AGOA Renewal Recommendations Sought by USTR

Submit Your Comments By October 11, 2012

For 2012, there are 40 Sub-Saharan African countries which have been designated as beneficiary countries under the African Growth and Opportunity Act (AGOA).  This means that articles, including certain textile and apparel products, made in these countries are eligible upon importation to the US for duty-free treatment.

The US Trade Representative’s Office (USTR) has requested comments in order to develop recommendations on AGOA country eligibility for the 2013 calendar year.

In order to qualify as an AGOA beneficiary country is, among other things, the establishment (or progress towards) a market based economy, governance by the rule of law, the right to due process, and political pluralism.  In addition, economic policies to reduce poverty, a system to combat corruption and bribery, and the protection of internationally recognized worker’s rights are also required.

USTR is also interested in identifying countries and the extent to which child labor is used.

Where the US President determines that a beneficiary country is not making continual progress in meeting the eligibility requirements, he must terminate the designation of the country as a beneficiary of AGOA.

Countries under consideration for 2013 are the State of Eritrea, Democratic Republic of Congo, the Republics of South Sudan, Madagascar, Zimbabwe, Equatorial Guinea and Sudan, Somalia, and the Central African Republic which are not currently beneficiaries under the AGOA.

Public comments in connection with the annual review regarding country eligibility in relation to the above criteria, and also with respect to child labor, are requested for submission online at www.regulations.gov .  Enter the “docket number” USTR-2012-0026 on the home page (and click “search”) so that the case can be pulled up. 

You can thereafter find a reference to this notice by clicking “Notice” under the header “Document Type” on the search-results page and click on the link entitled “Submit a Comment.”

If you are unable to make a submission, or have a question related to an attachment or a confidential submission, you may contact Don Eiss, Trade Policy Staff Committee at (202) 395-3475.

All other non-technical or procedural questions should be directed to Constance Hamilton, Deputy Assistant U.S. Trade Representative for Africa, Office of the USTR at (202) 395-9514.

Questions/comments? Post below or email me at clark.deanna@gmail.com

Labeling Products as Being Made or Assembled in the USA

Both the Federal Trade Commission (FTC) and US Customs have distinct rules governing country of origin marking and qualifying claims of US origin.

The FTC’s focus is with regards to the labeling and advertising of products making claims of US origin.  This is because the FTC is charged with preventing deception and unfairness in the marketplace.  It therefore has the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin.  Naturally, where a product is being imported and it’s labeled “Made in USA,” it is likely going to raise some eyebrows without further explanation.

Traditionally, the FTC has required that a product labeled or advertised as Made in USA be "all or virtually all" made in the U.S.  While this is not clearly defined, the thrust of this rule is that the product itself is comprised of components that are of US origin, or virtually all of US origin.

US Customs interest in marking however, has to do with consumer preferences.  According to the case, United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940), the intention behind the marking law (19 U.S.C. 1304) was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product.  The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will."

US Customs, on the other hand, does not require any marking of Made in the USA when a product is of US origin.  Where this issue typically arises however, is in the case of an article whose components are of US origin but for which the final product is “assembled” in another country.

Customs has held that where the word “assembled” is used in conjunction with the origin statement to supply additional information, it has been found acceptable provided the additional information about where the watch was assembled was (1) not false or misleading, (2) appeared in close proximity to, and (3) was in a comparable font size to, the country of origin marking.

One point to note is that the FTCs rules tend to be more prohibitive than that of US Customs, so when in doubt, consult with the agency itself, such as at the FTC webpage entitled “Complying With the Made in USA Standard” http://business.ftc.gov/documents/bus03-complying-made-usa-standard or your attorney.

Questions/comments?  Post below or email me at clark.deanna@gmail.com

OWIT New York Networking Event - 6 PM Thurs. 9/13

Come join me this Thursday for the Fall networking event of the Organization of Women in International Trade - New York Chapter!

When: September 13, 2012, 6:00 PM - 8:00 PM

Location:  Forum Bar at 127 4th Avenue (btw. 12th and 13th streets) - conveniently located one block from Union Square

Cost: Members, Students, Government - $10.00 (USD)

Non-Members - $15.00 (USD)

To register, go to www.owitny.org and click on the “Events” tab or click here.

Hope to see you there!

An Importer’s Requirement to Retain Records

Sure, you know that it is important to keep business records, but did you know that it is against the law not to?

Importers are mandated under the law, and specifically under 19 U.S.C. 1509(a)(1)(A) and 19 CFR Part 163, to keep records for 5 years from the date of entry, and to make them readily available in the event Customs requests to review a transaction.

A primary issue as it relates to Customs and Recordkeeping is the ability to locate those records tracing backwards from the Customs Transaction.

 Luckily, most of the records that are required to be kept for Customs purposes are the same as those normally kept for business and tax purposes. 

Those that need to be kept include the

-        - Commercial Invoice

-        - Packing List

-        - Bill of Lading or Waybill (e.g., Air, Rail)

-        - Entry Summary

      As good practice, proofs of payment not only for the merchandise itself, but for the freight and customs broker fees, along with their invoices, together with any other declarations filed, such as a US Dept. of Fish and Wildlife Declaration form, a Statement of Non-Reimbursement form for an anti-dumping duty, or an Interim Footwear Invoice.

Every effort should be made to maintain records on-site going back at least 1 year, or such longer period as storage will permit.  In addition, when records are sent off-site for storage, a log should be kept identifying the records, where they are archived, and how to retrieve them.

Remember, the proper preparation and maintenance of complete and accurate transaction documentation is essential to both good commercial operations as well as Customs compliance.

Questions/comments?  Post below or email me at clark.deanna@gmail.com

Translating Numbers – Converting a “Compound Duty Rate” to an Equivalent “Ad Valorem” Duty Rate

Every type of imported product has a tariff classification number to identify it and a corresponding numerical figure that represents its duty rate.

The duty rate for most products is represented as a percentage value such as 19.7%.  When it is a percentage, a duty rate is referred to as an “Ad Valorem” rate of duty.

The concept of a duty rate is relatively simple except for when a product has a “compound rate” of duty, such as a watch.  Under the tariff, an example of a watch’s rate of duty is broken out into multiple components, four (4) in fact, in the following example (HTSUS* 9102.11.10):

Movement – 0.44¢ (cents)

Band/strap or bracelet – 14.0%

Case – 6.0%

Battery – 5.3%

On certain occasions however, there is a need to convert a compound rate of duty to a percentage, or Ad Valorem one, such as in the case of dinnerware sets classifiable under HTSUS Heading 8215.

As described by US Customs**, to convert a compound rate to an equivalent Ad Valorem rate, one.

(i)                  obtains the unit value of each article,

(ii)                applies the article’s listed compound rate of duty, and

(iii)               calculates the “equivalent Ad Valorem rate” by computing the percentage of the article’s value that the compound rate of duty amounts to. 

For example, suppose that a set classified in subheading 8215.20.0000, includes a knife that is separately classifiable in subheading 8211.91.5000.  The applicable rate of duty for the knife is “0.7¢ + 3.7%,” a compound duty rate.

Suppose that there are four knives included in the set and their total value is 32¢.  To obtain the unit value of a knife (i.e., the value of one knife), we divide 32¢ by 4 which equals 8¢.

Now, we apply the knife’s listed compound duty rate.  Plugging 8¢ into the duty rate, we get 0.7¢ + 3.7%(8¢).  This equals .996¢ per knife, which amounts to 12.45% of the knife’s value (i.e., .996 is 12.45% of 8¢). 

Therefore, 12.45% is the knife’s equivalent Ad Valorem rate. 

Sounds simple?  I didn’t say it would be, though it doesn’t have to be complicated either.  Give it a try!

Questions/comments?  Post below or email me at clark.deanna@gmail.com

* HTSUS stands for the "Harmonized Tariff Schedule of the United States" which can be found at the US International Trade Commission's website at www.usitc.gov

**Reference is made to HQ967248 (12/22/04)

Gift Sets and Other “Sets For Retail Sale”

Ever find yourself at the shopping mall debating over whether or not to buy a single product or to go ahead and splurge on the gift set instead?

After all, the gift set comes with all of these extra articles that you may be interested in using, but simply don’t know yet (because you haven't tried it) right?!

When it comes to a “set” for US Customs classification and valuation purposes, a set as the average consumer knows it, is not necessarily the same definition as that of US Customs.

 For one, in order to be considered a set, the products all need to work “in concert” together if you will.

Specifically, to be a “set for retail sale,” the set must

ü  Consist of at least 2 different articles classifiable in different headings,

ü  Consist of products put up together to meet a particular need or carry out a specific activity, and

ü  Be put up in a manner suitable for sale directly to users without repacking

An example of this would be a tube of a skin exfoliant that comes packaged with a loofah sponge.  These two articles are sold together to carry out the specific activity of skin softening or other skin care.

When a set is does not meet the above standard, that is, where an item is imported with another article and packaged together but are NOT intended to meet a particular need or carry out a common specific activity, such as in the case of a facial cream and a finger nail file being imported together, then each item should be classified separately.

Questions/comments?  Post below or email me at clark.deanna@gmail.com.

AGOA Third Country Fabric Provision Extended to 2015

With the AGOA’s Favorable Duty Rates, Apparel Importers Can Find Greater Savings When Sourcing From African Countries

The cost of an imported product can vary tremendously when the amount of duty to be paid is factored into the equation, and in the case of apparel, it can run anywhere from an average of $16 to $32 extra for every $100 imported into the US, when made in a foreign country such as China.

The African Growth and Opportunity Act (AGOA) has a provision for imports of apparel when sourced from certain Sub-Saharan African countries, where such clothing originates from either African or US components.  It provides for the duty-free treatment of these products which means rather than paying the additional $16-$32 in duties for every $100 of imported apparel, $0 in duties is instead owed.

Within the AGOA is a “Third Country Fabric” provision which allows fabrics from other countries to be used in the manufacturing process and still qualify for the benefit of “AGOA treatment,” i.e., duty free treatment, of the product.

Last Friday, August 10, 2012, President Obama signed the bill (H.R. 5986) which had been passed on August 2, 2012 by the House and Senate to amend the African Growth and Opportunity Act’s (AGOA) “Third Country Fabric Program” as well as to add South Sudan to the list of countries eligible for designation under the AGOA.

With this passage, apparel importers can now continue to place orders with African manufacturers with the knowledge that these duty savings will continue for the next few years, saving them money, and perhaps saving us consumers some as well.

Questions/comments?  Post below or email me at clark.deanna@gmail.com