The U.S.-Peru Trade Promotion Agreement Implementation Act; Public Law 110-138; 121 Stat. 1455; 19 U.S.C. 3805 note, was signed into law on December 14, 2007. The Act allowed for the Agreement to take effect on or after January 1, 2008 with the actual implementation date to be determined by the President. Sections 201, 202 and 203 of the Act authorize 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.
Presidential Proclamation 8341, dated January 16, 2009 and published in the Federal Register on January 22, 2009 (74 FR 4105), implemented the U.S.-Peru Trade Promotion Agreement (PTPA) for goods entered, or withdrawn, from warehouse for consumption on or after February 1, 2009. The Proclamation incorporated, by reference, Publication 4058 of the United States International Trade Commission (USITC). Annex I of Publication 4058 amends the Harmonized Tariff Schedule (HTS) by adding a new General Note 32 (GN32) containing specific information regarding the PTPA and a new Subchapter XVII to Chapter 99 to provide for temporary tariff rate quotas (TRQs) implemented by the PTPA. In addition, new provisions have been added to Subchapter XXII to Chapter 98. Annex II of Publication 4058 amends the HTS to provide for immediate and staged tariff reductions. Publication 4058 has been posted to the USITC's 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 Peru.
This memorandum provides instructions on the filing and acceptance of claims for preferential tariff treatment made under the PTPA.
Title 19, Code of Federal Regulations (CFR), is being amended to implement the Agreement and the Act. This memorandum outlines U.S. Customs and Border Protection's (CBP) procedures in advance of the issuance of regulations and thus these instructions are subject to change once the regulations are issued.
PTPA General Rules of Origin
Section 203 of the PTPA Implementation Act specifies the general rules of origin to be used in determining if a good qualifies for preferential tariff treatment under the Agreement. The HTS has been amended to include GN32, which contains specific rules of origin, definitions and other provisions to determine whether a good originates under the PTPA.
The PTPA employs a similar methodology to determine whether a good qualifies for preferential tariff treatment that is found in previous agreements such as the U.S.-Dominican Republic - Central America Free Trade Agreement. Another notable similarity is that the responsibility for providing information to substantiate the claim is on the importer.
Generally, under the PTPA, a non-textile good is originating where:
- The good is wholly obtained or produced entirely in the territory of the Parties (Peru, 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 GN32(n); or
- The good otherwise satisfies any applicable regional value content (RVC) requirements specified in GN32(n); 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.
The PTPA contains a de minimis provision of 10 percent, which applies to most goods, except those specifically enumerated in GN32(e). This provision also is inapplicable to textile articles, which have their own de minimis rule provided for in GN32(d)(i). Under the de minimis rule, a non-textile good that contains materials that do not undergo a required change in tariff classification (tariff shift) as specified in GN32(n) may still qualify as originating if the value of all non-originating materials used in the production of the good that do not undergo the required change in classification does not exceed 10 percent of the adjusted value of the good. The de minimis provision applies provided that the value of such non-originating materials will be included in the total value of non-originating materials for any applicable RVC requirement.
A list of exceptions to the de minimis provision may be found in GN32(e)(ii) of the HTS.
Goods that undergo further production outside the territory of Peru or the United States, other than unloading, reloading or other processes that preserve the condition of the good, 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, the Agreement provides for two methods for calculating RVC: (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. However, the RVC for certain automotive goods must be calculated using the net cost method. This is limited to the following automotive goods:
|8407.31 through 8407.34||Engines|
|8408.20||Diesel Engines for Vehicles|
|8409||Parts of Engines|
|8701 through 8708||Motor Vehicles, Chassis, Bodies and Parts|
Information Necessary to Make a Claim
Preferential tariff treatment may be received for imported goods of a PTPA country that are eligible as an originating good. A claim for preferential tariff treatment may be filed at the time of entry summary by placing the Special Program Indicator (SPI) "PE" as a prefix to the HTS subheading for each good or line item for which treatment is being claimed.
An originating good is one that meets the general and/or product specific rules of origin set forth in GN32(b) or (n). An originating good must be more than a product of a country in that it must meet the rules of origin of the Agreement in order to receive benefits.
Certification or Other Information Requirements
The importer may make a claim for preferential tariff treatment based on a written or electronic certification issued by the importer, exporter or producer, or based on the importer's knowledge to include reasonable reliance on information in the importer's possession that the good qualifies as an originating good according to the rules of origin. The importer must be prepared to submit upon CBP's request the certification or other information setting forth the reasons that the good qualifies as originating. The certification or other information is not required to be filed with CBP at the time the claim is made. However, the importer is responsible for retaining supporting documentation, which may be requested by CBP, as to the good's eligibility for preferential treatment at the time the claim was made.
If the certification serves as the basis for the claim, it does not need to be in a prescribed format, may be submitted electronically and may cover a single shipment or multiple shipments of identical goods not to exceed the time period of 12 months. The certification must not only include the reason the good qualifies as originating, but must contain the required data elements pertaining to the importation of the good, as outlined 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 a certification completed or generated by an exporter or producer or may issue the certification based on information submitted by the exporter or producer that the good qualifies as originating; however, the importer must exercise reasonable care when certifying to the accuracy and truthfulness of the information submitted to CBP. The fact that the importer has issued a certification based on information provided by the exporter or producer or submits a certification executed by the exporter or producer does not relieve the importer of the responsibility to exercise reasonable care.
If the basis for the claim is not a certification but rather is supported by other information, that information must also include the required data elements outlined in Attachment A, but does not need to include the certifying statement or the blanket period. However, the information must sufficiently support the claim for preference.
A certification or other information shall not be required for an importation of goods with an F.O.B. value of $2,500 or less unless CBP considers the importation to be carried out or planned for the purposes of evading U.S. laws and regulations. Moreover, if CBP conducts a verification to determine if the goods are in compliance with other U.S. laws and/or regulations, CBP may require the importer to furnish a valid certification regardless of the monetary value of the good.
Importers are required to maintain records for five years after the date of importation, including the certification, if completed, and all records relating to the importation of the good.
PTPA Eligibility for Textiles and Apparel
Textiles and apparel products may qualify as originating under PTPA if they meet the requirements as specified in the Agreement. The duty rates for these goods will be identified in the "special" column.
Below is a summary of the types of processes required for some of the more basic products in order for them to be considered eligible for PTPA. There are exceptions even to these requirements, depending on the specific type of product it is. For more specific information refer to Annex I of the Modification to the HTS to implement PTPA, USITC Publication 4058 or GN32 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. It should also be noted that U.S. or Peruvian sewing thread must be used for all articles in Chapters 61-63 in order for a good to qualify for PTPA.
- Yarn - generally, fiber must originate in Peru or the United States to qualify for preferential tariff treatment.
- Fabric - generally, yarn must originate in Peru or the United States to qualify for preferential tariff treatment. Cotton and man-made knit fabric are under fiber forward rules, meaning the fiber must originate in Peru or the United States to qualify for preferential treatment.
- Apparel - generally, yarn must originate in Peru or the United States 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 or GN32, 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.
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 GN32 (d)).
Certain Nylon Filament Yarn
Textile or apparel goods may also 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. The nylon filament yarn is classified in HTS numbers:
5402.10.30, 5402.10.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.41.10, 5402.41.90, 5402.51.00 or 5402.61.00 (See GN32 (d)(i)(B)).
Fabric used for visible linings in certain apparel, such as suits, coats and skirts, must be formed and finished in a PTPA beneficiary country.
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 a PTPA beneficiary country (see Rule 3 of Chapters 61 & 62 found in GN32(n)).
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 29. Importers making a short supply claim must use HTS number 9822.06.20 for textile and apparel goods in Chapters 50-63 and subheading 9404.90. Importers are cautioned to check any updates on the Office of Textile and Apparel website for the status of short supply claims.
Pocket Bag Fabric
If a good of Chapter 61 or 62 contains a pocket or pockets, the pocketbag fabric must be formed and finished in the territory of Peru, the United States or both from yarn wholly formed in Peru, the United States or both (Chapter 61, chapter rule 5 and Chapter 62, chapter rule 5).
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 country has negotiated a folklore agreement, goods can be entered under HTS number 9822.06.25 in addition to their Chapter 1-97 number. To date, there has been no mutual agreement; a Textile Book Transmittal (TBT) will be issued if an agreement is reached.
For PTPA agricultural products subject to quantitative limits, the SPI "PE" must be placed in front of the required 98 or 99 HTS number when the entry is filed. In addition to the required 98 or 99 HTS number, the appropriate chapter 1-97 HTS number must be identified on the CBP form 7501. The PTPA agricultural quotas are covered by HTS numbers 9822.06.10, 9822.06.15, and 9917.04.10 through 9917.04.69.
The application of tariff rate quotas for the PTPA is addressed in separate instructions in the form of a quota bulletin 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.
In addition to QBTs, refer to the Commodity Status Report. This weekly report lists the fill rates for the tariff rate quotas. The past four reports are maintained on the site.
Treatment of Sets (Textile and Non-Textile)
Notwithstanding the specific rules of origin set out in GN32, textile or apparel goods classified under General Rule of Interpretation 3 of the HTS 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 value of the set determined for purposes of assessing customs duties (see GN32(c)(v)).
Non-textile goods classified under General Rule of Interpretation 3 of the HTS as goods put up in sets for retail sale will be considered originating for purposes of receiving preferential tariff treatment only if each good in the set is originating per the specific rules of origin set forth in GN32 or the value of the non-originating goods in the set does not exceed 15 percent of the adjusted value of the set.
Eligible Articles (Non-Textile and Textile) / Immediate and Staged Reductions The list of HTS item numbers that are eligible for immediate duty free treatment, as well as those subject to staged tariff rate reductions, can be found in Annex II of USITC Publication 4058.
Verification by CBP The PTPA places the burden of substantiating the validity of the claim for preferential tariff treatment on the importer. An importer may make a claim based on a certification or knowledge or information in his/her possession that the good qualifies as an originating good. CBP may verify the validity of the claim and will direct inquiries for verification via a CBP Form 28, Request for Information, to the importer.
Furthermore, when requested by CBP, the importer shall provide additional documentation above and beyond the certification such as additional cost and manufacturing information. Such information may include records concerning the RVC calculation used in the claim for preference such as the build up or build down methods as outlined in GN32(f) of the HTS. This includes, but is not limited to, records concerning the purchase of, cost of, value of, and payment for the good and the purchase of, cost of, value of and payment for all materials used in the production of the good, and the production of the good in its exported form.
In addition, the importer may provide relevant information from the exporter or producer of the good. In many instances, the exporter may be unwilling to provide cost and/or sourcing information to the importer. CBP will still work through the importer. The importer is expected to arrange for the foreign supplier to provide information directly to CBP.
The PTPA provides flexibility by not mandating the certification or other information be in a prescribed format (such as the NAFTA Certificate of Origin) and by permitting the certification to be submitted to CBP electronically where feasible.
Examples of actions that CBP may take when verifying a claim:
- Since the PTPA is an "importer-focused" agreement, a CBP Form 28 should be issued to the importer first. If the requested information is not in the importer's possession, the importer may have the exporter or producer provide it directly to CBP.
- If the importer is unsuccessful either in obtaining the documentation from the exporter or producer or in obtaining cooperation in providing CBP with the documentation, CBP may issue a CBP Form 28 directly to the exporter or producer.
- CBP may also conduct a verification visit, in accordance with procedures established by the Parties, to the exporter or producer's premises.
Determination of a Verification
If the importer forwards the certification and all other records or documentation demonstrating that the goods qualify for preferential tariff treatment, CBP will notify the importer of the positive determination via a CBP Form 29, Notice of Action, stating that based on the information submitted the goods qualify as originating. The CBP Form 29 will include the HTS number, description of the good, and the relevant rule of origin applied to the good.
If the importer fails to submit a certification or any relevant information, CBP will issue a negative determination via a "Proposed" CBP Form 29. The notice shall specify why the goods do not qualify for preferential tariff treatment and notify the importer that they have 20 days from the date of the notice to provide the certification and all related documentation to CBP. The proposed CBP Form 29 will cite the appropriate legal authority and/or regulations and detail the rate and/or value advance where appropriate.
If the importer fails to comply with the proposed CBP Form 29 within 20 days of the date of the notice, or provides a certification and/or any other documentation, and CBP determines, based on the information submitted, that the goods do not qualify for preferential tariff treatment, a negative determination will be issued to the importer via the form of a CBP Form 29 "Action Taken." The notice will specify why the goods do not originate pursuant to the PTPA rules of origin, cite the appropriate legal authority and/or regulations and detail the rate and/or value advance where appropriate.
If claims were made for preferential tariff treatment based on a blanket certification against which a negative determination was established, CBP shall deny preferential tariff treatment to all importations of identical merchandise covered by that blanket certification for all entries that have not reached final liquidation.
Where CBP determines through verification that an importer has certified more than once, falsely or without substantiation, that a good qualifies as originating, CBP may suspend preferential tariff treatment to identical goods imported by such person until that person proves to CBP's satisfaction that the goods comply with the applicable rules and regulations and qualify for preferential treatment under the Agreement.
If CBP determines that a certification or other information containing the data elements is illegible, defective or has not been completed in accordance with the requirements, the importer shall be granted no less than five working days to submit a corrected certification. Failure to provide a corrected certification shall result in denial of the claim.
Correction of PTPA Claims
An importer is required to promptly make a corrected declaration if the importer has reason to believe the declaration was based on incorrect information. The importer is required to submit corrections and pay any additional duties and merchandise processing fee (MPF) within 30 days from the date the error was discovered.
Penalties will not be assessed for promptly and voluntarily declaring that imported goods were not originating according to the rules of origin, provided the importer complies with the requirements set forth in 19 CFR 162.74 and did not engage in negligence, gross negligence, or fraud.
Post-Importation Claims If a claim for preference was not made at the time of importation and the goods were originating, the PTPA permits importers to make post-importation claims for preferential tariff treatment and request a refund of excess duties and/or MPF. The importer may make a post-importation claim no later than one year after the date of importation and must comply with the requirements of 19 USC 1520(d). The importer shall submit a claim in writing to the port where the goods were entered which must include:
- A written declaration stating that the good qualified as an originating good at the time of importation and the number and date of the entry or entries covering the good;
- A copy of a certification or supporting documentation containing the required data elements of Attachment A demonstrating that the goods qualified as originating on the day of importation;
- A statement indicating whether the entry summary or equivalent documentation was provided to any other person;
- A statement indicating whether a protest, petition or request for reliquidation has been filed relating to the good and identification of such filing(s).
If CBP determines that a certification or other information containing the required data elements is illegible, defective or has not been completed in accordance with the requirements, the importer shall be granted no less than five working days to submit a corrected certification. Failure to provide a corrected certification or other information shall result in denial of the post-importation claim.
In addition, CBP shall deny a claim that was not filed timely, or that was based on an invalid certification, or other information. A claim can also be denied following an origin verification if CBP makes a negative determination based on findings discovered during the verification.
Protest Rights 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 the date of liquidation. The protest may enable 10
the importer to receive a refund of duties and/or MPF for eligible goods entered, or withdrawn from warehouse, for consumption.
Merchandise Processing Fees (MPF) and Harbor Maintenance Fees (HMF)
In addition to the reduced and free rates of duty afforded by the PTPA, originating goods that qualify for preferential tariff treatment are not subject to MPF. However, no merchandise is exempt from the harbor maintenance fee.
Termination of the Agreement
There is no set expiration date for the PTPA. However, the provisions of and amendments made by the Act will cease to be effective upon the termination of the Agreement by written notification from the United States or Peru. The PTPA will expire six months after the date of the notification.
Loss of GSP Benefits/Retention of ATPA and ATPDEA Benefits
Upon implementation of the PTPA, goods of Peru will no longer be eligible to receive benefits under the Generalized System of Preferences (GSP) program. However, please note that Peru will retain its benefits under the Andean Trade Preference Act (ATPA) and the Andean Trade Promotion Drug Eradication Act (ATPDEA) as per the technical correction published in the Federal Register on February 9, 2009 (74 FR 6441). Goods of Peru that were entered or withdrawn from warehouse for consumption between February 1 and February 8, 2009 that wish to make a retroactive ATPA/ATPDEA claim may do so using a post-entry amendment.
On or after February 1, 2009, importers and brokers may file claims for preferential tariff treatment on goods that originate in Peru. These claims shall be made at the time the entry summary is filed by placing on the document the SPI "PE" as a prefix to the HTS item number for each line on which preferential tariff treatment is claimed.
Currently, program updates to the Automated Commercial System (ACS), which allow for automated processing have not been completed. Therefore, until further notice from this office, importers claiming preference under the PTPA must file non-ABI entries. Importers will have the option to file ABI entries at release and follow through with manual entry summaries. This option is allowed only for PTPA claims and will terminate once ACS programming to allow electronic filing is complete.
Questions regarding non-textile provisions of the PATPA should be directed to Trade Agreements Branch.
Questions regarding textile and apparel provisions under the PATPA should be directed to Textile Policy and Operations Branch.
Questions regarding quota issues should be directed to Quota Branch.