Commerce to Maintain Wholly Formed Requirement for DR "2 for 1" Program
The Commerce Department has determined to maintain the current interpretation of the wholly formed requirement of qualifying woven fabric under the “2 for 1” Earned Income Allowance Program (EIAP) for certain apparel from the Dominican Republic.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
OTEXA Currently Defines Wholly Formed within Definition of Qualifying Woven Fabric
In January 2009, the Office of Textiles and Apparel published interim procedures, implementing Section 2 of the Andean Trade Preference Extension Act of 2008 (ATPEA) setting forth the provisions OTEXA would follow in implementing the EIAP.
“Qualifying woven fabric” is defined in Section 2 of the ATPEA and in OTEXA’s interim procedures as “woven fabric of cotton wholly formed in the U.S. from yarns wholly formed in the U.S.” and intended for production of apparel in the Dominican Republic. Neither the ATPEA nor the interim procedures define the term “wholly formed” as it is used in the definition of “qualifying woven fabric.”
OTEXA received inquiries regarding the interpretation of “wholly formed” as a requirement under the definition of “qualifying woven fabric.” Accordingly, OTEXA requested public comment on the intended meaning of the “wholly formed” requirement in the definition of “qualifying woven fabric” for the purposes of the EIAP. In that request for public comment, OTEXA explained that it “currently interprets ‘wholly formed’ within the definition of ‘qualifying woven fabric’ to require that all production processes and finishing operations, starting with weaving and ending with a fabric ready for cutting or assembly without further processing, take place in the U.S.”
After Consideration of Comments, OTEXA to Continue its Interpretation of Wholly Formed
OTEXA received ten comments and has carefully analyzed the points raised in each submission. After careful consideration of the interested party comments and discussions with stakeholders, OTEXA has determined it will continue to interpret “wholly formed” within the definition of “qualifying woven fabric” to require that all production processes and finishing operations, starting with weaving and ending with a fabric ready for cutting or assembly without further processing, take place in the U.S. under the EIAP.
(This program was mandated by the ATPEA, which requires the International Trade Administration to create an un-capped duty-free benefit for "qualifying apparel articles" wholly assembled in the Dominican Republic from fabrics (not including denim), fabric components, or yarns, regardless of their source, if such apparel articles are accompanied by an earned import allowance certificate in accordance with the "2 for 1" program.
Under the program, one square meter equivalent (SME) credit will be issued to a qualifying apparel producer for every two SMEs of "qualifying woven fabric" that this producer can demonstrate was purchased for the manufacture in the Dominican Republic of "qualifying apparel articles" wholly assembled in the Dominican Republic.)
(See ITT’s Online Archives or 04/07/09 news, 09040730, for BP summary of OTEXA seeking comment on the wholly formed requirement.
See ITT’s Online Archives or 07/30/10 news, 10073011, for BP summary of recent ITC report on the EIAP.)
Commerce Department contact- (202) 482-2573