CBP Issues Interim Rule to Implement Colombia TPA Customs Provisions

September 25, 2012 by Tim Warren|Top News

CBP will issue an interim rule, effective Sept. 26 that amends CBP regulations to implement the customs-related provisions of the U.S.-Colombia Trade Promotion Act (CTPA). Comments must be received by Nov. 26. The notice is ran in the Federal Register Sept. 26.

(Presidential Proclamation 8818, published on May 18, amended the Harmonized Tariff Schedule to implement the CTPA, effective for goods of Colombia entered or withdrawn from warehouse for consumption on or after May 15. ITC Report 4320 contains Annexes I and II to the Proclamation and lists all the 2012 and later year amendments to the HTS for the CTPA.¹ See ITT's Online Archives 12030929 for summary.)

Overview of Interim Regulatory Amendments

The following is an overview of some of the interim regulations' amendments to 19 CFR Part 10 (articles conditionally free, subject to a reduced rate, etc.) and Part 24 (Customs financial and accounting procedure). Most of the interim regulatory amendments occur in 19 CFR Part 10, including the creation of a new Subpart T to provide for the CTPA.

Temporary Importations Under Bond

Section 10.31(f) concerns temporary importations under bond. It's amended by adding references to certain goods originating in Colombia for which -- like goods originating in Canada, Mexico, Singapore, Chile, Morocco, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic, Costa Rica, Bahrain, Oman, Peru, or Korea -- no bond or other security will be required when imported temporarily for prescribed uses.

Import Requirements for Claiming CTPA Preferential Treatment, Certification, Etc.

Claiming preferential treatment. Section 10.3003 sets forth the procedure for claiming CTPA preferential tariff treatment at the time of entry and says an importer may make a claim for CTPA preferential tariff treatment based on a certification by the importer, exporter, or producer, or the importer’s knowledge that the good is an originating good. This section also provides that when an importer has reason to believe that a claim is based on inaccurate information, the importer must correct the claim and pay any duties that may be due.

Certification of treatment. Section 10.3004 requires a U.S. importer, upon request, to submit a copy of the certification of the importer, exporter, or producer if the certification forms the basis for the CTPA preferential treatment claim. This section specifies the information that must be included on the certification, sets forth the circumstances under which the certification may be prepared by the exporter or producer of the good, and provides that the certification may be used either for a single importation or for multiple importations of identical goods.

Importer obligations. Section 10.3005 sets forth certain importer obligations regarding the truthfulness of information and documents submitted in support of a claim for preferential tariff treatment.

Non-commercial, low-value shipments. Section 10.3006 provides that the certification is not required for certain non-commercial or low-value importations.

Maintenance of records. Section 10.3007 implements CTPA provisions concerning the maintenance of relevant records regarding the imported good.

Denial of CTPA tariff benefits. Section 10.3008 authorizes the denial of CTPA tariff benefits if the importer fails to comply with any of the requirements under 19 CFR Part 10, Subpart R.

Export Certification Requirements for U.S. Goods to Colombia

Section 10.3009 sets forth certain obligations of a person who completes and issues a certification for a good exported from the U.S. to Colombia. Paragraphs (a) and (b) of this section require a person who completes such a certification to provide a copy of the certification to CBP upon request and to give prompt notification of any errors in the certification to every person to whom the certification was given. Paragraph (c) concerns the recordkeeping requirements that apply to a person who completes and issues such a certification.

Post-Importation Duty Refund Claims Allowed Within 1 Year of Import

Sections 10.3010 through 10.3012 allow an importer who did not claim CTPA tariff benefits on a qualifying good at the time of importation to apply for a refund of any excess duties at any time within one year after the date of importation. Such a claim may be made even if liquidation of the entry would otherwise be considered final under other provisions of law.

CTPA Rules of Origin

Sections 10.3013 through 10.3025 provide the implementing regulations regarding the rules of origin provisions of HTS General Note 34, as follows:

Definitions. Section 10.3013 sets forth terms that are defined for purposes of the rules of origin as found in the CTPA Implementation Act.

General rules of origin. Section 10.3014 sets forth the basic rules of origin established in the CTPA, Implementation Act, and HTS General Note 34. The provisions of this section apply both to (i) the determination of the status of an imported good as an originating good for purposes of preferential tariff treatment and to (ii) the determination of the status of a material as an originating material used in a good which is subject to a determination under HTS General Note 34.

Section 10.3014(a) of this section specifies those goods that are originating goods because they are wholly obtained or produced entirely in the territory of one or both of the Parties.
Section 10.3014 (b) of this section provides that goods that have been produced entirely in the territory of one or both of the Parties from non-originating materials, each of which undergoes an applicable change in tariff classification and satisfies any applicable regional value content or other requirement set forth in HTS General Note 34, are originating goods. Essential to the rules in this paragraph are the specific rules of HTS General Note 34 which are incorporated by reference.
Paragraph 10.3014 (c) to this section provides that goods that have been produced entirely in the territory of one or both of the Parties exclusively from originating materials are originating goods.

Value content. Section 10.3015 concerns the basic rules that apply for purposes of determining whether an imported good satisfies a minimum regional value content (RVC) requirement. Section 10.3016 sets forth the rules for determining the value of a material for purposes of calculating the RVC of a good as well as for purposes of applying the de minimis rules.

Accumulation. Section 10.3017 sets forth the rule by which originating materials from the territory of a Party that are used in the production of a good in the territory of the other Party will be considered to originate in the territory of that other country. In addition, this section also establishes that a good that is produced by one or more producers in the territory of one or both of the Parties is an originating good if the good satisfies all of the applicable requirements of the rules of origin of the CTPA.

De minimis. Section 10.3018 sets forth de minimis rules for goods that may be considered to qualify as originating goods even though they fail to qualify as originating goods under the rules specified in Section 10.3014. There are a number of exceptions to the de minimis rule set forth in CTPA Annex 4.6 as well as a separate rule for textile and apparel goods.

Fungible goods and materials. Section 10.3019 sets forth the rules by which “fungible” goods or materials may be claimed as originating.

Accessories, spare parts, or tools. Section 10.3020 specifies the conditions under which a good's standard accessories, spare parts, or tools are: (1) treated as originating goods; and (2) disregarded in determining whether all non-originating materials undergo an applicable change in tariff classification under HTS General Note 34.

Goods classifiable as "goods put up in sets". Section 10.3021 provides that, notwithstanding the specific rules of HTS General Note 34, goods classifiable as "goods put up in sets for retail sale" as provided for in HTS General Rule of Interpretation (GRI) 3, will not qualify as originating goods unless: (1) each of the goods in the set is an originating good; or (2) the total value of the non-originating goods in the set does not exceed 15 percent of the adjusted value of the set, or 10 percent of the adjusted value of the set in the case of textile or apparel goods.

Packaging and packing materials. Sections 10.3022 and 10.3023 provide that retail packaging materials and packing materials for shipment are to be disregarded with respect to their actual origin in determining whether non-originating materials undergo an applicable change in tariff classification under HTS General Note 34. These sections also set forth the treatment of packaging and packing materials for purposes of the regional value content requirement of the note.

Indirect materials. Section 10.3024 provides that indirect materials, as defined in Section 10.3013(h), are disregarded for the purpose of determining whether a good is originating.

Transit and transshipment. Section 10.3025 sets forth the rule that an originating good loses its originating status and is treated as a non-originating good if, subsequent to production in the territory of one or both of the Parties that qualifies the good as originating, the good: (1) undergoes production outside the territories of the Parties, other than certain specified minor operations; or (2) does not remain under the control of customs authorities in the territory of a non-Party.

Origin Verifications and Determinations (General and for Textiles & Apparel)

Section 10.3026 concerns the conduct of verifications to determine whether imported goods are originating goods entitled to CTPA preferential tariff treatment. This section also governs the conduct of verifications directed to producers of materials that are used in the production of a good for which CTPA preferential duty treatment is claimed. Section 10.3027 sets forth the verification and enforcement procedures specifically relating to trade in textile and apparel goods.

Section 10.3028 provides the procedures that apply when preferential tariff treatment is denied on the basis of an origin verification conducted under Subpart T of Part 10. Section 10.3029 concerns the denial of preferential tariff treatment in situations in which there is a pattern of conduct by an importer, exporter, or producer of false or unsupported FTA preference claims.

Penalty Exceptions for CTPA Transactions

Section 10.3030 concerns the general application of penalties to CTPA transactions as follows:

Exception for importer corrected claims. Section 10.3031 concerns an exception to the application of penalties in the case of an importer who promptly and voluntarily makes a corrected claim and pays any duties owing.

Exception for exporter notification of incorrect certification. Section 10.3032 concerns an exception to the application of penalties in the case of a U.S. exporter or producer who promptly and voluntarily provides notification of the making of an incorrect certification with respect to a good exported to Colombia

Prompt & voluntary corrections or notifications. Section 10.3033 sets forth the circumstances under which the making of a corrected claim or certification by an importer or the providing of notification of an incorrect certification by a U.S. exporter or producer will be considered to have been done “promptly and voluntarily”. Corrected claims or certifications that fail to meet these requirements are not excepted from penalties, although the U.S. importer, exporter, or producer making the corrected claim or certification may, depending on the circumstances, qualify for a reduced penalty as a prior disclosure under 19 USC 1592(c)(4). This section also specifies the content of the statement that must accompany each corrected claim or certification, including any certifications and records demonstrating that a good is an originating good.

Goods Returned After Repair or Alteration

Section 10.3034 concerns duty-free treatment for goods re-entered after repair or alteration in Colombia.

MPF is Not Applicable to Qualifying Originating Goods Under CTPA

An amendment is made to Section 24.23(c), to provide that the merchandise processing fee (MPF) is not applicable to goods that qualify as originating goods under the CTPA that are entered, or withdrawn from warehouse for consumption, on or after May 15.

(Other minor conforming changes have been made to 19 CFR Parts 162, 163, and 178. See interim regulations for complete details.)

¹The modifications to the HTS to implement the CTPA include the addition of a new General Note 34, incorporating the relevant CTPA rules of origin, and the insertion throughout the HTS of the preferential duty rates applicable to individual products under the CTPA where the special program indicator (SPI) "CO" appears in the "Special" rate of duty subcolumn. The HTS modifications also include a new Subchapter XXI to Chapter 99 to provide for temporary tariff-rate quotas and applicable safeguards implemented by the CTPA.

²The U.S.-Colombia TPA Implementation Act was enacted on October 21, 2011 and requires that regulations be prescribed as necessary to implement the provisions of the CTPA.

(See ITT's Online Archives 12051815 for summary of the CTPA taking effect . See ITT's Online Archives 12052229 for summary of the ITC posting Revision 2 of the 2012 HTS which contains the rates for the CTPA. See ITT's Online Archives 12051824 for summary of CBP's instructions for the CTPA, including an overview of the CTPA rules of origin and instructions for handling WCO tariff number discrepancies, process for verifying importer claims, the SPI "CO", post-importation claims and protests, etc.)

CBP Contacts:

Textile Operational Aspects -- Nancy Mondich (202) 863-6524

Other Operational Aspects -- Katrina Chang (202) 863-6532

Legal Aspects -- Karen Greene (202) 325-0041

(Docket Number USCBP-2012-0017, FR Pub 09/26/12)