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Haiti Trade Preference Program Frequently Asked Questions

 

Trade Preferences for Haitian Textiles and Apparel under CBTPA,

Haiti HOPE, HOPE II, and HELP

Last Updated: 06/16/2017

In an effort to provide information and guidance to parties exploring use of trade preferences available for imports of Haitian textile and apparel goods, the Office of Textiles and Apparel (“OTEXA”) has compiled the following Frequently Asked Questions (“FAQs”).

While the FAQs are intended to be helpful to parties who are not familiar with the trade preference programs under the Caribbean Trade Promotion Act (“CBTPA”), the Haiti Haitian Hemispheric Opportunity for Partnership Encouragement Act of 2006 (“HOPE”), the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008 (“HOPE II”), and the Haitian Economic Lift Program (“HELP”), please note that the relevant statutory provisions (see 19 U.S.C. §2703a), OTEXA’s Interim Procedures for Implementation of the Earned Import Allowance Program (73 Fed. Reg. 53, 191; September 15, 2008), and U.S. Customs and Border Protection’s (“CBP”) regulations and procedures are dispositive. CBP is the final arbiter whether imports of textiles and apparel from Haiti qualify for duty-free treatment under any of the preference programs.

Should you have any additional questions regarding preferential treatment for Haitian textiles and apparel, please contact Kayla Johnson at 202-482-2532 or via email.

 

Trade Preference Programs for Haitian Manufactured Textiles and Apparel: An Introduction

Trade Preference programs are established by the United States to provide a reduction or elimination of import duties on goods that would otherwise be subject to a higher level of duty, under certain restrictions. Certain textile and apparel goods that are wholly assembled, knit or knit-to-shape in Haiti may be imported into the United States duty-free, provided the inputs (e.g. yarns and fabrics) are sourced from certain specified countries. There are currently four legislative acts establishing trade preference programs for Haitian-made textiles and apparel: CBTPA, HOPE, HOPE II, and HELP. Information on all of these programs may be found on OTEXA’s website, under Trade Preference Programs/Haiti
 

1. What is the Caribbean Basin Trade Promotion Act (CBTPA)?

The CBTPA is a trade preference program enacted in October 2000, which provides duty-free treatment for apparel wholly assembled, knit or knit-to-shape in certain “beneficiary countries” in the Caribbean, as long as the apparel uses U.S. fabrics and U.S. yarns. There are some programs that have exceptions for knit apparel, which allow fabrics sourced from the beneficiary countries, as long as they are made with U.S. yarns. These exceptions are subject to annual quantitative limits, known as “quotas.” Haiti is a beneficiary country under the CBTPA, and, historically, most of the Haitian apparel imported into the United States enters duty-free under one of CBTPA’s preference programs. Information about the eligibility of apparel for duty-free treatment may be found in the text of the CBTPA legislation, as found on OTEXA’s webpage for CBTPA. Currently, the preferences under CBTPA will expire on September 30, 2020.


2. What trade preferences are available under CBTPA?

CBTPA provides several preferences for apparel manufactured in Haiti.

There is unlimited duty-free treatment for apparel manufactured in CBTPA beneficiary countries, including Haiti, under certain conditions. Apparel qualifies for duty-free treatment if it is wholly assembled, knit or knit-to-shape in CBTPA beneficiary countries, using:

  • U.S. yarn and fabric, cut in U.S. and assembled in CBTPA beneficiary countries;
  • U.S. yarn and fabric, cut in U.S., further processed in CBTPA beneficiary countries;
  • U.S. yarn, fabric and thread, cut in CBTPA beneficiary countries;
  • Brassieres cut and sewn in US and/or CBTPA beneficiary countries.

There are other preferences that are available for certain knit apparel manufactured in Haiti, but these are subject to annual quota limits or tariff rate quotas (“TRQ”). The two TRQ programs are as follows:

  • Knit apparel articles (excluding socks and non-underwear T-shirts), made of U.S. yarn, CBTPA knit fabric or knit-to-shape components, that are cut and sewn in CBTPA beneficiary countries. The annual quota limit is 970 million square meter equivalents (“SME”).
  • Non-underwear T-shirts, of U.S. yarn and CBTPA fabric, that are cut and sewn in CBTPA beneficiary countries. The annual quota limit is 12 million dozen.

More detailed information about the eligibility of apparel for duty-free treatment may be found in the text of the CBTPA legislation, as found on OTEXA’s webpage for CBTP.

 

3. What is Haiti HOPE?

In December 2006, Congress enacted the “Haitian Hemispheric Opportunity for Partnership Encouragement Act of 2006,” commonly known as “HOPE.” HOPE amended the Caribbean Basin Economic Recovery Act (“CBERA”), authorizing the President to extend additional trade preferences to Haitian manufactured apparel. HOPE preference programs do not replace those provided by CBTPA, but are separate programs that were added as part of CBERA. More detailed information about the eligibility of apparel for duty-free treatment may be found in the text of the Haiti HOPE legislation, as found on OTEXA’s webpage, Trade Preference Progams/Haiti. With the Trade Preferences Extension Act of 2015, the preferences under HOPE (and HOPE II and HELP) are set to expire on September 30, 2025, with the exception of the Value-Added quota program, which expires on December 19, 2025.


4. What trade preferences were created under HOPE?

HOPE established the first preference programs for Haitian apparel that allowed duty-free treatment for certain apparel wholly assembled, knit, or knit-to-shape in Haiti, using yarns and fabrics from any country, in contrast to CBTPA, which requires yarns and fabrics from the U.S. in order to qualify for duty-free treatment.

HOPE created two preference programs: the Value-Added tariff rate quota (TRQ) and the Woven Apparel TRQ, each of which limit qualifying imports to certain annual quotas. More detailed information about the eligibility of apparel for duty-free treatment may be found in the text of the HOPE legislation, as found on OTEXA’s webpage, Trade Preference Programs/Haiti.

 

5. What is Haiti HOPE II?

In June 2008, Congress enacted the Food, Conservation, and Energy Act of 2008 (Public Law 110-246). Title XV, Subtitle D, Part I of the Act contains amendments to the established special rules for imports of apparel and other textile articles from Haiti, which can be found in 19 U.S.C. §2703a. These amendments are cited as the “Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008” which is commonly known as “HOPE II.” HOPE II expanded the preferences originally established in HOPE, and created four new preference programs for Haitian-manufactured apparel. Information about the eligibility of apparel for duty-free treatment may be found in the text of the HOPE II legislation, as found on OTEXA’s webpage, Trade Preference Programs/Haiti.


6. What trade preferences were created under HOPE II?

HOPE II modified the preference programs to allow qualifying goods under HOPE to be exported either from Haiti or the Dominican Republic (NOTE: CBTPA also allows exports of qualifying apparel to be exported from the Dominican Republic, as a former beneficiary country).

HOPE II also capped the Value-Added tariff-rate quota at 1.25 percent of total U.S. apparel imports until its expiration (currently, December 2025), and increased the quota for Woven Apparel TRQ from 50 million to 70 million SME.

The new preferences established under HOPE II were:

  • A Knit Apparel TRQ of 70 million SME for knit apparel manufactured in Haiti using fabric and yarns from any source;
  • The Haiti Earned Import Allowance Program (“Haiti EIAP”);
  • Unlimited duty-free treatment for certain articles (brassieres, luggage, headwear, and certain sleepwear) created, wholly assembled or knit-to-shape in Haiti, using fabric from any source.
  • Allowing any apparel wholly assembled or knit-to-shape in Haiti to qualify for duty-free treatment, even if a fabric, components or yarns are sourced from a non-qualifying country, as long as the product has been deemed to be in “short supply” under a trade preference program or Free Trade Agreement.


More detailed information about the eligibility of apparel for duty-free treatment may be found in the text of the HOPE II legislation, as found on OTEXA’s webpage, Trade Preference Programs/Haiti.


7. What is Haiti HELP?
In May of 2010, the President signed into law the “Haiti Economic Lift Program Act,” commonly known as “HELP.” HELP further expanded existing preferences for apparel and established new preferences for certain non-apparel textile goods. With the exception of the Value-Added TRQ (which expires in December 2025), HELP extended all of CBTPA’s and HOPE/HOPE II/HELP’s preference programs through 2020, but the Trade Preference Extension Act of 2015 extended all programs to September 30, 2025 (with the exception of the Value-Added quota program, which expires on December 19, 2025). Information about the eligibility of apparel for duty-free treatment may be found in the text of the HELP legislation, as found on OTEXA’s webpage, Trade Preference Programs/Haiti.


8. What trade preferences were created under HELP?

HELP expanded and extended current preference programs under HOPE (as modified by HOPE II), and established new preferences providing unlimited duty-free treatment for certain knit apparel and certain non-apparel textiles wholly assembled or knit-to-shape in Haiti, using fabric or components from any source.

For programs already established by HOPE and HOPE II, HELP enacted the following modifications:

  • Modified the step-increases for the minimum percentage of value under the Value-Added TRQ, ranging from 50% to 60%. See FAQ #9.
  • Provides a conditional increase of the Woven Apparel TRQ quota limit from 70 million SME to 200 million SME, with certain sub-limits. See FAQ #10.
  • Provides a conditional increase of the Knit Apparel TRQ quota limit from 70 million SME to 200 million SME, with certain sub-limits. See FAQ #11.
  • Modified the allowance ratio for the Haiti Earned Import Allowance Program from 1 SME allowance for every 3 SME of qualifying fabric to 1 SME allowance for every 2 SME of qualifying fabric intended for manufacture of apparel in Haiti. See FAQ #12.


More detailed information about the eligibility of apparel for duty-free treatment may be found in the text of the HELP legislation, as found on OTEXA’s webpage, Trade Preference Programs/Haiti.


9. What is the Value-Added Tariff Rate Quota?
Originally established in HOPE, the Value-Added TRQ provides duty-free treatment for imports of apparel wholly assembled or knit-to-shape in Haiti, as long as a certain “applicable percentage” of the export value of the apparel is sourced from Haiti, the United States, or any free trade agreement partner or trade preference beneficiary country.

Subsequently, HELP and then the Trade Preference Extension Act of 2015 modified the “applicable percentage” required for each annual period as follows:

  • Until December 19, 2015, the applicable percentage is 50% or more;
  • From December 20, 2015 to December 19, 2017, the applicable percentage is 55% or more;
  • From December 20, 2017 to December 19, 2025, the applicable percentage is 60% or more.


The text of the HOPE legislation outlines the calculation of the value of inputs from qualifying countries, which includes the cost or value of materials plus direct costs of processing operations. CBP enforces the program, and determines whether imported apparel meets the requisite applicable percentage of value added from specified countries.

The annual quota, calculated every year, is 1.25% of total apparel imports into the U.S., in SME, based on import data for the most recent 12 months at the time of publication. Every December, OTEXA publishes a Federal Register notice announcing the upcoming quota level for the next annual period. Current utilization rates for the Value-Added TRQ may be found on OTEXA’s website, under Trade Data/Textiles and Apparel/Trade Preference Programs – Utilization of Certain Tariff Rate Quotas.


10. What is the Woven Apparel Tariff Rate Quota?
The Woven Apparel TRQ was established under HOPE, but the annual quota level was modified in HOPE II and HELP.

The program allows for duty-free treatment of certain apparel of woven fabric, classified under Chapter 62 of the U.S. Harmonized Tariff Schedule (“HTS”). Although brassieres classified under 6212.10 are not eligible under the TRQ, these items are granted unlimited duty free treatment under a separate provision. Qualifying woven apparel must be wholly assembled in Haiti, but may use fabric from any source. A good is “wholly assembled” in Haiti if all components, of which there must be at least two, pre-existed in essentially the same condition as found in the finished good and were combined to form the finished good in Haiti, excluding minor attachments, minor embellishments and minor subassemblies.

Currently, the quota limit for each annual period (from October 1st through September 30th of the following year) is 70 million SME. HELP provided for a conditional increase in the quota level: Should imports within a given annual period exceed 52 million SME, the annual quota increases from 70 to 200 million SME, with a sublimit of 70 million SME for certain woven apparel. The apparel subject to the sublimit is described (by HTS classification) in the text of the Public Law, as found on OTEXA’s website under Trade Preference Programs/Haiti. Current utilization rates for the TRQ may be found on OTEXA’s website, under Trade Data/Textiles and Apparel/Trade Preference Programs – Utilization of Certain Tariff Rate Quotas.


11. What is the Knit Apparel Tariff Rate Quota?
The Knit Apparel TRQ, established under HOPE II, allows for duty-free treatment for imports of certain knit apparel, classified under Chapter 61 of the HTS, but excludes certain men’s and boys’ T-shirts and sweatshirts. The HTS classifications of the excluded knit apparel can be found in the text of the HOPE II legislation, found on OTEXA’s website.

in 2010, HELP modified the knit apparel TRQ by providing for a conditional increase in the annual quota level under certain circumstances, and with sumblimits for certain knit apparel goods (see below). In addition, some knit apparel items, identified by HTS classifications, were excluded from the TRQ, and have been granted unlimited duty-free treatment. The list of HTS classifications now granted unlimited duty-free treatment may be found in the test of the HELP legislation, found on OTEXA’s website.

Qualifying apparel must be wholly assembled or knit to shape in Haiti, but may use fabric or components from any source. A good is “wholly assembled” in Haiti if all components, of which there must be at least two, pre-existed in essentially the same condition as found in the finished good and were combined to form the finished good in Haiti, excluding minor attachments, minor embellishments and minor subassemblies. A good is “knit-to-shape” in Haiti if 50 percent or more of the exterior surface area of the good is formed by major parts that have been knitted or crocheted directly to the shape used in the good, excluding minor cutting, trimming, or sewing of those major parts.

Currently, the quota limit for each annual period (from October 1st through September 30th of the following year) is 70 million SME. HELP provided for a conditional increase in the quota level: Should imports within a given annual period exceed 52 million SME, the annual quota increases from 70 to 200 million SME, with a sublimit of 85 million SME for certain knit apparel. The apparel subject to the sublimit is described (by HTS classification) in the text of the Public Law, as found on OTEXA’s website. Current utilization rates for the TRQ may be found on OTEXA’s website, under Trade Data/Textiles and Apparel/Trade Preference Programs – Utilization of Certain Tariff Rate Quotas.


12. What is the Earned Import Allowance Program?
HOPE II includes an earned import allowance rule, which provides that for a certain amount of qualifying fabric purchased or manufactured by the producer and intended for apparel production in Haiti, qualifying producers can earn import allowances to claim duty-free treatment for imports of Haitian apparel using fabric from any source. There is no quantitative limit to the allowances that may be earned under the program.

Established by HOPE II, the Haiti Earned Import Allowance Program (“Haiti EIAP”) initially provided an import allowance of 1 SME for each 3 SME of qualifying woven or knit fabric purchased or manufactured in qualifying countries. With the enactment of HELP, for requests for deposits of credits submitted after May 24, 2010, qualifying producers may earn an import allowance of 1 SME for every 2 SME of qualifying fabric. However, credits approved by OTEXA prior to May 24, 2010, under a 3 for 1 allowance will not be adjusted for the 2 for 1 allowance.

On September 15, 2008, the Department of Commerce’s Office of Textiles and Apparel (“OTEXA”) published a Federal Register notice issuing interim procedures governing the implementation of this rule (See 73 Fed. Reg. 53191, September 15, 2008). OTEXA’s interim procedures and other information on the Haiti EIAP may be found on OTEXA’s website under Earned Import Allowance Program/Haiti 2 x 1.


13. What kinds of apparel are provided unlimited duty-free treatment?
The following apparel goods qualify for unlimited duty-free treatment, as long as they are wholly assembled or knit-to-shape in Haiti, but may use fabric or components from any country:

  • Brassieres,
  • Certain headwear,
  • Certain sleepwear, and
  • Certain knit apparel


The HTS classifications for these qualifying goods may be found in the text of the legislation under HOPE, HOPE II, and/or HELP, all of which may be found on OTEXA’s website under Trade Preference Programs/Haiti.


14. What kinds of non-apparel textiles are provided unlimited duty-free treatment?
The following non-apparel textile goods qualify for unlimited duty-free treatment, as long as they are wholly assembled or knit-to-shape in Haiti, but may use fabric or components from any country:

  • Luggage;
  • Certain towels; and
  • Certain bedspreads and quilts.

The HTS classifications for these qualifying goods may be found in the text of the legislation under HOPE, HOPE II, and/or HELP, all of which may be found on OTEXA’s website under Trade Preference Programs/Haiti.


15. Where can I get information about U.S. Customs’ requirements for importing under one of the preference programs for Haitian apparel?
In addition to its standard requirements for all imports, U.S. Customs and Border Protection may have additional requirements for imports under various trade preference programs. Imports claiming trade preferences for CBTPA or HOPE must meet these requirements to be eligible for duty-free treatment.

Specific information on trade programs and imports of textiles and apparel may be found on CBP’s website under Priority Trade Issues: Textiles and Quota Enforcement and Administration.

General information on importing may be found on CBP’s website under Trade.

Please note that the Government of Haiti may also require special documentation and other requirements (e.g. visas) before certain textile and apparel goods may be exported from Haiti. Inquiries should be directed to the Haitian customs authority. Additional information may be found by contacting the Embassy of Haiti to the United States in Washington, D.C., or on the Embassy of Haiti’s website.