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AGOA GSP Provisions

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Title: Presentation title - 42 pt Times New Roman, White Author: Joseph B. Adamoli Last modified by: PMG Created Date: 8/19/2003 10:15:17 PM – PowerPoint PPT presentation

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Title: AGOA GSP Provisions


1
AGOA GSP Provisions
December 8, 2003
2
Overview
  • Title 1 of the Trade Development Act of 2000 is
    the African Growth and Opportunity Act (AGOA)
  • The Act provides for the duty-free treatment of
    certain non-textile articles previously
    ineligible for preferential treatment under the
    Generalized System of Preferences (GSP) (19
    U.S.C. 2461 et seq.)
  • GSP benefits are in addition to the AGOA
    duty-free and quota-free treatment of certain
    textile and apparel articles.

3
AGOA Beneficiary Countries for GSP Articles
  • The President Has Designated 38 Countries As
    Beneficiary Sub-Saharan African Countries (SSA)
  • ALL of These Countries Are Eligible for GSP
    (Non-textile) Benefits.

4
AGOA Beneficiary Countries for GSP Articles
  • GSP is extended to SSA countries until September
    30, 2008
  • GSP benefits for the rest of the world expire on
    December 31, 2006
  • For SSA, President allowed all 4,600 items on
    standard GSP product list
  • PLUS for SSA an additional 1,800 tariff line
    items not part of GSP product list which were
    considered import sensitive
  • Currently, a Pending Bill would Extend AGOA
    benefits until 2015

5
Import Sensitive Articles
  • Examples of Articles previously ineligible for
    GSP treatment which can now be entered duty free
    under AGOA if made in a SSA country
  • Watches
  • Electronic Articles
  • Footwear, Handbags, Luggage, Flat Goods, Work
    Gloves, and Leather Apparel
  • Certain Semi-Manufactured and Manufactured Glass
    Products
  • Other Miscellaneous Articles

6
GSP Articles Under AGOA
  • 2001 Total Value of US Imports From SSA Under
    the GSP and AGOA US 7.5 Billion
  • 2002 Total Value of US Imports From SSA Under
    the GSP and AGOA US 8.3 Billion
  • 2003, January through September Total Value of
    US Imports From SSA Under the GSP and AGOA US
    9.6 Billion

7
GSP Articles Under AGOA
Value of US Imports from Sub-Saharan Africa
Source US ITC/Dept. of Commerce
8
GSP Articles Under AGOA
Value of US Imports from Sub-Saharan Africa
9
GSP Requirements Under AGOA
  • Requirements for Duty Free Entry of GSP Articles
  • Product of SSA Beneficiary Country
  • 35 Value Requirement
  • Imported Directly into US
  • 19 CFR 10.175 10.176 10.178a

10
GSP Requirements Under AGOA
  • Product of Requirement
  • The Article Must be the Growth, Product, or
    Manufacture of the Beneficiary Sub-Saharan
    African Country
  • Article Must Either be Made Entirely of Materials
    Which Originate in 1 or More SSA, or
  • If Made of Materials imported into SSA from 1 or
    more Non-Beneficiary Country, Those Materials
    Must be Substantially Transformed into a New and
    Different Article of Commerce

11
GSP Requirements Under AGOA
  • Substantial Transformation For Product of
    Requirement
  • Foreign Materials Must Undergo A Single
    Substantial Transformation In Order to Qualify
    for the Product of Requirement
  • Substantial Transformation Results When a New or
    Different Article Emerges with a New Name,
    Character or Use

12
GSP Requirements Under AGOA
  • Substantial Transformation for Product of
    Requirement
  • Example 1
  • Leather made in Argentina is imported into RSA
  • In RSA, leather is cut, sewn and assembled
  • Metal buckles made in RSA added to produce
    finished belts
  • The processing in RSA results in a single
    substantial transformation of the imported
    leather into a new and different article of
    commercethe finished belt, which is a product
    of South Africa

13
GSP Requirements Under AGOA
  • Substantial Transformation for Product of
    Requirement
  • Example 2
  • Raw rubber made in India is imported into
    Mauritius
  • In Mauritius, rubber is melted and formed by a
    mold into a finished rubber boot
  • Producing the finished boot results in a single
    substantial transformation of the imported rubber
    into a product of Mauritius

14
GSP Requirements Under AGOA
  • Double Substantial Transformation for Foreign
    Materials
  • Foreign Materials Must Undergo A Double
    Substantial Transformation In Order To Qualify To
    Be Counted Toward The 35 Value Requirement
  • There Must Be A Finding That There Is An
    Intermediate Article In Order For A Double
    Substantial Transformation To Occur

15
GSP Requirements Under AGOA
  • Double Substantial Transformation
  • Example 1
  • Leather from Korea is imported into Tanzania
  • In Tanzania, leather is cut to shape to create 6
    components comprising the outer surface of a
    travel bag
  • The components are assembled with 20 other metal,
    plastic and vinyl components to create the
    finished bag

16
GSP Requirements Under AGOA
  • Double Substantial Transformation Example 1
    (Cont.)
  • Cutting the leather to shape to create bag
    components substantially transforms the leather
    into intermediate materials which are
    substantially transformed a second time when
    assembled into the finished bag. Because the
    leather is substantially transformed twice in
    Tanzania, its cost or value may be counted
    toward satisfying the 35 value-content
    requirement

17
GSP Requirements Under AGOA
  • Double Substantial Transformation
  • Example 2
  • 50 fabricated components from China, including
    resistors, capacitors, diodes, transistors, and
    integrated circuits, are imported into Kenya
  • In Kenya, they inserted into and soldered to a
    Chinese printed circuit board
  • The finished printed circuit board assembly
    (PCBA) is then assembled with numerous other
    components to produce a printer for a personal
    computer

18
GSP Requirements Under AGOA
  • Double Substantial Transformation Example 2
    (Cont.)
  • Producing the PCBA results in one substantial
    transformation, and the subsequent assembly of
    the PCBA with other components to create the
    printer results in a second substantial
    transformation of the Chinese PCBA components

19
GSP Requirements Under AGOA
  • Value-Content Requirement
  • At Least 35 of the Full Appraised Value of the
    Article Must be Attributed to
  • The Cost or Value of Materials Produced in One or
    More Beneficiary Sub-Saharan African Countries
    plus
  • The Direct Costs of Processing Operations
    Performed in a Beneficiary Sub-Saharan African
    country

20
GSP Requirements Under AGOA
  • Value-Content Requirement (Cont.)
  • For purposes of determining compliance with the
    35 value content requirement, an amount not to
    exceed 15 of the full appraised value may be
    attributed to the cost or value of materials
    produced in the US

21
GSP Requirements Under AGOA
  • Example
  • 50 of Value Is Attributed to Leather Imported
    From Argentina
  • 30 of Value Is Attributed to Metal Imported From
    US
  • 20 of Value Is Attributed to Processing and
    Assembly in Mauritius

22
GSP Requirements Under AGOA
  • Direct Cost of Processing
  • Costs Either Directly Incurred or Reasonably
    Allocated to the Growth, Production, Manufacture,
    or Assembly of Article
  • Actual Labor Costs
  • Such as Fringe Benefit On the Job Training Cost
    of Engineering First Line Supervisory Quality
    Control
  • Dies, Molds, and Tooling
  • Research and Development
  • Cost of Inspecting and Testing (19 CFR 10.178)

23
GSP Requirements Under AGOA
  • Imported Directly Requirement
  • The Article Must be Imported Directly from a SSA
    country to the US
  • Three definitions of Imported Directly

24
GSP Requirements Under AGOA
  • Imported Directly
  • Direct Shipment from SSA to US without passing
    through the Territory of any Non-Beneficiary
    Country
  • Shipment from SSA to US through a Non-Beneficiary
    Country
  • May not enter commerce and US is Final
    Destination
  • Shipment from SSA to US through a Non-Beneficiary
    Country and US is not Final Destination on
    Documents
  • May not enter commerce and must remain under
    Customs Authority

25
GSP Requirements Under AGOA
  • Imported Directly
  • Direct shipment from SSA to US without passing
    through the Territory of Any Non-beneficiary
    Country
  • No limitation to the Number of SSA Countries
    which may Contribute to Production of a Product
  • Merchandise can undergo operations such as
    sorting, grading, testing, packing, affixing
    labels, preservation, etc. in any SSA country

26
GSP Requirements Under AGOA
  • Imported Directly
  • Example
  • Oranges Grown in Uganda
  • Oranges Sent to Tanzania Where They Are Sorted
    and Packed
  • Oranges Are Sent Through Mozambique to South
    Africa
  • Oranges Shipped Directly From South Africa to
    the US

27
GSP Requirements Under AGOA
  • Imported Directly
  • Shipment from SSA to US through a Non-Beneficiary
    Country only if
  • The merchandise does not enter into the commerce
    of any Non-Beneficiary Country, and
  • Invoice, Bills of Lading, and other Shipping
    Documents show US as the Final Destination

28
GSP Requirements Under AGOA
  • Imported Directly
  • Example
  • Lemons Grown in Ethiopia
  • Lemons Sent to Kenya Where They Are Loaded on a
    Ship Going to France
  • In France the Lemons Are Transferred to a Ship
    Going to the US
  • The Invoice and Bill of Lading Accompanying the
    Shipment From Ethiopia Show US As the Final
    Destination

29
GSP Requirements Under AGOA
  • Imported Directly
  • Shipment From a SSA to US Through a
    Non-beneficiary Country and the Invoices and
    Other Documents Do Not Show US As the Final
    Destination Only If
  • Goods Remained Under the Control of the Customs
    Authority of the Intermediate Country
  • Goods Did Not Enter the Commerce of That
    Intermediate Country

30
GSP Requirements Under AGOA
  • Imported Directly (Cont.)
  • Shipment From a SSA to US Through a
    Non-beneficiary Country and the Invoices and
    Other Documents Do Not Show US As the Final
    Destination Only If
  • The Transaction That Causes the Goods to Be
    Imported Into the US Must Be Between the US
    Importer and the Producer or the Producers Agent
  • Goods Were Not Subjected to Operations Other Than
    Loading and Unloading or Preservation

31
GSP Requirements Under AGOA
  • Example
  • A Producer of Baskets in Lesotho Ships Baskets
    to Hamburg, Germany for Storage in a Bonded
    Warehouse
  • Shipping Documents Do Not Show U.S. As the Final
    Destination and The Baskets Are Only Loaded and
    Unloaded
  • Orders Are Received by the Producers Agent in
    Germany From Buyers From Various Countries,
    Including the US
  • Baskets Are Shipped From Germany to the U.S.
  • Does This Transaction Qualify?

32
GSP Requirements Under AGOA
  • Answer
  • The Baskets Are Considered Imported Directly
    Under the Third Definition
  • Because the Baskets Are Stored in a Bonded
    Warehouse, They Are Considered to Be Under the
    Control of Customs in Germany
  • The Baskets Did Not Enter the Commerce of Germany
    Except for a Sale Other Than at Retail
  • The Transaction Which Caused the Merchandise to
    Be Imported Was Between the U.S. Importer and the
    Producers Agent?

33
Electronic Ruling Requests
  • Determine Applicability of Trade Programs
  • Must Concern Prospective Shipments
  • Excludes Requests Requiring a Sample
  • Legally Binding
  • Provides for Uniformity Across Ports

34
Electronic Ruling Requests
  • eRuling Request Procedures
  • binding.ruling_at_dhs.gov
  • Follow Up Questions Referred to (646)
    733-3056/3063

35
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