DUTY- FREE TREATMENT FOR FABRICS

Rule of Origin for Woven Fabrics

• SILK fabrics, can use fiber and yarn from the DR-CAFTA countries or any other country.
• WOOL fabrics can use fiber and yarn from the DR-CAFTAC countries or any other country.
• COTTON fabrics will be eligible for duty-free treatment when used cotton yarn, synthetic or artificial filament yarn, synthetic or artificial monofilaments, man made staple fibers or wool yarn from United States, Central America or Dominican Republic. (Chapter 52)
• SYNTHETIC OR ARTIFICIAL FILAMENTS will be eligible for duty-free treatment, as long as using cotton yarn, synthetic or artificial filament yarn, synthetic or artificial monofilaments, man made staple fibers or wool yarn from United States, Central America or Dominican Republic. (Chapter 54).
• MAN MADE STAPLE FIBER will be eligible for duty-free treatment, as long as using cotton yarn, synthetic or artificial filament yarn, synthetic or artificial monofilaments, man made staple fibers or wool yarn from United States, Central America or Dominican Republic. (Chapter 55).

Rule or Origin for Knit Fabrics

• Knit COTTON fabrics, will be eligible for duty-free treatment, as long as using cotton from the United States, Central America or Dominican Republic.
• SYNTHETIC OR MAN-MADE FIBERS OR MAN MADE STAPLE FIBERS will be eligible for duty-free treatment, as long as using cotton yarn, synthetic or artificial filament yarn, synthetic or artificial monofilaments, man made staple fibers or wool yarn from United States, Central America or Dominican Republic.
• For blends, wool yarn or vegetables fiber yarn could be used when coming from United States, Central America, Dominican Republic or any other country not included in the Agreement.

DUTY-FREE TREATMENT FOR APPAREL
(Knit or Woven)

Rule of Origin

• COTTON apparel (knit and woven), will be eligible for duty-free treatment, as long as made with yarn and fabric formed in United States, Central America, or Dominican Republic, as well as cut and assembled in one of these countries.
• SYNTHETIC OR MAN-MADE FIBERS OR MAN MADE STAPLE FIBERS apparel (knit and woven) will be eligible for duty-free treatment, as long as made from synthetic filament or man-made yarn (included the monofilaments) and fabric formed in the United States, Central America or Dominican Republic, as well as cut and assembled in one of the mentioned countries.
• WOOL apparel (knit or woven), will be eligible for duty free treatment, as long as made with fabric formed in United States, Central America or Dominican Republic, as well as cut and assembled in one of the mentioned countries (the fiber and yarn can be originated from any other country outside the agreement)
• VEGETABLE FIBERS (like linen, among others) ( knit or woven) will be eligible for duty-free treatment, as long as made from fabric formed in United States, Central America or Dominican Republic, as well as cut and assembled in one of the mentioned countries, (the fiber and yarn can be originated from any other country outside the agreement).
• OTHER MADE UP TEXTILE ARTICLES; SETS; WORN CLOTHING AND WORN TEXTILE ARTICLES; RAGS will be eligible for duty-free treatment, as long as made with yarn and fabric formed in United States, Central America or Dominican Republic, as well as cut and assembled in one of the mentioned countries.
• FOLKLORE AND HANDMADE ARTICLES will have duty-free treatment immediately as long as certified as such.

Additional Conditions

• ACCESORIES AND BEADINGS used as a complement in a garment, can be originally from any country not included in CAFTA, because the tax classification is based in the structure of the garment (the fabric has to apply the origin).
• SEWING THREAD (cotton, synthetic fibers or man-made or synthetic filaments or discontinuous man-made) should be formed and finished in United States,
Central America or Dominican Republic. (the fiber and yarn can be originated from any other country outside the agreement).
• ELASTICS (rest of ribbon, with a content of elastomeric thread or rubber above or same as 5% in weight classified in tariff number 5806.20 or knit fabric less than 30 cm. width containing elastomeric yarn or rubber yarn above or same as 5% of classified tariff number 60.02), should be formed and finished in the United States, Central America or Dominican Republic and finished in one of these countries. (the fiber and yarn can be originated from any other country outside the agreement).
Latex can be originated from any other country outside DR-CAFTA. Only Spandex has to be original from one of the countries in DR-CAFTA.
• When certain fabrics use VISIBLE LININGS in certain men's and women's suits, suit-type jackets, skirts, overcoats, carcoats, anoraks, windbreakers, and similar articles, must be both formed from yarn and finished in the territory of one or more of the Parties (see list of visible linings appendix 2).

SPECIAL RULE FOR GARMENTS
(Single Transformation)

a) Brassieres: Eligible for duty-free treatment, if fabric is made in one of the DR-CAFTA countries or any other country, cut and assembled in United States, Central America or Dominican Republic.
In this case, additional conditions do not apply in thread, visible lining, elastics and ribbons with elastomeric yarn.
The products included under this rule are:
• Brassieres (HTS 6212.10)

b) Woven boxer shorts: are eligible for duty-free treatment using fabric made in one the DR-CAFTA countries or any other country, cut and assembled in United States, Central America or Dominican Republic.
In this case additional conditions are not applied in sewing thread, visible linings, elastics and ribbons with elastomeric yarns.
• The products included under this rule are:
• Cotton Boxer shorts (HTS 6207.11)
• Synthetic or man-made Boxer shorts (HTS 6207.19.9010)
• Boxer short for women and girl (HTS 6208.91.30)
• Boxer short for women(HTS 6208.92.0030)
• Boxer short for girls (HTS 6208.92.0040)

c) Pajamas: Eligible for duty-free treatment using fabric made in one the DR-CAFTA countries or any other country, cut and assembled in United States, Central America or Dominican Republic.
In this case additional conditions are not applied in sewing thread, visible linings, elastics and ribbons with elastomeric yarns.
The products included under this rule are:
• Cotton pajamas for men/ (HTS 6207.21)
• Synthetic and man-made nightwear (HTS 6207.22)
• Nightwear (HTS 6207.91.3010 y 6207.91.4010)
• Cotton nightdress and pajamas for women/girls (HTS 6208.21)
• Synthetic and man-made nightdress and pajamas for women/girls(HTS 6208.22)

d) Girl’s Dresses: Eligible for duty-free treatment using fabric formed in one the DR-CAFTA countries or any other country, cut and assembled in United States, Central America or Dominican Republic.
In this case additional conditions are not applied in sewing thread, visible linings, elastics and ribbons with elastomeric yarns.
The products included under this rule are:
• Cotton girl dresses different to the ones containing 36% or more in weight of linen fibers, corduroy, with two or more colors in the warp and/or weft. (HTS 6204.42.3040 y 6204.42.3060)
• Cotton girl dresses different to the ones containing 36% or more in weight in silk fibers or silk wastage; different to the ones containing 36% or more in weight of wool or fine animal hair, with two or more colors in the warp and/or weft. (HTS 6204.43.4020 y 6204.43.4040).
• Cotton girl dresses different to the ones containing 36% or more in weight of wool or fine animal hair (HTS 6204.44.4020)

Most Favored Nation Rates of Duty on Certain Goods

• Will be eligible for duty-free treatment for garment cut and sewn in United States, Central America or Dominican Republic, as long as made from fabric formed in United States (yarn can be from any other country), and will pay tax only for the added value.
Will not pay tax: the fabric formed in United States, the components or any other material from United States.
• Sewing thread has to be from the United States.

Nylon Yarn Filament

• Nylon yarn filament can be used if originated from Mexico, Canada or Israel and will be considered as originated from a DR-CAFTA country.
• The products must be identified under the following tariff number: 5402.10.30, 5402.10.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.41.10, 5402.41.90, 5402.51.00 ó 5402.61.00

SHORT SUPPLY LIST

• Grants duty-free treatment for products defined as “short supply” in annex 401 of NAFTA, as well as the list of preferential programs of the African Growth and Opportunity Act (AGOA), Andean Trade Promotion and Drug Eradication Act (ATPDEA) and Caribbean Basin Trade Partnership Act (CBTPA) programs.
• Agreement allows the automatic addition of any other products that are approved for “Short Supply” status prior to the effective date of the CAFTA (See Appendix 1.1).
• Grants authority to the Committee for the Implementation of Textile Agreements (CITA) to authorize to add new fibers, fabric and yarn to the “Short Supply” list. CITA will publish procedures at a later date. Will include new type of Short Supply approvals that are limited to a specific amount of imports from a specific manufacturer.
• An interested entity, will be able to make a request to the Government of the United States, to use certain fibers, yarn or fabric, under the concept of “short supply” in an specific program or during a certain period
• The specific procedure to do this type of request (application) will be published by United States Customs
(See Short Supply list in APPENDIX I)

FLEXIBILITY MECHANISMS

Cumulation

• Grants duty-free treatment to certain woven apparel made from Mexican1 fabrics
• Apparel shipments are capped at 100 million SME during the first year for Central America and Dominican Republic and the limit can increase based on the level of importations that qualify as originated from Central America
• The shipments that qualify under this concept, will not exceed the following sub limits:
o 45 millions SME of shorts and cotton trousers (category 347/348) cotton skirts or Man made fabrics (category 342/642), Man-made fiber shorts and trousers (category 647/648).
o 20 millions SME for cotton denim trousers and skirts (categories 342/642, 347/348).
o 1 million SME for wool apparel (categories 433, 435, 442, 443, 444, 447 and 448).
• To use this benefit, it is necessary to compare the rule of origin that Guatemala and Mexico have currently. It is also necessary that Mexico authorizes and implements custom control mechanisms for the verification of the fabric origin, from the United States Customs.

De Mínimis

• Allows use of non-originating fibers or yarns up to ten (10) percent of total weight.
• However, elastomeric yarn (except Latex) cannot be considered in the 10% De Minimis, only if such yarn has been totally formed in the United States, Central America or Dominican Republic.

Treatment for Sets

• Duty-free if all goods in a set are originating
• Duty-free if the value of the non-originating components are not more than ten (10) percent of the value of the set

Preference Tariff Levels for Costa Rica

• The Preference Tariff Levels will be of 500,000 SME for two years. The taxes will be reduced in a fifty (50) percent for the wool apparel made in Costa Rica from non-originating fabrics.
• The products that could classify are: Women/girl wool sets (category 433), women/girl wool jackets (category 435), wool skirts (category 442), men/boy wool suits (category 443), women/girl wool suits (category 444), men/boys wool trousers and shorts (category 447) and women/girl wool trousers and shorts (category 448).

Preference Tariff Levels for Nicaragua

• Garments cut and sewn in Nicaragua will qualify for Tariff Preference Levels if made from cotton fabrics, or man-made fibers from any country.
• The limits will apply as follows:

APPENDIX I.

APPENDIX II.

GLOSSORY: ALL THE VOCABULARY