226(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 § 10.224, 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.

§ 10.226 Maintenance of records and

submission of Certificate by importer.

(a) Maintenance of records. Each

importer claiming preferential treatment

for an article under § 10.225 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

§ 10.225(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 § 10.225(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 § 10.224(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,

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59663

importer or authorized agent includes

on, or attaches to, the invoice or other

document accompanying the shipment

the following signed statement:

I hereby certify that the article covered by

this shipment qualifies for preferential

treatment under the CBTPA.

Check One:

( ) Producer

( ) Exporter

( ) Importer

( ) Agent

lllllllllllllllllllll

Name

Title

Address

Signature and Date

(2) Exception. If the port director

determines that an importation

described in paragraph (d)(1) of this

section forms part of a series of

importations that may reasonably be

considered to have been undertaken or

arranged for the purpose of avoiding a

Certificate of Origin requirement under

§§ 10.224 through 10.226, 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.

§ 10.227 Verification and justification of

claim for preferential treatment.

(a) Verification by Customs. A claim

for preferential treatment made under

§ 10.225, including any statements or

other information contained on a

Certificate of Origin submitted to

Customs under § 10.226, 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 CBTPA 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 CBTPA 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 § 10.225, 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 § 10.223(a). If the

importer is claiming that the article

incorporates fabric or yarn that 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

§ 10.224(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

Certificates 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

CBTPA beneficiary country to the

United States. If the imported article

was shipped through a country other

than a CBTPA beneficiary country and

the invoices and other documents from

the CBTPA 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

§ 10.223(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.

9. Part 10 is amended by adding a

new center heading followed by new

§§ 10.231 through 10.237 to read as

follows:

Non-Textile Articles Under the United

States-Caribbean Basin Trade

Partnership Act

Sec.

10.231 Applicability.

10.232 Definitions.

10.233 Articles eligible for preferential tariff

treatment.

10.234 Certificate of Origin.

10.235 Filing of claim for preferential tariff

treatment.

10.236 Maintenance of records and

submission of Certificate by importer.

10.237 Verification and justification of

claim for preferential tariff treatment.

Non-Textile Articles Under the United

States-Caribbean Basin Trade

Partnership Act

§ 10.231 Applicability.

Title II of Public Law 106–200 (114

Stat. 251), entitled the United StatesCaribbean Trade Partnership Act

(CBTPA), amended section 213(b) of the

Caribbean Basin Economic Recovery Act

(the CBERA, 19 U.S.C. 2701–2707) to

authorize the President to extend

additional trade benefits to countries

that have been designated as beneficiary

countries under the CBERA. Section

213(b)(3) of the CBERA (19 U.S.C.

2703(b)(3)) provides for special

preferential tariff treatment of certain

non-textile articles that are otherwise

excluded from duty-free treatment

under the CBERA. The provisions of

§§ 10.231–10.237 of this part set forth

the legal requirements and procedures

that apply for purposes of obtaining

preferential tariff treatment pursuant to

CBERA section 213(b)(3).

§ 10.232 Definitions.

When used in §§ 10.231 through

10.237, the following terms have the

meanings indicated:

CBERA. ‘‘CBERA’’ means the

Caribbean Basin Economic Recovery

Act, 19 U.S.C. 2701–2707.

CBTPA beneficiary country. ‘‘CBTPA

beneficiary country’’ means a

beneficiary country’’ as defined in

§ 10.191(b)(1) for purposes of the

CBERA which the President also has

designated as a beneficiary country for

purposes of preferential duty treatment

of articles under 19 U.S.C. 2703(b)(3).

CBTPA originating good. ‘‘CBTPA

originating good’’ means a good that

meets the rules of origin for a good as

set forth in General Note 12, HTSUS,

and in the appendix to part 181 of this

chapter and as applied under

§ 10.233(b).

HTSUS. ‘‘HTSUS’’ means the

Harmonized Tariff Schedule of the

United States.

NAFTA. ‘‘NAFTA’’ means the North

American Free Trade Agreement

59664 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

entered into by the United States,

Canada, and Mexico on December 17,

1992.

Preferential tariff treatment.

‘‘Preferential tariff treatment’’ when

used with reference to an imported

article means entry, or withdrawal from

warehouse for consumption, in the

customs territory of the United States

with duty and other tariff treatment that

is identical to the tariff treatment that

would be accorded at that time under

Annex 302.2 of the NAFTA to an

imported article described in the same

8-digit subheading of the HTSUS that is

a good of Mexico.

§ 10.233 Articles eligible for preferential

tariff treatment.

(a) General. The preferential tariff

treatment referred to in § 10.231 applies

to any of the following articles,

provided that the article in question is

a CBTPA originating good, is imported

directly into the customs territory of the

United States from a CBTPA beneficiary

country, and is not accorded duty-free

treatment under U.S. Note 2(b),

Subchapter II, Chapter 98, HTSUS (see

§ 10.26):

(1) Footwear not designated on

August 5, 1983, as eligible articles for

the purpose of the Generalized System

of Preferences under Title V, Trade Act

of 1974, as amended (19 U.S.C. 2461

through 2467);

(2) Tuna, prepared or preserved in

any manner, in airtight containers;

(3) Petroleum, or any product derived

from petroleum, provided for in

headings 2709 and 2710 of the HTSUS;

(4) Watches and watch parts

(including cases, bracelets, and straps),

of whatever type including, but not

limited to, mechanical, quartz digital or

quartz analog, if those watches or watch

parts contain any material which is the

product of any country with respect to

which HTSUS column 2 rates of duty

apply; and

(5) Articles to which reduced rates of

duty apply under § 10.198a, except as

otherwise provided in paragraph (c) of

this section.

(b) Application of NAFTA rules of

origin. In determining whether an article

is a CBTPA originating good for

purposes of paragraph (a) of this section,

application of the provisions of General

Note 12 of the HTSUS and the appendix

to part 181 of this chapter will be

subject to the following rules:

(1) No country other than the United

States and a CBTPA beneficiary country

may be treated as being a party to the

NAFTA;

(2) Any reference to trade between the

United States and Mexico will be

deemed to refer to trade between the

United States and a CBTPA beneficiary

country;

(3) Any reference to a party will be

deemed to refer to a CBTPA beneficiary

country or the United States; and

(4) Any reference to parties will be

deemed to refer to any combination of

CBTPA beneficiary countries or to the

United States and one or more CBTPA

beneficiary countries (or any

combination involving the United States

and CBTPA beneficiary countries).

(c) Duty reductions for leather-related

articles. If, after it is determined that an

article described in paragraph (a)(5) of

this section qualifies as a CBTPA

originating good and is eligible for

preferential tariff treatment under this

section, it is determined that the article

in question also would otherwise

qualify for a reduced rate of duty under

§ 10.198a and that reduced rate of duty

is lower than the rate of duty that would

apply under this section, that lower rate

of duty will apply to the article for

purposes of preferential tariff treatment

under this section.

(d) Imported directly defined. For

purposes of paragraph (a) of this section,

the words ‘‘imported directly’’ mean:

(1) Direct shipment from any CBTPA

beneficiary country to the United States

without passing through the territory of

any country that is not a CBTPA

beneficiary country;

(2) If the shipment is from any CBTPA

beneficiary country to the United States

through the territory of any country that

is not a CBTPA beneficiary country, the

articles in the shipment do not enter

into the commerce of any country that

is not a CBTPA 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 CBTPA

beneficiary country to the United States

through the territory of any country that

is not a CBTPA beneficiary country, and

the invoices and other documents do

not show the United States as the final

destination, the articles in the shipment

upon arrival in the United States are

imported directly only if they:

(i) Remained under the control of the

customs authority of the intermediate

country;

(ii) Did not enter into the commerce

of the intermediate country except for

the purpose of sale other than at retail,

and the port director is satisfied that the

importation results from the original

commercial transaction between the

importer and the producer or the

producer’s sales agent; and

(iii) Were not subjected to operations

other than loading or unloading, and

other activities necessary to preserve the

articles in good condition.

§ 10.234 Certificate of Origin.

A Certificate of Origin as specified in

§ 10.236 must be employed to certify

that an article described in

§ 10.233(a)(1) through (5) being exported

from a CBTPA beneficiary country to

the United States qualifies for the

preferential tariff treatment referred to

in § 10.231. The Certificate of Origin

must be prepared by the exporter in the

CBTPA beneficiary country. Where the

CBTPA beneficiary country exporter is

not the producer of the article, that

exporter may complete and sign a

Certificate of Origin on the basis of:

(a) Its reasonable reliance on the

producer’s written representation that

the article qualifies for preferential tariff

treatment; or

(b) A completed and signed Certificate

of Origin for the article voluntarily

provided to the exporter by the

producer.

§ 10.235 Filing of claim for preferential

tariff treatment.

(a) Declaration. In connection with a

claim for preferential tariff treatment for

an article described in § 10.233(a)(1)

through (5), the importer must make a

written declaration that the article

qualifies for that treatment. The written

declaration should be made by

including on the entry summary, or

equivalent documentation, the symbol

‘‘R’’ as a prefix to the subheading of the

HTSUS under which the article in

question is classified. Except in any of

the circumstances described in

§ 10.236(d)(1), the declaration required

under this paragraph must be based on

a complete and properly executed

original Certificate of Origin 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.

§ 10.236 Maintenance of records and

submission of Certificate by importer.

(a) Maintenance of records. Each

importer claiming preferential tariff

treatment for an article under § 10.235

Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations 59665

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

§ 10.235(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 tariff

treatment on an article under § 10.235(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 on Customs Form 450,

including privately-printed copies of

that Form, or, as an alternative to

Customs Form 450, in an approved

computerized format or other medium

or format as is approved by the Office

of Field Operations, U.S. Customs

Service, Washington, DC 20229. An

alternative format must contain the

same information and certification set

forth on Customs Form 450;

(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 period, not to exceed

12 months, set out in the Certificate by

the exporter.

(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 tariff 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:

I hereby certify that the article covered by

this shipment qualifies for preferential tariff

treatment under the CBTPA.

Check One:

( ) Producer

( ) Exporter

( ) Importer

( ) Agent

lllllllllllllllllllll

Name

Title

Address

Signature and Date

(2) Exception. If the port director

determines that an importation

described in paragraph (d)(1) of this

section forms part of a series of

importations that may reasonably be

considered to have been undertaken or

arranged for the purpose of avoiding a

Certificate of Origin requirement under

§§ 10.234 through 10.236, 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 tariff 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 tariff 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.

§ 10.237 Verification and justification of

claim for preferential tariff treatment.

(a) Verification by Customs. A claim

for preferential tariff treatment made

under § 10.235, including any

statements or other information

contained on a Certificate of Origin

submitted to Customs under § 10.236,

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 tariff treatment. A

verification of a claim for preferential

tariff 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 CBTPA 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 CBTPA 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 tariff

treatment under § 10.235, the importer:

(1) Must have records that explain

how the importer came to the

conclusion that the article qualifies for

preferential tariff treatment. Those

records must include documents that

support a claim that the article in

question qualifies for preferential tariff

treatment because it meets the

applicable rule of origin set forth in

General Note 12, HTSUS, and in the

appendix to part 181 of this chapter. A

properly completed Certificate of Origin

in the form prescribed in § 10.236(b) is

a record that would serve this purpose;

(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

CBTPA beneficiary country to the

United States. If the imported article

was shipped through a country other

than a CBTPA beneficiary country and

the invoices and other documents from

the CBTPA 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

59666 Federal Register / Vol. 65, No. 194 / Thursday, October 5, 2000 / Rules and Regulations

§ 10.233(d)(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 tariff 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 two new listings

under section IV in numerical order to

read as follows:

Appendix to Part 163—Interim (a)(1)(A)

List

* * * * *

IV. * * *

§ 10.226 CBTPA Textile Certificate of

Origin and supporting records

§ 10.236 CBTPA Non-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. 00–25517 Filed 10–2–00; 8:45 am]

BILLING CODE 4820–02–P