AMS Proposes 10.2% Increase to Cotton Import Tax

(The Cotton Research and Promotion Tax is the sum of the One-Dollar per Bale Assessment - a flat assessment rate of $0.004409/kg, and the Supplemental Assessment - an annually adjusted per kilogram assessment rate levied at a rate of five-tenths of one percent of the calendar year value of imported cotton (for 2008 it is $0.006471 per kilogram).)

In addition, AMS is proposing to modify the Harmonized Tariff Schedule numbers that are subject to this assessment.

Comments are due on or before May 11, 2009.

Imported Cotton Assessment Would Increase by 10.2%

According to AMS, the proposed rule would only affect importers of cotton and cotton-containing products and would raise the total assessment paid by the importers under the Cotton Research and Promotion Order.

The proposed assessment on imported cotton is $0.01088/kg (from $0.009874/kg, an increase of $0.001006/kg). This represents an approximate 10.2% increase in the assessment.

According to AMS, the proposed increase reflects the increase in the Average Weighted Price of Upland Cotton Received by U.S. farmers during the period January - December 2008.

Certain Importers May Still be Exempt from Assessments

AMS states that importers with line-items appearing on U.S. Customs and Border Protection (CBP) documentation with value of the imported cotton contained therein results of an assessment of two dollars ($2.00) or less will continue to not be subject to assessments.

In addition, imported products containing cotton may continue to be exempt from assessment if the cotton content of products is U.S. produced, cotton other than Upland, or imported products that are eligible to be labeled as 100% organic under the National Organic Program (7 CFR Part 205) that is not the product of a split operation.

Proposed Revised Cotton Assessment Table for Imports

AMS' proposed rule also contains a proposed revision to the import assessment table (found in 1205.510(b)(3)). (This table lists the 10-digit HTS numbers subject to the cotton assessment; the conversion factor for each such HTS number, and the resulting converted proposed assessment rate for each such HTS number, expressed in cents/kg.)

On November 19, 2008, AMS issued a final rule which removed HTS statistical reporting numbers from 7 CFR 1205.510(b)(3) that were no longer in the International Trade Commission official HTS, and has worked with ITC to identify the new corresponding HTS statistical reporting numbers that ITC is using in the 2009 HTS.

In many instances, the number is a replacement of a previous number and has no impact on the physical properties or cotton content of the product involved. In other instances, the HTS statistical reporting numbers were expanded and are now represented by two HTS statistical reporting numbers:

In addition, AMS is proposing the following changes in order to align the table with the 2009 HTS. AMS notes that the new proposed numbers corresponds with the same ITC category, but with the amended number as it appears in ITC's HTS:

(See ITT's Online Archives or 11/20/08 news, 08112025, for BP summary of AMS increase to the cotton import tax in 2008, and the removal of certain tariff numbers.)

- comments due by 05/11/09

AMS contact - Shethir Riva (202) 720-6603

AMS Proposed Rule (D/N AMS-CN-09-0015; CN-09-002, FR Pub 04/10/09) available at http://edocket.access.gpo.gov/2009/pdf/E9-8175.pdf

USDA press release on increase (dated 04/08/09) available at http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateU&navID=&page=Newsroom&resultType=Details&dDocName=STELPRDC5076134&dID=110419&wf=false&description=USDAProposesAmendmentstoCottonImporterAssessmentProvisions&topNav=Newsroom&