African Growth and Opportunity Act (AGOA) and Generalized System of Preferences and Trade Benefits Under AGOA, 30355-30398 [2014-11692]

Agencies

• DEPARTMENT OF HOMELAND SECURITY
• U.S. Customs and Border Protection
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 79, Number 101 (Tuesday, May 27, 2014)]
[Rules and Regulations]
[Pages 30355-30398]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11692]



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Vol. 79

Tuesday,

No. 101

May 27, 2014

Part III





Department of Homeland Security





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 U.S. Customs and Border Protection





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Department of the Treasury





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19 CFR Parts 10, 163, and 178





 African Growth and Opportunity Act (AGOA) and Generalized System of 
Preferences and Trade Benefits Under AGOA; Final Rule

Federal Register / Vol. 79 , No. 101 / Tuesday, May 27, 2014 / Rules 
and Regulations

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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

DEPARTMENT OF THE TREASURY

19 CFR Parts 10, 163, and 178

[CBP Dec. 14-07]
RIN 1515-AD47 (former RIN 1505-AB26) and RIN 1515-AD50 (former RIN 
1505-AB38)


African Growth and Opportunity Act (AGOA) and Generalized System 
of Preferences and Trade Benefits Under AGOA

AGENCIES: U.S. Customs and Border Protection, Department of Homeland 
Security; Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule, with some changes, 
interim amendments to the U.S. Customs and Border Protection (CBP) 
regulations which were published in the Federal Register on October 5, 
2000, as T.D. 00-67, and later amended by T.D. 03-15 published in the 
Federal Register on March 21, 2003, to implement the trade benefit 
provisions for sub-Saharan Africa contained in Title I of the Trade and 
Development Act of 2000, as amended. The trade benefits under Title I, 
also referred to as the African Growth and Opportunity Act (AGOA), 
apply to sub-Saharan African countries designated by the President and 
involve: The extension of duty-free treatment under the Generalized 
System of Preferences (GSP) to non-textile articles normally excluded 
from GSP duty-free treatment that are not import-sensitive; and the 
entry of specific textile and apparel articles free of duty and free of 
any quantitative limits.
    The regulatory amendments adopted as a final rule in this document 
reflect and clarify the statutory standards for preferential tariff 
treatment under the AGOA, as amended by section 3108 of the Trade Act 
of 2002 and include other amendments necessitated by passage of the 
AGOA Acceleration Act of 2004 and the Africa Investment Incentive Act 
of 2006. This final rule includes specific documentary, procedural and 
other related requirements that must be met in order to obtain 
preferential treatment. This document also adopts as a final rule 
interim amendments to the CBP regulations implementing the GSP which 
were included in T.D. 00-67 to conform those regulations to previous 
amendments to the GSP statute. Moreover, this document adopts as a 
final rule other changes to the AGOA implementing regulations made by 
T.D. 03-15 to clarify several issues that arose after their original 
publication.

DATES: Effective June 26, 2014.

FOR FURTHER INFORMATION CONTACT:

Operational issues regarding textiles: Jacqueline Sprungle, Trade 
Policy and Programs, Office of International Trade (202-863-6517).
Other operational issues: Seth Mazze, Trade Policy and Programs, Office 
of International Trade (202-863-6567).
Legal issues: Cynthia Reese, Regulations and Rulings, Office of 
International Trade (202-325-0046).

SUPPLEMENTARY INFORMATION:

Background

African Growth and Opportunity Act

    On May 18, 2000, the President signed into law the Trade and 
Development Act of 2000, Public Law 106-200, 114 Stat. 251. Title I of 
the Trade and Development Act of 2000 (Act of 2000) is referred to as 
the African Growth and Opportunity Act (AGOA) and authorizes the 
President to extend certain trade benefits to designated countries in 
sub-Saharan Africa.
    Subtitle A of Title I of the Trade and Development Act of 2000 
concerns trade policy for sub-Saharan Africa. Subtitle A is codified at 
19 U.S.C. 3701-3706 and includes section 104 (19 U.S.C. 3703) which (1) 
authorizes the President to designate a sub-Saharan African country as 
an ``eligible'' sub-Saharan African country if the President determines 
that the country meets specified eligibility requirements and (2) 
requires that the President terminate a designation if the President 
determines that an eligible country is not making continual progress in 
meeting those requirements. Subtitle A also includes section 107 (19 
U.S.C. 3706) which, for purposes of Title I, defines the terms ``sub-
Saharan Africa'' and ``sub-Saharan African country'' and variations of 
those terms with reference to 48 listed countries.
    Subtitle B of Title I of the Trade and Development Act of 2000 
concerns trade benefits under the AGOA. The provisions within Subtitle 
B to which this document relates are sections 111, 112 and 113. These 
sections will be discussed in detail below.
    On October 2, 2000, the President signed Proclamation 7350 to 
implement the provisions of the AGOA. The Proclamation, which was 
published in the Federal Register (65 FR 59321) on October 4, 2000, 
designated certain countries as beneficiary sub-Saharan African 
countries and modified the Harmonized Tariff Schedule of the United 
States (HTSUS) as set forth in the Annex to the Proclamation by, among 
other things, the addition of a new Subchapter XIX to Chapter 98 to 
address the majority of the textile and apparel provisions of the AGOA.
    On October 5, 2000, U.S. Customs and Border Protection (CBP) 
published in the Federal Register (65 FR 59668) as T.D. 00-67 an 
interim rule setting forth amendments to the CBP regulations to 
implement the trade benefit provisions of the AGOA. Sections 10.211 
through 10.217 of the CBP regulations (19 CFR 10.211 through 10.217) 
set forth the legal requirements and procedures that apply for purposes 
of obtaining preferential treatment of certain textile and apparel 
articles pursuant to sections 112 and 113 of the AGOA. In addition, 
T.D. 00-67 included interim amendments to the existing CBP regulations 
implementing the Generalized System of Preferences (GSP) program to 
conform those regulations to previous statutory amendments or other 
changes involving the GSP program. Furthermore, on November 9, 2000, a 
correction document pertaining to T.D. 00-67 was published in the 
Federal Register (65 FR 67260). Action to adopt those interim 
regulations as a final rule was withheld pending anticipated action on 
the part of Congress to amend the underlying statutory provisions.

Trade Act of 2002

    On August 6, 2002, the President signed into law the Trade Act of 
2002 (Act of 2002), Public Law 107-210, 116 Stat. 933. Sections 3108(a) 
and (b) of the Act of 2002 amended section 112(b) of the AGOA (codified 
at 19 U.S.C. 3721(b)) which specifies the textile and apparel articles 
to which preferential treatment applies under the AGOA. The majority of 
the provisions of section 112 of the AGOA are reflected for tariff 
purposes in Subchapter XIX, Chapter 98, HTSUS.
    On November 13, 2002, the President signed Proclamation 7626 
(published in the Federal Register at 67 FR 69459 on November 18, 2002) 
which, among other things, in Annex II set forth modifications to the 
HTSUS to implement the changes to section 112(b) of the AGOA made by 
sections 3108(a) and (b) of the Act of 2002. The Proclamation provided 
that the HTSUS modifications that implement the changes made by section 
3108(a) of the Act of 2002 are effective with respect to eligible 
articles entered, or withdrawn from warehouse for consumption, on or 
after August 6, 2002. The Proclamation

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further provided that the HTSUS modifications that implement the 
changes made by section 3108(b) are effective with respect to eligible 
articles entered, or withdrawn from warehouse for consumption, on or 
after October 1, 2002.
    On March 21, 2003, CBP published in the Federal Register (68 FR 
13820) as T.D. 03-15 an interim rule document setting forth amendments 
to the CBP regulations that implement the trade benefits for sub-
Saharan African countries contained in the AGOA. T.D. 03-15 involved 
the textile and apparel provisions of the AGOA and in part reflected 
the changes made to those statutory provisions by section 3108 of the 
Act of 2002.

AGOA Acceleration Act of 2004

    On July 13, 2004, the President signed into law the AGOA 
Acceleration Act of 2004 (Act of 2004), Public Law 108-274, 118 Stat. 
820. Section 7(a)(1) of the Act of 2004 amended Title V of the Trade 
Act of 1974 (the Generalized System of Preferences, or GSP, statute) at 
section 506B (codified at 19 U.S.C. 2466b) by extending GSP duty-free 
treatment through September 30, 2015, in the case of a beneficiary sub-
Saharan African country as defined in section 506A(c) of the GSP 
statute (codified at 19 U.S.C. 2466a(c)).
    Section 7(a)(2)(A) of the Act of 2004 amended section 506A(b)(2)(B) 
of the GSP statute (codified at 19 U.S.C. 2466a(b)(2)(B)) by providing 
for the inclusion of the cost or value of materials produced in one or 
more ``former beneficiary sub-Saharan African countries'' in 
determining whether the GSP 35% value-content rule has been satisfied 
in regard to an article described in section 506A(b)(1) (non-textiles). 
Section 7(a)(2)(B) of the Act of 2004 amended section 506A(c) to 
include a definition of ``former beneficiary sub-Saharan African 
country.''
    Sections 7(b), (c) and (d) of the Act of 2004 amended section 
112(b) of the AGOA (codified at 19 U.S.C. 3721(b)) which specifies the 
textile and apparel articles to which preferential treatment applies 
under the AGOA. These amendments to section 112(b) were as follows:
    1. The article description in the introductory text of paragraph 
(b)(1) was amended by inserting the words ``or both'' immediately 
before the parenthetical matter. The effect of this change is to 
clarify that the apparel articles described in this paragraph may be 
made both from fabrics wholly formed and cut in the United States and 
from components knit-to-shape in the United States.
    2. The portion of the article description in the introductory text 
of paragraph (b)(3) relating to the origin of the yarns from which the 
article is made was amended by replacing the words ``either in the 
United States or one or more beneficiary sub-Saharan African 
countries'' each place they appear with the words ``in the United 
States or one or more beneficiary sub-Saharan African countries or 
former beneficiary sub-Saharan African countries, or both.'' The 
introductory text of paragraph (b)(3) was further amended by inserting 
the words ``whether or not the apparel articles are also made from any 
of the fabrics, fabric components formed, or components knit-to-shape 
described in paragraph (1) or (2) (unless the apparel articles are made 
exclusively from any of the fabrics, fabric components formed, or 
components knit-to-shape described in paragraph (1) or (2))'' 
immediately before the words ``subject to the following.'' The effect 
of the latter amendment is to extend preferential treatment under this 
paragraph to include apparel articles made in part from fabrics, 
fabrics components or knit-to-shape components that meet the production 
requirements set forth in paragraph (b)(1) or (b)(2).
    3. Paragraph (b)(3)(A)(i) was amended by replacing the words ``in 
the 1-year period beginning on October 1, 2000, and in each of the 
seven succeeding 1-year periods'' with the words ``in the 1-year period 
beginning October 1, 2003, and in each of the 11 succeeding 1-year 
periods.'' Paragraph (b)(3)(A)(ii) was amended by increasing the 
``applicable percentage'' used for determining the quantitative limits 
that apply to apparel articles under this paragraph. Neither of these 
changes affects the AGOA implementing regulations.
    4. The article description in paragraph (b)(3)(B) [now paragraph 
(c)(1)] , which sets forth a special rule for lesser developed 
beneficiary sub-Saharan African countries, was amended by extending the 
applicability of the rule through September 30, 2007, and by 
establishing a separate ``applicable percentage'' for use in 
determining the quantitative limits that apply to apparel articles 
subject to this special rule. The articles described in paragraph 
(b)(3)(B) [now paragraph (c)(1)] previously were subject to the 
``applicable percentage'' set forth in paragraph (b)(3)(A)(ii). Neither 
of these changes affects the AGOA implementing regulations.
    5. The article description in paragraph (b)(5)(A) was amended by 
removing the words ``from fabric or yarn that is not formed in the 
United States or a beneficiary sub-Saharan African country.'' As a 
result of this change, apparel articles of fabric or yarn that was 
formed in the United States or a beneficiary sub-Saharan African 
country will not be precluded from receiving preferential treatment 
under this paragraph, assuming all applicable production requirements 
are met.
    6. The article description in paragraph (b)(6) was amended by 
adding a reference to ``ethnic printed fabric'' and by including a 
description of the ``ethnic printed fabrics'' that qualify for 
preferential treatment under this paragraph.
    7. The article description in paragraph (b)(7) was amended by 
adding a reference to ``or former beneficiary sub-Saharan African 
countries'' after the words ``and one or more beneficiary sub-Saharan 
African countries'' each place they appear. This change would permit 
the cutting and knitting-to-shape of fabric components to be performed 
in former beneficiary sub-Saharan African countries (if any).
    Section 7(e)(1) of the Act of 2004 amended section 112(d) of the 
AGOA (codified at 19 U.S.C. 3721(d)), which sets forth certain special 
rules regarding the preferential treatment of eligible textile and 
apparel articles, by adding a new paragraph (d)(3) entitled ``Certain 
components.'' This new rule provides that an article otherwise eligible 
for preferential treatment under section 112 will not be ineligible for 
such treatment because the article contains certain specified 
components that do not meet the requirements set forth in the 
applicable paragraph under section 112(b), regardless of the country of 
origin of the component.
    Section 7(e)(2) of the Act of 2004 amended the de minimis rule in 
section 112(d)(2) by adding a reference to ``or former beneficiary sub-
Saharan African countries'' after the words ``beneficiary sub-Saharan 
African countries,'' and by increasing the applicable de minimis 
percentage from 7 to 10 percent.
    Finally, section 7(f) of the Act of 2004 amended section 112(e) of 
the AGOA (codified at 19 U.S.C. 3721(e)), by adding a definition of 
``Former sub-Saharan African country'' in new paragraph (e)(4).
    On September 7, 2004, the President signed Proclamation 7808 
(published in the Federal Register on September 9, 2004, at 69 FR 
54739) which, among other things, in Annex II set forth modifications 
to the HTSUS to implement the changes to sections 506A and 506B of the 
GSP statute and section 112 of the AGOA made by section 7 of the Act of 
2004. The Proclamation provided that the HTSUS modifications that 
implement the changes made by section 7 of the Act of 2004 are 
effective

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with respect to goods entered, or withdrawn from warehouse for 
consumption, on or after July 31, 2004.
    As described above, the Act of 2004 made various technical 
amendments to the GSP statute as well as the AGOA which require 
amendments to the GSP and AGOA implementing regulations. Because these 
regulatory changes are not interpretative in nature but closely reflect 
the language of the statute, they are included in this final rule 
without need for comment.

Africa Investment Incentive Act of 2006

    On December 20, 2006, the President signed into law the Tax Relief 
and Health Care Act of 2006 (Act of 2006), Public Law 109-432, 120 
Stat. 2922. Title VI of the Act of 2006 is referred to as the ``Africa 
Investment Incentive Act of 2006''. Section 6002 of the Act of 2006 
amended section 112 of the AGOA (19 U.S.C. 3721) by transferring the 
existing special rule for lesser developed beneficiary sub-Saharan 
African countries from paragraph (b)(3)(B) of section 112 to new 
paragraph (c) of section 112, by extending the applicability of the 
rule through September 30, 2012, and by revising the ``applicable 
percentage'' for use in determining the quantitative limits that apply 
to apparel articles subject to this special rule. None of these changes 
affects the AGOA implementing regulations.
    Section 6002 of the Act of 2006 further amended section 112 of the 
AGOA by adding a new paragraph (b)(8) to create a new category of 
textile and textile articles to which preferential treatment applies 
under the AGOA. This new paragraph encompasses textile and textile 
articles classifiable under Chapters 50 through 60 or Chapter 63 of the 
HTSUS that are products of a lesser developed beneficiary sub-Saharan 
African country and are wholly formed in one or more such countries 
from fibers, yarns, fabrics, fabric components, or components knit-to-
shape that are the product of one or more of such countries. The 
changes to the AGOA implementing regulations necessitated by this 
statutory change are not interpretative in nature but closely reflect 
the language of the statute. Therefore, these regulatory changes are 
included in this final rule without need for comment.
    On March 19, 2007, the President signed Proclamation 8114 
(published in the Federal Register on March 22, 2007 (72 FR 13655)) 
which, in Annex II, set forth modifications to the HTSUS to implement 
the changes to section 112 of the AGOA made by section 6002 of the Act 
of 2006. The HTSUS provisions proclaimed in Proclamation 8114 were 
modified by Proclamation 8157 of June 28, 2007 (72 FR 35895), and 
Proclamation 8240 of April 17, 2008 (73 FR 21515) to provide the tariff 
treatment authorized by the Act of 2006. The HTSUS provisions were 
further modified by Proclamation 8323 of November 25, 2008 to implement 
the changes to section 112(c) of the AGOA made by section 3 of the 
Extension of Andean Trade Preference Act, Public Law 110-436, 122 Stat. 
4976.

Current AGOA Statutory Trade Benefit Provisions

    Sections 111, 112 and 113 of Subtitle B of Title I of the Trade and 
Development Act of 2000, including amendments to the AGOA trade benefit 
provisions made by section 3108(a) of the Trade Act of 2002 and section 
7 of the AGOA Acceleration Act of 2004, provide as follows:
Section 111
    Subsection (a) of section 111 of the Act of 2000 amended Title V of 
the Trade Act of 1974 (the GSP statute which previously consisted of 
sections 501-507, codified at 19 U.S.C. 2461-2467) by inserting after 
section 506 a new section 506A entitled ``Designation of sub-Saharan 
African countries for certain benefits'' and codified at 19 U.S.C. 
2466a.
    Subsection (a) of new section 506A authorizes the President, 
subject to referenced eligibility requirements and criteria, to 
designate a country listed in section 107 of the Act as a beneficiary 
sub-Saharan African country eligible for the benefits described in 
subsection (b). This subsection (a) also requires that the President 
terminate a designation if the President determines that a beneficiary 
sub-Saharan African country is not making continual progress in meeting 
the requirements for designation.
    Subsection (b) of new section 506A concerns preferential tariff 
treatment for certain articles and consists of the following two 
paragraphs:
    1. Paragraph (1) authorizes the President to provide duty-free 
treatment for any article described in section 503(b)(1)(B) through (G) 
of the GSP statute that is the growth, product, or manufacture of a 
beneficiary sub-Saharan African country. A beneficiary sub-Saharan 
African country is a country listed in section 107 of the Act of 2000 
that has been designated by the President as eligible under subsection 
(a) of new section 506A. The President is authorized to provide duty-
free treatment for an article if, after receiving the advice of the 
International Trade Commission in accordance with section 503(e) of the 
GSP statute, the President determines that the article is not import-
sensitive in the context of imports from beneficiary sub-Saharan 
African countries. The articles described in section 503(b)(1)(B) 
through (G) of the GSP statute are those that are normally excluded 
from duty-free treatment under the GSP and consist of the following:
    a. Watches, except those watches entered after June 30, 1989, that 
the President specifically determines, after public notice and comment, 
will not cause material injury to watch or watch band, strap, or 
bracelet manufacturing and assembly operations in the United States or 
the United States insular possessions;
    b. Import-sensitive electronic articles;
    c. Import-sensitive steel articles;
    d. Footwear, handbags, luggage, flat goods, work gloves, and 
leather wearing apparel which were not eligible articles for purposes 
of the GSP on January 1, 1995, as the GSP was in effect on that date;
    e. Import-sensitive semimanufactured and manufactured glass 
products; and
    f. Any other articles which the President determines to be import-
sensitive in the context of the GSP.
    2. Paragraph (2), as amended by section 7(a)(2)(A) of the Act of 
2004, provides that the duty-free treatment under paragraph (1) will 
apply to any article described in that paragraph that meets the 
requirements of section 503(a)(2) (that is, the basic GSP origin and 
related rules). Paragraph (2) also makes application of those basic 
rules in this context subject to the following two additional rules:
    a. If the cost or value of materials produced in the customs 
territory of the United States is included with respect to that 
article, an amount not to exceed 15 percent of the appraised value of 
the article at the time it is entered that is attributed to that United 
States cost or value may be applied toward determining the percentage 
referred to in subparagraph (A) of section 503(a)(2); and
    b. The cost or value of the materials included with respect to that 
article that are produced in one or more beneficiary sub-Saharan 
African countries or former beneficiary sub-Saharan African countries 
shall be applied in determining that percentage.
    Thus, in order for an article described in paragraph (1) to receive 
duty-free treatment, that article must meet the basic origin and 
related rules that apply to all eligible articles from any GSP-eligible 
country, but subject to two additional rules. In other words, (1) the 
article must have become the growth,

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product, or manufacture of a beneficiary sub-Saharan African country by 
some process other than a simple combining or packaging operation or 
the mere dilution with water or the mere dilution with another 
substance that does not materially alter the characteristics of the 
article; (2) the article must be imported directly from a beneficiary 
sub-Saharan African country into the customs territory of the United 
States; (3) the article must have at least 35 percent of its appraised 
value attributed to the sum of the direct costs of processing 
operations performed in the beneficiary sub-Saharan African country or 
in any two or more beneficiary sub-Saharan African countries that are 
members of the same association of countries and are treated as one 
country under section 507(2) of the GSP statute, plus the cost or value 
of the materials produced in the beneficiary sub-Saharan African 
country or in any two or more beneficiary sub-Saharan African countries 
or former beneficiary sub-Saharan African countries; and (4) as 
variations from the general GSP 35 percent value-content rule (the two 
additional rules): The cumulation of the cost or value of materials 
from different beneficiary countries (or former beneficiary countries) 
is not dependent on those countries being members of an association of 
countries; and the cost or value of materials produced in the customs 
territory of the United States (the 50 States, the District of 
Columbia, and Puerto Rico) may be counted toward the 35 percent 
requirement to a maximum of 15 percent of the article's appraised 
value.
    Subsection (c) of new section 506A defines the terms ``beneficiary 
sub-Saharan African country'' and ``beneficiary sub-Saharan African 
countries'' for purposes of the AGOA as a country or countries listed 
in section 107 of the Act that the President has determined is eligible 
under subsection (a) of new section 506A. In addition, pursuant to an 
amendment by section 7(a)(2)(B) of the Act of 2004, subsection (c) 
defines the term ``former beneficiary sub-Saharan African country'' as 
a country that, after being designated as a beneficiary sub-Saharan 
African Country under the AGOA, ceased to be designated as such a 
country by reason of its entering into a free trade agreement with the 
United States.
    Subsection (b) of section 111 of the Act of 2000 revised section 
503(c)(2)(D) of the GSP statute in order to accommodate inclusion of a 
reference to ``any beneficiary sub-Saharan African country.'' The 
effect of this amendment is to preclude the withdrawal of GSP duty-free 
treatment from a beneficiary sub-Saharan African country by application 
of the GSP competitive need limitation provisions. This amendment is 
not addressed in the regulatory changes adopted as a final rule in this 
document.
    Section 114 of the Act of 2000 also amended the GSP statute by 
inserting after new section 506A another new section 506B, codified at 
19 U.S.C. 2466b and entitled ``Termination of benefits for sub-Saharan 
African countries.'' This new section, as amended by section 7(a)(1) of 
the Act of 2004, provides for the continuation of GSP duty-free 
treatment through September 30, 2015, in the case of a beneficiary sub-
Saharan African country as defined in section 506A(c). The provisions 
of section 506B also are not addressed in the regulatory changes 
adopted as a final rule in this document.
Section 112
    Section 112 of the Act of 2000 set forth rules that provide for the 
preferential treatment of certain textile and apparel products. These 
rules are codified at 19 U.S.C. 3721 and thus are outside the GSP 
statutory framework. Moreover, these rules in effect operate as an 
exception to the approach under the GSP because section 503(b)(1)(A) of 
the GSP statute excludes most textile and apparel articles from 
preferential (that is, duty-free) treatment under the GSP.
    Subsection (a) of section 112 contains the basic preferential 
treatment statement. It provides that textile and apparel articles 
described in subsection (b) that are imported directly into the customs 
territory of the United States from a beneficiary sub-Saharan African 
country described in section 506A(c) of the GSP statute shall enter the 
United States free of duty and free of any quantitative limitations in 
accordance with the provisions set forth in subsection (b), if the 
country has satisfied the requirements set forth in section 113 of the 
Act of 2000.
    Subsection (b) of section 112 lists the specific textile and 
apparel products to which the preferential treatment described in 
subsection (a) applies. The textile and apparel products described in 
section 112(b), as amended by section 3108(a) of the Act of 2002, 
section 7(b), (c) and (d) of the Act of 2004, and section 6002 of the 
Act of 2006, are as follows:
    1. Apparel articles sewn or otherwise assembled in one or more 
beneficiary sub-Saharan African countries from fabrics wholly formed 
and cut, or from components knit-to-shape, in the United States from 
yarns wholly formed in the United States, or both (including fabrics 
not formed from yarns, if such fabrics are classifiable under heading 
5602 or 5603 of the Harmonized Tariff Schedule of the United States 
(HTSUS) and are wholly formed and cut in the United States) that are 
entered under subheading 9802.00.80 of the HTSUS [paragraph (b)(1)(A)];
    2. Apparel articles sewn or otherwise assembled in one or more 
beneficiary sub-Saharan African countries from fabrics wholly formed 
and cut, or from components knit-to-shape, in the United States from 
yarns wholly formed in the United States, or both (including fabrics 
not formed from yarns, if such fabrics are classifiable under heading 
5602 or 5603 of the HTSUS and are wholly formed and cut in the United 
States) that are entered under Chapter 61 or 62 of the HTSUS, if, after 
that assembly, the articles would have qualified for entry under 
subheading 9802.00.80 of the HTSUS but for the fact that the articles 
were embroidered or subjected to stone-washing, enzyme-washing, acid 
washing, perma-pressing, oven-baking, bleaching, garment-dyeing, screen 
printing, or other similar processes [paragraph (b)(1)(B)];
    3. Apparel articles sewn or otherwise assembled in one or more 
beneficiary sub-Saharan African countries with thread formed in the 
United States from fabrics wholly formed in the United States and cut 
in one or more beneficiary sub-Saharan African countries from yarns 
wholly formed in the United States, or from components knit-to-shape in 
the United States from yarns wholly formed in the United States, or 
both (including fabrics not formed from yarns, if such fabrics are 
classifiable under heading 5602 or 5603 of the HTSUS and are wholly 
formed in the United States) [paragraph (b)(2)];
    4. Apparel articles wholly assembled in one or more beneficiary 
sub-Saharan African countries from fabric wholly formed in one or more 
beneficiary sub-Saharan African countries from yarns originating in the 
United States or one or more beneficiary sub-Saharan African countries 
or former beneficiary sub-Saharan African countries, or both (including 
fabrics not formed from yarns, if those fabrics are classifiable under 
heading 5602 or 5603 of the HTSUS and are wholly formed in one or more 
beneficiary sub-Saharan African countries), or from components knit-to-
shape in one or more beneficiary sub-Saharan African countries from 
yarns originating in the United States or one or more beneficiary sub-
Saharan African countries or former beneficiary sub-Saharan African 
countries, or both, whether or not the apparel articles are also made 
from any of the fabrics, fabric

[[Page 30360]]

components formed, or components knit-to-shape described in paragraph 
(b)(1) or (b)(2) (unless the apparel articles are made exclusively from 
any of the fabrics, fabric components formed, or components knit-to-
shape described in paragraph (b)(1) or (b)(2)), subject to the 
application of certain quantitative limits [paragraph (b)(3)];
    5. Apparel articles wholly formed on seamless knitting machines in 
a beneficiary sub-Saharan African country from yarns originating in the 
United States or one or more beneficiary sub-Saharan African countries 
or former beneficiary sub-Saharan African countries, or both, whether 
or not the apparel articles are also made from any of the fabrics, 
fabric components formed, or components knit-to-shape described in 
paragraph (b)(1) or (b)(2) (unless the apparel articles are made 
exclusively from any of the fabrics, fabric components formed, or 
components knit-to-shape described in paragraph (b)(1) or (b)(2)), 
subject to the application of certain quantitative limits [paragraph 
(b)(3)];
    6. Cashmere sweaters, that is, sweaters in chief weight of 
cashmere, knit-to-shape in one or more beneficiary sub-Saharan African 
countries and classifiable under subheading 6110.10 of the HTSUS 
[paragraph (b)(4)(A)];
    7. Wool sweaters containing 50 percent or more by weight of wool 
measuring 21.5 microns in diameter or finer, knit-to-shape in one or 
more beneficiary sub-Saharan African countries [paragraph (b)(4)(B)];
    8. Apparel articles that are both cut (or knit-to-shape) and sewn 
or otherwise assembled in one or more beneficiary sub-Saharan African 
countries, to the extent that apparel articles of such fabrics or yarns 
would be eligible for preferential treatment, without regard to the 
source of the fabric or yarn, under Annex 401 to the North American 
Free Trade Agreement (NAFTA). (This AGOA provision in effect applies to 
apparel articles that are entitled to preferential duty treatment under 
the NAFTA based on the fact that the fabrics or yarns used to produce 
them were determined to be in short supply in the context of the NAFTA. 
The subject fabrics and yarns include fine count cotton knitted fabrics 
for certain apparel, linen, silk, cotton velveteen, fine wale corduroy, 
Harris Tweed, certain woven fabrics made with animal hairs, certain 
lightweight, high thread count poly-cotton woven fabrics, and certain 
lightweight, high thread count broadwoven fabrics used in the 
production of men's and boys' shirts. See House Report 106-606, 106th 
Congress, 2d Session, at page 77.) [paragraph (b)(5)(A)];
    9. Apparel articles that are both cut (or knit-to-shape) and sewn 
or otherwise assembled in one or more beneficiary sub-Saharan African 
countries, from fabric or yarn that is not described in paragraph 
(b)(5)(A), to the extent that the President has determined that the 
fabric or yarn cannot be supplied by the domestic industry in 
commercial quantities in a timely manner and has proclaimed the 
treatment provided under paragraph (b)(5)(A) [paragraph (b)(5)(B)];
    10. A handloomed, handmade, or folklore article or an ethnic 
printed fabric of a beneficiary sub-Saharan African country or 
countries that is certified as such by the competent authority of the 
beneficiary country or countries, subject to a determination by the 
President regarding which, if any, particular textile and apparel goods 
of the country or countries will be treated as being handloomed, 
handmade, or folklore articles or an ethnic printed fabric [paragraph 
(b)(6)];
    11. Apparel articles sewn or otherwise assembled in one or more 
beneficiary sub-Saharan African countries with thread formed in the 
United States from components cut in the United States and one or more 
beneficiary sub-Saharan African countries or former beneficiary sub-
Saharan African countries from fabric wholly formed in the United 
States from yarns wholly formed in the United States, or from 
components knit-to-shape in the United States and one or more 
beneficiary sub-Saharan African countries or former beneficiary sub-
Saharan African countries from yarns wholly formed in the United 
States, or both (including fabrics not formed from yarns, if such 
fabrics are classifiable under heading 5602 or 5603 of the HTSUS) 
[paragraph (b)(7)].
    12. Textile and textile articles classifiable under Chapters 50 
through 60 or Chapter 63 of the HTSUS that are products of a lesser 
developed beneficiary sub-Saharan African country and are wholly formed 
in one or more such countries from fibers, yarns, fabrics, fabric 
components, or components knit-to-shape that are the product of one of 
more such countries [paragraph (b)(8)]; and
    13. Apparel articles wholly assembled, or knit-to-shape and wholly 
assembled, or both, in one or more lesser developed beneficiary sub-
Saharan African countries regardless of the country of origin of the 
fabric or yarn used to make the articles, subject to the application of 
certain quantitative limits [paragraph (c)];
    Subsection (d) of section 112 concerns the elimination of existing 
quotas on textile and apparel articles imported into the United States 
from Kenya and Mauritius. This provision is not addressed in the 
regulatory changes adopted as a final rule in this document.
    Subsection (e) of section 112, as amended by section 7(e) of the 
Act of 2004, sets forth special rules that apply for purposes of 
determining the eligibility of articles for preferential treatment 
under section 112. These special rules are as follows:
    1. Paragraph (e)(1)(A) sets forth a special rule regarding the 
treatment of findings and trimmings. It provides that an article 
otherwise eligible for preferential treatment under section 112 will 
not be ineligible for that treatment because the article contains 
findings or trimmings of foreign origin, if the value of those foreign 
findings and trimmings does not exceed 25 percent of the cost of the 
components of the assembled article. This provision specifies the 
following as examples of findings and trimmings: Sewing thread, hooks 
and eyes, snaps, buttons, ``bow buds,'' decorative lace trim, elastic 
strips (but only if they are each less than 1 inch in width and used in 
the production of brassieres), zippers (including zipper tapes), and 
labels. However, as an exception to the paragraph (e)(1)(A) general 
rule, paragraph (e)(1)(C) provides that sewing thread will not be 
treated as findings or trimmings in the case of an article described in 
paragraph (b)(2) of section 112 (because that paragraph specifies that 
the thread used in the assembly of the article must be formed in the 
United States and thus cannot be of ``foreign'' origin).
    2. Paragraph (e)(1)(B) sets forth a special rule regarding the 
treatment of specific interlinings, that is, a chest type plate, a 
``hymo'' piece, or ``sleeve header,'' of woven or weft-inserted warp 
knit construction and of coarse animal hair or man-made filaments. 
Under this rule, an article otherwise eligible for preferential 
treatment under section 112 will not be ineligible for that treatment 
because the article contains interlinings of foreign origin, if the 
value of those interlinings (and any findings and trimmings) does not 
exceed 25 percent of the cost of the components of the assembled 
article. The paragraph also provides for the termination of this 
treatment of interlinings if the President makes a determination that 
United States manufacturers are producing those interlinings in the 
United States in commercial quantities.
    3. Paragraph (e)(2) sets forth a de minimis rule which provides 
that an article otherwise eligible for preferential

[[Page 30361]]

treatment under section 112 will not be ineligible for that treatment 
because the article contains fibers or yarns not wholly formed in the 
United States or one or more beneficiary sub-Saharan African countries 
or former beneficiary sub-Saharan African countries if the total weight 
of all those fibers and yarns is not more than 10 percent of the total 
weight of the article.
    4. Paragraph (e)(3) sets forth a special rule regarding the 
treatment of certain specified components, namely collars and cuffs 
(cut or knit-to-shape), drawstrings, shoulder pads or other padding, 
waistbands, belt attached to the article, straps containing elastic, 
and elbow patches. Under this rule, an article otherwise eligible for 
preferential treatment under section 112 will not be ineligible for 
that treatment because the article contains a specified component that 
fails to meet the requirements set forth in section 112(b), regardless 
of the country of origin of the component.
    Subsection (f) of section 112 defines certain terms for purposes of 
sections 112 and 113 of the Act of 2000 and, in paragraph (e)(2), 
states that the terms ``beneficiary sub-Saharan African country'' and 
``beneficiary sub-Saharan African countries'' have the same meaning as 
those terms have under new section 506A(c) discussed above.
    Finally, subsection (g) of section 112 provides that section 112 
takes effect on October 1, 2000, and will remain in effect through 
September 30, 2015.
Section 113
    Section 113 of the Act of 2000 sets forth standards and conditions 
for the designation of beneficiary sub-Saharan African countries and 
for the granting of preferential treatment to textile and apparel 
articles under section 112. These provisions are primarily intended to 
avoid transshipment situations and thus ensure that preferential 
treatment is applied to goods as intended by Congress.
    Subsection (a) of section 113 sets forth various terms and 
conditions that a potential beneficiary sub-Saharan African country 
must satisfy for purposes of preferential treatment under section 112. 
These terms and conditions involve enforcement and related actions to 
be taken by, and within, those potential beneficiary sub-Saharan 
African countries and thus, except in the case of paragraphs (a)(1)(F) 
and (a)(2), do not relate to matters that require regulatory action by 
CBP. Paragraph (a)(1)(F) requires a country to agree to report, on a 
timely basis, at the request of the CBP, documentation establishing the 
country of origin of covered articles as used by that country in 
implementing an effective visa system. For purposes of paragraph 
(a)(1)(F), paragraph (a)(2) states that documentation regarding the 
country of origin of the covered articles includes documentation such 
as production records, information relating to the place of production, 
the number and identification of the types of machinery used in 
production, the number of workers employed in production, and 
certification from both the manufacturer and the exporter.
    Subsection (b) of section 113 sets forth regulatory standards for 
purposes of preferential treatment under section 112, prescribes a 
specific factual determination that the President must make regarding 
the implementation of certain procedures and requirements by each 
beneficiary sub-Saharan African country, prescribes a penalty that the 
President must impose on an exporter if the President determines that 
the exporter has engaged in transshipment, specifies when transshipment 
occurs for purposes of the subsection, and sets forth responsibilities 
of CBP regarding monitoring and reporting to Congress on actions taken 
by countries in sub-Saharan Africa. The specific provisions under 
subsection (b) that require regulatory action by CBP are the following:
    1. Paragraph (b)(1)(A) provides that any importer that claims 
preferential treatment under section 112 must comply with customs 
procedures similar in all material respects to the requirements of 
Article 502(1) of the NAFTA as implemented pursuant to United States 
law, in accordance with regulations promulgated by the Secretary of the 
Treasury. The NAFTA provision referred to in paragraph (b)(1)(A) 
concerns the use of a Certificate of Origin and specifically requires 
that the importer (1) make a written declaration, based on a valid 
Certificate of Origin, that the imported good qualifies as an 
originating good, (2) have the Certificate in its possession at the 
time the declaration is made, (3) provide the Certificate to CBP on 
request, and (4) promptly make a corrected declaration and pay any 
duties owing where the importer has reason to believe that a 
Certificate on which a declaration was based contains information that 
is not correct.
    2. Paragraph (b)(2) provides that the Certificate of Origin that 
otherwise would be required pursuant to the provisions of paragraph 
(b)(1)(A) will not be required in the case of an article imported under 
section 112 if that Certificate of Origin would not be required under 
Article 503 of the NAFTA (as implemented pursuant to United States 
law), if the article were imported from Mexico. Article 503 of the 
NAFTA sets forth, with one general exception, three specific 
circumstances in which a NAFTA country may not require a Certificate of 
Origin.
    Finally, subsection (c) of section 113 requires CBP to provide 
technical assistance to the beneficiary sub-Saharan African countries 
and to send production verification teams to at least four beneficiary 
sub-Saharan African countries each year, and subsection (d) of section 
113 contains an appropriation authorization to carry out these duties. 
These provisions are not addressed in the regulatory changes adopted as 
a final rule in this document.

Interim Regulatory Amendments in T.D. 00-67

    The interim amendments to the CBP regulations set forth in T.D. 00-
67 to implement the trade benefit provisions of the Act of 2000 
consisted of the following: (1) The addition of a new Sec.  10.178a (19 
CFR 10.178a) reflecting the non-textile duty-free treatment provisions 
of new section 506A of the GSP statute as added by section 111(a) of 
the Act of 2000; (2) the addition of new Sec. Sec.  10.211 through 
10.217 (19 CFR 10.211 through 10.217) to implement those textile and 
apparel preferential treatment provisions within sections 112 and 113 
of the Act of 2000 that relate to U.S. import procedures; and (3) the 
addition of a reference in the list of entry records in the Appendix 
(the interim ``(a)(1)(A) list'') to Part 163 (19 CFR Part 163) to cover 
AGOA textile documentation.
    T.D. 00-67 also included a number of interim amendments to the 
existing CBP regulations concerning the Generalized System of 
Preferences (GSP) program (19 CFR 10.171-10.178) to implement previous 
statutory and other changes to that program and to correct several out-
of date statutory references. The specific GSP regulations affected 
were Sec. Sec.  10.171(a), 10.175(e), 10.176(a), and 10.176(c) (19 CFR 
10.171(a), 10.175(e), 10.176(a), and 10.176(c)). For more detailed 
information concerning these regulatory changes, please see T.D. 00-67.
    Although the interim regulatory amendments were promulgated without 
prior public notice and comment procedures and took effect on October 
1, 2000, T.D. 00-67 nevertheless provided for the submission of public 
comments which would be considered before adoption of the interim 
regulations as a final rule, and the prescribed public comment period 
closed on December 4, 2000. A discussion of the comments received by 
CBP is set forth below.

[[Page 30362]]

Interim Regulatory Amendments in T.D. 03-15

    As a consequence of the statutory changes made by section 3108 of 
the Act of 2002 and the modifications to the HTSUS made by Proclamation 
7626, T.D. 00-67 no longer fully reflected the state of the law. 
Accordingly, T.D. 03-15 set forth interim amendments involving the 
textile and apparel provisions in the AGOA and, in part, reflected 
changes made to those statutory provisions by section 3108 of the Act 
of 2002. The specific statutory changes addressed in T.D. 03-15 
involved the amendment of several AGOA regulatory provisions to clarify 
the status of apparel articles assembled from knit-to-shape components, 
the inclusion of a specific reference to apparel articles formed on 
seamless knitting machines, a change of the wool fiber diameter 
specified in one provision and the addition of a new provision to cover 
additional production scenarios involving the United States and AGOA 
beneficiary countries. T.D. 03-15 also included a number of other 
changes to the AGOA implementing regulations to clarify a number of 
issues that arose after their original publication. For further details 
regarding these regulatory provisions, see T.D. 03-15.
    The interim regulatory amendments promulgated by T.D. 03-15 became 
effective on March 21, 2003. However, public comments on the interim 
amendments were solicited, and a discussion of the comments received 
during the comment period, which closed on May 20, 2003, is set forth 
below.

Regulatory Amendments To Reflect Changes Made by the Acts of 2004 and 
2006

    This final rule incorporates in the regulatory text statutory 
changes made to the AGOA by section 7 of the Act of 2004 (and the 
modifications to the HTSUS made by Proclamation 7808) and by section 
6002 of the Act of 2006 (and the modifications to the HTSUS made by 
Proclamation 8114). As stated earlier, because these changes to the 
interim regulatory texts, as described below, are not interpretative in 
nature but closely reflect the language of the statute, they are 
included in this final rule without need for comment.
    1. In Sec.  10.178a, paragraphs (d)(2) and (d)(4)(ii) are revised 
to reflect the amendment to section 506A(b)(2)(B) of the GSP statute 
providing for the inclusion of the cost or value of materials produced 
in ``former beneficiary sub-Saharan African countries'' toward 
satisfying the GSP 35% value-content requirement.
    2. In Sec.  10.178a, a new paragraph (d)(5) is added to reflect the 
definition of
    ``former beneficiary sub-Saharan African country'' set forth in 
amended section 506A(c) of the GSP statute.
    3. In Sec.  10.212, a definition of ``ethnic printed fabric'' is 
added as new
    paragraph (d) to reflect the inclusion of references to, and 
description of, ``ethnic printed fabric'' in paragraph (b)(6) of 
section 112 of the AGOA.
    4. In Sec.  10.212, a definition of ``former beneficiary country'' 
is added as new paragraph (f) to reflect the inclusion of references to 
this term in paragraphs (b)(3), (b)(7) and (e)(2) of section 112 of the 
AGOA as well as the definition of this term set forth in new paragraph 
(f)(4) of section 112 of the AGOA.
    5. In Sec.  10.212, a definition of ``lesser developed beneficiary 
country'' is added as new paragraph (j) to reflect the inclusion of 
references to this term in paragraphs (b)(8) and (c) of section 112 of 
the AGOA.
    6. In Sec.  10.213, paragraphs (a)(1) and (a)(2) are revised to 
conform to the amendment of the product description in the introductory 
text of paragraph (b)(1) of section 112 of the AGOA.
    7. In Sec.  10.213, paragraph (a)(4) is revised to conform to the 
amendment of the product description in the introductory text of 
paragraph (b)(3) of section 112 of the AGOA.
    8. In Sec.  10.213, paragraph (a)(8) is revised to conform to the 
amendment of the product description in paragraph (b)(5)(A) of section 
112 of the AGOA.
    9. In Sec.  10.213, paragraph (a)(10) is revised to conform to the 
amendment of the product description in paragraph (b)(6) of section 112 
of the AGOA.
    10. In Sec.  10.213, paragraph (a)(11) is revised to conform to the 
amendment of the product description in paragraph (b)(7) of section 112 
of the AGOA.
    11. In Sec.  10.213, a new paragraph (a)(12) is added to reflect 
the addition of paragraph (b)(8) to section 112 of the AGOA.
    12. In Sec.  10.213, the de minimis rule set forth in re-designated 
paragraph (c)(1)(iv) (formerly paragraph (b)(1)(iv)) is revised to 
conform to the amendments made to section 112(d)(2) of the AGOA (now 
section 112(e)(2)). An explanation for the re-designation of former 
paragraph (b) of the interim regulatory texts as paragraph (c) is set 
forth below in the discussion of comments in response to T.D. 00-67.
    13. In Sec.  10.213, re-designated paragraph (c) (formerly 
paragraph (b)), entitled ``Special rules for certain component 
materials,'' is revised by adding a new paragraph (c)(1)(v) to reflect 
the inclusion of an additional special rule relating to certain 
specified components in new paragraph (d)(3) of section 112 of the AGOA 
(now section 112(e)(3)).
    14. The preference group descriptions on the Certificate of Origin 
set forth under paragraph (b) of Sec.  10.214 are revised to reflect 
the amended product descriptions in section 112(b) of the AGOA. The 
instructions for completion of the Certificate in paragraph (c) of 
Sec.  10.214 are also revised as appropriate to reflect the changes 
made to the Certificate.
    CBP is now publishing one document that (1) addresses both the 
comments submitted on the interim regulations published in T.D. 00-67 
and T.D. 03-15, and (2) adopts, as a final rule, the AGOA implementing 
regulations contained in the two interim rule documents with changes 
reflecting the statutory amendments made by the Acts of 2004 and 2006 
as well as other changes identified and discussed below.

Discussion of Comments in Response to T.D. 00-67

    A total of 19 commenters responded to the solicitation of public 
comments in the October 5, 2000, interim rule document referred to 
above. One commenter addressed the interim conforming amendments to the 
GSP regulations, and the other 18 commenters made a variety of 
observations or suggestions regarding the interim AGOA implementing 
regulations.
    It should be noted that the comments received in response to T.D. 
00-67 were received prior to the subsequent statutory changes effected 
by section 3108 of the Act of 2002, the regulatory interim amendments 
made by T.D. 03-15, and the statutory changes effected by section 7 of 
the Act of 2004 and section 6002 of the Act of 2006. To the extent that 
the comments received were unaffected by these subsequent changes, CBP 
has responded.

I. Conforming GSP Regulations Changes

    Comment:
    The comment on the interim conforming amendments to the existing 
GSP regulations concerned specifically the revision of paragraph (a) of 
Sec.  10.176. This commenter asserted that, in view of the decision in 
Uniden America Corp. v. United States, 120 F.Supp. 2d 1091, 24 CIT 1191 
(2000), revised Sec.  10.176(a) does not adequately implement the 
changes made to the GSP statute by section 226 of the Customs and Trade 
Act of 1990 in two respects. First, the revised regulation should 
provide that the ``substantial transformation'' test

[[Page 30363]]

applies to the ``eligible article'' rather than each of its detachable 
elements. Second, the revised regulation should clarify that ``simple 
combining or packaging operations'' do not include complex 
manufacturing operations that also involve the combining or packaging 
of foreign components.
    CBP's Response:
    The commenter seeks a change to revised Sec.  10.176(a) based on 
the decision in Uniden, rather than the language of section 226 of the 
Customs and Trade Act of 1990. In Uniden, the Court of International 
Trade determined that a cordless phone assembled in a GSP eligible 
country and packaged with an A/C adapter imported from a non-GSP 
eligible country was a product of the GSP eligible country and entitled 
to GSP preferential tariff treatment when imported into the United 
States.
    CBP does not agree that the changes to revised Sec.  10.176(a) 
suggested by the commenter should be implemented as part of this final 
rule document. Section 226 of the Customs and Trade Act of 1990 (Public 
Law 101-382, 104 Stat. 660) amended the GSP statute (19 U.S.C. 2463) to 
include explicit country of origin language nearly identical to that 
found in the Caribbean Basin Economic Recovery Act (CBERA) (19 U.S.C. 
2703). As the legislative history of section 226 indicates that the GSP 
and CBERA ``growth, product or manufacture'' requirements should be 
applied identically (see House Report 101-650, 101st Congress, 2d 
Session, at page 137), revised Sec.  10.176(a) was drafted to closely 
follow the corresponding CBERA regulatory provision (19 CFR 10.195(a)). 
Consistent with this legislative intent, CBP believes that it would be 
inappropriate to alter Sec.  10.176(a) in the manner suggested by the 
commenter.

II. AGOA Implementing Regulations

    All of the comments received on the interim AGOA implementing 
regulations were directed to the textile and apparel provisions of 
sections 112 and 113 of the AGOA, and thus there were no comments 
pertaining to the expanded GSP provisions contained in section 111 of 
the AGOA. The comments submitted by these 18 commenters are summarized 
and responded to below.
General Comments Regarding Scope of Intended Benefits
    Four commenters expressed views regarding the scope of the AGOA, 
particularly in regard to its intended beneficiaries.
    Comment:
    Three commenters asserted that because the Congressional intent 
behind the AGOA was to encourage two-way trade between the United 
States and the countries of sub-Saharan Africa with no other third 
country participation, CBP must bar preferential entry of any 
merchandise under the AGOA that has undergone any processing or been 
advanced in value or improved in condition in any way other than in the 
United States or a designated beneficiary country, except for one 
specific provision involving lesser developed beneficiary countries. 
Accordingly, these commenters stated that CBP must ensure that the 
final regulations maximize trade benefits to the beneficiary countries 
and to producers in the United States.
    CBP's Response:
    CBP agrees that the AGOA was intended to promote the creation of a 
climate conducive to greater levels of trade and investment and to 
foster a growing economic partnership between the United States and 
sub-Saharan African countries (see the discussion of the beneficiary 
country eligibility criteria in the Conference Report relating to the 
Act of 2000, House Report 106-606, 106th Congress, 2d Session, at p. 
68).
    CBP also agrees that under the statutory scheme, the processing of 
textile and apparel articles entitled to preferential treatment under 
the AGOA is specified to occur either in the United States or in the 
AGOA beneficiary countries (and in certain instances, in former 
beneficiary countries, if any), except as regards the sourcing of 
fabric or yarn in the case of certain lesser developed beneficiary 
countries. In addition, the direct importation requirement set forth in 
the statute and regulations operates as a practical matter to limit the 
feasibility of operations in countries other than the United States or 
AGOA beneficiary countries.
    Comment:
    One commenter complained that the AGOA textile and clothing 
provisions substantially dilute the benefits of the NAFTA for Canadian 
textile producers and their United States customers and suppliers. This 
commenter noted in this regard that the AGOA provisions impair the 
ability of United States fabric and apparel producers to source yarns 
and fabrics from all the available competitive suppliers in the NAFTA 
region, because they are limited to buying from United States 
suppliers. The commenter argued that this runs contrary to the textile/
apparel infrastructure that has emerged under the NAFTA. Another 
commenter expressed regret that Canadian and NAFTA yarns and fabrics 
are excluded from eligibility under the AGOA.
    CBP's Response:
    Although CBP agrees that the provisions provide limited benefits to 
Canadian textile producers, CBP believes this to be consistent with the 
language and intent of the legislation. The intent of the legislation 
was to foster increased opportunities for the United States and 
countries in the sub-Saharan African region. Thus, where the 
legislation requires that yarns and fabric for certain apparel articles 
be wholly formed in the United States, it does not allow for the 
sourcing of yarns and fabric from other NAFTA countries. CBP notes that 
the ``wholly formed'' requirement would not preclude the sourcing of 
fibers from NAFTA countries (or any other countries) so long as those 
fibers are spun into yarns and used to form qualifying fabric in the 
United States.
Definition of ``Apparel Articles''
    Comment:
    One commenter stated that within the Sec.  10.212 definition of 
``apparel articles'' the reference to HTSUS subheading ``6406.99'' is 
incorrect because that subheading includes rubber/plastic footwear 
parts. This commenter suggested that the correct reference should be to 
subheading ``6406.99.15.''
    CBP's Response:
    CBP agrees with the commenter that the reference to HTSUS 
subheading 6406.99 is incorrect. In 2000, the reference should have 
been to subheading 6406.99.15 so as to limit the articles to those made 
of textile materials. In 2012, the subheading was changed from 
6406.99.15, HTSUS to 6406.90.15, HTSUS. Since the definition of 
``apparel articles'' in Sec.  10.212 was directed to textile apparel 
articles, the reference to subheading 6406.99 in this definition (now 
Sec.  10.212(a)) has been replaced in this final rule document by a 
reference to subheading 6406.90.15, HTSUS.
Definitions of ``Knit-To-Shape'' and ``Major Parts''
    Comment:
    One commenter noted with regard to Sec.  10.212 that definitions of 
``knit-to-shape'' and ``major parts'' already appear in Sec.  102.21 of 
the CBP regulations (19 CFR 102.21). The commenter argued that those 
definitions should not be repeated in Sec.  10.212 because meanings are 
presumed to be consistent throughout the regulations.
    CBP's Response:
    CBP does not agree with this commenter. While there may be cases in

[[Page 30364]]

which definitions or meanings might have broad regulatory application 
(see, for example, Sec.  101.1 of the CBP regulations (19 CFR 101.1) 
which sets forth various definitions that generally apply throughout 
the CBP regulations), no presumption of consistency can operate where, 
as in the case of both Sec. Sec.  10.212 and 102.21, the introductory 
text of the definitions provision expressly limits application of the 
definitions to the specific regulatory context in which the definitions 
appear. CBP also believes that, for the convenience of the reader, it 
is generally preferable for a regulatory text to repeat a text that is 
the same as one used in another regulatory context rather than to use a 
cross-reference to that other text, particularly when repeating the 
text will not add significant length to the regulations as a whole.
Meaning of ``Wholly Assembled''
    Comment:
    One commenter took issue with what it believes is an assumption or 
interpretation of CBP that the words ``wholly assembled'' in the 
regulatory texts would preclude partial assembly in the United States. 
This commenter argued that Congress neither intended to penalize goods 
that include value added in the United States nor wanted to discourage 
apparel companies from maximizing the use of U.S. inputs involving 
partial assembly in the United States.
    CBP's Response:
    CBP disagrees with the commenter's view of the intent of Congress. 
Certain of the categories of textile and apparel products entitled to 
preferential treatment under the AGOA specify that the affected 
articles must be ``sewn or otherwise assembled in one or more 
beneficiary sub-Saharan African countries.'' See, for example, section 
112(b)(1) and (b)(2) of the AGOA. [It is noted that the words ``sewn or 
otherwise'' were added to these provisions by section 3108(a) of the 
Act of 2002.] However, section 112(b)(3) of the AGOA specifies that the 
affected apparel articles must be ``wholly assembled in one or more 
beneficiary sub-Saharan African countries.'' CBP believes that adding 
the word ``wholly'' prior to ``assembled'' in the latter provision was 
purposeful and a clear indication of the intent of Congress that, as a 
prerequisite to receiving benefits under this provision, all assembly 
operations must be performed in one or more of the AGOA beneficiary 
countries. In provisions such as those cited above in which the word 
``assembled'' is not prefaced by ``wholly,'' CBP believes that Congress 
intended to permit prior partial assembly operations to be performed in 
the United States. The definitions of ``sewn or otherwise assembled in 
one or more beneficiary countries'' and ``wholly assembled in'' in 
Sec.  10.212 of the regulations give effect to this intent.
Definition of ``Wholly Formed''
    Fourteen commenters submitted observations on the Sec.  10.212 
definition of ``wholly formed'' which was drafted with reference to 
yarns, thread and fabric.
    Comment:
    Two commenters indicated that the reference to ``thread'' in the 
definition was inappropriate because the word ``wholly'' does not 
appear in the statute in the context of thread formation. Rather, these 
commenters noted that the statute merely refers to ``thread formed in 
the United States.'' They therefore suggested that the definition be 
amended to ensure consistency with the wording of the statute.
    CBP's Response:
    CBP agrees. In this regard, it is noted that in T.D. 03-15, CBP 
replaced the original interim Sec.  10.212 definition of ``wholly 
formed'' with two definitions, one covering ``wholly formed'' as it 
relates to fabrics and the other covering ``wholly formed'' as it 
relates to yarns (see the comment discussion relating to wholly formed 
yarns below). This was done to reflect the separate fabric and yarn 
contexts under the statute. The separate definition for wholly formed 
yarns was further revised by removing the words ``or thread'' to 
reflect the fact that, as the commenters correctly point out, the 
statute does not use the word ``wholly'' in the context of thread 
formation.
Wholly Formed Fabrics
    Comment:
    With regard to fabrics, eight commenters expressed the view that 
the concept of ``wholly formed'' encompasses dyeing, printing and 
finishing operations and that, consequently, any requirement that a 
fabric be ``wholly formed in the United States'' means that any dyeing, 
printing or finishing of the fabric also must be performed in the 
United States. Some of the commenters further recommended that the 
regulatory texts be modified to clearly reflect this principle or to 
set forth all processing steps necessary to result in ``wholly formed'' 
fabric.
    Six commenters took the position that dyeing, printing and 
finishing operations do not fall within the concept of ``wholly 
formed'' and that, consequently, a requirement that a fabric be 
``wholly formed in the United States'' does not mean that any dyeing, 
printing or finishing of the fabric must be restricted to the United 
States. Some of the commenters further recommended that the regulatory 
texts be modified to clearly reflect the principle that U.S. fabric may 
be dyed and finished outside the United States.
    CBP's Response:
    The comments regarding the meaning of ``wholly formed'' as it 
applies to fabric fall on both sides of the issue of whether dyeing, 
printing and/or finishing should be included within the scope of the 
term. Some argue strenuously that dyeing, printing and/or finishing 
must be encompassed within the definition of ``wholly formed'', while 
others argue just as strenuously that these processes clearly are not 
part of fabric formation. Both sides argue that their view reflects the 
intent of Congress.
    CBP agrees with the latter position. ``Form'' refers to shape, 
being, existence. ``Wholly'' refers to completeness. Fabric is 
completely shaped, or wholly formed, prior to finishing. CBP disagrees 
with those who argue that any definition of ``wholly formed'' that does 
not include dyeing, printing and finishing would render the term 
``wholly'' meaningless. It has meaning as it applies to the term 
``formed;'' that is, it refers to all of the processes that contribute 
to the formation of the fabric. See also the response to the next 
comment.
    Comment:
    CBP is correct in interpreting that dyeing, printing and similar 
finishing operations may be performed on fabrics in the United States 
or in the beneficiary country. Consistent with the Breaux-Cardin rules, 
CBP has not included such dyeing, printing and finishing operations (or 
similar procedures) in the definition of operations that occur under 
the term ``wholly formed.'' As a result, the interim regulations do not 
prohibit such dyeing and finishing operations from being performed in 
beneficiary countries.
    CBP's Response:
    CBP believes it would be inconsistent with the plain language of 
the AGOA to conclude that printing and/or dyeing is part of the fabric 
formation process. In drafting the interim regulations, CBP crafted a 
definition of ``wholly formed'' which was based in part on the 
definition of ``fabric-making process'' contained in Sec.  102.21(b)(2) 
of the CBP regulations (19 CFR 102.21(b)(2)) and which was also 
intended to reflect the common meanings of the words ``wholly'' and 
``formed.'' ``Form'' is defined, in part, in Webster's Third New 
International Dictionary (1993), at 893, as: ``1a. to give form or 
shape to: . . . 2.a.

[[Page 30365]]

to give a particular shape to: shape, mold, or fashion into a certain 
state or condition or after a particular model.'' ``Wholly'' is defined 
in Webster's Third New International Dictionary (1993), at 2612, as: 
``1. To the full or entire extent: without limitation or diminution or 
reduction: ALTOGETHER, COMPLETELY, TOTALLY. 2. to the exclusion of 
other things: solely.'' Similar definitions of both terms may be found 
in various lexicographic sources.
    ``Finishing'' is defined in Webster's Third New International 
Dictionary (1993), at 854, as: ``the act or process of completing: the 
final work upon or ornamentation of a thing. specif : the processing 
applied to cloth after it is taken from the loom.'' Fairchild's 
Dictionary of Textiles, (7th ed. 1996), at 220, defines finishing as a 
``[s]equence of treatments (excluding coloration) worked on greige 
fabric intended for sale to consumers or downstream users prior to that 
sale.'' In the 6th edition of Fairchild's Dictionary of Textiles, 
(1979), at 238, ``finishing'' is defined as: ``[a] process through 
which fabric passes after being removed from the loom. (1) To improve 
appearance. . . . (2) To affect stiffness, weight, elasticity, 
softness. . . . (3) To facilitate care. . . . (4) To protect the 
wearer. . . .'' In the Dictionary of Fiber & Textile Technology (KoSa, 
1999), at 86, ``finishing'' is defined as: ``All the processes through 
which fabric is passed after bleaching, dyeing, or printing in 
preparation for the market or use. Finishing includes such operations 
as heat-setting, napping, embossing, pressing, calendering, and the 
application of chemicals that change the character of the fabric. The 
term finishing is also sometimes used to refer collectively to all 
processing operations above, including bleaching, dyeing, printing, 
etc.'' In Fairchild's Dictionary of Textiles (Second printing, 1970), 
at 230, ``finishing'' is defined as: ``All processes through which 
fabric passes after being taken from loom. This covers bleaching, 
dyeing, sizing, and processes which give the desired surface effect, 
e.g., napping, calendering, embossing, etc. . . .'' CBP's review of the 
above definitions reveals that the definition of ``finishing'' found in 
the cited technical sources is consistent with the common meaning of 
the term as defined in general lexicographic sources. Thus, 
``finishing'' in regard to fabric has been understood in the textile 
industry, as reflected by the various definitions cited above, as 
referring to processes which occur to fabric after it has been formed.
    Absent evidence of a different commercial meaning or a legislative 
intent to the contrary, the terms of a tariff statute are to be given 
their common meaning. Based on the common meaning of the terms 
``wholly'' and ``formed,'' the position of CBP is that dyeing, printing 
and finishing of fabric are not part of the fabric formation process 
and thus do not fall within the scope of ``wholly formed'' as it 
relates to fabric.
    As to the reference in the comment to the Breaux-Cardin rules (the 
textile and apparel country of origin rules set forth in section 334 of 
the Uruguay Round Agreements Act (URAA), and implemented in Sec.  
102.21 of the CBP regulations (19 CFR 102.21)), CBP notes that the AGOA 
is a preferential tariff treatment program which is based, for textile 
apparel, upon specified manufacturing processes; it is not a program 
based upon origin.
    Comment:
    Processes such as bleaching, dyeing and printing that are commonly 
recognized as ``finishing operations'' are separate from the forming of 
the materials and it is therefore appropriate that those processes 
should not affect the definition of ``wholly formed.'' The final rule 
should clarify the distinction between formation and finishing.
    CBP's Response:
    Based on the definitions cited above in this comment discussion, 
CBP agrees with the comment, including the suggestion that the final 
regulations should contain a clarification regarding the fact that the 
processes of dyeing, printing and finishing are distinct from fabric 
formation. See the description of the regulatory text changes at the 
end of this wholly formed fabric comment discussion.
    Comment:
    In the terminology of the textile industry, ``finishing'' is 
necessary before fabric can be used, and without it the fabric is 
``unfinished,'' the opposite of ``wholly formed.'' Apparel is not made 
of ``unfinished'' fabric, and ``unfinished'' cannot be stretched to 
mean ``complete,'' ``entire'' or ``whole.''
    CBP's Response:
    CBP disagrees with this comment. As already stated, CBP believes 
that finishing and formation are separate processes. ``Unfinished'' is 
not the opposite of ``wholly formed,'' and CBP also notes that 
unfinished fabric is still fabric. The statute requires formation of 
fabric. Based upon the language of the statute and the common meaning 
of the terms chosen by Congress to express its intent in the statute, 
``wholly formed'' as used in the AGOA speaks to formation of fabric and 
does not include finishing.
    Comment:
    The common definition of ``formed'' as it relates to fabric is that 
once the yarn is spun and fabric is woven or knit, it is considered 
formed. Printing, dyeing and finishing (or similar processes) are 
irrelevant and not essential to the fabric formation process and thus 
should be allowable operations in the United States and/or beneficiary 
countries. It should be made clear that one can export greige fabric to 
the AGOA beneficiary country and then dye, cut and assemble there.
    CBP's Response:
    Based on the definitions cited earlier in this wholly formed fabric 
comment discussion, CBP agrees that printing, dyeing and finishing are 
not part of the fabric formation process. CBP also agrees that dyeing, 
printing and finishing operations may occur in the United States or in 
the AGOA beneficiary countries except in the case of provisions subject 
to the restrictions under subheading 9802.00.80, HTSUS.
    Comment:
    The plain meaning of the term ``wholly formed'' when applied to 
fabric refers not only to the basic greige goods but also to any 
dyeing, printing and other finishing operations prior to cutting of the 
apparel components, since otherwise the word ``wholly'' would be 
essentially meaningless.
    CBP's Response:
    As discussed above, ``wholly'' has meaning as it applies to 
``formed.'' Congress is presumed to use words according to their 
common, ordinary meaning in drafting legislation unless some other 
intent is evident. Nothing in the AGOA or in the Conference Report 
relating to the Act leads CBP to believe that Congress intended a 
meaning other than the plain meaning of the words ``wholly'' and 
``formed.'' Therefore, based on the common meanings of ``wholly'' and 
``formed,'' CBP disagrees with the commenter's assertion that ``wholly 
formed'' as it refers to fabric includes dyeing, printing and finishing 
operations.
    Comment:
    If Congress had intended to limit the phrase ``wholly formed'' to 
the formation of the greige goods, there would have been no need to 
include the word ``wholly'' in the statute. There is no circumstance in 
which greige goods may be ``partially'' formed in one country and 
``partially'' formed in another country. Since language in a statute 
must be read to give effect to all of its terms, the use of the word 
``wholly'' was evidently intended to reference dyeing, printing and 
finishing operations.
    CBP's Response:
    As already discussed above, ``wholly'' is an adverb that applies to 
``formed.'' An examination of the common meanings of the terms, which 
Congress

[[Page 30366]]

is presumed to have intended, leads to the conclusion that ``wholly 
formed'' as it pertains to fabric means the fabric is completely shaped 
or formed. CBP is giving effect to all the terms of the statute 
according to their context. Although CBP agrees with the commenter's 
assertion that ordinarily greige fabric is not ``partially'' formed in 
one country and ``partially'' formed in another country, CBP disagrees 
with the commenter's underlying premise that fabric cannot be ``wholly 
formed'' in the greige state.
    Comment:
    In sections 112(b)(1) and (b)(2) of the AGOA, ``wholly'' means 
fabrics which have been processed up to the point at which they are 
ready to be transformed into a new and different article of commerce, 
that is, apparel. Before fabric can be transformed into apparel through 
cutting and assembly, it must first be scoured and bleached or dyed or 
printed and finished. Therefore, ``fabrics wholly formed'' means 
fabrics which have been formed from their constituent yarns by 
knitting, weaving, etc. and subsequently scoured or bleached or dyed or 
printed and finished in the United States only (the word ``wholly'' 
makes it clear that none of these processes may be carried out on the 
fabric in any other country).
    CBP's Response:
    This comment asserts that dyeing, printing and finishing must be 
within the meaning of ``fabrics wholly formed'' without offering 
support for the assertion other than an argument that such processing 
must occur before fabric is cut and assembled into apparel. Although 
fabric is normally dyed or printed and finished before being cut and 
assembled into goods, that is not always the case. Some garments are 
garment-dyed, a process recognized by Congress in section 112(b)(1)(B) 
of the AGOA which requires apparel to be assembled in one or more AGOA 
beneficiary countries from ``fabrics wholly formed'' and cut in the 
United States. If ``fabrics wholly formed'' meant that a greige fabric 
could not be ``wholly formed'' and that to be ``wholly formed'' a 
fabric had to be dyed or printed and finished in the United States, it 
would be incongruous for Congress to provide for garment-dyeing in the 
beneficiary countries in section 112(b)(1)(B) of the AGOA as it did. 
CBP is not persuaded by this comment and for reasons already stated 
maintains that dyeing, printing and finishing are operations separate 
and apart from the formation of fabric and thus do not fall within the 
scope of ``wholly formed'' as it pertains to fabric.
    Comment:
    Longstanding practice has made a distinction between ``formed'' 
(that is, knitted, woven, tufted, etc.) and ``wholly formed'' (meaning 
formed and subject to further processing to complete its identity, that 
is, preparation, dyeing or printing, and finishing). Congress clearly 
intended to make this distinction in the AGOA.
    CBP's Response:
    CBP disagrees with the assertion made in the comment which is 
offered without support. The term ``wholly formed'' appears in 
subheading 9802.00.90, HTSUS, which is the provision created under the 
NAFTA to succeed the Special Regime program and which covers textile 
and apparel goods assembled in Mexico from fabric components wholly 
formed and cut in the United States. The term ``wholly formed'' has 
been interpreted by CBP in numerous rulings under this provision as 
referring to fabric that is woven or milled in the United States. See, 
for example, HQ 558708 of June 14, 1995, and HQ 559411 of April 7, 
1997. The assertion of a ``longstanding practice'' is refuted by these 
rulings.
    Comment:
    In order to be consistent with the Special Access Program, as 
Congress intended, CBP must define the ``forming'' of fabric in the 
AGOA regulations to include the processes of dyeing, printing and 
finishing in addition to the processes of weaving and knitting. The 
Special Access Program clearly applies to goods that only undergo the 
overseas process of assembly and do not undergo other fabrication 
processes overseas, including dyeing, printing and finishing in the 
beneficiary country. Manifestly, fabric components exported from the 
United States under the Special Access Program could only be ``in 
condition ready for assembly with no further fabrication'' if one of 
the two exclusive steps undertaken before export from the United States 
(that is, ``forming'' and ``cutting'' the fabric) included the 
processes of dyeing, printing and finishing, and those processes would 
most sensibly be placed within the category of fabric formation.
    CBP's Response:
    CBP agrees that Congress wanted the AGOA to be administered in a 
manner similar to the way in which the Special Access program is 
administered. This desire is evident in the Conference Report relating 
to the Act of 2000. However, CBP finds nothing in the Federal Register 
notices regarding that program or in the language of the tariff 
provision providing for implementation of the program which supports 
the argument that ``wholly formed'' in reference to fabric requires the 
inclusion of finishing operations. In fact, notices regarding the 
Special Access program support the opposite conclusion. In the initial 
notice announcing the implementation of the Special Access program, 
published in the Federal Register (51 FR 21208) on June 11, 1986, the 
Committee for the Implementation of Textile Agreements (CITA) referred 
to the requirement that fabric be ``entirely U.S. formed'' or 
``entirely formed in the United States.'' In discussing this 
requirement, the notice stated that ``[f]abric which . . . would have 
to be labeled `Imported cloth, finished in the USA' or `Made in 
(foreign country), finished in USA' does not qualify as U.S. formed and 
cut fabric. . . .'' A later notice by CITA to clarify requirements and 
procedures for the Special Access program, published in the Federal 
Register (52 FR 26057) on July 10, 1987, stated the following in regard 
to the definition of U.S.-formed and cut parts: (1) greige goods 
imported into the United States and then finished in the United States 
do not qualify under the program because that fabric is foreign-formed; 
and (2) fabric that is woven or knitted in the United States from 
foreign yarn is considered U.S.-formed for the purposes of this 
program. Similar language is found in the notice announcing the 
requirements for participation in the Special Regime program, published 
in the Federal Register (53 FR 15724) on May 3, 1988, which stated that 
greige goods imported into the United States and then finished in the 
United States do not qualify under the Special Regime program because 
that fabric is foreign-formed.
    Thus, CITA recognized a distinction between fabric formation and 
fabric finishing and viewed dyeing and printing as being in the latter 
category. There is no discussion of finishing of fabrics as being 
considered part of fabric formation in the notices regarding the 
Special Access and Special Regime programs.
    Comment:
    In order to qualify under section 112(b)(1) of the AGOA, the 
apparel articles must be either ``entered under subheading 9802.00.80'' 
or ``qualified for entry'' under that subheading but for the fact of 
certain operations performed on the assembled articles, and, in order 
to qualify under subheading 9802.00.80, the components exported to the 
foreign country must be ``ready for assembly without further 
fabrication.'' This means that in order to qualify under subheading 
9802.00.80, neither the fabric nor the fabric components could be sent 
to the foreign country and subjected to operations such as dyeing, 
printing and other finishing operations (in other words, any operations 
such as

[[Page 30367]]

dyeing, printing and other finishing operations must be done in the 
United States prior to the export of the fabric components).
    CBP's Response:
    CBP agrees that fabric formed and cut in the United States and used 
in the assembly of apparel articles described in Sec.  10.213(a)(1) and 
(a)(2) (which corresponds to Sec.  112(b)(1) of the Act) cannot be 
subject to dyeing, printing or most other finishing operations in an 
AGOA beneficiary country. The apparel described in Sec.  10.213(a)(1) 
is entered under subheading 9802.00.80, HTSUS, which precludes 
processing of the U.S. components outside the United States other than 
by assembly operations or operations incidental to assembly. The 
apparel described in Sec.  10.213(a)(2) are goods which would have 
qualified for entry under subheading 9802.00.80, HTSUS, but for the 
performance of certain enumerated operations. The regulations 
implementing subheading 9802.00.80, HTSUS (see, in particular, 19 CFR 
10.16(c) which delineates what will not be considered ``incidental'' to 
assembly), preclude bleaching, dyeing and similar processing of the 
fabric components abroad. However, there is no requirement that these 
processes be performed in the United States prior to the foreign 
assembly. Thus, for instance, a U.S. importer wishing to garment dye 
his goods in the United States after assembly in an AGOA beneficiary 
country would be able to do so after entry of the assembled goods under 
subheading 9802.00.80, HTSUS.
    Comment:
    There are close parallels between the two special access rules 
contained in Appendix 2.4 of NAFTA Annex 300-B and the first two 
categories of goods afforded preferential treatment under the AGOA. As 
regards the second special access rule (which is implemented in HTSUS 
subheading 9802.00.90) and the second AGOA category, each contains the 
same two core requirements, that is, (1) that all the fabric components 
must be formed and cut in the United States and (2) that those fabric 
components must, by virtue solely of those forming and cutting 
processes, be in condition ready for assembly overseas (certain 
specified post-assembly dyeing and washing operations are permitted 
under each provision); thus, a ``fabric component'' is produced by the 
operations of forming and cutting, and only by those operations. 
However, in the case of the first special access rule and the first 
AGOA category (which are both covered by HTSUS subheading 9802.00.80 
and thus include two identical core requirements, that is, that the 
components must be fabricated in the United States and must be exported 
in a condition ready for assembly without further fabrication), the two 
core requirements could only be met if the fabric components were fully 
dyed, printed, and finished in the United States, because there is no 
provision for post-assembly dyeing, printing, and finishing overseas. 
Therefore, if the phrase ``wholly formed and cut'' in the AGOA does not 
include dyeing, printing and finishing operations, the first AGOA 
category would become meaningless because its terms could not be met as 
a technological matter.
    CBP's Response:
    CBP disagrees with the premise of the argument in the comment that 
the limitations or requirements set forth in subheading 9802.00.80, 
HTSUS, and applicable to the goods described in Sec.  10.213(a)(1) and 
(a)(2) (section 112(b)(1)(A) and (B) of the AGOA) impact upon the 
meaning of ``wholly formed and cut'' as used in the AGOA. The same 
terms, ``wholly formed'' and ``cut,'' appear in Sec.  10.213(a)(3) 
(section 112(b)(2) of the AGOA), albeit in a different order but, in 
CBP's view, with the same meaning. ``Wholly formed'' is used in all 
three paragraphs in regard to fabric. The limitations associated with 
subheading 9802.00.80, HTSUS, are clearly tied to section 112(b)(1)(A) 
and (B) of the AGOA because Congress specifically required, in the case 
of goods described in section 112(b)(1)(A) of the AGOA, that the goods 
be entered under subheading 9802.00.80, HTSUS, and, in the case of 
goods described in section 112(b)(1)(B) of the AGOA, that the goods 
would have qualified for entry under subheading 9802.00.80, HTSUS, but 
for the performance of certain enumerated operations. However, section 
112(b)(2) of the AGOA, which requires the use of fabric ``wholly 
formed'' in the United States, contains no mention of subheading 
9802.00.80, HTSUS. If CBP were to adopt the reasoning set forth in the 
comment, CBP would impose a restriction under section 112(b)(2) of the 
AGOA that Congress clearly intended to apply in the case of goods 
described in section 112(b)(1)(A) and (B) of the AGOA but just as 
clearly did not include in section 112(b)(2) of the AGOA.
    Comment:
    Similar use of the word ``wholly'' is found in subheading 
9802.00.90, HTSUS, which confers duty-free entry under the NAFTA for 
certain goods imported from Mexico, that is, textile and apparel goods 
``assembled in Mexico in which all fabric components were wholly formed 
and cut in the United States. . . .'' Clearly, the intent of Congress 
in that provision as well as in the AGOA was to go beyond those 
processes by which yarns are manufactured into fabric and to include 
fabric finishing operations in the United States.
    CBP's Response:
    CBP disagrees that the words ``assembled in Mexico in which all 
fabric components were wholly formed and cut in the United States'' in 
subheading 9802.00.90, HTSUS, and CBP rulings construing that 
subheading support a conclusion that, for purposes of the AGOA, dyeing, 
printing and finishing operations must occur in the United States for 
fabric to be ``wholly formed.'' There is nothing in the language of 
subheading 9802.00.90, HTSUS, or in the rulings issued by CBP 
interpreting that provision that would compel that conclusion. On the 
contrary, subheading 9802.00.90, HTSUS, and Sec.  10.213(a)(2) of the 
regulations (section 112(b)(1)(B) of the AGOA) expressly permit garment 
dyeing and other finishing operations after assembly. The inclusion of 
references to those post-assembly operations supports the conclusion 
that dyeing or finishing of fabric prior to cutting and exportation of 
the components for assembly is not required for the fabric to be 
``wholly formed.'' In fact, a requirement to dye the fabric prior to 
exportation of the cut components would be counterproductive in the 
case of a producer planning to garment dye his apparel after assembly.
    Comment:
    Rulings issued by CBP construing HTSUS subheading 9802.00.90 
support the conclusion that the references to fabrics ``wholly formed'' 
in the United States require that any dyeing, printing and other 
finishing operations prior to cutting take place in the United States 
rather than in the sub-Saharan African country or anywhere else.
    CBP's Response:
    As already stated, CBP believes the rulings construing subheading 
9802.00.90, HTSUS, support a conclusion opposite to the one asserted by 
this commenter. The terminology in subheading 9802.00.90, HTSUS, is 
different from that used in the various textile provisions of the AGOA. 
Although the term ``wholly formed'' appears in subheading 9802.00.90, 
HTSUS, and in the AGOA, in subheading 9802.00.90, HTSUS, it applies to 
``fabric components'' whereas in the AGOA it is used with reference to 
``fabric'' and ``yarns.'' In subheading 9802.00.90, fabric components 
which have been ``wholly formed and cut'' are exported to Mexico for 
assembly. The

[[Page 30368]]

language of subheading 9802.00.90, HTSUS, imposes certain limitations 
on the processing that the fabric components may undergo in Mexico. 
These limitations include the requirement that the fabric components, 
in whole or in part, not be advanced in value or improved in condition 
abroad except by being assembled and except by operations incidental to 
the assembly process. This is the limitation the commenter seeks to 
impose upon all apparel produced in accordance with those provisions of 
the AGOA that provide for the use of ``fabric wholly formed'' in the 
United States. However, no such limitation appears in, or applies 
under, the AGOA in section 112(b)(2) of the AGOA. In regard to section 
112(b)(1) of the AGOA, because this provision specifically references 
subheading 9802.00.80, HTSUS, the restrictions set forth in subheading 
9802.00.80, HTSUS, apply to the apparel articles described in this 
section. CBP previously addressed in this comment discussion the effect 
of referencing subheading 9802.00.80, HTSUS, in the AGOA texts.
    As CBP has already noted in this comment discussion, the inclusion 
of references to post-assembly operations in subheading 9802.00.90, 
HTSUS, supports the conclusion that dyeing or finishing of fabric prior 
to cutting and exportation of the components for assembly is not 
required for the fabric to be ``wholly formed'' because a requirement 
to dye the fabric prior to exportation of the cut components would be 
counterproductive in the case of a producer planning to garment dye his 
apparel after assembly.
    Comment:
    The definition of ``wholly formed'' included in the interim 
regulations is fundamentally inadequate because it could be interpreted 
to limit this concept (in the case of fabrics) to the circumstance 
where a greige good is produced, without referencing the addition of 
any dyeing, printing and other finishing operations that take place 
before the fabric for the apparel is cut into the component parts. 
Accordingly, under section 112(b)(2) of the AGOA, the interim 
regulations could be interpreted to permit the AGOA preference to apply 
to apparel made from greige goods produced in the United States and 
subjected to dyeing, printing and other finishing operations in the 
beneficiary country. However, although section 112(b)(2) of the AGOA 
expressly permits the cutting of fabric in the beneficiary country, it 
does not permit additional operations such as dyeing, printing and 
finishing prior to the cutting of the fabric to be conducted in the 
beneficiary country (or anywhere else other than the United States).
    CBP's Response:
    CBP disagrees with the underlying premise of this comment, that is, 
that ``wholly formed'' as it pertains to fabric includes dyeing, 
printing and finishing operations. The reasons for this CBP position 
have already been explained in this comment discussion. Additionally, 
CBP disagrees with the assertion that cutting is the only operation 
that may be performed on fabric in the AGOA beneficiary countries under 
section 112(b)(2) of the AGOA because that provision only refers to 
cutting of fabric. Following that reasoning in the interpretation of 
the AGOA would mean that any operation not specifically mentioned in a 
provision simply could not occur either in the United States or in an 
AGOA beneficiary country. CBP believes that reasoning represents a 
restrictive approach in interpreting the AGOA provisions and was not 
intended by Congress in enacting trade preference provisions subject to 
express conditions. For example, the express conditions on preference 
that articles may not be advanced in value or improved in condition 
abroad other than by assembly or operations incidental to assembly 
(which Congress provided in subheading 9802.00.80, HTSUS, and 
incorporated by reference in certain provisions of the AGOA) would have 
been entirely unnecessary under the commenter's interpretive view.
    Comment:
    The references in the statute to ``apparel articles assembled'' and 
``apparel articles cut and assembled'' in beneficiary countries means 
that no benefits are provided for or intended for operations other than 
assembly-related operations except when explicitly stated in the 
statutory provision.
    CBP's Response:
    CBP finds no basis within the language of the AGOA to conclude, as 
asserted by the above comment, that if an operation (that is, dyeing, 
printing or finishing) is not specified within the Act, then it must 
occur in the United States and may not occur in an AGOA beneficiary 
country. CBP finds no support for that conclusion in the language of 
the Act or in its legislative history. In the Statement of Policy in 
section 103 of the AGOA, Congress articulated the goals or purpose 
behind this legislation. Among the goals, Congress stated its support 
for encouraging increased trade and investment between the United 
States and sub-Saharan Africa, reducing tariff and nontariff barriers 
and other obstacles to sub-Saharan African and United States trade, and 
strengthening and expanding the private sector in sub-Saharan Africa. A 
conclusion that silence regarding specific operations related to the 
production of apparel and the materials utilized in that production 
means that those operations must occur only in the United States is at 
odds with these stated goals.
    Comment:
    Congress in the first three categories of eligible goods took 
exquisite pains to specify, in positive, explicit language, the 
overseas operations that would qualify an apparel article for duty-free 
treatment: (1) The first category refers only to assembly abroad; (2) 
the second category refers only to assembly abroad plus ten carefully 
enumerated post-assembly dyeing and finishing operations; and (3) the 
third category refers only to two overseas operations, that is, cutting 
and assembly. Thus, any additional overseas operations, other than 
incidental, trivial ones, would disqualify the article. In carefully 
specifying cutting and assembly as the overseas processes in the third 
category, Congress could hardly have intended to allow those third 
category goods to undergo an entire set of additional overseas 
processes when Congress thought it was necessary to positively specify 
them in the second category as a predicate for duty-free eligibility.
    CBP's Response:
    As already pointed out in this comment discussion, the first and 
second categories of eligible goods are clearly tied to requirements 
set forth in subheading 9802.00.80, HTSUS. Congress chose not to impose 
these requirements in the third category of eligible goods. By choosing 
to draft the requirements for the third category of eligible goods 
differently from those of the first and second categories, CBP 
understands that Congress deliberately intended different requirements 
to apply. The commenter asks CBP to impose on the third category of 
eligible goods restrictions taken from the first and second categories 
of eligible goods. As Congress did not impose those restrictions, 
neither can CBP.
    Comment:
    In the case of the third category of eligible goods, Congress could 
not, through its silence on the matter, have intended that preferential 
origin would be conferred on articles that underwent dyeing, bleaching, 
printing, finishing, etc., in beneficiary countries because this would 
be inconsistent with United States obligations as a party to the WTO 
Agreement on Rules of Origin. Annex II of that Agreement requires each 
party to the Agreement to precisely and positively specify the 
manufacturing or

[[Page 30369]]

processing operations that confer preferential status.
    CBP's Response:
    CBP does not agree that interpreting ``wholly formed'' as not 
including dyeing, printing and finishing, thus allowing those processes 
to occur in the AGOA beneficiary countries, would violate United States 
obligations as a party to the World Trade Organization (WTO) Agreement 
on Rules of Origin. CBP first notes in this regard that since the AGOA 
provisions incorporate standards for a tariff preference rather than 
rules of origin, the WTO Agreement on Rules of Origin is not directly 
applicable to the AGOA. Moreover, even if the WTO Agreement on Rules of 
Origin were applicable in an AGOA context, CBP notes that the 
applicable provision referred to by the commenter requires that ``in 
cases where the criterion of manufacturing or processing operation is 
prescribed, the operation that confers preferential origin shall be 
precisely specified.'' Annex II, Clause 3, WTO Agreement on Rules of 
Origin. In the AGOA, Congress stated positively the operations 
necessary for preferential treatment. Clause 3, referenced by the 
commenter, does not preclude additional operations from occurring or 
being allowed, but rather only provides that those additional 
operations must be specified in the preferential rule if they affect 
the determination of preferential origin.
    Comment:
    In referring in the AGOA to apparel assembled from ``fabrics wholly 
formed and cut in the United States,'' Congress mentioned only two 
steps, that is, forming and cutting. Since fabric finishing is an 
intermediate step between fabric formation and cutting, it cannot be a 
separate category but rather must be associated with one of the two 
statutory steps. Clearly, as between ``wholly formed'' and ``cut,'' 
``finished'' belongs with the former.
    CBP's Response:
    CBP rejects the premise of this comment that an operation which is 
not specified in the AGOA must be included with one that is specified. 
As stated above, Congress enumerated the required manufacturing 
processes and where those processes had to occur in order for apparel 
to qualify for preferential treatment under the AGOA. Any other 
processes not affecting eligibility under the AGOA need not be 
associated with a specified process as argued in the comment.
    Comment:
    Dyeing, printing and finishing operations must be performed on the 
fabric before it is cut into the shapes required by the particular 
apparel article to be produced. For both practical and aesthetic 
reasons, these operations cannot be performed on the apparel components 
after they are cut (in some cases, dyeing or printing is done on an 
apparel garment after it is assembled from the cut pieces, but those 
operations are exceptional and differ qualitatively from the dyeing, 
printing and other fabric finishing operations included within the 
concept of ``wholly formed'' fabric).
    CBP's Response:
    CBP agrees that dyeing, printing and finishing operations are 
normally performed on fabric before it is cut into components for 
assembly into garments. However, CBP disagrees with the suggestion made 
in the comment that the ``concept of `wholly formed' fabric'' includes 
dyeing, printing and other fabric finishing operations. The reasons for 
CBP disagreement have been stated earlier in this comment discussion.
    Comment:
    Sections 112(b)(1) and (b)(2) of the AGOA should include fabric 
dyeing and finishing in the United States (and only in the United 
States). Dyeing and finishing processes are necessary to add color, 
chemical and physical properties to the fabrics prior to their being 
used in apparel and industrial products. Fabrics not dyed and finished 
are not yet ready to be components of the retail merchandise.
    CBP's Response:
    As stated above, CBP agrees that normally dyeing, printing and 
finishing operations are performed on fabric prior to cutting and 
assembly into garments. However, this is not always true as some 
garments are garment-dyed and some may be made of yarn-dyed fabric. For 
reasons already stated in this comment discussion, CBP disagrees with 
this commenter's suggestion that fabric dyeing and finishing should be 
included in section 112(b)(1) and (b)(2) of the AGOA.
    Comment:
    The words ``or other process'' in the definition of ``wholly 
formed'' as it applies to fabric, if interpreted narrowly to exclude 
dyeing, printing and finishing operations, would have the consequence 
of conferring duty-free treatment on apparel articles that undergo in 
sub-Saharan Africa not only cutting and assembly but also any of the 
wide range of fabric dyeing, printing and finishing operations that 
transform fabric after the early stage processes (weaving, knitting, 
needling, etc.) that are performed in the United States. This result 
would be contrary to Congressional intent because Congress in the 
development of the AGOA deliberately chose not to aid the development 
of sub-Saharan African industry by sending offshore the intermediate 
and final value-adding processes (for example, bleaching, stone-
washing, acid washing, dyeing, printing, embroidering) which are 
applied to greige fabric that is transformed into final textile 
articles or into apparel articles.
    CBP's Response:
    As already noted in an earlier comment response, Congress sought to 
promote the growth of trade and economic activity between the United 
States and sub-Saharan African countries. Congress specified the 
requirements for eligibility of goods and, in some cases, restrictions 
which Congress desired for certain categories of goods. CBP has found 
no support, nor was any provided by the commenter, for the argument 
that Congress deliberately chose not to send certain value-adding 
processes to offshore locations.
    The phrase ``or other process'' within the definition of ``wholly 
formed'' as it pertains to fabric, relates to fabric formation 
processes that were not enumerated or that may have yet to be 
developed.
    Comment:
    Dyeing and finishing operations represent the largest part (that 
is, 70-75 percent) of the value added in a fabric and represent the 
most complicated part of the textile manufacturing process. Moreover, 
in terms of aesthetic value, printing adds on the order of 100 percent 
of value based on creative effort and intellectual property 
considerations. It would be absurd to consider as ``wholly formed'' a 
product which lacks these value-added components.
    CBP's Response:
    CBP does not dispute that dyeing, printing and finishing operations 
may be important in that they may add significantly to the value of 
fabric and contribute to the use of fabric. However, CBP finds no 
rationale for using a value-added measurement as a basis for including 
those operations within the scope of the term ``wholly formed.'' Based 
on the common meaning of the terms ``wholly'' and ``formed'' as 
discussed above, and in the absence of any language in the AGOA or its 
legislative history to support a contrary conclusion, the amount of 
value added by dyeing, printing or finishing operations (even when 
contrasted to the relatively lower percentage of cost attributable to 
labor) is entirely irrelevant in determining if fabric is ``wholly 
formed.''
    Comment:
    The legislative history of the AGOA contains no indication that 
Congress

[[Page 30370]]

intended to permit the large disruption to the U.S. textile industry 
that would result if dyeing, printing and other finishing operations 
could be performed in sub-Saharan African countries on greige good 
fabric.
    CBP's Response:
    As already stated, CBP relies on the words Congress used in the 
statute and Congress is presumed to have used these words according to 
their common, ordinary meaning unless some other intent is evident. The 
legislative history of the AGOA contains no reference to precluding 
dyeing, printing and other finishing operations from occurring in the 
AGOA beneficiary countries. Moreover, the legislative history provides 
no reason for CBP to interpret the term ``wholly formed'' other than 
according to its plain meaning.
    Comment:
    The current practice of permitting fabric finishing operations in 
the United States or the beneficiary countries greatly enhances the 
value of this program and thus the incentive to use U.S. fabric. 
Without this flexibility, U.S. fabric sales (from greige goods 
manufacturers) may be lost and trade may be diverted to lower cost 
Asian suppliers-an outcome that runs contrary to the spirit of the 
legislation.
    CBP's Response:
    CBP first notes that the definition of ``wholly formed'' as it 
relates to fabric is predicated not on any potential impact on 
international trade patterns but rather only on the common meaning of 
the words chosen by Congress to express its intent in the AGOA. As 
already noted in this comment discussion, Congress intended benefits to 
accrue to the United States and the AGOA beneficiary countries by 
increasing trade and investment between the United States and sub-
Saharan Africa countries and by reducing obstacles to trade between 
sub-Saharan African countries and the United States. Among its findings 
in section 102 of the AGOA, Congress found that ``it is in the mutual 
interest of the United States and the countries of sub-Saharan Africa 
to promote stable and sustainable economic growth and development in 
sub-Saharan Africa'' and that ``encouraging the reciprocal reduction of 
trade and investment barriers in Africa will enhance the benefits of 
trade and investment for the region as well as enhance commercial and 
political ties between the United States and sub-Saharan Africa.'' 
Based on these findings, CBP agrees with the basic point made in this 
comment. CBP further notes, however, that performing dyeing, printing 
and finishing operations on U.S.-formed fabric in countries other than 
the United States and AGOA beneficiary countries would be contrary to 
Congressional intent reflected in sections 102 and 103 of the AGOA and 
thus should not be allowed. Therefore, CBP believes that dyeing, 
printing and finishing operations performed on U.S.-formed fabric 
outside the United States should continue to be restricted in the 
regulatory texts to AGOA beneficiary countries -- see the description 
of the regulatory text changes to 19 CFR 10.2013(b)(1) at the end of 
this wholly formed fabric comment discussion.
    Comment:
    It was the understanding of the dyeing and finishing industry and 
Congressional representatives and trade organizations that the AGOA 
legislation was intended to benefit not only sub-Saharan African 
countries but also producers of textile fabrics in the United States. 
If the legislation is now interpreted as to benefit only unfinished 
(versus wholly formed) fabrics, the results will be devastating to the 
U.S. dyeing and finishing industry which will fail to benefit from the 
AGOA and will suffer from yet another wave of imported products priced 
without the environmental and health and safety standards which the 
U.S. textile industry is proud to uphold.
    CBP's Response:
    CBP is not in a position to comment on ``understandings'' regarding 
this legislation prior to its passage. As stated above, CBP can only 
interpret the legislation based upon its words, Congressional intent as 
reflected by those words, and information contained in the Conference 
Report relating to the AGOA. With regard to the concern of this 
commenter and as already pointed out in this comment discussion, the 
reference in some provisions of section 112(b) of the AGOA to 
subheading 9802.00.80, HTSUS, means that in those cases fabric dyeing, 
printing and finishing processes, which are not assembly operations or 
(in most instances) operations incidental to assembly, must have taken 
place in the United States. Moreover, in regard to those other 
provisions of section 112(b) of the AGOA that refer to fabric ``wholly 
formed'' in the United States, there is nothing in the Act that 
precludes that U.S.-formed fabric from also being dyed, printed and/or 
finished in the United States.
    Comment:
    The fact that the Breaux-Cardin rules of origin (section 334 of the 
Uruguay Round Agreements Act and Sec.  102.21 of the CBP regulations) 
mandate that the spinning, knitting or weaving process is determinative 
of origin further supports the conclusion that printing or dyeing 
should not be viewed as relevant, much less essential, to the formation 
process.
    CBP's Response:
    Finishing, by definition, occurs to fabric after the fabric has 
been formed; after it has taken shape from weaving or knitting or other 
formation processes. A distinction between fabric formation and fabric 
finishing has existed in the realm of origin determinations for textile 
goods under the Customs laws and regulations for over 15 years, first 
by regulation (19 CFR 102.22) and then by statute (section 334 of the 
URAA, codified at 19 U.S.C. 3592). While CBP agrees with the commenter 
that the rules for determining the origin of textile goods offer 
support for the position that fabric formation and fabric finishing are 
distinct operations, as CBP has already noted above, the AGOA is a 
preferential trade program based on meeting the specified manufacturing 
process requirements set forth in the AGOA and is not a program based 
on origin.
    Comment:
    In the provision within the Act of 2000 that clarified section 334 
of the Uruguay Round Agreements Act, Congress explicitly confirmed the 
interpretation that dyeing, printing and finishing are in fact 
``fabric-making processes,'' just as weaving and knitting are fabric-
making processes, for purposes of determining the country in which 
fabric is made, regardless of how many such operations will determine 
the country of origin of fabric for different purposes in different 
specific statutes. CBP should follow this clarification in the AGOA 
definition text.
    CBP's Response:
    In this comment it is argued that Congress confirmed that dyeing, 
printing and finishing are ``fabric-making processes.'' However the 
provision referenced by the commenter does not say these processes are 
``fabric-making'' but rather provides that they are origin conferring 
for certain fabrics. More specifically, section 334 of the URAA was 
amended by section 405 of the Act of 2000 so that it now provides in 
effect that dyeing and printing of certain fabrics, when accompanied by 
two or more other designated finishing operations, results in the 
fabric having its origin in the place where that processing occurred. 
CBP notes the amendment made by section 405 of the Act of 2000 
addressed a specific dispute between the United States and the European 
Union concerning the effect of the URAA section 334 changes on United 
States obligations under a number of international agreements (see

[[Page 30371]]

the Conference Report relating to the Act at page 118). Since the 
section 405 amendment relates to a context and a purpose that are 
entirely outside the scope of the AGOA (which is not a country of 
origin regime but rather is a preferential tariff treatment program), 
CBP believes that it has no bearing on the meaning of ``wholly formed'' 
as it relates to fabric under the AGOA.
    Comment:
    Processes such as dyeing, printing and finishing are treated in 
many statutes and regulations as fabric-making processes, that is, they 
are treated as the same type of processes as weaving and knitting 
because they are all processes in the ``production'' or ``manufacture'' 
of ``fabric.'' The regulatory provision on which the definition of 
``wholly formed'' was based, that is, 19 CFR 102.21(b)(2), states that 
a ``fabric-making process is any manufacturing operation that . . . 
results in a textile fabric.'' United States laws and regulations 
include innumerable ``textile fabrics'' that are the ``result'' of the 
operations of dyeing, printing and finishing and could not have been 
the ``result'' only of the operations of weaving and knitting. There is 
no warrant for treating the fabric-production processes of dyeing, 
printing and finishing any differently from the co-equal fabric-
production processes of weaving and knitting.
    CBP's Response:
    The commenter mischaracterizes the definition of a ``fabric-making 
process'' which appears in 19 CFR 102.21(b)(2). That regulation 
implements section 334 of the URAA which has been dealt with earlier in 
this comment discussion in the context of arguments for distinguishing 
between fabric formation and fabric finishing and for not including 
dyeing, printing and finishing operations within the scope of ``wholly 
formed'' as it relates to fabric.
    Comment:
    The Textile Fiber Products Identification Act makes perfectly clear 
(1) that the process of finishing a fabric is a fabric-making or 
fabrication process and (2) that both unfinished fabric and finished 
fabric are ``fabric components.''
    CBP's Response:
    CBP has frequently pointed out in its rulings, and the courts have 
held (see Sabritas S.A. de C.V. v. United States, 998 F. Supp. 1123 
(CIT 1998)), that Congress did not intend CBP to be bound by another 
agency's statutes and regulations in determining the meaning of tariff 
terms. Nevertheless, CBP notes that the Textile Fiber Products 
Identification Act (the TFPIA, 15 U.S.C. 70-70k) defines ``fabric'' as 
``any material woven, knitted, felted, or otherwise produced from, or 
in combination with, any natural or manufactured fiber, yarn or 
substitute therefor.'' This definition of ``fabric'' is not 
substantially at variance with the definition CBP set forth in the 
interim regulations for ``wholly formed'' as it relates to fabric.
    Comment:
    In a colloquy with Senator Coverdell during Senate floor 
consideration of the Act of 2000, Senator Grassley affirmed that the 
intention of the managers was to permit dyeing and finishing operations 
in the United States or in beneficiary countries. In that colloquy, 
Senator Coverdell asked: ``I have one final question regarding the so-
called 809 provisions of both the Africa and Caribbean Basin measures. 
Am I correct that it is the managers' intent that these provisions do 
not permit dying [sic] or finishing of the fabrics to be performed in 
countries other than the United States or the beneficiary countries?'' 
Senator Grassley responded: ``That is correct.''
    CBP's Response:
    CBP does not find the colloquy to be dispositive for purposes of 
interpreting the statute and drafting the regulations. In regard to 
``wholly formed'' as it pertains to fabric, the responses above justify 
not including dyeing, printing, and finishing operations in the 
definition of ``wholly formed'' in the interim regulations, as further 
clarified in this final rule document.
    Comment:
    The colloquy that took place on the floor of the Senate between 
Senators Grassley and Coverdell (reported at 146 Cong. Rec. at S3867, 
daily ed. May 11, 2000) regarding finishing operations in third 
countries is of essentially no value on the issue of whether Congress 
intended to permit dyeing, printing or finishing operations to take 
place in the beneficiary countries because the colloquy is ambiguous on 
this point, because the courts have held that the remarks of individual 
legislators made during a floor debate are not controlling in analyzing 
legislative history, and because there is some doubt as to whether the 
colloquy in fact took place prior to the enactment of the legislation.
    CBP's Response:
    CBP believes that the response to the immediately preceding comment 
adequately addresses this comment.
    Based on the comments received on the definition of ``wholly 
formed'' as it pertains to fabrics and the analysis of those comments 
set forth above, CBP in this final rule document has modified the 
interim Sec.  10.212 definition of ``wholly formed fabrics'' to clarify 
that fabric formation does not encompass dyeing, printing and finishing 
operations.
    In addition, a new paragraph (b) has been added to Sec.  10.213 
(with paragraphs (b) and (c) of the interim regulation consequently re-
designated as (c) and (d)) which in subparagraph (1) clarifies that 
while dyeing, printing, and finishing operations are not part of the 
fabric or component (for example, a knit-to-shape component that is 
made directly from yarn) formation process, those dyeing, printing, and 
finishing operations are only permissible if performed in the United 
States or in the AGOA beneficiary countries. New paragraph (b)(1) also 
includes a caveat that any dyeing, printing, and finishing operations 
performed in an AGOA beneficiary country must be incidental to assembly 
in the case of articles described in paragraphs (a)(1) and (a)(2) of 
Sec.  10.213 which are subject to the rules that apply under subheading 
9802.00.80, HTSUS.

Wholly Formed Yarns

    Unlike the comments regarding the dyeing, printing, and finishing 
of fabric discussed above, which were sharply divided on the question 
of whether those processes fall within the concept of ``wholly formed'' 
as it pertains to fabric, the comments received in regard to the 
definition of ``wholly formed'' as it pertains to yarn uniformly 
supported the conclusion that dyeing and finishing operations are not 
part of the yarn formation process. Some of these commenters also 
suggested that the dyeing and finishing of yarns should be limited to 
the United States and AGOA beneficiary countries. A discussion of the 
specific points made by these commenters in support of those views is 
set forth below.
    Comment:
    With regard to yarns (other than thread), seven commenters took the 
position that dyeing and finishing operations do not fall within the 
concept of ``wholly formed'' and that, consequently, a requirement that 
a yarn be ``wholly formed in the United States'' does not mean that any 
dyeing or finishing of the yarn must be restricted to the United 
States. One of these commenters argued that allowing dyeing and 
finishing operations to be performed on U.S. yarns in the AGOA 
beneficiary countries is consistent with Congressional intent, noting 
in this regard that this issue was addressed in a colloquy between 
Senator Coverdell and Senator Grassley during Senate floor 
consideration of the Trade and Development Act of 2000. In that 
colloquy, Senator Coverdell asked: ``When the Act requires yarn to be

[[Page 30372]]

`wholly formed' in the United States, am I correct that the intention 
of the managers is to require that all processes necessary to convert 
fibers into yarn--i.e., spinning, extruding-be performed in the United 
States?'' In reply, Senator Grassley stated: ``That is correct. While 
the fibers need not be manufactured in the United States, let me be 
clear that it is the managers' intent that the man-made core of a 
wrapped yarn must originate in the United States and that all 
mechanical processes necessary to convey fibers into yarns must be 
performed in the United States.'' Two of these commenters maintained 
that, with regard to dyeing, bleaching, or other similar finishing 
operations, the interim regulation is consistent with past 
interpretations of the so-called ``Breaux-Cardin'' rule of origin that 
those finishing operations do not fall within the term ``wholly 
formed.'' Another of these commenters specifically recommended 
modification of the regulatory texts to clearly reflect the principle 
that subsequent processing of U.S.-formed yarn may take place in an 
AGOA beneficiary country. Two commenters took the position that the 
concept of ``wholly formed'' under section 112(b)(2) of the AGOA 
encompasses all operations relating to the production of yarn up to the 
point that it is ready to be transformed into a new and different 
article of commerce, that is, fabric. Noting that at this point yarn 
need not be scoured and bleached or dyed or printed in order to be so 
transformed, these commenters argued that, therefore, ``wholly formed'' 
means, with respect to untextured filament yarns, yarns which have been 
formed by an extrusion process and fully drawn, and, with respect to 
spun yarns, yarns which have been formed by the spinning of staple 
fibers.
    CBP's Response:
    Based on the common meaning of the words ``wholly'' and ``formed'' 
as already discussed above in the comment discussion regarding wholly 
formed fabrics, CBP agrees with the commenters here that dyeing and 
finishing operations are not part of the yarn formation process. CBP 
also agrees, based on Congressional intent regarding the intended 
beneficiaries under the AGOA as noted above in the wholly formed fabric 
comment discussion, that the application of dyeing and finishing 
processes to yarn should be limited to the United States and AGOA 
beneficiary countries.
    As to the suggestion that the ``Breaux-Cardin'' rules of origin 
(that is, the rules set forth in section 334 of the URAA as already 
mentioned in this comment discussion) support the conclusion that 
dyeing, bleaching and other similar finishing operations are not part 
of yarn formation, CBP has already pointed out in this comment 
discussion that the AGOA legislation is directed only to preferential 
treatment of certain goods that meet specified production standards and 
is not based upon country of origin principles. In addition, section 
334, as amended by section 405 of the Act, does not define ``wholly 
formed'' in regard to fabric or yarn. In regard to fabric, section 334 
describes fabric-making processes which CBP views as the same as fabric 
formation processes. However, in regard to yarn, section 334 merely 
addresses origin as being determined by the spinning of fibers or the 
extrusion and drawing of filaments.
    While the spinning of fibers and the extrusion and drawing of 
filaments form yarns, many yarns are further processed with other yarns 
by plying or twisting to create specific types of yarns later used in 
forming fabric or in knitting to shape an apparel component or article. 
Thus, while some types of yarn are formed by spinning or by extrusion 
and drawing, other types of yarn are further processed before they are 
complete. Some yarns may be used without being combined with other 
yarns, such as a monofilament thread which may be used in hemming a 
garment. Most yarns, however, must be combined with other yarns to form 
a multifilament or multiple (folded or plied) yarn to impart the 
strength and yarn size necessary for use in the production of other 
textile products. For this reason, the interim rule defined ``wholly 
formed'' as it relates to yarn to include all the processes starting 
with the extrusion of filament or the spinning of fibers into yarn, or 
both, and ending with a yarn or plied yarn.
    For instance, in the case of a cotton/polyester fabric which is 
woven using a 3-ply yarn consisting of two cotton yarns and one 
polyester filament yarn, the yarn would be ``wholly formed'' in the 
United States if all of the following occurred in the United States: 
Cotton fibers are spun into yarn to form the cotton yarns, the 
polyester filament is extruded, and the two cotton yarns and the 
polyester filament are plied to form the 3-ply yarn used in the 
production of the cotton/polyester fabric. Although the 3-ply yarn 
consists of three separate yarns, it is the 3-ply yarn which is the 
final, complete yarn used in the formation of the woven fabric.
    CBP agrees with the commenters that wholly formed yarn has to 
undergo all the processes necessary for the formation of the final, 
complete yarn which is used in the production of a textile product, 
such as fabric or knit-to-shape components or articles, whether that 
final yarn is a monofilament or a plied yarn.
    Comment:
    Two commenters noted that textured filament yarn is first extruded 
in an undrawn condition as partially oriented yarn (POY) which cannot 
be transformed into fabric but rather has no use other than to be drawn 
and textured in a sequential process on the same machine, with the 
resulting yarn being, for purposes of the AGOA, wholly formed and now 
ready to be transformed; therefore, to satisfy the definition of 
``wholly formed,'' the texturing must be done only in the United 
States.
    CBP's Response:
    The process described by the commenters is known as ``draw-
texturing.'' ``Draw-texturing'' is defined as a process ``[i]n the 
manufacture of thermoplastic fibers, [consisting of] the simultaneous 
process of drawing to increase molecular orientation and imparting 
crimp to increase bulk.'' Dictionary of Fiber & Textile Technology 
(KoSa, 1999), at 60. CBP agrees that the texturing of partially 
oriented yarn (POY) by a process which requires drawing to fully orient 
the yarn falls within the scope of ``wholly formed'' as it relates to 
yarn.
    In the definition of ``wholly formed'' as it relates to yarn, CBP 
intended to encompass all steps in the production of a yarn or plied 
yarn up to the point at which it is fully formed or completely shaped 
as a yarn or plied yarn. Fairchild's Dictionary of Textiles (7th ed. 
1996), at 410, defines ``partially oriented yarn'' as: ``Filament yarn 
of manufactured fibers that has not been drawn all the way immediately 
after fiber formation. The drawing (drawstretching) is completed as 
part of the draw texturing process. This is a less costly way of 
processing these yarns than full drawing followed by texturing.'' 
According to Polymers: Fibers and Textiles, A Compendium (John Wiley & 
Sons, Inc., 1990), at 691, '' . . . the principal end use for POY is as 
a feeder yarn for draw texturing.''
    The commenters claim, and CBP agrees, that a partially oriented 
yarn may not function as a yarn in the manufacture of a textile product 
until it is further processed into a fully oriented yarn. Consequently, 
a partially oriented yarn cannot be considered ``wholly formed'' 
because it is not fully oriented. In order to be ``wholly formed'' a 
yarn must have reached the stage in its formation that nothing else 
(for example, drawing to fully orient the yarn or plying the yarn with 
other yarns) need be done to it to complete its

[[Page 30373]]

formation as a yarn capable of utilization in the production of another 
textile product, for example, in fabric formation. The completion of 
the orientation of yarn as a consequence of creating a textured yarn 
from POY using draw-texturing results in a fully oriented yarn. Thus, 
the process of draw-texturing falls within the scope of ``wholly 
formed'' as it relates to yarn.
    Comment:
    Two commenters mentioned section 112(b)(3) of the AGOA which refers 
to ``originating'' rather than ``wholly formed'' yarns. After noting 
that the reason for this distinction is unclear, they argued that, in 
order to secure the benefits envisioned in the Statement of Policy 
contained in the AGOA, ``originating'' should have the same meaning as 
``wholly formed,'' thus assuring that the only beneficiaries are the 
United States and AGOA countries.
    CBP's Response:
    CBP disagrees with these commenters. In the Conference Report 
relating to the Act of 2000, at page 77, Congress made clear its intent 
in using the term ``originating'' in regard to yarn in section 
112(b)(3) of the AGOA. In discussing the apparel articles which fall 
within the AGOA regional cap provision, the Conference Report included 
the following parenthetical explanation: ``The country of origin of the 
yarn is to be determined by the rules of origin set forth in section 
334 of the Uruguay Round Agreements Act.''
    As indicated above in the comment discussion regarding wholly 
formed fabric, in T.D. 03-15, CBP replaced the original interim Sec.  
10.212 definition of ``wholly formed'' with two definitions, one 
relating to ``wholly formed'' fabrics and the other relating to 
``wholly formed'' yarns. Based on the comments received relating to the 
definition of ``wholly formed'' as it relates to yarn and the analysis 
of those comments as set forth above, CBP has in this final rule 
document further modified the ``wholly formed yarns'' definition to:
    1. Clarify that yarn formation does not encompass dyeing, printing 
and finishing operations.
    Even though the above comment discussion regarding wholly formed 
yarns refers primarily only to dyeing and finishing operations, the 
definition also refers to printing because technical sources indicate 
that printing is relevant to yarns (see, for example, Fairchild's 
Dictionary of Textiles [7th ed. 1996] which, at 445, sets forth a 
definition of ``printed yarn''); and
    2. Reflect the CBP position with regard to Partially Oriented Yarns 
(POY).
    In addition, the text of new paragraph (b) of Sec.  10.213, 
mentioned above at the end of the wholly formed fabric comment 
discussion, includes a clarification that dyeing, printing and 
finishing operations are not part of the yarn formation process and are 
only permissible if performed in the United States or in the AGOA 
beneficiary countries.

Other ``Wholly Formed'' Issues

    Comment:
    Two commenters noted that, paramount among the requirements for 
preferential entry of apparel articles under section 112 of the AGOA, 
is the requirement that they be made from ``fabrics wholly formed . . . 
in the United States.'' These commenters also noted that the Act does 
not speak directly to the matter of which fabric(s) in an eligible 
article must satisfy the criteria set forth in sections 112(b)(1), 
(b)(2) and (b)(3). Further, they alleged that the practice of CBP is to 
apply criteria such as those in the AGOA only to that fabric 
(component) which determines the classification of the apparel article 
for tariff purposes, that is, the ``shell'' fabric. However, these two 
commenters asserted that language in section 103(4) of the AGOA-
``negotiating reciprocal and mutually beneficial trade agreements''-as 
well as past practice clearly indicate that the mandated use of U.S. or 
sub-Saharan Africa-formed or, where permitted, third country fabric, 
should apply to all the fabric components of an eligible article, not 
just the shell fabric. The commenters argued in this regard that in the 
section 103 language Congress intended the benefits of the Act to 
redound to producers in the United States as well as Africa and that 
this can best be accomplished by requiring that all the fabric in an 
eligible article be formed in the United States (section 112(b)(1) and 
(b)(2)) or an eligible beneficiary country (section 112(b)(3)). These 
commenters further argued that in all previous and existing programs 
which administratively or legislatively granted unilateral trade 
privileges to eligible apparel articles--for example, the Special 
Access Program for Caribbean and Andean Pact countries, the Outward 
Processing Program for certain Eastern European countries, and the 
Special Regime for Mexico--the fabric origin requirements pertain to 
all fabric components, and they urged CBP to ensure that this is 
carried over into the AGOA.
    CBP's Response:
    CBP agrees with the commenters that under section 112(b)(1) and 
(b)(2) of the AGOA, the requirement that the fabric be formed in the 
United States means that all the fabric components of eligible articles 
must be formed in the United States, subject to the special rules set 
forth in section 112(e). For example, section 112(e)(1) and (e)(2) 
allow a certain quantity of ``findings and trimmings'' and 
``interlinings'' to be of foreign origin. There would be no need for 
these special rules if Congress did not intend that all fabric 
components of these eligible articles must be formed in the United 
States. The Conference Report relating to the Act of 2000 at page 76 
clearly confirms this Congressional intent.
    Consistent with the above, CBP also agrees with the commenters 
that, under section 112(b)(3) of the AGOA, the requirement that the 
fabric be formed in a beneficiary sub-Saharan African country means 
that all the fabric components of eligible articles must be formed in a 
sub-Saharan African beneficiary country, subject again to the special 
rules set forth in section 112(e).
    Comment:
    Two commenters stated that the requirements for wholly-formed 
fabric do not apply in the case of garment-dyed garments. They noted 
that fabrics used to produce garment-dyed garments are all scoured and 
many are bleached as well, and all subsequent dyeing and finishing are 
then done after the garment is cut and assembled. CBP must therefore 
make a distinction between fabrics wholly formed for garments which are 
not garment-dyed and fabrics for garments which are garment-dyed 
because commercial practice compels this. The essential determinant is 
that the fabric is in the state at which it is ready to be transformed 
into a new and different article of commerce.
    CBP's Response:
    CBP believes that the term ``wholly formed'' as it pertains to 
fabric must have a single, consistent meaning throughout the 
regulations. As CBP has explained in the comment discussion above 
regarding the definition of ``wholly formed'' as it pertains to fabric, 
dyeing, printing and other finishing operations do not fall within the 
scope of ``wholly formed.'' Thus, the distinction urged by these 
commenters does not have to be made. It should be noted, however, that 
garment dyeing after assembly is not permitted in the case of apparel 
articles covered by section 112(b)(1)(A) of the AGOA and Sec.  
10.213(a)(1) of the regulations because garment dyeing is not 
considered to be incidental to assembly for purposes of subheading 
9802.00.80, HTSUS.
    Comment:
    One commenter stated that although both the AGOA and the interim

[[Page 30374]]

regulations are silent with respect to post-yarn-formation and post-
fabric-formation processes such as dyeing, bleaching, printing, and 
coating, that silence should not mean that post-formation processes 
performed in Canada would disqualify the article from AGOA eligibility. 
This commenter argued that as long as the fabric is woven or knit or 
otherwise formed in the United States and as long as the yarn is spun 
or extruded in the United States, and because those minor, incidental 
post-formation processes in Canada do not alter its identity as fabric 
or yarn, it should be considered to have met the definition of ``wholly 
formed'' for purposes of the AGOA. The commenter therefore agreed with 
the definition of ``wholly formed'' as set forth in the interim 
regulations and further suggested that this is consistent with the 
practice under the CBI Special Access Program and under the country of 
origin rules contained in Sec.  102.21 of the CBP regulations.
    CBP's Response:
    CBP of course agrees with the views expressed by this commenter 
regarding the definition of ``wholly formed'' and the distinction 
between fabric and yarn formation and dyeing, printing and finishing 
operations. However, CBP does not share the view that since finishing 
operations are not part of formation, those operations may occur 
anywhere and the fabric and yarn would remain eligible for use in 
apparel receiving benefits under the AGOA. As already discussed above 
in the portions of this comment discussion regarding the definition of 
``wholly formed'' as it pertains to fabric and yarn, Congress expressed 
its intent in the Conference Report relating to the Act of 2000 and in 
section 103 of the statute that the AGOA benefits are to accrue to sub-
Saharan African countries and to U.S. producers. CBP believes that 
permitting dyeing, printing and finishing operations to be performed on 
fabric in countries other than the United States and AGOA beneficiary 
countries would be contrary to Congressional intent and therefore 
should not be allowed. As indicated above, 19 CFR 10.213(b)(1) has been 
modified in this final rule document to clarify this position.

Scope of the Terms ``Yarn'' and ``Thread''

    Comment:
    One commenter stated that the regulations should clarify that 
wherever the word ``yarn'' is used, it means textile yarns of the sort 
classified in Chapters 50-59 of the HTSUS and does not include other 
non-textile products which may be knitted or woven into a textile 
product (for example, rubber thread of the sort classified in heading 
4007 of the HTSUS). This commenter further suggested that paragraph 
(a)(3) of Sec.  10.213 should be changed to clarify that ``thread 
formed in the United States'' refers only to textile sewing thread used 
to assemble cut parts of garments and does not include rubber thread 
used in fabric formation.
    CBP's Response:
    In Sec.  10.213(a)(3) (section 112(b)(2) of the AGOA), the term 
``thread'' is used in the context of requiring the use of ``thread 
formed in the United States'' in the assembly of apparel articles in 
one or more AGOA beneficiary countries. ``Thread'' is used in the same 
context in section 112(b)(7) of the AGOA (Sec.  10.213(a)(11) of the 
regulations), which was added by the Act of 2002. Based on the context 
in which the term ``thread'' is used in the statute, CBP believes that 
Congress was referring to sewing thread. Accordingly, CBP agrees with 
the suggestion of the commenter in this regard, and Sec.  10.213(a)(3) 
and (a)(11) have been modified in this final rule document by inserting 
the word ``sewing'' into the text before the word ``thread.''
    CBP agrees with the commenter that ``yarn'' as used in the AGOA 
refers to textile yarn. However, CBP disagrees with the commenter's 
suggestion that ``yarn'' be defined as textile yarns classified in 
Chapters 50-59 of the HTSUS. In the comment discussion above regarding 
``wholly formed'' as it relates to yarn, CBP set forth a definition of 
yarn which appears in two related textile dictionaries and which refers 
to ``textile'' materials. A similar approach is taken in other 
technical textile dictionaries. For example, ``yarn'' is defined in 
Fairchild's Dictionary of Textiles (7th ed. 1996), at 641, in part, as: 
``A continuous strand of textile fibers that may be composed of endless 
filaments or shorter fibers twisted or otherwise held together. Yarns 
may be single or ply and form the basic elements for CABLED YARN, 
FABRIC, THREAD, AND TWINE. Yarns can be utilized in many such fabric-
making processes as weaving, knitting, crocheting, tatting, netting, or 
braiding, depending on the result desired and the character of the 
yarn.'' In The Modern Textile and Apparel Dictionary (1973), at 676, 
``yarn'' is defined, in part, as: ``A generic term for an assemblage of 
fibers or filaments, either natural or man-made, twisted together to 
form a continuous strand which can be used in weaving, knitting, 
braiding, or plaiting, or otherwise made into a textile material.''
    For purposes of this discussion, CBP also notes definitions of 
``yarn'' from non-technical sources. ``Yarn'' is defined, in relevant 
part, in The Random House Unabridged Dictionary, Second Edition (1993), 
at 2200, as ``1. thread made of natural or synthetic fibers and used 
for knitting and weaving. 2. a continuous strand or thread made from 
glass, metal, plastic, etc.'' It is defined, in relevant part, in 
Webster's Third New International Dictionary (1993), at 2647, as: 
``1.a: A continuous strand often of two or more plies that is composed 
of carded or combed fibers twisted together by spinning, filaments laid 
parallel or twisted together, or a single filament, is made from 
natural or synthetic fibers and filaments or blends of these, and is 
used for the warp and weft in weaving and for knitting or other 
interlacings that form cloth b: A similar strand of metal, glass, 
asbestos, paper, or plastic used separately or in blends c: THREAD; 
esp.: a component of a plied thread.'' While the HTSUS offers some 
discussion of attributes of various yarns and gives guidance as to 
yarns classified within Section XI of the HTSUS, it provides no 
definition of yarn.
    CBP has defined the phrase ``textile or apparel product'' in the 
context of the rules of origin for textile and apparel products set 
forth in Sec.  102.21 of the CBP regulations (19 CFR 102.21) which 
implements Sec.  334 of the URAA. CBP believes that defining ``yarn'' 
as suggested by the commenter would result in ``yarn'' in the AGOA 
context having a narrower meaning than ``yarn'' in the context of the 
rules of origin for textiles. CBP does not believe that Congress in 
drafting the AGOA intended to change the scope of ``textile and apparel 
articles'' as understood under Sec.  334 or under the Agreement on 
Textiles and Clothing to which the United States is a signatory. In 
determining the scope of the term ``yarn,'' as well as the term 
``fabric,'' CBP will rely upon the scope of ``textile and apparel 
articles'' as set forth in 19 CFR 102.21. Therefore, CBP sees no need 
to define ``yarn,'' or ``fabric'' for that matter, in these 
regulations.
    Comment:
    With regard to thread, two commenters argued that Congress has made 
a clear distinction between ``wholly formed'' and ``formed.'' 
Therefore, although the thread does not have to be ``wholly formed'' in 
the United States, it nevertheless must be thread, that is, it must 
have undergone an extrusion or spinning process and subsequent doubling 
(plying) process necessary to give it the unique properties of thread. 
These commenters

[[Page 30375]]

further stated that whereas thread formation must take place in the 
United States, subsequent processing such as lubricating, bleaching or 
dyeing may be performed outside the United States. However, the 
commenters argued that, in order to satisfy the requirements set forth 
in the Statement of Policy contained in the AGOA, any subsequent 
processing of the thread may only be done in a beneficiary country or 
the United States and not in any third country.
    CBP's Response:
    CBP agrees with the above comment except for the statement that 
thread must be plied in order to have the unique properties of thread. 
As stated in the immediately preceding comment response, CBP believes 
Congress was referring to sewing thread in section 112(b)(2) and (b)(7) 
of the AGOA when it referred to ``thread formed in the United States.'' 
In order to be recognized and usable as sewing thread, thread must be 
in its final form, that is, generally plied with a ``Z'' twist. 
However, sewing thread is not always plied, nor does it always have a 
``Z'' twist.
    CBP believes that Congress in using the term ``thread'' in section 
112(b)(2) and (b)(7) meant ``sewing thread'' in all its various 
commercially used forms. Sewing thread is a form of yarn and is made 
from yarn. Like yarn, sewing thread may be made in various ways. In the 
Dictionary of Fiber & Textile Technology (Hoechst Celanese, 1990), at 
161, ``thread'' is defined, in relevant part, as ``1. A slender, strong 
strand or cord, especially one designed for sewing or other needlework. 
Most threads are made by plying and twisting yarns. A wide variety of 
thread types is in use today, e.g., spun cotton and spun polyester, 
core-spun cotton with a polyester filament core, polyester or nylon 
filaments (often bonded), and monofilament threads.''
    While most sewing thread consists of yarns which have been plied, 
some may consist of a single monofilament. In order to avoid limiting 
the type of sewing thread formed in the United States which may be used 
in the assembly of textile apparel in the AGOA beneficiary countries 
for purposes of section 112(b)(2) and (b)(7) of the AGOA and Sec.  
10.213(a)(3) and (a)(11) of the regulations, respectively, CBP believes 
that ``sewing thread'' should be defined for AGOA purposes not on the 
basis of a type of construction but rather only with reference to the 
way it is used. Section 10.212 has been modified in this final rule 
document by the addition of a definition of ``sewing thread'' in 
paragraph (p) to reflect this position. CBP believes this definition 
will ensure that there are no undue restrictions on the options for 
apparel manufacturers as to the type of U.S. sewing thread they may use 
in the construction of their garments.
    CBP agrees with the commenters that once sewing thread is 
``formed,'' subsequent processing such as lubricating, bleaching or 
dyeing will not alter that formation. In addition, based on the CBP 
position set forth in the comment discussion regarding ``wholly 
formed'' fabrics, CBP also agrees with the commenters that processing 
of sewing thread after its formation may be done in the United States 
or in the AGOA beneficiary countries but not elsewhere.

Articles Knit-to-Shape in the United States

    Two commenters complained that the product descriptions in Sec.  
10.213 do not make adequately clear that garments knit-to-shape in the 
United States, or garments assembled with components knit-to-shape in 
the United States, are eligible for duty-free and quota-free treatment 
under the Act. However, as these concerns were addressed by the 
subsequent amendments made to the AGOA by section 3108(a) of the Act of 
2002, no further response is required.

Cutting in the United States and Beneficiary Countries

    Comment:
    Two commenters stated that, as a basic principle, cutting should be 
allowed either in the United States or in the AGOA beneficiary 
countries or in both, and they suggested that CBP should clarify this 
point in the regulations. These commenters argued that the benefits 
under the AGOA should be accorded so long as the assembled goods came 
from components made from U.S. fabric made from U.S. yarn. One of these 
commenters further argued that Congress did not intend a narrow reading 
of the statute, that is, that cutting of portions of the garment in the 
United States and a beneficiary country would disqualify a garment 
while cutting of portions in the United States or a beneficiary country 
would not. The commenter noted in this regard that an October 18, 2000, 
letter from the Ways and Means Committee Chairman and Ranking Minority 
Member and Trade Subcommittee Chairman states that ``garments assembled 
in eligible countries from U.S. fabric/U.S. yarn are eligible for 
preferential treatment, regardless of whether portions of the garment 
were cut both in the beneficiary country and in the United States.''
    CBP's Response:
    With respect to the question of whether, or to what extent, cutting 
of fabric may be performed in both the United States and a beneficiary 
country, CBP notes initially that the only specific interpretative 
reference to this issue in the interim regulations was in the 
definition of ``cut in one or more beneficiary countries'' in Sec.  
10.212. These words were defined there to mean that ``all fabric 
components used in the assembly of the article were cut from fabric in 
one or more beneficiary countries.'' The section-by-section discussion 
of the interim amendments in T.D. 00-67 stated that this definition 
``precludes any cutting operation performed in a country other than a 
beneficiary country in accordance with the clear language of the 
statute.''
    CBP does not dispute the commenters' assertion that the AGOA was 
intended to accord preferential treatment to garments assembled in a 
beneficiary country from U.S.-formed fabric made from U.S.-formed yarn. 
However, in addition to requiring the use of U.S.-formed fabric and 
yarn, paragraphs (b)(1) and (b)(2) of section 112 of the AGOA also 
specify the location of the cutting of the fabric: The United States 
for paragraph (b)(1) and a beneficiary country for paragraph (b)(2). 
Thus, as a general matter, CBP cannot agree with the commenters that, 
under these provisions, whether cutting is performed entirely in the 
United States or in a beneficiary country, or both, is essentially 
irrelevant. CBP believes that the statutory language relating to the 
location of the cutting in each provision cannot be ignored. Regarding 
the reference to the October 18, 2000, letter, CBP submits that its 
post-enactment origin precludes it from being dispositive on any 
interpretative issue regarding the legislation.
    However, CBP agrees that these statutory provisions permit certain 
cutting to be performed both in the United States and in one or more 
beneficiary countries. CBP believes that the cutting issue has been 
raised by the commenters primarily in regard to paragraphs (b)(1)(A), 
(b)(1)(B) and (b)(2) of section 112 of the AGOA (covered by Sec.  
10.213(a)(1), (a)(2) and (a)(3) of the regulations, respectively). CBP 
will address this issue as it relates to paragraph (b)(1) first.
    Paragraph (b)(1) encompasses apparel articles assembled in one or 
more beneficiary countries from fabrics wholly formed and cut in the 
United States, from yarns wholly formed in the United States, that (1) 
are entered under subheading 9802.00.80, HTSUS, or (2) would have 
qualified for entry under

[[Page 30376]]

subheading 9802.00.80 but for the fact that the articles were subjected 
to certain specified processes, such as stone-washing and screen 
printing. As a preliminary matter, CBP interprets the reference to 
cutting in this context to mean that all fabric components comprising 
the eligible article must be cut in the United States.
    Concerning what, if any, additional cutting may be performed in a 
beneficiary country under this provision, CBP submits that this is 
dependent upon the extent to which cutting abroad is permitted under 
subheading 9802.00.80, HTSUS, because of the statutory reference to 
this subheading. CBP believes that articles for which preference is 
sought under paragraph (b)(1) are subject to the conditions and 
requirements that apply under subheading 9802.00.80 and its 
implementing regulations (19 CFR 10.11-10.26), except for the 
additional processing specifically permitted by paragraph (b)(1)(B). 
Under subheading 9802.00.80, only assembly operations and operations 
incidental to assembly may be performed abroad. Examples of operations 
incidental to assembly are set forth in 19 CFR 10.16 and include 
``trimming . . . or cutting off of small amounts of excess materials'' 
and ``cutting to length of . . . products exported in continuous 
length.'' However, this regulation further sets forth ``cutting of 
garment parts according to pattern from exported material'' as an 
example of an operation that is not incidental to assembly.
    Thus, it is the position of CBP that only cutting that is 
incidental to the assembly process abroad, within the meaning of 
subheading 9802.00.80, HTSUS, may be performed in a beneficiary country 
under paragraph (b)(1) of section 112.
    Paragraph (b)(2) of Section 112 of the AGOA differs from paragraph 
(b)(1), in part, in that it refers to cutting of fabric ``in one or 
more beneficiary sub-Saharan African countries'' (rather than in the 
United States) and it contains no reference to subheading 9802.00.80, 
HTSUS. As indicated above, the definition of ``cut in one or more 
beneficiary countries'' in the interim regulations was intended to 
preclude any cutting of fabric in any country other than a beneficiary 
country. However, CBP has re-evaluated that intention in light of the 
fact that the definition of the phrase ``assembled in one or more 
beneficiary countries'' (appearing in paragraph (b)(2) of Section 112 
of the AGOA and in the corresponding regulatory provision, Sec.  
10.213(a)(3)) set forth in Sec.  10.212 of the interim regulations 
conflicts with the Sec.  10.212 definition of ``cut in one or more 
beneficiary countries.'' This conflict arises from the fact that the 
definition of ``assembled in one or more beneficiary countries'' allows 
a prior partial assembly operation to be performed in the United 
States, which presupposes that the fabric components involved in that 
assembly operation were cut in the United States.
    To resolve this apparent conflict, CBP in this final rule document 
has amended the definition of ``cut in one or more beneficiary 
countries'' in Sec.  10.212 to expressly authorize the cutting of 
fabric components in the United States but only to the extent that 
those components are used in a prior partial assembly operation in the 
United States. CBP submits that this limitation on the extent of the 
cutting that may be performed in the United States under this provision 
is warranted by the fact that the provision mentions cutting only in 
reference to one or more beneficiary countries.
    CBP also notes that, under paragraph (b)(2) of section 112, the 
cutting of bolts of fabric in the United States into fabric pieces of 
smaller dimensions would be acceptable since the requirement that the 
articles be produced from fabric would be fulfilled.
    Finally, CBP notes that the commenters' concerns regarding cutting 
have been at least partially addressed by the addition of new paragraph 
(b)(7) to section 112 of the AGOA by section 3108(a) of the Act of 
2002. This change was made to cover combinations of various production 
scenarios involving beneficiary countries and the United States 
described in other paragraphs in section 112 of the AGOA. Section 
112(b)(7) specifies that the cutting of fabric is to be performed ``in 
the United States and one or more beneficiary sub-Saharan African 
countries or former beneficiary sub-Saharan African countries.'' 
(Paragraph (b)(7) of section 112 of the AGOA was subsequently amended 
by section 7(d) of the Act of 2004, to allow beneficiary countries that 
may in the future graduate from AGOA to still provide the qualifying 
components for assembly in beneficiary countries.)

Merino Wool Sweaters

    Comment:
    Two commenters referred to the so-called ``merino wool'' sweater 
provision in the AGOA (section 112(b)(4)(B)) and in the regulatory 
texts (Sec.  10.213(a)(7)). They expressed disappointment that the 
interim regulatory text did not address and correct a legislative 
drafting error in the definition (description) of the goods in question 
that has the effect of creating a benefit for a product that does not 
exist. To fix this problem, the commenters recommended substitution of 
the word ``greater'' for ``finer'' in the regulatory text so that the 
text would refer to ``wool measuring 18.5 microns in diameter or 
greater.''
    CBP's Response:
    Congress used the term ``finer,'' and CBP does not have the 
authority to vary from the statutory language by substituting the term 
``greater'' as requested by the commenters. However, it appears that 
the concerns of the commenters have been addressed by an amendment to 
section 112(b)(4)(B) made by section 3108(a) of the Act of 2002. 
Paragraph (b)(4)(B) and the corresponding regulatory text, Sec.  
10.213(a)(7), now refer to ``wool measuring 21.5 microns in diameter or 
finer.''

The Findings and Trimmings Exception

    Four commenters provided comments or suggestions regarding the 
findings and trimmings rule set forth in section 112(e)(1) of the AGOA. 
One of these commenters simply endorsed the CBP interpretation in Sec.  
10.213(b)(2) that gives precedence to the findings and trimmings rule 
over the de minimis rule (section 112(e)(2) of the AGOA) in cases where 
the two rules are in conflict. The various comments or suggestions of 
the other three commenters are discussed below.
    Comment:
    The regulations should clarify, in Sec.  10.213(b)(1)(i), that 
narrow elastic fabrics used for waistbands, leg closures, and similar 
applications are not considered ``findings and trimmings'' and must be 
formed in the United States if the garments are to receive preferential 
treatment.
    CBP's Response:
    The regulatory text in question (re-designated in this final rule 
document as Sec.  10.213(c)(1)(i) as discussed above) states that 
elastic strips are findings and trimmings only if they are each less 
than 1 inch in width and are used in the production of brassieres. 
Accordingly, CBP believes that it is already sufficiently clear that 
narrow elastic fabrics used for waistbands, leg closures and similar 
applications are not considered findings and trimmings.
    Furthermore, CITA has clearly stated that the foreign origin 
exception for elastic strips under the Special Access program was 
intended to be limited to narrow elastic fabrics for use as brassiere 
straps and not to include elastic fabrics such as those used in 
waistbands. See Clarification of Requirements for Participation in the

[[Page 30377]]

Caribbean Basin Special Access Program, 52 FR 26057 (1987).
    CBP disagrees with the commenter's statement that those narrow 
elastic fabrics must be made only in the United States. In some 
circumstances, the AGOA statutory and regulatory provisions expressly 
permit the use of fabric formed in one or more beneficiary countries or 
in any country in the case of lesser developed beneficiary countries.
    The Act of 2004 amended section 112(d) of the AGOA (now section 
112(e)) by adding a new special rule providing that an article 
otherwise eligible for preferential treatment under section 112 will 
not be ineligible for that treatment because it contains certain 
specified components, including ``waistbands'' and ``straps containing 
elastic,'' that do not meet the applicable production requirements set 
forth in section 112(b), regardless of the country of origin of the 
component. CBP in this final rule document has incorporated the above 
new rule in new Sec.  10.213(c)(1)(v) of the regulations.
    Comment:
    In addition to the named findings and trimmings mentioned in the 
statutory language, other examples of findings and trimmings should be 
added to the text in Sec.  10.223(b)(1)(i) based on CBP rulings issued 
under the Special Access and Special Regime programs. These involve the 
following: Patches that symbolize a brand and add ornamentation (HQ 
560726, HQ 560520); reinforcing tape (HQ 559961, HQ 560398); and slide 
fasteners, featherbone, belting, and braids (HQ 559738). In addition, 
trimmings similar in use to decorative lace, such as piping or 
decorative strips of fabric reinforcement at seams or raw edges, are 
appropriate to be included as ``trimmings'' for purposes of the statute 
because they are equivalent to decorative lace trimming while 
performing functions similar to reinforcing tape.
    CBP's Response:
    Although CBP agrees that the other items have been previously found 
to qualify as findings and trimmings under the Special Access program 
and subheading 9802.00.90, HTSUS, CBP has concluded that there is no 
need to list additional examples. The list of findings and trimmings is 
intended to be representative in nature and is not an exhaustive list. 
With respect to items that have not previously been ruled upon, CBP 
intends to deal with the items on a case-by-case basis through 
interpretive rulings.
    Comment:
    Narrow elastic fabric should be considered the same as in the past 
in the Special Access program, that is, except for elastic strips of 1 
inch width or less used in the manufacture of brassieres, narrow 
elastic fabric should be excluded from ``findings and trimmings.''
    CBP's Response:
    CBP agrees with the comment and feels that the position is 
adequately set forth in the regulation. It should be noted that the 
statute and regulations refer to elastic strip ``less than 1 inch in 
width'' not ``1 inch width or less.''
    Comment:
    The various ``knit-to-shape'' exclusions were developed with wide 
fabric or ``large tube'' circular knit fabric in mind. Knitted or woven 
narrow elastic fabric was not intended to be part of this category and 
should not be part of any exclusion but rather should be treated in a 
similar manner as sewing thread and therefore must be made in the 
United States.
    CBP's Response:
    The commenter appears to be referring to narrow circular knit 
fabric and any other kind of narrow elastic fabric (knit or woven) used 
in the production of a garment. CBP would agree that those narrow 
elastic fabrics, if not less than 1 inch in width and used in the 
production of brassieres, are not subject to the findings and trimmings 
exception. However, for the reasons noted earlier in this comment 
discussion, CBP disagrees with the contention that those narrow elastic 
fabrics must be made only in the United States.

The De Minimis Rule

    Comment:
    A commenter stated that the relevance of including the word 
``fibers'' in the statutory language was unclear because the statute 
contains no requirements that ``fibers'' be formed in the United States 
or a beneficiary country and thus the inclusion of foreign fibers in 
yarns or fabrics does not affect the apparel's eligibility. This 
commenter argued that it would have been more appropriate for the 
statute to refer to ``yarns or fabrics'' in place of ``fibers or 
yarns'' and that the anomaly in the present statute substantially 
reduces the already minimal flexibility provided under the AGOA to use 
non-U.S.-formed inputs.
    CBP's Response:
    The commenter is correct that there is no requirement that 
``fibers'' be formed in the United States or a beneficiary country and 
thus the reference to fibers in the statutory provision appears to be 
unnecessary. Although the regulatory language at Sec.  
10.213(c)(1)(iv), consistent with the statute at 19 U.S.C. 3721(e)(2), 
mentions fibers, the inclusion of foreign fibers in yarns or fabrics 
will not affect the eligibility of an apparel article.

Elastic Rubber Tape

    Comment:
    One commenter urged CBP to include in the final regulations 
language that requires elastic rubber tape to be classified similarly 
to narrow web elastic and spandex so as to receive the same protection 
and treatment under the AGOA, that is, that it must be wholly formed in 
the United States. In support of this position, the commenter stated 
that elastic rubber tape is distinguished from rubber thread by its 
width (greater than 1/16 of an inch and no greater than 6 inches) and 
is distinguished from rubber ribbon by consisting of a single ``end'' 
as opposed to multiple ends in the case of ribbon. In addition, this 
commenter asserted that flat rubber tape competes with, and is a 
substitute for, woven or knit elastic web and logically should be 
subject to the same U.S.-formed requirement as elastic web.
    CBP's Response:
    As the commenter noted, rubber tape is distinguished from both 
narrow web elastic and spandex by virtue of its construction and 
composition. Both narrow web elastic and spandex are textile products. 
Spandex is a well known man-made fiber textile product. Narrow web 
elastic is a fabric produced by combining synthetic or natural rubber 
thread with textile fiber. Rubber tape and elastic rubber tape as 
referenced in the comments are the same product which is not a textile 
product because it is made of rubber. The Conference Report relating to 
the Act of 2000 states at page 76 that ``the requirement that products 
must be assembled from fabric formed in the United States applies to 
all textile components of the assembled products, including linings and 
pocketing, subject to the exceptions that currently apply under the 
'Special Access Program.''' Thus the Conference Report reflects a 
legislative intent to promote the use of U.S. textile fabric and yarn. 
There is no indication in the statute or legislative history of a 
requirement that rubber tape, a non-textile component, be of U.S. 
origin. Accordingly, notwithstanding the potential economic impact on 
U.S. rubber tape producers, CBP does not find a basis in the statute or 
in its legislative history to require rubber tape to be wholly formed 
in the United States.

Post-Assembly Processing

    Comment:

[[Page 30378]]

    Four commenters were of the opinion that the regulations should 
make it clear that certain processes (such as embroidery, stonewashing, 
enzyme washing, acid washing, oven-baking, perma-pressing, garment 
dyeing, screen printing, or similar processes) do not disqualify a 
garment for preferential treatment when all other criteria for 
eligibility are met. In support of this position, it was argued that 
the AGOA is silent on the permissibility of post-assembly operations 
for merchandise entered under section 112(b)(2) of the AGOA only for 
the reason that it is understood that those post-assembly operations 
are permitted because the merchandise in question will not be entered 
under HTSUS heading 9802. Moreover, there is no proscription against 
post-assembly processing anywhere in the HTSUS or in the CBP 
regulations except for heading 9802. Finally, the commenters argued 
that a significant portion of garments produced in the sub-Saharan 
region under the AGOA will undergo post-assembly processing, that 
Congress did not intend them to be denied preferential treatment 
because no specific reference appeared in the AGOA, and that Congress 
in fact did intend that those processes be performed in beneficiary 
countries.
    CBP's Response:
    CBP fully agrees with these commenters that apparel articles that 
satisfy the criteria for eligibility under section 112(b)(2) of the Act 
should not be disqualified from receiving preferential treatment 
because they are subjected to one or more post-assembly processes, such 
as embroidery, stonewashing, and garment dyeing, in a beneficiary 
country. Consistent with the conclusion reached in regard to whether 
dyeing and finishing of fabric, yarn and thread may be performed other 
than in a beneficiary country or in the United States, CBP believes 
that post-assembly finishing processes may only be performed in 
beneficiary countries or in the United States.
    Accordingly, CBP in this final rule document has included in new 
paragraph (b) of Sec.  10.213 a subparagraph (2) to clarify that 
articles otherwise entitled to preferential treatment under the AGOA 
will not be disqualified from receiving that treatment because they 
undergo post-assembly operations (such as those mentioned in section 
112(b)(1)(B) of the Act) in the United States or in one or more 
beneficiary countries. As in the case of the dyeing, printing and 
finishing operations covered by new paragraph (b)(1), under this new 
paragraph (b)(2), those other operations may only be performed in the 
United States or in a beneficiary country. New paragraph (b)(2) also 
includes a caveat that in the case of articles covered by paragraph 
(a)(1) of Sec.  10.213, a post-assembly operation performed in a 
beneficiary country must be incidental to the assembly process.

Short Supply Provisions

    Four commenters submitted observations on the interpretation and 
application of the so-called short supply provisions (section 112(b)(5) 
of the AGOA and Sec.  10.213(a)(8) and (a)(9) of the interim 
regulations).
    Comment:
    One commenter urged CBP to clarify what is considered a qualifying 
product under the Sec.  10.213(a)(8) short supply provision, to ensure 
that it coincides with the NAFTA short supply rules as was intended by 
Congress. This commenter argued that, under the NAFTA, a garment 
qualifies for short supply treatment if the fabric that provides its 
essential character and determines its classification is one that has 
been identified as being in short supply. The fact that linings or 
other items are not made in the United States or a beneficiary country 
is not relevant, and that should be clear from the regulations.
    CBP's Response:
    CBP notes initially that the Act of 2004 amended the short supply 
provision in section 112(b)(5) of the AGOA by removing the words ``from 
fabric or yarn that is not formed in the United States or a beneficiary 
sub-Saharan African country.'' As amended to reflect this change, Sec.  
10.213(a)(8) has two parts: First, the apparel article must be both cut 
(or knit-to-shape) and sewn or otherwise assembled in one or more 
beneficiary countries and, second, the fabric or yarn of which the 
article is constructed must have been determined to be in short supply. 
There appears to be no issue regarding the first part. On the second 
part, there is no question raised regarding the use of the 
predetermined short supply fabrics and yarns but rather only on what 
requirements, if any, the remaining fabrics or yarns in the apparel 
article must meet. CBP believes that the last portion of the provision 
clearly states the intent and thus provides an answer to that question. 
That portion of the text provides that an apparel article constructed 
of yarns or fabrics that were determined to be in short supply may 
receive preferential treatment under the AGOA if those apparel articles 
would be eligible for preferential treatment under the rules of origin 
in Annex 401 of the NAFTA. In the absence of a qualifier to this 
language, CBP believes it is clear that the drafters intended that this 
provision use the same rules as those used in the NAFTA. That is, an 
apparel article would qualify for preferential treatment if the article 
is made of a short supply fabric or yarn that determines its 
classification.
    As to the commenter's concern regarding linings not made in the 
United States or a beneficiary country, CBP believes that the 
regulation as drafted is clear that the rules of origin in Annex 401 of 
the NAFTA apply. Therefore, if under those rules for the apparel 
article at issue the origin of the lining is of no consequence, then 
the commenter is correct, the fact that the lining is not made in the 
United States or a beneficiary country is not relevant. However, if the 
lining material is relevant to the rule applicable to the apparel 
article at issue, then the origin of the lining material may be 
relevant. Such determinations must be made on a case-by-case basis and 
are best addressed through the rulings process.
    Comment:
    A commenter took the view that the short supply regulatory 
provisions (Sec.  10.213(a)(8) and (a)(9)) do not clearly state the 
requirement under the statute that all yarn and fabric components of an 
apparel article other than those that determine the classification must 
be wholly formed in the United States. The following points were made 
by this commenter in support of this interpretation of the statute:
    1. The AGOA mandates the use of fabrics wholly formed in the United 
States for all fabric components except for specific fabrics that are 
not available in the United States.
    2. An interpretation of the statute allowing non-U.S. fabric for 
all fabric components in the case where the outer shell alone is of a 
fabric that cannot be supplied in commercial quantities would be an 
inappropriate imposition on the AGOA program.
    3. Whereas the NAFTA was a negotiated agreement among nations in 
which concessions regarding the ``short supply'' list made sense, the 
AGOA program is a unilateral gift of the United States to the nations 
of sub-Saharan Africa and ought to be construed to require the use of 
U.S. fabrics in all cases except for the specific fabric which cannot 
be supplied in commercial quantities.
    CBP's Response:
    CBP does not agree with this commenter that all yarn and fabric 
components of an apparel article other than those that determine the 
classification must be wholly formed in the United States. The text 
dealing with short supply or non-availability of fabric

[[Page 30379]]

provides in effect that an apparel article constructed of yarns or 
fabrics that were determined to be in short supply may receive AGOA 
preferential treatment if that apparel article would be eligible for 
preferential treatment under the rules of origin in Annex 401 of the 
NAFTA. In the absence of a qualifier to this language, CBP believes it 
is clear that the drafters intended that this provision use the same 
rules as those used in the NAFTA. That is, an apparel article would 
qualify for preferential treatment if the article were made of a short 
supply fabric or yarn that determines the classification of the 
article. See Note 2 to Chapter 61 and Note 3 to Chapter 62 of Annex 401 
of the NAFTA.
    Comment:
    A commenter referred to trade advisory TBT-00-023 entitled 
``Implementation Information for the CBTPA for Textile and Apparel 
Products'' issued by CBP Headquarters on October 20, 2000, which 
included, among other things, a list of fabrics covered by the 
Caribbean Basin Trade Partnership Act short supply provisions. 
According to the commenter, the list in TBT-00-023, which would apply 
equally for purposes of the AGOA short supply provisions, was not 
complete because it omitted some products (for example, visible lining 
fabrics woven from foreign yarns as specified in NAFTA rule 1 for 
Chapters 61 and 62 within HTSUS General Note 12(t), and all yarns and 
fabrics covered by HTSUS headings other than those specifically 
excluded in the specific rules of origin) that would not be precluded 
from receiving NAFTA treatment under the NAFTA rules even though they 
do not qualify under the regular ``yarn forward'' concept. The 
commenter argued that all yarns and fabrics that allow apparel traded 
between NAFTA parties to qualify for NAFTA preference (that is, that 
allow apparel to meet the NAFTA rules of origin under Annex 401) should 
be considered as eligible under the AGOA preference.
    CBP's Response:
    TBT stands for ``Textile Book Transmittal.'' Textile Book 
Transmittals provide textile information to the trade community from 
CBP and are issued by the Textiles and Trade Agreements Division. TBTs 
may be found on the CBP Web site at https://www.cbp.gov/xp/cgov/trade/priority_trade/textiles/tbts/.
    CBP agrees that the list included in TBT-00-023 was not complete. 
CBP has since issued further clarifications that include all of the 
short supply fabrics and yarns that are covered by the two short supply 
provisions set forth in section 112(b)(5)(A) and (B) of the AGOA (Sec.  
10.213(a)(8) and (a)(9) of the regulations, respectively). Those 
issuances are TBT-01-004 dated September 18, 2001, TBT-04-009 dated 
April 21, 2004, TBT-04-019 dated June 28, 2004, and TBT-04-021 dated 
July 1, 2004. However, the first of those issuances, which relates to 
the Sec.  10.213(a)(8) short supply provision, does not list the 
visible lining fabrics mentioned by this commenter because those 
fabrics are not treated as short supply fabrics under the NAFTA.
    CBP has already addressed above the commenter's concern that CBP 
ensure that all interested parties are made aware that the rules for 
the short supply provisions will be interpreted in the same way for 
both the NAFTA and the AGOA.
    Comment:
    One commenter noted that draft regulations implementing the short 
supply program for fabrics and yarn have not yet been issued and 
indicated that it had sent detailed suggestions to the Office of the 
U.S. Trade Representative on how the regulations should be drafted. The 
commenter suggested that further delay is unwarranted because short 
supply requests have already been submitted.
    CBP's Response:
    The commenter refers to a matter that falls within the 
jurisdictional authority of agencies other than CBP and therefore is 
not an appropriate subject for these regulations. CBP further notes in 
this regard that on March 6, 2001, the Committee for the Implementation 
of Textile Agreements (CITA) published in the Federal Register (66 FR 
13502) a notice setting forth procedures to be used in considering 
requests under the AGOA short supply provisions.

Meaning of ``Entered'' in Sec.  10.213(a)(1)

    Comment:
    One commenter noted that Sec.  10.213(a)(1) refers to articles 
``entered'' under HTSUS subheading 9802.00.80. The commenter expressed 
concern that the use of this term suggests that post-entry claims are 
not allowed and therefore, to solve this problem, suggested replacing 
``entered'' by ``classified.''
    CBP's Response:
    The use of the word ``entered'' reflects the wording of the 
underlying statute and also is appropriate from a technical and 
practical standpoint because it is the entry process that brings an 
AGOA import transaction under the jurisdiction of a CBP office (the 
suggested word ``classified'' would have no relevance outside an entry 
context). With regard to the specific concern expressed by this 
commenter, there was no intention on the part of CBP, by using the word 
``entered'' in this context, to restrict the ability of an importer to 
submit post-entry information to CBP prior to the date on which 
liquidation of the entry in question becomes final.

Certificate of Origin

    Four commenters submitted observations on one or more aspects of 
the Certificate of Origin as provided for in Sec.  10.214 and referred 
to in Sec. Sec.  10.215 and 10.216. To the extent that comments 
received regarding the Certificate of Origin set forth in T.D. 00-67 
are still relevant to the subsequent Certificate of Origin set forth in 
T.D. 03-15, CBP will respond.
    Comment:
    One commenter complained that the Certificate of Origin is 
unnecessarily complicated and thus presents an obstacle to achieving 
the goals of the AGOA. The commenter questioned whether the 
identification of options for benefits is necessary given that the 
Certificate is not required by the Government but rather is part of the 
importer's record keeping. This commenter further questioned whether in 
fact the Certificate of Origin is even necessary since the importer is 
accountable for records that establish eligibility for benefits.
    CBP's Response:
    Section 113(b)(1)(A) of the AGOA requires importers claiming 
preferential treatment under section 112 of the AGOA to comply with 
customs procedures similar in all material respects to the requirements 
of Article 502(1) of the NAFTA and requires the Secretary of the 
Treasury to promulgate regulations to that end. Article 502(1) of the 
NAFTA covers procedures regarding the use of a Certificate of Origin. 
In view of the clear mandate in the AGOA to apply the NAFTA Certificate 
of Origin approach, CBP has no authority to vary from that approach by 
dispensing with the Certificate of Origin requirement in these 
regulations.
    As regards the commenter's assertions that the identification of 
options for benefits is not necessary and that the Certificate of 
Origin is not required by the Government, CBP disagrees with both 
points. The identification of the specific basis for claiming 
preferential treatment is like the approach under the NAFTA whereby the 
preparer of the Certificate of Origin identifies the specific rule of 
origin standard upon which the claim for NAFTA duty treatment is based. 
Further, although the Certificate of Origin is not provided for in the 
regulations as a condition of entry, similar to the practice under the 
NAFTA, it not only must be in the

[[Page 30380]]

possession of the importer when the claim under the AGOA is made but 
also, under Sec.  10.216(b), must be provided to CBP upon request.
    Comment:
    A commenter questioned the propriety of using a NAFTA-type 
Certificate of Origin, suggesting in this regard that in some respects 
the Certificate of Origin should be more like ITA Form 370P. The 
commenter noted in this regard that because the 807A+ and 809+ programs 
in most instances, including the selection of the fabric used, are 
controlled by the U.S. importer, it makes little sense to ask an 
African producer of apparel to attest to the accuracy of the identity 
of the manufacturer of U.S. yarn or thread. Therefore, this commenter 
recommended that Sec.  10.214(a) be revised to permit the United States 
importer to sign the Certificate on the same basis on which the 
producer or exporter may sign it.
    CBP's Response:
    As indicated in the previous comment response, CBP has no latitude 
to vary from the Certificate of Origin approach. As regards who may 
sign the Certificate of Origin, the interim regulations provide that 
the exporter or the exporter's authorized agent may sign the 
Certificate. Section 113(b)(1)(B) of the AGOA makes each beneficiary 
country responsible for implementing and following procedures and 
requirements similar in all material respects to those under Chapter 5 
of the NAFTA. As Chapter 5 of the NAFTA does not authorize the 
preparation of the Certificate of Origin by the importer, CBP has no 
authority to provide in these regulations for the preparation and 
signature of the AGOA textile Certificate of Origin by the U.S. 
importer.
    However, as discussed later in this document under ``Additional 
Changes to the Regulations,'' CBP has determined that the Certificate 
may be prepared and signed by the producer or exporter or by the 
producer's or exporter's authorized agent having knowledge of the 
relevant facts.
    Comment:
    Three commenters objected, principally on business confidentiality 
grounds, to the inclusion of specific information regarding fabric, 
yarn and thread producers in blocks 6-8 on the Certificate of Origin. 
One of these commenters suggested that, as regards yarn producer 
information, the Certificate of Origin should have provision for 
stating that the information may be obtained from the fabric producer 
when the fabric producer provides a statement to the garment producer, 
exporter or importer that this information will be provided directly to 
CBP upon request. The other two commenters suggested that, in lieu of 
including the specific information in blocks 6-8, the regulations 
should allow the inclusion of words such as ``available to CBP upon 
request.'' One of them pointed out that this would be similar to the 
approach taken regarding producer information on the NAFTA Certificate 
of Origin and in the instructions for block 2 in Sec.  10.214(c)(3).
    CBP's Response:
    CBP notes that it is incumbent upon the importer to know the facts 
of the transaction. If the U.S. importer wishes to make an AGOA claim, 
it is important that the origin of the raw materials used in the 
production of the garment be known in order to assess whether the 
garment qualifies. While for CBP import purposes it is the importer's 
responsibility to have the necessary information and documentation to 
justify any claim for preferential treatment, it is the exporter's or 
producer's responsibility under the AGOA to accurately complete and 
sign the Certificate of Origin.
    When CBP requests the Certificate of Origin, CBP wants, among other 
things, the name of the fabric and yarn supplier that makes this 
merchandise eligible for AGOA benefits. CBP is given the responsibility 
to enforce and administer this program. In order to ensure that 
importers are properly claiming benefits under the AGOA, it is 
essential that information be provided showing the names and addresses 
of the parties providing the raw materials.
    The United States importer does not need to present the Certificate 
of Origin until requested to do so by CBP. The requirement that fabric, 
yarn, and/or thread producers be identified in blocks 6-8 of the AGOA 
Certificate of Origin is based on the requirement in most AGOA 
preference provisions that those items must be produced in the United 
States and/or in one or more beneficiary countries. These requirements 
are specifically provided for in the AGOA which differ in this regard 
from the approach taken in the NAFTA. Neither the NAFTA nor its 
implementing legislation discusses specific intermediate processes such 
as these, nor do they address producer requirements specifically. For 
these reasons, the producers described in blocks 6-8 must be identified 
on the AGOA Certificate of Origin, which cannot be completed merely by 
including wording such as ``Available to CBP upon request.''
    Comment:
    A commenter recommended that the instructions for completing the 
Certificate of Origin make clear that the producer or exporter may 
state ``not applicable'' where the information sought is not relevant 
for the particular preference group. This commenter stated, as an 
example, that blocks 6-8 are not relevant for a producer or exporter of 
apparel in preference group ``E.''
    CBP's Response:
    As in the case of any form designed to cover a variety of factual 
situations, it was never intended that all blocks be completed on the 
Certificate of Origin set forth in Sec.  10.214. In fact, there should 
never be a case where all the blocks will be completed. For example, as 
the commenter pointed out, blocks 6-8 are not relevant to articles 
covered by preference group ``E'' (nor are blocks 9 and 10 relevant in 
that case). Similarly, in the case of preference group ``H,'' blocks 6-
9 do not need to be completed. If a block is not relevant to the 
article covered by the Certificate of Origin, the exporter can either 
leave the block blank or insert the words ``not applicable'' or the 
symbol ``N/A.'' CBP does not believe that it is necessary to modify the 
instructions for completing the Certificate of Origin to cover 
something that is implicit in its design and use. What is essential is 
to ensure that all information relevant to the article under 
consideration is included on the Certificate of Origin, and that is 
what the instructions are intended to do.
    Comment:
    One commenter noted that Sec.  10.214(a) provides both that an 
exporter must prepare the Certificate of Origin and that, where the 
exporter is not the producer, the exporter may complete and sign the 
Certificate based upon a Certificate voluntarily provided to the 
exporter by the producer. In the latter case, the commenter questioned 
which Certificate is considered the ``original'' for purposes of Sec.  
10.215(a). The commenter suggested in this case that the Certificate 
signed by the exporter will be considered the original and that this 
should be clarified in the regulations.
    CBP's Response:
    The basic customs statutory record keeping requirements which are 
contained in sections 508 and 509 of the Tariff Act of 1930, as amended 
(19 U.S.C. 1508 and 1509), and the regulations implementing those 
statutory provisions which are set forth in Part 163 of the CBP 
regulations (19 CFR Part 163) are applicable to AGOA transactions in 
the same way that they apply to any statutory import program 
administered by CBP. For this reason a general statement regarding the 
applicability of the Part 163 provisions

[[Page 30381]]

was included in Sec.  10.216(a), in lieu of repeating portions of the 
Part 163 provisions in the AGOA regulations. Thus, the meaning of 
``original'' in an AGOA Certificate of Origin context is controlled by 
the definition of ``original'' set forth in Sec.  163.1(g). Under that 
definition, what is received or made by the one required to maintain 
the record (the U.S. importer, for example) is what is considered to be 
the original. As regards the suggested clarification, CBP believes that 
no change is necessary in this regard since the regulations, as amended 
by this final rule, clearly indicate who may prepare and sign a 
Certificate of Origin.
    Comment:
    A commenter noted that whereas Sec.  10.216(b)(2) provides that the 
exporter or his authorized agent must have signed the Certificate, 
Sec.  10.214(a) makes no reference to an authorized agent. This 
commenter suggested that if an authorized agent may sign the 
Certificate, this should also be noted in Sec.  10.214(a).
    CBP's Response:
    CBP agrees that Sec.  10.214(a) should clarify who may prepare and 
sign the Certificate of Origin. As previously indicated in this comment 
discussion, CBP has determined that, in addition to the exporter or the 
exporter's authorized agent, the producer or the producer's authorized 
agent may prepare and sign the Certificate. Therefore, Sec. Sec.  
10.214(a), 10.214(c)(13), and 10.216(b)(2) have been changed to reflect 
this modification as to who may sign the Certificate. It should be 
noted that T.D. 03-15 modified the instructions for preparing the 
Certificate in Sec.  10.214(c) by adding a new paragraph (c)(13) 
regarding who may sign the Certificate.
    Comment:
    Two commenters noted that the preference groups listed on the 
Certificate of Origin as set forth in Sec.  10.214(b) are identified by 
letters whereas the paragraphs setting forth the groups of eligible 
articles under Sec.  10.213(a) are identified by numbers. These 
commenters expressed concern that this inconsistency will lead to 
confusion and errors in filling out the Certificate, and, therefore, 
they requested that the same type of identifier be used in each 
context. One of the commenters specifically suggested in this regard 
that preference group ``A'' should be indicated as ``(1)'' on the 
Certificate to correlate with Sec.  10.213(a)(1), preference group 
``B'' should be indicated as ``(2)'' on the Certificate to correlate 
with Sec.  10.213(a)(2), and so forth.
    CBP's Response:
    In T.D. 03-15, CBP adjusted the Certificate of Origin form to 
coordinate the relevant provision with the applicable preference and 
visa group.
    Comment:
    With reference to the requirement in Sec.  10.216(b)(3) that the 
importer provide upon request an English translation of a Certificate 
not prepared in English, a commenter recommended that the provision be 
revised to require that the Certificate be completed in English or in 
both English and the language of the exporting country, so that the 
importer would be able to more readily respond with an English version 
when a copy of the Certificate is requested by CBP. This commenter 
suggested that although the practice under NAFTA has been for companies 
to prepare both an English version and a native language version, 
having this as a regulation would ensure the ready availability of 
translations.
    CBP's Response:
    CBP does not believe that the regulatory text should be changed as 
suggested by this commenter. CBP notes in this regard that so long as 
the regulatory standard for an English language Certificate or 
translation is met, whatever additional procedure the exporter and U.S. 
importer may choose to employ for their convenience in meeting that 
requirement is not appropriate for regulatory treatment.

Record Keeping Requirements

    Four commenters made observations on the maintenance of records 
provision in Sec.  10.216(a) and on the amendment to the (a)(1)(A) list 
contained in the Appendix to Part 163.
    Comment:
    Two commenters objected to application of the NAFTA 5-year record 
retention period, noting that the AGOA specifically mentions a 2-year 
period. One of these commenters, after noting that the AGOA regulations 
only need to be similar, rather than identical, in all material 
respects to the requirements of Article 502(1) of the NAFTA, argued 
that the record keeping requirements should be designed to meet the 
intent of Congress while placing the smallest possible administrative 
burden on producers, exporters, importers and CBP. Moreover, 
considering the requirements under the NAFTA, this commenter argued 
that only certain records were contemplated in the 5-year retention 
requirements and therefore suggested that CBP should review the 
specific records required under the NAFTA and stipulate exactly what 
must be retained to satisfy the requirements of the AGOA. This 
commenter suggested that the spinner's certifications of materials 
origin may be considered representative of the type of records that 
should be retained for 5 years, whereas manufacturing records should 
not be required beyond the statutory 2-year period.
    CBP's Response:
    CBP first notes that the only reference to a 2-year record 
retention period in the AGOA is found in section 113(a)(1)(E) which 
concerns the obligation of each beneficiary sub-Saharan African country 
to require its producers and exporters to maintain production and 
export records. That exporting country context is distinct from, and 
therefore is not an appropriate subject for, these AGOA implementing 
regulations which concern U.S. import requirements. CBP further notes 
that Article 502(1) of the NAFTA does not mention a record retention 
period (that subject is addressed in Article 505 of the NAFTA which is 
not specifically referred to in the AGOA). Therefore, it is not the 
NAFTA standard that controls record retention in the United States 
under the AGOA. Rather, as already pointed out above, the provisions of 
19 U.S.C. 1508 and 1509 and Part 163 of the CBP regulations set forth 
the standards for record retention in an AGOA context, including the 
length of time that a record must be retained. CBP believes that those 
statutory and regulatory provisions strike an appropriate balance, 
consistent with Congressional intent, between the law enforcement needs 
of CBP and the interest of the importing community in having the 
smallest possible record keeping burden.
    Comment:
    With regard to the amendment to the (a)(1)(A) list contained in the 
Appendix to Part 163, two commenters objected to the inclusion of the 
words ``and supporting records.'' These commenters noted that the 
(a)(1)(A) list is defined as covering documents which are ``required by 
law or regulation for the entry of the merchandise . . . '' (19 U.S.C. 
1509(a)(1)(A)). One of these commenters suggested that in this 
circumstance supporting documents might include production records such 
as cutting or sewing tickets and argued that these may not be construed 
as documents required for entry and that there is nothing in the 
interim regulation to suggest that this is the case. The other 
commenter mentioned certain supporting documents referred to in Sec.  
10.217(a)(2) (that is, production records, information relating to the 
place of production, the number and identification of the types of 
machinery used in production, and the number of workers employed in 
production) and similarly stated that these records are

[[Page 30382]]

not required for entry. Both commenters therefore requested elimination 
of the reference to supporting records.
    CBP's Response:
    CBP has reviewed this issue in light of the points made by these 
commenters and has concluded that the commenters are correct. 
Accordingly, the amendment to the (a)(1)(A) list in the Appendix to 
Part 163 has been modified in this final rule document by removing the 
words ``and supporting records.''
    It should be noted, however, that although records to support a 
claim for preferential treatment (other than the Certificate of Origin) 
are not required for the entry of the merchandise in question, they 
nevertheless may be records required to be maintained and made 
available to CBP.

Other Comments

    Comment:
    With reference to Sec.  10.213(a)(1), which covers apparel articles 
assembled from fabrics wholly formed and cut in the United States, one 
commenter stated that the AGOA implementing regulations should include 
a definition of the expression ``wholly formed and cut in the United 
States'' that confirms that cutting fabrics to length outside the 
United States, incidental to the assembly process in an AGOA 
beneficiary country, does not adversely affect eligibility under the 
program. The commenter noted in this regard that the expression 
``wholly formed and cut in the United States'' has been present in 
HTSUS subheading 9802.00.90, that CBP rulings (for example, HQ 559856 
and HQ 561069) have confirmed that the cutting-to-length of fabric 
components is an operation incidental to the assembly operation and may 
take place in Mexico under the statutory language and that those 
rulings are in accord with Sec.  10.16 of the CBP regulations which has 
been interpreted by CBP in numerous administrative rulings in the 
context of HTSUS subheading 9802.00.80 that establish that cutting-to-
length is an operation incidental to the assembly process while the 
cutting of garment parts according to pattern from exported material is 
an operation not incidental to assembly.
    CBP's Response:
    The issue of the extent to which cutting of fabric may be performed 
in a beneficiary country with respect to articles covered by paragraph 
(b)(1) of section 112 of the AGOA (Sec.  10.223(a)(1) and (a)(2) of the 
regulations) has already been addressed in the CBP responses to the 
comments regarding cutting in the United States and beneficiary 
countries. Based upon the statutory reference to subheading 9802.00.80, 
HTSUS, in paragraph (b)(1) of section 112, CBP concluded that 
additional cutting operations may be performed in a beneficiary country 
under that statutory provision only to the extent that the cutting 
operations are considered ``incidental'' to the assembly process 
abroad. CBP also noted in this regard that the regulations implementing 
subheading 9802.00.80 specify that examples of operations considered 
``incidental'' to the assembly process include ``cutting to length . . 
. of products exported in continuous lengths'' (see 19 CFR 
10.16(b)(6)).
    Therefore, CBP agrees with the commenter that cutting fabric 
components to length in a beneficiary country will not adversely affect 
eligibility of products covered by paragraph (b)(1) of the statute and 
Sec.  10.213(a)(1) and (2) of the regulations. However, CBP does not 
agree that a clarifying amendment to the regulations is necessary in 
this regard in view of the already existing regulations implementing 
subheading 9802.00.80, HTSUS, which include specific examples of 
operations which are and are not ``incidental'' to assembly.
    Comment:
    A commenter referred to the following changes made to the HTSUS by 
Presidential Proclamation 7350: modification of subheading 9802.00.80 
to include an exception reference for ``goods imported under provisions 
of subchapter XIX;'' inclusion of the words ``[f]ree, for products 
described in U.S. note 7 to this subchapter'' in the special rates of 
duty column for subheading 9802.00.80; and inclusion of a new U.S. Note 
7 to Subchapter II to Chapter 98 which states, among other things, that 
articles otherwise eligible to enter under subheading 9802.00.80, and 
which satisfy the conditions set forth in U.S. Note 3 to Subchapter XIX 
of Chapter 98, shall not be ineligible to enter under subheading 
9802.00.80. This commenter, after suggesting that the latter change 
recognized that an overlap exists between subheading 9802.00.80 and the 
Subchapter XIX provisions, stated that (1) the language of subheadings 
9802.00.80 and 9802.00.90 provides for eligibility where the fabric 
components in whole or in part meet the three-part eligibility 
requirement (ready for assembly, no loss of physical identity, and 
nothing more than assembly), (2) CBP has additionally recognized with 
respect to application of subheading 9802.00.90 that further 
fabrication of one or more fabric components in Mexico will not 
preclude classification of the apparel in that subheading (see, for 
example, HQ 560201), and (3) in this regard, the limitation of the 
subheading 9802.00.80 duty exemption resulting from language in the 
general rates of duty column (which requires each individual component 
to be eligible for that component to enjoy a partial duty exemption on 
its cost) is not operative for the special rates of duty column. This 
commenter thus concluded that under the AGOA not all components need 
meet the three-part requirement for classification of the finished 
article in subheading 9802.00.80 for the article to be duty free, as 
long as there is compliance with the fabric and yarn origin 
requirements of the AGOA. The commenter ended by stating that the 
regulations (1) should state that fabrication of individual fabric 
components before assembly does not preclude eligibility as long as 
some components meet the requirements and (2) should identify when the 
processing is sufficient to require classification in subheading 
9819.11.03 rather than under subheading 9802.00.80.
    CBP's Response:
    As the commenter correctly notes, CBP has held in prior rulings 
with respect to subheading 9802.00.90, HTSUS, that the fact that every 
fabric component of a textile or apparel article does not satisfy one 
or more of the three conditions set forth in that provision (that is, 
``(a) were exported in condition ready for assembly without further 
fabrication, (b) have not lost their physical identity in such articles 
by change in form, shape or otherwise, and (c) have not been advanced 
in value or improved in condition abroad except by being assembled and 
except by operations incidental to the assembly process'') will not 
preclude the article from receiving duty-free treatment, provided other 
fabric components in the article satisfy those three conditions. (See, 
e.g., HQ 559780 dated May 19, 1997, and HQ 560201 dated May 14, 1998. 
The basis for these holdings is the specific wording of this provision 
requiring that the ``fabric components, in whole or in part'' meet the 
three conditions (emphasis added). The ``in whole or in part'' wording 
was added to subheading 9802.00.90, HTSUS, by Presidential Proclamation 
6821 (published in the Federal Register (60 FR 47663) on September 13, 
1995). Prior to the insertion of that wording in the provision, CBP had 
required that all fabric components satisfy the three conditions 
identified above.)
    CBP does not agree with the commenter's contention that under the 
AGOA (specifically, the provision which refers to articles entered 
under subheading 9802.00.80, HTSUS, that is, section 112(b)(1)(A) of 
the statute which

[[Page 30383]]

is reflected in Sec.  10.213(a)(1) of the regulations) not all fabric 
components must satisfy the three conditions set forth in subheading 
9802.00.80, HTSUS, for the articles to qualify for preferential 
treatment. Unlike subheading 9802.00.90, HTSUS, the subject provision 
of the AGOA does not say that the fabric components may ``in part'' 
satisfy the three conditions of subheading 9802.00.80, HTSUS. CBP 
believes that, had Congress intended the conclusion urged by the 
commenter, it would have included specific wording to that effect in 
this provision. In the absence of that wording, CBP construes this AGOA 
provision as requiring that all the fabric components must meet the 
three conditions of the subheading. Therefore, CBP declines to amend 
the regulations in this regard to reflect the commenter's position.
    CBP notes that section 112(b)(1)(B) of the AGOA (which is reflected 
in Sec.  10.213(a)(2) of the regulations) specifically permits certain 
additional processing (for example, stonewashing and garment dyeing) as 
an exception to the third of the three conditions under subheading 
9802.00.80, HTSUS. Therefore, in the case of articles covered by 
section 112(b)(1)(B) and Sec.  10.213(a)(2), all of the fabric 
components may be subjected to one or more of those additional 
processes.
    CBP also does not agree that the regulations should be changed to 
indicate when processing would require classification in subheading 
9819.11.03, HTSUS, (Sec.  10.213(a)(2)) rather than in subheading 
9802.00.80, HTSUS, (Sec.  10.213(a)(1)). CBP believes that sufficient 
guidance is available through the specific processing exemplars in 
subheading 9819.11.03, HTSUS, and Sec.  10.213(a)(2) and in the 
regulations interpreting subheading 9802.00.80, HTSUS, (19 CFR 10.11-
10.26) and in the various administrative rulings and judicial decisions 
regarding what processes do or do not constitute operations incidental 
to assembly.
    Comment:
    A commenter expressed agreement with the change to the Sec.  10.212 
definition of ``assembled in one or more beneficiary countries'' made 
in the correction document published in the Federal Register on 
November 9, 2000, which involved removal of the parenthetical exception 
clause regarding thread, decorative embellishments, buttons, zippers, 
or similar components. The commenter suggested that with this change 
the regulations now recognize that duty-free treatment is to be 
accorded even to apparel exported for the addition of decorative 
appliques, bead effects and the like where these additions qualify as 
assemblies and that this is in keeping with the goal of the legislation 
to enhance the competitiveness of both domestic and sub-Saharan African 
textile industries.
    CBP's Response:
    CBP in this final rule document has replaced the definition of 
``assembled in one or beneficiary countries'' with ``sewn or otherwise 
assembled in one or more beneficiary countries'' in Sec.  10.212(q) as 
explained below under ``Additional Changes to the Regulations.'' This 
change in language does not change the definition which, as noted by 
the commenter, includes the addition of decorative embellishments, 
buttons, zippers or similar components where the additions qualify as 
assemblies.
    Comment:
    Three commenters suggested that either the categories of eligible 
products in Sec.  10.213(a)(1) and (a)(2) or the corresponding 
preference groups ``A'' and ``B'' on the Certificate of Origin in Sec.  
10.214(b), or both, should be combined into one because the statute 
does not require this distinction and because fewer categories or 
groups will present fewer opportunities for error and misunderstanding. 
These commenters suggested in this regard that there is no reason for 
distinguishing between apparel that is merely assembled and apparel 
that is subjected to additional finishing operations. One of these 
commenters further noted that these products are all ``807A+'' type 
products (that is, products assembled in the region from U.S.-formed-
and-cut parts from U.S.-formed yarn). This commenter suggested that 
since these AGOA provisions are intended to track the benefits provided 
under the NAFTA Special Regime (which is covered by one HTSUS 
provision, that is, subheading 9802.00.90), there is no reason why a 
single provision cannot be provided for these AGOA products. One of 
these commenters also stated that the two short supply provisions in 
Sec.  10.213(a) (that is, subparagraphs (8) and (9)) should be 
consolidated into one provision.
    CBP's Response:
    With the exception of preference groups ``3-C'' and ``8-H'' on the 
Certificate of Origin (which consolidate similar provisions), the 
regulatory text in Sec.  10.213(a) and the preference groups listed on 
the Certificate of Origin in Sec.  10.214(b) reflect the individual 
product descriptions or groupings that are contained both under section 
112(b) of the Act and in the subheadings of Subchapter XIX within 
Chapter 98 of the HTSUS. CBP strongly believes that it is essential to 
have a separate regulatory provision for each statutory product 
category or group so that appropriate distinctions among the different 
categories or groups may be maintained for legal, operational and 
statistical purposes. Accordingly, CBP does not agree with any of the 
suggestions for consolidation of these categories or groups.

Discussion of Comments in Response to T.D. 03-15

General Comments

    Comment:
    A commenter stated the belief that CBP's interpretation of the AGOA 
``is unnecessarily restrictive and at odds with the purpose of the 
legislation--to expand trade with countries in sub-Saharan Africa. . . 
. While economic conditions and infrastructure deficiencies are part of 
the reason, the narrow views adopted by Customs [now CBP] are a very 
significant contributor to this circumstance.''
    CBP's Response:
    The interpretations adopted by CBP with regard to the AGOA must be 
consistent with the language of the statute. It is CBP's desire and 
obligation to carry out the expressed intent of Congress as reflected 
by the language of the statute.
    Comment:
    A commenter noted that ``[c]hanges to existing interim regulations 
for CBTPA and AGOA that address the knit-to-shape and hybrid cutting 
issues will have a positive and immediate impact on U.S. textile 
suppliers and companies in the region.''
    CBP's Response:
    No response necessary.

Wholly Formed Fabrics

    Two commenters recommended amendments of the definition of ``wholly 
formed fabrics.''
    Comment:
    One commenter objected to the definition of ``wholly formed 
fabrics'' stating that it is beyond what is appropriate. The commenter 
believes the definition includes yarn formation and requires processing 
to begin with polymers and fiber formation. The commenter argues that 
the definition is inconsistent with the definition of ``wholly formed 
yarn'' and suggests the definition be changed to simply state that 
``fabrics wholly formed means that the fabric has been entirely knit or 
woven within the United States or a beneficiary country.''
    CBP's Response:
    The commenter has misinterpreted the definition of ``wholly formed 
fabric.'' The definition is not drafted to

[[Page 30384]]

require yarn formation. It is drafted to include the formation of all 
types of fabrics, including knit, woven and non-woven. As non-woven 
fabrics are generally formed by the entanglement of fibers or 
filaments, the definition necessarily includes beginning with polymers, 
fibers and filaments in order to include these fabrics which are not 
produced by knitting or weaving yarns.
    Comment:
    One commenter agreed with the inclusion of the phrase ``one or more 
beneficiary countries'' in the definition of ``wholly formed fabrics'' 
to fully reflect the circumstances where the term ``wholly formed 
fabrics'' is used, but the commenter believes that the addition of the 
term ``as appropriate'' after ``beneficiary countries'' would provide 
clarification.
    CBP's Response:
    CBP disagrees with the commenter's suggestion to add ``as 
appropriate'' to the end of the definition of ``wholly formed 
fabrics.'' We do not believe it is necessary, nor would it add the 
clarification suggested by the commenter.

Wholly Formed Yarns

    Comment:
    While the commenter agrees with the definition of ``wholly formed 
yarn'' in the ATPDEA and believes CBP ``correctly included draw-
texturing in the definition of `wholly formed' filament yarns,'' the 
commenter believes that ``[o]mitting this clarification from the CBTPA 
and AGOA regulations is inconsistent and will lead to confusion down 
the road.'' The commenter strongly urges the same definition be 
reflected in the CBTPA and AGOA regulations.
    CBP's Response:
    As indicated above in the discussion of comments relating to wholly 
formed yarns in response to T.D. 00-67, CBP has in this final rule 
document revised the definition of ``wholly formed yarns'' to clarify 
that the process of draw-texturing falls within the scope of ``wholly 
formed'' as it relates to yarn. CBP agrees with the commenter that the 
definition of ``wholly formed yarns'' should be changed to reflect the 
same definition for all the preference trade programs.

Knit-To-Shape Components

    Comment:
    The definition of knit-to-shape components includes a requirement 
that a knit-to-shape component have a self-start edge. One commenter 
requested that CBP define this term. In addition, the commenter, citing 
the Informed Compliance Publication (ICP), What Every Member of the 
Trade Community Should Know About: Knit to Shape Apparel Products 
(January 1999) and Headquarters Ruling Letter 953224 of May 13, 1993, 
stated that knit-to-shape components have not included squares or 
rectangles. The commenter requests that CBP clarify that the term 
``shape'' does not include ``regular geometric shapes such as 
rectangles and squares.'' The commenter further requests that the 
definition be amended to include a requirement that a component be in 
condition ready for assembly without further processing.
    CBP's Response:
    CBP agrees with the commenter that the term ``self-start edge'' 
needs to be defined. CBP has defined ``self-start bottom'' in the ICP 
cited by the commenter. Drawing from that definition, a definition for 
``self-start edge'' has been added in Sec.  10.212 of this final rule 
document as new paragraph (o). CBP also agrees with the commenter that 
the term ``specific shape'' as used in the definition of ``knit-to-
shape components'' needs to be clarified. As a result, the definition 
of ``knit-to-shape components'' (now Sec.  10.212(h)) has been modified 
in this final rule document by the insertion of the language, ``, that 
is, the shape or form of the component as it is used in the apparel 
article,'' after the word ``shape'' and before the word ``containing.'' 
CBP has further modified the definition of ``knit-to-shape components'' 
by replacing the article ``a'' immediately before ``self-start edge'' 
with the words ``at least one'' to clarify that knit-to-shape 
components may contain one or more self-start edges.
    CBP disagrees with the commenter's assertion that a knit-to-shape 
component cannot be of a square or rectangular shape for purposes of 
this definition. The ICP publication cited by the commenter discusses 
knit-to-shape components which are considered ``major parts'' in 
determining whether an apparel article is to be considered a knit-to-
shape article. ``Major parts,'' by definition, does not include all 
components of a knit-to-shape article; ``major parts'' does not include 
collars, cuffs, waistbands, plackets, pockets, linings, paddings, trim, 
accessories, or similar parts. In that context, the ICP addresses the 
requisite features of a knit-to-shape front, back or sleeve panel. In 
other words, it addresses the requirements for a ``knit-to-shape 
component'' that is a ``major part.'' CBP agrees that, in that context, 
square or rectangular textile pieces have been rejected from 
consideration as ``knit-to-shape'' because they lacked features, such 
as armholes, necklines, or shaping, which made it possible to clearly 
identify the pieces as specific components of a garment. The definition 
of ``knit-to-shape components'' in this final rule document, however, 
includes all components of an apparel article, not just ``major 
parts,'' which may be knit directly into the shape in which the 
component is used in the apparel article. Whether a knit component is 
knit directly into a geometric shape such as a rectangle or square is 
of no consequence provided that knit component is knit directly into 
the shape in which it will be used in a garment and it is identifiable 
as a garment component.
    With regard to the commenter's reliance upon HQ 953224, we believe 
the commenter meant to cite to HQ 953234 which was issued on May 13, 
1993, and addressed the country of origin of plastic coated fabric. 
However, we believe HQ 953234 does not support the commenter's position 
as that ruling dealt with the classification of certain woven fabric.
    Finally, CBP disagrees with the suggestion by the commenter to 
amend the definition of ``knit-to-shape components'' to include a 
requirement that a component be in condition ready for assembly without 
further processing. We do not believe such a requirement is necessary. 
In addition, it contradicts the language in the definition which allows 
for minor cutting or trimming of such components.

Lesser Developed Beneficiary Countries Provision

    Comment:
    Section 10.213(a)(5) describes a preference available to apparel 
articles that are ``wholly assembled, or knit-to-shape and wholly 
assembled, or both.'' An explanation is sought as to why there is a 
reference to ``both'' in section 10.213(a)(5) because the commenter is 
unable to envision a circumstance where an apparel article would be 
both ``wholly assembled'' and ``knit-to-shape and wholly assembled.''
    CBP's Response:
    The language in Sec.  10.213(a)(5) follows the language of the 
statute in section 112 (c)(1)(A) of the AGOA (codified at 19 U.S.C. 
3721(c)(1)(A)).
    Comment:
    A commenter asserts that the lesser developed country beneficiary 
rule is a relaxation of the more restrictive rules of the other 
provisions and, therefore, it should be interpreted to allow knit-to-
shape components from third countries to be used in the assembly of 
apparel in the lesser developed beneficiary countries. The commenter 
posits that

[[Page 30385]]

since Congress has not specifically indicated that using third-country 
knit-to-shape components would disqualify a garment from preferential 
treatment, their use in the assembly of apparel articles should be 
allowed. The commenter requests CBP to clarify Sec.  10.213(a)(5), by 
inserting the phrase ``, knit to shape components,'' between the words 
``fabric'' and ``or,'' to indicate that third-country knit-to-shape 
components are allowed in the assembly of apparel provided for by that 
provision.
    CBP's Response:
    CBP does not have the authority to add the requested language which 
would change the scope of the provision as enacted. Only Congress may 
make the change the commenter seeks as the language in the regulation 
reflects the language in the statute which Congress passed.
    The only allowance for the use of foreign (third-country) 
components in the production of apparel articles eligible for 
preferential treatment under the AGOA is found in the Special Rules in 
section 112(e) of the AGOA. Paragraphs (e)(1)(A) and (B) of section 112 
(Sec.  10.213(c)(1)(i) and (c)(1)(ii) of the regulations, respectively) 
allow for the use of certain foreign interlinings and findings and 
trimmings, subject to a specified value limitation. Paragraph (e)(3) 
sets forth a new special rule added by the Act of 2004 which was 
discussed above. Under this new rule, an article otherwise eligible for 
preferential treatment under section 112 will not be ineligible for 
that treatment because the article contains certain specified 
components that fail to meet the applicable requirements set forth in 
section 112(b), regardless of the origin of the component (see new 
Sec.  10.213(c)(1)(v) of the regulations). The specified components 
are: collars, cuffs, drawstrings, shoulder pads or other padding, 
waistbands, belt attached to the article, straps containing elastic, 
and elbow patches.
    Comment:
    A commenter asserts that, consistent with the plain language of 
section 112(b)(3)(B)(i) of the AGOA (as amended by section 
3108(a)(3)(B) of the Act of 2002) [now section 112(c)(1)(A)], section 
10.213(a)(5) of the interim regulations should be clarified or modified 
to indicate that the provision ``requires knit-to-shape apparel 
articles to be knit-to-shape and assembled in a lesser-developed 
beneficiary country, but does not require knit fabric components 
assembled in non-knit-to-shape articles to be knit in a beneficiary 
country.''
    CBP's Response:
    CBP agrees that the phrase ``or knit-to-shape and wholly 
assembled,'' refers to apparel articles. However, CBP disagrees with 
the commenter's conclusion with regard to knit fabric components 
assembled in non-knit-to-shape articles. It is assumed that the 
commenter is referring to knit components that have been knit-to-shape 
as the concern appears to be where those components are knit. CBP 
believes that the language of the provision (section 112(c)(1)(A) of 
the AGOA) must be read as a whole and in so doing, the language 
``regardless of the country of origin of the fabric or the yarn used to 
make such articles'' must be considered. Congress clearly intended to 
allow third country fabric or yarn to be used in the production of 
apparel wholly assembled in lesser developed beneficiary countries. If 
Congress had intended to allow third-country components, whether knit-
to-shape or cut to shape, it is reasonable to expect such intent would 
have been clearly reflected in the language of the statute as is the 
case of third-country fabric or yarn. No such intent is reflected in 
section 112(c)(1)(A) of the AGOA, although as noted above, the Special 
Rules in section 112(e) of the statute allow the use of certain third-
country components. The commenter's effort to draw a distinction 
between knit-to-shape apparel and cut to shape apparel is without 
support in the language of the statute.
    Comment:
    A commenter argues that a distinction exists in Sec.  10.213(a)(5) 
between knit-to-shape apparel articles and non-knit-to-shape (cut and 
sew) apparel articles. Based on this belief, the commenter states that 
a small foreign rectangular knit component, such as a collar, cannot 
disqualify, from Preference Group E, a non-knit-to-shape garment that 
is wholly assembled in a lesser-developed beneficiary country. The 
argument is that in the case of non-knit-to-shape apparel, ``the fabric 
containing minor knit rectangular components such as collars, cuffs and 
waistbands, may be knit in any country.'' However, for ``knit-to-shape 
apparel the components must be knit in a lesser-developed beneficiary 
country.'' The commenter believes that if CBP ``interprets section 
3108(a)(3)(B) of the Trade Act of 2002 to prevent preferential 
treatment for a simple make garment, like a polo shirt, that is wholly 
assembled in a lesser-developed beneficiary country from a full package 
of third country fabric, including fabric containing rectangular 
components for the collars and cuffs, it strains the bounds of 
reasonable effectuation of preferential access policy and contradicts 
legislative intent.''
    CBP's Response:
    The response to the previous comment is equally applicable to this 
comment. CBP finds no basis in the language of the lesser developed 
beneficiary countries provision to justify a distinction between knit-
to-shape and other apparel articles.
    Comment:
    Only knit-to-shape apparel articles are required to be knit-to-
shape in a lesser developed beneficiary country under the terms of 
Sec.  10.213(a)(5). Knit-to-shape apparel articles are defined as 
apparel articles ``of which 50 percent or more of the exterior surface 
area is formed by major parts that have been knitted or crocheted 
directly to the shape used in the apparel article.'' ``Major parts'' 
are defined as ``integral components of a good'' but not including 
``collars, cuffs, waistbands, plackets, pockets, linings, paddings, 
trim, accessories, or similar parts.'' 19 CFR Sec.  102.21(a)(4); see 
also Sec.  10.212(k). Based on this reasoning, a commenter asserts that 
excluded from the definition of ``major parts'' are the types of 
components that Sec.  10.213(a)(5) should not require to be knit-to-
shape in a beneficiary country. Thus, the commenter seeks modification 
of Sec.  10.213(a)(5) by the addition of a sentence at the end that 
states, ``Minor components of apparel articles that are not knit-to-
shape articles may be assembled into such articles regardless [of] 
their origin and regardless [of] whether they are knit-to-shape 
components.'' The commenter also seeks the addition of the definition 
of ``major parts'' from Sec.  102.21 or a cross-reference to the 
definition in Sec.  102.21.
    CBP's Response:
    The commenter is using the definition of a knit-to-shape apparel 
article to argue that Congress must have meant that only ``major 
parts'' need be knit-to-shape in the lesser developed beneficiary sub-
Saharan countries to be eligible to receive preferential treatment 
under the AGOA lesser developed beneficiary countries provision. The 
commenter asserts that in the case of knit-to-shape apparel articles, 
it should be permissible to source ``minor components'' which are not 
considered in determining whether an apparel article is knit-to-shape 
from third countries. In making this argument, the commenter has 
ignored the language in section 112(c)(1)(A) of the AGOA which states, 
``regardless of the country of origin of the fabric or yarn.'' It is 
this phrase which is key to CBP's position that, except as expressly 
permitted by the Special Rules in section 112(e) of the AGOA, third-
country components,

[[Page 30386]]

whether knit to shape or cut to shape, may not be used in the assembly 
of apparel articles under the lesser developed beneficiary countries 
provision.
    The sentence which the commenter requests be added to Sec.  
10.213(a)(5) cannot be added as it goes beyond an interpretation of the 
language as enacted by Congress. The addition of such a statement would 
modify the scope of the provision and CBP does not have the authority 
to take such action.
    Comment:
    ``Even if the reference to `components' in section 3108(a)(3) of 
the Act of 2002 can be read into section 3108(a)(3)(B) setting forth 
the special rules for lesser-developed beneficiary countries, . . ., 
the term can only be understood to refer to the types of knit-to-shape 
components that render a garment a knit-to-shape garment as described 
in What Every Member of the Trade Community Should Know About Knit to 
Shape Apparel Products. The term as used does not apply to all 
components that may be classifiable as knit-to-shape garment parts.'' 
The commenter believes that based on CBP's interpretation of knit-to-
shape apparel under 19 U.S.C. 3592 (rules of origin) and the 
presumption that Congress was aware of CBP's regulations and other 
administrative interpretations with respect to knit-to-shape apparel, 
``Congress' reference to knit-to-shape components in the amended 
section [3108] should be understood to only refer to those knit-to-
shape components which render a garment a knit-to-shape garment. No 
other components need meet the requirement that they be knit in a 
lesser-developed beneficiary country.''
    Based on this line of reasoning, the commenter argues that even if 
collars are knit-to-shape components, they are not within the scope of 
the knit-to-shape components that must be knit in a lesser-developed 
beneficiary country under section 112(b)(3)(B)(i) of the AGOA, as 
amended by section 3108(a)(3)(B) of the Act of 2002 [now section 
112(c)(1)(A)]. The commenter asserts that there is an interpretative 
opportunity for CBP to allow preferential treatment under Preference 
Group E ``for (i) non-knit-to-shape garments wholly assembled in 
lesser-developed beneficiary countries from fabric and from knit fabric 
containing square or rectangular components of any origin, and (ii) 
knit-to-shape garments wholly assembled in lesser-developed beneficiary 
countries from components knit-to-shape in one or more lesser-developed 
beneficiary countries regardless the origin of the yarn.'' [Emphasis 
added.]
    CBP's Response:
    The commenter's argument with regard to 19 U.S.C. 3592 (rules of 
origin for textiles and apparel) is misplaced. The AGOA is not based on 
the rules of origin for textile and apparel goods in part 102 of the 
CBP regulations; it is a program which is based on meeting the specific 
production requirements detailed by Congress in the various provisions 
of the AGOA.
    In the case of the lesser developed beneficiary countries, Congress 
specified that the apparel must be ``wholly assembled, or knit-to-shape 
and wholly assembled, or both.'' In addition to specifying these 
requirements, Congress allowed the use of fabric or yarn in the 
production of apparel under this provision ``regardless of the country 
of origin.'' If Congress had intended the allowance of foreign-sourced 
(third-country) components (beyond that permitted by the Special Rules 
in section 112(e) of the AGOA), be they knit-to-shape or cut-to-shape, 
Congress would have so specified in this provision or Congress could 
have merely required that apparel be wholly assembled without 
specifically addressing the source of fabric and yarn.
    The commenter, in this instance, is attempting to limit the meaning 
of ``knit-to-shape components'' based on the definition of ``knit-to-
shape'' in the CBP regulations for determining the country of origin of 
textile goods (19 CFR 102.21). The commenter asks CBP to accept the 
assertion that Congress only meant to address those knit-to-shape 
components that are considered in determining whether a garment is 
knit-to-shape, i.e. ``major parts,'' in inserting the phrase ``knit-to-
shape and wholly assembled'' in the rule for lesser developed 
beneficiary countries. Even if CBP were to accept this assertion (which 
CBP does not), the language of the provision does not support the 
commenter's contention that other knit-to-shape components may be of 
third-country origin. The commenter suggests that CBP may interpret the 
rule for lesser developed beneficiary countries to allow for the 
inclusion of ``knit fabric containing square or rectangular components 
of any origin'' in the case of cut-to-shape apparel. The language of 
the provision does not support the proposition that third-country 
components (other than those specified in the Special Rules), be they 
knit-to-shape or cut-to-shape, are allowed under the rule for lesser 
developed beneficiary countries. Nor is there a basis in the language 
of the provision to support the commenter's assertion that knit-to-
shape garments and cut-to-shape garments should be treated differently 
with regard to an allowance for third-country components.
    Comment:
    A commenter asserts that ``[f]abric comprising simple rectangular 
knit components, like polo shirt collars, is not knit-to-shape 
components as that term has previously been defined by CBP, and it is 
not classifiable as such under the HTSUS.'' The commenter looks to the 
Informed Compliance Publication (ICP), What Every Member of the Trade 
Community Should Know About Knit to Shape Apparel Products for a 
discussion of when a component is considered to be ``knit-to-shape.'' 
The commenter admits that ``Customs never applied these rules [for 
determining if a component is knit-to-shape] to components such as 
collars, cuffs and waistbands, because such components are excluded 
altogether from consideration in determining whether a garment is a 
knit-to-shape garment.'' The commenter further argues that ``long rolls 
of knit fabric that is the size and shape of waistbands or cuffs but 
for cutting to length'' are fabric. In furtherance of this position, 
the commenter states that simple rectangular or square components are 
not ``made up'' articles within the meaning of Note 7, Section XI, 
HTSUS. In addition, the commenter believes the interim regulations 
definition of ``knit-to-shape components'' is too broad and vague.
    CBP's Response:
    With regard to the definition of knit-to-shape components as that 
term has been applied in the past by CBP, the commenter refers to the 
ICP, What Every Member of the Trade Community Should Know About Knit to 
Shape Apparel Products, to support the argument that a square or 
rectangular panel is not knit to shape. However, the commenter 
acknowledges that the ``rules'' regarding knit-to-shape components 
discussed in the ICP have never been applied to collars, cuffs, or 
waistbands. This is because the ICP is devoted to a discussion of knit-
to-shape panels that are ``major parts'' of knit-to-shape apparel. The 
context in which the knit rectangular or square collar, cuff and 
waistband components have been examined under the AGOA is quite 
different than the focus of the ICP. The issue in the AGOA has been 
whether the knit rectangular or square collar, cuff and waistband 
components are components or fabric for purposes of determining a 
garment's eligibility under a provision that allows for the use of 
fabric or yarn without regard to origin.

[[Page 30387]]

    The commenter cites to Note 7, Section XI, HTSUS, and claims that 
simple rectangular or square components are not ``made up'' articles as 
defined by that note. The commenter is correct, but only in part. Note 
7 defines ``made up'', in pertinent part, as ``(a) Cut otherwise than 
into squares or rectangles;'' and ``(f) Knitted or crocheted to shape, 
whether presented as separate items or in the form of a number of items 
in the length.'' Rectangular or square components that are cut from 
larger pieces of fabric are, as the commenter pointed out, not ``made 
up'' articles as defined by Note 7. However, with regard to components 
such as collars, cuffs, and waistbands which may be knit-to-shape and 
whose shape happens to be rectangular, such components would fall 
within the language of Note 7(f) and thus be considered ``made up.''
    Generally, collars which are knit-to-shape are knit in a series of 
collars separated by dividing threads or lines of demarcation. Thus, 
CBP must disagree with the commenter with regard to ``fabric'' which is 
knit with lines of demarcation to indicate the length and width of 
individual items which contain a self-start edge and are readily 
identifiable as garment components. Even if these individual items are 
rectangular in shape and require minor cutting or trimming before use, 
provided they have the essential character of the finished component, 
i.e., they are clearly recognizable as the component, such as collars, 
following General Rule of Interpretation 2(a) of the HTSUS, they would 
be classified as the finished good, that is, as garment parts. CBP has 
issued a number of rulings regarding the classification of such garment 
parts or components. See New York Ruling Letter (NY) 813955 of 
September 6, 1995 (classification in subheading 6117.90, HTSUS (as 
parts of garments), of collars and cuffs knitted into rolls in which 
the collars and cuffs are connected with separating threads creating 
lines of demarcation), NY B80190 of December 9, 1996 (classification of 
collars and cuffs knitted into rolls in which the collars and cuffs are 
connected with separating threads creating lines of demarcation), NY 
F80642 of January 4, 2000 (classification of collars and cuffs knitted 
into rolls in which the collars and cuffs are connected with separating 
threads creating lines of demarcation), and HQ 560304 of April 25, 1997 
(country of origin of collars and waistbands created by knitting a 
``fabric'' consisting of collars and waistbands connected by a melting 
thread for separation into individual components by steaming).
    As to the commenter's contention with regard to long rolls of knit 
fabric which are the size and shape of waistbands or cuffs but are to 
be cut to length, CBP agrees that such rolls remain fabric. Although 
strips of material may be used to produce any number of cuffs or 
waistbands or collars, if the quantity and identity of the components 
cannot be discerned from an examination of the material, CBP considers 
the material to be fabric. Support for this view may be found in 
Coraggio Design, Inc. v. United States, 12 CIT 143 (1988), in which the 
Court of International Trade, after discussing several cases involving 
the issue of material versus article or part, stated ``material cannot 
be classified as more than woven fabric when it is not processed to the 
point where the individual `article' is identifiable with certainty, 
not cut to specific lengths or marked for cutting, and not advanced to 
a point where significant processing steps no longer remain.'' 12 CIT 
143, 147.
    As for the definition of ``knit-to-shape components,'' CBP in this 
final rule document is changing the definition, as already discussed, 
to add clarity.
    Comment:
    According to a commenter, CBP's position that collars and cuffs 
used in the production of articles under the lesser developed 
beneficiary countries provision ``are not fabric, but rather `fabric 
components'. . . . is a distinction without a difference and these 
components should be properly characterized as fabric.'' The commenter 
states that ``in past rulings, the Customs Service has characterized 
knit fabric components as `fabric.''' The commenter asserts that these 
fabric components are an integral part of the garment and are not 
themselves knit-to-shape and to adopt such an interpretation would not 
conflict with Congressional intent. This commenter requests that Sec.  
10.213(b)(5) of the regulations be clarified to allow the use of third 
country formed collars and cuffs.
    CBP's Response:
    CBP believes that the commenter's concerns have effectively been 
rendered moot by the addition of the new special rule in section 
112(e)(3) of the AGOA by the Act of 2004, as discussed above. As 
applied to this commenter's specific concerns, this statutory change 
permits the use of collars and cuffs (cut or knit-to-shape) made in a 
non-lesser developed beneficiary country in the construction of apparel 
articles covered by section 112(c)(1)(A)of the AGOA (Sec.  
10.213(b)(5)).
    Comment:
    Two commenters request that the regulations be clarified with 
regard to the eligibility under AGOA of garments knit-to-shape and 
assembled in a lesser developed beneficiary country with collars and 
cuffs knit in a non-lesser developed beneficiary country. These 
commenters disagree with CBP's interpretation that collars and cuffs 
must be knit-to-shape in a lesser developed beneficiary country in 
order for the apparel to qualify. The commenters believe apparel should 
still qualify for preferential treatment under the AGOA, provided the 
knit components which are knit-to-shape in a non-lesser developed 
beneficiary country otherwise meet the AGOA eligibility requirements.
    CBP's Response:
    Again, the commenters' concerns have been rendered moot by the new 
special rule in section 112(e)(3) of the AGOA and Sec.  10.213(c)(1)(v) 
of the regulations.

Findings and Trimmings

    Comment:
    One commenter stated that the definition of the ``cost'' of 
components and the ``value'' of findings and trimmings and interlinings 
set forth in Sec.  10.213(b)(2) of the Interim Regulations 
``incorporate a bias that could overstate the relative cost of trim and 
findings'' in comparison to the cost of the other components of the 
article. The commenter pointed out that in the ``usual circumstance,'' 
components subject to the findings and trimmings exception would 
originate in a non-AGOA beneficiary country while the other components 
of the article would be produced at the site of manufacture of the 
article in an AGOA beneficiary country. Thus, by applying an f.o.b. 
port of exportation standard, the value of foreign findings and 
trimmings would include the cost of transportation within the country 
of origin, but the cost of the other components would include little or 
no transportation costs. The commenter suggests using an ex-factory 
cost or value in lieu of the f.o.b port of exportation standard 
provided for in Sec.  10.213(b)(2) of the Interim Regulations.
    CBP's Response:
    CBP agrees with the commenter and believes that the definition of 
``cost'' and ``value'' in re-designated Sec.  10.213(c)(2) (formerly 
Sec.  10.213(b)(2)) also has the potential for overstating the 
``value'' of foreign interlinings in comparison to the ``cost'' of the 
components of the assembled article for the same reason cited by the 
commenter. CBP also agrees that the use

[[Page 30388]]

of an ex-factory standard in lieu of the f.o.b. port of exportation 
standard would resolve the potential problem by eliminating 
transportation costs from the comparison between the ``value'' of 
foreign findings and trimmings and/or foreign interlinings and the 
``cost'' of the components of the assembled article. Therefore, CBP has 
revised re-designated Sec.  10.213(c)(2) in this final rule document to 
incorporate an ex-factory standard in lieu of the f.o.b. port of 
exportation standard.

Post-Assembly Processing

    Comment:
    One commenter suggested that the regulations make it clear that 
post-assembly processes (such as embroidering, stone-washing, enzyme-
washing, acid washing, perma-pressing, oven-baking, bleaching, garment-
dyeing or screen printing) do not disqualify an apparel article for 
preferential treatment when all other criteria for eligibility are met. 
The commenter noted that including such language in the AGOA 
regulations would be consistent with similar provisions currently found 
in the regulations relating to textile and apparel articles under the 
United States-Caribbean Basin Trade Partnership Act (CBTPA) (see Sec.  
10.223(b)(2)) and the Andean Trade Promotion and Drug Eradication Act 
(ATPDEA) (see Sec.  10.243(b)(2)).
    CBP's Response:
    Nearly identical comments were previously received in response to 
the initial AGOA interim regulations adopted in T.D. 00-67. An analysis 
of these previous comments relating to post-assembly processing is set 
forth above in this final rule document in the discussion of comments 
on post-assembly processing received in response to T.D. 00-67.

Short Supply

    Comment:
    A commenter strongly disagreed with the language in Sec.  
10.213(a)(8) that excludes brassieres from receiving preferential 
treatment under this short supply provision. The commenter recommended 
that the words ``, other than brassieres classifiable under subheading 
6212.10, HTSUS,'' (which were added to Sec.  10.213(a)(8) by T.D. 03-
15) be deleted. CBP concluded in T.D. 03-15 that Congress intended to 
exclude brassieres from the AGOA short supply provision because the 
CBTPA and the ATPDEA each contained separate provisions specific to 
preferential treatment for brassieres and as the short supply language 
in the three trade preference programs are substantially similar, if 
the short supply provisions in CBTPA and ATPDEA do not include 
brassieres, then neither does AGOA's short supply provision. The 
commenter stated that, as a result of amendments made by the Act of 
2002, language was included in the CBTPA and ATPDEA preference 
provisions covering brassieres that specifically envisions brassieres 
being imported under the short supply provisions in each of those two 
trade preference programs. The commenter stated that this statutory 
language stands in sharp contrast to CBP's view that brassieres are not 
eligible for short supply treatment in those trade programs.
    CBP's response:
    As CBP stated in the discussion of the interim amendments in the 
preamble of T.D. 03-15, Sec.  10.223(a)(7) provides for apparel 
articles constructed of fabrics or yarns which for purposes of Annex 
401 of the NAFTA are deemed to be in ``short supply.'' There is no list 
of ``short supply'' fabrics or yarns for purposes of the NAFTA. The 
determination of these ``short supply'' fabrics or yarns is based upon 
the various provisions of the NAFTA and whether, under the NAFTA, for 
the particular apparel article at issue, certain fabrics or yarns may 
be sourced from outside the NAFTA parties for use in the production of 
an ``originating'' good. If the sourcing of certain fabrics or yarns 
outside the NAFTA parties is allowed, then those fabrics or yarns are 
deemed to be in ``short supply'' for that apparel article.
    In the case of brassieres under the NAFTA, no restrictions or 
limitations apply regarding fabrics or yarns. Therefore, fabrics and 
yarns may be obtained from anywhere. The only requirement under Annex 
401 is that articles classified in subheading 6212.10, HTSUS, must be 
``both cut (or knit to shape) and sewn or otherwise assembled in the 
territory of one or more of the NAFTA parties.'' CBP believes that the 
absence of NAFTA restrictions on fabrics or yarns used in the 
production of brassieres, does not mean that all fabrics or yarns used 
for this purpose must be in ``short supply.'' CBP submits that applying 
the short supply provision to a product where the NAFTA rule makes no 
mention of excluded materials would render meaningless the specific 
provisions on brassieres in the CBTPA and ATPDEA. Thus, CBP remains of 
the view that it was appropriate to amend Sec.  10.213(a)(8) to clarify 
that brassieres are not covered by this provision.
    Additionally, the commenter pointed out that, as a result of 
amendments made by the Act of 2002, language was added to the 
preferential provisions specifically covering brassieres in the CBTPA 
and ATPDEA which excluded articles covered by certain other provisions 
in those programs. According to the commenter, the exception language 
added by Congress to the brassiere provisions clearly envisioned 
brassieres being imported under these excluded provisions, including 
the short supply provisions. In CBP's opinion, the addition of this 
exception language should not be interpreted as indicating that 
brasseries are eligible under any or all of the excepted provisions. 
This clarifying language merely states that any brassieres classified 
in one of the excepted provisions would not be considered in 
determining eligibility under the specific CBTPA and ATPDEA brassiere 
provisions.

Certificate of Origin

    Comment:
    A commenter expressed agreement with the removal of the words ``in 
a beneficiary country'' from Sec.  10.217(a)(2) and (a)(3) in 
recognition of the fact ``that many companies do not necessarily keep 
the verification documentation in the factory that performed the 
sewing.'' The commenter also recommended that the Certificate of Origin 
be further simplified into one form to serve the AGOA, the CBTPA and 
the ATPDEA programs because the requirements for these programs are the 
same. The commenter also suggested that the exporter be given the 
option of inserting ``available upon request'' in the three blocks on 
the Certificate in which the names and addresses of the producers of 
the fabric, yarn and thread are to be provided.
    CBP's Response:
    CBP would certainly be open to any suggestions concerning the 
simplification of the Certificate of Origin. However, developing one 
form to accommodate AGOA, CBTPA and ATPDEA would result in the form 
becoming substantially more complex, especially for the exporter who is 
required to complete the form and is responsible for ensuring that the 
information is accurate. Although the textile and apparel provisions in 
the three programs are substantially similar, there are sufficient 
differences in the preferential groupings and requirements among the 
programs to present significant obstacles to the creation of a common 
certificate.
    With regard to the commenter's recommendation that CBP accept 
``available upon request'' in the blocks on the Certificate where the 
names and addresses of the yarn, fabric and thread suppliers are to be 
provided, CBP notes that the same suggestion previously was

[[Page 30389]]

made by several commenters in response to T.D. 00-67. CBP's response to 
that suggestion is set forth above in the discussion of comments 
received in response to T.D. 00-67 (under the heading ``Certificate of 
Origin'').

Other Issues

    Comment:
    A commenter recommends a change in the language in Sec.  
10.213(a)(1) and (a)(2) to add the phrase ``or both'' before the 
parenthetical. The commenter believes it will clarify that garments 
using a combination of knit-to-shape components and cut fabric 
components are allowed.
    CBP's Response:
    The commenter's concerns have been addressed by an amendment to 
section 112(b)(1) of the AGOA by the Act of 2004. Accordingly, as 
discussed previously, CBP has in this final rule document amended Sec.  
10.213(a)(1) and (a)(2) by adding the words ``or both'' immediately 
before the parenthetical matter.
    Comment:
    A commenter recommends changing the language in Sec.  10.213(a)(4) 
``from yarns originating either in the United States or one or more 
beneficiary countries'' to ``from yarns originating in any combination 
of the United States or one or more beneficiary countries.'' The 
commenter believes this will clarify that a combination of U.S. and 
sub-Saharan African yarns is allowed in the production of fabric or 
knit-to-shape components.
    CBP's Response:
    Again, the commenter's concerns have been addressed by an amendment 
to section 112(b)(3) of the AGOA by the Act of 2004. As amended in this 
final rule document, Sec.  10.213(a)(4) now reads, in pertinent part: 
``. . . from yarns originating in the United States or one or more 
beneficiary countries or former beneficiary countries, or both. . . .'' 
(Emphasis added.)
    Comment:
    A commenter requested that the language, ``or any combination of 
the above fabric formation or knit to shape operations'' be added 
immediately before the ``subject to the applicable quantitative limit'' 
language in Sec.  10.213(a)(4). The commenter believes this will 
clarify that cut fabric components and knit-to-shape components may be 
combined.
    CBP's Response:
    The language set forth in Sec.  10.213(a)(4) is consistent with the 
statutory language in section 112(b)(3) of the AGOA. In addition, the 
suggested change is unnecessary as CBP construes the word ``or'' 
between ``fabric wholly formed in one or more beneficiary countries'' 
and ``components knit-to-shape in one or more beneficiary countries'' 
in the context in which it is used in Sec.  10.213(a)(4) to mean ``and/
or.''
    Comment:
    A commenter proposed that CBP clarify various hybrid operations by 
the addition of a ``global hybrid phrase'', which may appear as a new 
special rule in Sec.  10.213(b)(1) [re-designated in this document as 
Sec.  10.213(c)(1)]. The rule would provide that an article otherwise 
eligible for preferential treatment will not be ineligible for that 
treatment because it contains: ``(v) Fabrics, fabric components formed, 
or components knit-to-shape described in paragraph (a)(1).'' According 
to the commenter, the insertion of this new provision in the 
regulations will ensure that the inclusion of United States components 
in a garment will not render the garment ineligible for duty benefits. 
The commenter also states that the inclusion of such a provision is 
consistent with pending clarifying changes that Congress is 
considering, which will provide further guidance as to original 
congressional intent.
    CBP's Response:
    The commenter's concerns were partially addressed by an amendment 
to section 112(b)(3) of the AGOA made by the Act of 2004 which added 
the words ``whether or not the apparel articles are also made from any 
of the fabrics, fabric components formed, or components knit-to-shape 
described in paragraph (1) or (2)'' of section 112(b). A comparable 
change has been made in this document to Sec.  10.213(a)(4). However, 
beyond this change, CBP is without authority to add the requested new 
special rule in the regulations as it would change the scope of certain 
of the statutory preferential groupings.

Additional Changes to the CBP Regulations

    In addition to the regulatory changes identified and discussed 
above in connection with (1) the statutory changes to the AGOA made by 
section 7 of the Act of 2004 and section 6002 of the Act of 2006, and 
(2) the discussion of public comments in response to T.D. 00-67 and 
T.D. 03-15, the regulatory texts set forth below incorporate the 
following additional changes which CBP believes are necessary based on 
further internal review of the interim regulatory texts:
    1. As a result of changes to the AGOA made by section 3108(a) of 
the Act of 2002, T.D. 03-15 amended paragraphs (a)(1), (a)(2), and 
(a)(3) of interim Sec. Sec.  10.213 (among other changes to the interim 
regulations) to insert the words ``sewn or otherwise'' immediately 
before the words ``assembled in one or more beneficiary countries.'' In 
addition, a new paragraph (a)(11) was added to Sec.  10.213 by T.D. 03-
15 to reflect the addition of new paragraph (b)(7) to section 112 of 
the AGOA by the Act of 2002. The words ``sewn or otherwise assembled in 
one or more beneficiary countries'' appear in Sec.  10.213(a)(11) as 
well. As a result of these changes, the definition of ``assembled in 
one or more beneficiary countries'' in interim Sec.  10.212 has been 
replaced by a definition of ``sewn or otherwise assembled in one or 
more beneficiary countries'' (now Sec.  10.212(q)). The substance of 
the definition has not changed.
    2. CBP has determined that the definition of ``foreign'' as set 
forth in interim Sec.  10.212 could cause some confusion and might lead 
to anomalous and unintended results in certain circumstances. That 
definition (which has relevance only in the context of the findings, 
trimmings and interlinings provisions of re-designated Sec.  10.213(c)) 
in the interim texts simply reads ``of a country other than the United 
States or a beneficiary country.'' However, because the various textile 
and apparel articles to which preferential treatment applies are 
described in Sec.  10.213(a) with reference to specific production 
processes in the case of yarns, fabrics and components that must take 
place in the United States or in a beneficiary country (or in certain 
instances, in a former beneficiary country) or both, more is required 
than that the yarn or fabric or component be ``of'' (that is, have its 
origin in) the United States or a beneficiary country. For example, 
Sec.  10.213(a)(1) refers to articles ``sewn or otherwise assembled'' 
in one or more beneficiary countries from ``fabrics wholly formed and 
cut'' in the United States from ``yarns wholly formed'' in the United 
States. A fabric that was wholly formed in the United States but from 
yarns formed outside the United States would not meet the Sec.  
10.213(a)(1) standard and also would not be considered ``foreign'' 
under the interim definition because it is ``of'' (that is, it has its 
origin in) the United States by virtue of its having been formed in the 
United States. Therefore, that fabric could not be present in the 
article under the finding, trimming or interlining rule exception; 
consequently, even if all of the other fabric in the article was wholly 
formed and cut in the United States from yarns wholly formed in the 
United States and the article was assembled in a beneficiary country, 
the assembled article would not qualify for preferential

[[Page 30390]]

treatment. On the other hand, a fabric formed outside the United States 
or the AGOA region, if used as a finding, trimming or interlining 
within the 25 percent limit, would not disqualify the article. Thus, 
under the interim definition of ``foreign,'' U.S. and beneficiary 
country textile materials could be at a disadvantage vis-a-vis 
materials from outside the United States and the AGOA region, contrary 
to the overall thrust of the AGOA program as discussed in the comment 
discussion set forth above in this document. CBP believes that the 
interim definition was appropriate in the case of non-textile findings 
and trimmings. However, in the case of textile findings, trimmings and 
interlinings the concept of ``foreign'' logically only has relevance in 
the context of an exception to the production standards that apply to 
articles eligible for preferential treatment. Accordingly, the 
definition of ``foreign'' has been replaced by a definition of 
``foreign origin'' in Sec.  10.212(e) to address these concerns.
    3. Section 10.213(a)(6) includes a reference to subheading 6110.10, 
HTSUS, which has been replaced by subheading 6110.12, HTSUS. 
Accordingly, the reference in Sec.  10.213(a)(6) to subheading 6110.10 
has been replaced by a reference to subheading 6110.12.
    4. CBP has determined that the producer or the producer's 
authorized agent having knowledge of the relevant facts should be 
permitted to sign the Certificate of Origin in addition to the exporter 
or the exporter's authorized agent. The producer clearly is in the best 
position to attest to the accuracy of the information set forth in the 
Certificate. Therefore, Sec. Sec.  10.214(a), 10.214(c)(13), and 
10.216(b)(2) have been changed to provide that the Certificate of 
Origin must be signed by the exporter or producer or by the exporter's 
or producer's authorized agent having knowledge of the relevant facts. 
CBP notes that this change is consistent with changes to the 
implementing regulations under the Caribbean Basin Trade Partnership 
Act (CBTPA) and the Andean Trade Promotion and Drug Eradication Act 
(ATPDEA) and thus brings uniformity to the three programs in this 
regard.
    5. References to ``Customs'' within the regulatory text in 
Sec. Sec.  10.214, 10.215, 10.216, and 10.217 have been changed to 
``CBP.''
    6. Several numerical or alphabetical paragraph designations or 
other references within regulatory text in Sec. Sec.  10.212, 10.213, 
10.214, 10.216, and 10.217 have been changed to conform to additions or 
other changes to the regulatory texts discussed above.
    7. In Sec.  178.2, the table has been amended by adding a listing 
for Sec. Sec.  10.214-10.216 to provide the Office of Management and 
Budget (OMB) control number for the collection of information in 
Sec. Sec.  10.214-10.216.

Conclusion

    Accordingly, based on the analysis of comments received as set 
forth above and the additional considerations discussed above, CBP is 
adopting as a final rule the interim regulations initially published in 
T.D. 00-67 and later amended in T.D. 03-15 with certain changes as 
discussed above and as set forth below. The following is a 
comprehensive listing of all of the changes made to the interim 
regulatory texts by CBP in this final rule document:
    1. In Sec.  10.178a, paragraphs (d)(2) and (d)(4)(ii) have been 
revised to provide for the inclusion of the cost or value of materials 
produced in ``former beneficiary sub-Saharan African countries'' toward 
meeting the GSP 35% value-content requirement, and a new paragraph 
(d)(5) has been added to define ``former beneficiary sub-Saharan 
African country;''
    2. In Sec.  10.212:
    a. The definition of ``apparel articles'' (now paragraph (a)) has 
been revised to delete heading ``6503'', to replace the reference to 
subheading ``6406.99'' of the HTSUS with a reference to subheading 
``6406.90.15'', and to replace the reference to subheading ``6505.90'' 
with a reference to subheadings ``6505.00.02-6505.00.90'';
    b. The definition of ``assembled in one or more beneficiary 
countries'' has been replaced by a definition of ``sewn or otherwise 
assembled in one or more beneficiary countries'' (now paragraph (q));
    c. The definition of ``cut in one or more beneficiary countries'' 
(now paragraph (c)) has been revised to add the words ``or were cut 
from fabric in the United States and used in a partial assembly 
operation in the United States prior to the cutting of fabric and final 
assembly of the article in one or more beneficiary countries, or 
both;''
    d. A definition of ``ethnic printed fabric'' has been added as new 
paragraph (d);
    e. The definition of ``foreign'' has been replaced by a definition 
of ``foreign origin'' (now paragraph (e));
    f. A definition of ``former beneficiary country'' has been added as 
new paragraph (f);
    g. The definition of ``knit-to-shape components'' (now paragraph 
(i)) has been modified to clarify the words ``specific shape'' and to 
replace the article ``a'' immediately before ``self-start edge'' with 
the words ``at least one'' to clarify that knit-to-shape components may 
contain one or more self-start edges;
    h. A definition of ``lesser developed beneficiary country'' has 
been added as new paragraph (j);
    i. A definition of ``self-start edge'' has been added as new 
paragraph (o);
    j. A definition of ``sewing thread'' has been added as new 
paragraph (p);
    k. The definition of ``wholly formed fabrics'' (now paragraph (s)) 
has been modified to clarify that fabric formation does not encompass 
dyeing, printing and finishing operations; and
    l. The definition of ``wholly formed yarns'' (now paragraph (u)) 
has been revised to clarify that draw-texturing to fully orient a 
filament falls within the scope of ``wholly formed'' as it relates to 
yarn while dyeing, printing, and finishing operations do not;
    3. In Sec.  10.213, paragraphs (a)(1) and (a)(2) have been revised 
to include the words ``or both'' immediately before the parenthetical 
matter to clarify that the described apparel articles may be made both 
from fabrics wholly formed and cut in the United States and from 
components knit-to-shape in the United States;
    4. In Sec.  10.213, paragraphs (a)(3) and (a)(11) have been 
modified to insert the word ``sewing'' before the word ``thread;''
    5. In Sec.  10.213, paragraph (a)(4) has been revised to replace 
the words ``either in the United States or one or more beneficiary 
countries'' each place they appear with the words ``in the United 
States or one or more beneficiary countries or former beneficiary 
countries, or both,'' and to insert the words ``whether or not the 
apparel articles are also made from any of the fabrics, fabric 
components formed, or components knit-to-shape described in paragraph 
(a)(1), paragraph (a)(2) or paragraph (a)(3) of this section (unless 
the apparel articles are made exclusively from any of the fabrics, 
fabric components formed, or components knit-to-shape described in 
paragraph (a)(1), paragraph (a)(2), or paragraph (a)(3) of this 
section),'' immediately before the words ``subject to;''
    6. In Sec.  10.213, paragraph (a)(6) has been revised to replace 
the reference to ``subheading 6110.10 of the HTSUS'' with ``subheading 
6110.12 of the HTSUS;''
    7. In Sec.  10.213, paragraph (a)(8) has been modified to remove 
the words ``from fabrics or yarn that is not formed

[[Page 30391]]

in the United States or a beneficiary country;''
    8. In Sec.  10.213, paragraph (a)(10) has been modified to add a 
reference to ``ethnic printed fabric;''
    9. In Sec.  10.213, paragraph (a)(11) has been revised to add 
references to ``former beneficiary countries;''
    10. In Sec.  10.213, a new paragraph (a)(12) has been added to 
include preferential treatment for ``[t]extile and textile articles 
classifiable under Chapters 50 through 60 or Chapter 63 of the HTSUS 
that are products of a lesser developed beneficiary country and are 
wholly formed in one or more such countries from fibers, yarns, 
fabrics, fabric components, or components knit-to-shape that are the 
product of one or more such countries;''
    11. In Sec.  10.213, a new paragraph (b) has been added (with 
paragraphs (b) and (c) of the interim regulations re-designated as (c) 
and (d)) to provide:
    a. In paragraph (b)(1)), in part, that while dyeing, printing, and 
finishing operations are not part of the fabric, component, or yarn 
formation process, those operations are only permissible if performed 
in the United States or in a beneficiary country; and
    b. In paragraph (b)(2)), in part, that articles otherwise entitled 
to preferential treatment under the AGOA will not be disqualified from 
receiving that treatment because they undergo post-assembly operations 
in the United States or in one or more beneficiary countries;
    12. In Sec.  10.213, re-designated paragraph (c)(1)(iv) (formerly 
paragraph (b)(1)(iv)) has been modified to add a reference to ``former 
beneficiary countries'' and to increase the applicable de minimis 
percentage from 7 to 10 percent;
    13. In Sec.  10.213, re-designated paragraph (c) (formerly 
paragraph (b)) has been revised to add a new paragraph (c)(1)(v) that 
sets forth a new special rule regarding certain specified components;
    14. In Sec.  10.213, re-designated paragraph (c)(2) (formerly 
paragraph (b)(2)) has been modified to incorporate an ex-factory 
standard in lieu of the f.o.b. port of exportation standard;
    15. In Sec.  10.214, paragraphs (a), (b)(2), and (c)(13) have been 
revised to provide that the Certificate of Origin must be signed by the 
exporter or producer or by the exporter's or producer's authorized 
agent having knowledge of the relevant facts;
    16. In Sec.  10.214, the preference group descriptions on the 
Certificate of Origin set forth in paragraph (b) have been revised, as 
appropriate, to reflect the changes and additions made to the textile 
and apparel product descriptions in paragraphs (a)(1), (a)(2), (a)(4), 
(a)(8), (a)(10), (a)(11), and (a)(12) of Sec.  10.213;
    17. In Sec.  10.214, the instructions for the completion of the 
Certificate of Origin set forth in paragraph (c) have been revised, as 
appropriate, to reflect the changes made to the Certificate;
    18. In Sec. Sec.  10.214, 10.215, 10.216, and 10.217, references to 
``Customs'' have been changed to ``CBP;''
    19. In Sec. Sec.  10.212, 10.213, 10.214, 10.216, and 10.217, 
certain numerical or alphabetical paragraph designations or other 
references have been changed to conform to additions or other changes 
to the regulatory texts discussed above;
    20. In the Appendix to Part 163, the reference to the ``AGOA 
Textile Certificate of Origin and supporting records'' in the 
``(a)(1)(A)'' list has been modified by deleting the words ``and 
supporting records;'' and
    21. In Sec.  178.2, the table has been modified to provide the OMB 
control number for the collection of information in Sec. Sec.  10.214 
through 10.216.
    In view of the multiple changes throughout the AGOA textile and 
apparel regulatory provisions contained in Sec. Sec.  10.211 through 
10.217, those provisions are revised in their entirety in this final 
rule document.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule is not a ``significant regulatory action,'' 
under section 3(f) of Executive Order 12866 as it is not likely to have 
an annual effect on the economy of $100 million or more or adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities; create a 
serious inconsistency or otherwise interfere with an action taken or 
planned by another agency; materially alter the budgetary impact of 
entitlements, grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in this Executive order. Accordingly, OMB has 
not reviewed this regulation.

Regulatory Flexibility Act

    As set forth in the preamble of this final rule document, the 
regulations to implement the trade benefits for sub-Saharan Africa 
contained in the AGOA as well as certain changes to the GSP statute 
were previously published in T.D. 00-67 and T.D. 03-15 as interim 
regulations. Those interim regulations provided trade benefits to the 
importing public, in some cases implemented direct statutory mandates, 
and were necessary to carry out the preferential treatment and U.S. 
tariff changes proclaimed by the President under the AGOA. Pursuant to 
the provisions of 5 U.S.C. 553(b)(B), CBP issued the regulations as 
interim rules because it had determined that prior public notice and 
comment procedures on these regulations were unnecessary and contrary 
to the public interest. For these reasons, pursuant to the provisions 
of 5 U.S.C. 553(d)(1) and (3), CBP also found that there was good cause 
for dispensing with a delayed effective date. Because no notice of 
proposed rulemaking was required, the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 601 et. seq.) do not apply. Accordingly, this 
final rule is 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 
previously been reviewed and approved by the Office of Management and 
Budget (OMB) in accordance with the Paperwork Reduction Act (44 U.S.C. 
3507) under control number 1651-0082. The collection of information in 
this final rule is in sections 10.214, 10.215, and 10.216. This 
information is used by CBP to determine whether textile and apparel 
articles imported from designated beneficiary sub-Saharan African 
countries are entitled to duty-free entry under the African Growth and 
Opportunity Act. The likely respondents are business organizations 
including importers, exporters, and manufacturers.
    The estimated average number of respondents filing annually under 
AGOA is 210, with each respondent filing an average of 107 AGOA claims 
per year for an aggregate total of 22,470 claims. The average time to 
complete each claim is 20 minutes which results in an annual burden of 
7,640 hours for this collection of information. Under the Paperwork 
Reduction Act, an agency may not conduct or sponsor, and a person is 
not required to respond to, a

[[Page 30392]]

collection of information unless it displays a valid OMB control 
number.

Signing Authority

    This final rule is being issued in accordance with Sec.  0.1(a)(1) 
of the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority 
of the Secretary of the Treasury (or his/her delegate) to approve 
regulations related to certain CBP revenue functions.

List of Subjects

19 CFR Part 10

    Assembly, Bonds, Caribbean Basin Initiative, Customs duties and 
inspection, Exports, Generalized System of Preferences, Imports, 
Preference programs, Reporting and recordkeeping requirements, Trade 
agreements.

19 CFR Part 163

    Administrative practice and procedure, Customs duties and 
inspection, Imports, Reporting and recordkeeping requirements.

19 CFR Part 178

    Administrative practice and procedure, Exports, Imports, Reporting 
and recordkeeping requirements.

Amendments to the CBP Regulations

    Accordingly, the interim rule amending Parts 10 and 163 of the CBP 
regulations (19 CFR Parts10 and 163), which was published at 65 FR 
59668-59681 on October 5, 2000, corrected at 65 FR 67260 on November 9, 
2000, and further amended at 68 FR 13820-13827 on March 21, 2003, is 
adopted as a final rule with certain changes as discussed above and set 
forth below. In addition, Part 178 of the CBP regulations (19 CFR Part 
178) is amended as discussed above and set forth below.

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

0
1. The general authority citation for Part 10 and the specific 
authority for Sec. Sec.  10.171 through 10.178a and Sec. Sec.  10.211 
through 10.217 continue to read as follows:

    Authority:  19 U.S.C. 66, 1202 (General Note 3(i), Harmonized 
Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 
1498, 1508, 1623, 1624, 3314;
* * * * *
    Sections 10.171 through 10.178a also issued under 19 U.S.C. 2461 
et seq.;
* * * * *
    Sections 10.211 through 10.217 also issued under 19 U.S.C. 3721;
* * * * *

0
2. In Sec.  10.178a, paragraphs (d)(2) and (d)(4)(ii) are revised and 
paragraph (d)(5) is added to read as follows:


10.178a   Special duty-free treatment for sub-Saharan African countries

* * * * *
    (d) * * *
    (2) In the GSP declaration set forth in Sec.  10.173(a)(1)(i), the 
column heading ``Materials produced in a beneficiary developing country 
or members of the same association'' should read ``Material produced in 
a beneficiary sub-Saharan African country, a former beneficiary sub-
Saharan African country, or the U.S.;''
* * * * *
    (4) * * *
    (ii) The cost or value of materials included in the article that 
are produced in more than one beneficiary sub-Saharan African country 
or former beneficiary sub-Saharan African country may be applied 
without regard to whether those countries are members of the same 
association of countries.
    (5) As used in this paragraph, the term ``former beneficiary sub-
Saharan African country'' means a country that, after being designated 
by the President as a beneficiary sub-Saharan African country under 
section 506A of the Trade Act of 1974 (19 U.S.C. 2466a), ceased to be 
designated as such a beneficiary sub-Saharan African country by reason 
of its entering into a free trade agreement with the United States.
* * * * *

0
3. Subpart D is revised to read as follows:

Subpart D--Textile and Apparel Articles Under the African Growth 
and Opportunity Act

Sec.
10.211 Applicability.
10.212 Definitions.
10.213 Articles eligible for preferential treatment.
10.214 Certificate of Origin.
10.215 Filing of claim for preferential treatment.
10.216 Maintenance of records and submission of Certificate by 
importer.
10.217 Verification and justification of claim for preferential 
treatment.


Sec.  10.211  Applicability.

    Title I of Public Law 106-200 (114 Stat. 251), entitled the African 
Growth and Opportunity Act (AGOA), authorizes the President to extend 
certain trade benefits to designated countries in sub-Saharan Africa. 
Section 112 of the AGOA, codified at 19 U.S.C. 3721, provides for the 
preferential treatment of certain textile and apparel articles from 
beneficiary countries. The provisions of Sec. Sec.  10.211-10.217 of 
this part set forth the legal requirements and procedures that apply 
for purposes of extending preferential treatment pursuant to section 
112.


Sec.  10.212  Definitions.

    When used in Sec. Sec.  10.211 through 10.217, the following terms 
have the meanings indicated:
    (a) Apparel articles. ``Apparel articles'' means goods classifiable 
in Chapters 61 and 62 and headings 6501, 6502, 6504 and subheadings 
6406.90.15 and 6505.00.02-6505.00.90, of the HTSUS;
    (b) Beneficiary country. ``Beneficiary country'' means a country 
listed in section 107 of the AGOA (19 U.S.C. 3706) which has been the 
subject of a finding by the President or his designee, published in the 
Federal Register, that the country has satisfied the requirements of 
section 113 of the AGOA (19 U.S.C. 3722) and which the President has 
designated as a beneficiary sub-Saharan African country under section 
506A of the Trade Act of 1974 (19 U.S.C. 2466a). See U.S. Note 1, 
Subchapter XIX, Chapter 98, Harmonized Tariff Schedule of the United 
States (HTSUS);
    (c) Cut in one or more beneficiary countries. ``Cut in one or more 
beneficiary countries'' when used with reference to apparel articles 
means that all fabric components used in the assembly of the article 
were cut from fabric in one or more beneficiary countries, or were cut 
from fabric in the United States and used in a partial assembly 
operation in the United States prior to cutting of fabric and final 
assembly of the article in one or more beneficiary countries, or both;
    (d) Ethnic printed fabrics. ``Ethnic printed fabrics'' means 
fabrics:
    (1) Containing a selvedge on both edges, having a width of less 
than 50 inches, classifiable under subheading 5208.52.30 or 5208.52.40 
of the HTSUS;
    (2) Of the type that contains designs, symbols, and other 
characteristics of African prints:
    (i) Normally produced for and sold on the indigenous African 
market; and
    (ii) Normally sold in Africa by the piece as opposed to being 
tailored into garments before being sold in indigenous African markets;
    (3) Printed, including waxed, in one or more eligible beneficiary 
countries; and
    (4) Formed in the United States, from yarns formed in the United 
States, or from fabric formed in one or more beneficiary countries from 
yarn originating in either the United States or one or more beneficiary 
countries;

[[Page 30393]]

    (e) Foreign origin. ``Foreign origin'' means, in the case of a 
finding or trimming of non-textile materials, that the finding or 
trimming is a product of a country other than the United States or a 
beneficiary country and, in the case of a finding, trimming, or 
interlining of textile materials, that the finding, trimming, or 
interlining does not meet all of the United States and beneficiary 
country or former beneficiary country production requirements for 
yarns, fabrics, and/or components specified under Sec.  10.213(a) for 
the article in which it is incorporated;
    (f) Former beneficiary country. ``Former beneficiary country'' 
means a country that, after being designated by the President as a 
beneficiary sub-Saharan African country under section 506A of the Trade 
Act of 1974 (19 U.S.C. 2466a), ceased to be designated as such a 
beneficiary sub-Saharan African country by reason of its entering into 
a free trade agreement with the United States;
    (g) HTSUS. ``HTSUS'' means the Harmonized Tariff Schedule of the 
United States;
    (h) Knit-to-shape articles. ``Knit-to-shape,'' when used with 
reference to sweaters or other apparel articles, means any apparel 
article of which 50 percent or more of the exterior surface area is 
formed by major parts that have been knitted or crocheted directly to 
the shape used in the apparel article, with no consideration being 
given to patch pockets, appliques, or the like. Minor cutting, 
trimming, or sewing of those major parts will not affect the 
determination of whether an apparel article is ``knit-to-shape;''
    (i) Knit-to-shape components. ``Knit-to-shape,'' when used with 
reference to textile components, means components that are knitted or 
crocheted from a yarn directly to a specific shape, that is, the shape 
or form of the component as it is used in the apparel article, 
containing at least one self-start edge. Minor cutting or trimming will 
not affect the determination of whether a component is ``knit-to-
shape;''
    (j) Lesser developed beneficiary country. ``Lesser developed 
beneficiary country'' means a country that is enumerated in U.S. Note 
2(d), Subchapter XIX, Chapter 98, HTSUS and that is also enumerated in 
U.S. Note 1, Subchapter XIX, Chapter 98, HTSUS. See section 112(c)(3) 
of the AGOA (19 U.S.C. 3721(c)(3));
    (k) Major parts. ``Major parts'' means integral components of an 
apparel article but does not include collars, cuffs, waistbands, 
plackets, pockets, linings, paddings, trim, accessories, or similar 
parts or components;
    (l) NAFTA. ``NAFTA'' means the North American Free Trade Agreement 
entered into by the United States, Canada, and Mexico on December 17, 
1992;
    (m) Originating. ``Originating'' means having the country of origin 
determined by application of the provisions of Sec.  102.21 of this 
chapter;
    (n) Preferential treatment. ``Preferential treatment'' means entry, 
or withdrawal from warehouse for consumption, in the customs territory 
of the United States free of duty and free of any quantitative 
limitations, as provided in 19 U.S.C. 3721(a);
    (o) Self-start edge. ``Self-start edge,'' when used with reference 
to knit-to-shape components, means a finished edge which is finished as 
the component comes off the knitting machine. Several components with 
finished edges may be linked by yarn or thread as they are produced 
from the knitting machine;
    (p) Sewing thread. ``Sewing thread'' means thread designed and used 
for the assembly or hemming of textile or apparel components or 
articles;
    (q) Sewn or otherwise assembled in one or more beneficiary 
countries. ``Sewn or otherwise assembled in one or more beneficiary 
countries'' when used in the context of a textile or apparel article 
has reference to a joining together of two or more components that 
occurred in one or more beneficiary countries, whether or not a prior 
joining operation was performed on the article or any of its components 
in the United States;
    (r) Wholly assembled in. ``Wholly assembled,'' when used with 
reference to a textile or apparel article in the context of one or more 
beneficiary countries or one or more lesser developed beneficiary 
countries, means that all of the components of the textile or apparel 
article (including thread, decorative embellishments, buttons, zippers, 
or similar components) were joined together in one or more beneficiary 
countries or one or more lesser developed beneficiary countries;
    (s) Wholly formed fabrics. ``Wholly formed,'' when used with 
reference to fabric(s), means that all of the production processes, 
starting with polymers, fibers, filaments, textile strips, yarns, 
twine, cordage, rope, or strips of fabric and ending with a fabric by a 
weaving, knitting, needling, tufting, felting, entangling or other 
process, took place in the United States or in one or more beneficiary 
countries or former beneficiary countries. For purposes of this 
definition, dyeing, printing and finishing operations are not 
production processes that involve fabric formation (see Sec.  
10.213(b)(1));
    (t) Wholly formed on seamless knitting machines. ``Wholly formed on 
seamless knitting machines,'' when used to describe apparel articles, 
has reference to a process that created a knit-to-shape apparel article 
by feeding yarn(s) into a knitting machine to result in that article. 
When taken from the knitting machine, an apparel article created by 
this process either is in its final form or requires only minor cutting 
or trimming or the addition of minor components or parts such as patch 
pockets, appliques, capping, or elastic strip; and
    (u) Wholly formed yarns. ``Wholly formed,'' when used with 
reference to yarns, means that all of the production processes, 
starting with the extrusion of filament, strip, film, or sheet and 
including drawing to fully orient a filament, slitting a film or sheet 
into strip, or the spinning of all fibers into yarn, or both, and 
ending with a yarn or plied yarn, took place in a single country. For 
purposes of this definition, dyeing, printing and finishing operations 
are not production processes that involve yarn formation (see Sec.  
10.213(b)(1)).


Sec.  10.213  Articles eligible for preferential treatment.

    (a) General. The preferential treatment referred to in Sec.  10.211 
applies to the following textile and apparel articles that are imported 
directly into the customs territory of the United States from a 
beneficiary country:
    (1) Apparel articles sewn or otherwise assembled in one or more 
beneficiary countries from fabrics wholly formed and cut, or from 
components knit-to shape, in the United States, from yarns wholly 
formed in the United States, or both (including fabrics not formed from 
yarns, if those fabrics are classifiable under heading 5602 or 5603 of 
the HTSUS and are wholly formed and cut in the United States) that are 
entered under subheading 9802.00.80 of the HTSUS;
    (2) Apparel articles sewn or otherwise assembled in one or more 
beneficiary countries from fabrics wholly formed and cut, or from 
components knit-to-shape, in the United States, from yarns wholly 
formed in the United States, or both (including fabrics not formed from 
yarns, if those fabrics are classifiable under heading 5602 or 5603 of 
the HTSUS and are wholly formed and cut in the United States) that are 
entered under Chapter 61 or 62 of the HTSUS, if, after that assembly, 
the articles would have qualified for entry under subheading 9802.00.80 
of the HTSUS

[[Page 30394]]

but for the fact that the articles were embroidered or subjected to 
stone-washing, enzyme-washing, acid washing, perma-pressing, oven-
baking, bleaching, garment-dyeing, screen printing, or other similar 
processes in a beneficiary country;
    (3) Apparel articles sewn or otherwise assembled in one or more 
beneficiary countries with sewing thread formed in the United States 
from fabrics wholly formed in the United States and cut in one or more 
beneficiary countries from yarns wholly formed in the United States, or 
from components knit-to-shape in the United States from yarns wholly 
formed in the United States, or both (including fabrics not formed from 
yarns, if those fabrics are classified under heading 5602 or 5603 of 
the HTSUS and are wholly formed in the United States);
    (4) Apparel articles wholly assembled in one or more beneficiary 
countries from fabric wholly formed in one or more beneficiary 
countries from yarns originating in the United States or one or more 
beneficiary countries or former beneficiary countries, or both 
(including fabrics not formed from yarns, if those fabrics are 
classifiable under heading 5602 or 5603 of the HTSUS and are wholly 
formed in one or more beneficiary countries), or from components knit-
to-shape in one or more beneficiary countries from yarns originating in 
the United States or one or more beneficiary countries or former 
beneficiary countries, or both, or apparel articles wholly formed on 
seamless knitting machines in a beneficiary country from yarns 
originating in the United States or one or more beneficiary countries 
or former beneficiary countries, or both, whether or not the apparel 
articles are also made from any of the fabrics, fabric components 
formed, or components knit-to-shape described in paragraph (a)(1), (2) 
or (3) of this section (unless the apparel articles are made 
exclusively from any of the fabrics, fabric components formed, or 
components knit-to-shape described in paragraph (a)(1), (2), or (3) of 
this section), subject to the applicable quantitative limit published 
in the Federal Register pursuant to U.S. Note 2, Subchapter XIX, 
Chapter 98, HTSUS;
    (5) Apparel articles wholly assembled, or knit to shape and wholly 
assembled, or both, in one or more lesser developed beneficiary 
countries regardless of the country of origin of the fabric or the yarn 
used to make the articles, subject to the applicable quantitative limit 
published in the Federal Register pursuant to U.S. Note 2, Subchapter 
XIX, Chapter 98, HTSUS;
    (6) Sweaters, in chief weight of cashmere, knit-to-shape in one or 
more beneficiary countries and classifiable under subheading 6110.12 of 
the HTSUS;
    (7) Sweaters, containing 50 percent or more by weight of wool 
measuring 21.5 microns in diameter or finer, knit-to-shape in one or 
more beneficiary countries;
    (8) Apparel articles, other than brassieres classifiable under 
subheading 6212.10, HTSUS, that are both cut (or knit-to-shape) and 
sewn or otherwise assembled in one or more beneficiary countries, 
provided that the apparel articles would be considered an originating 
good under General Note 12(t) HTSUS, without regard to the source of 
the fabric or yarn of which the articles are made, if the apparel 
articles had been imported directly from Canada or Mexico;
    (9) Apparel articles that are both cut (or knit-to-shape) and sewn 
or otherwise assembled in one or more beneficiary countries from 
fabrics or yarn that the President or his designee has designated in 
the Federal Register as not available in commercial quantities in the 
United States;
    (10) A handloomed, handmade, or folklore article or an ethnic 
printed fabric of a beneficiary country or countries that is certified 
as a handloomed, handmade, or folklore article or an ethnic printed 
fabric by the competent authority of the beneficiary country or 
countries, provided that the President or his designee has determined 
that the article in question will be treated as being a handloomed, 
handmade, or folklore article or an ethnic printed fabric;
    (11) Apparel articles sewn or otherwise assembled in one or more 
beneficiary countries with sewing thread formed in the United States:
    (i) From components cut in the United States and one or more 
beneficiary countries or former beneficiary countries from fabric 
wholly formed in the United States from yarns wholly formed in the 
United States (including fabrics not formed from yarns, if those 
fabrics are classifiable under heading 5602 or 5603 of the HTSUS);
    (ii) From components knit-to-shape in the United States and one or 
more beneficiary countries or former beneficiary countries from yarns 
wholly formed in the United States; or
    (iii) From any combination of two or more of the cutting or 
knitting-to-shape operations described in paragraph (a)(11)(i) or 
paragraph (a)(11)(ii) of this section; and
    (12) Textile and textile articles classifiable under Chapters 50 
through 60 or Chapter 63 of the HTSUS that are products of a lesser 
developed beneficiary country and are wholly formed in one or more such 
countries from fibers, yarns, fabrics, fabric components, or components 
knit-to-shape that are the product of one or more such countries.
    (b) Dyeing, printing, finishing and other operations. (1) Dyeing, 
printing and finishing operations. Dyeing, printing and other finishing 
operations do not constitute part of a yarn or fabric or component 
formation process. Those operations may be performed on any yarn 
(including sewing thread) or fabric or knit-to-shape or other component 
used in the production of any article described under paragraph (a) of 
this section without affecting the eligibility of the article for 
preferential treatment, provided that the operation is performed in the 
United States or in a beneficiary country and not in any other country. 
However, in the case of an assembled article described in paragraph 
(a)(1) or (2) of this section, a dyeing, printing or other finishing 
operation may be performed in a beneficiary country without affecting 
the eligibility of the article for preferential treatment only if that 
operation is incidental to the assembly process.
    (2) Other operations. An article described under paragraph (a) of 
this section that is otherwise eligible for preferential treatment will 
not be disqualified from receiving that treatment by virtue of having 
undergone one or more operations such as embroidering, stone-washing, 
enzyme-washing, acid washing, perma-pressing, oven-baking, bleaching, 
garment-dyeing or screen printing, provided that the operation is 
performed in the United States or in a beneficiary country and not in 
any other country. However, in the case of an assembled article 
described in paragraph (a)(1) of this section, an operation may be 
performed in a beneficiary country without affecting the eligibility of 
the article for preferential treatment only if it is incidental to the 
assembly process.
    (c) Special rules for certain component materials--(1) General. An 
article otherwise described under paragraph (a) of this section will 
not be ineligible for the preferential treatment referred to in Sec.  
10.211 because the article contains:
    (i) Findings and trimmings of foreign origin, if the value of those 
findings and trimmings does not exceed 25 percent of the cost of the 
components of the assembled article. For purposes of this

[[Page 30395]]

section ``findings and trimmings'' include, but are not limited to, 
hooks and eyes, snaps, buttons, ``bow buds,'' decorative lace trim, 
elastic strips (but only if they are each less than 1 inch in width and 
are used in the production of brassieres), zippers (including zipper 
tapes), labels, and sewing thread except in the case of an article 
described in paragraph (a)(3) of this section;
    (ii) Interlinings of foreign origin, if the value of those 
interlinings does not exceed 25 percent of the cost of the components 
of the assembled article. For purposes of this section ``interlinings'' 
include only a chest type plate, a ``hymo'' piece, or ``sleeve 
header,'' of woven or weft-inserted warp knit construction and of 
coarse animal hair or man-made filaments;
    (iii) Any combination of findings and trimmings of foreign origin 
and interlinings of foreign origin, if the total value of those 
findings and trimmings and interlinings does not exceed 25 percent of 
the cost of the components of the assembled article;
    (iv) Fibers or yarns not wholly formed in the United States or one 
or more beneficiary countries or former beneficiary countries if the 
total weight of all those fibers and yarns is not more than 10 percent 
of the total weight of the article; or
    (v) Any collars or cuffs (cut or knit-to-shape), drawstrings, 
shoulder pads or other padding, waistbands, belt attached to the 
article, straps containing elastic, or elbow patches that do not meet 
the requirements set forth in paragraph (a) of this section, regardless 
of the country of origin of the applicable component referred to in 
this paragraph.
    (2) ``Cost'' and ``value'' defined. The ``cost'' of components and 
the ``value'' of findings and trimmings or interlinings referred to in 
paragraph (c)(1) of this section means:
    (i) The ex-factory price of the components, findings and trimmings 
or interlinings as set out in the invoice or other commercial 
documents, or, if the price is other than ex-factory, the price as set 
out in the invoice or other commercial documents adjusted to arrive at 
an ex-factory price; or
    (ii) If the price cannot be determined under paragraph (c)(2)(i) of 
this section or if that price is unreasonable, all reasonable expenses 
incurred in the growth, production, manufacture or other processing of 
the components, findings and trimmings, or interlinings, including the 
cost or value of materials and general expenses, plus a reasonable 
amount for profit.
    (3) Treatment of fibers and yarns as findings or trimmings. If any 
fibers or yarns not wholly formed in the United States or one or more 
beneficiary countries are used in an article as a finding or trimming 
described in paragraph (c)(1)(i) of this section, the fibers or yarns 
will be considered to be a finding or trimming for purposes of 
paragraph (c)(1) of this section.
    (d) Imported directly defined. For purposes of paragraph (a) of 
this section, the words ``imported directly'' mean:
    (1) Direct shipment from any beneficiary country to the United 
States without passing through the territory of any non-beneficiary 
country;
    (2) If the shipment is from any beneficiary country to the United 
States through the territory of any non-beneficiary country, the 
articles in the shipment do not enter into the commerce of any 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
    (3) If the shipment is from any beneficiary country to the United 
States through the territory of any non-beneficiary country, and the 
invoices and other documents do not show the United States as the final 
destination, the articles in the shipment upon arrival in the United 
States are imported directly only if they:
    (i) Remained under the control of the customs authority of the 
intermediate country;
    (ii) Did not enter into the commerce of the intermediate country 
except for the purpose of sale other than at retail, and the port 
director is satisfied that the importation results from the original 
commercial transaction between the importer and the producer or the 
producer's sales agent; and
    (iii) Were not subjected to operations other than loading or 
unloading, and other activities necessary to preserve the articles in 
good condition.


Sec.  10.214  Certificate of Origin.

    (a) General. A Certificate of Origin must be employed to certify 
that a textile or apparel article being exported from a beneficiary 
country to the United States qualifies for the preferential treatment 
referred to in Sec.  10.211. The Certificate of Origin must be prepared 
in the beneficiary country by the exporter or producer or by the 
exporter's or producer's authorized agent having knowledge of the facts 
in the form specified in paragraph (b) of this section. If the person 
preparing the Certificate of Origin is not the producer of the article, 
the person may complete and sign a Certificate of Origin on the basis 
of:
    (1) The person's reasonable reliance on the producer's written 
representation that the article qualifies for preferential treatment; 
or
    (2) A completed and signed Certificate of Origin for the article 
voluntarily provided to the person by the producer.
    (b) Form of Certificate. The Certificate of Origin referred to in 
paragraph (a) of this section must be in the following format:

    African Growth and Opportunity Act Textile Certificate of Origin
------------------------------------------------------------------------
 
------------------------------------------------------------------------
1. Exporter Name and Address:        3. Importer Name and Address:
------------------------------------------------------------------------
2. Producer Name and Address:        4. Preference Group:
------------------------------------------------------------------------
5. Description of Article:
------------------------------------------------------------------------


 
               Each description below is only a
    Group          summary of the cited CFR               19 CFR
                          provision.
------------------------------------------------------------------------
1-A.........  Apparel assembled from U.S.        10.213(a)(1).
               fabrics and/or knit-to-shape
               components, from U.S. yarns. All
               fabric must be cut in the United
               States.
2-B.........  Apparel assembled from U.S.        10.213(a)(2).
               fabrics and/or knit-to-shape
               components, from U.S. yarns. All
               fabric must be cut in the United
               States. After assembly, the
               apparel is embroidered or
               subject to stone-washing, enzyme-
               washing, acid washing, perma-
               pressing, oven-baking,
               bleaching, garment-dyeing,
               screen printing, or other
               similar processes.
3-C.........  Apparel assembled from U.S.        10.213(a)(3) or
               fabrics and/or U.S. knit-to-       10.213(a)(11).
               shape components and/or U.S. and
               beneficiary country or former
               beneficiary country knit-to-
               shape components, from U.S.
               yarns and sewing thread. The
               U.S. fabrics may be cut in
               beneficiary countries or in the
               United States and beneficiary
               countries or former beneficiary
               countries.

[[Page 30396]]

 
4-D.........  Apparel assembled from             10.213(a)(4).
               beneficiary country fabrics and/
               or knit-to-shape components,
               from yarns originating in the
               United States and/or one or more
               beneficiary countries or former
               beneficiary countries.
5-E.........  Apparel assembled or knit-to-      10.213(a)(5).
               shape and assembled, or both, in
               one or more lesser developed
               beneficiary countries regardless
               of the country of origin of the
               fabric or the yarn used to make
               such articles.
6-F.........  Knit-to-shape sweaters in chief    10.213(a)(6).
               weight of cashmere.
7-G.........  Knit-to-shape sweaters 50 percent  10.213(a)(7).
               or more by weight of wool
               measuring 21.5 microns in
               diameter or finer.
8-H.........  Apparel assembled from fabrics or  10.213(a)(8) or
               yarns considered in short supply   10.213(a)(9).
               in the NAFTA, or designated as
               not available in commercial
               quantities in the United States.
9-I.........  Handloomed fabrics, handmade       10.213(a)(10).
               articles made of handloomed
               fabrics, or textile folklore
               articles--as defined in
               bilateral consultations; ethnic
               printed fabric.
0-J.........  Textile articles classifiable in   10.213(a)(12).
               Chapters 50 through 60 or
               Chapter 63, HTSUS, that are
               products of a lesser developed
               beneficiary country and are
               wholly formed in one or more
               such countries from fibers,
               yarns, fabrics, fabric
               components, or components knit-
               to-shape that are the product of
               one or more such countries.
------------------------------------------------------------------------


 
 
------------------------------------------------------------------------
6. U.S./African Fabric Producer Name  7. U.S./African Yarn Producer Name
 and Address:                          and Address:
                  ------------------------------------------------------
                                      8. U.S. Thread Producer Name and
                                       Address:
------------------------------------------------------------------------
9. Handloomed, Handmade, or Folklore  10. Name of Short Supply or
 Article or Ethnic Printed Fabric:     Designated Fabric or Yarn:
------------------------------------------------------------------------
I certify that the information on this document is complete and accurate
 and I assume the responsibility for proving such representations. I
 understand that I am liable for any false statements or material
 omissions made on or in connection with this document. I agree to
 maintain, and present upon request, documentation necessary to support
 this certificate.
------------------------------------------------------------------------
11. Authorized Signature:             12. Company:
------------------------------------------------------------------------
13. Name: (Print or Type)             14. Title:
------------------------------------------------------------------------
15. Date: (DD/MM/  16. Blanket        17. Telephone:
 YY)                Period             Facsimile:
                   From: To:
------------------------------------------------------------------------

    (c) Preparation of Certificate. The following rules will apply for 
purposes of completing the Certificate of Origin set forth in paragraph 
(b) of this section:
    (1) Blocks 1 through 5 pertain only to the final article exported 
to the United States for which preferential treatment may be claimed;
    (2) Block 1 should state the legal name and address (including 
country) of the exporter;
    (3) Block 2 should state the legal name and address (including 
country) of the producer. If there is more than one producer, attach a 
list stating the legal name and address (including country) of all 
additional producers. If this information is confidential, it is 
acceptable to state ``available to CBP upon request'' in block 2. If 
the producer and the exporter are the same, state ``same'' in block 2;
    (4) Block 3 should state the legal name and address (including 
country) of the importer;
    (5) In block 4, insert the number and/or letter that identifies the 
preference group which applies to the article according to the 
description contained in the CFR provision cited on the Certificate for 
that group;
    (6) Block 5 should provide a full description of each article. The 
description should be sufficient to relate it to the invoice 
description and to the description of the article in the international 
Harmonized System. Include the invoice number as shown on the 
commercial invoice or, if the invoice number is not known, include 
another unique reference number such as the shipping order number;
    (7) Blocks 6 through 10 must be completed only when the block in 
question calls for information that is relevant to the preference group 
identified in block 4;
    (8) Block 6 should state the legal name and address (including 
country) of the fabric producer;
    (9) Block 7 should state the legal name and address (including 
country) of the yarn producer;
    (10) Block 8 should state the legal name and address (including 
country) of the thread producer;
    (11) Block 9 should state the name of the folklore article or 
should state that the article is handloomed, handmade or an ethnic 
printed fabric;
    (12) Block 10, should be completed only when preference group 
identifier ``8'' and/or ``H'' is inserted in block 4 and should state 
the name of the fabric or yarn that is in short supply in the NAFTA or 
that has been designated as not available in commercial quantities in 
the United States;
    (13) Block 11 must contain the signature of the exporter or 
producer or of the exporter's or producer's authorized agent having 
knowledge of the relevant facts;
    (14) Block 15 should reflect the date on which the Certificate was 
completed and signed;
    (15) Block 16 should be completed if the Certificate is intended to 
cover multiple shipments of identical articles as described in block 5 
that are imported into the United States during a specified period of 
up to one year (see Sec.  10.216(b)(4)(ii)). The ``from'' date is the 
date on which the Certificate became applicable to the article covered 
by the blanket Certificate (this date may be prior to the date 
reflected in block 15). The ``to'' date is the date on which the 
blanket period expires;
    (16) The telephone and facsimile numbers included in block 17 
should be those at which the person who signed the Certificate may be 
contacted; and
    (17) The Certificate may be printed and reproduced locally. If more 
space is needed to complete the Certificate, attach a continuation 
sheet.


Sec.  10.215  Filing of claim for preferential treatment.

    (a) Declaration. In connection with a claim for preferential 
treatment for a textile or apparel article described in Sec.  10.213, 
the importer must make a written declaration that the article qualifies 
for that treatment. The inclusion on the entry summary, or equivalent 
documentation, of the subheading within Chapter 98 of the HTSUS under 
which the article is classified will constitute the written 
declaration. Except in any of the circumstances described in Sec.  
10.216(d)(1), the declaration required

[[Page 30397]]

under this paragraph must be based on an original Certificate of Origin 
that has been completed and properly executed in accordance with Sec.  
10.214, that covers the article being imported, and that is in the 
possession of the importer.
    (b) Corrected declaration. If, after making the declaration 
required under paragraph (a) of this section, the importer has reason 
to believe that a Certificate of Origin on which a declaration was 
based contains information that is not correct, the importer must 
within 30 calendar days after the date of discovery of the error make a 
corrected declaration and pay any duties that may be due. A corrected 
declaration will be effected by submission of a letter or other written 
statement to the CBP port where the declaration was originally filed.


Sec.  10.216  Maintenance of records and submission of Certificate by 
importer.

    (a) Maintenance of records. Each importer claiming preferential 
treatment for an article under Sec.  10.215 must maintain, in 
accordance with the provisions of part 163 of this chapter, all records 
relating to the importation of the article. Those records must include 
the original Certificate of Origin referred to in Sec.  10.215(a) and 
any other relevant documents or other records as specified in Sec.  
163.1(a) of this chapter.
    (b) Submission of Certificate. An importer who claims preferential 
treatment on a textile or apparel article under Sec.  10.215(a) must 
provide, at the request of the port director, a copy of the Certificate 
of Origin pertaining to the article. A Certificate of Origin submitted 
to CBP under this paragraph:
    (1) Must be in writing or must be transmitted electronically 
pursuant to any electronic data interchange system authorized by CBP 
for that purpose;
    (2) Must be signed by the exporter or producer or by the exporter's 
or producer's authorized agent having knowledge of the relevant facts;
    (3) Must be completed either in the English language or in the 
language of the country from which the article is exported. If the 
Certificate is completed in a language other than English, the importer 
must provide to CBP upon request a written English translation of the 
Certificate; and
    (4) May be applicable to:
    (i) A single importation of an article into the United States, 
including a single shipment that results in the filing of one or more 
entries and a series of shipments that results in the filing of one 
entry; or
    (ii) Multiple importations of identical articles into the United 
States that occur within a specified blanket period, not to exceed 12 
months, set out in the Certificate by the exporter. For purposes of 
this paragraph and Sec.  10.214(c)(15), ``identical articles'' means 
articles that are the same in all material respects, including physical 
characteristics, quality, and reputation.
    (c) Correction and nonacceptance of Certificate. If the port 
director determines that a Certificate of Origin is illegible or 
defective or has not been completed in accordance with paragraph (b) of 
this section, the importer will be given a period of not less than five 
working days to submit a corrected Certificate. A Certificate will not 
be accepted in connection with subsequent importations during a period 
referred to in paragraph (b)(4)(ii) of this section if the port 
director determined that a previously imported identical article 
covered by the Certificate did not qualify for preferential treatment.
    (d) Certificate not required. (1) General. Except as otherwise 
provided in paragraph (d)(2) of this section, an importer is not 
required to have a Certificate of Origin in his possession for:
    (i) An importation of an article for which the port director has in 
writing waived the requirement for a Certificate of Origin because the 
port director is otherwise satisfied that the article qualifies for 
preferential treatment;
    (ii) A non-commercial importation of an article; or
    (iii) A commercial importation of an article whose value does not 
exceed US $2,500, provided that, unless waived by the port director, 
the producer, exporter, importer or authorized agent includes on, or 
attaches to, the invoice or other document accompanying the shipment 
the following signed statement:
    I hereby certify that the article covered by this shipment 
qualifies for preferential treatment under the AGOA.
    Check One:

( ) Producer
( ) Exporter
( ) Importer
( ) Agent
Name
Title
Address
Signature and Date

    (2) Exception. If the port director determines that an importation 
described in paragraph (d)(1) of this section forms part of a series of 
importations that may reasonably be considered to have been undertaken 
or arranged for the purpose of avoiding a Certificate of Origin 
requirement under Sec. Sec.  10.214 through 10.216, the port director 
will notify the importer in writing that for that importation the 
importer must have in his possession a valid Certificate of Origin to 
support the claim for preferential treatment. The importer will have 30 
calendar days from the date of the written notice to obtain a valid 
Certificate of Origin, and a failure to timely obtain the Certificate 
of Origin will result in denial of the claim for preferential 
treatment. For purposes of this paragraph, a ``series of importations'' 
means two or more entries covering articles arriving on the same day 
from the same exporter and consigned to the same person.


Sec.  10.217  Verification and justification of claim for preferential 
treatment.

    (a) Verification by CBP. A claim for preferential treatment made 
under Sec.  10.215, including any statements or other information 
contained on a Certificate of Origin submitted to CBP under Sec.  
10.216, will be subject to whatever verification the port director 
deems necessary. In the event that the port director for any reason is 
prevented from verifying the claim, the port director may deny the 
claim for preferential treatment. A verification of a claim for 
preferential treatment may involve, but need not be limited to, a 
review of:
    (1) All records required to be made, kept, and made available to 
CBP by the importer or any other person under part 163 of this chapter;
    (2) Documentation and other information regarding the country of 
origin of an article and its constituent materials, including, but not 
limited to, production records, information relating to the place of 
production, the number and identification of the types of machinery 
used in production, and the number of workers employed in production; 
and
    (3) Evidence to document the use of U.S. materials in the 
production of the article in question, such as purchase orders, 
invoices, bills of lading and other shipping documents, and customs 
import and clearance documents.
    (b) Importer requirements. In order to make a claim for 
preferential treatment under Sec.  10.215, the importer:
    (1) Must have records that explain how the importer came to the 
conclusion that the textile or apparel article qualifies for 
preferential treatment. Those records must include documents that 
support a claim that the article in question qualifies for preferential 
treatment because it is specifically described in one of the provisions 
under Sec.  10.213(a). If the importer is claiming that the article 
incorporates fabric or yarn that originated or was wholly formed in the

[[Page 30398]]

United States, the importer must have records that identify the U.S. 
producer of the fabric or yarn. A properly completed Certificate of 
Origin in the form set forth in Sec.  10.214(b) is a record that would 
serve these purposes;
    (2) Must establish and implement internal controls which provide 
for the periodic review of the accuracy of the Certificate of Origin or 
other records referred to in paragraph (b)(1) of this section;
    (3) Must have shipping papers that show how the article moved from 
the beneficiary country to the United States. If the imported article 
was shipped through a country other than a beneficiary country and the 
invoices and other documents from the beneficiary country do not show 
the United States as the final destination, the importer also must have 
documentation that demonstrates that the conditions set forth in Sec.  
10.213(d)(3)(i) through (iii) were met; and
    (4) Must be prepared to explain, upon request from CBP, how the 
records and internal controls referred to in paragraphs (b)(1) through 
(3) of this section justify the importer's claim for preferential 
treatment.

PART 163--RECORDKEEPING

0
4. The authority citation for part 163 continues to read as follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1484, 1508, 1509, 1510, 
1624.


0
5. The Appendix to Part 163 is amended by revising the listing for 
Sec.  10.216 under section IV to read as follows:

Appendix to Part 163--Interim (a)(1)(A) List

* * * * *
    IV. * * *

Sec.  10.216 AGOA Textile Certificate of Origin

* * * * *

PART 178--APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

0
6. 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.

0
7. Section 178.2 is amended by adding an entry for ``Sec. Sec.  10.214-
10.216'' to the table in numerical order to read as follows:


Sec.  178.2  Listing of OMB control numbers.

------------------------------------------------------------------------
         19 CFR Section                Description       OMB Control No.
------------------------------------------------------------------------
 
                              * * * * * * *
Sec.  Sec.   10.214-10.216.....  Claim for preferential  1651-0082
                                  treatment on textile
                                  and apparel articles
                                  under the African
                                  Growth and
                                  Opportunity Act.
 
                              * * * * * * *
------------------------------------------------------------------------

* * * * *

R. Gil Kerlikowske,
Commissioner.
    Approved: May 15, 2014.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 2014-11692 Filed 5-23-14; 8:45 am]
BILLING CODE 9111-14-P