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 17th 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.