[Federal Register Volume 73, Number 179 (Monday, September 15, 2008)]
[Notices]
[Pages 53191-53193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-21481]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration


Imports of Certain Apparel Articles: Interim Procedures for the 
Implementation of the Earned Import Allowance Program Established Under 
the Food, Conservation, and Energy Act of 2008

ACTION: Interim procedures, request for comments.

-----------------------------------------------------------------------

SUMMARY: The Department of Commerce is issuing interim procedures 
implementing provisions under the Food, Conservation, and Energy Act of 
2008 (``the Act''), enacted in its entirety by Congress on June 18, 
2008. Title XV, Subtitle D, Part I of the Act contains amendments to 
the special rules for apparel and other textiles from Haiti in Section 
213A(b) of the Caribbean Basin Economic Recovery Act (``CBERA'') (19 
U.S.C. 2703a(b)), including rules enacted in 2006 by the Haitian 
Hemispheric Opportunity through Partnership Encouragement Act of 2006 
(``HOPE''). These amendments are also cited as the ``Haitian 
Hemispheric Opportunity through Partnership Encouragement Act of 2008'' 
(``HOPE II''). Under Section 15402 of the Act, Section 213A(b) of CBERA 
is amended by creating a benefit for apparel wholly assembled or knit-
to-shape in Haiti that meets a ``3 for 1'' earned import allowance. The 
amendment requires the Secretary of Commerce to establish a program to 
provide earned import allowance certificates to any producer or entity 
controlling production of apparel in Haiti, such that apparel wholly 
assembled or knit-to-shape in Haiti from any combination of fabrics, 
fabric components, components knit-to-shape, or yarns, regardless of 
their source, and imported directly from Haiti or the Dominican 
Republic may enter the United States duty-free, pursuant to the 
satisfaction of the terms governing issuance of the earned import 
allowance certificate by the producer or entity controlling production 
of apparel in Haiti.

DATES: These interim procedures are effective as of September 30, 2008. 
Although these procedures are not subject to the requirement to provide 
prior notice and opportunity for public comment under 5 U.S.C. 
553(b)(A) (``Administrative Procedures Act''), Commerce will consider 
written comments received by 5 p.m. on November 14, 2008.

ADDRESSES: Comments should be addressed to: R. Matthew Priest, Deputy 
Assistant Secretary for Textiles and Apparel, Room 3001, United States 
Department of Commerce, Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT: Maria Dybczak, Office of Textiles and 
Apparel, U.S. Department of Commerce, (202) 482-3651.

SUPPLEMENTARY INFORMATION:

Background

    The Department of Commerce is issuing interim procedures 
implementing Section 15402 of the Act, which was enacted in its 
entirety by Congress on June 18, 2008. Title XV, Subtitle D, Part I of 
the Act contains amendments to the special rules for apparel and other 
textiles from Haiti in Section 213A(b) of CBERA (19 U.S.C. 2703a(b)), 
including rules enacted in 2006 by HOPE. These amendments are also 
cited as HOPE II.
    Under Section 15402 of the Act, Section 213A(b) of CBERA is amended 
by creating an uncapped benefit for apparel wholly assembled or knit-
to-shape in Haiti that meets a ``3 for 1'' earned import allowance. The 
Act requires that the Secretary of Commerce establish an Earned Import 
Allowance program under Section 213A(b) such that apparel wholly 
assembled or knit-to-shape in Haiti from any combination of fabrics, 
fabric components, components knit-to-shape, or yarns and imported 
directly from Haiti or the Dominican Republic shall enter the United 
States free of duty, without regard to the source of the fabrics, 
fabric components, components knit-to-shape or yarns from which the 
articles are made, if such apparel articles are accompanied by an 
earned import allowance certificate (``certificate'') that reflects the 
amount of credits equal to the total square meter equivalent (``SME'') 
of such apparel articles, in accordance with the program outlined 
below. The Secretary of Commerce has delegated his authority under the 
Act to implement and administer the Earned Import Allowance program to 
the International Trade Administration's Office of Textiles and Apparel 
(``OTEXA'').
    This notice sets forth the interim procedures OTEXA will follow in 
implementing the provisions of HOPE II and the Earned Import Allowance 
program. In accordance with these procedures, OTEXA will issue 
certificates to qualifying apparel producers to accompany imports of 
apparel wholly formed or knit-to-shape in Haiti and exported from Haiti 
or the Dominican Republic. Such certificates will be issued as long as 
there is sufficient balance of SMEs available as a result of the 
purchase of qualifying woven fabrics or qualifying knit fabrics, as 
defined below, intended for production in Haiti. OTEXA, promptly upon 
promulgation of these interim procedures, intends to begin the process 
of opening and administering qualifying apparel producers' accounts to 
issue certificates as appropriate.
    These procedures may be modified in the future to address concerns 
that may arise as OTEXA gains experience in implementing them. Pursuant 
to the Secretary's delegation of authority, OTEXA may reconsider, and/
or subsequently amend, any determination to deposit credits or request 
to issue certificates that may have been procured by error, fraud, or 
similar faults.

[[Page 53192]]

Interim Procedures

    1. Introduction: OTEXA will issue a certificate to any producer or 
entity controlling production in Haiti (``qualifying apparel 
producer'') based on the following elements: (1) One SME credit shall 
be issued to a qualifying apparel producer for every three SMEs of 
qualifying woven fabric or qualifying knit fabric that the qualifying 
apparel producer can demonstrate that it purchased for the manufacture 
in Haiti of apparel wholly assembled or knit-to-shape in Haiti. SME 
quantities are to be calculated by the use of the appropriate 
conversion factor, defined below. OTEXA shall, as requested by a 
qualifying apparel producer, create and maintain an account for such 
qualifying apparel producer, into which such credits shall be 
deposited. (2) Such qualifying apparel producer may redeem credits for 
certificates reflecting such number of credits as the qualifying 
apparel producer may request and has available. Requests for deposits 
of credits for purchases of qualifying woven fabrics and qualifying 
knit fabrics as well as redemption of said credits for earned import 
allowance certificates will be made through a dedicated on-line system, 
known as the Haiti HOPE II Earned Import Allowance Online System 
(``HOPE II online system'').
    2. Definitions:
    a. The Act: The Food, Conservation, and Energy Act of 2008.
    b. Conversion Factor: Conversion factors listed in ``Correlation: 
U.S. Textile and Apparel Industry Category System with the Harmonized 
Tariff Schedule of the United States of America, 2008,'' or its 
successor publications, of the United States Department of Commerce.
    c. Imported Directly from Haiti or the Dominican Republic: Articles 
are ``imported directly from Haiti or the Dominican Republic'' if--
    (1) the articles are shipped directly from Haiti or the Dominican 
Republic into the United States without passing into the territory of 
any intermediate country; or
    (2) the articles are shipped from Haiti or the Dominican Republic 
into the United States through the territory of an intermediate 
country, and--
    (A) the articles in the shipment do not enter into the commerce of 
any intermediate country, and the invoices, bills of lading, and other 
shipping documents specify the United States as the final destination; 
or
    (B) the invoices and other documents do not specify the United 
States as the final destination, but the articles in the shipment--
    (i) Remain under the control of the customs authority in the 
intermediate country;
    (ii) do not enter into the commerce of the intermediate country 
except for the purpose of a sale other than at retail; and
    (iii) have not been subjected to operations in the intermediate 
country other than loading, unloading, or other activities necessary to 
preserve the articles in good condition.
    d. Knit-to-Shape: A good is ``knit-to-shape'' if 50 percent or more 
of the exterior surface area of the good is formed by major parts that 
have been knitted or crocheted directly to the shape used in the good, 
with no consideration being given to patch pockets, appliqu[eacute]s, 
or the like. Minor cutting, trimming, or sewing of those major parts 
shall not affect the determination of whether a good is ``knit-to-
shape.''
    e. Qualifying Apparel Producer: An individual, corporation, 
partnership, association, or other entity or group that exercises 
direct, daily operational control over the apparel production process 
in Haiti; or an individual, corporation, partnership, association or 
other entity that is not a producer and that controls the apparel 
production process in Haiti through a contractual relationship or other 
indirect means.
    f. Qualifying Knit Fabric: For the purposes of these procedures, 
the term ``qualifying knit fabric'' means fabric or knit-to-shape 
components wholly formed or knit-to-shape in any country or any 
combination of countries described in Section 213A(1)(B)(iii) of CBERA, 
as amended by the Act, from yarns wholly formed in the United States, 
purchased on or after October 1, 2008, expressly for production of 
apparel in Haiti, except that:
    (1) Fabric or knit-to-shape components otherwise eligible as 
qualifying knit fabric shall not be ineligible as qualifying knit 
fabric because the fabric or knit-to-shape components contain nylon 
filament yarn to which Section 213(b)(2)(A)(vii)(IV) of CBERA applies;
    (2) fabric or knit-to-shape components that would otherwise be 
ineligible as qualifying knit fabric because the fabric or knit-to-
shape component contains yarns not wholly formed in the United States 
shall not be ineligible as qualifying knit fabric if the total weight 
of all such yarns is not more than 10 percent of the total weight of 
the fabric or knit-to-shape component; and
    (3) fabric or knit-to-shape components otherwise eligible as 
qualifying knit fabric shall not be ineligible as qualifying knit 
fabric because the fabric or knit-to-shape components contain yarns 
covered by the short supply provisions of Section 213A(b)(5) of CBERA, 
as amended by the Act.
    g. Qualifying Woven Fabric: For the purposes of these procedures, 
the term ``qualifying woven fabric'' means fabric wholly formed in the 
United States from yarns wholly formed in the United States, purchased 
on or after October 1, 2008, expressly for production of apparel in 
Haiti, except that:
    (1) Fabric otherwise eligible as qualifying woven fabric shall not 
be ineligible as qualifying woven fabric because the fabric contains 
nylon filament yarn to which Section 213(b)(2)(A)(vii)(IV) of CBERA 
applies;
    (2) fabric that would otherwise be ineligible as qualifying woven 
fabric because the fabric contains yarns not wholly formed in the 
United States shall not be ineligible as qualifying woven fabric if the 
total weight of all such yarns is not more than 10 percent of the total 
weight of the fabric; and
    (3) fabric otherwise eligible as qualifying woven fabric shall not 
be ineligible as qualifying fabric because the fabric contains yarns 
covered by the short supply provisions of Section 213A(b)(5) of CBERA, 
as amended by the Act.
    h. Wholly Assembled: A good is ``wholly assembled'' in Haiti if all 
its components, of which there must be at least two, pre-existed in 
essentially the same condition as found in the finished good and were 
combined to form the finished good in Haiti. Minor attachments and 
minor embellishments (for example, appliqu[eacute]s, beads, spangles, 
embroidery, and buttons) not appreciably affecting the identity of the 
good, and minor subassemblies (for example, collars, cuffs, plackets, 
and pockets), shall not affect the determination of whether a good is 
``wholly assembled'' in Haiti.
    3. Submitting a Request to Open an Account: A qualifying apparel 
producer, as defined in section 2(e) of these procedures, may request 
that OTEXA open an account to which records of purchases of qualifying 
woven fabric or qualifying knit fabric, as defined in sections 2(g) and 
2(f) of these procedures, may be deposited toward a balance from which 
to draw certificates. Such request should be made online, via the HOPE 
II online system, located on the OTEXA Web site. In making a request to 
open an account, the qualifying apparel producer must provide:
    a. The full name and address of the qualifying apparel producer;
    b. All designated contacts and contact information, and any 
designees

[[Page 53193]]

authorized to have access to the account; and
    c. A statement affirming the accuracy and authenticity of the 
information submitted to OTEXA.
    Once the application has been received by the HOPE II online system 
and reviewed and approved by OTEXA, the qualifying apparel producer 
will be assigned a unique user identification number, and a password to 
enable future access to its online account. The qualifying apparel 
producer may request to update contact and designee information in its 
account at any time through the HOPE II online system.
    4. Submitting a Request to Deposit Credits. A qualifying apparel 
producer with an existing account may submit a request to deposit 
credits for purchases of qualifying woven fabric or qualifying knit 
fabric. The request must contain the following information:
    a. The name of the qualifying apparel producer;
    b. A complete description of the qualifying woven fabric or 
qualifying knit fabric;
    c. The quantity, in SMEs, of the qualifying woven fabric or 
qualifying knit fabric;
    d. A statement that the qualifying woven fabric or qualifying knit 
fabric is intended for the production of apparel in Haiti; and
    e. Supporting documentation: Documentation, which, in their 
totality includes:
    (1) The U.S. manufacturer of the qualifying woven fabric or 
qualifying knit fabric;
    (2) the full description of the fabric in question, including any 
non-U.S. components or inputs and their manufacturer;
    (3) if the fabric consists wholly or in part of knit-to-shape 
components, the manufacturer of said components, and documentation 
indicating that U.S. yarns were used in the production of said 
components;
    (3) the name of the qualifying apparel producer as the ultimate 
consignee; and
    (4) that the fabric purchased is intended for production of apparel 
in Haiti.
    f. An affirmation from the qualifying apparel producer as to the 
accuracy and authenticity of the information provided.
    The request must be submitted via the Hope II online system. All 
supporting documentation must be submitted either electronically via 
the Hope II online system, or via fax to 202-482-0858 or 202-482-2331. 
OTEXA will review the request and supporting documentation and shall 
make a determination whether to approve or deny the request to deposit 
credits. Should there be insufficient information with which to make a 
determination, OTEXA may request additional information from the 
qualifying apparel producer, the manufacturer of the fabric or 
components at issue, or any other entity identified in supporting 
documentation, as provided by section 6.
    5. Submitting a Request for an Earned Income Allowance Certificate. 
A qualifying apparel producer may request the issuance of a certificate 
via the HOPE II online system. The qualifying apparel producer must log 
on to the HOPE II online system to access its account, and submit a 
request to redeem credits and be issued a certificate. As long as there 
are sufficient credits available, a certificate will be automatically 
generated by the HOPE II online system, and the credits will be 
automatically withdrawn from the qualifying apparel producer's account. 
If there are insufficient credits in the qualifying apparel producer's 
account, the request for a certificate will automatically be denied by 
the HOPE II online system.
    6. Verification of Submitted Information. OTEXA may, at any time, 
verify the information submitted by a qualifying apparel producer or 
its designee. OTEXA may require any textile mill or other entity 
located in the United States that exports to Haiti qualifying woven 
fabric or qualifying knit fabric to submit, upon such export or upon 
request, documentation to OTEXA: (a) verifying that the qualifying 
woven fabric or qualifying knit fabric was exported to a producer in 
Haiti or to an entity controlling production; and (b) identifying such 
producer or entity controlling production, and the quantity and 
description of qualifying woven fabric or qualifying knit fabric 
exported to such producer or entity controlling production. OTEXA may 
also require that a producer or entity controlling production submit 
documentation to verify purchases of qualifying woven fabric or 
qualifying knit fabric. OTEXA may make available to each person or 
entity identified in documentation submitted under these provisions 
information contained in the documentation that relates to the purchase 
of qualifying woven fabric or qualifying knit fabric involving such 
person or entity. OTEXA may establish and impose penalties for the 
submission to OTEXA of fraudulent information under this program, other 
than a claim under the customs laws of the United States or under title 
18, United States Code.
    7. Contact Information: Questions regarding the Earned Import 
Allowance program or the HOPE II online system may contact OTEXA via e-
mail at [email protected], or by phone to the Office of 
Textiles and Apparel, U.S. Department of Commerce, (202) 482-3400.

R. Matthew Priest,
Chairman, Committee for the Implementation of Textile Agreements.
[FR Doc. E8-21481 Filed 9-12-08; 8:45 am]
BILLING CODE 3510-DS-P