Friday, April 28, 2006
Tweet[IWS] CRS: Textile and Apparel Rules of Origin in International Trade [online 21 April 2006]
IWS Documented News Service
_______________________________
Institute for Workplace Studies Professor Samuel B. Bacharach
School of Industrial & Labor Relations Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor Stuart Basefsky
New York, NY 10016 Director, IWS News Bureau
________________________________________________________________________
Congressional Research Service (CRS)
Order Code RL31934
Textile and Apparel Rules of Origin in International Trade
May 23, 2003 [online 21 April 2006]
Bernard A. Gelb, Specialist in Industry Economics, Resources, Science, and Industry Division
http://opencrs.cdt.org/rpts/RL31934_20030523.pdf
[full-text, 15 pages]
Summary
In moves to open foreign markets to U.S. goods and services, and vice versa,
and to boost economic growth in poorer regions of the world, the United States has
entered into free trade agreements and established preferential trade programs. Major
challenges are preventing non-members or ineligible countries or products from
benefitting, and limiting the potential harm to U.S. producers. These challenges are
addressed in part by explicitly or implicitly setting rules for determining the origin
of each of particular categories of goods to ensure that benefits flow only to the
appropriate trade partner(s) and/or only to the designated categories of goods made
by a partner or beneficiary country. Usually, this is done by establishing rules of
origin based upon one more or conceptual approaches that have been developed to
help designate a category of products or particular item as the product of a
particular country or group of countries as unambiguously as possible. Because
the United States is considering entering into other free trade agreements, it may be
instructive to examine the rules that are part of current agreements and preferential
programs.
Existing U.S. free trade agreements and trade preference programs include the
following: the North American Free Trade Agreement, the United States-Jordan Free
Trade Agreement, the United States-Israel Free Trade Agreement, Andean trade
preference (Andean Trade Preference and Drug Eradication Act), Caribbean trade
preference (Caribbean Basin Trade Partnership Act as amended), and sub-Saharan
trade preference (African Growth and Opportunity Act, AGOA, as amended). The
United States has signed proposed free trade agreements with Chile and Singapore.
Based upon brief summaries of the free trade agreements and preferential trade
programs listed above, it is observed that if a trade agreement has broader coverage
than a trade preference program it does not necessarily indicate that it is a more
generous trade promotion vehicle with respect to textiles and apparel. A trade
agreement is intended to generate reciprocal benefits whereas a preference program
is a unilateral grant of benefits to the intended beneficiary country(ies). However,
while recognizing this caveat, it needs to be reported that the trade agreements cover
textile and apparel categories more broadly than the preferential programs.
Also, a major characteristic of rules of origin contained in all of the agreements
and programs covered is that they tend to be very specific with respect to textiles and
apparel. One overall rule, usually set out at the beginning of the relevant
document(s), applies to textiles and apparel to the extent that the specific rules do not
supercede it. That rule requires that the value of materials produced in a beneficiary
country plus the direct cost of processing in a beneficiary country must equal at least
35% of the total value of the article at its entry into the United States. But up to 15%
of the 35% may consist of the value originating in the United States.
Thirdly, all of the agreements and preferential programs make special allowance
for handloomed, handmade, and folklore articles, as defined by consultation among
or between the countries. This report will not be updated.
Contents
Setting and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Need for and Approaches to Rules of Origin . . . . . . . . . . . . . . . . . . . . . . . . . 2
Concepts and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Substantial transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Change in tariff classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Value-added standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Critical process criterion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summaries of Rules of Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
General Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Specific Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
North American Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S.-Jordan Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Proposed U.S.-Singapore Free Trade Agreement . . . . . . . . . . . . . . . . . 9
Andean Trade Preference Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Caribbean Basin Preference Program . . . . . . . . . . . . . . . . . . . . . . . . . 10
Sub-Saharan Africa Preference Program . . . . . . . . . . . . . . . . . . . . . . . 10
Selected Current CRS Reports Related to Free Trade Agreements and Preferential Trade Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
List of Tables
Summaries of Textile and Apparel Rules of Origin: Selected Trade Agreements and Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky *
Director, IWS News Bureau *
Institute for Workplace Studies *
Cornell/ILR School *
16 E. 34th Street, 4th Floor *
New York, NY 10016 *
*
Telephone: (607) 255-2703 *
Fax: (607) 255-9641 *
E-mail: smb6@cornell.edu *
****************************************
_______________________________
Institute for Workplace Studies
School of Industrial & Labor Relations
Cornell University
16 East 34th Street, 4th floor
New York, NY 10016
________________________________________________________________________
Congressional Research Service (CRS)
Order Code RL31934
Textile and Apparel Rules of Origin in International Trade
May 23, 2003 [online 21 April 2006]
Bernard A. Gelb, Specialist in Industry Economics, Resources, Science, and Industry Division
http://opencrs.cdt.org/rpts/RL31934_20030523.pdf
[full-text, 15 pages]
Summary
In moves to open foreign markets to U.S. goods and services, and vice versa,
and to boost economic growth in poorer regions of the world, the United States has
entered into free trade agreements and established preferential trade programs. Major
challenges are preventing non-members or ineligible countries or products from
benefitting, and limiting the potential harm to U.S. producers. These challenges are
addressed in part by explicitly or implicitly setting rules for determining the origin
of each of particular categories of goods to ensure that benefits flow only to the
appropriate trade partner(s) and/or only to the designated categories of goods made
by a partner or beneficiary country. Usually, this is done by establishing rules of
origin based upon one more or conceptual approaches that have been developed to
help designate a category of products or particular item as the product of a
particular country or group of countries as unambiguously as possible. Because
the United States is considering entering into other free trade agreements, it may be
instructive to examine the rules that are part of current agreements and preferential
programs.
Existing U.S. free trade agreements and trade preference programs include the
following: the North American Free Trade Agreement, the United States-Jordan Free
Trade Agreement, the United States-Israel Free Trade Agreement, Andean trade
preference (Andean Trade Preference and Drug Eradication Act), Caribbean trade
preference (Caribbean Basin Trade Partnership Act as amended), and sub-Saharan
trade preference (African Growth and Opportunity Act, AGOA, as amended). The
United States has signed proposed free trade agreements with Chile and Singapore.
Based upon brief summaries of the free trade agreements and preferential trade
programs listed above, it is observed that if a trade agreement has broader coverage
than a trade preference program it does not necessarily indicate that it is a more
generous trade promotion vehicle with respect to textiles and apparel. A trade
agreement is intended to generate reciprocal benefits whereas a preference program
is a unilateral grant of benefits to the intended beneficiary country(ies). However,
while recognizing this caveat, it needs to be reported that the trade agreements cover
textile and apparel categories more broadly than the preferential programs.
Also, a major characteristic of rules of origin contained in all of the agreements
and programs covered is that they tend to be very specific with respect to textiles and
apparel. One overall rule, usually set out at the beginning of the relevant
document(s), applies to textiles and apparel to the extent that the specific rules do not
supercede it. That rule requires that the value of materials produced in a beneficiary
country plus the direct cost of processing in a beneficiary country must equal at least
35% of the total value of the article at its entry into the United States. But up to 15%
of the 35% may consist of the value originating in the United States.
Thirdly, all of the agreements and preferential programs make special allowance
for handloomed, handmade, and folklore articles, as defined by consultation among
or between the countries. This report will not be updated.
Contents
Setting and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Need for and Approaches to Rules of Origin . . . . . . . . . . . . . . . . . . . . . . . . . 2
Concepts and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Substantial transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Change in tariff classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Value-added standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Critical process criterion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summaries of Rules of Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
General Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Specific Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
North American Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S.-Jordan Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Proposed U.S.-Singapore Free Trade Agreement . . . . . . . . . . . . . . . . . 9
Andean Trade Preference Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Caribbean Basin Preference Program . . . . . . . . . . . . . . . . . . . . . . . . . 10
Sub-Saharan Africa Preference Program . . . . . . . . . . . . . . . . . . . . . . . 10
Selected Current CRS Reports Related to Free Trade Agreements and Preferential Trade Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
List of Tables
Summaries of Textile and Apparel Rules of Origin: Selected Trade Agreements and Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
_____________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 2:20 PM
