Industry News

CBP Issues Panama TPA Implementing Instructions

November 14, 2012


U.S. Customs and Border Protection (CBP) has issued implementing instructions for the U.S.-Panama Trade Promotion Agreement (TPA). President Obama signed implementing legislation for the Agreement on October 21, 2011 and recently issued Proclamation 8894, which provides for the U.S.-Panama TPA to take effect October 31, 2012.  The Agreement applies to goods entered or withdrawn from warehouse for consumption, on or after October 31, 2012.

CBP’s implementing instructions include the following information:

Originating Good

 In order to qualify as an originating good, a good must meet the rules of origin in General Note 35 and all other requirements of the Agreement.

Transit and Transshipment

Goods that undergo further production outside the territory of Panama or the United States, other than unloading, reloading or other processes to preserve the condition of the good or to transport the good to the territory of Panama or the United States, or goods that do not stay under customs control in the territory of a non-Party, will not be considered originating.

Regional Value Content

For most goods that are subject to a Regional Value Content requirement, the Agreement provides for two calculation methods: (1) the build-up method based on the value of originating materials; and (2) the build-down method, based on the value of non-originating materials. Additionally, for certain automotive goods, the net cost method, based on production cost, may be used.

De Minimis

The Panama TPA has a 10 percent de minimis provision for most goods, with separate provisions for certain textiles and non-textiles listed in General Note 35.

Quota

For agricultural products subject to quantitative limits, the required 98 or 99 HTS number and the appropriate chapter 1-97 HTS number must be identified on the CBP Form 7501. The Panama TPA agricultural quotas are covered by HTS numbers 9822.09.17, 9822.09.18, 9822.09.20, 9822.09.22, 99.19.02.01,9919.02.02, 9919.04.10, 9919.04.11, 9919.04.12, 9919.04.40, 9919.04.41, 9919.04.50, 9919.04.51-58, 9919.21.10, and 9919.21.11.

Merchandise Processing Fee (MPF)  

The MPF exemption applies to originating goods under the Panama TPA. MPF preference may be claimed on unconditionally free tariff lines to obtain the MPF exception, even though “PA” will not be listed in the Special column of the HTSUS. These goods are subject to the same certification, verification and other requirement as dutiable goods.

Correction of a False or Unsupported Panama TPA Claim

An importer who has made a false or unsupported preference claim must submit a correction within 30 days of discovery and pay all duties and MPF fees. According to CBP, penalties will not be assessed when the importer promptly and voluntarily makes a corrected claim and pays any duties owed.

Certification Requirements

The importer may make a claim for preferential tariff treatment based on a written or electronic certification issued by the exporter or producer, or based on the importer’s knowledge, including a reasonable reliance on information in his possession. The importer must maintain all certifications and records related to the importation for five years from the date of importation and is responsible for providing the substantiating documentation to CBP upon request.

Verification by CBP

The importer is responsible for substantiating the validity of a preference claim irrespective of whether it is based on an exporter or producer certification, or importer knowledge. CBP will use a CBP Form 28 to initiate a verification.

Preference Claims

A claim for preferential treatment under the Panama TPA may be made at the time of entry summary by prefacing the HTSUS number of the applicable good on CBP Form 7501 with the Special Program Indicator “PA”. Alternatively, the importer may make a post-importation claim, in accordance with 19 USC 1520(d) and the corresponding regulations, once promulgated, for preferential treatment under the Panama TPA, within one year of importation, by submitting a claim in writing to the port of entry.

CBP’s full implementing instructions are available here.

For further information or assistance, please contact a Barnes/Richardson attorney.