ATPDEA Brassiere Provision

1
ATPDEABrassiere Provision

• Customs and Border Protection
• 2003

2
Andean Trade Promotion and Drug Eradication Act

• H.R. 3009
• Public Law 107-210
• Signed into law on August 6, 2002
• Will expire on December 31, 2006
• Andean Trade Promotion and Drug Eradication Act
  (ATPDEA)

3
Andean Trade Promotion and Drug Eradication Act
(ATPDEA)
Benefits

• Preferential Treatment for Certain Textiles and
  Apparel and Luggage
• Protections Against Transshipment

Obligations
4
ATPDEA Eligible Countries

• Colombia
• Ecuador
• Peru
• Bolivia

5
Preference Groups A-E

• Apparel Assembled from
• A US Fabric or US Components from US or Andean
  yarns
• B Chief Value Llama, Alpaca, or Vicuna Andean
  Fabrics/Components from Andean yarns
• C NAFTA Short Supply
• D Designated Short Supply
• E Combination of Groupings A through D

6
Preference Groups F - I

• Apparel Assembled from
• F Handloomed, Handmade, or Folklore Textile
  and Apparel Articles
• G Brassieres Assembled in the US/Andean
  Beneficiary Countries
• H Textile Luggage Assembled from US Fabrics
  and Yarns
• I Apparel Assembled from Regional Fabrics or
  Components, Whether or Not in Combination with
  Groupings
• A - D

7
Preference Group G

• Brassieres
• Cut and Sewn in the US, or one or more ATPDEA
  beneficiary countries or both
• Subject to Value Requirement
• Entered under 9821.11.19 and 6212.10, HTSUS

19 CFR 10.243(a)(4)
8

• 19 CFR 10.248(b) Limitations on Preferential
  Treatment
• (1) General. During the year that begins on
  October 1, 2003, during any subsequent year,
  articles of a producer or entity controlling
  production that conform to the production
  standards set forth in 10.243(a)(4) will be
  eligible for preferential treatment only if

9
Group G Brassieres

• In first year, only requirement is that the bras
  be cut and sewn or otherwise assembled in the US
  or ATPDEA beneficiary countries or both (no US
  fabric content required for duty free treatment)
• Beginning Oct. 1, 2003, requirement that in the
  preceding year, the aggregate cost of US fabrics
  used in the production of a producers or
  entitys bras was at least 75 of aggregate
  declared customs value of the fabric in all bras
  of that producer or entity that were entered and
  eligible under this provision in preceding 1-year
  period
• 19 CFR 10.243(a)(4) 19 CFR 10.248(b)

10
19 CFR 10.248(b) Limitations on Preferential
Treatment

• (1)(i) The aggregate cost of fabrics (exclusive
  of all findings and trimmings) formed in the US
  that were used in the production of all of those
  articles of that producer or that entity
  controlling production that are entered as
  articles described in 10.243(a)(4) during the
  immediately preceding year was at least 75 of
  the aggregate declared customs value of the
  fabric (exclusive of all findings and trimmings)
  contained in all of those articles of that
  producer or that entity controlling production
  that are entered as articles described in
  10.243(a)(4) during that year or

11
19 CFR 10.248(b) Limitations on Preferential
Treatment
(1)(ii) In a case in which the 75 requirement
set

forth in (b)(1)(i) of this section was not met
during a year and therefore those articles of
that producer or entity controlling production
were not eligible for preferential treatment
during the following year, the aggregate cost of
fabrics (exclusive of all findings and trimmings)
formed in the US that were used in the production
of all those articles of that producer or that
entity controlling production that conform to the
production standards set forth in 10.243(a)(4)
and that were entered during the immediately
preceding year was at least 85 of the aggregate
declared customs value of the fabric (exclusive
of all findings and trimmings) contained in all
of those articles of that producer or that entity
controlling production that conform to the
production standards set forth in 10.243(a)(4)
and that were entered during that year.
12
Group G Brassieres

• If Producer or Entity Fails to Meet Requirement,
  Ineligible for the Subsequent Program Year and
  85 US Fabric Requirement is Imposed on Same Year
• 85 Rule Includes Producers and Entities Not
  Participating in program in first year, Oct. 1,
  2002 to Sept. 30, 2003
• Eligibility Not Reinstated Until Year Following
  One in which 85 Standard is Met
• Return to 75 Standard for Year Following the
  Reinstatement Year

19 CFR 10.243(a)(4) 19 CFR 10.248(b)
13
Brassieres-19 CFR 10.248(a) Definitions of Terms

• Producer
• Entity controlling production
• Fabrics formed in the US
• Cost
• Declared customs value
• Year
• Entered

14
Brassieres-19 CFR 10.248(a) Definitions of Terms

• Producer
• Individual
• Corporation
• Partnership
• Association
• Other Entity or Group
• Direct, Daily Control Over Production
• In ATPDEA Country

15
Brassieres-19 CFR 10.248(a) Definitions of Terms

• Entity Controlling Production
• Individual
• Corporation
• Partnership
• Association
• Other Entity or Group
• Not a Producer
• Controls Production in ATPDEA Country through
  Contractual Relationship or other Indirect
  Method

16
Brassieres-19 CFR 10.248(a) Definitions of Terms

• Fabrics Formed in the U.S.
• Weaving
• Knitting
• Needling
• Tufting
• Felting
• Entangling
• Other Formation Process

17
Brassieres-19 CFR 10.248(a) Definitions of Terms

• Cost
• Price of U.S.-formed fabrics when last purchased
  FOB port of export, or with adjustments to reach
  a FOB price
• If unable to determine FOB price, or price is
  determined to be unreasonable, then a Computed
  Value equivalent for the fabrics plus costs
  representing freight, insurance, packing, and
  other costs to get it to port of export

18
Brassieres-19 CFR 10.248(a) Definitions of Terms

• Cost Examples
• U.S. formed fabric, purchased FOB Miami
• Price paid is the cost
• U.S. formed fabric, purchased on the local
  (ATPDEA) market
• Cost is price paid, minus
• freight and insurance, from U.S. to ATPDEA
  country
• duty paid at entry to ATPDEA country
• mark-up
• etc.

19
Brassieres-19 CFR 10.248(a) Definitions of Terms

• Declared Customs Value
• Cost of U.S. Formed Fabric, plus
• Cost of All Non-U.S.-Formed Fabric Contained in
  Article
• Value of Findings/Trimmings not Included
• Each Figure Must be Verifiable

20
Findings and Trimmings

• Findings - sewing essentials used in garments
• Trimmings- decorative or ornamental parts

21
Findings and Trimmings

• Examples
• Sewing Thread
• Hooks and Eyes
• Snaps
• Buttons
• Bow Buds
• Decorative Lace Trim
• Zippers, Zipper Tapes
• Labels
• Elastic Strips

22
Findings and Trimmings

• For Purposes of ATPDEA, Elastic Strip is

23
Group G General Rules

• Shipments Under Consideration Must be
• Produced as Specified in 10.243(a)(4)
• Entered into the U.S. within the same program
  year in order to be considered in that years
  value determination
• Articles Exported to Countries Other than U.S.
  not Factored into Relevant Value
• Compliance with 75 Rule
• Value of Articles Entered Outside of HTS
  9821.11.19 (Bras/Group G) not Included

24
Group G General Rules

• Compliance with 85 Rule
• Include Value of All Articles Meeting Production
  Standards of 10.243(a)(4), Regardless of Entered
  HTSUS Subheading
• Value of Findings and Trimmings NOT Considered
  when Evaluating for 75/85 Rule Compliance

25
Declaration of Compliance

• In Addition to Certificate Required by 19 CFR
  10.244
• Filed by Producer or Entity Controlling
  Production Prior to First Shipment
• In English or Language of Producing C/O
• Specifies and Supports Which Standard Met
• Submitted to New York STC
• Unique Number Assigned to Producer/Entity by NY
  STC
• Number Must be Provided to all U.S. Customers
• Number Must be Referenced by U.S. Importers at
  Time of Each Entry/Warehouse Withdrawal

26
Declaration of Compliance

• Amendments
• If based on estimates, must be made within thirty
  days of company determining year end figures
• If based on erroneous information, within thirty
  days of discovery
• Filed with NY STC

27
Declaration of Compliance

• 1. Year Commencing October 1, Ending
  September 30 of Calendar Year in Which
  Applicable Standard was Met
• 2. Legal Name and Address of the Preparer,
  Including Preparers I.R. Number, if
  Applicable
• 3. Legal Name(s) and Address(es) of ATPDEA
  Producer, if not Already Identified in Block 2
• 4.,5. Related to Goods Entered During Year in
  Block 1
• 6. Declare Standard 75 or 85
• 7. Signature of Authorized, Knowledgeable
  Person

28
(No Transcript)
29
Recordkeeping Verification

• All Records in Accordance with 19 CFR 163
• Documents and Other Information Related to Bra
  Exports to the U.S., Entered in the Year in
  Question, Whether or Not a Preference Claim is
  Made Pursuant to 19 CFR 10.245
• Work Orders
• Production Orders
• Purchase Orders
• Invoices
• Bills of Lading
• Others

30
Recordkeeping Verification

• Documentation of Cost of U.S. Fabric
• Documentation of Cost of Foreign Fabric
• Both Include
• Purchase Orders
• Invoices
• Bills of Lading
• Shipping and Insurance Documents
• Foreign Customs/Entry Documents
• Others

31
Recordkeeping Verification

• Accounting Books/Records
• Audit Trail Must Consist of
• Cash Disbursements, Purchase Journal, or
  Equivalents that Demonstrate Purchase of Fabric
• Must Contain Date, Vendor, and Amount Paid
• Production Records and Work Orders
• Accomplish via Analysis of Inventory Records of
  Producer/Controlling Entity
• Fabric Must be Clearly Traceable from Purchase
  Order to Finished Article
• Inventory Records Demonstrating Opening, Interim,
  and Ending Balances of Materials

32
Recordkeeping Verification

• If CBP is Prevented from Verifying Declaration
  of Compliance, Preference Claim may be Denied
• If CBP Determines that 75 / 85 Standard not
  Met, Name of Producer/Entity and Results will be
  Published in the Federal Register

33
Preference Group G-Summary

• Brassieres Assembled in the US and/or One or More
  ATPDEA Beneficiary Countries
• 9821.11.19, HTSUS
• 19 CFR 10.243(a)(4)
• ATPDEA Certificate of Origin
• Declaration of Compliance
• Traceable Raw Materials and Production

34
Example 1

• A Producer in an ATPDEA Country
• Manufactures articles that meet 10.243(a)(4)
• In Year 1, sends 50 of production to ATPDEA
  markets, balance to U.S.
• In Year 1, cost of U.S. formed fabric is
• 100 of value for goods sold regionally
• 60 of value for goods sold to U.S.
• Does this Producer Qualify?

35
Example 1

• Producer Does NOT Qualify Does not Meet 75
  Standard
• Value Analysis Only on Exports to the U.S. when
  Evaluating for Compliance with the 75 / 85
  Standard
• To be Eligible in Following Year, Must Meet 85
  Standard

36
Example 2

• A Producer in an ATPDEA Country
• Manufactures Articles that meet 10.243(a)(4)
• In Year 1, Exports three shipments of those
  articles to the U.S.
• One entered as goods covered by 10.243(a)(4)
• 9821.11.19
• One entered as goods covered by 10.243(a)(7)
• Not 9821.11.19
• One entered under HTS 9802.00.80
• Which Shipment(s) Must be Reviewed Under a
  Compliance Audit?

37
Example 2

• Shipment 1 Only
• When Evaluating for Compliance with the 75
  Standard, Analysis Can Only be Made of the Values
  Related to Merchandise Entered under 10.243(a)(4)
  / ATPDEA Group G

38
Example 3

• A Producer in an ATPDEA Country
• In Year 2, produces goods that meet 10.243(a)(4)
• In that same year, these goods are exported to
  the U.S. and entered under HTS 6212.10 and/or
  9802.00.80, not under HTS 9821.11.19
• Previous year, 75 Standard had Not Been Met
• For Year 3 Claims, Values for Which Year
  2-Shipments Must be considered for determining
  compliance?
• Assuming Compliance for Year 3, which Standard
  Must be Met for Year 4 Claims?

39
Example 3

• Values for All Shipments of Goods Described in
  10.243(a)(4), Regardless of Entered
  Classification, Must be Analyzed
• Year 4
• Year 1, 75 Not Met
• Year 2, No Claims but Must Meet 85 Standard
• Year 3, Claims under 9821.11.19 based on 85
  Standard from Year 2
• Year 4, Claims under 9821.11.19 based on 75
  Standard from Year 3

40
Example 4

• In an ATPDEA Country, an Entity Controlling
  Production of Goods Meeting 10.243(a)(4)
• Buys for US, CA, and MX Markets
• All Goods Entered for Consumption in the U.S.,
  then Distributed to Various Retail Outlets in the
  Three Markets
• Which Portion(s) of these Shipments Must be
  Covered by the Declaration of Compliance,
  therefore any CBP Compliance Review?

41
Example 4

• All Must be Evaluated as All Goods are Entered
  for Consumption in the U.S. Prior to
  Redistribution

42
Example 5

• Fabric Cut and Sewn in U.S., with Other U.S.
  Materials to form Cups Joined in U.S. to form
  Brassiere Front Sub-assemblies
• Sub-assemblies Warehoused until Following Year
• Sent to ATPDEA Country and Assembled with
• Elastic Strips and Labels Produced in Asia
• Other Materials/Components Produced in the ATPDEA
  Country
• to form Goods which meet 10.243(a)(4)
• Values of Which Components Must be Considered in
  Evaluating the 75 / 85 Standard

43
Example 5

• To the Extent that the Elastic and Labels Meet
  the Definition of a Finding or Trimming, they are
  NOT included in the Value Analysis Relative to
  the 75 / 85 Standard

44
Example 6

• A Producer in an ATPDEA Country
• In Single Calendar Year, Sends Entire Production
  of Goods meeting 10.243(a)(4) to the U.S.
• Consists of Two Shipments
• Shipment 1 does not Meet 75 Standard
• Shipment 2 Exceeds 85 Standard
• Shipment 1 is Entered on March 1
• Shipment 2 is Entered into a Warehouse and not
  Withdrawn for Consumption until November 1
• For that Calendar Year, Can the Producer Complete
  a Valid Declaration of Compliance?

45
Example 6

• No Valid Declaration for that Year can be
  Completed
• Shipment 1 does not Meet 75 Standard
• Shipment 2, while Produced and Exported in the
  Same Calendar Year, was not Entered for
  Consumption until November 1, the Subsequent
  Program Year

46
Example 7

• A Producer in an ATPDEA Country
• In Year 2 of the Program (10/1/03 through
  9/30/04), begins production of goods meeting
  10.243(a)(4) for the U.S. Market
• Goods do not Meet 85 Standard until Program Year
  3
• For the Following Years, are the Producers Goods
  Eligible for a Group G Claim?
• Year 2
• Year 3
• Year 4

47
Example 7

• Year 2
• No, Because there was no Production in the First
  Program Year, the 75 Standard was not Met
  Relative to Year 2
• Year 3
• No, Because the Production in Program Year 2 did
  not Meet the 85 Standard
• Year 4
• Yes, Because the Production in Program Year 3 Met
  the 85 Standard

48
Example 8

• An Entity (A) Controlling Production Uses Five
  ATPDEA Producers
• All Produce Goods that Meet 10.243(a)(4)
• Producers 1 - 4 Ship 100 of their Production to
  the U.S. Market
• Producer 5 Ships 5 to 10 of Such Production to
  the U.S., the Balance to Europe
• Producers 1 - 3 and 5 Produce Only Pursuant to
  Contracts from A
• Producer 4 Works for Self, for A, and Even
  Produces for Another Entity Controlling
  Production, B
• B Controls All Production of Producer 6
• Declarations of Compliance
• Who, What, etc.

49
Example 8

• Declaration of Compliance for Producers 1 - 3
• May be Completed by A
• Declaration not needed from Each Producer as They
  do not Produce in Absence of As Contract
• Declaration of Compliance for Producer 5
• May be Completed by A
• Must Cover the 5 to 10 of Production Exported
  to U.S.
• Declaration of Compliance for Producers 4 6
• If Completed by Producer, Must Cover All of Its
  Production
• If Completed by A, Must Cover Relevant
  Production from 4
• If Completed by B, Must Cover Relevant
  Production from 4, and All from 6

50
Additional Information

• CBP Website www.cbp.gov
• OTEXA Website www.otexa.ita.doc.gov
• USTR Website www.ustr.gov

51
The End