and

Even though it is NOT physically attached, but it is attached "on paper". Importer pays saves on duty since he pays lower rate on the zoom lenses, then he normally pays.

TIP 1. Before you looking up item's HTS# on the exam:

Before you even go to the HTS# itself UNLESS THE QUESTION GIVES YOU ALL THE SAME ITEMS IN THE SAME CHAPTER (if all 5 answers in the same chapter: 0809.1; 0809.2; 0809.3; 0809.4 and 0809.5. Then you should probably go to HTS# itself) ALWAYS GO TO THE CHAPTER NOTES FIRST. Most likely the answer will be in the Chapter Notes, but not in the HTS# itself.

TIP 2. Headings & Subheadings in international shipping

If items meet headings, then stay in the heading and look for subheadings.

------HEADING----------------------------------------------------------------

------SUBHEADING------------------------------------------------------------

------SUBHEADING----------------------------------------------------

------SUBHEADING---------------------------------------------

------HEADING-----------------------------------------------------------------

------SUBHEADING------------------------------------------------------------

(i) Except as provided in subparagraph (iv) of this paragraph, the rates of duty in column 1 are rates which are applicable to all products other than those of countries enumerated in paragraph (b) of this note. (Exemptions in 3(b): CUBA, LAOS and NORTH KOREA. It goes to column 2): Column 1 is divided into two subcolumns, "General" and "Special", which are applicable as provided below.

(ii) The "General" subcolumn sets forth the general or normal trade relations (NTR) (Column 1 is for Normal Trade Relations) rates which are applicable to products of those countries described in subparagraph (i) above which are not entitled to special tariff treatment as set forth below.

(iii) The "Special" subcolumn reflects rates of duty under one or more special tariff treatment programs described in paragraph (c) of this note and identified in parentheses immediately following the duty rate specified in such subcolumn. These rates apply to those international shipping products which are properly classified under a provision for which a special rate is indicated and for which all of the legal requirements for eligibility for such program or programs have been met. Where an international shipping product is eligible for special treatment under more than one program, the lowest rate of duty provided for any applicable program shall be imposed. Where no special rate of duty is provided for a provision, or where the country from which a product otherwise eligible for special treatment was imported is not designated as a beneficiary country under a program appearing with the appropriate provision, the rates of duty in the "General" subcolumn of column 1 shall apply.

(iv) Products of Insular Possessions. http://www.macmeekin.com/Library/AAA/Docs/US/Terr-general/GN3(a).htm
- This is regarding programs connected to U.S. insular areas outside the U.S. customs territory (I.E. COUNTRIES WHICH BELONGS TO THE USA, BUT GOVERN THEMSELVES) where merchandise can be assembled and entered into the USA under special duty rates. GUAM, SAMOA, CNMI, US Virgin Islands etc). There is no special codes for that but you must check it out.
...(B) In determining whether international shipping goods produced or manufactured in any such insular possession contain foreign materials to the value of more than 70 percent, no material shall be considered foreign which either-- (1) at the time such goods are entered, or (2) at the time such material is imported into the insular possession, may be imported into the customs territory from a foreign country, and entered free of duty; except that no international shipping goods containing material to which (2) of this subparagraph applies shall be exempt from duty under subparagraph (A) unless adequate documentation is supplied to show that the international shipping material has been incorporated into such goods during the 18-month period after the date on which such international shipping material is imported into the insular possession.
- Most important here that NO MORE THEN 70% OF MATERIALS CAN BE FOREIGN.

*****

(b) Rate of Duty Column 2. 1/ Notwithstanding any of the foregoing provisions of this note, the rates of duty shown in column 2 shall apply to international shipping products, whether imported directly or indirectly, of the following countries and areas pursuant to section 401 of the Tariff Classification Act of 1962, to section 231 or 257(e)(2) of the Trade Expansion Act of 1962, to section 404(a) of the Trade Act of 1974 or to any other applicable section of law, or to action taken by the President thereunder:

Cuba Laos North Korea

That means if CUBA (1), LAOS (2) or NORTH KOREA (3), then you automatically go to the Column 2. If ANY OTHER COUNTRIES, then it will be either in Column 1a or 1b.

*****

The Government of the United States develops Special Programs with countries that need help. Different programs have different rules. Under ?C it lists different rules and letters.

C covers also GENERAL SYSTEM OF PREFERENCES. A, A* or A+
- "A" means that EVERY COUNTRY qualify for special duty rate for this HTS#.
- "A* or A+" means that CERTAIN COUNTIES ARE EXCLUDED or special duty rate for this HTS#. You must look at General
Notes as well as Chapter Notes to see those exclusions. (Actually there are just 3 letters related to those programs: A, E & J.

(c) Products Eligible for Special Tariff Treatment.

(i) Programs under which special tariff treatment may be provided, and the corresponding symbols for such programs as they are indicated in the "Special" subcolumn, are as follows:

Generalized System of Preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A, A* or A+
Automotive Products Trade Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B
United States-Australia Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . . AU
Agreement on Trade in Civil Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C
North American Free Trade Agreement:
Goods of Canada, under the terms of
general note 12 to this schedule. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . CA
Goods of Mexico, under the terms of
general note 12 to this schedule . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . MX
United States-Chile Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . CL
African Growth and Opportunity Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D
Caribbean Basin Economic Recovery Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E or E*
United States-Israel Free Trade Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IL
Andean Trade Preference Act or
Andean Trade Promotion and Drug Eradication Act . . . . . . . . . . .. .. .. .. . . . . . . J, J* or J+
United States-Jordan Free Trade Area Implementation Act . . . . . . . . . . . . . . . . JO
Agreement on Trade in Pharmaceutical Products . . . . . . .. . . . . . . . . . . . . . . . . . K
Uruguay Round Concessions on Intermediate
Chemicals for Dyes L
United States-Caribbean Basin Trade Partnership Act . . . . . . .. . . . . . . . . . . . . . R
United States-Singapore Free Trade Agreement . . . . . . . . . . . . . . . . . .. . . . . . . . SG

*****

GSP. Products of Countries Designated Beneficiary Developing Countries for Purposes of the Generalized System of Preferences (GSP).
- It tells how product has to be done in order to be classified.
First you look at HTS#. THEN YOU LOOK IF THERE IS letter A or A* or A+ and refer to the lists.

IMPORTANT:

1. TO BE CLASSIFIED FOR GSP PRODUCTS MUST BE DIRECT SHIPPED! i.e. it must go directly to the USA without entering into commerce zones of third countries.

2. 35% of value requires to be qualified for GSP. YOU CANNOT ADD PROFIT TO CALCULATE THAT 35%!

Examples:
- 1.1. International shipping goods from Ukraine via Germany to the USA. It just had been hold in a German warehouse for transshipment. Then it qualifies for GSP.
- 1.2. Those Ukrainian international shipping goods had been sold in Germany and go to the USA. Then NOT. It is NOT qualified for GSP.
- 2.1. Item is made in Ukraine with 40% of Ukrainian parts and 60% Japanese. Then it IS qualified. 40% > 35% (minimum)

(a) The following countries, territories and associations of countries eligible for treatment as one country (pursuant to section 507(2) of the Trade Act of 1974 (19 U.S.C. 2467(2)) are designated beneficiary developing countries for the purposes of the Generalized System of Preferences, provided for in Title V of the Trade Act of 1974, as amended (19 U.S.C. 2461 et seq.):

*****

Automotive Products and Motor Vehicles Eligible for Special Tariff Treatment. Articles entered under the Automotive Products Trade Act are subject to the following provisions: (Auto-Motor Act or Automotive Products Trade Act. FOR DUTY FREE AUTOMOBILE PRODUCTS [not Automobiles only but auto parts as well. No trailers etc. ] IMPORTED FROM CANADA ONLY. Letter - " B "

The term "bona fide motor-vehicle manufacturer" means a person who, upon application to the Secretary of Commerce, is determined by the Secretary to have produced no fewer than 15 complete motor vehicles in the United States during the previous 12 months (1), and to have installed capacity in the United States to produce 10 or more complete motor vehicles per 40-hour week (2). The Secretary of Commerce shall maintain, and publish from time to time in the Federal Register, a list of the names and addresses of bona fide motor-vehicle manufacturers.
- In general to be eligible for the special treatment Canadian exporter must:

1. have produce no fewer than 15 complete motor vehicles in the United States during the previous 12 months

2. have installed capacity in the United States to produce 10 or more complete motor vehicles per 40-hour week

The term "civil aircraft" does not include any aircraft, aircraft engine, or ground flight simulator (or parts, components, and subassemblies thereof) purchased for use by the Department of Defense or the United States Coast Guard, unless such aircraft, aircraft engine, or ground flight simulator (or parts, components, and subassemblies thereof) satisfies the requirements of subdivisions (i) (A) and (i) (B)(1) or (2).
IT CANNOT BE PURCHASED FOR the Department of Defense (1) or the United States Coast Guard (2).
The only thing it requires is FAA Certification. FAA is U.S. Federal Aviation Administration.

CBERA. Caribbean Basic Economy Recovery Act. Products of Countries Designated as Beneficiary Countries for Purposes of the Caribbean Basin Economic Recovery Act (CBERA). Letters - "E" or "E* "

The following countries and territories or successor political entities are designated beneficiary countries for the purposes of the CBERA, pursuant to section 212 of that Act (19 U.S.C. 2702):

- Some products from those countries (marked E*) goes into the column 1b (examples: beef, weal, sugar, watches etc)

• IT HAS 35% of the Value RULE and;
• Must be direct shipped and;
• You can merge those 35% of CBERA countries with Virgin Islands & Puerto Rico to get Free Duty.
  Example: A product made from a. 20% CBERA's country + b. 15% Puerto Rico + c. 65% Japan's THEN IT IS QUALIFIED! 15% + 20% = 35%
• The U.S. CAN SUPPLY SOME COMPONENTS to get free duty. BUT ONLY UP TO 15%. [exam question]
  Example when product DOES NOT qualified:
  

  Value	%	Country
  $.10	10%	Jamaica CBERA's country
  $.30	30%	USA's part of product	=> ONLY 15% U.S. value can be qualified! THEN IT IS JUST 15%!
  $.60	60%	Japan
  $1.00	100%	=> CBERA's part is only 25% (not 40%!) < 35%. Then it is NOT qualified.

• IT HAS 35% of the Value RULE and;
• Must be direct shipped and;
• The U.S. CAN SUPPLY SOME COMPONENTS to get free duty. BUT ONLY UP TO 15%. (NO Virgin Islands & Puerto Rico in this case)
• Must have an EXPORT DECLARATION from an exporter.
  Declarations in general state that Exporter certifies that following % is true. The item is made in this country and % of foreign to that country components.

...3 countries:
Marshall Islands;
Micronesia;
Federated States of Republic of Palau

• IT HAS 35% of the Value RULE and;
• Must be direct shipped and;
• The U.S. CAN SUPPLY SOME COMPONENTS to get free duty. BUT ONLY UP TO 15%. (NO Virgin Islands & Puerto Rico in this case)

Exemptions in general: Tunas (1); Skipjack (3) and Watches (3)

(d) The duty-free treatment provided under subdivision (b) of this note shall not apply to--
(i) tunas and skipjack, prepared or preserved, not in oil, in airtight containers weighing with their contents not over 7 kilograms each, in excess of the quantity afforded duty-free entry under subdivision (c) of this note;
(ii) textile and apparel articles which are subject to textile agreements;
(iii) footwear, handbags, luggage, flat international shipping goods, work gloves and leather wearing apparel, the foregoing which were not eligible articles for purposes of the Generalized System of Preferences on April 1, 1984;
(iv) watches, clocks and timing apparatus of chapter 91 (except such articles incorporating an optoelectronic display and no other type of display);
(v) buttons of subheading 9606.21.40 or 9606.29.20; and
(vi) any agricultural product of chapters 2 through 52, inclusive, that is subject to a tariff-rate quota, if entered in a quantity in excess of the in-quota quantity for such product.

The following countries or successor political entities are designated beneficiary countries for purposes of the ATPA, pursuant to section 203 of the Act (19 U.S.C. 3202): (4 countries)

• IT HAS 35% of the Value RULE and;
• Must be direct shipped and;
• You can merge those 35% of ATPA countries with Virgin Islands & Puerto Rico to get Free Duty.
  Example: A product made from a. 20% ATPA country + b. 15% Puerto Rico + c. 65% Japan's THEN IT IS QUALIFIED! 15% + 20% = 35%
• The U.S. CAN SUPPLY SOME COMPONENTS to get free duty. BUT ONLY UP TO 15%.
• Must have an EXPORT DECLARATION from an exporter.

• It must be a DIRECT shipment.
• NAFTA CERTIFICATE OF ORIGIN must be used (CF434)
• Also EXPORTER CERTIFICATE (CF363) has to be used.
• Invoice can be in English, Spanish or French. HOWEVER, if an invoice in Spanish or French then ENGLISH TRANSLATION MUST BE ATTACHED.
• You have 5 (FIVE) WORKING DAYS to submit NAFTA certificate of origin to Customs.

If it 100% grown in Canada or Mexico, then it is automatically qualifies for NAFTA (Examples: Tomatoes, plants etc).

If it is NOT 100%, then it in order to qualify for NAFTA exemptions it must have two things [see GN12 (c)]:

• SUBSTANTIAL TRANSFORMATION (1) (Also known as TARIFF CHANGE).
• It CAN have foreign components, BUT you must calculate the REGIONAL VALUE CONTENT (2).

Substantial Transformation occurs when it has:

1. New Name
2. New Use
3. New Characteristic

(t) Change in Tariff Classification Rules.
Chapter 1. A change to headings 0101 through 0106 from any other chapter.
Chapter 2. A change to headings 0201 through 0210 from any other chapter.
Chapter 3. A change to headings 0301 through 0307 from any other chapter.
Chapter 4. A change to headings 0401 through 0410 from any other chapter, except from tariff items 1901.90.32, 1901.90.33, 1901.90.34, 1901.90.36, 1901.90.38, 1901.90.42 or 1901.90.43....

After that, if according GN 12 (c) the product IS eligible to be qualified for NAFTA but HAS FOREIGN COMPONENTS IN IT, then you have to calculate its REGIONAL VALUE CONTENT:

There are TWO ways to calculate the REGIONAL VALUE CONTENT:

1. TV (Transactional Value) = 60% or grater.
   VNM -Non NFTA Materials (Foreign Components)
   
   TV - VNM
   RVC = --------------------------- X 100 TV - including PROFIT.
   TV
2. N/C (Net Cost) = 50% or grater.
   NC - VNM
   RVC = -------------------------- X 100 NC - NO Profit
   NC

Example: International shipping TV made in Canada with foreign components in it:
- Sell price of TV = $550
- Foreign components = $250
- Profit = $50

$550 - $250
1. TV (Transactional Value) = --------------- X 100 = 54.5% - NOT. IT IS NOT QUALIFIED.
$550

$500 - $250
2. N/C (Net Cost - NO PROFIT) = --------------- X 100 = 50% - YES. IT IS QUALIFIED.
$500

!!! IMPORTER HAS A CHOICE, WHICH METHOD OF CALCULATION OF REGIONAL VALUE CONTENT TO CHOOSE AND SUBMIT TO THE CUSTOMS !!!

Exception: YOU CANNOT TO USE TRANSACTION VALUE (TV) METHOD IF YOU ARE DEALING WITH RELATED PARTIES because in this case RELATED PARTIES can move around value of products.

VNM -Non NFTA Materials (Foreign Components) = Its cost + FREIGHT.
That means all international freight to bring foreign parts of product to Canada or Mexico must be added to the cost of Non NFTA Materials.

NAFTA Agreement continually changes. You must keep track to changes in annual issues of U.S. HTS all the time.

Intermediate chemicals for dyes. Whenever a rate of duty of "Free" followed by the symbol " L" in parentheses appears in the special subcolumn for a heading or subheading, any product classifiable in such provision which is the international shipping product of a country eligible for tariff treatment under column 1 shall be entered free of duty, provided that such product is listed in the intermediate chemicals for dyes appendix to the tariff schedule.

Exclusions. Whenever any agricultural product of chapters 2 through 52, inclusive, is of a type (i) subject to a tariff-rate quota and (ii) subject to the provisions of subchapter IV of chapter 99, entries of such international shipping products described in this note shall not be counted against the quantity specified as the in-quota quantity for any such international shipping product in such chapters: ...

CBTPA. Caribbean Basin Trade Partnership Act (CBTPA). Products of Countries Designated as Beneficiary Countries under the United States-Caribbean Basin Trade Partnership Act of 2000. Rate of duty appears in the ?Special? subcolumn followed by the symbol ? R ?.
Barbados, Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Panama, Saint Lucia, Trinidad and Tobago.

GSN information used especially for CF3461 and CF7501.

Except as provided in paragraph (b) of this note, and in the absence of specific instructions to the contrary elsewhere, the statistical reporting number for an article consists of the 10-digit number formed by combining the 8-digit subheading number with the appropriate 2-digit statistical suffix. Thus, the statistical reporting number for live monkeys dutiable under subheading 0106.00.50 is "0106.00.5010".

Whenever an article is eligible for reduced Merchandise Processing Fee (MPF), and a claim therefor is made under one of the following programs, the statistical reporting number is, in absence of specific instructions to the contrary elsewhere, the 10-digit number prefixed by the appropriate symbol indicated below:

Automotive Products Trade Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B#
Agreement on Trade in Civil Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C#

North American Free Trade Agreement:
Goods of Canada or of Mexico, under the terms of general note 12, included in the
pharmaceutical appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . K#
Goods of Canada or of Mexico, under the terms of general note 12, included in the
intermediate chemicals for dyes appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L#
Other international shipping goods of Canada, under the terms of general note 12 . . . . . . . . . . . . . . . . . . . . . CA
Other goods of Mexico, under the terms of general note 12 . . . . . . . . . . . . . . . . . . . . . . MX

Whenever a claim is made for special tariff treatment under one of the following programs, the statistical reporting number is, in absence of specific instructions to the contrary elsewhere, the 10-digit number prefixed by the appropriate symbol indicated below:

Products of West Bank and Gaza Strip . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N
Products of Puerto Rico (advanced in value or improved in condition
in a CBERA beneficiary country (see 19 U.S.C. 2703(a)(5)) . . . . . . . . . . . . . . . W
Products of Insular Possessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Y
Articles from the Freely Associated States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Z

Whenever in the tariff schedule goods are classified as a set in accordance with General Rules of Interpretation 3(b) or 3(c), the set is to be identified by placing the prefix "X" in front of the statistical reporting numbers applicable to the set.

Whenever two separate units of quantity are shown for the same article, the value of the article is to be reported with the first unit of quantity shown, unless there is a "v" following the second unit of quantity in which case the value of the article is to be reported with that unit of quantity.

CHAPTER NOTES:

IT IS VERY IMPORTANT TO READ CHAPTER NOTES BEFORE USING HTS#. If you do not read chapter notes before dealing with HTS# then you have slightest idea what you are dealing with.

As an example international shipping TEXTILE (HTS Chapter 52):
It gives you an idea how to calculate the number applies to wool and cotton, list of countries and quote for cotton for them, different terms etc.

Another example: (HTS Chapter 61) ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, KNITTED OR CROCHETED gives you DEFINITION OF CLOTHING such as "Suit"; "ensemble"; "babies' garments and clothing accessories", male or female etc.

Rule for UNISEX clothing: IF IT SUITABLE FOR BOTH MAN AND WOMAN, THEN IT AUTOMATICALLY CLASSIFIES UNDER WOMEN.

QUOTAS:

• Department of State negotiates different programs with different countries regarding reduced Customs duty rates or no duty at all for certain countries.
• Department of Commerce regulates imports of goods as far as it relates to QUOTAS and create contracts or agreements with foreign countries in order to establish numbers of quotas for international shipping.
• U.S. Customs enforces other Government Agency programs and contracts.

Chapters from 52 up to 60 in brackets 3 digit numbers are QUOTA ITEMS.
It can be found in U.S. TEXTILE AND APPAREL CATEGORY SYSTEM by U.S. Department of Commerce. Office of Textiles and Apparel (OTEXA). See http://otexa.ita.doc.gov/corr.htm

...To view a Correlation of Harmonized Tariff Schedule (HTS) numbers with a specific textile or apparel category number, visit http://otexa.ita.doc.gov/corr.htm and click on the specific category. Categories numbered in the:

200 series are of cotton and/or man-made fiber
300 series are of cotton
400 series are of wool
600 series are of man-made fiber
800 series are of silk blends or non-cotton vegetable fibers

NAFTA
CA OR MX
100% GROWTH OR PRODUCT OF CA OR MX
IF SUB-PART IS TRANSFORMED, IT MUST BE ON " SHIFT LIST" AND MAY HAVE REGIONAL VALUE CONTENT
REQUIREMENT - GN 12C
TRANSACTIONAL VALUE = 60% OR MORE
NET COST METHOD = 50% OR MORE
DIRECT SHIP ONLY

United States - Singapore Free Trade Agreement (SFTA)
General Note 25
Letter Symbol = SG
Two Countries: USA and Singapore
Direct Shipment
100% or Use:
Tariff Shift [GN 25(o)]
Regional Value Content [GN 25(g)]:
Build Up Method = 35% or Build Down Method = 45%
Records and Certificates of Origin Kept for 5 years
from date of Importation
**New Programs

United States - Chile Free Trade Agreement (UCFTA)
General Note 26
Letter Symbol = CL
Two Countries: USA and Chile
Direct Shipment
100% or Use:
Tariff Shift [GN 26(n)]
Regional Value Content [GN 26(g)]:
Build Up Method = 35% or Build Down Method = 45%
Records and Certificates of Origin Kept for 5 Years from
Date of Importation