In order for countries to be eligible for apparel benefits, they must have in place an effective visa system to prevent illegal trans-shipment and use of counterfeit documentation, as well as effective enforcement and verification procedures. For a list of countries eligible for apparel benefits, including those also eligible for the Special Rule for Apparel, click on the Country Eligibility page.
Qualifying Textile and Apparel Articles
The Africa Investment Incentive Act of 2006 (signed by President Bush on December 20, 2006) amends the textile and apparel portions of the African Growth and Opportunity Act (AGOA) and is referred to as "AGOA IV".
AGOA IV provides duty-free and quota-free treatment for eligible apparel articles made in qualifying sub-Saharan African countries through 2015. Qualifying articles include:
- Apparel made of U.S. yarns and fabrics;
- Apparel made of sub-Saharan African (regional) yarns and fabrics, subject to a cap until 2015;
- Apparel made in a designated lesser developed country of third-country yarns and fabrics, subject to a cap until 2012;
- Apparel made of yarns and fabrics not produced in commercial quantities in the United States;
- Certain cashmere and merino wool sweaters;
- Eligible handloomed, handmade, or folklore articles and ethnic printed fabrics; and
- Textiles and textile articles produced entirely in a lesser-developed beneficiary country.
Special Rule for Apparel Applying to Lesser Developed AGOA Countries
Until September 30, 2012, lesser-developed beneficiary sub-Saharan African countries may use non-U.S. fabric and yarn in apparel wholly assembled in their countries and still qualify for duty- and quota-free treatment. Exports under the Special Rule are subject to a cap (see below for details on the cap). Lesser-developed countries are those with a per capita gross national product of less than $1500 a year in 1998 as measured by the World Bank. AGOA IV continues to grant lesser-developed beneficiary country status to Botswana and Namibia, qualifying both countries for the Special Rule.
Other Textile and Apparel Provisions
The Committee for the Implementation of Textile Agreements (CITA), an interagency group chaired by the Commerce Department's Deputy Assistant Secretary for Textiles and Apparel, has the authority to implement certain provisions of AGOA's textile and apparel benefits. These provisions include:
- Determination of the annual cap on imports of apparel that is assembled in beneficiary countries from fabric formed in beneficiary countries from yarn originating either in the United States or in beneficiary countries. Through September 30, 2012, the statute permits lesser-developed beneficiary countries to obtain preferential treatment for apparel assembled in beneficiary countries regardless of the origin of the fabric;
- Determination that yarn or fabric cannot be supplied by the U.S. industry in commercial quantities in a timely manner, and to extend preferential treatment to eligible apparel from such yarn or fabric (commercial availability);
- Determination of eligible handloomed, handmade, or folklore articles and ethnic printed fabrics;
- A "tariff snapback" in the event that a surge in imports of eligible articles causes serious damage or threat thereof to domestic industry;
- Determination of whether U.S. manufacturers produce interlinings in the United States in commercial quantities, thereby rendering articles containing foreign interlinings ineligible for benefits under AGOA; and
- Determination of whether exporters have engaged in illegal transshipment and denial of benefits to such exporters for a period of five years.
AGOA limits imports of apparel made with regional or third country fabric to a fixed percentage of the aggregate square meter equivalents (SME) of all apparel articles imported into the United States. For the year beginning October 1, 2006, the aggregate quantity of imports eligible for preferential treatment under these provisions is an amount not to exceed 6.43675 percent of all apparel articles imported into the United States. Of this overall amount, apparel imported under the Special Rule for lesser-developed countries is limited to an amount not to exceed 3.5 percent of apparel imported into the United States in the preceding 12-month period. Apparel articles entered in excess of these quantities will be subject to otherwise applicable tariffs. The duty- free cap is not allocated among countries. It is filled on a "first-come, first-served" basis.
For the most current data on aggregate imports under the cap, please visit http://otexa.ita.doc.gov and click on "AGOA".
AGOA IV provides for special rules for fabrics or yarns produced in commercial quantities (or "abundant supply") in any designated sub-Saharan African country for use in qualifying apparel articles. Upon receiving a petition from any interested party, the International Trade Commission will determine the quantity of such fabrics or yarns that must be sourced from the region before applying the third country fabric provision. It also provides for 30 million square meter equivalents (SMEs) of denim to be determined to be in abundant supply beginning October 1, 2006. The U.S. International Trade Commission will provide further guidance on how it will implement this provision.
Under AGOA, the President is authorized to proclaim duty-free and quota-free benefits for apparel that is both cut (or knit-to-shape) and sewn or otherwise assembled in beneficiary countries from fabric or yarns not formed in the United States or a beneficiary country, if the President has determined that such yarns or fabrics cannot be supplied by the domestic industry in commercial quantities in a timely manner. In Executive Order 13191, the President delegated to the Committee for the Implementation of Textile Agreements (CITA) authority to determine whether yarn or fabric cannot be supplied by the domestic industry in commercial quantities in a timely manner and to extend preferential treatment to apparel articles from such yarn or fabric.
For details on products that receive duty- free treatment under the AGOA, please visit http://otexa.ita.doc.gov and click on "Commercial Availability".
AGOA IV provides for a process to remove designated fabrics or yarns that were determined not to be available in commercial quantities in the United States on the basis of fraud.
Handloomed/Handmade/Folklore Articles/Ethnic Printed Fabrics
AGOA provides duty- and quota-free benefits for handloomed, handmade, folklore articles, or ethnic printed fabrics, made in beneficiary sub-Saharan African countries. This provision is known as "Category 9". In Executive Order 13191, the President authorized CITA, after consultation with the Commissioner of Customs and Border Protection, to consult with beneficiary sub-Saharan African countries and to determine which, if any, particular textile and apparel goods shall be treated as being handloomed, handmade, folklore articles or ethnic printed fabrics.
As of August 2009, Botswana, Burkina Faso, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mali, Mozambique, Namibia, Niger, Nigeria, Senegal, Sierra Leone, South Africa, Swaziland, Tanzania and Zambia have been approved under the hand-loomed and the handmade provisions of Category 9.
Findings and Trimmings
An apparel article is eligible for benefits even if the article contains findings or trimmings of foreign origin, if the value of such findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article. Examples of findings and trimmings include sewing thread, hooks and eyes, snaps, buttons, "bow buds," decorative lace trim, elastic strips, and zippers. Elastic strips are considered findings or trimmings only if they are each less than 1 inch in width and used in the production of brassieres.
Articles containing certain interlinings of foreign origin are eligible for benefits if the value of the interlinings (and any findings and trimmings) does not exceed 25 percent of the cost of the components of the assempled article. The interlinings permitted include only a chest type plate, a "hymo" piece, or "sleeve header," made of woven or weft-inserted warp knit construction and of coarse animal hair or man-made filaments. This benefit will terminate if the President determines such interlinings are made in the United States in commercial quantities.
AGOA III expanded product eligibility to allow non-AGOA produced collars, cuffs, drawstrings, padding/shoulder pads, waistbands, belts attached to garments, straps with elastic, and elbow patches for all import categories to be eligible. This treatment continues under AGOA IV.
De Minimis Rule
Apparel products assembled in sub-Saharan Africa which would otherwise be considered eligible for AGOA benefits but for the presence of some fibers or yarns not wholly formed in the United States or the beneficiary sub-Saharan African country will still be eligible for benefits as long as the total weight of all such fibers and yarns is not more than 10 percent of the total weight of the article. AGOA III increased this percentage from seven percent.
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