The Colombia FTA. David M. Spooner Squire Sanders, Washington, D.C

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1 The Colombia FTA David M. Spooner Squire Sanders, Washington, D.C

2 Goes into effect May 15, Applies to goods entered on and after that date.

3 Tariffs: The Good News All Qualifying Goods duty free immediately. No tariff staging.

4 Rule of Origin: The Bad News A yarn forward rule of origin, for virtually all products. As with other agreements, the yarn forward rule applies to the component that determines the tariff classification of the good. Pocketing fabric, sewing thread, visible linings, and narrow elastics must all originate too.

5 Exceptions to the Yarn Forward Rule 1. Bras (cut and assemble rule), 2. Nylon filament yarn (may come from Mexico, Canada and Israel), 3. Rayon filament yarn (may come from anywhere), short supply fabrics (12 fabrics and 6 yarns found starting at page 38 of the following link: a/asset_upload_file664_10163.pdf ), 5. De minimus (up to 10%, by weight, of a garment may come from outside the region except for elastomeric). 6. Handloomed fabrics, traditional handicraft goods, and handmade goods incorporating a traditional or historical design or motif.

6 Ways to Amend the Rules of Origin A CAFTA-like short supply process. Future negotiations to permit inputs from other countries in the region. No deadline for these negotiations.

7 ATPDEA vs. Colombia FTA PROVISION ATPDEA U.S.-Colombia TPA Scope/Coverage Market Access Expiration Accumulation - build-up of goods Apparel, textile travel goods, and footwear Unilateral program, duty free for qualifying goods entering the U.S. Legislated with a start and end date and has been renewed various times U.S.- Andean regional accumulation All textile, apparel, textile travel goods, and footwear Bilateral, reciprocal free trade agreement - immediate duty-free access for qualifying U.S. goods entering Colombia and Colombian goods entering the U.S. No expiration date U.S. and Colombia accumulation

8 PROVISION ATPDEA U.S.-Colombia TPA Rule of Origin Apparel: yarn forward Travel goods: fabric forward Footwear - (see below) Textiles and apparel: yarn forward with exceptions Travel goods - fabric forward Footwear - (see below) Apparel: rules apply to the entirety of the good Textiles and Apparel: rules apply to the essential character of the good Trimmings / Linings / Accessories Findings and Trimmings, and Interlinings can be of non-u.s. foreign origin if the value of such does not exceed 25 percent of the cost of all the components of the garment. In addition to the to the essential character, the following must qualify: Visible lining fabrics Sewing thread (HS 5204, 5401) Pocketing bag fabric Narrow elastic fabrics De Minimis 7% (by weight) 10% (by weight)

9 PROVISION ATPDEA U.S.-Colombia TPA Elastomeric yarn requirement Short Supply List Short Supply Process Nylon filament yarn Viscose Rayon Filament Yarn None - elastomeric inputs from anywhere 7 products, limited end use day determination process. Limited to U.S. suppliers Certain nylon filament yarn may be sourced from Mexico, Canada, and Israel Can be sourced from anywhere - on short supply list All elastomeric yarns in qualifying goods must be from the U.S. or Colombia 18 products - unlimited end-use day determination process. Ability to add, remove, or make determinations in limited quantities. Both U.S. and Colombian suppliers can make offers to supply the products Certain nylon filament yarn may be sourced from Mexico, Canada, and Israel (same) Can be sourced from anywhere - amended product specific rules of origin (same idea, different mechanism)

10 PROVISION ATPDEA U.S.-Colombia TPA Gimped Yarn (HS 5606) Brassieres (HTSUS ) U.S. or Andean made unless under the de minimis level 75% of the value must be U.S. No requirement - can be sourced from anywhere cut-and-assemble rule of origin Folklore Provision Consultations, no products designated Consultations for any future designations Footwear 35% regional value content rule of origin. Certain footwear articles not eligible under the ATPDEA 20% regional value content rule of origin with immediate dutyfree benefits. Certain footwear articles require U.S./Colombian uppers and follow a 55% regional value content rule and a 10- year duty phase out

11 Thank you!

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