Customs Alert - The Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA) has Become Effective
The Dominican Republic-Central America-United States Free Trade Agreement (“DR-CAFTA”) has become effective for imports of merchandise from the Dominican Republic. Originating countries now include the United States, Dominican Republic, El Salvador, Honduras, Nicaragua and Guatemala. Customs has recently explained new internal procedures that remove GSP and CBI benefits for Dominican Republic goods, with a limited CBI exception for goods produced in the Dominican Republic when some processing is performed in Haiti. The implementation of DR-CAFTA requires that goods be entered with the (“P” or “P+”) indicator to be eligible for duty free benefits.
The determination of country of origin under DR-CAFTA is different than the formulas used for GSP and CBI (single and double substantial transformations). The new formula is tariff-shift and regional content value based, more akin to NAFTA. The basic criteria for free entry are as follows:
- the goods are classified in chapters 1 through 97 of the tariff schedule
and a “P” or 'P+” appear in the “special” sub-column of column 1.
- the goods are wholly obtained or produced entirely in the territory of one
or more parties to the Agreement, and each non-originating material undergoes
an applicable change in tariff classification or otherwise satisfies any
regional value content requirements. There is a de minimis exception for non-originating
materials that do not exceed 10% of the adjusted value of the good.
Entries for Dominican Republic merchandise filed under CBI or GSP will be rejected by Customs. Goods previously eligible for duty free treatment under those programs may be eligible for free entry under DR-CAFTA, however, the specific rules of origin must be satisfied. Common imports include gold and silver jewelry, wearing apparel and electronics. For information on the new rules of origin and duty free criteria, please contact our office.
The Customs Alert being sent to you as a service of the Cowan Liebowitz & Latman Customs Practice Group Our desire is to better service international trade community. Your comments regarding this newsletter are appreciated. If you would like additional information please contact: C.J. Erickson, 212.790.9200 or Carl R. Soller, 212.790.9200.
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