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

Reference Material - Websites  – U.S. Trade Representative  – International Trade Commission  – U.S. Customs and Border Protection (click “Trade”, “Trade Programs”, then “International Agreements”  – U.S. Government (Departments of Agriculture, Commerce, State, Treasury and the Office of the United States Trade Representative) interagency effort  – Office of Textiles and Apparel

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

FREE TRADE AGREEMENTS / SPECIAL TRADE PROGRAMSGENERAL NOTESPI African Growth and Opportunity Act (AGOA) GN 16D Andean Trade Preferences Act (ATPA) & Andean Trade Promotion and Drug Eradication Act (ATPDEA) GN 11J, J*, J+ Australia Free Trade Agreement (AFTA) GN 28AU Bahrain Free Trade Agreement (BFTA) GN 30BH Caribbean Basin Economic Recovery Act (CBERA) and Caribbean Basin Trade Partnership Act (CBTPA) GN 7/ GN 17E, E* & R Central America – Dominican Republic Free Trade Agreement (CAFTA-DR) GN 29P, P+ Chile Free Trade Agreement (CFTA) GN 26CL Generalized System of Preferences (GSP) GN 4A, A+, A* Israel Free Trade Area, West Bank, Gaza Strip, Qualified Industrial Zones (ILFTA) GN 8IL, N (QIZ) Jordan Free Trade Area (JFTA) GN 18JO Morocco Free Trade Agreement (MFTA) GN 27MA North American Free Trade Agreement (NAFTA) GN 12CA, MX Oman Free Trade Agreement None yet Singapore Free Trade Agreement (SFTA) GN 25SG, (ISI provision)

1.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. a)Jordan QIZ 11/21/96 b)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)

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

 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

 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 Origin The NAFTA Model Preference Criterion

 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

 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 Origin The GSP Model Objectives

 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

 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

 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

 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?

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

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

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  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

Comparison Chart Available on CBP.gov

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 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

 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 a  US Code: 19 USC 3706  Public Law: AGOA References

AGOA Summary ReferenceGeneral Note 16 SPID General Rules of OriginWholly Obtained, 35% Value Added + Substantial Transformation Value Content15% of US cost & value may count towards 35% Level of Documentation at Importation Knowledge Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA, 19 USC 1514 MPFNo exemption ( but products of least-developed beneficiary developing countries General Note 4 (b)(i) are exempt )

 Expiration Date: 06/30/07  General Note in HTS: GN 11  Special Indicator in HTS: J, J*, J+  Regulation Cite: 19 CFR – 207 &  US Code: 19 USC  Public Law: ATPA/ATPDEA References

ATPA/ATPDEA Summary ReferenceGeneral Note 11 SPIJ, J*, J+ General Rules of Origin (Preference Criteria) Wholly Growth, 35% Value Added + Substantial Transformation Regional Value Content15% 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 NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA, 19 USC 1514 MPFNo exemption

Australia Free Trade Agreement  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:

Australia FTA Summary ReferenceGeneral Note 28 SPIAU General Rules of Origin (Preference Criteria) Wholly Obtained, Tariff Shift &/or RVC, Exclusively from Originating Materials, Other Qualifying Method Regional Value ContentBuild-up, Build-down, Net Cost Level of Documentation at Importation Freeform Statement (10 data elements); Importer Knowledge Verification NotificationImporter, At discretion may contact exporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentMust support no further production occurred in a 3 rd country Post-ImportationsSIL/PEA or 19 USC 1514 MPFExempt for Originating Goods

 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: Bahrain Free Trade Agreement

Bahrain FTA Summary ReferenceGeneral Note 30 SPIBH General Rules of Origin (Preference Criteria) Wholly Growth, 35% Value Added + Substantial Transformation; Tariff Shift for specific goods Value ContentUnlimited US content towards meeting 35% Level of Documentation at Importation Supporting Declaration; Importer Knowledge Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA, 19 USC 1514 MPFExempt for originating goods

 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  US Code: 19 USC  Public Law: Caribbean Basin Economic Recovery Act

CBERA Summary ReferenceGeneral Note 7 SPIE, E* General Rules of Origin (Preference Criteria) Wholly Growth, 35% Value Added + Substantial Transformation Value Content15% of US cost or value can be counted towards 35% Level of Documentation at Importation Knowledge Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA, 19 USC 1514 MPFExempt for all goods, whether or not they are originating

 Expiration Date: 9/30/08  General Note in HTS: GN 17  Special Indicator in HTS: R  Regulation Cite: 19 CFR  US Code: 19 USC  Public Law: Caribbean Basin Trade Preferences Act

CBTPA Summary ReferenceGeneral Note 17 SPIR General Rules of Origin (Preference Criteria) Wholly Obtained, Good originates according to the NAFTA rules of origin Regional Value ContentIf applicable per GN 12 Level of Documentation at Importation CPB Form 450, Signed by the exporter Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA, 19 USC 1514 MPFExempt for all goods, whether or not they are originating

Central America-Dominican Republic Free Trade Agreement  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:

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)* 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 ReferenceGeneral Note 29 SPIP, P+ General Rules of Origin (Preference Criteria) Wholly Obtained, Tariff Shift &/or RVC, Exclusively from Originating Materials; [Qualifying Goods] Regional Value ContentBuild-up, Build-down, Net Cost Level of Documentation at Importation Freeform Certification (10 data elements); Importer Knowledge Verification NotificationImporter, At discretion may contact exporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentNo further production; must stay under Customs control Post-Importations19 USC 1520(d) MPFExempt for Originating Goods & Qualifying Goods * Imports from CAFTA countries will lose GSP, CBERA & CBTPA eligibility upon implementation of FTA

Chile Free Trade Agreement  Effective Date: 1/1/04  Expiration Date: None  General Note in HTS: GN 26  Special Indicator in HTS: CL  Regulation Cite: 19 CFR et. seq.  US Code: 19 USC 3805 Note  Public Law:

Chile FTA Summary ReferenceGeneral Note 26 SPICL General Rules of Origin (Preference Criteria) Wholly Obtained, Tariff Shift &/or RVC, Exclusively of Originating Materials Regional Value ContentBuild-up, Build-down Level of Documentation at Importation Freeform Certification (10 data elements); Sufficient Knowledge Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentMust support no further production occurred in a 3 rd country Post-Importations19 USC 1520(d) MPFExempt for Originating Goods * Imports from Chile lost GSP eligibility upon implementation of FTA (Jan 1, 2004)

 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 – 178a  US Code: 19 USC Generalized System of Preferences

GSP Summary ReferenceGeneral Note 4 SPIA, A+, A* General Rules of Origin (Preference Criteria) Wholly Obtained, 35% Value Added + Substantial Transformation Value ContentUS cost and value may NOT count towards 35% Level of Documentation at Importation Knowledge (Form A no longer required) Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA, 19 USC 1514 MPF Exempt for products of least-developed beneficiary developing countries regardless of whether a claim is made

Israel Free Trade Agreement  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 FTA Summary ReferenceGeneral Note 8 SPIIL General Rules of Origin (Preference Criteria) Wholly Growth, 35% Value Added + Substantial Transformation Value Content15% of US cost or value can be counted towards 35% Level of Documentation at Importation Knowledge, Form A (optional) Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA, 19 USC 1514 MPFExempt for all products, whether or not originating

Qualified Industrial Zone (QIZ)

 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

Jordan Qualified Industrial Zone (QIZ)  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 QIZ Summary ReferenceGeneral Note 8 and 3(a)(v), General Statistical Note 3(d) SPIIL in HTS, but N on 7501 General Rules of Origin (Preference Criteria) Wholly Growth, 35% Value Added + Substantial Transformation Value Content15% of US cost or value can be counted towards 35% Level of Documentation at Importation Knowledge Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentDirect Shipment Post-ImportationsSIL/PEA, 19 USC 1514 MPFNo exemption

Egypt Qualified Industrial Zone (QIZ)  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  Eligible company list at: Egypt Ministry of Foreign Trade and Industry Website (

Egypt QIZ Summary ReferenceGeneral Note 8 and 3(a)(v), General Statistical Note 3(d) SPIIL in HTS, but N on 7501 General Rules of Origin (Preference Criteria) Wholly Growth, 35% Value Added + Substantial Transformation Value Content15% of US cost or value can be counted towards 35% Level of Documentation at Importation Knowledge Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentDirect Shipment Post-ImportationsSIL/PEA, 19 USC 1514 MPFNo exemption

 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: Jordan Free Trade Agreement

Jordan FTA Summary ReferenceGeneral Note 18 SPIJO General Rules of Origin (Preference Criteria) Wholly Growth, 35% Value Added + Substantial Transformation Value Content15% of US cost or value can be counted towards 35% Level of Documentation at Importation Knowledge Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA, 19 USC 1514 MPFNo exemption

 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: Morocco Free Trade Agreement

Morocco FTA Summary ReferenceGeneral Note 27 SPIMA General Rules of Origin (Preference Criteria) Wholly Obtained, Substantial Transformation + 35% Valued Added, Tariff Shift Value ContentUnlimited US content towards meeting 35% Level of Documentation at Importation Freeform Declaration (10 data elements); Deemed Certification Verification NotificationImporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentImported Directly Post-ImportationsSIL/PEA or 19 USC 1514 MPFNo Exemption * Imports from Morocco lost GSP eligibility upon implementation of FTA

North American Free Trade Agreement  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  Public Law:

NAFTA Summary ReferenceGeneral Note 12 SPIMX, 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 ContentTransaction Value, Net Cost Level of Documentation at Importation Certificate of Origin, CBP Form 434; Alternate CBP Form 434; Computer Generated CBP Form 434 Verification NotificationExporter (Importer must provide C/O prior to verification) Determination NotificationExporter, Negative Determination issued to Importer Post-Importations19 USC 1520(d) MPFExempt for Originating Goods

Singapore Free Trade Agreement  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:

Singapore FTA Summary ReferenceGeneral Note 25 SPISG General Rules of OriginWholly Obtained, Tariff Shift &/or RVC, Integrated Sourcing Initiative Regional Value ContentBuild-up, Build-down Level of Documentation at Importation Freeform Statement (10 data elements); Importer Knowledge Verification NotificationImporter, At discretion may contact exporter Determination NotificationImporter, Exporter if provided documentation to CBP Transit/TransshipmentMust support no further production occurred in a 3 rd country Post-ImportationsSIL/PEA or 19 USC 1514 MPFExempt for Originating Goods and ISI Goods