U.S.-Colombia Trade Promotion Agreement Implementation Instructions
The U.S. - Colombia Trade Promotion Agreement Implementation Act ("the Act," Pub. L. No. 112-42, 125 Stat. 462) was signed into law on October 21, 2011. The Act allowed for the Agreement to take effect on or after January 1, 2012, with the actual implementation date to be determined by the President. Section 201 of the Act authorizes the President to proclaim the tariff modifications and provide the rules of origin for preferential tariff treatment with respect to goods provided for in the Agreement. The text of the Agreement is posted on the U.S. Trade Representative's website.
The President issued a Proclamation implementing the U.S. - Colombia Trade Promotion Agreement (COTPA) on May 14, 2012, for goods entered, or withdrawn from warehouse for consumption, on or after May 15, 2012. The Proclamation incorporated, by reference, Publication 4320 of the United States International Trade Commission (USITC). Annex I of Publication 4320 amends the Harmonized Tariff Schedule of the United States (HTSUS) by adding a new General Note 34 (GN 34) containing specific information regarding the COTPA and a new Subchapter XXI to Chapter 99 to provide for temporary tariff rate quotas (TRQs) implemented by the COTPA. In addition, new provisions have been added to Subchapter XXII to Chapter 98. Annex II of Publication 4320 amends the HTSUS to provide for immediate and staged tariff reductions. Publication 4320 has been posted to the USITC website.
The Agreement provides for the immediate or staged elimination of duties and barriers to bilateral trade in goods and services originating in the United States and/or Colombia.
This memorandum provides guidance with respect to preferential tariff claims under the COTPA.
Title 19, Code of Federal Regulations (CFR), is being amended to implement the Agreement and the Act.
An originating good is one that meets the general and/or product specific rules of origin set forth in GN 34 and all other requirements of the agreement.
Rules of Origin
Section 203 of the COTPA Implementation Act specifies the rules of origin used to determine if a good qualifies for preferential tariff treatment or "originates" under the Agreement. The HTSUS has been amended to include GN 34, both the general and specific rules of origin, definitions, and other related provisions.
In general terms, under the COTPA a good is originating when:
The good is wholly obtained or produced entirely in the territory of the Parties (Colombia, the United States or both);
The good is produced entirely in the territory of one or more of the Parties and
Each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in GN 34(o); or
The good otherwise satisfies any applicable regional value content (RVC) requirements specified in GN 34(b); and
The good satisfies all other applicable requirements; or
The good is produced entirely in the territory of one or more of the Parties exclusively from originating materials.
Transit and Transshipment
Goods that undergo further production outside the territory of Colombia or the United States, other than unloading, reloading or other processes to preserve the condition of the good or to transport the good to the territory of Colombia or the United States, or goods that do not stay under customs control in the territory of a non-Party, will not be considered originating.
Regional Value Content (RVC) Calculation Methods
For most goods that are subject to an RVC requirement, the Agreement provides for two calculation methods: (1) the build-up method based on the value of originating materials; and (2) the build-down method, based on the value of non-originating materials. For certain automotive goods, the net cost method, based on the production costs, must be used.
Net Cost Method for Automotive Goods
For the automotive goods indicated below, the net cost method, based on all production costs less those of the non-originating materials, must be used.
|8407.31 through 8407.34||Engines|
|8408.20||Diesel Engines for Vehicles|
|8409||Parts of Engines|
|8701 through 8705||Motor Vehicles|
|8708||Motor Vehicle Parts|
De Minimis (Non-Textiles)
The COTPA has a 10 percent de minimis provision for most goods, with exceptions for textiles in GN 34(d)(ii) and other goods enumerated in GN 34(e)(ii). Under the non-textile de minimis rule, a good containing a non-originating material that does not undergo the tariff classification change specified in GN 34(o) may still originate if the value of all such non-originating materials does not exceed 10 percent of the adjusted value of the good. When performing an RVC computation, the value of de minimis materials is included in the total value of the non-originating materials.
COTPA Eligibility for Textiles and Apparel
Textiles and apparel products may qualify as originating under COTPA if they meet the requirements as specified in the Agreement. The duty rates for these goods will be identified in the "special" column.
A summary of some of the processes required for some basic products to originate under the COTPA is below. There are product-specific exceptions to these requirements. For more specific information, refer to Annex I of USITC Publication 4320 or GN 34 to the HTS. It should be noted that for apparel in Chapters 61 & 62 and made-up textile articles in Chapter 63, only the component that determines the essential character for classification must meet the tariff shift rules (see Rule 1 of Chapters 61, 62 and 63 found in GN 34(o)).
Yarn - generally, fiber must originate in Colombia or the United States for yarn to qualify for preferential tariff treatment.
Fabric - generally, yarn must originate in Colombia or the United States for fabric to qualify for preferential tariff treatment. Cotton and man-made knit fabric use fiber forward rules, meaning that the fiber must originate in Colombia or the United States for the good to qualify for preferential treatment.
Apparel - generally, yarn must originate in Colombia or the United States for the good to qualify for preferential tariff treatment.
De Minimis (Textiles)
A textile or wearing apparel good that is not an originating good because certain fibers or yarns used in the production of the component of the good that determines the tariff classification of the good do not undergo an applicable change in tariff classification set out in Annex I of USITC Publication 4320 or GN 34(o), shall nonetheless be considered to be an originating good if the total weight of all such fibers or yarns in that component is not more than 10 percent of the total weight of that component (see GN 34(d)(ii)(A)).
Notwithstanding the preceding paragraph regarding de minimis, a good containing elastomeric yarns in the component of the good that determines the tariff classification of the good shall be considered to be an originating good only if such yarns are wholly formed in the territory of a Party (see GN 34(d)(ii)).
Certain Nylon Filament Yarn
Textile or apparel goods may contain, in the component that determines the classification of the good, specified nylon filament yarn (other than elastomeric yarn described above) from Israel, Canada or Mexico, without regard to the de minimis limitation. The nylon filament yarn is classified in HTSUS:
5402.11.30, 5402.11.60, 5402.19.30, 5402.19.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.45.10, 5402.45.90, 5402.51.00 or 5402.61.00 (see GN 34 (d)(ii)(B)).
Fabric used for visible linings in certain apparel, such as suits, coats and skirts, must be formed and finished in either the United States or Colombia. (See Rule 1 of Chapters 61 & 62 found in GN 34(o)).
Narrow Elastomeric Fabric of Subheadings 5806.20 or 6002
Despite the fact that only the component that determines the classification of the good must meet the tariff shift rule, if apparel contains a narrow elastomeric fabric of subheadings 5806.20 or 6002, such fabric must be formed and finished in the United States or Colombia (see Rule 3 of Chapters 61 & 62 found in GN 34(o)).
Sewing thread of headings 5204 or 5401 contained in originating goods in Chapters 61, 62 or 63 must be formed and finished in the United States or Colombia (see Rule 4 of Chapters 61 & 62; Rule 2 of Chapter 63 found in GN 34(o)).
Pocket Bag Fabric
If a good of Chapter 61 or 62 contains a pocket or pockets, the pocket bag fabric must be formed and finished in the territory of Colombia, the United States, or both, from yarn wholly formed in Colombia, the United States, or both (see Rule 5 of Chapters 61 & 62 found in GN 34(o)).
Fibers, yarns or fabrics not available in commercial quantities in a timely manner among the Parties are listed in Chapter 98, subchapter XXII, U.S. Note 33. Importers making a short supply claim must use HTS number 9822.08.25 for textile and apparel goods in Chapters 42, 50 through 63 and 94. Importers are cautioned to check any updates on the Office of Textile and Apparel (OTEXA) website for the most recent list of allowable short supply inputs.
Handloomed, Handmade and Folklore Goods
A folklore agreement must be negotiated between the two Parties before goods may be eligible for this provision. Once a folklore agreement has been agreed to, goods can be entered under HTS number 9822.08.35 in addition to their Chapter 1-97 number. To date, there has been no such agreement; a Textile Book Transmittal (TBT) will be issued if an agreement is reached.
For COTPA agricultural products subject to quantitative limits, the required 98 or 99 HTS number and the appropriate chapter 1-97 HTS number must be identified on the CBP form 7501. The COTPA agricultural quotas are covered by HTS numbers 9918.02.01, 9918.04.01, 9918.04.04, 9918.04.50, 9918.04.60, 9918.21.10, and 9918.24.10.
The application of tariff rate quotas for the COTPA is addressed in separate instructions in the form of a quota book transmittal (QBTs) issued by the Headquarters Quota Branch. These instructions include the quota period, procedures for quota openings, restraint limits, applicable HTS numbers, and any special processing instructions. The instructions are available on the CBP website on the "Quota Enforcement and Administration" page (see "Programs and Administration"). In addition to QBTs, there is also a link to the Commodity Status Report. This weekly report lists the fill rates for the tariff rate quotas.
Treatment of Sets
Notwithstanding the rules of origin set forth in GN 34(o), goods classified under General Rule of Interpretation (GRI) 3 of the HTSUS as goods put up in sets for retail sale shall not be regarded as originating goods unless each of the goods in the set is an originating good or the total value of the non-originating goods in the set does not exceed 10 percent of the entered value of the set per GN 34(c)(iv)(B)(1) for textile or apparel goods or 15 percent of the entered value of the good per GN 34(c)(iv)(B)(2) for non-textile goods.
Immediate and Staged Duty Rate Reductions
The list of HTSUS tariff lines that are eligible for immediate duty free treatment, as well as those subject to staged tariff rate reductions, can be found in Annex II, Section A and Section B, respectively, of USITC Publication 4320. Dutiable tariff lines that are eligible for a COTPA claim indicate "CO" in the Special column of the HTSUS.
Merchandise Processing Fees (MPF) Exemption
The COTPA provides the MPF exemption on originating goods.
Preference may be claimed on unconditionally free tariff lines to obtain the MPF exemption, even though "CO" will not be listed in the Special column of the HTSUS. Unconditionally free goods with a COTPA claim are subject to the same certification, verification and other requirements as dutiable goods.
Correction of a False or Unsupported Claims
An importer who has made a false or unsupported preference claim must submit a correction within 30 days of discovery and pay all duties and merchandise processing fees (MPF). Penalties will not be assessed when the importer promptly and voluntarily makes a corrected claim and pays any duties owing.
Certification and Other Information Requirements
The importer may make a claim for preferential tariff treatment based on a written or electronic certification issued by the exporter or producer, or based on the importer's knowledge, including a reasonable reliance on information in his possession. The importer must submit, upon request by CBP, the certification and other information substantiating the preference claim. The importer is responsible for providing the substantiating documentation to CBP upon request, including that information provided to CBP directly by the exporter or producer.
The certification need not be in a prescribed format, may be submitted electronically, and may cover a single importation or multiple importations of identical goods within a maximum 12-month period. The certification must include the data elements specified in Attachment A. The certification may be submitted in English or Spanish. If submitted in Spanish, CBP may request an English translation.
An importer may submit his own certification or that of the exporter or producer. Irrespective of the source of the information submitted to CBP, the importer is responsible for exercising reasonable care and for the accuracy of all documentation submitted to CBP.
Importers are required to maintain all certifications in their possession and all records related to the importation for five years from the date of importation.
Analysis and Certification when No Product-Specific Rule of Origin Exists
Manufacturers, exporters and importers are advised that the COTPA product-specific rules of origin (SROs) were negotiated using the 2002 Harmonized Tariff Schedule (HTS). Goods assigned new classification numbers in 2007, 2012 or 2017, to correspond to World Customs Organization approved modifications, will not find corresponding SROs in GN 34(o).
Until revised SROs are published, manufactures of affected goods should classify both the good and its materials in accordance with the 2002 HTSUS when performing the SRO analysis.
Verification by CBP
Under the COTPA, the importer is responsible for substantiating the validity of a preference claim. This preference claim may be based on a certification, other documentation, or the importer's knowledge. CBP will initiate a verification via a CBP Form 28, Request for Information, to the importer.
Upon request, the importer shall provide the certification (Attachment A) and documentation supporting the certification. Importers should be prepared to substantiate the originating status of the goods with documentation such as, but not limited to, the following:
Manufacturing process flow chart, narrative, description, etc.
Bill of materials (BOM) indicating the HTSUS number (6 digits) and the originating status of each material. (If the tariff-shift rule includes a regional value content (RVC) or you’ve elected to use the “de minimis” exception, include the value of each material.)
A statement that the BOM is complete
For each originating material that would have failed the tariff shift—had it been non-originating— provide a certification of origin or manufacturer’s affidavit attesting to its FTA ORIGINATING STATUS. (Manufacturer’s affidavits should state where the material is manufactured and that it originates under the terms of the free trade agreement.)
If the tariff-shift rule requires a regional value content (RVC) analysis, provide the RVC formula and computation, and clearly state the composition of all values.
If an inventory management method (FIFO, LIFO, average) is used to differentiate originating from non-originating goods or materials, elaborate on the methodology.
Other documentation or explanation as appropriate.
The importer is responsible for ensuring that adequate substantiating documentation is provided to CBP upon request.
The exporter or producer may provide this documentation directly to CBP to protect its confidentiality. Subsequent to the initial contact with the importer, CBP may, at its discretion, communicate directly with the exporter or producer.
CBP may verify the originating status of a good by means of a verification visit to the exporter or producer in accordance with procedures established by the Parties.
Issuing a Determination
If the importer provides CBP with sufficient information to demonstrate that the goods originate, CBP will notify the importer of the positive determination via a CBP Form 29, Notice of Action, Taken. The CBP Form 29 will include the HTSUS number, description of the good, and the rule of origin, as well as the legal authority/regulation.
If the importer fails to adequately substantiate the claim, CBP will issue a negative determination via a CBP Form 29, Proposed. The notice shall state why the documentation was insufficient or the good otherwise does not originate and allow an additional 20 days for the submission of documentation prior to the issuance of a CBP Form 29, Taken, and rate advancing the good.
Impact of a Negative Determination on a Blanket Certification
The issuance of a negative determination for a good on a blanket certification may result in the denial of preference on all identical goods covered by that blanket.
Repeated False or Unsupported Claims (Pattern of Conduct)
Where verification or other information reveals a pattern of false or unsupported preference claims by an importer, exporter, or producer, CBP may suspend preferential treatment on identical goods covered by subsequent statements, declarations, or certifications until CBP determines that such representations are in conformity with GN 34.
Importers or other interested parties may file a protest to contest a negative origin determination pursuant to 19 U.S.C 1514, within 180 days of liquidation. If approved, the protest will provide the importer with a refund of duties and/or MPF.
Entry into Force
Importers may claim COTPA preference on originating goods entered or withdrawn from warehouse on or after May 15, 2012.
Making a Preference Claim
A claim for preferential tariff treatment may be made at the time of entry summary by prefacing the HTSUS number of the applicable good on CBP Form 7501 with the Special Program Indicator (SPI) "CO".
Post-importation claims may be made within one year of importation, irrespective of the liquidation status of the tariff line in accordance with 19 USC 1520(d) and 19 CFR 10.3010 – 10.3012.
Data Elements for the United States-Colombia Trade Promotion Agreement Certification
(This certification is to be signed and dated by a responsible official of the importer, exporter, or producer, or by the importer's, exporter's, or producer's authorized agent having knowledge of the relevant facts.)
- Name and address of the importer: The legal name, address, telephone, and e-mail of the importer of record of the good.
- Name and address of the exporter: The legal name, address, telephone, and e-mail of the exporter of the good. (If different from the producer).
- Name and address of the producer: The legal name, address, telephone and e-mail of the producer of the good. (If known).
- Description of good: The description of a good shall be sufficiently detailed to relate it to the invoice and the Harmonized System (HS) nomenclature.
- HS tariff classification number: The HS tariff classification, to six or more digits, as specified for each good in the Rules of Origin.
- Preference criterion: The rule of origin in HTSUS General Note 34(b) or Article 4.1 of the Agreement. In the case of a rule of origin in General Note 34(b)(ii) or Article 4.1(b), please indicate the product-specific rule in General Note 34(o) or Annex 4.1 or 3-A of the Agreement.
- Single shipment: Provide the commercial invoice number.
- Multiple shipments of identical goods: Provide the blanket period in "mm/dd/yyyy to mm/dd/yyyy" format. (12-month maximum
- Authorized signature, company, title, telephone, fax, e-mail, and certification date: The signee must have access to the underlying records and the legal authority to bind the company. This field shall include signature, company, title, telephone, fax, and e-mail.
- I certify that:
The information on this document is true and accurate and I assume the responsibility for proving such representations. I understand 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 these representations;
The goods comply with all requirements for preferential tariff treatment specified for those goods in the United States-Colombia Trade Promotion Agreement; and
This document consists of _______ pages, including all attachments.