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New Textile and Apparel Rules for the USMCA

The USMCA textile and apparel rules of origin are generally based on the “yarn forward” rule, which requires the formation of the yarn (spinning or extruding) and all processes following yarn formation to occur in the USMCA territory. Yarn itself is generally subject to a “fiber-forward” rule which means that the fiber must originate in a USMCA country and all processes are required to produce the yarn after that, e.g. extruding or spinning and any final processing must occur in the USMCA territory.

However, there are a number of exceptions to these general rules of origin for textile and apparel products, such as:

  • “Single transformation” - allows foreign origin fabric and/or yarns to be used for specific products as long as the cutting of the fabric or knitting to shape, and all subsequent processes, are performed in the USMCA territory;
  • Short Supply provisions - allows the use of certain foreign fiber, fabric or yarns, that are determined to be in short supply;
  • Tariff preference levels – allows duty-free treatment for specific quantities of non-originating product that has undergone significant processing in the USMCA territory
  • US/Mexico Assembly provision – allows duty-free treatment into the US when using the HTSUS subheading 9802.00.90 for goods that are assembled in Mexico from fabric wholly formed and cut in the US.

Other special rules for textile and apparel include:

  1. The de minimis rule which is based on weight, rather than value, and which allows foreign elastomeric content within the 10% by weight de minimis rule of no more than 7% ;
  2. A rule for sets whereby all the goods of a set must be originating or the total value of non-originating goods in the set must not exceed 10%;
  3. Visible Lining fabrics may be sourced outside the US, Mexico, and Canada;
  4. After certain specific transition periods, designated narrow elastic fabric, sewing thread, and pocket bag fabric must meet the specified rules of origin requirements for each component; and
  5. Certain foreign origin rayon fiber and rayon filaments may be used in textile and apparel goods, provided the good meets all other applicable requirements.

Verification for Textiles/Apparel

In addition to the normal verification procedures found in Article 5.9, there is a special textile and apparel origin verification procedure in Article 6.6. that essentially brings into the USMCA, the concept of “jump visits”. Under these procedures laid out in this paragraph, the customs agency of the importing country may request that it be allowed to visit multiple exporters and producers in the exporting country under one verification notice provided to the customs authority of the exporting country at least 20 days prior to the date of the visit (although there appears to be some wiggle room to this time frame). Advance notice to the companies who will be visited is not required. The company being visited may request a one-day delay in the visit, however, continued refusals to allow the visit can provide the basis for denial of USMCA claims. These provisions provide new tools, which mirror the “jump team” textile and apparel verification tools provided for in a number of other Agreements to which the U.S. is a party, and which, according to CBP provides for strengthening customs enforcement and preventing fraud regarding textile and apparel imports under USMCA.

De Minimis Rule for Textiles

A textile or wearing apparel good of Chapters 50 through 60 or heading 9619 containing non-originating materials, or a good of Chapters 61 through 63 with a primary component containing non-originating fibers or yarns, may nonetheless be originating only if the total weight of all those non-originating materials is not more than 10% of the total weight of the good or component as appropriate. Within the overall de minimis limit, the total weight of elastomeric content of the good or component may not exceed 7%. Under NAFTA, the de minimis requirement applied only to the primary component for all textile goods.

Read The Full Analysis Here: CBP Takes First Step Towards Full USMCA Implementation

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