Background:
On February 23, 2011, the CAFTA-DR Free Trade Commission adopted amendments to certain rules of origin for textile and apparel goods set forth in Annex 4.1 of the Agreement. These changes were subsequently signed into U.S. law on August 10, 2012 (Public Law 112-63) and incorporated into the Harmonized Tariff Schedule of the United States (HTS). However, the changes could not enter into effect until the Office of the U.S. Trade Representative (USTR) determined and provided notice that the equivalent amendments entered into force in all other CAFTA-DR Parties.
These steps have now been completed and on September 26, 2012, USTR published a notice in the Federal Register (77 FR 59241) announcing October 13, 2012 as the effective date for these certain modifications to the textile and apparel preference rules.
Summary of Modifications:
Commercial Availability ("Short Supply") Rules
Three of the modifications to the CAFTA-DR textile and apparel rules affect the Agreement's short supply provisions (HTS GN 29 (m)(viii) and HTS 9822.05.01):
- HTS General Note (GN) 29 (m)(viii) provides three separate short supply rules for:
- Textile goods of chapters 50 through 60;
- Apparel goods of chapters 61 and 62; or
- Made-up textile goods of chapter 63 or 94
Each of these provisions is amended to remove the requirement that any elastomeric yarn contained in the short supply yarns or fabrics be formed in the territory of one or more of the Parties to the Agreement.
If such goods are made from a combination of short supply materials and originating materials, then the originating materials may contain up to ten percent by weight of fibers or yarns that do not undergo an applicable change in tariff classification (HTS GN 29 (n)) but any elastomeric yarn contained in the originating materials must be formed and finished in the territory of one or more of the Parties to the Agreement.
- The short supply rule for apparel found in HTS GN 29 (m)(viii)(B) is modified so that the rule applies to the outer shell, excluding not only collars and cuffs, but also ribbed waistbands in limited applications. The new outer shell language for GN 29 (m)(viii)(B) reads:
...outer shell, exclusive of collars, cuffs, and ribbed waistbands (only if the ribbed waistband is present in combination with cuffs and identical in fabric construction to the cuffs)...
Under HTS GN 29 (m)(viii)(B), the short supply rule for apparel goods in chapters 61 and 62, the outer shell must be wholly of one or more of the fabrics listed in Annex 3.25 (Short Supply List), one or more fabrics or knit to shape components formed in the territory of one or more of the Parties to the Agreement from one or more of the yarns listed in Annex 3.25 (Short Supply List), or any combination of such fabrics or knit to shape components and originating fabrics or knit to shape components.
Because of the exclusions, the collars, cuffs, and ribbed waistbands do not need to be knit to shape from yarns listed in Annex 3.25 (Short Supply List) or originating yarns.
- A new chapter rule is created for chapters 61 (rule 6), 62 (rule 6) and 63 (rule 3) under HTS GN 29 (n) to permit materials listed in Annex 3.25 (Short Supply List), of any origin, to be utilized to satisfy the other chapter rules of HTS GN 29 (n). Such goods of chapter 61, 62 or 63 will be considered originating provided the required change in tariff classification dictated by the product specific rule occurs.
The existing chapter rules for chapters 61 and 62 cover the visible lining fabric, narrow elastic fabric, sewing thread and pocket bag fabric. The chapter rules for chapter 63 cover sewing thread.
Sewing Thread Chapter Rule for Goods of Chapters 61 (rule 4), 62 (rule 4) and 63 (rule 2)
The CAFTA-DR chapter rules for sewing thread found in HTS GN 29 (n) chapters 61, 62 and 63 are modified by adding "yarn of heading 5402 used as sewing thread" to the original chapter rule. Therefore goods of chapters 61, 62 or 63 containing sewing thread of heading 5204, 5401, 5508 or yarn of heading 5402 used as sewing thread, shall be considered originating only if such sewing thread or yarn is both formed and finished in the territory of one or more of the Parties.
Product Specific Tariff Shift Rule for Women's and Girls' Woven Sleepwear
The product specific tariff shift rule of HTS GN 29 (n) chapter 62 no. 33 is modified in two ways. First, the word "nightwear" is replaced with "sleepwear." Second, additional HTS numbers for certain women's and girls' woven sleepwear are added to the "cut and sew" tariff shift rule. The added HTS numbers are 6208.91.3010, 6208.91.3020, 6208.92.0030, 6208.92.0040, and 6208.99.2020.
The Agreement's "cut and sew" tariff shift rules require only that the goods undergo a change in classification "from any other chapter, provided that the good is cut or knit to shape, or both, sewn or otherwise assembled in the territory of one or more of the Parties."
Action:
As of October 13, 2012, textile and apparel goods entered, or withdrawn, for consumption, must meet the amended rules under CAFTA-DR, found in HTS GN 29, in order to qualify for duty-free treatment. Any post entry preference claims filed for goods entered prior to October 13, 2012, must comply with the CAFTA-DR rules in effect on the date of entry.
Please pass this memorandum to Port Directors, Assistant Port Directors, Import Specialists, CBP Officers, Entry Officers, Brokers, Importers and other interested parties.
Information:
For additional information, please contact Textile Operations Branch, Office of International Trade.
Source Document: INFO: TBT-12-005 Modifications to Certain Textile & Apparel Rules of Origin Under the United States-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)