Global Affairs Canada issued a notice on February 17 informing Tariff Preference Level clients of changes to the treatment of narrow woven elastics and pocket lining rules which entered into force effective January 1, 2022.
This information follows a previous notice regarding entry into force of sewing thread requirements for apparel goods effective July 1, 2021.
Rule of Origin Changes
The Canada-United States-Mexico Agreement (CUSMA, aka USMCA in the United States) includes new measures designed to encourage the use of North American sewing thread, narrow elastics and pocketing fabric. It also provides greater flexibility for producers that use small amounts of non-originating materials, thereby helping such goods qualify for preferential treatment.
In order to qualify as “originating” under CUSMA/USMCA, apparel must, in addition to other requirements, be produced using originating sewing thread, narrow elastics and pocket lining.
These requirements are provided for in chapter notes 2, 3, or 4 of Chapter 61 and chapter notes 3, 4, or 5, of Chapter 62 of Annex 4-B (Product-Specific Rules of Origin).
The originating sewing thread rule became effective on July 1, 2021, and the narrow elastics and pocket lining came into effect on January 1, 2022.
Global Affairs points out a recent Free Trade Commission decision clarifying that apparel goods of Chapter 61 and 62 which are produced in a CUSMA/USMCA party using non-originating sewing thread, pocket lining or narrow elastic may nonetheless be eligible for duty-free treatment when imported into Canada, the United States or Mexico under the applicable TPL, regardless of the origin of the yarn or fabric used.
Obtaining Import Permits
In order to process applications for import permits and export certificates of eligibility in the new Export Import Controls System under these new rules, customs brokers are to indicate that:
The Yarn is non-originating (e.g. Yarn = 3C for third country) under Country of Origin – Raw Material (box 19 on the application form), when the sewing thread, narrow elastic or pocket lining is non-originating and the goods are TPL eligible under the chapter notes indicated above.
In addition, brokers are requested to indicate in the Comment Box the following: “Goods not originating under Chapter Notes.”