18. Caribbean Basin Initiative (CBI) and the Caribbean Basin Economic Recovery Act (CBERA)

 

18. Caribbean Basin Initiative (CBI) and the Caribbean Basin Economic  Recovery Act (CBERA) 

The Caribbean Basin Initiative (CBI) is a program that allows duty-free entry of certain  merchandise from designated beneficiary countries or territories. This program was enacted by  the United States as the Caribbean Basin Economic Recovery Act, (CBERA) which became  effective January 1, 1984, and has no expiration date. 

Beneficiary Countries 

The following countries and territories have been designated as beneficiary countries for  purposes of the CBI: [printed in two columns] 

Antigua and Barbuda 

Aruba 

Bahamas 

Barbados 

Belize 

Costa Rica 

Dominica 

Dominican Republic 

El Salvador 

Grenada 

Guatemala  

Guyana 

Haiti 

Honduras 

Jamaica 

Montserrat 

Netherlands Antilles 

Nicaragua 

Panama 

Saint Kitts and Nevis 

Saint Lucia 

Saint Vincent and the Grenadines 

Trinidad and Tobago 

Virgin Islands, British 

Eligible Items 

Most products from designated beneficiary countries may be eligible for CBI duty-free  treatment. These items are identified by either an “E” or “E*” in the Special column under  column 1 of the Harmonized Tariff Schedule. Merchandise classifiable under a subheading  designated in this manner may qualify for duty-free entry if imported into the United States  directly from any of the designated countries and territories. 

Merchandise from one or more of these countries, however, may be excluded from time  to time over the life of the program. Also, the list of beneficiary countries may change from time  to time as well. Therefore, importers should consult the latest edition of the Harmonized Tariff  Schedule of the United States for the most up-to-date information on eligible commodities.  General Note 7(a) in the latest edition of the Harmonized Tariff Schedule contains updated  information on the current list of beneficiary countries. 

Claims 

Merchandise will be eligible for CBI duty-free treatment only if the following conditions  are met: 

• The merchandise must have been produced in a beneficiary country. This  requirement is satisfied when: 

1. The goods are wholly the growth, product, or manufacture of a beneficiary  country, or 

2. The goods have been substantially transformed into a new or different article  of commerce in a beneficiary country. 

• The merchandise must be imported directly from any beneficiary country into the  customs territory of the United States. 

• For commercial shipments requiring a formal entry, a claim for preferential tariff  treatment under CBI is made by showing that the country of origin is a designated  beneficiary country and by inserting the letter “E” as a prefix to the applicable  tariff schedule number on CBP Form 7501. 

• At least 35 percent of the imported article’s appraised value must consist of the  cost or value of materials produced in one or more beneficiary countries and/or  the direct costs of processing operations performed in one or more beneficiary  countries. The Commonwealth of Puerto Rico and the U.S. Virgin Islands are  defined as beneficiary countries for purposes of this requirement; therefore, value  attributable to Puerto Rico or to the Virgin Islands may also be counted. The cost  or value of materials produced in the customs territory of the United States other  than Puerto Rico may also be counted toward the 35 percent value-added  requirement, but only to a maximum of 15 percent of the imported article’s  appraised value. 

The cost or value of materials imported into a beneficiary country from a non-beneficiary  country may be included in calculating the 35 percent value-added requirement for an  eligible article if the materials are first substantially transformed into new or different articles  of commerce which are subsequently used as constituent materials in the production of the  eligible article. The phrase “direct costs of processing operations” includes costs directly  incurred or reasonably allocated to the production of the article; for example, the cost of  actual labor, dies, molds, tooling, depreciation of machinery, research and development,  inspection, and testing. Business overhead, administrative expenses and profit, and general  business expenses like casualty and liability insurance, advertising, and salespeople’s  salaries, are not considered direct costs of processing operations. 

CBI II Sections 215 and 222 

In addition to the origin rules enumerated above, the Customs and Trade Act of 1990  added new criteria for duty-free eligibility under the Caribbean Basin Initiative. First, articles  that are the growth, product or manufacture of Puerto Rico and that are subsequently processed  in a CBI beneficiary country may also receive duty-free treatment if the three following  conditions are met: 

• They are imported directly from a beneficiary country into the customs territory of  the United States. 

• They are advanced in value or improved in condition by any means in a beneficiary  country. 

• Any material added to the article in a beneficiary country must be a product of a  beneficiary country or the United States. 

In addition, articles that are assembled or processed in whole from U.S. components or  ingredients (other than water) in a beneficiary country may be entered free of duty. Duty-free  treatment will apply if the components or ingredients are exported directly to the beneficiary  country, and the finished article is imported directly into the customs territory of the  United States. 

Importers and other interested parties may obtain an advance ruling to determine whether  your commodity is eligible for CBI treatment, please see Chapter 13 for details regarding the issuance of administrative rulings. 

Sources Of Additional Information 

CBP rules and regulations regarding CBI are incorporated in sections 10.191-10.198 of  the CBP Regulations. Address any questions you may have about CBI’s administrative or  operational aspects to the port director where the merchandise will be entered, or to: 

Director, Trade Enforcement and Facilitation Division 

U.S. Customs and Border Protection 

1300 Pennsylvania Avenue, NW 

Washington, DC 20229