Free Trade Agreements and Special Trade Programs

1. Free Trade Agreements and Special Trade Programs Rick O’Connell Assistant Area Director, Trade JFK International Airport Thursday, November 13, 2008

2. 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

3. 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

5. 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)

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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?

15. Can be in any format CBP requires certain data elements Must be submitted upon request May be submitted electronically Certification/Statement/Declaration Importer Requirement

16. Importer Exporter Producer Description of Good Classification Data Elements Data Elements • Preference Criteria or Rule of Origin • Single Shipment • Multiple Shipment • Authorized Signature • Certification

17. 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:

18. 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

19. Comparison Chart Available on CBP.gov

23. Preferential Trade Agreements & Trade Programs Synopsis(Non-Textile) Trade Agreements Branch Special Enforcement Division Commercial Targeting and Enforcement May 2007

24. 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

25. 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

26. 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 )

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

37. 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

38. 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

39. 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

40. 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

41. 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)

42. 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

43. 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

44. 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

45. 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

46. Qualified Industrial Zone (QIZ)

47. 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

48. 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)

49. 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

50. 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)