Home   About PBB   Services   Account Setup   Trade Solutions   Tools   News & Resources   Careers   Investor Relations   Contacts  Canada USA China United Kingdom Latin America Mexico Ch. 5 Special Products Certain products require, from either Customs or other U.S. Government Agencies, additional forms and/or procedures before entering the U.S. For example, textile wearing apparel, originally made in other than a NAFTA country, may be subject to visa/quota restraints, and therefore not allowed to enter the U.S. without original visas from the country of manufacture. Consulting with your Customs Broker is the most prudent way to ensure meeting these requirements. 5.1 PROHIBITED MERCHANDISE The following items may not be imported into the United States. They are prohibited by regulation, law or international agreement and are subject to seizure, destruction and possible criminal prosecution: Obscene Matter Articles for causing unlawful Abortion and Literature thereof Any matter advocating Treason against the United States Merchandise subject to economic sanctions Merchandise produced by convict, forced or indentured labor Endangered Species or their By-Products Cable TV Decoder Lottery Tickets Pepper Shells Counterfeit coins, obligations and other securities; illustrations or reproductions of coins or stamps Cultural Property - archeological and ethnological material subject to the 1970 UNESCO Convention including pre-Columbian monumental and architectural sculpture and murals Switchblade Knives White Phosphorus Matches 5.2 TEXTILES Beginning with the Agricultural Act of 1956, in an attempt to counteract the disruptive effects of imports from low wage countries, and curtail their imports, the United States entered into bilateral and multilateral agreement with various foreign countries. These agreements set quantitative limits called quotas, and established export requirements in the form of export licenses and visas on specified textile products and articles of apparel. These import restrictions vary by country of origin and also with the materials from which an article is made. Generally, restrictions are placed on textile and apparel products containing certain specified amounts of cotton, wool and man-made fibers, silk blends, and other vegetable fibers. Textile and apparel products include most of the textile classifications found in Chapters 50 through 63 of the Harmonized Tariff System (HTS) and any other classifications with category numbers. Chapters 50 through 63 contain textile fibers, yarns, fabrics and finished products including clothing and other articles of apparel. The following textile items in the HTS classifications listed below also have been defined by the World Trade Organization as textile and apparel products and are subject to the 334 country of origin rules for textile and apparel products: 3005 Non-adhesive wadding, gauze bandages 3921 PVC and polyurethane sheets, film, etc. 4202 Luggage, handbags, etc. 6405,6406 Footwear of textiles 6501-6505 Headwear of textiles 6601 Umbrellas 7019Fiberglass yarns and fabrics 8708 Automobile seat belts 8804Parachutes 9113 Watch straps 9404Comforters, quilts, pillows 9502 Doll clothing 9612Typewriter ribbons Rules of Origin Lengthy, complicated and subject to frequent and extensive changes, the rules for determining origin of textile and apparel products are extremely complex. The current major rules of origin are summarized as follows: Cutting does not determine the country of origin (previously cutting determined country of origin for 90 percent of wearing apparel imports). The 334 rules are based on processing or assembly operations. Customs previous interpretation of substantial transformation has been replaced with statutory rules based on processing. A subjective determination under the provisions of 19 CFR 12.130 of the Custom Regulations is largely replaced by objective processing operations expressed in terms of tariff shifts. Country of origin for textile and apparel products processed, assembled or manufactured in two or more countries is determined by where the most important processing occurs, and, if that cannot be ascertained, the last country in which an important assembly or manufacturing process occurs. In addition to the above, there are special rules that apply to sixteen specified HTS classifications: Special rules govern the articles in the following 16 specified Harmonized Tariff System (HTS) classifications (the HTS classification is followed by a general description): Articles Produced from Yarns The country of origin of articles made from yarn, strips, twine, cordage, rope or cables is the country in which the yarn, etc., is produced: 5609Articles of yarn, strip or the like of heading 5404 or 5405, twine, cordage, rope or cables, not elsewhere specified or included. 2 19 CFR 12.130 refers to section 12, paragraph 130 of title 19 of the Code of Federal Regulations Articles Produced from Fabric The country of origin of certain articles made from fabric in the following Harmonized Tariff System classifications is the country in which the fabric is produced: Labels, badges, emblems Quilted textile products in the piece, or lengths or rolls of quilted fabrics to be cut and hemmed Baby diapers Handkerchiefs Shawls, scarves, mufflers, mantillas, veils, etc. Blankets, traveling rugs Bed linen, table linen, toilet linen, kitchen linen Curtains, drapes, interior blinds, valences Bedspreads, furnishings Sacks and bags for packing Tarpaulins, awnings, sunblinds, tents, sails, camping goods Dust cloths, mop cloths, polishing cloths, shop towels, bar mops, dishcloths Labels, cords, tassels, corset and footwear lacings, toys for pets, wall banners, surgical towels, tufted towels, pillow shells, quilt and comforter shells, national flag, moving pads Needlecraft sets Pillows, cushions, quilts, comforters Failure to Follow the Origin Rules Because the rules govern the origin of goods for purposes of quantitative restrictions (quota), goods subject to quota which arrive without correct visas are inadmissible and may be detained (until correct visas are obtained), denied entry or in certain cases seized. Material false statements or omissions regarding origin may also lead to civil penalties or criminal prosecution. Failure to have the goods properly marked with the correct country of origin may also lead to the assessment of marking duties or, in certain cases, penalties. In cases of repeated or intentional violations, seizure and forfeiture may occur. In addition, goods which were released may be subject to orders for redelivery to Customs. Failure to comply with such orders may lead to the assessment of liquidated damages or other penalties. Required Documents Textile Declaration One regulation that has not changed is the regulatory requirement to file a Textile Declaration providing sufficient information to enable U.S. Customs to verify the country of origin of textile and apparel product shipments in order to determine if the goods are subject to quota/visa requirements. Basically, one of two types of declarations is required of the manufacturer, producer, exporter or importer of textile and apparel products. The first is a simple declaration for articles wholly the growth, product or manufacture of a single country, which is known as the Single Country Textile Declaration. If multiple manufacturers, producers or exporters are involved, a separate Single Country Declaration may be filed by each, or a single declaration called the Multiple Country Declaration may be filed detailing all of the manufacturing or processing operations which occurred from fiber stage through the completion of the finished article. This declaration permits the enumeration of each of these stages. A third type of declaration, The Negative Declaration, is required of all textile and apparel products not subject to Section 204 of the Agricultural Act of 1956. This document must state that the shipped goods are not subject to the provisions of Section 204. Quota Charge Statement In addition to the Textile Declaration, a statement may be required from the foreign seller or importer regarding any quota charges applicable to the merchandise. A quota charge is a fee paid to a foreign government or company when application is made to obtain an export quota. Known as the Quota Charge Statement, it is an affirmation or denial of charges paid, included or not, known or not, or that the importer has no knowledge of quota charges or no quota or quota charges exist. Exemptions Despite all of the foregoing, there are also circumstances when articles produced from restricted material and/or in a restricted country may be exempt from quota and visa requirements. Those circumstances generally involve shipments not subject to entry procedures because they fall below a stated value, or are bona-fide gifts valued at not over $100 U.S. retail in the exporting country, or articles, which, regardless of value, are for the personal, non-commercial use of travelers, whether residents or not, and whether accompanying them or not. Certain commercial textile samples may also be entered without restriction provided that the goods are mutilated samples to be used for evaluation or order taking purposes only. They must be dye-stamped with indelible ink, or cut, torn or otherwise mutilated according to stated specifications. There are other exemptions, but the rules here, too, are complex and the recommendation is to find out before you ship to be sure your goods are eligible to enter the United States under an exempt provision. Canada Canada presents special circumstances with regard to the importation of textile and apparel products. There are no quota or visa restrictions or requirements on textile and apparel goods which are products of Canada EXCEPT for textile and apparel goods that do not qualify for NAFTA because the materials are non-originating, but which qualify for NAFTA rates of duty because they fall within a special quota, included in the NAFTA agreement, known as a Tariff Preference Level (TPL). Let us briefly review the NAFTA rules for textile and apparel products from Canada: The basic rule for YARN is "fiber forward" The basic rule for TEXTILE & APPAREL ARTICLES is "yarn forward" In other words, for yarn to qualify for NAFTA treatment, the fiber must originate in a NAFTA country; for textile and apparel articles to qualify for NAFTA treatment, the yarn must originate in a NAFTA country. Bearing these rules in mind, there are THREE possible scenarios: Does qualify for NAFTA because the product meets the requirements as specified in the agreement; Does NOT qualify for NAFTA because the product does not fully meet the requirements as specified in the agreement, HOWEVER, tariff rate quotas (called TPL’s) have been established under NAFTA for that specific product to allow entry under the preferential duty treatment up to a specific quantity. Dutiable at the Most Favored Nation (MFN) rate once the specified level is reached. Does not fully qualify for NAFTA and no TPL’s have been established for this product, or the importer does not meet the requirements to enter the merchandise under the TPL. The product is dutiable at the MFN rate. NAFTA Qualifying Products that meet the specific rules as set out in Annex 401 of the NAFTA agreement may receive the preference if: The paperwork declares it; The claim is based on a properly completed NAFTA Certificate of Origin (NCO), and; The submission of a country of origin declaration, as set forth in 19 CFR 12.132, signed by all U.S., Canadian and/or Mexican manufacture(s) or producer(s) claiming NAFTA qualifying. If there are multiple manufacturers or producers, an importer must submit a separate country of origin declaration for each manufacturer or producer. The textile declaration MUST BE signed by the exporter or producer. The textile declaration must contain enough information to enable Customs to properly determine NAFTA origin and eligibility. If Customs is unable to determine origin or eligibility because of incomplete information, then the importer will not be entitled to claim preferential tariff treatment under NAFTA. NAFTA Qualifying Based on a Tariff Preference Level Both Mexico and Canada will issue CERTIFICATES OF ELIGIBILITY for textile articles that are eligible for TPL’s. TPL’s have been established for APPAREL GOODS classified in Chapters 61 & 62 that are both cut (or knit to shape) and sewn or otherwise assembled in Mexico or Canada from foreign fabric or yarn; and for cotton or man-made fiber FABRIC and cotton or man-made fiber TEXTILE ARTICLES classified in Chapters 52-55, 58, 60 and 63 that are woven or knit in Mexico or Canada from foreign spun yarn. Textile Merchandise Entered Under a TPL is Not Considered NAFTA Originating Therefore: It DOES NOT require NAFTA Certificate or Origin. NCO’s need be filled out for NAFTA originating goods only. This textile merchandise is NOT EXEMPT from the U.S. Customs User Fee. (.21% ad valorum; currently $25 minimum - $485 maximum per release). If the importer does not have a Certificate of Eligibility and the merchandise is considered non-originating, then the importer is not entitled to the Preferential Tariff Treatment under NAFTA. The Certificate of Eligibility must be presented with the entry summary when the NAFTA claim is made. Non-NAFTA Qualifying Products that do not qualify for NAFTA treatment or a TPL and are products from Mexico or Canada are dutiable at the MFN rate. PBB Consulting Services are knowledgeable of the rules, complexities and exemptions and can provide guidance to the Canadian exporter shipping textiles and/or textile products. § 5.3 QUOTA Quota Quotas are limits placed on the number of units of merchandise that may be imported during specific periods. Absolute quotas are such limits placed on the importation of merchandise beyond which no additional units may be imported. Prior to 1995 there existed a number of Absolute Quotas in the Harmonized Tariff Schedules of the United States (HTSUS), most notably in the areas of textile and agricultural products. Textiles, textile products and apparel are still under Absolute Quota systems and are largely controlled by the administration of bilateral and territorial textile agreements with foreign countries and administered by their governments. Countries that are the subject of textile quotas are mostly located in South and Central America, Eastern Europe, Africa and Asia. Textile products of Canadian and Western European origin are exempt from quota restrictions provided they can be shown to be of true Canadian or Western European origin. The principal agricultural products under quota control include products containing sugar and dairy products. Beet and cane sugar, syrup containing sugar and other products containing sugar are included here. Such items include certain mixes and dough’s for bakery products, flavored beverages, including juice mixes, coffees and teas containing more than a stated percentage of sugar and sugar based sweeteners. Also included here are dairy products such as milk, butter, cheese and ice cream. Bulk sweetened chocolate products and peanuts are included here. A complete list of merchandise and articles under quota restrictions is available from PBB Consulting Services. The implementation of the General Agreement on Tariffs and Trade (GATT) on January 1, 1995 changed the structure of the quota systems in the United States. With the aforementioned exception of textile products and apparel, which are still under Absolute Quota restrictions, all other goods formerly under Absolute Quotas have since been under Tariff Rate Quota (TRQ) restrictions. A TRQ permits a specific number of units to be imported at a reduced duty rate during specific periods. Units over limit or outside the specified periods are subject to full duty rates. Some products require export/import certificates or licenses issued to the exporter in order to gain the benefits of the reduced duty rates. These licenses and certificates are typically administered by the governments or governmental agencies of either the exporting or importing countries. The majority of import quotas are administered by the U.S. Customs Service. The Commissioner of Customs controls the importation of quota merchandise, but has no authority to change or modify any quota. Quota merchandise is subject to the usual Customs procedures applicable to other imports. No import licenses are currently required for quota purposes for quotas administered by the Commissioner or Customs. Generally, licenses are required to access the reduced tariff rate for products that required licensing under the Absolute Quota system. Obtaining these licenses and certificates may be a condition for exporting or importing these products as well as a condition for obtaining the more favorable lower duty rates. However, possession of the proper certificates and documentation, although a condition for shipping, does not guarantee entry under the reduced rate if the quota limit has been filled or the period has expired. TRQ, unlike Absolute Quotas, do not restrict the amount of product that may be imported although, they impose high restrictive duties on product imported over the stated low rate amount once the low rate amount has been filled within any stated quota period. These higher duties may be prohibitive and exporters may wish to withhold further shipments until the opening of the next quota period rather than pay these high duties. With the notable exception of some dairy products, generally, there are no restrictions or licensing requirements for goods brought in under the high duty rates. Absolute Quotas Absolute quotas limit the quantity of goods that may enter the commerce of the United States in a specific period. When an absolute quota is filled, other entries are prohibited during the remainder of the quota period. Some quotas are global while others are allocated to specific foreign countries. Certain absolute quotas are immediately filled at or shortly after the opening of the quota period. For this reason, an absolute quota is usually officially opened at a specified time on the first workday of the quota period so all importers may have an equal opportunity for the simultaneous presentation of entries. If the quantity of quota merchandise covered by entries presented at the opening of the quota period exceeds the quota, the commodity is released on a prorated basis (i.e., the ratio between the quota limit and the total quantity offered for entry). Quotas not filled upon opening are thereafter administered on a first-come, first-serve basis, that is, in the order of time of presentation of each entry. Imports in excess of an absolute quota may be exported or detained for entry during the next quota period. No importer may offer for entry a quantity in excess of the quota limit. Customs currently administers Absolute Quota imports controls on certain cotton, wool, man-made fiber, silk blend, and other vegetable fiber articles manufactured in designated countries. See the section on Textiles for more detail. Examples of Absolute Quotas Textiles and Textile products Articles of apparel Spun Cotton Cotton card strips made from cotton having a staple length under 1 3/16" and comber waste, lap waste, silver waste and roving waste, whether or not advanced. Fibers of cotton process, but not spun Upland cotton Tariff Rate Quotas Tariff-rate quotas permit a specific quantity of imported merchandise to be entered at a reduced rate of duty during the quota period. There is no limitation on the amount of the quota product that may be imported into the United States at any time, but quantities entered during the quota period in excess of the quota for that period are subject to higher duty rates. Most of the tariff-rate quotas were made by Presidential Proclamation under agreements negotiated under the GATT. Duties at the reduced rates provided for in the President’s proclamation and the HTSUS are assessed on shipments entered under the quota. When the commissioner of Customs determines the quotas nearing fulfillment, Customs field officers are instructed to require the deposit of estimated duties at the over-quota duty rates as of a specified date and to report the time of official acceptance of each entry. When an official determination is made of the date and time that the quota is filled, Customs field officers are authorized to make the required adjustments in the duty rates on that portion of the merchandise entitled to quota preference. Commodities Subject to Tariff Rate Quotas Dairy products Anchovies, satsuma, mandarin oranges, and olives as in Presidential Proclamation 5924 Tuna fish, described in item 1604.14.20 HTSUS Whiskbrooms, wholly or in part of broom corn Other brooms, wholly or in part of broom corn Canadian non-wool apparel, wool apparel, and other textile articles from Canada Sugars, syrups, and molasses described in subheadings 9904.40.20 and 9904.40.60 HTSUS Quotas Administered by Other Agencies Watches & Watch Movements The Departments of Interior and Commerce administer import quotas on watches and watch movements from U.S. insular possessions admissible free of duty under General Note 3(a) (iv) HTSUS, on licensing basis. Information concerning licenses may be obtained from the Statutory Import Programs Staff, International Trade Administration, U.S. Department of Commerce, Washington DC 20230. Dairy Products The Department of Agriculture administers annual import tariff-rate quotas on certain dairy products. With some exceptions (low value personal shipments or small samples sent for testing purposes), these may only be imported under licenses issued by that Department to enable the low rate. Detailed information on the licensing of these products or the conditions under which limited quantities of the products may be imported without licenses, may be obtained from the Dairy Import Group, Foreign Agricultural Service, U.S. Department of Agriculture, Washington, DC 20250. Dairy Products Subject to Licensing to Qualify for the Low Tariff Rates Butter American-type cheese, including Colby, washed curd, and granular cheese and cheese substitutes containing or processed from such American-type cheese Blue mold (except Stilton cheese) cheese and cheese and cheese substitutes containing or processed from Cheddar cheese Cheddar and cheese substitutes containing or processed from Cheddar cheese Cheese and cheese substitutes (except cheese not containing cow’s milk and soft ripened cow’s milk cheese and cheese not over 0.5% by weight of butterfat) Cheese and cheese substitutes containing 0.5% or less by weight of butterfat Eden and Gouda cheese Italian-type cheese, made from cow’s milk in original loaves (Romano made from cow’s milk, Reggiano, Parmesan, Provolone, Provolette, and Sbrinz) Italian-type cheese, not in the original loaves Swiss or Emmenthaler cheese with eye formation; Gruyere-processed cheese; and cheese and cheese substitutes containing or processed from such cheese. Dried cream Dried whole milk Dried skim milk Dried buttermilk and whey Malted milk and compounds or mixtures of or substitutes for milk or cream PBB Consulting Services can assist the foreign exporter in identifying and obtaining the proper documentation. PBB Consulting Services also monitor the TRQ’s and can advise prospective shippers of their prospects of obtaining favorable duty conditions or the possibility of facing high restrictive duties on their goods. § 5.4 U.S. GOODS RETURNED U.S. Goods Returned (USGR) The country of origin of a good is determined by the country of manufacture, not the country of purchase. A Japanese manufactured camera purchased in Canada and then imported into the U. S. is a product of Japan, not a product of Canada. Such a product would be subject to any and all restrictions on products of Japan and would be subject to the same duties as if it had been shipped directly from Japan to the U.S. Goods manufactured in the United States, exported from the United Sates and then returned to the U.S., may be allowed conditionally duty-free treatment on their return to the U.S. This is subject to verification by U.S. Customs of their origin, the circumstances regarding their re-importation, and is at the discretion of the local U.S. Customs Port Director. This is true regardless of whether they are new or used, as long as they have not been advanced in value or improved in condition while abroad (there are other special provisions in the HTS for goods of U.S. origin that are advanced in value of improved in condition while abroad). Customs reserves the right to make the final determination of origin regardless of the value of the goods. Claimed USGR, valued at $10,000, US dollars, or more, will not be released on PBB’s bond. Customers wishing to send USGR as defined above must have their own Customs’ Bond or have a valid Power of Attorney on file with PBB so that a single entry bond can be opened to cover the transaction. The shipment must be accompanied by an AFFIDAVIT OF MANUFACTURE completed by the ACTUAL U.S. MANUFACTURER prior to the release of the shipment. This form cannot be completed or signed by the foreign shipper and will never be completed or signed by PBB. The importance of this document is not only to establish U.S. origin, but to help Customs determine the duty-free status of the goods. Only if the goods were originally exported from the United States without benefit of duty drawback will they be entitled to full duty-free consideration. Otherwise, they will only be duty-free on the portion for which duty drawback was not claimed, If the affidavit is not provided, it will have to be obtained by the release staff prior to release. Providing PBB with a properly completed AFFIDAVIT OF MANUFACTURE will help minimize delays at the border. If you have any questions regarding the dutiable status of claimed USGR, please contact PBB Consultants prior to shipping the goods. Back ©2006 PBB Global Logistics | Privacy Statement | Disclaimer | Site Tree | Contacts