Update on CITA's Interim Procedures for CAFTA-DR Commercial Availability Requests (List of Allowed Non-originating Textiles Expanded)

The Committee for the Implementation of Textile Agreements (CITA) has issued a notice, effective March 1, 2006, setting forth the interim procedures it will follow in implementing the Commercial Availability provision of the U.S. - Central America - Dominican Republic Free Trade Agreement (CAFTA-DR, DR-CAFTA).

Under the interim procedures, CITA will consider requests to allow additional non-originating fabrics, yarns, or fibers to be treated as if they are originating goods, if they are not available in commercial quantities in a timely manner in the U.S. or the other CAFTA-DR countries. Those approved for treatment as originating goods are added to the Commercial Availability List in either an unrestricted or a restricted quantity (See BP Note on Annex 3.25).

These interim procedures also provide that CITA may remove certain of the fabrics, yarns, or fibers from the Commercial Availability List, or subject them to a restricted quantity.

Although fabrics, yarns and fibers on the Commercial Availability List will be treated as if they are originating goods for purposes of the specific rules of origin in Annex 4.1 of CAFTA-DR, regardless of the actual origin of those inputs, all other fabrics, yarns, or fibers of the component that determines the classification of the good must meet the specific rules of origin in Annex 4.1 of CAFTA-DR.

Highlights of Interim Procedures on Commercial Availability Requests

CITA's notice on its interim procedures describes the process it will follow when considering requests to have fibers, yarns, or fabrics placed on the Commercial Availability List. Of note are the following features of this process:

CITA can restrict the quantity of a product added to the List, etc. Under these interim guidelines, CITA may respond to a commercial availability request with the following types of determinations (partial list):

Approval in unrestricted quantity - Such an approval means that CITA has determined the subject product is not available in commercial quantities in a timely manner in the CAFTA-DR area or that no interested entity has objected to the request. CITA will approve the request in an unrestricted quantity if it determines that no CAFTA-DR supplier(s) or manufacturer(s) could fulfill the request for the subject product.

Approval in restricted quantity - CITA may approve the request in a restricted quantity if it determines that a CAFTA-DR supplier(s) or manufacturer(s) could partially fulfill the request for the subject product.

CITA also states that not later than six months after adding a product to the commercial availability list with a restricted quantity, CITA may eliminate the restriction if it determines that the subject product is not available in commercial quantities in a timely manner in the CAFTA-DR area.

Deemed approval - In the unlikely event that CITA does not make a determination in response to a request, not later than 45 U.S. business days after the official receipt of the request or not later than 60 U.S. business days after the official receipt of the request that was determined to lack sufficient information, the requested subject product will be added to the Commercial Availability list, in accordance with the requirements of 202(o)(4)(D) of the CAFTA-DR.

Denial - CITA may determine that the subject product is available in commercial quantities in a timely manner in the CAFTA-DR area.

Requests to remove item or restrict a quantity six months after listed. According to CITA, an interested entity may request that a product be either removed or that a quantity restriction be introduced six months after a requested subject product has been added to the Commercial Availability List in an unrestricted quantity.

If CITA determines that the product is available in commercial quantities in a timely manner in the CAFTA-DR area, e.g., that a CAFTA-DR supplier(s) or manufacturer(s) is capable to supply all of the subject product requested originally, then that product will be removed from the Commercial Availability List.

If CITA determines that the product is available in commercial quantities in a timely manner in the CAFTA-DR area, e.g., that a CAFTA-DR supplier(s) or manufacturer(s) is capable to supply part of the subject product requested originally, then a restricted quantity will be introduced for that product.

Requests for changed circumstances review to remove item 12 months after listed. Whenever CITA receives information concerning, or a request from an interested entity for the review of, a final affirmative determination that resulted in a product being added to the Commercial Availability List, which shows changed circumstances sufficient to warrant a review of such determination, CITA may conduct a review of the determination. During the review, the entity seeking revocation of a product from the Commercial Availability List shall have the burden of persuasion with respect to whether there are changed circumstances sufficient to warrant such revocation. Absent a show of good cause, CITA may not review a determination less than 12 months after the date of publication of notice of that final affirmative determination.

Due Diligence Certification required for each factual submission. CITA's interim guidelines also require that an interested entity file a Due Diligence Certification with each submission containing factual information. If the interested entity has legal counsel or other representative, the legal counsel or other representative must file a Due Diligence Certification with each submission containing factual information. In the case of commercial availability requests, CITA notes that due diligence means the requestor has made reasonable efforts to obtain subject products from CAFTA-DR manufacturers. Requestors must provide certain specified documentation in order to demonstrate this requirement.

(See CITA's notice for description of the commercial availability request and determination process including: requirements for filing requests and submissions, CITA's consideration and acceptance of a commercial availability request, etc.)

Email notification. A separate Commerce Department press release states that interested parties may receive email notifications regarding new requests for commercial availability determinations, etc.

- written comments on interim procedures due by March 9, 2006

CITA contact: Richard Stetson (202) 482-3400

CITA Interim Guidelines notice (FR Pub 02/23/06) available at http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-1734.pdf

Current Commercial Availability List available in 2006 HTS, Revision 1, Chapter 98, pages 85 - 89, at http://hotdocs.usitc.gov/docs/tata/hts/bychapter/0601C98.pdf

Commerce Dept press release, providing link for email notification opportunity (dated 02/22/06) available at http://otexa.ita.doc.gov/OTEXA_CAP_release_v3_022106.pdf

BP Note

The Commercial Availability List as of March 1, 2006 consists of Annex 3.5 of the CAFTA-DR as expanded under the terms of the agreement and its implementing legislation.

According to government sources, Annex 3.25 in the CAFTA-DR is the "short supply list" of fabrics, yarns, and fibers that the negotiating parties agreed were not available in commercial quantities in a timely manner from producers in the U.S. or other CAFTA-DR countries.

43 types of fabric, yarn, fiber are permanently on List, etc. Prior to March 1, 2006, Annex 3.25 consisted of all of the fabrics, yarns and fibers - 43 types - determined as of December 2003 to be in short supply/not available in commercial quantities under AGOA, CBTPA, and/or ATPDEA, etc.

Sources state that under the terms of the agreement and its implementing legislation, these 43 types are not subject to CITA's commercial availability procedures, and as a result, cannot be removed from the Commercial Availability List nor become subject to a quantitative restriction.

26 types of fabric, yarn or fiber added to List effective March 1, 2006 - can be removed, etc. Once the DR-CAFTA was implemented on March 1, 2006 (currently only for El Salvador), Annex 3.25 was required to be expanded to include the fabric, yarn or fiber that was determined to be in short supply/not available in commercial quantities under CBTPA, ATPDEA, and/or AGOA after December 2003 and before March 1, 2006. This has resulted in the addition of 26 types of fabrics, yarns and fiber to Annex 3.25, for a total of 69 types. All 69 types are listed in Revision 1 to the 2006 HTS. See the 2006 HTS, Revision 1, Chapter 98, pages 85 - 89, at http://hotdocs.usitc.gov/docs/tata/hts/bychapter/0601C98.pdf for list .

The additional 26 types have been added to Annex 3.25 in an unrestricted quantity. However, the DR-CAFTA indicates that the 26 are subject to CITA's interim procedures; and as a result, could be removed from the list, or subject to a quantitative restriction.

(According to government sources, at this point, no additional AGOA, ATPDEA, or CBTPA items will be 'grandfathered' onto this list.)

Commercial availability requests expected to be decided quickly; requests can be made for prospective DR-CAFTA countries. Sources state that as much of the communication is electronic and there is no congressional review period, most commercial availability requests can be decided in 30-45 days. In addition, commercial availability requests may also be made for prospective production in Guatemala, Honduras, Nicaragua, Costa Rica, and the Dominican Republic, which will take effect once the U.S. implements the DR-CAFTA for these countries.

CAFTA-DR Annex 3.25 Short Supply List, available at http://www.ustr.gov/assets/Trade_Agreements/Bilateral/CAFTA/CAFTA-DR_Final_Texts/asset_upload_file721_3920.pdf (Annex 3.25 is located at pp. 67-70)

See the DR-CAFTA Agreement, 2. National Treatment and Market Access for Goods, pp 3-19 through 3-21, at http://www.ustr.gov/assets/Trade_Agreements/Bilateral/CAFTA/CAFTA-DR_Final_Texts/asset_upload_file721_3920.pdf

See the DR-CAFTA Implementation Act, pp. 20-22, at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h3045enr.txt.pdf