[Federal Register Volume 63, Number 186 (Friday, September 25, 1998)]
[Rules and Regulations]
[Pages 51291-51296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25722]


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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 10 and 178

[T.D. 98-76]
RIN 1515-AB59


Andean Trade Preference

AGENCY: Customs Service, Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule, without any changes, 
proposed amendments to the Customs Regulations to implement the duty 
preference provisions of the Andean Trade Preference Act (the Act). The 
final regulatory texts set forth the country of origin and related 
rules which apply for purposes of duty-free or reduced-duty treatment 
on imported goods under the Act and specify the documentary and other 
procedural requirements which apply to any claim for such preferential 
tariff treatment under the Act.

EFFECTIVE DATE: October 26, 1998.

FOR FURTHER INFORMATION CONTACT: Operational Aspects: Tony Mazzoccoli, 
Office of Field Operations (202-927-0564). Legal Aspects: Craig Walker, 
Office of Regulations and Rulings (202-927-1116).

SUPPLEMENTARY INFORMATION:

Background

    On December 4, 1991, President Bush signed into law the Andean 
Trade Preference Act (Pub. L. 102-182, Title II, Sections 201-206, 105 
Stat. 1236-1244) (``the Act'', commonly referred to as the ATPA), the 
provisions of which are codified at 19 U.S.C. 3201 through 3206. 
Sections 202 and 204(c) of the Act (19 U.S.C. 3201 and 3203(c)) 
authorize the President to proclaim duty-free treatment for all 
eligible articles, and duty reductions for certain other goods, from 
any country designated by the President as a beneficiary country 
pursuant to section 203 of the Act (19 U.S.C. 3202). On July 2, 1992, 
President Bush signed Proclamation 6455 (57 FR 30069) which (1) 
proclaimed the duty treatment authorized by the Act, (2) designated 
Colombia as a beneficiary country for purposes of the Act, and (3) 
modified the Harmonized Tariff Schedule of the United States (HTSUS) to 
incorporate the substance of the relevant provisions of the Act; under 
the terms of the proclamation, the proclaimed duty treatment was 
effective with respect to articles entered, or withdrawn from warehouse 
for consumption, on or after July 22, 1992. On the same date President 
Bush signed Proclamation 6456 (57 FR 30097) designating Bolivia as a 
beneficiary country for purposes of the Act, similarly effective July 
22, 1992. On April 13, 1993, President Clinton signed Proclamation 6544 
(58 FR 19547) which, among other things, designated Ecuador as a 
beneficiary country for purposes of the Act, effective April 30, 1993. 
On August 11, 1993, President Clinton signed Proclamation 6585 (58 FR 
43239) designating Peru as a beneficiary country for purposes of the 
Act, effective August 26, 1993. The modifications to the HTSUS 
contained in Proclamation 6455 setting forth the substance of the 
relevant provisions of the Act are now contained in General Note 11, 
HTSUS, and eligible articles and other goods to which preferential duty 
treatment under the Act applies are identified within the HTSUS by the 
designation ``J'' appearing with or without an asterisk in the 
``Special'' rate of duty subcolumn.
    Sections 204(a)-(c) of the Act (19 U.S.C. 3203(a)-(c)) set forth 
the standards which govern the eligibility of articles for duty-free or 
reduced-duty treatment under the Act. Section 204(a), which contains 
the basic origin and related rules for purposes of duty-free treatment, 
was based on section 213(a) of the Caribbean Basin Economic Recovery 
Act, as amended (19 U.S.C. 2703(a)), which sets forth the origin and 
related rules governing duty-free treatment under the Caribbean Basin 
Initiative (CBI). Thus, in order to be eligible for duty-free treatment 
under the Act, an article imported from a designated beneficiary 
country must meet three basic requirements: (1) it must be imported 
directly from a beneficiary country into the customs territory of the 
United States; (2) it must have its origin in a beneficiary country, 
that is, it either must be wholly the growth, product, or manufacture 
of a beneficiary country or must be a new or different article of 
commerce that has been grown, produced, or manufactured in a 
beneficiary country; and (3) it must have a minimum domestic value 
content, that is, at least 35 percent of its appraised value must be 
attributed to the sum of the cost or value of materials produced in one 
or more beneficiary countries plus the direct costs of processing 
operations performed in one or more beneficiary countries. The 
provisions of section 204(a) of the Act further parallel the provisions 
of section 213(a) of the CBI statute in the following regards: (1) 
simple combining or packaging operations or mere dilution with water or 
another substance does not confer beneficiary country origin on an 
imported article or on a constituent material of an imported article; 
(2) the term ``beneficiary country'' is defined as including the 
Commonwealth of Puerto Rico and the U.S. Virgin Islands for purposes of 
determining compliance with the 35 percent value content requirement; 
(3) the cost or value of materials produced in the customs territory of 
the United States (other than in Puerto Rico) may be counted toward the 
35 percent value content requirement to a maximum of 15 percent of the 
appraised value of the imported article; and (4) the expression 
``direct costs of processing operations'' is defined in the same 
manner. However, the origin and related rules of section 204(a) of the 
Act differ from the corresponding provisions in section 213(a) of the 
CBI statute in two principal respects: (1) section 204(a) of the Act 
specifically allows input attributable to one or more CBI beneficiary 
countries for purposes of the 35 percent value content requirement (the 
corresponding CBI statutory provision makes no mention of input 
attributable to beneficiary countries under the Act); and (2) section 
204(a) of the Act has no provision corresponding to section 213(a)(4) 
of the CBI statute which was added to facilitate the addition of value 
to an article in Puerto Rico and the granting of duty-free treatment 
after final exportation of an article from a CBI beneficiary country. 
Section 204(b) of the Act lists eight categories of goods excluded from 
the duty-free treatment provided for in section 204(a), one of which 
refers to articles to which reduced rates of duty apply under section 
204(c) of the Act. Section 204(c) directs the President to proclaim 
reductions in the rates of duty on handbags, luggage, flat goods, work 
gloves and leather wearing apparel that: (1) are the product of any 
beneficiary country; and (2) were not designated on August 5, 1983, as 
eligible articles for purposes of the Generalized System of Preferences 
(GSP) under Title V of the Trade Act of 1974 (19 U.S.C. 2461-2466). 
These reduced duty rates, which

[[Page 51292]]

were generally implemented in equal annual stages over a 5-year period 
(commencing in 1992 and ending in 1996), appear in the HTSUS in the 
``Special'' rate of duty subcolumn followed by the symbol ``J'' within 
parentheses.
    Section 204(a)(2) of the Act directed the Secretary of the Treasury 
to promulgate such regulations as may be necessary to carry out the 
duty-free treatment provisions of the Act. Accordingly, on January 30, 
1998, Customs published in the Federal Register (63 FR 4601) a proposal 
to add Secs. 10.201 through 10.208 within part 10 of the Customs 
Regulations (19 CFR Part 10) to implement the duty preference 
provisions of the Act. In view of the similarity between the origin and 
related rules under the Act and those under the CBI, the texts set 
forth in the January 30, 1998, notice of proposed rulemaking closely 
followed the CBI regulations contained in Secs. 10.191-10.198 of the 
Customs Regulations (19 CFR 10.191-10.198) except where statutory 
differences or editorial considerations warranted a variance from the 
CBI approach.
    The January 30, 1998, notice included a detailed, section-by-
section explanation of the proposed new regulatory texts and made 
provision for the submission of public comments on the proposed texts 
for consideration before adoption of those texts as a final rule. The 
prescribed public comment period closed on March 31, 1998, and no 
comments on the proposed new regulatory texts were received by Customs 
during that comment period. Accordingly, Customs believes that the 
proposed texts should be adopted as a final rule without change. The 
final regulatory amendments set forth in this document also include an 
appropriate update of the list of information collection approvals 
contained in Sec. 178.2 of the Customs Regulations (19 CFR 178.2).

Executive Order 12866

    This document does not meet the criteria for a ``significant 
regulatory action'' as specified in Executive Order 12866.

Regulatory Flexibility Act

    Pursuant to the provisions of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), it is certified that the amendments will not have 
a significant economic impact on a substantial number of small 
entities. The amendments reflect statutory requirements that are 
already in effect and follow existing regulatory provisions that 
implement similar statutory programs. Accordingly, the amendments are 
not subject to the regulatory analysis or other requirements of 5 
U.S.C. 603 and 604.

Paperwork Reduction Act

    The collection of information contained in this final rule has been 
reviewed and approved by the Office of Management and Budget (OMB) in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) 
under control number 1515-0219. An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a valid control number assigned by OMB.
    The collection of information in this final rule is in Sec. 10.207. 
This information conforms to requirements in 19 U.S.C. 3203(a) and is 
used by Customs to determine whether goods imported from designated 
beneficiary countries are entitled to duty-free entry under that 
statutory provision. The likely respondents are business organizations 
including importers, exporters, and manufacturers.
    The estimated average annual burden associated with the collection 
of information in this final rule is 2 minutes per respondent or 
recordkeeper. Comments concerning the accuracy of this burden estimate 
and suggestions for reducing this burden should be directed to the U.S. 
Customs Service, Information Services Group, Office of Finance, 1300 
Pennsylvania Avenue, NW, Washington, DC. 20229, and to OMB, Attention: 
Desk Officer for the Department of the Treasury, Office of Information 
and Regulatory Affairs, Washington, DC 20503.

Drafting Information

    The principal author of this document was Francis W. Foote, Office 
of Regulations and Rulings, U.S. Customs Service. However, personnel 
from other offices participated in its development.

List of Subjects

19 CFR Part 10

    Andean trade preference, Customs duties and inspection, Entry 
procedures, Imports.

19 CFR Part 178

    Administrative practice and procedure, Recordkeeping and reporting 
requirements.

Amendments to the Regulations

    For the reasons stated in the preamble, Parts 10 and 178, Customs 
Regulations (19 CFR Parts 10 and 178), are amended as set forth below.

PART 10--ARTICLES CONDITIONALLY FREE, SUBJECT TO A REDUCED RATE, 
ETC.

    1. The general authority citation for part 10 continues to read, 
and a specific authority citation for Secs. 10.201 through 10.207 is 
added to read, as follows:

    Authority: 19 U.S.C. 66, 1202 (General Note 20, Harmonized 
Tariff Schedule of the United States), 1321, 1481, 1484, 1498, 1508, 
1623, 1624, 3314;
* * * * *
    Secs. 10.201 through 10.207 also issued under 19 U.S.C. 3203.

    2. Part 10 is amended by adding a new center heading followed by 
new Secs. 10.201 through 10.208 to read as follows:

Andean Trade Preference

Sec.
10.201  Applicability.
10.202  Definitions.
10.203  Eligibility criteria in general.
10.204  Imported directly.
10.205  Country of origin criteria.
10.206  Value content requirement.
10.207  Procedures for filing duty-free treatment claim and 
submitting supporting documentation.
10.208  Duty reductions for certain products.

Andean Trade Preference


Sec. 10.201  Applicability.

    Title II of Pub. L. 102-182 (105 Stat. 1233), entitled the Andean 
Trade Preference Act (ATPA) and codified at 19 U.S.C. 3201-3206, 
authorizes the President to proclaim duty-free treatment for all 
eligible articles from any beneficiary country, to designate countries 
as beneficiary countries, and to proclaim duty reductions for certain 
goods not eligible for duty-free treatment. The provisions of 
Secs. 10.202-10.208 of this part set forth the legal requirements and 
procedures that apply for purposes of obtaining such duty-free or 
reduced-duty treatment for articles from a beneficiary country which 
are identified for purposes of such treatment in General Note 11, 
Harmonized Tariff Schedule of the United States (HTSUS), and in the 
``Special'' rate of duty column of the HTSUS.


Sec. 10.202  Definitions.

    The following definitions apply for purposes of Secs. 10.201 
through 10.208:
    (a) Beneficiary country. Except as otherwise provided in 
Sec. 10.206(b), the term ``beneficiary country'' refers to any country 
or successor political entity with respect to which there is in effect 
a proclamation by the President designating such country or successor 
political entity as a beneficiary country

[[Page 51293]]

in accordance with section 203 of the ATPA (19 U.S.C. 3202).
    (b) Eligible articles. The term ``eligible'' when used with 
reference to an article means merchandise which is imported directly 
from a beneficiary country as provided in Sec. 10.204, which meets the 
country of origin criteria set forth in Sec. 10.205 and the value-
content requirement set forth in Sec. 10.206, and which, if the 
requirements of Sec. 10.207 are met, is therefore entitled to duty-free 
treatment under the ATPA. However, the following merchandise shall not 
be considered eligible articles entitled to duty-free treatment under 
the ATPA:
    (1) Textile and apparel articles which are subject to textile 
agreements;
    (2) Footwear not designated on December 4, 1991, as eligible for 
the purpose of the Generalized System of Preferences under Title V, 
Trade Act of 1974, as amended (19 U.S.C. 2461-2466);
    (3) Tuna, prepared or preserved in any manner, in airtight 
containers;
    (4) Petroleum, or any product derived from petroleum, provided for 
in headings 2709 and 2710, Harmonized Tariff Schedule of the United 
States (HTSUS);
    (5) Watches and watch parts (including cases, bracelets, and 
straps), of whatever type including, but not limited to, mechanical, 
quartz digital or quartz analog, if such watches or watch parts contain 
any material which is the product of any country with respect to which 
HTSUS column 2 rates of duty apply;
    (6) Sugars, syrups, and molasses classified in subheadings 
1701.11.03, 1701.12.02, 1701.99.02, 1702.90.32, 1806.10.42, and 
2106.90.12, HTSUS;
    (7) Rum and tafia classified in subheading 2208.40.00, HTSUS; or
    (8) Articles to which reduced rates of duty apply under section 
204(c) of the ATPA (19 U.S.C. 3203(c)) (see Sec. 10.208).
    (c) Entered. The term ``entered'' means entered, or withdrawn from 
warehouse for consumption, in the customs territory of the United 
States.
    (d) Wholly the growth, product, or manufacture of a beneficiary 
country. The expression ``wholly the growth, product, or manufacture of 
a beneficiary country'' has the same meaning as that set forth in 
Sec. 10.191(b)(3) of this part.


Sec. 10.203  Eligibility criteria in general.

    An article classifiable under a subheading of the Harmonized Tariff 
Schedule of the United States for which a rate of duty of ``Free'' 
appears in the ``Special'' subcolumn followed by the symbol ``J'' or 
``J*'' in parentheses is eligible for duty-free treatment, and will be 
accorded such treatment, if each of the following requirements is met:
    (a) Imported directly. The article is imported directly from a 
beneficiary country as provided in Sec. 10.204.
    (b) Country of origin criteria. The article complies with the 
country of origin criteria set forth in Sec. 10.205.
    (c) Value content requirement. The article complies with the value 
content requirement set forth in Sec. 10.206.
    (d) Filing of claim and submission of supporting documentation. The 
claim for duty-free treatment is filed, and any required documentation 
in support of the claim is submitted, in accordance with the procedures 
set forth in Sec. 10.207.


Sec. 10.204  Imported directly.

    In order to be eligible for duty-free treatment under the ATPA, an 
article shall be imported directly from a beneficiary country into the 
customs territory of the United States. For purposes of this 
requirement, the words ``imported directly'' mean:
    (a) Direct shipment from any beneficiary country to the United 
States without passing through the territory of any non-beneficiary 
country; or
    (b) If shipment from any beneficiary country to the United States 
was through the territory of a non-beneficiary country, the articles in 
the shipment did not enter into the commerce of the non-beneficiary 
country while en route to the United States, and the invoices, bills of 
lading, and other shipping documents show the United States as the 
final destination; or
    (c) If shipment from any beneficiary country to the United States 
was through the territory of a non-beneficiary country and the invoices 
and other documents do not show the United States as the final 
destination, then the articles in the shipment, upon arrival in the 
United States, are imported directly only if they:
    (1) Remained under the control of the customs authority in the 
intermediate country;
    (2) Did not enter into the commerce of the intermediate country 
except for the purpose of sale other than at retail, and the articles 
are imported into the United States as a result of the original 
commercial transaction between the importer and the producer or the 
latter's sales agent; and
    (3) Were not subjected to operations in the intermediate country 
other than loading and unloading, and other activities necessary to 
preserve the articles in good condition.


Sec. 10.205  Country of origin criteria.

    (a) General. Except as otherwise provided in paragraph (b) of this 
section, an article may be eligible for duty-free treatment under the 
ATPA if the article is either:
    (1) Wholly the growth, product, or manufacture of a beneficiary 
country; or
    (2) A new or different article of commerce which has been grown, 
produced, or manufactured in a beneficiary country.
    (b) Exceptions. No article shall be eligible for duty-free 
treatment under the ATPA by virtue of having merely undergone simple 
(as opposed to complex or meaningful) combining or packaging 
operations, or mere dilution with water or mere dilution with another 
substance that does not materially alter the characteristics of the 
article. The principles and examples set forth in Sec. 10.195(a)(2) of 
this part shall apply equally for purposes of this paragraph.


Sec. 10.206  Value content requirement.

    (a) General. An article may be eligible for duty-free treatment 
under the ATPA only if the sum of the cost or value of the materials 
produced in a beneficiary country or countries, plus the direct costs 
of processing operations performed in a beneficiary country or 
countries, is not less than 35 percent of the appraised value of the 
article at the time it is entered.
    (b) Commonwealth of Puerto Rico, U.S. Virgin Islands and CBI 
beneficiary countries. For purposes of determining the percentage 
referred to in paragraph (a) of this section, the term ``beneficiary 
country'' includes the Commonwealth of Puerto Rico, the U.S. Virgin 
Islands, and any CBI beneficiary country as defined in 
Sec. 10.191(b)(1) of this part. Any cost or value of materials or 
direct costs of processing operations attributable to the Virgin 
Islands or any CBI beneficiary country must be included in the article 
prior to its final exportation to the United States from a beneficiary 
country as defined in Sec. 10.202(a).
    (c) Materials produced in the United States. For purposes of 
determining the percentage referred to in paragraph (a) of this 
section, an amount not to exceed 15 percent of the appraised value of 
the article at the time it is entered may be attributed to the cost or 
value of materials produced in the customs territory of the United 
States (other than the Commonwealth of Puerto Rico). The principles set 
forth in paragraph (d)(1) of this section shall apply in determining 
whether a material is ``produced in the customs territory of the United 
States'' for purposes of this paragraph.
    (d) Cost or value of materials.--(1) ``Materials produced in a 
beneficiary

[[Page 51294]]

country or countries'' defined. For purposes of paragraph (a) of this 
section, the words materials produced in a beneficiary country or 
countries refer to those materials incorporated in an article which are 
either:
    (i) Wholly the growth, product, or manufacture of a beneficiary 
country or two or more beneficiary countries; or
    (ii) Substantially transformed in any beneficiary country or two or 
more beneficiary countries into a new or different article of commerce 
which is then used in any beneficiary country as defined in 
Sec. 10.202(a) in the production or manufacture of a new or different 
article which is imported directly into the United States. For purposes 
of this paragraph (d)(1)(ii), no material shall be considered to be 
substantially transformed into a new or different article of commerce 
by virtue of having merely undergone simple (as opposed to complex or 
meaningful) combining or packaging operations, or mere dilution with 
water or mere dilution with another substance that does not materially 
alter the characteristics of the article. The examples set forth in 
Sec. 10.196(a) of this part, and the principles and examples set forth 
in Sec. 10.195(a)(2) of this part, shall apply for purposes of the 
corresponding context under paragraph (d)(1) of this section.
    (2) Questionable origin. When the origin of a material either is 
not ascertainable or is not satisfactorily demonstrated to the 
appropriate port director, the material shall not be considered to have 
been grown, produced, or manufactured in a beneficiary country or in 
the customs territory of the United States.
    (3) Determination of cost or value of materials. (i) The cost or 
value of materials produced in a beneficiary country or countries or in 
the customs territory of the United States includes:
    (A) The manufacturer's actual cost for the materials;
    (B) When not included in the manufacturer's actual cost for the 
materials, the freight, insurance, packing, and all other costs 
incurred in transporting the materials to the manufacturer's plant;
    (C) The actual cost of waste or spoilage, less the value of 
recoverable scrap; and
    (D) Taxes and/or duties imposed on the materials by any beneficiary 
country or by the United States, provided they are not remitted upon 
exportation.
    (ii) Where a material is provided to the manufacturer without 
charge, or at less than fair market value, its cost or value shall be 
determined by computing the sum of:
    (A) All expenses incurred in the growth, production, or manufacture 
of the material, including general expenses;
    (B) An amount for profit; and
    (C) Freight, insurance, packing, and all other costs incurred in 
transporting the material to the manufacturer's plant.
    (iii) If the pertinent information needed to compute the cost or 
value of a material is not available, the appraising officer may 
ascertain or estimate the value thereof using all reasonable ways and 
means at his disposal.
    (e) Direct costs of processing operations.--(1) Items included. For 
purposes of paragraph (a) of this section, the words direct costs of 
processing operations mean those costs either directly incurred in, or 
which can be reasonably allocated to, the growth, production, 
manufacture, or assembly of the specific merchandise under 
consideration. Such costs include, but are not limited to the 
following, to the extent that they are includable in the appraised 
value of the imported merchandise:
    (i) All actual labor costs involved in the growth, production, 
manufacture, or assembly of the specific merchandise, including fringe 
benefits, on-the-job training, and the cost of engineering, 
supervisory, quality control, and similar personnel;
    (ii) Dies, molds, tooling, and depreciation on machinery and 
equipment which are allocable to the specific merchandise;
    (iii) Research, development, design, engineering, and blueprint 
costs insofar as they are allocable to the specific merchandise; and
    (iv) Costs of inspecting and testing the specific merchandise.
    (2) Items not included. For purposes of paragraph (a) of this 
section, the words ``direct costs of processing operations'' do not 
include items which are not directly attributable to the merchandise 
under consideration or are not costs of manufacturing the product. 
These include, but are not limited to:
    (i) Profit; and
    (ii) General expenses of doing business which either are not 
allocable to the specific merchandise or are not related to the growth, 
production, manufacture, or assembly of the merchandise, such as 
administrative salaries, casualty and liability insurance, advertising, 
and salesmen's salaries, commissions, or expenses.
    (f) Articles wholly the growth, product, or manufacture of a 
beneficiary country. Any article which is wholly the growth, product, 
or manufacture of a beneficiary country as defined in Sec. 10.202(a), 
and any article produced or manufactured in a beneficiary country as 
defined in Sec. 10.202(a) exclusively from materials which are wholly 
the growth, product, or manufacture of a beneficiary country or 
countries, shall normally be presumed to meet the requirement set forth 
in paragraph (a) of this section.


Sec. 10.207  Procedures for filing duty-free treatment claim and 
submitting supporting documentation.

    (a) Filing claim for duty-free treatment. Except as provided in 
paragraph (c) of this section, a claim for duty-free treatment under 
the ATPA may be made at the time of filing the entry summary by placing 
the symbol ``J'' as a prefix to the Harmonized Tariff Schedule of the 
United States subheading number applicable to each article for which 
duty-free treatment is claimed on that document.
    (b) Shipments covered by a formal entry.--(1) Articles not wholly 
the growth, product, or manufacture of a beneficiary country.--(i) 
Declaration. In a case involving an article covered by a formal entry 
for which duty-free treatment is claimed under the ATPA and which is 
not wholly the growth, product, or manufacture of a single beneficiary 
country as defined in Sec. 10.202(a), the exporter or other appropriate 
party having knowledge of the relevant facts in the beneficiary country 
as defined in Sec. 10.202(a) where the article was produced or last 
processed shall be prepared to submit directly to the port director, 
upon request, a declaration setting forth all pertinent detailed 
information concerning the production or manufacture of the article. 
When requested by the port director, the declaration shall be prepared 
in substantially the following form:

ATPA DECLARATION

    I, ______________(name), hereby declare that the articles 
described below (a) were produced or manufactured in ______________
(country) by means of processing operations performed in that country 
as set forth below and were also subjected to processing operations in 
the other beneficiary country or countries (including the Commonwealth 
of Puerto Rico, the U.S. Virgin Islands, and any CBI beneficiary 
country) as set forth below and (b) incorporate materials produced in 
the country named above or in any other beneficiary country or 
countries (including the Commonwealth of Puerto Rico, the U.S. Virgin 
Islands, and any CBI beneficiary country) or in the customs territory 
of the United States (other than the Commonwealth of Puerto Rico) as 
set forth below:

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    (ii) Retention of records and submission of declaration. The 
information necessary for the preparation of the declaration shall be 
retained in the files of the party responsible for its preparation and 
submission for a period of 5 years. In the event that the port director 
requests submission of the declaration during the 5-year period, it 
shall be submitted by the appropriate party directly to the port 
director within 60 days of the date of the request or such additional 
period as the port director may allow for good cause shown. Failure to 
submit the declaration in a timely fashion will result in a denial of 
duty-free treatment.
    (iii) Value added after final exportation. In a case in which value 
is added to an article in the Commonwealth of Puerto Rico or in the 
United States after final exportation of the article from a beneficiary 
country as defined in Sec. 10.202(a), in order to ensure compliance 
with the value requirement under Sec. 10.206(a), the declaration 
provided for in paragraph (b)(1)(i) of this section shall be filed by 
the importer or consignee with the entry summary. The declaration shall 
be completed by the party responsible for the addition of such value.
    (2) Articles wholly the growth, product, or manufacture of a 
beneficiary country. In a case involving an article covered by a formal 
entry for which duty-free treatment is claimed under the ATPA and which 
is wholly the growth, product, or manufacture of a single beneficiary 
country as defined in Sec. 10.202(a), a statement to that effect shall 
be included on the commercial invoice provided to Customs.
    (c) Shipments covered by an informal entry. The normal procedure 
for filing a claim for duty-free treatment as set forth in paragraph 
(a) of this section need not be followed, and the filing of the 
declaration provided for in paragraph (b)(1)(i) of this section will 
not be required, in a case involving a shipment covered by an informal 
entry. However, the port director may require submission of such other 
evidence of entitlement to duty-free treatment as deemed necessary.
    (d) Evidence of direct importation.--(1) Submission. The port 
director may require that appropriate shipping papers, invoices, or 
other documents be submitted within 60 days of the date of entry as 
evidence that the articles were ``imported directly'', as that term is 
defined in Sec. 10.204.
    (2) Waiver. The port director may waive the submission of evidence 
of direct importation when otherwise satisfied, taking into 
consideration the kind and value of the merchandise, that the 
merchandise was, in fact, imported directly and that it otherwise 
clearly qualifies for duty-free treatment under the ATPA.
    (e) Verification of documentation. The documentation submitted 
under this section to demonstrate compliance with the requirements for 
duty-free treatment under the ATPA shall be subject to such 
verification as the port director deems necessary. In the event that 
the port director is prevented from obtaining the necessary 
verification, the port director may treat the entry as fully dutiable.


Sec. 10.208  Duty reductions for certain products.

    (a) General. Handbags, luggage, flat goods, work gloves, and 
leather wearing apparel that were not designated on August 5, 1983, as 
eligible articles for purposes of the Generalized System of Preferences 
under Title V, Trade Act of 1974, as amended (19 U.S.C. 2461-2466), are 
not eligible for duty-free treatment under the ATPA. However, any such 
article from a beneficiary country may be subject to a reduced rate of 
duty set forth in the Harmonized Tariff Schedule of the United States 
in the applicable ``Special'' subcolumn followed by the symbol ``J'' in 
parenthesis, provided the article is a product of any beneficiary 
country. For purposes of this section, an article is a ``product of'' a 
beneficiary country if the article is either:
    (1) Wholly the growth, product, or manufacture of a beneficiary 
country; or
    (2) A new or different article of commerce which has been grown, 
produced, or manufactured in a beneficiary country.
    (b) Filing reduced-duty claim. A claim for reduced-duty treatment 
under the ATPA may be made at the time of filing the entry summary or 
other entry document by placing thereon the symbol ``J'' as a prefix to 
the Harmonized Tariff Schedule of the United States subheading number 
applicable to each article for which reduced-duty treatment is claimed 
and by placing thereon the reduced duty rate applicable to each such 
article.
    (c) Verification of reduced-duty claim. Any claim for reduced-duty 
treatment under this section shall be subject to such verification as 
the port director deems necessary. In the event that the port director 
is prevented from obtaining the necessary verification, the port 
director may treat the entry as dutiable at the applicable non-ATPA 
rate.

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

    1. The authority citation for part 178 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.
    2. Section 178.2 is amended by adding a new listing to the table in 
numerical order to read as follows:


Sec. 178.2  Listing of OMB control numbers.

------------------------------------------------------------------------
                                                             OMB control
         19 CFR Section                  Description             no.
------------------------------------------------------------------------
       *        *        *          *          *        *        *
Sec.  10.207...................  Claim for duty-free entry     1515-0219
                                  of eligible articles
                                  under the Andean Trade
                                  Preference Act.
       *        *        *          *          *        *        *
------------------------------------------------------------------------


[[Page 51296]]

Douglas M. Browning,
Acting Commissioner of Customs.
    Approved: August 31, 1998.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 98-25722 Filed 9-24-98; 8:45 am]
BILLING CODE 4820-02-P