Department of Homeland Security Department of the Treasury

Vol. 79 Tuesday, No. 101 May 27, 2014

Part III

Department of Homeland Security

U.S. Customs and Border Protection

Department of the Treasury

19 CFR Parts 10, 163, and 178 African Growth and Opportunity Act (AGOA) and Generalized System of Preferences and Trade Benefits Under AGOA; Final Rule

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DEPARTMENT OF HOMELAND final rule other changes to the AGOA African countries and modified the SECURITY implementing regulations made by T.D. Harmonized Tariff Schedule of the 03–15 to clarify several issues that arose United States (HTSUS) as set forth in U.S. Customs and Border Protection after their original publication. the Annex to the Proclamation by, DATES: Effective June 26, 2014. among other things, the addition of a DEPARTMENT OF THE TREASURY new Subchapter XIX to Chapter 98 to FOR FURTHER INFORMATION CONTACT: address the majority of the textile and 19 CFR Parts 10, 163, and 178 Operational issues regarding textiles: apparel provisions of the AGOA. Jacqueline Sprungle, Trade Policy and On October 5, 2000, U.S. Customs and [CBP Dec. 14–07] Programs, Office of International Border Protection (CBP) published in Trade (202–863–6517). RIN 1515–AD47 (former RIN 1505–AB26) the Federal Register (65 FR 59668) as and RIN 1515–AD50 (former RIN 1505– Other operational issues: Seth Mazze, T.D. 00–67 an interim rule setting forth AB38) Trade Policy and Programs, Office of amendments to the CBP regulations to International Trade (202–863–6567). implement the trade benefit provisions African Growth and Opportunity Act Legal issues: Cynthia Reese, Regulations of the AGOA. Sections 10.211 through (AGOA) and Generalized System of and Rulings, Office of International 10.217 of the CBP regulations (19 CFR Preferences and Trade Benefits Under Trade (202–325–0046). 10.211 through 10.217) set forth the AGOA SUPPLEMENTARY INFORMATION: legal requirements and procedures that apply for purposes of obtaining AGENCIES: U.S. Customs and Border Background preferential treatment of certain textile Protection, Department of Homeland African Growth and Opportunity Act and apparel articles pursuant to sections Security; Department of the Treasury. 112 and 113 of the AGOA. In addition, On May 18, 2000, the President ACTION: Final rule. T.D. 00–67 included interim signed into law the Trade and amendments to the existing CBP SUMMARY: This document adopts as a Development Act of 2000, Public Law regulations implementing the final rule, with some changes, interim 106–200, 114 Stat. 251. Title I of the Generalized System of Preferences amendments to the U.S. Customs and Trade and Development Act of 2000 (GSP) program to conform those Border Protection (CBP) regulations (Act of 2000) is referred to as the regulations to previous statutory which were published in the Federal African Growth and Opportunity Act amendments or other changes involving Register on October 5, 2000, as T.D. 00– (AGOA) and authorizes the President to the GSP program. Furthermore, on 67, and later amended by T.D. 03–15 extend certain trade benefits to November 9, 2000, a correction published in the Federal Register on designated countries in sub-Saharan document pertaining to T.D. 00–67 was March 21, 2003, to implement the trade Africa. published in the Federal Register (65 benefit provisions for sub-Saharan Subtitle A of Title I of the Trade and FR 67260). Action to adopt those Africa contained in Title I of the Trade Development Act of 2000 concerns trade interim regulations as a final rule was and Development Act of 2000, as policy for sub-Saharan Africa. Subtitle withheld pending anticipated action on amended. The trade benefits under Title A is codified at 19 U.S.C. 3701–3706 the part of Congress to amend the I, also referred to as the African Growth and includes section 104 (19 U.S.C. underlying statutory provisions. and Opportunity Act (AGOA), apply to 3703) which (1) authorizes the President sub-Saharan African countries to designate a sub-Saharan African Trade Act of 2002 designated by the President and involve: country as an ‘‘eligible’’ sub-Saharan On August 6, 2002, the President The extension of duty-free treatment African country if the President signed into law the Trade Act of 2002 under the Generalized System of determines that the country meets (Act of 2002), Public Law 107–210, 116 Preferences (GSP) to non-textile articles specified eligibility requirements and Stat. 933. Sections 3108(a) and (b) of the normally excluded from GSP duty-free (2) requires that the President terminate Act of 2002 amended section 112(b) of treatment that are not import-sensitive; a designation if the President the AGOA (codified at 19 U.S.C. and the entry of specific textile and determines that an eligible country is 3721(b)) which specifies the textile and apparel articles free of duty and free of not making continual progress in apparel articles to which preferential any quantitative limits. meeting those requirements. Subtitle A treatment applies under the AGOA. The The regulatory amendments adopted also includes section 107 (19 U.S.C. majority of the provisions of section 112 as a final rule in this document reflect 3706) which, for purposes of Title I, of the AGOA are reflected for tariff and clarify the statutory standards for defines the terms ‘‘sub-Saharan Africa’’ purposes in Subchapter XIX, Chapter preferential tariff treatment under the and ‘‘sub-Saharan African country’’ and 98, HTSUS. AGOA, as amended by section 3108 of variations of those terms with reference On November 13, 2002, the President the Trade Act of 2002 and include other to 48 listed countries. signed Proclamation 7626 (published in amendments necessitated by passage of Subtitle B of Title I of the Trade and the Federal Register at 67 FR 69459 on the AGOA Acceleration Act of 2004 and Development Act of 2000 concerns trade November 18, 2002) which, among other the Africa Investment Incentive Act of benefits under the AGOA. The things, in Annex II set forth 2006. This final rule includes specific provisions within Subtitle B to which modifications to the HTSUS to documentary, procedural and other this document relates are sections 111, implement the changes to section 112(b) related requirements that must be met in 112 and 113. These sections will be of the AGOA made by sections 3108(a) order to obtain preferential treatment. discussed in detail below. and (b) of the Act of 2002. The This document also adopts as a final On October 2, 2000, the President Proclamation provided that the HTSUS rule interim amendments to the CBP signed Proclamation 7350 to implement modifications that implement the regulations implementing the GSP the provisions of the AGOA. The changes made by section 3108(a) of the which were included in T.D. 00–67 to Proclamation, which was published in Act of 2002 are effective with respect to conform those regulations to previous the Federal Register (65 FR 59321) on eligible articles entered, or withdrawn amendments to the GSP statute. October 4, 2000, designated certain from warehouse for consumption, on or Moreover, this document adopts as a countries as beneficiary sub-Saharan after August 6, 2002. The Proclamation

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further provided that the HTSUS 2. The portion of the article apparel articles of fabric or yarn that modifications that implement the description in the introductory text of was formed in the United States or a changes made by section 3108(b) are paragraph (b)(3) relating to the origin of beneficiary sub-Saharan African country effective with respect to eligible articles the yarns from which the article is made will not be precluded from receiving entered, or withdrawn from warehouse was amended by replacing the words preferential treatment under this for consumption, on or after October 1, ‘‘either in the United States or one or paragraph, assuming all applicable 2002. more beneficiary sub-Saharan African production requirements are met. On March 21, 2003, CBP published in countries’’ each place they appear with 6. The article description in paragraph the Federal Register (68 FR 13820) as the words ‘‘in the United States or one (b)(6) was amended by adding a T.D. 03–15 an interim rule document or more beneficiary sub-Saharan African reference to ‘‘ethnic printed fabric’’ and setting forth amendments to the CBP countries or former beneficiary sub- by including a description of the regulations that implement the trade Saharan African countries, or both.’’ ‘‘ethnic printed fabrics’’ that qualify for benefits for sub-Saharan African The introductory text of paragraph (b)(3) preferential treatment under this countries contained in the AGOA. T.D. was further amended by inserting the paragraph. 03–15 involved the textile and apparel words ‘‘whether or not the apparel 7. The article description in paragraph provisions of the AGOA and in part articles are also made from any of the (b)(7) was amended by adding a reflected the changes made to those fabrics, fabric components formed, or reference to ‘‘or former beneficiary sub- statutory provisions by section 3108 of components knit-to-shape described in Saharan African countries’’ after the the Act of 2002. paragraph (1) or (2) (unless the apparel words ‘‘and one or more beneficiary sub-Saharan African countries’’ each AGOA Acceleration Act of 2004 articles are made exclusively from any of the fabrics, fabric components place they appear. This change would On July 13, 2004, the President signed formed, or components knit-to-shape permit the cutting and knitting-to-shape into law the AGOA Acceleration Act of described in paragraph (1) or (2))’’ of fabric components to be performed in 2004 (Act of 2004), Public Law 108–274, immediately before the words ‘‘subject former beneficiary sub-Saharan African 118 Stat. 820. Section 7(a)(1) of the Act to the following.’’ The effect of the latter countries (if any). of 2004 amended Title V of the Trade amendment is to extend preferential Section 7(e)(1) of the Act of 2004 Act of 1974 (the Generalized System of treatment under this paragraph to amended section 112(d) of the AGOA Preferences, or GSP, statute) at section include apparel articles made in part (codified at 19 U.S.C. 3721(d)), which 506B (codified at 19 U.S.C. 2466b) by from fabrics, fabrics components or knit- sets forth certain special rules regarding extending GSP duty-free treatment to-shape components that meet the the preferential treatment of eligible through September 30, 2015, in the case production requirements set forth in textile and apparel articles, by adding a of a beneficiary sub-Saharan African paragraph (b)(1) or (b)(2). new paragraph (d)(3) entitled ‘‘Certain country as defined in section 506A(c) of 3. Paragraph (b)(3)(A)(i) was amended components.’’ This new rule provides the GSP statute (codified at 19 U.S.C. by replacing the words ‘‘in the 1-year that an article otherwise eligible for 2466a(c)). period beginning on October 1, 2000, preferential treatment under section 112 Section 7(a)(2)(A) of the Act of 2004 and in each of the seven succeeding 1- will not be ineligible for such treatment amended section 506A(b)(2)(B) of the year periods’’ with the words ‘‘in the 1- because the article contains certain GSP statute (codified at 19 U.S.C. year period beginning October 1, 2003, specified components that do not meet 2466a(b)(2)(B)) by providing for the and in each of the 11 succeeding 1-year the requirements set forth in the inclusion of the cost or value of periods.’’ Paragraph (b)(3)(A)(ii) was applicable paragraph under section materials produced in one or more amended by increasing the ‘‘applicable 112(b), regardless of the country of ‘‘former beneficiary sub-Saharan African percentage’’ used for determining the origin of the component. countries’’ in determining whether the quantitative limits that apply to apparel Section 7(e)(2) of the Act of 2004 GSP 35% value-content rule has been articles under this paragraph. Neither of amended the de minimis rule in section satisfied in regard to an article described these changes affects the AGOA 112(d)(2) by adding a reference to ‘‘or in section 506A(b)(1) (non-textiles). implementing regulations. former beneficiary sub-Saharan African Section 7(a)(2)(B) of the Act of 2004 4. The article description in paragraph countries’’ after the words ‘‘beneficiary amended section 506A(c) to include a (b)(3)(B) [now paragraph (c)(1)] , which sub-Saharan African countries,’’ and by definition of ‘‘former beneficiary sub- sets forth a special rule for lesser increasing the applicable de minimis Saharan African country.’’ developed beneficiary sub-Saharan percentage from 7 to 10 percent. Sections 7(b), (c) and (d) of the Act of African countries, was amended by Finally, section 7(f) of the Act of 2004 2004 amended section 112(b) of the extending the applicability of the rule amended section 112(e) of the AGOA AGOA (codified at 19 U.S.C. 3721(b)) through September 30, 2007, and by (codified at 19 U.S.C. 3721(e)), by which specifies the textile and apparel establishing a separate ‘‘applicable adding a definition of ‘‘Former sub- articles to which preferential treatment percentage’’ for use in determining the Saharan African country’’ in new applies under the AGOA. These quantitative limits that apply to apparel paragraph (e)(4). amendments to section 112(b) were as articles subject to this special rule. The On September 7, 2004, the President follows: articles described in paragraph (b)(3)(B) signed Proclamation 7808 (published in 1. The article description in the [now paragraph (c)(1)] previously were the Federal Register on September 9, introductory text of paragraph (b)(1) was subject to the ‘‘applicable percentage’’ 2004, at 69 FR 54739) which, among amended by inserting the words ‘‘or set forth in paragraph (b)(3)(A)(ii). other things, in Annex II set forth both’’ immediately before the Neither of these changes affects the modifications to the HTSUS to parenthetical matter. The effect of this AGOA implementing regulations. implement the changes to sections 506A change is to clarify that the apparel 5. The article description in paragraph and 506B of the GSP statute and section articles described in this paragraph may (b)(5)(A) was amended by removing the 112 of the AGOA made by section 7 of be made both from fabrics wholly words ‘‘from fabric or yarn that is not the Act of 2004. The Proclamation formed and cut in the United States and formed in the United States or a provided that the HTSUS modifications from components knit-to-shape in the beneficiary sub-Saharan African that implement the changes made by United States. country.’’ As a result of this change, section 7 of the Act of 2004 are effective

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with respect to goods entered, or proclaimed in Proclamation 8114 were 503(e) of the GSP statute, the President withdrawn from warehouse for modified by Proclamation 8157 of June determines that the article is not import- consumption, on or after July 31, 2004. 28, 2007 (72 FR 35895), and sensitive in the context of imports from As described above, the Act of 2004 Proclamation 8240 of April 17, 2008 (73 beneficiary sub-Saharan African made various technical amendments to FR 21515) to provide the tariff treatment countries. The articles described in the GSP statute as well as the AGOA authorized by the Act of 2006. The section 503(b)(1)(B) through (G) of the which require amendments to the GSP HTSUS provisions were further GSP statute are those that are normally and AGOA implementing regulations. modified by Proclamation 8323 of excluded from duty-free treatment Because these regulatory changes are November 25, 2008 to implement the under the GSP and consist of the not interpretative in nature but closely changes to section 112(c) of the AGOA following: reflect the language of the statute, they made by section 3 of the Extension of a. Watches, except those watches are included in this final rule without Andean Trade Preference Act, Public entered after June 30, 1989, that the need for comment. Law 110–436, 122 Stat. 4976. President specifically determines, after Africa Investment Incentive Act of 2006 Current AGOA Statutory Trade Benefit public notice and comment, will not Provisions cause material injury to watch or watch On December 20, 2006, the President band, strap, or bracelet manufacturing signed into law the Tax Relief and Sections 111, 112 and 113 of Subtitle and assembly operations in the United Health Care Act of 2006 (Act of 2006), B of Title I of the Trade and States or the United States insular Public Law 109–432, 120 Stat. 2922. Development Act of 2000, including possessions; Title VI of the Act of 2006 is referred to amendments to the AGOA trade benefit b. Import-sensitive electronic articles; as the ‘‘Africa Investment Incentive Act provisions made by section 3108(a) of c. Import-sensitive steel articles; of 2006’’. Section 6002 of the Act of the Trade Act of 2002 and section 7 of d. Footwear, handbags, luggage, flat 2006 amended section 112 of the AGOA the AGOA Acceleration Act of 2004, goods, work gloves, and leather wearing (19 U.S.C. 3721) by transferring the provide as follows: apparel which were not eligible articles existing special rule for lesser Section 111 for purposes of the GSP on January 1, developed beneficiary sub-Saharan 1995, as the GSP was in effect on that African countries from paragraph Subsection (a) of section 111 of the date; (b)(3)(B) of section 112 to new Act of 2000 amended Title V of the e. Import-sensitive semimanufactured paragraph (c) of section 112, by Trade Act of 1974 (the GSP statute and manufactured glass products; and extending the applicability of the rule which previously consisted of sections f. Any other articles which the through September 30, 2012, and by 501–507, codified at 19 U.S.C. 2461– President determines to be import- revising the ‘‘applicable percentage’’ for 2467) by inserting after section 506 a sensitive in the context of the GSP. use in determining the quantitative new section 506A entitled ‘‘Designation 2. Paragraph (2), as amended by limits that apply to apparel articles of sub-Saharan African countries for section 7(a)(2)(A) of the Act of 2004, subject to this special rule. None of certain benefits’’ and codified at 19 provides that the duty-free treatment these changes affects the AGOA U.S.C. 2466a. under paragraph (1) will apply to any implementing regulations. Subsection (a) of new section 506A article described in that paragraph that Section 6002 of the Act of 2006 authorizes the President, subject to meets the requirements of section further amended section 112 of the referenced eligibility requirements and 503(a)(2) (that is, the basic GSP origin AGOA by adding a new paragraph (b)(8) criteria, to designate a country listed in and related rules). Paragraph (2) also to create a new category of textile and section 107 of the Act as a beneficiary makes application of those basic rules in textile articles to which preferential sub-Saharan African country eligible for this context subject to the following two treatment applies under the AGOA. This the benefits described in subsection (b). additional rules: new paragraph encompasses textile and This subsection (a) also requires that the a. If the cost or value of materials textile articles classifiable under President terminate a designation if the produced in the customs territory of the Chapters 50 through 60 or Chapter 63 of President determines that a beneficiary United States is included with respect the HTSUS that are products of a lesser sub-Saharan African country is not to that article, an amount not to exceed developed beneficiary sub-Saharan making continual progress in meeting 15 percent of the appraised value of the African country and are wholly formed the requirements for designation. article at the time it is entered that is in one or more such countries from Subsection (b) of new section 506A attributed to that United States cost or fibers, yarns, fabrics, fabric components, concerns preferential tariff treatment for value may be applied toward or components knit-to-shape that are the certain articles and consists of the determining the percentage referred to product of one or more of such following two paragraphs: in subparagraph (A) of section 503(a)(2); countries. The changes to the AGOA 1. Paragraph (1) authorizes the and implementing regulations necessitated President to provide duty-free treatment b. The cost or value of the materials by this statutory change are not for any article described in section included with respect to that article that interpretative in nature but closely 503(b)(1)(B) through (G) of the GSP are produced in one or more beneficiary reflect the language of the statute. statute that is the growth, product, or sub-Saharan African countries or former Therefore, these regulatory changes are manufacture of a beneficiary sub- beneficiary sub-Saharan African included in this final rule without need Saharan African country. A beneficiary countries shall be applied in for comment. sub-Saharan African country is a determining that percentage. On March 19, 2007, the President country listed in section 107 of the Act Thus, in order for an article described signed Proclamation 8114 (published in of 2000 that has been designated by the in paragraph (1) to receive duty-free the Federal Register on March 22, 2007 President as eligible under subsection treatment, that article must meet the (72 FR 13655)) which, in Annex II, set (a) of new section 506A. The President basic origin and related rules that apply forth modifications to the HTSUS to is authorized to provide duty-free to all eligible articles from any GSP- implement the changes to section 112 of treatment for an article if, after receiving eligible country, but subject to two the AGOA made by section 6002 of the the advice of the International Trade additional rules. In other words, (1) the Act of 2006. The HTSUS provisions Commission in accordance with section article must have become the growth,

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product, or manufacture of a beneficiary sub-Saharan African country by not formed from yarns, if such fabrics sub-Saharan African country by some application of the GSP competitive need are classifiable under heading 5602 or process other than a simple combining limitation provisions. This amendment 5603 of the Harmonized Tariff Schedule or packaging operation or the mere is not addressed in the regulatory of the United States (HTSUS) and are dilution with water or the mere dilution changes adopted as a final rule in this wholly formed and cut in the United with another substance that does not document. States) that are entered under materially alter the characteristics of the Section 114 of the Act of 2000 also subheading 9802.00.80 of the HTSUS article; (2) the article must be imported amended the GSP statute by inserting [paragraph (b)(1)(A)]; directly from a beneficiary sub-Saharan after new section 506A another new 2. Apparel articles sewn or otherwise African country into the customs section 506B, codified at 19 U.S.C. assembled in one or more beneficiary territory of the United States; (3) the 2466b and entitled ‘‘Termination of sub-Saharan African countries from article must have at least 35 percent of benefits for sub-Saharan African fabrics wholly formed and cut, or from its appraised value attributed to the sum countries.’’ This new section, as components knit-to-shape, in the United of the direct costs of processing amended by section 7(a)(1) of the Act of States from yarns wholly formed in the operations performed in the beneficiary 2004, provides for the continuation of United States, or both (including fabrics sub-Saharan African country or in any GSP duty-free treatment through not formed from yarns, if such fabrics two or more beneficiary sub-Saharan September 30, 2015, in the case of a are classifiable under heading 5602 or African countries that are members of beneficiary sub-Saharan African country 5603 of the HTSUS and are wholly the same association of countries and as defined in section 506A(c). The formed and cut in the United States) are treated as one country under section provisions of section 506B also are not that are entered under Chapter 61 or 62 507(2) of the GSP statute, plus the cost addressed in the regulatory changes of the HTSUS, if, after that assembly, or value of the materials produced in adopted as a final rule in this document. the articles would have qualified for entry under subheading 9802.00.80 of the beneficiary sub-Saharan African Section 112 country or in any two or more the HTSUS but for the fact that the beneficiary sub-Saharan African Section 112 of the Act of 2000 set articles were embroidered or subjected countries or former beneficiary sub- forth rules that provide for the to stone-washing, enzyme-washing, acid Saharan African countries; and (4) as preferential treatment of certain textile washing, perma-pressing, oven-baking, variations from the general GSP 35 and apparel products. These rules are bleaching, garment-dyeing, screen percent value-content rule (the two codified at 19 U.S.C. 3721 and thus are printing, or other similar processes additional rules): The cumulation of the outside the GSP statutory framework. [paragraph (b)(1)(B)]; cost or value of materials from different Moreover, these rules in effect operate 3. Apparel articles sewn or otherwise beneficiary countries (or former as an exception to the approach under assembled in one or more beneficiary beneficiary countries) is not dependent the GSP because section 503(b)(1)(A) of sub-Saharan African countries with on those countries being members of an the GSP statute excludes most textile thread formed in the United States from association of countries; and the cost or and apparel articles from preferential fabrics wholly formed in the United value of materials produced in the (that is, duty-free) treatment under the States and cut in one or more customs territory of the United States GSP. beneficiary sub-Saharan African (the 50 States, the District of Columbia, Subsection (a) of section 112 contains countries from yarns wholly formed in and Puerto Rico) may be counted the basic preferential treatment the United States, or from components toward the 35 percent requirement to a statement. It provides that textile and knit-to-shape in the United States from maximum of 15 percent of the article’s apparel articles described in subsection yarns wholly formed in the United appraised value. (b) that are imported directly into the States, or both (including fabrics not Subsection (c) of new section 506A customs territory of the United States formed from yarns, if such fabrics are defines the terms ‘‘beneficiary sub- from a beneficiary sub-Saharan African classifiable under heading 5602 or 5603 Saharan African country’’ and country described in section 506A(c) of of the HTSUS and are wholly formed in ‘‘beneficiary sub-Saharan African the GSP statute shall enter the United the United States) [paragraph (b)(2)]; countries’’ for purposes of the AGOA as States free of duty and free of any 4. Apparel articles wholly assembled a country or countries listed in section quantitative limitations in accordance in one or more beneficiary sub-Saharan 107 of the Act that the President has with the provisions set forth in African countries from fabric wholly determined is eligible under subsection subsection (b), if the country has formed in one or more beneficiary sub- (a) of new section 506A. In addition, satisfied the requirements set forth in Saharan African countries from yarns pursuant to an amendment by section section 113 of the Act of 2000. originating in the United States or one 7(a)(2)(B) of the Act of 2004, subsection Subsection (b) of section 112 lists the or more beneficiary sub-Saharan African (c) defines the term ‘‘former beneficiary specific textile and apparel products to countries or former beneficiary sub- sub-Saharan African country’’ as a which the preferential treatment Saharan African countries, or both country that, after being designated as a described in subsection (a) applies. The (including fabrics not formed from beneficiary sub-Saharan African textile and apparel products described yarns, if those fabrics are classifiable Country under the AGOA, ceased to be in section 112(b), as amended by section under heading 5602 or 5603 of the designated as such a country by reason 3108(a) of the Act of 2002, section 7(b), HTSUS and are wholly formed in one or of its entering into a free trade (c) and (d) of the Act of 2004, and more beneficiary sub-Saharan African agreement with the United States. section 6002 of the Act of 2006, are as countries), or from components knit-to- Subsection (b) of section 111 of the follows: shape in one or more beneficiary sub- Act of 2000 revised section 503(c)(2)(D) 1. Apparel articles sewn or otherwise Saharan African countries from yarns of the GSP statute in order to assembled in one or more beneficiary originating in the United States or one accommodate inclusion of a reference to sub-Saharan African countries from or more beneficiary sub-Saharan African ‘‘any beneficiary sub-Saharan African fabrics wholly formed and cut, or from countries or former beneficiary sub- country.’’ The effect of this amendment components knit-to-shape, in the United Saharan African countries, or both, is to preclude the withdrawal of GSP States from yarns wholly formed in the whether or not the apparel articles are duty-free treatment from a beneficiary United States, or both (including fabrics also made from any of the fabrics, fabric

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components formed, or components Congress, 2d Session, at page 77.) Subsection (d) of section 112 concerns knit-to-shape described in paragraph [paragraph (b)(5)(A)]; the elimination of existing quotas on (b)(1) or (b)(2) (unless the apparel 9. Apparel articles that are both cut textile and apparel articles imported articles are made exclusively from any (or knit-to-shape) and sewn or otherwise into the United States from Kenya and of the fabrics, fabric components assembled in one or more beneficiary Mauritius. This provision is not formed, or components knit-to-shape sub-Saharan African countries, from addressed in the regulatory changes described in paragraph (b)(1) or (b)(2)), fabric or yarn that is not described in adopted as a final rule in this document. subject to the application of certain paragraph (b)(5)(A), to the extent that Subsection (e) of section 112, as quantitative limits [paragraph (b)(3)]; the President has determined that the amended by section 7(e) of the Act of 5. Apparel articles wholly formed on fabric or yarn cannot be supplied by the 2004, sets forth special rules that apply seamless knitting machines in a domestic industry in commercial for purposes of determining the beneficiary sub-Saharan African country quantities in a timely manner and has eligibility of articles for preferential from yarns originating in the United proclaimed the treatment provided treatment under section 112. These States or one or more beneficiary sub- under paragraph (b)(5)(A) [paragraph special rules are as follows: Saharan African countries or former (b)(5)(B)]; 1. Paragraph (e)(1)(A) sets forth a beneficiary sub-Saharan African 10. A handloomed, handmade, or special rule regarding the treatment of countries, or both, whether or not the folklore article or an ethnic printed findings and trimmings. It provides that apparel articles are also made from any fabric of a beneficiary sub-Saharan an article otherwise eligible for of the fabrics, fabric components African country or countries that is preferential treatment under section 112 formed, or components knit-to-shape certified as such by the competent will not be ineligible for that treatment described in paragraph (b)(1) or (b)(2) authority of the beneficiary country or because the article contains findings or (unless the apparel articles are made countries, subject to a determination by trimmings of foreign origin, if the value exclusively from any of the fabrics, the President regarding which, if any, of those foreign findings and trimmings fabric components formed, or particular textile and apparel goods of does not exceed 25 percent of the cost components knit-to-shape described in the country or countries will be treated of the components of the assembled paragraph (b)(1) or (b)(2)), subject to the as being handloomed, handmade, or article. This provision specifies the folklore articles or an ethnic printed following as examples of findings and application of certain quantitative limits fabric [paragraph (b)(6)]; trimmings: Sewing thread, hooks and [paragraph (b)(3)]; 11. Apparel articles sewn or otherwise eyes, snaps, buttons, ‘‘bow buds,’’ 6. Cashmere sweaters, that is, assembled in one or more beneficiary decorative lace trim, elastic strips (but sweaters in chief weight of cashmere, sub-Saharan African countries with only if they are each less than 1 inch in knit-to-shape in one or more beneficiary thread formed in the United States from width and used in the production of sub-Saharan African countries and components cut in the United States brassieres), zippers (including zipper classifiable under subheading 6110.10 and one or more beneficiary sub- tapes), and labels. However, as an of the HTSUS [paragraph (b)(4)(A)]; Saharan African countries or former exception to the paragraph (e)(1)(A) 7. Wool sweaters containing 50 beneficiary sub-Saharan African general rule, paragraph (e)(1)(C) percent or more by weight of wool countries from fabric wholly formed in provides that sewing thread will not be measuring 21.5 microns in diameter or the United States from yarns wholly treated as findings or trimmings in the finer, knit-to-shape in one or more formed in the United States, or from case of an article described in paragraph beneficiary sub-Saharan African components knit-to-shape in the United (b)(2) of section 112 (because that countries [paragraph (b)(4)(B)]; States and one or more beneficiary subparagraph specifies that the thread used 8. Apparel articles that are both cut Saharan African countries or former in the assembly of the article must be (or knit-to-shape) and sewn or otherwise beneficiary sub-Saharan African formed in the United States and thus assembled in one or more beneficiary countries from yarns wholly formed in cannot be of ‘‘foreign’’ origin). sub-Saharan African countries, to the the United States, or both (including 2. Paragraph (e)(1)(B) sets forth a extent that apparel articles of such fabrics not formed from yarns, if such special rule regarding the treatment of fabrics or yarns would be eligible for fabrics are classifiable under heading specific interlinings, that is, a chest type preferential treatment, without regard to 5602 or 5603 of the HTSUS) [paragraph plate, a ‘‘hymo’’ piece, or ‘‘sleeve the source of the fabric or yarn, under (b)(7)]. header,’’ of woven or weft-inserted warp Annex 401 to the North American Free 12. Textile and textile articles knit construction and of coarse animal Trade Agreement (NAFTA). (This classifiable under Chapters 50 through hair or man-made filaments. Under this AGOA provision in effect applies to 60 or Chapter 63 of the HTSUS that are rule, an article otherwise eligible for apparel articles that are entitled to products of a lesser developed preferential treatment under section 112 preferential duty treatment under the beneficiary sub-Saharan African country will not be ineligible for that treatment NAFTA based on the fact that the and are wholly formed in one or more because the article contains interlinings fabrics or yarns used to produce them such countries from fibers, yarns, of foreign origin, if the value of those were determined to be in short supply fabrics, fabric components, or interlinings (and any findings and in the context of the NAFTA. The components knit-to-shape that are the trimmings) does not exceed 25 percent subject fabrics and yarns include fine product of one of more such countries of the cost of the components of the count cotton knitted fabrics for certain [paragraph (b)(8)]; and assembled article. The paragraph also apparel, linen, silk, cotton velveteen, 13. Apparel articles wholly provides for the termination of this fine wale corduroy, Harris Tweed, assembled, or knit-to-shape and wholly treatment of interlinings if the President certain woven fabrics made with animal assembled, or both, in one or more makes a determination that United hairs, certain lightweight, high thread lesser developed beneficiary sub- States manufacturers are producing count poly-cotton woven fabrics, and Saharan African countries regardless of those interlinings in the United States in certain lightweight, high thread count the country of origin of the fabric or commercial quantities. broadwoven fabrics used in the yarn used to make the articles, subject 3. Paragraph (e)(2) sets forth a de production of men’s and boys’ shirts. to the application of certain quantitative minimis rule which provides that an See House Report 106–606, 106th limits [paragraph (c)]; article otherwise eligible for preferential

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treatment under section 112 will not be in implementing an effective visa United States law), if the article were ineligible for that treatment because the system. For purposes of paragraph imported from Mexico. Article 503 of article contains fibers or yarns not (a)(1)(F), paragraph (a)(2) states that the NAFTA sets forth, with one general wholly formed in the United States or documentation regarding the country of exception, three specific circumstances one or more beneficiary sub-Saharan origin of the covered articles includes in which a NAFTA country may not African countries or former beneficiary documentation such as production require a Certificate of Origin. sub-Saharan African countries if the records, information relating to the Finally, subsection (c) of section 113 total weight of all those fibers and yarns place of production, the number and requires CBP to provide technical is not more than 10 percent of the total identification of the types of machinery assistance to the beneficiary sub- weight of the article. used in production, the number of Saharan African countries and to send 4. Paragraph (e)(3) sets forth a special workers employed in production, and production verification teams to at least rule regarding the treatment of certain certification from both the manufacturer four beneficiary sub-Saharan African specified components, namely collars and the exporter. countries each year, and subsection (d) and cuffs (cut or knit-to-shape), Subsection (b) of section 113 sets of section 113 contains an appropriation drawstrings, shoulder pads or other forth regulatory standards for purposes authorization to carry out these duties. padding, waistbands, belt attached to of preferential treatment under section These provisions are not addressed in the article, straps containing elastic, and 112, prescribes a specific factual the regulatory changes adopted as a elbow patches. Under this rule, an determination that the President must final rule in this document. article otherwise eligible for preferential make regarding the implementation of Interim Regulatory Amendments in T.D. treatment under section 112 will not be certain procedures and requirements by 00–67 ineligible for that treatment because the each beneficiary sub-Saharan African article contains a specified component country, prescribes a penalty that the The interim amendments to the CBP that fails to meet the requirements set President must impose on an exporter if regulations set forth in T.D. 00–67 to forth in section 112(b), regardless of the the President determines that the implement the trade benefit provisions country of origin of the component. exporter has engaged in transshipment, of the Act of 2000 consisted of the Subsection (f) of section 112 defines specifies when transshipment occurs for following: (1) The addition of a new certain terms for purposes of sections purposes of the subsection, and sets § 10.178a (19 CFR 10.178a) reflecting 112 and 113 of the Act of 2000 and, in forth responsibilities of CBP regarding the non-textile duty-free treatment paragraph (e)(2), states that the terms monitoring and reporting to Congress on provisions of new section 506A of the ‘‘beneficiary sub-Saharan African actions taken by countries in sub- GSP statute as added by section 111(a) country’’ and ‘‘beneficiary sub-Saharan Saharan Africa. The specific provisions of the Act of 2000; (2) the addition of African countries’’ have the same under subsection (b) that require new §§ 10.211 through 10.217 (19 CFR meaning as those terms have under new regulatory action by CBP are the 10.211 through 10.217) to implement section 506A(c) discussed above. following: those textile and apparel preferential Finally, subsection (g) of section 112 1. Paragraph (b)(1)(A) provides that treatment provisions within sections provides that section 112 takes effect on any importer that claims preferential 112 and 113 of the Act of 2000 that October 1, 2000, and will remain in treatment under section 112 must relate to U.S. import procedures; and (3) effect through September 30, 2015. comply with customs procedures the addition of a reference in the list of similar in all material respects to the entry records in the Appendix (the Section 113 requirements of Article 502(1) of the interim ‘‘(a)(1)(A) list’’) to Part 163 (19 Section 113 of the Act of 2000 sets NAFTA as implemented pursuant to CFR Part 163) to cover AGOA textile forth standards and conditions for the United States law, in accordance with documentation. designation of beneficiary sub-Saharan regulations promulgated by the T.D. 00–67 also included a number of African countries and for the granting of Secretary of the Treasury. The NAFTA interim amendments to the existing CBP preferential treatment to textile and provision referred to in paragraph regulations concerning the Generalized apparel articles under section 112. (b)(1)(A) concerns the use of a System of Preferences (GSP) program These provisions are primarily intended Certificate of Origin and specifically (19 CFR 10.171–10.178) to implement to avoid transshipment situations and requires that the importer (1) make a previous statutory and other changes to thus ensure that preferential treatment written declaration, based on a valid that program and to correct several out- is applied to goods as intended by Certificate of Origin, that the imported of date statutory references. The specific Congress. good qualifies as an originating good, (2) GSP regulations affected were Subsection (a) of section 113 sets forth have the Certificate in its possession at §§ 10.171(a), 10.175(e), 10.176(a), and various terms and conditions that a the time the declaration is made, (3) 10.176(c) (19 CFR 10.171(a), 10.175(e), potential beneficiary sub-Saharan provide the Certificate to CBP on 10.176(a), and 10.176(c)). For more African country must satisfy for request, and (4) promptly make a detailed information concerning these purposes of preferential treatment under corrected declaration and pay any regulatory changes, please see T.D. 00– section 112. These terms and conditions duties owing where the importer has 67. involve enforcement and related actions reason to believe that a Certificate on Although the interim regulatory to be taken by, and within, those which a declaration was based contains amendments were promulgated without potential beneficiary sub-Saharan information that is not correct. prior public notice and comment African countries and thus, except in 2. Paragraph (b)(2) provides that the procedures and took effect on October 1, the case of paragraphs (a)(1)(F) and Certificate of Origin that otherwise 2000, T.D. 00–67 nevertheless provided (a)(2), do not relate to matters that would be required pursuant to the for the submission of public comments require regulatory action by CBP. provisions of paragraph (b)(1)(A) will which would be considered before Paragraph (a)(1)(F) requires a country to not be required in the case of an article adoption of the interim regulations as a agree to report, on a timely basis, at the imported under section 112 if that final rule, and the prescribed public request of the CBP, documentation Certificate of Origin would not be comment period closed on December 4, establishing the country of origin of required under Article 503 of the 2000. A discussion of the comments covered articles as used by that country NAFTA (as implemented pursuant to received by CBP is set forth below.

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Interim Regulatory Amendments in T.D. countries’’ toward satisfying the GSP reflect the inclusion of an additional 03–15 35% value-content requirement. special rule relating to certain specified As a consequence of the statutory 2. In § 10.178a, a new paragraph (d)(5) components in new paragraph (d)(3) of changes made by section 3108 of the Act is added to reflect the definition of section 112 of the AGOA (now section ‘‘former beneficiary sub-Saharan of 2002 and the modifications to the 112(e)(3)). African country’’ set forth in amended 14. The preference group descriptions HTSUS made by Proclamation 7626, section 506A(c) of the GSP statute. on the Certificate of Origin set forth T.D. 00–67 no longer fully reflected the 3. In § 10.212, a definition of ‘‘ethnic under paragraph (b) of § 10.214 are state of the law. Accordingly, T.D. 03– printed fabric’’ is added as new revised to reflect the amended product 15 set forth interim amendments paragraph (d) to reflect the inclusion descriptions in section 112(b) of the involving the textile and apparel of references to, and description of, AGOA. The instructions for completion provisions in the AGOA and, in part, ‘‘ethnic printed fabric’’ in paragraph of the Certificate in paragraph (c) of reflected changes made to those (b)(6) of section 112 of the AGOA. § 10.214 are also revised as appropriate statutory provisions by section 3108 of 4. In § 10.212, a definition of ‘‘former to reflect the changes made to the the Act of 2002. The specific statutory beneficiary country’’ is added as new Certificate. changes addressed in T.D. 03–15 paragraph (f) to reflect the inclusion of CBP is now publishing one document involved the amendment of several references to this term in paragraphs that (1) addresses both the comments AGOA regulatory provisions to clarify (b)(3), (b)(7) and (e)(2) of section 112 of submitted on the interim regulations the status of apparel articles assembled the AGOA as well as the definition of published in T.D. 00–67 and T.D. 03–15, from knit-to-shape components, the this term set forth in new paragraph and (2) adopts, as a final rule, the AGOA inclusion of a specific reference to (f)(4) of section 112 of the AGOA. implementing regulations contained in apparel articles formed on seamless 5. In § 10.212, a definition of ‘‘lesser the two interim rule documents with knitting machines, a change of the wool developed beneficiary country’’ is changes reflecting the statutory fiber diameter specified in one added as new paragraph (j) to reflect the amendments made by the Acts of 2004 provision and the addition of a new inclusion of references to this term in and 2006 as well as other changes provision to cover additional paragraphs (b)(8) and (c) of section 112 identified and discussed below. production scenarios involving the of the AGOA. United States and AGOA beneficiary 6. In § 10.213, paragraphs (a)(1) and Discussion of Comments in Response to countries. T.D. 03–15 also included a (a)(2) are revised to conform to the T.D. 00–67 number of other changes to the AGOA amendment of the product description A total of 19 commenters responded implementing regulations to clarify a in the introductory text of paragraph to the solicitation of public comments in number of issues that arose after their (b)(1) of section 112 of the AGOA. the October 5, 2000, interim rule original publication. For further details 7. In § 10.213, paragraph (a)(4) is document referred to above. One regarding these regulatory provisions, revised to conform to the amendment of commenter addressed the interim see T.D. 03–15. the product description in the conforming amendments to the GSP The interim regulatory amendments introductory text of paragraph (b)(3) of regulations, and the other 18 promulgated by T.D. 03–15 became section 112 of the AGOA. commenters made a variety of effective on March 21, 2003. However, 8. In § 10.213, paragraph (a)(8) is observations or suggestions regarding public comments on the interim revised to conform to the amendment of the interim AGOA implementing amendments were solicited, and a the product description in paragraph regulations. discussion of the comments received (b)(5)(A) of section 112 of the AGOA. It should be noted that the comments during the comment period, which 9. In § 10.213, paragraph (a)(10) is received in response to T.D. 00–67 were closed on May 20, 2003, is set forth revised to conform to the amendment of received prior to the subsequent below. the product description in paragraph statutory changes effected by section (b)(6) of section 112 of the AGOA. Regulatory Amendments To Reflect 3108 of the Act of 2002, the regulatory 10. In § 10.213, paragraph (a)(11) is Changes Made by the Acts of 2004 and interim amendments made by T.D. 03– revised to conform to the amendment of 2006 15, and the statutory changes effected by the product description in paragraph section 7 of the Act of 2004 and section This final rule incorporates in the (b)(7) of section 112 of the AGOA. 6002 of the Act of 2006. To the extent regulatory text statutory changes made 11. In § 10.213, a new paragraph that the comments received were to the AGOA by section 7 of the Act of (a)(12) is added to reflect the addition of unaffected by these subsequent changes, 2004 (and the modifications to the paragraph (b)(8) to section 112 of the CBP has responded. HTSUS made by Proclamation 7808) AGOA. and by section 6002 of the Act of 2006 12. In § 10.213, the de minimis rule I. Conforming GSP Regulations Changes (and the modifications to the HTSUS set forth in re-designated paragraph Comment: made by Proclamation 8114). As stated (c)(1)(iv) (formerly paragraph (b)(1)(iv)) The comment on the interim earlier, because these changes to the is revised to conform to the conforming amendments to the existing interim regulatory texts, as described amendments made to section 112(d)(2) GSP regulations concerned specifically below, are not interpretative in nature of the AGOA (now section 112(e)(2)). the revision of paragraph (a) of § 10.176. but closely reflect the language of the An explanation for the re-designation of This commenter asserted that, in view statute, they are included in this final former paragraph (b) of the interim of the decision in Uniden America Corp. rule without need for comment. regulatory texts as paragraph (c) is set v. United States, 120 F.Supp. 2d 1091, 1. In § 10.178a, paragraphs (d)(2) and forth below in the discussion of 24 CIT 1191 (2000), revised § 10.176(a) (d)(4)(ii) are revised to reflect the comments in response to T.D. 00–67. does not adequately implement the amendment to section 506A(b)(2)(B) of 13. In § 10.213, re-designated changes made to the GSP statute by the GSP statute providing for the paragraph (c) (formerly paragraph (b)), section 226 of the Customs and Trade inclusion of the cost or value of entitled ‘‘Special rules for certain Act of 1990 in two respects. First, the materials produced in ‘‘former component materials,’’ is revised by revised regulation should provide that beneficiary sub-Saharan African adding a new paragraph (c)(1)(v) to the ‘‘substantial transformation’’ test

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applies to the ‘‘eligible article’’ rather Three commenters asserted that expressed regret that Canadian and than each of its detachable elements. because the Congressional intent behind NAFTA yarns and fabrics are excluded Second, the revised regulation should the AGOA was to encourage two-way from eligibility under the AGOA. clarify that ‘‘simple combining or trade between the United States and the CBP’s Response: packaging operations’’ do not include countries of sub-Saharan Africa with no Although CBP agrees that the complex manufacturing operations that other third country participation, CBP provisions provide limited benefits to also involve the combining or packaging must bar preferential entry of any Canadian textile producers, CBP of foreign components. merchandise under the AGOA that has believes this to be consistent with the CBP’s Response: undergone any processing or been language and intent of the legislation. The commenter seeks a change to advanced in value or improved in The intent of the legislation was to revised § 10.176(a) based on the condition in any way other than in the foster increased opportunities for the decision in Uniden, rather than the United States or a designated United States and countries in the sub- language of section 226 of the Customs beneficiary country, except for one Saharan African region. Thus, where the and Trade Act of 1990. In Uniden, the specific provision involving lesser legislation requires that yarns and fabric Court of International Trade determined developed beneficiary countries. for certain apparel articles be wholly that a cordless phone assembled in a Accordingly, these commenters stated formed in the United States, it does not GSP eligible country and packaged with that CBP must ensure that the final allow for the sourcing of yarns and an A/C adapter imported from a non- regulations maximize trade benefits to fabric from other NAFTA countries. CBP GSP eligible country was a product of the beneficiary countries and to notes that the ‘‘wholly formed’’ the GSP eligible country and entitled to producers in the United States. requirement would not preclude the GSP preferential tariff treatment when CBP’s Response: sourcing of fibers from NAFTA CBP agrees that the AGOA was imported into the United States. countries (or any other countries) so intended to promote the creation of a long as those fibers are spun into yarns CBP does not agree that the changes climate conducive to greater levels of to revised § 10.176(a) suggested by the and used to form qualifying fabric in the trade and investment and to foster a United States. commenter should be implemented as growing economic partnership between part of this final rule document. Section the United States and sub-Saharan Definition of ‘‘Apparel Articles’’ 226 of the Customs and Trade Act of African countries (see the discussion of Comment: 1990 (Public Law 101–382, 104 Stat. the beneficiary country eligibility One commenter stated that within the 660) amended the GSP statute (19 U.S.C. criteria in the Conference Report § 10.212 definition of ‘‘apparel articles’’ 2463) to include explicit country of relating to the Act of 2000, House the reference to HTSUS subheading origin language nearly identical to that Report 106–606, 106th Congress, 2d ‘‘6406.99’’ is incorrect because that found in the Caribbean Basin Economic Session, at p. 68). subheading includes rubber/plastic Recovery Act (CBERA) (19 U.S.C. 2703). CBP also agrees that under the footwear parts. This commenter As the legislative history of section 226 statutory scheme, the processing of suggested that the correct reference indicates that the GSP and CBERA textile and apparel articles entitled to should be to subheading ‘‘6406.99.15.’’ ‘‘growth, product or manufacture’’ preferential treatment under the AGOA CBP’s Response: requirements should be applied is specified to occur either in the United CBP agrees with the commenter that identically (see House Report 101–650, States or in the AGOA beneficiary the reference to HTSUS subheading 101st Congress, 2d Session, at page 137), countries (and in certain instances, in 6406.99 is incorrect. In 2000, the revised § 10.176(a) was drafted to former beneficiary countries, if any), reference should have been to closely follow the corresponding except as regards the sourcing of fabric subheading 6406.99.15 so as to limit the CBERA regulatory provision (19 CFR or yarn in the case of certain lesser articles to those made of textile 10.195(a)). Consistent with this developed beneficiary countries. In materials. In 2012, the subheading was legislative intent, CBP believes that it addition, the direct importation changed from 6406.99.15, HTSUS to would be inappropriate to alter requirement set forth in the statute and 6406.90.15, HTSUS. Since the definition § 10.176(a) in the manner suggested by regulations operates as a practical of ‘‘apparel articles’’ in § 10.212 was the commenter. matter to limit the feasibility of directed to textile apparel articles, the II. AGOA Implementing Regulations operations in countries other than the reference to subheading 6406.99 in this United States or AGOA beneficiary definition (now § 10.212(a)) has been All of the comments received on the countries. replaced in this final rule document by interim AGOA implementing Comment: a reference to subheading 6406.90.15, regulations were directed to the textile One commenter complained that the HTSUS. and apparel provisions of sections 112 AGOA textile and clothing provisions and 113 of the AGOA, and thus there substantially dilute the benefits of the Definitions of ‘‘Knit-To-Shape’’ and were no comments pertaining to the NAFTA for Canadian textile producers ‘‘Major Parts’’ expanded GSP provisions contained in and their United States customers and Comment: section 111 of the AGOA. The suppliers. This commenter noted in this One commenter noted with regard to comments submitted by these 18 regard that the AGOA provisions impair § 10.212 that definitions of ‘‘knit-to- commenters are summarized and the ability of United States fabric and shape’’ and ‘‘major parts’’ already responded to below. apparel producers to source yarns and appear in § 102.21 of the CBP fabrics from all the available General Comments Regarding Scope of regulations (19 CFR 102.21). The competitive suppliers in the NAFTA Intended Benefits commenter argued that those definitions region, because they are limited to should not be repeated in § 10.212 Four commenters expressed views buying from United States suppliers. because meanings are presumed to be regarding the scope of the AGOA, The commenter argued that this runs consistent throughout the regulations. particularly in regard to its intended contrary to the textile/apparel CBP’s Response: beneficiaries. infrastructure that has emerged under CBP does not agree with this Comment: the NAFTA. Another commenter commenter. While there may be cases in

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which definitions or meanings might intended to permit prior partial States’’ does not mean that any dyeing, have broad regulatory application (see, assembly operations to be performed in printing or finishing of the fabric must for example, § 101.1 of the CBP the United States. The definitions of be restricted to the United States. Some regulations (19 CFR 101.1) which sets ‘‘sewn or otherwise assembled in one or of the commenters further forth various definitions that generally more beneficiary countries’’ and recommended that the regulatory texts apply throughout the CBP regulations), ‘‘wholly assembled in’’ in § 10.212 of be modified to clearly reflect the no presumption of consistency can the regulations give effect to this intent. principle that U.S. fabric may be dyed operate where, as in the case of both and finished outside the United States. §§ 10.212 and 102.21, the introductory Definition of ‘‘Wholly Formed’’ CBP’s Response: text of the definitions provision Fourteen commenters submitted The comments regarding the meaning expressly limits application of the observations on the § 10.212 definition of ‘‘wholly formed’’ as it applies to definitions to the specific regulatory of ‘‘wholly formed’’ which was drafted fabric fall on both sides of the issue of context in which the definitions appear. with reference to yarns, thread and whether dyeing, printing and/or CBP also believes that, for the fabric. finishing should be included within the convenience of the reader, it is generally Comment: scope of the term. Some argue preferable for a regulatory text to repeat Two commenters indicated that the strenuously that dyeing, printing and/or a text that is the same as one used in reference to ‘‘thread’’ in the definition finishing must be encompassed within another regulatory context rather than to was inappropriate because the word the definition of ‘‘wholly formed’’, use a cross-reference to that other text, ‘‘wholly’’ does not appear in the statute while others argue just as strenuously particularly when repeating the text will in the context of thread formation. that these processes clearly are not part not add significant length to the Rather, these commenters noted that the of fabric formation. Both sides argue regulations as a whole. statute merely refers to ‘‘thread formed that their view reflects the intent of in the United States.’’ They therefore Congress. Meaning of ‘‘Wholly Assembled’’ suggested that the definition be CBP agrees with the latter position. Comment: amended to ensure consistency with the ‘‘Form’’ refers to shape, being, existence. One commenter took issue with what wording of the statute. ‘‘Wholly’’ refers to completeness. Fabric it believes is an assumption or CBP’s Response: is completely shaped, or wholly formed, interpretation of CBP that the words CBP agrees. In this regard, it is noted prior to finishing. CBP disagrees with ‘‘wholly assembled’’ in the regulatory that in T.D. 03–15, CBP replaced the those who argue that any definition of texts would preclude partial assembly original interim § 10.212 definition of ‘‘wholly formed’’ that does not include in the United States. This commenter ‘‘wholly formed’’ with two definitions, dyeing, printing and finishing would argued that Congress neither intended to one covering ‘‘wholly formed’’ as it render the term ‘‘wholly’’ meaningless. penalize goods that include value added relates to fabrics and the other covering It has meaning as it applies to the term in the United States nor wanted to ‘‘wholly formed’’ as it relates to yarns ‘‘formed;’’ that is, it refers to all of the discourage apparel companies from (see the comment discussion relating to processes that contribute to the maximizing the use of U.S. inputs wholly formed yarns below). This was formation of the fabric. See also the involving partial assembly in the United done to reflect the separate fabric and response to the next comment. States. yarn contexts under the statute. The Comment: CBP’s Response: separate definition for wholly formed CBP is correct in interpreting that CBP disagrees with the commenter’s yarns was further revised by removing dyeing, printing and similar finishing view of the intent of Congress. Certain the words ‘‘or thread’’ to reflect the fact operations may be performed on fabrics of the categories of textile and apparel that, as the commenters correctly point in the United States or in the beneficiary products entitled to preferential out, the statute does not use the word country. Consistent with the Breaux- treatment under the AGOA specify that ‘‘wholly’’ in the context of thread Cardin rules, CBP has not included such the affected articles must be ‘‘sewn or formation. dyeing, printing and finishing otherwise assembled in one or more operations (or similar procedures) in the beneficiary sub-Saharan African Wholly Formed Fabrics definition of operations that occur countries.’’ See, for example, section Comment: under the term ‘‘wholly formed.’’ As a 112(b)(1) and (b)(2) of the AGOA. [It is With regard to fabrics, eight result, the interim regulations do not noted that the words ‘‘sewn or commenters expressed the view that the prohibit such dyeing and finishing otherwise’’ were added to these concept of ‘‘wholly formed’’ operations from being performed in provisions by section 3108(a) of the Act encompasses dyeing, printing and beneficiary countries. of 2002.] However, section 112(b)(3) of finishing operations and that, CBP’s Response: the AGOA specifies that the affected consequently, any requirement that a CBP believes it would be inconsistent apparel articles must be ‘‘wholly fabric be ‘‘wholly formed in the United with the plain language of the AGOA to assembled in one or more beneficiary States’’ means that any dyeing, printing conclude that printing and/or dyeing is sub-Saharan African countries.’’ CBP or finishing of the fabric also must be part of the fabric formation process. In believes that adding the word ‘‘wholly’’ performed in the United States. Some of drafting the interim regulations, CBP prior to ‘‘assembled’’ in the latter the commenters further recommended crafted a definition of ‘‘wholly formed’’ provision was purposeful and a clear that the regulatory texts be modified to which was based in part on the indication of the intent of Congress that, clearly reflect this principle or to set definition of ‘‘fabric-making process’’ as a prerequisite to receiving benefits forth all processing steps necessary to contained in § 102.21(b)(2) of the CBP under this provision, all assembly result in ‘‘wholly formed’’ fabric. regulations (19 CFR 102.21(b)(2)) and operations must be performed in one or Six commenters took the position that which was also intended to reflect the more of the AGOA beneficiary dyeing, printing and finishing common meanings of the words countries. In provisions such as those operations do not fall within the ‘‘wholly’’ and ‘‘formed.’’ ‘‘Form’’ is cited above in which the word concept of ‘‘wholly formed’’ and that, defined, in part, in Webster’s Third New ‘‘assembled’’ is not prefaced by consequently, a requirement that a International Dictionary (1993), at 893, ‘‘wholly,’’ CBP believes that Congress fabric be ‘‘wholly formed in the United as: ‘‘1a. to give form or shape to: . . . 2.a.

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to give a particular shape to: shape, common meaning. Based on the it is considered formed. Printing, dyeing mold, or fashion into a certain state or common meaning of the terms ‘‘wholly’’ and finishing (or similar processes) are condition or after a particular model.’’ and ‘‘formed,’’ the position of CBP is irrelevant and not essential to the fabric ‘‘Wholly’’ is defined in Webster’s Third that dyeing, printing and finishing of formation process and thus should be New International Dictionary (1993), at fabric are not part of the fabric allowable operations in the United 2612, as: ‘‘1. To the full or entire extent: formation process and thus do not fall States and/or beneficiary countries. It without limitation or diminution or within the scope of ‘‘wholly formed’’ as should be made clear that one can reduction: ALTOGETHER, it relates to fabric. export greige fabric to the AGOA COMPLETELY, TOTALLY. 2. to the As to the reference in the comment to beneficiary country and then dye, cut exclusion of other things: solely.’’ the Breaux-Cardin rules (the textile and and assemble there. Similar definitions of both terms may be apparel country of origin rules set forth CBP’s Response: found in various lexicographic sources. in section 334 of the Uruguay Round Based on the definitions cited earlier ‘‘Finishing’’ is defined in Webster’s Agreements Act (URAA), and in this wholly formed fabric comment Third New International Dictionary implemented in § 102.21 of the CBP discussion, CBP agrees that printing, (1993), at 854, as: ‘‘the act or process of regulations (19 CFR 102.21)), CBP notes dyeing and finishing are not part of the completing: the final work upon or that the AGOA is a preferential tariff fabric formation process. CBP also ornamentation of a thing. specif : the treatment program which is based, for agrees that dyeing, printing and processing applied to cloth after it is textile apparel, upon specified finishing operations may occur in the taken from the loom.’’ Fairchild’s manufacturing processes; it is not a United States or in the AGOA Dictionary of Textiles, (7th ed. 1996), at program based upon origin. beneficiary countries except in the case 220, defines finishing as a ‘‘[s]equence Comment: of provisions subject to the restrictions of treatments (excluding coloration) Processes such as bleaching, dyeing under subheading 9802.00.80, HTSUS. worked on greige fabric intended for and printing that are commonly Comment: sale to consumers or downstream users recognized as ‘‘finishing operations’’ are The plain meaning of the term prior to that sale.’’ In the 6th edition of separate from the forming of the ‘‘wholly formed’’ when applied to fabric Fairchild’s Dictionary of Textiles, materials and it is therefore appropriate refers not only to the basic greige goods (1979), at 238, ‘‘finishing’’ is defined as: that those processes should not affect but also to any dyeing, printing and ‘‘[a] process through which fabric passes the definition of ‘‘wholly formed.’’ The other finishing operations prior to after being removed from the loom. (1) final rule should clarify the distinction cutting of the apparel components, since To improve appearance. . . . (2) To affect between formation and finishing. otherwise the word ‘‘wholly’’ would be stiffness, weight, elasticity, softness. . . CBP’s Response: essentially meaningless. . (3) To facilitate care. . . . (4) To protect Based on the definitions cited above CBP’s Response: the wearer. . . .’’ In the Dictionary of in this comment discussion, CBP agrees As discussed above, ‘‘wholly’’ has Fiber & Textile Technology (KoSa, with the comment, including the meaning as it applies to ‘‘formed.’’ 1999), at 86, ‘‘finishing’’ is defined as: suggestion that the final regulations Congress is presumed to use words ‘‘All the processes through which fabric should contain a clarification regarding according to their common, ordinary is passed after bleaching, dyeing, or the fact that the processes of dyeing, meaning in drafting legislation unless printing in preparation for the market or printing and finishing are distinct from some other intent is evident. Nothing in use. Finishing includes such operations fabric formation. See the description of the AGOA or in the Conference Report as heat-setting, napping, embossing, the regulatory text changes at the end of relating to the Act leads CBP to believe pressing, calendering, and the this wholly formed fabric comment that Congress intended a meaning other application of chemicals that change the discussion. than the plain meaning of the words character of the fabric. The term Comment: ‘‘wholly’’ and ‘‘formed.’’ Therefore, finishing is also sometimes used to refer In the terminology of the textile based on the common meanings of collectively to all processing operations industry, ‘‘finishing’’ is necessary before ‘‘wholly’’ and ‘‘formed,’’ CBP disagrees above, including bleaching, dyeing, fabric can be used, and without it the with the commenter’s assertion that printing, etc.’’ In Fairchild’s Dictionary fabric is ‘‘unfinished,’’ the opposite of ‘‘wholly formed’’ as it refers to fabric of Textiles (Second printing, 1970), at ‘‘wholly formed.’’ Apparel is not made includes dyeing, printing and finishing 230, ‘‘finishing’’ is defined as: ‘‘All of ‘‘unfinished’’ fabric, and operations. processes through which fabric passes ‘‘unfinished’’ cannot be stretched to Comment: after being taken from loom. This covers mean ‘‘complete,’’ ‘‘entire’’ or ‘‘whole.’’ If Congress had intended to limit the bleaching, dyeing, sizing, and processes CBP’s Response: phrase ‘‘wholly formed’’ to the which give the desired surface effect, CBP disagrees with this comment. As formation of the greige goods, there e.g., napping, calendering, embossing, already stated, CBP believes that would have been no need to include the etc. . . .’’ CBP’s review of the above finishing and formation are separate word ‘‘wholly’’ in the statute. There is definitions reveals that the definition of processes. ‘‘Unfinished’’ is not the no circumstance in which greige goods ‘‘finishing’’ found in the cited technical opposite of ‘‘wholly formed,’’ and CBP may be ‘‘partially’’ formed in one sources is consistent with the common also notes that unfinished fabric is still country and ‘‘partially’’ formed in meaning of the term as defined in fabric. The statute requires formation of another country. Since language in a general lexicographic sources. Thus, fabric. Based upon the language of the statute must be read to give effect to all ‘‘finishing’’ in regard to fabric has been statute and the common meaning of the of its terms, the use of the word understood in the textile industry, as terms chosen by Congress to express its ‘‘wholly’’ was evidently intended to reflected by the various definitions cited intent in the statute, ‘‘wholly formed’’ as reference dyeing, printing and finishing above, as referring to processes which used in the AGOA speaks to formation operations. occur to fabric after it has been formed. of fabric and does not include finishing. CBP’s Response: Absent evidence of a different Comment: As already discussed above, ‘‘wholly’’ commercial meaning or a legislative The common definition of ‘‘formed’’ is an adverb that applies to ‘‘formed.’’ intent to the contrary, the terms of a as it relates to fabric is that once the An examination of the common tariff statute are to be given their yarn is spun and fabric is woven or knit, meanings of the terms, which Congress

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is presumed to have intended, leads to knitted, woven, tufted, etc.) and regarding the Special Access program the conclusion that ‘‘wholly formed’’ as ‘‘wholly formed’’ (meaning formed and support the opposite conclusion. In the it pertains to fabric means the fabric is subject to further processing to complete initial notice announcing the completely shaped or formed. CBP is its identity, that is, preparation, dyeing implementation of the Special Access giving effect to all the terms of the or printing, and finishing). Congress program, published in the Federal statute according to their context. clearly intended to make this distinction Register (51 FR 21208) on June 11, 1986, Although CBP agrees with the in the AGOA. the Committee for the Implementation commenter’s assertion that ordinarily CBP’s Response: of Textile Agreements (CITA) referred to greige fabric is not ‘‘partially’’ formed in CBP disagrees with the assertion the requirement that fabric be ‘‘entirely one country and ‘‘partially’’ formed in made in the comment which is offered U.S. formed’’ or ‘‘entirely formed in the another country, CBP disagrees with the without support. The term ‘‘wholly United States.’’ In discussing this commenter’s underlying premise that formed’’ appears in subheading requirement, the notice stated that fabric cannot be ‘‘wholly formed’’ in the 9802.00.90, HTSUS, which is the ‘‘[f]abric which . . . would have to be greige state. provision created under the NAFTA to labeled ‘Imported cloth, finished in the Comment: succeed the Special Regime program USA’ or ‘Made in (foreign country), In sections 112(b)(1) and (b)(2) of the and which covers textile and apparel finished in USA’ does not qualify as AGOA, ‘‘wholly’’ means fabrics which goods assembled in Mexico from fabric U.S. formed and cut fabric. . . .’’ A later have been processed up to the point at components wholly formed and cut in notice by CITA to clarify requirements which they are ready to be transformed the United States. The term ‘‘wholly and procedures for the Special Access into a new and different article of formed’’ has been interpreted by CBP in program, published in the Federal commerce, that is, apparel. Before fabric numerous rulings under this provision Register (52 FR 26057) on July 10, 1987, can be transformed into apparel through as referring to fabric that is woven or stated the following in regard to the cutting and assembly, it must first be milled in the United States. See, for definition of U.S.-formed and cut parts: scoured and bleached or dyed or printed example, HQ 558708 of June 14, 1995, (1) greige goods imported into the and finished. Therefore, ‘‘fabrics wholly and HQ 559411 of April 7, 1997. The United States and then finished in the formed’’ means fabrics which have been assertion of a ‘‘longstanding practice’’ is United States do not qualify under the formed from their constituent yarns by refuted by these rulings. program because that fabric is foreign- knitting, weaving, etc. and subsequently Comment: formed; and (2) fabric that is woven or scoured or bleached or dyed or printed In order to be consistent with the knitted in the United States from foreign and finished in the United States only Special Access Program, as Congress yarn is considered U.S.-formed for the (the word ‘‘wholly’’ makes it clear that intended, CBP must define the purposes of this program. Similar none of these processes may be carried ‘‘forming’’ of fabric in the AGOA language is found in the notice out on the fabric in any other country). regulations to include the processes of announcing the requirements for CBP’s Response: dyeing, printing and finishing in participation in the Special Regime This comment asserts that dyeing, addition to the processes of weaving program, published in the Federal printing and finishing must be within and knitting. The Special Access Register (53 FR 15724) on May 3, 1988, the meaning of ‘‘fabrics wholly formed’’ Program clearly applies to goods that which stated that greige goods imported without offering support for the only undergo the overseas process of into the United States and then finished assertion other than an argument that assembly and do not undergo other in the United States do not qualify such processing must occur before fabrication processes overseas, under the Special Regime program fabric is cut and assembled into apparel. including dyeing, printing and finishing because that fabric is foreign-formed. Although fabric is normally dyed or in the beneficiary country. Manifestly, Thus, CITA recognized a distinction printed and finished before being cut fabric components exported from the between fabric formation and fabric and assembled into goods, that is not United States under the Special Access finishing and viewed dyeing and always the case. Some garments are Program could only be ‘‘in condition printing as being in the latter category. garment-dyed, a process recognized by ready for assembly with no further There is no discussion of finishing of Congress in section 112(b)(1)(B) of the fabrication’’ if one of the two exclusive fabrics as being considered part of fabric AGOA which requires apparel to be steps undertaken before export from the formation in the notices regarding the assembled in one or more AGOA United States (that is, ‘‘forming’’ and Special Access and Special Regime beneficiary countries from ‘‘fabrics ‘‘cutting’’ the fabric) included the programs. wholly formed’’ and cut in the United processes of dyeing, printing and Comment: States. If ‘‘fabrics wholly formed’’ meant finishing, and those processes would In order to qualify under section that a greige fabric could not be ‘‘wholly most sensibly be placed within the 112(b)(1) of the AGOA, the apparel formed’’ and that to be ‘‘wholly formed’’ category of fabric formation. articles must be either ‘‘entered under a fabric had to be dyed or printed and CBP’s Response: subheading 9802.00.80’’ or ‘‘qualified finished in the United States, it would CBP agrees that Congress wanted the for entry’’ under that subheading but for be incongruous for Congress to provide AGOA to be administered in a manner the fact of certain operations performed for garment-dyeing in the beneficiary similar to the way in which the Special on the assembled articles, and, in order countries in section 112(b)(1)(B) of the Access program is administered. This to qualify under subheading 9802.00.80, AGOA as it did. CBP is not persuaded desire is evident in the Conference the components exported to the foreign by this comment and for reasons already Report relating to the Act of 2000. country must be ‘‘ready for assembly stated maintains that dyeing, printing However, CBP finds nothing in the without further fabrication.’’ This means and finishing are operations separate Federal Register notices regarding that that in order to qualify under and apart from the formation of fabric program or in the language of the tariff subheading 9802.00.80, neither the and thus do not fall within the scope of provision providing for implementation fabric nor the fabric components could ‘‘wholly formed’’ as it pertains to fabric. of the program which supports the be sent to the foreign country and Comment: argument that ‘‘wholly formed’’ in subjected to operations such as dyeing, Longstanding practice has made a reference to fabric requires the inclusion printing and other finishing operations distinction between ‘‘formed’’ (that is, of finishing operations. In fact, notices (in other words, any operations such as

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dyeing, printing and other finishing components must be fabricated in the of Congress in that provision as well as operations must be done in the United United States and must be exported in in the AGOA was to go beyond those States prior to the export of the fabric a condition ready for assembly without processes by which yarns are components). further fabrication), the two core manufactured into fabric and to include CBP’s Response: requirements could only be met if the fabric finishing operations in the United CBP agrees that fabric formed and cut fabric components were fully dyed, States. in the United States and used in the printed, and finished in the United CBP’s Response: assembly of apparel articles described in States, because there is no provision for CBP disagrees that the words § 10.213(a)(1) and (a)(2) (which post-assembly dyeing, printing, and ‘‘assembled in Mexico in which all corresponds to § 112(b)(1) of the Act) finishing overseas. Therefore, if the fabric components were wholly formed cannot be subject to dyeing, printing or phrase ‘‘wholly formed and cut’’ in the and cut in the United States’’ in most other finishing operations in an AGOA does not include dyeing, printing subheading 9802.00.90, HTSUS, and AGOA beneficiary country. The apparel and finishing operations, the first AGOA CBP rulings construing that subheading described in § 10.213(a)(1) is entered category would become meaningless support a conclusion that, for purposes under subheading 9802.00.80, HTSUS, because its terms could not be met as a of the AGOA, dyeing, printing and which precludes processing of the U.S. technological matter. finishing operations must occur in the components outside the United States CBP’s Response: United States for fabric to be ‘‘wholly other than by assembly operations or CBP disagrees with the premise of the formed.’’ There is nothing in the operations incidental to assembly. The argument in the comment that the language of subheading 9802.00.90, apparel described in § 10.213(a)(2) are limitations or requirements set forth in HTSUS, or in the rulings issued by CBP goods which would have qualified for subheading 9802.00.80, HTSUS, and interpreting that provision that would entry under subheading 9802.00.80, applicable to the goods described in compel that conclusion. On the HTSUS, but for the performance of § 10.213(a)(1) and (a)(2) (section contrary, subheading 9802.00.90, certain enumerated operations. The 112(b)(1)(A) and (B) of the AGOA) HTSUS, and § 10.213(a)(2) of the regulations implementing subheading impact upon the meaning of ‘‘wholly regulations (section 112(b)(1)(B) of the 9802.00.80, HTSUS (see, in particular, formed and cut’’ as used in the AGOA. AGOA) expressly permit garment 19 CFR 10.16(c) which delineates what The same terms, ‘‘wholly formed’’ and dyeing and other finishing operations will not be considered ‘‘incidental’’ to ‘‘cut,’’ appear in § 10.213(a)(3) (section after assembly. The inclusion of assembly), preclude bleaching, dyeing 112(b)(2) of the AGOA), albeit in a references to those post-assembly and similar processing of the fabric different order but, in CBP’s view, with operations supports the conclusion that components abroad. However, there is the same meaning. ‘‘Wholly formed’’ is dyeing or finishing of fabric prior to no requirement that these processes be used in all three paragraphs in regard to cutting and exportation of the performed in the United States prior to fabric. The limitations associated with components for assembly is not required the foreign assembly. Thus, for instance, subheading 9802.00.80, HTSUS, are for the fabric to be ‘‘wholly formed.’’ In a U.S. importer wishing to garment dye clearly tied to section 112(b)(1)(A) and fact, a requirement to dye the fabric his goods in the United States after (B) of the AGOA because Congress prior to exportation of the cut assembly in an AGOA beneficiary specifically required, in the case of components would be country would be able to do so after goods described in section 112(b)(1)(A) counterproductive in the case of a entry of the assembled goods under of the AGOA, that the goods be entered producer planning to garment dye his subheading 9802.00.80, HTSUS. under subheading 9802.00.80, HTSUS, apparel after assembly. Comment: and, in the case of goods described in Comment: There are close parallels between the section 112(b)(1)(B) of the AGOA, that Rulings issued by CBP construing two special access rules contained in the goods would have qualified for entry HTSUS subheading 9802.00.90 support Appendix 2.4 of NAFTA Annex 300–B under subheading 9802.00.80, HTSUS, the conclusion that the references to and the first two categories of goods but for the performance of certain fabrics ‘‘wholly formed’’ in the United afforded preferential treatment under enumerated operations. However, States require that any dyeing, printing the AGOA. As regards the second section 112(b)(2) of the AGOA, which and other finishing operations prior to special access rule (which is requires the use of fabric ‘‘wholly cutting take place in the United States implemented in HTSUS subheading formed’’ in the United States, contains rather than in the sub-Saharan African 9802.00.90) and the second AGOA no mention of subheading 9802.00.80, country or anywhere else. category, each contains the same two HTSUS. If CBP were to adopt the CBP’s Response: core requirements, that is, (1) that all the reasoning set forth in the comment, CBP As already stated, CBP believes the fabric components must be formed and would impose a restriction under rulings construing subheading cut in the United States and (2) that section 112(b)(2) of the AGOA that 9802.00.90, HTSUS, support a those fabric components must, by virtue Congress clearly intended to apply in conclusion opposite to the one asserted solely of those forming and cutting the case of goods described in section by this commenter. The terminology in processes, be in condition ready for 112(b)(1)(A) and (B) of the AGOA but subheading 9802.00.90, HTSUS, is assembly overseas (certain specified just as clearly did not include in section different from that used in the various post-assembly dyeing and washing 112(b)(2) of the AGOA. textile provisions of the AGOA. operations are permitted under each Comment: Although the term ‘‘wholly formed’’ provision); thus, a ‘‘fabric component’’ Similar use of the word ‘‘wholly’’ is appears in subheading 9802.00.90, is produced by the operations of found in subheading 9802.00.90, HTSUS, and in the AGOA, in forming and cutting, and only by those HTSUS, which confers duty-free entry subheading 9802.00.90, HTSUS, it operations. However, in the case of the under the NAFTA for certain goods applies to ‘‘fabric components’’ whereas first special access rule and the first imported from Mexico, that is, textile in the AGOA it is used with reference AGOA category (which are both covered and apparel goods ‘‘assembled in to ‘‘fabric’’ and ‘‘yarns.’’ In subheading by HTSUS subheading 9802.00.80 and Mexico in which all fabric components 9802.00.90, fabric components which thus include two identical core were wholly formed and cut in the have been ‘‘wholly formed and cut’’ are requirements, that is, that the United States. . . .’’ Clearly, the intent exported to Mexico for assembly. The

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language of subheading 9802.00.90, in the beneficiary country (or anywhere and expanding the private sector in sub- HTSUS, imposes certain limitations on else other than the United States). Saharan Africa. A conclusion that the processing that the fabric CBP’s Response: silence regarding specific operations components may undergo in Mexico. CBP disagrees with the underlying related to the production of apparel and These limitations include the premise of this comment, that is, that the materials utilized in that production requirement that the fabric components, ‘‘wholly formed’’ as it pertains to fabric means that those operations must occur in whole or in part, not be advanced in includes dyeing, printing and finishing only in the United States is at odds with value or improved in condition abroad operations. The reasons for this CBP these stated goals. except by being assembled and except position have already been explained in Comment: by operations incidental to the assembly this comment discussion. Additionally, Congress in the first three categories process. This is the limitation the CBP disagrees with the assertion that of eligible goods took exquisite pains to commenter seeks to impose upon all cutting is the only operation that may be specify, in positive, explicit language, apparel produced in accordance with performed on fabric in the AGOA the overseas operations that would those provisions of the AGOA that beneficiary countries under section qualify an apparel article for duty-free provide for the use of ‘‘fabric wholly 112(b)(2) of the AGOA because that treatment: (1) The first category refers formed’’ in the United States. However, provision only refers to cutting of fabric. only to assembly abroad; (2) the second no such limitation appears in, or applies Following that reasoning in the category refers only to assembly abroad under, the AGOA in section 112(b)(2) of interpretation of the AGOA would mean plus ten carefully enumerated post- the AGOA. In regard to section 112(b)(1) that any operation not specifically assembly dyeing and finishing of the AGOA, because this provision mentioned in a provision simply could operations; and (3) the third category specifically references subheading not occur either in the United States or refers only to two overseas operations, 9802.00.80, HTSUS, the restrictions set in an AGOA beneficiary country. CBP that is, cutting and assembly. Thus, any forth in subheading 9802.00.80, HTSUS, believes that reasoning represents a additional overseas operations, other apply to the apparel articles described restrictive approach in interpreting the than incidental, trivial ones, would AGOA provisions and was not intended in this section. CBP previously disqualify the article. In carefully by Congress in enacting trade preference addressed in this comment discussion specifying cutting and assembly as the provisions subject to express conditions. the effect of referencing subheading overseas processes in the third category, For example, the express conditions on 9802.00.80, HTSUS, in the AGOA texts. Congress could hardly have intended to preference that articles may not be As CBP has already noted in this allow those third category goods to advanced in value or improved in comment discussion, the inclusion of undergo an entire set of additional condition abroad other than by references to post-assembly operations overseas processes when Congress assembly or operations incidental to in subheading 9802.00.90, HTSUS, thought it was necessary to positively assembly (which Congress provided in supports the conclusion that dyeing or specify them in the second category as subheading 9802.00.80, HTSUS, and finishing of fabric prior to cutting and incorporated by reference in certain a predicate for duty-free eligibility. exportation of the components for provisions of the AGOA) would have CBP’s Response: assembly is not required for the fabric been entirely unnecessary under the As already pointed out in this to be ‘‘wholly formed’’ because a commenter’s interpretive view. comment discussion, the first and requirement to dye the fabric prior to Comment: second categories of eligible goods are exportation of the cut components The references in the statute to clearly tied to requirements set forth in would be counterproductive in the case ‘‘apparel articles assembled’’ and subheading 9802.00.80, HTSUS. of a producer planning to garment dye ‘‘apparel articles cut and assembled’’ in Congress chose not to impose these his apparel after assembly. beneficiary countries means that no requirements in the third category of Comment: benefits are provided for or intended for eligible goods. By choosing to draft the The definition of ‘‘wholly formed’’ operations other than assembly-related requirements for the third category of included in the interim regulations is operations except when explicitly stated eligible goods differently from those of fundamentally inadequate because it in the statutory provision. the first and second categories, CBP could be interpreted to limit this CBP’s Response: understands that Congress deliberately concept (in the case of fabrics) to the CBP finds no basis within the intended different requirements to circumstance where a greige good is language of the AGOA to conclude, as apply. The commenter asks CBP to produced, without referencing the asserted by the above comment, that if impose on the third category of eligible addition of any dyeing, printing and an operation (that is, dyeing, printing or goods restrictions taken from the first other finishing operations that take finishing) is not specified within the and second categories of eligible goods. place before the fabric for the apparel is Act, then it must occur in the United As Congress did not impose those cut into the component parts. States and may not occur in an AGOA restrictions, neither can CBP. Accordingly, under section 112(b)(2) of beneficiary country. CBP finds no Comment: the AGOA, the interim regulations support for that conclusion in the In the case of the third category of could be interpreted to permit the language of the Act or in its legislative eligible goods, Congress could not, AGOA preference to apply to apparel history. In the Statement of Policy in through its silence on the matter, have made from greige goods produced in the section 103 of the AGOA, Congress intended that preferential origin would United States and subjected to dyeing, articulated the goals or purpose behind be conferred on articles that underwent printing and other finishing operations this legislation. Among the goals, dyeing, bleaching, printing, finishing, in the beneficiary country. However, Congress stated its support for etc., in beneficiary countries because although section 112(b)(2) of the AGOA encouraging increased trade and this would be inconsistent with United expressly permits the cutting of fabric in investment between the United States States obligations as a party to the WTO the beneficiary country, it does not and sub-Saharan Africa, reducing tariff Agreement on Rules of Origin. Annex II permit additional operations such as and nontariff barriers and other of that Agreement requires each party to dyeing, printing and finishing prior to obstacles to sub-Saharan African and the Agreement to precisely and the cutting of the fabric to be conducted United States trade, and strengthening positively specify the manufacturing or

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processing operations that confer to be produced. For both practical and development of sub-Saharan African preferential status. aesthetic reasons, these operations industry by sending offshore the CBP’s Response: cannot be performed on the apparel intermediate and final value-adding CBP does not agree that interpreting components after they are cut (in some processes (for example, bleaching, ‘‘wholly formed’’ as not including cases, dyeing or printing is done on an stone-washing, acid washing, dyeing, dyeing, printing and finishing, thus apparel garment after it is assembled printing, embroidering) which are allowing those processes to occur in the from the cut pieces, but those operations applied to greige fabric that is AGOA beneficiary countries, would are exceptional and differ qualitatively transformed into final textile articles or violate United States obligations as a from the dyeing, printing and other into apparel articles. party to the World Trade Organization fabric finishing operations included CBP’s Response: (WTO) Agreement on Rules of Origin. within the concept of ‘‘wholly formed’’ As already noted in an earlier CBP first notes in this regard that since fabric). comment response, Congress sought to the AGOA provisions incorporate CBP’s Response: promote the growth of trade and standards for a tariff preference rather CBP agrees that dyeing, printing and economic activity between the United than rules of origin, the WTO finishing operations are normally States and sub-Saharan African Agreement on Rules of Origin is not performed on fabric before it is cut into countries. Congress specified the directly applicable to the AGOA. components for assembly into garments. requirements for eligibility of goods Moreover, even if the WTO Agreement However, CBP disagrees with the and, in some cases, restrictions which on Rules of Origin were applicable in an suggestion made in the comment that Congress desired for certain categories AGOA context, CBP notes that the the ‘‘concept of ‘wholly formed’ fabric’’ of goods. CBP has found no support, nor applicable provision referred to by the includes dyeing, printing and other was any provided by the commenter, for commenter requires that ‘‘in cases fabric finishing operations. The reasons the argument that Congress deliberately where the criterion of manufacturing or for CBP disagreement have been stated chose not to send certain value-adding processing operation is prescribed, the earlier in this comment discussion. processes to offshore locations. operation that confers preferential origin Comment: The phrase ‘‘or other process’’ within shall be precisely specified.’’ Annex II, Sections 112(b)(1) and (b)(2) of the the definition of ‘‘wholly formed’’ as it Clause 3, WTO Agreement on Rules of AGOA should include fabric dyeing and pertains to fabric, relates to fabric Origin. In the AGOA, Congress stated finishing in the United States (and only formation processes that were not positively the operations necessary for in the United States). Dyeing and enumerated or that may have yet to be preferential treatment. Clause 3, finishing processes are necessary to add developed. referenced by the commenter, does not color, chemical and physical properties Comment: preclude additional operations from to the fabrics prior to their being used Dyeing and finishing operations occurring or being allowed, but rather in apparel and industrial products. represent the largest part (that is, 70–75 only provides that those additional Fabrics not dyed and finished are not percent) of the value added in a fabric operations must be specified in the yet ready to be components of the retail and represent the most complicated part preferential rule if they affect the merchandise. of the textile manufacturing process. determination of preferential origin. CBP’s Response: Moreover, in terms of aesthetic value, Comment: As stated above, CBP agrees that printing adds on the order of 100 In referring in the AGOA to apparel normally dyeing, printing and finishing percent of value based on creative effort assembled from ‘‘fabrics wholly formed operations are performed on fabric prior and intellectual property and cut in the United States,’’ Congress to cutting and assembly into garments. considerations. It would be absurd to mentioned only two steps, that is, However, this is not always true as some consider as ‘‘wholly formed’’ a product forming and cutting. Since fabric garments are garment-dyed and some which lacks these value-added finishing is an intermediate step may be made of yarn-dyed fabric. For components. between fabric formation and cutting, it reasons already stated in this comment CBP’s Response: cannot be a separate category but rather discussion, CBP disagrees with this CBP does not dispute that dyeing, must be associated with one of the two commenter’s suggestion that fabric printing and finishing operations may statutory steps. Clearly, as between dyeing and finishing should be included be important in that they may add ‘‘wholly formed’’ and ‘‘cut,’’ ‘‘finished’’ in section 112(b)(1) and (b)(2) of the significantly to the value of fabric and belongs with the former. AGOA. contribute to the use of fabric. However, CBP’s Response: Comment: CBP finds no rationale for using a value- CBP rejects the premise of this The words ‘‘or other process’’ in the added measurement as a basis for comment that an operation which is not definition of ‘‘wholly formed’’ as it including those operations within the specified in the AGOA must be applies to fabric, if interpreted narrowly scope of the term ‘‘wholly formed.’’ included with one that is specified. As to exclude dyeing, printing and Based on the common meaning of the stated above, Congress enumerated the finishing operations, would have the terms ‘‘wholly’’ and ‘‘formed’’ as required manufacturing processes and consequence of conferring duty-free discussed above, and in the absence of where those processes had to occur in treatment on apparel articles that any language in the AGOA or its order for apparel to qualify for undergo in sub-Saharan Africa not only legislative history to support a contrary preferential treatment under the AGOA. cutting and assembly but also any of the conclusion, the amount of value added Any other processes not affecting wide range of fabric dyeing, printing by dyeing, printing or finishing eligibility under the AGOA need not be and finishing operations that transform operations (even when contrasted to the associated with a specified process as fabric after the early stage processes relatively lower percentage of cost argued in the comment. (weaving, knitting, needling, etc.) that attributable to labor) is entirely Comment: are performed in the United States. This irrelevant in determining if fabric is Dyeing, printing and finishing result would be contrary to ‘‘wholly formed.’’ operations must be performed on the Congressional intent because Congress Comment: fabric before it is cut into the shapes in the development of the AGOA The legislative history of the AGOA required by the particular apparel article deliberately chose not to aid the contains no indication that Congress

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intended to permit the large disruption countries other than the United States the conclusion that printing or dyeing to the U.S. textile industry that would and AGOA beneficiary countries would should not be viewed as relevant, much result if dyeing, printing and other be contrary to Congressional intent less essential, to the formation process. finishing operations could be performed reflected in sections 102 and 103 of the CBP’s Response: in sub-Saharan African countries on AGOA and thus should not be allowed. Finishing, by definition, occurs to greige good fabric. Therefore, CBP believes that dyeing, fabric after the fabric has been formed; CBP’s Response: printing and finishing operations after it has taken shape from weaving or As already stated, CBP relies on the performed on U.S.-formed fabric outside knitting or other formation processes. A words Congress used in the statute and the United States should continue to be distinction between fabric formation Congress is presumed to have used restricted in the regulatory texts to and fabric finishing has existed in the these words according to their common, AGOA beneficiary countries — see the realm of origin determinations for ordinary meaning unless some other description of the regulatory text textile goods under the Customs laws intent is evident. The legislative history changes to 19 CFR 10.2013(b)(1) at the and regulations for over 15 years, first of the AGOA contains no reference to end of this wholly formed fabric by regulation (19 CFR 102.22) and then precluding dyeing, printing and other comment discussion. by statute (section 334 of the URAA, finishing operations from occurring in Comment: codified at 19 U.S.C. 3592). While CBP the AGOA beneficiary countries. It was the understanding of the dyeing agrees with the commenter that the Moreover, the legislative history and finishing industry and rules for determining the origin of provides no reason for CBP to interpret Congressional representatives and trade textile goods offer support for the the term ‘‘wholly formed’’ other than organizations that the AGOA legislation position that fabric formation and fabric according to its plain meaning. was intended to benefit not only sub- finishing are distinct operations, as CBP Comment: Saharan African countries but also has already noted above, the AGOA is The current practice of permitting producers of textile fabrics in the United a preferential trade program based on fabric finishing operations in the United States. If the legislation is now meeting the specified manufacturing States or the beneficiary countries interpreted as to benefit only unfinished process requirements set forth in the greatly enhances the value of this (versus wholly formed) fabrics, the AGOA and is not a program based on program and thus the incentive to use results will be devastating to the U.S. origin. U.S. fabric. Without this flexibility, U.S. dyeing and finishing industry which Comment: fabric sales (from greige goods will fail to benefit from the AGOA and In the provision within the Act of manufacturers) may be lost and trade will suffer from yet another wave of 2000 that clarified section 334 of the may be diverted to lower cost Asian imported products priced without the Uruguay Round Agreements Act, suppliers-an outcome that runs contrary environmental and health and safety Congress explicitly confirmed the to the spirit of the legislation. standards which the U.S. textile interpretation that dyeing, printing and CBP’s Response: industry is proud to uphold. finishing are in fact ‘‘fabric-making CBP first notes that the definition of CBP’s Response: processes,’’ just as weaving and knitting ‘‘wholly formed’’ as it relates to fabric CBP is not in a position to comment are fabric-making processes, for is predicated not on any potential on ‘‘understandings’’ regarding this purposes of determining the country in impact on international trade patterns legislation prior to its passage. As stated which fabric is made, regardless of how but rather only on the common meaning above, CBP can only interpret the many such operations will determine of the words chosen by Congress to legislation based upon its words, the country of origin of fabric for express its intent in the AGOA. As Congressional intent as reflected by different purposes in different specific already noted in this comment those words, and information contained statutes. CBP should follow this discussion, Congress intended benefits in the Conference Report relating to the clarification in the AGOA definition to accrue to the United States and the AGOA. With regard to the concern of text. AGOA beneficiary countries by this commenter and as already pointed CBP’s Response: increasing trade and investment out in this comment discussion, the In this comment it is argued that between the United States and sub- reference in some provisions of section Congress confirmed that dyeing, Saharan Africa countries and by 112(b) of the AGOA to subheading printing and finishing are ‘‘fabric- reducing obstacles to trade between sub- 9802.00.80, HTSUS, means that in those making processes.’’ However the Saharan African countries and the cases fabric dyeing, printing and provision referenced by the commenter United States. Among its findings in finishing processes, which are not does not say these processes are ‘‘fabric- section 102 of the AGOA, Congress assembly operations or (in most making’’ but rather provides that they found that ‘‘it is in the mutual interest instances) operations incidental to are origin conferring for certain fabrics. of the United States and the countries of assembly, must have taken place in the More specifically, section 334 of the sub-Saharan Africa to promote stable United States. Moreover, in regard to URAA was amended by section 405 of and sustainable economic growth and those other provisions of section 112(b) the Act of 2000 so that it now provides development in sub-Saharan Africa’’ of the AGOA that refer to fabric ‘‘wholly in effect that dyeing and printing of and that ‘‘encouraging the reciprocal formed’’ in the United States, there is certain fabrics, when accompanied by reduction of trade and investment nothing in the Act that precludes that two or more other designated finishing barriers in Africa will enhance the U.S.-formed fabric from also being dyed, operations, results in the fabric having benefits of trade and investment for the printed and/or finished in the United its origin in the place where that region as well as enhance commercial States. processing occurred. CBP notes the and political ties between the United Comment: amendment made by section 405 of the States and sub-Saharan Africa.’’ Based The fact that the Breaux-Cardin rules Act of 2000 addressed a specific dispute on these findings, CBP agrees with the of origin (section 334 of the Uruguay between the United States and the basic point made in this comment. CBP Round Agreements Act and § 102.21 of European Union concerning the effect of further notes, however, that performing the CBP regulations) mandate that the the URAA section 334 changes on dyeing, printing and finishing spinning, knitting or weaving process is United States obligations under a operations on U.S.-formed fabric in determinative of origin further supports number of international agreements (see

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the Conference Report relating to the otherwise produced from, or in dyeing, printing and finishing Act at page 118). Since the section 405 combination with, any natural or operations. amendment relates to a context and a manufactured fiber, yarn or substitute In addition, a new paragraph (b) has purpose that are entirely outside the therefor.’’ This definition of ‘‘fabric’’ is been added to § 10.213 (with paragraphs scope of the AGOA (which is not a not substantially at variance with the (b) and (c) of the interim regulation country of origin regime but rather is a definition CBP set forth in the interim consequently re-designated as (c) and preferential tariff treatment program), regulations for ‘‘wholly formed’’ as it (d)) which in subparagraph (1) clarifies CBP believes that it has no bearing on relates to fabric. that while dyeing, printing, and the meaning of ‘‘wholly formed’’ as it Comment: finishing operations are not part of the relates to fabric under the AGOA. In a colloquy with Senator Coverdell fabric or component (for example, a Comment: during Senate floor consideration of the knit-to-shape component that is made Processes such as dyeing, printing Act of 2000, Senator Grassley affirmed directly from yarn) formation process, and finishing are treated in many that the intention of the managers was those dyeing, printing, and finishing statutes and regulations as fabric- to permit dyeing and finishing operations are only permissible if making processes, that is, they are operations in the United States or in performed in the United States or in the treated as the same type of processes as beneficiary countries. In that colloquy, AGOA beneficiary countries. New weaving and knitting because they are Senator Coverdell asked: ‘‘I have one paragraph (b)(1) also includes a caveat all processes in the ‘‘production’’ or final question regarding the so-called that any dyeing, printing, and finishing ‘‘manufacture’’ of ‘‘fabric.’’ The 809 provisions of both the Africa and operations performed in an AGOA regulatory provision on which the Caribbean Basin measures. Am I correct beneficiary country must be incidental definition of ‘‘wholly formed’’ was that it is the managers’ intent that these to assembly in the case of articles based, that is, 19 CFR 102.21(b)(2), provisions do not permit dying [sic] or described in paragraphs (a)(1) and (a)(2) states that a ‘‘fabric-making process is finishing of the fabrics to be performed of § 10.213 which are subject to the any manufacturing operation that . . . in countries other than the United States rules that apply under subheading results in a textile fabric.’’ United States or the beneficiary countries?’’ Senator 9802.00.80, HTSUS. laws and regulations include Grassley responded: ‘‘That is correct.’’ Wholly Formed Yarns innumerable ‘‘textile fabrics’’ that are CBP’s Response: Unlike the comments regarding the the ‘‘result’’ of the operations of dyeing, CBP does not find the colloquy to be printing and finishing and could not dyeing, printing, and finishing of fabric dispositive for purposes of interpreting discussed above, which were sharply have been the ‘‘result’’ only of the the statute and drafting the regulations. operations of weaving and knitting. divided on the question of whether In regard to ‘‘wholly formed’’ as it those processes fall within the concept There is no warrant for treating the pertains to fabric, the responses above fabric-production processes of dyeing, of ‘‘wholly formed’’ as it pertains to justify not including dyeing, printing, fabric, the comments received in regard printing and finishing any differently and finishing operations in the from the co-equal fabric-production to the definition of ‘‘wholly formed’’ as definition of ‘‘wholly formed’’ in the it pertains to yarn uniformly supported processes of weaving and knitting. interim regulations, as further clarified CBP’s Response: the conclusion that dyeing and finishing The commenter mischaracterizes the in this final rule document. operations are not part of the yarn definition of a ‘‘fabric-making process’’ Comment: formation process. Some of these which appears in 19 CFR 102.21(b)(2). The colloquy that took place on the commenters also suggested that the That regulation implements section 334 floor of the Senate between Senators dyeing and finishing of yarns should be of the URAA which has been dealt with Grassley and Coverdell (reported at 146 limited to the United States and AGOA earlier in this comment discussion in Cong. Rec. at S3867, daily ed. May 11, beneficiary countries. A discussion of the context of arguments for 2000) regarding finishing operations in the specific points made by these distinguishing between fabric formation third countries is of essentially no value commenters in support of those views is and fabric finishing and for not on the issue of whether Congress set forth below. including dyeing, printing and finishing intended to permit dyeing, printing or Comment: operations within the scope of ‘‘wholly finishing operations to take place in the With regard to yarns (other than formed’’ as it relates to fabric. beneficiary countries because the thread), seven commenters took the Comment: colloquy is ambiguous on this point, position that dyeing and finishing The Textile Fiber Products because the courts have held that the operations do not fall within the Identification Act makes perfectly clear remarks of individual legislators made concept of ‘‘wholly formed’’ and that, (1) that the process of finishing a fabric during a floor debate are not controlling consequently, a requirement that a yarn is a fabric-making or fabrication process in analyzing legislative history, and be ‘‘wholly formed in the United States’’ and (2) that both unfinished fabric and because there is some doubt as to does not mean that any dyeing or finished fabric are ‘‘fabric components.’’ whether the colloquy in fact took place finishing of the yarn must be restricted CBP’s Response: prior to the enactment of the legislation. to the United States. One of these CBP has frequently pointed out in its CBP’s Response: commenters argued that allowing rulings, and the courts have held (see CBP believes that the response to the dyeing and finishing operations to be Sabritas S.A. de C.V. v. United States, immediately preceding comment performed on U.S. yarns in the AGOA 998 F. Supp. 1123 (CIT 1998)), that adequately addresses this comment. beneficiary countries is consistent with Congress did not intend CBP to be Based on the comments received on Congressional intent, noting in this bound by another agency’s statutes and the definition of ‘‘wholly formed’’ as it regard that this issue was addressed in regulations in determining the meaning pertains to fabrics and the analysis of a colloquy between Senator Coverdell of tariff terms. Nevertheless, CBP notes those comments set forth above, CBP in and Senator Grassley during Senate that the Textile Fiber Products this final rule document has modified floor consideration of the Trade and Identification Act (the TFPIA, 15 U.S.C. the interim § 10.212 definition of Development Act of 2000. In that 70–70k) defines ‘‘fabric’’ as ‘‘any ‘‘wholly formed fabrics’’ to clarify that colloquy, Senator Coverdell asked: material woven, knitted, felted, or fabric formation does not encompass ‘‘When the Act requires yarn to be

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‘wholly formed’ in the United States, am dyeing, bleaching and other similar shape components or articles, whether I correct that the intention of the finishing operations are not part of yarn that final yarn is a monofilament or a managers is to require that all processes formation, CBP has already pointed out plied yarn. necessary to convert fibers into yarn— in this comment discussion that the Comment: i.e., spinning, extruding-be performed in AGOA legislation is directed only to Two commenters noted that textured the United States?’’ In reply, Senator preferential treatment of certain goods filament yarn is first extruded in an Grassley stated: ‘‘That is correct. While that meet specified production undrawn condition as partially oriented the fibers need not be manufactured in standards and is not based upon country yarn (POY) which cannot be the United States, let me be clear that it of origin principles. In addition, section transformed into fabric but rather has no is the managers’ intent that the man- 334, as amended by section 405 of the use other than to be drawn and textured made core of a wrapped yarn must Act, does not define ‘‘wholly formed’’ in in a sequential process on the same originate in the United States and that regard to fabric or yarn. In regard to machine, with the resulting yarn being, all mechanical processes necessary to fabric, section 334 describes fabric- for purposes of the AGOA, wholly convey fibers into yarns must be making processes which CBP views as formed and now ready to be performed in the United States.’’ Two of the same as fabric formation processes. transformed; therefore, to satisfy the these commenters maintained that, with However, in regard to yarn, section 334 definition of ‘‘wholly formed,’’ the regard to dyeing, bleaching, or other merely addresses origin as being texturing must be done only in the similar finishing operations, the interim determined by the spinning of fibers or United States. regulation is consistent with past the extrusion and drawing of filaments. CBP’s Response: interpretations of the so-called ‘‘Breaux- While the spinning of fibers and the The process described by the Cardin’’ rule of origin that those extrusion and drawing of filaments form commenters is known as ‘‘draw- finishing operations do not fall within yarns, many yarns are further processed texturing.’’ ‘‘Draw-texturing’’ is defined the term ‘‘wholly formed.’’ Another of with other yarns by plying or twisting as a process ‘‘[i]n the manufacture of these commenters specifically to create specific types of yarns later thermoplastic fibers, [consisting of] the recommended modification of the used in forming fabric or in knitting to simultaneous process of drawing to regulatory texts to clearly reflect the shape an apparel component or article. increase molecular orientation and principle that subsequent processing of Thus, while some types of yarn are imparting crimp to increase bulk.’’ U.S.-formed yarn may take place in an formed by spinning or by extrusion and Dictionary of Fiber & Textile Technology AGOA beneficiary country. Two drawing, other types of yarn are further (KoSa, 1999), at 60. CBP agrees that the commenters took the position that the processed before they are complete. texturing of partially oriented yarn concept of ‘‘wholly formed’’ under Some yarns may be used without being (POY) by a process which requires section 112(b)(2) of the AGOA combined with other yarns, such as a drawing to fully orient the yarn falls encompasses all operations relating to monofilament thread which may be within the scope of ‘‘wholly formed’’ as the production of yarn up to the point used in hemming a garment. Most yarns, it relates to yarn. that it is ready to be transformed into a however, must be combined with other In the definition of ‘‘wholly formed’’ new and different article of commerce, yarns to form a multifilament or as it relates to yarn, CBP intended to that is, fabric. Noting that at this point multiple (folded or plied) yarn to impart encompass all steps in the production of yarn need not be scoured and bleached the strength and yarn size necessary for a yarn or plied yarn up to the point at or dyed or printed in order to be so use in the production of other textile which it is fully formed or completely transformed, these commenters argued products. For this reason, the interim shaped as a yarn or plied yarn. that, therefore, ‘‘wholly formed’’ means, rule defined ‘‘wholly formed’’ as it Fairchild’s Dictionary of Textiles (7th with respect to untextured filament relates to yarn to include all the ed. 1996), at 410, defines ‘‘partially yarns, yarns which have been formed by processes starting with the extrusion of oriented yarn’’ as: ‘‘Filament yarn of an extrusion process and fully drawn, filament or the spinning of fibers into manufactured fibers that has not been and, with respect to spun yarns, yarns yarn, or both, and ending with a yarn or drawn all the way immediately after which have been formed by the plied yarn. fiber formation. The drawing spinning of staple fibers. For instance, in the case of a cotton/ (drawstretching) is completed as part of CBP’s Response: polyester fabric which is woven using a the draw texturing process. This is a less Based on the common meaning of the 3-ply yarn consisting of two cotton costly way of processing these yarns words ‘‘wholly’’ and ‘‘formed’’ as yarns and one polyester filament yarn, than full drawing followed by already discussed above in the comment the yarn would be ‘‘wholly formed’’ in texturing.’’ According to Polymers: discussion regarding wholly formed the United States if all of the following Fibers and Textiles, A Compendium fabrics, CBP agrees with the commenters occurred in the United States: Cotton (John Wiley & Sons, Inc., 1990), at 691, here that dyeing and finishing fibers are spun into yarn to form the ’’ . . . the principal end use for POY is operations are not part of the yarn cotton yarns, the polyester filament is as a feeder yarn for draw texturing.’’ formation process. CBP also agrees, extruded, and the two cotton yarns and The commenters claim, and CBP based on Congressional intent regarding the polyester filament are plied to form agrees, that a partially oriented yarn the intended beneficiaries under the the 3-ply yarn used in the production of may not function as a yarn in the AGOA as noted above in the wholly the cotton/polyester fabric. Although manufacture of a textile product until it formed fabric comment discussion, that the 3-ply yarn consists of three separate is further processed into a fully oriented the application of dyeing and finishing yarns, it is the 3-ply yarn which is the yarn. Consequently, a partially oriented processes to yarn should be limited to final, complete yarn used in the yarn cannot be considered ‘‘wholly the United States and AGOA beneficiary formation of the woven fabric. formed’’ because it is not fully oriented. countries. CBP agrees with the commenters that In order to be ‘‘wholly formed’’ a yarn As to the suggestion that the ‘‘Breaux- wholly formed yarn has to undergo all must have reached the stage in its Cardin’’ rules of origin (that is, the rules the processes necessary for the formation that nothing else (for set forth in section 334 of the URAA as formation of the final, complete yarn example, drawing to fully orient the already mentioned in this comment which is used in the production of a yarn or plying the yarn with other discussion) support the conclusion that textile product, such as fabric or knit-to- yarns) need be done to it to complete its

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formation as a yarn capable of In addition, the text of new paragraph be formed in the United States means utilization in the production of another (b) of § 10.213, mentioned above at the that all the fabric components of eligible textile product, for example, in fabric end of the wholly formed fabric articles must be formed in the United formation. The completion of the comment discussion, includes a States, subject to the special rules set orientation of yarn as a consequence of clarification that dyeing, printing and forth in section 112(e). For example, creating a textured yarn from POY using finishing operations are not part of the section 112(e)(1) and (e)(2) allow a draw-texturing results in a fully yarn formation process and are only certain quantity of ‘‘findings and oriented yarn. Thus, the process of permissible if performed in the United trimmings’’ and ‘‘interlinings’’ to be of draw-texturing falls within the scope of States or in the AGOA beneficiary foreign origin. There would be no need ‘‘wholly formed’’ as it relates to yarn. countries. for these special rules if Congress did not intend that all fabric components of Comment: Other ‘‘Wholly Formed’’ Issues Two commenters mentioned section these eligible articles must be formed in 112(b)(3) of the AGOA which refers to Comment: the United States. The Conference ‘‘originating’’ rather than ‘‘wholly Two commenters noted that, Report relating to the Act of 2000 at formed’’ yarns. After noting that the paramount among the requirements for page 76 clearly confirms this preferential entry of apparel articles reason for this distinction is unclear, Congressional intent. under section 112 of the AGOA, is the they argued that, in order to secure the Consistent with the above, CBP also requirement that they be made from benefits envisioned in the Statement of agrees with the commenters that, under ‘‘fabrics wholly formed . . . in the Policy contained in the AGOA, section 112(b)(3) of the AGOA, the United States.’’ These commenters also ‘‘originating’’ should have the same requirement that the fabric be formed in noted that the Act does not speak meaning as ‘‘wholly formed,’’ thus a beneficiary sub-Saharan African directly to the matter of which fabric(s) assuring that the only beneficiaries are country means that all the fabric in an eligible article must satisfy the the United States and AGOA countries. components of eligible articles must be criteria set forth in sections 112(b)(1), CBP’s Response: formed in a sub-Saharan African (b)(2) and (b)(3). Further, they alleged beneficiary country, subject again to the CBP disagrees with these commenters. that the practice of CBP is to apply In the Conference Report relating to the special rules set forth in section 112(e). criteria such as those in the AGOA only Comment: Act of 2000, at page 77, Congress made to that fabric (component) which Two commenters stated that the clear its intent in using the term determines the classification of the requirements for wholly-formed fabric ‘‘originating’’ in regard to yarn in apparel article for tariff purposes, that do not apply in the case of garment- section 112(b)(3) of the AGOA. In is, the ‘‘shell’’ fabric. However, these dyed garments. They noted that fabrics discussing the apparel articles which two commenters asserted that language used to produce garment-dyed garments fall within the AGOA regional cap in section 103(4) of the AGOA- are all scoured and many are bleached provision, the Conference Report ‘‘negotiating reciprocal and mutually as well, and all subsequent dyeing and included the following parenthetical beneficial trade agreements’’-as well as finishing are then done after the explanation: ‘‘The country of origin of past practice clearly indicate that the garment is cut and assembled. CBP must the yarn is to be determined by the rules mandated use of U.S. or sub-Saharan therefore make a distinction between of origin set forth in section 334 of the Africa-formed or, where permitted, third fabrics wholly formed for garments Uruguay Round Agreements Act.’’ country fabric, should apply to all the which are not garment-dyed and fabrics As indicated above in the comment fabric components of an eligible article, for garments which are garment-dyed discussion regarding wholly formed not just the shell fabric. The because commercial practice compels fabric, in T.D. 03–15, CBP replaced the commenters argued in this regard that in this. The essential determinant is that original interim § 10.212 definition of the section 103 language Congress the fabric is in the state at which it is ‘‘wholly formed’’ with two definitions, intended the benefits of the Act to ready to be transformed into a new and one relating to ‘‘wholly formed’’ fabrics redound to producers in the United different article of commerce. and the other relating to ‘‘wholly States as well as Africa and that this can CBP’s Response: formed’’ yarns. Based on the comments best be accomplished by requiring that CBP believes that the term ‘‘wholly received relating to the definition of all the fabric in an eligible article be formed’’ as it pertains to fabric must ‘‘wholly formed’’ as it relates to yarn formed in the United States (section have a single, consistent meaning and the analysis of those comments as 112(b)(1) and (b)(2)) or an eligible throughout the regulations. As CBP has set forth above, CBP has in this final beneficiary country (section 112(b)(3)). explained in the comment discussion rule document further modified the These commenters further argued that above regarding the definition of ‘‘wholly formed yarns’’ definition to: in all previous and existing programs ‘‘wholly formed’’ as it pertains to fabric, 1. Clarify that yarn formation does not which administratively or legislatively dyeing, printing and other finishing encompass dyeing, printing and granted unilateral trade privileges to operations do not fall within the scope finishing operations. eligible apparel articles—for example, of ‘‘wholly formed.’’ Thus, the Even though the above comment the Special Access Program for distinction urged by these commenters discussion regarding wholly formed Caribbean and Andean Pact countries, does not have to be made. It should be yarns refers primarily only to dyeing the Outward Processing Program for noted, however, that garment dyeing and finishing operations, the definition certain Eastern European countries, and after assembly is not permitted in the also refers to printing because technical the Special Regime for Mexico—the case of apparel articles covered by sources indicate that printing is relevant fabric origin requirements pertain to all section 112(b)(1)(A) of the AGOA and to yarns (see, for example, Fairchild’s fabric components, and they urged CBP § 10.213(a)(1) of the regulations because Dictionary of Textiles [7th ed. 1996] to ensure that this is carried over into garment dyeing is not considered to be which, at 445, sets forth a definition of the AGOA. incidental to assembly for purposes of ‘‘printed yarn’’); and CBP’s Response: subheading 9802.00.80, HTSUS. 2. Reflect the CBP position with CBP agrees with the commenters that Comment: regard to Partially Oriented Yarns under section 112(b)(1) and (b)(2) of the One commenter stated that although (POY). AGOA, the requirement that the fabric both the AGOA and the interim

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regulations are silent with respect to textile product (for example, rubber For purposes of this discussion, CBP post-yarn-formation and post-fabric- thread of the sort classified in heading also notes definitions of ‘‘yarn’’ from formation processes such as dyeing, 4007 of the HTSUS). This commenter non-technical sources. ‘‘Yarn’’ is bleaching, printing, and coating, that further suggested that paragraph (a)(3) of defined, in relevant part, in The silence should not mean that post- § 10.213 should be changed to clarify Random House Unabridged Dictionary, formation processes performed in that ‘‘thread formed in the United Second Edition (1993), at 2200, as ‘‘1. Canada would disqualify the article States’’ refers only to textile sewing thread made of natural or synthetic from AGOA eligibility. This commenter thread used to assemble cut parts of fibers and used for knitting and argued that as long as the fabric is garments and does not include rubber weaving. 2. a continuous strand or woven or knit or otherwise formed in thread used in fabric formation. thread made from glass, metal, plastic, the United States and as long as the yarn CBP’s Response: etc.’’ It is defined, in relevant part, in is spun or extruded in the United States, In § 10.213(a)(3) (section 112(b)(2) of Webster’s Third New International and because those minor, incidental the AGOA), the term ‘‘thread’’ is used in Dictionary (1993), at 2647, as: ‘‘1.a: A post-formation processes in Canada do the context of requiring the use of continuous strand often of two or more not alter its identity as fabric or yarn, it ‘‘thread formed in the United States’’ in plies that is composed of carded or should be considered to have met the the assembly of apparel articles in one combed fibers twisted together by definition of ‘‘wholly formed’’ for or more AGOA beneficiary countries. spinning, filaments laid parallel or purposes of the AGOA. The commenter ‘‘Thread’’ is used in the same context in twisted together, or a single filament, is therefore agreed with the definition of section 112(b)(7) of the AGOA made from natural or synthetic fibers ‘‘wholly formed’’ as set forth in the (§ 10.213(a)(11) of the regulations), and filaments or blends of these, and is interim regulations and further which was added by the Act of 2002. used for the warp and weft in weaving suggested that this is consistent with the Based on the context in which the term and for knitting or other interlacings practice under the CBI Special Access ‘‘thread’’ is used in the statute, CBP that form cloth b: A similar strand of Program and under the country of origin believes that Congress was referring to metal, glass, asbestos, paper, or plastic rules contained in § 102.21 of the CBP sewing thread. Accordingly, CBP agrees used separately or in blends c: regulations. with the suggestion of the commenter in THREAD; esp.: a component of a plied CBP’s Response: this regard, and § 10.213(a)(3) and thread.’’ While the HTSUS offers some CBP of course agrees with the views discussion of attributes of various yarns expressed by this commenter regarding (a)(11) have been modified in this final rule document by inserting the word and gives guidance as to yarns classified the definition of ‘‘wholly formed’’ and within Section XI of the HTSUS, it the distinction between fabric and yarn ‘‘sewing’’ into the text before the word ‘‘thread.’’ provides no definition of yarn. formation and dyeing, printing and CBP has defined the phrase ‘‘textile or finishing operations. However, CBP CBP agrees with the commenter that apparel product’’ in the context of the does not share the view that since ‘‘yarn’’ as used in the AGOA refers to rules of origin for textile and apparel finishing operations are not part of textile yarn. However, CBP disagrees products set forth in § 102.21 of the CBP formation, those operations may occur with the commenter’s suggestion that regulations (19 CFR 102.21) which anywhere and the fabric and yarn would ‘‘yarn’’ be defined as textile yarns implements § 334 of the URAA. CBP remain eligible for use in apparel classified in Chapters 50–59 of the believes that defining ‘‘yarn’’ as receiving benefits under the AGOA. As HTSUS. In the comment discussion suggested by the commenter would already discussed above in the portions above regarding ‘‘wholly formed’’ as it result in ‘‘yarn’’ in the AGOA context of this comment discussion regarding relates to yarn, CBP set forth a definition having a narrower meaning than ‘‘yarn’’ the definition of ‘‘wholly formed’’ as it of yarn which appears in two related in the context of the rules of origin for pertains to fabric and yarn, Congress textile dictionaries and which refers to textiles. CBP does not believe that expressed its intent in the Conference ‘‘textile’’ materials. A similar approach Congress in drafting the AGOA intended Report relating to the Act of 2000 and is taken in other technical textile to change the scope of ‘‘textile and in section 103 of the statute that the dictionaries. For example, ‘‘yarn’’ is apparel articles’’ as understood under AGOA benefits are to accrue to sub- defined in Fairchild’s Dictionary of § 334 or under the Agreement on Saharan African countries and to U.S. Textiles (7th ed. 1996), at 641, in part, Textiles and Clothing to which the producers. CBP believes that permitting as: ‘‘A continuous strand of textile fibers United States is a signatory. In dyeing, printing and finishing that may be composed of endless determining the scope of the term operations to be performed on fabric in filaments or shorter fibers twisted or ‘‘yarn,’’ as well as the term ‘‘fabric,’’ countries other than the United States otherwise held together. Yarns may be CBP will rely upon the scope of ‘‘textile and AGOA beneficiary countries would single or ply and form the basic and apparel articles’’ as set forth in 19 be contrary to Congressional intent and elements for CABLED YARN, FABRIC, CFR 102.21. Therefore, CBP sees no therefore should not be allowed. As THREAD, AND TWINE. Yarns can be need to define ‘‘yarn,’’ or ‘‘fabric’’ for indicated above, 19 CFR 10.213(b)(1) utilized in many such fabric-making that matter, in these regulations. has been modified in this final rule processes as weaving, knitting, Comment: document to clarify this position. crocheting, tatting, netting, or braiding, With regard to thread, two depending on the result desired and the commenters argued that Congress has Scope of the Terms ‘‘Yarn’’ and character of the yarn.’’ In The Modern made a clear distinction between ‘‘Thread’’ Textile and Apparel Dictionary (1973), ‘‘wholly formed’’ and ‘‘formed.’’ Comment: at 676, ‘‘yarn’’ is defined, in part, as: ‘‘A Therefore, although the thread does not One commenter stated that the generic term for an assemblage of fibers have to be ‘‘wholly formed’’ in the regulations should clarify that wherever or filaments, either natural or man- United States, it nevertheless must be the word ‘‘yarn’’ is used, it means textile made, twisted together to form a thread, that is, it must have undergone yarns of the sort classified in Chapters continuous strand which can be used in an extrusion or spinning process and 50–59 of the HTSUS and does not weaving, knitting, braiding, or plaiting, subsequent doubling (plying) process include other non-textile products or otherwise made into a textile necessary to give it the unique which may be knitted or woven into a material.’’ properties of thread. These commenters

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further stated that whereas thread CBP believes this definition will ensure CBP’s Response: formation must take place in the United that there are no undue restrictions on With respect to the question of States, subsequent processing such as the options for apparel manufacturers as whether, or to what extent, cutting of lubricating, bleaching or dyeing may be to the type of U.S. sewing thread they fabric may be performed in both the performed outside the United States. may use in the construction of their United States and a beneficiary country, However, the commenters argued that, garments. CBP notes initially that the only specific in order to satisfy the requirements set CBP agrees with the commenters that interpretative reference to this issue in forth in the Statement of Policy once sewing thread is ‘‘formed,’’ the interim regulations was in the contained in the AGOA, any subsequent subsequent processing such as definition of ‘‘cut in one or more processing of the thread may only be lubricating, bleaching or dyeing will not beneficiary countries’’ in § 10.212. done in a beneficiary country or the alter that formation. In addition, based These words were defined there to mean United States and not in any third on the CBP position set forth in the that ‘‘all fabric components used in the country. comment discussion regarding ‘‘wholly assembly of the article were cut from CBP’s Response: formed’’ fabrics, CBP also agrees with fabric in one or more beneficiary CBP agrees with the above comment the commenters that processing of countries.’’ The section-by-section except for the statement that thread sewing thread after its formation may be discussion of the interim amendments must be plied in order to have the done in the United States or in the in T.D. 00–67 stated that this definition unique properties of thread. As stated in AGOA beneficiary countries but not ‘‘precludes any cutting operation the immediately preceding comment elsewhere. performed in a country other than a response, CBP believes Congress was beneficiary country in accordance with Articles Knit-to-Shape in the United referring to sewing thread in section the clear language of the statute.’’ 112(b)(2) and (b)(7) of the AGOA when States CBP does not dispute the it referred to ‘‘thread formed in the Two commenters complained that the commenters’ assertion that the AGOA United States.’’ In order to be product descriptions in § 10.213 do not was intended to accord preferential recognized and usable as sewing thread, make adequately clear that garments treatment to garments assembled in a thread must be in its final form, that is, knit-to-shape in the United States, or beneficiary country from U.S.-formed generally plied with a ‘‘Z’’ twist. garments assembled with components fabric made from U.S.-formed yarn. However, sewing thread is not always knit-to-shape in the United States, are However, in addition to requiring the plied, nor does it always have a ‘‘Z’’ eligible for duty-free and quota-free use of U.S.-formed fabric and yarn, twist. treatment under the Act. However, as paragraphs (b)(1) and (b)(2) of section CBP believes that Congress in using these concerns were addressed by the 112 of the AGOA also specify the the term ‘‘thread’’ in section 112(b)(2) subsequent amendments made to the location of the cutting of the fabric: The and (b)(7) meant ‘‘sewing thread’’ in all AGOA by section 3108(a) of the Act of United States for paragraph (b)(1) and a its various commercially used forms. 2002, no further response is required. beneficiary country for paragraph (b)(2). Sewing thread is a form of yarn and is Cutting in the United States and Thus, as a general matter, CBP cannot made from yarn. Like yarn, sewing agree with the commenters that, under Beneficiary Countries thread may be made in various ways. In these provisions, whether cutting is the Dictionary of Fiber & Textile Comment: performed entirely in the United States Technology (Hoechst Celanese, 1990), at Two commenters stated that, as a or in a beneficiary country, or both, is 161, ‘‘thread’’ is defined, in relevant basic principle, cutting should be essentially irrelevant. CBP believes that part, as ‘‘1. A slender, strong strand or allowed either in the United States or in the statutory language relating to the cord, especially one designed for sewing the AGOA beneficiary countries or in location of the cutting in each provision or other needlework. Most threads are both, and they suggested that CBP cannot be ignored. Regarding the made by plying and twisting yarns. A should clarify this point in the reference to the October 18, 2000, letter, wide variety of thread types is in use regulations. These commenters argued CBP submits that its post-enactment today, e.g., spun cotton and spun that the benefits under the AGOA origin precludes it from being polyester, core-spun cotton with a should be accorded so long as the dispositive on any interpretative issue polyester filament core, polyester or assembled goods came from regarding the legislation. nylon filaments (often bonded), and components made from U.S. fabric However, CBP agrees that these monofilament threads.’’ made from U.S. yarn. One of these statutory provisions permit certain While most sewing thread consists of commenters further argued that cutting to be performed both in the yarns which have been plied, some may Congress did not intend a narrow United States and in one or more consist of a single monofilament. In reading of the statute, that is, that beneficiary countries. CBP believes that order to avoid limiting the type of cutting of portions of the garment in the the cutting issue has been raised by the sewing thread formed in the United United States and a beneficiary country commenters primarily in regard to States which may be used in the would disqualify a garment while paragraphs (b)(1)(A), (b)(1)(B) and (b)(2) assembly of textile apparel in the AGOA cutting of portions in the United States of section 112 of the AGOA (covered by beneficiary countries for purposes of or a beneficiary country would not. The § 10.213(a)(1), (a)(2) and (a)(3) of the section 112(b)(2) and (b)(7) of the AGOA commenter noted in this regard that an regulations, respectively). CBP will and § 10.213(a)(3) and (a)(11) of the October 18, 2000, letter from the Ways address this issue as it relates to regulations, respectively, CBP believes and Means Committee Chairman and paragraph (b)(1) first. that ‘‘sewing thread’’ should be defined Ranking Minority Member and Trade Paragraph (b)(1) encompasses apparel for AGOA purposes not on the basis of Subcommittee Chairman states that articles assembled in one or more a type of construction but rather only ‘‘garments assembled in eligible beneficiary countries from fabrics with reference to the way it is used. countries from U.S. fabric/U.S. yarn are wholly formed and cut in the United Section 10.212 has been modified in eligible for preferential treatment, States, from yarns wholly formed in the this final rule document by the addition regardless of whether portions of the United States, that (1) are entered under of a definition of ‘‘sewing thread’’ in garment were cut both in the beneficiary subheading 9802.00.80, HTSUS, or (2) paragraph (p) to reflect this position. country and in the United States.’’ would have qualified for entry under

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subheading 9802.00.80 but for the fact the § 10.212 definition of ‘‘cut in one or a benefit for a product that does not that the articles were subjected to more beneficiary countries.’’ This exist. To fix this problem, the certain specified processes, such as conflict arises from the fact that the commenters recommended substitution stone-washing and screen printing. As a definition of ‘‘assembled in one or more of the word ‘‘greater’’ for ‘‘finer’’ in the preliminary matter, CBP interprets the beneficiary countries’’ allows a prior regulatory text so that the text would reference to cutting in this context to partial assembly operation to be refer to ‘‘wool measuring 18.5 microns mean that all fabric components performed in the United States, which in diameter or greater.’’ comprising the eligible article must be presupposes that the fabric components CBP’s Response: cut in the United States. involved in that assembly operation Congress used the term ‘‘finer,’’ and Concerning what, if any, additional were cut in the United States. CBP does not have the authority to vary cutting may be performed in a To resolve this apparent conflict, CBP from the statutory language by beneficiary country under this in this final rule document has amended substituting the term ‘‘greater’’ as provision, CBP submits that this is the definition of ‘‘cut in one or more requested by the commenters. However, dependent upon the extent to which beneficiary countries’’ in § 10.212 to it appears that the concerns of the cutting abroad is permitted under expressly authorize the cutting of fabric commenters have been addressed by an subheading 9802.00.80, HTSUS, components in the United States but amendment to section 112(b)(4)(B) made because of the statutory reference to this only to the extent that those by section 3108(a) of the Act of 2002. subheading. CBP believes that articles components are used in a prior partial Paragraph (b)(4)(B) and the for which preference is sought under assembly operation in the United States. corresponding regulatory text, paragraph (b)(1) are subject to the CBP submits that this limitation on the § 10.213(a)(7), now refer to ‘‘wool conditions and requirements that apply extent of the cutting that may be measuring 21.5 microns in diameter or under subheading 9802.00.80 and its performed in the United States under finer.’’ implementing regulations (19 CFR this provision is warranted by the fact 10.11–10.26), except for the additional that the provision mentions cutting only The Findings and Trimmings Exception processing specifically permitted by in reference to one or more beneficiary Four commenters provided comments paragraph (b)(1)(B). Under subheading countries. or suggestions regarding the findings 9802.00.80, only assembly operations CBP also notes that, under paragraph and trimmings rule set forth in section and operations incidental to assembly (b)(2) of section 112, the cutting of bolts 112(e)(1) of the AGOA. One of these may be performed abroad. Examples of of fabric in the United States into fabric commenters simply endorsed the CBP operations incidental to assembly are set pieces of smaller dimensions would be interpretation in § 10.213(b)(2) that acceptable since the requirement that forth in 19 CFR 10.16 and include gives precedence to the findings and the articles be produced from fabric ‘‘trimming . . . or cutting off of small trimmings rule over the de minimis rule would be fulfilled. amounts of excess materials’’ and (section 112(e)(2) of the AGOA) in cases Finally, CBP notes that the ‘‘cutting to length of . . . products where the two rules are in conflict. The commenters’ concerns regarding cutting exported in continuous length.’’ various comments or suggestions of the have been at least partially addressed by However, this regulation further sets other three commenters are discussed the addition of new paragraph (b)(7) to forth ‘‘cutting of garment parts below. according to pattern from exported section 112 of the AGOA by section Comment: material’’ as an example of an operation 3108(a) of the Act of 2002. This change that is not incidental to assembly. was made to cover combinations of The regulations should clarify, in Thus, it is the position of CBP that various production scenarios involving § 10.213(b)(1)(i), that narrow elastic only cutting that is incidental to the beneficiary countries and the United fabrics used for waistbands, leg assembly process abroad, within the States described in other paragraphs in closures, and similar applications are meaning of subheading 9802.00.80, section 112 of the AGOA. Section not considered ‘‘findings and HTSUS, may be performed in a 112(b)(7) specifies that the cutting of trimmings’’ and must be formed in the beneficiary country under paragraph fabric is to be performed ‘‘in the United United States if the garments are to (b)(1) of section 112. States and one or more beneficiary sub- receive preferential treatment. Paragraph (b)(2) of Section 112 of the Saharan African countries or former CBP’s Response: AGOA differs from paragraph (b)(1), in beneficiary sub-Saharan African The regulatory text in question (re- part, in that it refers to cutting of fabric countries.’’ (Paragraph (b)(7) of section designated in this final rule document ‘‘in one or more beneficiary sub-Saharan 112 of the AGOA was subsequently as § 10.213(c)(1)(i) as discussed above) African countries’’ (rather than in the amended by section 7(d) of the Act of states that elastic strips are findings and United States) and it contains no 2004, to allow beneficiary countries that trimmings only if they are each less than reference to subheading 9802.00.80, may in the future graduate from AGOA 1 inch in width and are used in the HTSUS. As indicated above, the to still provide the qualifying production of brassieres. Accordingly, definition of ‘‘cut in one or more components for assembly in beneficiary CBP believes that it is already beneficiary countries’’ in the interim countries.) sufficiently clear that narrow elastic regulations was intended to preclude fabrics used for waistbands, leg closures any cutting of fabric in any country Merino Wool Sweaters and similar applications are not other than a beneficiary country. Comment: considered findings and trimmings. However, CBP has re-evaluated that Two commenters referred to the so- Furthermore, CITA has clearly stated intention in light of the fact that the called ‘‘merino wool’’ sweater provision that the foreign origin exception for definition of the phrase ‘‘assembled in in the AGOA (section 112(b)(4)(B)) and elastic strips under the Special Access one or more beneficiary countries’’ in the regulatory texts (§ 10.213(a)(7)). program was intended to be limited to (appearing in paragraph (b)(2) of Section They expressed disappointment that the narrow elastic fabrics for use as 112 of the AGOA and in the interim regulatory text did not address brassiere straps and not to include corresponding regulatory provision, and correct a legislative drafting error in elastic fabrics such as those used in § 10.213(a)(3)) set forth in § 10.212 of the definition (description) of the goods waistbands. See Clarification of the interim regulations conflicts with in question that has the effect of creating Requirements for Participation in the

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Caribbean Basin Special Access Narrow elastic fabric should be mentions fibers, the inclusion of foreign Program, 52 FR 26057 (1987). considered the same as in the past in the fibers in yarns or fabrics will not affect CBP disagrees with the commenter’s Special Access program, that is, except the eligibility of an apparel article. statement that those narrow elastic for elastic strips of 1 inch width or less Elastic Rubber Tape fabrics must be made only in the United used in the manufacture of brassieres, States. In some circumstances, the narrow elastic fabric should be excluded Comment: AGOA statutory and regulatory from ‘‘findings and trimmings.’’ One commenter urged CBP to include provisions expressly permit the use of CBP’s Response: in the final regulations language that fabric formed in one or more beneficiary CBP agrees with the comment and requires elastic rubber tape to be countries or in any country in the case feels that the position is adequately set classified similarly to narrow web of lesser developed beneficiary forth in the regulation. It should be elastic and spandex so as to receive the countries. noted that the statute and regulations same protection and treatment under The Act of 2004 amended section refer to elastic strip ‘‘less than 1 inch in the AGOA, that is, that it must be 112(d) of the AGOA (now section width’’ not ‘‘1 inch width or less.’’ wholly formed in the United States. In 112(e)) by adding a new special rule Comment: support of this position, the commenter providing that an article otherwise The various ‘‘knit-to-shape’’ stated that elastic rubber tape is eligible for preferential treatment under exclusions were developed with wide distinguished from rubber thread by its section 112 will not be ineligible for that fabric or ‘‘large tube’’ circular knit fabric width (greater than 1/16 of an inch and treatment because it contains certain in mind. Knitted or woven narrow no greater than 6 inches) and is specified components, including elastic fabric was not intended to be part distinguished from rubber ribbon by ‘‘waistbands’’ and ‘‘straps containing of this category and should not be part consisting of a single ‘‘end’’ as opposed elastic,’’ that do not meet the applicable of any exclusion but rather should be to multiple ends in the case of ribbon. production requirements set forth in treated in a similar manner as sewing In addition, this commenter asserted section 112(b), regardless of the country thread and therefore must be made in that flat rubber tape competes with, and of origin of the component. CBP in this the United States. is a substitute for, woven or knit elastic final rule document has incorporated CBP’s Response: web and logically should be subject to The commenter appears to be the above new rule in new the same U.S.-formed requirement as referring to narrow circular knit fabric § 10.213(c)(1)(v) of the regulations. elastic web. and any other kind of narrow elastic Comment: fabric (knit or woven) used in the CBP’s Response: In addition to the named findings and production of a garment. CBP would As the commenter noted, rubber tape trimmings mentioned in the statutory agree that those narrow elastic fabrics, if is distinguished from both narrow web language, other examples of findings not less than 1 inch in width and used elastic and spandex by virtue of its and trimmings should be added to the in the production of brassieres, are not construction and composition. Both text in § 10.223(b)(1)(i) based on CBP subject to the findings and trimmings narrow web elastic and spandex are rulings issued under the Special Access exception. However, for the reasons textile products. Spandex is a well and Special Regime programs. These noted earlier in this comment known man-made fiber textile product. involve the following: Patches that discussion, CBP disagrees with the Narrow web elastic is a fabric produced symbolize a brand and add contention that those narrow elastic by combining synthetic or natural ornamentation (HQ 560726, HQ fabrics must be made only in the United rubber thread with textile fiber. Rubber 560520); reinforcing tape (HQ 559961, States. tape and elastic rubber tape as HQ 560398); and slide fasteners, referenced in the comments are the featherbone, belting, and braids (HQ The De Minimis Rule same product which is not a textile 559738). In addition, trimmings similar Comment: product because it is made of rubber. in use to decorative lace, such as piping A commenter stated that the relevance The Conference Report relating to the or decorative strips of fabric of including the word ‘‘fibers’’ in the Act of 2000 states at page 76 that ‘‘the reinforcement at seams or raw edges, are statutory language was unclear because requirement that products must be appropriate to be included as the statute contains no requirements assembled from fabric formed in the ‘‘trimmings’’ for purposes of the statute that ‘‘fibers’’ be formed in the United United States applies to all textile because they are equivalent to States or a beneficiary country and thus components of the assembled products, decorative lace trimming while the inclusion of foreign fibers in yarns including linings and pocketing, subject performing functions similar to or fabrics does not affect the apparel’s to the exceptions that currently apply reinforcing tape. eligibility. This commenter argued that under the ’Special Access Program.’’’ CBP’s Response: it would have been more appropriate for Thus the Conference Report reflects a Although CBP agrees that the other the statute to refer to ‘‘yarns or fabrics’’ legislative intent to promote the use of items have been previously found to in place of ‘‘fibers or yarns’’ and that the U.S. textile fabric and yarn. There is no qualify as findings and trimmings under anomaly in the present statute indication in the statute or legislative the Special Access program and substantially reduces the already history of a requirement that rubber subheading 9802.00.90, HTSUS, CBP minimal flexibility provided under the tape, a non-textile component, be of has concluded that there is no need to AGOA to use non-U.S.-formed inputs. U.S. origin. Accordingly, list additional examples. The list of CBP’s Response: notwithstanding the potential economic findings and trimmings is intended to The commenter is correct that there is impact on U.S. rubber tape producers, be representative in nature and is not an no requirement that ‘‘fibers’’ be formed CBP does not find a basis in the statute exhaustive list. With respect to items in the United States or a beneficiary or in its legislative history to require that have not previously been ruled country and thus the reference to fibers rubber tape to be wholly formed in the upon, CBP intends to deal with the in the statutory provision appears to be United States. items on a case-by-case basis through unnecessary. Although the regulatory Post-Assembly Processing interpretive rulings. language at § 10.213(c)(1)(iv), consistent Comment: with the statute at 19 U.S.C. 3721(e)(2), Comment:

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Four commenters were of the opinion the United States or in a beneficiary that the drafters intended that this that the regulations should make it clear country. New paragraph (b)(2) also provision use the same rules as those that certain processes (such as includes a caveat that in the case of used in the NAFTA. That is, an apparel embroidery, stonewashing, enzyme articles covered by paragraph (a)(1) of article would qualify for preferential washing, acid washing, oven-baking, § 10.213, a post-assembly operation treatment if the article is made of a short perma-pressing, garment dyeing, screen performed in a beneficiary country must supply fabric or yarn that determines its printing, or similar processes) do not be incidental to the assembly process. classification. disqualify a garment for preferential As to the commenter’s concern Short Supply Provisions treatment when all other criteria for regarding linings not made in the eligibility are met. In support of this Four commenters submitted United States or a beneficiary country, position, it was argued that the AGOA observations on the interpretation and CBP believes that the regulation as is silent on the permissibility of post- application of the so-called short supply drafted is clear that the rules of origin assembly operations for merchandise provisions (section 112(b)(5) of the in Annex 401 of the NAFTA apply. entered under section 112(b)(2) of the AGOA and § 10.213(a)(8) and (a)(9) of Therefore, if under those rules for the AGOA only for the reason that it is the interim regulations). apparel article at issue the origin of the understood that those post-assembly Comment: lining is of no consequence, then the operations are permitted because the One commenter urged CBP to clarify commenter is correct, the fact that the merchandise in question will not be what is considered a qualifying product lining is not made in the United States entered under HTSUS heading 9802. under the § 10.213(a)(8) short supply or a beneficiary country is not relevant. Moreover, there is no proscription provision, to ensure that it coincides However, if the lining material is against post-assembly processing with the NAFTA short supply rules as relevant to the rule applicable to the anywhere in the HTSUS or in the CBP was intended by Congress. This apparel article at issue, then the origin regulations except for heading 9802. commenter argued that, under the of the lining material may be relevant. Finally, the commenters argued that a NAFTA, a garment qualifies for short Such determinations must be made on significant portion of garments supply treatment if the fabric that a case-by-case basis and are best produced in the sub-Saharan region provides its essential character and addressed through the rulings process. under the AGOA will undergo post- determines its classification is one that Comment: assembly processing, that Congress did has been identified as being in short A commenter took the view that the not intend them to be denied supply. The fact that linings or other short supply regulatory provisions preferential treatment because no items are not made in the United States (§ 10.213(a)(8) and (a)(9)) do not clearly specific reference appeared in the or a beneficiary country is not relevant, state the requirement under the statute AGOA, and that Congress in fact did and that should be clear from the that all yarn and fabric components of intend that those processes be regulations. an apparel article other than those that performed in beneficiary countries. CBP’s Response: determine the classification must be CBP’s Response: CBP notes initially that the Act of wholly formed in the United States. The CBP fully agrees with these 2004 amended the short supply following points were made by this commenters that apparel articles that provision in section 112(b)(5) of the commenter in support of this satisfy the criteria for eligibility under AGOA by removing the words ‘‘from interpretation of the statute: section 112(b)(2) of the Act should not fabric or yarn that is not formed in the 1. The AGOA mandates the use of be disqualified from receiving United States or a beneficiary sub- fabrics wholly formed in the United preferential treatment because they are Saharan African country.’’ As amended States for all fabric components except subjected to one or more post-assembly to reflect this change, § 10.213(a)(8) has for specific fabrics that are not available processes, such as embroidery, two parts: First, the apparel article must in the United States. stonewashing, and garment dyeing, in a be both cut (or knit-to-shape) and sewn 2. An interpretation of the statute beneficiary country. Consistent with the or otherwise assembled in one or more allowing non-U.S. fabric for all fabric conclusion reached in regard to whether beneficiary countries and, second, the components in the case where the outer dyeing and finishing of fabric, yarn and fabric or yarn of which the article is shell alone is of a fabric that cannot be thread may be performed other than in constructed must have been determined supplied in commercial quantities a beneficiary country or in the United to be in short supply. There appears to would be an inappropriate imposition States, CBP believes that post-assembly be no issue regarding the first part. On on the AGOA program. finishing processes may only be the second part, there is no question 3. Whereas the NAFTA was a performed in beneficiary countries or in raised regarding the use of the negotiated agreement among nations in the United States. predetermined short supply fabrics and which concessions regarding the ‘‘short Accordingly, CBP in this final rule yarns but rather only on what supply’’ list made sense, the AGOA document has included in new requirements, if any, the remaining program is a unilateral gift of the United paragraph (b) of § 10.213 a subparagraph fabrics or yarns in the apparel article States to the nations of sub-Saharan (2) to clarify that articles otherwise must meet. CBP believes that the last Africa and ought to be construed to entitled to preferential treatment under portion of the provision clearly states require the use of U.S. fabrics in all the AGOA will not be disqualified from the intent and thus provides an answer cases except for the specific fabric receiving that treatment because they to that question. That portion of the text which cannot be supplied in undergo post-assembly operations (such provides that an apparel article commercial quantities. as those mentioned in section constructed of yarns or fabrics that were CBP’s Response: 112(b)(1)(B) of the Act) in the United determined to be in short supply may CBP does not agree with this States or in one or more beneficiary receive preferential treatment under the commenter that all yarn and fabric countries. As in the case of the dyeing, AGOA if those apparel articles would be components of an apparel article other printing and finishing operations eligible for preferential treatment under than those that determine the covered by new paragraph (b)(1), under the rules of origin in Annex 401 of the classification must be wholly formed in this new paragraph (b)(2), those other NAFTA. In the absence of a qualifier to the United States. The text dealing with operations may only be performed in this language, CBP believes it is clear short supply or non-availability of fabric

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provides in effect that an apparel article regulations, respectively). Those using the word ‘‘entered’’ in this constructed of yarns or fabrics that were issuances are TBT–01–004 dated context, to restrict the ability of an determined to be in short supply may September 18, 2001, TBT–04–009 dated importer to submit post-entry receive AGOA preferential treatment if April 21, 2004, TBT–04–019 dated June information to CBP prior to the date on that apparel article would be eligible for 28, 2004, and TBT–04–021 dated July 1, which liquidation of the entry in preferential treatment under the rules of 2004. However, the first of those question becomes final. origin in Annex 401 of the NAFTA. In issuances, which relates to the Certificate of Origin the absence of a qualifier to this § 10.213(a)(8) short supply provision, language, CBP believes it is clear that does not list the visible lining fabrics Four commenters submitted the drafters intended that this provision mentioned by this commenter because observations on one or more aspects of use the same rules as those used in the those fabrics are not treated as short the Certificate of Origin as provided for NAFTA. That is, an apparel article supply fabrics under the NAFTA. in § 10.214 and referred to in §§ 10.215 would qualify for preferential treatment CBP has already addressed above the and 10.216. To the extent that if the article were made of a short commenter’s concern that CBP ensure comments received regarding the supply fabric or yarn that determines that all interested parties are made Certificate of Origin set forth in T.D. 00– the classification of the article. See Note aware that the rules for the short supply 67 are still relevant to the subsequent 2 to Chapter 61 and Note 3 to Chapter provisions will be interpreted in the Certificate of Origin set forth in T.D. 03– 62 of Annex 401 of the NAFTA. same way for both the NAFTA and the 15, CBP will respond. Comment: AGOA. Comment: A commenter referred to trade Comment: One commenter complained that the advisory TBT–00–023 entitled One commenter noted that draft Certificate of Origin is unnecessarily ‘‘Implementation Information for the regulations implementing the short complicated and thus presents an CBTPA for Textile and Apparel supply program for fabrics and yarn obstacle to achieving the goals of the Products’’ issued by CBP Headquarters have not yet been issued and indicated AGOA. The commenter questioned on October 20, 2000, which included, that it had sent detailed suggestions to whether the identification of options for among other things, a list of fabrics the Office of the U.S. Trade benefits is necessary given that the covered by the Caribbean Basin Trade Representative on how the regulations Certificate is not required by the Partnership Act short supply provisions. should be drafted. The commenter Government but rather is part of the According to the commenter, the list in suggested that further delay is importer’s record keeping. This TBT–00–023, which would apply unwarranted because short supply commenter further questioned whether equally for purposes of the AGOA short requests have already been submitted. in fact the Certificate of Origin is even supply provisions, was not complete CBP’s Response: necessary since the importer is because it omitted some products (for The commenter refers to a matter that accountable for records that establish example, visible lining fabrics woven falls within the jurisdictional authority eligibility for benefits. from foreign yarns as specified in of agencies other than CBP and therefore CBP’s Response: NAFTA rule 1 for Chapters 61 and 62 is not an appropriate subject for these Section 113(b)(1)(A) of the AGOA within HTSUS General Note 12(t), and regulations. CBP further notes in this requires importers claiming preferential all yarns and fabrics covered by HTSUS regard that on March 6, 2001, the treatment under section 112 of the headings other than those specifically Committee for the Implementation of AGOA to comply with customs excluded in the specific rules of origin) Textile Agreements (CITA) published in procedures similar in all material that would not be precluded from the Federal Register (66 FR 13502) a respects to the requirements of Article receiving NAFTA treatment under the notice setting forth procedures to be 502(1) of the NAFTA and requires the NAFTA rules even though they do not used in considering requests under the Secretary of the Treasury to promulgate qualify under the regular ‘‘yarn AGOA short supply provisions. regulations to that end. Article 502(1) of forward’’ concept. The commenter the NAFTA covers procedures regarding argued that all yarns and fabrics that Meaning of ‘‘Entered’’ in § 10.213(a)(1) the use of a Certificate of Origin. In view allow apparel traded between NAFTA Comment: of the clear mandate in the AGOA to parties to qualify for NAFTA preference One commenter noted that apply the NAFTA Certificate of Origin (that is, that allow apparel to meet the § 10.213(a)(1) refers to articles ‘‘entered’’ approach, CBP has no authority to vary NAFTA rules of origin under Annex under HTSUS subheading 9802.00.80. from that approach by dispensing with 401) should be considered as eligible The commenter expressed concern that the Certificate of Origin requirement in under the AGOA preference. the use of this term suggests that post- these regulations. CBP’s Response: entry claims are not allowed and As regards the commenter’s assertions TBT stands for ‘‘Textile Book therefore, to solve this problem, that the identification of options for Transmittal.’’ Textile Book Transmittals suggested replacing ‘‘entered’’ by benefits is not necessary and that the provide textile information to the trade ‘‘classified.’’ Certificate of Origin is not required by community from CBP and are issued by CBP’s Response: the Government, CBP disagrees with the Textiles and Trade Agreements The use of the word ‘‘entered’’ reflects both points. The identification of the Division. TBTs may be found on the the wording of the underlying statute specific basis for claiming preferential CBP Web site at http://www.cbp.gov/xp/ and also is appropriate from a technical treatment is like the approach under the cgov/trade/priority_trade/textiles/tbts/. and practical standpoint because it is NAFTA whereby the preparer of the CBP agrees that the list included in the entry process that brings an AGOA Certificate of Origin identifies the TBT–00–023 was not complete. CBP has import transaction under the specific rule of origin standard upon since issued further clarifications that jurisdiction of a CBP office (the which the claim for NAFTA duty include all of the short supply fabrics suggested word ‘‘classified’’ would have treatment is based. Further, although the and yarns that are covered by the two no relevance outside an entry context). Certificate of Origin is not provided for short supply provisions set forth in With regard to the specific concern in the regulations as a condition of section 112(b)(5)(A) and (B) of the expressed by this commenter, there was entry, similar to the practice under the AGOA (§ 10.213(a)(8) and (a)(9) of the no intention on the part of CBP, by NAFTA, it not only must be in the

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possession of the importer when the that this information will be provided Certificate of Origin make clear that the claim under the AGOA is made but also, directly to CBP upon request. The other producer or exporter may state ‘‘not under § 10.216(b), must be provided to two commenters suggested that, in lieu applicable’’ where the information CBP upon request. of including the specific information in sought is not relevant for the particular Comment: blocks 6–8, the regulations should allow preference group. This commenter A commenter questioned the the inclusion of words such as stated, as an example, that blocks 6–8 propriety of using a NAFTA-type ‘‘available to CBP upon request.’’ One of are not relevant for a producer or Certificate of Origin, suggesting in this them pointed out that this would be exporter of apparel in preference group regard that in some respects the similar to the approach taken regarding ‘‘E.’’ Certificate of Origin should be more like producer information on the NAFTA CBP’s Response: ITA Form 370P. The commenter noted Certificate of Origin and in the As in the case of any form designed in this regard that because the 807A+ instructions for block 2 in § 10.214(c)(3). to cover a variety of factual situations, and 809+ programs in most instances, CBP’s Response: it was never intended that all blocks be including the selection of the fabric CBP notes that it is incumbent upon completed on the Certificate of Origin used, are controlled by the U.S. the importer to know the facts of the set forth in § 10.214. In fact, there importer, it makes little sense to ask an transaction. If the U.S. importer wishes should never be a case where all the African producer of apparel to attest to to make an AGOA claim, it is important blocks will be completed. For example, the accuracy of the identity of the that the origin of the raw materials used as the commenter pointed out, blocks 6– manufacturer of U.S. yarn or thread. in the production of the garment be 8 are not relevant to articles covered by Therefore, this commenter known in order to assess whether the preference group ‘‘E’’ (nor are blocks 9 recommended that § 10.214(a) be garment qualifies. While for CBP import and 10 relevant in that case). Similarly, revised to permit the United States purposes it is the importer’s in the case of preference group ‘‘H,’’ importer to sign the Certificate on the responsibility to have the necessary blocks 6–9 do not need to be completed. same basis on which the producer or information and documentation to If a block is not relevant to the article exporter may sign it. justify any claim for preferential covered by the Certificate of Origin, the CBP’s Response: treatment, it is the exporter’s or exporter can either leave the block blank As indicated in the previous comment producer’s responsibility under the or insert the words ‘‘not applicable’’ or response, CBP has no latitude to vary AGOA to accurately complete and sign the symbol ‘‘N/A.’’ CBP does not believe from the Certificate of Origin approach. the Certificate of Origin. that it is necessary to modify the As regards who may sign the Certificate When CBP requests the Certificate of instructions for completing the of Origin, the interim regulations Origin, CBP wants, among other things, Certificate of Origin to cover something provide that the exporter or the the name of the fabric and yarn supplier that is implicit in its design and use. exporter’s authorized agent may sign the that makes this merchandise eligible for What is essential is to ensure that all Certificate. Section 113(b)(1)(B) of the AGOA benefits. CBP is given the information relevant to the article under AGOA makes each beneficiary country responsibility to enforce and administer consideration is included on the responsible for implementing and this program. In order to ensure that Certificate of Origin, and that is what following procedures and requirements importers are properly claiming benefits the instructions are intended to do. similar in all material respects to those under the AGOA, it is essential that Comment: under Chapter 5 of the NAFTA. As information be provided showing the One commenter noted that § 10.214(a) Chapter 5 of the NAFTA does not names and addresses of the parties provides both that an exporter must authorize the preparation of the providing the raw materials. prepare the Certificate of Origin and Certificate of Origin by the importer, The United States importer does not that, where the exporter is not the CBP has no authority to provide in these need to present the Certificate of Origin producer, the exporter may complete regulations for the preparation and until requested to do so by CBP. The and sign the Certificate based upon a signature of the AGOA textile Certificate requirement that fabric, yarn, and/or Certificate voluntarily provided to the of Origin by the U.S. importer. thread producers be identified in blocks exporter by the producer. In the latter However, as discussed later in this 6–8 of the AGOA Certificate of Origin is case, the commenter questioned which document under ‘‘Additional Changes based on the requirement in most Certificate is considered the ‘‘original’’ to the Regulations,’’ CBP has AGOA preference provisions that those for purposes of § 10.215(a). The determined that the Certificate may be items must be produced in the United commenter suggested in this case that prepared and signed by the producer or States and/or in one or more beneficiary the Certificate signed by the exporter exporter or by the producer’s or countries. These requirements are will be considered the original and that exporter’s authorized agent having specifically provided for in the AGOA this should be clarified in the knowledge of the relevant facts. which differ in this regard from the regulations. Comment: approach taken in the NAFTA. Neither CBP’s Response: Three commenters objected, the NAFTA nor its implementing The basic customs statutory record principally on business confidentiality legislation discusses specific keeping requirements which are grounds, to the inclusion of specific intermediate processes such as these, contained in sections 508 and 509 of the information regarding fabric, yarn and nor do they address producer Tariff Act of 1930, as amended (19 thread producers in blocks 6–8 on the requirements specifically. For these U.S.C. 1508 and 1509), and the Certificate of Origin. One of these reasons, the producers described in regulations implementing those commenters suggested that, as regards blocks 6–8 must be identified on the statutory provisions which are set forth yarn producer information, the AGOA Certificate of Origin, which in Part 163 of the CBP regulations (19 Certificate of Origin should have cannot be completed merely by CFR Part 163) are applicable to AGOA provision for stating that the including wording such as ‘‘Available to transactions in the same way that they information may be obtained from the CBP upon request.’’ apply to any statutory import program fabric producer when the fabric Comment: administered by CBP. For this reason a producer provides a statement to the A commenter recommended that the general statement regarding the garment producer, exporter or importer instructions for completing the applicability of the Part 163 provisions

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was included in § 10.216(a), in lieu of In T.D. 03–15, CBP adjusted the considered representative of the type of repeating portions of the Part 163 Certificate of Origin form to coordinate records that should be retained for 5 provisions in the AGOA regulations. the relevant provision with the years, whereas manufacturing records Thus, the meaning of ‘‘original’’ in an applicable preference and visa group. should not be required beyond the AGOA Certificate of Origin context is Comment: statutory 2-year period. controlled by the definition of With reference to the requirement in CBP’s Response: ‘‘original’’ set forth in § 163.1(g). Under § 10.216(b)(3) that the importer provide CBP first notes that the only reference that definition, what is received or made upon request an English translation of a to a 2-year record retention period in the by the one required to maintain the Certificate not prepared in English, a AGOA is found in section 113(a)(1)(E) record (the U.S. importer, for example) commenter recommended that the which concerns the obligation of each is what is considered to be the original. provision be revised to require that the beneficiary sub-Saharan African country As regards the suggested clarification, Certificate be completed in English or in to require its producers and exporters to CBP believes that no change is both English and the language of the maintain production and export records. necessary in this regard since the exporting country, so that the importer That exporting country context is regulations, as amended by this final would be able to more readily respond distinct from, and therefore is not an rule, clearly indicate who may prepare with an English version when a copy of appropriate subject for, these AGOA and sign a Certificate of Origin. the Certificate is requested by CBP. This implementing regulations which Comment: commenter suggested that although the concern U.S. import requirements. CBP A commenter noted that whereas practice under NAFTA has been for further notes that Article 502(1) of the § 10.216(b)(2) provides that the exporter companies to prepare both an English NAFTA does not mention a record or his authorized agent must have version and a native language version, retention period (that subject is signed the Certificate, § 10.214(a) makes having this as a regulation would ensure addressed in Article 505 of the NAFTA no reference to an authorized agent. the ready availability of translations. which is not specifically referred to in This commenter suggested that if an CBP’s Response: the AGOA). Therefore, it is not the CBP does not believe that the NAFTA standard that controls record authorized agent may sign the regulatory text should be changed as retention in the United States under the Certificate, this should also be noted in suggested by this commenter. CBP notes AGOA. Rather, as already pointed out § 10.214(a). in this regard that so long as the above, the provisions of 19 U.S.C. 1508 CBP’s Response: regulatory standard for an English and 1509 and Part 163 of the CBP CBP agrees that § 10.214(a) should language Certificate or translation is regulations set forth the standards for clarify who may prepare and sign the met, whatever additional procedure the record retention in an AGOA context, Certificate of Origin. As previously exporter and U.S. importer may choose including the length of time that a indicated in this comment discussion, to employ for their convenience in record must be retained. CBP believes CBP has determined that, in addition to meeting that requirement is not that those statutory and regulatory the exporter or the exporter’s authorized appropriate for regulatory treatment. provisions strike an appropriate agent, the producer or the producer’s balance, consistent with Congressional Record Keeping Requirements authorized agent may prepare and sign intent, between the law enforcement the Certificate. Therefore, §§ 10.214(a), Four commenters made observations needs of CBP and the interest of the 10.214(c)(13), and 10.216(b)(2) have on the maintenance of records provision importing community in having the been changed to reflect this in § 10.216(a) and on the amendment to smallest possible record keeping modification as to who may sign the the (a)(1)(A) list contained in the burden. Certificate. It should be noted that T.D. Appendix to Part 163. Comment: 03–15 modified the instructions for Comment: With regard to the amendment to the preparing the Certificate in § 10.214(c) Two commenters objected to (a)(1)(A) list contained in the Appendix by adding a new paragraph (c)(13) application of the NAFTA 5-year record to Part 163, two commenters objected to regarding who may sign the Certificate. retention period, noting that the AGOA the inclusion of the words ‘‘and Comment: specifically mentions a 2-year period. supporting records.’’ These commenters Two commenters noted that the One of these commenters, after noting noted that the (a)(1)(A) list is defined as preference groups listed on the that the AGOA regulations only need to covering documents which are Certificate of Origin as set forth in be similar, rather than identical, in all ‘‘required by law or regulation for the § 10.214(b) are identified by letters material respects to the requirements of entry of the merchandise . . . ’’ (19 whereas the paragraphs setting forth the Article 502(1) of the NAFTA, argued U.S.C. 1509(a)(1)(A)). One of these groups of eligible articles under that the record keeping requirements commenters suggested that in this § 10.213(a) are identified by numbers. should be designed to meet the intent of circumstance supporting documents These commenters expressed concern Congress while placing the smallest might include production records such that this inconsistency will lead to possible administrative burden on as cutting or sewing tickets and argued confusion and errors in filling out the producers, exporters, importers and that these may not be construed as Certificate, and, therefore, they CBP. Moreover, considering the documents required for entry and that requested that the same type of requirements under the NAFTA, this there is nothing in the interim identifier be used in each context. One commenter argued that only certain regulation to suggest that this is the of the commenters specifically records were contemplated in the 5-year case. The other commenter mentioned suggested in this regard that preference retention requirements and therefore certain supporting documents referred group ‘‘A’’ should be indicated as ‘‘(1)’’ suggested that CBP should review the to in § 10.217(a)(2) (that is, production on the Certificate to correlate with specific records required under the records, information relating to the § 10.213(a)(1), preference group ‘‘B’’ NAFTA and stipulate exactly what must place of production, the number and should be indicated as ‘‘(2)’’ on the be retained to satisfy the requirements identification of the types of machinery Certificate to correlate with of the AGOA. This commenter used in production, and the number of § 10.213(a)(2), and so forth. suggested that the spinner’s workers employed in production) and CBP’s Response: certifications of materials origin may be similarly stated that these records are

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not required for entry. Both commenters paragraph (b)(1) of section 112, CBP limitation of the subheading 9802.00.80 therefore requested elimination of the concluded that additional cutting duty exemption resulting from language reference to supporting records. operations may be performed in a in the general rates of duty column CBP’s Response: beneficiary country under that statutory (which requires each individual CBP has reviewed this issue in light provision only to the extent that the component to be eligible for that of the points made by these commenters cutting operations are considered component to enjoy a partial duty and has concluded that the commenters ‘‘incidental’’ to the assembly process exemption on its cost) is not operative are correct. Accordingly, the abroad. CBP also noted in this regard for the special rates of duty column. amendment to the (a)(1)(A) list in the that the regulations implementing This commenter thus concluded that Appendix to Part 163 has been modified subheading 9802.00.80 specify that under the AGOA not all components in this final rule document by removing examples of operations considered need meet the three-part requirement for the words ‘‘and supporting records.’’ ‘‘incidental’’ to the assembly process classification of the finished article in It should be noted, however, that include ‘‘cutting to length . . . of subheading 9802.00.80 for the article to although records to support a claim for products exported in continuous be duty free, as long as there is preferential treatment (other than the lengths’’ (see 19 CFR 10.16(b)(6)). compliance with the fabric and yarn Certificate of Origin) are not required for Therefore, CBP agrees with the origin requirements of the AGOA. The the entry of the merchandise in commenter that cutting fabric commenter ended by stating that the question, they nevertheless may be components to length in a beneficiary regulations (1) should state that records required to be maintained and country will not adversely affect fabrication of individual fabric made available to CBP. eligibility of products covered by components before assembly does not Other Comments paragraph (b)(1) of the statute and preclude eligibility as long as some § 10.213(a)(1) and (2) of the regulations. components meet the requirements and Comment: However, CBP does not agree that a (2) should identify when the processing With reference to § 10.213(a)(1), clarifying amendment to the regulations is sufficient to require classification in which covers apparel articles assembled is necessary in this regard in view of the subheading 9819.11.03 rather than from fabrics wholly formed and cut in already existing regulations under subheading 9802.00.80. the United States, one commenter stated implementing subheading 9802.00.80, CBP’s Response: that the AGOA implementing HTSUS, which include specific As the commenter correctly notes, regulations should include a definition examples of operations which are and CBP has held in prior rulings with of the expression ‘‘wholly formed and are not ‘‘incidental’’ to assembly. respect to subheading 9802.00.90, cut in the United States’’ that confirms Comment: HTSUS, that the fact that every fabric that cutting fabrics to length outside the A commenter referred to the following component of a textile or apparel article United States, incidental to the changes made to the HTSUS by does not satisfy one or more of the three assembly process in an AGOA Presidential Proclamation 7350: conditions set forth in that provision beneficiary country, does not adversely modification of subheading 9802.00.80 (that is, ‘‘(a) were exported in condition affect eligibility under the program. The to include an exception reference for ready for assembly without further commenter noted in this regard that the ‘‘goods imported under provisions of fabrication, (b) have not lost their expression ‘‘wholly formed and cut in subchapter XIX;’’ inclusion of the words physical identity in such articles by the United States’’ has been present in ‘‘[f]ree, for products described in U.S. change in form, shape or otherwise, and HTSUS subheading 9802.00.90, that note 7 to this subchapter’’ in the special (c) have not been advanced in value or CBP rulings (for example, HQ 559856 rates of duty column for subheading improved in condition abroad except by and HQ 561069) have confirmed that 9802.00.80; and inclusion of a new U.S. being assembled and except by the cutting-to-length of fabric Note 7 to Subchapter II to Chapter 98 operations incidental to the assembly components is an operation incidental which states, among other things, that process’’) will not preclude the article to the assembly operation and may take articles otherwise eligible to enter under from receiving duty-free treatment, place in Mexico under the statutory subheading 9802.00.80, and which provided other fabric components in the language and that those rulings are in satisfy the conditions set forth in U.S. article satisfy those three conditions. accord with § 10.16 of the CBP Note 3 to Subchapter XIX of Chapter 98, (See, e.g., HQ 559780 dated May 19, regulations which has been interpreted shall not be ineligible to enter under 1997, and HQ 560201 dated May 14, by CBP in numerous administrative subheading 9802.00.80. This 1998. The basis for these holdings is the rulings in the context of HTSUS commenter, after suggesting that the specific wording of this provision subheading 9802.00.80 that establish latter change recognized that an overlap requiring that the ‘‘fabric components, that cutting-to-length is an operation exists between subheading 9802.00.80 in whole or in part’’ meet the three incidental to the assembly process while and the Subchapter XIX provisions, conditions (emphasis added). The ‘‘in the cutting of garment parts according to stated that (1) the language of whole or in part’’ wording was added to pattern from exported material is an subheadings 9802.00.80 and 9802.00.90 subheading 9802.00.90, HTSUS, by operation not incidental to assembly. provides for eligibility where the fabric Presidential Proclamation 6821 CBP’s Response: components in whole or in part meet the (published in the Federal Register (60 The issue of the extent to which three-part eligibility requirement (ready FR 47663) on September 13, 1995). Prior cutting of fabric may be performed in a for assembly, no loss of physical to the insertion of that wording in the beneficiary country with respect to identity, and nothing more than provision, CBP had required that all articles covered by paragraph (b)(1) of assembly), (2) CBP has additionally fabric components satisfy the three section 112 of the AGOA (§ 10.223(a)(1) recognized with respect to application conditions identified above.) and (a)(2) of the regulations) has already of subheading 9802.00.90 that further CBP does not agree with the been addressed in the CBP responses to fabrication of one or more fabric commenter’s contention that under the the comments regarding cutting in the components in Mexico will not AGOA (specifically, the provision United States and beneficiary countries. preclude classification of the apparel in which refers to articles entered under Based upon the statutory reference to that subheading (see, for example, HQ subheading 9802.00.80, HTSUS, that is, subheading 9802.00.80, HTSUS, in 560201), and (3) in this regard, the section 112(b)(1)(A) of the statute which

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is reflected in § 10.213(a)(1) of the additions qualify as assemblies and that regulatory provision for each statutory regulations) not all fabric components this is in keeping with the goal of the product category or group so that must satisfy the three conditions set legislation to enhance the appropriate distinctions among the forth in subheading 9802.00.80, HTSUS, competitiveness of both domestic and different categories or groups may be for the articles to qualify for preferential sub-Saharan African textile industries. maintained for legal, operational and treatment. Unlike subheading CBP’s Response: statistical purposes. Accordingly, CBP 9802.00.90, HTSUS, the subject CBP in this final rule document has does not agree with any of the provision of the AGOA does not say that replaced the definition of ‘‘assembled in suggestions for consolidation of these the fabric components may ‘‘in part’’ one or beneficiary countries’’ with categories or groups. satisfy the three conditions of ‘‘sewn or otherwise assembled in one or subheading 9802.00.80, HTSUS. CBP more beneficiary countries’’ in Discussion of Comments in Response to believes that, had Congress intended the § 10.212(q) as explained below under T.D. 03–15 conclusion urged by the commenter, it ‘‘Additional Changes to the General Comments would have included specific wording Regulations.’’ This change in language Comment: to that effect in this provision. In the does not change the definition which, as A commenter stated the belief that absence of that wording, CBP construes noted by the commenter, includes the CBP’s interpretation of the AGOA ‘‘is this AGOA provision as requiring that addition of decorative embellishments, unnecessarily restrictive and at odds all the fabric components must meet the buttons, zippers or similar components three conditions of the subheading. where the additions qualify as with the purpose of the legislation—to Therefore, CBP declines to amend the assemblies. expand trade with countries in sub- regulations in this regard to reflect the Comment: Saharan Africa. . . . While economic commenter’s position. Three commenters suggested that conditions and infrastructure CBP notes that section 112(b)(1)(B) of either the categories of eligible products deficiencies are part of the reason, the the AGOA (which is reflected in in § 10.213(a)(1) and (a)(2) or the narrow views adopted by Customs [now § 10.213(a)(2) of the regulations) corresponding preference groups ‘‘A’’ CBP] are a very significant contributor specifically permits certain additional and ‘‘B’’ on the Certificate of Origin in to this circumstance.’’ processing (for example, stonewashing § 10.214(b), or both, should be CBP’s Response: and garment dyeing) as an exception to combined into one because the statute The interpretations adopted by CBP the third of the three conditions under does not require this distinction and with regard to the AGOA must be subheading 9802.00.80, HTSUS. because fewer categories or groups will consistent with the language of the Therefore, in the case of articles covered present fewer opportunities for error statute. It is CBP’s desire and obligation by section 112(b)(1)(B) and and misunderstanding. These to carry out the expressed intent of § 10.213(a)(2), all of the fabric commenters suggested in this regard Congress as reflected by the language of components may be subjected to one or that there is no reason for distinguishing the statute. more of those additional processes. between apparel that is merely Comment: CBP also does not agree that the assembled and apparel that is subjected A commenter noted that ‘‘[c]hanges to regulations should be changed to to additional finishing operations. One existing interim regulations for CBTPA indicate when processing would require of these commenters further noted that and AGOA that address the knit-to- classification in subheading 9819.11.03, these products are all ‘‘807A+’’ type shape and hybrid cutting issues will HTSUS, (§ 10.213(a)(2)) rather than in products (that is, products assembled in have a positive and immediate impact subheading 9802.00.80, HTSUS, the region from U.S.-formed-and-cut on U.S. textile suppliers and companies (§ 10.213(a)(1)). CBP believes that parts from U.S.-formed yarn). This in the region.’’ sufficient guidance is available through commenter suggested that since these CBP’s Response: the specific processing exemplars in AGOA provisions are intended to track No response necessary. the benefits provided under the NAFTA subheading 9819.11.03, HTSUS, and Wholly Formed Fabrics § 10.213(a)(2) and in the regulations Special Regime (which is covered by interpreting subheading 9802.00.80, one HTSUS provision, that is, Two commenters recommended HTSUS, (19 CFR 10.11–10.26) and in subheading 9802.00.90), there is no amendments of the definition of the various administrative rulings and reason why a single provision cannot be ‘‘wholly formed fabrics.’’ judicial decisions regarding what provided for these AGOA products. One Comment: processes do or do not constitute of these commenters also stated that the One commenter objected to the operations incidental to assembly. two short supply provisions in definition of ‘‘wholly formed fabrics’’ Comment: § 10.213(a) (that is, subparagraphs (8) stating that it is beyond what is A commenter expressed agreement and (9)) should be consolidated into one appropriate. The commenter believes with the change to the § 10.212 provision. the definition includes yarn formation definition of ‘‘assembled in one or more CBP’s Response: and requires processing to begin with beneficiary countries’’ made in the With the exception of preference polymers and fiber formation. The correction document published in the groups ‘‘3–C’’ and ‘‘8–H’’ on the commenter argues that the definition is Federal Register on November 9, 2000, Certificate of Origin (which consolidate inconsistent with the definition of which involved removal of the similar provisions), the regulatory text ‘‘wholly formed yarn’’ and suggests the parenthetical exception clause regarding in § 10.213(a) and the preference groups definition be changed to simply state thread, decorative embellishments, listed on the Certificate of Origin in that ‘‘fabrics wholly formed means that buttons, zippers, or similar components. § 10.214(b) reflect the individual the fabric has been entirely knit or The commenter suggested that with this product descriptions or groupings that woven within the United States or a change the regulations now recognize are contained both under section 112(b) beneficiary country.’’ that duty-free treatment is to be of the Act and in the subheadings of CBP’s Response: accorded even to apparel exported for Subchapter XIX within Chapter 98 of The commenter has misinterpreted the addition of decorative appliques, the HTSUS. CBP strongly believes that the definition of ‘‘wholly formed bead effects and the like where these it is essential to have a separate fabric.’’ The definition is not drafted to

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require yarn formation. It is drafted to Every Member of the Trade Community which made it possible to clearly include the formation of all types of Should Know About: Knit to Shape identify the pieces as specific fabrics, including knit, woven and non- Apparel Products (January 1999) and components of a garment. The woven. As non-woven fabrics are Headquarters Ruling Letter 953224 of definition of ‘‘knit-to-shape generally formed by the entanglement of May 13, 1993, stated that knit-to-shape components’’ in this final rule fibers or filaments, the definition components have not included squares document, however, includes all necessarily includes beginning with or rectangles. The commenter requests components of an apparel article, not polymers, fibers and filaments in order that CBP clarify that the term ‘‘shape’’ just ‘‘major parts,’’ which may be knit to include these fabrics which are not does not include ‘‘regular geometric directly into the shape in which the produced by knitting or weaving yarns. shapes such as rectangles and squares.’’ component is used in the apparel Comment: The commenter further requests that the article. Whether a knit component is One commenter agreed with the definition be amended to include a knit directly into a geometric shape inclusion of the phrase ‘‘one or more requirement that a component be in such as a rectangle or square is of no beneficiary countries’’ in the definition condition ready for assembly without consequence provided that knit of ‘‘wholly formed fabrics’’ to fully further processing. component is knit directly into the reflect the circumstances where the term CBP’s Response: shape in which it will be used in a ‘‘wholly formed fabrics’’ is used, but the CBP agrees with the commenter that garment and it is identifiable as a commenter believes that the addition of the term ‘‘self-start edge’’ needs to be garment component. the term ‘‘as appropriate’’ after defined. CBP has defined ‘‘self-start With regard to the commenter’s ‘‘beneficiary countries’’ would provide bottom’’ in the ICP cited by the reliance upon HQ 953224, we believe clarification. commenter. Drawing from that the commenter meant to cite to HQ CBP’s Response: definition, a definition for ‘‘self-start 953234 which was issued on May 13, CBP disagrees with the commenter’s edge’’ has been added in § 10.212 of this 1993, and addressed the country of suggestion to add ‘‘as appropriate’’ to final rule document as new paragraph origin of plastic coated fabric. However, the end of the definition of ‘‘wholly (o). CBP also agrees with the commenter we believe HQ 953234 does not support formed fabrics.’’ We do not believe it is that the term ‘‘specific shape’’ as used the commenter’s position as that ruling necessary, nor would it add the in the definition of ‘‘knit-to-shape dealt with the classification of certain clarification suggested by the components’’ needs to be clarified. As a woven fabric. commenter. result, the definition of ‘‘knit-to-shape Finally, CBP disagrees with the components’’ (now § 10.212(h)) has suggestion by the commenter to amend Wholly Formed Yarns been modified in this final rule the definition of ‘‘knit-to-shape Comment: document by the insertion of the components’’ to include a requirement While the commenter agrees with the language, ‘‘, that is, the shape or form of that a component be in condition ready definition of ‘‘wholly formed yarn’’ in the component as it is used in the for assembly without further processing. the ATPDEA and believes CBP apparel article,’’ after the word ‘‘shape’’ We do not believe such a requirement ‘‘correctly included draw-texturing in and before the word ‘‘containing.’’ CBP is necessary. In addition, it contradicts the definition of ‘wholly formed’ has further modified the definition of the language in the definition which filament yarns,’’ the commenter believes ‘‘knit-to-shape components’’ by allows for minor cutting or trimming of that ‘‘[o]mitting this clarification from replacing the article ‘‘a’’ immediately such components. the CBTPA and AGOA regulations is before ‘‘self-start edge’’ with the words inconsistent and will lead to confusion ‘‘at least one’’ to clarify that knit-to- Lesser Developed Beneficiary Countries down the road.’’ The commenter shape components may contain one or Provision strongly urges the same definition be more self-start edges. Comment: reflected in the CBTPA and AGOA CBP disagrees with the commenter’s Section 10.213(a)(5) describes a regulations. assertion that a knit-to-shape preference available to apparel articles CBP’s Response: component cannot be of a square or that are ‘‘wholly assembled, or knit-to- As indicated above in the discussion rectangular shape for purposes of this shape and wholly assembled, or both.’’ of comments relating to wholly formed definition. The ICP publication cited by An explanation is sought as to why yarns in response to T.D. 00–67, CBP the commenter discusses knit-to-shape there is a reference to ‘‘both’’ in section has in this final rule document revised components which are considered 10.213(a)(5) because the commenter is the definition of ‘‘wholly formed yarns’’ ‘‘major parts’’ in determining whether unable to envision a circumstance to clarify that the process of draw- an apparel article is to be considered a where an apparel article would be both texturing falls within the scope of knit-to-shape article. ‘‘Major parts,’’ by ‘‘wholly assembled’’ and ‘‘knit-to-shape ‘‘wholly formed’’ as it relates to yarn. definition, does not include all and wholly assembled.’’ CBP agrees with the commenter that the components of a knit-to-shape article; CBP’s Response: definition of ‘‘wholly formed yarns’’ ‘‘major parts’’ does not include collars, The language in § 10.213(a)(5) follows should be changed to reflect the same cuffs, waistbands, plackets, pockets, the language of the statute in section definition for all the preference trade linings, paddings, trim, accessories, or 112 (c)(1)(A) of the AGOA (codified at programs. similar parts. In that context, the ICP 19 U.S.C. 3721(c)(1)(A)). addresses the requisite features of a Comment: Knit-To-Shape Components knit-to-shape front, back or sleeve panel. A commenter asserts that the lesser Comment: In other words, it addresses the developed country beneficiary rule is a The definition of knit-to-shape requirements for a ‘‘knit-to-shape relaxation of the more restrictive rules components includes a requirement that component’’ that is a ‘‘major part.’’ CBP of the other provisions and, therefore, it a knit-to-shape component have a self- agrees that, in that context, square or should be interpreted to allow knit-to- start edge. One commenter requested rectangular textile pieces have been shape components from third countries that CBP define this term. In addition, rejected from consideration as ‘‘knit-to- to be used in the assembly of apparel in the commenter, citing the Informed shape’’ because they lacked features, the lesser developed beneficiary Compliance Publication (ICP), What such as armholes, necklines, or shaping, countries. The commenter posits that

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since Congress has not specifically CBP agrees that the phrase ‘‘or knit- effectuation of preferential access policy indicated that using third-country knit- to-shape and wholly assembled,’’ refers and contradicts legislative intent.’’ to-shape components would disqualify a to apparel articles. However, CBP CBP’s Response: garment from preferential treatment, disagrees with the commenter’s The response to the previous their use in the assembly of apparel conclusion with regard to knit fabric comment is equally applicable to this articles should be allowed. The components assembled in non-knit-to- comment. CBP finds no basis in the commenter requests CBP to clarify shape articles. It is assumed that the language of the lesser developed § 10.213(a)(5), by inserting the phrase ‘‘, commenter is referring to knit beneficiary countries provision to justify knit to shape components,’’ between the components that have been knit-to- a distinction between knit-to-shape and words ‘‘fabric’’ and ‘‘or,’’ to indicate that shape as the concern appears to be other apparel articles. third-country knit-to-shape components where those components are knit. CBP Comment: are allowed in the assembly of apparel believes that the language of the Only knit-to-shape apparel articles are provided for by that provision. provision (section 112(c)(1)(A) of the required to be knit-to-shape in a lesser developed beneficiary country under CBP’s Response: AGOA) must be read as a whole and in the terms of § 10.213(a)(5). Knit-to-shape CBP does not have the authority to so doing, the language ‘‘regardless of the apparel articles are defined as apparel add the requested language which country of origin of the fabric or the articles ‘‘of which 50 percent or more of would change the scope of the provision yarn used to make such articles’’ must the exterior surface area is formed by be considered. Congress clearly as enacted. Only Congress may make the major parts that have been knitted or intended to allow third country fabric or change the commenter seeks as the crocheted directly to the shape used in yarn to be used in the production of language in the regulation reflects the the apparel article.’’ ‘‘Major parts’’ are apparel wholly assembled in lesser language in the statute which Congress defined as ‘‘integral components of a developed beneficiary countries. If passed. good’’ but not including ‘‘collars, cuffs, Congress had intended to allow third- The only allowance for the use of waistbands, plackets, pockets, linings, country components, whether knit-to- foreign (third-country) components in paddings, trim, accessories, or similar shape or cut to shape, it is reasonable to the production of apparel articles parts.’’ 19 CFR § 102.21(a)(4); see also expect such intent would have been eligible for preferential treatment under § 10.212(k). Based on this reasoning, a the AGOA is found in the Special Rules clearly reflected in the language of the commenter asserts that excluded from in section 112(e) of the AGOA. statute as is the case of third-country the definition of ‘‘major parts’’ are the Paragraphs (e)(1)(A) and (B) of section fabric or yarn. No such intent is types of components that § 10.213(a)(5) 112 (§ 10.213(c)(1)(i) and (c)(1)(ii) of the reflected in section 112(c)(1)(A) of the should not require to be knit-to-shape in regulations, respectively) allow for the AGOA, although as noted above, the a beneficiary country. Thus, the use of certain foreign interlinings and Special Rules in section 112(e) of the commenter seeks modification of findings and trimmings, subject to a statute allow the use of certain third- § 10.213(a)(5) by the addition of a specified value limitation. Paragraph country components. The commenter’s sentence at the end that states, ‘‘Minor (e)(3) sets forth a new special rule added effort to draw a distinction between components of apparel articles that are by the Act of 2004 which was discussed knit-to-shape apparel and cut to shape not knit-to-shape articles may be above. Under this new rule, an article apparel is without support in the assembled into such articles regardless otherwise eligible for preferential language of the statute. [of] their origin and regardless [of] treatment under section 112 will not be Comment: whether they are knit-to-shape ineligible for that treatment because the A commenter argues that a distinction components.’’ The commenter also article contains certain specified exists in § 10.213(a)(5) between knit-to- seeks the addition of the definition of components that fail to meet the shape apparel articles and non-knit-to- ‘‘major parts’’ from § 102.21 or a cross- applicable requirements set forth in shape (cut and sew) apparel articles. reference to the definition in § 102.21. section 112(b), regardless of the origin of Based on this belief, the commenter CBP’s Response: the component (see new states that a small foreign rectangular The commenter is using the definition § 10.213(c)(1)(v) of the regulations). The knit component, such as a collar, cannot of a knit-to-shape apparel article to specified components are: collars, cuffs, disqualify, from Preference Group E, a argue that Congress must have meant drawstrings, shoulder pads or other non-knit-to-shape garment that is that only ‘‘major parts’’ need be knit-to- padding, waistbands, belt attached to wholly assembled in a lesser-developed shape in the lesser developed the article, straps containing elastic, and beneficiary country. The argument is beneficiary sub-Saharan countries to be elbow patches. that in the case of non-knit-to-shape eligible to receive preferential treatment Comment: apparel, ‘‘the fabric containing minor under the AGOA lesser developed A commenter asserts that, consistent knit rectangular components such as beneficiary countries provision. The with the plain language of section collars, cuffs and waistbands, may be commenter asserts that in the case of 112(b)(3)(B)(i) of the AGOA (as knit in any country.’’ However, for knit-to-shape apparel articles, it should amended by section 3108(a)(3)(B) of the ‘‘knit-to-shape apparel the components be permissible to source ‘‘minor Act of 2002) [now section 112(c)(1)(A)], must be knit in a lesser-developed components’’ which are not considered section 10.213(a)(5) of the interim beneficiary country.’’ The commenter in determining whether an apparel regulations should be clarified or believes that if CBP ‘‘interprets section article is knit-to-shape from third modified to indicate that the provision 3108(a)(3)(B) of the Trade Act of 2002 to countries. In making this argument, the ‘‘requires knit-to-shape apparel articles prevent preferential treatment for a commenter has ignored the language in to be knit-to-shape and assembled in a simple make garment, like a polo shirt, section 112(c)(1)(A) of the AGOA which lesser-developed beneficiary country, that is wholly assembled in a lesser- states, ‘‘regardless of the country of but does not require knit fabric developed beneficiary country from a origin of the fabric or yarn.’’ It is this components assembled in non-knit-to- full package of third country fabric, phrase which is key to CBP’s position shape articles to be knit in a beneficiary including fabric containing rectangular that, except as expressly permitted by country.’’ components for the collars and cuffs, it the Special Rules in section 112(e) of CBP’s Response: strains the bounds of reasonable the AGOA, third-country components,

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whether knit to shape or cut to shape, countries regardless the origin of the knit-to-shape garments and cut-to-shape may not be used in the assembly of yarn.’’ [Emphasis added.] garments should be treated differently apparel articles under the lesser CBP’s Response: with regard to an allowance for third- developed beneficiary countries The commenter’s argument with country components. provision. regard to 19 U.S.C. 3592 (rules of origin Comment: The sentence which the commenter for textiles and apparel) is misplaced. A commenter asserts that ‘‘[f]abric requests be added to § 10.213(a)(5) The AGOA is not based on the rules of comprising simple rectangular knit cannot be added as it goes beyond an origin for textile and apparel goods in components, like polo shirt collars, is interpretation of the language as enacted part 102 of the CBP regulations; it is a not knit-to-shape components as that by Congress. The addition of such a program which is based on meeting the term has previously been defined by statement would modify the scope of specific production requirements CBP, and it is not classifiable as such the provision and CBP does not have the detailed by Congress in the various under the HTSUS.’’ The commenter authority to take such action. provisions of the AGOA. looks to the Informed Compliance Comment: In the case of the lesser developed Publication (ICP), What Every Member beneficiary countries, Congress ‘‘Even if the reference to ‘components’ of the Trade Community Should Know specified that the apparel must be in section 3108(a)(3) of the Act of 2002 About Knit to Shape Apparel Products ‘‘wholly assembled, or knit-to-shape and for a discussion of when a component can be read into section 3108(a)(3)(B) wholly assembled, or both.’’ In addition is considered to be ‘‘knit-to-shape.’’ The setting forth the special rules for lesser- to specifying these requirements, commenter admits that ‘‘Customs never developed beneficiary countries, . . ., Congress allowed the use of fabric or applied these rules [for determining if a the term can only be understood to refer yarn in the production of apparel under component is knit-to-shape] to to the types of knit-to-shape this provision ‘‘regardless of the country components such as collars, cuffs and components that render a garment a of origin.’’ If Congress had intended the waistbands, because such components knit-to-shape garment as described in allowance of foreign-sourced (third- are excluded altogether from What Every Member of the Trade country) components (beyond that consideration in determining whether a Community Should Know About Knit to permitted by the Special Rules in garment is a knit-to-shape garment.’’ Shape Apparel Products. The term as section 112(e) of the AGOA), be they The commenter further argues that used does not apply to all components knit-to-shape or cut-to-shape, Congress ‘‘long rolls of knit fabric that is the size that may be classifiable as knit-to-shape would have so specified in this and shape of waistbands or cuffs but for garment parts.’’ The commenter believes provision or Congress could have cutting to length’’ are fabric. In that based on CBP’s interpretation of merely required that apparel be wholly furtherance of this position, the knit-to-shape apparel under 19 U.S.C. assembled without specifically commenter states that simple 3592 (rules of origin) and the addressing the source of fabric and yarn. rectangular or square components are presumption that Congress was aware of The commenter, in this instance, is not ‘‘made up’’ articles within the CBP’s regulations and other attempting to limit the meaning of meaning of Note 7, Section XI, HTSUS. administrative interpretations with ‘‘knit-to-shape components’’ based on In addition, the commenter believes the respect to knit-to-shape apparel, the definition of ‘‘knit-to-shape’’ in the interim regulations definition of ‘‘knit- ‘‘Congress’ reference to knit-to-shape CBP regulations for determining the to-shape components’’ is too broad and components in the amended section country of origin of textile goods (19 vague. [3108] should be understood to only CFR 102.21). The commenter asks CBP CBP’s Response: refer to those knit-to-shape components to accept the assertion that Congress With regard to the definition of knit- which render a garment a knit-to-shape only meant to address those knit-to- to-shape components as that term has garment. No other components need shape components that are considered been applied in the past by CBP, the meet the requirement that they be knit in determining whether a garment is commenter refers to the ICP, What Every in a lesser-developed beneficiary knit-to-shape, i.e. ‘‘major parts,’’ in Member of the Trade Community country.’’ inserting the phrase ‘‘knit-to-shape and Should Know About Knit to Shape Based on this line of reasoning, the wholly assembled’’ in the rule for lesser Apparel Products, to support the commenter argues that even if collars developed beneficiary countries. Even if argument that a square or rectangular are knit-to-shape components, they are CBP were to accept this assertion panel is not knit to shape. However, the not within the scope of the knit-to-shape (which CBP does not), the language of commenter acknowledges that the components that must be knit in a the provision does not support the ‘‘rules’’ regarding knit-to-shape lesser-developed beneficiary country commenter’s contention that other knit- components discussed in the ICP have under section 112(b)(3)(B)(i) of the to-shape components may be of third- never been applied to collars, cuffs, or AGOA, as amended by section country origin. The commenter suggests waistbands. This is because the ICP is 3108(a)(3)(B) of the Act of 2002 [now that CBP may interpret the rule for devoted to a discussion of knit-to-shape section 112(c)(1)(A)]. The commenter lesser developed beneficiary countries panels that are ‘‘major parts’’ of knit-to- asserts that there is an interpretative to allow for the inclusion of ‘‘knit fabric shape apparel. The context in which the opportunity for CBP to allow containing square or rectangular knit rectangular or square collar, cuff preferential treatment under Preference components of any origin’’ in the case and waistband components have been Group E ‘‘for (i) non-knit-to-shape of cut-to-shape apparel. The language of examined under the AGOA is quite garments wholly assembled in lesser- the provision does not support the different than the focus of the ICP. The developed beneficiary countries from proposition that third-country issue in the AGOA has been whether the fabric and from knit fabric containing components (other than those specified knit rectangular or square collar, cuff square or rectangular components of in the Special Rules), be they knit-to- and waistband components are any origin, and (ii) knit-to-shape shape or cut-to-shape, are allowed components or fabric for purposes of garments wholly assembled in lesser- under the rule for lesser developed determining a garment’s eligibility developed beneficiary countries from beneficiary countries. Nor is there a under a provision that allows for the use components knit-to-shape in one or basis in the language of the provision to of fabric or yarn without regard to more lesser-developed beneficiary support the commenter’s assertion that origin.

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The commenter cites to Note 7, thread for separation into individual Comment: Section XI, HTSUS, and claims that components by steaming). Two commenters request that the simple rectangular or square As to the commenter’s contention regulations be clarified with regard to components are not ‘‘made up’’ articles with regard to long rolls of knit fabric the eligibility under AGOA of garments as defined by that note. The commenter which are the size and shape of knit-to-shape and assembled in a lesser is correct, but only in part. Note 7 waistbands or cuffs but are to be cut to developed beneficiary country with defines ‘‘made up’’, in pertinent part, as length, CBP agrees that such rolls collars and cuffs knit in a non-lesser ‘‘(a) Cut otherwise than into squares or remain fabric. Although strips of developed beneficiary country. These rectangles;’’ and ‘‘(f) Knitted or material may be used to produce any commenters disagree with CBP’s crocheted to shape, whether presented number of cuffs or waistbands or interpretation that collars and cuffs as separate items or in the form of a collars, if the quantity and identity of must be knit-to-shape in a lesser number of items in the length.’’ the components cannot be discerned developed beneficiary country in order Rectangular or square components that from an examination of the material, for the apparel to qualify. The CBP considers the material to be fabric. commenters believe apparel should still are cut from larger pieces of fabric are, Support for this view may be found in qualify for preferential treatment under as the commenter pointed out, not Coraggio Design, Inc. v. United States, the AGOA, provided the knit ‘‘made up’’ articles as defined by Note 12 CIT 143 (1988), in which the Court components which are knit-to-shape in 7. However, with regard to components of International Trade, after discussing a non-lesser developed beneficiary such as collars, cuffs, and waistbands several cases involving the issue of country otherwise meet the AGOA which may be knit-to-shape and whose material versus article or part, stated eligibility requirements. shape happens to be rectangular, such ‘‘material cannot be classified as more CBP’s Response: components would fall within the than woven fabric when it is not Again, the commenters’ concerns language of Note 7(f) and thus be processed to the point where the have been rendered moot by the new considered ‘‘made up.’’ individual ‘article’ is identifiable with special rule in section 112(e)(3) of the Generally, collars which are knit-to- certainty, not cut to specific lengths or AGOA and § 10.213(c)(1)(v) of the shape are knit in a series of collars marked for cutting, and not advanced to regulations. separated by dividing threads or lines of a point where significant processing Findings and Trimmings demarcation. Thus, CBP must disagree steps no longer remain.’’ 12 CIT 143, with the commenter with regard to 147. Comment: One commenter stated that the ‘‘fabric’’ which is knit with lines of As for the definition of ‘‘knit-to-shape definition of the ‘‘cost’’ of components demarcation to indicate the length and components,’’ CBP in this final rule and the ‘‘value’’ of findings and width of individual items which contain document is changing the definition, as trimmings and interlinings set forth in a self-start edge and are readily already discussed, to add clarity. § 10.213(b)(2) of the Interim Regulations identifiable as garment components. Comment: According to a commenter, CBP’s ‘‘incorporate a bias that could overstate Even if these individual items are position that collars and cuffs used in the relative cost of trim and findings’’ in rectangular in shape and require minor the production of articles under the comparison to the cost of the other cutting or trimming before use, provided lesser developed beneficiary countries components of the article. The they have the essential character of the provision ‘‘are not fabric, but rather commenter pointed out that in the finished component, i.e., they are ‘fabric components’. . . . is a distinction ‘‘usual circumstance,’’ components clearly recognizable as the component, without a difference and these subject to the findings and trimmings such as collars, following General Rule components should be properly exception would originate in a non- of Interpretation 2(a) of the HTSUS, they characterized as fabric.’’ The commenter AGOA beneficiary country while the would be classified as the finished good, states that ‘‘in past rulings, the Customs other components of the article would that is, as garment parts. CBP has issued Service has characterized knit fabric be produced at the site of manufacture a number of rulings regarding the components as ‘fabric.’’’ The commenter of the article in an AGOA beneficiary classification of such garment parts or asserts that these fabric components are country. Thus, by applying an f.o.b. port components. See New York Ruling an integral part of the garment and are of exportation standard, the value of Letter (NY) 813955 of September 6, 1995 not themselves knit-to-shape and to foreign findings and trimmings would (classification in subheading 6117.90, adopt such an interpretation would not include the cost of transportation within HTSUS (as parts of garments), of collars conflict with Congressional intent. This the country of origin, but the cost of the and cuffs knitted into rolls in which the commenter requests that § 10.213(b)(5) other components would include little collars and cuffs are connected with of the regulations be clarified to allow or no transportation costs. The separating threads creating lines of the use of third country formed collars commenter suggests using an ex-factory demarcation), NY B80190 of December and cuffs. cost or value in lieu of the f.o.b port of 9, 1996 (classification of collars and CBP’s Response: exportation standard provided for in cuffs knitted into rolls in which the CBP believes that the commenter’s § 10.213(b)(2) of the Interim collars and cuffs are connected with concerns have effectively been rendered Regulations. separating threads creating lines of moot by the addition of the new special CBP’s Response: demarcation), NY F80642 of January 4, rule in section 112(e)(3) of the AGOA by CBP agrees with the commenter and 2000 (classification of collars and cuffs the Act of 2004, as discussed above. As believes that the definition of ‘‘cost’’ knitted into rolls in which the collars applied to this commenter’s specific and ‘‘value’’ in re-designated and cuffs are connected with separating concerns, this statutory change permits § 10.213(c)(2) (formerly § 10.213(b)(2)) threads creating lines of demarcation), the use of collars and cuffs (cut or knit- also has the potential for overstating the and HQ 560304 of April 25, 1997 to-shape) made in a non-lesser ‘‘value’’ of foreign interlinings in (country of origin of collars and developed beneficiary country in the comparison to the ‘‘cost’’ of the waistbands created by knitting a construction of apparel articles covered components of the assembled article for ‘‘fabric’’ consisting of collars and by section 112(c)(1)(A)of the AGOA the same reason cited by the waistbands connected by a melting (§ 10.213(b)(5)). commenter. CBP also agrees that the use

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of an ex-factory standard in lieu of the CBTPA and ATPDEA do not include specifically covering brassieres in the f.o.b. port of exportation standard would brassieres, then neither does AGOA’s CBTPA and ATPDEA which excluded resolve the potential problem by short supply provision. The commenter articles covered by certain other eliminating transportation costs from stated that, as a result of amendments provisions in those programs. According the comparison between the ‘‘value’’ of made by the Act of 2002, language was to the commenter, the exception foreign findings and trimmings and/or included in the CBTPA and ATPDEA language added by Congress to the foreign interlinings and the ‘‘cost’’ of the preference provisions covering brassiere provisions clearly envisioned components of the assembled article. brassieres that specifically envisions brassieres being imported under these Therefore, CBP has revised re- brassieres being imported under the excluded provisions, including the short designated § 10.213(c)(2) in this final short supply provisions in each of those supply provisions. In CBP’s opinion, the rule document to incorporate an ex- two trade preference programs. The addition of this exception language factory standard in lieu of the f.o.b. port commenter stated that this statutory should not be interpreted as indicating of exportation standard. language stands in sharp contrast to that brasseries are eligible under any or CBP’s view that brassieres are not all of the excepted provisions. This Post-Assembly Processing eligible for short supply treatment in clarifying language merely states that Comment: those trade programs. any brassieres classified in one of the One commenter suggested that the CBP’s response: excepted provisions would not be regulations make it clear that post- As CBP stated in the discussion of the considered in determining eligibility assembly processes (such as interim amendments in the preamble of under the specific CBTPA and ATPDEA embroidering, stone-washing, enzyme- T.D. 03–15, § 10.223(a)(7) provides for brassiere provisions. washing, acid washing, perma-pressing, apparel articles constructed of fabrics or oven-baking, bleaching, garment-dyeing yarns which for purposes of Annex 401 Certificate of Origin or screen printing) do not disqualify an of the NAFTA are deemed to be in Comment: apparel article for preferential treatment ‘‘short supply.’’ There is no list of ‘‘short A commenter expressed agreement when all other criteria for eligibility are supply’’ fabrics or yarns for purposes of with the removal of the words ‘‘in a met. The commenter noted that the NAFTA. The determination of these beneficiary country’’ from § 10.217(a)(2) including such language in the AGOA ‘‘short supply’’ fabrics or yarns is based and (a)(3) in recognition of the fact ‘‘that regulations would be consistent with upon the various provisions of the many companies do not necessarily similar provisions currently found in NAFTA and whether, under the keep the verification documentation in the regulations relating to textile and NAFTA, for the particular apparel the factory that performed the sewing.’’ apparel articles under the United States- article at issue, certain fabrics or yarns The commenter also recommended that Caribbean Basin Trade Partnership Act may be sourced from outside the the Certificate of Origin be further (CBTPA) (see § 10.223(b)(2)) and the NAFTA parties for use in the simplified into one form to serve the Andean Trade Promotion and Drug production of an ‘‘originating’’ good. If AGOA, the CBTPA and the ATPDEA Eradication Act (ATPDEA) (see the sourcing of certain fabrics or yarns programs because the requirements for § 10.243(b)(2)). outside the NAFTA parties is allowed, these programs are the same. The CBP’s Response: then those fabrics or yarns are deemed commenter also suggested that the Nearly identical comments were to be in ‘‘short supply’’ for that apparel exporter be given the option of inserting previously received in response to the article. ‘‘available upon request’’ in the three initial AGOA interim regulations In the case of brassieres under the blocks on the Certificate in which the adopted in T.D. 00–67. An analysis of NAFTA, no restrictions or limitations names and addresses of the producers of these previous comments relating to apply regarding fabrics or yarns. the fabric, yarn and thread are to be post-assembly processing is set forth Therefore, fabrics and yarns may be provided. above in this final rule document in the obtained from anywhere. The only CBP’s Response: discussion of comments on post- requirement under Annex 401 is that CBP would certainly be open to any assembly processing received in articles classified in subheading suggestions concerning the response to T.D. 00–67. 6212.10, HTSUS, must be ‘‘both cut (or simplification of the Certificate of knit to shape) and sewn or otherwise Origin. However, developing one form Short Supply assembled in the territory of one or to accommodate AGOA, CBTPA and Comment: more of the NAFTA parties.’’ CBP ATPDEA would result in the form A commenter strongly disagreed with believes that the absence of NAFTA becoming substantially more complex, the language in § 10.213(a)(8) that restrictions on fabrics or yarns used in especially for the exporter who is excludes brassieres from receiving the production of brassieres, does not required to complete the form and is preferential treatment under this short mean that all fabrics or yarns used for responsible for ensuring that the supply provision. The commenter this purpose must be in ‘‘short supply.’’ information is accurate. Although the recommended that the words ‘‘, other CBP submits that applying the short textile and apparel provisions in the than brassieres classifiable under supply provision to a product where the three programs are substantially similar, subheading 6212.10, HTSUS,’’ (which NAFTA rule makes no mention of there are sufficient differences in the were added to § 10.213(a)(8) by T.D. 03– excluded materials would render preferential groupings and requirements 15) be deleted. CBP concluded in T.D. meaningless the specific provisions on among the programs to present 03–15 that Congress intended to exclude brassieres in the CBTPA and ATPDEA. significant obstacles to the creation of a brassieres from the AGOA short supply Thus, CBP remains of the view that it common certificate. provision because the CBTPA and the was appropriate to amend § 10.213(a)(8) With regard to the commenter’s ATPDEA each contained separate to clarify that brassieres are not covered recommendation that CBP accept provisions specific to preferential by this provision. ‘‘available upon request’’ in the blocks treatment for brassieres and as the short Additionally, the commenter pointed on the Certificate where the names and supply language in the three trade out that, as a result of amendments addresses of the yarn, fabric and thread preference programs are substantially made by the Act of 2002, language was suppliers are to be provided, CBP notes similar, if the short supply provisions in added to the preferential provisions that the same suggestion previously was

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made by several commenters in formed in one or more beneficiary ‘‘sewn or otherwise’’ immediately before response to T.D. 00–67. CBP’s response countries’’ and ‘‘components knit-to- the words ‘‘assembled in one or more to that suggestion is set forth above in shape in one or more beneficiary beneficiary countries.’’ In addition, a the discussion of comments received in countries’’ in the context in which it is new paragraph (a)(11) was added to response to T.D. 00–67 (under the used in § 10.213(a)(4) to mean ‘‘and/or.’’ § 10.213 by T.D. 03–15 to reflect the heading ‘‘Certificate of Origin’’). Comment: addition of new paragraph (b)(7) to A commenter proposed that CBP section 112 of the AGOA by the Act of Other Issues clarify various hybrid operations by the 2002. The words ‘‘sewn or otherwise Comment: addition of a ‘‘global hybrid phrase’’, assembled in one or more beneficiary A commenter recommends a change which may appear as a new special rule countries’’ appear in § 10.213(a)(11) as in the language in § 10.213(a)(1) and in § 10.213(b)(1) [re-designated in this well. As a result of these changes, the (a)(2) to add the phrase ‘‘or both’’ before document as § 10.213(c)(1)]. The rule definition of ‘‘assembled in one or more the parenthetical. The commenter would provide that an article otherwise beneficiary countries’’ in interim believes it will clarify that garments eligible for preferential treatment will § 10.212 has been replaced by a using a combination of knit-to-shape not be ineligible for that treatment definition of ‘‘sewn or otherwise components and cut fabric components because it contains: ‘‘(v) Fabrics, fabric assembled in one or more beneficiary are allowed. components formed, or components countries’’ (now § 10.212(q)). The CBP’s Response: knit-to-shape described in paragraph substance of the definition has not The commenter’s concerns have been (a)(1).’’ According to the commenter, the changed. addressed by an amendment to section insertion of this new provision in the 2. CBP has determined that the 112(b)(1) of the AGOA by the Act of regulations will ensure that the definition of ‘‘foreign’’ as set forth in 2004. Accordingly, as discussed inclusion of United States components interim § 10.212 could cause some previously, CBP has in this final rule in a garment will not render the garment confusion and might lead to anomalous document amended § 10.213(a)(1) and ineligible for duty benefits. The and unintended results in certain (a)(2) by adding the words ‘‘or both’’ commenter also states that the inclusion circumstances. That definition (which immediately before the parenthetical of such a provision is consistent with has relevance only in the context of the matter. pending clarifying changes that Comment: Congress is considering, which will findings, trimmings and interlinings A commenter recommends changing provide further guidance as to original provisions of re-designated § 10.213(c)) the language in § 10.213(a)(4) ‘‘from congressional intent. in the interim texts simply reads ‘‘of a yarns originating either in the United CBP’s Response: country other than the United States or States or one or more beneficiary The commenter’s concerns were a beneficiary country.’’ However, countries’’ to ‘‘from yarns originating in partially addressed by an amendment to because the various textile and apparel any combination of the United States or section 112(b)(3) of the AGOA made by articles to which preferential treatment one or more beneficiary countries.’’ The the Act of 2004 which added the words applies are described in § 10.213(a) with commenter believes this will clarify that ‘‘whether or not the apparel articles are reference to specific production a combination of U.S. and sub-Saharan also made from any of the fabrics, fabric processes in the case of yarns, fabrics African yarns is allowed in the components formed, or components and components that must take place in production of fabric or knit-to-shape knit-to-shape described in paragraph (1) the United States or in a beneficiary components. or (2)’’ of section 112(b). A comparable country (or in certain instances, in a CBP’s Response: change has been made in this document former beneficiary country) or both, Again, the commenter’s concerns to § 10.213(a)(4). However, beyond this more is required than that the yarn or have been addressed by an amendment change, CBP is without authority to add fabric or component be ‘‘of’’ (that is, to section 112(b)(3) of the AGOA by the the requested new special rule in the have its origin in) the United States or Act of 2004. As amended in this final regulations as it would change the scope a beneficiary country. For example, rule document, § 10.213(a)(4) now of certain of the statutory preferential § 10.213(a)(1) refers to articles ‘‘sewn or reads, in pertinent part: ‘‘. . . from groupings. otherwise assembled’’ in one or more yarns originating in the United States or beneficiary countries from ‘‘fabrics Additional Changes to the CBP one or more beneficiary countries or wholly formed and cut’’ in the United Regulations former beneficiary countries, or both. States from ‘‘yarns wholly formed’’ in . . .’’ (Emphasis added.) In addition to the regulatory changes the United States. A fabric that was Comment: identified and discussed above in wholly formed in the United States but A commenter requested that the connection with (1) the statutory from yarns formed outside the United language, ‘‘or any combination of the changes to the AGOA made by section States would not meet the § 10.213(a)(1) above fabric formation or knit to shape 7 of the Act of 2004 and section 6002 standard and also would not be operations’’ be added immediately of the Act of 2006, and (2) the considered ‘‘foreign’’ under the interim before the ‘‘subject to the applicable discussion of public comments in definition because it is ‘‘of’’ (that is, it quantitative limit’’ language in response to T.D. 00–67 and T.D. 03–15, has its origin in) the United States by § 10.213(a)(4). The commenter believes the regulatory texts set forth below virtue of its having been formed in the this will clarify that cut fabric incorporate the following additional United States. Therefore, that fabric components and knit-to-shape changes which CBP believes are could not be present in the article under components may be combined. necessary based on further internal the finding, trimming or interlining rule CBP’s Response: review of the interim regulatory texts: exception; consequently, even if all of The language set forth in 1. As a result of changes to the AGOA the other fabric in the article was wholly § 10.213(a)(4) is consistent with the made by section 3108(a) of the Act of formed and cut in the United States statutory language in section 112(b)(3) 2002, T.D. 03–15 amended paragraphs from yarns wholly formed in the United of the AGOA. In addition, the suggested (a)(1), (a)(2), and (a)(3) of interim States and the article was assembled in change is unnecessary as CBP construes §§ 10.213 (among other changes to the a beneficiary country, the assembled the word ‘‘or’’ between ‘‘fabric wholly interim regulations) to insert the words article would not qualify for preferential

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treatment. On the other hand, a fabric additions or other changes to the ‘‘specific shape’’ and to replace the formed outside the United States or the regulatory texts discussed above. article ‘‘a’’ immediately before ‘‘self- AGOA region, if used as a finding, 7. In § 178.2, the table has been start edge’’ with the words ‘‘at least trimming or interlining within the 25 amended by adding a listing for one’’ to clarify that knit-to-shape percent limit, would not disqualify the §§ 10.214–10.216 to provide the Office components may contain one or more article. Thus, under the interim of Management and Budget (OMB) self-start edges; definition of ‘‘foreign,’’ U.S. and control number for the collection of h. A definition of ‘‘lesser developed beneficiary country textile materials information in §§ 10.214–10.216. beneficiary country’’ has been added as could be at a disadvantage vis-a-vis Conclusion new paragraph (j); materials from outside the United States i. A definition of ‘‘self-start edge’’ has and the AGOA region, contrary to the Accordingly, based on the analysis of been added as new paragraph (o); overall thrust of the AGOA program as comments received as set forth above j. A definition of ‘‘sewing thread’’ has discussed in the comment discussion and the additional considerations been added as new paragraph (p); set forth above in this document. CBP discussed above, CBP is adopting as a k. The definition of ‘‘wholly formed believes that the interim definition was final rule the interim regulations fabrics’’ (now paragraph (s)) has been appropriate in the case of non-textile initially published in T.D. 00–67 and modified to clarify that fabric formation findings and trimmings. However, in the later amended in T.D. 03–15 with does not encompass dyeing, printing case of textile findings, trimmings and certain changes as discussed above and and finishing operations; and interlinings the concept of ‘‘foreign’’ as set forth below. The following is a l. The definition of ‘‘wholly formed logically only has relevance in the comprehensive listing of all of the yarns’’ (now paragraph (u)) has been context of an exception to the changes made to the interim regulatory revised to clarify that draw-texturing to production standards that apply to texts by CBP in this final rule document: fully orient a filament falls within the articles eligible for preferential 1. In § 10.178a, paragraphs (d)(2) and scope of ‘‘wholly formed’’ as it relates treatment. Accordingly, the definition of (d)(4)(ii) have been revised to provide to yarn while dyeing, printing, and ‘‘foreign’’ has been replaced by a for the inclusion of the cost or value of finishing operations do not; definition of ‘‘foreign origin’’ in materials produced in ‘‘former 3. In § 10.213, paragraphs (a)(1) and § 10.212(e) to address these concerns. beneficiary sub-Saharan African (a)(2) have been revised to include the 3. Section 10.213(a)(6) includes a countries’’ toward meeting the GSP 35% words ‘‘or both’’ immediately before the reference to subheading 6110.10, value-content requirement, and a new parenthetical matter to clarify that the HTSUS, which has been replaced by paragraph (d)(5) has been added to described apparel articles may be made subheading 6110.12, HTSUS. define ‘‘former beneficiary sub-Saharan both from fabrics wholly formed and cut Accordingly, the reference in African country;’’ in the United States and from 2. In § 10.212: § 10.213(a)(6) to subheading 6110.10 has components knit-to-shape in the United a. The definition of ‘‘apparel articles’’ been replaced by a reference to States; (now paragraph (a)) has been revised to subheading 6110.12. delete heading ‘‘6503’’, to replace the 4. In § 10.213, paragraphs (a)(3) and 4. CBP has determined that the reference to subheading ‘‘6406.99’’ of (a)(11) have been modified to insert the producer or the producer’s authorized the HTSUS with a reference to word ‘‘sewing’’ before the word agent having knowledge of the relevant subheading ‘‘6406.90.15’’, and to ‘‘thread;’’ facts should be permitted to sign the replace the reference to subheading 5. In § 10.213, paragraph (a)(4) has Certificate of Origin in addition to the ‘‘6505.90’’ with a reference to been revised to replace the words exporter or the exporter’s authorized subheadings ‘‘6505.00.02–6505.00.90’’; ‘‘either in the United States or one or agent. The producer clearly is in the b. The definition of ‘‘assembled in one more beneficiary countries’’ each place best position to attest to the accuracy of or more beneficiary countries’’ has been they appear with the words ‘‘in the the information set forth in the replaced by a definition of ‘‘sewn or United States or one or more beneficiary Certificate. Therefore, §§ 10.214(a), otherwise assembled in one or more countries or former beneficiary 10.214(c)(13), and 10.216(b)(2) have beneficiary countries’’ (now paragraph countries, or both,’’ and to insert the been changed to provide that the (q)); words ‘‘whether or not the apparel Certificate of Origin must be signed by c. The definition of ‘‘cut in one or articles are also made from any of the the exporter or producer or by the more beneficiary countries’’ (now fabrics, fabric components formed, or exporter’s or producer’s authorized paragraph (c)) has been revised to add components knit-to-shape described in agent having knowledge of the relevant the words ‘‘or were cut from fabric in paragraph (a)(1), paragraph (a)(2) or facts. CBP notes that this change is the United States and used in a partial paragraph (a)(3) of this section (unless consistent with changes to the assembly operation in the United States the apparel articles are made implementing regulations under the prior to the cutting of fabric and final exclusively from any of the fabrics, Caribbean Basin Trade Partnership Act assembly of the article in one or more fabric components formed, or (CBTPA) and the Andean Trade beneficiary countries, or both;’’ components knit-to-shape described in Promotion and Drug Eradication Act d. A definition of ‘‘ethnic printed paragraph (a)(1), paragraph (a)(2), or (ATPDEA) and thus brings uniformity to fabric’’ has been added as new paragraph (a)(3) of this section),’’ the three programs in this regard. paragraph (d); immediately before the words ‘‘subject 5. References to ‘‘Customs’’ within the e. The definition of ‘‘foreign’’ has to;’’ regulatory text in §§ 10.214, 10.215, been replaced by a definition of ‘‘foreign 6. In § 10.213, paragraph (a)(6) has 10.216, and 10.217 have been changed origin’’ (now paragraph (e)); been revised to replace the reference to to ‘‘CBP.’’ f. A definition of ‘‘former beneficiary ‘‘subheading 6110.10 of the HTSUS’’ 6. Several numerical or alphabetical country’’ has been added as new with ‘‘subheading 6110.12 of the paragraph designations or other paragraph (f); HTSUS;’’ references within regulatory text in g. The definition of ‘‘knit-to-shape 7. In § 10.213, paragraph (a)(8) has §§ 10.212, 10.213, 10.214, 10.216, and components’’ (now paragraph (i)) has been modified to remove the words 10.217 have been changed to conform to been modified to clarify the words ‘‘from fabrics or yarn that is not formed

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in the United States or a beneficiary textile and apparel product descriptions order. Accordingly, OMB has not country;’’ in paragraphs (a)(1), (a)(2), (a)(4), (a)(8), reviewed this regulation. 8. In § 10.213, paragraph (a)(10) has (a)(10), (a)(11), and (a)(12) of § 10.213; Regulatory Flexibility Act been modified to add a reference to 17. In § 10.214, the instructions for ‘‘ethnic printed fabric;’’ the completion of the Certificate of As set forth in the preamble of this 9. In § 10.213, paragraph (a)(11) has Origin set forth in paragraph (c) have final rule document, the regulations to been revised to add references to been revised, as appropriate, to reflect implement the trade benefits for sub- ‘‘former beneficiary countries;’’ the changes made to the Certificate; Saharan Africa contained in the AGOA 10. In § 10.213, a new paragraph 18. In §§ 10.214, 10.215, 10.216, and as well as certain changes to the GSP (a)(12) has been added to include 10.217, references to ‘‘Customs’’ have statute were previously published in preferential treatment for ‘‘[t]extile and been changed to ‘‘CBP;’’ T.D. 00–67 and T.D. 03–15 as interim textile articles classifiable under 19. In §§ 10.212, 10.213, 10.214, regulations. Those interim regulations Chapters 50 through 60 or Chapter 63 of 10.216, and 10.217, certain numerical or provided trade benefits to the importing the HTSUS that are products of a lesser alphabetical paragraph designations or public, in some cases implemented developed beneficiary country and are other references have been changed to direct statutory mandates, and were wholly formed in one or more such conform to additions or other changes to necessary to carry out the preferential countries from fibers, yarns, fabrics, the regulatory texts discussed above; treatment and U.S. tariff changes fabric components, or components knit- 20. In the Appendix to Part 163, the proclaimed by the President under the to-shape that are the product of one or reference to the ‘‘AGOA Textile AGOA. Pursuant to the provisions of 5 more such countries;’’ Certificate of Origin and supporting U.S.C. 553(b)(B), CBP issued the 11. In § 10.213, a new paragraph (b) records’’ in the ‘‘(a)(1)(A)’’ list has been regulations as interim rules because it has been added (with paragraphs (b) and modified by deleting the words ‘‘and had determined that prior public notice (c) of the interim regulations re- supporting records;’’ and and comment procedures on these designated as (c) and (d)) to provide: 21. In § 178.2, the table has been regulations were unnecessary and a. In paragraph (b)(1)), in part, that modified to provide the OMB control contrary to the public interest. For these while dyeing, printing, and finishing number for the collection of information reasons, pursuant to the provisions of 5 operations are not part of the fabric, in §§ 10.214 through 10.216. U.S.C. 553(d)(1) and (3), CBP also found component, or yarn formation process, In view of the multiple changes that there was good cause for dispensing those operations are only permissible if throughout the AGOA textile and with a delayed effective date. Because performed in the United States or in a apparel regulatory provisions contained no notice of proposed rulemaking was beneficiary country; and in §§ 10.211 through 10.217, those required, the provisions of the b. In paragraph (b)(2)), in part, that provisions are revised in their entirety Regulatory Flexibility Act (5 U.S.C. 601 articles otherwise entitled to in this final rule document. et. seq.) do not apply. Accordingly, this preferential treatment under the AGOA Executive Orders 12866 and 13563 final rule is not subject to the regulatory will not be disqualified from receiving analysis or other requirements of 5 that treatment because they undergo Executive Orders 12866 and 13563 U.S.C. 603 and 604. direct agencies to assess the costs and post-assembly operations in the United Paperwork Reduction Act States or in one or more beneficiary benefits of available regulatory countries; alternatives and, if regulation is The collection of information 12. In § 10.213, re-designated necessary, to select regulatory contained in this final rule has paragraph (c)(1)(iv) (formerly paragraph approaches that maximize net benefits previously been reviewed and approved (b)(1)(iv)) has been modified to add a (including potential economic, by the Office of Management and reference to ‘‘former beneficiary environmental, public health and safety Budget (OMB) in accordance with the countries’’ and to increase the effects, distributive impacts, and Paperwork Reduction Act (44 U.S.C. applicable de minimis percentage from equity). Executive Order 13563 3507) under control number 1651–0082. 7 to 10 percent; emphasizes the importance of The collection of information in this 13. In § 10.213, re-designated quantifying both costs and benefits, of final rule is in sections 10.214, 10.215, paragraph (c) (formerly paragraph (b)) reducing costs, of harmonizing rules, and 10.216. This information is used by has been revised to add a new paragraph and of promoting flexibility. This rule is CBP to determine whether textile and (c)(1)(v) that sets forth a new special not a ‘‘significant regulatory action,’’ apparel articles imported from rule regarding certain specified under section 3(f) of Executive Order designated beneficiary sub-Saharan components; 12866 as it is not likely to have an African countries are entitled to duty- 14. In § 10.213, re-designated annual effect on the economy of $100 free entry under the African Growth and paragraph (c)(2) (formerly paragraph million or more or adversely affect in a Opportunity Act. The likely (b)(2)) has been modified to incorporate material way the economy, a sector of respondents are business organizations an ex-factory standard in lieu of the the economy, productivity, competition, including importers, exporters, and f.o.b. port of exportation standard; jobs, the environment, public health or manufacturers. 15. In § 10.214, paragraphs (a), (b)(2), safety, or State, local, or tribal The estimated average number of and (c)(13) have been revised to provide governments or communities; create a respondents filing annually under that the Certificate of Origin must be serious inconsistency or otherwise AGOA is 210, with each respondent signed by the exporter or producer or by interfere with an action taken or filing an average of 107 AGOA claims the exporter’s or producer’s authorized planned by another agency; materially per year for an aggregate total of 22,470 agent having knowledge of the relevant alter the budgetary impact of claims. The average time to complete facts; entitlements, grants, user fees, or loan each claim is 20 minutes which results 16. In § 10.214, the preference group programs or the rights and obligations of in an annual burden of 7,640 hours for descriptions on the Certificate of Origin recipients thereof; or raise novel legal or this collection of information. Under the set forth in paragraph (b) have been policy issues arising out of legal Paperwork Reduction Act, an agency revised, as appropriate, to reflect the mandates, the President’s priorities, or may not conduct or sponsor, and a changes and additions made to the the principles set forth in this Executive person is not required to respond to, a

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collection of information unless it ■ 2. In § 10.178a, paragraphs (d)(2) and provisions of §§ 10.211–10.217 of this displays a valid OMB control number. (d)(4)(ii) are revised and paragraph part set forth the legal requirements and (d)(5) is added to read as follows: procedures that apply for purposes of Signing Authority extending preferential treatment 10.178a Special duty-free treatment for pursuant to section 112. This final rule is being issued in sub-Saharan African countries accordance with § 0.1(a)(1) of the CBP § 10.212 Definitions. regulations (19 CFR 0.1(a)(1)) pertaining * * * * * (d) * * * to the authority of the Secretary of the When used in §§ 10.211 through (2) In the GSP declaration set forth in Treasury (or his/her delegate) to 10.217, the following terms have the § 10.173(a)(1)(i), the column heading approve regulations related to certain meanings indicated: ‘‘Materials produced in a beneficiary (a) Apparel articles. ‘‘Apparel CBP revenue functions. developing country or members of the articles’’ means goods classifiable in List of Subjects same association’’ should read ‘‘Material Chapters 61 and 62 and headings 6501, produced in a beneficiary sub-Saharan 6502, 6504 and subheadings 6406.90.15 19 CFR Part 10 African country, a former beneficiary and 6505.00.02–6505.00.90, of the Assembly, Bonds, Caribbean Basin sub-Saharan African country, or the HTSUS; Initiative, Customs duties and U.S.;’’ (b) Beneficiary country. ‘‘Beneficiary inspection, Exports, Generalized System * * * * * country’’ means a country listed in of Preferences, Imports, Preference (4) * * * section 107 of the AGOA (19 U.S.C. programs, Reporting and recordkeeping (ii) The cost or value of materials 3706) which has been the subject of a requirements, Trade agreements. included in the article that are produced finding by the President or his designee, in more than one beneficiary sub- published in the Federal Register, that 19 CFR Part 163 Saharan African country or former the country has satisfied the Administrative practice and beneficiary sub-Saharan African country requirements of section 113 of the procedure, Customs duties and may be applied without regard to AGOA (19 U.S.C. 3722) and which the inspection, Imports, Reporting and whether those countries are members of President has designated as a recordkeeping requirements. the same association of countries. beneficiary sub-Saharan African country (5) As used in this paragraph, the term under section 506A of the Trade Act of 19 CFR Part 178 ‘‘former beneficiary sub-Saharan African 1974 (19 U.S.C. 2466a). See U.S. Note 1, Administrative practice and country’’ means a country that, after Subchapter XIX, Chapter 98, procedure, Exports, Imports, Reporting being designated by the President as a Harmonized Tariff Schedule of the and recordkeeping requirements. beneficiary sub-Saharan African country United States (HTSUS); under section 506A of the Trade Act of (c) Cut in one or more beneficiary Amendments to the CBP Regulations 1974 (19 U.S.C. 2466a), ceased to be countries. ‘‘Cut in one or more beneficiary countries’’ when used with Accordingly, the interim rule designated as such a beneficiary sub- Saharan African country by reason of its reference to apparel articles means that amending Parts 10 and 163 of the CBP all fabric components used in the regulations (19 CFR Parts10 and 163), entering into a free trade agreement with the United States. assembly of the article were cut from which was published at 65 FR 59668– fabric in one or more beneficiary 59681 on October 5, 2000, corrected at * * * * * ■ countries, or were cut from fabric in the 65 FR 67260 on November 9, 2000, and 3. Subpart D is revised to read as United States and used in a partial further amended at 68 FR 13820–13827 follows: assembly operation in the United States on March 21, 2003, is adopted as a final Subpart D—Textile and Apparel prior to cutting of fabric and final rule with certain changes as discussed assembly of the article in one or more above and set forth below. In addition, Articles Under the African Growth and Opportunity Act beneficiary countries, or both; Part 178 of the CBP regulations (19 CFR (d) Ethnic printed fabrics. ‘‘Ethnic Part 178) is amended as discussed above Sec. printed fabrics’’ means fabrics: and set forth below. 10.211 Applicability. (1) Containing a selvedge on both 10.212 Definitions. edges, having a width of less than 50 PART 10—ARTICLES CONDITIONALLY 10.213 Articles eligible for preferential inches, classifiable under subheading FREE, SUBJECT TO A REDUCED treatment. 5208.52.30 or 5208.52.40 of the HTSUS; RATE, ETC. 10.214 Certificate of Origin. (2) Of the type that contains designs, 10.215 Filing of claim for preferential symbols, and other characteristics of ■ 1. The general authority citation for treatment. 10.216 Maintenance of records and African prints: Part 10 and the specific authority for (i) Normally produced for and sold on §§ 10.171 through 10.178a and §§ 10.211 submission of Certificate by importer. 10.217 Verification and justification of the indigenous African market; and through 10.217 continue to read as claim for preferential treatment. (ii) Normally sold in Africa by the follows: piece as opposed to being tailored into Authority: 19 U.S.C. 66, 1202 (General § 10.211 Applicability. garments before being sold in Note 3(i), Harmonized Tariff Schedule of the Title I of Public Law 106–200 (114 indigenous African markets; United States (HTSUS)), 1321, 1481, 1484, Stat. 251), entitled the African Growth (3) Printed, including waxed, in one 1498, 1508, 1623, 1624, 3314; and Opportunity Act (AGOA), or more eligible beneficiary countries; * * * * * authorizes the President to extend and Sections 10.171 through 10.178a also certain trade benefits to designated (4) Formed in the United States, from issued under 19 U.S.C. 2461 et seq.; countries in sub-Saharan Africa. Section yarns formed in the United States, or * * * * * 112 of the AGOA, codified at 19 U.S.C. from fabric formed in one or more Sections 10.211 through 10.217 also issued 3721, provides for the preferential beneficiary countries from yarn under 19 U.S.C. 3721; treatment of certain textile and apparel originating in either the United States or * * * * * articles from beneficiary countries. The one or more beneficiary countries;

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(e) Foreign origin. ‘‘Foreign origin’’ (l) NAFTA. ‘‘NAFTA’’ means the processes that involve fabric formation means, in the case of a finding or North American Free Trade Agreement (see § 10.213(b)(1)); trimming of non-textile materials, that entered into by the United States, (t) Wholly formed on seamless the finding or trimming is a product of Canada, and Mexico on December 17, knitting machines. ‘‘Wholly formed on a country other than the United States 1992; seamless knitting machines,’’ when or a beneficiary country and, in the case (m) Originating. ‘‘Originating’’ means used to describe apparel articles, has of a finding, trimming, or interlining of having the country of origin determined reference to a process that created a textile materials, that the finding, by application of the provisions of knit-to-shape apparel article by feeding trimming, or interlining does not meet § 102.21 of this chapter; yarn(s) into a knitting machine to result all of the United States and beneficiary (n) Preferential treatment. in that article. When taken from the country or former beneficiary country ‘‘Preferential treatment’’ means entry, or knitting machine, an apparel article production requirements for yarns, withdrawal from warehouse for created by this process either is in its fabrics, and/or components specified consumption, in the customs territory of final form or requires only minor cutting under § 10.213(a) for the article in the United States free of duty and free or trimming or the addition of minor which it is incorporated; of any quantitative limitations, as components or parts such as patch (f) Former beneficiary country. provided in 19 U.S.C. 3721(a); pockets, appliques, capping, or elastic ‘‘Former beneficiary country’’ means a (o) Self-start edge. ‘‘Self-start edge,’’ strip; and country that, after being designated by when used with reference to knit-to- (u) Wholly formed yarns. ‘‘Wholly the President as a beneficiary sub- shape components, means a finished formed,’’ when used with reference to Saharan African country under section edge which is finished as the yarns, means that all of the production 506A of the Trade Act of 1974 (19 component comes off the knitting processes, starting with the extrusion of U.S.C. 2466a), ceased to be designated machine. Several components with filament, strip, film, or sheet and as such a beneficiary sub-Saharan finished edges may be linked by yarn or including drawing to fully orient a African country by reason of its entering thread as they are produced from the filament, slitting a film or sheet into into a free trade agreement with the knitting machine; strip, or the spinning of all fibers into United States; (p) Sewing thread. ‘‘Sewing thread’’ yarn, or both, and ending with a yarn or (g) HTSUS. ‘‘HTSUS’’ means the means thread designed and used for the plied yarn, took place in a single Harmonized Tariff Schedule of the assembly or hemming of textile or country. For purposes of this definition, United States; apparel components or articles; dyeing, printing and finishing (h) Knit-to-shape articles. ‘‘Knit-to- operations are not production processes shape,’’ when used with reference to (q) Sewn or otherwise assembled in one or more beneficiary countries. that involve yarn formation (see sweaters or other apparel articles, means § 10.213(b)(1)). any apparel article of which 50 percent ‘‘Sewn or otherwise assembled in one or or more of the exterior surface area is more beneficiary countries’’ when used § 10.213 Articles eligible for preferential formed by major parts that have been in the context of a textile or apparel treatment. knitted or crocheted directly to the article has reference to a joining together (a) General. The preferential treatment shape used in the apparel article, with of two or more components that referred to in § 10.211 applies to the no consideration being given to patch occurred in one or more beneficiary following textile and apparel articles pockets, appliques, or the like. Minor countries, whether or not a prior joining that are imported directly into the cutting, trimming, or sewing of those operation was performed on the article customs territory of the United States major parts will not affect the or any of its components in the United from a beneficiary country: determination of whether an apparel States; (1) Apparel articles sewn or otherwise article is ‘‘knit-to-shape;’’ (r) Wholly assembled in. ‘‘Wholly assembled in one or more beneficiary (i) Knit-to-shape components. ‘‘Knit- assembled,’’ when used with reference countries from fabrics wholly formed to-shape,’’ when used with reference to to a textile or apparel article in the and cut, or from components knit-to textile components, means components context of one or more beneficiary shape, in the United States, from yarns that are knitted or crocheted from a yarn countries or one or more lesser wholly formed in the United States, or directly to a specific shape, that is, the developed beneficiary countries, means both (including fabrics not formed from shape or form of the component as it is that all of the components of the textile yarns, if those fabrics are classifiable used in the apparel article, containing at or apparel article (including thread, under heading 5602 or 5603 of the least one self-start edge. Minor cutting decorative embellishments, buttons, HTSUS and are wholly formed and cut or trimming will not affect the zippers, or similar components) were in the United States) that are entered determination of whether a component joined together in one or more under subheading 9802.00.80 of the is ‘‘knit-to-shape;’’ beneficiary countries or one or more HTSUS; (j) Lesser developed beneficiary lesser developed beneficiary countries; (2) Apparel articles sewn or otherwise country. ‘‘Lesser developed beneficiary (s) Wholly formed fabrics. ‘‘Wholly assembled in one or more beneficiary country’’ means a country that is formed,’’ when used with reference to countries from fabrics wholly formed enumerated in U.S. Note 2(d), fabric(s), means that all of the and cut, or from components knit-to- Subchapter XIX, Chapter 98, HTSUS production processes, starting with shape, in the United States, from yarns and that is also enumerated in U.S. Note polymers, fibers, filaments, textile wholly formed in the United States, or 1, Subchapter XIX, Chapter 98, HTSUS. strips, yarns, twine, cordage, rope, or both (including fabrics not formed from See section 112(c)(3) of the AGOA (19 strips of fabric and ending with a fabric yarns, if those fabrics are classifiable U.S.C. 3721(c)(3)); by a weaving, knitting, needling, tufting, under heading 5602 or 5603 of the (k) Major parts. ‘‘Major parts’’ means felting, entangling or other process, took HTSUS and are wholly formed and cut integral components of an apparel place in the United States or in one or in the United States) that are entered article but does not include collars, more beneficiary countries or former under Chapter 61 or 62 of the HTSUS, cuffs, waistbands, plackets, pockets, beneficiary countries. For purposes of if, after that assembly, the articles would linings, paddings, trim, accessories, or this definition, dyeing, printing and have qualified for entry under similar parts or components; finishing operations are not production subheading 9802.00.80 of the HTSUS

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but for the fact that the articles were (6) Sweaters, in chief weight of (12) Textile and textile articles embroidered or subjected to stone- cashmere, knit-to-shape in one or more classifiable under Chapters 50 through washing, enzyme-washing, acid beneficiary countries and classifiable 60 or Chapter 63 of the HTSUS that are washing, perma-pressing, oven-baking, under subheading 6110.12 of the products of a lesser developed bleaching, garment-dyeing, screen HTSUS; beneficiary country and are wholly printing, or other similar processes in a (7) Sweaters, containing 50 percent or formed in one or more such countries beneficiary country; more by weight of wool measuring 21.5 from fibers, yarns, fabrics, fabric (3) Apparel articles sewn or otherwise microns in diameter or finer, knit-to- components, or components knit-to- assembled in one or more beneficiary shape in one or more beneficiary shape that are the product of one or countries with sewing thread formed in countries; more such countries. the United States from fabrics wholly (8) Apparel articles, other than (b) Dyeing, printing, finishing and formed in the United States and cut in brassieres classifiable under subheading other operations. (1) Dyeing, printing one or more beneficiary countries from 6212.10, HTSUS, that are both cut (or and finishing operations. Dyeing, yarns wholly formed in the United knit-to-shape) and sewn or otherwise printing and other finishing operations States, or from components knit-to- assembled in one or more beneficiary do not constitute part of a yarn or fabric shape in the United States from yarns countries, provided that the apparel or component formation process. Those wholly formed in the United States, or articles would be considered an operations may be performed on any both (including fabrics not formed from originating good under General Note yarn (including sewing thread) or fabric yarns, if those fabrics are classified 12(t) HTSUS, without regard to the or knit-to-shape or other component under heading 5602 or 5603 of the source of the fabric or yarn of which the used in the production of any article HTSUS and are wholly formed in the articles are made, if the apparel articles described under paragraph (a) of this United States); had been imported directly from Canada section without affecting the eligibility (4) Apparel articles wholly assembled or Mexico; of the article for preferential treatment, in one or more beneficiary countries (9) Apparel articles that are both cut provided that the operation is from fabric wholly formed in one or (or knit-to-shape) and sewn or otherwise performed in the United States or in a more beneficiary countries from yarns assembled in one or more beneficiary beneficiary country and not in any other originating in the United States or one countries from fabrics or yarn that the country. However, in the case of an or more beneficiary countries or former President or his designee has designated assembled article described in beneficiary countries, or both (including in the Federal Register as not available paragraph (a)(1) or (2) of this section, a fabrics not formed from yarns, if those dyeing, printing or other finishing in commercial quantities in the United fabrics are classifiable under heading operation may be performed in a States; 5602 or 5603 of the HTSUS and are beneficiary country without affecting (10) A handloomed, handmade, or wholly formed in one or more the eligibility of the article for folklore article or an ethnic printed beneficiary countries), or from preferential treatment only if that fabric of a beneficiary country or components knit-to-shape in one or operation is incidental to the assembly countries that is certified as a more beneficiary countries from yarns process. originating in the United States or one handloomed, handmade, or folklore (2) Other operations. An article or more beneficiary countries or former article or an ethnic printed fabric by the described under paragraph (a) of this beneficiary countries, or both, or competent authority of the beneficiary section that is otherwise eligible for apparel articles wholly formed on country or countries, provided that the preferential treatment will not be seamless knitting machines in a President or his designee has disqualified from receiving that beneficiary country from yarns determined that the article in question treatment by virtue of having undergone originating in the United States or one will be treated as being a handloomed, one or more operations such as or more beneficiary countries or former handmade, or folklore article or an embroidering, stone-washing, enzyme- beneficiary countries, or both, whether ethnic printed fabric; washing, acid washing, perma-pressing, or not the apparel articles are also made (11) Apparel articles sewn or oven-baking, bleaching, garment-dyeing from any of the fabrics, fabric otherwise assembled in one or more or screen printing, provided that the components formed, or components beneficiary countries with sewing operation is performed in the United knit-to-shape described in paragraph thread formed in the United States: States or in a beneficiary country and (a)(1), (2) or (3) of this section (unless (i) From components cut in the not in any other country. However, in the apparel articles are made United States and one or more the case of an assembled article exclusively from any of the fabrics, beneficiary countries or former described in paragraph (a)(1) of this fabric components formed, or beneficiary countries from fabric wholly section, an operation may be performed components knit-to-shape described in formed in the United States from yarns in a beneficiary country without paragraph (a)(1), (2), or (3) of this wholly formed in the United States affecting the eligibility of the article for section), subject to the applicable (including fabrics not formed from preferential treatment only if it is quantitative limit published in the yarns, if those fabrics are classifiable incidental to the assembly process. Federal Register pursuant to U.S. Note under heading 5602 or 5603 of the (c) Special rules for certain 2, Subchapter XIX, Chapter 98, HTSUS; HTSUS); component materials—(1) General. An (5) Apparel articles wholly assembled, (ii) From components knit-to-shape in article otherwise described under or knit to shape and wholly assembled, the United States and one or more paragraph (a) of this section will not be or both, in one or more lesser developed beneficiary countries or former ineligible for the preferential treatment beneficiary countries regardless of the beneficiary countries from yarns wholly referred to in § 10.211 because the country of origin of the fabric or the formed in the United States; or article contains: yarn used to make the articles, subject (iii) From any combination of two or (i) Findings and trimmings of foreign to the applicable quantitative limit more of the cutting or knitting-to-shape origin, if the value of those findings and published in the Federal Register operations described in paragraph trimmings does not exceed 25 percent of pursuant to U.S. Note 2, Subchapter (a)(11)(i) or paragraph (a)(11)(ii) of this the cost of the components of the XIX, Chapter 98, HTSUS; section; and assembled article. For purposes of this

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section ‘‘findings and trimmings’’ interlinings as set out in the invoice or in the United States are imported include, but are not limited to, hooks other commercial documents, or, if the directly only if they: and eyes, snaps, buttons, ‘‘bow buds,’’ price is other than ex-factory, the price (i) Remained under the control of the decorative lace trim, elastic strips (but as set out in the invoice or other customs authority of the intermediate only if they are each less than 1 inch in commercial documents adjusted to country; width and are used in the production of arrive at an ex-factory price; or brassieres), zippers (including zipper (ii) If the price cannot be determined (ii) Did not enter into the commerce tapes), labels, and sewing thread except under paragraph (c)(2)(i) of this section of the intermediate country except for in the case of an article described in or if that price is unreasonable, all the purpose of sale other than at retail, paragraph (a)(3) of this section; reasonable expenses incurred in the and the port director is satisfied that the (ii) Interlinings of foreign origin, if the growth, production, manufacture or importation results from the original value of those interlinings does not other processing of the components, commercial transaction between the exceed 25 percent of the cost of the findings and trimmings, or interlinings, importer and the producer or the components of the assembled article. including the cost or value of materials producer’s sales agent; and For purposes of this section and general expenses, plus a reasonable (iii) Were not subjected to operations ‘‘interlinings’’ include only a chest type amount for profit. other than loading or unloading, and plate, a ‘‘hymo’’ piece, or ‘‘sleeve (3) Treatment of fibers and yarns as other activities necessary to preserve the header,’’ of woven or weft-inserted warp findings or trimmings. If any fibers or articles in good condition. knit construction and of coarse animal yarns not wholly formed in the United hair or man-made filaments; States or one or more beneficiary § 10.214 Certificate of Origin. (iii) Any combination of findings and countries are used in an article as a (a) General. A Certificate of Origin trimmings of foreign origin and finding or trimming described in must be employed to certify that a interlinings of foreign origin, if the total paragraph (c)(1)(i) of this section, the textile or apparel article being exported value of those findings and trimmings fibers or yarns will be considered to be and interlinings does not exceed 25 a finding or trimming for purposes of from a beneficiary country to the United percent of the cost of the components of paragraph (c)(1) of this section. States qualifies for the preferential the assembled article; (d) Imported directly defined. For treatment referred to in § 10.211. The (iv) Fibers or yarns not wholly formed purposes of paragraph (a) of this section, Certificate of Origin must be prepared in in the United States or one or more the words ‘‘imported directly’’ mean: the beneficiary country by the exporter beneficiary countries or former (1) Direct shipment from any or producer or by the exporter’s or beneficiary countries if the total weight beneficiary country to the United States producer’s authorized agent having of all those fibers and yarns is not more without passing through the territory of knowledge of the facts in the form than 10 percent of the total weight of the any non-beneficiary country; specified in paragraph (b) of this article; or (2) If the shipment is from any section. If the person preparing the (v) Any collars or cuffs (cut or knit- beneficiary country to the United States Certificate of Origin is not the producer to-shape), drawstrings, shoulder pads or through the territory of any non- of the article, the person may complete other padding, waistbands, belt attached beneficiary country, the articles in the and sign a Certificate of Origin on the to the article, straps containing elastic, shipment do not enter into the basis of: or elbow patches that do not meet the commerce of any non-beneficiary (1) The person’s reasonable reliance requirements set forth in paragraph (a) country while en route to the United on the producer’s written representation of this section, regardless of the country States and the invoices, bills of lading, that the article qualifies for preferential of origin of the applicable component and other shipping documents show the treatment; or referred to in this paragraph. United States as the final destination; or (2) ‘‘Cost’’ and ‘‘value’’ defined. The (3) If the shipment is from any (2) A completed and signed Certificate ‘‘cost’’ of components and the ‘‘value’’ beneficiary country to the United States of Origin for the article voluntarily of findings and trimmings or through the territory of any non- provided to the person by the producer. interlinings referred to in paragraph beneficiary country, and the invoices (b) Form of Certificate. The Certificate (c)(1) of this section means: and other documents do not show the of Origin referred to in paragraph (a) of (i) The ex-factory price of the United States as the final destination, this section must be in the following components, findings and trimmings or the articles in the shipment upon arrival format:

AFRICAN GROWTH AND OPPORTUNITY ACT TEXTILE CERTIFICATE OF ORIGIN

1. Exporter Name and Address: 3. Importer Name and Address:

2. Producer Name and Address: 4. Preference Group:

5. Description of Article:

Group Each description below is only a summary of the cited CFR provision. 19 CFR

1–A ..... Apparel assembled from U.S. fabrics and/or knit-to-shape components, from U.S. yarns. All fabric must be cut in 10.213(a)(1). the United States. 2–B ..... Apparel assembled from U.S. fabrics and/or knit-to-shape components, from U.S. yarns. All fabric must be cut in 10.213(a)(2). the United States. After assembly, the apparel is embroidered or subject to stone-washing, enzyme-washing, acid washing, perma-pressing, oven-baking, bleaching, garment-dyeing, screen printing, or other similar processes. 3–C ..... Apparel assembled from U.S. fabrics and/or U.S. knit-to-shape components and/or U.S. and beneficiary country or 10.213(a)(3) or former beneficiary country knit-to-shape components, from U.S. yarns and sewing thread. The U.S. fabrics may 10.213(a)(11). be cut in beneficiary countries or in the United States and beneficiary countries or former beneficiary countries.

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Group Each description below is only a summary of the cited CFR provision. 19 CFR

4–D ..... Apparel assembled from beneficiary country fabrics and/or knit-to-shape components, from yarns originating in the 10.213(a)(4). United States and/or one or more beneficiary countries or former beneficiary countries. 5–E ..... Apparel assembled or knit-to-shape and assembled, or both, in one or more lesser developed beneficiary countries 10.213(a)(5). regardless of the country of origin of the fabric or the yarn used to make such articles. 6–F ...... Knit-to-shape sweaters in chief weight of cashmere ...... 10.213(a)(6). 7–G ..... Knit-to-shape sweaters 50 percent or more by weight of wool measuring 21.5 microns in diameter or finer ...... 10.213(a)(7). 8–H ..... Apparel assembled from fabrics or yarns considered in short supply in the NAFTA, or designated as not available 10.213(a)(8) or in commercial quantities in the United States. 10.213(a)(9). 9–I ...... Handloomed fabrics, handmade articles made of handloomed fabrics, or textile folklore articles—as defined in bilat- 10.213(a)(10). eral consultations; ethnic printed fabric. 0–J ...... Textile articles classifiable in Chapters 50 through 60 or Chapter 63, HTSUS, that are products of a lesser devel- 10.213(a)(12). oped beneficiary country and are wholly formed in one or more such countries from fibers, yarns, fabrics, fabric components, or components knit-to-shape that are the product of one or more such countries.

6. U.S./African Fabric Producer Name and Address: 7. U.S./African Yarn Producer Name and Address:

8. U.S. Thread Producer Name and Address:

9. Handloomed, Handmade, or Folklore Article or Ethnic Printed Fabric: 10. Name of Short Supply or Designated Fabric or Yarn:

I certify that the information on this document is complete and accurate and I assume the responsibility for proving such representations. I un- derstand that I am liable for any false statements or material omissions made on or in connection with this document. I agree to maintain, and present upon request, documentation necessary to support this certificate.

11. Authorized Signature: 12. Company:

13. Name: (Print or Type) 14. Title:

15. Date: (DD/MM/YY) 16. Blanket Period 17. Telephone: From: To: Facsimile:

(c) Preparation of Certificate. The on the commercial invoice or, if the (15) Block 16 should be completed if following rules will apply for purposes invoice number is not known, include the Certificate is intended to cover of completing the Certificate of Origin another unique reference number such multiple shipments of identical articles set forth in paragraph (b) of this section: as the shipping order number; as described in block 5 that are (1) Blocks 1 through 5 pertain only to (7) Blocks 6 through 10 must be imported into the United States during the final article exported to the United completed only when the block in a specified period of up to one year (see States for which preferential treatment question calls for information that is § 10.216(b)(4)(ii)). The ‘‘from’’ date is may be claimed; relevant to the preference group the date on which the Certificate (2) Block 1 should state the legal identified in block 4; became applicable to the article covered name and address (including country) of (8) Block 6 should state the legal by the blanket Certificate (this date may the exporter; name and address (including country) of be prior to the date reflected in block (3) Block 2 should state the legal the fabric producer; 15). The ‘‘to’’ date is the date on which name and address (including country) of (9) Block 7 should state the legal the blanket period expires; the producer. If there is more than one name and address (including country) of (16) The telephone and facsimile producer, attach a list stating the legal the yarn producer; numbers included in block 17 should be name and address (including country) of (10) Block 8 should state the legal those at which the person who signed all additional producers. If this name and address (including country) of the Certificate may be contacted; and information is confidential, it is the thread producer; (17) The Certificate may be printed acceptable to state ‘‘available to CBP (11) Block 9 should state the name of and reproduced locally. If more space is upon request’’ in block 2. If the the folklore article or should state that needed to complete the Certificate, producer and the exporter are the same, the article is handloomed, handmade or attach a continuation sheet. state ‘‘same’’ in block 2; an ethnic printed fabric; (4) Block 3 should state the legal (12) Block 10, should be completed § 10.215 Filing of claim for preferential name and address (including country) of only when preference group identifier treatment. the importer; ‘‘8’’ and/or ‘‘H’’ is inserted in block 4 (a) Declaration. In connection with a (5) In block 4, insert the number and/ and should state the name of the fabric claim for preferential treatment for a or letter that identifies the preference or yarn that is in short supply in the textile or apparel article described in group which applies to the article NAFTA or that has been designated as § 10.213, the importer must make a according to the description contained not available in commercial quantities written declaration that the article in the CFR provision cited on the in the United States; qualifies for that treatment. The Certificate for that group; (13) Block 11 must contain the inclusion on the entry summary, or (6) Block 5 should provide a full signature of the exporter or producer or equivalent documentation, of the description of each article. The of the exporter’s or producer’s subheading within Chapter 98 of the description should be sufficient to relate authorized agent having knowledge of HTSUS under which the article is it to the invoice description and to the the relevant facts; classified will constitute the written description of the article in the (14) Block 15 should reflect the date declaration. Except in any of the international Harmonized System. on which the Certificate was completed circumstances described in Include the invoice number as shown and signed; § 10.216(d)(1), the declaration required

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under this paragraph must be based on exceed 12 months, set out in the writing that for that importation the an original Certificate of Origin that has Certificate by the exporter. For purposes importer must have in his possession a been completed and properly executed of this paragraph and § 10.214(c)(15), valid Certificate of Origin to support the in accordance with § 10.214, that covers ‘‘identical articles’’ means articles that claim for preferential treatment. The the article being imported, and that is in are the same in all material respects, importer will have 30 calendar days the possession of the importer. including physical characteristics, from the date of the written notice to (b) Corrected declaration. If, after quality, and reputation. obtain a valid Certificate of Origin, and making the declaration required under (c) Correction and nonacceptance of a failure to timely obtain the Certificate paragraph (a) of this section, the Certificate. If the port director of Origin will result in denial of the importer has reason to believe that a determines that a Certificate of Origin is claim for preferential treatment. For Certificate of Origin on which a illegible or defective or has not been purposes of this paragraph, a ‘‘series of declaration was based contains completed in accordance with importations’’ means two or more information that is not correct, the paragraph (b) of this section, the entries covering articles arriving on the importer must within 30 calendar days importer will be given a period of not same day from the same exporter and after the date of discovery of the error less than five working days to submit a consigned to the same person. make a corrected declaration and pay corrected Certificate. A Certificate will any duties that may be due. A corrected not be accepted in connection with § 10.217 Verification and justification of claim for preferential treatment. declaration will be effected by subsequent importations during a submission of a letter or other written period referred to in paragraph (b)(4)(ii) (a) Verification by CBP. A claim for statement to the CBP port where the of this section if the port director preferential treatment made under declaration was originally filed. determined that a previously imported § 10.215, including any statements or identical article covered by the other information contained on a § 10.216 Maintenance of records and Certificate did not qualify for Certificate of Origin submitted to CBP submission of Certificate by importer. preferential treatment. under § 10.216, will be subject to (a) Maintenance of records. Each (d) Certificate not required. (1) whatever verification the port director importer claiming preferential treatment General. Except as otherwise provided deems necessary. In the event that the for an article under § 10.215 must in paragraph (d)(2) of this section, an port director for any reason is prevented maintain, in accordance with the importer is not required to have a from verifying the claim, the port provisions of part 163 of this chapter, all Certificate of Origin in his possession director may deny the claim for records relating to the importation of the for: preferential treatment. A verification of article. Those records must include the (i) An importation of an article for a claim for preferential treatment may original Certificate of Origin referred to which the port director has in writing involve, but need not be limited to, a in § 10.215(a) and any other relevant waived the requirement for a Certificate review of: documents or other records as specified of Origin because the port director is (1) All records required to be made, in § 163.1(a) of this chapter. otherwise satisfied that the article kept, and made available to CBP by the (b) Submission of Certificate. An qualifies for preferential treatment; importer or any other person under part importer who claims preferential (ii) A non-commercial importation of 163 of this chapter; (2) Documentation and other treatment on a textile or apparel article an article; or information regarding the country of under § 10.215(a) must provide, at the (iii) A commercial importation of an origin of an article and its constituent request of the port director, a copy of article whose value does not exceed US materials, including, but not limited to, the Certificate of Origin pertaining to $2,500, provided that, unless waived by production records, information relating the article. A Certificate of Origin the port director, the producer, exporter, to the place of production, the number submitted to CBP under this paragraph: importer or authorized agent includes and identification of the types of (1) Must be in writing or must be on, or attaches to, the invoice or other machinery used in production, and the transmitted electronically pursuant to document accompanying the shipment number of workers employed in any electronic data interchange system the following signed statement: production; and authorized by CBP for that purpose; I hereby certify that the article (2) Must be signed by the exporter or (3) Evidence to document the use of covered by this shipment qualifies for producer or by the exporter’s or U.S. materials in the production of the preferential treatment under the AGOA. producer’s authorized agent having article in question, such as purchase Check One: knowledge of the relevant facts; orders, invoices, bills of lading and (3) Must be completed either in the ( ) Producer other shipping documents, and customs English language or in the language of ( ) Exporter import and clearance documents. the country from which the article is ( ) Importer (b) Importer requirements. In order to exported. If the Certificate is completed ( ) Agent make a claim for preferential treatment in a language other than English, the Name under § 10.215, the importer: importer must provide to CBP upon Title (1) Must have records that explain request a written English translation of Address how the importer came to the the Certificate; and Signature and Date conclusion that the textile or apparel (4) May be applicable to: (2) Exception. If the port director article qualifies for preferential (i) A single importation of an article determines that an importation treatment. Those records must include into the United States, including a described in paragraph (d)(1) of this documents that support a claim that the single shipment that results in the filing section forms part of a series of article in question qualifies for of one or more entries and a series of importations that may reasonably be preferential treatment because it is shipments that results in the filing of considered to have been undertaken or specifically described in one of the one entry; or arranged for the purpose of avoiding a provisions under § 10.213(a). If the (ii) Multiple importations of identical Certificate of Origin requirement under importer is claiming that the article articles into the United States that occur §§ 10.214 through 10.216, the port incorporates fabric or yarn that within a specified blanket period, not to director will notify the importer in originated or was wholly formed in the

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United States, the importer must have documentation that demonstrates that Appendix to Part 163—Interim (a)(1)(A) records that identify the U.S. producer the conditions set forth in List of the fabric or yarn. A properly § 10.213(d)(3)(i) through (iii) were met; * * * * * completed Certificate of Origin in the and IV. * * * form set forth in § 10.214(b) is a record (4) Must be prepared to explain, upon § 10.216 AGOA Textile Certificate of Origin that would serve these purposes; request from CBP, how the records and * * * * * (2) Must establish and implement internal controls referred to in internal controls which provide for the paragraphs (b)(1) through (3) of this periodic review of the accuracy of the PART 178—APPROVAL OF section justify the importer’s claim for INFORMATION COLLECTION Certificate of Origin or other records preferential treatment. referred to in paragraph (b)(1) of this REQUIREMENTS section; PART 163—RECORDKEEPING (3) Must have shipping papers that ■ 6. The authority citation for part 178 show how the article moved from the ■ 4. The authority citation for part 163 continues to read as follows: beneficiary country to the United States. continues to read as follows: Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 If the imported article was shipped U.S.C. 3501 et seq. through a country other than a Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510, 1624. ■ 7. Section 178.2 is amended by adding beneficiary country and the invoices an entry for ‘‘§§ 10.214–10.216’’ to the ■ and other documents from the 5. The Appendix to Part 163 is table in numerical order to read as beneficiary country do not show the amended by revising the listing for follows: United States as the final destination, § 10.216 under section IV to read as the importer also must have follows: § 178.2 Listing of OMB control numbers.

OMB Con- 19 CFR Section Description trol No.

******* §§ 10.214–10.216 ...... Claim for preferential treatment on textile and apparel articles under the African 1651–0082 Growth and Opportunity Act.

*******

* * * * * R. Gil Kerlikowske, Commissioner. Approved: May 15, 2014. Timothy E. Skud, Deputy Assistant Secretary of the Treasury. [FR Doc. 2014–11692 Filed 5–23–14; 8:45 am] BILLING CODE 9111–14–P

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