§2703. Eligible articles
(a) Growth, product, or manufacture of beneficiary countries
(1) Unless otherwise excluded from eligibility by this chapter, and subject to section 423 of the Tax Reform Act of 1986, the duty-free treatment provided under this chapter shall apply to any article which is the growth, product, or manufacture of a beneficiary country if-
(A) that article is imported directly from a beneficiary country into the customs territory of the United States; and
(B) the sum of (i) the cost or value of the materials produced in a beneficiary country or two or more beneficiary countries, plus (ii) the direct costs of processing operations performed in a beneficiary country or countries is not less than 35 per centum of the appraised value of such article at the time it is entered.
For purposes of determining the percentage referred to in subparagraph (B), the term "beneficiary country" includes the Commonwealth of Puerto Rico and the United States Virgin Islands. If the cost or value of materials produced in the customs territory of the United States (other than the Commonwealth of Puerto Rico) is included with respect to an article to which this paragraph applies, an amount not to exceed 15 per centum of the appraised value of the article at the time it is entered that is attributed to such United States cost or value may be applied toward determining the percentage referred to in subparagraph (B).
(2) The Secretary of the Treasury shall prescribe such regulations as may be necessary to carry out this subsection including, but not limited to, regulations providing that, in order to be eligible for duty-free treatment under this chapter, an article must be wholly the growth, product, or manufacture of a beneficiary country, or must be a new or different article of commerce which has been grown, produced, or manufactured in the beneficiary country; but no article or material of a beneficiary country shall be eligible for such treatment by virtue of having merely undergone-
(A) simple combining or packaging operations, or
(B) mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article.
(3) As used in this subsection, the phrase "direct costs of processing operations" includes, but is not limited to-
(A) all actual labor costs involved in the growth, production, manufacture, or assembly of the specific merchandise, including fringe benefits, on-the-job training and the cost of engineering, supervisory, quality control, and similar personnel; and
(B) dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the specific merchandise.
Such phrase does not include costs which are not directly attributable to the merchandise concerned or are not costs of manufacturing the product, such as (i) profit, and (ii) general expenses of doing business which are either not allocable to the specific merchandise or are not related to the growth, production, manufacture, or assembly of the merchandise, such as administrative salaries, casualty and liability insurance, advertising, and salesmen's salaries, commissions or expenses.
(4) Notwithstanding section 1311 of this title, the products of a beneficiary country which are imported directly from any beneficiary country into Puerto Rico may be entered under bond for processing or use in manufacturing in Puerto Rico. No duty shall be imposed on the withdrawal from warehouse of the product of such processing or manufacturing if, at the time of such withdrawal, such product meets the requirements of paragraph (1)(B).
(5) The duty-free treatment provided under this chapter shall apply to an article (other than an article listed in subsection (b) of this section) which is the growth, product, or manufacture of the Commonwealth of Puerto Rico if-
(A) the article is imported directly from the beneficiary country into the customs territory of the United States,
(B) the article was by any means advanced in value or improved in condition in a beneficiary country, and
(C) if any materials are added to the article in a beneficiary country, such materials are a product of a beneficiary country or the United States.
(b) Articles to which duty-free treatment does not apply
The duty-free treatment provided under this chapter shall not apply to-
(1) textile and apparel articles which are subject to textile agreements;
(2) footwear not designated at the time of the effective date of this chapter [Aug. 5, 1983] as eligible articles for the purpose of the generalized system of preferences under title V of the Trade Act of 1974 [19 U.S.C. 2461 et seq.];
(3) tuna, prepared or preserved in any manner, in airtight containers;
(4) petroleum, or any product derived from petroleum, provided for in headings 2709 and 2710 of the Harmonized Tariff Schedule of the United States;
(5) watches and watch parts (including cases, bracelets and straps), of whatever type including, but not limited to, mechanical, quartz digital or quartz analog, if such watches or watch parts contain any material which is the product of any country with respect to which HTS column 2 rates of duty apply; or
(6) articles to which reduced rates of duty apply under subsection (h) of this section.
(c) Sugar and beef products; stable food production plan; suspension of duty-free treatment; monitoring
(1) As used in this subsection-
(A) The term "sugar and beef products" means-
(i) sugars, sirups, and molasses provided for in subheadings 1701.11.00, 1701.12.00, 1701.91.20, 1701.99.00, 1702.90.30, 1806.10.40, and 2106.90.10 of the Harmonized Tariff Schedule of the United States, and
(ii) articles of beef or veal, however provided for in chapters 2 and 16 of the Harmonized Tariff Schedule of the United States.
(B) The term "Plan" means a stable food production plan that consists of measures and proposals designed to ensure that the present level of food production in, and the nutritional level of the population of, a beneficiary country will not be adversely affected by changes in land use and land ownership that will result if increased production of sugar and beef products is undertaken in response to the duty-free treatment extended under this chapter to such products. A Plan must specify such facts regarding, and such proposed actions by, a beneficiary country as the President deems necessary for purposes of carrying out this subsection, including but not limited to-
(i) the current levels of food production and nutritional health of the population;
(ii) current level of production and export of sugar and beef products;
(iii) expected increases in production and export of sugar and beef products as a result of the duty-free access to the United States market provided under this chapter;
(iv) measures to be taken to ensure that the expanded production of those products because of such duty-free access will not occur at the expense of stable food production; and
(v) proposals for a system to monitor the impact of such duty-free access on stable food production and land use and land ownership patterns.
(2) Duty-free treatment extended under this chapter to sugar and beef products that are the product of a beneficiary country shall be suspended by the President under this subsection if-
(A) the beneficiary country, within the ninety-day period beginning on the date of its designation as such a country under section 2702 of this title, does not submit a Plan to the President for evaluation;
(B) on the basis of his evaluation, the President determines that the Plan of a beneficiary country does not meet the criteria set forth in paragraph (1)(B); or
(C) as a result of the monitoring of the operation of the Plan under paragraph (5), the President determines that a beneficiary country is not making a good faith effort to implement its Plan, or that the measures and proposals in the Plan, although being implemented, are not achieving their purposes.
(3) Before the President suspends duty-free treatment by reason of paragraph (2)(A), (B), or (C) to the sugar and beef products of a beneficiary country, he must offer to enter into consultation with the beneficiary country for purposes of formulating appropriate remedial action which may be taken by that country to avoid such suspension. If the beneficiary country thereafter enters into consultation within a reasonable time and undertakes to formulate remedial action in good faith, the President shall withhold the suspension of duty-free treatment on the condition that the remedial action agreed upon be appropriately implemented by that country.
(4) The President shall monitor on a biennial basis the operation of the Plans implemented by beneficiary countries, and shall submit a written report to Congress by March 15 following the close of each biennium, that-
(A) specifies the extent to which each Plan, and remedial actions, if any, agreed upon under paragraph (4), have been implemented; and
(B) evaluates the results of such implementation.
(5) The President shall terminate any suspension of duty-free treatment imposed under this subsection if he determines that the beneficiary country has taken appropriate action to remedy the factors on which the suspension was based.
(d) Tariff-rate quotas
No quantity of an agricultural product subject to a tariff-rate quota that exceeds the in-quota quantity shall be eligible for duty-free treatment under this chapter.
(e) Proclamations suspending duty-free treatment
(1) The President may by proclamation suspend the duty-free treatment provided by this chapter with respect to any eligible article and may proclaim a duty rate for such article if such action is provided under chapter 1 of title II of the Trade Act of 1974 [19 U.S.C. 2251 et seq.] or section 1862 of this title.
(2) In any report by the International Trade Commission to the President under section 202(f) of the Trade Act of 1974 [19 U.S.C. 2252(f)] regarding any article for which duty-free treatment has been proclaimed by the President pursuant to this chapter, the Commission shall state whether and to what extent its findings and recommendations apply to such article when imported from beneficiary countries.
(3) For purposes of subsections 1 section 203 of the Trade Act of 1974 [19 U.S.C. 2253(a), (c)], the suspension of the duty-free treatment provided by this chapter shall be treated as an increase in duty.
(4) No proclamation which provides solely for a suspension referred to in paragraph (3) of this subsection with respect to any article shall be taken under section 203 of the Trade Act of 1974 [19 U.S.C. 2253] unless the United States International Trade Commission, in addition to making an affirmative determination with respect to such article under section 202(b) of the Trade Act of 1974 [19 U.S.C. 2252(b)], determines in the course of its investigation under such section that the serious injury (or threat thereof) substantially caused by imports to the domestic industry producing a like or directly competitive article results from the duty-free treatment provided by this chapter.
(5)(A) Any action taken under section 203 of the Trade Act of 1974 [19 U.S.C. 2253] that is in effect when duty-free treatment pursuant to section 2701 2 of this title is proclaimed shall remain in effect until modified or terminated.
(B) If any article is subject to any such action at the time duty-free treatment is proclaimed pursuant to section 2701 of this title, the President may reduce or terminate the application of such action to the importation of such article from beneficiary countries prior to the otherwise scheduled date on which such reduction or termination would occur pursuant to the criteria and procedures of section 203 of the Trade Act of 1974 [19 U.S.C. 2253].
(f) Petitions to International Trade Commission
(1) If a petition is filed with the International Trade Commission pursuant to the provisions of section 201 of the Trade Act of 1974 [19 U.S.C. 2251] regarding a perishable product and alleging injury from imports from beneficiary countries, then the petition may also be filed with the Secretary of Agriculture with a request that emergency relief be granted pursuant to paragraph (3) of this subsection with respect to such article.
(2) Within fourteen days after the filing of a petition under paragraph (1) of this subsection-
(A) if the Secretary of Agriculture has reason to believe that a perishable product from a beneficiary country is being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing a perishable product like or directly competitive with the imported product and that emergency action is warranted, he shall advise the President and recommend that the President take emergency action; or
(B) the Secretary of Agriculture shall publish a notice of his determination not to recommend the imposition of emergency action and so advise the petitioner.
(3) Within seven days after the President receives a recommendation from the Secretary of Agriculture to take emergency action pursuant to paragraph (2) of this subsection, he shall issue a proclamation withdrawing the duty-free treatment provided by this chapter or publish a notice of his determination not to take emergency action.
(4) The emergency action provided by paragraph (3) of this subsection shall cease to apply-
(A) upon the taking of action under section 203 of the Trade Act of 1974 [19 U.S.C. 2253],
(B) on the day a determination by the President not to take action 1 under section 203 of such Act [19 U.S.C. 2253] not to take action 1 becomes final,
(C) in the event of a report of the United States International Trade Commission containing a negative finding, on the day the Commission's report is submitted to the President, or
(D) whenever the President determines that because of changed circumstances such relief is no longer warranted.
(5) For purposes of this subsection, the term "perishable product" means-
(A) live plants and fresh cut flowers provided for in chapter 6 of the HTS;
(B) fresh or chilled vegetables provided for in headings 0701 through 0709 (except subheading 0709.52.00) and heading 0714 of the HTS;
(C) fresh fruit provided for in subheadings 0804.20 through 0810.90 (except citrons of subheading 0805.90.00, tamarinds and kiwi fruit of subheading 0810.90.20, and cashew apples, mameyes colorados, sapodillas, soursops and sweetsops of subheading 0810.90.40) of the HTS; and
(D) concentrated citrus fruit juice provided for in subheadings 2009.11.00, 2009.19.40, 2009.20.40, 2009.30.20, and 2009.30.60 of the HTS.
(g) Fees not affected by proclamation
No proclamation issued pursuant to this chapter shall affect fees imposed pursuant to section 624 of title 7.
(h) Duty reduction for certain leather-related products
(1) Subject to paragraph (2), the President shall proclaim reductions in the rates of duty on handbags, luggage, flat goods, work gloves, and leather wearing apparel that-
(A) are the product of any beneficiary country; and
(B) were not designated on August 5, 1983, as eligible articles for purposes of the generalized system of preferences under title V of the Trade Act of 1974 [19 U.S.C. 2461 et seq.].
(2) The reduction required under paragraph (1) in the rate of duty on any article shall-
(A) result in a rate that is equal to 80 percent of the rate of duty that applies to the article on December 31, 1991, except that, subject to the limitations in paragraph (3), the reduction may not exceed 2.5 percent ad valorem; and
(B) be implemented in 5 equal annual stages with the first one-fifth of the aggregate reduction in the rate of duty being applied to entries, or withdrawals from warehouse for consumption, of the article on or after January 1, 1992.
(3) The reduction required under this subsection with respect to the rate of duty on any article is in addition to any reduction in the rate of duty on that article that may be proclaimed by the President as being required or appropriate to carry out any trade agreement entered into under the Uruguay Round of trade negotiations; except that if the reduction so proclaimed-
(A) is less than 1.5 percent ad valorem, the aggregate of such proclaimed reduction and the reduction under this subsection may not exceed 3.5 percent ad valorem, or
(B) is 1.5 percent ad valorem or greater, the aggregate of such proclaimed reduction and the reduction under this subsection may not exceed the proclaimed reduction plus 1 percent ad valorem.
(
References in Text
Section 423 of the Tax Reform Act of 1986, referred to in subsec. (a)(1), is section 423 of
The Trade Act of 1974, referred to in subsecs. (b)(2), (e)(1), and (h)(1)(B), is
The Harmonized Tariff Schedule of the United States, referred to in subsecs. (b)(4) and (c)(1)(A), is not set out in the Code. See Publication of Harmonized Tariff Schedule note set out under section 1202 of this title.
Section 2701 of this title, referred to in subsec. (e)(5)(A), was in the original "section 101 of this title" which has been translated as the probable intent of Congress as meaning section 211 of this title.
Amendments
1994-Subsec. (d).
1990-Subsec. (a)(5).
Subsec. (b)(2).
Subsec. (b)(6).
Subsec. (h).
1988-Subsec. (b)(4).
Subsec. (b)(5).
Subsec. (c)(1)(A)(i).
Subsec. (c)(1)(A)(ii).
Subsec. (d).
Subsec. (e)(1).
Subsec. (e)(2).
Subsec. (e)(3).
Subsec. (e)(4).
Subsec. (e)(5)(A).
Subsec. (e)(5)(B).
Subsec. (f)(4)(A).
Subsec. (f)(4)(B).
Subsec. (f)(5)(A).
Subsec. (f)(5)(B).
Subsec. (f)(5)(C).
Subsec. (f)(5)(D).
Subsec. (f)(5)(E).
Subsec. (f)(5)(F).
1986-Subsec. (a)(1).
Subsec. (a)(3), (4).
Subsec. (f)(5)(B).
1984-Subsec. (a)(3).
Effective Date of 1994 Amendment
Amendment by
Effective Date of 1990 Amendment
Section 215(b) of
"(1) The amendment made by subsection (a) [amending this section] shall apply with respect to articles entered, or withdrawn from warehouse for consumption, on or after October 1, 1990.
"(2) Notwithstanding section 514 of the Tariff Act of 1930 [19 U.S.C. 1514] or any other provision of law, upon proper request filed with the appropriate customs officer after September 30, 1990, and before April 1, 1991, any entry, or withdrawal from warehouse-
"(A) which was made after August 5, 1983, and before October 1, 1990, and with respect to which liquidation has not occurred before October 1, 1990, and
"(B) with respect to which there would have been no duty, or a lesser duty, if the amendment made by subsection (a) applied,
shall be liquidated as though such amendment applied to such entry or withdrawal."
Effective Date of 1988 Amendments
Amendment by
Amendment by section 1214(q)(2) of
Amendment by section 1401(b)(2) of
Effective Date of 1986 Amendment
Section 423(g) of
"(1) The provisions of, and the amendments made by, this section (other than subsection (e)) [amending this section and General Headnote 3(a)(i) of the Tariff Schedules of the United States formerly set out under section 1202 of this title and enacting provisions set out as a note below] shall apply to articles entered-
"(A) after December 31, 1986, and
"(B) before the expiration of the effective period of item 901.50 of the Appendix to the Tariff Schedules of the United States [not classified to the Code].
"(2) The provisions of subsection (e) [set out as a note below] shall take effect on the date of the enactment of this Act [Oct. 22, 1986]."
Effective Date of 1984 Amendment
Amendment by
Ethyl Alcohol and Mixtures Thereof for Fuel Use
Section 423(a)–(c), (e) of
"(a)
"(1) for purposes of general headnote 3(a) of the Tariff Schedules of the United States [formerly set out under section 1202 of this title], to be-
"(A) the growth or product of an insular possession of the United States,
"(B) manufactured or produced in an insular possession from materials which are the growth, product, or manufacture of any such possession, or
"(C) otherwise eligible for exemption from duty under such headnote as the growth or product of an insular possession; or
"(2) for purposes of section 213 of the Caribbean Basin Economic Recovery Act [19 U.S.C. 2703], to be-
"(A) an article that is wholly the growth, product, or manufacture of a beneficiary country,
"(B) a new or different article of commerce which has been grown, produced, or manufactured in a beneficiary country,
"(C) a material produced in a beneficiary country, or
"(D) otherwise eligible for duty-free treatment under such Act [19 U.S.C. 2701 et seq.] as the growth, product, or manufacture of a beneficiary country;
unless the ethyl alcohol or mixture thereof is an indigenous product of that insular possession or beneficiary country.
"(b)
"(1) Subject to the limitation in paragraph (2), subsection (a) shall not apply to ethyl alcohol that is imported into the United States during calendar years 1987, 1988, and 1989 and produced in-
"(A) an azeotropic distillation facility located in a beneficiary country, if that facility was established before, and in operation on, July 1, 1987,
"(B) an azeotropic distillation facility-
"(i) at least 50 percent of the total value of the equipment and components of which were-
"(I) produced in the United States, and
"(II) owned by a corporation at least 50 percent of the total value of the outstanding shares of stock of which were owned by a United States person (or persons) on or before January 1, 1986, and
"(ii) substantially all of the equipment and components of which were, on or before January 1, 1986-
"(I) located in the United States under the possession or control of such corporation,
"(II) ready for shipment to, and installation in, a beneficiary country or an insular possession of the United States, and
"(iii) which-
"(I) has on the date of enactment of this Act [Oct. 22, 1986], or
"(II) will have at the time such facility is placed in service (based on estimates made before the date of enactment of this Act),
a stated capacity to produce not more than 42,000,000 gallons of such product per year, or
"(C) a distillation facility operated by a corporation which, before the date of enactment of the Omnibus Trade Act of 1987 [probably means the Omnibus Trade and Competitiveness Act of 1988,
"(i) has completed engineering and design of a full-scale fermentation facility in the United States Virgin Islands, and
"(ii) has obtained authorization from authorities of the United States Virgin Islands to operate a full-scale fermentation facility.
"(2) The exception provided under paragraph (1) shall cease to apply during each of calendar years 1987, 1988, and 1989 to ethyl alcohol produced in a facility described in subparagraph (A), (B), or (C) of paragraph (1) after 20,000,000 gallons of ethyl alcohol produced in that facility are entered into the United States during that year.
"(c)
"(1) The term 'ethyl alcohol or a mixture thereof' means (except for purposes of subsection (e)) ethyl alcohol or any mixture thereof described in item 901.50 of the Appendix to the Tariff Schedules of the United States [not classified to the Code].
"(2) Ethyl alcohol or a mixture thereof that is produced by a process of full fermentation in an insular possession or beneficiary country shall be treated as being an indigenous product of that possession or country.
"(3)(A) Ethyl alcohol and mixtures thereof that are only dehydrated within an insular possession or beneficiary country (hereinafter in this paragraph referred to as 'dehydrated alcohol and mixtures') shall be treated as being indigenous products of that possession or country only if the alcohol or mixture, when entered, meets the applicable local feedstock requirement.
"(B) The local feedstock requirement with respect to any calendar year is-
"(i) 0 percent with respect to the base quantity of dehydrated alcohol and mixtures that is entered;
"(ii) 30 percent with respect to the 35,000,000 gallons of dehydrated alcohol and mixtures next entered after the base quantity; and
"(iii) 50 percent with respect to all dehydrated alcohol and mixtures entered after the amount specified in clause (ii) is entered.
"(C) For purposes of this paragraph:
"(i) The term 'base quantity' means, with respect to dehydrated alcohol and mixtures entered during any calendar year, the greater of-
"(I) 60,000,000 gallons; or
"(II) an amount (expressed in gallons) equal to 7 percent of the United States domestic market for ethyl alcohol, as determined by the United States International Trade Commission, during the 12-month period ending on the preceding September 30;
that is first entered during that calendar year.
"(ii) The term 'local feedstock' means hydrous ethyl alcohol which is wholly produced or manufactured in any insular possession or beneficiary country.
"(iii) The term 'local feedstock requirement' means the minimum percent, by volume, of local feedstock that must be included in dehydrated alcohol and mixtures.
"(4) The term 'beneficiary country' has the meaning given to such term under section 212 of the Caribbean Basin Economic Recovery Act (19 U.S.C. 2702).
"(5) The term 'United States person' has the meaning given to such term by section 7701(a)(3) of the Internal Revenue Code of 1986 [26 U.S.C. 7701(a)(3)].
"(6) The term 'entered' means entered, or withdrawn from warehouse, for consumption in the customs territory of the United States.
"(e)
"(1) For purposes of subsections (b) and (j)(2) of section 313 of the Tariff Act of 1930 (19 U.S.C. 1313), as amended by section 1888(2) of this Act, any ethyl alcohol (provided for in item 427.88 of the Tariff Schedules of the United States [not classified to the Code]) or mixture containing such ethyl alcohol (provided for in part 1, 2, or 10 of schedule 4 of such Schedules) which is subject to the additional duty imposed by item 901.50 of the Appendix to such Schedules may be treated as being fungible with, or of being of the same kind and quality as, any other imported ethyl alcohol (provided for in item 427.88 of such Schedules) or mixture containing such ethyl alcohol (provided for in part 1, 2, or 10 of schedule 4 of such Schedules) only if such other imported ethyl alcohol or mixture thereof is also subject to such additional duty.
"(2) Paragraph (1) shall not apply with respect to ethyl alcohol (provided for in item 427.88 of the Tariff Schedules of the United States) or mixture containing such ethly [ethyl] alcohol (provided for in part 1, 2, or 10 of schedule 4 of such Schedules) that is exempt from the additional duty imposed by item 901.50 of the Appendix to such Schedules by reason of-
"(A) subsection (b), or
"(B) any agreement entered into under section 102(b) of the Trade Act of 1974 [19 U.S.C. 2112(b)]."
[Section 7(b) of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1801–1899A] of
Duty-Free Treatment of Imported Rum; Compensation Measures; Presidential Authority; Report to Congress
Section 214(c) of
Section Referred to in Other Sections
This section is referred to in title 7 section 7236; title 26 section 7652.