CBP Issues Guidance re Textile/Apparel TPLs Under USMCA

Trade Update • MARCH 21, 2021

In a recent bulletin, U.S. Customs and Border Protection issued new guidance regarding implementation of the Tariff Preference Level provisions of the United States-Mexico-Canada Agreement with respect to certain textile and apparel goods entering into the United States.

Pursuant to a decision published earlier this year by the Free Trade Commission setting out the definitive interpretation of paragraph 1 of Section C (Preferential Tariff Treatment for Non-Originating Goods of another Party) of Annex 6-A (Special Provisions), CBP states that:

“apparel goods of Chapters 61 and 62 of the Harmonized System for which originating yarn or fabric is used in the production of the component that determines the tariff classification of the good that do not qualify as originating solely on the basis of not meeting the requirements of chapter notes 2, 3, or 4 of Chapter 61 or chapter notes 3, 4, or 5, of Chapter 62 of Annex 4-B (Product-Specific Rules of Origin), are eligible for preferential tariff treatment under an applicable TPL.”

This guidance is effective as of July 1, 2020. CBP also indicates that additional guidance on filing a claim is forthcoming.

Background

The USMCA TPL provisions, found in Chapter 98 of the Harmonized Tariff Schedule of the United States for subheadings 9823.52.01, 9823.52.02 and 9823.52.03 for Canada and 9823.53.01 and 9823.53.02 for Mexico, provide duty-free treatment for specified quantities of certain apparel goods of Chapters 61 and 62 and textile and apparel goods, other than of wadding, of heading 9619 that do not qualify as originating goods under the product-specific rules of origin found in HTSUS General Note 11.

More specifically, the language of these TPL provisions requires the eligible apparel of Chapters 61 and 62 and textile and apparel goods, other than of wadding, of heading 9619, to be cut (or knit to shape) and sewn or otherwise assembled from fabric or yarn produced or obtained outside the territory of any one of the USMCA countries, in order to receive preferential duty treatment.

However, as explained by the Free Trade Commission in its decision, the intent of the Parties was to allow apparel goods of Chapters 61 and 62 and textile or apparel goods, other than of wadding, of heading 96.19 of the Harmonized System to qualify for preferential tariff treatment under the USMCA when they are produced from non-originating materials or a combination of originating and non-originating materials, including materials that are non-originating pursuant to the USMCA’s product-specific Rules of Origin.

Such goods must be both cut (or knit-to-shape) and sewn or otherwise assembled in the territory of a Party and meet other applicable conditions for preferential tariff treatment under the USMCA.

Need More Information?

Find out more about Tariff Preference Levels, specifically for Canadian textile/apparel exports, on our Trade Talk blog here.

Questions regarding CBP’s guidance should be directed to Ms. Anita Harris, Chief, Textile Policy Branch, at OTTEXTILE_POLICY_ENF@cbp.dhs.gov.