AMS to Increase Cotton Import Tax Effective December 19, 2008

The Agricultural Marketing Service has issued a final rule, effective December 19, 2008, which will amend 7 CFR Part 1205 to increase the tax on imported cotton and the cotton content of imported products (unless excluded) under the Cotton Research and Promotion Program.

AMS' final rule will also remove certain Harmonized Tariff Schedule numbers that were absorbed into other HTS numbers since the last assessment adjustment.

19.4% Imported Cotton Assessment Increase
AMS is increasing the assessment applicable to imported cotton and the cotton content of imported products by 19.4% to $0.009874 per kilogram (from $0.008267/kg, an increase of $0.001607/kg). According to AMS, this increase reflects the increase in the Average Weighted Price of Upland Cotton Received by U.S. farmers during the period January-December 2007.
(The Cotton Research and Promotion Tax is the sum of the One-Dollar per Bale Assessment - a flat assessment rate of $0.004409 per kilogram, and the Supplemental Assessment - an annually adjusted per kilogram assessment rate levied at a rate of five-tenths of one percent of the calendar year value of imported cotton (which the final rule will set at $ 0.005465 per kilogram).)

Certain Importers May be Exempt from Assessments
AMS states that importers with line-items appearing on U.S. Customs and Border Protection (CBP) documentation with the value of the cotton contained therein results of an assessment of two dollars ($2.00) or less will not be subject to assessments. Importers who import only products that are eligible to be labeled as 100% organic under the National Organic Program (7 CFR Part 205), and that are not a split operation, are also exempt from payment of assessments.
In addition, imported cotton and products may be exempt from assessment if the cotton content of products is U.S. produced, or cotton other than Upland.

Revised Cotton Assessment Table for Imports
AMS' final rule also contains a revised assessment table, listing the 10-digit HTS numbers subject to the cotton assessment; the conversion factor for each such HTS number, which is determined by AMS and varies according to the tariff number; and the resulting converted assessment rate for each such HTS number, expressed in cents/kg. (http://edocket.access.gpo.gov/2008/pdf/E8-27397.pdf)

ALL DR-CAFTA TEXTILE & APPAREL DUTY REFUND CLAIMS
DUE BY APRIL 1, 2009

President Bush issued a proclamation announcing that DR-CAFTA will take effect with respect to Costa Rica as of Jan. 1, 2009. As a result, importers now have until April 1, 2009 (i.e., 90 days after this implementation date) to file:

• claims for refunds of duties paid from Jan. 1, 2004, through Jan. 1, 2009, on DR-CAFTA originating textile or apparel products that are products of Costa Rica;
• claims for refunds of duties paid from Jan. 1, 2004, through Jan. 1, 2009, on DR-CAFTA originating textile or apparel products that contain Costa Rican inputs; and
• any outstanding refund claims for goods of other DR-CAFTA countries.

Importers should take note that DR-CAFTA textile and apparel goods must meet the current rules of origin under that agreement, including the modifications that went into effect Aug. 15 to require originating pocketing fabric and to relax the yarn-forward requirement for certain apparel articles. Importers of any apparel articles that became single transformation under the Aug. 15 changes should make sure to examine their prior imports of such goods from all DR-CAFTA countries to assess their eligibility for refunds.