Details of Interim Rule on the U.S.-Oman FTA

Comments on the interim rule are due by March 7, 2011.

(In December 2008, President Bush issued Proclamation 8332 which modified the Harmonized Tariff Schedule (HTS) to implement the tariff provisions of the OFTA, for qualifying goods entered or withdrawn from warehouse for consumption on or after January 1, 2009. CBP is issuing this interim rule as certain customs-related OFTA provisions require amendments to its regulations. See ITT’s Online Archives or 01/06/11 news, 11010629, for previous BP summary announcing the interim rule.)

Entry Summary Claim and Declaration

Making a Claim for OFTA Treatment

An importer may make a claim for OFTA preferential tariff treatment for an originating good by including on the entry summary or equivalent documentation the symbol ''OM'' as a prefix to the HTS subheading under which each qualifying good is classified, or by the method specified for equivalent reporting via an authorized electronic data interchange system.

Declaration upon Request by CBP

At the request of the port director, an importer who claims OFTA preferential tariff treatment must submit a declaration setting forth all pertinent information concerning the production or manufacture of the good.

Required information. The declaration submitted to CBP has no prescribed format but must be in writing or transmitted electronically pursuant to any electronic means authorized by CBP for that purpose. It must include certain information, including (partial list):

1) information identifying the: (i) importer of record or responsible official or authorized agent of the importer signing the declaration (if different from the importer of record); (ii) the producer (if known); and (iii) the exporter (if different from the producer);

2) description of the good, including quantity, numbers, invoice numbers, and bills of lading;

3) description of the operations performed in the growth, production, or manufacture of the good in Oman and/or or the U.S. and where applicable, identification of the direct costs of processing operations;

4) description of any materials used in the growth, production, or manufacture of the good that are wholly the growth, product, or manufacture of Oman and/or the U.S. and a statement as to the value of such materials;

5) description of the operations performed on, and a statement as to the origin and value of, any materials used in the article that are claimed to have been sufficiently processed in Oman and/or the U.S. so as to be materials produced in Oman and/or the U.S, or are claimed to have undergone an applicable change in tariff classification specified in HTS General Note 31(h);

6) description of the origin and value of any foreign materials used in the good that have not been substantially transformed in Oman or have not undergone an applicable change in tariff classification; and

7) statement certifying the truth and accuracy of the declaration.

Signature. The declaration must be signed and dated by a responsible official of the importer or by the importer's authorized agent having knowledge of the relevant facts.

Single and multiple shipments. The declaration may be applicable to: (1) a single importation of a good into the U.S., including a single shipment that results in the filing of one or more entries and a series of shipments that results in the filing of one entry; or (2) multiple importations of identical goods into the U.S. that occur within a specified blanket period, not exceeding 12 months.

Confidential info. CBP will allow for the direct submission by the exporter or producer of business confidential or other sensitive information, including cost and sourcing information. However importers are responsible for certifying that the good is eligible for preferential tariff treatment under OFTA, for submitting any supporting documents requested by CBP, and for the truthfulness of the information contained in the declaration and other supporting documents.

Non-commercial/low-value imports. Importers will not be required to submit a declaration for either non-commercial importations of goods or for commercial importations for which the value of the originating goods does not exceed $2,500 unless the port director determines that such importation may reasonably be considered to have been carried out or planned for the purpose of evading compliance with the rules and procedures governing claims for preference under the OFTA.

Recordkeeping. An importer claiming OFTA preferential tariff treatment for a good imported into the U.S. must maintain all records and documents necessary for the preparation of the declaration for five years after the date of the claim for preferential tariff treatment.

Originating and Non-Originating Goods

3 Categories of Originating Goods Under OFTA

A good will be considered originating under the OFTA when imported directly¹ from the territory of a Party into the territory of the other Party only if the good is:

1) wholly the growth, product, or manufacture of Oman and/or the U.S.;

2) a new or different article of commerce,² that has been grown, produced, or manufactured in Oman and/or the U.S., is provided for in an HTS heading or subheading that is not covered by the product-specific rules set forth in HTS General Note 31(h) and meets a 35% value-content requirement³; or

3) is provided for in an HTS heading or subheading covered by the product-specific rules set forth in HTS General Note 31(h) and: (i)(A) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in General Note 31(h), as a result of production occurring entirely in the territory of one or both of the Parties; or (B) the good otherwise satisfies the requirements specified in General Note 31(h); and (ii) the good meets any other requirements specified in General Note 31.

Indirect materials. Indirect materials (i.e. materials that are part of growth or manufacture but are not incorporated into a product such as tools, molds, fuels, lubricants, safety equipment, etc.) are to be disregarded in determining whether a good qualifies as an originating good, except that the cost of such indirect materials may be included in meeting the value-content requirement³ discussed above.

Accumulation. An originating good or material produced in Oman and/or the U.S. that is incorporated into a good in the territory of the other Party will be considered to originate in the territory of the other Party. A good that is grown, produced, or manufactured in the territory of Oman and/or the U.S. by one or more producers is an originating good if the good satisfies the requirements of 19 CFR 10.873 (on OFTA originating goods) and all other applicable requirements of HTS General Note 31.

De Minimis and Special Origin Rules for Apparel

The interim rule sets forth the following de minimis and special origin rules for apparel:

7% non-originating fiber/yarn allowance. Textile or apparel good which is not originating under the OFTA 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 HTS General Note 31(h) can still be considered to be an originating good if the total weight of all such fibers or yarns is not more than seven percent of the total weight of that component.

However, a textile or apparel good containing elastomeric yarns in the component of the good that determines the tariff classification of the good will be considered to be an originating good only if such yarns are wholly formed in Oman or the U.S.

10% non-originating value allowance for sets.Notwithstanding the specific rules specified in HTS General Note 31(h), textile or apparel goods classifiable as goods put up in sets for retail sale as provided for in HTS General Rule of Interpretation 3, will not be considered to be originating goods under the OFTA 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 ten percent of the appraised value of the set.

TPL for Certain Non-Originating Apparel

Certain cotton or man-made fiber apparel goods (described below) that do not qualify as an originating good under 19 CFR 10.873 of the interim rule may nevertheless be entitled to preferential tariff treatment under the OFTA under an applicable tariff preference level (TPL).

Eligible cotton, MMF apparel. Goods eligible for the OFTA TPL are cotton or man-made fiber apparel goods provided for in HTS Chapters 61 or 62 that are cut or knit to shape, or both, and sewn or otherwise assembled in the territory of Oman from fabric or yarn produced or obtained outside the territory of Oman or the U.S.

Claims. To make a TPL claim, the importer must include on the entry summary, or equivalent documentation, the applicable subheading in HTS Chapter 99 (9916.99.20) immediately above the applicable subheading in HTS Chapter 61 or Chapter 62 underwhich each non-originating cotton or manmade fiber apparel good is classified.

Declaration. An importer who claims preferential tariff treatment on a non-originating cotton or man-made fiber good under the TPL must submit, at the request of the port director, a declaration supporting such a claim for preferential tariff treatment that sets forth all pertinent information concerning the production of the good, including a: (1) description of the good, quantity, invoice numbers, and bills of lading; (2) description of the operations performed in the production of the good in the territory of Oman and/or the U.S.; and (3) a statement as to any yarn or fabric of a third-party and the origin of such materials used in the production of the good.

Recordkeeping. An importer must retain all documents relied upon to prepare the declaration for a period of five years.

CBP Origin Verifications and Determinations

A claim for preferential tariff treatment made under the OFTA, including any declaration or other information submitted to CBP in support of the claim, will be subject to verification as the port director deems necessary. In the event that the port director for any reason is prevented from verifying the claim or is provided with insufficient information to verify or substantiate the claim, the port director may deny the claim for preferential tariff treatment.

If, as a result of an origin verification, CBP determines that a claim for preferential tariff treatment should be denied, it will issue a determination in writing or via an authorized electronic data interchange system to the importer that describes the good that was the subject of the verification together with the identifying numbers and dates of the export and import documents pertaining to the good, along with CBP’s findings of fact and basis for its determination.

Noncompliance, Denial of Preferential Treatment, Penalties

Noncompliance May Result in Denial of OFTA Preferential Tariff Treatment

If the importer fails to comply with any requirement under new Subpart P including submission of a complete declaration when requested, the port director may deny preferential tariff treatment to the imported good.

The port director may also deny preferential treatment to a good if the good is shipped through or transshipped in a country other than Oman or the U.S., and the importer of the good does not provide, at the request of the port director, evidence demonstrating to the satisfaction of the port director that the good was "imported directly" (e.g. bills of lading, airway bills, packing lists, commercial invoices, receiving and inventory records, customs entry and exit documents, etc.)

Penalties. All criminal, civil, or administrative penalties which may be imposed upon importers or other parties for violations of the U.S. customs or related laws or regulations will also apply to importations subject to the OFTA.

¹“Imported directly” means: (1) Direct shipment from the territory of Oman or the U.S. into the territory of the other Party without passing through the territory of a non-Party; or (2) If the shipment passed through the territory of a non-Party, the good, upon arrival in the territory of Oman or the U.S., will be considered to be ‘‘imported directly’’ only if the good did not undergo production, manufacturing, or any other operation outside the territories of the Parties, other than unloading, reloading, or any other operation necessary to preserve the good in good condition or to transport the good to the territory of a Party. Operations that may be performed outside the territories of Oman or the U.S. include inspection, removal of dust that accumulates during shipment, ventilation, spreading out or drying, chilling, replacing salt, sulfur dioxide, or aqueous solutions, replacing damaged packing materials and containers, and removal of units of the good that are spoiled or damaged and present a danger to the remaining units of the good, or to transport the good to the territory of a Party.

²“New or different article of commerce” means, except for simple combining, packaging or mere dilution of a product (which is not considered to result in a new or different article of commerce), a good that: (1) Has been substantially transformed from a good or material that is not wholly the growth, product, or manufacture of one of both of the Parties; and(2) Has a new name, character, or use distinct from the good or material from which it was transformed.

In addition, goods may not be considered “new or different articles of commerce” (OFTA originating goods) by virtue of merely having undergone simple combining or packaging operations, or mere dilution with water or another substance that does not materially alter the characteristics of the good, as set forth in 19 CFR 10.195(a)(2) (country of origin criteria related to combining, packaging and diluting operations).

³A good will be considered an originating good under this scenario only if the sum of the value of materials produced in Oman and/or the U.S., plus the direct costs of processing operations performed in Oman and/or the U.S., is not less than 35% of the appraised value of the good at the time the good is entered into the territory of the U.S. (See the interim rule for information on determining cost or value of materials, etc.)

(See ITT's Online Archives or 01/15/09 news, 09011520, for BP summary of Proclamation 8322 which modified the HTS for the OFTA.

See ITT’s Online Archives or 01/16/09 news, 09011630, for BP summary of CBP instructions for filing claims under the OFTA.

See ITT’s Online Archives or 02/11/09 news, 09021125, for BP summary of CBP issuing the ABI system requirements for filing OFTA claims.

See ITT’s Online Archives or 02/12/09 news, 09021225, for BP summary of CBP announcing the 2009 OFTA TPL for certain cotton, MMF apparel.)

(FR Pub 01/06/11, D/N USCBP-2010-0041)