CBP Issues Implementation Instructions on Filing & Acceptance of Claims Under DR-CAFTA (Part III)

To date, the President has declared that the DR-CAFTA will be in effect and implemented for El Salvador only. Therefore, for purposes of these instructions, CBP states that reference to a DR-CAFTA country is the U.S. and El Salvador. The DR-CAFTA took effect for El Salvador on March 1, 2006.

This is Part III of a multi-part series of summaries of this memorandum, and highlights, amendments to made by the DR-CAFTA Implementation Act (Act) to the Caribbean Basin Economic Recovery Act (CBERA) and the Caribbean Basin Trade Partnership Act (CBTPA), instructions for correcting DR-CAFTA claims, post-importation claims, etc.. See future issues of ITT for additional summaries. See ITT's Online Archives or 03/08/06 and 03/09/06 news, 06030805 and 06030920, for Parts I & II of BP summary of CBP's memorandum.)

Amendments to CBERA and CBTPA

DR-CAFTA countries are "former beneficiary countries." According to CBP, Section 402 of the Act amended Sections 212 and 213 of the CBERA by striking the DR-CAFTA countries from the list of beneficiary countries. The amendments also define a "former [CBERA] beneficiary country" and a "former CBTPA beneficiary country" as those that are no longer eligible for CBERA/CBTPA benefits as a result of entering into an FTA with the U.S. For purposes of the implementation of the DR-CAFTA, CBP explains that a former beneficiary country and a former CBTPA beneficiary country refer to the DR-CAFTA countries that have implemented the Agreement.

Some cost/value of materials from former beneficiary countries, Virgin Islands, P.R. can count toward CBERA value added requirements. In addition, CBERA was also amended to allow the cost or value of materials produced in the territory of the U.S. Virgin Islands, Puerto Rico, and "former beneficiary countries" to be counted towards meeting the 35% value added requirement. CBERA still allows for up to 15% be attributed to the cost or value of materials produced in the territory of the U.S. (other than the U.S. Virgin Islands and Puerto Rico).

Inputs and processing from former beneficiary countries may count towards CBTPA requirements. DR-CAFTA also amended the CBTPA by allowing the remaining CBTPA beneficiary countries to continue to use inputs of, or processing performed in, former CBTPA beneficiary countries in order for a good to be eligible for CBTPA benefits. The amendment provides that a "former CBTPA beneficiary country" will be considered a CBTPA beneficiary country for purposes of determining the eligibility for preferential treatment under CBTPA.

Origin conferring activities must occur in current CBTPA beneficiary countries. CBP states that this amendment allows for inputs of, and processing in, current DR-CAFTA countries to count towards a good meeting the preference rules under CBTPA. However, in order for a good to receive preferential treatment under CBTPA, the origin conferring activity must occur in a current CBTPA beneficiary country.

CBTPA goods may be shipped from DR-CAFTA country. Currently, the CBERA/CBTPA requires a good to be imported directly from a beneficiary country in order to receive CBTPA preferential treatment. Section 402 of the Implementing Act provides that a good will not be disqualified from CBTPA treatment because it is imported directly from a former CBTPA beneficiary country. Goods of current CBTPA beneficiary countries may be shipped from a current DR-CAFTA country and still claim preference under CBTPA.

Country of origin limitation for goods of former CBTPA beneficiary countries (exception will be made for Haiti & Dominican Republic). CBP further states that the amendments also provide for a country of origin limitation in that if a good is a good of a former CBTPA beneficiary country under the non-preferential rules of origin found in 19 CFR 102 (marking rules), then the good is not eligible for CBTPA preferential treatment. An exception to this limitation is afforded to goods that are co-produced in Haiti and the Dominican Republic. Under this exception, a good may receive preferential treatment under CBTPA when origin-conferring activities, such as production, take place in the Dominican Republic so long as the good undergoes processing in Haiti. This exception will take effect when Dominican Republic implements the Agreement.

Correction of DR-CAFTA Claims

Incorrect declarations must be corrected promptly. According to CBP, an importer is required to promptly make a corrected declaration if the importer has reason to believe the declaration was based on incorrect information. The importer is required to submit corrections and pay any additional duties and merchandise processing fee (MPF) within 30 days from the date the error was discovered.

Penalties not assessed for prompt, voluntary corrections. CBP notes that penalties will not be assessed for promptly and voluntarily declaring that imported goods were not originating according to the rules of origin, provided the importer complies with the requirements set forth in 19 CFR 162.74 and did not engage in negligence, gross negligence, or fraud.

Post-Importation Claims

Requirements for post-importation claims. CBP states that if a claim for preference was not made at the time of importation and the goods were originating, the DR-CAFTA permits importers to make post-importation claims for preferential tariff treatment and request a refund of excess duties and/or MPF. The importer may make a post-importation claim no later than one year after the date of importation and must comply with the requirements of 19 USC 1520(d). The importer shall submit a claim in writing to the port where the goods were entered which must include:

A written declaration stating that the good qualified as an originating good at the time of importation and the number and date of the entry or entries covering the good;

A copy of a certification or supporting documentation containing the required data elements of Attachment A of CBP's Memorandum demonstrating that the goods qualified as originating on the day of importation;

A statement indicating whether the entry summary or equivalent documentation was provided to any other person;

A statement indicating whether a protest, petition or request for reliquidation has been filed relating to the good and identification of such filing(s).

If CBP determines that a certification or other information containing the required data elements is illegible, defective or has not been completed in accordance with the requirements, the importer shall be granted no less than five working days to submit a corrected certification. Failure to provide a corrected certification or other information shall result in denial of the post-importation claim.

In addition, CBP shall deny a claim that was not filed timely, or that was based on an invalid certification, or other information. A claim can also be denied following an origin verification if CBP makes a negative determination based on findings discovered during the verification.

(CBP adds that 19 CFR will be amended to implement the DR-CAFTA and the DR-CAFTA Implementation Act. As such, the instructions contained in this memorandum are subject to change once the regulations are issued.)

(See ITT's Online Archives or 03/03/06 news, 06030305, for BP summary of a CBP notice announcing the temporary non-ABI requirement (see Part I of this series of summaries for additional discussion), and removal of El Salvador's GSP, CBTPA, and CBERA benefits due to implementation of the DR-CAFTA for that country. See ITT's Online Archives or 03/02/06 news, 06030200, for Part I of a multi-part series of BP summaries on Proclamation 7987 implementing the DR-CAFTA.)

CBP Memorandum, including Attachment A (dated 03/03/06) available at http://www.cbp.gov/linkhandler/cgov/import/international_agreements/free_trade/dominican_republic/us_dominican.ctt/us_dominican.doc

BP Note

The DR-CAFTA is also referred to as "CAFTA-DR"