22. Compact of Free Association (FAS)

 

22. Compact of Free Association (FAS)

FAS is a program providing for the duty-free entry of certain merchandise from  designated freely associated states. (U.S. Pub. Law 99-239, Compact of Free Assoc. Act of 1985,  48 USC 1681 note. 59 Stat. 1031 and amended Dec. 17, 2003 by House Jt. Res. 63; U.S. Pub.  Law 180-188) 

The Compact of Free Association between the Federated States of Micronesia and the  United States was initialed by negotiators in 1980 and signed in 1982. The Compact was  approved by the citizens of the FSM in a plebiscite held in 1983. Legislation on the Compact  was adopted by the U.S. Congress in 1986, and signed into law on November 13, 1986. 

Beneficiary Countries 

The following freely associated states have been designated as beneficiary countries for  purposes of the FAS: 

Marshall Islands 

Federated States of Micronesia 

Republic of Palau 

Eligible Items 

The duty-free treatment is applied to most products from the designated beneficiaries. For  commercial shipments requiring formal entry, a claim for duty-free status is made by placing the  letter “Z” next to the eligible subheading. The following merchandise is excluded from the  duty-free exemption: 

• Textile and apparel articles that are subject to textile agreements. 

• Footwear, handbags, luggage, flat goods, work gloves, and leather wearing  apparel that were not eligible for GSP treatment, discussed in Chapter 17, on  April 1, 1984. 

• Watches, clocks, and timing apparatus of Chapter 91 of the Harmonized Tariff  Schedule (except such articles incorporating an opto-electronic display and no  other type of display). 

• Buttons of subheading 9606.21.40 or 9606.29.20 of the Harmonized Tariff  Schedule. 

• Tuna and skipjack, prepared or preserved, not in oil, in airtight containers  weighing with their contents not more than 7 kilograms each, “in excess” of the  consumption quota quantity allowed duty-free entry. 

• Any agricultural product of Chapters 2 through 52 inclusive, that is subject to a  tariff-rate quota, if entered in a quantity in excess of the in-quota quantity for such  products. 

Rules Of Origin 

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

• The merchandise must have been produced in the freely associated state. This  requirement is satisfied when (1) the goods are wholly the growth, product, or  manufacture of the freely associated state, or (2) the goods have been 

substantially transformed into a new or different article of commerce in the freely  associated state. 

• The merchandise must be imported directly from the freely associated state into  the customs territory of the United States. 

• At least 35 percent of the appraised value of the article imported into the  United States must consist of the cost or value of materials produced in the  beneficiary country. In addition, the cost or value of materials produced in the  customs territory of the United States may be counted toward the 35 percent  value-added requirement, but only to a maximum of 15 percent of the appraised  value of the imported article. The cost or value of the materials imported into the  freely associated state 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 and are then used as constituent materials in the production of the  eligible product. 

Sources Of Additional Information 

Address any questions you may have about the administrative or operational aspects of the FAS  to the port director where the merchandise will be entered or to: 

 Director 

 Commercial Compliance Division 

 U.S. Customs and Border Protection 

 Washington, DC 20229. 

 

23. AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA) 

The African Growth and Opportunity Act provides duty-free treatment under the  Generalized System of Preferences (GSP) for certain articles from sub-Saharan African countries  that would normally be excluded from GSP provisions. Enacted May 18, 2000, as Title I of the  Trade and Development Act of 2000 (P.L. 106-200, 114 Stat. 251), AGOA became effective on  October 1, 2000 and was amended by the Trade Act of 2002. The expanded GSP treatment  remains effective through September 30, 2008. 

AGOA also provides for the duty-free, quantity-free entry of specific textile and apparel  articles provided that strict conditions are met. This preferential treatment for eligible textiles  and apparel is subject to certain limitations. 

Non-textile, non-apparel AGOA claims are designated by inserting the symbol “D” in the  “Rates of Duty 1-Special" column of the Harmonized Tariff Schedule for subheadings covering  such articles. Textile and apparel claims are made by entering the appropriate Chapter 98 tariff  number, details of which may be found in subchapter XIX of Chapter 98 of the Harmonized  Tariff Schedule. 

Beneficiary Countries 

 There are three types of beneficiary-country designations under AGOA: 

• Beneficiary sub-Saharan African countries; 

• Lesser-developed beneficiary sub-Saharan African countries; and 

• Beneficiary sub-Saharan African countries eligible for textile/apparel benefits. 

The president will monitor and review annually the current or potential eligibility of sub Saharan African countries to be designated as beneficiary countries. Thus, the list of such  countries may change over the life of the program. Importers should consult General Note 16 of  the latest edition of the Harmonized Tariff Schedule of the United States for the current information on designated countries. 

Countries designated as beneficiary sub-Saharan African countries for AGOA purposes  are listed in General Note 16 of the Harmonized Tariff Schedule. Sub-Saharan African countries  designated as lesser-developed beneficiary countries for AGOA purposes are listed in Chapter  98, subchapter XIX, U.S. Note 2(d), of the Harmonized Tariff Schedule. Countries that have  established visa systems and can import textiles and apparel merchandise for purposes of AGOA  are listed in Chapter 98, subchapter XIX, U.S. Note 1, of the Harmonized Tariff Schedule. 

Eligible Items

Expanded GSP Treatment

The Trade Act of 1974 authorizes the president to provide duty-free treatment under the  GSP to certain articles that would otherwise be excluded from such treatment. A variety of  products have been designated as eligible for duty-free treatment for beneficiary sub-Saharan  African countries, including: 

  • Some watches and clocks, 

• Certain electronics, 

• Certain steel and metals, 

• Certain textiles and wearing apparel, and 

• Certain semi-manufactured and manufactured glass products. 

A complete listing of products eligible for duty-free treatment under AGOA is available  on the Web at www.agoa.gov. The president may extend duty-free treatment to imports of  essentially all products except textiles and apparel, as long as the products: 

• Are the “growth, product or manufacture” of a beneficiary sub-Saharan African  country, 

• Are imported directly from a beneficiary sub-Saharan African country into the  customs territory of the U.S., 

• Meet a value-added requirement, and 

• The president determines that the products are not import-sensitive in the context  of imports from beneficiary sub-Saharan African countries. Sub-Saharan African  beneficiary countries are also exempted from competitive-need limitations. 

Sub-Saharan African beneficiary countries are also exempted from competitive-need  limitations. 

Preferential Treatment for Certain Textile and Apparel Articles 

In order for textile or apparel articles to be eligible for preferential treatment, the  beneficiary sub-Saharan African country must be designated as eligible for textile/apparel  benefits. This designation requires that the United States determine whether the country has satisfied the requirements of AGOA regarding that country's procedures to protect against  unlawful transshipments (including an effective visa system) and the implementation of  procedures and requirements similar in all material respects to the relevant procedures and  requirements under Chapter 5 of the NAFTA. The United States Trade Representative will  publish a Federal Register notice when it designates a country as eligible for preferential  treatment. This information will be available on the Web at www.ustr.gov and at www.agoa.gov

AGOA provides duty-free and quota-free benefits to imports of certain textile and  apparel articles produced in eligible sub-Saharan African countries. In most instances, these  benefits are available regardless of the total volume of apparel exported from eligible countries  to the United States. The six broad categories of textile and apparel articles that may receive  preferential treatment are listed in Chapter 98, subchapter XIX of the Harmonized Tariff  Schedule. 

Additional sources of information 

The entire text of the AGOA agreement is available on the Web at www.agoa.gov.

CBP rules and regulations about AGOA are incorporated in sections 10.211-10.217 of  the CBP Regulations. Additional regulations implementing the GSP provisions are incorporated  in section 10.178 of the CBP Regulations. CBP regulations pertaining to AGOA are also  available on the Web at www.agoa.gov. 

For answers to specific questions or to request a ruling, send inquiries to: 

Director 

National Commodity Specialist Division 

U.S. Customs and Border Protection 

One Penn Plaza, 11th Floor 

New York, NY 10119 

Further information regarding importing procedures is also available on the CBP  Website, cbp.gov/xp/cgov/import/international_agreements/. 

The Office of the United States Trade Representative has prepared an African Growth  and Opportunity Act Implementation Guide available at the AGOA Website, www.agoa.gov.  Questions about AGOA not covered in the guidebook may be directed to: 

Office of African Affairs 

Office of the United States Trade Representative 

600 17^th Street, NW 

Washington, DC 20508 

Tel. 202.395.9514 

Fax: 202.395.4505

 

Additional information on the GSP program is available at the United States Trade  Representative Website, www.ustr.gov, and from the GSP Information Center, Office of the U.S.  Trade Representative, at the above address, tel. 202.395.6971, and in Chapter 17 of this book. 

Information on apparel cap, fabric and yarn not available in commercial quantities, and  on hand-loomed, handmade and folklore articles is available from the Department of Commerce,  Office of Textile and Apparel at otexa.ita.doc.gov.