[Federal Register Volume 64, Number 239 (Tuesday, December 14, 1999)]
[Notices]
[Pages 69746-69748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32421]


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COMMITTEE FOR THE IMPLEMENTATION OF TEXTILE AGREEMENTS


Implementation and Enforcement of the Outward Processing Program 
for Textiles and Apparel

December 8, 1999.
AGENCY: Committee for the Implementation of Textile Agreements (CITA).

ACTION: Issuing a directive to the Commissioner of Customs setting 
forth the requirements for participation in the Outward Processing 
Program.

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[[Page 69747]]

SUMMARY: This notice sets forth the requirements for participating in 
the Outward Processing Program for textiles and apparel. Under the 
Outward Processing Program, textile products will not be subject to 
quantitative restrictions upon importation into the United States if 
they either (a) are assembled in a participating country of fabrics 
formed and cut in the United States or (b) are cut and assembled in a 
participating country of fabric formed in the United States. Products 
exported on or after January 1, 2000 may be imported pursuant to the 
Outward Processing Program.
EFFECTIVE DATE: January 1, 2000

FOR FURTHER INFORMATION CONTACT: Brian F. Fennessy, International Trade 
Specialist, Office of Textiles and Apparel, U.S. Department of 
Commerce. (202) 482-3400.

SUPPLEMENTARY INFORMATION:

    Authority: Section 204 of the Agricultural Act of 1956, as 
amended (7 U.S.C. 1854); Executive Order 11651 of March 2, 1972, as 
amended.

    On September 10, 1999 the Government of the United States and the 
Government of Romania signed a Memorandum of Understanding providing 
for an Outward Processing Program for certain wool apparel products. On 
September 17, 1999, the Government of the U.S. and the Government of 
the Former Yugoslav Republic of Macedonia signed a Memorandum of 
Understanding providing for an Outward Processing Program for certain 
wool apparel products.
    Pursuant to these agreements, products that qualify for Outward 
Processing Program treatment will not be subject to quantitative 
restrictions. However, products that qualify for Outward Processing 
Program treatment must be certified by the participating government and 
will be monitored by the U.S. Customs Service. Each shipment must be 
certified by the placing of the original square-shaped stamped marking 
in blue ink on the front of the commercial invoice.
    Outward Processing Program treatment is available for qualifying 
wool apparel products exported on or after January 1, 2000. Future 
Federal Register notices will indicate qualifying products eligible for 
the Outward Processing Program.
General Requirements; Qualifying Products
    In order to qualify for Outward Processing Program treatment, 
qualifying wool apparel products must meet the following requirements:
    (1) the product must be either manufactured from fabric that is 
both cut and assembled in a participating country, or from fabric which 
is cut in the United States and assembled in a participating country. 
The product may be partially cut or partially assembled in either 
country, but all assembly and cutting operations must be performed in 
either the participating country or the United States. A participating 
country is a country with which the United States has entered into a 
bilateral agreement regarding the Outward Processing Program;
    (2) the product must be assembled or manufactured (that is, both 
cut and assembled) from fabric which is formed in the United States; 
i.e., all fabric components of the product must be U.S. formed. This 
requirement applies to all textile components of the product, including 
linings and pocketing, except as provided in (4) below. Greige goods 
imported into, and then finished in, the United States are not 
considered fabric formed in the United States. Fabric that is woven or 
knitted in the United States from yarn is considered U.S. formed;
    (3) the importer of the qualifying wool apparel product and the 
exporter of the U.S. formed fabric or the component parts must be the 
same entity or person;
    (4) findings and trimmings of non-U.S. origin may be incorporated 
into the product, provided they do not exceed 25 percent of the cost of 
the fabric in the product. Findings and trimmings include sewing 
thread, hooks and eyes, snaps, buttons, ``bow buds,'' decorative lace 
trim, zippers, including zipper tapes, and labels;
    (5) upon entry into the United States, the product must be 
classified under a subheading of heading 9802 of the Harmonized Tariff 
Schedule of the United States (HTS) created to capture such trade 
(9802.00.8016) or qualify for the special ``S'' prefix indicating the 
item was produced with U.S. formed fabric.
    Nothing in these requirements precludes performing any operation in 
the United States.
Record keeping Requirements
    The following documents shall be maintained and made available for 
review by the U.S. Customs Service and CITA:
    (1) entry documents made during the quarter;
    (2) design style costing sheets or similar documents providing a 
complete description of the assembled products;
    (3) cutting tickets (if the fabric is cut in the United States), 
including the name and location of the cutting facility for those 
entries;
    (4) mill invoices, including the name of the mill where the fabric 
was formed. If the fabric was purchased from a third party, the 
participant is responsible for obtaining the mill invoice. The 
participant must also obtain a signed statement from a principal at the 
mill that the fabric is of U.S. origin. This can be stated directly on 
the invoice or on a separate document that relates to each specific 
shipment of fabric. Vertically integrated participants, i.e., 
participants that both form and cut fabric, must retain an internal 
transfer document or other documentary proof that they formed the 
fabric in the United States;
    (5) transportation documents if fabric is cut in the United States 
(mill to cutting facility; cutting facility to border/assembler); and
    (6) export documentation.
    The above documents shall be maintained by calendar quarter, by 
country, and by category; and shall be retained for three years from 
the date of the exportation of the U.S. formed fabric or U.S. formed 
and cut fabric. The documents shall be organized and filed (preferably 
in a single location) to facilitate U.S. Customs' review.
Enforcement Procedures and Penalties
    The U.S. Customs Service shall monitor all shipments entered 
pursuant to the Outward Processing Program.
    In order to ensure that participants in the Outward Processing 
Program comply fully with the requirements set forth in this notice, 
Customs will conduct Post Entry Compliance reviews. These reviews will 
be conducted for entries made for the first quarter of 2000 and shall 
continue for each successive quarter. During the course of such review, 
the participant must provide Customs officials with evidence, through 
the documents described above, that all products entered under the 
Outward Processing Program qualify for Outward Processing Program 
treatment.
    False or inaccurate representations made in the context of the 
Outward Processing Program may result in liability under U.S. laws 
prohibiting false or misleading statements, including 18 U.S.C. 1001 
and 19 U.S.C. 1592. Moreover, participants may be suspended from 
participation in the Outward Processing Program for such 
representations, for failing to abide by the Outward Processing 
Program's record keeping requirements, or for otherwise violating the 
terms of the Program.
    In the event of credible evidence that a participant has violated 
the terms of the Outward Processing Program, the Chairman of CITA will 
notify the participant in writing of the alleged violation. The 
participant will have 30 days to respond and/or request a

[[Page 69748]]

meeting with CITA representatives to discuss the alleged violation. 
After reviewing the evidence and the participant's response, CITA will 
determine whether a violation occurred and what penalty, if any, is 
appropriate. Penalties may include temporary or permanent suspension 
from participation in the Outward Processing Program. In determining 
the appropriate penalty, CITA will consider all relevant factors, 
including the seriousness of the violation, previous violations by the 
participant, the experience of the participant with the Outward 
Processing Program, and the steps taken by the participant to prevent 
future violations.
    CITA has determined that this action falls within the foreign 
affairs exception to the rulemaking provisionsof 5 U.S.C. 553(a)(1).
Troy H. Cribb,
Chairman, Committee for the Implementation of Textile Agreements.

Committee for the Implementation of Textile Agreements
December 8, 1999.

Commissioner of Customs
Department of Treasury, Washington, DC 20229

    Dear Commissioner: This directive sets forth the requirements 
for participation in the Outward Processing Program for textiles and 
apparel and provides for enforcement procedures to ensure that these 
requirements are met.
    Effective on January 1, 2000, no quantitative restrictions shall 
apply to qualifying textile products which are exported from a 
participating country to the United States under the Outward 
Processing Program for textiles and apparel. However, products that 
qualify for Outward Processing Program treatment must be certified 
by the participating government and shall be monitored by the U.S. 
Customs Service. Each shipment must be certified by the placement of 
the original square-shaped stamped marking in blue ink on the front 
of the commercial invoice. Qualifying products must be either 
manufactured (that is, both cut and assembled) in a participating 
country or cut in the United States and assembled in a participating 
country and must be assembled or manufactured (that is, both cut and 
assembled) from fabric formed in the United States.
General Requirements; Qualifying Products
    In order to qualify for Outward Processing Program treatment, 
qualifying wool apparel products must meet the following 
requirements:
    (1) the product must be either manufactured from fabric that is 
both cut and assembled in a participating country, or from fabric 
which is cut in the United States and assembled in a participating 
country. A participating country is a country with which the United 
States has entered into a bilateral agreement regarding the Outward 
Processing Program;
    (2) the product must be assembled or manufactured (that is, both 
cut and assembled) from fabric which is formed in the United States; 
i.e., all fabric components of the product must be U.S. formed. This 
requirement applies to all textile components of the product, 
including linings and pocketing except as provided in (4) below. 
Greige goods imported into, and then finished in, the United States 
are not considered fabric formed in the United States. Fabric that 
is woven or knitted in the United States from yarn is considered 
U.S. formed;
    (3) the importer of the qualifying wool apparel product and the 
exporter of the U.S. formed fabric or its component parts must be 
the same entity or person;
    (4) findings and trimmings of non-U.S. origin may be 
incorporated into the product provided they do not exceed 25 percent 
of the cost of the fabric in the product. Findings and trimmings 
include sewing thread, hooks and eyes, snaps, buttons, ``bow buds,'' 
decorative lace trim, zippers, including zipper tapes, and labels;
    (5) upon entry into the United States, the product must be 
classified under a subheading of heading 9802 of the Harmonized 
Tariff Schedule of the United States (HTS) created to capture such 
trade (9802.00.8016) or qualify for the special ``S'' prefix 
indicating the item was produced with U.S. formed fabric.
    Nothing in these requirements precludes performing any operation 
in the United States.
Record keeping Requirements
    Participants are required to retain the following documents for 
review by Customs:
    (1) entry documents made during the quarter;
    (2) design style costing sheets or similar documents providing a 
complete description of the assembled products;
    (3) cutting tickets (if the fabric is cut in the United States) 
including the name and location of the cutting facility for those 
entries;
    (4) mill invoices, including the name of the mill where the 
fabric was formed. If the fabric was purchased from a third party, 
the participant is responsible for obtaining the mill invoice. The 
participant must also obtain a signed statement from a principal at 
the mill that the fabric is of U.S. origin. This can be stated 
directly on the invoice or on a separate document that relates to 
each specific shipment of fabric. Vertically integrated 
participants, i.e., participants that both for and cut fabric must 
retain an internal transfer document or other documentary proof that 
they formed the fabric in the United States;
    (5) transportation documents if fabric is cut in the United 
States (mill to cutting facility; cutting facility to border/
assembler); and
    (6) export documentation.
    The participant is obligated to maintain the above documents by 
calendar quarter, by country, and by category, and must retain them 
for three years from the date of the exportation of the U.S. formed 
fabric or U.S. formed and cut fabric. The documents must be 
organized and filed (preferably in a single location) to facilitate 
U.S. customs review.
Enforcement Procedures and Penalties
    All shipments entered pursuant to the Outward Processing Program 
shall be monitored. To facilitate the implementation and enforcement 
of the Outward Processing Program, Customs is directed to require 
entry/entry-summary procedures for all imports for consumption and 
withdrawals from warehouse for consumption under the Outward 
Processing Program.
    In order to determine that participants in the Outward 
Processing Program comply fully with the requirements set forth in 
this notice, Customs will conduct Post Entry Compliance reviews. 
These reviews will be conducted for entries made for the first 
quarter of 2000 and shall continue for each successive quarter. 
During the course of such review, the participant must provide 
Customs officials with evidence, through the documents described 
above, that all products entered under the Outward Processing 
Program qualify for Outward Processing Program treatment. Customs 
shall inform CITA of any violations of the program.
    The Committee for the Implementation of Textile Agreements has 
determined that this action falls within the foreign affairs 
exception to the rulemaking provisionsof 5 U.S.C. 553(a)(1).
    Sincerely,
Troy H. Cribb,
Chairman, Committee for the Implementation of Textile Agreements
[FR Doc. 99-32421 Filed 12-13-99; 8:45 am]
BILLING CODE 3510-DR-F