COMMITTEE FOR THE IMPLEMENTATION OF TEXTILE AGREEMENTS

Implementation and Enforcement of the Outward Processing Program for Textiles and Apparel

December 8, 1999.

AGENCY: Committee for the Implementation of Textile Agreements (CITA).


ACTION: Issuing a directive to the Commissioner of Customs setting forth the requirements for participation in the Outward Processing Program.

SUMMARY: This notice sets forth the requirements for participating in the Outward Processing Program for textiles and apparel. Under the Outward Processing Program, textile products will not be subject to quantitative restrictions upon importation into the United States if they either (a) are assembled in a participating country of fabrics formed and cut in the United States or (b) are cut and assembled in a participating country of fabric formed in the United States. Products exported on or after January 1, 2000 may be imported pursuant to the Outward Processing Program.

EFFECTIVE DATE: January 1, 2000


FOR FURTHER INFORMATION CONTACT: Brian F. Fennessy, International Trade Specialist, Office of Textiles and Apparel, U.S. Department of Commerce.
(202) 482-3400.


SUPPLEMENTARY INFORMATION:


Authority: Section 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854); Executive Order 11651 of March 2, 1972, as amended.


On September 10, 1999 the Government of the United States and the Government of Romania signed a Memorandum of Understanding providing for an Outward Processing Program for certain wool apparel products. On September 17, 1999, the Government of the U.S. and the Government of the Former Yugoslav Republic of Macedonia signed a Memorandum of Understanding providing for an Outward Processing Program for certain wool apparel products.

Pursuant to these agreements, products that qualify for Outward Processing Program treatment will not be subject to quantitative restrictions. However, products that qualify for Outward Processing Program treatment must be certified by the participating government and will be monitored by the U.S. Customs Service. Each shipment must be certified by the placing of the original square-shaped stamped marking in blue ink on the front of the commercial invoice.

Outward Processing Program treatment is available for qualifying wool apparel products exported on or after January 1, 2000. Future Federal Register notices will indicate qualifying products eligible for the Outward Processing Program.

General Requirements; Qualifying Products

In order to qualify for Outward Processing Program treatment, qualifying wool apparel products must meet the following requirements:

(1)the product must be either manufactured from fabric that is both cut and assembled in a participating country, or from fabric which is cut in the United States and assembled in a participating country. The product may be partially cut or partially assembled in either country, but all assembly and cutting operations must be performed in either the participating country or the United States. A participating country is a country with which the United States has entered into a bilateral agreement regarding the Outward Processing Program;

(2)the product must be assembled or manufactured (that is, both cut and assembled) from fabric which is formed in the United States; i.e., all fabric components of the product must be U.S. formed. This requirement applies to all textile components of the product, including linings and pocketing, except as provided in (4) below. Greige goods imported into, and then finished in, the United States are not considered fabric formed in the United States. Fabric that is woven or knitted in the United States from yarn is considered U.S. formed;

(3)the importer of the qualifying wool apparel product and the exporter of the U.S. formed fabric or the component parts must be the same entity or person;

(4)findings and trimmings of non-U.S. origin may be incorporated into the product, provided they do not exceed 25 percent of the cost of the fabric in the product. Findings and trimmings include sewing thread, hooks and eyes, snaps, buttons, ``bow buds,'' decorative lace trim, zippers, including zipper tapes, and labels;

(5)upon entry into the United States, the product must be classified under a subheading of heading 9802 of the Harmonized Tariff Schedule of the United States (HTS) created to capture such trade (9802.00.8016) or qualify for the special ``S'' prefix indicating the item was produced with U.S. formed fabric.

Nothing in these requirements precludes performing any operation in the United States.

Record keeping Requirements

The following documents shall be maintained and made available for review by the U.S. Customs Service and CITA:

(1)entry documents made during the quarter;

(2)design style costing sheets or similar documents providing a complete description of the assembled products;

(3)cutting tickets (if the fabric is cut in the United States), including the name and location of the cutting facility for those entries;

(4)mill invoices, including the name of the mill where the fabric was formed. If the fabric was purchased from a third party, the participant is responsible for obtaining the mill invoice. The participant must also obtain a signed statement from a principal at the mill that the fabric is of U.S. origin. This can be stated directly on the invoice or on a separate document that relates to each specific shipment of fabric. Vertically integrated participants, i.e., participants that both form and cut fabric, must retain an internal transfer document or other documentary proof that they formed the fabric in the United States;

(5)transportation documents if fabric is cut in the United States (mill to cutting facility; cutting facility to border/assembler); and

(6)export documentation.

The above documents shall be maintained by calendar quarter, by country, and by category; and shall be retained for three years from the date of the exportation of the U.S. formed fabric or U.S. formed and cut fabric. The documents shall be organized and filed (preferably in a single location) to facilitate U.S. Customs' review.

Enforcement Procedures and Penalties

The U.S. Customs Service shall monitor all shipments entered pursuant to the Outward Processing Program.
In order to ensure that participants in the Outward Processing Program comply fully with the requirements set forth in this notice, Customs will conduct Post Entry Compliance reviews. These reviews will be conducted for entries made for the first quarter of 2000 and shall continue for each successive quarter. During the course of such review, the participant must provide Customs officials with evidence, through the documents described above, that all products entered under the Outward Processing Program qualify for Outward Processing Program treatment.

False or inaccurate representations made in the context of the Outward Processing Program may result in liability under U.S. laws prohibiting false or misleading statements, including 18 U.S.C. 1001 and 19 U.S.C. 1592. Moreover, participants may be suspended from participation in the Outward Processing Program for such representations, for failing to abide by the Outward Processing Program's record keeping requirements, or for otherwise violating the terms of the Program.

In the event of credible evidence that a participant has violated the terms of the Outward Processing Program, the Chairman of CITA will notify the participant in writing of the alleged violation. The participant will have 30 days to respond and/or request a meeting with CITA representatives to discuss the alleged violation. After reviewing the evidence and the participant's response, CITA will determine whether a violation occurred and what penalty, if any, is appropriate. Penalties may include temporary or permanent suspension from participation in the Outward Processing Program. In determining the appropriate penalty, CITA will consider all relevant factors, including the seriousness of the violation, previous violations by the participant, the experience of the participant with the Outward Processing Program, and the steps taken by the participant to prevent future violations.

CITA has determined that this action falls within the foreign affairs exception to the rulemaking provisions
of 5 U.S.C. 553(a)(1).

Troy H. Cribb,
Chairman, Committee for the Implementation of Textile Agreements.



Committee for the Implementation of Textile Agreements
December 8, 1999.

Commissioner of Customs
Department of Treasury, Washington, DC 20229


Dear Commissioner: This directive sets forth the requirements for participation in the Outward Processing Program for textiles and apparel and provides for enforcement procedures to ensure that these requirements are met.

Effective on January 1, 2000, no quantitative restrictions shall apply to qualifying textile products which are exported from a participating country to the United States under the Outward Processing Program for textiles and apparel. However, products that qualify for Outward Processing Program treatment must be certified by the participating government and shall be monitored by the U.S. Customs Service. Each shipment must be certified by the placement of the original square-shaped stamped marking in blue ink on the front of the commercial invoice. Qualifying products must be either manufactured (that is, both cut and assembled) in a participating country or cut in the United States and assembled in a participating country and must be assembled or manufactured (that is, both cut and assembled) from fabric formed in the United States.

General Requirements; Qualifying Products

In order to qualify for Outward Processing Program treatment, qualifying wool apparel products must meet the following requirements:

(1)the product must be either manufactured from fabric that is both cut and assembled in a participating country, or from fabric which is cut in the United States and assembled in a participating country. A participating country is a country with which the United States has entered into a bilateral agreement regarding the Outward Processing Program;

(2)the product must be assembled or manufactured (that is, both cut and assembled) from fabric which is formed in the United States; i.e., all fabric components of the product must be U.S. formed. This requirement applies to all textile components of the product, including linings and pocketing except as provided in (4) below. Greige goods imported into, and then finished in, the United States are not considered fabric formed in the United States. Fabric that is woven or knitted in the United States from yarn is considered U.S. formed;

(3)the importer of the qualifying wool apparel product and the exporter of the U.S. formed fabric or its component parts must be the same entity or person;

(4)findings and trimmings of non-U.S. origin may be incorporated into the product provided they do not exceed 25 percent of the cost of the fabric in the product. Findings and trimmings include sewing thread, hooks and eyes, snaps, buttons, ``bow buds,'' decorative lace trim, zippers, including zipper tapes, and labels;

(5)upon entry into the United States, the product must be classified under a subheading of heading 9802 of the Harmonized Tariff Schedule of the United States (HTS) created to capture such trade (9802.00.8016) or qualify for the special ``S'' prefix indicating the item was produced with U.S. formed fabric.

Nothing in these requirements precludes performing any operation in the United States.

Record keeping Requirements

Participants are required to retain the following documents for review by Customs:

(1)entry documents made during the quarter;

(2)design style costing sheets or similar documents providing a complete description of the assembled products;

(3)cutting tickets (if the fabric is cut in the United States) including the name and location of the cutting facility for those entries;

(4)mill invoices, including the name of the mill where the fabric was formed. If the fabric was purchased from a third party, the participant is responsible for obtaining the mill invoice. The participant must also obtain a signed statement from a principal at the mill that the fabric is of U.S. origin. This can be stated directly on the invoice or on a separate document that relates to each specific shipment of fabric. Vertically integrated participants, i.e., participants that both for and cut fabric must retain an internal transfer document or other documentary proof that they formed the fabric in the United States;

(5)transportation documents if fabric is cut in the United States (mill to cutting facility; cutting facility to border/assembler); and

(6)export documentation.

The participant is obligated to maintain the above documents by calendar quarter, by country, and by category, and must retain them for three years from the date of the exportation of the U.S. formed fabric or U.S. formed and cut fabric. The documents must be organized and filed (preferably in a single location) to facilitate U.S. customs review.

Enforcement Procedures and Penalties

All shipments entered pursuant to the Outward Processing Program shall be monitored. To facilitate the implementation and enforcement of the Outward Processing Program, Customs is directed to require entry/entrysummary procedures for all imports for consumption and withdrawals from warehouse for consumption under the Outward Processing Program.

In order to determine that participants in the Outward Processing Program comply fully with the requirements set forth in this notice, Customs will conduct Post Entry Compliance reviews. These reviews will be conducted for entries made for the first quarter of 2000 and shall continue for each successive quarter. During the course of such review, the participant must provide Customs officials with evidence, through the documents described above, that all products entered under the Outward Processing Program qualify for Outward Processing Program treatment. Customs shall inform CITA of any violations of the program.

The Committee for the Implementation of Textile Agreements has determined that this action falls within the foreign affairs exception to the rulemaking provisions
of 5 U.S.C. 553(a)(1).

Sincerely,

Troy H. Cribb,
Chairman, Committee for the Implementation of Textile Agreements
[FR Doc. 99-0000 Filed 0-00-99; 8:45 am]
BILLING CODE 3510-DR-F