Decemeber 20, 2004
On December 13, 2004, the Committee for the Implementation of Textile Agreements (CITA) issued a directive to Customs and Border Protection (CBP) instructing it not to allow 2004 over quota shipments of certain textiles to enter the US until at least February 1, 2005.
The limitation applies to all shipments exported in 2004 that exceed the applicable 2004 agreed quota limit from WTO Members and from non- WTO Member countries with bilateral textile agreements expiring on December 31. Vietnam and Russia are examples of non-WTO countries. The WTO website maintains a membership roster.
From February 1 through February 28, 2005, entry will be permitted to goods in an amount equal to 5 percent of the applicable 2004 base quota limit. Subsequently, entry will be permitted to goods in an amount equal to 5 percent of the applicable base 2004 quota limit, until all shipments in excess of the quota limits have been entered.
In addition, entry will not be permitted until January 24, 2005, for shipments exported from China that exceed the applicable Accession Agreement safeguard limits for categories 222, 349/649, and 350/650 exported from China between December 24, 2003, and December 23, 2004.
From January 24 through February 23, 2005, entry will permitted to such goods in an amount equal to 5 percent of the applicable safeguard limit. For each succeeding period, beginning on the 24th of the month and extending through the 23rd of the following month, entry will permitted to goods in an amount equal to 5 percent of the applicable base safeguard limit, until all shipments in excess of safeguard limits have been entered.
What is an "Over-shipment"?
Over-shipments are goods from a particular quota category that exceed the category quota limit for that year. Imports in excess of 2004 quota limitations can still be exported and then stored in an FTZ or bonded warehouse until 2005, when WTO quotas expire, or their arrival can be timed so that the goods leave the country of export in 2004 but arrive in the U.S. in 2005.
To prevent a flood of imports at the beginning of the new year, CITA has directed Customs to treat 2004 over-shipments to a staged entry program, under which limited quantities of over-shipped merchandise will be allowed entry in periodic intervals, typically every 30 days.
Exports from Intermediary Countries May Create Hidden Liabilities For Importers
Importers should review the transit documentation of shipments prior to entry with respect to shipments entering in early 2005. If merchandise is shipped to and enters the U.S. from an intermediary country in 2005, it may still be considered a 2004 export if the goods were exported from the actual country of origin on or before December 30, 2004.
Canadian Transshipment Concerns
Importers from Canada should be aware that the Canadian government will eliminate all import quotas (on WTO members and non-members alike) at the end of December 2004.
While the Canadian government believes that this policy is consistent with previous stages of quota elimination, where quotas were eliminated on all countries, the Canadian policy is very different from the policy of the United States, which will not eliminate quota on non-WTO members.
This policy difference will likely result in an increase in U.S. Customs' risk assessments on Canadian textiles, and could lead to Customs targeting Canadian imports for production document reviews.
For background on the expiration of Quota, see our previous articles:
"Are Quota's Gone For Good? The Integration of Textile And Apparel Quotas Under the WTO Agreement on Textiles and Clothing And The China Safeguard Provisions" March 17, 2004
"Third Stage Integration of Textiles Under WTO" (Elimination of Quotas)" December 10, 2001.
For further information, please contact Stephen S. Spraitzar at (415) 288-0427 or via email at firstname.lastname@example.org, or George R. Tuttle at (415) 288-0425 or via email at email@example.com.
George Tuttle and Stephen Spraitzar are attorneys with the Law Offices of George R. Tuttle in San Francisco. The information in this article is general in nature and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.
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