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AGOA GSP Provisions. December 8, 2003. Overview. Title 1 of the Trade & Development Act of 2000 is the African Growth and Opportunity Act (AGOA)

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AGOA GSP Provisions

December 8, 2003


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Overview

  • Title 1 of the Trade & Development Act of 2000 is the African Growth and Opportunity Act (AGOA)

  • The Act provides for the duty-free treatment of certain non-textile articles previously ineligible for preferential treatment under the Generalized System of Preferences (GSP) (19 U.S.C. 2461 et seq.)

  • GSP benefits are in addition to the AGOA duty-free and quota-free treatment of certain textile and apparel articles.


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AGOA Beneficiary Countries for GSP Articles

  • The President Has Designated 38 Countries As Beneficiary Sub-Saharan African Countries (SSA)

  • ALL of These Countries Are Eligible for GSP (Non-textile) Benefits.


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AGOA Beneficiary Countries for GSP Articles

  • GSP is extended to SSA countries until September 30, 2008

  • GSP benefits for the rest of the world expire on December 31, 2006

  • For SSA, President allowed all 4,600 items on standard GSP product list

  • PLUS for SSA an additional 1,800 tariff line items not part of GSP product list which were considered import sensitive

  • Currently, a Pending Bill would Extend AGOA benefits until 2015


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Examples of Articles previously ineligible for GSP treatment which can now be entered duty free under AGOA if made in a SSA country:

Watches

Electronic Articles

Footwear, Handbags, Luggage, Flat Goods, Work Gloves, and Leather Apparel

Certain Semi-Manufactured and Manufactured Glass Products

Other Miscellaneous Articles

“Import Sensitive” Articles


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GSP Articles Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

  • 2001: Total Value of US Imports From SSA Under the GSP and AGOA = US $7.5 Billion

  • 2002: Total Value of US Imports From SSA Under the GSP and AGOA = US $8.3 Billion

  • 2003, January through September: Total Value of US Imports From SSA Under the GSP and AGOA = US $9.6 Billion


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GSP Articles Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Value of US Imports from Sub-Saharan Africa

Source: US ITC/Dept. of Commerce


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GSP Articles Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Value of US Imports from Sub-Saharan Africa


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Requirements for Duty Free Entry of GSP Articles which can now be entered duty free under AGOA if made in a SSA country:

Product of SSA Beneficiary Country

35% Value Requirement

Imported Directly into US

19 CFR 10.175; 10.176; 10.178a

GSP Requirements Under AGOA


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

“Product of” Requirement

  • The Article Must be the Growth, Product, or Manufacture of the Beneficiary Sub-Saharan African Country

    • Article Must Either be Made Entirely of Materials Which Originate in 1 or More SSA, or

    • If Made of Materials imported into SSA from 1 or more Non-Beneficiary Country, Those Materials Must be Substantially Transformed into a New and Different Article of Commerce


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Substantial Transformation For “Product of” Requirement

  • Foreign Materials Must Undergo A Single Substantial Transformation In Order to Qualify for the “Product of” Requirement

  • Substantial Transformation Results When a New or Different Article Emerges with a New Name, Character or Use


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Substantial Transformation for “Product of” Requirement

  • Example 1

    • Leather made in Argentina is imported into RSA

    • In RSA, leather is cut, sewn and assembled

    • Metal buckles made in RSA added to produce finished belts

  • The processing in RSA results in a single substantial transformation of the imported leather into a new and different article of commerce—the finished belt, which is a “product of” South Africa


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Substantial Transformation for “Product of” Requirement

  • Example 2

    • Raw rubber made in India is imported into Mauritius

    • In Mauritius, rubber is melted and formed by a mold into a finished rubber boot

  • Producing the finished boot results in a single substantial transformation of the imported rubber into a “product of” Mauritius


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Double Substantial Transformation for Foreign Materials

  • Foreign Materials Must Undergo A Double Substantial Transformation In Order To Qualify To Be Counted Toward The 35% Value Requirement

  • There Must Be A Finding That There Is An Intermediate Article In Order For A Double Substantial Transformation To Occur


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Double Substantial Transformation

  • Example 1

    • Leather from Korea is imported into Tanzania

    • In Tanzania, leather is cut to shape to create 6 components comprising the outer surface of a travel bag

    • The components are assembled with 20 other metal, plastic and vinyl components to create the finished bag


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Double Substantial Transformation Example 1 (Cont.)

  • Cutting the leather to shape to create bag components substantially transforms the leather into intermediate materials which are substantially transformed a second time when assembled into the finished bag. Because the leather is substantially transformed twice in Tanzania, its cost or value may be counted toward satisfying the 35% value-content requirement


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Double Substantial Transformation

  • Example 2

    • 50 fabricated components from China, including resistors, capacitors, diodes, transistors, and integrated circuits, are imported into Kenya

    • In Kenya, they inserted into and soldered to a Chinese printed circuit board

    • The finished printed circuit board assembly (PCBA) is then assembled with numerous other components to produce a printer for a personal computer


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Double Substantial Transformation Example 2 (Cont.)

  • Producing the PCBA results in one substantial transformation, and the subsequent assembly of the PCBA with other components to create the printer results in a second substantial transformation of the Chinese PCBA components


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Value-Content Requirement

  • At Least 35% of the Full Appraised Value of the Article Must be Attributed to:

    • The Cost or Value of Materials Produced in One or More Beneficiary Sub-Saharan African Countries; plus

    • The Direct Costs of Processing Operations Performed in a Beneficiary Sub-Saharan African country


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Value-Content Requirement (Cont.)

  • For purposes of determining compliance with the 35% value content requirement, an amount not to exceed 15% of the full appraised value may be attributed to the cost or value of materials produced in the US


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

  • Example

    • 50% of Value Is Attributed to Leather Imported From Argentina

    • 30% of Value Is Attributed to Metal Imported From US

    • 20% of Value Is Attributed to Processing and Assembly in Mauritius


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Direct Cost of Processing

  • Costs Either Directly Incurred or Reasonably Allocated to the Growth, Production, Manufacture, or Assembly of Article

    • Actual Labor Costs

      • Such as Fringe Benefit; On the Job Training; Cost of Engineering; First Line Supervisory; Quality Control

    • Dies, Molds, and Tooling

    • Research and Development

    • Cost of Inspecting and Testing (19 CFR 10.178)


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Imported Directly Requirement

  • The Article Must be Imported Directly from a SSA country to the US

  • Three definitions of “Imported Directly”


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Imported Directly:

  • Direct Shipment from SSA to US without passing through the Territory of any Non-Beneficiary Country

  • Shipment from SSA to US through a Non-Beneficiary Country

    • May not enter commerce and US is Final Destination

  • Shipment from SSA to US through a Non-Beneficiary Country and US is not Final Destination on Documents

    • May not enter commerce and must remain under Customs Authority


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

“Imported Directly:

  • Direct shipment from SSA to US without passing through the Territory of Any Non-beneficiary Country

    • No limitation to the Number of SSA Countries which may “Contribute” to Production of a Product

    • Merchandise can undergo operations such as sorting, grading, testing, packing, affixing labels, preservation, etc. in any SSA country


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Imported Directly

  • Example

    • Oranges Grown in Uganda

    • Oranges Sent to Tanzania Where They Are Sorted and Packed

    • Oranges Are Sent Through Mozambique to South Africa

    • Oranges Shipped Directly From South Africa to the US


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Imported Directly

  • Shipment from SSA to US through a Non-Beneficiary Country only if:

    • The merchandise does not enter into the commerce of any Non-Beneficiary Country, and

    • Invoice, Bills of Lading, and other Shipping Documents show US as the Final Destination


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

Imported Directly

  • Example

    • Lemons Grown in Ethiopia

    • Lemons Sent to Kenya Where They Are Loaded on a Ship Going to France

    • In France the Lemons Are Transferred to a Ship Going to the US

    • The Invoice and Bill of Lading Accompanying the Shipment From Ethiopia Show US As the Final Destination


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

“Imported Directly”

  • Shipment From a SSA to US Through a Non-beneficiary Country and the Invoices and Other Documents Do Not Show US As the Final Destination Only If:

    • Goods Remained Under the Control of the Customs Authority of the Intermediate Country

    • Goods Did Not Enter the Commerce of That Intermediate Country


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

“Imported Directly” (Cont.)

  • Shipment From a SSA to US Through a Non-beneficiary Country and the Invoices and Other Documents Do Not Show US As the Final Destination Only If:

    • The Transaction That Causes the Goods to Be Imported Into the US Must Be Between the US Importer and the Producer or the Producer’s Agent

    • Goods Were Not Subjected to Operations Other Than Loading and Unloading or Preservation


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

  • Example

    • A Producer of Baskets in Lesotho Ships Baskets to Hamburg, Germany for Storage in a Bonded Warehouse

    • Shipping Documents Do Not Show U.S. As the Final Destination and The Baskets Are Only Loaded and Unloaded

    • Orders Are Received by the Producer’s Agent in Germany From Buyers From Various Countries, Including the US

    • Baskets Are Shipped From Germany to the U.S.

    • Does This Transaction Qualify?


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GSP Requirements Under AGOA which can now be entered duty free under AGOA if made in a SSA country:

  • Answer

    • The Baskets Are Considered “Imported Directly” Under the Third Definition

      • Because the Baskets Are Stored in a Bonded Warehouse, They Are Considered to Be Under the Control of Customs in Germany

      • The Baskets Did Not Enter the Commerce of Germany Except for a Sale Other Than at Retail

      • The Transaction Which Caused the Merchandise to Be Imported Was Between the U.S. Importer and the Producer’s Agent?


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Electronic Ruling Requests which can now be entered duty free under AGOA if made in a SSA country:

  • Determine Applicability of Trade Programs

  • Must Concern Prospective Shipments

  • Excludes Requests Requiring a Sample

  • Legally Binding

  • Provides for Uniformity Across Ports


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Electronic Ruling Requests which can now be entered duty free under AGOA if made in a SSA country:

  • eRuling Request Procedures


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