Tuesday, May 4, 2010

Free Trade Tuesday - CBERA

Welcome to Free Trade Tuesday! This week we are discussing the Caribbean Basin Economic Recovery Act (CBERA).

CBERA was implemented in 1983 to promote economic revitalization in the Caribbean Basin region and encourage countries in the Caribbean to engage in manufacturing operations to produce articles for the U.S. These goods would enter the U.S. market without payment of duty. Like the GSP, CBERA is similar to GSP in that it is a system of duty reduction that gives favorable treatment to a select group of countries. Unlike the GSP, CBERA is a permanent program.

A list of the eligible countries is found in GN 7(a) of the HTSUS. If a tariff number is eligible for CBERA, the symbol "E" appears in the "Special" sub-column.

In order to qualify for special treatment under CBERA, the merchandise must be imported directly from the CBERA country and be wholly the growth, product or manufacture of the CBERA country or two or more beneficiary countries. Imported directly means that the goods were shipped from the beneficiary country to the U.S. without passing through the territory of any other country. However, goods may transit through another country without losing eligibility so long as nothing is done to the merchandise other than loading and unloading and the goods do not enter the commerce of the other country.

The sum of the cost of the material produced in the beneficiary country plus direct costs of the processing operations performed in the country must not be less than 35% of the appraised value of the imported article in order to qualify for benefits. In calculating the 35%, “beneficiary country” also includes Puerto Rico and the U.S. Virgin Islands, as well as any former CBERA country. The former beneficiary countries include El Salvador, Guatemala, Honduras, Nicaragua, Dominican Republic and Costa Rica. Up to 15% of the 35% can be contributed from the United States.

If the article is not wholly from a CBERA country, it may still be eligible if the article is substantially transformed into a different article of commerce.

CBERA - Key Facts
HTS General Note: GN 7
Imported Directly: Yes
De Minimis: No
Origin Criteria: 35%, with 15% U.S. Origin Content Allowable, Substantial Transformation
MPF: Exempt for all goods, whether or not originating
Countries: Multiple - Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, British Virgin Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, Netherlands Antilles, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago.
Regulations: 19 CFR 10.191 – 10.198

Join us again next Tuesday when we discuss the United States-Israel Free Trade Area Agreement (IFTA).

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