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Free Trade Agreements and Special Trade Programs. Rick O’Connell Assistant Area Director , Trade JFK International Airport. Thursday, November 13, 2008. www.ustr.gov – U.S. Trade Representative www.usitc.gov – International Trade Commission

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Free Trade Agreements and Special Trade Programs


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free trade agreements and special trade programs

Free Trade Agreements and Special Trade Programs

Rick O’Connell

Assistant Area Director, Trade

JFK International Airport

Thursday, November 13, 2008

reference material websites
www.ustr.gov–U.S. Trade Representative

www.usitc.gov– International Trade Commission

www.cbp.gov – U.S. Customs and Border Protection (click “Trade”, “Trade Programs”, then “International Agreements”

www.tradeagreements.gov – U.S. Government (Departments of Agriculture, Commerce, State, Treasury and the Office of the United States Trade Representative) interagency effort

www.otexa.itc.doc.gov – Office of Textiles and Apparel

Reference Material - Websites
trade agreement vs trade program
Trade Agreement vs. Trade Program

Free Trade Agreement

  • A reciprocal agreement between two or more parties
  • Broader provisions beyond Customs issues
  • Israel, Jordan, NAFTA, Chile, Singapore, Australia, Morocco, CAFTA-DR, Bahrain

Special Trade Program

  • A unilateral action on the part of the United States
  • US exporters do not receive benefits
  • GSP, ATPA/ATPDEA, CBERA/CBI, CBPTA, AGOA
current free trade agreements ftas
Israel 9/1/85

The United States–Israel Free Trade Area Agreement (US-ILFTA) also affords preferential tariff treatment to goods manufactured by eligible companies in the Egyptian Qualifying Industrial Zones (QIZs) and the Jordanian QIZs.

Jordan QIZ 11/21/96

Egypt QIZ 12/29/04

2. NAFTA 1/1/94

3. Jordan 12/17/01

4. Chile 1/1/04

5. Singapore 1/1/04

6. Australia 1/1/05

7. Morocco 1/1/06

8. CAFTA-DR 3/1/06 El Salvador; 4/1/06 Honduras, Nicaragua; 7/1/06 Guatemala; 3/1/07 Dominican Republic

9. Bahrain 8/1/06

Current Free Trade Agreements (FTAs)
potential or future ftas
CAFTA-DR (Costa Rica)

Peru

Oman

Colombia

Panama

South Korea

Ecuador

Malaysia

Thailand

United Arab Emirates

Free Trade Area of the Americas (FTAA) - Efforts to integrate the Western Hemisphere into a free trade area of the region’s 34 democracies

Southern African Customs Union (SACU) – Botswana, Lesotho, Namibia, South Africa and Swaziland

Egypt

Vietnam

Potential &/or Future FTAs
free trade agreement overview
New FTAs based on NAFTA and GSP – each has a dedicated note in the HTS

FTAs not “free” but preferential

Concrete obligations for the importer regarding customs procedures

Commitment to publish laws and regulations on the Internet

The rules are not identical and can only be applied to the respective agreements.

Free Trade Agreement Overview
rules of origin the nafta model
What is a Rule of Origin?

Wholly Obtained

Product Specific Rules of Origin

Tariff Shift (based on international nomenclature, transparent and not subjective)

Regional Value Content (RVC)

Exclusively from Originating Materials

De Minimis

Current Agreements based on the NAFTA model: Singapore, Chile, Australia and CAFTA-DR

Rules of OriginThe NAFTA Model

Preference Criterion

general rules of origin
A good must be “more than” a product of a Party country, it must meet a preference rule of origin

The general rules incorporate different methods for determining origin

An imported good must be “originating” per the general rules of the agreement in order to receive preferential treatment

General Rules of Origin
rules of origin the gsp model
A good must be “more than” a product of a Party country, it must meet the rules of origin

Wholly Obtained (same principle as found in NAFTA model)

Substantial Transformation + 35% Value Added

Tariff Shift (same principle as found in NAFTA model)

Present only in new trade agreements

Imported Directly

Deemed Certification and Declaration

Current Agreements based on the GSP model: Israel FTA, Egypt QIZ, Jordan QIZ, Jordan FTA, Morocco FTA, Bahrain FTA

Rules of OriginThe GSP Model

Objectives

deemed certification declaration
An importer making a claim for preference is deemed to have certified that the goods qualify

Importer must be prepared to submit a signed declaration

Description of the good, invoice numbers, quantity

Description of operations performed identifying direct cost of processing

Description of materials and value

Description of any applicable change in tariff classification

* The concept is not found in NAFTA

Deemed Certification & Declaration
making an fta claim
A claim is essentially an assertion by the importer that the good is originating according to the rules of the agreement, based on:

Certification, Supporting Statement or Declaration in the importer’s possession; or

Importer Knowledge

Claim is made by placing the Special Program Indicator field “SPI” on the entry summary

Making an FTA Claim

Basis for a Claim

importer focus
Correspondence is with the importer

Importer should coordinate with the exporter/producer for submission of business confidential information directly to CBP

*NAFTA is an exporter focused agreement

Importer Focus
requesting information
Certification, Supporting Statement or Declaration

Documents supporting production process, cost data, materials used in production

Information concerning the growth, production or manufacture

Affect of a Claim Based on Importer Knowledge

CBP retains authority through the agreement to request the necessary information to conduct a verification and make a determination

CBP may be required to ask specific detailed questions

What preference criteria was used to qualify the good as originating?

Requesting Information

What will CBP ask for?

certification statement declaration
Can be in any format

CBP requires certain data elements

Must be submitted upon request

May be submitted electronically

Certification/Statement/Declaration

Importer Requirement

data elements
Importer

Exporter

Producer

Description of Good

Classification

Data Elements

Data Elements

  • Preference Criteria or Rule of Origin
  • Single Shipment
  • Multiple Shipment
  • Authorized Signature
  • Certification
supporting documentation needed
For Wholly Obtained

Evidence of origin of good and/or all materials used in production.

For Tariff Shift Qualifications

Bill of Materials

Affidavits of origin for originating materials

Production records of finished goods

Classification of all non-originating materials

Demonstration of tariff shift

For RVC Requirements:

Bill of Materials

Invoices for all materials

Affidavits of origin for originating materials

Production records of finished goods

Cost breakdown of all expenses related to the production of the good

RVC calculation

Supporting Documentation Needed:
post entry procedures
Post Entry

Supplemental Information Letters/Post Entry Amendments

19 USC 1514 for liquidated entries in which the entry date of the merchandise is after Dec. 18, 2004

Post Importation

19 USC 1520 (d) post-importation

Only method available if provision is present in the agreement

NAFTA, Chile, CAFTA-DR

Post-Entry Procedures
preferential trade agreements trade programs synopsis non textile

Preferential Trade Agreements & Trade Programs Synopsis(Non-Textile)

Trade Agreements Branch

Special Enforcement Division

Commercial Targeting and Enforcement

May 2007

general notes reference

African Growth and Opportunity Act

GN 16

General Notes Reference

Andean Trade Preferences Act & Andean Trade Promotion and Drug Eradication Act (ATPA/ATPDEA)

GN 11

Australia Free Trade Agreement (AFTA)

GN 28

Bahrain Free Trade Agreement (BFTA)

GN 30

Caribbean Basin Economic Recovery Act (CBERA)

GN 7

Caribbean Basin Trade Partnership Act (CBTPA)

GN 17

Central America-Dominican Republic Free Trade Agreement (CAFTA-DR)

GN 29

Chile Free Trade Agreement (CFTA)

GN 26

Generalized System of Preferences (GSP)

GN 4

Israel Free Trade Agreement (IFTA)

GN 8

Jordan Free Trade Agreement (JFTA)

GN 18

Morocco Free Trade Agreement (MFTA)

GN 27

North American Free Trade Agreement (NAFTA)

GN 12

Singapore Free Trade Agreement (SFTA)

GN 25

agoa references
Effective Date: 10/2/00

Expiration Date: 9/30/15

General Note in HTS: GN 16

Special Indicator in HTS: D

Regulation Cite: 19 CFR 10.178a

US Code: 19 USC 3706

Public Law: 106-200

AGOA References
agoa summary

Reference

General Note 16

AGOA Summary

SPI

D

General Rules of Origin

Wholly Obtained, 35% Value Added + Substantial Transformation

Value Content

15% of US cost & value may count towards 35%

Level of Documentation at Importation

Knowledge

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA, 19 USC 1514

MPF

No exemption (but products of least-developed beneficiary developing countries General Note 4 (b)(i) are exempt )

atpa atpdea references
Expiration Date: 06/30/07

General Note in HTS: GN 11

Special Indicator in HTS: J, J*, J+

Regulation Cite: 19 CFR 10.201 – 207 & 10.241 - 248

US Code: 19 USC 3201 - 3206

Public Law: 102-182

ATPA/ATPDEA References
atpa atpdea summary

Reference

General Note 11

ATPA/ATPDEA Summary

SPI

J, J*, J+

General Rules of Origin (Preference Criteria)

Wholly Growth, 35% Value Added + Substantial Transformation

Regional Value Content

15% of US cost or value can be counted towards 35%

Level of Documentation at Importation

Knowledge (ATPA); CPB Form 449, Signed by the exporter (ATPDEA)

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA, 19 USC 1514

MPF

No exemption

slide29
Effective Date: 1/1/05

Expiration Date: None

General Note in HTS: GN 28

Special Indicator in HTS: AU

US Code: 19 USC 3805

Public Law: 108-286

Australia Free Trade Agreement

australia fta summary

Reference

General Note 28

Australia FTA Summary

SPI

AU

General Rules of Origin (Preference Criteria)

Wholly Obtained, Tariff Shift &/or RVC, Exclusively from Originating Materials, Other Qualifying Method

Regional Value Content

Build-up, Build-down, Net Cost

Level of Documentation at Importation

Freeform Statement (10 data elements); Importer Knowledge

Verification Notification

Importer, At discretion may contact exporter

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Must support no further production occurred in a 3rd country

Post-Importations

SIL/PEA or 19 USC 1514

MPF

Exempt for Originating Goods

bahrain free trade agreement
Effective Date: August 1, 2006

Expiration Date: None

General Note in HTS: GN 30

Special Indicator in HTS: BH

US Code: 19 USC 3805 note

Public Law: 109-169

Bahrain Free Trade Agreement
bahrain fta summary

Reference

General Note 30

Bahrain FTA Summary

SPI

BH

General Rules of Origin (Preference Criteria)

Wholly Growth, 35% Value Added + Substantial Transformation; Tariff Shift for specific goods

Value Content

Unlimited US content towards meeting 35%

Level of Documentation at Importation

Supporting Declaration; Importer Knowledge

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA, 19 USC 1514

MPF

Exempt for originating goods

caribbean basin economic recovery act
Effective Date: 10/2/00

Expiration Date: N/A

General Note in HTS: GN 7

Special Indicator in HTS: E, E*

Regulation Cite: 19 CFR 10.191 - 199

US Code: 19 USC 2701 - 2706

Public Law: 98-67

Caribbean Basin Economic Recovery Act
cbera summary

Reference

General Note 7

CBERA Summary

SPI

E, E*

General Rules of Origin (Preference Criteria)

Wholly Growth, 35% Value Added + Substantial Transformation

Value Content

15% of US cost or value can be counted towards 35%

Level of Documentation at Importation

Knowledge

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA, 19 USC 1514

MPF

Exempt for all goods, whether or not they are originating

slide35
Expiration Date: 9/30/08

General Note in HTS: GN 17

Special Indicator in HTS: R

Regulation Cite: 19 CFR 10.231 - 237

US Code: 19 USC 2701 - 2707

Public Law: 106-200

Caribbean Basin Trade Preferences Act

cbtpa summary

Reference

General Note 17

CBTPA Summary

SPI

R

General Rules of Origin (Preference Criteria)

Wholly Obtained, Good originates according to the NAFTA rules of origin

Regional Value Content

If applicable per GN 12

Level of Documentation at Importation

CPB Form 450, Signed by the exporter

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA, 19 USC 1514

MPF

Exempt for all goods, whether or not they are originating

slide37
Effective Dates:

3/1/06 (El Salvador)

4/1/06 (Nicaragua & Honduras)

7/1/06 (Guatemala)

Expiration Date: None

General Note in HTS: GN 29

Special Indicator in HTS: P, P+

US Code: 19 USC 4001 note

Public Law: 109-53

Central America-Dominican Republic Free Trade Agreement

cbi cbera cbtpa cafta dr comparison

Caribbean Basin Initiative (CBI)

Caribbean Basin Economic Recovery Act (CBERA)

Caribbean Basin Trade Partnership Act (CBTPA)

Central America-Dom. Rep. Free Trade Agreement (CAFTA-DR)*

CBI/CBERA/CBTPA/CAFTA-DR Comparison

Program providing duty free treatment of certain goods

Act that implemented CBI

Expands CBERA benefits to previously excluded articles applying NAFTA rules of origin & tariffs

Reciprocal trade agreement between the US and Central American countries

Countries listed in GN 7(a)

Countries listed in GN 17(a)

Costa Rica, Guatemala, Honduras, El Salvador, Nicaragua, Dominican Republic

SPI “E” or “E*”

SPI “R”

SPI “P” or “P+”

* CAFTA amends certain provisions of CBERA/CBTPA

cafta dr summary

Reference

General Note 29

CAFTA-DR Summary

SPI

P, P+

General Rules of Origin (Preference Criteria)

Wholly Obtained, Tariff Shift &/or RVC, Exclusively from Originating Materials; [Qualifying Goods]

Regional Value Content

Build-up, Build-down, Net Cost

Level of Documentation at Importation

Freeform Certification (10 data elements); Importer Knowledge

Verification Notification

Importer, At discretion may contact exporter

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

No further production; must stay under Customs control

Post-Importations

19 USC 1520(d)

MPF

Exempt for Originating Goods & Qualifying Goods

* Imports from CAFTA countries will lose GSP, CBERA & CBTPA eligibility upon implementation of FTA

slide40
Effective Date: 1/1/04

Expiration Date: None

General Note in HTS: GN 26

Special Indicator in HTS: CL

Regulation Cite: 19 CFR 10.400 et. seq.

US Code: 19 USC 3805 Note

Public Law: 108-77

Chile Free Trade Agreement

chile fta summary

Reference

General Note 26

Chile FTA Summary

SPI

CL

General Rules of Origin (Preference Criteria)

Wholly Obtained, Tariff Shift &/or RVC, Exclusively of Originating Materials

Regional Value Content

Build-up, Build-down

Level of Documentation at Importation

Freeform Certification (10 data elements); Sufficient Knowledge

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Must support no further production occurred in a 3rd country

Post-Importations

19 USC 1520(d)

MPF

Exempt for Originating Goods

* Imports from Chile lost GSP eligibility upon implementation of FTA (Jan 1, 2004)

generalized system of preferences
Effective Date: 1/1/76

Expiration Date: 12/31/08

General Note in HTS: GN 4

Special Indicator in HTS: A, A+, A*

Regulation Cite: 19 CFR 10.171 – 178a

US Code: 19 USC 2461 - 2467

Generalized System of Preferences
gsp summary

Reference

General Note 4

GSP Summary

SPI

A, A+, A*

General Rules of Origin (Preference Criteria)

Wholly Obtained, 35% Value Added + Substantial Transformation

Value Content

US cost and value may NOT count towards 35%

Level of Documentation at Importation

Knowledge (Form A no longer required)

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA, 19 USC 1514

MPF

Exempt for products of least-developed beneficiary developing countries regardless of whether a claim is made

slide44
Effective Date: 9/1/85

Expiration Date: None

General Note in HTS: GN 8

Special Indicator in HTS: IL

US Code: 19 USC 2112

Public Law: 99-47

Israel Free Trade Agreement

israel fta summary

Reference

General Note 8

Israel FTA Summary

SPI

IL

General Rules of Origin (Preference Criteria)

Wholly Growth, 35% Value Added + Substantial Transformation

Value Content

15% of US cost or value can be counted towards 35%

Level of Documentation at Importation

Knowledge, Form A (optional)

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA, 19 USC 1514

MPF

Exempt for all products, whether or not originating

qiz general information
Extension of ILFTA benefits to goods produced in designated regions outside of Israel

Company must be approved by Joint Committees

Separate requirements for inputs regulated by Joint Committees

Imported goods must meet the 35% value added + substantial transformation and imported directly requirement to receive benefits

QIZ General Information
slide48
Effective Date: 11/21/96

Expiration Date: None

General Note in HTS: GN 3(a)(v) & GSN 3(d)

Special Indicator in HTS: IL in HTS, N on 7501

Jordan Qualified Industrial Zone (QIZ)

jordan qiz summary

Reference

General Note 8 and 3(a)(v), General Statistical Note 3(d)

Jordan QIZ Summary

SPI

IL in HTS, but N on 7501

General Rules of Origin (Preference Criteria)

Wholly Growth, 35% Value Added + Substantial Transformation

Value Content

15% of US cost or value can be counted towards 35%

Level of Documentation at Importation

Knowledge

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Direct Shipment

Post-Importations

SIL/PEA, 19 USC 1514

MPF

No exemption

slide50
Effective Date: 12/29/04

Expiration Date: None

General Note in HTS: GN 3(a)(v) & GN 3(d)

Special Indicator in HTS: IL in HTS, N on 7501

US-Israel Free Trade Area Implementation Act: 69 FR 78094

Eligible company list at: Egypt Ministry of Foreign Trade and Industry Website (www.qizegypt.gov.eg)

Egypt Qualified Industrial Zone (QIZ)

egypt qiz summary

Reference

General Note 8 and 3(a)(v), General Statistical Note 3(d)

Egypt QIZ Summary

SPI

IL in HTS, but N on 7501

General Rules of Origin (Preference Criteria)

Wholly Growth, 35% Value Added + Substantial Transformation

Value Content

15% of US cost or value can be counted towards 35%

Level of Documentation at Importation

Knowledge

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Direct Shipment

Post-Importations

SIL/PEA, 19 USC 1514

MPF

No exemption

jordan free trade agreement
Effective Date: 12/17/01

Expiration Date: None

General Note in HTS: GN 18

Special Indicator in HTS: JO

US Code: 19 USC 2112

Public Law: 107-43

Jordan Free Trade Agreement
jordan fta summary

Reference

General Note 18

Jordan FTA Summary

SPI

JO

General Rules of Origin (Preference Criteria)

Wholly Growth, 35% Value Added + Substantial Transformation

Value Content

15% of US cost or value can be counted towards 35%

Level of Documentation at Importation

Knowledge

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA, 19 USC 1514

MPF

No exemption

morocco free trade agreement
Effective Date: 1/1/06

Expiration Date: None

General Note in HTS: GN 27

Special Indicator in HTS: MA

US Code: 19 USC 3805 note

Public Law: 108-302

Morocco Free Trade Agreement
morocco fta summary

Reference

General Note 27

Morocco FTA Summary

SPI

MA

General Rules of Origin (Preference Criteria)

Wholly Obtained, Substantial Transformation + 35% Valued Added, Tariff Shift

Value Content

Unlimited US content towards meeting 35%

Level of Documentation at Importation

Freeform Declaration (10 data elements); Deemed Certification

Verification Notification

Importer

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Imported Directly

Post-Importations

SIL/PEA or 19 USC 1514

MPF

No Exemption

* Imports from Morocco lost GSP eligibility upon implementation of FTA

slide56
Effective Date: 1/1/94

Expiration Date: None

General Note in HTS: GN 12

Special Indicator in HTS: CA / MX

Regulation Cite: 19 CFR 181

US Code: 19 USC 3301 - 3473

Public Law: 103-182

North American Free Trade Agreement

nafta summary

Reference

General Note 12

NAFTA Summary

SPI

MX, CA

General Rules of Origin (Preference Criteria)

Wholly Obtained, Tariff Shift &/or RVC, Wholly of Originating Materials, Exception to Tariff Shift, IT goods

Regional Value Content

Transaction Value, Net Cost

Level of Documentation at Importation

Certificate of Origin, CBP Form 434; Alternate CBP Form 434; Computer Generated CBP Form 434

Verification Notification

Exporter (Importer must provide C/O prior to verification)

Determination Notification

Exporter, Negative Determination issued to Importer

Post-Importations

19 USC 1520(d)

MPF

Exempt for Originating Goods

slide58
Effective Date: 1/1/04

Expiration Date: None

General Note in HTS: GN 25

Special Indicator in HTS: SG

US Code: 19 USC 3805 Note

Public Law: 108-78

Singapore Free Trade Agreement

singapore fta summary

Reference

General Note 25

Singapore FTA Summary

SPI

SG

General Rules of Origin

Wholly Obtained, Tariff Shift &/or RVC, Integrated Sourcing Initiative

Regional Value Content

Build-up, Build-down

Level of Documentation at Importation

Freeform Statement (10 data elements); Importer Knowledge

Verification Notification

Importer, At discretion may contact exporter

Determination Notification

Importer, Exporter if provided documentation to CBP

Transit/Transshipment

Must support no further production occurred in a 3rd country

Post-Importations

SIL/PEA or 19 USC 1514

MPF

Exempt for Originating Goods and ISI Goods